The decision was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA).
"The implementation of 1997 pay revision will be from the date of approval with one time relaxation of the Department of Public Enterprises (DPE) guidelines," an official statement said.
The government has made a provision of non-plan loan of Rs 61.04 crore at seven per cent interest per annum spread over two years (2014-15 and 2015-16) to bear the additional impact of implementation of 1997 pay revision.
Besides, it has sanctioned Rs 75 crore as non-plan loan for working capital purposes.
The CCEA in its decision has empowered the Board of the company to increase the age of retirement from 58 to 60 years to the extent of 10 per cent of the employees retiring in any year. Guidelines in this regard would be formulated, it said.
It also waived interest on a government loan of Rs 38.58 crore (upto March 31, 2014).
The total financial implication of the proposal in the form of non-plan loan would be Rs 136.04 crore.
HMT Machine Tools Ltd was carved out as a subsidiary of HMT Ltd 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 work force of the company as on June 30, 2013 was 2,806. The company has authorised share capital of Rs 800 crore and paid up share capital of Rs 719.60 crore.