Sunday, 7 July 2013

D. KAMANI ENGINEERING CORPORATION LTD.


As a result of the company’s determination to conquer new fields in the industry, irrespective of profits, the annual profits of the largest company of the Kamani Group also started to gradually decline. In the year 1964-65 the profit was Rs. 52 lakhs, 72 thousand. Since there was a plan to issue bonus shares worth Rs. 22.5 lakhs, the shareholders could not be paid any dividend.
In the previous year the company had received a contract from the Central Railways to carry out the electrical work on the 370 kilometre track from Igatpuri to Nandgaon, due to this they made good progress in this year. When they started this kind of electrical installation work for the railways, about ten years previously, they had done so with the technical collaboration of a Belgian company – The Traction. However, for this electrical work along the 370 kilometres of railway tracks, there was no need of any technical collaboration. This contract was worth Rs. 1 crore, 70 lakhs. Moreover, the company had got a contract worth Rs. 1.25 crores, for the ropeway from Chasnala to Burnpur.
In addition to having the largest factory for transmission towers throughout Asia, this company also had a centre for testing towers, which was deemed as the largest in Asia. This centre started functioning on 20th May, 1965. This testing tower was 40 metres tall and had a width of 10.5 metres at its base.
The factory had an output of 25,000 tons. An application was submitted to the Industrial Credit and Investment Corporation to increase this to 60,000 tons, and this was approved. A loan of Rs. 70 lakhs – Rs. 40 lakhs in foreign exchange and Rs. 30 lakhs in Indian currency - was taken for this purpose. The first step in this venture was to put up a factory in Jaipur.
Thus, the year 1964-65 was momentous for both the country and for this company. During the conflict with Pakistan, the nation’s spirit burned bright, but along with this the country was also caught up in a financial crisis. Highly experienced persons like Pandit Nehru, Shri Lal Bahadur Shastri, Shri Balwantrai Mehta and Dr. H.J. Bhabha were no more. Within the company, Ramjibhai and Shri H.D. Hiranandani had also passed away. The tax on bonus shares was cancelled. Tax on dividends of up to 10% on fully paid up capital was also cancelled. The surtax was decreased from 40% to 35%. But simultaneously, the tax on the company’s income was increased by 10%. As a result the company had to shoulder a burden of nearly Rs. 1 lakh. The production of towers increased from 18248 to 27851 tons, i.e. an increase of 50%. Instead of manufacturing road rollers for only one type of tractor, the company now began producing them for three different types of tractors. The largest buyer of road rollers was the district assemblies. During this year 59 road rollers were sold.
Six hundred tons of towers were exported to Thailand and Nigeria. Exports would gradually increase. Since orders were being received from developing countries, payment was to be made in instalments over a period of 7 to 10 years. As a result the company had to bear a reduction in cash flow.
In the year 1965-66, the margin of profit increased to Rs. 43 lakhs, 26 thousand. It was possible to give a dividend of 7%. The production of towers was 22,678 tons, 5,173 tons less than that of the previous year. However the number of road rollers that were produced was 130, the highest ever. A new model of road roller was also brought out.
There was good progress in the export division. There was an order from Nigeria, worth Rs. 2 crores for 14,000 tons of 330 kv (kilovolt) towers. These towers were tested in India, for the first time ever, at the Jaipur factory on 29th September, 1966. At that time, the British consultants, M/s Merkz & McLeylan, representatives of the Niger Dam Authority were present. Towers worth Rs. 15 lakhs, 41 thousand and meters worth Rs. 75,000 were exported to Thailand and Kuwait, which was about 7% of the total production.
During this year there was a drastic change in the financial policy of the country. As a result the Rupee was devalued in June 1966. Funds generated by companies by taking fixed deposits and giving interest on them, were now controlled by the Central Government.
The business industrial union petitioned the Central Government that they be allowed take part in agricultural activities as a Joint Stock Company, but this was rejected.
Shri Navnit Kamani was appointed as a director of the company on 28.3.1966, whilst Dr. Balraj Nizavan was elected as a director on 19.1.1967.
1966-67: In this year the margin of profit was Rs. 37 lakhs, 53 thousand, which was less than that of the previous year by Rs. 5 lakhs, 73 thousand, but the company still declared a dividend of 12%.
As soon as the Jaipur factory was set up in June 1967, it went into production and on 26.12.67 it was inaugurated by the then finance minister, Shri Morarjibhai Desai.
Despite the fact that in October – November 1966, that is at the beginning of the company’s year, there was a sit down strike for 42 days - the production was slightly higher than that of the previous year. The construction work of the transmission lines and the ropeway in Andhra was completed during this year.
The company received an order to build an underground power house in Ukai.  Until now the various projects undertaken were ropeways, radio towers and electrification lines – now civil construction work was also added.
In this year the annual output of the Kurla factory increased from 24,000 tons to 30,000 tons. The effect of the depression was still prevailing, so gradually special attention was paid to exports, and 42% of the output was allotted for exports. In addition, work on transmission lines went on at eighteen different places.
1967-68: In this year, the profit margin remained at Rs. 28 lakhs, 47 thousand. A point worth noting is that the country’s financial position once again declined and then started to stabilize. Agricultural output increased. In industry, the output increased in certain fields, the country’s foreign exchange position started to improve and the market rates remained fairly stable. These factors were signs that the financial state of affairs of the country was improving.
During the fourth Five Year Plan, the irrigation minister at that time, Dr. K.L. Rao announced that Rs. 800 crores would be allotted for the supply and spread of electrification.
It was anticipated that next year the export of engineering goods would increase from Rs. 42 crores to Rs. 85 crores, as the government established The Industrial Development Bank for industrial products and growth of exports.
Amongst the export orders received by the company this year the three main ones were:
1.    Package deal from Iran: This included 25,000 tons of towers and 11,500 tons of copper conductors and A.C.S.R. The total worth of these goods was Rs. 15 crores.

