Reversal Of Fortune

It is ironical, but eight of the 10 richest people on our Super Rich 2011 list lost the most wealth in 2012. The Ambani brothers, Gautam Adani, Azim Premji, K.P. Singh, Anil Agarwal, Savitri Jindal and Sunil Mittal have collectively lost over Rs 1,42,000 crore between 1 April 2011 and 31 March 2012. The total wealth lost by the top 10 is just over Rs 1,50,000 crore.

Stock markets — the basis on which the wealth of India's Super Rich has been estimated — have been cruel in FY12. Not that the global economy and its effect upon India have been particularly kind either. In contrast to the 199 families and people who actually gained wealth to the tune of Rs 87,000 crore, those who lost number 286, with the total wealth lost being about Rs 2,51,700 crore.

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As with the gainers, it has been the fortunes of their businesses that have caused the loss. Most have been natural resource-based (oil, minerals and metals) or in sectors that have been at the receiving end of the economic backlash, like realty and infrastructure. In one instance, it can be blamed upon the misfortunes of the IT services industry.

These businesses are also cyclical, and bear the brunt during any economic downturn. That apart, several of them have been bested by specific problems. Infrastructure firms — telecom and power — have been challenged by changes in the business environment. In the case of the former, the next stage of growth has been slow in coming; in the latter, policy uncertainty over fuel linkages and supply have hurt badly.

The natural resources business is always a political hot potato; roadblocks are recurrent, erected either by the government or by activist groups. And to be fair, some of them have highly leveraged balance sheets that have slowed growth, and thus additions to wealth.

In contrast to the businesses of the wealth gainers, however, those who lost wealth have shown no capacity for breaking into new markets, or expanding existing ones. Business cycles determine their fortunes, and they have no way of getting away from that.

But are they hurting? Hardly. Their wealth runs into thousands of crores, and is far from being affected by what may ultimately be a reduction in paper wealth. The lights of Antilia, the Mukesh Ambani family residence on Altamount Road in Mumbai, still light up the city's skyline.

(This story was published in Businessworld Issue Dated 30-07-2012)