Hindustan Motors Ltd declared a “suspension of work” at its Uttarpara plant in West Bengal on Saturday. In a statement, the company said: “The suspension of work will enable the company to have some space to restructure the organisation, debts, etc. As of today the company has been trying to restructure a running organisation – the suspension of work will, we are hoping, allow us to focus more on the restructuring”.
The statement further said the promoters (CK Birla group) have been funding losses for several years by divesting some of the business units and also monetising some investments. Efforts to find strategic investors have also not materialised and the company faces a critical shortage of funds.
“The company’s efforts are falling short of the large liabilities that have been accumulated. The management has every intention to significantly pay off existing liabilities as well as limit future liabilities and also to bring down the outstanding dues to statutory authorities, employees and lenders,” Hindustan Motors said.
“Given the present circumstances, the company said it had “no alternative but to declare a suspension of work at its Uttarpara Plant with effect from May 24. As part of the restructuring exercise, the company will evaluate all options to reduce losses and pay accumulated liabilities.”
Some 2,400 workers are employed at the plant that produces Ambassador brand taxis. Until recently, it produced 100 such vehicles a month. The plant’s workers are understood to have not been paid for the past six months.
The sources close to the company claimed it was in “constant touch with the State Government to look at all possible options in an effort to restructure the organisation, debts, etc”.
The company had earlier hived off its Chennai plant to a promoter outfit for an unknown consideration, and made reference to the BIFR in February 2014.