Financial Analysis Of Hmt

1.1 Introduction

Industrialization commenced in earnest only after the independence in 1947. From a predominantly agrarian economy, India has moved towards rapid industrialization with the state retaining the privilege of entrepreneurship an authority in a system of mixed economy. For four decades, the focus had been on the public sector, which was perceived as a means of achieving industrial growth with social justice.

It was Pandit Jawaharlal Nehru the 1st prime minister of independent India, who laid the foundation of a strong industrial base for the country. It was he who should be given the chief credit for fostering the creation of a rich scientific and technological pool by which the country is benefiting today. During his time many dams were built such as the one at Bhakra Nangal. In the mixed economy followed during that period as per his brand of socialist ideology, in which both the public and private sectors were given the scope and the opportunities to grow. The private sector was allowed to function along with public enterprises, but under the control of the government with strict licensing and supervision. Initially, this led to a rapid industrialization with large capital-intensive industries in the public sectors. A number of state owned industrial enterprises were established in various sectors - In steel, power, heavy engineering etc. It cannot be denied that much of the industrial and scientific advance achieved by India of which are proudly boasted today owe a lot to his foresight and vision. He called all theses projects ¡§The Temples of Modern India¡¨ that would bring about the country¡¦s progress and prosperity.

But unfortunately many of the state owned and run enterprises in various sectors did not function successfully and satisfactorily due to structural, operational, managerial, marketing, and other such deficiencies so that the public sector came to be looked upon as inefficient, not yielding, the results that have been expected of them, some of them even turning out to be white elephants. At the same time many of them did serve the socio economic objectives which was the purpose behind their setting up, but this being quite cited as the reason and made an excuse for their inefficient functioning, largely the consequences of their not being run on commercial principles. These reasons causing inefficiency in the functioning of the industries, brought the country to a state of crisis, prompting the government to make a complete turn around by introducing the National Industrial Policy (NIP) in 1991 which sought to build on past industrial achievements and depend on market mechanisms to make Indian industry internationally competitive.