The Hindu Business Line : MSL minority shareholders seek rights protection

ARMED with an independent valuation report by ICRA advisory services, a section of minority shareholders of Maharashtra Scooters Ltd (MSL) has approached the Securities and Exchange Board of India seeking protection of their rights.

The minority shareholders of the 27:24 joint venture between Western Maharashtra Development Corporation (WMDC) and Bajaj Auto form the largest block of investors, holding a total of 49 per cent stake in MSL. This group of shareholders has been expressing concern over the future of MSL in the event of disinvestment by WMDC, a Maharashtra State unit, in favour of Bajaj Auto.

The minority shareholders of MSL have pointed out to the market regulator that the spirit of corporate governance as also the takeover norms on the maximisation of the shareholders value, equality of opportunity and treatment for all shareholders could not be compromised.

The principal arguments put forward by the MSL shareholders are that (a) the valuation of the company should be based on valuation of the assets, including investments at their current market value; (b) the exemption to the takeover norms should not be applicable to MSL promoters in case of inter-se transfer from the State-level development corporation to the co-promoter.

Mr Mehul Damani, an investor in MSL, has also pointed out that the Supreme Court in a recent judgment held that a state government could not adopt double standards in dealing with a corporate and its own outfits.

As the valuation and the disinvestment price issues could not be resolved between the MSL joint promoters, an arbitration proceeding has been initiated to thrash them out. For the loss-making MSL, Bajuj Auto had earlier offered a price of Rs 75 per share, which was not acceptable to WMDC.

ICRA has now valued MSL at Rs 490.98 crore based on the market value of investments held by MSL as on December 31, 2003. It further clarified in its valuation report that "If this amount were to be set off against the value of assets other than investments, we would get Rs 486.32 crore corresponding to Rs 425.47 per share."