HUMAN RESOURCE MANAGEMENT IN TEXTILE INDUSTRY, IT’S IMPACT ON PROFITABILITY

(A CASE STUDY)
*AUTHOR: R. R. GOSAI

ABSTRACT:
For performance and profitability improvement of any company, a proper strategy, covering aspects like
Technical (Productivity, Product Quality, Wastages etc.) Improvements, Image & Marketing Improvements
etc needs to be formulated & implemented. For successful implementation of those formulated strategies
needs to be done by employees (Humans) and HRM plays a very vital role in success of this. In the following
case study, how a proper HRM has helped company to implement its strategies and come out of Red.

KEY WORDS:
Strategy formation, Performance and profitably improvements, Human resource management.

INTRODUCTION:
Profitability of any industry depends on money (financial inputs), material (raw material & other store spares
inputs), machinery (technology used and its level of upkeep), Man (employees – human resources), systems /
procedures and market (demand and price position). But over & all above there is one most important aspect
and that is Culture – Ethics of company and people working there. It must help to create in the mind of all
employees a bond of togetherness & belongings to the company and every one in company must feel this.
This is real HRM and most importantly it is UNDERSTANDING of Human / Labour Psychology)

OBJECTIVES OF HRM:
It should create environment where every employee feels that:
- They are important part of the company and there contribution is always being dully recognized.
- Their superiors are there to help and not harass them. They are also fully unbiased in dealing with
individuals
- Company is fully concerned about their carrier growth & transparent in dealing to their needs.
And most importantly:
- Company has defined goals & clear massage to employees that goal achieving needs work culture,
positive attitude, strict discipline, work related performance, honest, punctuality etc. and they will be
the criteria for growth of individual employee in the company.

EFFECT OF IMPLEMENTATION OF HRM ON COMPANY’S PERFORMANCE

(A CASE STUDY OF A SPINNING MILL):

OVERVIEW OF COMPANY:
- TOTAL INSTALLED CAPACITY: 15840 Ring Spindles.
- PLANT DESIGNED FOR: Average 32s Ne Carded Count.
- COMPANY WAS TOTALLY FREE FROM INTEREST BURDON (BIFR Settlement)
- PLANT WAS WORKING ON JOB SPINNING DUE TO NO WORKING CAPITAL.
- THE AVERAGE PLANT UTILISATION WAS > 60%, MAINLY DUE TO:
1) VERY HIGH RATE OF WORKER ABCENTISM: <10%
2) HEAVY BREAKDOWNS & SHORTAGE OF SPARE PARTS RESULTING TO ABOUT 15%
UTILISATION LOSS
3) FURTHER ABOUT 5% UTILISATION LOSS DUE TO MIS MATCH OF PRODUCTION BETWEEN
DIFFERENT SECTIONS (Empties shortage, Simplex Bobbins shortage, Card sliver shortage etc…)
4) PRODUCTION LOSS DUE TO LOW SPEED: <8%
5) IDLE SPINDLE: <5%
- VERY LOW CONVERSION CHARGES DUE TO POOR YARN QUALITY:
0.75 Rs / Count / Kgs. Against Normal Rate of +0.85 Rs. / Count / Kgs.
AND AS A RESULT THERE WAS CASH LOSS OF Rs. 8 to 10 Lakh per month (excluding depreciation
and tax)
Impact:
1) Company was unable to make regular payments to:
A) Suppliers (shortage of spare parts due to irregular and inferior quality supply and higher unit rate
charged by suppliers)
B) Workers Salary (Dissatisfaction and high rate of absenteeism)
C) Power bill (Frequent interruptions of power supply)

2) Totally under the mercy of converter (unable to bargain for better rate, regular supply of raw material,
regular payment of conversion cost, rejecting working of non profitable counts etc…)

