It is the best of times for some employees of HMT Ltd, when the cabinet under Prime Minister Narendra Modi on Thursday approved the budgetary support for payment of outstanding salary, wages and other employee related dues. The employees of tractor dvision based at Pinjore had not been paid salary since July 2014 and other statutory dues are also pending since November 2013. But it was also the worst of times, for the cabinet approval of VRS and VSS at 2007 notional pay scales brought down the curtains on the HMT tractor division.
The cabinet decision will cost the government Rs. 718.72 crores for payment of outstanding salary, wages and statutory dues, VRS and VSS ex-gratia payments and clearance of Tractor division's liabilities towards banks and creditors. The Cabinet has also given its approval for transfer of selected HMT land parcels at Bangalore and Kochi to different Government entities for their use in larger public interest.
The cabinet observed that continuation of tractor business with its insignificant market share in the sector may not be a financially viable or sustainable option for HMT. Hence it would be prudent to close the tractor business, make an exit from the segment and focus on the core sectors of machine tools.
HMT Ltd, a Public Sector Enterprise under the Ministry of Heavy Industries and Public Enterprises, was established at Bangalore in 1953 with the objective of producing machine tools required for building the industrial edifice of a young nation. It played a key role in laying the foundation for evolution of engineering and manufacturing capabilities in the country.
HMT Tractor Division was established in 1971 at Pinjore, Haryana with Russian collaboration. The tractors first made headlines for their powerful machines that drove the Green Revolution, and later for the the fact that H.L.Khera, who was the general manager of HMT was kidnapped and killed in 1990. Ace film director Mani Ratnam's film, “Roja” in Hindi and Tamil and set in the backdrop of militancy in Kashmir, is said to be loosely based on Khera's life.
HMT is better known as the maker of watches, which in its heydays had a long queue of people waiting to procure one. The watches were made in collaboration with the 'Citizen' brand of Japanese watches. The watch company shut down a couple of years ago, though watches that remain are still being sold.
Performance of the HMT tractor division started to decline in the '90s, in the post-liberalisation economic environment with rising costs, stiff competition from international players and availability of imported goods at cheaper rates. Several efforts were made to arrest the declining trend, but it could not be turned around. HMTL's profit-making tractor business was affected due to poor off-take, under-utilisation of capacity and working capital constraints, etc.