Hindustan Motors chairman C.K. Birla (centre) flanked by MD R. Santhanam (right) and director P.P. Khaitan in Calcutta on Wednesday. Picture by Kishor Roy Chowdhury

Calcutta, Oct. 26: Hindustan Motors is steering a financial restructuring to be back on the profit trail from 2006-07.

The CK Birla group flagship, which makes cars for Mitsubishi in India besides its own Ambassador, has been going through a bad phase as the sale of the Ambassador dwindled with the advent of new generation cars from manufacturers such as Maruti, Hyundai and Tata Motors.

However, with the financial restructuring in place, the Ambassador sales have started picking up. The introduction of new models is also expected to augur well for the company in churning out profits next year. Between April and September, the Ambassador sales grew by 7 per cent. It is selling about 13,000 units a year. However, Hindustan Motors has stopped manufacturing Contessa car.

“We hope to be back in the black sometime next year,” said C. K. Birla, chairman of Hindustan Motors. He was in the city today for the 63rd annual general meeting of the company.

In this accounting year, which has been cut short to nine months ? from July 2005 to March 2006 ? the company could end up with a loss. However, Birla declined a comment.

Meanwhile, the hive-off of its power unit plant and power products division into a new entity, AVTEC Ltd, and the subsequent sale of 51 per cent stake in it to Actis Powertrain Investments Ltd, a financial investor, has helped Hindustan Motors earn a net profit of Rs 190.42 crore.

Consequently, the company posted Rs 61.20 crore profit for the 15-month accounting year ended June 30.

The transaction has also reduced HM’s debt burden and interest outgo to Rs 12-14 crore.

When asked about the group’s plan to sale the excess land at HM’s Uttarpara plant, Birla said the company’s application was lying with the state government.

“The state has passed a law but the rules are yet to be framed. Once they are in place, we will start the proceedings,” he added.

Going forward, the company intends to bolster its Mitsubishi line-up by launching the Cedia. The work for the new car has already begun at its Chennai works.

R. Santhanam, Hindustan Motors’s managing director, said the new offering would be a premium car.

Besides, the company will also sell some completely built Mitsubishi cars through its dealer network. At present it sales Mitsubishi’s Lancer and Pajero cars.

During the year, the company will invest Rs 30-40 crore for the upgradation and modernisation of its manufacturing facilities.