In connection with this project, the Shah of Iran visited Mumbai on 12th January and on that occasion the Kamani Group had organized a function at the Taj Mahal Hotel, during which he had showered praise on Kamani Inustries.

2.    Sudan turnkey project: This deal was for Rs. 6 crores. It included 9,000 tons of towers for 220 Kv and 110 Kv transmission lines and in addition A.C.S.R conductors and ground wire was to be supplied and the transmission lines set up.

              This work was inaugurated on 8.2.1969, by the Prime Minister of the Republic of Sudan at that time: On this occasion he said, “The inspiration for the country of Sudan to gain (political) independence came from Mahatma Gandhi and Shri Nehru, who are very important to us; just as important for our country’s financial development is this cooperation with the Kamani Group. Can there be any greater praise from a non-developed nation towards a developing nation?

3.    Order from the USA: This order, for 7,000 tons of towers for 500 Kv (transmission lines) was received from three power companies in America and was worth Rs. 1 crore, 20 lakhs. This order was the first of its kind, not only for Kamani, but for the whole of India. To receive an order for such engineering goods from a country considered as very advanced in the fields of science and technology, was not only a feather in the cap of the Kamani Group, but in that of the whole nation. On 26.2.69, Mr. A.W. Longacre, visited the Kurla factory on behalf of the American power companies. He wrote in the visitor’s book, “I have seen goods of extremely high quality produced in this factory. My power companies will be extremely satisfied with such work.”

As the company’s export business gradually increased, there was also criticism from some quarters that the factory was only concentrating on export orders and not giving enough attention to the nation’s needs. But this criticism was not valid, as in this year the following projects were to be completed:

1.    In Maharashtra: Borivali - Tarapore transmission line                     
2.    In Kerala: Sabarigir – Tamil Nadu border line
3.    In Andhra Pradesh: Upper Sileru – Gazuvaka line

The underground power house in Ukai could not be completed due to water logging because of excessive rainfall.

In addition an order worth Rs. 1 crore, 55 lakhs was received for electrical installations from the Western Railways.
A new design of 220 Kv was brought out by the factory, leading to a 15% savings; over and above this a separate plant for galvanizing nuts and bolts was set up.
On 10.9.68, the company’s highly experienced director, Shri Chunilal Bhaichand Mehta passed away.
For the first time in the history of the Kamani Group, a decision was taken to sort out the differences between the workers and the management across the table.     
1968-69: In this year there was actually a loss, but by making changes in the accounting system, according to Article 205 (2) (B) of the company’s rules, they were able to show a profit of Rs. 12 lakhs, 94 thousand.
 In this year it was also decided to issue bonus shares in the ratio 1 : 10.
In the Jaipur factory, in addition to a sixteen day strike the zinc plating bath also failed. Due to water logging because of the floods, the work in Ukai also came to a halt. In Sudan, the route (along which the transmission lines were to be set up) was changed and so the work there was disrupted.
1969-70: This year the profit margin was Rs. 25 lakhs, 64 thousand. A dividend of 9% was distributed.

During the last two years or so the country had been facing a shortage of steel. This shortage continued in this year too. To put the new plans for the distribution of steel into effect, the Central Government appointed the Priority Committee in place of the Joint Plant Committee and gave the required importance to export orientated production.

The ruling Congress party won an overwhelming victory in the country. Bound by traditional conservative ideas, the public voted according to their own beliefs. As a result of which the ruling Congress party was victorious, and gained a greater majority than it had ever expected. In the fourth Five Year plan, it was decided that 232 lakh Kilowatts of electricity would be generated. The government’s financial policies were especially encouraging as far as exports were concerned. The company exported goods worth Rs. 8 crores, 18 lakhs, more than 50 times the amount as compared to the year 1965-66. The company was felicitated by the Engineering Export Promotion Council and the Federation of Indian Chambers of Commerce and Industry.

An order was received for 500 kilometres of 220 Kv transmission lines. In addition they also received an order for the tails and maintenance of Jumbo jets. Thus the company branched out more and more. To further the progress of diversification, they received a loan of Rs. 45 lakhs from the Industrial Development Bank.

As per the laws applicable to contracts it became necessary to register this company with the Central Government’s Companies’ Department.

The most notable thing that happened this year was that the management decided to adopt a new philosophy.

Its five branches were as given below and they became a five pointed code of behaviour.

1.    To maintain human dignity
2.    No exploitation
3.    Freedom of speech
4.    Management by agreement
5.    Agreement by persuasion

For many years the Kamani Brothers had been contemplating upon and discussing how to develop relations between the owners and the employees so that they were mutually beneficial to all. The philosophy, including the above five points, resulted after the services of Dr. Suresh Shrivastava of the Management College in Calcutta were introduced. And the philosophy was appreciated. Kamani Engineering was the first to take steps to act on this philosophy. Many committees were formed, which included representatives from all levels and all sides and the Kamini Brothers entrusted them with administrative responsibilities. The Kamani Brothers were always there to solve any difficult problems that arose. Business dealings which until now had been handled in traditional ways became more professional. With this new method of working, responsibility was decentralised in a major way. In the beginning, members of the committees experienced some confusion. They also experienced some trepidation, but later the idea of self preservation inspired them to accept their responsibilities and they all shouldered the work. A result of this was that people’s hidden strength bloomed and they made personal progress. This philosophy gradually extended to Kamani’s other companies and became widespread. With the employees having the opportunity to be directly involved in the company’s working, it was but natural that their attachment to the company grew and they felt it was their own; gradually this feeling became stronger.
                  


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