Govt to shut HMT tractor unit, pay staff pending dues

The Union Cabinet on Thursday cleared the closure of Haryana-based tractor division of HMT by offering voluntary retirement scheme (VRS) or voluntary separation scheme (VSS) at 2007 notional payscales to enable the public sector unit focus on its core business of machine tools.

The Cabinet also approved budgetary support to HMT for payment of outstanding salary/wages and other employee-related dues. It will have a financial implication (cash outgo) of Rs 718.72 crore for payment of outstanding salary/wages and statutory dues, VRS/VSS ex-gratia payments and clearing of tractor division's liabilities towards banks and creditors, an official statement said.

The Cabinet also approved transfer of select small parcels of HMT land at Bengaluru and Kochi to different government entities for their use in larger public interest. HMT's tractor division was established in Pinjore, Haryana in 1971. Performance of the company started to decline in the 1990s, 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 in the past to arrest the declining trend but it could not succeed in turning around.

HMT's profit-making tractor business was affected due to poor off-take, under-utilisation of capacity and working capital constraints, etc. It was observed that continuation in tractor business with its insignificant market share in the sector may not be a financially viable for HMT, and, hence, it would be prudent to close the tractor business, and focus on the core sector of machine tools, the statement said. The tractor division has been incurring losses and is unable to pay salaries and other statutory dues. The employees of the tractor division have not been paid wages since July 2014 and other dues are also pending since November 2013.

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