The Hindu Business Line : Hindustan Motors ties up with Shriram Properties

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Kolkata Feb. 27 Hindustan Motors Ltd (HM) has entered into an arrangement with Shriram Properties Ltd of Bangalore for the development of an integrated IT township and an auto park in 314 acres of land specifically identified for the purpose at Uttarpara and in accordance with the conditions laid down by the West Bengal Government in its approval order dated September 13, 2006.

In a communication to the Bombay Stock Exchange, the company has stated that it would forthwith submit necessary application to the consortium of lenders since the arrangement is subject to their approval.

Growth Initiatives

The development of the proposed integrated township and the auto park would be accomplished jointly with Shriram Properties through a SPV.

As compensation, HM expects to receive about Rs 295 crore in five tranches spread over the next 10 quarters as well as non-compete fee equal to 4 per cent of sales proceeds.

The communication states that the company will use the proceeds from the arrangement for implementation of the revival and renewal of its Uttarpara plant, as committed in its application to the State Government.

These include investments on modernisation, expansion and development of contemporary automotive forging, stamping and foundry facilities and growth initiatives.

Direct Employment

HM had engaged HDFC Ltd for advising in the identification of prospective developers, evaluation of bids and to conclude the commercial terms. When contacted, a company official said that the work on the identified projects would begin after receipt of statutory approvals from various authorities.

It would be completed in the next 5-7 years.

The project would bring "sustained socio-economic benefits by creating opportunities for direct employment as well as indirect employment".

Meanwhile, on the BSE, 11.23 lakh HM shares changed hands today and scrip touched a high of Rs 40.30 during intra-day before closing at Rs 38.50, gaining 2.26 per cent.

More Stories on : Infrastructure | Alliances & Joint Ventures | West Bengal | Automobiles

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