performance of coir industries in karnataka – a … · 2018-12-07 · review of literature ......

PERFORMANCE OF COIR INDUSTRIES IN KARNATAKA – A MANAGEMENT APPRAISAL

Thesis submitted to the University of Agricultural Sciences, Dharwad

in partial fulfilment of the requirements for the Degree of

MASTER OF BUSINESS ADMINISTRATION

IN

AGRIBUSINESS

By VISHWANATH D. S.

DEPARTMENT OF AGRIBUSINESS MANAGEMENT COLLEGE OF AGRICULTURE, DHARWAD

UNIVERSITY OF AGRICULTURAL SCIENCES, DHARWAD-580 005

JUNE, 2012

ADVISORY COMMITTEE

DHARWAD (C. MURTHY) JUNE, 2012 CHAIRMAN

Approved by :

Chairman : ____________________________ (C. MURTHY)

Members : 1. __________________________ (BASAVARAJ BANAKAR)

2. __________________________ (G. M. PATIL)

3. __________________________ (C. K. VENUGOPAL)

4. __________________________ (Y. N. HAVALDAR)

CONTENTS

Sl. No. Chapter Particulars

CERTIFICATE

ACKNOWLEDGEMENT

LIST OF TABLES

LIST OF FIGURES

LIST OF PLATES

1. INTRODUCTION

2. REVIEW OF LITERATURE

2.1 Investment pattern and financial feasibility of coir products

2.2 Cost and returns structure in the production of different coir products

2.3 Value addition in different coir products

2.4 Coir products and marketing management in the selected coir industry

2.5 Problems faced by coir industries in manufacturing and marketing operations

3. MATERIAL AND METHODS

3.1 Description of the study area

3.2 Sampling procedure

3.3 Nature and sources of data

3.4 Analytical techniques

3.5 Definition of term and concepts used in the study

4. EXPERIMENTAL RESULTS




4.4 Marketing cost of coir products

4.5 Problems faced by the coir units in manufacturing and marketing operation

5. DISCUSSION

5.1 Investment pattern and financial feasibility in coir products manufacturing


5.1 Value addition in different coir based products

5.4 Marketing management of coir products


6. SUMMARY AND CONCLUSIONS

REFERENCES

LIST OF TABLES

Table No.

Title

4.1 Investment pattern in different coir processing units

4.2 Cash flows in different co-operative coir processing units

4.3 Cash flows in different private coir processing units

4.4 Financial feasibility in different coir processing units

4.5 Financial ratios in respect of co-operative coir processing units

4.6 Financial ratios in respect of Private coir processing units

4.7 Staffing pattern in different coir processing units

4.8 Production cost and returns structure of coir fibre processing units

4.9 Production cost and returns structure of curled coir

4.10 Value addition to coir fibre in different co-operative coir processing units

4.11 Value addition to coir fibre in different private coir units

4.12 Value addition to curled coir in different co-operative coir units

4.13 Value addition to curled coir in different private coir units

4.14 Marketing cost incurred by different coir units

4.15 Marketing cost incurred by intermediaries in different coir processing units

4.16 Problems faced by different coir processing units

LIST OF FIGURES

Figure No.

Title

1. Map of Tumkur district showing the study taluks

2. Map of Hassan district showing the study taluks

LIST OF PLATES

Plate No. Title

1. Manual method of rope making

2. Production process of coir fibre in the study area

3. Finished fibre in the study area

4. Production process of curled coir in the study area

5. Value added coir products

1. INTRODUCTION

Coir is an unique natural fibre produced by coconut (Cocos nucifera) used in diverse applications. It is an important sector as far as economy of the country is concerned. The industry is a traditional one, with tradition and in some ways, outmoded practices and had a chequered history. Most of the coir workers are coming from socially and economically backward classes. The industry in India provides direct employment to more than 6.4 lakh workers, majority of whom are female. It is mainly concentrated in coastal districts of the state. The major constituents in the coir sector are cooperatives, private, public, government undertakings and unorganized manufacturing units.

Coir is the only natural fibre that does not get cultivated solely to extract the coir whereas jute and sisal are grown only to produce the fibres and in turn, the spun and woven products. Fibres like jute, sisal, cotton etc are derived from short cropping plants whereas coir originates from the near perennial coconut palm.

