Hindustan Motors Shuts Down Uttarpara Plant

Hindustan Motors, the oldest carmaker in the country, has suspended operations at its Uttarpara plant. In a statement to the Bombay Stock Exchange, the company has cited worsening conditions at the 40,000 units per annum plant which include very low productivity, growing indiscipline, critical shortage of funds, lack of demand for its core product (the Ambassador) and large accumulation of liabilities.

On February 18, Autocar Professional had reported that HM was set to get a new strategic investor – a foreign entity – with the announcement of the investment expected to be made during the April-June 2014 quarter. The investment by the new partner was to set off the turnaround plan of the beleaguered carmaker. HM has been looking for a strategic investor for the past few years but has failed to find any to invest in the entire company. That is why the company decided to demerge and transfer its Chennai Car Plant (CCP) in January 2013.

The new investment would have offered a new lease of life to HM. Demand for the Ambassador is at an all-time low: 2,214  units were sold in 2013-14, down from the 3,471 units sold in 2012-13.