Shishir tightens hold on Bajaj Hindusthan

Shishir tightens hold on Bajaj Hindusthan

Shishir Bajaj, chairman and managing director of Bajaj Hindusthan Ltd, hiked his stake in the family-owned sugar company by 4.7%, even as he terminated an agreement on the division of group companies and assets with his brother Rahul. By upping the stakes, the promoter group, which includes both the brothers and their families, will hold 45.6% in the firm.

The move will, however, block some promoters such as Rahul Bajaj from increasing their holdings this year in the company because existing laws prevent promoters from collectively buying up more than 5% in a year.

Following a messy fight since 2002, Rahul, chairman of Bajaj Auto Ltd, and his associates agreed to sell their 11% stake in Bajaj Hindusthan to Shishir and his family at a fixed price of Rs6.70 a share, which was the market price on31 March 2003.

In turn, the latter agreed to sell his 1.8% stake in Bajaj Auto at an average price of Rs450 a share. This untangling of the cross-holdings would have netted Shishir aboutRs71 crore.

Now, four years later, stock prices of both companies have risen with Bajaj Auto’s scrip at Rs2,528 and Bajaj Hindusthan’s at Rs170.35 at Thursday’s close. At these prices, Shishir would have a net gain of Rs198 crore from the transaction.

The rise in the price of the shares of all the Bajaj group companies meant that Shishir would have had to forego a gain of about Rs127 crore, if both parties had stuck to the original 2003 agreement.

Shishir’s move to bail out of the agreement comes almost a year after the other camp said it wanted to end the pact.

“It confirms our earlier action of termination of family settlement on account of breaches," said Niraj Bajaj, spokesman for the RahulBajaj faction.

Still, both sides maintain that they are trying for an out-of-court settlement.

Now, they have three weeks to reach a new settlement as the Company Law Board, a quasi-judicial body that oversees company disputes, will judge this case starting22 October.