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February 09, 2007 12:51 IST
Last Updated: February 09, 2007 12:59 IST
Two wheeler giant Bajaj Auto is all set to be carved into separate auto and finance entities, to be headed by group chief Rahul Bajaj's sons Rajiv and Sanjiv respectively.
A plan for demerger to utilise the company's cash surplus will be put before Bajaj Auto Board in the coming months, sources in the know of the development said, amid reports of differences between Rajiv and Sanjiv, neither of whom could be contacted for comments.
When approached, Rahul Bajaj told PTI, "I am proud of my sons. They have done a wonderful job for the company. They are individuals in their own rights and if you call it differences, then so be it."
He, however, declined to comment on the demerger plans. According to the sources, Bajaj Auto Board is likely to consider, either in its March or May meeting, a proposal to demerge the automobile and financial and investments businesses to utilise cash surplus and cash equivalent (in the form of investments such as bonds and in other companies).
This could be carved out either as a separate entity or merge into Bajaj Auto Finance, they said. While the March board meeting is one of the six mandatory meets held every year, the May meeting takes into consideration the annual accounts.
The sources, however, said that the cash surplus of the company has now grown to about Rs 8,000 crore (Rs 80 billion) from about Rs 3,000 crore (Rs 30 billion) about three years back when plans were first mooted to hive off the financial services and investments to utilise the surplus. As per the plans, Rajiv, who is currently the managing director of Bajaj Auto and credited for turning around the company would continue to look after the core automobile business, the sources said. On the other hand, the financial services company is expected to be headed by Sanjiv, a management graduate from Harvard. Bajaj Auto scrips have been gaining in the bourses on speculations of the demerger. In the last three trading sessions the company's share price have gained about Rs 183.
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