Sonalika has joined the race to pick a stake in the sick public sector enterprise Scooters India (SIL). The company is in talks with the department of heavy industry which is scouting for a strategic partner for Scooters India following the recommendation of the Board for Reconstruction of Public Sector Enterprises (BRPSE).

Sonalika Group chairman L D Mittal confirmed that he is negotiating with the government for purchasing a stake. ?It is still at an initial stage, so I can’t say how much we will pick up. But yes we are examining the options,? Mittal said.

Confirming the government?s plan to look for a strategic partner for Scooters India, minister of state for heavy industries, Arun S Yadav told FE, ?We are considering different models which include looking for a strategic partner for Scooters India.? He declined to divulge details. Sale of majority stake or complete divestment are among the options being considered for SIL, a source told FE. Mahindra & Mahindra (M&M) is among other companies which have shown interest in Scooters India, the source added.

?We have queries from other companies from automobile space too,? an official said.

In reply to an email, Mahindra?s auto division spokesperson Mohan Nair said,? as a matter of company policy, we do not comment on speculation.”

The Centre holds 95.38% in the Lucknow-based Scooters India, which manufactures two-wheeler and three-wheeler vehicles and, owns the Lambretta and Vijai Super brands. The company plans to foray into the four-wheeler segment with zero-emission cars.

The PSU has a single operating unit at Lucknow. It was formed in 1972 and became operational in 1975 after acquiring assets from Italy’s Innocenti.

Operating at less than 60% capacity, it has incurred net losses of more than Rs 60 crore in three years to 2008-09, according to the latest Public Enterprises Survey.

On an average the company loses about Rs 1,900 a vehicle due to price anomaly as the government imposes higher duty on three-wheeler chassis, ministry officials said.

However, this was rectified in the last quarter of 2008-09 and the company is expected to turnaround soon, they added.

M&M scrip closed 0.31% up at Rs 780.4 on Bombay Stock Exchange on Thursday. Sonalika is not listed either on Bombay Stock Exchange or National Stock Exchange.