Heavy Engineering Corporation (HEC), which has recently signed a memorandum of understanding (MoU) with HMT Machine Tools (HMT-MTL), will undertake a due diligence of HMT-MTL in three months to look into various aspects related to the possibility of merging the company with itself.
HEC will form teams for due diligence and also put forward a proposal to the ministry of heavy industries as to what financial resources would be required. If merger actually takes place, the new entity will become the largest machine tools manufacturer in the country.
HMT-MTL is one of the five subsidiaries of HMT. It has five plants in Bangalore, Pinjore, Hyderabad Kalamassery and Ajmer.
Asked whether the merger is a distinct possibility, HEC chairman-cum-managing director GK Pillai said, ?The merger hasn’t taken place yet; we will be looking towards that. In principle, there is a synergy in the products being manufactured (by the two companies); we would now be looking into all the other details including things like accumulated losses, etc.? He said HEC has in-principle agreed only to handle the management of HMT-MTL. As per the MoU, the companies have decided to “explore the feasibility” of taking HMT-MTL into HEC?s fold. All the actions regarding this will be completed within three months.
HEC in 2009-10, reported a net profit of Rs 26.93 crore on net sales of around Rs 490 crore.