chapter – 3 tobacco industry in india and...
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CHAPTER – 3
TOBACCO INDUSTRY IN INDIA AND PROFILE OF
SAMPLE ORGANISATIONS
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CHAPTER – 3TOBACCO INDUSTRY IN INDIA AND PROFILE OF
SAMPLE ORGANISATIONS
This chapter focuses on an analysis of the importance of Tobacco Crop in
India and in Andhra Pradesh, in particular, and review of exports of unmanufactured
tobacco and tobacco products from the country in the recent years from 2006 to 2012.
This is attempted in Section-I Production and Exports of Tobacco Products and
discussed about the profile of Guntur district in brief. Section-II presents the profile
of two selected tobacco processing enterprises in the large scale sector from Guntur
District of Andhra Pradesh. The enterprises covered in this chapter, from where
sample of employees was selected from primary investigation on Quality of Work
Life of Women Employees are: (i) Green Leaf Tobacco Threshers Ltd. (GLTTL),
Guntur, and (ii) Maddi Lakshmaiah Tobacco & Co. Ltd. (ML&Co) Chilakaluripet,
Guntur District, A.P.
SECTION-I: PRODUCTION AND EXPORTS OF TOBACCO PRODUCTS
3.1 Introduction
Tobacco is an important commercial crop, which plays a significant role in the
Indian Economy. India earned the distinction of being the world’s third largest
producer of tobacco, next only to China and Brazil. During the year 2012-13, the
estimated production for India is 681 million kgs of cured leaf of all types of tobacco,
with area of cultivation as 0.4 million hectares (ha.). The country is the second largest
exporter of Flue Cured Virginia (FCV) tobacco, next only to Brazil. FCV tobacco,
which is the main exportable variety produced in Andhra Pradesh and Karnataka,
accounted for about 263.55 million kgs, 38.7 per cent of total production of tobacco in
the country, according to statistics released by the Tobacco Board at Guntur (Andhra
Pradesh). FCV tobacco is cultivated in an area of 0.15 million hectares. Bidi tobacco
tops the non-FCV tobacco type in production with an estimated 160 million kgs
annually. Chewing and hookah tobaccos are next to bidi tobacco in annual production.
Among the different types of tobacco grown in the country (FCV, Bidi, Natu,
Chewing, Hooka, Cigar, Oriental and Burley), FCV and burley are the main
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exportable varieties. Besides, India has got an added advantage of producing FCV leaf
of different styles ranging from colour filler to high flavorful leaf, and thereby
catering to the needs of different countries.
Tobacco made a significant contribution to the national economy during the
year 2012-13 by earning about US$914.43 million foreign exchange, besides
contributing US$3.65 billion to the exchequer by way of excise levies on
manufactured tobacco. The tobacco industry being a labour intensive activity provides
employment to nearly 38 million people, who are engaged in the various processes of
tobacco cultivation, curing, redrying, packaging, distribution, manufacturing, export
and retailing activities. The three regions together accounted for nearly 62 percent of
tobacco products exports are being made.
Out of the total quantity of unmanufactured tobacco exports of 228,025 tonnes
during the year 2012-13, about 76,100 tonnes (33.4%) was exported to Western
Europe followed by 47,350 tonnes (20.8%) to South and South East Asia, and 30,710
tonnes (13.5%) to East Europe. The three regions together accounted for about 68 per
cent. The top export destination for Indian unmanufactured tobacco during the year
2012-13 volume-wise was Belgium. This was followed by Russia, South Korea,
UAE, USA, Indonesia, Egypt, Netherlands, South Africa, and France. Out of the total
unmanufactured tobacco exports from India, FCV tobacco constituted 76 per cent by
volume, and 83 per cent by value. Non FCV tobacco accounted for the balance 24 per
cent by volume and 17 per cent by value. Unmanufactured tobacco exports during the
year 2012-13 have increased by 12.2 per cent in quantity over the previous year.
Out of the Indian tobacco products exports during the year 2012-13 about
21,130 tonnes, Middle East accounted for a major share with 5,530 tonnes (26.2%),
followed by South and South East Asia, and Africa about 4,160 tonnes (19.7%), and
3,415 tonnes (16.0%), respectively. Exports of tobacco products during the year 2012-
13 declined by 43 per cent in quantity terms compared to the performance in the
previous year.
3.2 Tobacco Growing States in India
Tobacco is an agro-based product processed from the fresh leaves of plants of
the genus ‘Nicotine’. It is widely available for sale in the dried and cured form, and is
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often used for smoking. It can also be chewed or inhaled (as with powdered snuff).
Tobacco occupies a prime place in the Indian economy on account of its considerable
contribution to the agriculture, industrial and export sectors.
Even though the cultivation of tobacco is spread all over the country, it is
concentrated in a few states like Andhra Pradesh, Gujarat, Karnataka, Uttar Pradesh,
Bihar, Tamil Nadu, Maharashtra, and West Bengal. Cigarette tobacco is cultivated
mostly in Andhra Pradesh and Karnataka, whereas bidi tobacco is grown in Tamil
Nadu, Andhra Pradesh, and West Bengal. Chewing tobacco is grown in Tamil Nadu,
Gujarat, Bihar, West Bengal, and Uttar Pradesh; and Hookah tobacco is grown in
Uttar Pradesh and West Bengal. Out of the total production of tobacco in the country,
only 19 percent goes into the manufacture of cigarettes, whereas 81 percent is
consumed for chewing, making bidi, snuff, gutkha paste, jarda, hookah paste, etc.
3.3 Tobacco Industry – An Overview
The tobacco Industry in India contributes in a unique manner to several
important facets of the Indian economy, covering revenue, export, employment, and
GDP growth. It mainly involves the manufacture of cigarettes, bidis, cigars and
cheroots, hookahs, snuff and other chewing tobacco products like zarda, gutkha, and
paan masala. The cigarette industry in India and abroad, represents a big revenue
opportunity for the economy. The Bidi industry is one of the foremost cottage
industries in the country. Around 37 per cent of the tobacco produced in India goes
into Bidi making as per an Indian Market Research Bureau (IMRB) report in 1996.
The social significance of the Bidi Industry is that it generates more employment
compared to the cigarette industry.
In India the crop was introduced by a subsidiary of a leading cigarette
conglomerate, namely, the British America Tobacco Company (hereafter BAT),
unlike the operations of BAT in China, where they depended on a landlord,
moneylender combine to spread tobacco cultivation.
The tobacco industry is one of the most profitable industries. Tobacco
companies use their enormous wealth and influence on both locally and globally to
making their deadly products. Even as the advocacy groups and policy locally and
globally makers work to combat tobacco industry’s influence, new and manipulative
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tactics are used by tobacco companies and their allies to circumvent tobacco control
efforts. It is important for tobacco control advocates to know which companies are
present in their country, how and where they operate, the type and quantity of
products sold, and marketing tactics used to sell tobacco products. With the
information available within the country on all aspects of the tobacco industry,
advocates are better equipped to fight for effective tobacco control policies.
In India, tobacco industry is divided into three distinct and powerful sectors: i)
bidis (smoking products hand-rolled in tendu leaves), ii) smokeless tobacco (mainly
chewing tobacco), and iii) cigarettes. Bidis are the most popular tobacco products
consumed in India accounting for 48 per cent of the market1. Some aspects of the
tobacco industry, whether it is tobacco farming, manufacturing, or distribution, are
present in every Indian state, making tobacco control a truly national effort. Study of
the tobacco industry in India, covers a section on each of the tobacco sectors as well
as examples of tobacco promotion, sponsorship and corporate social responsibility
efforts designed to increase consumption and industry profiles.
The tobacco industry in India is complex and powerful. Knowing where and
how the industry operates is essential to creating and advocating for strong tobacco
control policies. Unless strong tobacco control regulations are enforced in India, the
tobacco industry will continue to expand and profit from the addicting consumers of
its deadly products.
3.4 Tobacco Cultivation in India and in Andhra Pradesh
Tobacco is the major export crop among commercial crops in Andhra Pradesh.
It is mainly grown during the Rabi season. Tobacco cultivation is a commercial crop
exported mainly from seven states of the country. Particulars of tobacco cultivation in
terms of area, production and yield of tobacco during the year 2010-11 along with
area covered under irrigation as per cent of cultivated area for the seven major states
well known for tobacco cultivation are given in Table 3.1.
1 Sunley, E. M. (2008), India: The Tax treatment of Bidis. New Delhi; Regional Office of International
Union Against Tuberculosis and Lung Disease. Available from: http://www.tobaccofreecenter.org
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Table 3.1Area, Production and Yield of Tobacco during the year 2010-11 in major
Producing States along with coverage under Irrigation(Area in 000 hectares, Production in 000 tonnes, & Yield in Kgs/hectare.)
