Business Today

Billions to Bust

Lessons from the failure of some of India's biggest business names.
twitter-logo Nevin John   New Delhi     Print Edition: October 7, 2018
Billions to Bust

As the sale of Essar Steel under the Insolvency and Bankruptcy Code, or IBC, moves a step closer, its past owner, the Ruia family, is coming to terms with the fact that re-building its business empire to the scale it enjoyed just five years ago might take decades. At its peak, the group, promoted by brothers Shashi Ruia and Ravi Ruia, and at present run by Shashi's son Prashant Ruia, had interests in half-a-dozen sectors - oil refining, power, steel, ports, telecom and BPO, in India and abroad. In 2014/15, it was among the top five business houses in India with revenues of Rs1.6 lakh crore. It had also run up a debt of Rs1.3 lakh crore.

After the IBC process is over, the Ruias would have lost not only their crown jewel, Essar Steel (Rs20,000 crore revenue in the last financial year), but also a number of power and port assets that lenders are referring to the National Companies Law Tribunal or NCLT. They will still own some companies but the group will be less than one-third the size it was five years ago.

The Ruias did everything possible to hold on to Essar Steel. In 2016, they sold their Vadinar oil refinery, a captive power plant and a port for $12.9 billion to pay off some group-level debt. They even tried to bid for Essar Steel when it was offered for sale under the IBC. But the government changed the IBC rules and barred promoters from bidding unless they paid banks the entire money owed by them.

The only consolation is that even after losing Essar Steel, the Ruias would control several companies with combined revenues of over $7 billion, thanks to the Stanlow refinery in the UK. Several others who had built their business empires using cheap debt during the go-go years of the economy in the last decade would consider them lucky. They, after all, are losing almost everythingthey ran.

ESSAR STEEL INDIA Shashi Ruia, 75, & Ravi Ruia, 69

The warring Singal brothers - Sanjay and his younger sibling Neeraj - in race to build bigger and more modern steel factories have lost their companies. Neeraj's Bhushan Steel has been snapped up by Tata Steel, while JSW Steel and Tata Steel are fighting for Sanjay's Bhushan Power and Steel. The Singals will have no significant business left after this.

The Gaur family of the Jaypee group will also lose most of their assets. They started off as government contractors for big dams such as Sardar Sarovar and Tehri. But after the IBC process is over, they would have lost almost all their businesses - cement, power, real estate and infrastructure. The most profitable cement plants have already been sold to clear some debt. The real estate business is facing bankruptcy, and after its sale/liquidation, the Gaurs will probably have a handful of relatively smaller assets, if anything.

BHUSHAN STEEL BHUSHAN POWER & STEEL, Sanjay Singal, 61,

They have company in Sandip Jajodia (the brother-in-law of JSW Group's Sajjan Jindal), who built the Monnet Ispat group; Arvind Dham, who created an auto ancillary empire under Amtek Auto; and Rishi Agarwal of ABG Shipyards. Then there are Valecha, Thakur and Mirchandani families, all partners in Jyoti Structures, which is facing liquidation.

BHUSHAN STEEL BHUSHAN POWER & STEEL Neeraj Singal, 50

These companies are among the 12 big loan default cases which lenders had taken to the NCLT for resolution in the first round. In the next rounds, many other big names will also have to get used to a far smaller presence. The Videocon empire, for instance, will shrink to a handful of small businesses (including hydrocarbon assets abroad), as would several others, such as Ruchi Soya, built by the Indore-based Shahra family.

These businessmen were ambitious. They used cheap debt to expand to unsustainable levels. And most made miscalculations in projections for the future. Their rise, and the subsequent fall, is a tale of how ambition is all it takes to build a fortune, and destroy it too. And though some may bounce back, most would never find a place on the Indian corporate world's high table.

