Saturday, March 10, 2007

Tata's car affect on market: Bajaj

There's no doubt Ratan Tata had only good intentions when he said he conceived the Rs one lakh car as he cared for the safety of those using two-wheelers. But Bajaj Auto Chairman Rahul Bajaj thinks its just a ploy to market the vehicle.

"He has to sell his car... so he has to speak like that," Bajaj shot back when reporters asked him about Tata Group Chairman Ratan Tata's remark that one of the major reasons for him to decide on the 'people's car' was the concern for safety of those travelling by two-wheelers.

Two-wheelers are sold all over the world, it has been proven that they are safe, he said, adding his company's products were safe.

Bajaj also denied that the advent of Rs one lakh car would affect the two-wheeler manufacturers.

"Ultimately it is the customers who will decide what they want," he said.

Tata had said that the Rs one lakh car would mark a paradigm shift in the way India travels and will draw customers from the two-wheeler segment as well as from the lower end of the four wheeler segment.

The small car to be powered by a 600 cc engine, which could have air conditioning option and seat four to five people, is widely considered to be a threat to the two-wheeler segment.

Tata Motors is in the process of building a plant in Singur in West Bengal for the people's car, which it hopes to roll out by next year.

The price differentials between the small car and the high end motorcycles likes of Bajaj Pulsar 200 cc, the to-be-launched Pulsar 220 cc and Hero Honda Karizma are expected to be minimal.

No division of Bajaj Auto : Rahul Bajaj

Ruling out a complete division of the Bajaj Auto empire between his two sons, Rajiv and Sanjiv, Chairman Rahul Bajaj Friday said they would continue to be part of the company even after the proposed demerger takes place.

"Both the boys will clearly continue to be in Bajaj Auto, no doubt about it," Bajaj told reporters here.

He, however, added that his younger son Sanjiv "may probably spend more time on the new demerged company or companies".

Bajaj reiterated that plan to demerge the company's financial and investments business into a separate entity was based on the intention of unlocking shareholder value by utilising surplus cash and not because of the reported "rift between the brothers".

"You cannot simply divide a company between individuals when you have so many shareholders interest to be taken into consideration," he said.

The board of Bajaj Auto is likely to take up the issue of demerger in its meeting in May or July, he added.

Sanjiv, Executive Director of BAL, however, said the demerger process was being evaluated at the moment and it would depend on what kind of impact it would have on bal.

"If the cash flows of BAL continue to be positive after the demerger, probably the board will give a go ahead. But if it is going to be negative, I don't think the board will approve of it," he said.

Sanjiv, however, added that in the past few years the company's cash flows have been positive and is likely to continue so.

Asked if the proposed demerger of Bajaj Auto would have any bearing on the company's joint-ventures with German financial firm Allianz, Rahul Bajaj replied in the negative.

"It will have no effect whatsoever on the shareholding of the joint ventures with Allianz," he said.

Bajaj Auto has joint ventures with Allianz -- Bajaj Allianz Life Insurance and Bajaj Allianz General Insurance -- in which it is the majority partner.

On the issue of BAL's 41.5 per cent holding in Bajaj Auto Finance post demerger, he said the board would decide on how and where it would be transferred.

Bajaj also said even if the board gives its nod for the demerger, the whole process was likely to take time as it would have to get regulatory and high court approvals.

BAL has about Rs 8,000 crore cash surplus and its foreign institutional investment partners have been pressing it to utilise it by hiving off the financial and investments business into separate entity.

Source:- CentralChronicle