Hindustan Motors reassess its strategies owing to market slowdown

Friday 27 December 2013, 12:06 PM by

Current slowdown in the Indian auto market has affected almost all companies largely. The impact is so adverse that companies are reconsidering its policies to revive itself from the tumbled scenario. Iconic Hindustan Motors is the new member of the league with recent declaration of gauging into its strategies, as the company is suffering from massive impedance in vehicle sales. Reportedly, the auto maker did not record a decent turnover in the last fiscal and is considering restructuring its plans.

Speaking to media, Hindustan Motor's Managing Director and Chief Executive Officer, Uttam Bose said, “HM remains fully committed to its revival plan. Slowdown in the economy, especially in the auto sector has affected the company too. In addition, we have had operational challenges in terms of cash flow problems for the company. Under these circumstances, it is becoming extremely challenging to manage daily operations.” Bose also claimed that reassessing the strategies would include dissolving the company's Chennai and Uttarpara plants.

Hindustan Motors reassess its strategies owing to market slowdown | CarTrade.com
Hindustan Motors reassess its strategies owing to market slowdown

The CK Birla Group company had earlier proposed to merge the Chennai plant with its subsidiary. However, the company official believes that the only secure outcome for maintaining Hindustan Motor's brand image is to disband its operation at the respective area. In the same regard, officials said, “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.” Eventually, Board of Directors of the company had to look for this alternative, which would mean putting up the plant on sale.

Hindustan Motors claims to have suffered a loss of Rs. 71.20 crore between April 2012 and September 2013, which is almost Rs. 41 crore more than what the company incurred in fiscal 2012. In this concern, the spokesperson of Hindustan Motors was quoted as saying, “The divestment proposal is in process and we are taking requisite approvals as required. The valuation study is being done by independent valuer. 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.”

The hindered domestic auto market had earlier forced Hindustan Motors to collaborate with Japanese auto maker, Isuzu Motors. The latter signed a contract to manufacture its MU-7 Sports Utility Vehicle (SUV) and a pick-up truck at former's Chennai plant. Industry experts are of a view that the closure of this facility will hamper Hindustan Motor's identity and Isuzu will have to reconsider moving into its Andhra Pradesh plant, which is in progress to be completed. It is believed that Hindustan Motors' never ending draught could only come to an end if it focuses majorly on present consumers' requirement. The company's last venture was the legendary Ambassador, which is still used as government officials' car.