Whether Bahubali Shah is or isn't able to take over Voltas isn't important. Even if he's shadow-boxing, he's doing the minority shareholder a huge favour.

It doesn't cause brows to be raised anymore. Kolkata jute baron Arun Bajoria did it, and so did Delhi real estate developer Abhishek Dalmia and Mumbai broker G.S. Damani. The newest kid (well, only metaphorically) to hit the gravy trail is Bahubali Shah, Managing Director, Lok Prakashan, publishers of the Gujarat Samachar daily. Bajoria got sweet on Bombay Dyeing, Dalmia took to Gesco, and Damani had a thing for VST Industries. These punters perceived their respective target companies to be undervalued, presenting them with the opportunity to make a big-not necessarily quick-buck by posing a threat to the management control of their promoters. Last fortnight, the hitherto low profile Shah got into the act, when he revealed that his holding in Tata group company Voltas had touched 13.3 per cent.

For the Tatas, who own some 20 per cent of the air conditioner maker, Shah is more than just a minor irritant. If he makes an open offer once his holding hits 15 per cent (which is what he would have to do, going by the book), the Tatas could be in for a long-drawn battle with the cash-rich publisher.

Shah and his number-crunchers have obviously done their homework; they've zeroed in on a company that's fairly undervalued, and on the mend. The book value of the Voltas share is Rs 47(much lower than the Rs 41 the stock was quoting at the time of writing); the Rs 854 crore company has reduced its debt from Rs 330 crore to Rs 135 crore; it has exited most of its non-core businesses; and it has huge hidden reserves of real estate.

Indo-Pak Games Cricket? No. Hockey? Yes. A Trade Fair? Maybe.

It's official; the unofficial trade between India and Pakistan is anything between Rs 5,000 crore ($1 billion) and Rs 15,000 crore ($3 billion). The official trade, in comparison, is a paltry $220-250 million (Rs 1,100-Rs 1,250 crore). Most of the unofficial trade is through third countries, like Singapore and Dubai. Now, a section of the Indian industry, led by the Confederation of Indian Industry (CII), wants to hold an Indian trade fair, sometime in September 2002, in Pakistan. The intention is to boost the official trade figure and bring down transaction costs by eliminating the intermediaries. That sounds great on paper, but the Indian government's stance on such things remains unclear. Cricket is a no-no, but India continues to play hockey, with mixed results, with Pakistan. Trade should be alright, since there is no way India can contrive to lose in that context. -Suveen K. Sinha

You have to wonder then: if the Tatas have been doing so much right, why is the stock so undervalued? That answer could lie in the dull market, in which even fundamentally-sound companies are finding few takers. The next logical question then: if Shah does eventually acquire Voltas-an admittedly outlandish eventuality-what further good would it do to the air conditioning maker? Indeed, things could only get worse. Shah is after all a publisher, not a capital goods producer.

Shah may not provide shareholders with much value if he succeeds in taking over Voltas, but he sure is doing the minority investors a huge favour by at least pretending to do so. Whoever the raider may be-even if he is a Barbarian at the Gate-his role in unleashing the might of the minority shareholder is huge. Many of our promoters may not know it yet (if they do, they just don't care), but their primary objective should be to increase value for all shareholders-not just to protect their part of the pie.

So Ratan Tata's sincere efforts to make Voltas leaner and meaner notwithstanding, Shah's recent high jinks will serve as a reminder-perhaps a slightly rude one-that: one, he needs to shore up his holding in Voltas, if he considers it as core to his empire; and, two, that he has to continue restructuring and growing the company in a bid to maximise shareholder value. If people like Shah don't crop up from time to time, even the best managements can shrink into complacency. There's no denying that the motive behind Shah and Co's stock accumulation is pure greed. But then that's exactly why greed is good-for all the parties concerned.

-Brian Carvalho

BANK-RUN
Vestigial? Not Quite
That question and answer pertains to urban co-operative banks, but what's urgently needed is some regulation of the sector.

Yawn! there's nothing new about the rot in co-operative banks. Five years ago, a co-operative bank in Gujarat invested (and lost) Rs 120 crore in a Non Banking Finance Company (NBFC) promoted by a certain C.R. Bhansali. And recent happenings at the Madhavpura Co-operative Bank, which loaned 77.9 per cent of its advances to one individual, broker Ketan Parekh, and at the Secunderabad-based Krushi Co-operative Bank, and the Lucknow-based City Co-operative Bank have shown that the cancer is far more widespread than anyone first imagined.

