India Inc fought both rivals and downturn with vigour

I / New Delhi December 31, 2009, 14:47 IST

From battering in the stock markets to the infamous financial fraud in IT giant Satyam, India Inc began 2009 on an ominous note but fought-off the effects of the global meltdown only to get sucked into pitched battles for turf or market share.

The end result is that the consumer benefited a lot with unheard of drop in telecom tariff, a wide-range of affordable small-to-luxury cars and great discounts for things ranging from garments to white goods.

The Ambani brothers' fierce battle was brought to a boil with differences on gas supply reaching the Supreme Court, while telecom and auto companies fought a price war. But corporate India recorded better than expected profits.

The most marked development of the year was the Rs 10,000 crore Satyam financial scam, disclosed by the founder B Ramalinga Raju, forcing the government to redraft rules for corporate governance and auditing standards.

Telecom companies including RCOM and Bharti came under government scrutiny and special audits were ordered even as they fought a tariff war.

Elsewhere, firms in retail industry were dealt body blows when the likes of Subhiksha went bust and Vishal Retail were forced to undergo debt restructuring to survive. Pharma firm Wockhardt, burdened with over Rs 3,400 crore of debt, also had to undertake a CDR and sell off non-core businesses.

Realty segment, perhaps the worst hit by the economic downturn, saw BPTP surrendering the largest ever land deal of Rs 5,006 crore in Noida due to inability to cough up finance.

The country's biggest realty player DLF was also compelled to shed 9.9 per cent of promoter stake fetching Rs 3,860 as it faced a fund crunch.

In such an environment, Satyam founder Raju's disclosure that he cooked the book of Satyam for years was hardly a thing to appreciate. Corporate functioning in India was under scanner like never before thanks to the estimated Rs 14,000 crore fraud executed by Raju. It forced the government to re-write corporate governance rules during the year and tighten the norms for chartered accountants.

In a rare happening, the government was forced to take over management of a global player to safeguard the credibility of India Inc, besides protecting the interest of investors and salvaging the nation's image across the globe. The Satyam fraud also hit two other companies - Maytas Infra and Maytas Properties - promoted and owned by kins of Raju.

Credit goes to the government for acting swiftly and moving the Company Law Board (CLB) to take charge of those companies as well, besides appointing its own nominees on the board of Satyam to salvage the company.

The CBI and the Serious Fraud Investigation Office (SFIO) had a tough time going through voluminous documents to get to the extent of the scam and uncover the modus-operandi of the fraud.

Although Tech Mahindra acquired Satyam and restored investor confidence after winning the auction for 31 per cent stake in the firm for Rs 1,756 crore and rechristened the IT major as Mahindra Satyam later on, it could still take quite some time for the courts to punish the guilty.

While Raju awaits his fate locked in Chanchalguda jail, his erstwhile peers in the Corporate India were fighting battles of a different kind as the global the economic downturn, described as the worst after the Great Depression of 1929, tightened its grip.

In the telecom sector, Bharti had to face disappointment when it had to call off the much-hyped $23 billion deal for amalgamation with South Africa's MTN after nearly 4 month-long intense discussions broke down in September.

It was the the second time in over a year when Sunil Mittal-led Bharti Airtel had to pull out from talks for amalgamation of the two organisations in a complex deal that also required Indian government's clearance for dual listing.

The automobile industry, however, had a different tale to tell. After struggling to overcome the impact of global financial crisis and liquidity crunch in the first half of the year, the sector gained momentum later on. Towards the end of the year, car sales zoomed over 60 per cent in November, inducing global car manufacturers to focus on the market here.

India became the destination as the year passed by with its flavour for big fuel saving small cars. Convinced that the future lies in compact cars, global majors, including Ford, GM and Toyota unveiled plans to launch small cars in India.

Besides, Indian auto players established dominance with Tatas giving the world its cheapest car Nano and bringing back from the financial brink the British iconic brands Jaguar and Land Rover, whose acquisition coincided with global meltdown.

Yet, the bright spark of auto industry could not light up the dark alleys hit by recession and companies across sectors were forced to different cost cutting measures. The most (un)popular was giving pink slips.