Tuesday, 2 June 2015

The land of the dinosaurs

The dinosaurs missed a trick when the comet (asteroid ?) hit the Yucatan peninsula 65 million years ago. They should have taken refuge in India. They wouldn't have gone extinct. India is veritably the land of the dinosaurs.

Well, at least corporate India is. In India, no company ever dies. It is extremely difficult to shut a company down in this country. They will live on for ever. Take the case of Andrew Yule.

If you had lived in British India and looked for a job, the bonanza would have been a job in Andrew Yule. It was one of the largest conglomerates of that time with businesses in jute, cotton, coal, tea, engineering, electrical, power, chemicals, insurance, railways, shipping, paper and printing, in addition to being a zamindar (land owner). The company was founded by, yes, a Mr Andrew Yule in 1863. He and his family ran it until India's independence in 1947.  The Indian government took majority control in 1948 under circumstances not very clear - perhaps it was socialism, perhaps the family decided to leave. It became a government majority owned company and then under the wave of socialism that Mrs Gandhi championed, the government took it over entirely.

It today is a pale shadow of its British India days. It currently does some engineering business and also owns some tea gardens. Long ago it became "sick" - Indian euphemism for bankrupt. Dinosaurs which fall sick come under the umbrella of the Bureau of Industrial and Financial Restructuring (BIFR), which is Ramamritham's idea of socialist utopia. Today , it has a turnover of Rs 400 crores ($ 70 m) and is still lumbering along. This year it managed to turn a small profit and declared its first dividend in 21 years.

Companies like this abound . Many have been taken over by the government under the misguided view that nothing should ever be closed down. The taxpayer funds this indulgence. The accumulated losses of such dinosaurs is Rs 60,000 crores ($10 bn). Veritable luminaries adorn this list. Air India is of course, numero uno, but there are other stars like Hindustan Photo Films (which still makes  the old film rolls), ITI (which presumably turns out analog telephone exchanges) and HMT (which makes mechanical watches). I have little doubt that there is also a company existing which makes music cassette tapes, or the telex machine, or something like that.

India is a culture that believes in the cycle of birth, death and rebirth. Regeneration is intrinsic to the belief of the Hindu faith. And yet, when it comes to companies, we do not accept the same philosophy. Maybe the companies are not Hindu !

And yes, in case you wondered, the East India Company is very much alive. In a nice twist of fate, it is now majority owned by a Mr Sanjiv Mehta !

10 comments:

  1. I should check with my father ... perhaps about forty years ago, I think he interviewed at HPF in Ooty and was offered the job ... I started dreaming of life in the hill station, having been exposed only to the Ooty of "Kaathalikka Neramillai" ;)
    But, eventually, father decided against it, and we stayed put in Neyveli (and I found neram for kaathal even there ... hehehe)

    That Indira Gandhi was a disaster every which way we look at her. But, damn, she came across to the people like how Eva Peron was a saint in the country whose failure to live up to expectations beats India hollow!

    BTW, this is perhaps some other new EIC ... wasn't that original one dissolved??? Did this guy manage to buy the name or something???

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    1. The East India Company was indeed dissolved in 1874 post the British government directly taking over control of India after the Indian war of independence in 1857. Sanjiv Mehta bought the the name and original trademarks of the East India Company. from the British government and so he is a rightful owner !

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  2. i see that company almost daily enroute to office..same kostins were running through mind.
    edaikku podra mathiri..as a mere real estate they would be worth their debt in gold..avlo perrrriiiiiiaa area

    ReplyDelete
    Replies
    1. Andrew Yule is planning to close that factory and sell off the land - it was that news item that was the trigger to this post !!

      By the way, do you commute on OMR to work every day ??? My sympathies entirely :)

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  3. Anne in Salem3/6/15

    The obvious question is why? Businesses in the US fail and close all the time, at least businesses other than those deemed too big to fail. Is it only big businesses that are not allowed to close? Is it an attempt to maintain employment? I suppose there could be a degree of shame. Curious situation.

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    1. Its a very socialist thing. Public opinion is such that no job should ever be lost preferably. That's why Indian public sector enterprises are enormously bloated. In the private sector, factory closures happen quietly, with handsome severance payments, but if it hits the public eye, even that is very difficult to do.

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  4. Though capitalism is the best balance, I believe a bit of socialism is not too bad. When we can burn millions of tax payer money laying and relaying the same roads, it's ok to protect a few jobs for whatever it lasts. Maybe stupid argument

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    1. At what cost Sandhya. You and I have paid some Rs 50,000 crores to keep these dinosaurs on ICU. Wouldn't it be better to close them down and spend the money on say education or health ?

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  5. Hola :) hope everything is fine at the dinosaur land :)

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    Replies
    1. Hola Sri. delighted to see you here. Yup, I've taken a break from blogging as I am occupied with a huge assignment. Will be back in a while :)

      Hope everything is fine with you la !

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