Hindustan Motors to demerge Chennai car plant

Hindustan Motors Ltd (HML) has decided to demerge and transfer its Chennai car plant to its fully owned subsidiary Hindustan Motor Finance Corporation Ltd (HMFCL). The remaining business and interests of HML, the flagship brand of the CK Birla-controlled Group, will continue to belong to and be managed by HML.

The HML Board has approved a scheme of arrangement between HML and HMFCL that will enable the segregation and realignment of the Chennai plant and other business units into two different entities to pursue their respective growth plans as appropriate, an HML statement said. The scheme will become operative from April 1, subject to approvals from shareholders and sanction from the Calcutta High Court.

After the demerger, HM will manage the passenger car business including the manufacture of the ageing Ambassador brand at its Uttarpara plant in West Bengal. Currently the 1500 and 2000cc diesel, 1800cc petrol, CNG and LPG variants of the Ambassador are made here. HML will also have the light commercial vehicle Winner under its wing. This 1-tonne payload mini-truck is powered by 1.5 and 2.0-litre diesel engines as also a 1.8-litre CNG engine.

The company also has its components business at its Uttarpara plant with assembly units for engines and axles. It also has operations at Pithampur, near Indore in Madhya Pradesh, where both variants of the Winner are produced.

Hindustan Motors entered into a technical collaboration with Mitsubishi Motors Corporation of Japan in 1998. Under this license, HML manufactures and markets Mitsubishi passenger vehicles from its third plant at Tiruvallur near Chennai in Tamil Nadu. The Lancer was the first Mitsubishi vehicle to be introduced in India by HML in 1998 and it was followed by the Pajero SFX, Cedia, Montero, Outlander and Lancer Evolution X. Special edition variants of some of these vehicles were also launched from time to time. The Pajero Sport, the latest model to be launched in March 2012, started off as a CBU coming from Thailand with CKD operations commencing since last October at the Tiruvallur facility.

According to SIAM data, HM's domestic sales between April-December 2012 stood at 281,449 units with a YoY growth of 0.90 percent. The carmaker experienced a drop of 9.55 percent in December alone with sales of 26,697 units.

SHOBHA MATHUR