The promoters of Hinduja Foundries have said that they don't have any intention to go sick in any form. The comments come at a time when the company was referred to the BIFR.
Addressing shareholders at the annual general meeting on Monday, chairman R Seshasayee, who also represent the promoters — Ashok Leyland and Hinduja Automotive — said the company had been impacted by three issues.
First, external, which relates to market conditions and power issue in Tamil Nadu and Andhra Pradesh.
The second factor relates to internal process, production and quality, and third factor was a one-time charge relating to VRS and writing off the loss as way of bad debts.
The company's accumulated loss is around Rs 291 crore as on September 30, 2012, which is 50 per cent of its net worth.
"It is due to mandate and due to compliance, we have reported to the BIFR. It is not the intention of promoters to go into any form of sickness. We (the promoters) will ensure that the company will get all support including people and money," said Seshasayee.
He added the promoters had infused around Rs 300 crore, of which around Rs 150 crore has already been infused and another Rs 150 crore will be infused as and when required.
On what went right and wrong, Seshasayee said the company went in for a large expansion in Sriperumbudur with the intention of moving to the new unit to become a global auto supplier. “This unit is a gold mine,” he said.
On what went wrong, he said, stabilisation of production, underestimating the learning of new products, process control in shop floor resulted in physical inventory and finally restructuring cost of VRS due to excess manpower, lower productivity at Ennore.
“Still the unit is low productivity,” he added.
The company had to write off around Rs 125 crore, of which around Rs 83 crore was written off due to difference stock, VRS amounted around Rs 21 crore and unrecoverable bad debts of Rs 21 crore, said B Swaminathan, managing director, Hinduja Foundries.
“We have appointed McKinsey to help the company address various operational issues,” he said.