A recent report said that the State Bank of India has taken possession of prime properties in Chennai, owned by Hindustan Teleprinters because the company and its guarantor, Mahendra Nahata failed to pay up debt of over Rs 103 crore in time. In 2001, Mahendra Nahata?s Himachal Futuristic Communication (HFCL) was in news when it had pipped other suitors including Wipro and picked up the government?s majority stake (74%) in the then public sector HTL for Rs 55 crore.
The story of Hindustan Teleprinters Ltd (HTL), the monopoly manufacturer of teleprinters owned by the Department of Communications (DoT) is actually a piece of Indian corporate history today. It is also an example of why governments should not even consider running businesses, especially those prone to technology changes and require swift decisions.
First, what is a teleprinter? An entire generation has grown up without ever having heard of it or seen it. A teleprinter is really a unit consisting two typewriters in two different locations which can send and receive messages. This was really World War II technology, which speeded up communications in the 60s.
HTL was set up in December 1960 to make electro mechanical teleprinters in technical collaboration with Olivetti of Italy. As was the norm of those times, after assembling the teleprinters in the initial days, manufacturing was indigenised. The initial capacity was 1,500 teleprinters. In those days, manufacturing scales were never thought of. HTL in its time sold over 1,25,000 teleprinters. The organisation took care of the entire needs of defense, P&T, railways, news agencies and others. HTL negotiated the prices of its products with the P&T department and these were fixed on a cost plus basis. Its profitability was never based on its efficiencies.
This happy state of affairs would have continued if the demand for teleprinters had not reached a plateau and the rest of the world had not moved to electronic one. HTL management then had a brainwave. It decided to produce electric typewriters. Not a bad idea as this was the 70s and the electronic typewriter was a few years away. HTL had hopes of selling the electric typewriter at the modest price of Rs 5,000, with indigenous technology.
This turned out to be a disastrous decision. HTL could manufacture and sell only a few hundred electric typewriters between 1975-79. The product was a complete failure. It turned out the model HTL chose to copy was a combination of obsolete IBM and Remington models. Self-reliance also did not work out as many of the components could not be manufactured indigenously. The company simply could not translate an idea into action.
A new chief executive in the late 70s sensibly decided to scrap the indigenous electric typewriter project and instead enter into collaboration with Olivetti to manufacture the same. The government took several years to approve the project. By early 80s, the typewriter scene had undergone a total change. Typewriter manufacturing was not a government monopoly. There were other manufacturers like Remington, Halda, Facit and Godrej in the scene. They had all seen the writing on the wall and leapfrogged to electronic typewriters. There were no takers for electric typewriters.
After the electric typewriter fiasco, the department of communications decided that HTL should go in for the manufacture of electronic teleprinters. Global tenders were floated for collaboration. The search ended with Sagem of France. Predictably the department dragged its feet for years before anything could move forward.
A lot of HTL?s problems were due to decisions delayed inordinately by the government, too many chief executives, lack of imagination or commercial sense, and too much politics. This really meant that by the end of the 80s, HTL had out lived its purpose. The fax machine had replaced the telex machine and the computer had replaced the teleprinter.
During the 90s, HTL did manage a makeover under its chief executive Lakshmi Menon. HTL transformed itself into a switching, transmission, data and access major, catering to the needs of DoT and MTNL. However, it was all too little too late. It was just not possible to change a factory used to manufacturing rods, levers, and gears into one making PCBs. Nor was it possible to retrain 2,000 odd workers. Like most public sector units, HTL was overstaffed. Investment to change it to suit modern times would have been enormous. So HTL was put on the block during the early days of disinvestment.
In 2001, it was sold off to Himachal Futuristic, which could not turn the company around. It is said that the company took over HTL more for its real estate value (around 12 acres at a prime location in Chennai). Now the SBI has taken possession of the land. For all one knows, an IT park, or a five star hotel may come up where HTL once ruled the roost.