THE BRIEF PROFIT & LOSS A/C OF THE COMPANY

MONTHLY EXPENDITURES Rs. Lakh MONTHLY INCOME Rs. Lakh (Approx)
Power Bill 22.00 Production (On avg. 32s Ne 4000 Kgs/Day
Ct) Approx.
Salary & Wages 10.00 Daily Conversion Income 01.00
Stores & Supplies 03.00 Monthly Conversion Income 30.00
Packing Material 01.00 Other Misc. Income :01.00
Misc. Contractor’s Payments 02.50 Total Income 31.00
Office Expenses 01.50 THUS Total Cash loss
Other Misc. Sundry Expenses 00.50 Excess expenses over income 09.50
Total Expenses 40.50

Earning Potentials of the company:

- Production
(On avg. 32s Ne Ct) Approx. at 96% Capacity Utilization : 6500 Kgs./Day
- Expected Conversion Value/Month @0.85 Rs. / Ct. / Kgs. : Rs. 53.00 Lakh
- Assume Monthly Expenses would be up and goes to : Rs. 43.00 Lakh
Thus Potential that Company Could earn by about Rs. 10.00 Lakh / Month.

STEPS TAKEN TO IMPROVE

CRASH MACHINE CONDITION IMPROVEMENT PROGRAM

Spent about Rs.12.00 Lakh to change card clothing, damaged beaters, Cots & Aprons, Defective Spindles,
Rings & other misc. items.
This resulted to: Reduction of Idle Spindle to > 0.50%
: Reduction in speed loss to > 2.00%
: Reduction in Break Down Losses to > 5.00%
: Improving trend in quality.

ORGANISED WORKING CAPITAL OF Rs. 30.00 Lakh THROUGH EXTERNAL BORROWINGS WITH
12% INTEREST.
This resulted to timely payments:
a) Thus regular supply & increased Capacity to bargain price with suppliers. Results no store expenses
increase in-spite of increase machine working & utilization.
b) Improved relationship with workers & union.

CRASH WORKER TRAINING PROGRAM

Resulted to reduce impact on production losses due to absenteeism.

REGULAR MEETING WITH FIXED AGENDA: –

- WEEKLY DEPARTMENTAL MEETING WITH WORKERS.
- MONTHLY MEETING WITH UNION OFFICE BEARERS.
- DAILY SUPERVISORY STAFF MEETING

Resulted to:
- Quick decision-making and problem solution.
- Improved Confidence among workers & supervisory staff
- Worker & Union Support for disciplinary actions against habitual absentee and other defaulters.
- Reduced absenteeism by about 5%
- Zero Overtime Payments.

WITH THESE 4 STEPS, PLANT UTILIZATION REACHED TO LEVEL OF < 85% AND QUALITY
COMPLAINS REDUCED TO MORE THAN 70%.

THUS NOW COMPANY WAS COMING TO DRIVER SEAT IN DEALING WITH SUPPLIERS AS
WELL CONVERTER. & GOT CONVERSION RATE INCREASED TO 0.80 Rs./Kgs/Ct. AS WELL
DESIRED RAW MATERIAL QUALITY & TIMELY SUPPLY.

RESULTS:
- Daily Production touched to approx. 5750 Kgs (avg. 32s Ne. Ct)
- Monthly Conversion income reached to: Rs. 44.00 Lakh, thus making some small operating profit.
Smile seen on workers face and improved their confidence as well relations with company.
Detected terms with converter to fix the product mix (count mix) and make the revision of rates as per count:
Below 30s Ne Ct. 0.78 Rs. / Ct. / Kgs.
Between 31s to 35s Ne Ct. 0.80 Rs. / Ct. / Kgs.
Between 36s to 40s Ne Ct. 0.85 Rs. / Ct. / Kgs.
Between 41s to 45s Ne Ct. 0.88 Rs. / Ct. / Kgs.
Between 46s to 50s Ne Ct. 0.90 Rs. / Ct. / Kgs.

Product mix was changed to: (Avg. 34.30s Ne Ct.)

