Hindustan Motors Limited of the C K Birla group plans major diversification into the auto components sector, from its Uttarpara factory in West Bengal.
Hindustan Motors Managing Director R Santhanam told reporters in Kolkata on Friday that on the identified surplus land at Uttarpara, the company plans to set up an integrated township comprising an IT park, auto-ancillary park and real estate projects.
He said the company plans to invest around Rs 100 crore (Rs 1 billion) in the auto ancillary sector, which would be raised from developing the IT park and real estate projects.
Although the company was yet to receive a formal communication from the West Bengal government, on the approval for sale of 314 acres of land identified as surplus for alternative use, the state Cabinet on Thursday cleared the HM proposal on it, Santhanam said.
The company had earlier approached the state government for selling the surplus land, the proceeds of which would be ploughed back for reviving the unit, which manufactures the traditional Ambassador car.
The proposed auto ancillary park had the potential of evolving as a major export base due to proximity to Haldia port, he said.
Diversification into the auto components sector would envisage developing modern and large-sized automotive forgings, castings and stampings centre within the area, Santhanam said.
Quoting a McKinsey study, he said the auto component industry in India has the potential to grow exponentially from current levels of $1.5 billion.
Meanwhile, the company has engaged HDFC Limited as advisor to the restructuring of the Uttarpara plant, as well as to identify a strategic partner for real estate development.
Development of 314 acres would take four to five years, Santhanam said.
Asked whether HM would set up separate subsidiaries for these three different projects, he said that they would be treated as independent units.
The company would aim at sustaining the existing vehicle business by expanding the range and upgrading technology, Santhanam said.
The company was to pay Rs 10 crore (Rs 100 million) to the West Bengal government for sale of the surplus land.
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