Scooters India to reduce net loss to Rs 17.9 cr

Sick state-owned Scooters India Ltd (SIL) has set a target to cut its net losses marginally to Rs 17.9 crore in 2011-12 from Rs 18.4 crore in the last fiscal by reducing its operational cost and increasing the production.

The company has pegged the production increase by 10% and reduction of operational cost by five%, according to the Memorandum of Understanding (MoU) between the company and its administrative ministry of heavy industries and public enterprises.

The ailing unit is likely to register an increase in its gross sales to Rs 223.2 crore in this fiscal from Rs 171.2 crore in the last year.

In May this year, the government decided to divest its entire 95% in the firm, which primarily manufactures three-wheelers, with an aim to revive the company that has been incurring losses since 2002-03.

The balance five% equity will remain with banks, financial institutions, corporate bodies and others.

The government will seek approval of Parliament to get the authority to identify a strategic partner. Besides, the Cabinet also gave its nod for continued extension of salary support and clearing the 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 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 the firm stopped two-wheeler production and has been engaged into manufacturing and marketing of three-wheelers only.

The government, which holds 95.38% as on 31 December last year, was considering a joint venture with the private sector or disinvestment of its stake for revival of SIL.

After a recommendation by the BRPSE to revive Scooters India through disinvestment or joint venture, private firms such as Atul Auto, Bajaj Auto, Mahindra & Mahindra and Piaggio are being looked as possible suitors.