C. K. Birla has decided to step down as the Chairman of Hindustan Motors, and also relinquish his directorship.
This decision has been communicated to the members of the board of directors, says a press release from the company.
As announced earlier, HM has been in discussions with strategic /financial investors for both its Uttarpara and Chennai units. Mr Birla’s decision to step down as the Chairman is in line with his thinking that his stepping down will pave the way for the entry of strategic investors and allow for greater flexibility during discussions, the note said.Challenges
The company admitted that it is facing challenges in executing its revival strategy. Its de-merger scheme is awaiting High Court’s sanction. HM is also initiating the process of divestment of the Chennai plant.
HM is in discussions with different entities for its revival plan, and is looking for strong support from the West Bengal Government.
“The slowdown in the economy, especially in the auto sector, has affected HM, 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,’’ according to its Managing Director U K Bose.
As decided earlier, HM needs to restructure its business by de-merging its Uttarpara and Chennai plants since the product portfolio and customer segment of these two units are very different. The company is seeking potential strategic / financial investors for both the units. It is already in talks with some of them. However, the potential partners, too, have specific needs, and are interested in either of the two units, not both.
During the 18-month period under review, beginning April 2012 and ending September 2013, The companyM incurred a loss of Rs. 71.20 crore as compared to a loss of Rs. 29.96 crore in 2011-12.
The company’s accumulated losses have exceeded its net worth at the completion of the financial year ended September 30, 2013.