Torrent Machines, a firm manufacturing certain kinds of machines, announced a scheme for helping young entrepreneurs to manufacture and supply some components and parts required by the firm.
Torrent Machines came forward to set up an industrial estate for housing thirty small factories, called ancillary units, which would manufacture and supply the components required by Torrent Machines.
A person setting up the ancillary unit needed to invest only rupees five lakh towards the machines that would be supplied by Torrent Machines. Additionally, he will have to pay a monthly rent for the factory shed.
The ancillary unit would manufacture the parts and components as per the orders received from Torrent Machines. However, the ancillary unit was not allowed to manufacture and supply any component or part for any other customer.
The number and specifications of the components to be manufactured by the ancillary unit and the price to be charged were to be decided based on an annual contract, which could be renewed every year.
Karthikeyan was one among the thirty applicants selected by Torrent Machines.
Karthikeyan's father, who had held a senior position in a large firm, told Karthikeyan, "This is a great opportunity which would enable you to settle down running a profitable business even at a young age. Torrent Machines is a company that has been growing well. You can keep running your business profitably, focusing only on production, with no worries about marketing and finance."
After three years, Karthikeyan moved his factory to a rented place outside the industrial estate, with the approval of Torrent Machines.
When the executives of Torrent Machines asked him the reason for his moving out of the company's industrial estate, Karthikeyan told them that one of his friends was offering him a factory shed with a large area at a low rent and that moving to a larger factory would help him expand his factory by installing more machines.
Since Torrent Machines had other ancillary units functioning outside its industrial estate, some of whom had been asking for allotment of a shed in the industrial estate, Torrent Machines had no problem in accepting Karthikeyan's request, since it could allot the shed to another ancillary unit.
"Why are you moving out of Torrent Machines' industrial estate to a shed outside the industrial estate, paying a higher rent?" asked Karthikeyan's father.
"If I run my factory from the shed in Torrent Machines' industrial estate, I can manufacture components only for them. If I move out, I will not have this restriction. I have saved some money from the profit earned by me during the last three years. With that money, I intend to buy new machines and manufacture components for some other large firms. I have already spoken to a firm and the firm has agreed to give me orders, once I have the required machines installed" said Karthikeyan.
"Why are you taking this risk? There is someone offering you a readymade business on a platter. You are unable to appreciate the bonanza you have been offered!" said his father, expressing his dissatisfaction with Karthikeyan's plan.
Karthikeyan did not reply.
For the next couple of years, Karthikeyan was manufacturing and supplying components to Torrent Machines and also to a few other firms.
After a few years, Torrent Machines began to face problems. It was said that due to technological changes, the demand for the machines manufactured by Torrent Machines was declining, resulting in fall in the sales and profitability of the firm.
Payments for the components supplied by Karthikeyan to Torrent Machines were getting delayed.
While at the beginning, Torrent Machines was paying the invoices in one month, the time for payment was progressively going up to two months, three months etc. At one stage, the firm was unable to make payments for the invoices even after six months.
Several ancillary units of Torrent Machines were unable to function, due to the funds crunch caused by non-receipt of the payments due to them from Torrent Machines. Some units stopped their production, after realizing that they won't be able to get the payments from Torrent Machines. Some units closed down. In many units, salaries were not paid to the employees for the last few months.
Since Karthikeyan had been manufacturing and supplying components to some other firms also, he was able to manage, in spite of the losses on account of non-receipt of the payment from Torrent Machines. Since he had been continuously engaged in getting orders from new customers, he was able to run his unit without interruption.
"You had been wise in coming out of Torrent Machines' industrial estate and expanding your business. How did you do it? Did you anticipate this development?" asked Karthikeyan's father.
"No, daddy. But I thought that depending on only one firm for my business was risky. After all, if we look around, we can see that people who are at the top go down after some time. I thought of the possibility of such developments happening to companies too. That is why I decided not to depend on only one firm, however big it was. Even now, I am thinking about what changes may occur in future and how I can prepare myself for them" said Karthikeyan.
Karthikeyan proudly looked at his son.
Section 2
Knowing the Right Time
thIrAmai Arkkum kayiRu.
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