The unit now makes only Pajero Sport and two models of Isuzu cars

Hindustan Motors has handed over the possession of the Chennai car plant at Adigathur, Kadambathur, Tiruvallur, Tamil Nadu, to its subsidiary Hindustan Motor Finance Corporation Ltd., effective March 30, 2014.

The company said that necessary approvals of the lenders at the Tamil Nadu Government and other approvals as may be required are under process.

The unit, which has a capacity to manufacture 12,000 vehicles annually, now makes only Pajero Sport and two models of Isuzu cars — a pick-up van and a sports utility vehicle — as part of a contract manufacturing agreement signed last year.

Company officials said that around 50 per cent of the capacity was being utilised in this manner.

The Tiruvallur unit was set up three decades ago for making earth moving equipment. In 1998, through a technical collaboration agreement with Mitsubishi of Japan, it started making Mitsubishi Lancer cars which were well accepted in India, but it started facing intense competition as other upscale car models became available in the Indian market.

The product range was extended to Pajero, Cedia and other models.

However, over the last few years, the state of the automobile industry and the high costs of imported components impacted the unit’s performance and the HM board approved a demerger of the Chennai unit with a plan to sell it to improve its liquidity.

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