Maha Scooters' sale controversy hots up

RS member urges Sebi, Maharashtra govt to protect small shareholders' interest

The controversy over valuation of the Maharashtra government's 27 per cent stake in Maharashtra Scooters Ltd (MSL) has taken a new turn with Dinesh Trivedi, a member of Rajya Sabha as well as finance committee of Parliament, entering the scene with the demand of protecting small shareholders.

Trivedi, in separate letters, has asked the Securities & Exchange Board of India (Sebi) chairman and the Maharashtra chief minister to unlock value of the stock so that the government could get maximum return and small shareholders would not be sacrificed to "help big investor."

Public holding in the company stands at 49 per cent. The letter follows the appointment of an arbitrator by the Maharashtra government to solve the impasse over pricing of its stake.

The difference over valuation of the government's stake cropped up when Bajaj Auto, which holds a 24 per cent stake, offered a rate of Rs 75 a share while the government appointed agency Crisil reportedly valued it at Rs 237 a piece.

In his letter to Sebi chairman, Trivedi has stated, "I am told that the company is sitting with disproportionately huge liquid assets which otherwise is not required for core business activities and the board had not taken any steps to unlock value out of it."

The company's investments in Bajaj Auto and mutual funds could be over Rs 100 crore.

He further added, "It seems they (the MSL management) have made a conscious attempt to keep the value locked and thereby impacting the market price (of MSL). The benefits of a low market price under such circumstances and its major beneficiaries is not hard to found out. Needless to say that if any deal is done at a lower valuation it would not only mean a huge revenue loss for the state government but also to the exchequer by way of taxes and would also jeopardise the interest of minority shareholders." His letters also reminded both the Maharashtra chief minister and the Sebi chairman that small shareholders had right to know the Crisil valuation which had been kept under the wraps.

Talking to Business Standard, he said, any step to "undersell" the MSL stock would be tantamount to "blatant cheating" with the small shareholders who had been keeping faith on the management for years, especially when there was buyer for the government's stake for Rs 200 a share. A jute industrialist, J K Kankaria, had given EoI to purchase the government's shareholding.

Trivedi may float a forum

Trivedi is working on formation of an Investors' Welfare Forum. He said the forum, which would take up issues beyond grievance, would have eminent economists, financial analysts, lawyers and chartered accounts on its board.

A former advocate general of West Bengal is likely to join the forum. It is understood that the MSL issue would be the first case which the forum would take up with the market regulators and the Maharashtra government.