CK Birla group company, Hindustan Motors (HM) is going the BIFR way. The automaker on Monday said it would approach the Board for Industrial and Financial Reconstruction (BIFR) after its net worth eroded by over 50 per cent in just over four financial years.
"The accumulated losses of the company at the end of financial year 31 March 2010, have resulted in erosion of more than 50 per cent of its peak net worth during the immediately preceding four financial years," the company informed the National Stock Exchange (NSE).
"While the company is taking necessary steps to protect further erosion, the company will report to the Board for Industrial and Financial Reconstruction about such erosion of net worth as envisaged under Section 23 of the Sick Industrial Companies (Special Provisions) Act, 1985, forthwith upon finalisation of audited accounts of the company at its annual general meeting," the company said in its stock market filing.
The company reported a net loss of Rs42.85 crore in the 2009-10 financial year against a net loss of Rs37.78 crore in the previous financial year.
Standalone net sales were down at Rs573.15 crore in 2009-10 against Rs597.76 crore in the previous financial year. Consolidated net sales were down at Rs576.90 crore from Rs602.74 crore in the previous financial year.
The board of directors of HM also accepted the resignation of its managing director R Santhanam with effect from 18 May, and appointed Manoj Jha in his place with effect from 19 May for a period of five years.
Shares of Hindustan Motors fell as much as 9 per cent after the announcement. The scrip touched an intraday low of Rs23.20 and were down 8.1 per cent at Rs23.25 at 3:26 pm.