Electric two-wheeler maker Lohia Auto today said it will be in the race to acquire beleaguered public sector firm, Scooters India in which the government has decided to offload its entire 95.38 per cent stake.
The National Capital-based firm will be slugging it out with the likes of Atul Auto and Mahindra & Mahindra (M&M) once the government goes ahead with the stake sale process with the seeking of approval of Parliament in the upcoming monsoon session.
“Once the due procedures are finalised, we will go ahead with putting a bid for Scooters India,” Lohia Auto Industries Chief Executive Officer Ayush Lohia told PTI.
When asked if the firm has decided on the size of the bid, Mr. Lohia said: “We have not decided yet as the valuation has not been done. It will be clear only after the due diligence.”
Meanwhile, the company has already started discussions with various private equity players to raise funds.
“We will tie up with PE firms to fund the acquisition. But we are not looking for any joint venture with any other auto maker,” Mr. Lohia said.
If the company succeeds in acquiring Scooters India Ltd (SIL), it will expand the reach of Lohia Auto, he added.
“This gives a very good opportunity. SCI products are already established. While SIL’s three-wheelers have 7 people capacity, our own upcoming vehicles will have a capacity to carry four passengers,” Mr. Lohia said.
The firm has recently announced its planned foray into the three-wheeler segment in the next six months with both diesel and CNG models, priced between Rs 1.25 lakh and Rs 1.35 lakh (ex-showroom).
Besides Lohia Auto, Rajkot-based Atul Auto had said it is willing to acquire the entire stake in SIL, while M&M had said it will examine the opportunity and will announce a final decision on the acquisition of SIL within the next 45 days.
The government, however, is hoping that some foreign players may show interest as the auto sector comes under automatic 100 per cent foreign direct investment.
Earlier, the Cabinet had approved divestment of the government’s entire 95.38 per cent stake in SIL, which has been suffering losses since 2002-03 and its entire networth completely eroded by 2008-09.
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 22.03 crore.
A senior government official had said the resolution to sell the 95.38 per cent stake is likely to be introduced in the monsoon session, which usually commences in July, of the Parliament and the stake sale exercise is likely to be completed within this fiscal.
After the government completely sells its stake, the balance equity of about 5 per cent will remain with banks, financial institutions, corporate bodies and others.
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 since been into manufacturing and marketing of three-wheelers only.
