ICRA Advisory Services, a division of the rating agency ICRA Ltd, has valued the stock of Maharashtra Scooters Ltd at Rs 425.47, two-and-a-half times over the ruling market price of Rs 170 a share.

The development has given a new dimension to the controversy over valuation of the Maharashtra government's 27 per cent stake in MSL, which was up for divestment.

The ICRA report said: "The value of investments held by MSL is Rs 490.98 crore (Rs 4.91 billion) as on December 31, 2003. If this amount were to be set off against the value of assets other than investments, we would get Rs 486.32 crore (Rs 4.86 billion) corresponding to Rs 425.47 per share."

It added that "if the value of the investments was to be realised, small shareholders might represent to the board of directors of MSL to take timely decision with regard to the sale." It felt small shareholders could also seek to appoint a director.

The basis of the valuation was government and trust securities and unquoted bonds are valued at cost, quoted equity shares are valued according to the closing price on the National Stock Exchange on December 31, 2003 and mutual funds were valued at the repurchase price on December 31, 2003.

The ICRA report was based on the annual reports of the company and "other sources it believed to be reliable".

However, officials of MSL and its two promoters, namely BAL and Western Maharashtra Development Corporation, declined to meet ICRA representatives.

The difference over valuation of the government's stake cropped up when Bajaj Auto Ltd, which holds a 24 per cent stake, offered a rate of Rs 75 a share while the government appointed agency CRISIL reportedly valued it at Rs 237 a piece.

Drawn by the difference between the BAL's intention to shell out the money and the CRISIL valuation, a handful of investors entered into the picture to ensure that shareholders' interest be protected.

Merits mention, Dinesh Trivedi, a member of Rajya Sabha as well as Finance Committee of Parliament, had sent letters to Sebi and Maharashtra chief minister demanding protection of interest of small shareholders. The public holding in the company stood at 49 per cent.

CRISIL valued the stock at Rs 237 a piece when the share price of BAL, in which MSL has substantial shareholding, was traded at Rs 400. Now, the BAL stock hovers over Rs 1,000. In fact, out of MSL's investments of Rs 490.98 crore (Rs 4.91 billion), nearly Rs 400 crore (Rs 4 billion) came from BAL.

Trivedi's letters, it may be mentioned, followed appointment of an arbitrator by the Maharashtra government to solve the impasse over pricing of its stake.