Bajaj Auto board approves demerger, profit falls

New Delhi, May 17 (UNI) Country's second largest two-wheeler maker Bajaj Auto Ltd's Board today approved a scheme to split the company's businesses into two seperate arms -- manufacturing, that is, its automotive business, and its financial operation, including Bajaj Allianz insurance and its non-banking operations.

The demerger of the company's two and three-wheeler manufacturing undertaking and strategic businesses including the generation of wind-energy, insurance business and others will now be incorporated into two subisidiaries, Bajaj Holdings and Investment Ltd (BHIL) and Bajaj Finserv Ltd (BFL).

The manufacturing undertaking shall vest in BHIL and strategic business undertaking shall vest in BFL, a company statement said.

As part of the restructuring, BHIL shall be renamed as ''Bajaj Auto Ltd (BAL)'' and the existing Bajaj Auto Ltd shall be christened as ''Bajaj Holdings and Investment Ltd''.

After the demerger, shareholders will get one share of Bajaj Holdings, Finserv for every one held.

The demerger has been announced considering the growth opportunities in the auto, wind-energy, insurance and finance sectors to enbale them to work under separate entities, each of which can focus on these core businesses and strengthen competencies.

The demerger will create three separate entities focusing on auto business, wind-energy generation, insurance, consumer finance and new initiatives in financial services space and new business opportunities.

Meanwhile, the company's net profit fell 11 per cent at Rs 308.31 crore for the fourth quarter ended March 31, 2007 as against Rs 346.97 crore during the same quarter a year ago.

The company's total income, however, rose 8.9 per cent to Rs 2,471.25 crore from Rs 2,268.95 crore during the said period.

For the fiscal ended March 31, 2007, the company's net profit went up 10.13 per cent to Rs 1,237.1 crore in comparison to Rs 1,123.27 crore for the year ended March 31, 2006 while its total income increased from Rs 8,106.35 crore to Rs 10,076.05 crore during the said period.

UNI