The Telegraph
Since 1st March, 1999
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Jute baron squares up for battle with Rahul Bajaj

Calcutta, July 2: Jute baron Joy Kankaria and his stockbroker C.V. Desai have joined hands to take on Rahul Bajaj in the battle for control of Maharashtra Scooters — a company jointly promoted by Bajaj Auto and the Maharashtra government.

Towards the end of May, Kankaria had expressed interest in picking up the 27 per cent stake that the Maharashtra government intends to sell off in Maharashtra Scooters. Now, his stockbroker Desai has informed the company that he has scooped up a little over 5 per cent of the company’s shares from the market.

Market mavens say Kankaria has bought around 2 per cent of Maharashtra Scooters’ shares, which implies that the duo may have already cornered a 7 per cent stake in the company. And there’s little doubt that they are hungry for more. Bajaj Auto holds 24 per cent in Maharashtra Scooters.

The predatory interest in Maharashtra Scooters has been sparked by the fact that the company has investments in Bajaj group companies, especially Bajaj Auto, that are currently valued at Rs 200 crore.

Kankaria had said that he was willing to pay up to Rs 200 per share for the 27 per cent stake in Maharashtra Scooters along with management control. He now says he could improve the offer if the share price of Bajaj Auto goes up.

Desai said, “The company's (Maharashtra Scooters’) investments are far more attractive than its principal business. Its investments in companies owned by the Bajaj group is worth Rs 200 crore at current market price. It also has Rs 70 crore parked in mutual funds.”

Admitting that Desai — his “house broker” — had advised him on the bid, Kankaria said his valuation was based on Crisil’s report on the company and its investments.

Bajaj Auto is also keen on acquiring the Maharashtra government’s stake in Maharashtra Scooters, understandably to protect its equity interest in the company. The equation is now quite simple. Bajaj Auto has to either outbid Kankaria and Desai, thereby giving them the opportunity to reap huge capital gains, or bow out of the firm.

Whoever acquires Maharashtra government’s 27 per cent stake in Maharashtra Scooters will have to make a cash offer to other shareholders for 20 per cent more at the same price. Kankaria said the Maharashtra Scooters stakeout started when the stock was priced much lower than its current value of Rs 97.

Even before Desai officially revealed himself as predator, he had sent out hints to the management of the company and Rahul Bajaj signalling his interest in the company. At the last annual general meeting, he said in the presence of Bajaj that the Maharashtra Scooters stock was undervalued. “I told investors that they were going to be rewarded if they were patient,” Desai recalls.

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