ANNUAL REPORT 2008-2009
Ladies & Gentlemen,
It gives me great pleasure to welcome you all, to the 56th Annual General
Meeting of your Company. The Audited Accounts and the Report of the
Directors for the year 2008-09 are already in your hands and I seek your
permission to take them as read.
During the year 2008-09, the Indian economy, the third largest in Asia, was
hit hard due to the global recessionary trends affecting the industry all
around. The global financial meltdown and consequent economic recession in
developed economies have been a major factor in India's economic slowdown.
Given the origin and dimension of the crisis in the advanced Countries,
which some have called the 'worst' since the Great Depression, every
developing Country has suffered in one way or the other. No country,
including India, remained immune to the global economic shock.
The economy which had grown at the rate of 9% plus consistently during the
previous three fiscals decelerated to 6.1% during 2008-09. The GDP at
factor cost reduced to a growth rate of 6.7% against 9% in 2007-08, while
the per capita income showed a 14.4% rise. The overall Index of Industrial
Production (IIP) for the year points towards a sharp slowdown with growth
being placed at 2.6% during the financial year 2008-09 while the IIP for
the manufacturing sector was a mere 2.3% as compared to 9% in the previous
year. However, despite the slowdown in growth, investments remained
relatively buoyant reflecting the resilience of the Indian Enterprise. It
is estimated that India's economic growth in the current fiscal would be
around 6.5 per cent. The economy continues to face wide ranging challenges
- from improving its social and physical infrastructure to enhancing the
productivity in agriculture and industry and addressing environmental
concerns. Meeting these challenges will be critical for improving India's
social and human development indicators and the quality of life.
THE COMPANY'S PERFORMANCE IN 2008-2009:
The inland Tractor industry remained stagnant during the year 2008-09. Your
Company recorded a Turnover of Rs. 161 crore as compared to Rs. 171 crore
in the previous year. The demand for tractors was affected due to stringent
credit terms and restricted flow of finance to the farm sector from Banks
owing to large levels of default. The Company took advance measures by
synchronising the production activities with sales, in order to avoid stock
pile up. The Company produced 3,651 tractors valued at Rs. 134.34 crore,
registering a net loss of Rs. 70.79 crore during the year as against Rs.
44.67 crore in the previous year.
One of the major factors that impacted production of tractors was
interruption in supplies by suppliers seeking price increase due to impact
of increase in price of inputs like steel, copper, pig iron etc. Further,
Production was controlled in line with the stock level of finished tractors
to avoid blockage of working capital. Sales of tractors was also affected
by the tightening of norms for tractor loan by Banks due to rising NPA and
this impinged on the off-take of tractors in the market. Specifically, the
Banks revised upward, the criteria related to land-holding, interest rates,
and limited number of loan cases per dealer. Consequently, there was a
drastic cut in Tractor Retail Finance. Further, the slow agricultural
growth was yet another factor which impacted the sales.
During the year, your Company initiated a number of operational measures
such as improvement in its products, rationalisation of product mix,
operational methods, capital investments, new strategies for marketing and
distribution and introduction of productivity improvement schemes.
Furthermore, the Revival Plans prepared for the Company for approval by
Government of India is in line with the Country's eleventh Five Year Plan
and your Company is gearing up to meet the performance targets set for the
current year 2009-10.
STRATEGIC INITIATIVES IN THE TRACTOR BUSINESS:
During the year under review, the following measures were initiated in the
* Appointment of dealers for tractors in un-represented areas / regions to
improve the market share of HMT Tractors, implementation of revised credit
policy for tractor dealers and focus on institutional orders for tractors
as part of Marketing strategies
* Introduction of new models of tractors and Rationalisation of Product
* Credit tie up with leading banks;
* Continued thrust on Plant upgradation and modernisation;
* Market / Industry bench marked incentive schemes to accelerate the sales
The Company would continue to invest in upgrading / replacement of plant
and machinery for modernisation of the tractor production facilities as
well as for product upgrades with emphasis on products with better
aesthetics, ergonomics and safety.
INITIATIVES AT THE SUBSIDIARIES DURING THE YEAR:
During the year 2008-2009, the various Subsidiaries of your Company,
embarked upon several measures to address the issues of new product
introduction, technology development and customer orientation. Various
activities in respect of augmentation of manufacturing capability by
investment in upgradation and modernization of plant and machinery have
been undertaken along with rationalization of manpower and organizational
restructuring. One of the key issues being addressed is in the area of
modernisation of plant and equipment and technology acquisition in order to
ensure improved technological capability to position the products in tune
with the market demand.
REVIVAL PLANS OF THE COMPANY AND SUBSIDIARIES:
The revival plan proposals of HMT Machine Tools Limited approved by the
Government are currently under implementation. The Company is progressively
implementing the revival plan, by upgrading manufacturing facilities,
imparting training to enhance manpower skills and has drawn future plans
considering the likely changes taking place in the macro environment.
The revival plan proposals formulated by the Company in respect of HMT
Limited - the Holding Company, HMT Watches Limited and HMT Chinar Watches
Limited along with the Draft Rehabilitation Scheme for HMT Bearings Limited
are under the active consideration of the Government for approval.
Concomitantly, the Company would pursue efforts for locating suitable joint
venture partners for its Subsidiaries with the objective of harnessing
higher levels of technology.
THRUST AREAS FOR THE FUTURE:
The outlook for the current year i.e. 2009-10 is promising and the Company
has planned to achieve a higher turnover with a better market forecast for
its products. In order to widen the product base and to gainfully utilize
the existing facilities, the Company has embarked upon an ambitious plan to
focus on rationalization of the product range together with manufacture of
engines for genset applications by introduction of certain modifications in
the existing engines. The Company also proposes to take up manufacture of
Rotavators which is being developed to suit the Company's range of
The Company has already initiated a host of measures towards performance
improvement by appointment of new Distributors and Dealers in select
Territories, engine upgradation for compliance of new emission norms for
all models of tractors, interaction and tie-ups with Banks for financing
purchase of HMT Tractors, introduction of debt settlement schemes for the
non-operative dealers, dynamic business strategies, focus on exports, focus
on institutional orders etc., which are expected to yield positive results
during the current financial year. It is also expected that the appointment
of new Distributors & Dealers in select territories would bring in new
business opportunities for the Company.
Your Company salutes the vast body of stakeholders who have contributed
their mite for building this great organisation. I take this opportunity to
thank my colleagues on the Board for the guidance given by them. I would
also like to thank the concerned Ministries of the Government of India,
particularly the Department of Heavy Industry, under the Ministry of Heavy
Industries and Public Enterprises, State Governments concerned, Joint
Venture Partners, Suppliers, Banks and Financial Institutions for their
valuable assistance and support. The valued customers of the Company both
in India and abroad deserve special mention for their continued patronage.
I also express my sincere appreciation to the employees at all levels for
their best efforts in the operations of the Company and their continued co-
operation and understanding for maintaining cordial relations during the
Shri A. V. Kamat,
Chairman & Managing Director