The coconut palm has been the subject of great adulation and admiration across the world and down the ages. This is perhaps the only tree, which has a systematic recorded history dating back to nearly 3000 years before the birth of Christ. Botanists say that the coconut was domesticated in Neolithic, Stone Age, times. When the lst Ice Age has frozen much of the waters of the world reducing the distance between the islands and continents, seafaring tribes found it easy to move between landmasses. They carried coconuts for food and water during their voyages and planted whatever was left over in their new home.

There are several legends associated with the origin of this wonder palm in many countries. The origin of coir industry dates back to pre- historic times, but it is only during the 19th century that coir products were increasingly introduced to the other parts of the world from the countries of their origin. In Indian mythology, it is believed that this is one of the five wish giving trees that emerged after the churning of the might oceans by the Gods.

According to the Indian Coconut Committee’s “History and Home of Coconut” published in September 1954, the coconut palm originated in Sri Lanka. In another view, the coconuts drifted in the sea from Polynesia and found new homes in many parts of the world. According to early Greek Chronicles, it was Megasthenes, Ambassador of the Seluces Nicater, who told the Indian King, Chandra Gupta about the Coconut Palm, he found in Sri Lanka in 300 BC. Arab writers of 11th century AD referred to the uses of coir as ships cables, fenders and rigging. “Marco Polo’s celebrated travelogue of the 12

th century mentioned on the

uses to which coir fibre and mats were put in use in the sailing vessels of Arabs. He later saw the land where Arabs brought their coir and recorded how it was made out of the fibre from the coconut husk.

Coir Industry in India consists of two distinct segments namely: (1). White fibre and (2). Brown fibre. White fibre is extracted from husk of matured coconut after a process known as retting. For retting, the green husk is kept in saline water for a period of six to eight months. Then it is taken out and beaten by hand. This process removes the 'lignin' and 'tannin' and gives coir the white colour from which white fibre is extracted by hand.

Till recently almost all the stages of production in this industry in Kerala were manual. This highly labour-intensive industry provided employment to nearly four lakhs of people in Kerala in 1988. India has the virtual monopoly for white fibre in the world. India is the largest coir producer in the world accounting for more than 80 per cent of the total world production of coir fibre. The coir sector in India is very diverse and involves households, co-operatives, NGOs, manufacturers and exporters.

Now Sri Lanka has also started producing white fibre. White fibre is more suited for spinning coir yarn, mats, matting, carpets and rope. In fact, white fibre is ideally suited for carpets and mats because it is soft in nature and hence conducive for spinning. It also assimilates colour better. As such it facilitates the manufacture of a wide range of products in various designs, shapes and sizes.

The brown fibre industry developed in other states is 'mechanized'. Simply speaking, the coir fibre produced with out retting by mechanical means is called 'brown fibre'. The dry coconut husk is directly fed into the machine for the extraction of fibre.

In fact, the brown fibre industry in India is patterned after the coir industry in Sri Lanka where the coir fibre extracted mechanically met with great success. Brown fibre comprising of bristle fibres, which are the coarser, thicker and longer staples and mattress fibres, which are finer and shorter staples, is extracted from unretted husk. The retting time for making the white fibre can be now reduced by using the 58 "coir ret" developed and popularized by the Coir Board's Research Centre. With the introduction of coir ret for converting mechanically extracted green husk fibre into retted white fibre the difference between white fibre and brown fibre became less pronounced. Brown coir is used to make coir ropes. It is better suited to make 'rubberized coir', which is being widely used to make mattresses, and pillows and are also used as padding and underlay for carpets. Rubberized coir is made of millions of tiny coir springs, which are uniformly sprayed, with latex to make the fibre tough and at the same time comfortable.

The largest concentration of coir industry is in Kerala. This is because of the existence of natural retting facility and extraction of golden fibre from refled husk by manual labour. In the states other than Kerala the art of natural refling has not been practiced to any appreciable extent. "The raw material of the coir spinning industry is the coconut husk which has great bulk and weight and low value. The material index, i.e., the proportion of weight of used material to the weight of product, is therefore, very high in the case of coir and the industry tends to gravitate to the material producing areas".

