Friday, December 14, 2007

Rs 700 cr revival package for HMT on cards

New Delhi, August 5 2005
Amid controversy of disinvestment of government’s stake in the state-owned navratna BHEL, Ministry of Heavy Industry and Public Enterprises has proposed a financial package of around Rs 700 crore to revive the HMT Ltd and some of its subsidiaries.
“We are working on a financial package to revive the HMT Ltd and some of its subsidiaries since it has already come out of red. The financial package will include waiver of earlier loans and new loans for expansion and upgradation purposes besides funds for infusion of additional equity,” said Mr Santosh Mohan Dev, while speaking on the sidelines of a conference on “Corporate Governance” organised by Standing Conference of Public Enterprises (SCOPE) here today.
He claimed that the ministry was studying the feasibility of reviving some of those sick companies, which have potential to survive and grow by infusion of fresh funds and through financial restructuring.
Mr Priyardarshi Thakur, Secretary, Heavy Industries and Public Enterprises disclosed that Ministry’s proposal of Rs 735 crore financial package is likely to be cleared by the Board for Reconstruction of Public Sector Enterprises in the next two months. After that package would be submitted to the Cabinet for final clearance.
He said the government is quite serious in reviving the manufacturing plants of the HMT Ltd in Pinjore and Chennai since the company has already gone through financial restructuring and brought down the employees’ strength.
Significantly, the previous BJP led NDA government had proposed to disinvest its stake in the company. But the UPA government has decided to revive those sick units, which have the potential.
Mr Thakur disclosed that HMT Ltd. is also likely to sign an MoU with the Japanese giant, Mitsubishi to manufacture multi-utility vehicles (MUVs) for the rural areas. A company delegation from Japan is coming this month to finalise the deal, he said.
As part of the revival package, he said, the company is already selling its surplus land in Chennai, besides offering VRS to the surplus staff to bring down administrative costs. It has also introduced new models and brought down the cost of production.
Incidentally, HMT has reported a net profit of Rs 5.98 crore during 2004-05 as against as compared to a net loss of Rs 7.97 crore for the year ended March 31, 2004.
After the good monsoon and substantial increase in agriculture credit, the company is looking forward for a good financial year. As part of its strategy to increase its market share, the company has launched HMT Yuva-a 25 hp tractor at a price of Rs 1.85 lakh.
HMT has a capacity to produce 20,000 tractors ranging from 25 HP to 75 HP. The company is also focussing heavily on research and development.
Mr Thakur added that after studying the economic factors, both the companies might decide to manufacture MUVs at Pinjore unit. Earlier, the minister informed that disinvestment of BHEL has been put on hold while a decision to sell stake in Tide Water Oil will depend on the recommendations of the Board for Reconstruction of Public Sector Enterprises.
“We are a transparent government. We will look at all objections to sale of government shares in BHEL. We do not want to steamroll our way. Till the consultations are over we would not go ahead with the sale of BHEL shares,” the minister said.
On the sale of remaining stake in Maruti, Dev said “it is not in my pocket”.

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