LMW Adopting Lean Method To Cut Cost

With the recession wave hitting global markets and India Inc reeling under the impact of a slowdown, the country’s largest textile machinery manufacturer, Lakshmi Machine Works (LMW), is looking to utilise the opportunity by adopting lean methodology to contain costs. “The global recession has turned out to be an opportunity for us to enforce some discipline among employees,” said LMW CFO R Rajendran. “Externally, we cannot create a market, but internally we can do some cost-cutting,” he said. Right from switching off the fan when leaving office to using economy class instead of business class in air-travel, the company has drawn up a list of cost-cutting measures for different grades of employees.

“We would even prefer our employees taking overnight trains instead of air travel,” he said. It has a total work force of 3,850 with 2,650 workmen and 1,200 staff. “We also have around 2000 as temporary or flexi man power,” Mr Rajendran said. “We have also asked our outside service providers to reduce their manpower. Since we have only two shifts, the members assigned for cleaning works can also be reduced since they only need to clean after two shifts,” Mr Rajendran said. Also, the company is looking at elimination of wastage and reduction in quality cost.

This reinstates the fact that even a company with an annual turnover of Rs 2,205.16 crore and having a reserve of Rs 745 crore is not immune to global financial meltdown. “The last time the longest recession happened in 1998-2003, there was a slowdown in demand but there wasn’t any cash crunch. Today, the global buying power has come down and has added further problems to the manufacturing companies,” Mr Rajendran said. A Confederation of Indian Textile Industry (CITI) study states that the results of textile companies in Q1 and Q2 of current fiscal show a significantly negative trend.

This decline in textiles industry would directly affect the textile machinery manufacturing companies like LMW. The Coimbatore-based market leader has a production capacity of 3.2 million spindlage. The weakening demand in domestic and international market has led to shut down of one shift and reduction of 40% in capacity utilisation. “The company runs only the morning and night shifts and the workers from the half-night shift are accommodated in the other two shifts,” he said. LMW is ready to manufacture and deliver a custom ordered machine in two weeks, but there isn’t many takers.

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