July 20, 2025

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HYUNDAI S ROCKY RIDE TO RECOVERY

To my way of thinking, there may be miracles in religion but not in politics or economics. We succeeded because our people devoted their enterprising spirits. Conviction created indomitable efforts. This is the key to miracles" The enterprising spirits and conviction that Chung Ju Yung--who founded the Hyundai Group and turned it into one of the world's largest industrial conglomerates in a classic rags-to-riches story--talked about decades ago are exactly what Hyundai Motor India needs as it battles the toughest challenge it has faced in its 29 years in the countryIn FY25, Hyundai Motor India's market share fell to 14%, the lowest since FY13. It slipped to the 4th spot in February and March 2025, behind Maruti Suzuki, Tata Motors and Mahindra & Mahindra. The company got back to the 3rd spot in May and June but its overall trajectory is worrying; before this, it had been an undisputed number two ever since the 1998 launch of Hyundai Santro that revolutionised India's small car market with its tall-boy design, spacious cabin and smart advertising featuring actor Shah Rukh Khan. In the first quarter of FY26, the company's sales declined 12% to 1,32,259 units, as against 1,49,455 units in the same period last year. In the first half of CY25, sales dipped 8% to 2,85,809 units, from 3,09,768 units in the same period last yearCan Hyundai Motor India, led by Managing Director Unsoo Kim and Whole-time Director & COO Tarun Garg, do a Santro redux and race comfortably ahead of Tata Motors and Mahindra & Mahindra, both of which are snapping at its heels? "Rather than market share alone, our focus has been on building a strong brand legacy anchored in delivering superior products, progressive technologies and seamless ownership experience. Our core philosophy of qualitative and sustainable growth drives every aspect of operations," says Unsoo KimHyundai is playing the long game but can ill-afford

SETTING INDUSIND IN ORDER

WHEN THE Reserve Bank of India (RBI) removed YES Bank founder, MD & CEO Rana Kapoor, Ravneet Gill took over as the CEO in March 2019. Unaware of the depth of the problem, Gill, a former Deutsche Bank executive, completely underestimated the stressed portfolio, with non-performing assets (NPAs) exceeding estimates quarter after quarter. He failed to raise the much-needed capitalWithin a year, the RBI superseded the board and roped in State Bank of India, the country's largest bank, and some private banks to pump in additional capital. But six years later, this mid-sized private bank is yet to regain pre-crisis returns, with full recovery still years awayAnother old private sector bank, RBL Bank, faced a similar crisis in 2021 as CEO Vishwavir Ahuja, a Bank of America professional who turned around the smallsized bank, abruptly exited amid RBI intervention over rising NPAs. A new public sector CEO, R. Subramaniakumar, stabilised operations, but even after more than three years, shareholder returns are still below pre-crisis levels. Much like YES Bank and RBL, private lender IndusInd Bank finds itself at a crossroads. Its troubles came to light on March 10, when the bank disclosed discrepancies in its derivatives portfolio. That caused a 2.35% erosion in its net worthThen, problems were identified in the microfinance portfolio, where misclassification resulted in underprovisioning and non-recognition of NPAs of `1,885 crore. This triggered a chain of events that resulted in the unceremonious exit of MD & CEO Sumant Kathpalia. The situation is volatile with key exits like those of the Deputy CEO and CFO. Lacking an internal successor, the bank's board has shortlisted three external candidates for the MD & CEO position: Anup Saha, MD of Bajaj Finance; Rajiv Anand, Deputy MD of Axis Bank; and, Rahul Shukla, Group Head­Commercial and Rural Banking of HDFC Bank. RBI requires a ranked panel of two candidates but can reject both and seek a fresh list, as seen in past casesWhile the new management team is still months away, it is evident from what transpired at YES Bank and RBL that it takes years to rebuild trust once lost. "The initial years are often spent on establishing a new leadership team and ensuring its stability, overhauling the midlevel organisational structure, implementing a new business model focused on sustainable and less risky assets, adopting a tighter credit assessment framework, and introducing new systems and processes with a strong emphasis on compliance and risk management," says a former bankerYES Bank and RBL Bank are still struggling to regain past glory due to a shift towards low-yield, secured lending. In fact, there could be more surprises in the form of new disclosures and additional provisioning like what happened at YES Bank. "Given the recent governance lapses, undisclosed risks may persist. A new CEO should mandate independent stress tests and forensic audits to uncover potential asset quality issues, offbalance-sheet risks or compliance gaps," says Atul Parakh, CEO of Bigul, a next generation algotrading investment platform. (See Box: The Task for the New CEO) There are already serious concerns, including accounting lapses, compliance failures, insider trading, and potential fraud-- an ex parte interim order by the Securities and Exchange Board of India (Sebi) has already banned five senior executives, including Kathpalia and ex-Deputy CEO Arun Khurana, from participating in the securities marketsIn a recent note, Nuvama Research said the new CEO will have to tighten internal controls, strengthen governance and likely rebalance the asset mix. "Proactively addressing legacy underwriting practices and