Hindustan Motors suspends operations at Uttarpara

Tags: News
The CK Birla owned auto flagship Hindustan Motors Ltd, which has been making iconic brand- Ambassador, starting its journey way back in 1942, on Saturday declared suspension of work at its Uttarpara plant in West Bengal. The company sent a notice to this effect to stock exchanges citing low productivity, large accumulation of liabilties, critical shortage of funds and lack of demand for the core product-Ambassador cars as the reasons for the shut down. "Given the present circumstances it has no alternative but to declare a suspension of work at its Uttarpara Plant till further notice. The suspension of work will enable the company in restricting mounting liabilities and restructure its organisation and finances and bring in a situation conducive to reopening of the plant," the notice said.

“As of today the company has been trying to restructure a running organisation – the suspension of work will, we are hoping, allow us to focus more on the restructuring. The promoters (CK Birla group) have been funding losses for several years by divesting some of the business units and also monetising some investments. Efforts to find strategic investors have also not materialised and the company faces a critical shortage of funds,” the company said.

Significantly, the company had earlier hived off its Chennai plant to a promoter outfit for an unknown consideration, and made reference to the BIFR in February 2014. Six months ago Birla quit as Hindustan Motors chairman apparently to facilitate the induction of strategy partners in the company’s two manufacturing units. A fortnight ago, its current managing director Uttam Bose also quit. The management claimed to be taking several steps for restructuring of the company’s operations.

Meanwhile, the 2400-strong workforce at the company’s Uttarpara unit alleged that they had not been paid for the past six months or so. West Bengal labour minister Purnendu Bose said that the management should have taken the government into confidence before taking the drastic step. "The Left Front government had allowed Hindustan Motors to sell off some surplus land of Uttarpara plant. It is sad that the management did not invest the money as working capital to run the factory," said Bose. CITU leader Shyamal Chakraborty, on his parts, however blamed what he described as anti-labour policy of the state government. "The closure is another gift of the Mamata Banerjee government in the state," he said.

A senior trade union leader alleged that during the Trinamul Congress’ tenure, three important plants in Hooghly-Dunlop at Sahaganj, Aditya Birla Insulators at Rishra and now Hindustan Motors at Uttarpara have closed down. On May 15, wagon Maker Jessop & Co Ltd, now owned and run by the Kolkata-headquartered Ruia Group, had announced a ‘suspension of operations’ at its Dum Dum plant, alleging state administration’s apathy and inaction in stopping continuous disturbances caused by outside miscreants. The suspension of work was declared on ground of ‘continuous theft and indiscipline’ at the plant leading to stoppage of production.

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