Corporate Grapevine

Published: Dec 29, 2021
Updated: Dec 29, 2021

Bajaj buys out old partner in Mukand

The Bajaj group will soon establish total control over Mukand Ltd, a manufacturer of alloy steel, stainless steel and stainless steel billets, as well as an exporter of hot rolled bars, by buying out its joint venture partner, the Shah family. The company was originally set up in Lahore (now in Pakistan) way back in 1929 by Lala Mukandlal. It was subsequently acquired by Jamnalal Bajaj and Jeevanlal Shah at the behest of Mahatma Gandhi. The company was shifted to Mumbai in 1937. Both partners, Jamnalal Bajaj and Jeevanlal Shah, had an equal partnership of 50 per cent each. But subsequently, with rights issues which were subscribed by the Bajaj group but in which the Shah family did not participate, the equity stake of the Bajaj group went up to 57.70 per cent while that of the Shah group nosedived to 16.57 per cent.

Rs 353-CRORE PAYOUT

Now, four Bajaj group companies — Bajaj Sevashram Pvt Ltd, Bachhraj & Company Pvt Ltd, Bachhraj Factories Pvt Ltd and Sanraj Nayan Investments Pvt Ltd — will acquire the 16.57 per cent stake of the Shah group. Thus, the Shah group will be out of the company management and the company will belong to the Bajaj group, which will have a hefty stake of 74.27 per cent. At what price the deal will be struck is not known, but at the current market price the Bajaj group will have to shell out Rs 353 crore to the Shah group.

The association with the two partners continued amicably all these years with Viren Shah, Jeevanlal’s son, managing the show for several years. After his death, his sons Suketu and Rajesh entered the management. But the company’s performance started declining and the debt went on increasing to Rs 3,083 crore. The new chairman, Neeraj Bajaj, was not happy with the performance of Mukand, which, albeit the smallest company in the Bajaj group, was involved in a high profile industry like steel. Mr Bajaj decided to restructure the company and revitalise it. First, it was decided to bring down the debt burden. The company sold its 55-acre leasehold land and accompanied structures in the Trans Thane Creek industrial area to NTT Global Data Centres for Rs 801 crore, which was used for debt repayment. The company also sold its 51 per cent stake in the joint venture Mukand Sumi Special Steel, formed with Sumitomo of Japan, to Jamnalal Sons Pvt Ltd, a Bajaj group company. The proceeds of the stake sale were also used for debt repayment. As a result of all such asset sales, the debt came down to Rs 975 crore during 2021.

Various plans are under consideration to restructure and revive the company. In the process, the Bajaj family feels that when the family’s stake in the company is increasing, it might as well own all of it. The Shah family has agreed and its stake is being handed over to the Bajaj group. The Competition Commission of India (CCI) has approved the acquisition of the 16.57 per cent shareholding of the Shah group in Mukand by the Bajaj group entities. Mukand will now be 100 per cent owned by the Bajaj group.