Shareholders of Hindustan Motors Ltd on Tuesday approved the companys plan to sell its Chennai factory for about Rs.150 crore. Hindustan Motors makes the Pajero Sport, Outlander and Montero sports utility vehicles and the Cedia sedan at its Tiruvallur plant near Chennai in collaboration with Japanese auto maker Mitsubishi Motors Corp. But operations at the plant have been affected by declining sales volumes as demand dropped, the company in its annual report. Besides, an adverse exchange rate and shortage of power hurt the margins on products manufactured at the plant, the company said.
Hindustan Motors is yet to identify buyers for the Chennai factory, which has a capacity to manufacture 12,000 vehicles a year. In February last year, the companys board approved the demerger of the Chennai plant to its subsidiary Hindustan Motors Finance Corp. Ltd to help it improve liquidity and strengthening its net worth. The company has another plant at Uttarpara in West Bengal where it makes the Ambassador sedan and light commercial vehicle Winner.
The Kolkata-based company sold 7,982 vehicles in 18 month period compared with 5,099 in the year-earlier period and posted a loss of Rs.71 crore for the 18 months ended March. The firm extended its fiscal year to 18 months because of the demerger. Hindustan Motors gained 9% to close at Rs.7.98 a share on BSE on Tuesday, while the Sensex ended nearly unchanged at 20,211.93 points.