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Bajaj Group has exited Force Motors through a series of share sales, cashing in on an 83 per cent appreciation in the stock in three months. The group once controlled the Navalmal Kundanmal Firodia-founded Force.
According to a BSE disclosure, Bajaj Holdings and Investment had 4.04 per cent stake in Force Motors on August 1, compared with 9.32 per cent on July 23. At the end of the quarter ended June last year, the stake stood at 23 per cent; the stake was accounted for by Bajaj group companies Bajaj Holdings, Bachhraj & Co, and Jamnalal Sons.
According to latest bulk deal disclosures on the BSE, Bajaj Holdings has sold the final tranche of 532,695 shares in Force Motors, ending the partnership. Force Motors promoter entities bought these shares, the disclosures showed.
Niraj Bajaj, director of Bajaj Group, said, “We have been offloading shares in Force Motors since the past many months. We thought we were getting a good price (on the sale). Though we have no direct business relations, we share a very cordial relationship with the Firodia family. This is a normal treasury transaction; there is no arrangement with the Firodia family here.”
Post Independence, both groups have worked to pave the way for mechanised mass transport solutions. While N K Firodia tied up with German company Vidal & Sohn Tempo Werke to make passenger three-wheelers, Bajaj Auto joined hands with Italy’s Piaggio to build geared scooters.
Subsequently, Bajaj Group controlled a quarter of the shares of Force Motors, called Bajaj Tempo at that time. Force Motors held nine per cent stake in Bajaj Auto. N K Firodia was chief executive of Bajaj Auto before Rahul Bajaj took over the reins of the company in the early 1970s.
Ties between the two groups soured when they fought each other in court over the use of the Bajaj brand. While the Firodias wanted to do away with the Bajaj brand when Daimler (which controlled the Tempo brand) exited Bajaj Tempo, the Bajaj camp urged the brand be retained. In 2005, Bajaj Tempo, popular for Matador mini buses, was renamed Force Motors.
While Force expanded to sports utility vehicles, light trucks & buses, ambulances and tractors, Bajaj Auto focused on two- and three-wheelers, with about 40 per cent of its revenue coming from abroad.
For 2013-14, Bajaj Auto’s net profit stood at Rs 3,243 crore, 60 per cent more than Force Motors’ turnover for the same year. At Rs 2,200 crore (according to BSE), the worth of Force Motors’ stake in Bajaj Auto is higher than the company’s turnover in 2013-14 (Rs 2,021 crore).
Prasan Firodia, managing director of Force Motors, declined to comment when asked whether the company would seek to monetise its stake in Bajaj Auto.
For growth, the company is keen on the sports utility vehicle and multi utility vehicle segments.
BREAKING OFF
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83% Appreciation in share price of Force Motors in three months
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4.04% Bajaj Holdings and Investment’s stake in Force Motors as on August 1, compared to 9.32% on July 23
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532,695 The final tranche of shares that Bajaj Holdings has sold in Force Motors
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9% Stake that Force Motors’ held in Bajaj Auto in the earlier years
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2005 Bajaj Tempo was renamed Force Motors
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40% Share of foreign revenues in Bajaj Auto
- 60% Difference between Bajaj Auto's net profit and Force Motors’ turnover in 2013-14
