Calcutta, Oct. 27: Bajaj Auto plans to raise its stake in group company Bajaj Auto Finance (BAFL) by acquiring the 15.52 per cent stake held by private corporate bodies. The acquisition will raise Bajaj Auto’s holding from 46.15 per cent to over 62 per cent.
Sources said the negotiations on the acquisition price are at an advanced stage. “The announcement is expected any moment,” they said.
The BAFL share price has increased by Rs 5 from Rs 63.40 on October 1 to Rs 68.45 on October 25 on the Bombay Stock Exchange.
With the acquisition of the shares, Bajaj Auto will have total control over the auto finance company in which public holding is as high as 37.85 per cent.
The Bajaj Auto management was not available for comment.
BAFL, which was promoted about 12 years ago, is now one of the leading auto finance companies in the country with 39 branch offices.
The company has close to one million customers and has set an ambitious target of adding at least half a million customers in the next two years’ time.
Bajaj Auto, which is inching ahead in the race to regain the top slot among two-wheeler companies, wants leverage the benefit of having a strong finance company as its subsidiary, sources said.
BAFL has operational tie-ups with over 4000 dealers of Bajaj Auto.
“It is a great strength for us to have such a strong finance outfit with us which can take care of all needs our customers’ needs. We will strengthen BAFL so as to cater to the demand which has been increasing substantially,” a Bajaj Auto official said.
The finance company has also obtained rating agency Crisil’s FAAA rating for its several deposit schemes, he said.
The official further pointed out that over 70 per cent vehicles are sold through finance schemes. These schemes are popular more in the semi-urban and rural areas where a large number of people buy two-wheelers through finance.
“Even in big cities like Calcutta, finance is an important aspect as more and more young people are buying vehicles when they are in college or university,” the official said.
The BAFL finance schemes, he added, are drawn in such a fashion so that it is not a burden on the customers.