From left, standing: Kiran (Shekhar's wife), Shekhar Bajaj (Rahul Bajaj's cousin), Shishir (Rahul's brother), Neelima (Madhur's daughter), Rupa (Rahul's wife), Sunaina (Rahul's daughter), Rahul Bajaj, Kumud (Madhur's wife), Madhur (Rahul's cousin), Niraj (Rahul's cousin); sitting: Meenal (Niraj's wife), Meenakshi (Shishir's wife), Rajiv (Rahul's son), Deepa (Rajiv's wife), Shefali (Sanjiv's wife), Sanjiv (Rahul's son), Savitri (Kamalnayan's wife), Vimal (Ramkrishna's wife); squatting: Nirav (Niraj's son), Nimisha (Madhur's daughter), Kriti (Niraj's daughter), Geetika (Shekhar's daughter), Kushagra (Shishir's son), Apoorva (Shishir's son), and Anant (Shekhar's son)

Shishir Bajaj and wife, Meenakshi

The heirs Kushagra (left) and Apoorva

With its wide-tarmac roads, palm trees swaying in the afternoon breeze and files of orderly grey-blue clad workers, Bajaj Auto's Akurdi plant-on the outskirts of Pune and around 160 kms from Mumbai-is a perfect picture of pastoral calm and brisk efficiency. Perhaps just the way patriarch Jamnalal Bajaj visualised it.

Yet it's on these sylvan surroundings, spread over a sprawling 225 acres, that one of the stormiest and most crucial chapters in the history of Indian family business is unfurling. Events that compelled Sharad Pawar, heavyweight Maharashtra politician who's close to the Bajaj family-known for his trouble-shooting and deal-making abilities-to mediate in the standoff between two Bajaj scions on a damp July weekend.

The impasse was triggered last month when Shishir Bajaj, 55, who runs three companies, Bajaj Hindustan being the most visible, decided to put the 'for sale' sign on his holding in the family flagship, Bajaj Auto, which has Rahul Bajaj, 64, as Chairman, and his two sons Rajiv and Sanjiv running the day-to-day operations. Shishir's stake in the Rs 4,125-crore Bajaj Auto-India's largest two-wheeler manufacturer-is said to be roughly 6 per cent.

What transpired last fortnight within the walls of Rahul Bajaj's imposing bungalow, barricaded by its formidable black wrought-iron gates, still remains a matter of conjecture and intense speculation. Shishir wanting out of Bajaj Auto sounds simple, but the procedures involved will ensure that the matter drags on for weeks if not months to come. ''It's a long, time-consuming process, involving issues like trusts and trusteeship. I've known the family for many years and since both of them seem keen to resolve matters, I've been trying to help,'' explains Pawar, who has already spent two full days with the family in a bid to hammer out a settlement.

A FAMILY MATTER

At Pawar's behest, the brothers Bajaj have declined to wash any more linen in public. Shishir Bajaj did not reply to a faxed questionnaire. A visit to Rahul Bajaj's second-floor corner office in the Akurdi plant also drew a blank with the Chairman refusing to speak to Business Today dismissing it as a ''family matter''.

A family matter it no doubt is-a family with a lineage that stretches back 70-odd years, and generating cumulative revenues of Rs 6,000 crore. Significantly, Bajaj Auto contributes 80 per cent of those revenues (and 90 per cent of the profits), and perhaps that's why it's no surprise that Rahul Bajaj's imposing frame towers over the other brothers and siblings as far as stature in Indian industry is concerned. Indeed, that could be one reason for Shishir wanting his place in the sun. As Gita Piramal, a close watcher of Indian business families, points out: ''One of the many reasons for family splits is when one sibling becomes more famous than another.''

Differences in business, and in business families, are inevitable. The danger only arises when they become irreconcilable. Disagreements between Kamalnayan Bajaj's (son of founder Jamnalal Bajaj) two siblings, Rahul and Shishir, have been simmering under the surface for the last two years, point out industry watchers. But they only erupted into full public glare when Shishir decided that the time had come to part ways.

The reason for choosing this radical course of action is, of course, predictable. Shishir, point out sources, felt that he was best placed to take over the reins of the group's flagship from Rahul. Rajiv, 35, and Sanjiv, 32, he felt, were still not ready to taken on the onus.

If that is indeed what Shishir wants, it's tough to agree with him. It isn't as if Rahul decided one fine day that his sons would start running the business. After sending them abroad for education, he brought them back and put them on the shopfloor, and both brothers have risen through the ranks. In fact, it's largely because of the efforts of Rajiv, currently President looking after marketing and product development, that Bajaj Auto has made the shift to motorcycles (from scooters) and is today in a position to challenge the dominance of Hero Honda.

