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Stop Watch – Time is up for the timekeepers to the nation

It was on September 9 that the Chief Executive Offi cer (CEO) of Apple, Tim Cook, unveiled the “Smart” watch at the Flint Center in Cupertino, California, and said that it would “redefi ne what people expect from a watch”. In contrast, Apple CEO Tim Cook speaks during an Apple event announcing the iPhone 6 and the Apple Watch at the Flint Center in Cupertinoaround the same time in India, curtains came down on the 53-years-old HMT (Hindustan Machine Tools) Watches Limited. At one point of time, every Indian household would possess at least one HMT watch

HMT Story.inddYour Time Starts Now
HMT limited was set up to manufacture machine tools in 1953. The HMT watches business group, in collaboration with Citizen Watch Co. of Japan soon followed in 1961, making HMT the first watch maker of the country. The first manufacturing facility of HMT Watches was set up in Bangalore, followed by setting up of units in Timkur, Karnataka, and Ranibagh in Uttarakhand. Later, a fully owned subsidiary of HMT, HMT Chinar Watches Limited, was set up in the state of Jammu and Kashmir. HMT was born out of then Prime Minister Jawahar Lal Nehru’s vision and it was him who named the first watch “Janata” (Hindi for ‘public’).

HMT, an Indian brand of the licence-permit era, could not withstand the competition it faced from Titan (Tata Group) and other new players who entered the market after the liberalisation of the economy. If failure to keep pace with the changing times was its greatest lacuna, slow decision making, often associated with Public Sector Undertakings (PSUs) added to its woes. HMT Watches Limited suffered a loss of 2.2 billion Indian Rupees in 2011-12 and next year, the figure grew further to 2.4 billion Indian Rupees. In these circumstances, the Board of Reconstruction of Public Sector enterprises (BRPSE’s) had recommended the shutdown of the page89-A-sep-octHMT Watches and HMT Chinar Watches. The Union ministry of heavy industries and public enterprises decided to follow the advice.

The “Timekeepers to the nation”, its famous punch line, is no exaggeration. Nearly every Indian above a certain age has seen his or her parents sporting the company’s watches on their wrists. HMT was a precious gift for many when they would excel in the board exams, a much sought after gift for the newlyweds and the most usual farewell gift for retired employees. In this context, the model Kanchan deserves special mention. Kanchan’s demand was such that people would buy it for 1000 Indian Rupees from the grey market which was about 300 Indian Rupees more than its actual market price.

page89-B-sep-octA First Time For Everything
In the 53 years of its journey, HMT has produced more than 115 million watches, creating new milestones. HMT watches Limited has many firsts to its credit – hand-wound mechanical watch, automatic day-date watch, Braille watch, Quartz watch and Women’s watch. At the peak of its operations, it had over 400 models in its portfolio. HMT was the first watch company in India to introduce quartz watches under the names of Sona and Vijay. But customers could not afford such high-priced watches at that time and the company soon went back to concentrate on its mechanical watch segment. This would prove to be a costly mistake. After Titan, from the Tata stable, came up with quartz watches in 1987, HMT continued to focus on mechanical watches. Till 1991, HMT ruled the Indian watch market, garnering over a 90 per cent share. In 1991-92, the company had about 8,000 employees and had annual sales of 3 billion Indian Rupees. “HMT had all the right ingredients to succeed. It had outstanding engineers, great technology, retail network, servicing and distribution,” says Bhaskar Bhat, managing director of Titan.

HMT Story.indd

HMT Story.inddGone With The Wind
There was a time when scooters and HMT watches were much sought after dowry gifts. But as the economy opened up in 1991 and new players brought in new designs and production techniques, HMT’s complacency proved to be its downfall. The new players flooded the market with hundreds of models in sync with the changing times, matching the aspirations and expectations of the buyers.

One of the major jolts it received from Titan was when around 350 of its best engineers left to join the competition. Titan would emerged as the number one manufacturer of watches in just four years. “Everything was going smoothly for HMT, which was a public sector jewel till 1989-90. It went into losses when production at its Srinagar factory stopped. It had to face working capital shortages as it had to feed 500 employees without any production,” recalls former HMT chairman and managing director N. Ramanujan. From 1994 onwards, losses became an annual feature and the company never recovered. Falling market share and shrinking revenue saw Titan gain the iconic status once reserved for HMT.

“A watch was no longer a time-keeping machine. It was becoming a fashion accessory. Consumers wanted a well designed one to match their style. Aesthetics played an important role in marketing,” quips Bhat.page91-sep-oct
Jolted by continuous losses, HMT’s watch business group was restructured in 2000 as HMT Watches Ltd. But there was no visible change in its loss-making streak which prompted BRPSE to moot a revival plan in 2006. After the Planning Commission and finance ministry refused to support the proposal, the government asked the company to get the plan evaluated by a consultant. With fresh cash infusion of 2.5 billion Indian Rupees and a noncash assistance of almost 12.5 billion Indian Rupees, it was believed that the company would redefine itself and would regain its glory days. However, HMT failed again. The shortage of working capital, erosion of trade channels and high cost of borrowing are some reasons that led to the downfall of the company. In 2012-13, the company recorded a revenue of 110 million Indian Rupees as compared to Titan’s 16.75 billion Indian Rupees figure. The company’s staff strength now stands 1286.

A Brief History of Time
“Long years ago, we made a tryst with destiny, and now the time comes when we shall redeem our pledge ……” declared then PM Pandit Jawaharlal Nehru at the stroke of midnight of August 14, 1947 as India attained Independence. His vision to bring in a sense of time consciousness among the Indians, his belief that India was capable of manufacturing precision components was the driving force behind HMT Watches. While Hindustan Machine Tools continue to do well, its tryst with keeping time became somewhat bitter. The watch that was “always ahead of time” had to bow out in face of changing times.

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