Divestment of Hind Motors Chennai plant stuck as lenders sit tight on assets

The BIFR-referred Hindustan Motors on Monday revealed that “divestment” of its Chennai plant is stuck in a tangle as the lenders have not released the charge on its assets.

A consortium of banks, led by ICICI Bank, still has a hold on the Chennai plant’s mortgaged assets because of the company’s borrowings, despite its corporate debt restructuring. Hindustan Motors said the company has sought the State Government’s “help in impressing upon the lenders to release their charge on assets”. The company revealed this after a meeting of its senior management with the West Bengal Labour Minister. The company sold its viable Chennai plant, producing Mitsubishi vehicles and under a contract manufacturing agreement with Isuzu, to a promoter outfit in March. The company was referred to the BIFR in February.

The company said: “In March 2014, the company divested its plant near Chennai and is now awaiting release by its lenders of their charge on its assets. Funds received will be used to pay off statutory payments, wages, suppliers and lenders”.

The company had earlier informed the stock exchanges that the divestment was made at a consideration of Rs 150 crore. The meeting focussed, the company said, on two key priorities identified by the Labour Minister — clearance of overdue wages of the 2,600 employees of Uttarpara unit, and operational viability of lifting suspension of the plant, imposed on May 24. “The company shared concrete steps that have already been initiated in an effort to significantly pay off statutory debts and overdue wages,” Hindustan Motors said.

According to State Labour Department sources, to protect the workers’ interests and carry on a dialogue with the management, the Department is likely to reconvene a tripartite meeting.

Earlier, on May 27, the management had skipped a tripartite meeting, expressing its intention to engage only with the State Labour Department.