The Hindu Business Line : `Stake increase will force Shishir Bajaj into negotiations'

Mumbai March 14 The Rahul faction of the Bajaj empire could use the vast funds at their disposal to further increase their stake in both Bajaj Hindusthan and the holding companies of the Bajaj group.

Such a strategy would pressure Mr Shishir Bajaj and his son, Mr Kushagra Bajaj, to come to the negotiating table for an early family settlement to the current dispute, and avoid the protracted delay that the Company Law Board and court settlements would entail, said family sources.

The objective is to also get the matter negotiated according as the Rahul camp's interpretation of the MoU arrived at between the two factions.

When contacted, Mr Niraj Bajaj (cousin of Rahul Bajaj and in his faction) agreed that they are open to further increasing their stake in the group companies: "We want to arrive at a solution through a family negotiation," he said.

Mr Rahul Bajaj recently disclosed that Bajaj Auto had bought 1.9 per cent stake in Hindusthan Bajaj, a move he described as a treasury operation.

"Bajaj Auto has Rs 8,500 crore of cash and we keep buying and selling shares in the normal course of business," he said.

Also, said the sources, if Bajaj Auto is answerable to its shareholders on such a buy, the family members themselves can set about increasing their stake.

"From increase in market capitalisation alone, each of the family members is richer by several thousand crore," said a member of the family.

Mr Niraj Bajaj, Mr Shekhar Bajaj and Mr Madhur Bajaj — cousins of Mr Rahul Bajaj — are backing him in the battle against Mr Rahul's brother Mr Shishir and the latter's son, Mr Kushagra.

According to an agreement between the two factions to settle their dispute, Mr Shishir Bajaj and Mr Kushagra will get control of Bajaj Hindusthan and Bajaj Consumer Care, in return for relinquishing their stake in Bajaj Auto.

Two days ago, the Company Law Board stayed all board meetings of the two holding companies Bajaj Sevashram and Jamnalal Sons Pvt Ltd acting on a complaint from Mr Kushagra. Jamnalal Sons owns Bachhraj & Co, which owns 24 per cent stake in Bajaj Hindusthan.

The Bajaj family's stake in Bachhraj is 78 per cent, while non-promoter minority shareholders, the Birlas and Pitties, own 22 per cent, said Mr Niraj Bajaj.

According to a memorandum of understanding arrived at between the two factions in 2003, the two factions would sell their stakes in Bajaj Hindusthan and Bajaj Auto to each other at pre-determined prices. In the net, the Rahul faction would have to pay the Shishir faction about Rs 180 crore.

The non-promoter holding would be left untouched through the creation of a `mirror image' company of Bachhraj, say Bachhraj 11, to which all Bajaj Hindusthan shares held by Bachhraj would be transferred, keeping intact the 22 per cent shareholding of the non-promoters, according to the Rahul faction.

But Mr Kushagra was insisting that the minority shareholders be paid market price, they said, and this was not agreeable to them, said Mr Niraj Bajaj.

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