Hindustan Motors Ltd is the flagship of the GP-CK Birla group of companies and was set up in Gujarat in 1942. Later, the company shifted its manufacturing activities to Uttarpara in West Bengal. It has three major divisions _ the automobiles, earth-moving equipment and power products.
Reflecting the sluggish demand in the automobile sector, Hindustan Motors' performance in 1997-98 was more or less on the same track as it was in 1996-97. Though in 1997-98, both sales and profit registered a positive growth, it cannot be considered significant.
Hindustan Motors saw a nearly 4 per cent rise in sales turnover in 1997-98. Operating profit and profit before tax increased by nearly 6 per cent and 9 per cent respectively.
But, due to a 74 per cent increase in tax burden, the net profit of the company remained almost at the same level as the previous year - registering a mere 0.08 per cent increase.
In 1996-97, Hindustan Motors posted a 23 per cent decline in net profit despite a 3.6 per cent growth in net sales and a 7.2 per cent rise in value of production. Though operating profit increased by only 2.5 per cent, sharp increases in interest charges (13.3 per cent), depreciation provision (15.0 per cent) and an unprecedented rise in MAT provision pulled down the company's bottom line.
As a consequence of the performance of the recent two years, the company's earnings per share dropped from Rs 4.75 in 1995-96 to Rs 3.66 in 1996-97 and remained at that level in 1997-98. The company, after skipping dividend paying in 1994-95, kept the dividend rate at 10 per cent level in the next three years.
During 1997-98, the company's auto division reported a fall in overall production. Number of vehicles produced stood at 26,687 in 1997-98 compared to 29,036 in 1996-97 and 30818 in 1995-96. During 1997-98, production of cars decreased to 22,790 compared to 25,412 in 1996-97. Production at the earth-moving equipment division at Tiruvallur and Pondicherry showed a marginal improvement during the year. Production increased to 646 units against 609 units in the previous year. In fact production of multi-utility vehicles increased to 3,827 units during the year from 2,569 in 1996-97.
Meanwhile, the power products division of the company at Hosur, which achieved a distinction of producing more than 1000 numbers of transmission sets in 1996-97, registered a fall in production during the year as some original equipment manufacturers reduced their orders. Production of transmissions dropped to 940 in 1997-98 against 1027 in 1996-97.
The company's joint venture with Messrs General Motors Corporation, USA _ General Motors India Ltd _ commenced commercial production of Opel Astra cars during 1996-97. In 1997-98, the company produced 7705 Opel Astra cars. In 1997, 7482 Opel Astra were produced.
The company has undertaken a project to manufacture Lancer cars in collaboration with Mitsubishi Motors Corporation of Japan.
It has also launched a project at the existing Indore plant to manufacture a rural transport vehicle in collaboration with Oka Motor Company of Australia. Hindustan Motors has also entered into agreements with a number of vendors for the supply of components for the company's Lancer MG41 model.
The auto marketing division of the company was awarded ISO 9001 certification in the 1996-97 fiscal. This is in addition to the ISO 9001 certifications obtained earlier by its other divisions, viz.. earth-moving equipment, power products at Indore as well as the Forge plant at the auto division. Manufacturing system engineering programmes have been completed at EED and PPD and are now under implementation at Auto and Indore divisions.