State Area Percent toAll India
Production Percent to
All India
Yield Area under irrigation
(%) 2009-101 2 3 4 5 6 7
Andhra Pradesh 157.00 31.85 281.00 33.80 1790 23.2
Gujarat 148.00 30.02 281.00 33.80 1899 86.4
Karnataka 125.00 25.36 134.00 16.12 1072 19.7
Uttar Pradesh 26.00 5.27 79.80 9.60 3069 100.0
Bihar 10.99 2.23 20.90 2.51 1902 93.0
Tamil Nadu 5.37 1.09 8.12 0.98 1512 100.0
Maharashtra 2.00 0.41 2.00 0.24 1000 16.7
Others 18.61 3.78 25.74 3.10 1383 -
All India 492.97 100.00 831.41 100.00 1687 44.6
Source: Government of India, Department of Agriculture and Cooperation, Directorate of Economics, & Statistics, Agricultural Statistics at a Glance 2012, New Delhi.
In relation to the all India position of area covered under tobacco of 493
thousand hectares, Andhra Pradesh tops the list of seven states, with an area of 157
thousand hectares (31.9%), production of 281 thousand tonnes (34%), and yield per
hectare of 1790 kgs. Irrigation coverage of cultivated area under tobacco is 23.2 per
cent. Gujarat stands a close second in area and production, and with higher yield of
1899 kgs, and higher irrigated area percentage of 86.4. Karnataka stands third in area
and production, but with lower yield and lower irrigation even when compared to
Andhra Pradesh. Bihar, Tamil Nadu and Maharashtra are the other states prominent
for tobacco cultivation. Irrigated area is 100 per cent of cultivated area in Tamil Nadu,
and 93 per cent in Bihar. Andhra Pradesh and Gujarat together accounted for 62 per
cent of area and 68 per cent of production of tobacco during the year 2010-11. In
yield Uttar Pradesh stands first with 3069 kgs/hectare, compared to the all India
average of 1687 kgs. A few other states are higher than Andhra Pradesh in yield. Area
under tobacco cultivation is the highest in Andhra Pradesh, closely followed by
Gujarat. In area of irrigated as per cent of area cultivated, Andhra Pradesh accounts
for 23.2 per cent compared to Gujarat of 86.4 per cent, Uttar Pradesh and Tamil Nadu
of 100 per cent, and Bihar of 93 per cent. In yield per hectare, Andhra Pradesh stands
fourth, and above the all India average.
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Table 3.2Area, Productivity and Production of Tobacco in Andhra Pradesh
(2006-07 to 2010-11)
Year Variety Area (in lakh hectares)
Productivity (in kgs per hectare)
Production (in lakh tonnes)
1 2 3 4 5
Average of the
preceding 5 years
(2006-11)
Virginia 1.14 1422 1.66
Natu 0.36 2279 0.80
Total 1.50 1601 2.46
2006-07 Virginia 0.99 1225 1.22
Natu 0.28 2155 0.60
Total 1.27 1429 1.82
2007-08 Virginia 0.92 1308 1.15
Natu 0.28 2490 0.60
Total 1.20 1458 1.75
2008-09 Virginia 1.30 1613 2.11
Natu 0.41 2541 1.03
Total 1.71 1834 3.14
2009-10 Virginia 1.51 1691 2.55
Natu 0.48 2185 1.05
Total 1.99 1810 3.60
2010-11 Virginia 1.22 1521 1.86
Natu 0.35 2710 0.95
Total 1.57 1787 2.81
Source: Season and Crop Report-Andhra Pradesh ( 2010-11), Directorate of Economics and Statistics, Government of Andhra Pradesh, Hyderabad.
In Andhra Pradesh, two varieties of tobacco are cultivated – Virginia and
Natu. Table 3.2 presents the area, productivity and production of tobacco in Andhra
Pradesh for Virginia and Natu varieties of tobacco, and total for tobacco for the recent
five years (2006-11), along with average of these five years. In view of the frequent
fluctuations in area under cultivation at district and state level, average for the five
years period is worked out to arrive at the norm for a certain period. Production of
tobacco during the year 2010-11 is 2.81 lakh tonnes for Andhra Pradesh – Virginia
1.86 lakh tonnes (66.2%) and Natu 0.95 lakh tonnes (33.8%). The five years average
reveals that production is 2.46 lakh tonnes, consisting of 1.66 lakh tonnes of Virginia
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(67.5%), and 0.80 lakh tonnes of Natu varieties (32.5%). During the year 2010-11, the
area and production has declined over the previous year. Out of five years, the decline
is recorded in two years in respect of area and production.
Table 3.3Area under Tobacco Cultivation in lead districts of Andhra Pradesh
Virginia and Desi Varieties (2010-11 and average of 2006-11) (area in hectares)
Sl.No
District Total Virginia Desi2010-11 Average
of 5 years (2006-11)
2010-11 Average of 5 years (2006-11)
2010-11 Average of 5 years (2006-11)
1 2 3 4 5 6 7 8
1 Prakasam 81271 70819 72700 64464 8571 6355
2 West Godavari 28168 24325 24315 19267 3853 5058
3 Kurnool 12141 11718 - 188 12141 11530
4 SPS Nellore 10863 11550 10863 11548 - 2
5 East Godavari 4804 7824 3825 6094 979 1730
6 Krishna 5160 5925 2723 2585 2437 2340
7 Khammam 4488 5188 1880 2388 2608 2800
8 Guntur 4116 4724 2757 4373 1359 351
9 Other districts 6364 8246 3067 3274 3297 2812
10 Andhra Pradesh 157375 150319 122130 114181 35245 36138
11 Sub-Total of 8
districts
151011 142073 119063 110907 31948 33326
12 % of 8 districts to the state total
96.0 94.5 97.5 97.1 90.6 92.2
Note: Lead districts are arranged in the descending order of total – average of five years (2006-11).Source: Season and Crop Report – Andhra Pradesh 2010-11, Directorate of Economics and Statistics,
Government of Andhra Pradesh, Hyderabad.
Table 3.3 explains the area under tobacco cultivation in lead districts of
Andhra Pradesh - Total and Virginia and Desi varieties, during the year 2010-11 and
average for the five-year period (2006-11). Eight districts are ranked as the prominent
lead districts. In the descending order of area under cultivation (average of five years),
the districts mentioned in Table 3.3, are Prakasam, West Godavari, Kurnool, SPS
Nellore, East Godavari, Krishna, Khammam, and Guntur. Prakasam district stands
first with 70,819 hectares as an average for five years (nearly 50% of the state
average) with Virginia tobacco (64,464 hectares, 91% of total) as the dominant crop,
and Desi variety occupying a small area (6,355 hectares – 9% of total). Districts
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prominent for Virginia variety are Prakasam, West Godavari, SPS Nellore, East
Godavari, Krishna and Guntur. Kurnool is known for Desi variety. Prakasam,
Krishna, Khammam, and West Godavari are known for both the varieties. Eight
districts together account for nearly 95 per cent of the average area for the state for
total tobacco 97 per cent for Virginia tobacco, and 92 per cent for Desi tobacco. As a
whole, Virginia variety accounts for 76% of average area under cultivation of
tobacco, and Desi variety accounts for 24 per cent.
Table 3.4Area Cultivated and Area Irrigated under Tobacco in Andhra Pradesh
2006-11, and average of five years
Year Area cultivated(000 hectares)
Area irrigated(hectares)
% of total area
irrigated to total area cultivated
Virginia Natu Total Virginia Natu Total
1 2 3 4 5 6 7 8
2006-07 99 28 127 19283 13450 32733 25.8
2007-08 92 28 120 20328 13413 34206 28.5
2008-09 130 41 171 29793 16917 46710 27.3
2009-10 151 48 199 30504 15690 46194 23.2
2010-11 122 35 157 28736 12654 41390 26.4
Average of 5 years (2006-11)
114 36 150 25729 14425 40247 26.8
Source: Season and Crop Report – Andhra Pradesh 2010-11, Directorate of Economics and Statistics, Government of Andhra Pradesh, Hyderabad.
Table 3.4, presents the area cultivated and area irrigated under tobacco in
Andhra Pradesh in the recent five years (2006-11) for Virginia and Natu varieties,
along with the total and average for the five years period. The five years average
reveals that out of the total area under tobacco cultivation in the state of 150,000
hectares, Virginia variety accounts for 114,000 hectares (76%) and Natu variety
36,000 hectares (24%). Average area irrigated works out to 25,729 hectares for
Virginia (22% of cultivated area for this variety), and 14,425 hectares for Natu (40%
of cultivated area for this variety). The aggregate picture of the average reveals that
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only 26.8 per cent of the cultivated area under tobacco is benefited by irrigation. In
individual years, the percentage varies from 23.2 to 28.5.
Table 3.5Area, Production and Yield of Tobacco in Guntur District during
2006-11 and average of five years
Year Season Area(in hectares)
Production(in tonnes)
Yield(Kgs /hectare)
1 2 3 4 5
2006-07 Rabi 2541 5377 2120
2007-08 Rabi 2495 5095 2500
2008-09 Kharif 6246 15890 2540
2009-10 Rabi 9223 21059 2280
2010-11 Whole Year 4116 10729 2610
Average of 5 years (2006-11)
4724 10610 3000
Source: Season and Crop report- Andhra Pradesh 2010-11, Directorate of Economics and Statistics, Government of Andhra Pradesh, Hyderabad.
