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HM pins revival hopes on Isuzu tie-up

Carmaker bets on stepping up production of BS-IV compliant Ambassador to meet demand.

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There seems to be momentum building at Hindustan Motors (HML) after the recent erosion in its net worth. The automaker is pinning its hopes on its tie-up with Isuzu whose vehicles are set to hit Indian roads this month and a ramp-up of production of its iconic Ambassador car (pictured) with the recent launch of BS-IV compliant emission norms, which have thrown up newer opportunities.

“The agreement with Isuzu Motors and Ambassador Encore are expected to improve the performance of the company in the current financial year (beginning October),” HML has told its shareholders. The manufacturing (of Isuzu SUVs and pick-up trucks) is expected to start from this month. The contract manufacturing will enable the company to utilise spare capacity at the Chennai car plant and also contribute positively to its profitability. In addition, the launch of BS-IV compliant Ambasador Encore has opened the market for the company in 17 metropolitan cities where sale of BS-III cars has been banned since 2010. The company is ramping up production at its Uttarpara plant as well as resurrecting its distribution network in these cities to meet the surging demand,” the annual report said.

The beleaguered auto maker would be holding its annual general meeting this month after extending its fiscal year to an 18-month period till September.

The Chennai plant has been churning out assembled vehicles from the Mitsubishi portfolio, but its viability has been under strain for some time due to factors like an adverse exchange rate for yen.

“The operation at the Chennai car plant has been affected due to lower volumes of vehicles caused mainly by higher petrol prices and high interest rates. Further adverse exchange rates and shortage of power availability in Tamil Nadu severely affected the margins,” the report said.

Apart from these steps, HM is developing new variants of the Ambassador and its 1-tonne mini truck Winner, the report stated though it didn’t specify the timeline for the launch. HM is planning to divest part or whole of its loss making forge and foundry shop for component business during the current year, the report added. While it has decided to demerge the division housed in HM’s Uttarpara plant in West Bengal, the move would need lenders’ approval.

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