Analysis of Demerger of Bajaj group

1. Demerger of Bajaj

2. DEMERGER “Division of a Company with two or more identifiable business units into two or more separate companies ” Partnering a deal with Kawasaki for instance to gain access to the distribution network that it enjoys in the Asean region and partnering with Taiwanese companies to gain access to the Chinese markets SECTION – 2(19AA) of Income Tax Act, 1961.

3. CONDITION FOR LISTING (Rule 19 (2) (b) of SCR Rules) At least 10 per cent of securities issued by a company was offered to the public through advertisement & following conditions were fulfilled: (a) minimum 20 lakh securities was offered to the public; (b) the size of the offer to the public ≤ Rs. 100 crores ; and (c) the issue was made only through book building with allocation of 60 % of the issue size to QIBs Or 2. It shall offer at least 25 % of each class to the public through Advertisement & Shares applied in pursuance of such offer were allotted

4. Bajaj Auto Ltd Company History Bajaj Auto Limited is India's largest manufacturer of scooters and motorcycles Origins The Bajaj Group was formed in the first days of India's independence from Britain Its founder Jamnalal Bajaj Type Public Founded 1945 Headquarters Pune, Maharashtra, India Key people Rahul Bajaj (Chairman), Rajiv Bajaj (Managing Director), Sanjeev Bajaj

5. Aftermath of the unseemly fight between the Ambani brothers Bajaj senior perhaps feels it’s wiser to let sons Rajiv and Sanjiv have their own little empires to run Rajeev’s Love for Sanjeev has motorcycles been more of & technology & has a number’s worked hard to build man, will the business. Inherit finance

8. Continue….. The demerger will enable the investors to hold separate focused stocks. The demerger will facilitate more transparent benchmarking of the companies with its peers in their respective industries. The restructuring will create 3 separate entities

9. Unlisted Reason It will also allow the Bajaj family to increase their stake in the holding company cheaply. Since the Bajaj family and its friends hold about 47 per cent in the current Bajaj Auto, if they increase their stake to 5o % or more. They have increased to 50 % (http://www.youtube.com/watch?v=d8Zp9yNQN dE)

10. Investment BankerJM Financial Group

12. Structure prior to demerger

13. Post demerger structure Spun Off

15. Demerger effective date, viz. 20 February 2008.

16. For every share held in Bajaj Auto Limited.would continue to hold one share of BHIL (formerly BAL) of the face value of Rs.10/- each fully paid up, has been allotted one share of the new BAL of face value of Rs.10/- each fully paid up and has been allotted one share of BFS of face value of Rs.5/- each fully paid up.

20. 1 share of Rs 10 of BHIL – holding company for investments

21. 1 share of Rs 10 of new BAL

23. Day 1 Bajaj Auto Ltd: Bajaj Auto, Bajaj Finserv and Bajaj Holdings & Investments on day 1 of relisting recorded a market cap of Rs 22,239 crore as against Rs 21,042 crore on March 13, 2008 which was the last day before the demerger, an increase of around 5.6 per cent.

24. Different Share Prices

25. Demerger Analysis EVA Valuation

29. BFL and BHIL showed negative EVA, clearly indicating that capital was not properly used by them

32. 32% of the market share is under Bajaj Auto

34. http://portfolio.rediff.com/quotes/bajaj%20life%20insurance http://en.wikipedia.org/wiki/Bajaj_Auto http://www.karvy.com/articles/bajaj.htm http://www.mysensex.com/nifty/8762-new-look-boards-demerged-bajaj-auto.html http://tejas-iimb.org/articles/38.php http://www.slideshare.net/pkvijay/unlocking-the-value-through-corporate-restructuring-gvalior-seminar-corp-res-190507 http://finance.yahoo.com/q/b?s=BAJAJAUT.BO+Financial+Blogs

35. Lets Go On A Ride