The Hindu Business Line : Bajaj Auto demerger plan hanging fire

TWO processes seem to have put the demerger option of Bajaj Auto Ltd on the backburner. One is the fact that Mr Shishir Bajaj, the estranged brother who has decided to move out of the group is yet to sign on the dotted line and second, the status of Maharashtra Scooters Ltd.

Talking to presspersons after the company's AGM, Mr Rahul Bajaj, Chairman and Managing Director, Bajaj Auto Ltd, said initially there was a very positive response to the idea of demerger. The idea of the demerger plan had come about in September last year and the intention was to split Bajaj Auto into two companies which would split its cash and investment assets totalling close to Rs 4,500 crore. He said that close to about Rs 2,000 crore, taken from the reserves of Bajaj Auto, would be utilised for the setting up of the new entity.

However, what the new company would do, whether it would be merged with the existing entity of Bajaj Auto Finance Ltd was yet to be decided, Mr Bajaj said. He added that splitting just to increase the P/E ratio was not enough.

Mr Rajiv Bajaj, who addressed the shareholders, said the company was looking at an export target of 2 lakh vehicles, against 1,54,000 vehicles exported last fiscal.

Replying to queries about their small marketshare in the executive segment, he said with the launch of the Discover, scheduled for next month, the sales were expected to pick up. The other players in this executive segment include Hero Honda's Splendor and Passion.

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