Bajaj family consolidates group stakes in key firms

Recently, family members have been buying group company shares from the open market.

After the Tatas, it seems the family members of the Rahul Bajaj-promoted Bajaj Group are consolidating their equity stakes in key group companies.

With the shares of Bajaj Auto hovering at a 52-week low, following the announcement of the demerger process in June this year and a sharp correction in the markets, the family members are buying shares of the company through open market purchases, albeit in small amounts, according to data available from stock exchanges.

The family members, who have purchased shares in Bajaj Auto in the past couple of months through the open market, include Rahul Bajaj, Niraj Bajaj, Sanjivnayan Bajaj and Shekhar Bajaj. 
 

FIRM GRIP Creeping acquisition (June to August 2007)
Family Members	Shares purchased recently in Bajaj Auto	Current  direct  holding  (%)
Rahul Bajaj	2,400	1.98
Niraj Bajaj	15,750	1.25
Sanjivnayan Bajaj	7,000	0.40
Shekhar Bajaj	12,750	0.78

When contacted, Niraj Bajaj, the chairman of Mukand Industries, a Bajaj Group company, refused to talk on the group's strategy. He said the family members, were, perhaps, utilising surplus money. "Often when there is surplus cash, we buy shares in our group companies," he said.

The Bajaj family move comes after the Tata Group recently increased its stakes in key group companies through its holding company, Tata Sons, to ward off possible takeover threats. Kumaramangalam Birla, the promoter of AV Birla Group, announced recently that the group would increase stakes in its key companies, whenever they saw an opportunity.

The rules allow promoters to buy as much as 2.5 per cent every year from the market through the creeping acquisition route.

A dealer of a local brokerage pointed out that for the Bajaj Group it was necessary to buy shares at this point of time for two reasons. One, the dispute between Rahul Bajaj and younger brother Shishir Bajaj is yet to be completely resolved and there is no clarity as to how the shares would be divided between the two groups. Moreover, each one would want to dominate the other. The fall in the company's share price, which has come down substantially to a 52-week low, could be the other reason that must have prompted the family members to buy the stocks, purely for investment purposes.

Niraj Bajaj has picked up 15,750 shares of Bajaj Auto this month, taking his direct holding in the company to 1.25 per cent. In the past couple of months, Sanjivnayan Bajaj bought 7,000 shares, taking his holding to 0.40 per cent, while Shekhar Bajaj purchased 12,750 shares, increasing his holding to 0.78 per cent, and Rahul Bajaj bought 2,400 shares, taking his direct holding in the company to 1.98 per cent. During the quarter ended June, the promoter holding in the company was 30.11 per cent.

Meanwhile, Bajaj Auto has acquired 2.85 per cent stake in Bajaj Hindusthan through the open market and over 8 per cent stake in Bajaj Auto Finance this year through the conversion of warrants. The company's holding has risen to 46 per cent from 38 per cent.