New Delhi: The ministry of heavy industries and public enterprises has sought cabinet approval to sell a majority stake in the ailing Scooters India Ltd.
“We have sent a draft of expression of interest to the cabinet about 10 days back. The cabinet is likely to take a decision in a month’s time,” said Ambuj Sharma, joint secretary, department of heavy industry in the ministry.
Vilasrao Deshmukh, heavy industries and public enterprises minister, said last month that the government was scouting for a joint venture (JV) partner to revive Scooters India.
The government was approached by firms such as Mahindra and Mahindra Ltd and three-wheeler maker Atul Auto Ltd for a possible stake acquisition in the Lucknow-based company. Earlier this month, Gujarat-based Atul Auto director Atul Kedia said his firm would be interested in taking a majority stake in the distressed firm.
Deshmukh had said in August the government would prefer to keep a majority stake, while the JV partner will have management control.
The ministry has now revisited that stand. “Majority stake will have to be given to the JV partner,” Sharma said on Friday.
An expert said buying a stake in Scooters India would boost Atul Auto’s brand position. Also, since Atul Auto and Scooters India make similar products—front-engined three-wheelers—a successful bid would result in better synergies.
“Atul Auto is looking for a stake in Scooters India to scale up its assets. It (Scooters India) will offer (the firm) much (more) attractive valuations,” said Angel Broking Ltd’s auto analyst Vaishali Jajoo.
Mumbai-listed Scooters India posted a Rs 22 crore loss in fiscal 2010. The government owns over 95% of the firm.
In another development, Sharma said the government would establish a specialized body in three months to cater to the interests of the Indian automobile industry. “The body will be called the National Automotive Board. It will help in the sustainable growth of the sector,” he said.