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HMT Ltd.

BSE: 500191 Sector: Auto
NSE: HMT ISIN Code: INE262A01018
BSE LIVE 15:40 | 17 Nov 40.95 -0.60






NSE 15:31 | 17 Nov 40.85 -0.60






OPEN 43.50
VOLUME 29169
52-Week high 49.00
52-Week low 31.00
Mkt Cap.(Rs cr) 4,931
Buy Price 42.00
Buy Qty 995.00
Sell Price 0.00
Sell Qty 0.00
OPEN 43.50
CLOSE 41.55
VOLUME 29169
52-Week high 49.00
52-Week low 31.00
Mkt Cap.(Rs cr) 4,931
Buy Price 42.00
Buy Qty 995.00
Sell Price 0.00
Sell Qty 0.00

HMT Ltd. (HMT) - Director Report

Company director report


The Members HMT Limited Bangalore

Dear Members

The Board of Directors has pleasure in presenting the 63rd Annual Report on theBusiness & Operations of your Company and Annual Accounts of the Company for the year2015-16 along with the Auditors' Report. The Comments of the Comptroller & AuditorGeneral of India are attached to this Report.

Financial summary / Performance of the Company (Standalone)

(Rs. in Crore)

Particulars 2015-16 2014-15
Gross Revenue from Operations 46.43 61.47
Profit Before Depreciation and 3.15 (75.48)
Finance Costs
Depreciation 2.57 2.71
Gross Profit/(Loss) 0.58 (78.19)
Finance Cost 25.33 18.36
Net profit before exceptional (24.75) (96.55)
Items and PPA
Add : Exceptional Items - -
Less : Prior Period Adjustments (0.01) 0.02
Net Profit before Tax (24.74) (96.57)
Provision for Tax - -
Net Profit After Tax (24.74) (96.57)
Profit/Loss carried forward to (24.74) (96.57)
Balance Sheet


As per the provisional estimates of national income released by Central StatisticsOffice on 31st May 2016 the growth rate of Gross Domestic Product (GDP) at constant(2011-12) prices for the year 2015-16 is estimated at 7.6 per cent as compared to thegrowth of 7.2 per cent in 2014- 15.

The growth in Gross ValueAdded (GVA) at constant (2011-12) basic prices for the year2015-16 is estimated at 7.2 per cent as compared to the growth of 7.1 per cent in 2014-15.

At the sectoral level the growth rate of GVA at constant (2011-12) basic prices foragriculture & allied sectors industry and services sectors for the year 2015-16 areestimated at 1.2 per cent 7.4 per cent and 8.9 per cent respectively.

Overall growth in the Index of Industrial Production (IIP) was 2.1 per cent in June2016 as compared to 4.2 per cent in June 2015. The IIP growth during the first quarter(April-June) of 2016-17 was 0.6 per cent as compared to 3.3 per cent during thecorresponding period of previous year. The low growth in IIP is mainly due to contractionin capital goods and consumer non-durable goods sectors.

Eight core infrastructure industries grew by 5.2 per cent in June 2016 as compared togrowth of 3.1 per cent in June 2015. The growth of core industries during the firstquarter (April-June) of 2016-17 was 5.4 per cent as compared to 2.5 per cent during thecorresponding period of previous year.

The production of manufacturing sector grew by 0.9 per cent in June 2016 as compared to5.2 per cent in the corresponding month of previous year. In terms of use basedclassification sectors like basic goods intermediate goods consumer goods registeredpositive growth while capital goods registered negative growth in June 2016.

Merchandise exports and imports declined by 6.8 per cent and 19.0 per cent (in USdollar terms) respectively in July 2016 over July 2015. During July 2016 oil imports andnon-oil imports declined by 28.1 per cent and 15.8 per cent respectively over July 2015.During April-July 2016 merchandise exports declined by 3.6 per cent while merchandiseimports declined by 16.3 per cent.

