Rahul Bajaj may split 25% shareholding

Baja family patriarch Rahul Bajaj may split his 25 per cent shareholding in the group holding company Bajaj Sevashram among his sons Rajiv Bajaj and Sanjiv Bajaj. The realignment in the holding company may coincide with the demerger of Bajaj Auto.

“They would get a share of the holding according to my will, and I am not going to share my will,” Bajaj said over the telephone from Delhi. This may scuttle chances of any settlement of the dispute between Rahul Bajaj and his cousin Sishir, over division of the Bajaj empire.

Bajaj Sevashram holds 100 per cent and 78 per cent respectively in Jamnalal Sons and Bachhraj & Co Ltd. Jamnalal and Bachhraj together hold major stakes in group companies including Bajaj Hindusthan, Bajaj Auto and Mukand Ltd. Bachhraj & Sons holds 24.5 per cent stake in Bajaj Hindusthan, which is now at the centre of the dispute between Rahul Bajaj and his cousin Shishir.

Sishir's son Kushagra Bajaj had earlier stated that a solution brokered by family friend DS Mehta had concluded that while Shishir Bajaj family would surrender its 10 per cent in Bajaj Auto, Rahul Bajaj would give back his 10 per cent stake in Bajaj Hindusthan, thus separating the two companies totally.

Kushagra had alleged that Rahul Bajaj was picking up Bajaj Hindusthan shares from the open market, sparking off a public spat between family members. Kushagra runs Bajaj Hindustan. Rahul Bajaj picked up 1.9 per cent in the sugar company last week.

Even as the Bajaj family feud is turning into a messy legal battle, Rahul Bajaj is quietly working on a plan to complete the demerger by July 2007. JM Financial, promoted by veteran investment banker Nimesh Kampani, has finalised the demerger plan, which has taken a leaf out of the Reliance group’s settlement plans.

“We are determined to complete the Bajaj Auto demerger by July. This is not linked to the family settelement plan,” said Rahul Bajaj. “The blue-print is ready. We are just waiting for the AGM of Bajaj Auto,” said an investment banking source close to the transaction.

Under the demerger plan, Bajaj Auto’s financial arm Bajaj Auto Finance will be demerged from Bajaj Auto. The demerger will also involve transferring Rs 6,000 crore of the Rs 8,000 crore surplus cash on Bajaj Auto’s books to the new company as share capital to oversee its non-automobile business.

The cash surplus of Bajaj Auto has now grown to about Rs 8,000 crore from about Rs 3,000 crore about three years back when plans were originally mooted to hive off the financial services and investments to utilise the surplus.

The demerger plan would help Bajaj Auto Chairman Rahul Bajaj's younger son Sanjiv Bajaj (37) to take control of the financial services business. Post demerger, Rahul Bajaj will be the chairman of Bajaj Auto and the new demerged entity.

According to sources, growing differences between Rahul Bajaj's elder son Rajiv Bajaj and Sanjiv Bajaj have forced Bajaj to step up the demeger plan. Ex-Citibanker Nanoo Pamnani, who is also a member of the Bajaj Auto board, is quietly working with the family members to expedite the smooth split of businesses.