On the election mode The 2019 general elections are fast approaching. Understandably, political parties are sharpening their strategies. With Congress decimated in the last Lok Sabha elections and losing state after state (except Punjab) and the Communists losing even Tripura, there is the by-now-familiar attempts on the part of regional parties to build strong coalitions. There is the realisation of the formidable strength built by BJP bringing successive states under its rule. In the process, BJP had decimated several dominant regional parties like BSP, SP and RJD. In meeting the challenge of BJP, traditional rivals are burying their hatchets and are coming together. There is a shortage of leaders who command respect and following at the national level. Even BJP relies too heavily on Narendra Modi. Other BJP leaders, mostly from the Hindi belt, Gujarat, and Maharashtra, have little following in the southern states (except Karnataka). Building the maha-gathbandhan (mega-coalition) across different states is also tricky. In Tamil Nadu, for instance, the DMK and the AIADMK have strong grass root organisational structures. Several other leaders of parties, including those of the new entrants, Rajinikanth and Kamal Hassan, have chief-ministerial ambitions. This will make it difficult for these to agree on seat-sharing. Multi-cornered fights would benefit mostly the DMK and the AIADMK. Prabhu moots merger of MMTC, STC and PEC Commerce and Industry Minister Suresh Prabhu recently indicated a merger of the state-owned trading companies, STC and MMTC. In the era of licences, permits and controls, a good portion of the foreign trade was channelised through these two companies. In their initial stages, these were headed by brilliant leaders from the MNCs. Both the corporations earned a fair name for efficiency. A major effort was made by that brilliant technocrat S V S Raghavan to develop these on the lines of the Japanese Sogoshoshas and South Korean Chaebols. Raghavan mooted bringing these together under a single holding company, Bharat Business International Ltd (BBIL). Unfortunately, Raghavan, hand-picked by V P Singh, resigned at the fall of the short-lived VPS government. His idea of the BBIL expanding counter trade in a big way, buying and selling goods across the seas, was not pursued. The opportunity thrown open by the liberalisation of the economy in 1991 was lost. The focus then was on reduction of tariffs and freeing exports from the shackles of controls. Prabhu\u2019s current plan of merging STC, MMTC and Projects & Equipment Corporation of India (PEC) into a single company would help build scale of operations. The Modi government is conscious of the advantages of size and has been attempting this in other sectors. eg. formation of a mega oil corporation merging the several public sector oil companies engaged in the entire range of operations from exploration to refining and marketing. Under a dynamic leadership familiar with global practices and opportunities, such a measure can take these public sector corporations to great heights. With the substantial outgo of foreign exchange on imports of equipment by the government and private companies, there is scope for building in the import contracts provision for quick, progressive manufacture of equipment in India. How efficiently China had done this in a short time! And how quickly she had absorbed and assimilated high technology for a variety of sectors like steel, automobiles, power plant... extending right up to agriculture; and building local expertise through innovation, research and development! Doubting Thomases deny finality The Insolvency and Bankruptcy Code, 2016 (IBC) is a significant step towards cleaning up the balance sheets of banks and activating the assets that had remained dormant. In the first tranche, 12 companies have been put on the block with a time limit for sale of their assets. Large numbers of other sick companies are bound to follow. India has a long tradition of arguments and litigation that delay meaningful action. One sees this in the implementation of IBC also. Even while processing the bids for the first dozen companies, some of the lenders are raising queries regarding valuation. A recent report suggests some of the lenders to Jaypee Infratech alleging under-valuation of assets including the Taj Expressway. They sought details of calculations made by Deloitte and IDBI Capital Markets (TOI-26 March). One can surely expect more such doubts and queries as the cleaning exercise expands. I relate this to the speed, efficiency and adherence to timelines by the German Trust company, Treuhandanstalt. In the wake of the unification in 1990, Germany had to tackle the mammoth task of privatisation of a few thousand enterprises in East Germany that was under communist rule for 45 years. In just four years the company completed this humongous task! There was a lot of trust in the trust company. There were no doubts or queries on the functioning of the company. In 1994, on my visit to Germany, I met Irene Liebau, the CEO of the trust company. At the end of the meeting she said that it was the last day of work and that the company was winding up after fulfilling the task handed to it! We must bestow all care in selecting specialists to prepare the due diligence reports. Once done, an element of finality must be built. This also requires cutting down the various layers of appeal. If we establish such a practice it would bring dramatic improvements to our judicial system. Tata Steel set to double domestic capacity In our February issue, we presented a detailed feature on the Tata Steel Kalinganagar plant. The steel behemoth has built a domestic steel capacity of 13 million tonnes at its Jamshedpur and Odisha plants (10+3). The company has been looking at opportunities for additions to capacity both through expansion of its existing plants and acquisitions. An opportunity for acquisition has come through the Insolvency and Bankruptcy Code, 2016 (IBC). The first such acquisition through this route has happened. The company has won its bid to acquire the bankrupt Bhushan Steel with a capacity of 5.6 million tonnes. With the expansion of its Kalinganagar plant and more such acquisitions, Tata Steel is all set to double its domestic capacity to 26 million tonnes in the next five years. There are more steel companies in RBI\u2019s first list of 12 companies awaiting sale under the IBC. Tatas have evinced interest in bidding for more such projects and stand a good chance of further acquisitions. Simultaneously, Tata Steel is also consolidating its acquisitions in Europe of Corus Steel by joining hands with the German ThyssenKrupp. The outlook thus appears bright for this steel giant. The consolidation of the steel sector should be welcome. The size and stature achieved by the Indian companies will help expand total steel capacity in quick time. This speed is necessary to meet the challenge posed by China with her large capacity: China accounts for half the global crude steel production: around 800 million tonnes out of 1600 million tonnes. This abundance of steel has helped China emerge dominant in a vast range of steel-based industries enabling her to dump goods at prices much less than the competitor\u2019s. Nagarjuna Oil Corporation \u2013 Still Stuck Under K S Raju, the Nagarjuna Group recorded impressive growth in a variety of sectors \u2013 steel, infrastructure, fertilizers\u2026 The group identified oil refining as a growth area, acquired a mothballed refinery in Europe and was setting up the refinery at Cuddalore in Tamil Nadu. Progress has not been smooth with several re-structurings and re-schedulings. When things seemed to have stabilised, the Vardah cyclone caused severe damage. The company went on the block. The state-owned BPCL that has refineries at Mumbai and Kochi was keen to bid for this and is stated to be the sole eligible bidder. But it is gathered that this PSU is not eager to acquire the entire NOCL.