Ethics over profits

The New Year has begun on a rather sobering note for India Inc, with markets coming down heavily on promoter adventurism. Under the spotlight now are companies that recklessly borrowed to fuel growth and unrelated diversifications. From lending practices to high promoter pledges, everything today is under the scanner. And the rating agencies may finally be made accountable, if the market watchdog SEBI's moves are anything to go by. Hopefully, this is the new normal, even though promoters are taking a little longer to get used to the changed circumstances. With lenders liquidating pledged shares in panic, some promoters have attempted taking an aggressive stance, but their heydays are clearly over. Essel Group Chairman Subhash Chandra even called his lenders "anarchical," after they started selling pledged shares. But the writing is clearly on the wall, which is forcing some of these promoters to sell their family silver. A little over a year ago, some of these promoters had investors eating out of their hands. They could seemingly do no wrong, so long as they made tall promises and analysts kept busy forecasting higher earnings. Despite breaching all loan covenants, one promoter told me, "It's no big deal... there are many others like us. We just need time." Some of these promoters have been facing a

This article was originally published on March 19, 2019.