Hindustan Motors Ltd (HML), maker of the iconic Ambassador car, is considering selling its Chennai plant, instead of an earlier proposal to hive it off and merge with a company subsidiary.
In a note, the CK Birla group company said on Thursday: “In view of the delay in the de-merger scheme awaiting the (Calcutta) High Court’s sanction, the company is initiating divestment of the Chennai plant. In the interim period, the company plans to have a working arrangement for the Chennai plant.”
The Board of the company has considered this alternative proposal. This means the Chennai plant now may be put up for direct sale, subject to approvals from lenders, shareholders, stock exchanges and Registrars of Companies.
The ‘divestment’ move can bypass the court approval route. The first step in this vein, however, would be to withdraw the de-merger scheme, which is lying before the High Court.
The earlier plan entailed hiving off the Chennai plant from the company and merging it with HMFCL, a subsidiary. The shareholders at a court-convened meeting in September had considered the proposal.
Meanwhile, the company is seeking potential strategic or financial investors for its Uttarpara (West Bengal) and Chennai units. HML is already in talks with a few of them.
“However, the potential partners, too, have specific needs and are interested in either of the two units, not both,” Uttam Bose, MD, said.
HML has also decided to sell its component business, comprising the forge and foundry shops at its Uttapara plant. It decided on October 30 to divest the whole or part of the component business. This is subject to approvals including that of lenders.
“The divestment proposal is in process and we are taking requisite approvals as required,” said a spokesperson of the company.
The proposal will go through requisite approvals process. “The valuation study is being done by independent valuer,” the spokesperson said in an email reply.
“Earlier, we had taken several steps to monetise assets such as divestment of business units and sale of assets to sustain operations. These options are limited now,” he added.