Promoter Leadership vs. Professional Leadership - Ajay Bhat Monnet Ispat

Last few years have been predominantly thickly overcast with problems of non-performing assets in the banking system. It’s not that the NPA is a new development or has been a fresh news, NPA’s are synonymous with lending business globally so are they in India as well but the magnitude & size of NPA’s in India after 2010 has been rising at alarming rate.
The objective of my article is not to discuss the NPA problem as such but one of the essential causes why they happen. Lot has been written on this subject but among the various reasons yet hidden there is one important & critical reason, which is not debated & at least has not been cited as one of the key inputs of this NPA menace.
Let me try to elucidate this, let’s look at top 50 companies referred to IBC in the past over 18 months. We know clearly they are all over leveraged & their business models have failed to meet the obligations, hence the reference. Why are these companies over-leveraged & why did their business model collapse. One of the striking reasons is lack of competent leadership team, which the promoters of these companies failed to develop & empower.
I made a salient study of these companies & found this to be a common problem. Only over-leverage can never be a source of potential trouble in a company to warrant its reference to IBC or otherwise a change in management. Collapse of an industry is different from a collapse of few companies in an industry. I am talking of the latter.
Expansion and diversification was purely driven by Promoters at their choice and plan with utter disregard to inputs, suggestion or advice of key management personnel. The so-called growth was essentially driven by debt.  read more 

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