Clipped from: https://www.business-standard.com/
Many people running MSMEs fear that the support offered by the government might not be enough, while many others are tweaking their business models – basically trying to do more with less
Overnight, Tulips reconfigured its production line from churning out cotton balls and pads for cosmetic use to swabs for coronavirus testing
The Covid-led lockdown drove many small firms to the brink. As India starts reopening its economy gradually, the three biggest challenges they are facing are the absence of demand and labour, and ensuring a steady supply of raw material to keep their production lines rolling. Many people running MSMEs fear that the support offered by the government might not be enough, while many others are tweaking their business models — basically trying to do more with less.
Here we will discuss the experiences of three MSMEs that took the challenge head on and seem to be getting around the crisis by repurposing their business, reskilling the available labour or putting into force the famed Indian jugaad.
Take Delhi-based Tulips, a producer of cotton products and swipes, which took a quick call to reposition itself from being a largely cosmetic product to becoming a medical consumable. It didn’t require much investment, just smart thinking, says the company. “We felt there was a huge dearth of coronavirus testing swabs in India, and they were being imported at the time the virus hit us,” says Rahul Jain, a partner in the medium enterprise whose business spans 15 countries. The firm had the requisite infrastructure, which had been put in place over the last two decades, the technical expertise, and the necessary R&D. It was also making many machinery parts in-house. “In sum, our in-house research and development team had to repurpose the existing infrastructure as per the WHO standards,” adds Jain.
The firm had to change the back-end lines as it now had to process polyester fibre, used for making the testing swabs, instead of the regular cotton ones. Intermediates, also produced in-house, were processed on the cotton buds-making or swabbing lines. Since everything was available in-house, the firm was able to keep the cost of the shift under control.
The going wasn’t smooth though. The first week the firm tried producing the swabs with the available viscose fibre, but the Indian Council of Medical Research (ICMR) rejected it. “They said we have to work with polyester or rayon, so we arranged polyester, but it took us five days to make the changes,” says Jain. Did the factory workers need a new brief or training? “It’s like a tennis player, who plays on clay, has to also play on a grass court,” says Jain. In other words, not much change was needed.
The firm received ICMR approval to manufacture the testing swabs on May 5 and started production that night itself. Indeed, it was the first manufacturer to develop the testing swabs in dia and get an ICMR approval also. By June 6, it had already supplied 10.4 million swabs across India. Tulips is among the two companies producing these swabs in India at the moment and it is the lead player producing 80 per cent of them. The company, which started as an exporter before foraying into the local market in 2015, is also looking to export these test swabs to other Asian, African and Latin American countries.
Luckily for Tulips, labour was not an issue as its manufacturing plant is located near the Delhi-Ghaziabad border and its workforce of roughly 400 lived nearby. “Our core teams were there. We ensured our workers didn’t leave us by taking measures such as advance payment of salary. For instance, we paid the March salary, usually paid in the first or second week of April, on March 27,” says Jain.
If Tulips saw an opportunity in the domestic market, Delhi-based QualeMagni (turnover < Rs 100 crore), maker and distributor of many international liquor brands in the country, sensed an opportunity in faraway France. When, at the height of the Covid crisis, the French government checked if it could produce hand sanitisers, it found no reason to dither. Says founder and managing director Surya Phadke, “We already manufacture the raw material for alcohol — ethanol — and we had enough stock of that. To be able to handle the order from the French government, all we had to do is dilute it with water and mix it with perfume. A reagent is also needed to give it a gel-like form, but we stuck to the basic liquid form as we didn’t want to increase the cost.”
The plant engineers reconfigured the machines to cater to the new demand. The company says it sold the product to the French government at cost. “It helped us in diluting some of our inventory and the cash stuck in it,” says Phadke who adds it didn’t want to go the same way in the local market as it didn’t want to dilute the brand back home.
Not everyone was so lucky. Take Maharashtra-based K V Garments, which was one of the first five units that were able to reopen in May-end after the state government gave these units a go-ahead. But the company was in for a shock. While all the necessary permissions were in place there were no workers — only 18 of the 92 who worked at its Bhiwandi unit in Thane were prepared to turn up for work. Varan Sehgal, director of the 26-year-old company, says, “Only a few textile and yarn producers have started production post lockdown. The orders are pouring in, but we have limited workforce.”
To deal with it, K V Garments, one of the handful of schiffli fabric producers in the country, have offered its workers double shifts with handsome pay. It is also using the post-shift hours for skill training, say on the use of more modern machines. Sehgal says earlier there were two shifts of 12 hours each. Now, as per the new protocol, the shift timing has been reduced to eight-nine hours. “We gave our workers the option to work overtime for another eight hours. The pay was 25 per cent more than their regular wages.”
“The workers have been benefited with the reskilling and extra pay, while we are able to service part of the demand with that small set of labourers till the time others return to work,” says Sehgal.
As demands surge, to meet the labour demand, merchants are also keeping an option of adding contract workers and hiking wages open.