The growth in GDP in Q4 (January-March) of 2015-16 is estimated at 7.9 per cent ascompared to the growth of 6.7 per cent in the corresponding quarter of 2014-15. GDP growthduring the first three quarters of 2015-16 was 7.5 per cent 7.6 per cent and 7.2 per centrespectively.

Operating Results

In the Company's main business portfolio of Tractors the market indicators reveal thatthe industry recorded de-growth of 10% in terms of quantity. Your Company had to facesevere pressure on performance during the year due to lack of working capital.

Your Company recorded a Production of Rs. 37.18 Crore (633 Nos. of Tractors) as againstRs. 53.66 Crore (1078 Nos. of Tractors) in the previous year and Sales of Rs. 45.43Crore (733 Nos. of Tractors) compared to Rs. 60.28 Crore (1127 Nos. of Tractors) in theprevious year.

HMT Group along with its Subsidiaries achieved an aggregate Production of Rs. 249.69Crore and Sales of Rs. 284.62 Crore for the year 2015-16.

During January 2016 CCEA has approved closure of the subsidiaries HMT Watches HMTChinar Watches and HMT Bearings and the Administrative Ministry has directed the Companyto take requisite action for the process of closure.

The Government of India vide letter no. 1-0501/8/2015-PE.X dated 4th November 2016communicated CCEA approval for Budgetary support to HMT Ltd for payment of outstandingsalary/wages and has also approved for Closure of operations at HMT Tractor Division withoffer of attractive and improved VRS/VSS package to allow ex-gratia and terminal benefitsbased on 2007 notional pay scales in relaxation of DPE guidelines disallowing payrevision in sick/ loss-making CPSEs as against the current pay scales of 1997 to all theemployees of Tractor Division. Employees not opting for VRS would be retrenched under theIndustrial Disputes Act 1947 as the Tractor Division is proposed to be closed down.

The Government of India has also approved for Infusion of funds of Rs. 718.72 Cr asinterest free loan for the said VRS/ VSS with ex-gratia and terminal benefits based on2007 notional pay scales for all employees of the Tractor Division (3 335.00 Cr) clearingof employee related liabilities of HMTL (3 271.05 Cr) and settlement of other liabilitiesin respect of HMT Tractor Division (3 112.67 Cr).

The Government of India has also approved for Restructuring of Balance Sheet of HMTL byreduction of paid-up capital to the extent of accumulated losses of Tractor Divisionamounting Rs. 848.49 Crore against Govt. of India paid up equity shareholding in theCompany of Rs. 1204.09 Crore and write-off of Govt. loans provided to HMT Ltd. (Rs. 72.02Cr) along with accrued interest (Rs. 18.56 Cr) to be frozen as on 31.03.2016 with nofurther liability of interest.

Further the process of transferring of land to Govt. of Haryana (GoH) on mutuallyagreed terms and negotiation of suitable compensation will be undertaken in a time boundmanner after the due approval. In addition sale of other assets which will becomesurplus after closure of the Tractor Division. The Company would explore the possibilitiesof using the productive resources for example factory premises of HMT Tractor Divisionwith clearly demarcated land and buildings plants and machineries for leasing out on‘As is Where is' basis to interested private parties engaged preferably in CapitalGoods or Auto sector on medium or long term basis after duly safeguarding the GoIinterest. Failing this an alternative option for strategic sale of the HMT TractorFactory Pinjore to national or International parties may be explored in consultation withDIPAM.


The Machine Tools Industry demand projections are based on CAGR of around 15% althoughthe industry expectations of growth are much higher.

The National Manufacturing Policy in Make in India program envisagesmanufacturing growth of 12 to 14 % per annum. The Policy is aimed at increasing the shareof manufacturing in the country's Gross Domestic Product (GDP) from 16 % to 25 % by theyear 2022. The policy also envisages creating of National Investment & Manufacturingzones which will help in creating demand for machine tools.

Increased allocation in Defence Sector India has the potential to emerge as a globalplatform for Defence research manufacturing supply chain sourcing software developmentand offsets which will strengthen our defence capabilities and spur industrialdevelopment as well as exports in this sector.

