In a long-standing battle between Western Maharashtra Development Corporation Limited (WMDCL), a Government of Maharashtra undertaking, and Bajaj Holding & Investment Limited (BHIL) over pricing of equity shares of Maharashtra Scooters Limited (MSL) has finally settled, and on June 17, 2019 MSL has become a subsidiary of BHIL. Upon the acquisition of 27% stake of MSL from WMDC, BHIL’s holding has increased to 51% in MSL.
In 1975, Maharashtra Scooters Limited was incorporated jointly by Bajaj Auto Limited (BAL) now Bajaj Holding and Investments Ltd post demerger in 2007 and Western Maharashtra Development Corporation Limited to manufacture geared scooters. With a gradual shift in consumer preferences from geared scooters to motorcycle, the company discontinued production of geared scooters in 2006. Currently, the company is engaged in two businesses — manufacturing of die casting dies, fixtures and die casting components, primarily meant for the automobiles industry and other being treasury operations involving management of surplus funds invested by the company. MSL holds a significant investment in Bajaj group companies.
*: Before Transfer
Bajaj Holding & Investment Limited is Bajaj group’s listed holding company. Currently, promoters own 49% & rest is owned by the public shareholder. Out of 51% of the public shareholding, MSL owns 3% of BHIL.
In 2003, WMDCL had offered to sell its 27% shareholding in MSL to BHIL. Since there was disagreement in price between both parties, both parties referred to a sole arbitrator with an understanding that the award would be binding on both. In 2006, the arbitrator awarded with a price of INR 153.6 per equity share. The said pricing/award was then challenged by the WMDCL in Bombay High Court.
In 2015, the Division Bench of the Bombay High Court had pronounced its judgment in the matter.
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Special Leave Petition (SLP) was then filed by WMDC in the Supreme Court against the above Order. After hearing both the parties, the Supreme Court has passed an order dated January 9, 2019, dismissing the SLP filed by WMDCL, subject to the following conditions:
- BHIL shall pay to WMDCL an amount of Rs. 232 per Share in place of Rs.151.63, along with interest @ 18% p.a. from the date of the award (i.e. January 14, 2006).
- No sooner the afore-said payments due are made, the shares shall be transferred to BHIL.
On June 17, 2019, BHIL purchased the 27% stake from WMDCL making MSL its subsidiary.
Gain/Loss to both parties
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