Co-operative as a strong backbone of coir processing units

There is a strong co-operative backbone for the industry though there are problems in the functioning of these co-operatives due to various reasons. A review of the historical development of coir co-operatives is pertinent at this juncture. Initially, the coir co-operatives were established to deal in retted husk and to liberate the small producers from the control of retted husk dealers. The co-operatives advanced retted husk to small producers. The producers sold yarn in the open market and settled their dues with the co-operatives. The co-operatives stepped in to buy the yarn from the producers when the market was bearish and the producers could not get a remunerative price elsewhere. Thus the co-operatives performed the function of putting-out industrialists to start with. From 1970s, co-operatives began to undertake yarn production directly by engaging member-workers. They organized both the defibring and spinning processes in their premises. With the increasing shortage and spiralling prices of raw husk their activities ran into a rough weather. The State intervened to ensure supply by introducing legislation curbing long-distance movement of husk. Further, the apex marketing federation was entrusted with the task of supplying fibre to the co-operatives.

Availability and consumption of husk

The entire husk obtained from the coconuts produced cannot be used as a raw material for the coir industry as it might not be suitable for fibre production. The quantity of fibre content present in a nut depends not only on the size and maturity of the nuts but also on the method of de-husking. Most of the husk that is derived from the coconuts used for domestic consumption is not suited for fibre production.

Indian coir industry is an important cottage industry contributing significantly to the economy of the major coconut growing states and union territories i.e., Kerala, Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, Goa, Orissa, Assam, Andaman and Nicobar, Lakshadweep, Pondicherry etc. About 6.4 lakhs persons get employment, mostly part time in this industry. The exports from this industry are around Rs. 70 crores.

The value addition in coir products has been focused on the demands of export market. The traditional floor coverings, mats and matting dominate the exports. The future of coir industry depends on development of non-conventional products, thereby enabling fuller utilization of raw material leading to creation of more employment opportunities especially in the rural areas. The coir industry has to focus mainly on product development and diversification, if it has to survive the mounting competition. It is heartening to note that some innovative steps are in progress to improve the quality and structural details of products using blends of coir fibre with other natural fibre like sisal, banana etc.

The domestic market in India, although very vast with good potential, still remains unexploited. At present organized marketing of coir in the country is being undertaken by the Coir Board, Coir Marketing Federations of the State Governments, State Coir Corporations and State Coir Development Agencies besides the manufacturers in the private sector. The indian domestic market is expanding and the pent up domestic demand is getting unleashed. Whether, it is for domestic or export purposes, the sector has developed the requisite market orientation and produced marketable products at competitive prices. The biggest challenge before the coir industry in the new era of open market will be to keep the quality of their products and service high and their cost low.

Currently, the global annual production of coir fibre is about 3,50,000 metric tonnes (MT). Yet, even in the world’s top two producers, India and Sri Lanka, which account for about 90 per cent of global coir fibre production, combined, this renewable resources is underutilized; local coir mills process only a fraction of the available husks, which accrue more or less year round as a waste during coconut processing.

Production of coir and coir products in Karnataka

Karnataka is one of the most important coir producers of coir in India where production is mainly confined to bristle and mattress fibre by mechanized process. Coir industry located in the district of Hassan, Tumkur, Chickmagalur, Mysore, Mandya, Bangalore, Chitradurga, Dakshina Kannada, Uttara Kannada and Bellary. About 190 units with an installed capacity of 3.1 million tonnes are working in the state. Total fibre production in the state is estimated at 2.04 million tonnes. The share of white fibre is only 8.61 million tonnes. The state produced coir yarn and products amounted to 9.82 million tonnes and 2.92 million tones. About 200 coir units with an installed capacity of 3.80 million tonnes are working in the state during 2009-10. Total fibre production in the state during 2009-10 was 2.15 million tonnes.

Fibre production showed an increasing trend from 1.84 million tonnes to 2.85 million tonnes during the same corresponding year. Yarn production during the same period showed growth oriented progress from 6.03 per cent to 11.29 per cent. Rope production also showed an increasing trend over the years under study. In 2005-06 rope production was 0.28 million tonnes and in 2009-10 it increased to 0.39 million tonnes.

Export of coir and its products

The coir products viz., curled coir (3365.70 tonnes worth of Rs. 668.33 lakhs), coir fibre (73074.93 tonnes worth of Rs. 9742.03 lakhs), coir rope (430.56 tonnes worth of Rs. 165.92 lakhs) and coir yarn (6108.35 tonnes worth of Rs. 2461.21 lakhs) are the major products exported from India to other nations of the world during 2010-11 .

