There is no resolve to the issues!
Interview with Mr Hemayatkar; CEO of Zomorod Mashhad Carpet Company
Continuous activity and a permanent effective presence of Mr Hemayatkar convinced us to set up an interview and spend an hour talking to him about various problems and obstacles that production is struggling with. The interesting point that caught our attention in Mr Hemayatkar was that he had no complaints towards rivals and authorities in conditions nowadays which everyone talks include misrepresentation of rivals.
He stated that we do our own business and we leave others to their own but we look for hard rivals who compete in progress of machine-made carpet and we’ll be glad to present products which such quality that causes progress for us and the rivals.
He recognizes quality as an important factor for the successful and continuous presence of Zomorod Mashhad Carpet company in top tier national and international carpet industry. You can read the complete interview of Mr. Hemayatkar about different issues of machine-made carpet below.
What is your description of the current situation of the country for producers in a different section? Tell us about the obstacles and problems that currently exist.
About the problems, they’ve been described time and time again by our friends, colleagues and counterparts in different ways but sadly, due to different issues there has been no resolve and the result is harsh conditions that producers are facing today.
First topic in these talks is the raw material needed in this industry, with our banks being disconnected with foreign banks and us needing around 70 percent of our raw material imported. And we need foreign currency to provide our raw material which in the current situation there is no path for transferring funds and work with an LC we need a high volume of cash flow in Rials to purchase our raw material which is considered a big challenge for us. You especially need to consider: when we want to buy the raw material, we need to transfer the cost completely in the beginning. On the other hand, you can’t transfer the funds directly to the provider and we need a third-party medium to do this process which has its own problems. Apart from these obstacles said, this whole process takes time, in about one month the provider receives funds. After that it takes 3 to 4 months for us to receive the said material.
So far there is a 3-month pause forced on us and we need to pay loan instalments and financing costs to the bank network. Even after we receive the material it’s not prepared and is raw, we need to do spinning and dyeing and after that it takes around 2 to 3 months to make the final product; the carpet.
Last step is selling the final product (carpet). Now if we look at it positively and the market is desirable, we sell our product. But with the recession in our society it might take 3 to 4 months for our investment to return. The said issues are a collection of our biggest challenges in this industry.
Next issue is taking loans from the bank. Currently, all banks need a property document and providing that as a producer is very difficult. This means that for entering this industry you need to be a landowner not an artisan, how much property can we own? We only have properties to meet our needs.
And with our current export situation, we have obstacles exporting to a lot of countries. Because of our country’s banking situation, we don’t do our exports with foreign currency, the buyer has the same problems with dealing with Iran so practically we receive no currency. As you may know, the foreign currency must be transferred via banks or individuals who carry cash and with our laws against money laundering and other problems transferring funds in cash or by banks is impossible. So, the only thing we can do is to tell the buyer to transfer funds as Rials via exchange currency or third-party countries. This issue and how we transfer the cash have some consequences for all evolved in this transaction so we can’t deal with them more than once or twice cause sanctions, restrictions, limitations and laws might cause them problems doing their own business.
The other issue is acquiring spare parts, for machinery that currently works in the production system. To this day we paid several times for the parts but in the end, the money was returned after a month and that’s because these companies are severely restricted and can’t work with Iran.
Even for doing this we need to find a trusted individual in a third-party country, and give them the required money for purchasing and sending us the part. And they won’t do this more than two or three times because they might be questioned about the end destination of the said parts and the machinery are scrap metal without these parts.
Aren’t there companies in Iran that produce these parts?
There is a possibility of making some parts in Iran but there is no way to make electronic parts here. These parts must be bought from the original creator of machinery and they have the monopoly on that.
With restrictions of exporting, what conditions are required to produce according to the high volume of producers? What is your plan to keep and increase sales in the national market?
