Hindustan Motors now considering Gujarat as site for e-vehicle plant
Informist, Monday, Jul 31, 2023
--Sources:Hindustan Motors may set up unit in part of its Gujarat plot
--Sources: Hindustan Motors' JV partner impatient with delay in plant
--Sources: Hindustan Motors may now eye Gujarat for e-vehicle plant
By Avishek Rakshit
KOLKATA – Faced with legal hurdles in its plan to set up an electric vehicle manufacturing facility in West Bengal, C.K. Birla group company Hindustan Motors Ltd is now considering Gujarat as a site for the plant, sources aware of the development told Informist.
Although the company's board is yet to take a call on the matter, the management is concerned that the foreign joint venture partner, which will pump in capital to set up the plant, is turning impatient and may look for a way out.
"It's going to be nearly three years since Hindustan Motors signed the memorandum of understanding with the foreign partner. Do you think the foreign partner will wait beyond three years to set up the planned project?" one of the sources said.
They added that despite the challenges, such as lack of an automotive manufacturing ecosystem in the state, the company's management is keen to develop the project at its now closed factory in West Bengal, as this may reduce capital expenses for both Hindustan Motors and its foreign partner.
"But there is a time limit to hold onto one's patience," a source said.
Hindustan Motors had earlier signed an agreement with an undisclosed foreign company to set up a plant to make electric vehicles in India. Sources said that as part of the agreement, Hindustan Motors was to provide the land and necessary basic infrastructure at its now closed automobile manufacturing plant in Uttarpara in West Bengal. The foreign joint venture partner would put in some capital and the technological know-how to roll out the electic vehicles.
However, in May, the state government issued an order to take back Hindustan Motors' 395 acres of land in Uttarpara, alleging that the company had breached several agreements in the past. Subsequently, the matter, under the West Bengal Land Reform and Tenancy Tribunal, was referred to courts and is now pending before the Calcutta High Court.
"I would not like to make any comments since the matter is sub-judice," Uttam Bose, director at Hindustan Motors, told Informist.
Sources said that Hindustan Motors has around 100 acres of land in Bharuch in Gujarat. A part of the land is expected to be sold, and the proceeds may be used to meet expenses and a part of the capital could be used to develop the electric vehicles project.
"But the land parcel (in Gujarat) will not be sold off completely and a portion of the land, enough to make a factory for an electric vehicle project, will be retained," a source in the know said.
For the year ended March, the company, which once made the iconic Ambassador and enjoyed near monopoly in the Indian automotive industry, made a net profit of only 500,000 rupees from investments.
"Since the matter is pending court's decision, and the foreign partner is getting impatient, Hindustan Motors' management is likely to relook into its plans of setting up the electric vehicle plant in its land West Bengal and instead may relocate the planned project to Gujarat," one of the sources said. "Besides, Gujarat already has a developed ecosystem for the automotive industry, whereas West Bengal lacks it."
Back in 2008, Tata Motors, which was developing an automotive plant in Singur, West Bengal, to make the Nano car, decided to quit the project, which was already under construction, amid protests. The project was subsequently relocated to Gujarat.
Shares of Hindustan Motors today closed 5% higher at 14.75 rupees on the National Stock Exchange. End
