HMT Watches to shut down

"Sherpa", HMT's watch that commemorates the 15th anniversary of the Indian Mountaineering Foundation.

THE news that the venerable watchmaker HMT Ltd is going to wind up its business does not come as a great surprise to observers of the Indian economy. With the present government following in the footsteps of the United Progressive Alliance (UPA) government to gradually disinvest from loss-making public sector companies, it was only a matter of time before HMT was identified as a target.

In an announcement on September 25, Heavy Industries and Public Enterprises Minister Anand Geete stated that apart from the flagship HMT Watches, the Ministry had submitted a proposal to the Cabinet to shut down five other sick public sector undertakings. These include HMT Bearings Ltd, HMT Chinar Watches Ltd, Hindustan Photo Films Mfg Co. Ltd, Hindustan Cables Ltd, and Tungbhadra Steel Products Ltd. These companies have not been making profits for several years now and have around 3,600 workers between them (of which 1,015 are employed by HMT Watches), according to statements made by the Minister. A one-time settlement will be offered to the workers at these units, according to the Minister. It will cost the government Rs.1,080 crore, he added.

The net loss of HMT Watches rose to Rs.242.47 crore in 2012-13 from Rs.224.04 crore in 2011-12. At the end of March 2012, its liabilities included a government loan and budgetary support for salary and statutory dues that amounted to Rs.694.52 crore. HMT Watches has been reporting losses since 2000 with current accumulated losses estimated to be in excess of Rs.1,500 crore. According to news reports, workers of the Tumkur unit, which employs 343 people have been struggling to get their salaries for the past 11 months even though union leaders had negotiated a much lesser wage structure.

HMT watches have been a marker of social status for at least two generations of Indians since the company started manufacturing watches in 1961 in collaboration with the Citizen Watch Co. of Japan. With strong support from the Central government matched by profitable sales, watch manufacturing units were set up in Bangalore, Srinagar, Tumkur and Ranibagh in the next three decades. The company described itself pithily as “Timekeepers to the Nation” and this was certainly true for a long time as it remained the first choice for any prospective watch buyer in the country.

As news that the company was winding up filtered out, there was a sudden increase in sales of HMT watches across its outlets in Bangalore as people wanted one last memento from the horological legend. For the older generation, an HMT watch brought back memories of their first watch, which was always an HMT, while the youth were curious to own a watch about which they had heard stories from their parents and grandparents. At its peak, the company had 400 different models.

Watch sales have doubled in HMT authorised showrooms across the city and the sought-after models are “Pilot” (a favourite of military personnel), “Janata” (the aam aadmi ’s watch) and “Kohinoor”. There is even a waiting list now, according to a company source. The situation is strangely similar to the early years of the company when an HMT watch had to be pre-ordered and would take six months to be delivered.

HMT Watches successfully negotiated the transition from the mechanised watch to the automatic watch in the mid-1970s. It was the gradual global move to quartz watches in the mid-1980s that the company could not keep up with and by 1991 it had surrendered its coveted market leadership to Titan Industries Ltd (now known as Titan Company Ltd). By the time HMT got its act together and got into the quartz manufacturing segment, Titan had already consolidated a major market share.

In 1991-92, when quartz watches had been around for more than five years, Titan sold 22.6 lakh quartz analogue watches, while HMT could only manage sales of 13.76 lakh pieces in the same category. Later, HMT could not keep up with competition from premium brands that were easily accessible to Indian consumers.

Xerxes Desai, who headed Titan (of the Tata Group) between 1986 and 2002, in an interview published in an English weekly, attributed the downfall of HMT Watches to the government, which was not perspicacious enough to foresee that the “future of watches was in quartz”. He added that the strength of HMT watches was in their manufacturing skills and scale but they lacked in terms of design, appearance of their products and marketing. He also added: “If they [HMT] were given the means to produce more, they would have been a formidable force. The government did not give them adequate funds to expand and forced them to stay in mechanical watches.”

Vikhar Ahmed Sayeed