Maharashtra Scooters valuation challenged

Western Maharashtra Development Corporation (WMDC), the investment arm of the state government in Maharashtra Scooters (MSL), has decided to challenge in the Bombay High Court the government-appointed arbitrator's valuation of share price for transfer of the 27 per cent stake held by it in the company to Bajaj Auto.

The arbitrator, retired Justice Arvind Sawant, had valued the MSL stock holding at Rs 151.63 a share in January, at a discount of more than 200 per cent compared with the prevailing market price of Rs 467 for the share. Even during the valuation announcement, the market price of the company's share was in the Rs 330 range.

"We will move the Bombay High Court against the arbitrator's decision. The valuation quoted by him is strictly below par," said a Maharashtra government official.

When contacted, Rahul Bajaj, chairman, Bajaj Auto, said, "I have come to know that WMDC is moving the Bombay High Court. If that is the case, we will legally fight it out."

Bajaj Auto executives had earlier said the company would not buy stake in WMDC at a price higher than that quoted by the arbitrator. MSL's board in February had approved the sale of WMDC stake to Bajaj Auto at a price quoted by the arbitrator.

At that price, Bajaj Auto was required to pay Rs 46.78 crore for the stake, which would have taken its total stake in MSL to 51 per cent from the existing 24 per cent.

Crisil had valued the stake at Rs 232 a share. A Kolkata-based jute industrialist, Jai Kankaria, had expressed interest in buying the state government stake in MSL for Rs 200 a share.

MSL's investment in various Bajaj group companies as well as in other instruments stood at Rs 174.27 crore on March 31, 2005. MSL's investments in the Bajaj group include 3.38 million shares in Bajaj Auto, 1.02 million shares in Bajaj Auto Finance and 1.25 million shares in Bajaj Hindustan.

Last year, MSL posted a net profit of Rs 10.67 crore over net sales and had other income amounting to Rs 46.85 crore.