· Hindustan Motors is a C K Birla group company having its Ambassador car as also components and spare parts manufacturing at Uttarpara, near Kolkata. Chennai Car Plant at Tiruvallur district, makes Lancer Car and spare parts as also Pajero SUV for Mitsubishi. Road Trusted Vehicle plant making multi-utility vehicles and spare parts is located at Pithampur, in M.P. state.
· The company's unit at Uttarpara is focusing on auto components business and supplying castings, forgings and stampings to other manufacturers. The company is also modernizing the facilities here, to increase its output and reduce costs.
· The company has total of 775 acres of land at Uttarpara, of which, about 630 acres is surplus, which shall be sold or developed by the company and balance of 145 acres shall be used for manufacturing operations.
· The company has agreed to sell 314 acres of land to Shriram Properties Ltd. Bangalore for Rs.295 crores plus non-compete fee of 4% of the sale proceeds of the developed property, as and when sold by the Developers. This amount works out to Rs.180 crores to Rs.200 crores. This is being developed as IT/ITeS Township and Auto Ancilliary Park and would be completed in the next 3 – 4 years. Land of 61.509 acres has been handed over and balance 252.491 acres shall be handed over in the next 24 months. An amount of Rs.57 crore has already been received by the company.
· The company is planning to spend Rs.85 crores on modernization and upgradation of Uttarpara unit and balance money shall be used to retire debts, which is close to Rs.150 crores.
· The remaining surplus land of 315 acres at Uttarpara shall have good value, post development, by Shriram Properties Ltd. and could be valued close to Rs.750 crores in the next 12 to 18 months.
· The company also owns 122.50 lakh equity shares of AVTEC Ltd., with book-value of Rs.69.10 crores. This represents 49% stake and company is engaged in manufacturing of engines with 21% held by C K Birla family and 30% by Actis, a private equity investor. It is talked that in due course of time, the company may liquidate this investment, as Actis is keen for 100% stake, and may realize between Rs.400 crores to Rs.500 croes.
· The car plant near Chennai, is equipped with all the modern equipments which makes Lancer Car and Pajero SUV. This plant was eyed by many auto global giants, as it is at an ideal location to cater to South-east Asian market. This plant is valued close to Rs.500 crores.
· All these surplus and non-core assets can get valued for about Rs.1,500 crores to Rs.1,600 crores. This translates into value per share to Rs.100 per share.
· The company would transform itself as auto ancillary unit, which has better margins and scope for expansion.
· The only concern is that the transformation process by the company is bit slow, which may be, due to agitation by workers at Uttarpara plant. Now, the process is likely to get accelerated and realization of non-core assets may take place, very soon.
· For FY 07, total income of the company was at Rs.708 crores with PBT of Rs.12.79 crores and PAT of Rs.13.30 crores. This is after booking an other income of Rs.73.42 crores, from sale of land and fixed assets.
· For June 07 quarter, total income was at Rs.143.59 crores, with net loss of Rs.9.15 crores. The losses are due to Uttarpara plant, under strike from 13th March 07 to 9th May 07.
· The company may be able to transform itself in FY 08, and may emerge as auto component manufacturer, with zero debt status.
· Share at Rs.31 looks like a good investment, which has potential to touch Rs.50 mark in the next 12 mont
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