Hindustan Motors is in the limelight today and once again the reason is the same – restructuring plan. The stock  which closed yesterday at Rs.7.93, opened at Rs.8.15, hitting an intra day high at Rs.8.39. It currently remains firmly in the green, above 2%.

The company yesterday announced after market closure that it is all for restructuring. The company has stated that it will demerge its Uttarpara and Chennai plants as the product portfolio and customer segment of these two units are very different. The company is seeking potential strategic / financial investors for both the units. It is already in talks with some of them. However, the potential partners, too, have specific needs and are interested in either of the two units, not both. In view of the delay in the demerger scheme awaiting the honourable High Court’s sanction, the company is initiating divestment of the Chennai plant to meet the goal. In the interim period, the Company plans to have a working arrangement for the Chennai plant. HM is in discussions with different entities involved and hopes for strong support from the West Bengal government which is equally interested in reviving Hindustan Motors.

During the 18-month period under review, beginning April 2012 and ending September 2013, HM incurred a loss of Rs. 71.20 crore as compared to a loss of Rs. 29.96 crore in FY2011-12. The company’s accumulated losses have exceeded its net worth at the completion of the financial year ended September 30, 2013.

HM entered into an agreement with Isuzu Motors India Private Limited in June 2013 for contract manufacturing of the Japanese company’s SUVs and pickup trucks in India, at its Chennai car plant. The first SUV rolled out of the company’s plant on December 10, 2013. This enhances the capacity utilization of the plant.