Ex-judge may arbitrate Maharashtra Scooters

Repeated negotiations between the state government and Bajaj Auto have failed to arrive at an agreeable price for the former's stake in Maharashtra Scooters.

According to a clause in the agreement between the state and Bajaj Auto, drawn up when Maharashtra Scooters was set up, Bajaj Auto has the first right of refusal whenever the state government wants to sell its stake.

Though Bajaj Auto has not refused to buy the government's stake, it has offered only Rs 75 per share, which is too low for the state government.

A state government official told Business Standard, "While so far, Bajaj Auto has declined to offer more than Rs 75 per share for the government's stake, it has not formally rejected the divestment offer."

The official added: "Bajaj Auto's original offer was to pay Rs 50 per share for the state government's stake in Maharashtra Scooters. We rejected this outright. Thereafter, the government, in consultation with Bajaj Auto, appointed Crisil to conduct an independent valuation of its stake in the company. The Crisil report pegged the value at Rs 204 per share. But this was unacceptable to Bajaj Auto, which then upped its offer to Rs 75 per share."

The official added that the government then set up a nine-member committee, headed by chief secretary Ajit Nimbalkar, to negotiate with Bajaj Auto and arrive at an agreeable price for its stake in Maharashtra Scooters.

Even the Nimbalkar committee failed to decide on a price for the selloff. The government, therefore, decided last week to appoint a retired Supreme Court or Bombay High Court judge to arbitrate on the issue afresh.

The official also confirmed that the state government was bound by the agreement with Bajaj Auto that did not allow it to offload more than a fraction of its stake in the market in the event of Bajaj's unwillingness to buy out its stake.