Ambassador maker blames fund crunch, falling demand, accumulating liabilities
Hindustan Motors, maker of the iconic Ambassador car, had suspended work at its Uttarpara facility here, the company said in a filing to BSE on Saturday.
“The company has been transparent in sharing updates about the worsening conditions at its Uttarpara 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. Given the present circumstances, it has no alternative but to declare suspension of work at the plant, till further notice,” the company filing said.
Suspension of work would help the company cut mounting liabilities, restructure its finances and arrive at a situation conducive to reopening the plant, the statement added.
The plant employs about 2,500 workers. It is unclear whether these workers will be paid remunerations for the period during which the work will be suspended. According to reports, the workers haven’t been paid for the past six months.
In March, the company had informed BSE it had handed over possession of its car plant in Chennai to Hindustan Motors Finance Corporation Ltd, a fully-owned subsidiary.
“The company’s promoters have been funding losses for several years, by divesting some business units and monetising some investments. The company’s efforts are falling short of the large liabilities that have been accumulated. The management has every intention to significantly pay off the existing liabilities, as well as limit future liabilities, and to reduce the dues to statutory authorities, employees and lenders,” the management said in a separate statement.
The suspension of work adds to the gloomy state of affairs in this regard in the state. About a fortnight ago, engineering firm Jessop & Co, controlled by the Ruia group, had announced suspension of work at its facility in Dum Dum, on the outskirts of this city.
The Jessop management said this was due to “continuous malicious intervention of outsiders in the functioning of the plant, resulting in overall disruption of the management’s plan to revamp operations of the company”. The plant, which was hardly operational through the past year, employed 685 workers. Earlier, the management had issued transfer notices to a few workers, which triggered protests.
On a different front, the Calcutta Stock Exchange (CSE) is in dire straits, with the Securities and Exchange Board of India (Sebi) issuing it a notice to wind up operations by May 30. However, CSE is set to write to Sebi to exempt it from the new rules set for regional stock exchanges, saying it doesn’t fall under this category. The exchange is also seeking a tie-up with MCX-SX Clearing Corporation.
All the employees of the Uttarpara plant would not be paid salary during the suspension of work period