The Ruias - Rise and Fall

For decades, it seemed the Ruias had been blessed with the nine lives of a cat as they survived one business mishap after another. Brothers Shashi and Ravi had started out as infrastructure contractors in 1969, building ports and pipelines, before getting into the core businesses themselves - steel, telecom, ports, refinery and power. But their problem has been, and still remains, over-dependence on debt. Essar Steel's first loan default, for example, was in 2000. That was not the only one. It had to file for bankruptcy protection for two separate group companies in the US, defaulted on power and refinery loans, among others, and had to seek debt restructuring several times. Each time, they managed to come out of the debt trap by selling smaller assets. Still, by March 2017, the group debt was Rs1.3 lakh crore.

Their other problem has been execution. Both the Vadinar refinery and Essar Steel's plant were delayed several times. The Ruias, when they last met BT, said the reasons were not under their control. Prashant Ruia, for example, said Essar Steel's problems were compounded by the fact that it did not get gas as promised by the government and so could not run at full steam. This, coupled with a global downturn in steel prices and dumping from China, made the business unviable. The Vadinar refinery was delayed due to several reasons, including a hurricane.

However, this time, even after selling several assets, the Ruias have not been able to retain their steel business. Between 2011 and now, they have sold their 33 per cent stake in Vodafone for Rs22,350 crore, BPO unit Aegis for $910 million, and the prized Vadinar refinery. They have sought bankruptcy protection for steel and mining business in Algoma and Minnesota in the US and are close to losing Essar Steel, Essar Projects (renamed as EPC Constructions India), Essar Power Jharkhand and Essar Bulk Terminal Salaya, besides Essar Steel.

After losing all this, the Ruias will have enough businesses - a nine-million-tonne refinery in the UK, a few power plants, ports, and some shipping vessels. The flip side is the enormous debt - the debt in the remaining business is estimated to be Rs30,000 crore.

The Singal Saga - Losing a Fortune

The Singal family - father Brij Bhushan and sons Sanjay and Neeraj - built up a sizeable steel empire in the 90s. Brij Bhushan had started out in the 1970s with a small unit for door hinges and rail track fasteners. The family moved up when it took over Jawahar Metal Industries Private Ltd in 1987 and got into cold rolled steel strips and ingots. Jawahar Metal was renamed Bhushan Steel and Strips in 1992, got listed in 1993, and went on an expansion binge. All under the radar.

It was only in early 2000 that the Singals hit headlines and that too after a family fight. Brij Bhushan Singal, who had expanded the group with the help of his sons, claimed that as per an oral family agreement, he would continue to hold one-third promoter stake in both group companies - Bhushan Steel or BSL (run by Neeraj) and Bhushan Power and Steel or BPSL (run by Sanjay). Sanjay got his father expelled from the company. Bhushan and Neeraj ended up on one side. In 2011, the Singals split the empire - the unlisted BPSL went to Sanjay and the listed BSL to Brij Bhushan and Neeraj.

The brothers entered into a race for capacity creation and went for frenetic expansion in Odisha. Their quest for coal and ore took them as far as Australia. BSL's debt rose from Rs11,400 crore in March 2010 to Rs48,000 crore at the end of March 2017. BPSL's debt rose from Rs17,900 crore in March 2012 to Rs38,000 crore by March 2017. Just before defaulting, the two brothers had a combined capacity of 9.1 million tonnes per annum (MTPA) - 5.6 MT for BSL and 3.5 MT for BPSL - of steel. These were state-of-the-art plants, with technology from Hitachi and orders from some of the biggest companies such as Maruti Suzuki, Mahindra & Mahindra and Tata Motors. But falling steel prices, along with high debt, did them in. BSL's 2014 annual report said the company paid around Rs1,700 crore interest and posted a Rs62 crore profit. Sources say they were close to many bankers and got loans easily. Despite the clear weakness on the balance sheet, in 2014, banks had extended it fresh loans of almost Rs18,000 crore.

