december 29, 2017 forbes india | 37the list
i
n June, India’s central bank released a
list of 12 companies that account for a
fourth of all bad loans at Indian banks
and face being liquidated under the new
Insolvency & Bankruptcy 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 labelled non-performing.
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 “discriminatory
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 2017, 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 41), who
at their peak in 2010 were among the top
five, with a net worth of $15 billion, have
seen their wealth erode to $3.4 billion.Several high-flying billionaires,
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 country
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
estranged 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 overboard. Education firm
Educomp, founded by former lister Shantanu
Prakash, who was worth $920 million in
2009, voluntarily applied to restructure
its $320 million debt under the new law.
—ARFallen Stars
shAshi & rAvi ruiAfor MethodoLoGy And ALL bios, Go to forbes.CoM/indiAthe ruias are ruing new rules
88
dinesh nAndWAnA$1.72 BILLION (^)
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
VPS HEALTHCARE AGE: 40
95
shyAM & hAri bhArtiA
$1.56 BILLION
JUBILANT GROUP
AGEs: 64, 60
96
AnAnd MAhindrA
$1.54 BILLION
MAHINDRA & MAHINDRA
AGE: 62
97
reddy fAMiLy
$1.53 BILLION
DR REDDY’S LABORATORIES
98
Arvind PoddAr
$1.48 BILLION
BALKRISHNA INDUSTRIES
AGE: 59
99
vijAy shekhAr shArMA
$1.47 BILLION
PAYTM AGE: 39
100
rAnA kAPoor
$1.46 BILLION (^)
YES BANK AGE: 60
UP MORE THAN 10% DOWN MORE THAN 10%
NEW TO LIST RETURNEE