The Telegraph
Since 1st March, 1999
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Suitors need a fatter purse to ride Maharashtra Scooters

Calcutta, July 23: The suitors for the Maharashtra government’s 27 per cent stake in Maharashtra Scooters may have to improve their offers substantially due to the rise in the market value of the company’s investments in shares and other securities.

Bajaj Auto and Joy Kankaria, a Calcutta-based jute baron, are in the fray for Western Maharashtra Development Corporation’s 27 per cent stake in Maharashtra Scooters — a joint venture between the Maharashtra government and Bajaj Auto.

The current market value of Maharashtra Scooters’ investments in various securities has shot up to Rs 285 crore. This implies that the realisable value of investments per share is currently pegged at Rs 250. (This is derived by dividing the market value of investments — as stated in Maharashtra Scooters’ balancesheet for 2002-03 — by the total number of shares of the company.)

Kankaria offered to pay Rs 200 per share for the Maharashtra government’s stake. Bajaj Auto, which holds 24 per cent in the company, had previously offered Rs 50 per share. But now, it is believed to be considering a better bid.

Kankaria says he is waiting for the Maharashtra government to indicate whether he could participate in the disinvestment of its 27 per cent stake.

Bigwigs in the Maharashtra government are still divided on whether or not to consider Kankaria’s bid. Some political leaders are of the opinion that the government should sell its holding to the bidder that offers the best price, while others feel, the stake should be sold to Bajaj Auto — the company’s joint venture partner which has the ‘first right of refusal’. Rahul Bajaj, the chairman of Bajaj Auto, also heads the joint venture.

The Calcutta-based jute baron had previously said he would consider raising his offer from Rs 200 per share if the value of Maharashtra Scooters’ investments appreciated.

The Maharashtra Scooters stock had shot up to around Rs 116 recently, but has since fallen from its peak and is currently trading at around Rs 93.

Maharashtra Scooters has invested over Rs 75 crore in mutual fund schemes, and close to Rs 200 crore in shares — mostly in Bajaj Auto, in which it holds 33.87 lakh shares valued at a little under Rs 190 crore.

The sharp increase in the value of investments is primarily due to the rise in the share price of Bajaj Auto. Maharashtra Scooters’ holding of 33.87 lakh shares in Bajaj Auto translates into a stake of 3.35 per cent, which it has built over several years.

Besides Bajaj Auto, Maharashtra Scooters also holds 10.24 lakh shares in Bajaj Auto Finance. The holding represents a 6.21 per cent stake in the company, and is valued at Rs 5.42 crore at the current market price of the stock.

Stockbroker C. V. Desai, who holds a 5 per cent stake in Maharashtra Scooters, said the company’s principal business of manufacturing two-wheelers was in shambles. “The investments of the company would effectively determine the price for the government’s stake,” he added.

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