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MUMBAI: The Bajaj Group’s promoters have initiated the process of passing on their wealth to the younger generation as part of succession planning by realigning their ownership through the purchase and sale of stock in various listed group companies among themselves.
Trades took place last week among Madhur Bajaj and his wife Kumud; Nirav Bajaj, son of Niraj Bajaj; and Anant Bajaj, son of Bajaj Electricals chairman Shekhar Bajaj. More such swaps are likely. “It is just a minor restructuring within the family. Not a single share has been sold outside the family nor purchased from outside the family,” said Niraj Bajaj, who acts as treasurer of family wealth and is the youngest of the four promoters. “This is only one step. There will be some further transactions also. It is work in progress.”
The Bajaj Group, which traces its history back 90 years to freedom fighter and founder Jamnalal Bajaj, is now owned by four promoters–patriarch Rahul Bajaj, along with Shekhar, Madhur and Niraj. The succession plan will see the assets pass on to their children. “The family has to keep thinking of succession and future planning for the group as well as the happy continuity of the joint family which comprises the families of four Bajaj brothers and their siblings,” said Niraj Bajaj. “We want the Bajaj group to continue its journey for a very long time so we need to keep taking steps.”
More than 4.5 million shares of Bajaj Holdings Investment were sold by some entities to others from the promoter group for more than Rs 1,369.55 crore at an average price of Rs 2,993 apiece, according to exchange data. Similar transactions occurred in the shares of Bajaj Auto, Bajaj Electricals and Bajaj Finserv worth Rs 408.20 crore, Rs 103.55 crore and Rs 597.69 crore, respectively. Transactions valued at a total Rs 2,479 crore took place. Jamnalal Bajaj’s five grandsons–Rahul, Shishir, Shekhar, Madhur and Niraj–built and nurtured a business with interests in two-wheelers, insurance, sugar, steel, and household electrical appliances. However, Shishir Bajaj left the group and took ownership of Bajaj Hindusthan Ltd and Bajaj Consumer Care Ltd almost a decade back. Rahul and Shishir are brothers while siblings Madhur, Shekhar and Niraj are their cousins. The promoters refer to themselves as brothers.
Shishir Bajaj’s demand for separation had roiled the family and shareholders in 2001. The dispute was settled after seven years of uncertainty.
“Shareholder realignment is to ensure a certain principle of equity maintained across generations and branches ,” said Kavil Ramachandran, executive director of Thomas Schmidheiny Centre for Family Enterprise at Indian School of Business. “This is good to keep different branches or members satisfied both in terms of wealth inheritance and power balance.”
Bajaj became a household name thanks to its scooters, tempo vans and electrical appliances. The Hamara Bajaj jingle of 1990s became synonymous with Indian middleclass dream of owning a scooter. The total wealth of the family is pegged at about Rs 70,000 crore and the Bajaj Group companies have a combined market value of Rs 3.25 lakh crore.
“Indian family businesses are increasingly becoming sensitive to these strategies and are proactive,” said Ramachandran. “Most often wealth is transferred in terms of shares across various companies if there are more than one company involved.” Some family members may opt out of continued ownership, in which case there could be other means of settlements, including funds or other properties, he said.