Geography Reference
In-Depth Information
Hit with heavy debts, the group has been selling stakes in its airport business and power
businesses.
The third leading company, Lanco, is the most politically high profile of the three com-
panies, having been led initially by Lagadapati Rajagopal, the Congress MP and a key YSR
supporter. His brother L. Madhusudan Rao and brother-in-law G. Bhaskara Rao now run
the group, which claims to be India's largest private sector power producer and also has
coal mining interests in Australia. To improve its image, Lanco moved its headquarters
from Hyderabad to Gurgaon on the outskirts of Delhi but it became over-extended and lost
large-scale projects for lack of funds, pulled out of others, dismissed a large number of em-
ployees, and formally announced a debt-restructuring process in 2013.
Some time in the future, Andhra's years of fraud and deception will almost certainly be
seen, in the traditions of early American business, as merely one of the stepping stones that
a new economy takes when it suddenly enjoys unexpected riches, and the prospect of much
more, if politicians are suborned, rules bent and the state cheated.
For now, the Andhra companies have fallen from favour with more conventional in-
vestors. Barring the sort of scandals that emerged with Satyam and the YSR investigations,
they should recover though, even if it is some time before they and their business families
can regain credibility with savvy Indian and foreign investors. Too many private equity and
other firms have been caught by what looked like sound deals and honest entreprenreurs for
this to happen quickly, especially with the current investigations and pending court cases.
Yet one should never under-estimate investors' ability to turn a proverbial blind eye when
offered the prospect of quick profits - a thought that no doubt brings a glimmer of hope to
such companies.
Notes
Conversation with JE, July 2013