Table 3.5 presents the area, production, and yield of tobacco in Guntur district
for the five years period (2006-11), and the five years average. The average reveals
that the area under tobacco cultivation in Guntur district is 4,724 hectares, with
production as 10,610 tonnes, and yield as 3000kgs/hectare. Out of the five-year
average of 4,724 hectares cultivated under tobacco, 4,373 hectares (92.6%) is for
Virginia, and 351 hectares (7.4%) for Desi varieties.
3.5 Export of Unmanufactured Tobacco and Tobacco Products
The latest position of exports of unmanufactured tobacco and tobacco products
during the year 2012-13 has been presented in the early part of this chapter. The
position of the earlier four years, 2008-09 to 2011-12 is presented in Tables 3.6 to
3.11. The data presented in Table 3.6 are in terms of quantity, and value in Rs.
1018.02 billion and in US$ million for exports of unmanufactured tobacco and
tobacco products, and total. Table 3.7, presents details of exports of flue cured
Virginia (FCV) tobacco exports on the same lines as Table 3.6. Percentage change
over the previous year is also presented. Table 3.8, presents the picture of tobacco
products exports in quantity, and value in Rs. crore, along with percentage change
annually. The other important aspect of the analysis is the destination of exports in
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terms of individual countries and geographic regions in different continents. Table 3.9
presents the picture of major markets country-wise for unmanufactured tobacco and
for 2010-12. Table 3.10 presents region-wise exports for unmanufactured tobacco;
Table 3.11, presents the major markets country-wise for FCV tobacco. These are for
two years 2010-2012. The global financial and economic crisis of 2008-09 with its
major impact on developed countries has had its impact on exports of Indian tobacco
in the recent years. The crisis in Europe continues to adversely affect the export
position for various components of tobacco exports.
During the year 2011-12, total quantity of tobacco exports was 240.40
thousand tonnes, of value in Rs.41.00 billion, and in US$ 855 million (Table 3.6).
Unmanufactured tobacco exports in relation to total tobacco exports were 84.6 per
cent in terms of quantity, and 75.4 per cent in terms of value. Tobacco products
exports constitute the balance 15.4 per cent in terms of quantity, and 14.6 per cent in
terms of value. Total tobacco exports during the years 2008-09 and 2009-10, recorded
increase over the previous years. In the recent two years, 2010-12 there has been a
decline, in all the categories in 2011-12, and total and unmanufactured exports in
2010-11. The position during the year 2008-09 as follows: total tobacco exports 225
thousand tonnes, Rs.34 billion, and US$738 million. Unmanufactured exports
accounted for 87.7 per cent in terms of quantity and 80.1 per cent in terms of value.
Unmanufactured exports consist of FCV tobacco exports and non-FCV tobacco
exports. FCV tobacco exports during the year 2011-12 was 149.33 thousand tonnes in
terms of quantity and Rs.25 billion and US$518 million in terms of value (Table 3.7).
In relation to total unmanufactured tobacco exports, FCV tobacco exports accounted
for 73.5 per cent in terms of quantity, and 80.4 per cent in terms of value, and non-
FCV tobacco exports for 26.5 per cent in terms of quantity, and 19.6 per cent in terms
of value. In relation to total tobacco exports as given in Table 3.6, the picture of FCV
tobacco exports in 2011-12 as follows: 62.1% in terms of quantity and 60.6% in terms
of value, non-FCV tobacco exports accounted for 22.5% in terms of quantity, and
14.8% in terms of value; and tobacco products exports accounted for 15.4% in terms
of quantity, and 14.6% in terms of value.
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Table 3.6Exports of Tobacco and Tobacco Products (2008-12)
(Quantity in ‘000 tonnes, Value 1 in Rs. billion, & Value 2 in US $ million)
Year Unmanufactured Tobacco Tobacco Products TotalQuantit
y
Value 1 Value 2 Quantit
y
Value 1 Value 2 Quantity Value 1 Value 2
1 2 3 4 5 6 7 8 9 10
2008-09
% change (±)
197.13
(n.a)
27.13
(n.a)
591.00
(n.a)
27.74
(n.a)
6.75
(n.a)
147.06
(n.a)
224.87
(10.0)
33.88
(68.0)
738.06
(47.0)
2009-10
% change (±)
229.63
(16.5)
36.55
(34.7)
770.88
(30.4)
29.93
(7.9)
7.47
(10.7)
157.49
(7.1)
259.57
(15.4)
44.02
(29.9)
928.37
(25.8)
2010-11
%change (±)
212.57
(-7.4)
31.92
(-12.7)
700.55
(-9.1)
39.73
(32.7)
10.18
(36.3)
223.40
(41.9)
252.30
(-2.8)
42.10
(-4.4)
923.95
(-0.5)
2011-12
% change (±)
203.29
(-4.4)
30.90
(-3.2)
644.33
(-8.0)
37.10
(-6.6)
10.10
(-0.8)
210.61
(5.7)
240.40
(-4.7)
41.00
(-2.6)
854.94
(-7.5)
Note: n.a: not availableSource: Tobacco Board, Guntur.
Table 3.7FCV Tobacco Exports (2008-12)
Year Quantity
(000 tonnes)
Value
(Rs. billion)
Value
(US$ million)
1 2 3 4
2008-09
%change (±)
150.17
(n.a)
22.30
(n.a)
485.79
(n.a)
2009-10
%change (±)
174.27
(16.1)
29.88
(34.0)
630.46
(29.8)
2010-11 %change (±)
154.96
(-11.1)
25.55
(-14.5)
560.74
(-11.1)
2011-12
%change (±)
149.33
(-3.6)
24.85
(-2.8)
518.05
(-7.6) Note: n.a: not available. Source: ibid.
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Table 3.8Tobacco Products Exports – Product-wise (2010-12)
Production 2011-12 2010-11
Qty(tonnes)
% change
Value(Rs. cr.)
%change
Qty(tonnes)
% change
Value(Rs. cr.)
% change
1 2 3 4 5 6 7 8 9
Cigarettes 9444 2.0 335.11 7.8 9259 15.4 310.90 12.3
Cut tobacco 5766 4.2 92.09 -2.3 5534 18.6 94.29 18.9
Chewing tobacco
11583 -18.3 482.95 -6.9 14172 62.4 518.81 64.3
Hookah tobacco paste
9767 -2.0 67.97 15.3 9967 26.1 58.93 22.8
Bidis 452 -32.7 27.12 -16.9 672 26.3 32.64 26.6
Snuff 73 -39.7 2.52 2.9 121 42.4 2.45 111.2
Cigars 16 - 2.33 - - - - -
Total 37101 -6.6 1010.09 -0.8 39725 32.7 1018.02 36.3
Source: ibid.
Tobacco products exports product-wise are given in Table 3.8. During the year
2011-12, the position in terms of quantity is 37,101 tonnes, and in terms of value
Rs.10.1 billion. The products covered are cigarettes (9,444 tonnes), cut tobacco (5,766
tonnes), chewing tobacco (11,583 tonnes), hookah tobacco paste (9,767 tonnes), bidis
(452 tonnes), snuff (73 tonnes), and cigars (16 tonnes). Chewing tobacco occupies the
first position in terms of quantity and value. (31.2% in terms of quantity, and 47.8%
in terms of value), followed by hookah tobacco paste (26.3% in terms of quantity and
6.7% in term of value), cigarettes (25.5% in terms of quantity, and 33.2% in terms of
value), and cut tobacco (15.5% in terms of quantity, and 9.1 in terms of value). Bidis
occupy a small proportion (1.2% in terms of quantity and 2.7% in terms of value).
The proportions of snuff and cigars are much less. Products with higher value added
are chewing tobacco and cigarettes. During the year 2010-11, there has been increase
in relation to the previous year in all categories. However, in 2011-12, there has been
a decline in a number of them, and the overall position also showed decline.
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Table 3.9Exports of Unmanufactured Tobacco (2010-12)
Country 2011-12 2010-11
Qty(tonnes)
% change
Value(Rs. cr.)
% change
Qty(tonnes)
% change
Value(Rs. cr.)
% change
1 2 3 4 5 6 7 8 9
Belgium 39050 +23.8 659.39 +19.0 31539 -20.0 554.33 -21.9
Egypt 11556 +20.1 136.22 +25.4 9620 -10.8 108.67 -21.5
Russia 11154 -20.3 184.26 -3.8 13993 -15.1 191.45 -25.1
USA 10612 +102.5 92.59 +83.8 5241 -1.5 50.37 -20.7
Netherlands 9962 -5.9 194.76 -2.9 10588 -13.1 200.61 -18.2
Indonesia 9048 +130.1 138.93 +114.7 3933 +41.4 64.7 +18.8
Total (including others)
203294 -4.4 3090.21 -3.2 212573 -7.4 3192.39 -12.7
Source: ibid.
Destination of exports is analysed in Tables - 3.9; Table 3.10 and Table 3.11.
