Promoters' wealth grows 90-fold in 2 years

Most of the first generation entrepreneurs who have taken their companies public in the last two calendar years have hit pay dirt.

A study of 41 such entrepreneurs, who mobilised over Rs 12,400 crore (Rs 124 billion) through public issues in 2005 and 2006, shows that their capital investments of Rs 1,066 crore (Rs 10.66 billion) have grown almost 90 times to Rs 90,000 crore (Rs 900 billion).

As much as three-fourths of this wealth is absolutely free, as the 75 per cent stake held by these promoters has been created by bonus issues prior to -- in some cases just before -- the public offers.

For some, the entire wealth is free, largely because nearly all of the equity was created by bonus capital.

Financially, they have done well, with sales growing at a compound annual rate of 30 per cent in three years. Profit has grown faster, at about 50 per cent.

The biggest beneficiary of the stock market has been Tulsi Tanti, whose 10-year-old windpower company, Suzlon Energy, went public in September 2005 to raise Rs 1,500 crore (Rs 15 billion).

Tanti holds 69 per cent in the company through an initial investment of Rs 5 crore (Rs 50 million). It is currently valued at Rs 25,544 crore (Rs 255.44 billion). Indeed, 98 per cent his equity holding is bonus shares.

Kalanithi Maran, the promoter of South India-based entertainment channel, Sun TV, is worth Rs 10,122 crore (Rs 101.22 billion), thanks to an investment of mere Rs 1.6 crore (Rs 16 million). Like Tanti, 98 per cent of his equity holding came through bonus shares.

The housing sector boom opened the pot of gold for realty players such as Sobha Developers, Parsvanath Developers and BL Kashyap.

PNC Menon of Sobha Developers is worth over Rs 6,682 crore (Rs 66.82 billion), which is how much his initial investment of Rs 5.61 crore (Rs 561 million) has grown to.

Pradeep Kumar Jain of Parsvanath Developers has seen his initial investment of Rs 2.58 crore (Rs 258 million) vault to Rs 6,075 crore (Rs 60.75 billion).

The infrastructure constructors too have reaped a rich harvest. GM Rao of GMR Infrastructure is worth Rs 9,819 crore (Rs 98.19 billion), L Madhusudhan Rao and G Bhaskara Rao of Lanco Infratech worth Rs 3,944 crore (Rs 39.44 billion), Atul Punj of Punj Lloyd Rs 2,941 crore (Rs 29.41 billion) and Rajhoo Barot of Atlanta Rs 1,395 crore (Rs 13.95 billion).

Individual brilliance, or perseverance, has never before been rewarded so handsomely. Shantanu Prakash and Anjlee Prakash, the promoters of Educomp Solutions, are worth Rs 990 crore (Rs 9.90 billion) for their entrepreneurship in the field of education. 

The list also includes G R Gopinath, who pioneered low-cost aviation in the country with Air Deccan. Gopinath and his two co-promoters are worth Rs 326 crore (Rs 3.26 billion).