Thursday, July 25, 2024

The rise and fall of Rita Singh: A cautionary tale of 1990s Indian capitalism

In 1998, Rita Singh was ranked as one of the richest women in the world. The source of the ranking, even the $600 million value it attributed to her Mesco group, may have been doubtful. What was in no doubt was her power and her presence in the 1990s.

It’s another story that she grew too big for her shoes. With a penchant for cockatoo colours and painted nails, the doughty lady was one of the new capitalists of the post-liberalisation era. In her all-too-brief heyday in the ’90s, her face was splashed across the covers of every women’s magazine and she was even named entrepreneur of the decade by the Federation of Indian Chambers of Commerce & Industry (FICCI). Any doubts about her new-found affluence were settled by the Rolls Royce parked at the glittering Maurya Sheraton hotel in the national capital, where she lived for a while in the ’80s.

A product of the public-market frenzy of the 1990s, the upstart dairy business entrepreneur once headed a 1,000-crore empire that expanded beyond Mesco shoes to encompass aviation, shipping, pharma, and that darling of the age, financial services, which could hide a multitude of sins. Success eluded her in many of these fields. 

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But in the first few years after liberalisation, there were always gullible investors – in a market that lacked any real supervision – who could be relied on to bail out a failing entrepreneur. Between 1992 and 1996, nearly 4,000 public issues hit the market, raising about 60,000 crore for the promoters. Tragically, 80% of these companies vanished.

Mesco was no different. Between 1992 and 1995, the group zipped through six public issues through three different companies to mop up 177 crore. When it was all done and dusted, its share price cratered from 180 in 1995 to 3 just three years later.

A silver tongue

Mesco’s failings were not just financial, and left people gaping at the in-your-face insouciance. Rita Singh could sell with such confidence that the product was just an afterthought. According to a report in Business Standard in February 1996, ghazal king Pankaj Udhas was asked by the group to inaugurate the blast furnace at its steel plant. About 500 people were in attendance, including chief minister of Odisha Biju Patnaik and union ministers Santosh Mohan Dev and Salman Khurshid.

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The next day, much to their chagrin, newspaper reports alleged that the furnace did not emit coke fumes but dark gases from tyres, coir, straw and cow dung. Remonstrations from Rita Singh that they were simply warming the stove and not inaugurating the furnace drew much derision as the company had lost credibility by then, thanks to a string of failed projects. The one-million-tonne steel plant it was setting up at Duburi in Odisha’s Jajpur district was abandoned in 2000 owing to a financial crunch.

The dark arts

In a cautionary tale of ambition unmoored by ethics, the company faced accusations of financial irregularities, including inflating revenues and profits through dubious accounting practices. The charges also included overstating sales and under-reporting expenses to create the illusion of financial health, and misleading regulators, investors and creditors such as IDBI and IFCI. Mesco, it was said, had been cavalier in its disregard for regulatory compliance. Rita Singh lost the 1996 parliamentary elections from Ghaziabad which she had fought on a Congress ticket, which compounded her troubles.

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It was time for past sins to catch up. The Central Bureau of Investigation (CBI) charged the company and its promoters with forging insurance claims and issuing fake shares. The tax man came calling, too.

Rita Singh, her husband JK Singh and nephew DK Singh ended up behind bars on charges of defrauding institutions and issuing fake company shares, cheating, diverting funds, and forgery. A trial court dismissed the charges against her in 2020 but the CBI filed a revision petition challenging the order.

While the cases are ongoing, Singh seems to have withdrawn into the relative quiet of the ashram she runs for pets in New Delhi’s Satbari area.

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