Remember when they decided to shut down the telegraph service? And everyone got all nostalgic and started sending each other “last and final" telegrams? And how a lot of people, including Rahul Gandhi , didn’t actually get these telegrams? And we all felt a little sheepish for often feeling nostalgic about things that are essentially dysfunctional? (Doordarshan, Air India, Amitabh Bachchan and Navjot Singh Sidhu all come to mind.)

Lo and behold another fresh wave of this nostalgia is just about to hit India like a Maruti 800 slamming headfirst into a Bajaj Chetak outside a branch of Wimpy’s.

This is because the government has finally thrown in the towel. After two decades of moribund business which saw its profits plummet faster than its market share, HMT Watches is to be finally wound up/down/out.

Few brands, let alone a public sector one, has ever dominated an Indian product market quite like HMT. The company became India’s first indigenous watchmaker, albeit with some help from Japan’s Citizen, in 1961. For the next three decades HMT reigned over the Indian watch industry, sometimes with a market share of as much as 90%.

What then happened to HMT is a collapse of catastrophic proportions.

Why did HMT fail so spectacularly?

The popular narrative is that HMT simply couldn’t compete with private sector brands, especially Titan, once liberalization opened up India’s markets.

It was a little more complicated than that.

The 1960s were a particularly vibrant time in Indian watchmaking. HMT was the big “sarkari" start-up with impressive Japanese collaboration. But there were other new brands and imports that were all vying to tap a market where demand far outstripped supply.

Around the same time, in February 1961, a group of businessmen from the French watchmaking town of Besançon joined with an Indian collaborator to form the Indo-French Time Industries Pvt. Ltd in Mumbai. They would rely on high quality French parts to sell watches named Timestar. (There is also some reference to an Indo-German collaboration based in Coonoor.)

So HMT did not exactly exist in a competitive vacuum. However it did benefit heavily from government policy that clamped down on imports. According to one estimate, the number of imported Swiss watches dropped from around a million in 1955 to just 12,000 in 1980. This also meant that watch retailers all over the country had no option but to stock HMT.

Despite aggressive advertising by Timestar and others, business for HMT boomed for two decades until 1981. Sales would remain buoyant for some years yet, but it was in 1981, well before liberalization, that HMT’s fortunes slowly began to turn. That was the year in which another public sector undertaking, Hyderabad Allwyn Ltd, entered the market with support from Seiko.

More importantly, 1981 was the year in which HMT would introduce quartz watches in India for the first time. By this time this new-fangled quartz technology had driven the traditional Swiss mechanical watch industry into a deep crisis. HMT sought to respond to this global trend quickly.

But then something unexpected happened. HMT’s quartz launch in India flopped. The pieces were too expensive to draw young, early adopters, while conservative users stuck to their old-fashioned mechanicals.

The managers at HMT then took a strategic call that would eventually go very, very pear-shaped. They decided that India simply didn’t care enough for quartz. So HMT would continue to focus on mechanicals. Handily, government policy prevented other players from easily importing quartz components.

This left India as something of an outlier as most major markets completely switched to quartz.

And then in the mid-1980s everything changed. Import restrictions were lifted, prices for quartz watches plummeted, and all this happened just in time for a crop of new competitors to face off against HMT. Chief amongst them was Tata’s Titan.

Titan launched with a quartz-only strategy. HMT and Allwyn, both heavily invested in manufacturing mechanicals, remained defiant. In 1987, T. Narasimha Rao, head of Allwyn watches, told the India Today magazine that he expected demand for mechanical watches to last for another 10 years.

BEEP. Wrong answer. Quartz boomed.

HMT soon realized that it had a problem. So in 1991, an astonishing 30 years after its founding, a watch design centre was set up for the first time. HMT also launched a range of quartz models across all price points.

Too little, too late. Even before open markets let in foreign competitors, HMT was getting slammed by Titan. The great inflexion point was the year 1994 when HMT made a record loss of ₹ 60 crore. Titan made a profit of ₹ 19.09 crore. That was the year when HMT Watches began to die. The entry of international brands only hastened HMT’s demise.

HMT’s mistake, ironically enough, may have been that it reacted to the quartz boom too soon. Had it waited just a few years more—for the Indian market to warm up to the idea, and component prices to fall—HMT may have fought Titan better. Instead it will become yet another once great PSU that will fold nary a whimper.

Unless one of you HNI readers snap it up cheaply. You will, won’t you?

Every week, Déjà View scours historical research and archives to make sense of current news and affairs. Comment at views@livemint.com. To read Sidin Vadukut’s previous columns, go to www.livemint.com/dejaview

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