Hindustan Motors has sold its Chennai factory to its subsidiary, Hindustan Motors Finance Corporation, the company said.
The company had said previously it planned to raise about INR1.5bn (US$25m) by selling its stake in the plant. It is in the process of getting required approvals from lenders and the Tamil Nadu government, Business Standard reported
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Hindustan Motors said: “In the present day and circumstance, it is imperative to induct a suitable investor/global leader in the respective businesses for viability in the long-term and, therefore, the company has been looking at suitable proposals for the Chennai plant.”
The company added “the divestment in the plant will not affect other operations of the company.”
Hindustan Motors manufactures Mitsubishi vehicles such as the Pajero Sport, Cedia, Outlander and Montero models and spare parts at the Chennai plant under a deal with the Japanese automaker.
The company also contract assembles vehicles for Isuzu at the plant, reported Business Standard.
Hindustan Motors had previously stated that lower volumes – driven by high petrol prices and interest rates – had negatively impacted the Chennai plant. Other factors include exchange rates and power shortages in Tamil Nadu.
Between April 2012 and September 2013, Hindustan Motors lost INR712m compared with a loss of INR299.6m in 2011-12.