JAYPEE INFRATECH & JAIPRAKASH ASSOCIATES Jaiprakash Gaur, 81 and Manoj Gaur (in pic), 54

Debt was just one issue. In November 2013, BSL had to shut down a blast furnace in Odisha after an explosion in the slag pit during a trial run killed three workers and left at least 14 severely injured. The plant was sealed for five months. In 2014, Neeraj was arrested by the CBI for allegedly bribing Syndicate Bank Chairman S.K. Jain for extending the companys credit limit. A few days before Neeraj's arrest, the Chief Financial Officer of BPSL, Arun Agarwal, was taken into custody. The events culminated in the Singals losing both the companies. The group doesn't have any other major business apart from this.

Today, Neeraj is out on bail after the second arrest recently by the Serious Fraud Investigation Office and Sanjay is maintaining a low profile. It is likely that the buyers for the two assets will rename the companies and the Bhushan empire will vanish just as fast as it had came into the limelight.

Both the Singal brothers didn't respond to messages from BT.

The Gaurs - How The Cookie Crumbled

When you travel on the Noida-Greater Noida Expressway and then to the Yamuna Expressway to Agra, you see the sheer scale of the ambitions of the Gaur family. For kilometres on end, towers, most of them incomplete, keep you company.

After IBC action against two group companies - holding firm Jaiprakash Associates, or JAL, and infrastructure arm Jaypee Infratech, is over, the Gaur empire would have shrunk to a few inconsequential pieces. They have already sold some profitable cement plants to Aditya Birla's UltraTech in a distress sale. The hydro power assets, too, have been sold. Manoj Gaur, the son of the founder, Jaiprakash Gaur, tried to cut a deal with lenders in May with a Rs10,000 crore offer for Jaypee Infratech. The proposal included paying a part of the Rs9,800 crore debt, giving lenders equity and completing unfinished housing projects. It did not go through.

But how did things come to such a pass? Jaiprakash Gaur had started out as a builder of infrastructure projects. JAL, floated in 1979, made a name for itself through high-profile dam projects. Gaur also built several cement plants. Execution skills and closeness to the powers that be in Lucknow ensured that they got many big projects. After the 90s liberalisation, the Gaurs used India's big infrastructure plans to build businesses and amass land, some bought outright and others as part of infrastructure development deals.

The Gaurs led a simple life. However, their aspirations soared with last decade's boom and they grabbed financially risky projects - including roads, power/cement plants, real estate and hotels, besides the Rs2,000 crore F1 track. They were close to several UP politicians. "Jaiprakash Associates is exposed to the risk of political upheaval or exigencies in Uttar Pradesh," an Edelweiss report said in 2011.

LANCO INFRATECH L. Madhusudhan Rao, 52

Till the time the group stuck to execution of big projects and building a cement empire, it kept doing well. Its cement business was at one time among the top five in the country. The Gaurs then ventured into road building, real estate and power generation, which was when the debt started rising. The Yamuna Expressway was built without government funding. The Gaurs, in return, got the rights to develop a big chunk of land and five townships along the expressway. Meanwhile, they started building 32,000 flats on the Noida-Greater Noida expressway under Jaypee Greens and Wish Town brand names. The company had the rights to develop 6,175 acres and took possession of 3,745 acres. At the start of the development, the land was projected to fetch a value of Rs1.35 lakh crore in 20 years.

But projects in Noida, Mirzapur and Agra were hit by financial constraints. Until March 2017, it had sold 52.63 million sq. ft. land for Rs18,052 crore. But working capital shortage continued, resulting in delays. Finally, the projects ground to a halt and it defaulted on loans

The Gaurs tried to sell whatever they could. Unfortunately, only good assets like hydro power projects and well-run cement factories found buyers. What was offered for the other projects, including land bank and incomplete real estate projects, was a fraction of what was required to pay off the debt. Even after paying off Rs35,000 crore loans, JAL and Jaypee Infra together had a debt burden of Rs40,000 crore in 2017, before the lenders started moves to take them to the NCLT. Another group company, Prayagraj Power Generation Company, is also up for sale. It owes around Rs11,000 crore to 17 lenders. Recently, the Jaiprakash Power Ventures board approved conversion of Rs4,000 crore debt into equity to prevent insolvency.

