This paper presents a novel scheme of remote condition monitoring of multi machine system where a secured and coded data of induction machine with different parameters is communicated between a state-of-the-art dedicated hardware Units (DHU) installed at the machine terminal and a centralized PC based machine data management (MDM) software. The DHUs are built for acquisition of different parameters from the respective machines, and hence are placed at their nearby panels in order to acquire different parameters cost effectively during their running condition. The MDM software collects these data through a communication channel where all the DHUs are networked using RS485 protocol. Before transmitting, the parameter’s related data is modified with the adoption of differential pulse coded modulation (DPCM) and Huffman coding technique. It is further encrypted with a private key where different keys are used for different DHUs. In this way a data security scheme is adopted during its passage through the communication channel in order to avoid any third party attack into the channel. The hybrid mode of DPCM and Huffman coding is chosen to reduce the data packet length. A MATLAB based simulation and its practical implementation using DHUs at three machine terminals (one healthy three phase, one healthy single phase and one faulty three phase machine) proves its efficacy and usefulness for condition based maintenance of multi machine system. The data at the central control room are decrypted and decoded using MDM software. In this work it is observed that Chanel efficiency with respect to different parameter measurements has been increased very much.