Business Today 7th October 2018 | Page 3

FROM THE EDITOR http :// www . businesstoday . in

Editor-in-Chief : Aroon Purie Group Editorial Director : Raj Chengappa

Kingdom Gone

O

VER THE NEXT few years , a number of entrepreneurs , who had shot to prominence over the past decade and a half , will either have lost their entire businesses or will see their empires shrink dramatically in size , after losing many of their companies . They will see their prized possessions either auctioned off or liquidated under the Insolvency and Bankruptcy Code . Their aggrieved lenders , with a little bit of prodding from the Reserve Bank of India ( RBI ), would have already taken them to the National Companies Law Tribunal ( NCLT ) for bankruptcy proceedings . For many tycoons , the process is already under way . Some others may see their firms going to the NCLT soon , unless they find the money to repay the banks .

Thus the Ruias of Essar will lose their flagship Essar Steel , and possibly several other power and port assets . In a bid to save their steel business , the family had already sold off plenty of assets , including a refinery , its captive power plant , a port , and also interests in BPO and telecom businesses . None of that helped , and pretty soon , the Ruias who had built an empire that was in the top 5 business groups in India by revenues will have shrunk to one-third of their size .

They won ’ t be the only ones – the Dhoots of Videocon are likely to lose their flagship consumer durables empire , which is what they are best known for . Several steel tycoons – like the Singal brothers of Bhushan , Sandeep Jajodia of Monnet Ispat ( who happens to be the brother-in-law of Sajjan and Naveen Jindal ), Umang Kejriwal of Electrosteel Steels , and Rajinder Miglani of Uttam Galva – will be left with little , if anything . The Gaurs of Jaypee group who had built power , real estate , cement and infrastructure assets and held huge land banks , will also have shrunk to a fraction of their size .

And these are only some of the names . Over the next couple of years , many others , particularly those who had bet heavily on infrastructure , will be referred to the NCLT unless they find new sources of financing , or turn their companies around quickly .

So , what went wrong with these businessmen ? Their ambitious plans were mostly drawn up during the go-go years of the Indian ( and global ) economy between 2004 and 2008 , when no goal seemed impossible . They were addicted to cheap debt . Most could not complete their projects in time – some because they miscalculated , others because of policy changes beyond their control , and still others because they diverted the money into different businesses . The banks , too , can share part of the blame – they often gave fresh loans even when it was apparent the company was in trouble – until the RBI and the government got strict on bad loans .

Senior Editor Nevin John looks at the rise and fall of the most prominent names in our cover story this issue .

prosenjit . datta @ intoday . com @ ProsaicView

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Vol . 27 , No . 20 , for the fortnight September 24 to October 7 , 2018 . Released on September 24 , 2018 .

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