The Supreme Court stalled NCLT proceedings against Jaypee Infra after homebuyers sought protection of their interests. But on August 9, it referred the case back to the insolvency court and asked it to start the process afresh under a new committee of creditors, or CoC, where homebuyers are represented. The court also directed the RBI to initiate similar resolution proceedings against JAL, observing that an audit had shown diversion of Rs10,000 crore from Jaypee Infratech to JAL.

"JAL is undergoing a serious financial crisis," said a Bench led by Chief Justice of India Dipak Misra. The court barred the promoters from bidding for the assets. In the first round of bidding for Jaypee Infra, the lenders got several offers from groups such as Adani and JSW but Lakshwadeep Investments and Finance Pvt Ltd quoted the highest price of Rs7,000 crore.

What will the Jaypee group be left with after this is over? Probably some real estate and small cement and power assets, but nothing like what they had for the past two decades when the promoters regularly made it to the list of Indian billionaires in Forbes.

L. Madhusudhan Rao - The Fall

Gurugram-based energy and infrastructure major Lanco Infratech grew at a tremendous pace after liberalisation. Initial growth was driven by large contracts, primarily in construction. Later, other infrastructure areas such as power generation and transportation were added. But it was the entry of L. Madhusudhan Rao, the younger brother of former MP from Vijaywada, Lagadapati Rajagopal, as chairman of Lanco Infra in 2002 that changed the pace of expansion. Lanco bet heavily on India's power generation opportunities and emerged as the highest bidder for the country's first ultra mega power project in Sasan in 2007. But it later got disqualified due to technical incompetence.

By 2010, the company increased its power generation capacity to 2,000 MW. Rao secured $1.5 billion funding for an additional 1,320 MW power plant in eastern India; floated a subsidiary in Singapore for foraying into power projects in emerging markets; partnered with Indonesian miner Bukit Asam; and pursued solar energy projects in Europe and the US. The Wayne State University graduate was the 29th richest Indian with a net worth of $2.3 billion in 2010.

AMTEK AUTO Arvind Dham, 57

Lanco Infra created power plants of 3,460 megawatt (MW) capacity. While going to the NCLT, close to 4,636 MW was under construction. It reported nearly Rs10,000 crore revenues in March 2015. But last three years' losses come to over Rs4,000 crore, mainly due to interest paid on the huge debt (Rs47,000 crore at the end of the 2017 financial year) and structural problems in the power sector that are affecting almost all big power producers. The government is trying to work out a solution for distressed power assets but that won't help Lanco as it is already under the IBC.

Arvind Dham - Hitting the Wall

Arvind Dham, son of a Haryana irrigation department officer, joined the family's construction business in 1985 after graduating in architecture from the University of New York at Buffalo. But his heart was not in it. He found opportunity in the automobile industry when Maruti Suzuki was looking for entrepreneurs to develop a supplier base for Maruti 800 parts. That was the beginning of Amtek Auto.

It was a fairytale journey as Dham became an original equipment manufacturer to Tata Motors, Fiat and Ford India. Unsatisfied with the scale of the domestic market, he went on an overseas buying spree between 2005 and 2014, a period when he made 22 acquisitions in areas such as iron casting, metal forging and machining. This made Amtek into a large player in the global casting and forging business and gave it marquee clients such as BMW and Daimler. His rise mirrored that of another auto ancillaries player Vivek Chaand Sehgal and his flagship firm Motherson Sumi Systems. Both Dham and Sehgal shopped for assets abroad. Both built global assets. But Sehgal was running a tighter operation with debt under control. Amtek's debt got out of hand.

