Leisure, Lifestyle & Wellness
Troubles brewing in Muscat

A brief note from the “managing partner” that he was personally taking over the Muscat plant left everyone shocked. The glorious start in the garment industry came to an end. The 29th part of a series describing the unknown triumphs and travails of doing international business

The Muscat factory ran like clockwork; our staff members did not have to spend a lot of time travelling back and forth to the plant. In fact, in less than two or three minutes, they could leave ‘home’ and be in the ‘factory’; all that they had to do was walk down the steps from their quarters!
Everything does not happen perfectly, as we plan. One fine day, around noon, we had a sudden visit of some inspectors from the health department, who came to the plant and wanted to inspect our facilities. We extended all our courtesies to them and showed them the facilities we had.
They inspectors were satisfied with the facilities; but they were upset that our local sponsor, Abdullah, whose name was mentioned in the license, had not formally obtained the “health department clearance certificate” from them to operate the kitchen. They told us that they had called him several times, and he had not come to the office to comply with some documents.
Anyway, now that they had come, they wanted us to make some small changes in the washing area for utensils, which we promised to do within three days, though they had given us one whole week to complete.
But while this inspection was going on, none of us could get Abdullah on the phone; his own coordinator failed to do so. Angry and upset that he had not cared to comply with their demands, the health department officials, without any consideration, simply locked up the kitchen door and walked out, and would not listen to our entreaties.
The food, ready to be served to some 230 people, was inside; this was a stupid and unimaginative move, but they wanted to ‘punish’ Abdullah for his lapse. However, when they left, they had overlooked the fact that a member of the kitchen staff was inside and the distribution outlet window was not closed! We were certainly not breaking the door, but, as he was inside with all readymade food, we simply dispensed the supplies thru the window!
We eventually got through to Abdullah, who went immediately to appease the health department and got the clearance. He took them to task for making all the staff starve for food and this kind of emotional threat to report to the higher authorities cleared our permit same day.
This was only a minor incident, compared to others that were brewing in the plant. First move by him was to bringing in a woman as his “coordinating manager”, who would report to Abdullah the daily production; except that she could speak some English, but had no idea of the working of a garment factory. He wanted her to be given a salary that was higher than the production manager. After my initial resistance and promise to discuss the issue with Zubair, he relaxed a bit, but she started coming daily to the plant. To him, it was a fait accompli; and for us, an unnecessary economic burden, as she was going to make no contribution in the factory.
We had just about gulped down this push, when we had a sudden visit of few Muscati ladies, with letters from Abdullah’s office, appointing them as staff workers in the plant. While we were trying to understand the situation, thanks to the coordinator’s translations, Abdullah himself turned up, and advised me that this was as per government regulations, and that we had to give jobs to at least 10% of the total strength, to local people. I had heard about this move earlier, and so, I volunteered to accept them, as ‘trainees’; but he had issued them letters of appointment, and the wage levels were just about twice that of the machine operators!  Such a move would demoralize the staff, and he wanted to ‘show’ that he was the boss and owner of the plant!  He had the government notification in hand, which was issued, along with the industrial license!
We did not know anything about this at all in the initial stages of negotiations and after hurried teletalks with Zubair, we had no choice but to absorb these additions and do the best we can.
That evening, when all these obstacles were over, I was in a pensive mood, sitting in my room, when I recalled in my mind, how we got into this business in the first place!
Both Perera and I arrived in the Muscat airport and proceeded to our hotel early in the morning.  About an hour later, our silent partner, who held a high government position, picked us up in the hotel, en route to his office. We found him to be very simple, had a bit of an English accent, well mannered, and had a touch of royalty in his behaviour.  He wanted us to assess the situation and tell him honestly if it was at all possible to convert an existing building into a factory, instead of building a new one and whether we could feed the factory with sufficient orders?  Almost at the fact end of the discussion, Abdullah came, and picked us up from the ministry office and took us to the site.
The site was a single independent building; at the road level was large car showroom; the basement was a government-operated library and the first floor had several rooms, above which was the terrace.
Abdullah was in a hurry to go; he wanted to know if we could finish our work in one hour and report back to his office. He showed us the basement, which had lots of books and shelves (a defunct library, I would say); the car show room was empty, as the company had moved out. The first floor had some tenants, one of whom, a young Indian lady was introduced to us, but Abdullah assured us, right in front of her, that they would all be moving out at short notice!
We had told Abdullah to collect us after two hours, as we had to draw sketches and take exact measurements of all the halls, rooms and other open places. We came back again around 2pm and continued our work till late in the evening, when we got dropped at the hotel. In the evening both Perera and myself had long discussions with our assessment and had to take our flight mid-day back to Dubai, before which we were to have a word with our silent partner in the ministry.
When we met the next day, we had assured Abdullah that we could actually get the factory started in 90 to 110 days after we get the industrial license in hand, since he confirmed that it would take him about three weeks to get the visas for the staff. “Can’t you do it in two months?  I saw your plant in Free zone, and you built that huge factory in six months, but this is a small one?” “How much are you going to invest?” I had told him that machinery alone would cost $500,000 and there were other ‘local’ construction expenses for this conversion. In any case,
