Wednesday, November 24, 2010


Demerger  is the converse of a merger or acquisition. It describes a form of restructure in which shareholders or unitholders in the parent company gain direct ownership in a subsidiary (the ‘demerged entity’). Underlying ownership of the companies and/or trusts that formed part of the group does not change. The company or trust that ceases to own the entity is known as the ‘demerging entity’. If the parent company holds a majority stake in the demerged entity , the resulting company is referred to as the subsidiary.
The act of splitting off a part of an existing company to become a new company, which operates completely separate from the original company. Shareholders of the original company are usually given an equivalent stake of ownership in the new company. A demerger is often done to help each of the segments operate more smoothly, as they can now focus on a more specific task. opposite of merger.
The huge glass-panelled window on the 13th floor of NCPA Apartments at Nariman Point offers a breathtaking view of the bay and Malabar Hill – home to another set of Mumbai’s rich and famous. But Sanjiv Bajaj prefers his other home at Akurdi near Pune where life is relatively unhurried, write Shyamal Majumdar and Sumit Sharma.
We are at the Bajaj family apartment in India’s  most expensive residential block – one of the flats was sold two years ago at Rs 1.35 lakh a square foot.
The 41-year-old managing director of Bajaj Finserv isn’t impressed by the common perception that a financial services company should be based in Mumbai rather than Pune.
The youngest son of Rahul Bajaj who took charge of the financial services business after the demerger of Bajaj Auto  three years ago, makes it clear that Pune is where his heart is and he would rather listen to his heart.
“In any case, if Warren Buffett can operate from Omaha, the top brass of Bajaj Finserve can easily operate from Pune,” he says, before ordering breakfast.
Sanjiv had explored two other options for the breakfast venue – the Trident hotel next door and Bajaj Bhawan, a couple of buildings away – but settled for his residence saying the ambience would be more informal.
While we wait for the food to arrive, we ask him about the speculation that he was a reluctant entrant to financial services after the demerger. “It was my decision to move to financial services,” he corrects us.
He has no reason to regret the decision since his financial services empire now spans life and general insurance in association with Allianz and consumer lending through Bajaj Finance. Next month, there’s a foray into wealth management planned, and an asset management company is awaiting approval from the market regulator.
Sanjiv also wants Bajaj Finance to make it big in loans against shares and property, personal loans and lending to small and medium enterprises, a sensible way to hedge risks during a slowdown.