The government on Thursday approved the Rs 200-crore revival package of ailing Lucknow-based public sector undertaking Scooters India Ltd that includes debt waiver of nearly Rs 112 crore.
The Cabinet also decided to hike salaries of employees of the two-wheeler maker. Their retirement age has also been increased to 60 years.
"The Union Cabinet today approved the revival of Scooters India Ltd (SIL) through infusion of funds of Rs 90.38 crore as capex/working capital and financial restructuring through waiver/conversion of government loan/interest to the tune of Rs 111.58 crore," information and broadcasting minister Manish Tewari told reporters after the meeting in New Delhi.
According to sources, the clearance for revival has come in view of implications relating to the fate of about 1,000 employees of Scooter India, though the finance ministry had expressed reservations about providing such a package to the ailing unit.
Earlier in 2011, the Cabinet had given approval to divesting government's entire 95.38% stake in Scooters India to a private player through strategic route.
Sources said this did not materialise due to perceived political implications.
After the government shelved plan to sell out its entire stake in SIL, the department of heavy industry had proposed a revival package of Rs 202 crore for revival of the unit.
Shares of Scooters India Ltd on Thursday closed at Rs 36.55 apiece, up 4.88% from the previous day on the Bombay Stock Exchange.
The Cabinet also approved the 2007 pay scales to the employees as per the department of public enterprises (DPE) guidelines and enhancement of superannuation age from 58 years to 60 years.
Earlier, the ailing company's employees pay scale was on 1997 pattern.
According to an official statement, the revival package will result in improvement of SIL's productivity through enhanced capacity utilisation and improvement in efficiency.
This would also lead to improved sales and employment generation in the area, it added.
Besides, it stated, the increase in production and sales will result in enhanced contribution to the exchequer.
The automobile company has been incurring losses since 2002-03. In March 2009, the company was declared sick.
SIL's net loss stood at about Rs 20 crore during the 2011-12 fiscal.
"The company will stop incurring losses and will operate on a sustained profit basis. The company's net worth shall become positive and it shall come out of the purview of the Board of Industrial and Financial Restructuring," the release said.
The current dependence of SIL on government for release of non-plan financial assistance for disbursement of wages and statutory dues to employees, shall also cease and the future of the employees of the company shall be secured, the release added.
Incorporated in 1972, SIL initially manufactured scooters under the brand name Vijai Super for the domestic market and Lambretta for overseas markets.
Later, it ventured into the three-wheeler segment with the Vikram brand. In 1997, it stopped two-wheeler production and is now engaged in the manufacture and marketing of only three-wheelers.