Table 3.9 presents unmanufactured tobacco exports country wise during the years
2010-11 and 2011-12. Table 3.10, presents the picture region wise in different
continents. Table 3.11 presents the major markets for FCV tobacco exports for 2010-
12 in quantity and value in Rs. crore. Belgium and Russia continue to be the leading
destinations for Indian unmanufactured tobacco exports. Egypt, USA, Netherlands,
Indonesia, Germany, South Africa, South Korea and Nepal are other important
markets during 2011-12 (Table 3.9). Out of the top ten destinations, exports to
Indonesia, USA, Egypt, and Belgium have improved whereas exports to South Korea,
South Africa, Germany, Russia, Netherlands and Nepal have declined on a year-to-
year basis.
Table 3.10 reveals that region wise exports during the year 2011-12, West
Europe, South and South East Asia, East Europe, and Africa occupy the prominent
position, with shares as 37.1 per cent, 19.3 per cent, 13.7 per cent and 13.5 per cent in
terms of quantity, and 41.5 per cent, 20.2 per cent, 14.5 per cent, and 12.5 per cent in
terms of value, respectively. The regions which have recorded improvement over the
previous year are: West Europe, East Europe, Middle East, and North and South
America. The other regions have shown decline. Major importing countries as
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revealed in region-wise analysis are as follows: Western Europe - Belgium,
Netherlands, Germany, UK and France; East Europe – Russia, Bulgaria, Poland,
Ukraine and Belarus; South and South East Asia – Indonesia, South Korea, Nepal,
Philippines, and Vietnam; Africa – Egypt, Middle East – UAE, Saudi Arabia, Yemen
and Turkey; North and South America; USA, Brazil; Australia. During 2011-12, the
major markets for FCV tobacco exports with shares in quantity and value in relation
to total FCV tobacco exports, respectively, are as follows: Belgium (24.8%),
(25.6%)., Russia (6.5%), (6.6%), Germany (4.7%), (5.1%), Nepal (4.2%), (4.1%), UK
(4.0%), (5.6%), Netherlands (3.9%), (5.2%), South Korea (3.7%), (2.8%), and
Indonesia (3.6%), (3.3%). Countries which have shown improvement during 2011-12
over the previous years are Belgium, Russia, Nepal, UK, Netherlands, Indonesia,
Egypt and UAE. A number of other countries have recorded decline.
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Table 3.10Region wise Exports of Unmanufactured Tobacco during the years 2010-12
Region 2011-12 2010-11 % change 2011-12/ 2010-11
Qty(tonnes)
Share (% )
Value(Rs. cr.)
Share (% )
Qty(tonnes)
Share ( % )
Value(Rs. cr.)
Share (%) Quantity Value
1 2 3 4 5 6 7 8 9 10 11
West Europe 75,332 37.1 1282.11 41.5 74,651 35.1 1222.93 38.3 +0.9 +4.8
East Europe 27,916 13.7 448.36 14.5 28,125 13.2 427.45 13.4 -0.7 +4.9
Middle East 13,531 6.7 133.66 4.3 13,514 6.4 131.24 4.1 +0.1 +1.8
South & South
East Asia
39,247 19.3 622.72 20.2 43,716 20.6 673.9 21.1 -10.2 -7.6
Africa 27,521 13.5 386.53 12.5 36,338 17.1 519.36 16.3 -24.3 -25.6
North & South
America
17,660 8.7 174.57 5.6 13,456 6.3 167.52 5.2 +31.2 +4.2
Australasia 2,087 1.0 42.26 1.4 2,773 1.3 49.99 1.6 -24.7 -15.5
Total 203,294 100 3090.21 100 212,573 100 3192.39 100 -4.4 -3.2
Source: ibid.
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Table 3.11Major Markets for Export of FCV Tobacco during the years 2010-12
Country2011-12 2010-11
Qty(tonnes)
% change Value(Rs. cr.)
% change Qty(tonnes)
% change Value(Rs. cr.)
% change
1 2 3 4 5 6 7 8 9
Belgium 37031 23.6 635.70 19.3 29951 -11.5 532.91 -14.9
Russia 9646 6.0 165.07 16.7 9098 -30.4 141.42 -35.2
Germany 7003 -37.3 127.35 -37.2 11177 +36.9 202.65 +28.0
Nepal 6327 0.9 102.06 2.3 6270 -6.1 99.79 +12.3
UK 5986 41.4 138.91 50.9 4231 -9.5 92.04 Nil
Netherlands 5885 6.0 128.60 6.7 5554 -29.5 120.55 -32.5
Total (including others)
149325 -3.6 2484.55 -2.8 154957 -11.1 2555.29 -14.5
Source: ibid.
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Figure 3.1Map of Guntur District
Source: www.mapsofindia.com
3.6 Profile of Guntur District (Andhra Pradesh)
Guntur is an agriculturally and industrially well developed district in South
Coastal Andhra Pradesh. It is bounded on the north by Krishna and Nalgonda districts, on
the west by Prakasam and Mahabubnagar districts, on the south by Prakasam district, on
the east by Krishna district and Bay of Bengal. Important rivers and rivulets in the district
are Krishna, Naguleru, Chandravanka, and Gundlakamma. River Krishna travels about
250 km through the district along the northern boundary of the district. The two major
irrigation projects in the district are: (i) old Krishna Ayacut , now renamed as, Prakasam
barrage with an ayacut of 2,02,118 hectares (ha), and (ii) Nagarjuna Sagar Project with
an ayacut of 2,72,182 ha. Both the projects are constructed on river Krishna. A medium
irrigation channel, by name, Guntur Branch Canal (GBC) having an ayacut of 10,931 ha;
and the minor irrigation sources like tanks, filter points, tube wells, etc. are providing
irrigation facilities for 4,157 ha for agriculture in the district. Total registered ayacut
under irrigation projects in the district works out to 4,89,388 ha. Out of this ayacut, gross
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area irrigated is 3,09,992 ha, and net area irrigated is 2,74,761 ha in 2009–10. Out of 974
km of coast line of the State, a few mandals near Bapatla and Repalle have the advantage
of the coast line. Coast line in the district is of 42 km comprising parts of Repalle,
Nizampatnam, Nagaram, and Bapatla mandals. The nearby minor sea ports are Vodarevu
near Chirala town falling in Prakasam district, and Nizampatnam in Guntur district, near
Repalle town.
Nagarjuna Sagar dam built on river Krishna to the north west of the district links
Nalgonda and Guntur districts, and Krishna district in the north east. The left canal from
the dam site (Lal Bahadur canal) moves to Nalgonda district, and the right canal (Jawahar
canal) moves to Guntur district. At Vijayawada, across river Krishna, there are two road
bridges, and two rail bridges. Krishna barrage–cum–road bridge, and two rail bridges are
quite old, and another road bridge, Kanakadurga Varadhi is a recent one. New Prakasam
barrage was constructed in 1957, replacing the old one constructed in 1854. The 4,014
feet long Prakasam Barrage, road bridge–cum–regulator, across river Krishna linking
Krishna and Guntur districts, benefits an ayacut of about 5 lakh acres in the krishna delta
covering the two districts. The National Highway passing through the district is NH - 5
connecting Chennai and Kolkata.
3.6.1 Demographic Features
The district has three revenue divisions with headquarters at Guntur, Tenali, and
Narasaraopet. There are 57 mandals in the district, formed in May 1985 in place of the
erstwhile taluks and firkas. The main objective of forming mandals is to take
administration closer to the people and to create more manageable units of
administration. The district with a geographical area of 11,391 sq. km, has a population
of 48.89 lakhs in 2011, compared to 44.65 lakhs in 2001. Decadal growth rate of
population during 2001–11 is 9.5% for the district which is much less, compared to the
corresponding figures of 11.1% for Andhra Pradesh, and 17.6% for India. The
Demographic Features of the district in relation to Andhra Pradesh and India based on
2011 Census48.89. Literacy rate for the district is 68.0% in compared to the State 67.7%
and the Country 74.0% on 2011 and 2001 Census data.
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Urbanisation of the district in 2001 was 28.8%; and it increased to 33.9% in 2011;
slightly higher compared to the State and the Country. Growth rate of urban population in
the district during 2001–11 was 20.9%, compared to 20.8% for the State, and 31.8% for
the Country. Density of population increased from 392 persons per sq. km in 2001 to 429
in 2011, which is much higher compared to the State and the Country. Literacy rate for
the district in 2001 was 62.5% which increased to 68.0% in 2011. Among males and
females, literacy rate has also increased during 2011 compared to 2001. These are all
about the same as the State picture, but lower compared to the all India position. Female
literacy rate in 2011 is 60.6% for the district, compared to 59.7% for the State and 65.5%
for the Country. Male-female literacy gap for the district is 14.8% in 2011 compared to
17.5% in 2001. It is lower compared to the State and all India, which is a healthy sign. In
rural areas, the gap is higher at 16.5% than in urban areas at 11.5% in 2011. These are
much less compared to the State and all India position. The gap in 2011 has declined
compared to 2001 in all categories for the district following the national pattern.
