Depression Is A Myth

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“I should be the last person in the country to stop the mill and lay off our employees, if the market slows down” said Mr Sabarinathan, GM of a private mill.

I looked at him and wondered about his high-level optimism and confidence. ‘When everyone is crying about economic slowdown, this gentleman’s view is different!’ I thought.

Mr Sabarinathan was one among many textile spinners that I had been interviewing recently to know the present status of the spinning mills. My straight question to him was whether he was planning to reduce the production and the above was the immediate answer I got from him.

“When 20% of the mills decide to close and 80% of the mills dare to run the mill, I should be among the 80%. And I would be the last one to stop the mill,” he reiterated.

“On what basis do you have such confidence?” I wanted to know. “Before that, you need to understand one thing. Do you know, there is an analogy between economic slowdown and Sani peyarchi, ie., Transit of Saturn”, he asked in response.

I frowned and started thinking about the answer.

He delved into Hindu mythology with a smile. “Ok. I will explain. Everybody fears that Lord Sani during his transit to their rashis would bring in many misfortunes and loss. Actually, in my opinion, he will bring in such misfortunes to those who deserve and confer boons and blessings to the worthy, depending upon the karma. Karma is a discussion for another day – but if our deeds are good before Sani’s transit, we won’t have any misfortunes, but, will have good lessons for further finetuning ourselves. Punishments await during the Sani period to those who haven’t done any good deeds. Do you agree?”

I didn’t have any reason to disagree with him. I just nodded my head.

He continued. “Well! The economic slowdown is the same thing. Like Sani-peyarchi, it would tend to repeat and would remain in different lengths of period according to the karma (deeds) done by the textile industry as a whole. These natural ups and downs are called by economists as a way to balance the demand and supply. During rosy days, the winners, those 80% of the people I mentioned earlier, would continuously invest their effort and money to improve their product quality, operational efficiency or introduce new kinds of products. This kind of deeds would make them stable during periods of depression. On the other hand, the losers – the 20% – don’t have any other choice than losing the game”

That was indeed a beautiful analogy. “But, during dull market period, because of the low demand, the yarn prices would be low, and how….” I started to ask before he cut me short.

“Naturally, there will be some loss on profit. But it also depends upon the product mix – commodity types and value- added ones. Let me show you the P&L statements of the last six months of some of the leading mills in India.”

He fished out one paper out of the pile of records and presented it to me.

The net profits of the mills which I knew were suppyling value-added products hovered around 9%. (I wondered if they could make 9% during this lean period, how much they would get during peak periods!) Some mills who I know supply regular yarns have net profits at around 0%.

I asked him. “You are in which category?”

“We had been in the second category, but, now we have woken up and started investing in the things that I mentioned earlier. I am prudently utilising this slow-down period for the modifications and we are preparing for the peak season,” he replied. “Tell me how you are preparing for the better times,” I asked.

“I will share some of the concepts with you. First I modified my back process so as to process any kind of counts and blends. Some machineries have been added to process lower grade raw material and still get good quality yarn. I have installed latest Rieter OE whose yarn will always be preferred by the customers. You know, this will make us remain on that 80% side.

Our employees have been given intensive training to improve their skills which would otherwise not possible be during bullish period. And, finally, changing the suction compact with mechanical green compact not only reduces the power cost, but also the headache of employing more people for cleaning, etc.”

He continued, “And finally, the important thing is I don’t let all the market chatter of there being a depression affect my way of thinking and working. I won’t read any article regarding this or won’t listen to anybody who brings in such matter. If at all anybody comes and sits in front of me and starts to tell the depression story, simply I will show him the gate. He doesn’t have the right to spread negative energy around me. Does he?” Saying this he laughed .

I recalled my initial question to him. Was I too also about to spread negative energy? I was glad that he didn’t show me the gate. Good friend!!!

(Mr S Murugan is MD, Texdoc Online Solution Pvt. Ltd)

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