BUSINESS

One-time settlement — only solution for HPF's survival

COIMBATORE OCT. 28. With the only joint venture promoter recommended by an international consultant also declining to extend a helping hand to the beleaguered Hindustan Photo Films Manufacturing Co. (HPF), Udhagamandalam, its survival now depends solely on the Central Government extending a one-time settlement.

According to highly placed official sources, who request anonymity, while closure looks a remote possibility, only an early Government decision could help revive the unit, only one of this kind in the country and one among the six in the world using a "secret technology". "Its dark room technology is not taught in any institution".

Its major processes are emulsion, coating and conversion. While coating is capital intensive, conversion is labour intensive. It manufactures a variety of products of high quality, including defence-related ones. They include medical x-ray, medical and digital imaging films, b/w rolls, cine sound negative, aerial film, dental x-rays, graphic arts, RC paper, bromide paper, and laser and ink jet printer paper.

But, this PSE, one of the oldest in the country (which started production in 1967), is in dire straits because of obsolete technology and machinery and its main product — black and white film — getting shunted out by colour film.

Besides, the policy of liberalisation which resulted in withdrawal of budgetary support for its polyester plant (that was initiated in 1985 with an installed capacity of 16 lakh sq. metres) is another major reason.

The sources pointed out that the machinery of 1960s, that produced black and white film, had to be totally scrapped. Their resale would not fetch even Rs. 20 to Rs. 30 crores.

And since 1992, following the introduction of VRS, the staff strength had slumped from 3,000 to 1,100. Besides, it has indirect employment potential for about 10,000.

In spite of the best efforts, the company had to be referred to the BIFR in 1996 as it had accumulated losses of Rs. 2,300 crores."While Rs. 1,600 crores is due to the banks, mostly because of the interest and which has been waived, the rest is from unsecured creditors-most of them sister PSEs".

The sources said that the Central Government did promise to help this plant because its closure would make the country dependent on other nations on defence-related items like aerial films and industrial x-rays. Besides, this plant had proved to be the "price controller".

It had a great bearing on the economy of the Nilgiris District as well. "While disinvestment is not possible and closure undesirable, the joint venture route was mooted. Even this has proved a non-starter now", the sources confided.

Last year, it had a turnover of Rs. 27 crores. It is confident of doubling it this fiscal. It would be able to break-even next fiscal. It has embarked on a scheme of trading which is quite competitive.

It has been getting orders including from Government offices and confident of a substantial volume. It has been contributing on an average Rs. 12 to 14 crores to the Exchequer. Its wage bill worked out to just Rs. 11 crores while the overheads Rs. 8 to Rs. 10 crores.

Its current survival is because of the Rs. 4 crores that the Central Government had given and the internal generation. But, still it required considerable funds towards the working capital.

They are confident that the plant could not only survive but also be back to its halcyon days if the Centre were to grant Rs. 8 crores more which it had promised. Besides, the bankers would be willing to help it out if it were to announce a one-time settlement even in the form of Government of India bonds.

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