The high-cost, debt-laden government of India enterprise Hindustan Machine Tools (HMT) is planning a complete restructure of the organisation which will result in the launch of Multi Utility Vehicles (MUVs) and Light Commercial Vehicles (LCVs) within a year.
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This is in attempt to hike return on assets and diversify its portfolio, which stretches from watches to tractors.
HMT plans to keep incremental and additional costs to the bare minimum by outsourcing 90% of the components of the MUV and LCV. Powered by an Isuzu powerplant, the 1800ISZ, from Hindustan Motors, the vehicles will be catering to the rural and semi-rural markets at €10,000 (INR550,000). These will be manufactured in HMT’s tractor facility along with the planned roll out of a light duty earthmover.
The company targets €145.45 million (INR8 billion) in revenue from its automotive business by 2008, of which €91million will be contributed by MUVs and LCVs and the rest by tractors.
HMT has a debt of €241.8 million which will in phases be retired by hiving off unutilised assets from a base of over €363.6 million (INR 20 billion). Additionally, the company might fund the project through an IPO, clearance for which awaits government approval.
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By GlobalDataDeepesh Rathore / Tilak Swarup
