HM says, its 50% net worth wiped out by losses

Hindustan Motors, one of the oldest car maker of India announced on Monday that it will soon report to the BIFR (Board for Industrial and Financial Reconstruction) as company's net worth has wiped-out by 50% after reaching the peak in the preceding four years.

The financial performance of the company will not affect the production of the Ambassador, said, CK Birla, Hindustan Motors chairman, in an interview given to a leading business group. Company's net worth has been wiped-out by 50% and it now have to report to BIFR. There is a significant difference between this and becoming a BIFR case, said, Mr Birla. Company has no plans of phasing out the Ambassador . In fact, demand has been good and it has lined up a lot of plans for the company, added Mr Birla.

BIFR is a government agency that helps to expedite either the revival or the closure of sick industrial companies. As per a communication company had with the National Stock Exchange, the accumulated losses at the end of 31 March 2010 has resulted in an erosion of more than 50% of the company’s net worth from the peak during the preceding four years. As per the news reports the board has also accepted the resignation of managing director Ravi Santhanam .

Sales of the HM has gone down to a very low level, as Maruti, which started sales 41 years after Hindustan Motors, last year sold more cars in a week than the annual sales of Hindustan Motors.

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