Bombay Dyeing – Asset play, Worth a look?

Yes, there are many reasons why people are skeptical.

First, the management had been talking about land monetization for more than 5 years now. It took them an eternity to proceed with the transaction. So, naturally, no one is betting than further asset sales will de done anytime soon.

Second, the management has a horrendous history of allocating capital. Look no further than BBTC (Bombay Burmah Trading Corp) & what it does with Britannia’s dividends. Post the debt reduction, will the management dividend the excess cash (from future asset sales) or reinvest the cash in the existing bad businesses (which is the status quo)?

Third, the board constantly mistreats minority shareholders. Consider the latest example. The CEO pay should be directly related to a company’s performance. However, the board refused to reduce Bombay Realty’s CEO’s pay despite bad performance of the firm. So, the CEO gets to share the upside but not the downside. How is that fair?

In short, the management & the board are not credible.