Tweeting to Lobby

Sucheta Dalal 29 November 2017

Economy & Nation

On 8th November, industrialist Sajjan Jindal tweeted: “Dubious promoters should not be allowed to submit the rehabilitation plan to prevent misuse of the IBC.” We absolutely agree; but, ironically, a decade ago, he was in the same boat as other steel barons who were happy recipients of bailout or corporate debt restructuring. But, unlike the Ruias of Essar, Vinod and Pramod Mittal of Ispat, or the Singhals of Bhushan Steel, he transformed his business. Sajjan Jindal, who is a key bidder for distressed steel assets, was provoked to tweet after the Insolvency and Bankruptcy Board of India (IBBI) amended the Insolvency and Bankruptcy Code (IBC) regulations allowing ‘credit-worthy’ promoters to bid for their own assets.

Gaming the IBC is a real concern. The first case under the new rules had a shocking outcome and some ‘dubious promoters’ (DPs) are openly saying that they will retain control. Also, we have no faith in public sector bankers or government officials who are colluding with DPs even today.

But why did Sajjan Jindal tweet, rather than pick up the phone? He tagged the finance minister, law minister and the prime minister’s office (PMO) in his tweets. But Mr Jindal’s proximity to this government is well known; he is even credited with organising the PM’s meet with the Pakistani PM, Nawaz Sharif, in December 2015.

Is it because this government responds faster to social media? Or is this about Indian industrialists learning to speak openly rather than lobby covertly—at least, about rivals if not about government policies? Mr Jindal also had some policy advice on how the bidding and transition process ought to be handled. He wanted that trading in the shares should be suspended during the bidding process (we agree) and the new investor “must have flexibility for automatic de-listing of the company as the equity value is not there in most of NCLT cases” (we disagree). There is no mention of what happens to minority shareholders who may be holding on to currently worthless stock that could soar on the acquisition. The upshot of this twitter exchange is that the government is, apparently, open to tweaking the rules again!

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