Developments in the last few days clearly show that Rahul and Shishir, the warring brothers, have drifted further apart rather than moving towards a solution.
First, the two announced that the four-year-old family settlement had fallen through. Next, Shishir, in a move aimed at consolidating his holding in Bajaj Hindusthan, the country's largest sugar producer that he controls, bought 4.67 per cent in the company from the market.
Bajaj Auto, which is controlled by older brother Rahul, had bought 3 per cent in the company a few months ago.
Bajaj insiders admit that finding a solution to the imbroglio is not easy because of the way the family holding is structured. Jamnalal Bajaj, the founder of the group and a close associate of Mahatma Gandhi, had two sons: Kamal Nayan and Ramkrishna.
The interests in the family holding companies were equally divided between the two.
Kamal Nayan's stake was equally divided between his two sons, Rahul and Shishir, while Ramkrishna's was trifurcated between his three sons: Shekhar, Madhur and Niraj.
Thus, Rahul and Shishir have 25 per cent each of the family stake in the group's main investment vehicle, Bajaj Sevashram, while their three cousins own 16.67 per cent each.
Bajaj Sevashram holds the Bajaj family's interests in all group companies directly and through subsidiaries. It has a wholly-owned subsidiary, Jamnalal Sons, and a 78 per cent subsidiary, Bachhraj & Co.
The problem is that the equations will alter in the next generation. Rahul and Shishir have two sons each: Rajiv, Sanjiv and Kushagra, Apoorv, respectively. Each of them will get 12.5 per cent in Bajaj Sevashram.
On the other hand, Anant (Shekhar's only son) and Nirav (Niraj's only son) will inherit 16.67 per cent each. In short, two GenNext Bajaj cousins will hold a bigger share in the key Bajaj group investment vehicle.
This may pose problems in the controlling group companies, said a corporate lawyer. There is no immediate threat as of now as Rahul, Sekhar, Madhur and Niraj form one camp while Shishir is in the other.
Bajaj Auto is run by Rahul and his sons, Rajiv and Sanjiv. Sekhar looks after Bajaj Electricals, while Niraj runs Mukund with their partners, the Shah family. Madhur plays various roles in Bajaj Auto.
Things may become more complicated with the way the minority shareholders of Bachhraj & Co, one of the family's holding companies, choose to go. In addition to the Bajaj family's holding, the Pittie family and B K Birla hold 22 per cent stake in Bachhraj. B K Birla's grand-daughter Vasavadatta is married to Kushagra, Shishir Bajaj's son.
The dispute came to the limelight when Shishir sought CLB intervention in 2003 for splitting the family assets.
On the CLB's advice, the family reached to a settlement formula and signed a memorandum of understanding to this effect.
Under the formula, the Shishir group would get Bajaj Hindusthan and Bajaj Consumer Care and the Rahul camp would get the rest. In addition, Shishir would get monetary compensation for foregoing his interest in the other group companies.
However, the formula has not been implemented so far, with both parties putting the responsibility for implementing it on each other. The dispute is mainly stuck over the amount of cash compensation that Shishir is to be paid.
The fact that the matter was referred to the CLB, industry observers said, is an indication that the Bajaj family dispute is nowhere close to a resolution.
"Family members normally reach a settlement on their own and then put a legal stamp on it. To ask the CLB to split assets indicates that nothing is going to happen in a hurry in the Bajaj family dispute," said a legal practitioner.
In the past, families like the Birlas, the Modis, the Thapars and the Ambanis split their businesses internally and in a much shorter time than the Bajajs.
