The ongoing auto sector crisis and the government's failure to find a buyer for loss-making Scooters India Ltd, once the maker of iconic scooter brand Lambretta in India, may force the PSU to shut down operations. The Ministry of Finance wants to shut it down by selling its manufacturing plants and machinery, reported Bloombergquint. As part of Plan B, the government may sell its non-core assets to improve its financial condition. The report says the Department of Investment and Public Asset Management will soon forward all these suggestions to the core group of secretaries, which will then take the final decision.
The Ministry of Finance, however, has not come up with any official statement on the state-owned firm's closure. Currently, Scooters India sells three-wheelers under the brand name 'Vikram'. The government owns 97.7 per cent stake in the firm, while rest is held by the public.
The loss-making company, which started commercial production of scooters under the brand name of Vijay Super for India and Lambretta for overseas market in 1975, has seen a continuous decline in revenue and profit in the past several years. It registered total revenue of just Rs 66 crore and a net loss of Rs 4.6 crore in 2018-19.
The company had discontinued its two-wheeler production in 1997 and concentrated only on the manufacturing and marketing of three-wheelers since then.
If the government decides to shut Scooter India, it will be second state-owned firm to see closure after Hindustan Fluorocarbons, which closed its operations in March this year.
The domestic automobile industry has faced unprecedented crisis in the past 12 months. Last month, sales crashed by nearly 30 per cent as consumers continued to stay away from dealerships. The declining sales have also led huge downsizing in workers' strength. The cull has been so extensive that one senior industry source told Reuters that initial estimates suggest that automakers, parts manufacturers and dealers have laid off about 350,000 workers since April.
Edited by Manoj Sharma