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Even though HMT has survived for over 50 years, it failed to find a new peg
to sell itself even as later entrants captured market share
Mahesh Kulkarni | Bangalore
September 14, 2014 Last Updated at 21:50 IST
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HMT, the iconic watch brand that was a sought-after gift till the nineties, will no
longer keep time to the nation. Last week, the Department of Heavy Industries &
Public Enterprises decided to wind down the company that had been making losses
for over a decade.
No time for new custom
It is a widely known fact that HMT lost out to quartz watches. But few know that its
failure was its own doing. HMT, which partnered with watchmaker Citizen of Japan, to
start manufacturing in 1961, was in fact, the first to introducequartz watches in India
in the 1970s, under the sub-brandsSona and Vijay. But then it was ahead of time and
consumers did not take to a high-priced watches. HMT soon went back to focus on
mechanical watches.
Even after Titan, Tata's watch-making division, introduced quartz watches in 1987,
HMT's senior management went ahead with plans to open more mechanical-watch
manufacturing plants.
A TIME CHECK
HMT Watch division was born as an offshoot
of Hindustan Machine Tools, following the mandate
given by former prime minister, Jawaharlal Nehru, in
1961. Nehru named the first watch Janata
It has since produced over 115 million
watches
Was the first to launch a hand-winded
mechanical watch, quartz watch, automatic watch,
womens watch and a Braille watch
Former CMD N Ramanujan had worked out a
JV withTitan Watches when Xerxes Desai was
heading it. But the government turned it down
The only operational plant at Tumkur,
Karnataka, has 2 million-unit capacity of quartz
watches
The watch model, Kanchan, used to sell at a
premium in the grey market at Rs 1,000, when its
legal price was Rs 700
"HMT had all the right ingredients to succeed. It had outstanding engineers who
knew the art of watch-making, possessed good technology, retail network, servicing
and distribution. It just had to redefine itself to come out of the glut," says Bhaskar
Bhat, Titan's managing director, who says he learnt a lesson or two on watch-making
from HMT's engineers who had joined Titan.
Much like the resurrected motorcycle brand, Royal Enfield, HMT, too, could have
repositioned itself as India's 'classic watch manufacturer', feel experts, to endear
itself to today's mature and older consumers. After all, many generations still
remember the HMT watch they got as a farewell gift at their office, from parents
when they did well in exams or as a wedding gift. Bhat reminisces that people had to
wait for days to buy HMT models like Asha and Kanchan.
Not cosmetic enough
Till 1991, HMT ruled the Indian watch market with almost 90 per cent market share
for three decades, with the tagline of 'Desh ki Dhadkan'. As the economy opened up,
HMT's complacency was laid bare. Imported watches and Indian watch-makers
flooded the market from the nineties.
Bhat says HMT failed to understand that "a watch was no longer a time-keeping
machine. It was becoming a fashion accessory for both men and women. Consumers
wanted a well-designed product to match their style. Aesthetics play an important
role in marketing". The Tata group company, in a span of four years, became the
leading watch manufacturer.
Pavan Padaki, director (insights & strategy), Brand-Comm, a brand consultancy, says,
"HMT got associated as a reputed but chunky mechanical watch manufacturer. Titan,
on the other hand, got recognised as 'Today's watch manufacturer', with sleek watch
models. HMT's quartz range had like-to-like watches with Titan but the brand
association of a quartz watch manufacturer eluded it, and it continued to be known
as an old watch maker."
Production out of time
Even when HMT attempted to prop up its image with campaigns for brand new watch
models, there were reports that the models advertised would be in short supply at
stores.
It was manufacturing, again, which tripped it up financially. Former CMD N
Ramanujan says, "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 shortage as it had to feed around 500
employees without any production. This led to its downfall." The government did not
accept the turnaround plan he proposed. HMT continued to accumulate lossed.
The net losses for 2013-14 stood at Rs 233.08 crore, compared to Rs 242.47 crore in
the previous year.
The paucity of working capital, erosion of trade channel and high cost of borrowings
affected it the worst. The annual wage bill of the company stood at Rs 35-40 crore.