Every once in a while, corporate giants appear invincible—deep pockets, entrenched industries, sky-high reputations. Yet history shows us there is no such thing as “too big to fail.” India’s corporate landscape is dotted with the ruins of businesses once deemed unstoppable. This article revisits three such fallen giants: Dewan Housing Finance Corporation Ltd (DHFL), Bhushan Power and Steel Ltd (BPSL), and Jet Airways, each leaving behind valuable lessons for investors.
Dewan Housing Finance Corporation Ltd: A House of Cards
DHFL was once India’s third-largest housing finance company, boasting a loan book of ₹1 trillion. But the collapse of IL&FS in 2018 triggered a liquidity crunch across non-banking financial companies (NBFCs). Beneath DHFL’s impressive façade lurked deeper problems—fabricated loans, shell companies, and misused subsidies.
By FY19, revelations of a fake Bandra branch with ₹14,000 crore of cooked-up loans shook the company’s foundations. Investigations unearthed frauds amounting to ₹34,615 crore, leading to a regulatory takeover by the Reserve Bank of India. Over 95% of investor wealth vanished as the stock plummeted from ₹680 to under ₹20 per share.
In 2021, DHFL was merged with Piramal Capital and Housing Finance Ltd, closing a chapter of reckless borrowing and shattered trust.
Bhushan Power and Steel Ltd: Insolvency Déjà Vu
Few companies illustrate the perils of overexpansion and debt as vividly as BPSL. Emerging from the bankruptcy of Jawahar Metals in 1987, BPSL grew into a steel powerhouse but stumbled amid aggressive growth plans, falling steel prices, and allegations of fraud.
By 2017, the company owed banks ₹47,000 crore, ranking first on the RBI’s infamous “Dirty Dozen” defaulters list. JSW Steel acquired BPSL for nearly ₹20,000 crore in 2021, turning its Odisha plant into a key production hub.
However, legal twists threatened to undo the acquisition as the Supreme Court initially annulled the insolvency resolution due to procedural lapses and asset-attachment disputes. The apex court has since reversed its order, offering relief to JSW Steel and creditors—but not before highlighting the complex interplay between insolvency laws and regulatory oversight.
Jet Airways: From Sky-High to Grounded
Jet Airways began in the 1990s as a private-sector pioneer, winning passenger loyalty with superior service. Its fortunes nosedived after acquiring Air Sahara in 2006—a move that saddled the airline with unsustainable debt.
Despite global partnerships with Etihad Airways and Air France, Jet could not recover from its mounting losses, money-laundering allegations, and crippling debt obligations totaling over ₹28,000 crore. By 2019, the airline ceased operations, and late last year, the Supreme Court ordered its liquidation, erasing thousands of jobs and retail investor wealth.
How Investors Can Avoid Similar Pitfalls
- Rising losses and mounting debt are early warnings—act before it’s too late.
- Heavy promoter pledges tie a company’s survival to stock volatility; treat them as red flags.
- Pending litigation, especially involving fraud or money laundering, must not be ignored.
- Auditor warnings, related-party dealings, and frequent churn in leadership indicate deeper issues.
- Cut losses when fundamentals deteriorate; do not chase “value” in troubled companies.
- Diversify portfolios to withstand unexpected corporate collapses.
The Bigger Picture
From DHFL’s fraudulent books to BPSL’s legal rollercoaster and Jet Airways’ debt-fueled downfall, these stories remind investors that even giants can fall—and usually after flashing multiple warning signals. Vigilance, rationality, and diversification remain the investor’s best defense against history repeating itself.
Feel free to share your experiences and insights in the comments below. Let’s continue the conversation and grow together as a community of traders and analysts.
By sharing this experience and insights, I hope to contribute to the collective knowledge of our professional community, encouraging a culture of strategic thinking and informed decision-making.
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Disclaimer
This article should not be interpreted as investment advice. For any investment decisions, consult a reputable financial advisor. The author and publisher are not responsible for any losses incurred by investors or traders based on the information provided.