Business Today
Loading...

"Help your customers even in difficult times"

Oil was at an all-time high at over $135 per barrel just before the financial meltdown. Then oil crashed to a low of $35 per barrel in January this year, bringing down any fresh demand for pipes from the global oil and gas industry.

twitter-logoAnand Adhikari | Print Edition: January 10, 2010

We had seen the best of times (at Welspun Gujarat Stahl Rohren, the flagship of the Welspun Group that makes pipes for the oil and gas sector). Oil was at an all-time high at over $135 per barrel just before the financial meltdown. Then oil crashed to a low of $35 per barrel in January this year, bringing down any fresh demand for pipes from the global oil and gas industry.

That was really the time to test one's business acumen. As demand perished towards the end of last year, the most difficult decision to make was how much to cut production by. The impact of any cost-cutting at best is only 10-15 per cent. We decided to run the pipe manufacturing plant at 50-60 per cent of its capacity and sell at a marginal cost. The idea was to recover the cost at least. As a result, our cost dropped by 10 per cent and efficiency went up by 7-8 per cent. The net benefit was to the extent of 18 per cent.

If you don't produce, you are pushing yourself into a very dangerous zone. You have to maintain relationships with customers and also help them in difficult times. That was one big lesson we learnt. 

Our next big learning was in the us where we decided to commission a pipe-making plant in Little Rock, Arkansas, in April at the peak of the us recession. We also recruited over 300 people when everybody else put a freeze on employment.

The logic of going ahead with the us plant was that any plant you set up takes time to go on stream. We took the call that it was just a question of time before the us economy would bounce back. Today, our us plant is already booked for two years. You don't learn these lessons in Harvard or at the IIMs.

— B.K. Goenka, 44, is the Chairman and Managing Director, Welspun Group

(As told to Anand Adhikari)

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close