Scandals, sagging sales disfigure Indian corporate sector in ’97

MUMBAI, December 27: For Corporate India, the best thing which could have happened in the calender 1997 was that it is finally coming to an...

MUMBAI, December 27: For Corporate India, the best thing which could have happened in the calender 1997 was that it is finally coming to an end. A slowdown in turnover and profits, coupled with the political and policy uncertainty, corporates would rather like to forget the year gone by, and concentrate on the new year. During the year, the most startling news came from the India’s largest corporate house – the Tata group, with the Tata Tea’s alleged nexus with the militant outfit, ULFA coming to light. The entire top brass of Tata Tea was interrogated by the Assam Police, and four of company’s employees were accused of sedition.

The bitter exit of Ajit Kerkar, the Chairman and Managing Director of the Indian Hotels, from the Tata group made headlines again. For the first time, a sober Tata Group Chairman, Ratan Tata came out in open during the Indian Hotels AGM and hit back at his predecessor. Though Tata and other Tata Sons directors, attributed the accomplishment of Kerkar to the growing tourism industry, the hotel industry will never forget Kerkar and the brand he built.

Unfortunately, the entire drama at the Taj and Tata Tea-ULFA tarnished the image of the Tatas which was, hitherto, a legend in the Indian corporate sector.

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Moreover, the news from the financial front was also not very heartening for the Tatas. Two of Tata group conglomerates — Telco and Tisco recorded negative sales and profits.

The corporate India was jolted once again when the capital market watchdog, the Securities and Exchange Board of India (SEBI) accused Hindustan Lever Ltd (HLL) of insider trading prior to the merger of Brooke Bond Lipton with itself. SEBI sent notices to the company, its directors and former chairman — S M Datta asking them to clarify their position.

The year particularly turned out to be a calamity for the finance companies and its investors. The collapse of the well-known non-banking finance company (NBFC), CRB resulted in many small investors losing hard-earned savings. The financial institutions, and investors lost more than Rs 1,000 crore, in what is now notoriously known as the CRB scam.

Though the chairman C R Bansali was arrested in Hong Kong, and bought back to India for prosecution, it was the collapse of the sloppy regulating system of the SEBI and RBI which was exposed due to the scam.

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CRB was soon followed by other NBFCs like the JVG group of New Delhi, Prudential of Calcutta, and DCM Finance who failed to pay back their investors in time.

It was certainly the year of the Reliance Industries. Chairman Dhirubhai Ambani became the hero of his shareholders by announcing a 1:1 bonus issue. The company made history when its net profits soared yet again to become the largest profit making company in the Indian private sector.

Among the growing software companies, Infosys turned out to be the jewel in the crown of the industry. The company turned out to be a world-class performer, as it plans to list its shares on the American stock markets.

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