“The future of MSL is bleak. The delay in selling government’s stake to Bajaj Auto is only eroding the marketcap of Maharashtra Scooters,” Rahul Bajaj, chairman of Maharashtra Scooters said at MSL’s AGM here on Friday. MSL’S marketcap is down from Rs 80 crore five years ago to Rs 20 crore now.
Crisil is carrying out valuations MSL and is expected to present its report on August 31, 2002. Crisil report would decided the value of the WMDC block. “However, these valuations are not binding on either WMDC or Bajaj Auto,” Bajaj said. MSL will also not be merged with Bajaj Auto Limited, Mr Bajaj said.
MSL was jointly promoted by the state government’s WMDC and Bajaj Auto. BAL and WMDC have an agreement not to pick up MSL stocks from the market and that WMDC would first sell their MSL shares to Bajaj Auto. Incidentally MSL also owns 33,87,036 shares of Bajaj Auto Ltd as part of its Rs 154.30 crore investment portfolio. MSL stocks have moved up from Rs 18.80 in August 2001 to about Rs 88 now.
Though the last two financial years have seen MSL post losses with drastic drop in turnover, Bajaj said there was no plan to close down the undertaking. If MSL has to stay afloat there is need for BAL to have flexibility to rationalize and restructure its production facilities and the only way seems to be by making MSL activities a part of BAL. “All this will only be possible after Bajaj Auto becomes a 51 per cent stakeholder,” Bajaj said. Bajaj Auto has been supplying CKD kits to MSL for assembly. “Eight months ago I wrote to the Maharashtra state CM that we will stop supplying CKDs ,” Bajaj said. Scooters assembled at MSL attract an additional sales tax of Rs 384 but the scooters have to be sold at identical prices as that of scooters from the Bajaj Auto plant and this could be avoided.
Maharashtra Scooters has posted better net profits in Q1 of 2002 though production is down to 11,422 scooters from 16,625 units same period last year. Sales is down to Rs 22.61 crore from Rs 33.50 crore. On better price realization, net profit went up to Rs 20 lakh from a net loss of Rs 1.79 crore during Q1 last year. During 2001-02, company sales and income was Rs 131.30 crore compared to Rs 217.40 crore in 2000-01.