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HM chairman steps down

Birla: Strategic move

Calcutta, Dec. 28: Chandra Kant Birla has stepped down as chairman of his flagship company Hindustan Motors (HM).

The development comes two days after the company’s board decided to refer the firm to the Board for Financial Reconstruction after accumulated losses wiped off its net worth.

The ailing auto maker had incurred a cumulative loss of Rs 71.20 crore in the 18-month period from April 2012 to September 2013. As of September 30, 2013, the net worth of the company was a negative Rs 31.59 crore.

The firm was already in the red in 2011-12, having reported a loss of Rs 29.96 crore.

“Hind Motors has been in discussions with strategic/financial investors for both its Uttarpara and Chennai units. There has been keen interest shown by potential global partners,” the company said in a statement.

“The decision reflects Birla’s thinking that his stepping down will pave the way for the entry of strategic investors and allow for greater flexibility during discussions,” the statement added.

The company currently manufactures the Ambassador and Winner from its Uttarpara plant.

The Chennai plant manufactures and assembles the Pajero, Cedia, Montero, Outlander and Evo X from Japanese partner Mitsubishi Motors Corporation’s stable. HM has a technical collaboration with Mitsubishi.

Industry observers said the decision of the chairman to step down indicated that the company was keen to get hold of an investor for its lucrative Chennai plant.

The future of the Uttarpara plant, however, remains uncertain over a disputed land sale whereby the company reportedly owes money to the Bengal government.

The demerger scheme, crucial for the company’s revival, is yet to receive the sanction of Calcutta High Court and can face a hurdle if the state government decides to stall the restructuring over the receipt of dues.

The company, however, has said the state government is “equally interested” in its revival.

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