Bajaj family members are in the final stages of reaching a peace formula to their six-year-old dispute over the division of group companies and assets. Sources familiar with the developments said an announcement can be expected in the next 10 days, but did not want to divulge details.
When contacted, Rahul Bajaj, chairman of Bajaj Auto [Get Quote] said, "We will inform the media when the agreement is reached. At the moment, I cannot comment on anything, except that all the brothers are continuously talking to each other to come to a settlement. It is always a possibility."This is the fourth attempt by the family to break the deadlock between Shishir Bajaj, the chairman of Bajaj Hindusthan, and Rahul Bajaj and his cousins Madhur and Niraj.
The market seems to have got a wind of the impending settlement. The share price of Bajaj Hindusthan, flagship of the Shishir Bajaj faction, was up 28 per cent last week over the previous week, and daily average volumes rose from 2.84 million to 7.31 million shares.
The Bajaj Auto scrip was, however, up marginally at 2.71 per cent and average daily volumes declined in the same period.
Under the original settlement plan reached in June 2003, Rahul Bajaj and his cousins agreed to sell their stake in Bajaj Hindusthan and Bajaj Consumer Care to Shishir Bajaj at a price agreed between the two factions. In return, Rahul Bajaj agreed to sell his 1.8 per cent stake in Bajaj Auto. In addition, Shishir was supposed to get monetary compensation for forgoing his interest in other group companies.
But the deal mediated by chartered accountant S Gurumurthy and close family friend D S Mehta fell through, the reasons for which have not been made public. Two more peace moves also failed, after which the Shishir Bajaj faction filed a case against the other Bajaj brothers for mismanagement. Shishir Bajaj also bought 4.67 per cent in the company from the market after Rahul Bajaj bought 3 per cent a few months before.
Apart from the amount of compensation that Shishir Bajaj is supposed to be paid, one of the main reasons for the repeated failures in settlement talks was the complicated untangling of family holdings. Jamnalal Bajaj, the founder of the group, had two sons: Kamal Nayan and Ramkrishna, and the interests in the family holding companies were equally divided between the two. Kamal Nayan's stake was divided between his two sons, Rahul and Shishir, and Ramkrishna's was trifurcated among his three sons: Shekhar, Madhur and Niraj.
Rahul and Shishir have 25 per cent each of the family stake in the group's main investment vehicle, Bajaj Sevashram, and their three cousins own 16.67 per cent each. Bajaj Sevashram holds the Bajaj family's interests in all group companies directly and through subsidiaries. It has a wholly-owned subsidiary, Jamnalal Sons, and a 78 per cent subsidiary, Bachhraj & Co.
Powered by 