Rs 723 cr revival package for HMT-MTL: Cabinet

New Delhi, Feb 1 (UNI) The government today announced a Rs 723 crore revival package for the HMT Machine Tools Ltd (HMT-MTL), Bangalore, and a joint venture (JV) proposal for turning the public sector unit into a healthy and profitable company.

The decision on the financial restructuring and JV was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Manmohan Singh.

Making the announcement, Finance Minister P Chidambaram told reporters that the joint venture partner would be identified as early as possible.

Asked whether the government would hold majority shareholding the JV, the Minister said the percentage of shares to be held by the partner would be decided later.

However, the JV move was not aimed at privatising HMT-MTL, he averred.

Under the package, the balance sheet of the company would be restructured and debt equity ratio would be improved. Accumulated losses would be reduced.

Of the Rs 723 crore, Rs 443 crore would be for preference share capital in order to repay VRS related loans (Rs 255 crore) and long term loans (Rs 138 crore), while Rs 50 crore would go towards diacharge of earlier liabilities on interest payment met from the working capital.

There would be a fresh equity share capital infusion of Rs 180 crore from the government. This would be utilised for capital expenditure (Rs 90 crore), training and retraining (Rs 10 crore) and technological acquisition and upgradation (Rs 80 crore), spread over four years (Rs 20 crore each year).

The government would also provide a special non-plan loan of Rs 100 crore for VRS at an interest rate of 3.5 per cent a year.

Government loan amounting to Rs 122.64 crore would be converted into equity, while interest (Rs 35.16 crore) on government loans would be waived.

UNI