Promoters of Maharashtra Scooters (MSL) — Bajaj Holdings & Investment Limited and Western Maharashtra Development Corporation (WMDC) — are headed for another legal battle. Bajaj’s plan to acquire a majority stake in MSL by buying out WMDC’s shares has hit a roadblock.
WMDC is all set to challenge the May 8 Bombay High Court order on valuation of their stake in Maharashtra Scooters. BHIL and MSL have been battling in the court for the last 12 years over the valuation of WMDC’s holdings in Maharashtra Scooters. WMDC owns a 27% stake in MSL, while Bajaj holds 24% with the remaining held by financial institutions and individual shareholders.
WMDC finds this valuation unacceptable and has decided to explore the legal options, Sadashiv S Survase, the WMDC nominee director on MSL board, MD of WMDC and joint director, industries (Maharashtra state government), said.
Survase said, BHIL had issued a cheque of Rs 130 crore to WMDC towards this buyout, but WMDC has returned the cheque as it found the valuation of Rs 152.63 unacceptable. The government has decided to exercise legal options before it, he said. WMDC has 90 days from the date of the order to respond and approaching the Supreme Court against the HC order is under consideration, said Survase.
The government’s legal team is working on the future course of action, he said. Shareholders of MSL were appraised of the situation at the AGM held in Pune on July 21.
Maharashtra Scooters stopped production of geared scooters almost a decade ago but it continues to be a tool room, dies and fixtures supplier to Bajaj Auto. MSL has in its investment portfolio the shares of Bajaj Auto, Bajaj Finance, Bajaj Finserv, Bajaj Holdings and Bajaj Hindusthan Sugar which makes it a critical buy for Bajaj.
The Maharashtra government, a decade ago, had decided to disinvest in the venture but both the promoters could not come to an understanding on the valuation, so they went in for arbitration.
The arbitrator came up with an award in July 2006 and fixed the share price for the sale at Rs 151.63. Unhappy with this price, WMDC went to the high court against this award. A single judge bench of Bombay High Court sets aside the award of the arbitrators in February 2010. Bajaj challenges this decision in the Bombay High Court by filing an appeal before the Division Bench of the High Court.
The HC order had upheld Bajaj Holding’s appeal regarding the arbitral award.