The Shapoorji Pallonji Mistry group company United Motors, one of Tata Engineering's largest distributors, is closing down operations.
United Motors has been hit due to dismal performance of Tata Engineering over the last two years, and though the company has bounced back since, the Mistry group company is finding the going tough.
The company, which has been de-listed recently from the Bombay Stock Exchange, was earlier looking at the possibility of roping in a strategic equity partner which could be offered up to a 49 per cent stake. However, it was unable to identify any buyer.
Industry sources said: "The automobile operations had become unviable and the group has proposed to close shop. The industry was not doing well, coupled with high cost of labour and low margins."
The company has offered a voluntary retirement scheme to its employees. Of the total staff strength of 400 employees, 80 per cent has accepted the scheme.
The automobile division of the Rs 200 crore (Rs 2 billion) United Motors has accumulated losses in excess of Rs 20 crore (Rs 200 million).
It started making losses since 1998 because the automobile industry including Tata Engineering going through a rough patch.
The company has outlets in Mumbai, Thane, Vashi and Ratnagiri on owned and leased premises.
The Mistry group holds around a 98 per cent stake in the company. In 2000, the Mistry group had made an open offer at Rs 140 per share and delisted United Motors from the bourses.