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Bajaj Tempo spurts on equity swap talk

Our Bureau

MUMBAI, March 7

LONG relegated as the smallest of India's top three manufacturers of multi-utility vehicles (MUVs), the Pune-based Rs. 548-crore Bajaj Tempo Ltd (BTL) has bucked the general trend in automotive stocks and registered a steady price gain.

BTL was quoting at Rs. 166.25 at close on January 3. By February 1, it was down to Rs. 150. But on February 8, the stock closed at Rs. 174.85 and by the weekend, had zoomed to Rs. 210. On March 1, it touched Rs. 285.20 and closed today on the Bombay Stoc k Exchange (BSE) at Rs. 275.

Analysts at portfolio management firms say there is no reason for the rise in price except on anticipation of a potential swap of equity-holding between BTL and Bajaj Auto Ltd (BAL). ``It is under negotiation,'' an analyst at a foreign portfolio manager said, adding no numbers were as yet available on the extent of gain accruing to BTL in a likely transaction.

When contacted, a senior BTL official said he was unaware of any particular cause for the rise in stock price which has been on for over a month. Mr. Abhay Firodia, Chairman and Managing Director, BTL, could not be reached today.

A few days ago, Mr. Madhur Bajaj, President, BAL, had said no deal was finalised on the issue. When contacted today, Mr. G.B. Laddha, General Manager (Finance), BAL, declined to comment.

However, a newspaper report in early February quoted Mr. Firodia as saying there have been some talks to resolve the cross-holding between BTL and BAL. It was also reported that against the 23 per cent equity share of BAL in BTL's capital base, the Firod ia family held a sizable stake in BAL.

BTL's stock price movement contrasts that of BAL, which, in line with sectoral movement, has declined in the recent past, rallying up only in the last couple of days. This opposing trend is perhaps due to what analysts said of BTL's peculiar case wherein the expected share price for equity swap is currently speculated to exceed its stock price.

As on September 1999, BTL's promoters held 4.46 per cent shares directly and 48.16 per cent through group companies. Besides this, 17.78 per cent of equity was vested in foreign hands, a sizable portion of it (around 15 per cent) being held by Daimler-Ch rysler.

In the recent past, co-operation between BTL and Daimler-Chrysler has risen to cover local assembly of engines by BTL for E-class cars of Mercedes Benz India Ltd (MBIL) and export of gear boxes for the G-Wagon, Daimler-Chrysler's top-end all-terrain vehi cle.

While a formal faxed reply to Business Line's queries on the subject is awaited from MBIL, officials said Daimler-Chrysler had no plans to raise its equity stake in BTL. This was also the feedback from senior MBIL officials during the Auto Expo at New De lhi in January.