Financially-troubled Hindustan Motors Ltd has decided to sell its component business, comprising the forge and foundry shops at its Uttapara plant in West Bengal.
The company, which makes the iconic Ambassador car, said in the latest directors’ report that “in view of smaller size and continuous operating losses”, directors have decided in their meeting held on October 30 to divest the whole or part of the component business interests.
This is subject to approvals, including that of lenders, as the C K Birla Group company has been attempting to revive its automobile businesses through corporate restructuring, fund infusion and asset sales.
Recently, the company sold its residual stake in former subsidiary HM Export Ltd to its wholly-owned subsidiary Hindustan Motor Finance Corp Ltd (HMFCL).
During the 18-month financial year ended September 30, 2013, the company had sold 33,82,857 shares (99.99 per cent) of Rs 10 each of HM Export.
It also divested an 11.78 per cent stake in Avtec Ltd, an associate company. The total profit from the stake sale, Rs 80.01 crore, was recorded in the 18-month fiscal accounts.
The plan for hiving off the Chennai plant through a merger with HMFCL is yet to be formalised as the final seal of approval from the court has not been received.
Hindustan Motors is working to rope in a new investor after the restructuring was through.
The company reported a net loss of Rs 79.20 crore during the 18-month period ended September 30.
The company said it paid Rs 15 crore against the recompense claim of the lenders (primarily ICICI Bank) over the profit it made for sale of an asset at Halol in Gujarat.