Hindustan Motors: Auto Maker or Realtor

Hindustan Motors has become a non-player in auto sector since long. Long back again, its management gave up the lead of one time or its pioneer role with entry of Maruti Udyog. It would have at least tried to remain a major player. The management never wanted to do that rather it decided to give a walk over. It believed in making money out of other incomes as a typical old time business house rather than surviving with innovations and risk taking. It kept on investing but without a long term strategy. It would have preferred a small car from Mitsubishi rather a compact bigger car. No manufacturer can think of remaining in that sector without the capability to go on changing the model.

Uttarpara plant could have been restructured in separate companies that could have become three four independent separate units supplying the major components for all the major automakers.

Years ago, a friend of mine in Noida enquired if the WB government would permit Hindustan Motors to sell its land. My friend, as I came to know later on, had some shares of the company and he wanted to sell them, but was told by his broker to wait till the government permitted to sell the land. The broker expected the share price to rise after the permission.

The management of Hindustan Motors had long been working as Real Estate Company rather an automobile manufacturer. We were very happy when HM went for a 50:50 venture with General Motors when General Motors set up its Halol plant. Hindustan Motors perhaps got its share in equity out of cost of the land and building facilities that it had created in mid 90s for a truck plant in collaboration with Isuzu Motors of Japan. Later on, Hindustan Motors also sold its manufacturing plants in Hosur and Chennai, naturally along with its land.

Hindustan Motors also had a plant in Pithampur with a lot of land. The major part of the plant also has changed hand.

The news in ‘Business Standard’ didn’t surprise me and confirmed my proposition. The company had approached the state government in 2003 to raise funds by selling the excess 314 acres so it could revive it, as its plant is built on 427 acres of land out of the total 741acres or it possessed once. How could a company which didn’t use the land for five or more decades sell it to survive?

BS reports, “In 2006, the company got an approval from the Left Front government to sell the land. HM declared Rs 85-crore projected revenue for the sale of this excess land. However, an internal audit done by the state government last November found that HM had sold the land to Bangalore-based Shriram Properties for the development of an integrated IT township at a price of Rs 285 crore in 2007. The state believes that, as the money was not ploughed back into the company, it should be returned to the government as it was the owner of the plot.”

As reported, the net profit of Rs 17.20 crore in the first quarter of the current financial year came from selling of land in Gujarat’s Halol that generated an earning of Rs 47.63 crore. Naturally, one can question even that sell, as the state agency offered the land for setting up the plant and not for selling it as real estate at any later date.

It hurts me when I hear that the company has already sold most of the machinery and equipment. Many of its empty sheds have tattered ceilings. Hardly a little more than thousand workers are left with almost no engineering staffs. It manufactures few thousands Ambassadors. But the company keeps on coming in press with tall plans of some foreign company proposing to buy stake in it, or its plan for introducing new models or to increase production by five fold.

Is it not an intentional misdemenour of a company and a business house that the company can afford with the politicians and bureaucrats with it? Should it not be considered as corruption or does it not involve corruption?

Usually all land deals involve corruption? Does the nation require an n Anna Hazare for this type for activities of responsible business house? What percentage of the business houses are involved in such unscrupulous deals”

I feel bad as I had decided to work for such a company early in my life and I remained there for whole of my life. It was too late when I realized my fault.

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