Big shifts in India. There has been an ongoing anti-crony fight there for years now. There is even a Facebook page (not affiliated in any way with us) called India Against Crony Capitalism. And it appears that some headway has been made. We certainly hope so. If India can shed its history of statist cronyism (a very tall order) it will be poised to become the country it seeks to be in the 21st Century.
We wish India the very best of luck. The future could be quite bright.
For almost the first time in decades, capitalists are learning that there is no free lunch in capitalism.
When did you last hear that a big chunk of the domestic steel industry is about to be liquidated – most of the 12 loan defaulters being referred to the bankruptcy courts are steel companies? Their promoters will probably be left with nothing in the end. When did you last hear a proud Ambani seeking a rescheduling of his loan and more time for repayment? When did you last hear of big name promoters being forced to sell off their best businesses to retain what they can of their former business empires? In the past, they left banks with their worst businesses, while saving the best for themselves. When did you last hear of a liquor baron, who liked strutting around with young models, living the life of a beleaguered fugitive in London, doing time in courts and extradition hearings?
The names are like a roll-call of India Inc. The Ruias, once compared to the Ambanis in terms of ambition, will be losing two of their biggest businesses – oil refining to Rosneft, and steel to liquidation proceedings. The Tatas are shedding some of their overseas steel businesses bought at the top of the steel cycle just before 2008. They sold their urea business in India, and are in the process of shedding more businesses in India (including possibly telecom). Andhra Inc’s proud standard bearers – creations of the United Progressive Alliance (UPA) era when Andhra supplied the bulk of Congress MPs – went into default in many cases, and have had to divest assets: GMR has sold off coal, power and road assets worth more than Rs 10,000 crore, and is now in the process of unloading 40 per cent of its crown jewel, Delhi airport, to a French-led consortium. GVK, which runs Mumbai and Bengaluru airports, has exited Bengaluru completely. Jaypee Group, whose JP Infra is being liquidated, sold its hugely profitable cement business to the Birlas under lender pressure. DLF, the largest listed realtor, has destroyed more value than it has created over the last few years. It has been selling more assets to reduce debt than homes to buyers.
In three years of the Narendra Modi government, India Inc has been drenched by torrential conditions when earlier it barely managed to get its feet wet, safe under the umbrella of crony relationships.