HMT Watches, the iconic brand that evokes nostalgia in most Indians, will be shutting shop soon. The government has decided to wind up the company, a wholly-owned subsidiary of HMT Ltd, which has been incurring losses since 2000 and has been unable to generate adequate resources to pay salaries to its employees.
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.
“The government has decided to shut down HMT Watches and HMT Chinar Watches Ltd. The Board for Reconstruction of Public Sector Enterprises (BRPSE) has already recommended it and the board of directors has also given the go-ahead,” a senior official told The Indian Express.
The official said the process of winding up will be set in motion soon.
As on March 31, 2013, the company had 1,105 employees.
In 2000, HMT Watch Business group was restructured as HMT Watches Ltd. However, the company started making losses soon after, following which a revival plan was mooted and approved by the BRPSE in 2006. With the Finance Ministry and Planning Commission not supporting the proposal, the government had asked the company to get the plan vetted by a consultant.
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.
According to the Directors’ Report of HMT Ltd, as on March 31, 2013, the watch company could not show significant improvement in performance in 2012-13 due to factors like paucity of working capital, erosion of trade channel and high cost of borrowings. It had sales worth Rs 11.06 crore and production of Rs 14.03 crore during the year.
As regards HMT Chinar Watches, the report said it could not be sustained at optimum levels due to working capital constraints and the situation prevailing in Jammu and Kashmir. Most of the employees have been given VRS, leaving about 54 employees at the Srinagar and Jammu units. It had negligible sale of Rs 0.36 crore in 2012-13 with zero production, taking net losses to Rs 51.16 crore compared to Rs 44.04 crore in 2011-12.
HMT Watches has four units, including those in Bangalore and Tumkur in Karnataka, and Ranibagh in Uttarakhand, while HMT Chinar Watches has two units at Jammu and Srinagar.