The step has been taken after the recommendations by Indian Institute of Techonology, Kharagpur, to introduce the production of six new products, was not found to be feasible for the company, if it works for them alone. The ministry of heavy industries and public enterprises is negotiating the joint venture with RINL, RailTel and MMTC. State Bank of India has been identified as the lead banker, a senior official in the ministry told FE. In 2001, the government also tried to rope in a private partner to revive the company. At that time, the government proposed to disinvest 74% in the company, but the plan could not be realised due to the political opposition.
The order book of Hindustan Cables, which primarily manufactures jelly-filled and optical fibre cables for BSNL and MTNL, fell with the introduction of various wireless services in the last decade. As a result, the companys plants in Hyderabad, Naini Allahabad and Rupnarainpur stopped producing large lots and the company started undertaking turnkey projects for the department of telecommunications and BSNL.
Hindustan Cables had an employee strength of 2,948 as on December 31, 2008 and an annual production capacity of 12 million conductor kilometres of jelly-filled cables, 40,000 fibre kilometres per annum of fibre optic cables and 2.5 million sets of telephone cords and computer cords.
The ministry official added that the government has also planned to waive the loans and interest thereon to unburden the company and make it attractive for other PSUs to create a joint venture with it. The company has received non-plan loan of Rs 400 crore since 2001-02.
Hindustan Cables has accumulated losses of more than Rs 1,200 crore. For the year ended March 31, 2008, Hindustan Cables incurred a total loss of Rs 435 crore against Rs 310 crore in the previous year. It had a negative net worth of Rs 2,267 crore, against Rs 1,833 crore.