M&M, Atul Auto eye 74 pc stake in Scooters India

With the heavy industries ministry planning to offer up to 74 per cent in Scooters India, at least two private sector players have lined up to acquire controlling stake in the sick public sector company. Mahindra & Mahindra (M&M), which yesterday signed preliminary agreement with Ssangyong to pick up a majority stake in the Korean firm, and Rajkot-based three-wheeler manufacturer Atul Auto have separately shown interest in the company.

Scooters India, in which the government owns about 95 per cent, reported a Rs 22 crore loss in the fiscal year ending March 2010, according to data on the Bombay Stock Exchange. However, on reports of the stake sale, shares in state-run firm opened up 4.74 per cent and rose to 4.88 per cent at Rs 39.75, its maximum daily limit. Company shares have risen 36 per cent so far in the year, outperforming the broader BSE Auto Index, which rose around 20 per cent.

A spokesperson for M&M said the firm would not comment on speculation. An auto analyst said M&M, which has about 11 per cent market share in the three-wheeler segment, is looking at acquiring Scooters India for its 150 acre plot close to the Lucknow airport. What M&M will also gain is the enterprise's manufacturing unit to ramp up its own three-wheeler plans. With M&M planning to foray into two-wheelers, acquiring Scooters India could be an advantage, the analyst said.