Bajaj Holdings buys majority stake in MSL as Maharashtra government exits joint venture

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Published: June 20, 2019 4:54:54 PM

With this acquisition, Bajaj Holdings’ stake in the company has gone up to 51% and MSL has become a subsidiary of BHIL with effect from June 17.

Bajaj Holdings, Bajaj Holdings and Investment Limited, WMDC, MSL venture, Bajaj Holdings shares, MSL share price Bajaj, which owned 24% (27,42,848 shares) in MSL had the first right of refusal and wanted to buyout WMDC.

Bajaj Holdings and Investment Limited (BHIL) has acquired a majority stake in Maharashtra Scooters (MSL) with Western Maharashtra Development Corporation (WMDC), transferring its 27% stake in MSL to BHIL. This marks the exit of the Maharashtra government from the MSL venture, ending a 16-year-long legal battle between Bajaj Group and the state government over the control of MSL.

According to a statement issued by BHIL, WMDC transferred its 27% stake to Bajaj Holdings on June 17. With this acquisition, Bajaj Holdings’ stake in the company has gone up to 51% and MSL has become a subsidiary of BHIL with effect from June 17.

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Bajaj Holdings and WMDC were co-promoters of MSL and together owned 51% in the company. Bajaj Holdings and Investment held 24% in MSL, while WMDC, a Maharashtra government undertaking, held 27%. MSL started manufacturing geared scooters in 1975. MSL discontinued production of geared scooters in April 2006. Since then, it has only manufactured pressure die casting dies, jigs and fixtures for two and three-wheelers.

In 2003, WMDC wanted to sell its 27% (30,85,712 shares) in Maharashtra Scooters. Bajaj, which owned 24% (27,42,848 shares) in MSL had the first right of refusal and wanted to buyout WMDC. However, the price of the stock and valuations have been a bone of contention between the promoters.

Both promoters have been litigating over stake sale for the last 16 years. This matter then went into arbitration. Justice Arvind V Savant’s (Retd) arbitration award of January 2006 valued the share price of MSL at Rs 151.63 per share but the arbitration award of 2006 was challenged by WMDC.

The Division Bench of the Bombay High Court had dismissed WMDC’s contention in May 2015. WMDC then filed a Special Leave Petition in the Supreme Court against the HC order. The Supreme Court passed an order on January 9, 2019, dismissing the WMDC SLP and directed that BHIL to pay WMDC Rs 232 per share along with interest at 18% per annum from January 14, 2006 and then shares were to be transferred to BHIL.

BHIL had made the payments in January 2019 which was no encashed by WMDC. BHIL again issued these cheques on April 12, 2019 which was finally accepted by WMDC. While this battle has been going on, the MSL stock has been soaring over the years.

It had a market cap of Rs 4,864.17 crore. The MSL stock ended 4.96% down at Rs 4,444.30 on BSE on Tuesday.
MSL derives its value from its investments especially equity of Bajaj Group companies. MSL owns 67,74,072 shares in Bajaj Auto, 1,89,74,660 shares in Bajaj Finance, 37,25,740 shares of Bajaj Finserv and 33,87,036 shares of BHIL (as per MSL Annual Report 2017-18). As on March 31, 2018 these equity holdings were valued at Rs 8,035.63 crore and has since then appreciated significantly.MSL is now a core investment company.

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