The Company proposes to further its initiatives in "Skill India"projects of the Government to train youth to become employable and contribute to the"Make in India" initiatives of the Government. Skill Development Centresare being planned at six locations across India.

To make the Company viable and vibrant a Restructuring Plan is now being formulated bythe Company with focus on achieving technology leadership capabilities in the corebusiness of Machine Tools in view of the enormous potential of the sector.


Owing to the losses incurred during the year the Directors are unable to recommend anydividend on the paid up equity share capital of the Company.

Share Capital

The Authorised Share Capital of the Company is Rs. 2100 Crore and Paid up Share Capitalis Rs.1240.95 Crore

Fixed Deposits:

The Company has not accepted any deposits from the public and hence there is noviolation of Chapter V of Companies Act 2013 and the corresponding rules made thereunder. Receipt of any commission by MD / WTD from the Company

Disclosure pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5 ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended:

Please refer Annexure to Directors Report

Disclosure as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

The Company has adopted a policy on prevention prohibition and redressal of SexualHarassment at workplace in line with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder.

During the Financial year 2015-16 the Company has not received any complaints ofSexual Harassment.

Fraud Reporting

There was no incident of fraud reported during the year under review.

Corporate Social Responsibility (CSR) Policy

[Pursuant to sub-section (3) (o) of Section 134 of the Companies Act 2013] consequentupon appointment of Independent director on the Board of the Company the CSR Committeewill be constituted.

Enterprise Risk Management:

Establishment of Risk Management System in terms of Clause 49(VI) of the ListingAgreement and the provisions of the Companies Act 2013 is under process.

Particulars of Employees:

No employees of the Company received remuneration in excess of the limits prescribedunder Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014.


HMT Machine Tools Limited

This company executed orders for several critical Machines and procured prestigiousorders from strategic sectors & auto sectors during the year. The Company alsoinitiated various product developments Technology development & Technology Tie-upsmaking it an eventful year. During the year the inflow of orders from Railways &Defence sector has also gone up by 168% and 30% respectively. The Subsidiary achievedSales of Rs.197.62 Crore against Rs.172.15 Crore and Production is Rs. 201.44 Crore asagainst

Rs.181.50 Crore in the previous year. Net loss reported is Rs.121.64 Crore during theyear 2015-16 against reported loss of Rs. 134.94 in previous year.

HMT (International) Limited

The Subsidiary achieved a turnover of Rs. 33.91 Crore during the year 2015-16 asagainst Rs.33.40 Crore recorded in the previous year 2014-15. The Order procurement duringthe year is Rs. 9.43 Crore as against Rs.82.08 Crore achieved in the previous year.Continuing the trend of achieving profits Subsidiary could achieve Profit Before Tax(PBT) of Rs. 0.87 Crore against Rs.1.66 Crore reported in previous year. The Subsidiaryhas maintained its consistent dividend payment record and has recommended a dividend of20% for the year 2015-16 on its Paid-up equity share capital

HMT Watches Limited

This Subsidiary achieved Sales of Rs. 4.32 Crore and Production of Rs. 0.94 Croreduring the year under review. The Net Loss for the year stood at Rs.159.71 Crore.Consequent to Govt. decision for closure 794 employees were releieved on VRS.

HMT Chinar Watches Limited

The Subsidiary achived Sales to Rs.0.11 Crore during the year with NIL Production forthe year. The Subsidiary incurred a Net loss of Rs. 9.51 Cr. Consequent to Govt. decisionfor closure of the company all the employees were releieved on VRS.

HMT Bearings Limited

During the year under review the Subsidiary achieved Sales of 310.34 Crore againstthe Previous Year's Sales of Rs. 14.75 Crore. In terms of Production the Company achievedRs.10.13 Crore compared to the Previous Year's Production of Rs. 14.20 Crore. ProfitBefore Tax registered at 33 (-) 8.09 Cr during 2015-16 as against Rs. (-) 17.78 Cr.reported during previous year. Consequent to Govt. decision for closure of the company allthe employees were releieved on VRS.


