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 !

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