Cabinet clears revival package for Scooters India
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The Union Cabinet on Thursday approved a Rs 200 crore restructuring and revival package for Lucknow-based public sector enterprise Scooters India.
Finance Minister P Chidambaram had objected to the proposal to pump in additional resources to the sick company on the ground that it would not yield desired results but the Prime Minister, sources said, stood his ground to clear the revival package.
The proposal regarding Scooters India has had interesting twists and turns over the last two years as the government had earlier moved a Cabinet proposal to sell off the sick unit.
The revival package for the loss-making unit envisages a Rs 200 crore package that includes an infusion of Rs 70 crore for capital expenditure and an interest free loan of Rs 20 crore for working capital, payable in five equal annual instalments only from 2015, after a three-year moratorium.
The revival package includes: converting the non-plan loan of Rs 83 crore into equity, waiving interest of about Rs 30 crore, providing fresh funds of Rs 70 crore as equity towards capital expenditure.
For the 1,200 employees, the proposal envisages enhancing superannuation age from 58 to 60 years and implementation of the 2007 pay revision.
The company, which employs around 1,200 and makes three-wheelers has been incurring losses since 2002-03. In March 2009, the company was declared sick.
SIL's net loss (before tax) stood at about Rs 20 crore during the 2011-12 fiscal.
Its fortunes have turned for the better after the Congress leadership grasped the political gains from attempts at reviving the loss-making unit in the electorally critical state of Uttar Pradesh.
State Congress leaders petitioned Congress vice president Rahul Gandhi, then a party general secretary, to seek his intervention and he is believed to have pushed the proposal with the Prime Minister.
At the meeting, Chidambaram's stand of opposing the proposal seemed to have been essentially as a finance minister, sources said.