The Cabinet Committee on Economic Affairs (CCEA) today approved financial assistance and other measures for HMT Machine Tools Limited (HMT MTL).   The details are as follows:-

a)   An amount of Rs. 75 crore as non-plan loan for working capital purposes.

b)   Implementation of 1997 pay revision from the date of approval with one time relaxation of the Department of Public Enterprises (DPE) guidelines.

c)   Provision of non-plan loan of Rs. 61.04 crore at seven percent interest per annum spread over two years [Rs. 29.34 crore for the first year (2014-15) and Rs.31.70 crore for the second year (2015-16)] towards additional impact of implementation of 1997 pay revision.

d)   Empowering the Board of the company to increase the age of retirement from 58 to 60 years to the extent of 10 percent of the employees retiring in any year in relaxation of DPE guidelines. Guidelines, in this regard, would be formulated.

e)   Extension of time for a period of 5 years would be required for the utilisation of the unspent balance available with the company under technology acquisition and upgradation fund sanctioned during the earlier revival plan and extension of time for a period of three years for utilisation of unspent balance, of Rs.2.63 crore for training and re-training.

f)     Waiver of interest on Government of India loan for Rs.38.58 crore (calculated upto 31.3.2014).

The total financial implication of the proposal in the form of non-plan loan would be Rs. 136.04 crore.  An increase in turnover will bring back business of the company towards a positive growth.   Implementation of 1997 pay scale and increase in the retirement age would motivate the workforce. The company is expected to turnaround with the proposed infusion of funds at its head office in Bangalore and its manufacturing units located at Bangalore (Karnataka), Pinjore (Haryana), Kalamassery (Kerala), Hyderabad (Andhra Pradesh) and Ajmer (Rajasthan).

Background:

HMT MTL was carved out as a subsidiary of HMT Ltd (having 100 percent shareholding) in the year 2000 with its head office in Bangalore. The company has facilities for manufacturing various types of machine tools and printing machines in its units located at Bangalore, Pinjore, Kalamassery, Hyderabad and Ajmer. The present work force of the company as on 30.06.2013 was 2806. The company has authorised share capital of Rs. 800 crore and paid up share capital of Rs. 719.60 crore.

Financial assistance to public sector company approved, enabling loans and DPE guideline relaxations to support operational turnaround. Cabinet approved a revival package for HMT Machine Tools Limited including a non plan working capital loan of Rs.75 crore, an additional non plan loan of Rs.61.04 crore to cover the cost of implementing the 1997 pay revision, a waiver of interest on a Government loan, one time relaxation to implement the 1997 pay revision, Board empowerment to increase retirement age for up to 10% of retirees in any year, and extensions for utilisation of sanctioned technology and training funds, aimed at motivating staff and supporting turnaround.