Sunset for Sungroup

By Adya Behera

Edited by Nandini Bhatia, Senior Editor, The Indian Economist

Media baron Kalanithi Maran, along with younger brother Dayanidhi, has neverhad a rougher time than now. They are facing interrogation by the Enforcement Directorate (ED) over the Aircel-Maxis deal and SpiceJet is on the verge of being grounded. With no political heavyweights to depend upon, days are becoming worse for the duo. As the fortune of SpiceJet tumbled, so did the Maran’s. Once the 17th  richest Indian, Kalanithi landed on 38th in the Forbes list of richest Indians with asset of $2.3 billion. Dayanidhi is embroiled in charges of corruption and for helping Sun TV network acquire investments through unfair meanns.

Sons of former Union Minister, Murasoli Maran, the brothers divided the roles between them after their father’s demise in 2003, with the younger and suave Dayanidhi being the political face and Kalanithi managing the business side. This synergy worked perfectly well, since Kalanithi launched Sun TV in 1993 with a bank loan, and had been closely linked to his political connections as well as renowned for his business acumen. Its growth was quicker when the DMK was in power in Tamil Nadu and when the party patriarch, and the Marans’ granduncle, M Karunanidhi enjoyed influence in the centre. The Marans’ rise has coincided with the DMK being in power. Liberalisation took off from 1996 and along with it the Chennai based Sun Group witnessed a phenomenal growth.

The media business still provides a thick cushion to the brothers in business but they have lost all strong holds in politics because DMK is far from returning to power with M K Stalin reluctant about fostering the Marans’ political ambitions as they could affect his own. Apparently Kalanithi Maran is paying the price for his trophy assets, notably SpiceJet, which reported a record loss of $165 millionand cricket team Sunrisers Hyderabad which did poorly last season. Earnings at his regional broadcaster Sun TV Network have remained flat amid a stagnant admarket and high costs linked to the cricket team. The Marans have been chargedwith laundering and other financial irregularities by the CBI. There have been charges against Dayanidhi for forcing NRI investor C Sivasankaran to sell mobile telecom firm Aircel to Malaysian tycoon T Ananda Krishnan’s Maxis Communication in 2006 in return for a huge investment in Sun TV to use hundreds of government telephone lines. Hence, DMK does not want the corruption charges to hurt the party ambitions and has decided not to foster Maran’s political ambition. A major mistake by the Sun Group was the way the airline business was managed. Just like their other business they focused only on capturing market power.  As a result SpiceJet placed big planes orders with undercut fares. SpiceJet has accumulated as loss of around Rs.2,194 crores.

The Sun Group’s cable business epitomises the Marans’ changing fortunes and their ruthless way of doing business. There was a time when every major broadcaster’s representative used Sun Group’s Sumangali Cable Vision (SCV) to carry their channel across Chennai. It was discovered only in 2003 that SCV used to cut its rivals’ cables. Maran owned Tamil Paper showed that Karunanidhi’s son Stalin was more popular than his eldest son Alagiri which ledto a bitter spat between Alagiri and the Marans. The DMK-led state governmentdecided to end Maran’s monopoly in cable distribution business by introducing a state owned cable Distribution Corporation called Arasu Cable. Thereafter SCV is no longer sought after. Following this, the Chennai based Sun Group shifted their focus to the DTH business and is the market leader in the South.

The Marans have enough money to keep the airline afloat but it seems that they have lost interest in the business. The brothers have been missing from many talks with the airline’s founder, Ajay Singh, in efforts to rescue and revive it. The Marans, who entered the world of business by launching a Tamil video magazine, Poomalai, have always held the media business as their forte. It can be safely concluded that the Sun Group is in a phase of weaning glory. If the brothers manage to escape the charges of money laundering and corruption, their fortunes could revive, both politically and in business.

Adya Behera is a 19 year old and a privileged economics Hons student of LSR, Delhi, she has been connected with the economics since last 3 years. With a will to serve the nation it shall be the endeavor of the incumbent  to put light on the current topics and put forth the view of the columnist.