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Negative photo finish: Mauled by competition, HPF on the block

High Costs, Poor Management And Digital Technology Spelled End Of Film Manufacturing Unit

Negative photo finish: Mauled by competition, HPF on the block

Niti Aayog recently announced the sale of 17 public sector undertakings and HPF is among these

India remains an ideal market for photo films. It produces the largest number of feature films and its population until recently consumed a large number of film rolls for personal and commercial use. Industrial goods need huge volumes of graphic art films and the health sector requires X-ray films. Yet, a unit backed by the might of the Union government — Hindustan Photo Films (HPF), Ooty — has been in the red for many years and now been put on the block.

 

The Niti Aayog recently announced the sale of 17 public sector undertakings and HPF is among these. With the employee strength thinning, there was not much resistance to the closure.

 

The decision to let go of the PSU cannot be faulted. Just look at the pathetic state of HPF’s finances: For the financial year of 2011-12, sales were at Rs 12.56 crore. Production stopped at the end of that year.  In 2015 the losses mounted to Rs 2200 crore, due to the accumulating interest on large loans.

 

This picture is drastically different from the situation half a century ago when the manufacturing facility for a variety of photo films commenced production in 1967. Riding on the wave of demand for film rolls for personal and commercial use, the facility was one of the six integrated manufacturers of photo films in the world with production ranging from the primary raw material of cellulose triacetate and silver chemicals to films run through sophisticated machinery.

 

When I first visited HPF, I was amazed when I was led through a vast flow line operating in total darkness. It naturally took time and a great deal of effort to train employees to work in such conditions (later the company trained even visually impaired people to work in this section). The imported machinery demanded highly skilled people and the recruitment of personnel with modest skill sets did not help. These shortcomings in the face of competition from imported films like Kodak, Agfa, Orwo and Fuji ensured that the brand name ‘Indu’ films, by HPF, did not have a smooth run. Low volumes, high-cost raw materials, especially silver, high portion of wastage and lack of knowledge and technology to recover precious materials from the waste rendered the operations costly.

 

It turned worse in the 1990s. Due to liberalisation and a steep fall in customs duties, the market was flooded with cheap high-quality films. HPF fell into the bad days of losses that soon wiped out the capital and rendered it sick. Without quality management it suffered further neglect and along with it came the inevitable industrial relations issues. With mounting losses there was little disposition to catch up with technology. For a while there was an attempt to produce magnetic tapes. But even this product became obsolete and HPF hurtled towards its end. Employment which exceeded 5,000 at one time declined progressively. In 2012 production completely stopped and a voluntary retirement scheme was availed by most of the employees.

 

HPF became one more example of how our national planners rushed into manufacturing

areas where others feared to tread. As the government persisted with keeping such terminally sick companies alive on considerations of protecting the employment of a few hundreds, HPF was kept alive. This is the story of several other PSUs: Remember in the 1970s, in the heyday of Indira Gandhi’s socialism, apart from nationalising banks, general insurance, petroleum production, the government liberally burdened itself with hundreds of loss-making industrial units.

In the absence of technology and trained manpower, revival of the facility is unfeasible. This prime property of around 350 acres is bound to help reduce the burden of payouts. The sad part of the HPF story is that despite having a demand for film rolls, HPF in its 55 years of existence could not keep pace with massive technology changes. One can only take comfort from the fact that even the giant Kodak could not survive these cataclysmic changes.

 

How pvt sector exec worked wonders

A decade into the business, Hindustan Photo Films (HPF) still struggled to break even due to high production costs and low capacity utilisation. At that time business leaders from private industry were being appointed as non-executive chairmen in PSUs to attempt a turn of fortunes.

 

C Subramaniam, minister of industry in the mid-1970s, conceived of a brilliant idea of appointing the renowned management expert M K Raju as nonexecutive chairman. Raju had earned a reputation as an outstanding management expert. An engineering graduate of the University of Michigan, USA, Raju earlier worked for Ford Motors. Later, he took India Pistons Ltd (IPL) to great heights, helping it emerge as a leader in the auto component sector. He also contributed to the management movement. He headed the Madras Management Association and the All India Management Association. Subramaniam and the next industry minister, T A Pai, gave a lot of autonomy to Raju.

 

I remember Raju spending hours on weekends looking at every aspect of operation, from human resources to productivity improvements, reduction of wastage and marketing. Using his contacts, Raju collaborated with the renowned DuPont of USA for free.

 

There was an electrifying change. The morale of the workforce shot up. The attention to engineering processes resulted in doubling the speeds of the rollers and hence of production. In another master stroke, HPF imported jumbo rolls, slit these to required sizes and marketed these.

 

All through, the management focused on reduction of wastage and quality.

From mounting losses, Raju helped turn HPF into a profit-making PSU. He expanded its operations by setting up plants in Chennai for industrial X-rays and graphic arts films. But since the fortunes of PSUs are tied to changes in political leadership, with the Congress losing power in 1977, Raju also resigned.

 

The enterprising spirit lasted for a while, but not for long. HPF did not make an effort to get

ready for the changes in the photo films industry. The advent of digital technology was a death knell. The largest of the photo film companies, Kodak, lost its leadership and was on decline. As digital cameras by Sony, Nikon, Canon entered the picture, the century-old photo film technology faded out.

Published at TOI on 10 October 2016

 

 

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