If economics doesn’t justify, appeal to the emotions. That is the strategy Heavy Industry Ministry is employing to revive Hindustan Photo Films Manufacturing Company Ltd (HPF) which was declared sick in 1996 and has been recommended for closure by the Board for Industrial and Financial Reconstruction (BIFR).With time running out—a decison on the revival has to be taken within two months—new Heavy Industry Minister Balasaheb Vikhe Patil has also thrown his weight behind the revival idea adding his two bits: HPF’s potential to export to West Asia and African countries!This despite the following:• Its accumulated debt burden on March 31, 2001 was Rs 1791.49 crores• Each year, interest burden of Rs 250 crores is being added• Its share of the Rs 350 crore black-and-white film market is a meagre 15 per cent• It has no footing in the Rs 1,150-crore colour films marketTo salvage the sick firm, the ministry is seeking waiver of Rs 1,063 crore dues, fresh infusion of Rs 590 crore, conversion of Rs 127 crore government loan into euity, write-off of interest dues of Rs 113 crore, government guarantee for raising working capital of Rs 36 crore and a slew of duty incentives to turnaround the photo-filmmaker. The Ministry’s reasoning for duty incentives is that foreign brands—which have pushed out Indu or HPF’s films—are cheaper as the semi-finished rolls attract low import duty. And the conversion units—where the rolls are cut and packaged to smaller size for sale—are located in tax-free areas providing sales-tax exemption and income-tax holidays.Some of the incentives asked for include import-duty exemption on capital goods and raw materials for film manufacturers and higher Customs duty on semi-finished and finished products to WTO bound rates of 40 per cent. Without these, it says, HPF will have to shut down and the government will have to shell out Rs 166 crore to pay VRS to 2,170 employees.The ministry’s rationale for HPF’s revival is that the project requires ‘‘national treatment’’ for being located in the backward area of Udhagmandalam (Ootacamund) and for providing employment to weaker sections. Of a total of 2,173 employees, two-thirds are from backward, scheduled caste and scheduled tribe communities, 79 visibly/physically disabled and 161 ex-servicemen, it says.Other arguments for revival are that it is an ISO 9002 firm; the only manufacturer of photo-sensitised products in Asia outside Japan; and, holds social and strategic importance as it provides cheap medical X-ray films for hospitals and industrial X-ray films to ordnance factories and the I AF. But these reasons have failed to cut ice with the Finance Ministry. Neither does it want to give the proposed duty incentives nor the additional money as it doubts the viability of the revival package. The Department of Disinvestment has suggested that HPF be disinvested after financial restructuring.
