 "Hindustan Motors gets shareholders' nod to sell Chennai Plant")
Hindustan Motors has got shareholders approval for sale or disposal of it Chennai Car Plant. The company sought shareholders approval for a special resolution, to partially of fully dilute stake in the Plant.
According to company's BSE announcement, the resolution has been duly approved by requisite majority of the shareholders, said the company.
Earlier, the company said it was planning to raise Rs 150 crore by divesting stake in its Tiruvallur plant, near Chennai. The facility currently produce Pajero, Cedia and others for Mitsubishi Motors Corporation and also into contract manufacturing with Isuzu Motors.
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In a notice to the shareholders, the company said that the Board of Directors have gave their nod to sell, lease or dispose of the whole or substantially the whole or part of the Chennai car plant for a consideration of not less than Rs 150 crore.
"In the present day and circumstance, it is imperative to induct a suitable investor/ global leader in the respective businesses for viability in the long term and therefore, the company has been looking at suitable proposals for the Chennai plant," said the company.
Earlier, HML said it is talking with consultants and interested parties and has received enquiries for direct and complete acquisitions of the Plant.
"...in view of the aforesaid and urgent need to cut losses, it is considered expedient to divest the Chennai car plant and the divestment in the Plant will not affect other operations of the company,” said the company.
The Chennai plant is engaged in the business of manufacture and trading of passenger vehicles like Pajero Sport, Cedia, Outlander and Montero brands of Cars and spare parts of the same. These brands are owned by Mitsubishi Motors Corporation of Japan. HML signed a technical collaboration with Mitsubishi. The plant is also engaged in contract manufacturing of vehicles for Isuzu Motors India Pvt Ltd.
Earlier the company said that its Chennai plant was adversely affected due to lower volumes caused mainly by higher petrol prices and increased interest rates. The company also said exchange rates and power shortage in Tamil Nadu are the added reasons, which affected company's margins on the products produced at its Chennai plant.
In October 2012, the company commenced production of Pajero Sport at its Chennai car plant, which has reduced cost of production. Earlier the company was importing completely built units of the vehicle.HM has entered into technical collaboration with Mitsubishi Motors Corporation of Japan in 1998.
It manufactures/markets premium SUV Pajero Sport. It has finalised an agreement with its long-time collaborator Mitsubishi Motors Corporation, Japan, to launch an automatic version of the renowned SUV Pajero Sport whose manual version was launched in March 2012.
It has also been decided to launch another model from the Mitsubishi stable. On the restructuring, HML said the company is facing challenges in executing its revival strategy.
In view of the delay in the demerger scheme, the company is initiating divestment of the Chennai plant to meet the goal. In the interim period, the Company plans to have a working arrangement for the Chennai plant.
While no specific numbers were available as far as Chennai plant concerned, during the 18-month period under review, beginning April 2012 and ending September 2013, HM incurred a loss of Rs 71.20 crore as compared to a loss of Rs 29.96 crore in 2011-12.
The company’s accumulated losses have exceeded its net worth at the completion of the financial year ended September 30, 2013.