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RAIDERS Jute And Cotton Don't Blend Arun Kumar Bajoria is holding on to a fair chunk of Bombay Dyeing stock. But there's little he can do for the time being. By Rakhi Mazumdar & Jaya Basu
This time round Bajoria is trapped. Bombay Dyeing officials point out that Chairman Nusli Wadia has no interest in taking up Bajoria's offer of Rs 250 per share, over three times the average price of Rs 72 at which he acquired this stock over the past 18 months. Neither are the Thapars keen on reclaiming the 6 per cent Bajoria claims to have mopped up of Ballarpur Industries. Bajoria claims to have bought them at Rs 55, and he's now offering them to the Thapars at Rs 130. ''We will consider his offer if he offers them at Rs 55,'' scoffs Bilt Managing Director Gautam Thapar. So what does Bajoria do? Or rather, what on earth is he trying to do? ''Obviously, his plan was to make some money by selling this stock, either back to the promoters or in the market. It hasn't quite worked out,'' says a Mumbai-based broker. But if you believe Bajoria, it's vengeance that's top of mind. Reason? Bombay Dyeing moved the CLB, which duly froze Bajoria's voting rights on the shares he had acquired for four months. ''This has hurt my ego,'' Bajoria says, ''I will exercise my full rights and let them try and see how much nuisance I can create.'' Hurdles Galore That's it? We could well end here itself, but let's examine what prompted Wadia to drag Bajoria to the CLB. Forget all the talk of open offers, Bombay Dyeing's contention is that Bajoria stumbled at the first hurdle itself. After all, once his holding crossed 5 per cent, he should have-as per SEBI guidelines-notified the company, which in turn would have had to inform the exchange. He didn't do that, say Bombay Dyeing officials, and has hence violated the takeover code. Thapar, too, could have hauled Bajoria to the CLB. For, in April, Bajoria shot off a letter to BILT, claiming that he had acquired 10 per cent of the company, and that he would like a seat on the board. But as Thapar points out: ''Since he did not inform us once he had crossed 5 per cent, or give all the details of share purchase, we do not regard this letter as a valid disclosure, according to SEBI's takeover code.'' Bajoria claims that one of his companies, Mega Resources, had sent a letter dated March 16, to Bombay Dyeing, informing it that his holding had exceeded 5 per cent. But Executive Director S.S. Kelkar denies receiving any such letter. Apparently, Mega Resources has even sent SEBI a copy of the 'postal proof' of the letter dated March 16. But Bombay Dyeing insists this proof is 'fabricated'. Who is lying? That may be the headache SEBI is saddled with, and that's also probably why it hasn't been able to flex its muscle. Bombay Dyeing's contention is that if Bajoria did indeed notify it about his holding crossing 5 per cent on March 16, why didn't he bring this up at the CLB hearing on September 19? ''If he had done so, and produced the proof, our plea would have been thrown out. But he didn't do so,'' says Kelkar. ''Obviously, this postal proof is an afterthought,'' he adds. Bajoria didn't have much to say about this, other than that he is consulting his lawyers (he has been given four weeks from September 19 to file an affidavit with the CLB to get back his voting rights). What's more, Kelkar points out that the March 16 date itself is of no relevance, as Bajoria's stake (including that of his relatives and group companies) in Bombay Dyeing was, based on information from the depositories, well below 5 per cent then. That information, says Kelkar, indicates that Bajoria's stake in Bombay Dyeing crossed 5 per cent only on May 16. So even if Bajoria did send a letter dated March 16, to Bombay Dyeing, its content couldn't be about his holding exceeding 5 per cent, simply because it hadn't. However, brokers explain, Bajoria could justify this two-month lag by citing delays in share delivery, courtesy his vyaj badla transactions. Other Crosses
But there are a few other crosses on which Bajoria could be nailed. For instance, on August 4, Bajoria sent a letter to SEBI (copies to Wadia and MD. Sarin), informing it about the 12.79 per cent he and his associates had acquired in Bombay Dyeing. But curiously, no mention of the March 16 letter was there. Kelkar says that this was the only intimation the company received from Bajoria about his acquisition. Bajoria's lawyers told the CLB at the September 19, hearing that he had intimated the Calcutta bourse in March that his holding had crossed 5 per cent. Why did Bajoria do this, when his stake (as per depository records) hadn't? And even if it had, why did he tell the exchange, when SEBI guidelines stipulate he has to notify the company? If the exchange did receive the information, it would have made it public. So did it slip up? SEBI has plenty of digging to do. If it manages to prove Bajoria violated the takeover code, it can criminally prosecute him, point out experts.
The tragedy of this whole affair is that Bajoria is just a street-smart speculator trying to make a quick buck; not a takeover tycoon (not in this case). Ironically, he isn't far off the mark when he expresses his lack of faith in the current Bombay Dyeing management. The company is sitting on a cash pile of close to Rs 600 crore-most of it collected via a GDR issue in 1993-94. Till today, it is not sure what to do with the money, preferring instead to run a massive treasury operation which accounts for a chunk of its profits. A takeover threat may be just the sort of kick in the seat of the pants it needs. Of course, acquiring the company won't be easy: Wadia controls 40 per cent of its equity, and the financial institutions hold 15 per cent. The Bajoria episode is also a warning to promoters with less than substantial holdings in their companies. Demat has only served to compound their problems as share transfer information is available only a week after the shares are transferred. Which is why SEBI has put the onus on the acquirer to inform the company's management within four days of his holding exceeding the 5 per cent limit. Whether Bajoria did that is for the SEBI to decide, but one thing is for sure: Bajoria, with or without voting rights, is no threat to Wadia.
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He claims
to be sitting on 14 per cent of Bombay Dyeing's equity-at least that's the
figure he gave us. But Arun Kumar Bajoria, the 55-year-old, white
safari-suit clad jute tycoon-cum-professional speculator, can do little
with those shares. He can't exercise his voting rights, because the
Company Law Board has taken them away from him, albeit temporarily. He
can't begin selling the stock, because no punter in his right senses would
touch it. He can't acquire any more, because he would then have to make an
open offer for an additional 20 per cent once he reaches the 15 per cent
limit, as per regulations of the Securities & Exchange Board of India
(SEBI). And the man, who has built a Rs 900 crore, nine-unit jute empire
via a string of acquisitions in the late eighties and early nineties,
admits he has no intention of making the open offer. ''It does not make
sense, simply because it will not give me a controlling stake in the
company,'' says Bajoria, who a few years ago made a killing by acquiring
over 10 lakh shares of State Bank of India at Rs 220-225, and selling them
later once the price went up.