The Arun Bajoria - Bombay Dyeing Tussle

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The Bajoria Story

This gave Bajoria ample chance to reap substantial returns in the stock markets. (During July 1999-November 2000, BD's market capitalization ranged between Rs 1.64 billion and Rs 3.28 billion. Taking an average market value of Rs 2.46 billion, the company was quoting at less than a sixth of its actual worth of Rs 14.65 billion according to a November 2000 Business Today report.)

BD noticed the acquisition by Bajoria later in June 2000 during a weekly review of transactions in its shares from the depositories . As the company had not received any intimation from Bajoria about this acquisition, it lodged a complaint with SEBI, the Company Law Board (CLB) and the BSE in the first week of July 2000. Bajoria however claimed that he had sent a letter to the company regarding the same, vide a letter dated March 16th 2000. As the issue remained pending with the SEBI, the CLB ordered the voting rights of Bajoria to be frozen until a solution was arrived at.

BD sources meanwhile blamed SEBI for the laxity shown in its investigations in the case, as even by the end of the month, there was no response from the market regulator. The company even had to send a reminder to SEBI, prompting Executive Director, S.S. Kelkar to comment, "We have been requesting them to take action under the takeover code. We even requested SEBI to conduct an investigation in terms of Regulation 38 of the SEBI takeover code and issue appropriate directions apart from initiating action under Section 24 of the SEBI Act, 1992. We have already written to them. They should call us."

The resentment of the Wadias was not difficult to understand. The controversy had come to be seen as a case of a lone stock market operator creating trouble for the company. Though Bajoria made claims of being concerned with BD's functioning, many believed that he had no interests in the company's business, and was looking solely to book gains through stock deals. According to a Financial Express report, "The truth is Bajoria is best a turnaround artist who has built a Rs 10 billion business empire buying sick companies at bargain prices and reviving them. A trader of jute goods at most with an eagle's eye for opportunistic windfall." There was even speculation that Bajoria was acting on behalf of a big corporate house, which was eyeing BD. Commenting on this, Bajoria said, "Nonsense. And even if I am, so what? I do not think that it is illegal. I know what you mean. And let me tell you, if Reliance approaches me with an offer to buy my holdings in Bombay Dyeing, I will readily sell off the entire lot to Dhirubhai. May be I will sell it cheaper if he comes up with an offer, cheaper than the 200 plus I am determined of getting from whosoever else I sell to, including Bombay Dyeing."

Bajoria came up with contradictory statements frequently in the media. While at one point he said he was willing to make an open offer for BD shares, later he changed his mind saying, "It does not make sense, simply because it will not give me a controlling stake in the company." Bajoria also claimed that he had bought a substantial portion of BD shares from Unit Trust of India (UTI). However, UTI officials denied this. Bajoria's claims of having received offers from Reliance India to buy the BD stake were also proved wrong.

In November 2000, Bajoria announced that he was willing to sell his stake to Nusli Wadia if he paid a good price. However, the Wadias refused to bow down to Bajoria's tactics and decided to continue the legal battle.

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