I told him, that we need to discuss the issue with Zubair before we can give a final commitment.
As I had mentioned earlier, I spent sleepless nights in converting the huge complex into a self-contained factory; a production area for making knitwear and another for other garments. It had to house some 230 workers, separating the males and females; kitchen and dining areas; cutting and finishing areas, besides the processing zones. Of course, I had delegated the work to various people, but I had to ensure that everything went clockwork to be completed on time. And it was, thanks to Zubair’s assistance in every way, including the despatch of fabric and accessories for the first two orders, so that we were fully occupied for the next couple of months!
We had a wonderful staff support and they all worked most enthusiastically. They were not aware of the pinpricks from Abdullah, though they resented the high wages the local girls were getting, which, we had explained, was as a result of the adjustments made to cover food, accommodation and other related expenses that we were having to incur for the Sri Lankan staff.
Abdullah’s demands began to crop up once in a while, and he was demanding that he be the official and authorized signatory for bank operations. While Zubair was the handling finance completely, for the sake of convenience, I had opened a personal account with the bank. Once goods were shipped, I transmitted the original documents to Zubair so that he could handle the bank in Dubai. Likewise when raw materials like fabric and accessories came, I did not have to make any payment, and these were delivered ‘free’ for processing. Thus our work was by perfect coordination between us.
In the meantime, in order to execute an urgent order, which I think came from a famous American brand called ‘Haband’, we had obtained a special “pocket-stitching machine” from Finetex, which came by road. We had just about finished the order, and shipped the goods, by coordinating the shipments with Finetex and had to return the same back to Dubai. This sophisticated equipment alone cost some $16,000 and had to be handled with delicate care.
It was in the afternoon, when I had just returned from an urgent trip from Dubai and I think, I had carried the original shipping documents of Haband. I was in the dining hall, when someone came told me that Abdullah was in the plant and wanted me to come and see him. As I was having my lunch, I told him that I would finish and join him, but rather invited him to join me!  He had a visitor with him and he wanted me right away, but I was not going to comply with such unreasonable requests. He came down, reluctantly, and introduced me to couple of people, who were Indians, as leading apparel makers from Hong Kong! They had assured him that what we were doing was some 50% of the actual capacity and we could really make more! They had “modern technology, and technical know-how” to get better returns from this plant! I was taken aback, but said nothing.  
Next morning, I had a brief note from the “managing partner” Abdullah that he was personally taking over the plant and that I should hand over charge to the production manager, leave the plant, after paying the months’ salary. I was shocked. The note also said that he would be ‘available’ for discussions on the ‘matter’ the following day at 10am in his office!
There were two priorities that came to my mind immediately; first was the staff with whom I had developed such close rapport; second was the expensive pocket stitching plant that I had ‘borrowed’ from Finetex, which would be required by them for continuing their production of Haband pants in the next three days. Immediately I called Anil our technicians and his assistants, who were already on the job of dismantling the plant, but at a leisurely fashion; they were doing this when they had free time! I wanted them to drop all other work and concentrate in getting the machine out, because I became scared that Abdullah would simply hold us to ransom. I arranged for the special equipment truck that had brought this in the first place, and wanted it to be cleared that very night so that the machine is in Muscat-Dubai border by mid night or so and reach Finetex early next morning. The machine left that night when the city was asleep.
Next morning I did call on Abdullah, as scheduled. He was upset that we had not made him a bank signatory; he was angry that I had not given him the export documents for negotiation in his bank and had sent these to Zubair directly without consulting him; and had refused to give him some advance money when he asked for it, as I had advised him that on money matters, he should speak to Zubair and not myself, as I do not handle them. “But you are having bank account in your name, and are keeping the cheque book in your office”. “Now, from yesterday, I have them in my office!”.  There was no sense in replying to these charges.
The following day, I moved out to a friend’s residence with whom I stayed for the next few days; arranged and despatched couple of pending shipments for which I had already signed the papers. I went back to the office on the salary day and paid the staff so that no one was in trouble of any kind and ensured that if any them had some urgent remittances to be made to their dependent family members, I arranged for it and returned back to deliver them the receipts.
The senior staff was upset, just as much as the rest, because my absence was noticed and Nancy was keeping Abdullah informed of the developments in the plant. I won’t blame her, because she had to do, what she was asked to do, if she wanted to keep her job!
A few days later I returned to Dubai, and spent a few hours with Zubair, to find out where we went wrong. But in between, Abdullah sent ‘feelers’ for me to come back and ‘work’ under his control, but having realized his demands and weakness, we had kept the silent partner informed, who, by the way, was technically a kind of brother-in-law of Abdullah, as both these guys had married two sisters! But these two men were miles apart in knowledge, behaviour and upbringing!
Our glorious start in the garment industry came to an end. Our operations of Muscat was seized by Abdullah and I had told him that with his attitude he would not even be able run the plant even for one month!
This had a telling effect on my work in Finetex itself and was mentally preparing myself for an exit of a plant for which I had shed every drop of my blood.  My citadel was crumbling down, right before my eyes...

