Special Correspondent

NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) on Thursday cleared a Rs. 880-crore restructure and revival package for the Bangalore-based HMT Limited.

The package includes a cash infusion of Rs. 443 crore in the form of 3.5 per cent preferential share capital redeemable after three years out of the sale proceeds of the surplus assets of the PSU, with the conversion of dividend on the preferential share capital into equity on accrual.

Repayment of loans

The preferential share capital would be utilised for repayment of loans relating to the voluntary retirement scheme (Rs. 255 crore), repayment of long term loans (Rs. 138 crore) and discharge of earlier liabilities on interest payment met through working capital (Rs. 50 crore).

Another major component is an infusion of Rs. 180 crore as equity share capital, which would be used for capital expenditure (Rs. 90 crore), technological acquisition and upgradation spread over four years (Rs. 80 crore) and training and retraining of the manpower (Rs. 10 crore).

The third important element of the package is a special non-Plan loan of Rs. 100 crore for the VRS.

The loan would be drawn and used for separation of 1,000 employees under the VRS over the next three years.

The package also includes conversion of Government's loan of Rs. 122 crore into equity and waiver of interest amounting to Rs. 35 crore.

Announcing the CCEA decision, Finance Minister and CCEA spokesperson, P. Chidambaram, said the PSU would be turned into a joint venture company soon.

The strategic partner for this would be identified at the earliest.