Do we need urban co-operative banks at all? Actually, yes. They provide soft loans to small-scale industries, which are mostly ignored by commercial banks because of their inability to furnish collateral. Besides, it won't be easy shutting them down, or appointing an independent regulator for the sector as the RBI wants to. Co-op banks often serve as slush-warehouses where politicians park their ill-begotten wealth. And many of them (the politicians, that is, not the banks) use the banks' funds to nurture a particular caste-group or industry-lobby. Right now, co-op banks fall under the purview of both the RBI and the Registrar of Co-operative Societies of the concerned state. ''This dual control,'' says Saumitra Chaudhuri, an economic adviser to ICRA, ''is that it gives both regulators an opportunity (to pass on the buck) when there is a crisis like Madhavpura''. And so, while Rome burns, Nero...

-Ashish Gupta

POLICY 
It's Only Words
...And the Government doesn't seem to mean a single word it says. But the industry is yet to give up hope.

Words, words, words/I'm so sick of words/I get words all day through/ First from him,now from you/ Is that all you blighters can do?
as trilled by Eliza Doolittle to Freddie Eynsford-Hill in My Fair Lady.

Ten days back, india inc. sang pretty much the same tune to Atal Behari Vajpayee and Yashwant Sinha. At a meeting of the Prime Minister's Advisory Council on Trade and Industry, President of the Associated Chambers of Commerce and Industry Raghu Mody rather unkindly pointed out that only 20 of the 500 recommendations made by the various task forces have been implemented!

Clearly, the government's recent economic overdrive has left India Inc. cold. Check out the gap between the government's declarations of intent and action on just three issues.

Vajpayee first talked tough on labour law reforms at the 36th session of the Indian Labour Conference in April 2000, then at the AGM of the Federation of Indian Chambers of Commerce and Industry (FICCI) and again at the 37th session of the ILC in May 2001, and even on International Women's Day this year. Action taken: zilch.

Meanwhile, the new Labour Minister Sharad Yadav has said there will be no reforms without a consensus.

Nearly 30 public sector undertakings (PSUs) have been cleared for disinvestment. The Disinvestment Commission was reconstituted in July, 2001. But the privatisation process is floundering. The Bharti-Singtel combine has lost interest in Videsh Sanchar Nigam Ltd, Singapore International Airlines, and Allied Deals have pulled out of the race for Air-India and Hindustan Zinc, respectively. And the fate of four mining PSUs-National Aluminium Corporation (Nalco), Hindustan Copper, Hindustan Zinc, and MMTC-depend on new Coal and Mines Minister Ram Vilas Paswan, a leading light of the backlash brigade.

Vajpayee talks about putting surplus government land to commercial use. Whatever happened to the Indian Railways ambitious plans to utilise its real estate?

No wonder, FICCI President Chirayu Amin notes: ''No new suggestion was made in the five-hour-long meeting.'' Yet, industry is willing to give the government another chance. Says Mody: ''In the last 30 years that I have been visiting the corridors of power, I have never seen such seriousness. If this doesn't bear fruit, I don't know what will.'' What will, indeed.

-Bhaswati Chakravorty and Swati Prasad.

POLICY-STATE
The Night of The Long Knives
Poor revenue collections push the government into a retrograde step, but then, industry often gets what it deserves.

On the morning of August 19, companies producing cotton yarn, chewing tobacco (gutka), independent textile processors, and secondary iron and steel products woke up to an unpleasant surprise: inspectors of the Central Board of Excise and Customs (CBEC) outside their factories.

The brainwave originated in the CBEC, and with the revenue department giving the rather neanderthal idea the go-ahead, inspectors were posted outside the factories of four sectors where incidence of tax evasion could be high. The modus operandi? The inspectors note down the number of vehicles with goods that move out every day. At the end of a fortnight, they will compare this figure with statistics of the previous fortnight and see whether there is a significant difference in the excise duty or modvat paid.

The CBEC's action was motivated by the desire to up revenue collection which could fall short of the estimated figure by at least 7 per cent this year. The inspectors are, predictably, thrilled with their new mandate, but industry isn't so happy. Still, companies have no one to blame but themselves. Most misused the system of self-assessment; in 2000-01, for instance, excise duty collections from gutka manufacturers in Delhi-the industry has a significant presence in the city-totaled a measly Rs 19 crore.

While the police-state initiative may undo some of the good done by first generation reforms in the direct tax domain, the CBEC says it is monitoring the results coming in to see whether there's been an increase in revenue collection. The bad news? If there has been that, the inspection-drill could be extended to other industries.

-Ashish Gupta

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