The ministry of heavy industries & public enterprises, which is the administrative ministry for HMT and is carrying out its privatisation, has appointed Ernst & Young. According to official sources, the newly appointed adivsers have already completed their due diligence exercise for HMT.
The advisers have also invited expressions of interest from private parties and will soon start the process of shortlisting. After this, the shortlisted bidders will carry out due diligence.
The government is selling 74 per cent of government equity in the tractor business to a joint venture partner. It is also offloading majority stakes in other businesses of HMT, which are HMT (International) in Bangalore, HMT Bearings (Hyderabad), HMT Machine Tools (Bangalore), HMT Watches (Bangalore) and HMT Chinar Watches (Jammu).
At present, the Centre holds a little more than 91.56 per cent shares of HMT. According to official sources, the government is open to the idea of privatising HMT in any manner selling the entire company, or privatising individual subsidiaries, or clusters of subsidiaries.
They, however, pointed out that most likely various HMT divisions would be sold off separately, for there is little common between the divisions, like those of watches and tractors. In fact, that was the reason why subsidiarisation was done, they added.
HMT has been in trouble for quite some time. It lost Rs 23.94 crore in 1997-98, which went up to Rs 36.57 crore in the next fiscal, and mounted to Rs 296.91 crore in 1999-2000. The anticipated loss for the last fiscal was Rs 14.84 crore. The government hopes that HMT would be back in the black in the current fiscal.
The decline in losses was the result of a massive turnaround package involving about Rs 1,150 crore that was cleared by the government in September 2000.
As per the package, fresh infusion of funds amounted to Rs 395 crore. The government also agreed to give guarantee to the bond issue of Rs 469 crore. The turnaround scheme also involved conversion of loans, interest, penal interest, etc, into equity.
With its 15 plants in different parts of the country, HMT manufactures machine tools, watches, tractors, printing machinery, special purpose machines, presses and dairy machinery. It also has two wholly-owned subsidiaries, HMT (International) and HMT (Bearings), and one partly-owned subsidiary, Praga Tools.