7200 Spindles on 31s Ne Ct. 2700 Kgs / Day Rs. 20.09 Lakh/Month
7200 Spindles on 36s Ne Ct. 2200 Kgs / Day Rs. 20.20 Lakh/Month
2400 Spindle on 43s Ne Ct. 600 Kgs / Day Rs. 6.82 Lakh/Month
Total Conversion Income Rs. 47.11 Lakh/Month.

THIS RESULTED TO OPERATING PROFIT OF Rs. 5.00 Lakh/Month

YET THERE WAS GAP TO INCREASE UTILISATION BY FURTHER 10%, TO REDUCE SPEED
LOSSES BY FURTHER 3%, TO INCREASE PRODUCTION FURTHER BY ANOTHER 500-600 Kgs.
Resulting to additional income of about Rs. 4.80Lakh.
- This would require further steps to reduce the impact of Absenteeism by introduction of Badli system.
- Run machines to full speed by taking through overhauling program

THE ROLE HUMAN RELATIONS (HR) PLAYED IN REVIVAL OF THE COMPANY

REGULAR MEETINGS WITH UNION

Through fully transparent discussions supported by all factual data, they understood the real financial
condition of the company. This resulted to the positive thinking of union and co-operation in positively
communicating the same to the down level workers. Even union supported all disciplinary actions taken by
management on habitual absentee as well those other workers who were defaulting in production, quality as
well other matters. They also helped management’s plans to impart training to workers so as to make them to
work at all sections & positions. This training helped very much to reduce overtime payments, lay offs and
effect of absenteeism on production losses.
REGULAR SHOP FLOOR MEETINGS WITH WORKERS & STAFF
They gained confidence that management is doing there best to revive the company and their full co-operation
in implementing the revival plans is must. They also understand that management is ready to immediately
solve their day-to-day working problems so they can achieve best possible results. They too got clear massage
that real performer shall be dully rewarded and on other side defaulter will get sever punishments.

MOST IMPORTANTLY EVERY EMPLOYEE CLEARLY UNDERSTOOD THAT:

- THEIR JOBS AS WELL FUTURE DEVELOPMENT IS ONLY POSSIBLE IF COMPANY WILL
SERVIVE.
- MANAGEMENT COULD NOT BEAR MORE LOSSES NOW AND IF NO IMPROVEMENT IS
VISIBLE, COMPANY WILL CLOSE THE SHUTTERS IMMEDIATELY.

COMPANY ALSO INTRODUCED SOME NEW SCHEMES FOR WORKER’S & STAFF MOTIVATION
Viz…
Incentive Scheme for Attendance and Performance, Morning Tiffin facility to workers whose shifts were
starting, at early morning, particularly for female workers, Company's transport at concesional fare for all
shifts, Development of team work through formation of group working, Introduction of TQM and Quality
Circle Systems.

CONCLUSSION

Apart from all act of improvements on technical and financial aspects, HR played a great role in reviving a
company which otherwise was on virtue of collapse.

HR is nothing but a positive communication for creating an environment of co-existence, teamwork, and
mutual confidence and working for survival.

AND in this era of Globalization with fierce Competition only fittest would survive where HR is now
considered as one most important tool and SA 7000 standards give very prime importance to this aspect.

Acknowledgement:
Author who as a Chief Executive Officer of this company and responsible to achieve this turn around wishes
to acknowledge his thanks to Directors, All Technical & Administrative Staff members, All Workers and
union representatives for whole heartedly supporting and following the laid down strategy.

*About Author:
Qualified Textile Technocrat with more that 40 years of experience right from shop floor supervisor to
Director – Operations of a company. Has wide experience in troubleshooting, project planning and
implementation and strategy formation for growth. At present he is working as consultant to World Bank and
also to many textile companies in India. He can be approached through his e-mail: r_r_gosai@yahoo.com
and / or Cell # +91 98201 35583.