India News
Search Web Directory
News Home
What next for CK Birla after Hindustan Motors?
Posted on 12th June 2014
In the early 1990s, the darling at Lyons Range, where the Calcutta Stock Exchange was located, was Hindustan Motors, or just Motor as the brokers called it. In the bourse where 3,400 companies were listed, Motor traded at around Rs 150. Old timers at the exchange recall the buzz surrounding the stock. Today, just a decade and a half since, the stories of both the stock exchange and Hindustan Motors are headed for an ignominious end.

The regional stock exchange, which once logged a turnover of Rs 2,40,000 crore, hasn't been trading on its own platform for a year now. After the Securities and Exchange Board of India set down strict stipulations in 2012 on financial obligations for regional bourses to continue operating and gave them two years to meet the norms, the men at Lyons Range had to admit failure. With the deadline passing on May 30, the only hope for the stock exchange lies in its appeal to Sebi for some more time to meet the new criteria.

The bourse's favourite scrip too has had a parallel tale. On May 23, Hindustan Motors, maker of the Ambassador car, citing worsening conditions, suspended all work at the manufacturing site of the iconic passenger vehicle in Uttarpara in the Hooghly district of West Bengal. For those who were hoping things would work out, the indication of the company's dire position came last weekend, when over 80 per cent of the managerial staff was handed out pink slips. The company is also looking to divest its stake in the Chennai plant which it had transferred to its subsidiary, Hindustan Motor Finance Corporation. The unit produces various cars in collaboration with Mitsubishi Motors of Japan.

Critics blame Hindustan Motors' former chairman, Chandra Kant Birla, for the crisis facing the company. Birla had officially dissociated himself from the management of the company last year to pave way for strategic investors. Birla family insiders, however, defend the 58-year-old CK, as he is known. "Hindustan Motors was already a sinking ship," a family member says.

The primary allegation against Birla is that he failed to innovate and allowed the Ambassador to remain trapped in time.

Hindustan Motors, established in 1942 by CK Birla's grandfather, B M Birla, was the first car maker in India. The first 40 years of the Ambassador's drive were terrific. By the end of the 1970s, it had a market share of 75 per cent. The slide started when Maruti Suzuki launched the Maruti 800 in 1983. Between 1984 and 1991, reports suggest that the Ambassador's market share tumbled to 20 per cent. The opening up of the market to foreign car makers and Hindustan Motors' failure to usher in changes stymied all efforts to keep the car company moving.

"Given the outdated plant and machinery at Uttarpara, the fate of Hindustan Motors was inevitable. If you ask me, the promoters lacked vision and intent," says a former company executive.

Birla last visited Uttarpara in 2011 - this was seven years after his earlier tour there.

It wasn't as if Birla did not want to make it big. His collaboration with foreign companies started early in the day. In 1994, Hindustan Motors entered into a joint venture with General Motors of the US, giving birth to General Motors India. In 1999, however, the Indian partner had to retreat due to its inability to expand equity.

In fact, as the former executive points out, Birla even sold his stake in Pilani Investment and Industries, the company through which the Birlas held critical stakes in their numerous group ventures. In 2005, the father-son duo of Ganga Prasad Birla and CK Birla sold its 20 per cent stake in Pilani to Basant Kumar Birla and his grandson, Kumar Mangalam Birla. Family insiders say Birla may have made Rs 300 crore from the deal. How were these funds deployed? A Hindustan Motors official says they were meant to be ploughed into the car company. A questionnaire sent to the Hindustan Motors chairman did not elicit a response.

Officials privy to the deal say that Birla had always wanted to pull out of Pilani for the sake of Hindustan Motors. But the sale was precipitated by the alleged will of Priyamvada Birla, the widow of MP Birla, that bequeathed the family estate to an outsider, Rajendra Singh Lodha. With the MP Birla group holding a 25 per cent stake in Pilani, it became imperative for the Birla family to consolidate its holding in the investment company.

The divestment in Pilani was not the only exit engineered by Birla. Birla Technical Services, which used to be one of the frontline project engineering companies of its time, was downsized significantly. The company had handled the modernisation of Durgapur Steel Plant in 1989 with Hindustan Steel Construction, Demag of Germany and Russia's Tyazpromexport. The company was also involved, as part of a consortium, in the modernisation of Rourkela Steel Plant in 1993. "The turnaround time in project engineering is high. For Birla, it was too high," explains a former official of Birla Technical Services.

In 2001, the earth moving division of Hindustan Motors was sold to Caterpillar, a US company. In 2005, the heavy engineering division of Hyderabad Industries, which manufactured wagons, was bought by the J P Chowdhury-controlled Titagarh Wagons. In 2007, 314 acres at the Uttarpara plant were sold to Bangalore-based Shriram Properties for developing an information-technology township in a deal that is still under a cloud.