The proportion of child population in the age group 0–6 years to total population
has come down to 9.5% in 2011 from 12.1% in 2001. Decline is noticed in the proportion
of male children as well as female children. This is in line with the trend at the National
and State level. This trend certainly causes concern. Work participation rate and
occupational pattern of workers of 2001. Along with the corresponding picture for the
State and the Country. The proportion of workers in relation to total workers is high in
the district for agricultural labourers (49.0% for the district, 39.6% for the State, and
26.5% for the Country), and low for cultivators and household workers (17.8% and 2.4%,
respectively for the district) compared to 22.5% and 4.7%, respectively for the State, and
31.7% and 4.2%, respectively for the Country. The district thus has a greater proportion
of agricultural labour and smaller proportion of cultivators and household workers. Other
workers’ proportion for the district is also lower compared to the State and the Country.
The district headquarters, Guntur is also an Urban Agglomeration (UA). Guntur
city has a population of 6.51 lakhs in 2011, compared to 5.15 lakhs in 2001 (decadal
growth rate of 26.6%). Population of the UA increased by 31.0% during this period. The
other major towns in the district with 2011 population are Tenali (1.65 lakh),
Narasaraopet (1.16 lakh), Mangalagiri (1.07 lakh), Chilakaluripet (1.02 lakh). Urban
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population of the district increased by 20.9% considering the 2001 population of all
towns as classified in 2011. Many of the tobacco processing industrial units and cold
storage plants are located in Guntur rural and Chilakaluripet mandals.
3.6.2 Agriculture
Land utilisation pattern of Guntur in the district accounted for 6.11 lakh hectares
(ha) (53.7% of the geographical area) in 2009–10. Gross cropped area is 7.96 lakh ha.
Area sown more than once accounted for 1.85 lakh ha. (30.2% of net area sown). Gross
area irrigated as 123.6% of grass area sown works out to 57.4%. Area irrigated more than
once as per cent of area sown more than once is 47.3%. Cropping intensity is 130.2%
(gross area sown/net area sown). Irrigation intensity is 124% (gross area irrigated/net area
irrigated). Major sources of irrigation, and percentage of gross area irrigated are canals
(68.8%), tube wells (23.3%), lift irrigation (4.4%), dug wells (1.9%), tanks (1.1%), and
other sources (0.5%).
Cropping pattern in the district in 2009-10 reveals that food crops account for
73.5% of gross area sown. Among commercial crops, cotton is the major crop (19.0% of
gross area sown). Tobacco accounts for 9,223 ha in 2009-10. It was 2,495 ha in 2007-08,
and 6,246 ha in 2008-09. Crop production in the district has been fluctuating in view of
the policy decision that tobacco farmers should opt for alternative crops over a period,
and phase out cultivation of tobacco in the district. The district is also known for spices,
which include chillies, turmeric, and a number of other crops. Spices Board at Kochi
(Kerala) has set up a local development office at Guntur, and developed a Spices Park in
Edlapadu mandal near Chilakaluripet by acquiring 125 acres of land for the Park. Among
the food crops, rice is the dominant crop (38.1% of gross area sown), followed by pulses
(13.9% of gross area sown), and maize (8.7% of gross area sown). The district is also
known for horticulture covering fruits and vegetables.
3.6.3 Minerals
The principal minerals available in the district are: limestone, lime kankar, napa
slabs, copper, and lead. Limestone is being utilised for cement factories in Macherla and
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Tadepalli. Copper mines are at Agnigundala of Ipur mandal. There are five cement plants
functioning in the district, and six more are under implementation.
3.6.4 Industrial Development
There are 10 industrial estates and industrial development areas, and three
autonagars in the district. All these are now known as industrial parks. Total area
developed for these locations works out to 747 acres. Autonagar at Guntur developed in
four phases is the largest in the district with 243 acres of land; the other autonagars are at
Tenali and Mangalagiri. These are of 55 acres and 64 acres, respectively; larger than the
other individual industrial estates (IEs). Eight IEs and two IDAs at Guntur and Nadikudi
account for 382 acres of land, slightly more than half of the total area acquired for
industries in the district, the other half being of autonagars. There is one mini industrial
estate on one acre land for SC entrepreneurs at Dokiparru, and 48 sheds for shopping
purpose in autonagar, Guntur. IDA at Nadikudi is in the early stages of development.
There are 93 medium and large industries in the district with fixed investment of
Rs.1,914 crore, and employment of 19,195 persons. In addition, 22 units are under active
implementation with fixed investment of Rs.4,100 crore, and employment of over 9,000
persons. Existing industries include: 42 textile mills (spinning, ginning and pressing), 23
food industries, 7 beverages and tobacco, 6 mineral and non-metallic, 3 chemical and
allied, 3 paper and printing, 2 rubber–based units, and 6 others. There are 4 power
generation plants in Nekarikallu, Amaravathi, Muppalla and Prathipadu mandals; 9
solvent extraction plants for oil extraction mainly using rice bran, cotton seed cake,
sunflower, and groundnut cake, and 5 cement plants. Among the 22 units under active
implementation, there are six cement plants, two solvent extraction plants, a number of
spinning mills, and one bio-compost plant.
There are 8,454 micro, small and medium enterprises (MSMEs) registered with
the District Industries Centre, Guntur with fixed investment of Rs.832 crore, and
employment of 90,630 persons. MSME growth of these indicators for the period ending
March 2006 to March 2012 reveals that the growth rate in the district is low in
comparison to the State. Compound annual growth rate (CAGR) of number of
enterprises: district 2.8%, and State 4.5%; fixed investment: district 17.6%, and State
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27.1%; and employment: district 3.9%, and State 7.5%. The district is well developed in
the small enterprise sector. However, its growth rate needs to be substantially improved.
There has been slackening in the growth rate up to 2006; since then growth has been
faster. This is in line with the trends at the State level.
Food and agro industries stand as number one industry group. Other important
groups in terms of fixed investment are: mineral and non–metallic products, metal
products, textile products, machinery and equipment, chemical and allied industries,
paper products and printing, and rubber products. Next to agro-based industries, mineral-
based industries are prominent. Small enterprises include tobacco processing, cotton
ginning and pressing, lime processing, slab polishing, cold storage plants, etc. Autonagars
cover largely automobile components and servicing enterprises. Exports from the district
are: cured virginia tobacco, chillies, turmeric, and other spices. The district is a prominent
export earner through MSMEs and large enterprises.
SECTION-II PROFILE OF SELECTED TOBACCO ENTERPRISES
3.7 Profile of Green Leaf Tobacco Threshers Limited (GLTTL)
Green Leaf Tobacco Threshers Limited (GLTTL), Guntur was started sixty years
ago as a small tobacco handling and marketing firm at Tadikonda village, one of the
tobacco growing areas which is about 16 km. from Guntur, Andhra Pradesh. The Green
Leaf Tobacco Threshers (GLTTL) has been developed in an area of 5 hectares at Guntur.
It possesses a giant processing line occupying 20,000 sq.m. Area with an impressive
threshing capacity of 5,000/6,000 kgs. per hour for export, and 8,000 kgs. per hour for
domestic supply. The company regularly handles prestigious orders from a number of
global tobacco industrial units like Phillip Morris, who have continued to stay with them
over the years. The quality assurance process is acknowledged as quite good for its
precision and accuracy in test findings. The storage and threshing facility at Guntur,
Andhra Pradesh, has a huge 20,000 cases/38,000 bales, capacity, and the second unit
located at Pasumarru has a capacity of 8,000 cases/15,000 bales.
96
Green Leaf Tobacco Threshers Ltd (GLTTL), is one of the prominent companies
in tobacco processing, and is proud of its origin in the Green Leaf Tobacco stronghold.
With a mission to bring the best technologies and the most advanced machinery within
the reach of the Indian tobacco industry, it maintains optimum levels of technical
excellence to add distributive values to the golden cash crop.
The modern threshing facility caters to the full-fledged requirements of the
company as well as the needs of the domestic cigarette manufacturers and other exporters
of tobacco. The unit constitutes 20,000 sq. meters of all weather godowns. Threshing
Plant of Cardwell make imported from USA is equipped with Fish Bourne Make
Automatic press with Two Re-drying Machines, in addition to one Stem Packing
Machine with 5,000/6,000 kgs threshing capacity per hour of export quality, and 8,000
kgs/hr of domestic supply.
GLTTL possesses exacting skills that satisfy individual quality parameters, with its
reliability assured by the diligent operations. A winning track record of technical
innovation, excellence and dependability has gained customer confidence all over the
country. A bounty of technical advances incorporated into the processing systems
sustains high quality standards.
