[Arun Bajoria owned one-sixth of the jute industries in
the 1990s, and was making obscene profits; then he lost his way. He tried to
wrest control of Bombay Dyeing from Nasli Wadia and failed. After his only son
died, he too died at the relatively early age of 63 in 2008. This columns was
written in Business Standard of 24
December 2000.]
Who is afraid of Bajoria?
Arun Bajoria has been making news. He has taken
substantial positions in the share capital of Bombay Dyeing and Ballarpur
Industries, and is wondering what to do with them. The promoters of the two
companies are not prepared to take him on the board of directors. He could sell
his holdings to the promoters’ ill-wishers. But unless the holdings were large
enough to help in unseating the promoters, their value would not much exceed
their market value; and if they were unloaded in the market their value would
be much less. Bombay Dyeing has also apparently referred Bajoria’s acquisition
of its shares to SEBI, for it is large enough to attract SEBI’s requirement of
an open offer.
An open offer would cost Bajoria much more money; and it
would not be worth making unless he had a good chance of taking over the
companies. Which he does not have seeing the holdings of the promoters and the
financial institutions. So why has he been playing this futile game?
It is unwise to try and look inside a rich man’s mind.
But an obvious reason is that he had money. It seems that he made it running
jute mills in Calcutta. He has run them with great profit, and used his
earnings to buy up 15 per cent of jute capacity. Here is a declining industry.
The government keeps it alive by forcing various producers to pack their goods
in gunny. Carpet backing seemed to be the hope twenty years ago; but its
stimulus proved short-lived. Travel goods, curtains and such offbeat items
offer niche markets but absorb very little volume. But the fact is, that there
is a market, and money can be made in it if someone knows how to cut costs. It
is difficult in Calcutta, since the CPM government would beat up anyone who
threw his workers out of job. But Bajoria somehow did it. He also tightened up
management. And he made money.
He is not the first one who has more money than he knows
what to do with. In the early 1990s, the Jains of Jain Irrigation were making a
lot of it. They were pioneers in drip irrigation equipment, and money was
pouring out of their ears. They looked well set for the next 20 years. I
recommended their shares to a friend, and she lost almost all her money. The
Jains issued a public apology, but it did not earn my friend anything. They had
used their profits unwisely and lost it.
There are other Indians who have made a lot of money.
Look at all the infant millionaires in Silicon Valley – Kanwal Rekhi, Sabeer
Bhatia, Chandra Shekhar and others. They got rich before they got old enough to
need massage. What did they do with their wealth? Of them, I know only Kanwal
Rekhi well. He decided that he had made enough to last his lifetime, and so
gave up making money. He spends his time teaching other Indians how to succeed,
collecting money for Indian Institutes of Technology, funding a libertarian
institute, and so on. He is playing venture capitalist to both entrepreneurs
and ideologically fired people. I know less about the others, but a number of
them are known to be setting up new businesses in information technology. In
other words, they are doing more of what they have been proved to be good at.
What would that be for Bajoria? More jute mills are an
obvious answer. There is still another 85 per cent of capacity to buy. There is
all of Bangladeshi industry. There are possibilities downstream – fashion
garments, for instance. But then Bajoria would have thought of these things
first, and rejected them for some good reason. Maybe there are no more jute mills
on sale; maybe he, like the rest of the world, has come to regard this industry
as a hopeless one.
In which case I would have thought first of similar
industries: polythene and polystyrene packing, cardboard, wood. That is where
his specialist knowledge of jute might be useful. I would have thought of
cotton weaving: that is where his knowledge of weaving might help. Or of jute
cultivation and preparation. Jute accounts for three-quarters of the cost of
gunny; a one per cent fall in its cost is worth three times a one per cent fall
in the downstream costs.
Or I would have thought of other half-dead Calcutta
industries. Printing, for instance. Calcutta at one time had the best printers
in India: their work was clean, accurate, and if properly supervised, beautiful.
Right into the 1990s, the Oxford University Press was using certain Calcutta
printers for high-value printing. Today that industry is in its death throes;
computers and related printers have made typesetting redundant.
In these circumstances, the communists try to halt
historical forces: they try to protect the jobs of letterpress printers. That
is silly. They will still be competed out of existence by computer operators
elsewhere in India. Jyoti Basu well realizes this, and after thirty years of bleeding,
his CPM rank and file in West Bengal too must find it impossible to miss
reality. The 1990s have been particularly sobering for West Bengal; despite its
best efforts to adapt itself to liberalization and open up to outside
investment, it has fallen behind.
Meanwhile, Calcutta’s work force, although it is aging,
still retains its old skills; and its wages have fallen far behind wages in the
west or the north. It has potential as low-cost producer of things that require
its old skills. So why do not Bajorias spring up to use the opportunity?
Because it is much easier to invest your money in the stock market than in
physical production. The latter is for the young and hungry. But once you’ve
made your millions out of jute, life is much easier twisting the tail of Nusli
Wadia.