SUDMO-HMT Process Engineers (India) Limited

This Joint Venture Company could not transact any business during the year underreview. For the financial year 2015-16 this Company showed a Profit after tax of Rs. 0.67Lakhs only on account of the interest income of Rs. 3.55 Lakhs on the fixed deposits keptwith the Banks.

Gujarat State Machine Tools Corporation Ltd

This Joint Venture Company between HMT and GIIC Ltd has discontinued its operationssince long. It is therefore proposed to divest from this Associate Company jointly withthe JV Partner. The process of disinvestment from this Company is under consideration bythe Company in consultation with the JV Partner.


As required under the Listing Agreement Consolidated Financial Statements of theCompany along with that of the Subsidiaries for the financial year 2015-16 conforming tothe applicable Accounting Standards are attached to this Report along with the Auditors'Report on the same.

In terms of the General Circular No. 2/2011 dated 8th February 2011 issued by theCentral Government in terms of Section 212(8) of the Companies Act 1956 the Directorshave consented not to attach copy of the Balance Sheet

Profit and Loss Account Report of the Board of Directors and Auditors of the five (5)Subsidiary Companies viz. HMT Machine Tools Limited; HMT Watches Limited; HMT ChinarWatches Limited; HMT Bearings Limited and HMT (International) Limited and one (1) JointVenture Company i.e. SUDMO- HMT Process Engineers (India) Limited to the Balance Sheet ofthe Company (Holding Company). However these documents will be made available uponrequest by any member of the Company interested in obtaining the same. Further incompliance with the conditions of the above referred Government circular the financialinformation of each of these subsidiary Companies have been furnished as part of theConsolidated Balance Sheet of the Company. The annual accounts and other detailedinformation of each of the Subsidiary companies will be available for inspection by anymember at the Registered Office of the Company.


Information in accordance with the Companies Act 2013 read with the Companies(Particulars of Employees) Rules 1975 as amended is NIL for the year 2015-16.

The employee strength of the Company as on March 31 2016 stood at 3795 Nos comprisingof various categories of employees in manufacturing plants and other offices in technicaland other professional areas.

The number of employees on the rolls of the Company as on March 31 2016 in SC/STEx-servicemen Physically Handicapped and Women Employee Categories etc. is detailedbelow:

Scheduled Castes 252
Scheduled Tribes 31
Other Backward Classes 89
Ex-Servicemen 5
Persons with Disabilities 14
Women employees 37
Minorities 181


The overall Industrial Relations situation in the Company during the year remainedcordial.


The efforts towards implementation of Official Language Act Rules & Policy as perthe directives of the Government in the Company is continuous. The Official LanguageImplementation Committee have been constituted in all the Units of the Company and theSubsidiaries including the Corporate Office at Bangalore to monitor implementation ofOfficial Language Act Rules Policy etc. which meets at regular intervals in everyquarter.

In order to propagate the usage of Hindi as Official Language "HINDI DIWAS/HINDIFORTNIGHT" was observed during the month of September 2015. Various competitions inHindi such as Hindi Story Writing Hindi News Paper Reading Hindi Quiz Writing HindiConversation Hindi Antyakshari etc. were organized and participants were awardedprizes. A workshop was organised during the above period. The Hindi Magazines/Newspapersare being procured to propagate the usage of Hindi among employees. The concernedOfficials of the Company regularly take part in the meetings of the Town Official LanguageImplementation Committee.

Reporting on progress of Hindi proliferation is being reported periodically onRajabhasha Vibhag portal.


The Chief Vigilance Officer appointed by the Government of India heads the CorporateVigilance Department of the Company. Presently the post of Chief Vigilance Officer isvacant and General Manager (HR) of HMT MTL is holding the additional charge of CVO as perthe directive of Ministry of Heavy Industry. Chief Vigilance Officer is assisted at Unitlevel by exclusively appointed Vigilance Officers.

The Corporate Vigilance Department carries out vigilance functions in the HoldingCompany as well as its Subsidiary Companies. The vigilance functions in the manufacturingUnits and Marketing Offices are looked after by Vigilance Officers under the guidance ofChief Vigilance Officer.

