JK Cement takes care of the people at the bottom of the ladder
Despite March being a very important month for the cement industry, everything came to a grinding halt on March 24. Did it take a toll on the numbers?
The March period is usually very critical for every industry. We could see the writing on the walls little early. We were early to see the change since the beginning of March. We were apprehending that things may change. Therefore we were not really shocked when the announcement came.
After April 20, certain relaxations were given for the plants located in the green zones. What were the challenges faced after you restarted your operations?
When the lockdown was declared, we had cement moving in trucks and wagons, while some of them were stored in the godown. The first thing was to take a stock of the situation and then come up with an action plan. The challenge started from that time itself.
We at JK Cement started working from home much before the lockdown was announced. All the travel advises were issued beforehand. When you take care of your employees, you take care of the business and stakeholders. We had a long time [March 24 to April 20] to plan our actions. When we restarted after a gap, we started from packing house, and then packed the cement that were there already in the silo. That means having limited staff at the plant.
We started focusing on direct orders, and no despatches to depots. This is because even today our depots are in red zones. Once the cement from silos are over, we will start the grinding mills. We will scale up our operations and then further scale it up to the kiln. Kiln is a continuous process and not to be shut down. None of us had dreamed of a situation like this. My experience from Army came in very handy.
We got permissions to restart our business in a graded manner. We first started our operations in Muddapur, near Belgavi in Karnataka. By the end of March, we had made a Covid-19 response playbook ready like what needs to be done, what kind of infra you will need, what materials you will require, and check if you have adequate PPEs, sanitisers, monitoring mechanisms. This is because you are risking the entire operations.
It was a good learning experience for us. We got engaged with our teams on the ground on a weekly/bi-weekly basis. Learned through our mistakes and shared it across the plant. As we are speaking today my integrated plant in Karnataka is fully operational and are running with 30 per cent of employees. Now we will start looking at how to work with lesser number of FTEs (full time employees). We are planning to go totally paperless. We are now going to approach the Government to go paperless in certain sections for various approvals because paper too is a source for carrying infections.
Today our plant in Nimbahera is not running but will start its grinding and clinkering operations soon. Grinding units in Aligarh and Jhajjar in Haryana are both operational. We started moving labour inside by making temporary arrangements for them. Once the business opens up there will be a surge in the demand. The major issue will be labour, who have moved away from the site.
Maintaining social distancing is possible for plant operations where there is less labour required, but the other areas of cement plants are labour intensive. What challenges do you foresee? Is automation the answer in the long run?
These are real challenges the industry is facing. We have permitted our heads of the plants to operate the plant at lower efficiency. We are not judging the efficiency of equipment by output numbers. But we are supposed to take efficiency of coronavirus precautions. You may get 2,000 tonnes or more but you may have to compromise with safety, resulting in shutting down the plant. My assurance to my team is that irrespective of the pressure about performances/targets, they are not going to violate our first principle "make sure everybody works safely".
We have asked our employees to make use of PPEs, sanitisers and take maximum precautions. We will sanitise all our vehicles. We will take care of their needs like food. Empathy with the workforce is very important. If they want to go home, we shall organise it with the permissions from the government. Every plant has different challenges. We are monitoring everything on a real-time basis through cameras so that there is no safety violations.
We are getting a sense that everybody is conserving cash. What is your take considering the extraordinary situation we are facing today? Have you provided any special support to the MSME or SMEs with whom you are working?
Cash is like the blood that is running in the veins of a company. It is extremely important to conserve cash at this point of time. There are both long term and short term measures all organisations would be taking. We are looking at it in a human manner. Our group, Singhania takes care of the lower people in the ladder first. Our COO, Madhavkrishna Singhania, came in public immediately after the lockdown and said we are going to protect the salaries of all our employees and our channel partners. But when we are in the business, we need to take some hard calls. The problem of coronavirus is going to be there at least for a year.
Our CFO is looking at it from the long-term perspectives like planning cash flows for two years of timeframe. Only things that are important to run the business will continue. What is immediate for the next two to three months is watched carefully. Every outgoing cash is monitored strictly by me and my accounts team. We are going back to big vendors to renegotiate the payment terms wherever possible.
The next is cash collection. We spoke to our dealers and assured them that we are going to be there with them during this difficult time. Whatever they owed to us started coming even without any follow up. We created a collection engine through which we offered some incentives on their payments. We have also tied up with banks for dealer financing. If the heart is not pumping the blood is not going to move.
Your statements are well appreciated and will go a long way to support your company to move further. Does it mean that the Capex you have undertaken like on energy conservation, capacity enhancement etc. will be kept on hold or will go on?
This was a time when we were supposed to start our cycle for the next year's capex. Our planning part just got over a little before the lockdown was announced. We are about to commission a grinding unit in Gujarat and likely to undertake upgradation of one of the kilns in Nimbahera. Some brownfield expansion in Mangrol. We had a relook at that and prioritised our cash out. Therefore I would not say that capex is a total stop. But whatever we could stop we have stopped. What is at a stage of completion, we are going ahead with it, because it is going to pay me back in the shortest possible of time. Especially where machinery is to come down will any way is going to take more time in the present situation. The important point is the cash out flow has been controlled significantly.
Watch the full interview with Rajnish Kapur on www.IndianCementReview.com