In the domestic market, Amtek invested Rs5,000 crore to expand capacities between 2011 and 2014. Growth expectations went wrong and led to cash flow mismatch. In 2014, the business generated $2.5 billion revenue from overseas and $1.5 billion from domestic operations. In the financial year ended September 2014, it had a whopping consolidated debt of Rs17,663 crore. It first defaulted in September 2015 on its Rs800 crore bonds. After this, things went from bad to worse. By the time it was referred to the NCLT, it had a debt of Rs4,000 crore. The company posted more standalone losses than revenues in 2016/17 - it made a loss before tax of Rs2,244 crore and generated revenue of less than Rs2,000 crore. London-based Liberty House paid Rs4,334 crore for the company. Liberty's resolution plan for Amtek's subsidiary, Castex Technologies, has also been approved.

VIDEOCON INDUSTRIES Venugopal Dhoot, 66

After losing the two bankrupt companies, Dham will be left with Metalyst Forgings, which made a loss of Rs650 crore in the December 2017 financial year, and Italian coffee chain Barista, which is in losses and on the block. It is managed by his daughter Anamika.

Venugopal Dhoot - Sinking Flagship

Videocon's Venugopal Dhoot could lose his flagship consumer durables business and end up with just oil and gas assets abroad. Videocon was India's leading brand in the 90s just after the era of Dyanora and Weston TV. Dhoot was hailed as the architect of the country's first homegrown consumer durables company. But the Koreans ousted the Indian television makers as they had lower prices, large distribution network and better technology. While Indian incumbents like BPL and Onida lost the plot, Videocon managed to survive by acquiring assets. Dhoot acquired the colour picture tube (CPT) business of Thomson SA in France in 2005. This made it the third-largest CPT maker in the world. He also took over the Philips colour television plant and three plants of Electrolux India.

But Dhoot's television business took a big knock when LCD, LED and plasma TV arrived. The decision to acquire CPT plants weighed down heavily on the balance sheet. Dhoot told BT a year back that the company had lost about Rs4,000 crore in modernisation of the Gujarat CPT plant.

Another misadventure was telecom. In 2008, just after Vodafone's $11 billion acquisition of Hutch, Dhoot applied for spectrum. He picked up a 64 per cent stake in Mahendra Nahata's Datacom Solutions, which had a pan-India licence to offer GSM-based mobile telephone services. But the partners fell out and the latter exited, selling his 36 per cent stake to Videocon for around Rs1,400 crore. Though Dhoot started the business, in 2012, the Supreme Court cancelled Videocon's licences after the 2G scam. The company bought spectrum for six circles in the next round of auction but failed to create a customer base. In 2016, Bharti Airtel bought its spectrum. Videocon lost around Rs7,000 crore in telecom.

MONNET ISPAT Sandeep Jajodia, 52

Videocon largely failed to counter cosumer durables giants such as LG and Samsung technologically. Margins have shrunk for the division - which includes televisions, refrigerators, washing machines, ACs and mobile phones - as its loss widened to Rs5,264 crore in the last financial year, compared to a peak profit of Rs855 crore .

In June, the NCLT's Mumbai Bench admitted the insolvency petition after it failed to repay its Rs21,000 crore debt. Reports say the SBI-led consortium has sought permission from the RBI to postpone action against subsidiary Videocon Oil Ventures that owes Rs20,000 crore to lenders.

Dhoot, whose brother Rajkumar is a Shiv Sena Rajya Sabha MP, also got embroiled in the Rs3,250 crore ICICI Bank loan controversy. Meanwhile, Dhoot has been charged by the Delhi Police's Economic Offences Wing in another corporate fraud case in which, if convicted, he may face imprisonment for seven years. Police reports say Dhoot had sold 3 million shares of Tirupati Ceramics, which had already been sold to another person.

Dinesh Shahra - Low Profile to Oblivion

Though not as high profile, Dinesh Shahra, the Managing Director of Indore-based Ruchi Soya Industries, which started off in 1955 as an oil trading firm, is in trouble too. Shahra founded FMCG player Ruchi Soya in 1986. Within 25 years, it was a Rs30,000 crore company and the largest marketer of edible oils, soya food, premium table spread, vanaspati and bakery fats. It is the largest edible oil extraction company with a capacity of 3.72 MTPA across 24 plants and owns popular brands Nutrela, Mahakosh, Sunrich, Ruchi Gold and Ruchi Star.

