A few decades ago, watches in India meant HMT. We Indians have grown up by seeing HMT watches, the iconic brand that evokes nostalgia. The government has decided to wind up the company, as it is incurring losses since 2000 and has been unable to generate adequate resources to pay salaries to its employees. How did a profit making government owned company fall from grace?
There are many reasons behind why the company is shutting down. The brand evokes some serious nostalgia in all of us who grew up in the previous millennium. And while many of us, including myself have grown to associate the brand as a visual reminder of the past – as an accessory personifying our grandparents, the truth is that the watch giant failed to keep pace with the sprinting Indian marketplace, and had its meaty share slowly usurped by competitive and innovative young brands
Set up in 1961 in collaboration with Japan’s Citizen Watch, the company’s net loss rose to Rs 242.47 crore in 2012-13 from Rs 224.04 crore in 2011-12. At the end of March 2012, it also had government loan, including budgetary support for salary and statutory dues, amounting to Rs 694.52 crore. If we go through management point of view, the company lacks innovation. If companies want to remain competitive they should invest in research and design. The days of monopoly will be over sooner than you can imagine, so don’t live in a bubble. Always, always, keep on innovating. Technology is reckless. It kills products every day. You’ve got to keep enhancing technology to keep the show running.
The company appointed ICRA Management Consultancy Services Ltd and prepared a revised proposal based on its report. Later, another consultant was roped in to study the HMT group of companies, including HMT Watches Ltd, following which another plan was mooted envisaging cash infusion of Rs 252.70 crore and non-cash assistance of Rs 1,247 crore.
HMT was never big on innovation. It copied designs of foreign products available in markets like Hong Kong and the Far East, which HMT officials would pick and bring back to India to imitate. In fact, even till 1982, HMT had just four basic designs, giving customers very little to choose from. Even two years after Titan, its biggest competitor to-be was launched; HMT still did not launch any new products. Lack of innovation is said to have gone against the company that at one point enjoyed a 34 per cent market share of the watch market in India.
Lack of discipline and commitment are also to blame for the sad demise of HMT. Even after possessing sufficient managerial talent and providing the employees with lots of training facilities, there was a lack of skilled employees that HMT faced. Apart from this, there was a serious dearth of team spirit and the drive to innovate. HMT also suffered from serious under-utilization of human and machines resources. Internal red tape, another common occurrence of PSUs, also resulted in HMT reacting slower to its competitors’ moves, in the process running huge losses as it lost out in the fiercely competitive space, now dominated by classy global and local private brands.
It is imperative to keep the employees motivated not just towards personal goals, but also organizational goals. Motivational strategies such as reward and punish (carrot and stick approach) should be adopted. And as a business, keep absolutely no space for red tape.
HMT failed to diversify. It could have diversified into different watch categories like analog-digital, multi-function, digital, stop-watch, alarm clocks, etc. It could have tapped the export market too. It could also have created a range of women’s watches. HMT also failed to tap in on the festival bonanza – one that Titan has captured wonderfully.
As a business, you must learn to cash in on possible opportunities and get there before the competition does.