BS reported that the Indian ministry of heavy industries and public enterprises is considering an outright sale of government’s stake in sick public sector units HMT Bearings and Scooters India.
While HMT Bearings had reported a net loss of INR 15.3 crore for 2009-10, Scooters India had registered a net loss of INR 22 crore.
A senior ministry official confirmed the development and said the proposal had been sent to the cabinet for approval. The official said that “We are considering selling the government’s entire stake in Scooters India and HMT Bearings, as both are in bad financial position.”
He said that “Competitive bids would be called for offloading stake in the companies. The companies can be revived with fresh capital infusion by the new owner.”
Last year, the ministry had approved a 74% stake sale in the loss making two and three wheeler maker Scooters India. The then heavy industries minister, Mr Vilasrao Deshmukh had said Mahindra & Mahindra was interested in buying the government’s stake in the company. However, the process was stalled following opposition from other ministries.
The government owns 95.4% in Scooters India. Buyers are expected to show keen interest in the company, as it owns 150 acres of land, worth more than its accumulated losses of INR 826 crore. The government had infused 600 crore into the company in 1996, but the move failed to revive the company.
HMT Bearings has cumulative losses of INR 81 crore. Production has declined over 60% over the last three years due to inadequate availability of raw material, arising out of shortage of working capital. The company’s revival plan is also affected, as it has failed to secure a loan of INR 17.4rore against government guarantee. The loan has been pending since 2006. HMT Bearings is trying to sell surplus land around the factory’s premises in Hyderabad to infuse working capital.
While the move, if approved, may breathe new life into the two entities, concerns persist as the ministry’s earlier proposals of outright sale of sick state-owned units, such as Indian Telephone Industries, had met with stiff opposition from trade unions and political parties, both in the opposition and the ruling alliance.
