CVC probe sought into Maha Scooters sale plan

The Maharashtra Scooters Minority Shareholders' Association (MSMA) has urged all the 15,000 shareholders of the company to join the forum to demand an investigation by the Central Vigilance Commission (CVC) into the alleged failure of the representatives of the Western Maharashtra Development Corporation (WMDC) in protecting the interest of the state government.

Maharashtra Scooters, manufacturers of Priya scooters, is a joint venture between the development corporation and Bajaj Auto Ltd (BAL).

The issue of the alleged negligence by the WMDC nominees came to the fore with the Maharashtra government's decision to pull out of the company by divesting its 27 per cent stake, the shareholders said. Bajaj Auto holds a 24 per cent in the company.

Chandra Vadan Desai, chairman of C D Equisearch and MSMA functionary, said the forum has been sending letters to all minority shareholders, who have a combined 49 per cent stake in Maharashtra Scooters, asking them to join it.

"Already a couple of hundreds of shareholders have joined the forum. Letters are sent to all the shareholders in phases. It is expected that a few more hundreds will join the forum shortly," he said. R M Mehta is the chairman of the forum.

The association apprehended that the government might overlook the huge investment the scooters company has made in Bajaj Auto as well as mutual funds while evaluating its stake.

It said the interest of the state government was not taken care of while making large investments in the Bajaj group companies. Desai said Maharashtra Scooters had invested over Rs 42 crore in Bajaj group firms in 1996-97 which earned hardly any returns till last year.

"This shows that the government nominees were not very cautious to protect the government's interest. Now a Central Vigilance Commission investigation is demanded to find out whether the intention behind the investment decision was wrong," said an MSMA functionary. Sources close to the situation said MSMA would be in a disadvantageous position if the Maharashtra government would sell its stake to BAL.

"As the state government and Bajaj Auto are joint venture partners, the transfer of shares from among them will not trigger the mandatory open offer. Even if a deal is struck at a high price, the MSL stock is unlikely to shoot up due to dearth of liquidity at the counter," they said.

Two years ago, BAL offered to purchase the government's stake at Rs 50 a share which was later revised to Rs 75.

Crisil and Icra valued the MSL stock at Rs 200 and Rs 425, respectively. The issue was sent to arbitration a few months ago.

Earlier, Dinesh Trivedi, a Rajya Sabha member, had sought intervention of Sebi chief and the Union finance minister to protect the minority shareholders' interest in the company.