Not everything failed. There have been positive developments around Birlasoft, an IT services company, and Orient Cement, both created by Birla. Recently, investor and trader Rakesh Jhunjhunwala picked up 1.7 million shares of Orient Cement for Rs 9 crore through an open market transaction. The move, say industry watchers, displays investor confidence in the company. Orient Cement has a capacity of five million tonnes and is a relatively small player in the sector. The group is also stepping up its plans for the electrical business. Recently, it rebranded the operations of Orient Electricals after nearly 60 years.

What's next on Birla's agenda? What will be the main revenue drivers for his group? Birla is not disclosing. As of now, what's making headlines is the dying Uttarpara plant. Is that the reason why Hindustan Motors doesn't feature on the website of the $1.6 billion group? Family members say, "We loved the car company." And then add almost in whispers, "But in a family, no one ever comes out even."

Related Companies: Hindustan Motors Limited   

Other Latest News
Tata Motors launches AMT variants of Tigor; price starts at ₹6.39 lakh
Posted on 18th June 2019
New Delhi: Tata Motors Monday launched automated manual transmision (AMT) versions of its compact sedan Tigor with price starting at ₹6.39 lakh (ex-showroom Delhi).

The company has introduced two variants under its Tigor AMT range - XMA and XZA , priced at ₹6.39 lakh and ₹7.24 lakh, respectively, Tata Motors said in a statement.

Lucknow makes its first road from plastic waste
Posted on 18th June 2019
Several cities in India are finding innovative ways to get rid of the growing menace of plastic. Chennai, Jamshedpur, Pune and Indore found an ingenious way and now Lucknow has joined the bandwagon.

The Lucknow Development Authority (LDA) has started using plastic waste to construct roads as a pilot project. This environment-friendly road is being constructed as a trial from Gomti Nagar Police Station to Indian Institute of Management (IIM) Lucknow.

Pulwama car blast: 2 wounded soldiers die
Posted on 18th June 2019
Two of the around 10 Army personnel injured in a car blast in Pulwama succumbed to their injuries in a Srinagar hospital on June 18.

“Two soldiers, brought to the hospital with severe contusions and concussions, have succumbed to their injuries, while undergoing treatment in the Army’s 92 Base Hospital. We deeply mourn the demise of our bravehearts,” said a Srinagar-based Army spokesman.

Maruti-Toyota tie-up: Analysts seek clarity from Suzuki arm
Posted on 18th June 2019
Analysts have raised concerns over Maruti Suzuki not disclosing more details pertaining to the partnership with Toyota, saying that there is a lack of communication and the company needs to be more open about the collaboration and its implications in the medium and near term.

In a letter to Maruti Suzuki CEO Kenichi Ayukawa, investment management and research firm Sanford Bernstein asked for clarity on what is Maruti offering Toyota in terms of pricing arrangements, who manufactures which model eventually and what kind of manufacturing margins will Maruti earn.

BPCL’s investment plan for Mozambique gas field gets approval
Posted on 18th June 2019
A ministerial group headed by home minister Amit Shah has given its nod to Bharat Petroleum Corporation’s (BPCL) plan to invest $2.2-2.4 billion in the Rovuma Offshore Area-1 gas field in Mozambique. The group — including finance minister Nirmala Sitharaman, commerce and railway minister Piyush Goyal, external affairs minister S Jaishankar and petroleum and steel minister Dharmendra Pradhan — had met on June 4 to scrutinise the investment plan, as it is still to be approved by the Cabinet Committee on Economic Affairs (CCEA).

» Post a FREE Classified Advertisement
Inviting Real Estate Agents, Job Placements Agents, Educational Institutes, Software Service Providers, Real Estate Builders, Marriage Bureaus, Travel Agents, Restaurant Owners, Health & Fitness Centers and other Local Businesses to Post a FREE Classified Advertisement on Classifieds Website.
Jobs in India India Real Estate Automobiles Matrimonials Beauty & Fitness

Add a comment for What next for CK Birla after Hindustan Motors?
Please only use this form to enter comments on the above company. All comments are reviewed before they are displayed on the web site. Not all comments may be displayed. Check back with us to see if your comments have been displayed.
If you want us to email the comments posted by users, please Subscribe by email
Security Code*

Be the first person to write a business review for What next for CK Birla after Hindustan Motors?

Most Read News

Private insurers continue strong growth in May, smaller ones gain more

Coal India to soon name merchant banker for Australian buy

Sensex furthers gains for 3rd session on robust global cues

Amitabh Bachchan's Twitter account hacked, tweets praise Pakistan

Jio impact waning? Airtel, Vodafone Idea arrest revenue slump

More India News

  India Web Directory
Business Profiles
Automotive Directory
IT/ITES/BPO Directory
Hotel Directory
Health Directory
Business Directory
Gems & Jewellery
Education Directory
Real Estate Directory
Agriculture Directory
Logistics Directory
Yellow Pages
NRI Guide
Photo Galleries
Global Web Directory
*** FREE India Classifieds
Order Premium Listings
Submit a Site
Business Reviews
About us
Link to us
Contact us
Google Search Keywords: India Catalog, IndiaCatalog, India Web Directory
    © 1999 - 2019
    All Rights Reserved
Privacy Statement