Mah Scooters

This Bajaj company has a market cap of over Rs.2300 crore. And all this for a company which has no manufacturing activity and this is for over a decade now, ever since it stopped assembling scoters for Bajaj Auto. What see’s it through is its other income of Rs.11 crore, which is mainly via dividend income of holding companies. This has come down substantially from Rs.52 crore it had in previous Q2. Its net profit for the quarter was at Rs.9 crore, down from Rs.49 crore in previous Q1. The company used to earlier make the Bajaj flagship scooters – Super and Chetak but it stopped this this 2006.

As at 30th Sept 2016, the company owned 1.90 crore shares of Bajaj Finance, 67.74 lakh shares in Bajaj Auto, 37.25 lakh shares in Bajaj Finserv and 33.87 lakh shares in Bajaj Holding Investment Company. The value of these holdings currently stands around over Rs.4000 crore. And this is the sole reason why the stock enjoys so much fancy.

The minority shareholders have been pushing for liquidation to unlock value; their contention is that when there is no manufacturing activity, what is the need to remain as a mere holding company? The company had sought RBI approval in July to become a Core Investment Company (CIC). The minority shareholders are against this and want to liquidate the company. Western Maharashtra Development Corporation (WMDC) holds 27% stake and Bajaj Holdings has 24% stake. The latter has the first right of refusal to buy WMDC’s stake and thus the two have been locked in a legal battle for years now. In May’15, the Bombay High Court ruled that Bajaj Holding would have to pay 18% simple interest for over nine years on the Rs.47 crore it owes to WMDC to acquire stake in Maharashtra Scooters. The HC also upheld Bajaj’s valuation of Rs.151.63 per share to buy out the stake. And thus there is hope that this long winding legal battle could soon see an end.