According to reports, Hindustan Motors Ltd have initiated the process of handing over the possession of its Chennai car plant in Tamil Nadu to a separate entity - Hindustan Motor Finance Corporation Ltd. The said move has been made in order to cut losses and to improve the overall health of the company. CK Birla Group-owned Hindustan Motors is currently in the process of getting approvals from lenders and Tamil Nadu government for the aforementioned process of handing over of its Chennai plant. Through the de-merger, the Indian automaker hopes to raise around Rs 150 crore.
In an announcement to BSE today, the company said that in supersession of the Working Arrangement Agreement dated January 5, 2014 the Company has on March 30, 2014 handed over the possession of the Chennai Car Plant at Adigathur, Kadambathur, Tiruvallur in the State of Tamil Nadu to Hindustan Motor Finance Corporation Limited.
Earlier Hindustan Motors’ Board of Directors gave their nod to sell, lease or dispose of the whole or substantially the whole or part of the Chennai car plant for a consideration of not less than Rs 150 crore. "In the present day and circumstance, it is imperative to induct a suitable investor / global leader in the respective businesses for viability in the long term and therefore, the company has been looking at suitable proposals for the Chennai plant," an official from Hindustan Motor said.
At present, the Chennai plant is engaged in the business of manufacturing and trading of passenger vehicles like the Pajero Sport and Montero and their respective spare parts. These models are owned by Mitsubishi Motors Corporation of Japan, with whom Hindustan Motor Ltd had signed a technical collaboration long ago. The plant is also engaged in contract manufacturing of vehicles for Isuzu Motors India Pvt. Ltd.