From Loss to Profits Journey of ALIMCO through COVID pandemic

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D R Sarin, Chairman and Managing Director, ALIMCO

The COVID-19 pandemic adversely impacted businesses across the globe. However, as it’s said, “change is the only constant”, the businesses that adopted technology solutions and took the digital route managed to stay afloat in the troubled times. Artificial Limbs Manufacturing Corporation of India (ALIMCO) is one such organisation. D R Sarin, Chairman and Managing Director, ALIMCO, highlights strategies and means that kept ALIMCO running successfully even during the pandemic at Elets Innovation Talk with Krishna Mishra of Elets News Network (ENN).

What were the challenges that you faced during the first and the second wave of the COVID pandemic? How were you able to ensure that the employees are motivated enough and aligned with the company’s objectives?

The COVID pandemic is a global challenge. ALIMCO was one of the organisations adversely impacted by the pandemic. Our core method of product distribution is through camp activities where we first do the assessment of the people who generally gather in large numbers and then we distribute the aids and assistive devices. The advantage of this format is that we are able to disseminate the information about the scheme to the masses and the quality of the products distributed can be seen by the people.

The last camp we organised was in 2019 when Prime Minister Narendra Modi visited the camp in Prayagraj. It was a mega camp organised for one lakh people who were given aids and assistive devices. The camp was held on 29th February. However, after the COVID, our operations were badly affected due to non-camp activities and necessary preventive measures like social distancing. Moreover, the production at ALIMCO remained shut for 63 days during 2019 and again in 2021, the production was suspended for nearly 70 days because of the lockdown.

In 2019-20, before the closure of the factory for 63 days, ALIMCO achieved a record turnover of around Rs 341 crore. However, in the first quarter of the year 2020, we were able to clock only Rs 78 crore. There was an operational loss for the company for the first time, at least during my tenure. However, we pulled up our socks and within six months we were able to clock a turnover of 268 crores and a profit of 56 crores.

Because of the second wave of the COVID, the operations were severely affected and we saw a no production period of around 70 days. However, we were able to clock a turnover of around 250 crores later. I feel contended to say that we were able to take up aggressive operations to sail through the tough times and survive the pandemic. Another important aspect is that we have not retrenched any employee. Even when the company was closed we paid complete salaries to all our employees. Also, I’ve ensured that all our employees were vaccinated. Apart from this, in case any COVID-related issue turned up with any employee, a task force was constituted through which we were able to aid the one in need. Unfortunately, we lost two of our colleagues during the pandemic.

Due to COVID, it was the first time you faced operational loss but with your tireless efforts, you were able to turn around the scenario in no time. What has been your success mantra?

I believe that employees are the greatest assets of any organisation but they become difficult to handle sometimes. I feel fortunate to have a great team working for ALIMCO.

In terms of the success mantra, I would say, we devised new standard operating procedures (SOPs) as soon as we could and shared them with the ministry for its approval. The employees were told that the physical camps will no longer be organised but a similar activity will be conducted through online modes. Also, we decentralised the distribution network. Earlier we used to call people to the campsite and now we reach out to the people at their doorstep to provide them with assistive devices.

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Further, we have two types of camp activities – the first wherein the number of people is 1000 or above. In such camps, ministers tend to participate and interact with differently-abled people.Then we have camps where the participants are less than 1000. In such cases, we organised small camps where we were able to distribute aid and assistive devices, provide consultation or any other service to the people and also generate revenue.

Elaborate on the scope of activities of ALIMCO and how it has been serving society at large?

ALIMCO has been in operations for over 50 years, since our inception in 1971. We are a major implementing agency of the Government’s two schemes – the first is ADIP (Assistance to Disabled Persons for Purchase/ Fitting of Aids/Appliances) scheme and the second is Rashtriya Vayoshri Yojana to serve the senior citizens of India.

Apart from this, we are also CSR partners to major PSUs. We have a dealer distribution network. The sole objective of ALIMCO is not to earn profits, however, we’re not running on grants and have to make money to keep up the operations. Our objective is to provide quality aids and assistive devices at a reasonable price.

This sector is represented by two major categories – high volume & low value and low volume & high value. ALIMCO falls in the first category because the challenge is big. We have around 2.68 crore people as per census 2011 which might have increased to four crores by now. We have the challenge to provide aids/assistive devices all over the country.

How PSUs can prevent losses and strengthen their operations, accuracy and efficiency?

There are three problems that PSUs have been facing for a long time. The Parliamentary Committee has also identified these three factors that play a major role in causing loss to a company. The first factor is the lack of apt technology and diversification. Some examples of the companies that did not change with time or worked on innovative solutions could be HMT, BSNL, ITI, etc. Once people used to stand in queues to buy an HMT watch but today we hardly see any watch from the company. Probably, a case wherein the company refused to change with time. The second factor is unregulated manpower. We should not hire manpower to the extent that it becomes a burden on the company. In ALIMCO, the turnover was around 150 crores when I took over and in 2018-19 it reached over 300 crores which is a 100 per cent increase. Meanwhile, the manpower which was 306 at the time of my joining the PSU, today it is 284. The third factor is ‘leadership, transparency and accountability’.

Apart from the Indian market, ALIMCO has been looking to explore markets overseas. How has been the business scenario so far?

ALIMCO has faced its share of ups and downs. It had a bright start but a time came when the Government of India was planning to shut it down and sell it off. Back in those days, ALIMCO had nearly 1200 employees working and many of them had to wait for six months to get their salaries. After hard efforts, the company was brought back on track.

We were running a particular factory on an obsolete fleet of machinery which is outdated and has a zero book value in our balance sheets. Therefore, it was difficult for me to pull up initially when I joined in 2014. This is why we didn’t go out of bounds for aggressive marketing because it was difficult to fulfil only the requirements of the government schemes.

However, we inducted a few essential pieces of machinery later as our first focus is to fulfil the government’s demands. Meanwhile, we have developed a few other revenue sources. I am delighted to say that the ratio of the revenue share of government : non-government was 90:10 respectively, while today it is 60:40. We have implemented a modernisation project and by March 2022 the construction work will be almost over and the machinery will be installed. We have already started our marketing strategy.

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I had presented ALIMCO to embassies of 68 countries with the help of the Ministry of External Affairs and we received a good response. Meanwhile, we are also getting paperwork done and acquiring certification for exporting our products to international markets. We have also let open our machines in spare capacity for work even from the private sector. Therefore, we have a good plan ready. We are on the right track.
We are developing products which we will be floating in the market soon.

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