NYSE in 2000, five years after it was founded and just when the Tech Wreck began.

Balakrishnan, then based in the US to understand the listing rules, could see it was a bad time for Internet companies, many of which had to fold up. Although he was confident about the Nets future, he could sense the disbelief about the Internet and business on the Net. What we did was to be careful in conserving cash. We were sitting on a pile of cash $60-70 million which we got after listing. We decided to use this money carefully. And 18 months later things turned around, Balakrishnan says. He feels a recession is a great time in which to innovate. At that time, the marketplace had only international players such as Google, Yahoo and MSN. But they were not investing in their business. Rediff decided to put its money to good use. We thought we should do something that will give us an edge. We first invested in building the news site, which became a leader, and also invested in rediffmail, which later went on to become one of the leading Indian e-mail service providers, he says. So, what should companies do now? Be patient, for one. One cannot say how long this recession is going to last. One has to wait and watch patiently, says Balakrishnan. Then, adjust cost structures a lot. If you have committed the sin of employing people at bloated salaries, this is the time to correct it, he says. At the same time, CEOs should shut down pet projects that are just pipe dreams. His message to youngsters: I see this recession as a midwife between one era and other you experience pain just like a woman does in her pregnancy. But, eventually, there is a happy ending. ANUSHA SUBRAMANIAN

S.D. SUBBU

Use resources well, even in boom

R. RAJENDRAN CFO, Lakshmi Machine Works textile machinery manufacturer, Lakshmi Machine Works, the early 90s (especially 1995-96) was, indeed, a golden period. Order books were full and buyers had to sometimes wait for a year. LMW had no debt on its bookscustomers actually paid an advance when placing an order. It appeared that nothing could go wrong. So, the cashrich LMW diversified into steelmaking and set up SISCOL, an integrated steel plant. Its share of the investment was Rs 145 crore, part of it funded through borrowings. In 1997, things went horribly wrong. The textiles industry slumped into a recession, the longest in its history. Orders dried up, sales fell and the interest burden (on account of SISCOL investment) pulled down the bottom line, leaving it with marginal profits. An organisation should use its resources optimally even during a boom, says R. Rajendran, CFO, LMW. In a downturn, there is very little one can do on the market front. Some internal measures can be resorted to. Inventory management, for instance, saves the day in a bad

OR THE COIMBATORE-BASED

HIS CRISIS PERIOD (1997-2003)

The longest slump in the textile industry Fallout of a failed diversification Shrinking sales and orders

WHAT HE DID

Helped divest SISCOL and made LMW debt-free again Managed inventory aggressively Cut fixed costs Use resources optimally even during good times Inventory management is critical Control fixed costs

LESSONS LEARNT

market as it aids better cash flow and reduces inventory carrying costs, he adds. LMW managed to shore up its finances during the revival in domestic demand in 2004-08 that followed a government initiative: the Textile Upgradation Fund to modernise the textiles industry. In fact, it sold its stake in SISCOL to the Jindals in 2004 and is a zero-debt company again. We are today better prepared to face the current downturn, Rajendran says. N . MADHAVAN

MARCH 8

2009

BUSINESS TODAY

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