Ruchi owes Rs12,000 crore to creditors. Last year, it announced a 51 per cent stake sale to private equity major Devonshire Capital for about Rs4,000 crore. However, with the NCLT admitting its case, the Devonshire deal failed to close. It is at the centre of a takeover battle between Adani Wilmar and Patanjali Ayurved. The creditors approved Adani Wilmar's Rs6,000 crore resolution plan but Patanjali moved the NCLT seeking disqualification of Adani.

BINANI CEMENT Braj Binani, 58

Braj Binani - A Crumbling Empire

Another case is that of Braj Binani, a fifth generation entrepreneur who diversified into cement, fibreglass, infrastructure/construction, zinc and energy. He built cement plants in China and Dubai. Binani fought a price war with the Birlas, ACC and Ambuja and created the 11.25 MTPA Binani Cement. Building plants worldwide was the beginning of his troubles. Binani cut costs but the infrastructure slowdown was too severe. In 2014, the Rajasthan government attached its 26 bank accounts under the VAT Act for recovering tax dues.

In July 2017, Binani was admitted for insolvency proceedings to recover dues of Rs7,000 crore. In the first round of bids, Rajputana Properties, a subsidiary of rival Dalmia Bharat, submitted the highest bid. However, Aditya Birla's UltraTech submitted a revised offer for Rs7,960 crore. The NCLAT has concluded the hearing and reserved judgment.

Now, Binani has assets in glass fibre and related composites, energy and industrial infrastructure. The holding company, Binani Industries, posted standalone revenue of Rs32.93 crore in the last fiscal and a loss of Rs5.05 crore.

The Miglanis - Losing Sheen

The Rajinder Kumar Miglani-led family, too, will lose specialty steel company Uttam Galva Steels (UGSL) and subsidiaries Uttam Galva Metallics and Uttam Value Steels. It owes 18 lenders around Rs6,200 crore in principal and interest payment. The subsidiaries owe Rs5,400 crore. ArcelorMittal had a 29.05 per cent stake in the galvanised steels major but it was sold back to the company for the global major to become eligible to bid for Essar Steel. ArcelorMittal was ready to repay the Rs7,000 crore debt of UGSL, if it gets Essar Steel. But the hope of the Miglanis ended when NCLT asked for a resolution professional.

Hailing from an entrepreneurial family, group Chairman, Rajinder Kumar Miglani, started his business as a hobby in the 1960s. He started by importing galvanised steel. By 1985, he had become the largest importer of galvanised steel, feeding half the total consumption of 2 lakh tonne. Later, he put up a production line. As the market turned dynamic, he set up his own cold-rolling facility and went downstream into colour-coated steel. Uttam Galva's small galvanising capacity has risen from 30,000 tonnes a year (1985) to 7,50,000 tonnes now.

RUCHI SOYA Dinesh Shahra, 66

Sandeep Jajodia - Bad Trade

Sandeep Jajodia belonged to a trading family in Kolkata and wanted to get into manufacturing. He started his steel company, Monnet Ispat & Energy, just before marrying the daughter of O.P. Jindal of the Jindal group. Jajodia has now lost Monnet. A small consolation is that it has been bagged by his brother-in-law Sajjan Jindal's JSW Steel.

It is a sad loss for a man who was nothing if not ambitious and set up a Rs1.7 crore ferro-alloy unit when he was barely 23. The stainless steel sector was kicking off in India then. He tied up with the Jindals for technology and chose Raigarh for the plant. However, he took unmanageable debt to scale up. He was, in fact, taking on debt even when steel prices were softening under the dual impact of economic slowdown and overcapacity in China. He might have a couple of small private businesses left after Monnet Ispat.

