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Asia's Most Popular Collection of Management Case Studies |
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In January 1999, HM filed a writ petition in the Calcutta High Court, claiming that its decision was not prompted by industrial relations, but by the company's poor financial position. It also stated that the layoff in the Uttarpara plant was temporary in nature and the company would resume normal production as soon as demand picked up. The High Court then ordered the state government to reconsider the issue.
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In May 1999, instead of reconsidering the issue, the state government filed an appeal before the division bench of the Calcutta High Court, claiming that HM had suppressed facts and figures during its meeting with them to settle the issue. The division bench directed that the matter be referred to the Industrial Tribunal. In July 1999, the Industrial Tribunal dismissed the company's proposal. |
When its attempts to reorganize its operations did not pay off, HM decided to look beyond its existing product portfolio to come out of its problems. As per McKinsey's recommendations, the company explored the global auto components business in 2000 and established a unit at Indore to assemble engines and gearboxes. Analysts said that this was a wise move because HM with its expertise, could easily become a component supplier for both domestic and global car majors. HM's executive director Sarker Narayanan said, "We are open to such opportunities. It brings in extra cash and it's an inexpensive way to upgrade our skills by working with different customers."
7] After another VRS, which closed in July 2001, the Uttarpara plan workforce had come down to 9,200. The plant,
suffering a loss of Rs. 70 million per month had stopped functioning on two weekdays. In August 2001, HM was asked
by the State Government to submit a comprehensive plan for reviving the plant. The situation at the plant
continued to
be grim even in late 2001.
Case Code : BSTR021
Themes: Turnaround Strategy
Case Length : 10 Pages
Period : 1998-2002
Organization : Hindustan Motors
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Automobile & Automotive
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