Scooters India divestment okayed

NEW DELHI: The Union Cabinet on Thursday gave an uncontested green signal to the disinvestment of Scooters India (SIL) but found itself saddled with political concerns from the ruling Congress. The Centre gave its nod to divest its entire 95% equity to a joint venture partner to revive SIL. The proposal from heavy industries ministry went through smoothly, marking the first strategic sale in UPA's tenure since 2004. The proposal elicited immediate response with Atul Auto, a Rajkot-based three-wheeler maker, expressing interest.

Market watchers say others such as Bajaj Auto and Mahindra & Mahindra may also eye the PSU.

Sources said following the unobstructed nod, heavy industries minister Praful Patel informed the PM-chaired session that he wanted to place on record the reservations expressed by Uttar Pradesh Congress chief Rita Joshi. Opposing the proposal, Joshi had told Patel that he should not accept the proposal in an election year, only to be told that it was way past the stage where it could be recalled. But the information about Joshi's resistance met with Cabinet's casual acknowledgement, sending SIL on the way to divestment. The Centre will now scout for a strategic partner which can turn around the company making three-wheelers to a successful two-wheeler manufacturer.

Joshi's concern appeared political, fearing that divestment could trigger fears among employees and provoke popular angst ahead of state elections.

The UPCC chief told TOI, "I spoke to Praful Patel when I came to know about the proposal being on the agenda. He promised to put my view before the Cabinet." The poll season, for which Congress sounded the bugle at its two-day Varanasi conference which ended on Thursday, has often met with scepticism among voters. However, the government is sure that SIL needs a resourceful private giant for reviving the sick unit which has been incurring operational losses since 2002 and net losses since 2006.

The government justified it by saying, "This (losses) is mainly on account of its inherent inefficiency and low productivity as compared to other players in a highly competitive three-wheeler market. SIL also suffers disadvantage of its old plant, machinery, lack of technology, aging workforce, poor systems etc." But it assured that employees would continue to get salary support. SIL employs 1,255 persons though the strategic partner would offer VRS to 900 workers.

There have been two views in Congress about SIL's divestment, with a section feeling that successful stake sale could raise hopes about the permanently sick unit which could then be flagged as a success in the heart of the state up for polls. It would mark a businesslike intent for Congress, desperate to make its presence felt on Mayawati's turf.