For many Indian tycoons, 2019 turned woeful as lenders -- empowered by the nation’s recent bankruptcy law and desperate to clean up soured debt from their books -- started seizing assets of delinquent firms or dragged them into insolvency.
Indian banks wrote off a record $39 billion of loans in the 18 months through September in a bid to repair their balance sheets as they battled the world’s worst bad debt pile. Making matters worse, a shadow banking crisis led to a funding squeeze, crushing debt-laden businesses that were critically dependent on rollover financing.
“Life has come a full circle for tycoons that had enjoyed debt-fueled growth,” said Nirmal Gangwal, founder of distress and debt restructuring advisory firm Brescon & Allied Partners LLP. “Many firms collapsed like a house of cards. The downfall was rather unprecedented.”
The government has also been cracking down on economic crime to assuage public anger over absconding businessmen. It’s even barred some from traveling overseas if they were deemed a flight risk.
Here are some of the country’s biggest and most-storied businessmen who saw their fortunes fade. Spokespersons for none of these tycoons, except Essar, immediately replied to emails and text messages seeking comments.
Anil Ambani
The chairman of Reliance Group, which makes movies to metro lines, had a close shave with jail time in March before his elder brother and Asia’s richest man, Mukesh Ambani, bailed him out at the last minute. The woes of the ex-billionaire came to the fore when India’s top court asked him to pay Ericsson AB’s India unit about $77 million of past dues or go to jail since Anil Ambani, 60, had given a personal guarantee. His telecom carrier slipped into insolvency this year, while unprofitable Reliance Naval & Engineering Ltd. faced a cash crunch. Reliance Capital Ltd. is selling assets to pare debt. Ambani is also fending off Chinese lenders in a London court.
Malvinder & Shivinder Singh
Karma caught up with ex-billionaires and brothers Malvinder Singh, 47, and Shivinder Singh, 44, and how. Scions of a prominent business family, they once helmed India’s top drug maker and second-largest hospital chain. In October, the two were arrested on charges of fraudulently diverting nearly $337 million from a lender they controlled. India’s market regulator found in 2018 that the brothers had defrauded their hospital company of about $56 million. The collapse of the $2 billion empire turned brother against brother, prompting their mother to broker a peace deal that was short-lived. In February, Malvinder accused Shivinder and their spiritual guru of fraud.
Shashikant & Ravikant Ruia
After a hard-fought battle to keep their flagship steel mill, the first-generation entrepreneurs finally saw the bankrupt Essar Steel India Ltd. pass on to ArcelorMittal last month. The $5.9 billion takeover was almost two years in the making with multiple legal wrangles. The group, controlled by Shashikant Ruia, 76, and Ravikant Ruia, 70, were also reprimanded by a U.K. judge in March this year for concealing documents. Started in 1969 as a construction firm, Essar Group diversified, investing about $18 billion between 2008 and 2012, and piled on debt. In 2017, the group had sold another prized asset, Essar Oil.
Selling an asset to pare a liability shouldn’t be seen as a “lost asset,” an Essar spokesman said, adding that the group remains a diversified conglomerate.
VG Siddhartha
Before jumping off a bridge into a river in July in an apparent suicide, the founder of India’s biggest coffee chain Cafe Coffee Day had penned a letter that spoke of pressure from lenders, a private equity firm and harassment by tax officials. He had spent much of the last two years pledging ever more of Coffee Day Enterprises Ltd. shares to refinance loans for ever shorter periods, at ever higher interest rates. “I would like to say I gave it my all,” V.G. Siddhartha, 60, wrote in the letter. “I fought for a long time but today I gave up.”
Naresh Goyal
The former ticketing agent who built India’s largest airline by value, stepped down as chairman of Jet Airways India Ltd. in March, caving in to pressure from banks who took over the company. Cut-throat price wars and surging costs pushed Jet deeper into loss. The airline stopped flying in April and went into bankruptcy two months later as lenders failed to find a buyer. In July, an Indian court barred Naresh Goyal from flying overseas after the government said it was investigating an alleged $2.6 billion fraud involving Jet Airways.
