C.K. Birla, who stepped down from the driver’s seat of Hindustan Motors Ltd (HML) on Friday, has ensured that he controls the direction of the company, at least for a while, even on its sick bed.

Before leaving, he got the board to refer the company to BIFR, approve the sale of its Chennai asset, and paved the way for new investors.

HML, financially troubled and operationally vulnerable since 2004, has seen a corporate debt restructuring, an asset sale and increased investments from its promoters. Apart from shareholders, lenders, the Bengal Government and workers have claims over it.

According to law experts, if the BIFR accepts the “reference” and registers HML as a sick company, it would mean a “virtual stay” on any stakeholder’s move for liquidation. Any stakeholder can move the BIFR now against the reference, but it may find it difficult to prove that the company is not actually sick.

If declared sick, it will be easy to sell assets and bring in a new equity partner. HML actually lost an opportunity to monetise its Chennai plant as its move for a court-approved scheme did not work out following objections from the Bengal Government.

HML has also proposed to sell a part of its Uttarpara facility, including forge and foundry shops, in West Bengal. Being declared sick will help the management overcome objections to a rehab plan. The Uttarpara plant has an employee strength of around 3,000.

A consortium of lenders led by ICICI Bank, which holds 14.22 per cent of the promoters’ stake (in pledge), however, can sell the pledged shares to realise funds even if the BIFR proceedings are on.

The Bengal Government, which claimed Rs 195 crore from HML under an earlier plan, will now have to knock the doors of the BIFR.

>jayanta.mallick@thehindu.co.in

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