Committed to the Tobacco Industry, the company has mastered the highest
technologies to keep on producing the best quality. Possessing an immense capacity for
safe storage, the company is integrally equipped with adequate number of storage
godowns which are strategically located in 16 key centers amidst the tobacco rich
countryside. Keeping in view the cost involved in transportation, all storage facilities are
positioned carefully in the tobacco growing areas. The enormous capacities and total
storage area constitutes 125,000 sq. mtrs., and comprises a huge stacking capacity of
50,000 cases/ cartons of 200 kgs., net or 100,000 bales of 100 kgs. Perfection of the
product to reach up to the standards of the discerning clientele, calls for facilities that
protect the inputs right from the stage of procuring to the point of delivery. The storage
facilities in Redrying factories at Guntur constitute 8,000 cases/15,000 bales; 18,000
Cases/35,000 bales at Pasumarru, and 20,000 cases/38,000 bales at the Threshing plant in
Guntur. Sharply focused on customer satisfaction at Green Leaf Tobaccos, a dedicated
97
approach is adopted to satisfy the needs of worldwide clientele. The state-of-the-art
operations are engineered to ensure consistent high quality through a vast well net-
worked infrastructure located in Guntur, India's Tobacco heartland.
3.8 Organizational Culture
3.8.1 Vision
The vision of the company is pronounced by the management:
To attain leadership in the tobacco processing technology;
To encourage the use of environment friendly practices in production; and
To make quality tobacco at affordable price.
3.8.2 Mission
"To enhance the wealth generating capacity of the enterprise in the globalizing
environment, delivering superior and sustainable stake holder value"
3.8.3 Values
Excellence in all aspects of the company.
Respect for the individual and personal growth.
Honesty, integrity and ethical business.
People the source of strength.
Continuous, self important, never being satisfied.
3.8.4 Trusteeship
As professional managers, we are conscious that the plant has been given to us in
“Trust” by our stakeholders. We will redeem the trust reposed in us by continuously
adding value to the product at different stages.
3.8.5 Core Values
Core Value of the Green Leaf Tobacco Threshing Ltd. (GLTTL) is to provide
customer focused products of high quality with value added for all the stake holders.
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3.8.6 Customer focus
We will always be customer focused. We will deliver what the customer needs in
terms of value, quality and satisfaction.
3.8.7 Respect for the people
The environment of the organization is based on the respect and value of the
people, and it upholds human dignity. It is the aspiration of the management teams to
value differences in individual capacities so as to create and experiment in pursuit of
opportunities, and achieve leadership through team work.
3.8.8 Ethical Corporate Citizenship
We will pursue exemplary standard of ethical behavior. We will at all times
comply with the laws of the land.
3.9 Business Objectives
1. To be a dominant player in every field in which, we choose to operate.
2. To attain and maintain the leadership position in exports among private sector
companies in India.
3. To become one of the foremost institutions in the world for plant material based
formulation/ products on a commercial scale to make this world a safer place to
live.
4. To reestablish and strengthen, our image as a friend of the farmer, as an
institution contributing significantly to rural prosperity through improving the
economics of the farming community and tribal population.
3.10 Quality Policy
GLTTL, a pioneer in processing premium tobacco is committed to maximize
customers satisfaction and maintain a clear and safe environment. It shall achieve these
by implementing and maintaining the ISO: 9001: 2000 International Standards of its
tobacco units to continually improve the effectiveness of this quality management system
and review its continued suitability.
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3.11 Safety Policy
Employees are important aspects and their safety is a primary responsibility.
1. The management is committed to provide workers with a safe work environment
and also conduct routine/regular workplace inspection.
2. Provide personal protective equipment for all employees.
3. Develop and implement safe work procedures and rules at work place.
4. The management provides safety education and on-going safety training.
5. To enforce safety rules and appropriate discipline.
3.12 Organization Environment
1. Main ProductsThe main products from the Green Leaf Threshing Factory are unmanufactured
tobaccos
Lamina
Stem
AVR/export scrap
The services that are assured with the product
Improved shelf life
Elimination of non-tobacco related material (NTRM)
Pest and mould free
Storage and handling/cool store
2. Processes/Stages 1. Feeding
2. Conditioning
3. Band reeling
4. Dividing
5. Picking
6. Threshing
7. Classification
8. Re-drying
9. Processing, packing
10. Prizing, Marking
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Table 3.12Shift Timings of GLTTL
Sl. No. Shift Timings Rest Period
1. Day shift 7 am 3 pm ½ hour
2. First half night shift 3 pm 11 pm ½ hour
3. Full night shift 11 pm 7 am ½ hour
4. General shift 7 am 12.00 pm ½ hour
12:30 pm 4:00 pm ½ Hour
Source: Records of GLTTL Organisation.
3.13 Work Schedule
The normal work schedule for all the employees and associated members are 8
hours (Excluding 1 hour lunch break) per day, i.e. there are three shifts running from, 7
am to 3 pm first shift, 3 pm to 11 pm, second shift 11 pm to 7 am, third shift, and general
7 am to 4 pm. Monday to Saturday. There may be a change in the shifts for every 15
days. In the first 15 days of the month the employee work in the full night shifts and in
the next 15 days of the month half night shift and in the remaining 15 days of the month
the employee will work in the day shift.
3.14 Organisation Set up
The company is managed by Chief Managing Director is the Chief Executive of
the Company, under him three managing directors are responsible for formation of
objectives, policies and programmes of the company which is approved by chief
managing director. Next to him, the business managers having charge over the functions
of the company, under him department heads of various departments like administration,
finance, quality workshop, electricity, and time office under the heads plant supervisors
for maintaining of production units, and different systems, under him supervisors
supervising the response for work distribution, general clerk/staff members are to help in
division of work under them labour/workers are working general duties.
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Chart 3.1: Organisation Chart of GLTTL
3.15 Man - Power Particulars
The total manpower of the organisation as per manpower position report 31-03-
2012, including all categories: 592 employees, 316 permanent, 198 seasonal and 78
temporary or daily wages.
Out of 592 employees, executive officers 14, non-executive officers 18,
supervisory staff 44, technical staff 38, male workers 162 and female workers 316.
It is clear from above table that out of 592 employees 316 are women workers,
whereas only 162 are male workers. That means a majority of the women workers are
working in GLTTL organisation.
MANAGER
MD
CMD
TIME OFFICE
MD
DEPARTMENTS HEAD
NON TECHNICAL PLANT
ELECTRACITYWORK SHOPQUALITYADMINISTRATION
LABOUR
CLERK
SUPERVISOR
MD
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Table 3.13Manpower Particulars of GLTTL
Sl. No
Particulars Permanent Seasonal Temporary/ Daily wage
Total
1. Executive Officers 14 - - 14
2. Non Executive
Officers
18 - - 18
3. Supervisory Staff 22 16 6 44
Technical Staff 18 12 8 38
4. Female Workers 160 120 36 316
5. Male Workers 84 50 28 162
Total 316 198 78 592
Source: GLTTL Manual Records.
3.16 Industrial Relations
Industrial relations form an integral part of the personnel philosophy, which aims
to create and sustain conducive atmosphere for the employees at all levels towards
achievement of its corporate objectives. At present, the relations between employees and
employer are cordial. The management has recognized INTUC Union.
The company has been continuously giving highest priority to health and safety of
the employees, and has been implementing stringent standards on the environmental
spheres. The company also gave priority to the well being and health of the employees by
carrying out regular medical examinations and maintaining hygienic environment at work
place. The company provides excellence in pollution control equipment and systems. All
the units have the reputation of zero waste deposal zones as all the waste and effluents are
suitably recycled.
3.17 Financial Status of GLTTL during the years 2006-10
Data available on the operations of GLTTL as revealed by the Balance Sheet and
Profit and Loss Statement for the recent years, 2006-07 to 2009-10, are presented in
Table 3.13. Total turnover or income of the company in 2009-10 is Rs.49.31 crore. In
earlier years, the picture was as follow in Rs. Crore: during the year 2006-07 20.75,
2007-08 19.22, and 2008-09 15.10. Tobacco sales and threshing charges received were
quite good in 2009-10. These were much lower in the earlier years. Wide fluctuations are
103
noticed, largely due to global economic and financial crisis. The same is reflected in
profit before taxes and after taxes, and also in earnings per share (EPS). In view of the
uncertainty regarding the level of exports, profitability and basic earnings per share have
also fluctuated. EPS during 2009-10 was Rs.19.54 compared to Rs.5.12 crore during
2008-09, and Rs.3.35 crore during 2007-08.
The share capital of the company is Rs.10.35 crore. Including reserves and
surplus, owned funds were Rs.14.35 crore in 2009-10. The picture has improved steadily.
Total liabilities have increased substantially to Rs.28.66 crore in 2009-10. Borrowings
and deferred tax liability in this year stood at Rs.14.31 crore. These are high compared to
the earlier years, in view of the higher turnover which is nearly three times that of the
previous years. Analysis of the Balance Sheet and Profit and Loss Statements, of recent
years (2006-10) thus shows steady increase in operations, and high level of profits.
