The Telegraph
Since 1st March, 1999
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Maharashtra Scooters deal may hit legal roadblock

Calcutta, Sept. 9: Stockbroker Chandravadan Desai is contemplating a class action lawsuit against the Maharashtra government and Bajaj Auto, the two promoters of Maharashtra Scooters.

Desai, who holds a substantial stake in Maharashtra Scooters, says the Maharashtra government’s move to sell 27 per cent in the company to Bajaj Auto “will hurt shareholders and hence should be stopped from doing so”.

Bajaj Auto, which holds 24 per cent in the joint venture, has offered to pay Rs 75 per share for the government’s stake in Maharashtra Scooters, which according to Desai is far below the intrinsic value of the company’s shares.

Maharashtra Scooters’ investments in financial assets, mostly in the shares of Bajaj Auto, exceed Rs 300 crore, or over Rs 275 per share.

“Why hasn’t the Maharashtra government restructured Maharashtra Scooters as yet when it could unlock value'

“And why does Bajaj Auto insist that Maharashtra Scooters could be restructured only after it has acquired the government’s stake'” asks Desai.

He contends the Maharashtra government’s move to sell its shares in the company will hurt all shareholders including itself, with the sole exception of Bajaj Auto, which is trying to buy it cheap.

Desai and his associates are together believed to have cornered over 10 per cent of the company’ shares. He now says all shareholders could join him in the ensuing legal battle. “All shareholders are similarly situated and would benefit equally from the lawsuit.”

Desai’s client Joy Kankaria, a jute baron, had previously offered to pay Rs 200 per share for the Maharashtra government’s stake and had indicated that he could improve it further. In response, Bajaj Auto upped its offer to Rs 75.

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