Zomorod Mashhad Carpet company is putting all its effort to preserve its high quality to expand and keep its market share. All the fibre we use is from raw material of German known and respected company Deralon which produces the best fiber in the world. I can say with high certainty that our carpets from 20 years ago are in our customers houses without any changes or quality drop.
We always tried to leave a name of ourselves so that customers would buy at ease when hearing the name Zomorod Mashhad. However, we heard that some rivals and friends buy fibres from different countries and mix them together but Zomorod Mashhad never did such a thing. Always we were consistent and tried to be the best product it can be, whether it’s design, colour or map we tried to be up-to-date. I believe that our carpets are comparable with respected foreign companies.
Some companies try to establish direct branches in different provinces. Some believe that the right time was a few years ago and it does not benefit able now. What’s your opinion on this?
In today’s conditions investing on the property has very high numbers dedicated to it and in practically there is no explanation for that. We usually use institutions to distribute our products. And costumers in every state they are can directly order the desired product in any number via our website. In the country current situation there is no economical justification for purchasing shops in different states.
Don’t you think the current way you mentioned increases the chance of fraud and copying your brand? Won’t you be at ease if Zomorod Mashhad was only purchasable in your official store?
Sadly, the number of machine-made carpet producers are way more than its national needs. There must be some control over this and there is none. For example, companies always try to use “Mashhad” in their brand and other examples of brands using “Zomorod” or “Mashhad” before and after their brand.
Presence in the national exhibition is not necessary according to some brand companies but you as an authentic brand take part in it for years what’s your strategy in this area?
People have different perspectives. My personal belief is that we have to participate in the national exhibition. First of all, this is a good place to meet people in the carpet business and all the people who hardly meet each other during all these hard years have a chance to meet in person. And each company has its own objective for taking part in the exhibition. The other issue is the amount of sales which depends on booth making and a variety of products.
Overall in my opinion attending the national exhibition is in the end announcing your presence, so consumers and buyers would be informed about latest products, and rivals would be forced to move forward by the innovations so that you can recognize weak companies from good. For example, which products are new this year and what improvements have been made compared to last year, are they the same or not? Is there a new thing to say a new product to present? Are products produced with higher quality or not? According to these reasons, I think it’s necessary to attend the national exhibition.
Did we make any progress in producing raw material compared to a few years ago? How is the quality of national companies’ raw material?
Near 90 percent of raw material used in machine-made carpet, factories are acrylic fibre. There was a factory with the potential to produce high volumes of acrylic which doesn’t anymore today. And that was Isfahan polly-acrylic factory which cannot provide national companies. In the end, all companies in need of acrylic have to acquire it overseas. For establishing such units, we need heavy investing which can’t be provided by the private sector. Here we need the government to take action or foreign investors. Anyway, no one will do it cause the volume of investing is too high and investor prefers to do a financial activity with lower risk and fewer funds needed to reach profit. In today’s condition, if someone puts their money in the bank and don’t do any industrial business, they can achieve 2 to 3 times the profit.
With all these acrylic fibre needs in the machine-made carpet industry, there will still be a little profit for who establishes an acrylic factory or is there another problem?
Even if investment for such factory is provided by the private sector, base and foundation of acrylic is raw material called acrylate which for uses in the defense industry, is included in heavy sanctions. In a way importing acrylic is a lot easier than importing the raw material for producing it and in the current situation, it’s impossible for us to buy that.
How successful were the textile association, professional society and other institutions present in leading textile industry and machine-made carpet?
There is a very good and friendly relation between us and these institutes and each of them always did their best to improve and progress the quality of the textile industry. They do all they can to solve industry problems. But their capability is somewhat limited.
With the current situation regarding carpet export, what is your plan for attending foreign exhibitions in the future?
With the high rate of currency exchange practically we can only attend as visitors in these events. First of all, as soon as they realize we are an Iranian company they’ll step aside because they know their government won’t allow them to do business with an Iranian counterpart. They can’t sell or buy anything from us.