As is customary at the end of every year, conceptual intelligence takes over social media feeds. However, what may yet prove to be revolutionary is a trend of corporate proposals in the public glare that has intensified in 2021. It has been a year of despair and hope, of the threat of a pandemic and of economic recovery, of the best of times to the worst. Several times – a year of Dickensian paradoxes. India’s resolve against Covid weakened initially, with a premature victory declared by the Prime Minister on it just weeks before Delta delivered its blow, but our resilience was evident in a commercial comeback that has allowed us to lose our lives. Helped to get the production back. Meanwhile, as easy money kept investor enthusiasm afloat and stock indexes hit new highs, corporate affairs had their share of drama. Several proposals attracted attention during the year.
Among the well-known types, some bankruptcy resolutions made news. Piramal Group snatches bankrupt financier DHFL for 34,250 crore in a cash and bond deal which is the first successful resolution under our bankruptcy code in the financial services sector. One issue that has hit observers lately is how the bankruptcy of Syntex Industries will be resolved. This 90-year-old maker of yarn and textiles was taken to court to be recovered by a creditor, Invesco 15.4 crores after loan default. Syntex operates in a sector that is largely associated with Reliance Industries, and part of the broader interest in its resolution process is among the entities of Mukesh Ambani’s megacorp that have bid for the company. Just as this megacorp’s big moves are tracked by a vast audience of shareholders (and others), so are its smaller ones, often in a variety of areas to understand its strategic intent. For example, with Syntex, Reliance can gain access to a global market of fashion brands that use its fabrics.
Among other category of resolutions, passed by companies in the course of business, there has been uproar over PNB Housing Finance’s attempt to make equity investments. 4,000 crore from Carlyle Group, an existing investor whose level of control (the deal had gone ahead) and the price of allotment of preference shares gave rise to a dispute. It turned into a legal battle when the financier was trying to stop our market regulator from issuing shares. A divided decision by an appellate body referred the matter to the Supreme Court, but then PNB quashed the deal. Another corporate resolution that stole the headlines was one that was never passed. As the sole largest stakeholder of Zee Entertainment, Invesco demanded that an extraordinary general meeting be convened, seeking to resolve the owners over the removal of its founder’s son Puneet Goenka as the head. Zee’s board would have none of this, so no such vote took place and the dispute even landed in court, although Zee’s recent merger announcement with Sony may have signaled the end of this tale of twists and turns. could. Last but not least, we rejected some of the company’s proposals in a dramatic spasm of disapproval by angry public shareholders. The rejection of a pay hike for Eicher Motors’ Siddhartha Lal, under whom the firm had performed quite well, seemed particularly unfair, though a sniped package was soon approved. Yes, investor activism can be misguided at times. Still, overall, the scrutiny by the owners augurs well for India Inc. Well directed, the revolution of shareholder democracy can aid the success of widely held businesses.
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