Senior management at Hindustan Motors have promised to make “partial payment” of five months’ pay arrears to 2,600 employees at its Uttarpara factory which made the iconic Ambassador model, a favourite of Indian government ministers and army generals.
The announcement followed a meeting at the end of last week with West Bengal labour minister Purnendu Bose. Hindustan halted production of the Ambassador, based on the late 1950s Morris Oxford, on May 24.
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Bose added representatives of the management have promised to meet him again this week.
“At present, our department is aware of the payment arrears to employees before work was suspended. I have discussed the issues of other arrears as well that are due from the company, like sales tax and land tax arrears. Other departments of the state government will engage with the Hindustan Motors management in the near future.”
Bose said the carmaker’s management had also informed him about its inability to run the operations at the Uttarpara plant due to financial problems and its failure to restructure the company by bringing in a partner.
The popularity of the ‘Amby’ as the ancient design is affectionately known, has waned due to the increase in modern, foreign brands in India.
Hindustan Motors said in a statement: “The company has no intention of suspending work for an indefinite period but given the present cash flow challenges arising out of continuing losses over the past 10 years, increased material cost on account of lower volumes and productivity of less than one car per employee per year as compared to the prevailing industry norm of 365 cars per employee per year makes the present operational structure unviable and unsustainable from the point of resuming operations.
“The current situation continues to remain challenging more so as the company has no disposable assets or investments which can be utilised to fund cash losses incurred out of operations at Uttarpara.”
The company has asked for time in which to try to restructure the business and reduce its liabilities. The state labour minister said that the West Bengal government was keen on reopening the unit and added: “We will take all legal measures to run the company. We have been told that the company has held discussions with two or three Chinese companies for a possible tie up.”
