The protracted dispute over the division of assets between a group led by Rahul Bajaj, chairman of India’s largest three-wheeler maker, and his brother over the division of the Bajaj group assets appears to have deepened with Shishir Bajaj demanding that a 25% share of the group should also include assets such as land.
At odds: Shishir Bajaj, chairman of Bajaj Hindusthan Ltd.
“The brothers are not just brothers, they are partners,” said a senior counsel to Shishir Bajaj, who didn’t wish to be identified because of the litigation involved. “Each partner must have his share in the business.”
The Shishir side, which manages sugar maker Bajaj Hindusthan Ltd, asked for this at a hearing at the Company Law Board (CLB), a quasi-judicial body that is trying to help with the division of assets after several attempts over five years at a settlement failed.
It has asked for a fair valution of all assets at the hearing.
At stake are the assets of several Bajaj companies that are held through a complicated cross-holding structure. There are about 40 companies in the Bajaj group, including eight listed companies. At the heart of the matter is the untangling of shareholdings in Bajaj Auto Ltd, the two-wheeler maker, and Bajaj Hindusthan and other group companies between the brothers.
According to the latest annual reports available on the company websites, the total assets of just Bajaj Auto and Bajaj Hindusthan, the two biggest companies, amount to Rs8,403.5 crore. Mint couldn’t ascertain the total assets of all the group companies as most of them are privately held.
In part, a settlement that would have included buying out shares of Shishir Bajaj in Bajaj Auto has been derailed because of the rapid rise of the Bajaj Auto share price, which has increased revenues and profit by diverisfying into other categories such as motorcycles and insurance services.
Since a failed 2003 settlement attempt, Bajaj Auto shares have risen fivefold to Rs2,480.15 a share. Bajaj Hindusthan shares have risen even more sharply, by 28 times to Rs185.05 a share, in the same period.
The Bombay Stock Exchange’s benchmark Sensex has gone up six times in this period.
A lawyer for Shishir Bajaj, Rafique A. Dada, told the CLB that a sub-committee appointed by a previous mediator was biased and was one of the reasons why previous settlements failed.
He told the board that the committee had set a price band for Bajaj Auto shares that didn’t reflect market price. “We need to protect our interests in Bajaj Auto,” he said.
Bajaj Auto, the group’s flagship, is managed by Rahul Bajaj and his two sons. Rahul Bajaj’s lawyers declined to comment.
Rahul Bajaj and his associates had agreed to sell their stake in Bajaj Hindusthan, one of India’s largest sugar producers, and Bajaj Consumer Care Ltd, which sells hair oil, to Shishir and his family at a fixed price. In turn, the latter agreed to sell his 1.8% stake in Bajaj Auto, India’s second largest two-wheeler maker, also at a fixed price.
But as share prices rose, Shishir Bajaj, who would have received Rs71 crore at the initial prices, would now have to be paid Rs165.5 crore, based on current market prices.
“The CLB may appoint an arbitrator or valuer this time around though it’s too early to say anything concretely,” said another lawyer for the Shishir Bajaj camp.
“They can’t just buy us off. It’s a family business.”
The tussle between the brothers erupted when Shishir wanted to opt out of the group and take ownership of Bajaj Hindusthan and Bajaj Consumer, the two group companies he managed.
He also filed a suit against his brother and cousins under Sections 397 and 398 of the Companies Act citing oppression and mismanagement.