Once a blue-chip company with an annual production of about 22,000 tractors in 1996-97, the company is grappling to retain its annual production of about 6,000 tractors. The ancillary cluster for HMT Tractors is scattered in Chandigarh, Panchkula, Baddi and Mohali.

Most units have diversified in the past few years. "We started our unit in the 1980s to cater to HMT Tractors alone and flourished, but the poor performance of the company forced us to look for alternatives and now HMT constitutes a small pie of our total business," says an entrepreneur.

Most small unit owners say that HMT Tractors, set up in year 1965, has quality infrastructure do not want to discontinue with the company. According to sources, HMT manufactured 5,200 tractors last year against a capacity of 24,000.

"It is sad that other players in the field in this region grew at the cost of HMT Tractors. Today, most of the tractor ancillaries working for Punjab Tractors Limited, International Tractor and Farmtrac were originally set up for HMT," says another entrepreneur.

He added that the working capital position of HMT is very tight and they received payment in 6-10 months. Ideally, the company is supposed to release the payment with in 60 days of the supply.

The OEMs (original equipment manufacturers) get their payments through a bank guarantee, so it's the SMEs who suffer the most while the company is in red.

Most SMEs are hoping for the revival package being mooted at the centre for HMT tractors. The insiders in the company also confirmed movement on the revival package.

"The rising steel prices and inflation has almost eliminated our thin margins. We have slashed our production by 30 per cent and are able to recover only variable cost," laments a small manufacturer.