Unitech flew too close to the Sun in trying to become the next Indian mega-conglomerate. Its fate is the same as Icarus’
The story of Icarus is a legend familiar to those who went to CBSE schools in the 1990s. The legend where Daedalus builds wings with wax and feathers. He and his son Icarus, then started flying. Icarus enjoyed flying so much that we wanted to touch the sun, and with unbridled enthusiasm, he moved to fly towards the sun. But the heat of the sun melted the wax and Icarus’ wings fell apart and he crashed to the ground. This is a parable about confidence and never to be overconfident and overambitious.
This brings us to Unitech, a company known for building so much of south Gurgaon wanted to move into telecom. But the move into telecom was a move that was to doom Unitech and not just because of the 2G fiasco. The bottom also fell out of the real-estate market around the same time and Unitech suffered more than most because of their ill-advised foray into telecom. The real-estate business is, at the end of the day, a business where cash is rotated. New buyers kept the wheels greased, new flat buyers paid for the development of older apartments. But Unitech just plain ran out of money and failed to develop houses. There was also undoubtedly a failure of the company to keep expenses in check and money was just frittered away on other vanity projects. This was a business failure of Unitech's promoters and board. And the Supreme Court has come down hard on Unitech's board and promoters because of this. But is the punishment a fair oneij Should the promoters family be made to sufferij There is an old saying of not holding the son responsible for the sins of the father. But at the same time the lifestyle being enjoyed by the family of the directors has been funded by thousands of families which bought houses that haven't been delivered over over a decade after they were promised. These are families almost bankrupted by Unitech's inability to deliver. Why should their directors’ families enjoy the good life in that caseij
This is a difficult question to address. But the Supreme Court has a valid point — if your gains are effectively ill-gotten thanks to your inability to deliver then you should not enjoy them and your families should not enjoy them. It is unlikely that the Supreme Court will bankrupt the promoter and their families but they should not enjoy the trappings of wealth acquired illicitly.