Table 3.14Financial Status of GLTTL during the years 2006-10
(Value in Rs. crore)
ParticularsYear end-March
2006-07 2007-08 2008-09 2009-101. Share holders’ funds
(a) Share capital (b) Reserves and Surplus
10.35 10.35 10.35 10.351.10 1.45 1.98 4.00
(c) Sub-total 11.45 11.80 12.33 14.352. Borrowings and Deferred Tax
Liability Total Liabilities (1+2)
6.38 3.41 0.21 14.31
17.83 15.21 12.55 28.66
3. (a) Fixed assets – Gross(b) Net block after depreciation
8.49 8.73 9.55 10.241.67 1.76 2.23 2.64
4. Incomea. Tobacco Sales
b. Threshing Charges received
16.51 11.57 5.82 32.48
4.24 7.65 9.29 16.70
(c) Turnover (a+b) 20.75 19.22 15.10 49.185. (a) profit before Taxes
(b) Profit after taxes
(c) Surplus for next year
0.39 0.55 0.82 3.230.22 0.35 0.53 2.02
0.46 0.80 1.33 3.356. Basic Earnings per share
(Rs.) (Profit after tax/No. of equity shares) n.a. 3.35 5.12 19.54
Note: n.a: not availableSource: Balance Sheet and Profit and Loss Statements of GLTTL for 2006-07 to 2009-10.
104
3.18 Profile of Maddi Lakshmaiah Group of Companies (ML&Co)
Maddi Lakshmaiah Group of Companies was founded by Maddi Lakshmaiah in
1970. He started his family business in 1952, after completing his Engineering degree.
The joint family business dealing with tobacco exports started way back in the year 1943
which is well before Indian Independence.
Maddi Lakshmaiah Group of Companies (ML&Co), a pioneer in Indian un-
manufactured Tobacco Industry, has been exporting tobacco all over the world for the
past three decades. It has consolidated its relationship with the overseas tobacco
merchants and manufacturers.
The Group has been performing exceedingly well from the date of its
incorporation, and has been exporting large volumes of tobacco to Russia,
CIS (Commonwealth of Independent States) Countries, UK, Europe, African countries,
China, Latin American countries, Middle East, Bangladesh, Nepal, etc.
The Group established its branches in Russia and European countries, and has
strong ties with the African and Latin American countries, and especially with the
neighbour giant, China.
3.19 Establishment of the Group
The group was founded by Sri Maddi Lakshmaiah, a Mechanical Engineer of
versatile experience in tobacco industry. After 15 years of his studies in the year 1970 he
established the factory at Chilakaluripet, Guntur District, Andhra Pradesh.
3.19.1 The Group has 5 major concerns, namely
1. Maddi Lakshmaiah &Co. Ltd (ML&CO)
2. Maddi Lakshmaiah Agro Products Ltd (MLAP)
3. K S Subbiah Pillai And Co. (India) Ltd (KSSP)
4. Maddi Lakshmaiah Exports (MLE)
5. Coromandel Agro Products and Oils Ltd (CAPOL)
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Except CAPOL which is engaged in the manufacture of edible oils through a
solvent extraction plant located at Chirala, all the other concerns are engaged in tobacco
industry. ML&Co and MLAP have concentrated on processing activities whereas KSSP
and MLE are leading exporters, and are recognized by Government of India as Export
Houses.
3.19.2 Share Holding Pattern and Management of the Group
Shri Maddi Lakshmaiah and his family members are holding 100% of shares of
all the Group of companies, except CAPOL where the Group is holding 66% of shares.
All the partners of Maddi Lakshmaiah Exports are family members.
The Group is totally managed and controlled by Shri Maddi Lakshmaiah and his family
members.
3.19.3 Maddi Lakshmaiah Group’s Infrastructure
The Group has been successfully improving its business in all of its activities, such
as domestic sales, export sales, tobacco processing and other tobacco development
activities, ware- housing facilities, etc.
The Group has two tobacco processing plants and one solvent Extraction plant in
South India. The Group owns around 1,00,000 sq. mts. of warehousing complexes in
South India. It has developed an excellent infrastructure during the past 30 years.
1. Threshing Plants
The Group has two most modern tobacco threshing plants. One is situated at
Ganapavaram, near Chilakaluripet and another at Martur, Prakasam District, Andhra
Pradesh, having a combined capacity of 105 million kgs. per annum, and also has four
independent redrying plants for processing tobaccos of their own as well as on
commercial basis.
2. Power Generation
The Group has in house power generation of 6.8 MW with the help of imported
generator sets to meet power fluctuations, power cut and power failure, etc.
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3. Tobacco Manual Processing Facility
The Group has grading centers to process tobacco manually engaging nearly
5,000 labour. Each center has a minimum area of 20,000 sq. feet of warehousing and
processing pandals.
4. The Group has port godowns at Kakinada.
5. The Group has a warehousing complex at Sanatnagar, Hyderabad.
3.20 Organizational Culture
3.20.1 Vision
To effective in corporate culture, business technology an activity in the future.
To effective in corporate culture, business technology an activity in the future.
Develop world class tobacco processing company in India and abroad.
Contemplating for 100% tobacco joint venture association with one of the best
cigarette manufacturers.
3.20.2 Mission
A mission statement is an enduring statement of purpose that distinguishes one
business from others similar firms. This statement identifies the scope of firms operations
in product and market terms.
ML&Co, mission is to produce good quality of tobacco and get number one
position in India in producing and exporting tobacco.
3.20.3 Policies
Policies can be considered a guide to action. It is desirable that persons
responsible for implementation of policies use discretion and judgment in appraising and
deciding among alternative courses of action.
The company has well defined policies for exports the quality tobacco.
To conduct its operation with honesty integrity and transparency.
This company shall maintain quality leadership by providing products and
services that completely and consistently meet the agreed demand.
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Requirements of all customs and unsure fitness for use of all products thereby
ensuring total confidence to every customer.
Canteen, cleaning, security maintenance of good industrial relations.
3.20.4 Nature of Activity
o ML&Co produces good quality tobacco
o The production capacity per day is one lakh 20 tonnes.
o The production capacity per year is around 15/16 million tonnes
3.21 Welfare Policy
The welfare policy of this organization is, to provide effective and efficient welfare amenities for the workers.
o In order to improve the overall culture of the organization.
o To provide job security to the workers.
o To make the employees well satisfied to their jobs.
o To provide them job satisfaction.
3.22 Safety Policy of the Organization
Management is committed to safety & health and promoting safety programs,
education & training.
The managers are directed to lead their subordinates in providing safety measures
and motivate the workers to follow them.
The chief executives & M.D may take the personal interest in the management of
safety; health and discuss the matters with other managers and executives and invite
suggestions to make necessary improvements in respect of safety provisions.
3.22.1 Safety program
In ML&Co the management is providing safety programs such as,
The management providing safety education to educate employees and to create
safety consciousness among them.
Safety education may be given by lectures, films shows, slogans etc.
Providing safety equipments.
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3.23 Organization Structure
The company is managed by Managing Director appointed by the Board of
Directors; the Managing Director is the Chief Executive of the Company. He is
responsible for formulating the basic objectives, policies and programmes of the
company with the Board of Directors. Next to him Deputy Manager he is the controller
of administration, under him General Managing Director, responsible for the overall
operation under him five managers, namely, Personnel, Leaf, Finance, Exports,
Production. Personnel Manager is incharge, of personnel department under him, welfare
officer, safety officer, and staff. Leaf Manager is the incharge for production and day
activities; under him circle manager, branch manager, buyers and staff and another duty
of factory co-ordinator, shifting incharge, supervisors and staff workers. Financial
manager in charge of the finance accounting and secretarial functions. He controls all
activities of corporate planning, accounting and all secretarial functions under him
accounting officer and staff. Export Manager is the key manager for exports of the
company under him export officer. Production Manager is the controller of all production
and services of entire machinery and maintenance under him plan manager assistant
engineer and staff.
Chat 3.2: Organisation Chart of ML&Co
Leaf Manager
AccountOfficer
Supervisor
Financial Manager
Manager
Staff
Deputy ManagingDirector
Export Manager
Factory Coordinator
Shifting Incharge
Supervisor
Circle Manager
BranchManager
Buyer
Staff
Personnel Officer
Welfare Officer
Safety Officer
Export Officer
Personnel Manager
managerProductionManager
Plant Engineer
AssistEngineer
Staff Workers
StaffWorker
General Manager
Managing Director
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3.24 Man-Power Particulars
The total manpower of the organisation as per manpower position report 31-03-
2012, including all categories was 650 employees 486 permanent, 64 seasonal and 100
temporary/daily wages.
Out of 650 employees executive officers 16, non-executive officers 20,
supervisory staff 37, technical staff 62, male workers are 205 and female workers are
310.
It is cleared from above table that out of 650 employees 310 are women, workers.
Whereas only 205 are male workers. That means majority of the women workers are
working in ML&Co organisation.
Table 3.15Manpower Particulars of ML&Co
Sl. No.
Type of Workers / Particulars
Permanent Seasonal Temporary/ Daily wage
Total
1. Executive Officers 16 - - 16
2. Non Executive Officers 20 - - 20
3. Supervisory Staff 27 10 - 37
4. Technical Staff 38 14 10 62
5. Female Workers 235 75 310
6. Male Workers 150 40 15 205
Total 486 64 100 650
Source: Ml&Co Manual Records.
