The year 2018 was an eventful year for the Indian corporate sector in more than one way. While the year witnessed many big-ticket, IBC-backed acquisitions of stressed assets, it will also be remembered for many of India Inc’s poster boys falling from grace.
The year began with Salil Parekh taking charge as the Chief Executive and MD of Bengaluru-based IT behemoth Infosys, which had seen a bitter boardroom battle prior to his entry. Parekh's task was cut out: to bring stability to India's most high-profile company.
Despite stabilisation, the company continued to witness top level exits, including the resignation of its former award-winning CFO MD Ranganath, in the middle of 2018.
In February, diamond merchants Mehul Choksi and Nirav Modi emerged new poster boys of multi-crore corporate fraud. After the Rs 14,000-crore Punjab National Bank fraud, it was revealed that the duo had deceived the employees, traders and stock markets.
To accompany liquor-baron Vijay Mallya and the duo, were the absconding promoters of pharmaceutical company Sterling Biotech Group Nitin and Chetan Sandesara, who are wanted in connection with a Rs 5,000-crore bank fraud and money laundering case.
The year also witnessed a bitter fight between Singh brothers, former Fortis and Ranbaxy promoters, who literally ended up on exchanging blows.
The brothers, Malvinder and Shivinder are also facing a criminal complaint filed by another firm they promoted, Religare Enterprises with the Economic Offences Wing of the Delhi Police for cheating, fraud, and misappropriation of funds to the tune of Rs 740 crore.
As the brothers have appealed against the award of Rs 3,500 crore by an arbitration panel in Singapore in April 2016 to be paid to Japan's Daiichi Sankyo in a dispute related to the acquisition of Ranbaxy, the matter cast a shadow on IHH Healthcare's open offer for Fortis Healthcare with the Supreme Court ordering status quo with regard to the sale of controlling stakes in the Indian hospital chain.
Buoyed by the adoption of Indian Bankruptcy Code (IBC), the National Company Law Tribunal (NCLT) witnessed heightened activities at its different benches and took up insolvency proceedings of 12 stressed assets, referred to it by the Reserve Bank last year.
While Tata Steel acquired debt-laden Bhushan Steel with a Rs 32,500-crore deal and UltraTech Cement bagging Binani Cement with a revised bid of Rs 7,950.34 crore, the proceedings had to reach all the way to the Supreme Court to decide the winner, highlighting a gap in IBC.
In the case of auto component maker Amtek Auto, Liberty House won the bid offering to pay financial creditors Rs 3,225 crore upfront and make a fresh infusion of Rs 500-crore but lenders approached the Chandigarh bench of NCLT alleging failure on the part of the UK-based firm to comply with approved resolution plan. During the year, the acquisitions of the debt-laden companies -- Essar Steel, Jaypee Infratech, and Ruchi Soya -- also picked up the momentum. Global steel giant Laxmi Mittal-owned ArcelorMittal emerged as the largest bidder for debt-laden Essar Steel.
The year closed on a high in terms of mergers and acquisitions, as tech major HCL bought out selected software products of global tech major IBM for a whopping Rs 13,200 crore -- highest in the IT services segment. Earlier this year, the global retail major Walmart also bought Indian e-commerce giant Flipkart for $16 billion, marking the first successful exit of an Indian unicorn.
Since the buy, both Bansals of Flipkart fame exited the company they co-founded 12 years ago.
On the automobile front, the passenger vehicle sales touched an 11- month low, after dipping for two consecutive months of October and November. This was mainly because of the shadow banking crisis as NBFCs stopped the credit flow in the economy.
And on the most important part -- bottomline: It seems that the crisis in India's banking sector caused a slowdown in the profit growth of India Inc. On the pan-industry basis, India’s corporate bottomline has jumped 15.6% to Rs 1.11 lakh crore in September 2018 quarter, from Rs 95,947 crore in the corresponding quarter last year. But, on the other hand, the quarterly earnings of India’s banking sector have perished by Rs 10,636 crore in the past two years, owing to the NPA crisis.