...the media really worsened the situation. The worst was when news began doing the rounds that we had defaulted on our payments to the Greater Noida Authority, even though its CEO went on television to say that we had not defaulted.
...The frustration with lenders was also huge because they were the same people who would come to you analysing your balance sheet, analysing your assets and lend you money. They came back to you after just three months and wanted to recall their money because the market perception had changed. And these were relationships which we had for years. We had a sanction of Rs 700 crore from a large public sector bank.
The loan was very heavily collateralised, they were happy with the structure, but one board member objected saying that "if this comes into the papers tomorrow we will be in trouble". So, the approved loan was not disbursed. Everyone asked for their money back—some nicely, some not so nicely. You learn not to expect anything. It was not the Indian institutions but the large FII shareholders who had more faith in us and participated in our QIP (qualified institutional placement) sale.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at email@example.com