 "Fallen Stars: When the big guns went quiet")
The year began well for Jignesh Shah. In February, he presided over the much awaited launch of equity trading in MCX Stock Exchange (MCX-SX), completing a near-five-year journey. Though the slow start and announcement of a commodities transaction tax in the Budget brought the group's listed stocks, Financial Technologies and MCX, down from their highs, nothing prepared his investors for the shock that was to follow in four months.
National Spot Exchange Ltd (NSEL), an unlisted, loosely regulated subsidiary that traded in spot contracts in the commodities space, ran into a massive payment crisis. As the exchange struggled to meet payment obligations of about Rs 5,600 crore towards some 13,000 investors, Shah's flagship listed firms began to bear the brunt.
According to data provided by BS Research Bureau, as of December 31, 2012, Financial Technologies and MCX had a combined market capitalisation of Rs 12,715 crore. By December 30 this year, the companies lost about 75 per cent of their value, with a market capitalisation of Rs 3,261 crore.
Sahara Q Shop Unique Products Range Ltd, an entity belonging to the Lucknow-based Sahara India Parivar, is an NSEL investor, with an exposure of Rs 220 crore. But the NSEL exposure is the least of Managing Worker Subrata Roy's troubles. In November, the Supreme Court barred Roy from travelling abroad. His group cannot sell any asset, and banks have been asked to freeze the group's deposit accounts. The directions followed two of Roy's group firms, Sahara India Real Estate Corp and Sahara Housing Invest Corp, delaying the payment of Rs 20,000 crore to market regulator Securities and Exchange Board of India (Sebi) for about a year.
In August 2012, the apex court had ordered the companies to pay Sebi Rs 24,029 crore, along with interest, to enable refunds to investors who had subscribed to illegal bonds issued by the firms. The two companies paid only Rs 5,120 crore. They submitted about a 100 truckloads of documents and argued these contained evidence of premature refunds of the remaining amount. Earlier this month, the companies pledged some 3,000 title deeds, purported to be worth Rs 20,000 crore. But the court has posed further queries and refused to grant relief to the grounded Roy. The year also saw the group's long-running ties with cricket being cut. Its relationship with the Indian Premier League was axed, while the Indian team jersey sponsorship was snatched by STAR Sports.
Vijay Mallya, Roy's rival in throwing flashy parties and his business partner in a Formula One venture, also saw tough times. Mallya's Kingfisher Airlines was grounded towards the end of last year but the loans he took to keep the airline in the skies continued to haunt him in 2013. As lenders went about selling the shares of group companies he had pledged with them, Mallya saw his empire slipping away. Even as the group is engaged in multiple legal battles, lenders are quarrelling over tangible assets such as the Kingfisher House.
While Mallya sold United Spirits to UK-based Diageo, Dutch beer maker Heineken has become the top shareholder in United Breweries. United Spirits, no longer a Mallya firm, was the only group entity to gain market cap in 2013. Even this deal has been recently struck down by the Karnataka High Court after lenders moved against it. The other listed entities - United Breweries, Mangalore Chemicals, Kingfisher Airlines, United Breweries (Holdings), McDowell Holdings and UB Engineering - saw their combined market cap fall by a fifth (from Rs 27,220 crore to Rs 21,442 crore).
Emails seeking comments from the Financial Technologies group, Sahara and UB spokespersons did not elicit any response.
While Shah, Roy and Mallya were perceived to be close to certain political figures, at least one, Roy, has attributed his troubles to politics. Will the changing political environment see them bounce back? 2014 could provide an answer.
National Spot Exchange Ltd (NSEL), an unlisted, loosely regulated subsidiary that traded in spot contracts in the commodities space, ran into a massive payment crisis. As the exchange struggled to meet payment obligations of about Rs 5,600 crore towards some 13,000 investors, Shah's flagship listed firms began to bear the brunt.
According to data provided by BS Research Bureau, as of December 31, 2012, Financial Technologies and MCX had a combined market capitalisation of Rs 12,715 crore. By December 30 this year, the companies lost about 75 per cent of their value, with a market capitalisation of Rs 3,261 crore.
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While Shah has portrayed the entire NSEL episode as an employee fraud, blaming the former chief executive Anjani Sinha-led management, investigative agencies are yet to give Shah a clean chit. Members of the NSEL Investors Forum insist he played a key role; they have named Shah in several complaints, including the First Information Report filed with the Mumbai Police. On December 17, the Forward Markets Commission declared Shah as unfit to run exchanges for his role in the irregularities in NSEL and MCX.
Sahara Q Shop Unique Products Range Ltd, an entity belonging to the Lucknow-based Sahara India Parivar, is an NSEL investor, with an exposure of Rs 220 crore. But the NSEL exposure is the least of Managing Worker Subrata Roy's troubles. In November, the Supreme Court barred Roy from travelling abroad. His group cannot sell any asset, and banks have been asked to freeze the group's deposit accounts. The directions followed two of Roy's group firms, Sahara India Real Estate Corp and Sahara Housing Invest Corp, delaying the payment of Rs 20,000 crore to market regulator Securities and Exchange Board of India (Sebi) for about a year.
In August 2012, the apex court had ordered the companies to pay Sebi Rs 24,029 crore, along with interest, to enable refunds to investors who had subscribed to illegal bonds issued by the firms. The two companies paid only Rs 5,120 crore. They submitted about a 100 truckloads of documents and argued these contained evidence of premature refunds of the remaining amount. Earlier this month, the companies pledged some 3,000 title deeds, purported to be worth Rs 20,000 crore. But the court has posed further queries and refused to grant relief to the grounded Roy. The year also saw the group's long-running ties with cricket being cut. Its relationship with the Indian Premier League was axed, while the Indian team jersey sponsorship was snatched by STAR Sports.
Vijay Mallya, Roy's rival in throwing flashy parties and his business partner in a Formula One venture, also saw tough times. Mallya's Kingfisher Airlines was grounded towards the end of last year but the loans he took to keep the airline in the skies continued to haunt him in 2013. As lenders went about selling the shares of group companies he had pledged with them, Mallya saw his empire slipping away. Even as the group is engaged in multiple legal battles, lenders are quarrelling over tangible assets such as the Kingfisher House.
While Mallya sold United Spirits to UK-based Diageo, Dutch beer maker Heineken has become the top shareholder in United Breweries. United Spirits, no longer a Mallya firm, was the only group entity to gain market cap in 2013. Even this deal has been recently struck down by the Karnataka High Court after lenders moved against it. The other listed entities - United Breweries, Mangalore Chemicals, Kingfisher Airlines, United Breweries (Holdings), McDowell Holdings and UB Engineering - saw their combined market cap fall by a fifth (from Rs 27,220 crore to Rs 21,442 crore).
Emails seeking comments from the Financial Technologies group, Sahara and UB spokespersons did not elicit any response.
While Shah, Roy and Mallya were perceived to be close to certain political figures, at least one, Roy, has attributed his troubles to politics. Will the changing political environment see them bounce back? 2014 could provide an answer.