Do Shishir Bajaj and his family, which includes son Kushagra, who've hardly been involved in the day-to-day running of Bajaj Auto, feel those credentials aren't enough to take over the reins of the country's largest motorcycle producer? And do they feel that, after running sugar and ayurvedic companies, they can smoothly start calling the shots at the two-wheeler manufacturer? Whether Shishir's demands can be justified or not, these issues appear to be exactly what have divided the extended joint family down the middle. First cousins Shekhar Bajaj (who runs Bajaj Electricals), Madhur Bajaj and Niraj Bajaj, incidentally, are on Rahul-bhaiya's side.

A SPLIT IN TIME...

Analjit Singh (top) and K.M. Birla: The splits served their groups well Splits in business families may make for sordid stories and result in vicarious thrills, but they could actually be good for industry. As Ashwini Puri, Head (Corporate Finance & Recovery), PricewaterhouseCoopers, points out, differences in viewpoints could slow down decision-making in a company. ''A split can help speed up the process," he says. Gita Piramal, Managing Editor, Smart Manager, points to four reasons for business families deciding to part ways: one, when a new generation steps in, two, when the business isn't doing well, three, when people have conflicting ideas, and four, when one sibling becomes more successful or famous than the others. Whatever the reason, post-split, companies tend to do well because the new factions are under tremendous pressure to prove themselves. Factions such as the Parvinder Singh, Manjit Singh, and Analjit Singh groups of the erstwhile Bhai Mohan Singh group are a case in point (split: 1993). The same can be said about the Thapars, who split in 1997, and the Chhabria brothers, who parted ways in 1993. A split served the Birlas well too, with the Aditya Birla Group emerging the third largest business house in the country. Of course, the same logic might not hold true in the Bajajs' case simply because of the nature of the group, 90 per cent of whose profits are accounted for by just one company, Bajaj Auto. And Shishir Bajaj had little to do with the operations of the two-wheeler maker, with Rahul Bajaj and his sons calling most of the shots there. Shishir was more busy running a sugar and an ayurvedic business, which has little to do with scooters and motorcycles. -Swati Prasad

If Shishir did ever contemplate running Bajaj Auto, he should have staked his claim in the early nineties, when Bajaj Auto as an almost pure-play scooter maker was floundering because Rahul had been slow in reading the shift from scooters to motorcycles. It was Rajiv who, after earning his spurs, initiated that shift, and to that extent, the credit for Bajaj Auto's success in the motorcycle segment should doubtless go to Rahul's elder son.

Old timers draw parallels between the current succession struggle and the past when Bajajs broke off ties with another Pune-based auto major, the Firodia group (of Kinetic fame). The Firodias were junior partners with Kamalnayan Bajaj and Ramkrishna Bajaj (father and uncle of Rahul Bajaj) in Bajaj Auto and Bajaj Tempo, and the flashpoint took place over Rahul Bajaj being appointed chief in the late sixties.

But blood ties are not so easily snapped and a resolution might still be on the cards. And whether the members like it or not, the Bajaj empire cannot be carved up so easily. Ownership is a complicated web of intra-family holdings spread over 25 companies and 30 trusts. In Bajaj Auto, for example, the Bajaj family only holds 28.59 per cent of the shares directly, with families and friends controlling 17.47 per cent.

Untangling this investment web is a laborious and time-consuming process and something the brothers would try to avoid if possible.

CARVING THE PIE

But should they finally decide to snap the family bond then the first step would be valuing the assets followed by fixing a price for the shares held by Shishir Bajaj. One straightforward way of valuing a going concern is by current market capitalisation or market value of outstanding shares.

Bajaj Auto's market cap has been hovering between Rs 4,500 crore and Rs 5,500 crore. Another way is by looking at the cash-generating potential of a business. ''A business can also be valued after considering its cash-generating potential after deducting its liabilities,'' says an analyst with a leading credit rating agency. Bajaj Auto generates anything between Rs 400 and Rs 500 crore every year.

If Shishir holds 6 per cent in Bajaj Auto, his asking price would be in the Rs 300-500 crore region. For Rahul Bajaj, paying that much to allow Shishir Bajaj's exit shouldn't be a problem, but he may well consider it unnecessary-especially when the scenario was hunky-dory for so long. One, the composite holding of the bajaj family, and its 'friends' will come down from 46.06 per cent to around 40 per cent. What's more, Rs 500 crore if pumped into product development at Bajaj Auto could go a long way in helping the company come out with some more indigenous blockbusters, like the Pulsar, which is already selling 10,000 units a month.

Of course, Rahul Bajaj may have no choice but to buy out Shishir. How that happens is not easy to figure (See Options For Carving Up The Pie). Corporate lawyers point out that historically large family businesses have preferred the option of swapping shareholdings internally by restructuring or merging their investment and holding companies. For the time being, though, it's over to Sharad Pawar.

additional reporting by Swati Prasad