Can HMT restructuring plan turn back the clock?

The government is all set to revive the sick public sector enterprise HMT Ltd, a manufacturer of tractors and watches.

The ministry of heavy industries has prepared a blue print for restructuring the company and a draft Cabinet note seeking comments from other ministries has been circulated.

The HMT turnaround plan is based on recommendations from PricewaterhouseCoopers (PwC) after the company suffered a Rs 82 crore loss in the financial year ending March 2012.

According to the blue print, sources say around Rs 1,083 crore will be pumped into HMT, situated at Bangalore, over the next three years. The revival plan includes modernisation of plants and technology upgrade in the existing infrastructure.

NDTV learns that the note justifies that the economic environment is now suitable for the government to revive HMT, after recommendations by PwC. Earlier in 2007, the government had put the revival plan on hold citing unfriendly economic conditions.

Sources say the government will provide a cash infusion of Rs 447 crore and non-cash assistance of around Rs 636 crore. The cash infusion will be used to modernize the plant and meet the company’s working capital needs. The non-cash assistance will include loans to the company from the government.