3.25 Work Schedule
The normal work schedule for all the employees and associated members are 8
hours (Excluding 1 hour lunch break) per day, i.e. there are three shifts running from, 6
am to 2 pm first shift, 2 pm to 10 pm second shift, 10 pm to 6 am third shift, 8 pm to 4.30
general shift, working Monday to Saturday. There may be a change in the shifts for
every 10 days. In the first 10 days of the month the employee work in the full night shifts
and in the next 10 days of the month half night shift and in the remaining 10 days of the
month the employee will work in the day shift.
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Staffing needs and operational demands may necessitate variations in beginning
and ending times, as well as variations in the total hours that may be scheduled each day
and week.
Since delay in arrival or unnoticed absentees put extra work load on fellow
employees and hamper smooth running of the company, reporting for work regularly and
on time is essential. This must be in the daily discipline of the employee. Failure in
reporting to work on time and tardiness will result in disciplinary action up to and
including termination.
Table 3.16Shift Timings Particulars of ML&Co
Sl. No. Name of the Shift Timing Interval
1. Day shift 6 am 2 pm ½ hour
2. First half night shift 2 pm 10 pm ½ hour
3. Full night shift 10 am 6 pm ½ hour
4. General shift 8 am 12.00 pm ½ hour
12:30 Pm 4:30 Pm ½ Hour
Source: Records of ML&Co Organisation.
3.26 Industrial Relations
In ML&Co organization has adopted better kind of industrial relations are
maintained to achieve organisation objectives. The organisation maintains good welfare
activities which create an effective working environment and thus better productivity.
There is different kind of welfare schemes like medical allowance, insurance, housing
and transportation facilities, recreation club etc. are provided by the company to the
employees to maintain the industrial relation better one. Also proper safety measures
have been adopted in the organization. All matters relating to safety, health and welfare
of employees are properly implemented. A better relationship between the employees,
trade union and the management has been followed which helps to reduce the problems
in the organization and also helps to increase the productivity. It is evident that good
industrial relations are the basis of higher production with minimum cost and higher
profits.
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Better relationship between the employee and employer is very essential for
successful running of any organization. Favorable relationship can avoid many adverse
situations. With a huge manpower, ML&Co has taken every step to maintain a cordial
relation. It has given a thrust on participation of employees through many forums - both
traditional and revolutionary.
3.27 Highlights of Operations of the Company during the years 2006-12
Data available from the Balance Sheet and Profit and Loss Statement of the
ML&Co for the year, 2006-07 to 2011-12, have been utilised for constructing Table 3.5.
Total turnover of the company in 2011-12 is Rs.51.57 crore. It has fluctuated widely over
the years. For the recent three years, the picture was as follows: 2008-09 Rs.71.73 crore,
2009-10 Rs.89.19 crore, and 2010-11 Rs.73.48 crore. During 2006-07, it was Rs36.06
crore, and in 2007-08 Rs 42.85 crore. Fluctuation in turnover is largely attributable to
exports turnover, which is dependent on the market trends globally, which were hit by
recession for a few years from 2008. Exports of the company in Rs. crore in the recent
years are as follows: 2008-09 29.81, 2009-10 34.29, 2010-11 20.21, and 2011-12 5.88.
The company in fact incurred loss of Rs.1.11 crore (net profit after taxes), and surplus for
next year was negative in 2011-12. This is because of low turnover due to low demand
from global markets, high export price, fall in cigarette consumption globally due to ban
on public smoking, strict cigarette pack printing, nicotine and tar contents restrictions,
etc. Increase in the cost of tobacco cultivation, and consequent increase in export prices,
really affected prospects of Indian tobacco exports. Keen competition in quality and price
from Chinese exporters has also been a major factor adversely affecting Indian tobacco
exports. Profit before taxes, and Profit after taxes have declined from 2008-09. The
highest recorded was in 2007-08. Earnings per share (EPS) was Rs.1,167 in 2007-08, and
declined to about half thereafter. Gross fixed assets improved from about Rs.75 crore in
2007-08 to nearly Rs.100 crore in 2011-12, with net block after depreciation reaching
about Rs 66 crore in 2011-12.
The share capital of the company is Rs.1.30 crore. Reserves and Surplus have
improved from Rs.19.42 crore in 2006-07 to Rs.58 crore in 2011-12. Total liabilities have
fluctuated in line with the production and export trends.
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Table 3.17Highlights of Operations of Maddi Lakshmaiah & Co. Ltd, during 2006-12
(Value in Rs. crore)
ParticularsYear end-March
2006-07 2007-08 2008-09 2009-10 2010-11 2011-121. (a) Share holders’ funds(b)Share capital (c) Reserves and Surplus
1.30 1.30 1.30 1.30 1.30 1.3019.42 34.59 42.46 51.24 59.07 57.96
(d) Sub-total 20.72 35.89 43.76 52.54 60.37 59.262. Borrowings and Deferred Tax Liability Total Liabilities (1+2)
56.58 55.47 69.94 47.54 64.33 58.98
77.30 91.36 113.70 100.08 124.70 118.24
3. (a) Fixed assets – Gross (b) Net block after depreciation
73.89 77.26 82.77 83.15 98.18 98.18
55.64 55.41 57.09 53.89 65.52 66.06
4. Income(a) Tobacco Sales(b) Threshing Charges received
(c) Turnover (a+b)
25.80 28.07 58.87 67.82 56.28 51.57
10.26 14.78 12.86 21.37 17.20 -
36.06 42.85 71.73 89.19 73.48 51.57
(a) Exports n.a n.a 29.81 34.29 20.21 5.885. (a) profit before Taxes(b) Profit after taxes(c) Surplus for next year
6.01 26.04 12.06 12.78 11.60 0.534.21 15.17 7.87 8.41 7.86 -1.114.32 15.19 7.96 8.84 7.87 -
6. Basic Earnings per share (Rs.) (Profit after tax/No. of equity shares)
324 1,167 605 647 604 Nil
Note: n.a: not availableSource: Balance Sheet and Profit and Loss Statements of ML&Co. Ltd., for 2006-07 to 2011-12.
3.28 Summing up
The chapter covers two main aspects associated with tobacco: (a) production and
exports of tobacco and tobacco products in India, and Andhra Pradesh during 2006-13,
and (b) profile of two selected tobacco processing enterprises in Guntur district of
Andhra Pradesh. These are GLTTL – Green Leaf Tobacco Threshers Ltd., Guntur
district, and ML&Co – Maddi Lakshmaiah Tobacco & Co. Ltd., Chilakaluripet, Guntur
district. During 2012-13, the estimated production of all types of tobacco in India is 681
million kgs., of curd leaf, with area of cultivation as 0.4 million hectors. The country is
the second largest exporter of Flue Cured Virginia (FCV) tobacco, next only to Brazil.
FCV tobacco, which is the main exportable variety of unmanufactured tobacco produced
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in Andhra Pradesh and Karnataka, accounting for about 264 million kgs., 38.7 per cent of
total production of tobacco in the country. This is cultivated in an area of 0.15 million
hectors. FCV and burley are the main exports varieties of tobacco in the country. Total
quantity of unmanufactured tobacco exports accounted for 228,025 tonnes during the
year 2012-13. The three regions which account for 68 per cent of unmanufactured exports
are Western Europe, South-East Asia, and East Europe. Out of total tobacco products
exports of 21,130 tonnes during the year 2012-13, the major markets are Middle East,
South and South East Asia, and Africa. Andhra Pradesh and Gujarat are the major
tobacco producing states in the country, accounting for production of 281,000 tonnes
each in 2010-11. The major difference between the two states is area under irrigation for
tobacco crop is only 23.2 per cent in Andhra Pradesh, compared to a very high figure of
86.4 per cent for Gujarat.
In Andhra Pradesh, Prakasam and West Godavari districts are prominent for
cultivation of Virginia tobacco, with desi variety being very low in terms of area under
tobacco cultivation. In all, eight districts are ranked as prominent in the state from this
crop. The profile and growth of Guntur district is discussed.
Green Leaf Tobacco Threshers Ltd. (GLTTL) is located in the urban area of
Guntur city, where as Maddi Lakshmaiah Tobacco & Company is located at
Chilakaluripeta – a small town with rural surroundings. Both the tobacco processing
enterprises are quite old and well established with regards to export of unmanufactured
Virginia tobacco in particular. Threshing, re-drying, and processing of unmanufactured
Virginia tobacco is the major activity. GLTTL has 592 total workforce, where ML&Co
has 650 total workforce. Among the total employees in both the factories, 150 female
employees from each factory, a total of 300 sample women employees have been selected
for soliciting response on Quality of Work Life in respect of women employees in both
the factories. In 2009-10, the turnover of GLTTL was Rs.49 crore, compared to Rs.89
crore in ML&Co. Export of ML&Co in 2009-10 were Rs.34 crore. In respect of both
turnover and exports, there have been wide fluctuations from year to year. From 2008-09,
impact of global recession has been felt by both companies. During the recent two years
2010-12, there has been a noticeable decline in exports in both the companies.