Rana Kapoor
The founder of Yes Bank Ltd., which became India’s fourth-largest non-state lender, tweeted in September 2018 that his shares were invaluable and requested his children never to sell them upon inheritance. But trouble was brewing. The nation’s banking regulator, which found the lender had repeatedly under-reported its bad loans, refused to extend his tenure as chief executive officer. This forced Rana Kapoor, 62, to step down by end-January. Kapoor, who has pledged some of his Yes Bank shares in July, sold almost his entire stake in the lender by October.
Subhash Chandra
The rice trader-turned-media mogul, 69, who brought cable television into Indian homes in the early 1990s with his ZEE TV, resigned as chairman of Zee Entertainment Enterprises Ltd. in November and lost control of his crown jewel. Subhash Chandra has been selling stake in Zee Entertainment in the past few months to repay group’s debt.
Gautam Thapar
A default by Gautam Thapar, founder of the paper mill-to-power transmission Avantha Group, on pledged shares made Yes Bank Ltd. the biggest shareholder in CG Power and Industrial Solutions Ltd. In August, the firm was hit by an accounting scandal forcing the board to remove Thapar, 59, from the chairman’s post. A month later, the market regulator ordered a forensic audit of the firm and barred Thapar from accessing securities market.
Comments
This is not only your question. my question too. that’s why we should end the mhar competition. Otherwise your son also may follow the same path one day.
Masha Allah! it is good to note that some of our brothers brought the globally acclaimed Islamic Scholar to Mangalore.
It would have been more beneficial for the community if the hosts arranged one two public programs in Mangalore and Kasaragod.
Masha Allah Masha Allah happy to see Mufti Menk at our place.Good message to the youth regarding non-competition over mahr.
My Reply to A Mangalorean. Why did your son agree to pay that much Mehr while it was not under his capacity. May be he tried to show his Father in Law that he is also a rich person. Why one should put himself in debt. Now he will have to pay interest on the loan and this is agaisnt the teaching of Islam. We will not put ourself in trouble if we follow simple way tought by our Prophet. May Allah bless us with right way Islam and keep us away from show up.
Hahaha
I m absolutely delighted that Mufti Menk has visited our place and given lecture on Mahr to Manglorean Muslims.
Hoping to see him again and again !!
Good that mufti menk has taken initiative to end mahr competition. Hope it won’t be the beginning of the ‘mufti competition’. Now another NRI businessman in mangalore may think of bringing numan ali khan for next wedding in family (kidding)
Welcome to mufti menk a renowed international scholar to Mangalore. Mufti should advise the rich muslims of coastal Karnatkada to refrain from luxury marriage style with luxury marriage halls and luxury foods.
Unlucky that i was not part of this event. Mufti Sir do visit Manglore frequetly and guide mangloreans who indulged in shirk and diddah... May god bles you, give you good health and long life.
demanding dowry is not islamic culture. he has given series of lectures on that issue. if you want u can google and listen. but what he did here is a timely decision- he pervented show off. why he should talk about non-islamic system of dowry at a wedding where there was no dowry?
A considerable number of Mangalore muslims have adopted the Hindu custom of dowry. But mhar has not disappeared. At the same time among rich muslims there is definitely competition over mahr. This had happened in my son’s wedding too. he had borrowed huge loan to pay a Rs 50 lakh gold as mahr. so I personally feel that Mufti menk’s initiative is good.
Thants Right, instead of speaking about the dowry system which is demanded by the men as oppose to the mahr he is speaking opposite which is very trivial issue in comparison to what a girl's parents suffer.
Barakallau lakumaa wa baarik alaikumaa wa jam'a bainakumaa fee khair. May Allah(swt) bless the new couple. Ameen.
Mahr was never a competition here. Its all peanuts compared to the jwellery the bride wears from her fathers hard earned money. If not that, then its the brand new car in display outside the wedding hall, again brought by the brides father for the bridegroom.
mufti menk has not realised that most of the bearys hav sold themselves to the indian custom of dowry for demand or for self prestige
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