Wednesday, May 07, 2008

Now for hum sabka Bajaj…

Tussle between scions paves way for demerger of Bajaj Auto
Sibling rivalry and Indian business go together like tea and sugar, both incomplete without the other. Having recently survived a public spat between the Ambani brothers, and another feud in the Singh family (Ranbaxy), the axe has now fallen on the Rs.47.7 billion two-wheeler major Bajaj Auto (BAL). But, putting an end to all speculation, the two-wheeler behemoth has prudently decided to demerge in a three-fold way. Bajaj with focus on auto business, Bajaj Holdings & Investment Ltd. (BHIL), primarily into investment and Bajaj Finserv(BFL) into wind energies and financial services. According to the new scheme, BAL (now BHEL) will be handled by Rajiv Bajaj, while BFL will be managed by the younger Bajaj scion Sanjiv Bajaj. The apparent reason for the demerger is to separate the entities of the existing company for better focus on each, while the management for individual companies remains the same. Incidentally, the market has taken the demerger negatively, registering 13% fall in stocks of the company to Rs.2,248.3 (on May 18, 2007) from Rs.2,680.6 (on May 16, 2007). The next issue of concern for the Bajajs is long term maintenance of status quo as the family has to deal with not one but two sibling rivalries (one between Rahul- Shishir Bajaj and one between Rajiv and Sanjiv). Resting easy for now...

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Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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