Bajaj Auto spun off into two subsidiaries

14 Mar 2008

Mumbai: Bajaj Auto has been spun off into two subsidiaries, Bajaj Holdings and Investments (BHIL) and Bajaj Finserv.

With the demerger, for each share of Bajaj Auto, investors will get one share each in both the new companies.

While Bajaj Finserv will look after businesses in wind energy generation, insurance, consumer finance, financial products distribution, and new initiatives in financial services, Bajaj Holdings & Investment will work as the investment arm of the Bajaj group, focusing on new business opportunities.

Both new companies are to be listed by April end.

CNBC TV-18 says that the value would be "a sum of parts of all of these companies." It has estimated that company's cash to be around Rs7,000 crore, which adds to around Rs700 per share of value coming from cash alone. 30 per cent of Bajaj Auto, according to the channel, works out to Rs165 per share, and 30 per cent of Bajaj Finserv to around Rs108 per share. By those estimates, the support would be around Rs950 to Rs1100 per share.

Technically, Bajaj Auto is delisting, and the holdings arm would be listed. Bajaj Auto has fixed 25 March, 2008 as the record date for determining shareholders of the company who would be eligible to receive shares of the auto and Finserv companies, in the aforementioned ratio of 1:1.

The demerger process was initiated subsequent to approval from the board on 17 May, 2007.