Like most Indian companies, UB had an image problem as far as the management went. Investors doubted the authenticity of figures put out by the management, like in other corporates. The result was that the stock traded at a huge discount to book value. So much so that Mallya was prompted to say that the markets have been unfair with his company's stock.

What can change now? One, the presence of a strategic investor will ensure greater transparency, shareholders can look forward to a greater flow of information. Second, a NASDAQ listing will mean reporting accounting information under US GAAP which will reveal any flaw in the present accounting treatment and valuations will re-adjust. The biggest beneficiary will be Mallya himself. Though not strictly comparable, one could look at what happened withcompanies like Indian Shaving Products, and Birla 3M to understand the potential benefit. In these cases the Indian promoter chose to take the back-seat giving a larger stake to a foreign collaborator. The result was a huge change in market capitalisation; enriching the promoter far more than if the company had remained under his management. Though Mallya is not diluting his stake in favour of a foreign collaborator a substantial foreign institutional stake coupled with a foreign listing will serve to improve market capitalisation. The lesson here for Indian corporates is that the promoter can gain more by enhancing investor perception than operating a private fiefdom.