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at anantha_ramdas@yahoo.com.)




5 years ago

Dear Mr. Ramdas,

Although I do not comment on each of your articles, please be assured that we love each and every of these articles very much. I gives very deep insight into running a company and how practical problems could be resolved.

Thanks a lot for sharing your experiences.


Reliance selects US-based Fluor for project management at Jamnagar refinery

Besides assisting in project management, Fluor will also provide engineering and procurement services for RIL's pet coke gasification project at Jamnagar

Reliance Industries Ltd (RIL), India's largest petrochemicals company said it selected US-based Fluor Corp to project management services for its projects being executed at Jamnagar refinery complex. No financial details were provided.

In addition to assisting RIL in project management, Fluor will also provide engineering and procurement services for the company's pet coke gasification project, it said in a release.

RIL said, the scope of the project management services to be provided by Fluor includes several world-scale units including petroleum coke gasification units, refinery off-gas cracker and downstream petrochemical plants, a captive power plant, associated utilities and offsites. 

The completed gasification project will gasify petroleum coke to produce fuel and hydrogen for the expanded refinery and petrochemical complexes and captive power plant as well as feedstock for future chemicals production, the company added. 

According to RIL, the investment in the expansion of Energy and Petrochemicals Projects represents one of the largest such investments globally. The proposed coke gasification facility is also among the largest such projects ever built.



CBI arrests MSTC's former CMD Malay Sengupta, three others in Rs464 crore fraud case

The MSTC official allegedly accepted forged and fake documents and released 80% of the export value to six exporters

Mumbai: The Central Bureau of Investigation (CBI) has arrested former top officials of Metal and Scrap Trading Corporation (MSTC) in an alleged gold export scam worth Rs464 crore in the public sector undertaking by accepting forged documents from exporters, CBI spokesperson said on Thursday, reports PTI.

The agency arrested MSTC's the then chairman and managing director (CMD) Malay Sengupta and chief general manager Tapas Basu, CGM from Kolkata, and an insurance consultant SK Sinha from Delhi for their alleged involvement in the case.

They have been sent to police remand till 10th May. They had allegedly colluded with insurance consultant Mr Singh in 2006 to cause the loss of Rs464 crore to the mini-ratna company.

"In pursuance of the criminal conspiracy, the six exporters submitted forged and fake documents. The three MSTC officials abused their official positions as public servants and allegedly accepted the said forged and fake documents and released 80% of the export value to them," CBI spokesperson said in New Delhi.

As part of the alleged conspiracy, directors of six export houses -- Ushma Jewellery and Packaging Export Pvt Ltd, Space Mercantile Company Pvt Ltd, KA Malle Pharmaceutical Company Ltd, Joshi Bullion and Gems Jewellery Pvt Ltd, Bond Gems Pvt Ltd and Indo Bonito Multinational Pvt Ltd --submitted forged and fake documents to get released 80% of the export value to them, agency sources said.

"The accused officials of MSTC allegedly, knowing that documents were fake, accepted them as part of a conspiracy and released the export value to them causing a loss of Rs464 crore to company", the spokesperson said.

CBI had earlier arrested six accused Shishir Dharkar, the then Chairmen of Pen Urban Co-Operative Bank, his wife Gul Raihana Omer, Prem Kumar Sharma, the then Advisor of the Bank, consultant Rahis Ahmed, Jayesh Desai, Associate and Consignee at UAE and R Mani, Consultant based at New Delhi.




5 years ago

This is not the first time that the MSTC top boss is in the anti-corruption net. The PSU is too corrupt an organisation.

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