The Hindu Business Line : PSU bond obligations will be honoured, say officials

THE Centre has taken note of the default in meeting bond obligations issued under sovereign guarantee by two public sector undertakings under the Ministry of Heavy Industries, namely Instrumentation Ltd and HMT Ltd, and is working out a plan to meet the obligations at the earliest.

Officials in the Ministry of Heavy Industries told Business Line that the situation was being examined at the highest level in the Government. "Since it is a question of sovereign guarantee, the Government will meet all obligations."

In December 2004, the two PSUs were unable to pay the interests for the funds raised by them through bond issues. Both the issues were guaranteed by the Central Government.

Following the companies' failure to honour their commitments, the lenders, which include a number of provident funds, invoked the sovereign guarantee through the trustees of the bonds, namely, Western India Trustees and Executor Company.

According to officials, the developments took place around the end of December, at a time when the entire Government machinery was busy fighting the tsunami disaster.

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