Hindustan Motors (HM) has planned to transfer and demerge its Chennai manufacturing plant as its fully owned division, Hindustan Motor Finance Corporation (HMFC). Currently, this facility is engaged in the production of Mitsubishi’s premium passenger vehicles. The board of HM had a meeting on January 10, wherein it approved the proposal of restructuring. It also expressed approval on the auto maker’s plan of segregation and realignment of Chennai facility at Tiruvallur as two different business entities, HM and Mitsubishi.
Reportedly, this strategy is anticipated to assist both – HM and HMFC in further accelerating their expansion plans. After the demerger, the C K Birla controlled Hindustan Motors (HM) will operate its Uttarpara plant, which is currently engaged in manufacturing the Ambassador cars in 1500 and 2000 cc diesel, 1800 cc petrol, CNG and LPG versions. The facility also rolls out Light Commercial Vehicles (LCVs) like 1-tonne payload mini-truck Winner 1.5 litre and 2.0 litre diesel, Winner 1.8 litre CNG and auto components.
The auto maker will also manage its Pithampur plant, near Indore in Madhya Pradesh, which manufactures both versions of Winner. HM’s Chennai facility at Tiruvallur produces Pajero SFX, Montero, Cedia, Outlander, Lancer Evolution X and Pajero Sport, as per the technical norms with Japan-based Mitsubishi Motors Corporation.
As a part of demerger, the shareholders of HM will be provided with 1 equity share of Rs. 5 each of HMFC, against surrendering of every thirteen equity shares of Rs. 5 each. In case of any fractional entitlements, HMFC will not issue fractional shares. Reportedly, such fractional entitlements will be consolidated and then allotted to HMFC officials for sale in the market. The net sale proceeds would be then distributed to the HM members in respect to their fractional entitlements.
