New Delhi: The government Thursday decided to divest its entire 95% in Scooters India Ltd (SIL), which primarly manufactures three-wheelers, with an aim to revive the company that has been incurring losses since 2002-03.
“Union cabinet decided to revive SIL. It is being proposed to revive the company through induction of strategic partner by off loading the entire government equity of around 95%,” information and broadcasting minister Ambika Soni told reporters after the meeting.
The balance 5% equity will remain with banks, financial institutions, corporate bodies and others.
She said the selling of stake will be done through the department of disinvestment. The government will seek approval of Parliament to get the authority to identify and induct a strategic partner. Besides, the cabinet also gave approval for continued extension of salary support and clearing of balance sheet.
“The intention is to transfer the entire government equity to a suitable identified strategic partner through the department of disinvestment,” Soni said.
SIL has been suffering losses since 2002-03 and by 2008 -09 its entire networth was eroded, she added.
In March 2009 the company was declared sick and went to the Board for Reconstruction of Public Sector Enterprises (BRPSE). As on 2009-10 it had a net loss of Rs 22.03 crore.
The firm’s “inherent inefficiencies”, “low productivity” and old plant technologies and ageing workforce didn’t help the matter either, she said, adding SIL was unable to meet even salaries and other statutory dues.
Incorporated in 1972, SIL started commercial production of scooters under the brand name of Vijai Super for domestic market and Lambretta for overseas market.
Later it ventured into three-wheelers with the Vikram brand. However, in 1997 the firm stopped two-wheeler production and has been into manufacturing and marketing of 3 -wheelers only.
The government, which holds 95.38% as on 31 December last year, was considering a joint venture with the private sector or disinvestment of its stake for revival of SIL.
After a recommendation by the BRPSE to revive Scooters India through disinvestment or joint venture, private firms such as Atul Auto, Bajaj Auto, Mahindra & Mahindra and Piaggio are being looked as possible suitors.
Rajkot-based three-wheeler maker Atul Auto had said it was interested in acquiring “not-less-than 51% stake” in SIL.