Mumbai: Lucknow-based Scooters India Ltd, the ailing maker of the Vikram brand of three-wheelers, has launched an Rs18 crore restructuring programme that it expects will help it return to profits by the end of this fiscal year.
As part of product diversification, the state-owned auto firm plans to start making electric two-wheelers and has received expressions of interest from about 10 firms, including some from China, to supply kits that can be assembled at the company’s Lucknow facility, Scooters India chairman and managing director Ajai Kumar said. A final decision on the supplier will be taken in six months.
Under the restructuring plan, Scooters India will seek to develop a vehicle free of the current problems with its three-wheelers, improve processes and outsource component manufacturing, said Kumar. Vikram has low fuel efficiency compared with competing vehicles.
Half of the cost for the three-year restructuring will be borne by Scooters India, 98% owned by the Union government, and the remaining by the ministry of heavy industry and public enterprises.
Bangalore-based Abcon Technology India Ltd, a consulting specialist in the automobiles industry, is assisting Scooters India in improving processes, Kumar said.
The auto maker, for instance, plans to employ cellular manufacturing, a factory floor design that allows for movement of parts and materials to make products in a continuous process flow.
The company has also engaged Pune-based Automotive Research Association of India, or Arai, for new product planning and to address problems in the Vikram three-wheeler platform.
Arai will also supervise the company’s vendor sourcing strategy, a key area identified as a problem by Scooters India, said Arai director Shrikant Marathe.
Of the 1,500 components used in making the Vikram, Kumar said, Scooters India plans to outsource manufacturing of at least 500 items. It is also in the process of identifying vendors with the help of Arai, he added.
Scooters India ended fiscal year 2008 reporting a loss of Rs21 crore on sales of Rs160 crore, selling 12,000 three-wheelers.
While it has a fairly strong positioning in seven-seater three-wheeler passenger carriers with a near-half market share in 2006-07, the company has taken a beating in the cargo-carrier segment as it has not been able to withstand competitive pressures from the likes of Italy’s Piaggio SpA, Mahindra and Mahindra Ltd and Bajaj Auto Ltd.