The Hindu Business Line : Maharashtra Scooters pricing: `WMDC interests will be protected'

THE Government of Maharashtra does not consider the proposed divestment of majority holding in Maharashtra Scooters Ltd (MSL) a done deal yet and has resolved to protect the interests of Western Maharashtra Development Corporation (WMDC) on the stake sale issue.

The State Government owns 27 per cent stake in MSL through WMDC. The arbitration award on the dispute with Bajaj Auto over pricing of the divestment is expected to be announced on January 31.

Talking to Business Line, the State's Industry Secretary, Mr V. Jairath, indicated that "it was too premature" at this stage while the WMDC's view was being awaited. He, however, made it clear that the "interest of the PSU (WMDC) would be protected".

Mr Jairath added: "We are aware of the substantial difference in prices" supposed to have been recommended by the arbitrator for each share of MSL and the current market valuation of the stock. This is the first official comment on the issue from the State Government.

WMDC's partner in MSL, Bajaj Auto is also playing the waiting game. Mr Sanjeev Bajaj, Executive Director of Bajaj Auto, told Business Line today that, "we are awaiting January 31, the arbitration day, to decide further course of action."

Meanwhile, investors other than WMDC and Bajaj Auto who hold 49 per cent stake in MSL are surprised by the reported lower valuation by the arbitrator. A group of investors in Pune, who are planning a PIL on the valuation issue said: "The offered price is almost 80 per cent lower and this is something which we cannot stomach."

An official MSL release stated, "WMDC has offered to sell its 27 per cent stake in MSL to Bajaj Auto in 2003 at a price of Rs 232.20 per share and though Bajaj had confirmed its willingness to buy out these shares, the company had felt that the asking price was too high. Since the price proposed was not mutually acceptable, the matter was referred to arbitration and Mr Justice Arvind Sawant, former Chief Justice of Kerala High Court, was suggested by WMDC and accepted as the sole arbitrator," it said. The release has also mentioned that both WMDC and BAL have agreed that the arbitration award would be binding on both the parties.

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