India Today - - BUSINESS & ECONMY -

“The hedge fund’s ar­gu­ments are pro­gres­sive for a change,” says Ko­tak In­sti­tu­tional Eq­ui­ties an­a­lyst Mur­tuza Ar­si­walla who con­curs that a higher prof­itabil­ity for Coal In­dia is even­tu­ally ben­e­fi­cial for the peo­ple of In­dia, as they own 90 per cent of the com­pany and still pro­tect the in­ter­ests of mi­nor­ity share­hold­ers. “They are right in be­ing con­cerned about the im­pact on div­i­dend, but they have no right to be dic­tat­ing terms on the coun­try’s pol­icy,” says a top of­fi­cial in Coal In­dia.

Hohn is sure to fight tooth and nail. He is not as in­ter­ested in money as in his de­sire to be proven right. “He likes to win ar­gu­ments, and the money is sim­ply ev­i­dence that he won,” wrote

The Econ­o­mist, re­fer­ring to the cases he has fought in the past. Son of a Ja­maican car me­chanic, he met his wife Amer­i­can-born Jamie Cooper-Hohn while study­ing at Har­vard Busi­ness School. He is fa­mous across Europe as a new age ven­ture phi­lan­thropist—ap­ply­ing ven­ture cap­i­tal con­cepts to char­ity. He has struc­tured TCI in such a way that ev­ery year it au­to­mat­i­cally do­nates 0.5 per cent of prof­its of the fund’s as­sets to his wife’s char­i­ta­ble or­gan­i­sa­tion, The Chil­dren’s In­vest­ment Fund Foun­da­tion ( TCIF). The or­gan­i­sa­tion fo­cuses on im­prov­ing the lives of poor chil­dren in Asia and Africa.

If TCI loses, an­a­lysts fear it could pull out, like it has done in the past in other com­pa­nies where it has taken the bat­tle to the man­age­ment. In 2009, TCI was re­spon­si­ble for the big­gest sin­gle sell-down by a for­eign in­sti­tu­tional in­vestor when it liq­ui­dated its stock in eight banks in its port­fo­lio—bank of Bar­oda, Pun­jab Na­tional Bank, Union Bank of In­dia and oth­ers—which amounted to Rs 3,113 crore. At present, it does not have more than 1 per cent stake in any In­dian com­pany other than Coal In­dia. This is a sit­u­a­tion best avoided. “Buy­ers will be harder to come by, given over­hangs of gov­ern­ment poli­cies and stag­nant pro­duc­tion lev­els,” be­lieves D.K. Ag­gar­wal, CMD of SMC In­vest­ments and Ad­vi­sors.

But if it wins, it could set a prece­dent. “Any out­come in favour of TCI may em­bolden other in­vestors to file suits against pro­mot­ers and di­rec­tors of er­rant com­pa­nies,” says Shri­ram Subra­ma­nian, founder and man­ag­ing di­rec­tor of In gov­ern, that does cor­po­rate gov­er­nance re­search.

So far, it has al­ready man­aged to in­sti­gate other in­de­pen­dent di­rec­tors to ob­ject to the FSAS and en­sure a min­i­mum 0.01 per cent penalty as well as sev­eral es­cape clauses in the draft. “Coal In­dia is by far the best in­vest­ment op­por­tu­nity in In­dia. It is a sleep­ing mon­ster,” Veld­hui­jzen said in an in­ter­view to Bloomberg in July 2011. Will Hohn man­age to wake it up?


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