Amid volatile market conditions, the government has put on hold the strategic sale of sick PSU Scooters India Ltd (SIL) and will review the proposal 'holistically' before taking a final decision.
"We have taken the decision to put disinvestment on hold and we will look at it holistically before we take a final decision," Heavy Industries and Public Enterprises Minister Praful Patel told reporters on the sidelines of an Assocham event here.
The Union Cabinet had earlier this year cleared the proposal to divest the government's entire 95.38% stake in Scooters India to a private player through the strategic route (outright sale). As the company was formed through a parliamentary Act, Parliament's nod was required for the disinvestment to go through.
Sources in-the-know, however, said that with Assembly elections scheduled in five states next year— including UP and Punjab — Congress leaders in the state are understood to have sought the postponement of the sale of Lucknow-based SIL.
The state Congress leaders do not want it to be an election issue, they said.
Following a recommendation by the Board for Reconstruction of Public Sector Enterprises (BRPSE) to revive Scooters India through disinvestment or a joint venture, several private firms are being viewed as possible suitors.
There was speculation that auto majors such as Bajaj Auto, Atul Auto, Mahindra & Mahindra and Piaggio were eyeing a stake in the company.
Asked if any auto company has shown interest in buying SIL, Patel said, "There is no proposal floated to invite somebody to invest in this, but the decision per se at the moment is not to proceed on that..."
He, however, said, "We intend to have a fresh relook before we take a final decision."
The automobile company— which has about 1,200 regular employees— has been incurring losses since 2002-03. In March, 2009, the company was declared sick and referred to the Board for Reconstruction of Public Sector Enterprises (BRPSE).
Incorporated in 1972, SIL initially manufactured scooters under the brand name Vijai Super for the domestic market and Lambretta for overseas markets.
Later, it ventured into the three-wheeler segment with the Vikram brand. In 1997, it stopped two-wheeler production and is now engaged in the manufacture and marketing of only three-wheelers.
SIL's net loss stood at Rs 18.4 crore during the 2010-11 fiscal.
Shares of Scooters India were trading flat at Rs 32 apiece on the BSE today.
