The government's move is expected to clear a hurdle in the disinvestment process of Scooters India Ltd (SIL). The decision was taken at a meeting of the Cabinet Committee of Economic Affairs chaired by Prime Minister Narendra Modi.
"The restructuring will be achieved by way of reduction of equity...
of Rs 85.21 crore in the share capital of SIL held by the government against accumulated losses," an official statement said.
The reduction would be deemed to have taken effect as on March 31, 2013 and by way of freezing the interest on the non-plan loan of Rs 1.89 crore released to SIL during 2012-13 from the date of its release to the company and conversion into equity of the outstanding principal amount of Rs 1.89 crore.
"With this approval, the balance sheets of Scooters India Limited from 2012-13 onwards will be regularised and further restructuring will be effected accordingly," the statement said.
The government had earlier this year invited expression of interest (EoI) to sell its entire stake with transfer of management control in Scooters India (SIL).
In a global invitation, the heavy industry ministry had asked interested parties to submit the EoI on or before May 7, 2018. Scooters India Limited (SIL) is a PSU under the administrative control of the ministry.
The government had in-principle' decided to disinvest 100 per cent of its equity shareholding in SIL (which is equivalent to 93.74 per cent of the total paid-up equity share capital of SIL) through strategic disinvestment with transfer of management control.
The board of directors of SIL, in its meeting held on February 26, had accorded its consent 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.
In 1975, SIL started its commercial production of scooters under the brand name of Vijay Super for domestic market and Lambretta for overseas market.
However, in 1997, SIL strategically discontinued its two-wheeler production and concentrated only on manufacturing and marketing of three-wheelers.