Bajaj Auto demerger leads to creation of three companies

India's second-largest motorcycle maker, Bajaj Auto Ltd., today approved the proposed demerger scheme, splitting the group into three separate entities with the creation of two new companies.

According to the scheme, Bajaj Auto's various businesses would be demerged into two newly incorporated subsidiaries — Bajaj Holdings and Investment (BHIL) and Bajaj Finserv (BFL).

As part of the scheme, Bajaj Holdings and Investment will become the new auto company, renamed Bajaj Auto. The existing Bajaj Auto will be renamed Bajaj Holdings and Investment, and will act as the primary investment company.

Bajaj Investments will hold Rs 6,000 crore in fixed income securities. The holding company will hold 30 per cent in both subsidiaries.

After the demerger, shareholders will get one share of Bajaj Holdings and Bajaj Finserv for every one held. The face value of Bajaj Finserv will be Rs 5 and that of Bajaj Holdings will be Rs 10. All transfers will take place at book value and all entities are zero debt companies.