While Birla did not reply to reporters' queries after the company's AGM (annual general meeting), the company's Managing Director and CEO Uttam Bose said that it was becoming very difficult for the company to manage daily operations due to poor cash flow.
Today's decision reflected Birla's thinking that his stepping down would pave the way for the entry of strategic investors and allow for greater flexibility during discussions, the company said in a statement.
Bose had said the company needed to restructure the business by demerging the Chennai and Uttarpara operations for which HM was seeking strategic investors for both the units.
During the 18-month period under review beginning April, 2012 and ending September 2013, HM incurred a loss of Rs 71.20 crore as compared to a loss of Rs 29.96 crore in FY2011-12.
The company's accumulated losses have exceeded its net worth at the completion of the extended financial year ended September 30, 2013.
Birla was appointed chairman of HM in November 1997. Birla had also relinquished the post of directorship in the company.