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BUSINESS:
ARUN BAJORIA
Raider
from the East
The little
known jute mill owner from Calcutta has dreams of taking over Bombay Dyeing
By Rakhi
Mazumdar
In
Calcutta's stock market and jute industry circles Arun Bajoria is acknowledged
as the takeover king. Since the mid-1980s, the 55-year-old jute baron
has gradually built up a Rs 900-crore empire through a string of takeovers.
A stickler for core competencies, he has focused only on jute, buying
up one sick mill after another at throwaway prices and turning them into
money spinners. But in June this year, Bajoria ventured out of jute and
into big time corporate intrigue after it was discovered that over the
past year and a half, he had picked up 57 lakh shares-or 14 per cent of
the total equity-of Nusli Wadia's flagship company Bombay Dyeing Ltd.
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WADIA
AND BAJORIA
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The discovery
sent shockwaves in Bombay Dyeing. The promoters own about 40 per cent
of the equity of the textile major. The company shot off a letter to the
Securities and Exchange Board of India (SEBI) complaining that Bajoria
had violated the takeover code. The code requires firms and individuals
to inform a company if they acquire more than 5 per cent of its shares.
However, Bajoria claims he had written to Bombay Dyeing as also the Calcutta
Stock Exchange way back in March giving details of the purchase of shares
by him. Curiously, though Bajoria has a certificate of posting from a
post office in Calcutta the letter has still not reached the company.
Also surprising is the fact that though the matter was brought to SEBI's
notice, the regulatory body has not initiated any action against the takeover
king.
Bajoria
in turn accuses Bombay Dyeing of keeping the information of the acquisition
under wraps and using its clout to bring the matter before the Company
Law Board (CLB). The CLB issued an interim order, freezing the voting
rights on the shares held by Bajoria for four months. "This has hurt
my ego. Now I have sought a berth on the board and will exercise my full
rights after consulting my lawyers," threatens Bajoria.
That's not
all. Bajoria says he has bigger plans. "I am ready to buy Nusli Wadia's
stake. If I acquire controlling stake in Bombay Dyeing I will run the
company very profitably." That is not going to be easy. If he acquires
another 1 per cent stake in Bombay Dyeing, he will have to make a public
offer for any further acquisition of the company's shares as per SEBI's
takeover code. But Bajoria does not want to do that. "It makes no
sense to make a public offer for acquiring 20 per cent shares simply because
it will still not give me control of the company," he says.
It's easy
to see through the bluff. For all practical purposes, Bajoria is unlikely
to mount a serious bid to take over Bombay Dyeing. The man who made his
millions buying and selling shares of companies is not really interested
in running them. His modus operandi is simple. He picks up a sizeable
number of shares of a particular company over a period of 12-14 months,
thus creating a shortage. Then when the price shoots up he offloads his
holding. A few years ago, he had accumulated nearly 10 lakh shares of
the State Bank of India and later sold them to make himself a neat profit.
This time it is Bombay Dyeing.
The jute
baron himself admits that, explaining that the Bombay Dyeing shares were
bought only as an innocuous investment that he wanted to eventually sell
off when the share price went up. He bought 57 lakh shares at an average
price of Rs 72 each. The share price had touched Rs 111 on October 11,
indicating that had he sold off his holdings then, Bajoria would have
made a profit of over Rs 22 crore. But the crafty businessman that he
is, Bajoria insists that he will sell for nothing less than Rs 250 per
share.
'I am
Afraid of Computers': There are other signs to suggest that Bajoria
has no long-term interest in Bombay Dyeing. Bajoria is an old-fashioned
businessman even by Calcutta's conservative standards. He does not believe
in getting into anything remotely unconnected to his jute business. He
is intimidated by technology-"I am afraid of computers"-and
keeps in touch with the world outside his office thanks only to Alexander
Graham Bell. His business does not need the latest technology or savvy
marketing-agents themselves come to the mills and procure jute. Contrast
this with the stiff competition that companies like Bombay Dyeing have
to face in the textile industry and it becomes clear that Bajoria is not
keen on a managerial role in the company.
Incidentally,
Bajoria is also seeking a position on the board of Ballarpur Industries.
He claims to have acquired 6-7 per cent shares in the company. However,
the company has not replied to his letter seeking a berth on its board.
But unlike in the case of Bombay Dyeing, Bajoria says he is not interested
in taking full control of Ballarpur Industries even if it were offered
to him because the company, he alleges, is up to its neck in debt.
Feeding
this seemingly insatiable appetite for companies is a massive coffer of
an estimated Rs 1,000 crore that Bajoria has at his disposal. Even during
the 1970s and 1980s, when the jute industry in the country was bogged
down by plant sickness and mounting losses, almost all the nine mills
owned by him were making money. The flagship Hooghly Mill Company Ltd
is almost always running to full capacity. The turnover from his jute
businesses in West Bengal touched Rs 700 crore last year. Bajoria expects
his three jute mills in Andhra Pradesh to contribute another Rs 150-200
crore this year, taking the total to around Rs 900 crore.
This makes
him a major player in this sunset industry, holding nearly 15-20 per cent
of the total jute production capacity in the country. But industry watchers
say that here too, it is Bajoria's speculation that has paid off more
than anything else. Bajoria's golden formula is to buy huge stocks of
raw jute at the start of the season and sell it at a premium when the
season advances and prices rise.
It is not
that there have been no diversifications at all. But here too success
has come in the brick and mortar businesses. Bajoria has some construction
companies and has been active in the Calcutta real-estate market. Recently,
he bought prime real estate in the city from the RP Goenka Group for about
Rs 10 crore and has submitted a Rs 12.5-crore bid for another coveted
property in Calcutta's business district. Besides, he owns properties
in posh localities of Delhi and Bangalore.
However,
a foray into information technology and software development, SriSoft,
is languishing for lack of orders and Bajoria is planning to pull down
the shutters soon. Clearly, there couldn't have been a more unlikely contender
for Wadia's high-profile textile company.
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