India Inc began 2008 on a promising note but...
Monday, 29 December , 2008, 16:12
Bullish on huge profitability and deep pockets, Corporate India
started 2008 with an aim to conquer the world and pocket global firms,
but ended with blues caused by bitter controversies, be it Tata's
Nano, ICICI Bank share debacle, Satyam fiasco or Ambani vs Ambani
battle.
Misery of the corporate world was further compounded by the slowdown
in the economy that forced virtual who's who of the industry resorting
to retrenchment, plan closures and other cost-cutting steps including
axing of perks and luxuries enjoyed by the top management.
Six hot stocks
The year going by also saw Tatas' euphoria of clinching global
trophies like steel giant Corus and auto marquees Jaguar and Land
Rover turning into despair caused by fund starvation and political and
corporate controversies surrounding the world's cheapest car Nano,
which is yet to hit the roads.
India Inc raises Rs 45,000 cr less in 2008
Who would have heard of a Rs 10,000-crore (Rs 100 billion) defamation
suit in India if it were not for the no-holds-barred fight between the
country's two richest and estranged Ambani brothers, Mukesh and Anil,
whose companies collectively lost over Rs 5 lakh crore in market
capitalisation to the shock of investors.
India Inc's dream run turning sour in UK
As if frustrated by elder brother 'sabotaging' his plans to acquire
over $50-billion South African telecom giant MTN, Anil slapped a
defamation suit on Mukesh for the latter's purported comments in an
interview to New York Times that the network of lobbyists and spies
were overseen by Anil before they split and has since been expunged
from his tranche of companies.
More India business stories | Get the latest Sensex update
Through a dogged legal battle, the younger one has also put a spook on
gas from the elder brother's prized find at KG Basin, which has
delayed commercialisation of the asset.
The end of the year would be best remembered for a corporate bloomer
by India's fourth largest IT company Satyam Computers, which apart
from being hit by aborted $1.6 billion acquisition of the two
companies promoted by chairman Ramalinga Raju's family, is also
suffering an eight-year ban from the World Bank on charges of bribery
and business wrong-doings.
The highs of stock markets in January turned into desolate bourses
making India Inc lose more than half of its wealth in terms of market
capitalisation of listed firms.
While Anil Ambani faced the embarrassment of not being able to salvage
the Rs 12,000-crore (Rs 120 billion) IPO by the group company Reliance
Power -- biggest in the Indian capital market history, country's
largest private sector lender ICICI Bank was virtually brought onto
its knees.
The bank's share prices crashed by 20 per cent in a single day due to
rumours on the running of the bank and its financial health in the
wake of news of its exposure to bankrupt Lehman Brothers, which its
chairman K V Kamath said was the handiwork of 'vested interests'.
The stock market crash also forced realty major Emaar MGF Land,
Wockhardt Hospitals and SVEC Constructions to withdraw their public
offers this year, while a host of other firms that got approval from
SEBI for their IPOs are awaiting a better market situation.
As if losing the market capitalisation was not enough, firms in
manufacturing sector were forced to deal with piling inventories and
dropping demands.
Big steel makers, including state-run SAIL, Essar, JSW and RINL, were
forced to cut output and prices, which at one point had touched a
record $1,250 a tonne. Tata Steel was an exception as it saw
production rising.
In the automotive sector, Tata Motors, Ashok Leyland and Mahindra &
Mahindra resorted to temporary plans shutdowns, while others like
Maruti Suzuki, Hyundai and General Motors India cut down production.
As a result, temporary workers in some companies lost jobs while in
some employees had to face salary cuts.
The aviation sector also saw turbulence as jet fuel prices
sky-rocketed threatening to ground carriers, who made desperate calls
to the government to bail them out.
Jet Airways' sacking-and-reinstatement drama of 1,900 employees hit
the headlines and the carrier came under severe criticism from the
government for its handling of the issue.
The woes of corporate India could be unending, with even high growth
sectors like real estate and automobiles scrambling for cover and
working overtime for getting a bailout package from the government.
Nevertheless, the year had its share of positives as well. The credit
for good news of the year went to country's largest private sector
entity Reliance Industries with its subsidiary Reliance Petroleum
creating history when it commissioned an only-for-export refinery in
just 36 months at rock-bottom prices to create the world's largest
refining hub at Jamnagar in Gujarat.
RPL commissioned a 580,000-barrel a day (29 million tonnes a year)
refinery adjacent to its parent Reliance Industries' existing 33
million tonne per annum refinery.
Other's like India's fifth largest IT firm HCL Technologies also
brought cheers by successfully completing the 440 million pounds
(approx Rs 3,100 crore) acquisition of
UK-based SAP consulting company Axon, after piping rival Infosys Technologies.
As Tatas would like to see it, ending of the two-year-long
controversial stay at Singur meant a new beginning for the Nano
project after it shifted to Sanand in Gujarat, which is expected to
start production by 2010.
More India business stories | Get the latest Sensex update
In the pharmaceutical sector, Ranbaxy Laboratories saw a change in
ownership with Japan's Daiichi Sankyo buying out the promoters --
Singh family -- and acquiring 63.82 per cent stake in India's blue
chip drugmaker in a total deal valued around Rs 21,000 crore (Rs 210
billion), the largest-ever in the country's pharma industry so far.
On the whole, the year 2008 will go down in history of corporate India
as one which began on a promising note but ended in despair.
"(c) 2004 sify.com India Limited. All Rights Reserved. This material
may not be published, broadcast, rewritten, or redistributed."
