Entrepreneurs & entrepreneurship

Entrepreneurship is booming in the country. So why are some of our biggest entrepreneurs headed for the door?

Pick up any recent survey on the state of entrepreneurship in the country, and chances are it will paint a picture of robust health. The latest version of the Global Entrepreneurship Monitor survey, one of the largest annual entrepreneurship study covering 62 countries, says that growth in entrepreneurship intention and perception in India is one of the highest among its peer Brics economies and compares favourably with developed countries.

In technology, the Nasscom tech startup report says 2018 has been a year of rebound after the slowdown last year. Over 1,200 new tech ventures were launched this year to take the number to over 7,700, the third highest globally after the US and the UK. Eight more startups braced the dollar one billion-valuation mark this year to make the hallowed unicorn club in the country 18-strong, next to just the US and China.

But even a cursory glance at the goings on at India Inc. reveals a different picture. It is a season of exits for many storied promoters. From Fortis’ Singhs, Bansals at Flipkart to Ruias at Essar. And it seems it is a matter of time before a few other bigwigs bow out, from Naresh Goyal at Jet Airways to Subhash Chandra at Zee Entertainment, to name a few. The sectors involved are varied — from healthcare, ecommerce, steel and oil to aviation and entertainment. So what’s up? Why are so many promoters heading for the door? It cannot be that all of them lost their appetite for a good fight at the same time. In fact, three trends underpin this current move by founder-promoters to head for the door:

Regulatory role: At the last count, over 1,200 corporates were admitted into the resolution process under the Insolvency and Bankruptcy Code (IBC). And over 50 firms have found new owners, driving out the likes of the Bhushans (of Bhushan Power & Steel), Kejriwals (Electrosteel Steels), Jiwrajkas (Alok Industries) and Jajodias (Monnet Ispat). These promoters were forced out of their ventures by regulatory changes, with some such as the Ruias of the Essar Group still fighting to retain control of their marquee firms. Outside the IBC, brothers Malvinder and Shivinder Singh too fall in this category, as they lost control of their hospital chain Fortis and financial services firm Religare due to a debt-trap coupled with corporate mismanagement leading to crackdown by lenders, regulators and the courts. 

Global game: In the end, India’s leading ecommerce firm Flipkart did not turn out to be India’s Amazon but world’s biggest retailer, the Bentonville, US-based Walmart’s India ecommerce plug-and-play! Though co-founder Binny Bansal left under a sexual assault allegation cloud and the other co-founder Sachin Bansal found himself out in the cold once Walmart acquired Flipkart, the writing on the wall for the unrelated Bansals was clear. With Amazon going all guns firing for dominance in one of the world’s last big market, the ecommerce game had gone global and there was no way one could stay single or isolated.

This story — of Indian entrepreneurs bowing out to global moneybags — had played out post economic liberalisation — in categories such as soft drinks (Chauhan of Parle and Pandoles of Duke) to ice creams (Lambas of Kwality). Why, even the country’s biggest brewer (United Breweries) and biggest distiller (United Spirits) changed ownership from founder-family to global spirits majors due to Vijay Mallya’s many shenanigans. And for all the protectionist noises that the India-founded ecommerce firms may be making of late, the Flipkart saga will surely repeat across the landscape sooner than later.    

  

Going gets tough/cashing out: Though it is still up in the air, if Goyal of Jet Airways and Chandra of Zee do decide to hang up their boots, they would be among the biggest exits by an Indian entrepreneur in a long time. While debt and losses have crippled Jet, and the firm needs deep pockets to resurrect its business model, Zee needs heavy doses of technology and global distribution muscle to remain relevant in a convergence-led world. If Messrs Goyal and Chandra do bow out, will it be seen as chickening out when the going got tough or the entrepreneurial instinct of surviving to fight another battle waned? History will decide.