Ringside view. Grilling cos, the Jhunjhunwala way

It is no secret that India’s ace investor Rakesh Jhunjhunwala, is very bullish on Indian stocks. In fact, he has been predicting that with the current momentum, the Indian market is heading for a ‘mother of all bull runs’.

But that does not mean that he watches passively when a company is not performing or not disclosing enough information. Of late, his voice has been heard loudly at post-results conference calls companies host for ‘select’ shareholders, investment analysts and fund houses.

Last year, the billionaire investor asked the Tata Motors management to disclose more about its forex hedging. With the wild fluctuations at the currency market, Jhunjhunwala asked the Tata Motors management to improve its disclosure on hedging practices. Jhunjhunwala cited the example of Infosys and other companies which disclosed their hedges and the rate at which it is done.

The forex component, according to him, has become an important part of Tata Motors’ profit. “If you guide us on how you hedge, it will give us a better assessment of the future profitability,” he had said.

That was last year. This week, the ace investor offloaded 50 lakh Tata Motors DVR (Differential Voting Rights) shares worth ₹133 crore through secondary market operation.

Similarly in August last year, the Big Bull had raised some hard questions to Aurobindo Pharma’s Managing Director, N Govindarajan, during the company’s conference call. He raised questions about new initiatives being taken by the company and why they were not yielding results or why were they not translating into revenues.

Last week, it was the turn of Titan Industries’ management to receive some tough questions from RJ. He was uncomfortable with numbers from Titan’s watch division, as he could not understand the watch division’s fluctuating profits. Besides, he also raised questions on Titan’s eyecare division.

Aggressive posture by influential investors is not new at the global level. In the last few years, investors like Carl Icahn and Bill Ackman questioned the management either by writing open letters and reports or directly at EGM/conference calls.

Investors who wish to succeed like Jhunjhunwala should not hesitate to ask questions at AGMs or EGMs. On most occasions, investors are mute spectators or exit quietly from EGMs even though they may not agree with the management on some of the decisions.

The time is right now as the market is now in a bull-run. This is the time when they should raise their voices for better disclosures and healthy practices.

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