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Bajaj Auto shares gain on proposal to split company

Bajaj Auto shares gain on proposal to split company
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First Published: Fri, May 11 2007. 04 33 PM IST
Updated: Fri, May 11 2007. 04 33 PM IST
Agencies
New Delhi: Two-wheeler major Bajaj Auto’s stock today jumped 4.20% to Rs2,718.60 on BSE as it decided to take up demerger issue at its May 17 board meeting.
The board of directors would consider dividing the company into manufacturing and financial services businesses to unlock shareholder value.
The company is in both general as well as life insurance businesses through Bajaj Allianz General Insurance Company and Bajaj Allianz Life Insurance Company, respectively.
The Pune-based company holds a 74% stake in both firms with the rest held by Allianz.
“It’s good for Bajaj Auto, as it will unlock value in the company,” Kalpesh Parekh, the head of institutional sales at Mumbai-based brokerage ASK Securities India Pvt. said in a phone interview today. “Bajaj can now focus on its core business of making motorcycles.”
Bajaj Auto will consider a plan to split itself into a manufacturing company and a finance unit, reviving a proposal first announced more than two years ago, Rahul Bajaj, the motorcycle maker’s chairman said 9 February.
His son, Rajiv Bajaj is the managing director of Bajaj Auto and the younger son, Sanjiv Bajaj, is the finance director.
Splitting Bajaj Auto into two and transferring some of the Rs65 billion ($1.6 billion) of cash it has will improve the finance and insurance businesses, Bajaj has said in the past.
Bajaj Auto has an insurance business in partnership with Allianz SE and lends money to consumers buying its products through Bajaj Auto Finance Ltd.
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First Published: Fri, May 11 2007. 04 33 PM IST
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