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Losses wipe out Hindusthan Motors net worth

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Hindustan Motors (HML), maker of the iconic Ambassador car, has turned sick with its entire net worth getting eroded with its mounting losses.

According to the company, the C K Birla group company will now approach the Board for Industrial and Financial Reconstruction (BIFR), the state mechanism for revival of sick industries.

“As the accumulated losses of the company at the end of the financial year ended September 30, 2013 exceeded its net worth, the company will take necessary steps to comply with the legal requirements,” HML said Monday while announcing the financial results.

Falling sales from both Amby, which now find takers only among cab owners in a few cities, as well as the vehicles from the Mitsubishi stable have led to steady losses. The losses touched Rs73.50 crore in the 18-months period ending September from Rs30 crore in 2011-12.

HML had extended the reporting period to give effect to the demerger of its state-of-the-art Chennai car plant that makes the Mitsubishi vehicles like Lancer and Pajero and separate it from the old plant in West Bengal that makes the Ambassador car.

Apart from restructuring operations, in a bid to rope in strategic partners for these two business units, HML has been disposing off investments and even land and real estate holdings to the tune of about Rs197 crore over 2010-11 and 2011-12.

These disposals cut down losses in a few quarters and even helped post a profit of Rs75 lakh in 2010-11.

During October, HML could sell only 330 passenger vehicles including 176 Ambassadors, lower than 417 and 278 units respectively a year ago.

The efforts to rope in strategic and financial investors for the two automobile plants and to divest its forge and foundry shops would continue company executives said. Also the project to develop a smaller– under 4 metre length – version of the new Ambassador would continue despite HML being now turning sick, they said.

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