Hindustan Motors calls meet to make subsidiary bullet proof

Shareholders' meet will decide on scheme of arrangement

Hindustan Motors Limited (HML), known for its production of Ambassador brand of cars, announced on Thursday that it is convening a shareholder’s meeting in Kolkata, for approval of a scheme of arrangement to make its South Indian operations a part of a subsidiary whose current business involves making passenger cars bullet proof.

Hindustan Motor’s Chennai operations would be demerged and made a part of its wholly owned subsidiary Hindustan Motor Finance Corporation Limited (HMFCL), which is now in the bullet proofing business.

“However, the level of operations of such business is relatively insignificant and HMFCL has been looking at suitable other business opportunities. The demerger herein will enable HMFCL to undertake substantial business with an established undertaking,” it said.

“…any potential financial investor or other strategic partner interested in supporting and taking a stake in the business comprised in Demerged Undertaking of HML would not be interested in the other business of HML and vice-versa by reason of the difference and divergence in the nature and financials of such businesses. The Scheme will enable independent evaluation of the said respective businesses through two separate companies and participation therein of suitable investors and strategic partners,” it said.

"The same will enable running and operation of the said businesses and growth and development plans thereof to be funded independently and unlock and enhance shareholders value,” it added.

The meeting is set to take place on September 23rd, according to an exchange notification on Thursday.

The meeting is set to take place as per an order of the HIgh Court of Calcutta which was dated August 8th, and subsequently modified on August 22nd; said the announcement.

Its Chennai Car Plant is located in the Tiruvallur District of Tamil Nadu. It is engaged in the business of manufacture and trading of passenger vehicles like Cedia, Pajero, Pajero sport, Montero and Outlander brands of Cars as well as their spare parts.

The brands are property of Mitsubishi Motors Corporation, Japan with which the company has a technical collaboration, according to documents on the scheme of arrangement.

Hindustan Motors also has a division in West Bengal as well as Madhya Pradesh.