HM, which suffered a loss of over Rs 62 crore during the year ended March 2000 and Rs 36 crore in the first quarter ended June this year, hopes to achieve a cash break-even during the current year ending March 2001.

The company has decided to implement an independent turnaround strategy for each of its three manufacturing facilities at Uttarpara, Pithampur and Chennai.

HM plans to increase sales from its Uttarpara plant which manufactures its flagship model, Ambassador and Trekker.

"The company sees a major part of the turnaround coming from selling improved `user friendly' Ambassadors in which major irritants have been removed," Hindustan Motors Ltd president (automobile division) BK Chaturvedi told The Financial Express.The changes in Ambassador are being made in consonance to market studies and customer feedback.

At the Pithampur plant, the company aims to generate 50 per cent of the revenue from non-HM sources through the sale of Isuzu engines and transmission sets to domestic companies and overseas markets. The company manufactures both petrol and diesel engines in collaboration with Isuzu at this plant.

"We see a potential in petrol engines with the price differential between petrol and diesel reducing and plan to sell to OEMs in the country this year", he informed. It exported around 1000 Isuzu engines last year and plans to do the same number this year. The key to the profitability of the Lancer operations at its Chennai facility is localisation. "We had a meeting with Mitsubishi recently in which we agreed on reducing costs either by more localisation or by sourcing components from South East Asia, where it has a presence", Mr Chaturvedi said. Hindustan Motors is in talks with Mitsubishi Motor Co to increase the product range as well as introduce more variants of the Lancer.

If localisation requires heavy investments, then toolings can be sourced from countries such as Taiwan and Malaysia. The company is planning to increase localisation to 70 per cent by March 2001 from the existing 56 per cent.

With an increase in the localisation level, the costs are expected to come down and would improve profitability. The company sold 9109 units of Ambassador and 4024 units of Lancer during April to September 2000.

Company to expand product range
Hindustan Motors is planning to widen its product range in order to make its operations viable in the country. HM is in talks with Japanese major Mitsubishi Motor Co on introducing more variants of the Lancer.

"We have to take a decision on whether a stripped down Lancer or an upper end of the model can be introduced so that we have a broad range in the country", Mr B K Chaturvedi, president, HM said.

In order to widen its range, the company is also planning to do trading, that is import cars from the Mitsubishi stable and sell them in the country.

The company may either import completely built units or kits and do part assembly at the Chennai plant. A decision will be taken in March 2001, once the automobile policy is clear.