Bajaj To Alter Investment Pattern

Bajaj Auto proposes to scale down its investment in equities and align it to the earlier investment pattern of 75:25, heavily favouring debt. As the equity market continues to remain sluggish, Bajaj Auto plans to invest its month-to-month surplus income in fixed-income securities, and thus give heavier weightage to debt once again.

Bajaj Auto's balance sheet for the year ended March 31, 2001, stated that the auto major invested more in the equity market during the year. This was due to the fact that the company was forced to liquidate its fixed-income investments of Rs 840 crore to finance its buyback and the voluntary retirement scheme, both introduced last year.

This resulted in a change in the investment portfolio of surplus funds, with 40.1 per cent of Bajaj Auto's surplus of Rs 1,655.7 crore being invested in equities and the balance 59.9 per cent in debt. In 1999-2000, fixed income investments accounted for 74.3 per cent and equities a mere 25.7 per cent.

Senior company officials denied any shift in the investment pattern, stating that what happened in 2000-01 had been brought about on account of the inability of the company to sell its equity investments in a sluggish market. "We will only offload our equity portfolio if the market is right. Our investment is for the long-term," said the official. Bajaj Auto encashed 46 per cent of its total fixed income funds, bringing down the total from Rs 1,843.1 crore in 1999-2000 to Rs 991.6 crore in 2000-01.

Corporates prefer not to invest much of their surplus funds in equities. Yet looking at Bajaj Auto's equity portfolio, the company has hiked its investment in quoted shares to Rs 26 crore. Much of this has been invested in Global Tele-Systems wherein the auto major has almost doubled its holding valued at Rs 13.5 crore in the previous fiscal to Rs 24.9 crore this fiscal.