Danfes

HMT was established in 1953 in technical collaboration with Oerlikon of Switzerland for the manufacture of machine tools. HMT’s diversified product range includes machine tools, watches, tractors, printing machines, presses, die-casting and plastic injection moulding machines, food processing machinery and CNC systems.  It has had technical collaborations with over 30 leading international engineering companies for the manufacture various products. In an exclusive interview with The DayAfter, the chairman and managing director of HMT Limited, M S Zahed, explained in detail the achievements of the company. Here are excerpts from the interview:

MSZ: HMT Group is a major precision engineering goods manufacturer meeting the demands of a range of customers from high precision fixtures for the aerospace industry and high accuracy machines for the automotive sector to the mechani-sation of agriculture and farming.  The product portfolio of HMT Group comprises machine tools, watches and tractors and is one of the very few companies having wide range of products.  HMT is a technology-driven company and has been meeting the demands of various sectors.  It may not be an exaggeration to say that HMT was one of the few Indian companies that was instrumental in laying the foundation for the evolution of the engineering manufacturing capability in the country, with the adoption of disaggregated expansion concept in the formative years.

MSZ: The process of liberalisation spawned both opportunities and challenges for the Indian industry. With liberalisation the trade barriers diminished leading to proliferation of global brands in the country. The foreign investment started flowing into the country with many multi-nationals setting base in India. The Indian skills found market all over the world with factor price equalisation phenomena leading to higher income levels in the case of people working in the high technology spectrum.  The technology gaps started shrinking. For instance, in machine tools in just three years the Indian industry bridged a technology gap of 10 years though we still lag behind. The flip side of liberalisation has been predatory competition leading to industry shakeouts. More importantly liberalisation has marginalised public sector.

As regards PSUs, the challenges were far greater as characteristically PSUs had to be business enterprises as well as vehicles of social change.  Therefore the strategies could not be isolated from social concerns and be driven by business considerations alone.  However, HMT could implement its turnaround plan, which envisaged comprehensive financial restruc-turing, closure of unviable units and down-sizing.

MSZ: The company has been restructured into five subsidiaries. The erstwhile businesses of machine tools and watches have been recast as individual subsidiaries namely, HMT Machine Tools Limited and HMT Watches Limited. The Watch unit in Srinagar has been spun off into a subsidiary – HMT Chinar Watches. These subsidiaries would benchmark themselves with the best industry practices as relevant and adopt suitable strategies for growth and consolidation. The company has also closed down some of the perennially loss-making units. Simultaneously, the manpower reduction has been undertaken and in terms of numbers the manpower has been reduced from a level of 30,000 to 10,000.  The company is poised for quantum increases in revenue on the implementation of the revival plans that have been formulated for each of the subsidiaries.

MSZ: HMT is a 50-year-old company and we celebrated the golden jubilee of inception in 2003. 
The Diversified product portfolio calls for formulation of strategies and initiatives that are specific to the industry. The first task when I took over as CMD was to assess the impact of the market downturn during the preceding years to plan appropriate actions. What was needed was a realistic 360-degree appraisal.  Overall at the company level the focus has been on cost reduction, debtors and interest management. Marketing initiatives with global focus on technology sourcing is another area.  At the unit level the strategies are aimed at improving operational capabilities and consolidation of the manufacturing activities.  These actions and strategies are inherently long-term nature.  Reduction in manpower cost is another aim that has been pursued assiduously over the last two years and has resulted in substantial decrease in manpower costs.  It is expected that the quantum increases in sales revenue would yield results and the forthcoming years.

MSZ: The issue of automation is of singular importance to Indian manufacturing industry as it would translate into improved levels of productivity and cost reduction. Companies could reap benefits by positioning attractive value propositions to the customer.  In order to realise this and cater to various sectors such as defence, automotive, process industries and others, HMT has partnered with GUDEL to offer total and customised automation solutions to the Indian manufacturing industry.  GUDEL is a Swiss company and is a leader in the field of automation with over 10,000 high-tech units and models in operation worldwide.  HMT can use the company’s expertise in system integration in India.

MSZ: HMT has been executing overseas projects through its export arm HMT (International) Limited for quite some years.  The primary driver responsible for undertaking this has been the project management capability inculcated in the Company through several expansion programmes, which resulted in 16 manufacturing units some in diverse fields. This experience translated into the formation of the Consultancy Division.  HMT’s foray into software service was less successful since it did not have a fit with the core competencies of the Company. While it is more profitable to offer services it has far greater challenges inherent in it. Most importantly we have to bond with the customer to understand his needs and apply the systems integration capabilities.

MSZ: World-class manufacturing is literally a function of a number of variables associated with manufacturing that in totality would give the enterprise an edge over competition. Enterprises that have reached the level of world-class manufacturing are successful in their markets regardless of size, country of origin and resources.  The attribute that sets them apart is significantly higher strength gained in terms of quality, lead-time, flexibility, price, customer service and innovation. The building blocks of world-class manufacturing in my opinion are focused and sustained efforts on lead-time, operational cost, visibility, time to market, customer service and strategic sourcing.