Govt plans Rs 300 cr bail-out plan for sick HMT

HMT’s three main business groups — Machine Tools, Watch and Tractors would be spun off as separate subsidiaries. However, these subsidiaries would eventually be converted into joint ventures with a majority stake to a strategic partner, the plan envisages.

Also, after severe opposition from workers unions and the Farooq Abdullah government in J&K, the GoM also decided against closing down the Srinagar watch factory which is running into losses. Instead, it would also be spun off as a separate subsidiary with an annual budgetary support to the tune of about Rs 10-11 crore till it becomes viable.

Five unviable units — Central Metal Forming Institute, watch case unit, lamp Factory, food processing, machinery unit and miniature battery unit have been identified for closure. A total of 450 employees in these five units will be given VRS according to the Gujarat Pattern which means 35 days of salary for each year of service put in, plus 25 days of salary for each year remaining. Apart from shedding workers in unviable units, the ailing undertaking will ease out around 7,000 employees out of a total strength of 19,387 employees through the VRS scheme.

While HMT has been identified for disinvestment, it is not among the 33 PSUs marked for divestment in this fiscal year. Divestment in HMT is also being opposed by Department of Heavy Industries Minister Manohar Joshi who considers the PSU as `strategic.’ Joshi considers machine tools segment in HMT as `strategic’ as it supplies equipment to the defence sector.

The Cabinet would now have to give a final clearance to the restructuring plans of HMT. The Cabinet had earlier referred the issue to the GoM because it could not take a unanimous decision on its restructuring. The GoM comprising Finance Minister Yashwant Sinha, Heavy Industries Minister Manohar Joshi, Tourism and Culture Minister Ananth Kumar and Deputy Chairman Planning Commission, K C Pant were asked to go into the nitty-gritty of the restructuring plans before Cabinet takes a final view. The GoM’s views have now been placed before the Cabinet.

HMT Ltd envisages losses to the tune of Rs 131.01 crore in 1999-2000 as against Rs 36.57 crore in 1998-99. Even in 2000-01, HMT does not believe it can come out of the red. It only hopes to reduce its losses to Rs 20.39 crore during this period.