HM makes interim payment to workers

HM makes interim payment to workers

HM makes interim payment to workers

India's oldest carmaker Hindustan Motors, which declared suspension of work at its Uttarpara plant on May 24, on Monday made an interim payment to workers.

The company paid Rs 7,000 each to around 2,500 workers with the total outgo touching Rs 1.8 crore, sources in Hindustan Motors said.

The money was credited to the bank accounts of workers, they said.

The sources said that the company had to arrange funds since there was no cash earnings as sale of Ambassador cars had dwindled resulting in zero production of the iconic brand.

The West Bengal government in a bipartite meeting held last Thursday asked the company management to pay workers as they were facing a salary backlog of nearly six months.

The government was scheduled to hold another bipartite meeting with the management tomorrow to ascertain the future of the company.

The management was forced to declare suspension of work at the plant because of severe lack of demand and strained cash flow.

The company was also looking for a strategic investor for the revival of the Uttarpara plant. Promoter C K Birla had stepped down from the company's board as chairman, followed by the resignation of CEO and MD Uttam Bose.

Moloy Chowdhury was appointed as acting CEO of Hindustan Motors.

HM said in statement that the company continued to face a very stark situation and funds accrued from sale of scrap were used for disbursing the advance wages.

Given the critical shortage of funds one of its key priorities in the immediate future was to significantly pay-off statutory payments and wages as and when it received funds.

As on April 30, 2014 the company accumulated outstanding liabilities amounting to Rs 94 crore comprising sales tax and other tax dues, salary and wages, electricity bills, land revenue, bank liabilities, supplier payments and other liabilities.

The company had sought the state government's help in enabling the closure on the forge and foundry divestment which required some approvals from a consortium of lenders which in turn would enable it to clear back log on overdue wages, the statement said.

The Uttarpara plant currently manufactured about 150 vehicles per month whereas to achieve a break even a minimum of 1,500 vehicles needed to be manufactured and sold every month.

It had been reporting a sharp decline in business performance owing to drop in sales of Ambassador, according to the statement. Prior to suspension of work, the monthly operational losses incurred were approximately Rs 7 crore.