Glory to dust

rashmi pratap | Updated on December 19, 2014 Published on November 28, 2014


The government is thinking of privatising sick public sector undertakings (PSUs). BLink brings to you five companies that were responsible for several ‘firsts’ in India — from watches and film rolls to landline phones and air travel. Today, each of these companies is sick — having lost in a financial year 50 per cent or more of its average net worth in the four preceding years. Here’s a quick peek at their history and current status

HMT Watches

Set up in 1961 in collaboration with Japan’s Citizen Watch Co, HMT was synonymous with watches and clocks in the ’60s and ’70s. On July 28 that year, Prime Minister Jawaharlal Nehru released the first batch of hand-wound wristwatches manufactured at the company’s Bengaluru plant. In 1985, it began making floral clocks (the one in Bengaluru’s Lal Bagh garden is famous even today), solar clocks and tower clocks.

What went wrong : HMT failed to come up with newer designs to keep pace with changing consumer demands. Lack of innovation, combined with the arrival of Tata group’s watchmaker, Titan, proved inimical to HMT, relegating it to the fringes of the industry.

Status update : Net loss of ₹242.47 crore in FY13; negative networth of ₹2,012 crore.

Scooters India Ltd

The company was launched in 1972 with plant and machinery bought from Italy’s Innocenti. The buy included the worldwide trademark registration of the iconic two-wheeler Lambretta. The scooter was sold as Vijai Super in the domestic market and Lambretta overseas. In 1975, SIL added an extra wheel to launch its Vikram or Lambro brand of three-wheelers.

What went wrong : By the late ’80s, there was competition from new players such as Kinetic Honda, LML, Hero Honda and Yamaha, which created excess capacity in the two-wheeler industry. Beset by labour issues, SIL’s worn-out plant near Lucknow and outdated technology were no match for the competition’s advanced and fuel-efficient technologies.

Status update : Loss of ₹6 crore on sales of ₹209 crore in FY13. After losses over a decade since 2002-03, SIL was declared sick in 2009.

Hindustan Photo Films

This PSU, set up in the hill-station Udhagamandalam (Ooty) in 1960, manufactured raw cine films for the movie industry, X-ray films, graphic arts films and photographic paper. It was here that Bollywood film rolls were developed for decades until digital cameras took over. Today, the plant is only used to develop negatives.

What went wrong : Failure to adapt to newer technologies, which necessitated diversification into IV fluids, colour paper, digital films and non-silver films. The Board for Industrial and Financial Reconstruction declared it sick in 1996.

Status update : It reported a net loss of ₹463.5 crore in the December 2013 quarter, with sales of just ₹22 lakh. In March 2013, a ₹181-crore voluntary retirement package was announced for the employees.

Hindustan Cables Ltd

Located in Rupnarainpur, West Bengal, since 1952 the company has connected the nooks and crannies of India through its jelly-filled and optical fibre cables. The Department of Telecom as well as the public-sector communication firms, BSNL and MTNL, were its customers in the pre-mobile phone era. HCL manufactured not just the fixed line networks, but also the coils in the phones.

What went wrong : Demand for polythene insulated jelly-filled (PIJF) cable, HCL’s main product, vanished with the advent of wireless (mobile) technology requiring optical fibre cables. In FY11, HCL’s optical-fibre manufacturing plant in Naini, near Allahabad, too became non-operative due to technological obsolescence.

Status update : Loss of ₹885 crore on revenues of a mere ₹3.22 crore in FY13. The company was referred to the Board for Industrial and Financial Reconstruction in 2002.

Air India

On October 15, 1932, Tata Airlines launched the country’s first commercial flight, carrying mail from London. JRD Tata, then a director in Tata Sons, piloted the flight’s Karachi-Bombay leg before it flew onwards to Madras. In February 1935, Tata Sons launched a trial flight — Bombay-Nagpur- Jamshedpur-Calcutta.

In July 1946, Tata Airlines became a public company and was renamed Air India Ltd. Genell Moots of Trans World Airlines (TWA) arrived from Kansas City in the US to train India’s first batch of airhostesses. In August 1953, Air India was nationalised. At its peak, the carrier commanded over 60 per cent of the market share and was the biggest airline in the subcontinent. Ministers and bureaucrats fly Air India even today for official travel.

What went wrong : The airline took on huge debts for expansion to newer routes as well as buying aircraft. By June 2014, its debt exceeded ₹44,000 crore. The entry of private airlines changed the rules of competition, with low-cost carriers eating into Air India’s market share. High staff costs (salaries make up 60 per cent of its expenses) and repeated union strikes have grounded it further.

Status update : Air India is one of the worst loss-making PSUs (net loss of around ₹5,000 crore in FY14). It has not yet been declared sick officially, but sick it is with a negative networth of ₹15,642 crore in FY13.

Published on November 28, 2014
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