Hindustan Motors, the oldest carmaker in the country, has suspended operations at its Uttarpara plant. In a statement to the BSE, the company cited worsening conditions at the 40,000-units-per-annum plant, including very low productivity, growing indiscipline, critical shortage of funds, lack of demand for its core product (the Ambassador) and large accumulation of liabilities.
On February 18, our sister magazine, Autocar Professional had reported that HM was set to get a new strategic investor – a foreign entity – with the announcement of an investment in the April-June 2014 quarter. The investment would have set off a turnaround plan for the beleaguered carmaker.
HM has been looking for a strategic investor for the past few years but has failed to find anyone willing to invest in the entire company. Following this, the carmaker decided to demerge and transfer its Chennai Car Plant (CCP) as a going concern to its fully owned subsidiary – Hindustan Motor Finance Corporation Ltd (HMFCL) in January 2013.
HM's accumulated losses exceeded its net worth at the end of financial year September 30, 2013. Demand for the Ambassador has also been at all-time low: only 2,214 units were sold in 2013-14, down from the 3,471 units in 2012-13