HINDUSTAN MOTORS LIMITED
ANNUAL REPORT 2008-2009
I welcome you all to this 67th Annual General Meeting of your Company.
The financial year under review was a particularly difficult one. Your
company incurred a loss of Rs 38.86 Crs, after taxes. The sharp decline in
demand for bigger cars & SUVs in the 2nd half as well as the dramatic
weakening of the Rupee during that period were the main reasons. Improved
operational performance in the first half of the year, cost reduction
initiatives in the second half and progress on developing an Integrated IT
Township & Auto Ancillary Park adjacent to the Uttarpara Plant, could only
partially offset the impact.
You are aware that in the recent years, your company has been focusing on
both the automobile business and the auto component business.
I will now share the progress on each of these initiatives:
* During the year under review, the sales fell from Rs 853 Crs to Rs. 764
Crs a drop of about 10%. In terms of units the Company sold 9211 units
compared to 12713 units in the previous financial year, a drop of about
* The Ambassador car produced at the Uttarpara Plant continues to enjoy
steady demand. However the sales volumes were not maintained, due to
operational challenges in the first half and economic environment in the
* The Uttarpara Plant launched a mini truck branded Winner during the
latter period of the financial year. Homologation Approvals - BS III
approval for the Diesel Version and BS IV approval for the CNG version -
have since been received and deliveries have commenced. At the initial
phase this new product has been rolled out in about 3 towns in West Bengal,
5 towns in Andhra Pradesh and 9 towns in Tamil Nadu. Launch of the CNG
version in Delhi and BS III version in Kolkata is planned in the coming
weeks. During the course of the financial year this new product would be
rolled out across the country and will begin to contribute to both sales
and production growth at Uttarpara Plant.
* Sales for the Mitsubishi range of products from Chennai Car Plant fell
sharply during the second half of the year with significant impact on both
volume and value. The Mitsubishi Outlander launched during the 2008
festival season was received well and went on to win the prestigious SUV of
the year award from both BBC's Top Gear & Times of India's Zig Wheels.
However, the macro economic developments thereafter inhibited growth from
the new product.
* The strategic initiative of developing Forge, Foundry & Press Shops into
an Auto Component Business was sustained during the year. The quantum of
enquiries and orders from OEMs as well as customers was showing a positive
trend till the middle of second quarter. Thereafter, in keeping with the
broader industry trend, demand fell sharply. Notwithstanding the reduced
demand in the short term, we are confident that In the coming years this
business will grow and emerge as a major contributor to revenue and
profitability of the Company.
Two major challenges confronting the Company as well as the Indian
Automobile Industry are:
1. Uncertainty in demand till such a time the economy reverts to a phase of
steady growth. Experts are of the view that our economy would revert to
growth mode before the end of current financial year. Current signs in the
market place are encouraging. However, the possibility of a weak monsoon
has created some apprehensions.
2. The transition to the next level of emission norms - Bharat Stage IV or
BS IV as it is more popularly known. You will be happy to learn that your
company is progressing well on this. Of the ten models of cars, SUVs and
mini trucks, as many as five already meet BS IV emission requirements and
initiatives are underway for the remaining products too to become BS IV
The sharp & sudden economic down turn in the latter half of 2008-09, was a
sharp reminder on the need for businesses to be lean and efficient. Keeping
this in mind your company has initiated a number of cost reduction measures
both in fixed costs and variable costs. But the latter half of current
financial year, the benefits of these initiatives should become more
You are well aware that the Govt. of West Bengal, through its order dated
13th September 2006, permitted the company to develop and cause to be
developed, an integrated IT Township & Auto Ancillary Park, in 314 acre
area, adjacent to the Uttarpara Plant. In accordance with the provisions of
the order, the Company delivered the first four lots of land and realized
proceeds. The remaining lot is expected to be delivered and proceeds
realized during the current financial year. The Developers M/s Bengal
Shriram Hi Tech City limited, have raised some issues and the same is
currently being heard in Kolkata High Court. I am hopeful that the matter
would get resolved in the coming months. I thank the West Bengal Govt. for
their continued support for the revival of the Uttarpara plant.
I take this opportunity to thank all our customers, dealers, suppliers,
bankers, financial institutions, employees and other stake holders for
their support and co-operation.
I also thank my colleagues on the Board for their continued guidance and
July 24, 2009.
Dated : 25th September, 2009