Three-wheeler maker Atul Auto, which is eyeing a significant stake acquisition in Scooters India, today said a successful buy would result in better synergies as both companies manufacture similar engines.
"If the deal goes through, it would help us a lot in increasing our capacity. Both (Atul Auto and Scooters India) make similar products in terms of front-engine three-wheelers. Therefore, it will be a right combination for us," Atul Auto Director Vijay Kedia told PTI here.
The Lucknow-based Scooters India, an ailing public sector unit, used to make the 'Lambretta' model, which it was forced to stop as it accumulated huge losses. The company then confined itself to the three-wheeler space.
"We are keen on picking up a stake in Scooters India. We are likely to ink a JV with the government and talks are on in this regard," he said.
Currently, the government owns 95 per cent in Scooters India, which posted a Rs 22-crore loss in FY10.
"Scooters India has liabilities of around 100 crore," Kedia said.
Rajkot-based Atul Auto and Scooters India make similar products in terms of front engine three-wheelers, whereas Bajaj and Piaggio, the two other leading players, are focusing on rear engine options.
Kedia said he met the Union Heavy Industries Minister Vilasrao Deshmukh a week ago and discussed the acquisition issue with him.
"I will visit the (Scooters India) plant soon," he said.
Atul Auto currently has an annual capacity of 24,000 units and plans to enhance this to 48,000 units by end-this fiscal.
The three-wheeler manufacturer has sold about 5,300 vehicles so far this year and is expecting a 50 per cent sales growth on the back of an increasing demand.
