Fighting in the battlefield –from Delhi to Luxembourg

For the last few days all eyes in the business sector in India were riveted to the news of takeover of one of them by the other. For once, people thought of having a giant Indian corporate house to take on the global challenge, for a short duration we thought of playing global and challenging some global corporate in that field. But, alas that was not to be. It turned out to be a bohemian flirting rather than any long term relationship. It became the story of an affair going sour before marriage. It once again became a story of a failed Indian saga.
Yes, I am talking about the much publicized Jet and Sahara deal which was cancelled in bizarre circumstances under unknown pretexts. This is not the right forum to talk about such matters, neither I am competent to analyze such a big deal in business. But what I felt at the falling of the deal is not something economic or business related. It was purely a feeling of a pain, a pain of unfulfilled promise, a pain of being unprofessional in a professional world. Its not first time in history that an acquisition has been cancelled at the last moment, neither is it the first case of an attempted takeover going awfully wrong. But what was wrong was the approach, the faulty valuation and moreover the mudslinging which continued (and still continues) after the deal turned backward. This once again showed the darkness of our system, the immaturity within our business as well as our political class and at the same time the unprofessional approach of some of our best brains in the respective field.
The Sahara airlines takeover, valued at Rs.2300 Crore was initially Okayed for acquisition by the Jet board of directors (read Mr. Naresh Goyel) and was duly notified by both the companies. Then the normal process of takeover started. Jet even went to the extent of overseeing day to day activities of Sahara and started giving change over training to erstwhile Sahara employees. Suddenly came the spanner in the spoke. Jet asked for revaluation of the airlines which Sahara rejected and the whole episode became tipsy turvy. Litigations, counter accusations, political pressures and legal proceedings followed one after another with stupendous indignity, and media coverage made the whole affair a public maasala rather than any business news. It then followed the same path as of the famous Ambani brother feud which only resulted in bad publicity and showed immaturity on their part. Events did not stop here. Tug of war started for the money deposited in the escrow account (Rs.1500 crore). The political clout followed and nothing was left to imagination.
The whole episode not only marginalized the goodwill of both the companies, it also showed how under prepared we are in business. We don’t have any business ethics and neither do we follow any business logic. We don’t have any long term strategy or vision to grow – be it business or be it politics. In the whole episode Jet got away scot-free due to its big brother status and Sahara was left in the lurch to fend almost a sure death (Sahara airlines has to pump in Rs.1200 crore for survival). A slow but untimely death (if and when happens) for Sahara would probably mean monopoly for the other. Sahara on its part was guilty of not evaluating Jet’s offers properly; they went into the deal hastily and paid the price. Now, there is nothing left in the wings of the Indian aviation. A booming industry with immature players showed how even with liberalization, we would not be a super power. This much was for an acquisition which went almost through.
But, in these gloomy days there was another battle being fought by another Indian. Another story of fierce board room discussions, competitive bidding and confident stride of a person, who, on his own has showed the world how to do business and how to turn around a sick plant. Year after year, through innumerable takeovers L N Mittal has showed his resilience and wisdom of doing business and his latest takeover of Arcelor is the latest feather in the cap. The whole thing started way back last year and after much deliberation, laws and discussions by the EU, it was decided to be allowed. Then came the crunch moment. Mittal approached the board of Arcelor with his new but elegant master stroke. He presented a mixed cash n share deal for Arcelor with higher than expected share price for existing shareholders. The result – the deal created the largest steel behemoth, 3 times larger than nearest competitor. There were some concessions made by Mr. Mittal himself in order to see the deal through, but he maintained a rationale attitude and gave preference to business logic rather than any silly market suggesstions.

The difference between these two stories has been the business acumen, the resilience of the concerned person(s) and also the maturity of the board of directors. This showed we are still way behind in the race of building a nation which can feed itself on its own, both politically and economically.