Business Daily from THE HINDU group of publications
Friday, May 18, 2007
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Business Daily from THE HINDU group of publications Friday, May 18, 2007 ePaper |
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Diversified Corporate - Restructuring
Our Bureau
Under the scheme The new auto co is Bajaj Holdings & Investment Ltd, to be renamed as Bajaj Auto Ltd The existing Bajaj Auto Ltd will be christened Bajaj Holdings & Investment Ltd Financial services, insurance come under Bajaj Finserv Ltd All shareholders will get shares of the two new cos in the ratio of 1:1
NEW BIZ FOCUS: (From right) Mr Rahul Bajaj, Chairman, Bajaj Auto Ltd; with Mr Madhur Bajaj, Vice-Chairman; and Mr Sanjiv Bajaj, Executive Director, at a press conference in Mumbai on Thursday. — Paul Noronha
Mumbai May 17 The patriarch of the Bajaj Group, Mr Rahul Bajaj, finally announced the demerger and realignment of business responsibilities between his sons Mr Rajiv and Mr Sanjiv Bajaj. The board of Bajaj Auto Ltd (BAL) on Thursday approved a demerger scheme splitting the company into a holding company and two newly created subsidiaries — Bajaj Holdings and Investment Ltd (BHIL) and Bajaj Finserv Ltd (BFL). BAL's demerged auto manufacturing business would be with BHIL and other strategic businesses would be with BFL. Also, BAL will switch names with BHIL to reflect future business plans, he said. As for the patriarch himself, Mr Rahul Bajaj will continue as Chairman of the holding company and the newly created subsidiaries.
Explaining the rationale behind the demerger, the younger scion Mr Sanjiv Bajaj said, Bajaj Auto has five different businesses, including automobiles and insurance. The automobile and insurance businesses are growing and need to tap into cash available with the company, he said. The company sits on Rs 8,000- crore cash reserves. Bajaj Auto's 4.08 per cent stake in ICICI Bank will be transferred to BHIL, following the restructuring, Mr Bajaj indicated. The demerger comes into effect by March 2007 and the process would be completed by the end of the calendar year. The automobile business would continue as it is today, under Mr Rajiv, said Mr Rahul Bajaj, defining the responsibility of his elder son sitting at the far end of the podium at a media interaction. The board of the new automobile manufacturing company will largely be the same as the existing board, with Mr Sanjiv continuing as the Executive Director and Mr Rajiv as the Chief Executive Officer or the "overall boss," he said. The international marketing business of the auto division is at present under Mr Sanjiv, Mr Rahul Bajaj said, of his younger son sitting closer to his right.
Bajaj Auto shares fell 6.7 per cent to close at Rs 2,500.30 on the BSE on Thursday.
Related Stories: More Stories on : Diversified | Restructuring | Two/Three Wheelers | NBFCs | Bajaj Auto Ltd
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