While the primary reason for extending sale deadline is the muted sentiment in the auto sector, the government wants the struggling company's electric vehicle (EV) business to grow. The Ministry of Heavy Industries has recommended to extend the disinvestment deadline to April 2020 in view of its EV plan.
"There was also a view that SIL be closed down with monetization of 147.5 acres of its land. But it has now been decided that EoI (Expression of Interest) be issued after allowing it time for EV business," a senior official said.
Scooters India has developed five prototypes of EVs but it is yet to get regulatory clearance for them. It has also not received any order for the vehicles.
The struggling automaker which once rolled out the classic Lambretta bikes has been cash-starved for quite some time prompting the government to sell it off. The state-owned auto firm currently manufactures Vikram brand of three-wheelers which are Bharat Stage (BS) -IV compliant. It does not have working capital to invest in BS-VI compliant three wheelers as required by the latest regulations.
"Niti Aayog's recommendations for migration to EVs by April, 2020 makes it imprudent to invest in BS-VI standards technology," as per an internal note seen by .
The Government of India had ain-principle' decided to disinvest 100 per cent of its equity shareholding in SIL (equivalent to 93.74 per cent of the total paid up equity share capital of SIL) through strategic disinvestment with transfer of management control. It had issued EoI kicking off the share sale but did not receive any financial proposal forcing it to snap the process.
Another EoI would now be issued for disinvestment in due course.
As per the latest financial figures, Scooters India had a turnover of Rs 63.85 crore in FY19 and it reported a loss of Rs 4.63 crore. Its networth is estimated at about Rs 66.05 crore.
The Board of SIL had in its meeting in February last year approved the plan to hive off non-core land of 89.69 acres out of total land of 147.499 acres subject to approval of shareholders and other regulatory authorities as applicable. The hived-off land shall not be part of the strategic disinvestment.
( With inputs from IANS )