Recession in India : It's unofficial

You know the country is definitely in a downturn--if not a full-blown recession--when you see offers screaming 'buy a mattress, get a bed free', instead of the other way round. And these "unbelievable" deals are being offered by India's biggest retailer--the Future Group--which runs Big Bazaar, Home Town, Central and other such chains.

Another pointer, if at all you needed one, is a statement by India's biggest businessman, Mukesh Ambani, that "it is not just a regular recession, it is a reset" (meaning we have been set back by a few years) at an awards function.

Of course, he had a reason to say so: Reliance's profits fell by 57% this quarter and are likely to fall further. He is also rumoured to have lost anywhere between Rs. 10-15,000 crore (2-3 billion dollars) personally, betting on oil futures. Anything the Ambanis do is generally of that order of magnitude, so I am not surprised. Also, I will not be surprised if Mr. Ambani resorts to creative accounting to recoups this loss from the general public, via Reliance's books. He might even consult Satyam's ex-chairman Ramalinga Raju for tips on that.

Speaking of Satyam,however, I am surprised at the attention the company is attracting from potential acquirers--one suitor, L&T, has increased its existing stake in Satyam from 4 to 12%--even without knowing whether there is really a business left to buy. Those licking their lips at its mouth-watering valuations look less like smart businessmen and more like a bunch of old guys intending to woo a recently-abandoned woman they all had fancied during their college days.

Then there is news of similar financial misconduct in several Indian companies (technically, that cannot be called news since everyone knows that), which the Department of Company Affairs has started looking into. It is uncanny how the tremors of downturns or recessions shake the corporate cupboards, spilling their skeletons out into public view. Then again, the government chaps have their own incentives to "look into" such affairs. Looks like, boom or bust, bureaucrats, cops, doctors and bars always make money.

But this time, the bust seems to be real bad. One of the Hindi news channels was running a program yesterday on how the donwturn has hit even the underworld. The managements of "companies" here, such as D (of course you know the chairman of this one), CR (Chota Rajan, you probably know this one too), and HP (no, not the one you know, it's Hemant Pujari) have all started outsourcing their contracts to cheaper, more cost-efficient outfits, the report said.

Having been in the outsourcing business for the last several years, and being hard-up on new business these days, I was wondering if I could suggest to my bosses about looking at new offerings for these contracts that are up for grabs. However, having seen (in films) and heard about their execution of penalty clauses in case of default or breach of contract, I decided I will deal with the recession or downturn (or whatever the bloody hell it is) in my own way. I am neither a Raju nor an Ambani.