The Hindu Business Line : Shishir-Kushagra faction claims 100% of Bachhraj's shares in Bajaj Hind

Mumbai March 16 There is a big difference between control of a company and control of its equity ownership, said Mr Kushagra Bajaj, CEO of Bajaj Hindusthan.

Mr Kushagra and his father Mr Shishir Bajaj are locked in a dispute with Mr Rahul Bajaj and the rest of the Bajaj family over what they say is their fair share of the family business.

Mr Kushagra was explaining why he wants 100 per cent of the shares of Bajaj Hindusthan that are with holding company Bachhraj & Co. The latter holds 25 per cent stake in Bajaj Hindusthan.

Adequately Compensated

"The original agreement between us was that 100 per cent of Bachhraj's holding in Bajaj Hindustan would finally be ours," said Mr Kushagra. This means that the Rahul Bajaj faction must ensure that the non-promoters are adequately compensated and their stake transferred to the Shishir-Kushagra faction, he said. The Rahul Bajaj camp says that they are willing at any time now to transfer the Bajaj family's 78 per cent holding in Bachhraj to Kushagra.

But it is not their responsibility to get the minority shareholders' 22 per cent stake in Bachhraj transferred to Mr Kushagra, they say. This, says Mr Kushagra, amounts to reneging on a promise.

According to the original family settlement agreement (drafted by their common mentor Mr D.S. Mehta) the Rahul Bajaj faction would sell its shares of Bajaj Hindusthan (held through Bachhraj) for Rs 6.7 per share.

But this intra-family deal at Rs 6.7 per share, when the market price of Bajaj Hindusthan is in the Rs 160-range, would have brought compensation claims from the non-family minority promoters of Bachhraj.

Outside Shareholders

Mr Kushagra said it is the Rahul camp's liability to settle these claims. According to the D.S. Mehta settlement agreed to, said Mr Kushagra: "If any claim for compensation is made by any outside shareholders on Bachhraj & Co to claim proportionate differential value, the compensation will have to be made solely by the Rahul Bajaj group which will retain the control of Bachhraj & Company."

And indeed there would be claims, the Pitties who with the Birlas, are among the minority shareholders had communicated last year itself to the Bajaj family their apprehension that they may stand to lose out through this family deal.

The Rahul group claims that the agreement was for the creation of a `mirror image company', say `Bachhraj II'. To this company would be transferred all the Bachhraj shares in Bajaj Hindusthan. The Bajaj family's 78 per cent stake in this would be transferred to Mr Shishir Bajaj and his son Mr Kushagra at Rs 6.7 per share. And buying out the minority shareholders would be Shishir-Kushagra's business.

Family Wealth

"This would be like giving us control but only a diluted stake in Bajaj Hindusthan," said Mr Kushagra. "This is not acceptable to us."

Now the Rahul camp has been voicing its intentions to buy out the non-promoters in Bachhraj itself. "If they say they are not liable for the non-promoters' stake in Bajaj Hindusthan, then why are they keen to buy them out in Bachhraj now?" asked Mr Kushagra.

"We strongly believe that in case the demerger of Bajaj Auto does not happen, he (Rahul) would definitely like to give Bajaj Hindusthan to his son Mr Sanjiv," said Mr Kushagra. "Last week my uncle Mr Rahul had tried to induct additional directors on the Board of Jamnalal sons and Bajaj Sewashram (other holding companies of the Bajaj family). My father has been chairman of Sewashram for the last 30 years, we strongly objected to this and filed a petition with the Company Law Board."

Mr Rahul and family control 25 per cent of the family wealth. Mr Shishir and family control 25 per cent.

Cousins Mr Shekhar, Mr Niraj and Mr Madhur and their families control 50 per cent "How can 90 per cent of the wealth be controlled by 25 per cent of the family? This is a joint family, everyone should have an equal share," said Mr Kushagra.

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