COST REDUCTION IN SPINNING MILLS – A SITRA STUDY REPORT

1. Introduction
Controlling the cost of production at optimum level is one of the essential
requirements for the spinning mills to compete successfully in the market. Hence,
mills are expected to initiate suitable measures such as profitable product-mix, higher
productivity, modernisation of machinery and cost control to improve profitability.
SITRA has been offering consultancy services to mills to reduce input costs without
any major investment. After a thorough study, the findings highlighting the expected
savings in various areas such as waste reduction, improvement in labour and machine
productivity and reduction in packing materials cost are submitted to the mills.
Five years ago, SITRA brought out a Focus (Vol.20, No.3, September 2002)
on case study of a spinning mill, in which suggestions were offered to reduce the
input cost. The present Focus covers the case study of another spinning mill, in which
measures for cost reduction have been offered.
2. Profile of the mill
It is a 20 years old unit with an installed capacity of 36000 spindles and 1380
rotors. The mill is equipped with hi-tech machinery in all the departments. It has
been producing 100% viscose, 100% polyester and polyester/ viscose blended yarns.
3. Areas identified for cost reduction
The summary of the mill’s performance and suggestions for cost reduction are
given in the following pages.


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Succeeding waves of Indian enterprise in Indonesia

Amol Titus , Contributor , Jakarta | Mon, 03/16/2009 4:26 PM | Source - The Jakarta Post

When embarking on a historic trip to ASEAN in October 2005, Indian Prime Minister Manmohan Singh remarked, "These are all countries with which we have no disputes of any kind and therefore on this benign background we can build a healthy economic relationship covering trade and investment flows.

"In years to come we have to notice that the largest savings surplus of the world is in East Asia and Southeast Asia. If we are looking for investment, we don't have to look towards the West. This is the region of the greatest importance."

What Singh and like-minded politicians and diplomats realized only fairly recently had been fully grasped by Indian traders, entrepreneurs and professional businesses a long while ago. In fact, like the waves of the Indian Ocean that keep lapping the shores of this wonderful archipelago Indian enterprise has been making its impact in several distinct but equally impactful stages.

The ancient histories of India and Indonesia have their roots in trade with even the great epics like the Ramayana and Mahabharata talking of the riches and splendors of Java. Indian traders carved profitable routes across the archipelago and accompanying commerce came also the influences of art, culture, customs, religion, language and architecture. Throughout Indonesia's transformation and history she held a unique magnetic appeal for India and early businesses were established in almost all major Indonesian ports in Aceh, Sumatra, Sulawesi, Kalimantan and of course Java.

In the early and middle part of the 20th century, there was a spurt in Indian enterprise especially as traders of Sindhi and Punjabi origin migrated and settled in Indonesia. Though owning prominent businesses in textiles, garments, entertainment, sports goods, chemicals and general trading now, they faced and overcame several challenges in the 1930s-1960s. Many came from displaced families with memories of the subcontinent's painful partition still fresh in their minds. Most had little or no education and actually started working in their teens as shop hands, assistants or odd job workers.

One such community elder and respected garments promoter, Mohan Mirpuri of the Sainath Group that has annual exports exceeding US$120 million, reminisces about 16-hour days spent exploring opportunities in Pasar Baru, Pintu Kecil in Jakarta as well as scouting markets in Bandung, Surakarta and Semarang. He believes abilities like hard work, networking and adapting to change as being instrumental in helping his generation first survive and then succeed.

In the 1970s at the height of India's dreaded "license raj" which throttled entrepreneurship through a dragnet of bureaucratic procedures and controls, some far-sighted Indian groups started to venture out eying ASEAN markets that were starting to welcome overseas investment. Leading this wave of enterprise was the Aditya Birla Group (now a diversified $28 billion Fortune 500 Group) that set up state-of-the-art rayon fiber and spun yarn factories in Indonesia in phases.

One of the most senior Indian professionals in Indonesia, KK Agrawal, President Director of PT Bitratex Industries, who led several of these projects in his earlier career with the Birlas, remembers how professionals coming from India were confronted with challenges related to both different manufacturing techniques as well as a distinct working culture. Agrawal, whose professional career spans 35 years, mentions how Indian companies had to give up their "short-cut mentality" and focus on "long-term quality based processes" while also learning to place greater emphasis on teamwork and mutual respect. This remains the challenge for new professional arrivals from India even now.

Indonesia also proved to be a successful launching base for Indian entrepreneurs. The famous billionaire Lakshmi Mittal, whose Arcelor-Mittal empire straddles most parts of the globe, commenced his meteoric rise from a Surabaya-based steel mill, PT Ispat Indo. Another success story is the Indorama Group that has a large manufacturing facility in Purwakarta employing 7,000 workers.

From its origins in Indonesia the group has systematically expanded into Thailand, Nigeria, Turkey, Sri Lanka, India and Egypt and is regarded as an emerging markets success story in diversified industrial products like polyolefins, polysters, PTA, PET resin, yarns and others. Its third generation promoter Amit Lohia appreciates Indonesia's support for entrepreneurship due to "the country's vast resources, large domestic economy, reasonably good infrastructure, productive workforce and business-friendly policies". He stresses that the country will always remain a "major focus" for Indorama.

Since the turn of the century the momentum has accelerated with a large number of Indian companies now present in sectors like engineering, mining, motorcycles, auto components, banking, information technology and consumer products. With overseas investment policies now liberalized back home and Indian blue chips searching for new markets and investment opportunities, this third wave of enterprise can be expected to only grow in prominence and bring much need foreign direct investment as well as a range of value-for-money products to Indonesian consumers. Infrastructure development, resources, engineering and services will be major drivers.

Waves of successful Indian enterprise are helping crystallize Manmohan Singh's vision of "the region of greatest importance" with Indonesia increasingly at the core.

The writer is CEO of the international management consulting firm IndonesiaWISE and honorary secretary of the Economic Association of Indonesia and India.