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The 12-year saga of Bajaj Auto acquiring Maharashtra Scooters Ltd (MSL) by buying out Western Maharashtra Development Corporation's stake may have finally come to a close.
The Bombay High Court has ruled that Bajaj Auto will have to pay 18 per cent simple interest per annum for over nine years on the ₹46.78 crore due to WMDC for its 27 per cent stake in MSL.
A two-member Bench of Chief Justice Mohit Shah and Justice BP Colabawala, which was hearing an appeal filed by the Pune-based company, upheld the arbitrator’s valuation of MSL at ₹151.63 per share. However, the court ordered Bajaj Auto to pay WMDC additionally an interest on ₹46.78 crore at the rate of 18% per annum from January 14, 2006, the date of the arbitration award.
Inflated amountSpeaking to BusinessLine , Bajaj Group Chairman Rahul Bajaj, happy with the 120-page judgment upholding the price, was sore about the interest rate. “Why should we be penalised?” he asked. “The 18 per cent rate of interest is crazily high,” he said, adding that 12 per cent interest rate would have been more understandable.
Bajaj, however, said the company had no intention of appealing the ruling unless the Maharashtra government filed a counter appeal.
Bajaj Auto holds 24 per cent in MSL, while state-owned WMDC holds 27 per cent (30.86 lakh shares). MSL is listed, and the issue of the former wanting to acquire the latter’s stake has been in caught up in some form of litigation.
The first tussle was over the valuation of the share, with Bajaj (which had first right of refusal) suggesting ₹75 per share and WMDC sticking to ₹400.
This was resolved through an arbitrator who arrived at a price of ₹151.63 in 2006.
On an appeal filed by WMDC, a single Bench ruled that it was unconstitutional for a listed company to not offer shares in the open. This was contested by Bajaj Auto in 2010 and the latest judgment has gone in its favour except for the high rate of interest.
On the BSE on Monday, the MSL stock zoomed over 6 per cent before closing at ₹919.25, a gain of ₹48.
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