Government Mulls Shutting Down Scooters India
The maker of iconic Lambretta scooters manufactures three-wheelers under the brand name Vikram.
The government may shut down Scooters India Ltd.—once the maker of iconic Lambretta scooters in India—after the state-owned company failed to attract any buyers.
The Finance Ministry is planning to sell the manufacturing plants and machinery of Scooters India to suitable buyers and shut the firm down, two people familiar with the development told BloombergQuint requesting anonymity. The loss-making public sector undertaking manufactures three-wheelers under the brand name ‘Vikram’.
The other option being considered is to sell non-core assets, with a separate sale of the company’s manufacturing plant and machinery in a bid to revive the firm and the brand, the people cited earlier said, adding that the sale of assets could attract buyers who may not be interested in buying the entire business.
An email query to the Ministry of Finance remained unanswered.
These options will be put forward by the Department of Investment and Public Asset Management before the core group of secretaries on divestment soon, one of the persons quoted earlier said. The group of secretaries, headed by cabinet secretary, will decide whether to revive the privatisation plan of the loss-making state-owned firm or close it down by selling its assets.
Scooters India has design, documentation, copyright of brand Lambretta, and possesses the rights of the trade name Lambretta/Lambro, according to the expression of interest document floated by the government last year to sell its entire 93.7 percent stake in the company. A little over 6 percent stake in the company is held by public.
As part of the expression of interest, about 89.7 acres of land of the total 147.5 acres of the three-wheeler maker in Lucknow had to be sold before its outright sale.
In 1975, the company started its commercial production of scooters under the brand name ‘Vijay Super’ for the domestic market and Lambretta for overseas market. From 1985-96, it produced and marketed two-wheelers and ‘Vikram’ three-wheelers. The company, however, discontinued two-wheeler production in 1997.
Scooters India, with assets worth Rs 111 crore as on March 31, 2018, has been reporting losses for the previous three financial years. While the government had considered shutting it down earlier, the proposal was junked due to political reasons.
This would not be the first such closure of a public sector company. In March, the government decided to shut Hindustan Fluorocarbons, and the company organised the sale of 66 acres of its land to offer voluntary retirement scheme to its employees, the person quoted earlier said.