Bangalore: India’s oldest watchmaker HMT Ltd plans to sell some of its land to be able to part retire its debt.
HMT Machine Tools Ltd, one of the five subsidiaries of the holding company, is putting up around 70 acres of premium land in north Bangalore for sale, two group executives familiar with the matter said.
The unit on 15 March issued a tender for appointing property valuers. Property consultants say the land could fetch Rs500-600 crore.
The loss-making HMT has a debt of around Rs1,300 crore. The Union government had in 2007 sanctioned a grant of Rs880.8 crore to help revive the firm that was once known as the time keeper of the nation, but the money will come in tranches on meeting certain conditions.
“The land sale is part of the milestones set in the revival package by the government,” said a senior HMT official—one of the two executives mentioned above.
“Because of the economic conditions, we did not look at selling land in the past two years,” said the second executive. The officials did not want to be named.
A.V. Kamat, chairman and managing director of HMT, declined to comment.
The two executives said HMT, which also makes tractors, would use proceeds from the land sale to repay some of its debt and bondholders, and improve its net worth.
Two property analysts in Bangalore said the land, located in Jalahalli, would fetch a premium, though land sales have been slow in the city.
Premium apartment projects in the area such as Aquilla Heights and Kensington Gardens, by Tata Housing Development Co. Ltd and Prestige Estates Projects Pvt. Ltd, are being developed on land once owned by HMT.
“HMT land would generate a lot of interest among developers and land buyers because they come with clean titles,” said Farook Mahmood, chairman, Silverline Group Inc., a property advisory in the city.
This is not the first time HMT is selling non-core assets like land. Mahmood, who bought 9 acres from HMT a few years back, said developers are willing to pay up to Rs8-10 crore for an acre because they don’t have to spend time getting the titles cleared.
HMT and its subsidiaries hold 200 acres in Bangalore and around 1,500 acres across Hyderabad, Pinjore in Haryana and Kalamassery in Kerala.
HMT earns less than 5% of its revenue from watches. Its biggest contributor HMT Machine Tools earned Rs188.12 crore in fiscal 2008-09, and HMT Tractors, Rs160.98 crore.
“There have been reports of HMT reviving its watch business, but they would need to completely revive the brand to be able to make a comeback,” said Saloni Nangia, vice-president, consumer products and retail, Technopak Advisors Ltd.
HMT as a group made a loss of Rs351.5 crore on a revenue of Rs367.5 crore in fiscal 2009.
HMT shares have risen 122% in this fiscal year, ending Tuesday at Rs78.05 on the Bombay Stock Exchange. The markets were closed on Wednesday.