THE RISE AND FALL OF HMT LTD Starting of Hindustan Machine Tools Ltd at Bangalore (around 1955) was

considered a giant leap towards industrialization of independent India. The PM of India Jawaharlal Nehru called it modern temple of India. Almost all the foreign dignitaries visiting India were called to Bangalore and shown HMT Ltd as proof of progressing India. HMT was originally started for manufacture of machineries like lathes, milling machines. Drilling machines, slotting machines, printing machines and special purpose machines. The Firtz foreign collaborator was Fritz Warner of Germany and there were many more collaborations lat on for various types of machines. Continuous investments were made to develop activities at faster pace as its products were required by other entrepreneurs to start small and medium industries. About 15 years after Independence India was still at infant stage of industrialization and whatever was produced by HMT was grabbed by the market. There were no competitors to HMT and no choice to the customer. A typical case of sellers market in a vast country where government were rigid for import-export business. HMT has production units of Bangalore (machine tools), Bangalore (watch making machinery, Tumkur and Sringar (watch making), Pinjore (tractors making), Ernakulam (printing machinery, Hyderabad (special purpose machines), Hyderabad (Ball Bearings), Hyderabad (Lamp bulbs) with HO at Bangalore and branches allover India and few overseas places. The business was doing well say up to 1980 when HMT was a monopoly and has less competition from locals for smaller machineries. After 1980 many units like Batliboi, Surat, BFW Bangalore, MKL, Harihar, Coopers, Satara, PSG, Coimbatore started giving tougher competition in terms of price and lesser delivery time and deferred payment terms. Added to this some of t employees of HMT became entrepreneurs to do smaller machines and to supply spares accessories. Many smaller units in Coimbatore started making better variety and quality of machines tools at lesser price. In case of watches some of the employees started doing watches in their sheds and selling them with HMT brand. In fact 50% of HMT watches sold were not manufactured in HMT facto the combined effect of machine tools competition and duplicate watches started showing head, impact on sales and profitability of HMT since 1984. Due to lack of workload employees w idling, huge machineries were underutilized and customer complaints were increasing for problems, delayed supplies and non payments to vendors. As a damage control measure no new recruitments were made for

retirements and VRS w announced every two years. Parallel efficient executives were joining competitors thus creating a void in technology and marketing management. The machinery making needs 65% materials input and the company didnt have funds to arrange various materials required to complete half done machineries. To add fuel to the fire, some of the good collaborations were not continued. The original GM who tied up with Fritz Warner did not continue the contract. Instead he started his own unit outside HMT premises with the same collaborator and started getting orders for his own company (BWF) beating HMT in competition. Further HMT bulbs did not chick in the market. Its takeover of sick ball bearing unit in Hyderabad proved wrong decision as it could not compete with SKF bearings. The employees were not re-trained. The machineries were not updated. By 1990 HMT was considered an outdated old company with very old type machines and average age of employees being 50. It looked difficult to change its culture to have competitive edge as it is a public sector unit. In the post liberalization era the situation of HMT is pathetic due to surplus manpower, poor orders and low morale of the employees. The company is now on offer for privatization and only a totally new management with latest technology can change its fate from closure situations. QUESTIONS 1. Explain how heavy industries, automobile industries enjoyed monopoly market with protective laws upto liberalization period. 2. Continued collaboration, adopting latest technology is essential for sustenance and growth. Explain with HMT and Maruti Udyog examples. 3. Was it right on the part of HMT management to diversify in various different lines? 4. If you were MD of HMT what steps would you have taken to bring it back to good health?