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Govt hints at putting Scooters India back on the block

07 Feb 2011 Evaluate

The government is mulling divesting its stake in closed or terminally sick public sector enterprises. Unless Scooters India gets fresh capital infusion, it cannot survive as it is not in a good financial position. But the ministry’s earlier proposals of outright sale of sick state-owned enterprises, such as Indian Telephone Industry, had met with stiff opposition from trade unions and political parties, both in the opposition and within the ruling alliance.

Last year, the ministry had approved a 74% stake sale in the loss-making two- and three-wheeler maker Scooters India. The government holds 95.38% stake in the company. Buyers would be interested in the ailing company as it owns 150 acres of land that may fetch more than its accumulated losses of around 826 crore.

The government had infused around 600 crore in the company in 1996 but the move failed to revive the company. In 2009, the department of public enterprise had finalised a list of 59 public sector firms and had sought opinion of various ministries on how to dilute or sell government stake in them.

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