BAL board likely to decide on demerger proposal tomorrow

Mumbai, May 16 (UNI) Country's second-largest two-wheeler manufacturer Bajaj Auto Limited (BAL) is expected to take up the proposal of demerger at its board meeting scheduled for tomorrow.

The BAL demerger proposal involves division of two-wheeler and finance businesses into two separate entities.

The BAL has a joint venture with Allianz insurance where Allianz holds 24 per cent stake for which they had paid a premium of Rs 117 crore in the JV when the insurance business was formed in 2001.

In the demerger proposal, a major part of the value for the proposed holding company for financial services business is expected to come from the insurance segment. Bajaj Allianz had declared the highest profit of Rs 73 crore.

The BAL board may give its nod for the distribution of shares of the new firm among shareholders in return for shares in the parent company, on the approval of the demerger, industry sources said.

In this proposed demerger proposal, financial services are likely to be parted with Sanjiv Bajaj whereas the two wheeler business may go to Rajiv Bajaj.

The share price of the BAL closed higher by Rs 45 to Rs 2,680 from the previous close of 2,635 at the Bombay Stock Exchange (BSE) ahead of the board meeting.

UNI