Scooters India may be put on the block

The heavy industries ministry may seek the cabinet’s nod for ‘strategic disinvestment’ of the sick PSU Scooters India, which used to make the Lambretta scooter


There have been talks about disinvestment of Scooters India in the past, but successive governments could not implement the plan.
There have been talks about disinvestment of Scooters India in the past, but successive governments could not implement the plan.

New Delhi: The heavy industries ministry is likely to seek the cabinet’s approval for “strategic disinvestment” of loss-making auto maker Scooters India Ltd, a top official said on Friday.

Strategic disinvestment denotes sale of substantial portion of government shareholding in identified central public sector enterprises (CPSE) up to 50% or more, along with transfer of management control.

“Scooters India (disinvestment) is in the process. It will be a strategic sale. Strategic disinvestment, I would say,” heavy industries secretary Girish Shankar told PTI.

There have been talks about disinvestment of Scooters India in the past, but successive governments could not implement the plan due to divergent views among stakeholders, including employees.

Despite the government’s attempts to review the CPSE including sanctioning a “financial package”, Scooters India continued to incur losses over a long period, and eventually was declared “sick”.

The disinvestment in Scooters India is part of the government’s larger plans of strategic stake sale in CPSEs. The company used to manufacture the Lambretta scooter.

The government’s think tank NITI Aayog recently submitted two separate lists of sick and loss-making public sector units (PSUs)—one comprising those that can be closed down, and the other comprising firms in which the government can divest its stake.

The government aims to collect Rs56,500 crore through disinvestment in PSUs this fiscal. Of the total budgeted proceeds, Rs36,000 crore is estimated to come from minority stake sale in PSUs and the remaining Rs20,500 crore from strategic sale in both profit and loss-making companies.

In 2015-16, the government raised less than half of the disinvestment estimates at Rs25,312 crore against the target of Rs69,500 crore. It had raised around Rs24,500 crore in 2014-15 by selling stake in public companies; about Rs16,000 crore in 2013-14, and Rs23,960 crore in 2012-13.

Besides, Shankar said it is expected that the Indian passenger car market will reach 4 billion units by 2020, from 1.97 million currently. He said the automobile sector has the potential to generate up to $300 billion in annual revenue by 2026, create additional 65 million jobs and contributing 12% to India’s gross domestic product (GDP).

The secretary was addressing an event organized by the Confederation of Indian Industry (CII). NITI Aayog chief executive Amitabh Kant said India must become an integral part of the global supply chain to realize its ambition of 9-10% growth in the coming decades.

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