The company, Bajaj said, is going slow on the transfer as it involves a 10per cent tax liability. "Besides, the Sebi norms require a public holding inan AMC, which we are not quite comfortable with," Bajaj said, adding thathis company would prefer to have the AMC as a wholly-owned subsidiary of thegroup flagship.

Bajaj Auto has, over the years, made large investments in some of theleading corporates in the country. The two-wheeler company is also a 5.6 percent stakeholder in ICICI, a premier financial institution. Foreigninstitutional investors (FIIs), it is learnt, have been advising Bajaj Autoto hive off its investments and stay focussed on its two-wheeler business.

Although the modus operandi of the transfer is still not clear, industrysources say that Bajaj Auto will transfer the investments at face value toavoid capital gains tax. Analysts say the move may have a positive effect onthe company's valuation as it will significantly improve its return oncapital employed (ROCE), which is currently pegged at around 20 per cent.

"Since almost half of BAL's balance sheet size is locked up in investments,it pulls down the composite ROCE of the company. As against the ROCE fromits manufacturing operations which is around 28-30 per cent, its ROCE frominvestments is only around 14 per cent," said an analyst, adding that themove may drive up BAL's share price by close to 50 per cent.

The Bajaj Auto scrip is quoting at just over Rs 400, which is marginallyhigher than its 52-week low. The yearly high and low of the stock are Rs 650and Rs 398.

When asked about the stock's poor performance on the bourses, Bajaj saidthat this has been influenced by the shift in consumer preference fromscooters to motorcycles.

Bajaj Auto may park investments in AMCÎ"Although we are graduallystregthening our position in the motorcycle segment, Bajaj Auto isessentially perceived as a scooter maker," Bajaj said.

The transfer of the investments, analysts say, will significantly improveits price earning ratio (P/E), which is pegged at much lower levels than itscompetitors, Hero Honda and TVS Suzuki. "While the TVS stock trades at a P/Eof 18-20, the Bajaj Auto scrip trades at a P/E of only around 8-10," said ananalyst. Hero Honda, the market leader in the motorcycle segment, trades ata whopping P/E of around 30.