All the Unit Vigilance Officers send their monthly Vigilance / Inspection Reports andSurprise Inspection reports to CVO. The reports so received are scrutinized at CVO Officefor further action. Unit Vigilance Officers also verify Annual Property Returns submittedby the employees of the Unit.

Apart from regular inspections by Unit Vigilance Officers CVO conducts CTE typesurprise and regular inspections of high value purchase/contracts and systems by visitingvarious Subsidiaries and Units.

Violations of rules and procedures observed during the inspection of files by CVO/ Dy.CVO/ Unit VOs were recorded and depending upon the seriousness of the deviations furtheractions are taken. Unit Vigilance Officers are advised to discuss deviations noticed bythem during their inspection in the quarterly Vigilance Workshop and advice the concernedofficers that the violations of rules and procedures pointed out by the VigilanceDepartment should not be repeated and should conform to CVC and Company Purchase Manualguidelines.

Emphasis was laid on preventive vigilance by striving towards strict adherence to allrules and procedures and all norms of transparency in tendering process. Based on CVC'sguidelines for ‘Improving vigilance administration by leveraging technology andincreasing transparency through effective use of website' necessary directions weregiven by CVO for implementation of the same. Some of the systems put in place by theCompany are:

1. Hosting of all open tenders and high value Limited Tenders on of GOI).

2. Publishing details regarding all purchase orders / contracts concluded duringthe month of and above the threshold value (presently Rs.5.00 lakhs). This is generallyfollowed by all manufacturing Units.

3. Application form for vendor registration along with list of items required bydifferent Units of HMT Limited and Subsidiaries are made available on Company Website soas to enable the interested vendors to download the application form and submit the sameto the Unit of their choice.

4. Efforts are being put to persuade the Managing Directors for switching over toE- Procurement process for all purchases of value Rs. 2 lakhs and above and adoptE-payment mode for making all payments including supplier payment. In many of the Units Epayment mode to suppliers is adopted and compliance level is 10 to 20%.

5. Quarterly vigilance workshops were organized at all manufacturing units toenhance the level of vigilance awareness among the employees and other stakeholders.Vigilance Awareness Week 2015 was observed in all Units and Offices of HMT Limited andSubsidiary Companies as per the guidelines of CVC.

6. A list of DOs and DONTs based on CVC Guidelines & CompanyPurchase Manual was prepared and released for the guidance of personnel working inPurchase & Contract department and Vigilance Officers

The number of inspections including surprise inspections carried out by CVO and UnitVigilance Officers along with the number of property returns scrutinized between April2015 to March 2016 is tabulated below :-

Inspection Total carried out between April 2015 – March 2016 (by Unit Vigilance Officers)
Periodic Inspection of Purchase Files 1074
Surprise Inspection 228
Scrutiny of Annual Property Returns 60
Inspections done by CVO at Units (I) HMT MTL Marketing Office Provident Fund Bangalore (ii) HMT MTL
(April 2015 to March 2016) Hyderabad (PTH & MTH) (iii) HMT MTL Pinjore


Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges a Report onthe Corporate Governance is annexed as part of this Report along with the ComplianceCertificate from the Auditors. A Report on Management Discussion and Analysis is alsoappended to this Report separately. Further a declaration by the Chairman & ManagingDirector for having obtained affirmation of compliance of the Code of Conduct by the BoardMember (s) and Senior Management for the year ended March 31 2016 is also appended.

The Audit Committee could not be reconstituted as per Cl. 49 of the Listing Agreementin the absence of Independent Directors on the Board to be appointed by the Government onthe Board.

The Register of Members and Share Transfer Records both in respect of the shares heldin physical and depository form are maintained by Karvy Computershare Private Limited theRegistrars & Share Transfer Agents of the Company.


Particulars in respect of conservation of energy technology absorption and foreignexchange earnings and outgo as required under the Companies (Disclosures of Particulars)Rules 1988 are annexed to this Report.