The Jiwrajkas - Integration Woes

The three Jiwrajka brothers - Ashok, Dilip and Surendra - had started their textile business in a modest fashion in 1986 with a single manufacturing unit in Silvassa. Over the next two decades, they expanded into integrated textile solutions, retail and exports. They had several blue chip clients - Walmart, JC Penny, Target - and a chain of 120 stores. Nearly a third of their revenues came from exports. By 2009, they were riding high, and the next generation was ready to take off. And yes, like many others, the Jiwrajkas entered real estate, in addition to garment retailing, though textile manufacturing continued to remain their mainstay.

The problems began when they expanded aggressively even as the economy was slowing rapidly. They made some ill-fated acquisitions abroad and sank a lot of money in real estate. By 2015, their debt had spiraled out of control and reached over Rs25,000 crore. By 2016, they had defaulted on loans. In 2017, the lenders took them to the NCLT and their UK retail business, Store Twenty One, entered compulsory liquidation in the UK.

A consortium of Reliance Industries and JM Financial ARC is close to taking over Alok Industries for Rs5,000 crore. The Jiwrajkas will be left with no other sizeable business.

Umang Kejriwal - One Gone, One Left

For Umang Kejriwal, who has just seen his Electrosteel Steels being taken over by Vedanta, things are not good, but not that bad either. He continues to retain control of the profitable Electrosteel Castings, the company he had started off with as an executive director in 1979 and which has 60 per cent share of the ductile iron pipes market in India. Close to 75 per cent of its Rs2,000 crore revenue comes from this business. Electrosteel Castings was a highly profitable company when, 10 years ago, it set up Electrosteel Steels to enter integrated steel manufacturing with a capacity of 2.5 million tonnes at a cost of Rs11,000 crore. It was lucky enough to get coking coal and non-coking coal mines. Its problems, however, started from the beginning. The promoters had given the task of building the project to Chinese vendors. There were delays and visa problems. Then, some bank financing got delayed. Finally, the coal mines got cancelled because of a Supreme Court order. By then, steel prices had softened, and by the time the company started operations, it was already in trouble. Kejriwal explored options to repay the loans but the lenders, prodded by the RBI, referred the company to the NCLT. The plant was a good asset and snapped up by Vedanta for a song.

ABG SHIPYARD Rishi Agarwal, 52

Hem Singh Bharana - End of an Era

Hem Singh Bharana has problems other than bankruptcy proceedings against his company Era Infrastructure. The police have charged him with fraud and diversion of funds. He was briefly arrested in 2015, though he is now out of jail.

Bharana's rise began when he started a construction company in 1990. By all accounts, he was a good executor, and built for NTPC, Nalco and Rail Vikas Nigam. About 15 years ago, Era went on a highway building and property development spree. But by 2014, it was running into serious cash flow troubles. Revenues halved and it started defaulting on loans. There were complaints that the promoter had used multiple subsidiaries, raised loans, diverted the money, and then defaulted. By the time Era was sent to the NCLT, there wasn't much left in the company. It is not known if Bharana has any other business.

Rishi Agarwal - Sunk Fortune

Rishi Agarwal has lost ABG Shipyard to lenders. He is also fighting a criminal complaint from Standard Chartered Bank. The Purdue University graduate is a first-time entrepreneur who built a large shipbuilding business and lost it before he hit 50.

ABG was born when Agarwal bought a small ship-building facility called Magdala Shipyard Pvt Ltd, a repairer of small boats. The ambitious Agarwal set up building scale and sophistication. By 2005, the shipyard was capable of building bulk carriers, specialised defence vehicles, and other big ships.

But he was deep in debt. In 2016/17, revenues were Rs16.40 crore, while debt was Rs10,000 crore. A restructuring saw bankers take control in 2016 by converting debt into equity. By the time it came up for resolution, Agarwal no longer had anything to do with his company.

Will he start again from scratch? One will have to wait and see.

@nevinjl

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