The Hindu Business Line : Maharashtra Scooters weak on valuation worries

THE Maharashtra Scooters stock has been moving downhill for the last two days on the apprehension that the arbitration proceedings to fix a valuation of the stock for purchase of one of the promoter's stake by the other could be much lower than the market valuation.

The stock skidded by 7.23 per cent on Monday from the level of Rs 377 and further slipped by 5.48 per cent today. Trading volumes also increased on the BSE to 29,255 against the 2-week average of just 7,926 shares.

Mr Kirit Somaya of Investors' Grievance Forum told Business Line that the organisation received several complaints from investors located in Mumbai and Kolkata that if the stock valuation recommended by the arbitrator was way below the market price, which was based on the company's investment valuation, it would not only mean loss to the Maharashtra Government, but the small investors also.

Western Maharashtra Development Corporation, a Maharashtra Government-promoted development agency, is the majority joint venture partner in MSL holding 27 per cent of the total paid-up capital of Rs 11.42 crore. MSL also has a general reserve of Rs 163.57.

"We would look into the complaints and if found that there are genuine reasons behind such concerns, we would take it up with appropriate authority," Mr Somaya added.

Apart from the promoters, who jointly hold 51 per cent, public holding in MSL is 30.48 per cent and institutional investors hold around 5.07 per cent.

The MSL stock price had moved up from Rs 311 to Rs 400 level in December and was hovering around that level in early January.

MSL's prize investments are in Bajaj Auto (33.86 lakh shares), Bajaj Auto Finance (10.24 lakh shares) and Bajaj Hindusthan (12.55 lakh shares). The today's closing prices of these stocks are: Bajaj Auto Fin Rs 455.95, Bajaj Hindusthan Rs 362 and Bajaj Auto Rs 1,999.45.