News APP

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  gplay

This article was first published 17 years ago
Rediff.com  » Business » Rs 700cr revival package for HMT

Rs 700cr revival package for HMT

By Sanjiv Shankaran in New Delhi
April 21, 2006 12:01 IST
Get Rediff News in your Inbox:

The government is planning a Rs 700 crore (Rs 7 billion) revival package for troubled public sector company HMT (Machine Tools), of which about Rs 400 crore (Rs 4 billion) would be a fresh infusion of cash in the form of equity and bridge loans. The infusion of equity will be spread over three years.

Other than the cash infusion, the rest of revival package would be in forms such as waiver of interest on existing government loans. The revival package has been sent by the ministry of heavy industries and public enterprises to the Cabinet Committee of Economic Affairs for approval, a ministry official said.

The revival package is underpinned by the boom in capital goods industry.

HMT (machine tools) is the largest Indian capital goods company, with a market share of around 23 per cent, the official added.

The ministry is upbeat about its performance, and has forecast a profit in the current financial after losses in the last four years. The government's revival package comes in the backdrop of upbeat expectations among firms in the capital goods industry.

The National Council of Applied Economic Research's business expectations survey for the first quarter of 2006 showed capital goods sector witnessed the maximum gain in sentiments.

HMT (Machine Tools)  production value in 2005-06 is expected to be around Rs 280 crore (Rs 2.8 billion), according to the ministry's annual report for the year.

HMT (Machine Tools) was one of the six subsidiaries carved out of the erstwhile HMT. The company makes a wide range of capital goods and its entire equity is held by the holding company, HMT.

One route of HMT (Machine Tools) growth is likely to be through a merger with the troubled state-owned capital goods maker, Praga Tools.

Praga Tools, which has about 2 per cent market share in the machine tools industry, is likely to be merged with HMT (Machine Tools) after October 2007 if it meets with the conditions set by the Board for Industrial and Financial Reconstruction for its merger.

Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group

Get Rediff News in your Inbox:
Sanjiv Shankaran in New Delhi
Source: source
 

Moneywiz Live!