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Bajoria's Bombay Dyeing stake up as capital shrinks

Kausik Datta

Jute baron Arun Kumar Bajoria has managed to increase his stake in Bombay Dyeing, though marginally, without buying a single share.

The hike follows a reduction in the company's paid-up equity capital after it cancelled the shares purchased through its buyback offer.

Jute baron Bajoria's holding stood unchanged at 2.257 million in the second half of the last financial year. But the reduced paid-up equity has increased his stake from 5.55 per cent to 5.76 per cent during the period.

On cancellation of 18,26,554 shares, which the company acquired through the buyback, Bombay Dyeing's paid-up equity fell to Rs 391.7 million on March 31, 2002 from Rs 410.1 million on September 7, 2001, the day the buyback was introduced.

Bajoria could not acquire Bombay Dyeing's stock with the imposition of the Sebi order barring him and his associates from the market for a year over alleged violation of the takeover norms.

The Sebi order was, however, quashed by the special appellate tribunal recently.

Bajoria is learnt to have transferred 1.78 million shares, representing 4.54 per cent of the reduced equity, to Gyan Traders immediately after the Sebi order was announced. Mega Stock, his group company, holds 477,000 shares equivalent to 1.22 per cent stake.

The buyback has also helped the promoters in scaling up their holdings too. The promoters did not depend solely on the buyback to increase their holding in the company.

They acquired over 260,000 shares from the market during the period. The combined effect of the acquisition and the reduction in equity capital has raised the Wadias' stake from 40.89 to 42.68 per cent.

Domestic and foreign institutions have sold out 505,212 shares during the period reducing their combined stake from 18.29 per cent to 17.85 per cent on the reduced equity. Public shareholding also reduced from 29.76 per cent to 25.53 per cent.

Bajoria shook corporate India nearly two years ago by acquiring a 13.5 per cent stake in the company which eventually appeared as a major corporate battle between the city-based jute industrialist and the Mumbai-based textiles baron.

The event divided Corporate India into two camps, one supporting Bajoria and the other opposing him.

It also raised a debate whether there was lack of level playing field between predators and promoters as the former was allowed to raise stake in a company by 15 per cent in one go, obviously informing the authorities, but the latter is permitted to increase stake by 5 per cent through creeping acquisition route in a year.

After the Bajoria development, Sebi hiked the creeping acquisition limit to 10 per cent for a limited period which was later extended to September 2002.

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