Mr C.K. Birla, Chairman of Hindustan Motors, on Thursday said that the company has ceased to be a “potentially sick company” under the provisions of Section 23 of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).

“The accumulated losses of the company at the end of fiscal 2011 have reduced to less than 50 per cent of its peak net worth during the immediate preceding four financial years.

Consequently, the company ceased to be a ‘potentially sick company',” Mr Birla said while addressing the company's 69th annual general meeting here on Thursday.

Financial revamp

In May 2010, the company had informed the stock exchanges that it would report to the Board for Industrial and Financial Reconstruction (BIFR) about substantial erosion (over 50 per cent) of its peak net worth in the past five financial years. Hindustan Motors underwent financial restructuring last year and brought down its share capital by half by adjusting it with the profit and loss debit balance with the approval from shareholders and the Kolkata High Court.

As on June 30, 2011, the company's net worth stood at Rs 58 crore against Rs 41 crore as on March 31, 2011. The accumulated losses were placed at about Rs 30 crore as on June 30, 2011, down from Rs 47 crore as on March 31, 2011, a senior company told Business Line .

Posts profit

Meanwhile, riding on a one-time gain from sale of immovable properties and investments, Hindustan Motors posted a net profit of Rs 17 crore for the quarter ended June 30, 2011, against a net loss of Rs 20 crore during corresponding period last year.

The company earned an ‘exceptional income' of Rs 48 crore from transfer of lease of its land in Halol, Gujarat. Except for this exceptional income, however, the company would have reported a net loss of about Rs 30 crore during the period.

“We had 120 acres of leasehold land in Halol in Gujarat. We transferred the lease to several buyers in two tranches. We earned about Rs 24 crore from lease transfer of one part of the land during the fourth quarter of fiscal 2011 and Rs 48 crore by selling the rest of the land during this quarter,” said the company's Chief Financial Officer, Mr Yogesh Goenka.

Net sales, however, dropped by 19 per cent to Rs 121 crore during the period under review. Last fiscal, the company sold 10,097 vehicles, compared with 11,003 units during the year ago period.

The West Bengal Government, Mr Birla said, had sought some clarifications regarding the utilisation of proceeds from the sale of 314 acres at its Uttarpara plant.

“We are in the process of providing clarification,” he said. The company had sold the land to Shriram Properties for Rs 285 crore to develop an integrated township.

shobha@thehindu.co.in

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