Follow-up of Scooters India’s Disinvestment

Home-grown auto makers Atul Auto and Mahindra & Mahindra are gearing up to explore the possibility of acquiring Scooters India, after the government today decided to divest its entire stake in the sick firm.

While Rajkot-based Atul Auto today said it is willing to acquire the 95 per cent stake in Scooters India  Ltd (SIL), Mahindra & Mahindra said it will examine the opportunity and will announce a final decision on  the acquisition of SIL within the next 45 days.

“We are interested in acquiring a minimum of 51 per cent stake in SIL. If the government permits, we can go  up to acquiring the entire 95 per cent stake of the firm,” Atul Auto Director Vijay Kedia told PTI. Asked about the valuation of SIL, Kedia declined to put any figure saying it will be possible only after  conducting a diligence.

Reiterating the company’s interest in SIL, he said: “We had earlier met the then Heavy Industries Minister Vilasrao Deshmukh and expressed our interest.

After Praful Patel took over, we again wrote a mail to them. But so far we have not got any reply as probably they were busy with this decision of disinvestment”.

He said if his company emerges as the acquirer, the acquisition will be funded through internal accruals and debt.

“At present we have a cash reserve of about Rs 25 crore. We have been already approached by many private equity firms,” Kedia said, adding, Atul Auto is expecting a revenue of Rs 190 crore for 2010-11 that will be declared in the next few weeks.

“We intend to invest in Scooters India’s technology and expand capacity. We have similar products,” Kedia said, adding, Atul Auto is the best candidate for Scooters India.

“Scooters India makes front-engine vehicles and we are are also into front-engine vehicles. So, we think it will be a a good combination,” he said.

Meanwhile, M&M said it will evaluate the possibilities of acquiring a stake in SIL.

“We will examine the opportunity and decide whether to approach the government. We will look to give any update in about 45 days,” a M&M spokesperson said.

The official, however, declined to share any further detail on this issue. Another three-wheeler maker Piaggio, which was earlier said to have been interested for a pie in SIL, said it is staying away from acquiring the troubled company.

“It (SIL) never appealed to us. We have our own facility at Baramati and are concentrating on it,” Piaggio Vehicles Chairman and Managing Director Ravi Chopra said.

Earlier in the day, the government, which holds 95.38 per cent in SIL as on December 31 last year, announced its decision to divest the entire stake in the firm with an aim to revive the company that has been incurring losses since 2002-03.

The selling of stake will be done through the Department of Disinvestment. The government will seek approval of the 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.

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.

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 it stopped two-wheeler production and has been into manufacturing and marketing of three-wheelers.

Thanks to Economic Times.

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