Two activist hedge funds have locked horns with the top management at Bollywood group The Indian Film Company over alleged low returns. Altima India Master Fund and Kelusa Master Fund, which hold stakes of 14.39 per cent and 6.36 per cent in TIFC respectively, have called for the removal of Raghav Bahl and Alok Verma as directors for 'failing to return value' to shareholders after the successes of the USD41m million blockbuster, Ghajini, India's highest-ever grossing film in its opening week, and another record-breaking film, Singh is Kinng.

Bahl is the founder of India's Network 18 television group and was ranked as India's 15th most powerful man last year. According to media reports, the TIFC board has called on shareholders to reject the funds' attempted coup at an extraordinary general meeting set for next month. However, Altima claims the group has already lined up 32 per cent of TIFC's shareholders and hopes to enlist more who are sympathetic to the activists' demands.

In times when businesses are finding it hard to generate returns of any kind to distribute to shareholders and debt financing not easily available, it may be that any immediate distribution of cash would not be financially prudent. On the other hand, if the company does have healthy cash flow and surplus funds on hand, this might be a good time to reward shareholders for their faith in the company.

It is not easy to say who is in the right, and eventually the shareholders must decide. But a fitting ending to this Bollywood battle should probably involve sending dacoits on horseback to retrieve shareholder money, or perhaps calling a truce, with those concerned singing in tandem and dancing around trees.


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