I
n June, India’s central bank
released a list of 12 compa-
nies that account for a fourth
of all bad loans at Indian banks
and face being liquidated under
the new Insolvency & Bank-
ruptcy Code. Prominent among
them is Essar Steel, controlled
by the Ruia brothers, with a
debt pile of nearly $ 7 billion,
more than $5 billion of which is
labeled nonperforming.
Essar Steel, a unit of the
brothers’ Essar Group, took the
Reserve Bank of India to court,
calling its move to refer it for
bankruptcy proceedings as “dis-
criminatory and arbitrary.” Essar
argued that the Reserve Bank
had given 488 other companies
an additional six months to
arrive at a resolution with
their bankers. It had also overlooked the company’s
improved financial position as of March 2 017, Essar
said. But the court dismissed the plea.
The case is now before the National Company
Law Tribunal. A court-appointed executive has
assumed oversight, and Essar Steel’s board has been
suspended. A newly formed creditors committee
has nine months to devise a plan to pay off lenders,
failing which Essar Steel will be liquidated.
In August, the Ruia brothers concluded a long-
delayed $ 12 .9 billion deal to sell the group’s oil assets
to Russia’s Rosneft. The bulk of the proceeds will pay
down part of Essar Group debt. The siblings (No.
4 1), who at their peak in 2010 were among the top
five, with a net worth of $ 15 billion, have seen theirwealth erode to $3. 4 billion.
Several high-flying billion-
aires, undone by their appetites
for debt, have disappeared from
the ranks altogether. One notable
figure is liquor and airline baron
Vijay Mallya, who fled the coun-
try in 2016 after his Kingfisher
Airlines reneged on loans of more
than $ 1 billion.
Another big defaulter in the
central bank’s list is Bhushan
Steel, which produces steel sheets
for the auto industry and owes
banks $6.9 billion. The company’s
chairman, Brij Bhushan Singal,
dropped off in 2014. Singal’s es-
tranged older son, Sanjay Singal,
who runs his own steel business
and is weighed down by debt of
$5.7 billion, lost his spot in 2015.
Other highly leveraged
drop-offs are hydropower pioneer Jaiprakash Gaur,
founder of the Jaypee Group, and L. Madhusudhan
Rao of Lanco Infratech, who last featured among
the richest in 2011 and 2012. “Many companies
overinvested in the exuberant period preceding the
global financial crisis,” says Rakesh Arora, managing
partner of Go India Advisors, a Mumbai strategic
advisory firm. “Banks were guilty of giving them
loans even when their equity base was too low.”
The court’s tough stance in the Essar case should
curb both borrowers and lenders from going over-
board. Education firm Educomp, founded by for-
mer lister Shantanu Prakash, who was worth $ 920
million in 2 009, voluntarily applied to restructure its
$32 0 million debt under the new law. —A.R.Fallen Stars
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88
DINESH NANDWANA
$1.72 BILLION Ì
VAKRANGEE AGE: 54
89
NANDAN NILEKANI
$1.71 BILLION
INFOSYS AGE: 62
90
RADHE SHYAM AGARWAL
$1.64 BILLION
EMAMI AGE: 72
90
RADHE SHYAM GOENKA
$1.64 BILLION
EMAMI AGE: 71
92
SENAPATHY GOPALAKRISHNAN
$1.61 BILLION
INFOSYS AGE: 62
93
SATISH MEHTA
$1.6 BILLION
EMCURE PHARMACEUTICALS AGE: 66
94
SHAMSHEER VAYALIL
$1.57 BILLION S
VPS HEALTHCARE AGE: 40
95
SHYAM & HARI BHARTIA
$1.56 BILLION S
JUBILANT GROUP AGES: 64, 60
96
ANAND MAHINDRA
$1.54 BILLION
MAHINDRA & MAHINDRA AGE: 62
97
REDDY FAMILY
$1.53 BILLION T
DR. REDDY’S LABORATORIES
98
ARVIND PODDAR
$1.48 BILLION Ì
BALKRISHNA INDUSTRIES AGE: 59
99
VIJAY SHEKHAR SHARMA
$1.47 BILLION Ì
PAYTM AGE: 39
100
RANA KAPOOR
$1.46 BILLION Ì
YES BANK AGE: 60THE LIST
SUP MORE THAN 10% TDOWN MORE THAN 10%
ÌNEW TO LIST 3 RETURNEEThe Ruias are ruing new rules.