Leaving a Small Bit of Beehive After Collecting Honey
As part of my legal practice, I often advise entrepreneurs whose businesses have turned sick and who are being hounded by all the draconian laws of the land. So, when the news about Vijay Mallya leaving the country appeared in the media, a friend called up to ask my reaction. I said that this country does not know how to handle wealth creators and in my opinion Mallya did the right thing./
I am and have been an entrepreneur for more than three decades. I have been an NPA and have experienced the way Banks of this country treat entrepreneurs. The country shed no tears when Pillai of Britannia died in mysterious circumstances in custody. The country is also not bothered by the ill treatment of Subroto Roy even though he has offered to pay up thousands of crores.
Banks and government authorities of India are blood suckers of the worst type. It is their job to suck when the business is healthy. The worst part comes when the business turns sick. The body now needs some respite from blood sucking, but no these suckers show no mercy. They want their share of blood and also a pound of flesh as penalty effectively acting as murderers of the sick business. They give priority to their own dues over all else. More businesses are killed in India by the illogical and often stupid ways of banks and such other authorities than by entrepreneurs' follies.
I have seen bank officers acting against all rational logic and the interests of their employer, the Bank, merely to either save their own back or to satisfy their ego. I can never forget the day when a Manager of State Bank of India threw my application on my face accusing me of showing off my good English. The egoist Manager threatened to get my unit closed and almost succeeded. That was a long time ago. Recently, a client was committed some facilities by a branch of State Bank of India; the officer who was handling the account got transferred; the new officer who came in refused to honor the commitments given by the Bank in writing. His boss, General Manager, pleads helplessness.
When an entrepreneur's company owes, say, Rs. 100 Crores to the Banks and the company does not have the capacity to service the loan, my advice to the entrepreneur is as follows: Try to save the relationship with the banks to the extent reasonably possible, but do not give your last penny to the banks. So, an entrepreneur should always protect his own personal self and family as well as retain a small portion. I tell my clients that the last, say, 1-5% of the loan amount that you hand over to the blood suckers will not quench their morbid thirst in any way. The suckers will take the last drops and continue to hound the poor entrepreneur with renewed vigor. The entrepreneur should always retain a small bit to be able to restart a fresh life or a new business.
Entrepreneurs are like honey bees. They are the wealth creators of a society. Often, they fail in their efforts. A society must understand and be sympathetic in case of failures because the greatest beneficiary of their efforts is the society. Sadly, Indian society, banks, authorities, political class and government lack this maturity. They want to lynch every entrepreneur who fails and dance around the burning pyre where the poor fellow burns. They are not ready to grant him a second chance. They are more stupid than the tribal honey gatherer who always leaves a bit of the beehive after collecting honey from a wild beehive.
So, it falls upon the entrepreneur to save up that small bit of beehive which will allow him to rebuild a new beehive. This is surely for his personal benefit but it is also for the benefit of the society. The greatest entrepreneurs are not those who never failed, but are those who knew how to rise up from the ashes of failure. It does take extreme courage, grit and perseverance to retain one's self respect when all that everyone wants to do is to throw one on the burning fire and dance around the fire. I salute all those who have endured such an ordeal and rose up from the ashes of such fires. They are great because they are the ones who build this country, create employment and make this country prosperous.
Postscript (In response to Readers' Comments)
I hold no brief for Mallya and am strongly opposed to his flamboyant ways. Having said that, it cannot be denied that he is and was an entrepreneur. Kingfisher Airlines was his baby. Banks must have noticed wrongdoings at Kingfisher Airlines well before it turned into an NPA. Why did they not act at that time? Why did they not try to move in at that time to sell the business as a running enterprise? It seems bankers behaved like village moneylenders trying to get more and more collateral securities instead of taking sensible decisions based on common sense. A few decades ago, I had a non-viable business. I pleaded with my bank to work with me and sell the business for whatever it could fetch. I was ready to make a sacrifice and settle for any amount of write off of my capital. The bank was not interested. They were only interested in litigation. I used to tell that any business is like a living horse. One can get higher value by selling a live horse than by selling horse meat. But bankers, as a rule, love to kill the horse, make the meat rot and then sell rotten meat. This is plain stupid. Banks must realise that killing living enterprises is harmful to their own interests and to the country.
I do not favour that Vijay Mallya should have been allowed a free hand. To the contrary, my point is that banks should have acted much earlier and instead of trying for getting more collaterals or doing paper exercises called restructuring, they should have forced a change in management when Kingfisher was still a running airline. They are as responsible for letting the horse die as is Mallya. Today they are complaining of unsaleability of rotten meat and are trying to lynch Mallya. They deserve the same, neither less nor more, amount of lynching as Mallya.