Most Controversial Businesses of 2019 in India

Most Controversial Indian Businesses in 2019
Indian companies that made headlines in 2019
Most Controversial Indian Businesses in 2019
Indian companies that made headlines in 2019

The Indian stock markets have been rising despite a global economic slowdown. However, there were Indian companies that made the headlines in 2019 for some controversial reasons.

Here are the most controversial business stories of the year 2019:

1. IL&FS

Infrastructure Leasing and Financial Services (IL&FS) drew media attention between July and September 2018 when two of its 256 subsidiaries reported an inability to repay loans. The controversy soon snowballed with the government stepping in. Subsequent audit trails revealed the company along with its subsidiaries, owed lenders INR 99,354 crores.

The audit revealed mismanagement and malpractice by its senior management. By October 2018, the government ordered a select team headed by reputed banker Uday Kotak to take over management and conducted a thorough probe into what went wrong.

The company’s auditors Deloitte Haskins and Sells, EY India, and KPMG India came under scrutiny for not identifying and reporting serious malpractices that were taking place over a period.

The company has remained in the news through 2019.


The year began with the sensational disclosure by Cobra Post claiming the non-banking financial company DHFL was involved in an INR 31,000 crore financial scam.

The report claimed the company had siphoned off over INR 31,000 crores by fraudulently diverting money through grants and loans to a maze of shell companies. A part of the money made it’s way overseas to fund acquisitions.

The markets reacted negatively to the news break and fell 9.73% in trading the next day. The three promoters of DHFL – Kapil Wadhawan, Aruna Wadhawan, and Dheeraj Wadhawan now face criminal charges along with other management staff.

Two of its biggest lenders – State Bank of India and Bank of Baroda have taken the biggest hit with exposures of INR 11,000 and INR 4,000 crore, respectively. The company continues to remain in the news.

3. PMC Bank

Mumbai-based Punjab and Maharashtra Co-operative Bank (PMC), one of India’s top 10 Co-operative banks, hit the headlines when the Reserve Bank of India issued instructions to the bank to restrict large withdrawals by its depositors.

It led to large scale panic among depositors, most of whom were salaried individuals who had placed their lifetime saving with the bank.

Investigations showed massive unsecured loans fraudulently given to a single company – HDIL, which had defaulted on loan repayment to PMC totalling INR 4,500 crores.

Investigations revealed PMC began diverting funds to HDIL through 21,000 dummy accounts. Joy Thomas, PMC’s Managing Director, has admitted to large scale fraud and has been arrested along with former Director Surjit Singh Arora. Two directors of HDIL – Rakesh and Sarang Wadhawan also stand arrested.

HDIL are DHFL are linked. HDIL’S Rakesh Wadhawan happens to be the younger brother of (late) Rajesh Wadhawan, whose sons Dheeraj and Kapil Wadhawan, run DHFL.

Read More: PMC Bank- A Story of Greed and Clueless Regulator

4. Essar

The Ruia-family promoted Essar Group has been in the news ever since the phone tapping controversy made headlines in 2015. Business-wise, the steel major began facing headwinds since 1999 when international steel prices crashed.

The group’s entry into power generation, in addition to oil and construction, further added to the financial stress which kept building over the years.

Essar Steel, despite strong manufacturing infrastructure, holds a debt of INR 54,550 crores and has been up for sale for some time. Global steel major Arcelor Mittal along with Nippon Steel and Sumitomo Corp, are leading the race to acquire the struggling company. Arcelor has put up a bid of INR 42,000 in upfront cash.

On November 16 2019, the Supreme Court upheld Arcelor’s bid to acquire Essar Steel.

5. Johnson & Johnson

Johnson & Johnson (J&J), the US drugmaker, has been in the news for quite some time, and 2019 was no different. The company is a dominant player in the Babycare segment and an established manufacturer of knee implants.

It has been in the news since 2018 when a Rajasthan-based government laboratory confirmed identifying the presence of formaldehyde, a chemical with carcinogenic properties, in J&J’s baby shampoo.

J&J has vehemently rejected the report claiming its baby talc was completely safe and free of any cariogenic substances. In UP, the Food Safety and Drug Administration (FSDA) banned the sale of baby shampoos and ordered samples collected for testing.

In May 2019, the National Commission for Protection of Child on Rights (NCPR) issued a directive asking the company to withdraw the batch immediately and report back.

Previously, J&J was involved in another controversy with claims of traces of asbestos, another carcinogenic substance, being found in its baby talc. The company rejected the claims.

6. Jet Airways

On 18 April 2019, passengers took the last flight on Jet Airways, once touted as India’s leading airline. The airline has accumulated a debt of over US$1 billion. From premier position to insolvency, Jet Airways is yet another story of mismanagement, poor planning, and excess promoter interference in the Indian corporate sector.

Things quickly went south for Naresh Goyal, the very visible promoter of Jet Airways. Once it became clear, he was unable to find a suitable partner to infuse additional funds to keep afloat, the airline, money lenders, and aircraft lessors began claiming payment of their dues. Jet Airways adds to the list of failed Indian airline companies.

Read More: The Dramatic Collapse of Jet Airways

7. Rcom

In 2006, Anil Ambani, the younger son of Reliance Industries promoter Dhirubhai Ambani, split from his elder brother Mukesh. In the settlement, Anil Ambani took control of Reliance Communications, an established player in the Indian telecom sector.

In 2007, Anil Ambani’s net worth stood at US$45 billion. According to Business Today, the value of Ambani’s un-encumbered equity stands at Rs 765 crore ($109 million) as on July 2019 – barely 2 times the $50 million Bombardier Global Express jet he flies.

Today, as Rcom faces bankruptcy, Anil was forced to seek his brother’s help to keep him out of jail in the Erickson case. Creditors continue to chase Anil to repay massive amounts due to them.

Related Links:

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Top 20 Indian Companies by Net Profit in 2019