Geography Reference
In-Depth Information
industrial corridor, a greenfield airport project and a shipyard and put the total land awarded
at 28,000 acres. In return, said the counsel, Prasad invested heavily in Jagan's companies. 57
In November 2013, the state government cancelled the project, 58 c laiming it was doing so
because it had not been properly cleared with the central government, which sounded like
a neat excuse.
Big Names
A clutch of Andhra companies that thrived during the years when Chandrababu Naidu and
YSR were chief ministers went on to run big projects in the rest of India and then abroad.
They include names such as Satyam in software, and GMR, GVK and Lanco in infrastruc-
ture. GMR and GVK each run two of India's main airports and were responsible along with
13 other companies, at their peak, for a third of the power projects and half the highway
concessions. 59
They were using the skills and resources that had been built up in Andhra Pradesh over
previous decades. These included the close connections with politicians in Hyderabad, Del-
hi and elsewhere that seemed to encourage risky expansion rather than business caution.
Many of the politicians involved are believed to have invested in the projects, channelling
accumulated bribe money through sources such as off-shore equity funds. They have all hit
problems. Satyam collapsed in a fraud scandal. The others have suffered from over-rapid
expansion in the boom years that led to heavy indebtedness, plus India's general problems
of project delays caused by slow land approvals, environmental blockages and shortages
of coal for power projects. Today, GMR, GVK and Lanco are among the country's most
heavily indebted companies. 60
Satyam and Maytas
The biggest collapse came in January 2009 when Satyam, India's third biggest software
company with 53,000 employees and customers and operations in 66 countries, imploded.
This was a rare case of the lid being lifted on India's rocky corporate governance. It was
especially worrying for the country's international image because it happened in the new
software information technology industry. Until the Satyam case, it had been assumed that
these companies had better standards than many of India's old family-controlled groups
that habitually switched funds between businesses and into personal accounts. It can now
be seen, however, with the subsequent exposure of widespread corruption, to be a prime
example of what was wrong.
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