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PSUS:
TEMPLES OF DOOM
HINDUSTAN
PHOTO FILMS MANUFACTURING COMPANY
Photo Finish
HPF's
share in X-ray film, its prime product, is less than 1 per cent. It does
not have the technology to make colour film.
By
Arun
Ram
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| IDLE
CLASS: HPF factories work at only 5 per cent of their installed capacity |
For
a newly independent nation, to be self-reliant
is undoubtedly praiseworthy. But that hardly means that the government
should take upon itself the task of producing everything locally, trusting
no private producer, domestic or foreign. However, that was the essence
of planning in Jawaharlal Nehru's India, which feared - in its palmy days
- that the Kodaks and Agfas had been conspiring to deny it raw film. That
would kill, warned the Central planning tsars, the Indian motion pictures
industry, still photography and X-ray films for medical and industrial
use.
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Incorporated:
1960; HQ: Ooty; Product: Photographic film and paper; Net worth:
-Rs 939 cr; Cumulative losses: Rs 1,159 cr; Capacity utilisation:
Under 5%
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So a PSU
promptly came into being. Hindustan Photo Films Manufacturing Company
(hpf) was set up in 1960 for making photo-sensitive materials. Over the
years, the main factory in the salubrious heights of Ootacamund was joined
by a polyester X-ray film plant, a magnetic tape plant, and, at Ambattur
in Chennai, a conversion plant to cut imported jumbo film rolls into retail
packs. HPF officials strutted about in Delhi claiming that making film
stock was indeed a "strategic" industry, with perhaps a clever
pun on the word "sensitive"-for both the film paper and the
nature of their industry.
While the
Indu brand, HPF's answer to international film brands, was a washout,
its real business, of being the monopoly distributor of raw film, went
under with import liberalisation since 1992. Today, working at a capacity
utilisation of less than 5 per cent, HPF is virtually invisible in the
market. Its prime product, X-ray film for medical use, commands a marketshare
of less than 1 per cent. Its share of the cine colour positive market
is even lower, with a total production of 24.9 sq m in 1998-99, just enough
to make 100 prints of a two-hour-long film.
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"Give
us working capital and we will prove ourselves. Kill HPF and India
will lose out on other fields like digital imaging."
BRIG (RETD) Chaithanya Prakash, CMD, HPF |
The abysmal
productivity has ravaged the bottom line. HPF today has a negative net
worth of Rs 939.72 crore (in 1999-2000). In other words, its accumulated
losses are more than the sum of its paid-up capital, reserves and surplus,
which amount to Rs 219.60 crore. Work on its polyester factory started
in 1986 but it came into being only in 1998 and cost a breathtaking Rs
680 crore. With such a high capital cost, the X-ray film it produces can
hardly match the competition from abroad. With only 5 per cent capacity
utilisation-it has very little working capital to keep production going-HPF
is as quiet as the hills in its backdrop.
Maybe it
is good that there is no production. For HPF's inventories of unsold products
are so huge that they can account for 236 days' sales. The company has
reduced its staff from over 5,000 in 1992 to 2,664 now. Even with the
truncated workforce, the wage bill is a formidable Rs 23.41 crore, half
the operating expenses (net of adjustments against prior assistance) of
the company. In a manufacturing industry, if you end up paying 50 per
cent of the sale proceeds in wages, the colour of the ink for writing
the bottom line can only be deep red.
The HPF
brass in Ooty, however, are eager to prove that they are more sinned against
than sinning. "The working capital is never there. Give us the money
and we'll prove ourselves. You kill HPF and India will never make film
again," says Brigadier (retd) Chaithanya Prakash, chairman-cum-managing
director. Prakash, like most other chiefs of loss-making PSUs, has mastered
the art of survival in an age of liberalisation-by claiming the technical
expertise of a rocket scientist or the business acumen of a Tata. No wonder
Prakash says that if the government quits making photographic films, "we'll
lose out on many other fields, including digital imaging". It's a
bit like saying that by making your own paper or ink you can hope to be
a Shakespeare some day.
In reality,
however, HPF has not yet attained the knowhow of making colour film. At
the Department of Disinvestment in Delhi, officials wonder at the stunning
losses incurred by the company in the simple operation of cutting jumbo
rolls of imported film stock. Much of the loss is due to hefty interest
payments. In 1998-99, HPF had Rs 117.57 crore in interest outgo charged
to the profit-and-loss account. But even the operating loss, prior to
interest charge, was about Rs 85 crore in that year. The cash haemorrhage
looks even more pitiful against the serene landscape of Indunagar which
is spread over 303 acres. Another 90 acres were added to the wasteful
expanse in 1997 on the pretext of housing the new polyester X-ray film
unit.
A walk along
the corridors of the new plant shows too grey a picture. Imposing machinery
in high-roof settings lie idle. Somewhere lost in the emulsion plant,
three employees watch the machine churn and mix little quantities of chemicals.
Many of the rooms appear to have been locked away for ages. The 'A-Category'
area, where the emulsion is coated on the base, is symbolic of the company's
failing health. As employees in the area are required to work in the dark,
the limited number of torches with a red glow testify that not much work
is perhaps going on out there.
HPF was
declared sick in 1996, though a rehabilitation package was forwarded to
the Board for Industrial and Financial Reconstruction (BIFR) even earlier,
in October 1995. There was no one willing to finance it though. In May,
1999, the BIFR made it categorical that it would serve a wind-up notice
to the company if the Government failed to come up with its final renewal
plans, if any.
The notice
would have been served but for the united opposition of the 11 unions
of officers and employees. The resistance found resonance in the dwindling
economy of the Nilgiris, where the tea gardens are improving efficiency
by working with fewer people. The labour environment in the neighbourhood
is so despiriting that even the bleeding HPF is valued as a giver of jobs.
With its
closure still unthinkable for the employees and union leaders, the management
has worked out a grandiose revival programme that needs financial assistance
of Rs 291 crore in the very first year. The plan has been approved by
the Ministry of Heavy Industries and Public Enterprises and is expected
to be placed before the Union Cabinet soon. "We can't disclose the
details," says Prakash. "It is highly confidential."
If a fresh
dose of public investment in the ailing PHF comes off, its confidentiality
alone cannot save it from disaster. The company has lost its monopoly
and the cream of its technical and marketing personnel. For those who
are left behind, more funding only means a longer stay in the bracing
climate of the Nilgiris.
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