To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(C) of the Companies Act 2013:

• that in the preparation of the annual financial statements for the year ended31.03.2016 the applicable accounting standards has been followed along with properexplanation relating to material departures;

• that such accounting policies have been selected and applied consistently andjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company at the end of the financial yearand of the profit and loss of the Company for the year ended on that date;

• that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

• that the annual financial statements have been prepared on a going concernbasis;

• that proper internal financial controls were in place and are adequate and wereoperating effectively;

• that proper systems to ensure compliance with the provisions of all applicablelaws were in place and were adequate and operating effectively;

• Since the overall performance of the Company is evaluated against the annual MoUtargets set by the Department of Public Enterprises (DPE) no specific criteria is laiddown for the evaluation of Board and of its Committees and the individual Directors. Sinceyour Company being a Central Public Sector Enterprise (CPSE) the personnel policies andguidelines issued by DPE are being adopted in line with other CPSEs. Accordingly yourCompany has not formulated any separate policy in respect of appointment or evaluation ofsenior management and key managerial personnel.

Extract of Annual Return

In terms of Section 92(3) of the Companies Act 2013 read with Rule 12 of the Companies(Management and Administration) Rules 2014 an extract of the Annual Return in theprescribed form is placed as Annexure - MGT9.


M/s Dokania S.Kumar & Co. Howrah were appointed as Statutory Auditors of theCompany for the year 2015-16 by the Comptroller & Auditor General of India. Threefirms of Chartered Accountants were also appointed as Branch Auditors for the otherUnits/Divisions of the Company. Replies to the observations by the Statutory Auditors intheir Report are given by way of an addendum to this Report.

Secretarial Audit Report

In terms of Section 204 of the Companies Act 2013 and Rules made thereunder Mr.Venkateswaralu Practicing Company Secretary have been appointed as Secretarial Auditor ofthe Company. The report of the Secretarial Auditors is enclosed as Annexure VII to thisreport. The report is self-explanatory and do not call for any further comments.


Vide Presidential Order No.5(8)/2010-P.E.X dated April 13 2016 and in terms of Article67(4) of the Articles of Association of the Company Shri Subhash Chandra PandeyAS&FA Department of Industrial Policy and Promotion holding additional charge of DHIhas been appointed as Part-time Official Director on the Board of the Company withimmediate effect until further orders vice Shri S.K.Bahri the then AS & FA.

Shri Subhash Chandra Pandey is proposed for appointment as Director in terms of Article67(4) of the Article of Association of the Company read with Section 160 of the CompaniesAct 2013 in the ensuing Annual General Meeting for which a notice has been received fromthe Member.

The Board placed on record its appreciation for the valuable services rendered by ShriS.K.Bahri whose term of Office ended during the year.

Smt. Shashi B. Srivastava (DIN. 07582574)IDAS was appointed as Director (Finance) ondeputation of the Company by the Ministry of Heavy Industries & Public Enterprisesvide letter I-.05/14/2014-PE-X dated April 29 2016 and accordingly was appointed as anwholetime Director of the Company pursuant to Article 67 of the Articles of Association ofthe Company read with Section 161 (1) of the Companies Act 2013 w.e.f. 01.07.2016 and whoholds Office upto the date of this Annual General Meeting."

Smt. Shashi B. Srivastava shall not be liable to retire by rotation.


Your Directors are thankful to the various Departments and Ministries in the Governmentof India particularly the Department of Heavy Industry Ministry of Corporate AffairsComptroller and Auditor General of India Principal Director-Commercial Audit Statutoryand Branch Auditors various State Governments Foreign Collaborators the SubsidiaryCompanies Suppliers Reserve Bank of India the Consortium of Banks lead by UCO Bank andthe valued Customers of the Company both in India and abroad for their continuedco-operation and patronage.

Your Directors would also like to take this opportunity to express their appreciationfor the contributions made by the Company's employees and look forward to their continuedservices in pursuit of building a world class Indian Company.

For and on behalf of the Board of Directors

(S. Girish Kumar)

Chairman & Managing Director

Place: Bangalore

Date: 6 Sept. 2016