Rahul Bajaj’s plan to create a separate holding company for Bajaj Hindusthan Ltd. is facing opposition not only from his brother Shishir Bajaj, but also from the other minority stakeholders in Bachhraj & Co Pvt. Ltd.
“We will have to take legal advice to see if mere creation of a separate holding company for Bajaj Hindusthan can ensure the interest of minority stakeholders when the sale of the shares take place,” said Hemant Ruia, a 2.5% stakeholder in Bachhraj & Co.
Ruia is clear that he is opposed to the move to sell the shares of Bajaj Hindusthan to Shishir at the negotiated price of Rs6.7 per share as compared to Wednesday’s closing market price of Rs172.75.
“We want the Rahul Bajaj camp to sell their stakes in Bajaj Hindusthan to Shishir at the prevailing market price and not at the pre-decided market price of Rs6.7 a share, as it will affect the interests of minority stakeholders,” said Ruia.
Rahul and his cousins— Shekhar, Madhur and Niraj —together control 79.13% stake in Bachhraj & Co. even though Shishir is the chairman of the company. Rahul and his associates have been increasing their hold over the investment company by buying out the stakes of some of the Birla factions.
Ruia said that he too has been approached by the Rahul Bajaj camp. “I have been approached for selling my stake but we could not reach an agreeable price for such a sale,” he added.
Bachhraj owns 24.54% of Bajaj Hindusthan Ltd. Rahul, along with his three cousins, signed a memorandum of understanding (MoU) with brother Shishir in June 2003 to settle a family dispute over ownership. Ruia and the Pittie family, another minority stake holder with a 10% stake in Bachhraj & co., wrote letters to the director of the company in mid-2006 urging them to protect the interest of minority stakeholders by not selling Bajaj Hindusthan shares at the pre-decided price.
In return, both factions of the Bajaj family promised to safeguard the interests of minority stake holders. However, the Shishir Bajaj camp still wants the Rahul Bajaj side to sell the stakes at the pre-decided price and compensate the minority stakeholders for their losses, something Rahul Bajaj is not open to.
On the other hand, the Rahul Bajaj camp is proposing that it create a separate holding company for Bachhraj & Co., which will own the shares of Bajaj Hindusthan. Rahul Bajaj proposes to transfer the family’s stake in this company to the Shishir Bajaj camp.
The Pittie family, a 10% stakeholder in the company, refused to comment on the issue when contacted.
“We are friends with all the members of the Bajaj family and we would not like to comment at it at this moment,” said Madhav Pittie.
The Aditya Birla group and the Basant Kumar Birla group are the two other minority stake holders in Bachhraj & Co with holdings of 6.5% and 1.87%, respectively.