Moneycontrol
Last Updated : Jun 06, 2020 01:04 PM IST | Source: Moneycontrol.com

Government wants to lease out HMT tractor plant 4 years after shutting it down

Only companies from capital goods sector or the auto sector will get to bid

 
 
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The government has proposed to lease out business assets of state-owned tractor making company HMT after shutting down the business four years ago.

Manufacturing, assembly and testing facilities of HMT (formerly Hindustan Machine Tools) tractor and engines located at Pinjore, Haryana spread over an area of 43 acre will be leased out for a period of 30 years, a request for proposal (RFP) document floated by the Department of Heavy Industries said.

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Shut since 2016, the same year when the iconic watches division of HMT went out of business, manufacturing capacity of the factory on a single shift basis is 8,500 tractors per annum.

Tender is invited in form of two bid format comprising ‘Technical Bid’ and ‘Financial Bid’ from interested bidders having minimum net worth of Rs 20 crore as on March 31, 2020. The bidder(s) must preferably be engaged in business of manufacturing or assembling or testing of products or equipment pertaining to capital goods or auto sector, the RFP document added.

The lessee shall be entitled to carry out structural changes and construct additional structures after gaining approval from the relevant statutory authorities and the prior written approval from the lessor, the RFP document stated.

HMT’s tractor business commenced operations in 1971 in technical collaboration with Zetor, Czechoslovakia Republic. Initially, HMT started the operation with the manufacture of 25 HP tractor.

Over the years, it developed tractors ranging from 25 HP to 75 HP in two cylinder, three cylinder and four cylinder engine variants successfully meeting the emission TREMIIIA norms. The company achieved market leadership in tractors by enlarging its range to cover most of the applications. HMT has produced and marketed over 400,000 tractors since inception in India and abroad.

From being a market leader at one time HMT’s tractor share dwindled to 0.25 percent in the year the division was shut down. Mismanagement, bureaucratic hurdles and rising competition post liberalisation in 1991 in the form of Mahindra & Mahindra, TAFE and Sonalika Tractors hurt HMT the most.

In 2016, the government decided to shut down the plant but not before the Union Cabinet sanctioned Rs 719 crore for payment of outstanding salaries and other dues of the company.

HMT’s lease proposal comes at a time when the tractor industry is seeing a revival in demand despite the challenges enforced by the coronavirus pandemic. After a poor FY20 when tractor sales contracted by 10 percent demand has remained steady in past few months.

In January and February domestic tractor volumes recorded a growth before the market was hit the nation-wide lockdown in March and April. In May demand revival was seen again when market leader M&M recorded 2 percent growth in volumes.
First Published on Jun 6, 2020 09:15 am
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