HMT in demand after government approves closure of 3 sick units

HMT rose 11.46% to Rs 56.90 at 14:29 IST on BSE after the government approved closure of HMT Watches, HMT Chinar Watches and HMT Bearings.

Meanwhile, the BSE Sensex was down 147.68 points, or 0.58%, to 25,432.66.

On BSE, so far 11.25 lakh shares were traded in the counter, compared with an average volume of 1.38 lakh shares in the past one quarter. The stock hit a high of Rs 60.05 and a low of Rs 50.80 so far during the day. The stock hit a 52-week high of Rs 77.80 on 15 January 2015. The stock hit a 52-week low of Rs 33.65 on 9 June 2015. The stock had underperformed the market over the past one month till 5 January 2016, falling 4.13% compared with 0.23% decline in the Sensex. The scrip had, however, outperformed the market in past one quarter, rising 22.42% as against Sensex's 4.50% fall.

The mid-cap company has an equity capital of Rs 760.35 crore. Face value per share is Rs 10.

The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Narendra Modi, has given its approval for offering attractive Voluntary Retirement Scheme (VRS)/Voluntary Separation Scheme (VSS) packages at 2007 pay scales to mitigate the hardships being faced by the employees of HMT Watches, HMT Chinar Watches and HMT Bearings and close their operations. The movable and immovable assets of the companies will be disposed of as per the government policy.

With a cash assistance of Rs 427.48 crore, the three loss making subsidiaries of HMT namely HMT Watches, HMT Chinar Watches and HMT Bearings will attain closure after separation of about a thousand employees through attractive VRS/VSS and settlement of their dues, CCEA said in a statement during trading hours today, 6 January 2016.

There are 31 Central Public Sector Enterprises (CPSEs) under the Department of Heavy Industry engaged in manufacturing, consultancy and contracting services. Out of these, 12 are making profits. The remaining 19 CPSEs are incurring losses. The Department of Heavy Industry has been undertaking appraisals of each loss making CPSE to assess the prospects of revival. As a part of this exercise, the loss making CPSEs having the potential of turn around are revived and those found chronically sick are disinvested or closed down after payment of due compensation to employees, CCEA said.

HMT reported net loss of Rs 24.26 crore in Q2 September 2015 as against net loss of Rs 24.68 crore in Q2 September 2014. Net sales declined 13.99% to Rs 15.06 crore in Q2 September 2015 over Q2 September 2014.

Incorporated in 1953, by the Government of India as a Machine Tool manufacturing company, it later diversified into watches, tractors, printing machinery, metal forming presses, die casting & plastic processing machinery, CNC systems & bearings. Today, HMT comprises five subsidiaries under the ambit of a Holding Company, which also manages the Tractors Business directly.

The Government of India holds 90% stake in the firm as at 30 September 2015.

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