Hindustan Motors suspends operations at loss-making Uttarpara plant
24 May 2014
Hindustan Motors, the maker of the iconic Ambassador cars, today announced the suspension of work at its loss-making Uttarpara plant in West Bengal with effect from 6.00 am, 24 May 2014.
Hindustan Motors, which has been scouting for funds to revive the loss-making Uttarpara plant, has so far failed to locate a suitable investor.
The company is reported to be looking at all possible options for the revival of the Uttarpara plant, including roping in new investors for funds.
''The suspension of work will enable the company to have some space to restructure the organisation, debts, etc. As of today the company has been trying to restructure a running organisation – the suspension of work will, we are hoping, allow us to focus more on the restructuring,'' the company said in a press release.
Hindustan Motors, promoted by the C K Birla group, said it has been funding losses for several years by divesting some of the business units and also monetising some investments, the statement said, adding that the company was facing critical shortage of funds.
''The company's efforts are falling short of the large liabilities that have been accumulated. The management has every intention to significantly pay off existing liabilities as well as limit future liabilities and also to bring down the outstanding dues to statutory authorities, employees and lenders,'' Hindustan Motors said.
''Given the present circumstances, the company said it had ''no alternative but to declare a suspension of work at its Uttarpara Plant with effect from May 24. As part of the restructuring exercise, the company will evaluate all options to reduce losses and pay accumulated liabilities.''
The Uttarpara plant, which produces the popular Ambassador cars, employs around 2,400 workers. Car production at the plant, however, has trickled to a mere 100 units a month and the workers have not been paid for the past six months.
The company had earlier hived off its Chennai plant to a promoter outfit for an unknown consideration, and made reference to the BIFR in February 2014.
Hindustan Motors is reported to be looking for state support to revive and restructure the unit.