Indra’s Drishtikona (Viewpoint)

Dying or Dead Elephants-HMT and HEC

Posted : August 23, 2004 at 6:38 am [IST]

Very few Indians will know that HMT (Hindustan Machine Tools Limited) may be the largest machine tools company of the world so far the facilities- land and buildings; number of machine tools, manpower- are concerned. The machine tools industry world over has undergone a huge restructuring to remain in the game. They have gone lean and mean in real sense of the term. Their own facilities included only design and main assembly operations. All the rest activities and manufacturing are outsourced.

HMT started with basic machine tools such as lathes, milling machines and radial drills. It continued to get into collaborations with world’s famous machine tool builders for almost all types of machine tools. In those days of DGTD when for any import of machine tools, a CG license was required; you could not think of any machine that HMT was not in manufacturing. In those days, it was essential to prove that the machine tool you are asking to import can not be manufactured in India. HMT also diversified in farm machinery, watches, electric lighting and many other products. I was one of the key men in the premier automobile organization of that era that was investing in big way in manufacturing because of the mandatory phased manufacturing programme essential for staring any product. With my interaction with HMT, I also helped them in developing some new products. At some point of time, some of the marketing executives used to consult me on the prices that they were quoting for certain projects in automobile industry at that time. And so I was pretty knowledgeable about the people, facilities and working of HMT.

The whole of machine tools industry was very short-sighted in its pricing policy. It used to work out a price which used to be just a little lower than the price of imported machine tools. The industry never worked to cut down the price through technological inputs to make its machine tools affordable for the industry.

But that golden period is over. HMT is almost sick like many in machine tools industry all over the world. However, HMT still have employee strength of 4714. Outstanding dues of employees of machine tools division total to about 42 crore.

I don’t know the strategy of the present UPA government. But HMT still can be saved with an aggressive restructuring and can serve useful purpose for the country. Some of the suggestions are:

1. Sell off all the real estate and huge landed property.

2. Build a national institute of manufacturing technology and management in certain portion of the premises that can provide teaching as well as residential facilities for teachers and students.

3. Concentrate on only a maximum of 5 types of machine tools- machining centres, turning centres, gear hobbing and shaping machines and cylindrical grinders

4. Cut down the prices of the machine tools produced with value engineering and other management techniques to the minimum and build in the best of reliability to compete with global manufacturers.
5. Make HMT a component manufacturer for other global machine tools builders and get into outsourcing business with its strength in CAD and CAM technology. .

5. HMT can easily be made an ‘incubator’ for world class manufacturing ventures in engineering industries that has got a lot of natural potential for world component market..

6. Privatise the non-core business such as tractor, watch, lighting, etc or close it down.

HEC (Heavy Engineering Corporation, Ranchi) is almost dead, but even after all efforts to reduce its strength still serves as shelter to 3,737employees. Outstanding dues of employees amount to about 136.61 crore.

Conceived as a showpiece of Soviet friendship, HEC was built and commissioned with a lot of fanfare. It was expected to bring a great change in the nation’s heavy industry capability. Was it a case of poor understanding of the country’s requirements and so a poor investment or poor management over the period is the reason for this never- performing corporation? Great managers even from private sector took over the management of HEC. The famous TR Gupta of Jaya Engineering was one such person. But everyone failed. And one can enumerate a number of reasons for that. But as in many other cases, the corporation would have been made working with a practical privatization. Even today, it may become usefully productive, all the managers are re-trained and workmen are replaced with a much smaller motivated team. The facility can serve heavy industry with its component requirements.

But the big question still remains. Is it priority of the government of today?

I am happy that quite a good portion of the real estate and residential facilities are being used by Jharkhand government for state legislature and its members as well as for state secretariat functions.

Is it not a poor and tragic story of Indian manufacturing sector?

- Indra

Category: Manufacturing |