Rs. 1,150-cr. turnaround plan for HMT

By Our Special Correspondent

BANGALORE, SEPT. 19. The Union Minister for Heavy Industries and Public Enterprises, Mr. Manohar Joshi, has assured the management and employees of the public sector Hindustan Machine Tools that the Centre would consider levying appropriate tariffs on import of machinery and watches.

The minister discussed implementation of the Rs. 1,150-crore turnaround plan for the ailing public sector giant, approved by the Union Cabinet on July 18, 2000, with the management, the employees' union and officers' association.

Later speaking to presspersons, Mr. Joshi noted that he had acted on the promise regarding HMT which he had made at a press conference here on November 24, 1999. It was the biggest ever support extended to a public sector undertaking. The turnaround plan included fresh infusion of Rs. 250 crores as equity and the issuance of bonds worth Rs. 469 crores guaranteed by the Government of India. He emphasised that the task of his ministry had not been completed with the provision of guarantee and infusion of cash. It would periodically monitor the targets set out in the turnaround plan and the MoU signed in that regard. The levying of tariffs would protect HMT, in particular, and the domestic machine tool industry, in general.

To a question, the Shiv Sena leader agreed that the continued import of second-hand machine tools was affecting the machine tool industry in the country. He, however, noted that a decision on stopping such imports had to be taken by the Union Commerce Ministry. He pointed out that the import of watches and components from China was affecting the HMT's watch unit.

As part of the turnaround plan, subsidiaries had been formed for machine tools and watch units and the watch factory at Srinagar. The tractor unit had been converted into a holding company. The subsidiaries would enter into joint ventures and it was expected that they would bring in a capital of Rs. 250 crores in the next few years. At the same time, he emphasised that the HMT subsidiaries had to improve their functioning to attract private investment. No one would enter into a joint venture with a sick company.

Mr. Joshi assured the company of assistance in realising the outstanding amounts from the various government departments, other PSUs, Defence and Railways. The machine tool unit of HMT depended on purchases by the Defence Ministry to the extent of 35 per cent of production and the Railways for 20 per cent. The HMT had 19,000 employees and a voluntary retirement scheme was being implemented. He noted that the turnaround plan had to be implemented over a period of five years and he was confident the HMT would stage a recovery. The plan envisaged the turnover of HMT going up by 51 per cent in the next five years. The employee costs were expected to come down from 29.5 per cent to 17.4 per cent in the five years. The disposal of non-performing assets was expected to fetch Rs. 220 crores. To improve its competitiveness, HMT had started investing in networking through a private network and adopted the concept of business process re- engineering. ``I want to help the HMT in all respects,'' Mr. Joshi declared.

The Chairman and Managing Director of HMT, Mr. N. Ramanuja, and the other directors briefed the Union minister about the functioning of the company.

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