THE DISRUPTORS

 

 

 

 

THE demise of Mr. Subrata Roy, the Managing Worker and Chairman of Sahara India Pariwar, at the age of 75 years, marks end of an era. He was not only the leader of a conglomerate but also a man who made it to the headlines due to dispute with Securities and Exchange Board of India (SEBI). Whatever might be the controversy surrounding him and his business empire, he was a disruptor. His death brings an occasion when certain aspects need to be discussed as far as disruptors are concerned. Mr. Subrata Roy, who took pride in calling himself ‘Saharasri’ and ‘Managing Worker’, and calling his company as Sahara India ‘Pariwar’ (family), started his foray into business world by acquiring a chit fund company and turning it around into a big para-banking model in next years. He expanded the operations of the company. Within a couple of decades, Sahara India Pariwar became a conglomerate with presence in not only finance but also real estate, aviation, media, health, hospitality, and even sports. In fact, his group was the sponsor of the Indian cricket team for 11 years, and also owned Force India F1 team. Till a dispute arose between his company and SEBI, he was doing so well that he even acquired famous hotels in London and New York City. Then came the moment when SEBI cracked down on him. The matter went to the Supreme Court, which ordered his detention over his failure to appear in court. Mr. Subrata Roy languished in jail for more than two years and was later released on parole in May 2016. Till his death, his company claimed to have refunded a large chunk of amount to the investors.

 

But, SEBI could refund only Rs 138.07 crore over 11 years to investors of two of Sahara group firms in question. Surprisingly, if one goes by the reports, the amount deposited in specially opened bank accounts rose to over Rs 25,000 crore. Even at the time of Mr. Roy’s death the group’s total net worth stood at a whopping Rs 2,59,900 crore, and it had land bank of 30,970 acres! Doesn’t it mean that his model contributed to evolution of what is referred to as ‘market’, though it might not have fitted into the existing set of rules? But, then, Mr. Roy was not the only disruptor, so to say. Some of the most villified names also are referred to as ‘disruptors’ by the market forces, as the models they set, taking advantage (due or undue) of existing loopholes in the system, actually came in practice in one way or the other after they were prosecuted. If those models were really uncouth, why they later on came in practice? This is another question that comes to a layman’s mind. One can quote the case of Mr. Harshad Mehta. One can also quote the case of Mr. Lalit Modi, who was declared an offender but the revenue-generating model he pioneered is still in practice. Then, some may also point out the case of Mr. Vijay Mallya, whose Kingfisher brand was in vogue for quite some time and his flamboyance was much in public eye.

 

The exercise here is not to glorify the businessmen in the dock, but to raise questions that come to public mind. It is pertinent to note that these disruptors, whether people like or hate them, added new dimensions to the market econmics and operations. Their ascendance to glory in business was patronised by political powers of the time and bureaucracy and the banking leaders also. In one case, a businessman’s file for a loan was rejected flatly by a private bank chief. He then went to an influential person in power corridors and got access to a Union Minister of the time, who facilitated loan of thousands of crores of rupees for that businessman by way of calling a nationalised bank’s chief. If a businessman’s application for loan is rejected by one bank, how come the same application clears the scrutiny of a nationalised bank? Is some politician’s word more powerful than the rules that are expected to save the banking system? If the rise of businessmen to dizzying heights of success is aided by factors other than rules for a long time, how come they suddenly go out of favour? What the parameters that define the moment when a businessman should be prosecuted for the progress of years? And, above all, who defines that moment? Of course, the answers to all these questions are not easy.

 

For, they involve the accountability and transparency at various layers. Given the fact that ‘the system’ uses businesses and markets to its advantage from time to time, it may be futile to expect answers to these questions. But, time has come for a growing economy like India to have a robust mechanism that guides economy, markets, and banking system to evolution by way of absorbing the shocks of violations and disruptions. It is in this context, Mr. Subrata Roy and disruptors like him should be looked at. They must not be let scot-free if they have committed a crime. But, if their model is found to be of use for the economy, markets, and banking system, they need not be treated like criminals. Instead, such cases should be used as studies for aiding evolution of market economy. Of course, while doing this, measures must be taken to ensure the interest of depositors or investors. Otherwise, there may come a stage when the businessmen with ground-breaking ideas will not dare to grow. But, as the lure of quick returns rules the public mind, nefarious elements will continue to feed on that psyche, and the gullible investors will keep losing money. That situation will not help the country in long-term economic stability. This is the import of the case of Mr. Roy and other disruptors. For, stability and consistency of response are the most important dimensions for a country’s growth as far as economic metrices are concerned.