Importance of coir

The major available replacement for wood products is plastic, metals and few other products. Coir, a byproduct of coconut and rubber wood, a byproduct of the rubber plantation industries and therefore, considered as an eco-friendly alternative to natural forest based timber.

Coir ply made from coir fibre and phenol formaldehyde resin is an innovative wood substitute. It is a composite board and other hard fibres such as sisal and jute etc. and pre-treated plantation rubber wood veneers could be incorporated The diversified new uses of coir composite and rubber wood will save the tropical forests, increase rural employment opportunities and also promote agriculture leading to sustainable development. Among the total number of coir units installed in India, Kerala (7794) stood first followed by Tamil Nadu (1307) and Karnataka (556).

The sustained growth of any processing industry depends on the viability which is largely determined by the cost of production and management efficiency in processing. The cost of production is one of the important variables influencing the profits which are also an indicator of management efficiency. Coir processing industry is not an exception to this. Over years, many coir processing units have been closed down in the state, while many other units are performing well. This difference in position clearly points out in-effective management as an important reason among several other reasons.

In this context, a comparative analysis of co-operative and private coir units in Karnataka assumes importance. Such an analysis sheds light on differences that exist in various dimensions of management between two types of coir units. Further, such a comparative study reveals the problems faced by coir processing units in the successful performance of their operations. At present, the studies that address these issues of coir processing units in the state are inadequate. The present study is an attempt in this direction. The study addresses the above issues with respect to Gubbi, Tumkur, Arsikere and Channarayapatna.

Tumkur and Hassan are having the major coir processing units and they have the largest number of coir processing units in the state. The districts nearly consists of 18 co-operative coir processing units and 23 private coir processing units. Besides, there is a vast scope for upgradation and modernization of coir processing units for the efficient use of the resources and to increase the efficiency of production of different coir products in the district.

Keeping all the above points in mind, the present investigation was carried out with the following objectives.

1. To analyse the investment pattern and financial feasibility of coir products in manufacturing units.

2. To analyze the cost and returns structure in the production of different coir products.

3. To study the value addition in different coir products.

4. To analyze the marketing management of coir product in the selected coir units.

5. To study the problems faced by coir units in manufacturing and marketing operations.

Scope of the study

The present study would critically analyze the efficiency aspects of co-operatives and private coir processing units. It attempts to compare different types of coir units with different efficiencies. It compares the efficiency of different types of coir units by employing certain business ratios. The study further attempts to bring out the attention pertaining to capacity utilization of each type of processing unit, which would help in modernizing the processing units. Finally, the study aims at identifying the problems in coir processing units into different products so that suitable policy measures could be suggested to improve the conditions of coir processing units through necessary financial and marketing facilities.

Limitations of the study

Due to the problems in collecting data on the products like doll making, geo-coir and others from the processing units, the study was confined only to co-operatives and private units engaged in processing different coir products.

Presentation of the study

The study has been presented in six chapters as indicated below. Chapter-I deals with the nature, importance and specific objectives of the study: Chapter-II describes comprehensive review of the relevant research work done in the past related to the present study; Chapter-III outlines the features of the study area, sampling design followed, collection of relevant data and analytical tools used in the study; Chapter-IV is devoted to present the main findings of the study through tables; Chapter-V discusses the results of the study; Chapter-VI provides summary of the whole study and also suggests the policy implication based on the finding of the study. At the end, important references have been listed relating to the present study.

2. REVIEW OF LITERATURE

The review of past studies helps us in framing objectives, developing research design, interpreting the results and in drawing meaningful conclusions. In accordance with the objectives of the study, a brief review of literature is presented under the following headings.





2.5 Problems faced by coir industries in manufacturing and marketing operations


In the recent years, there has been a phenomenal growth in the number of agro processing units and several of the studies have been conducted to identify the investment patterns and financial feasibility of coir products. Some of the important studies have been reviewed hereunder.

Nagesh (1990) studied on investment in production and marketing of cashew in Karnataka, indicated that the capital investment was the highest in building (72.81 %) followed by machinery and equipments (15.42 %) and land (11.77 %) at an overall level of the units. Further, it was observed that the processing units utilized only 55.80 per cent of their capacity.

Venkatasheshaiah (1992) evaluated the groundnut processing units in Andhra Pradesh. It was found that there was a direct relationship between the total capital invested and the size of oil mills. It was also indicated that the capital requirement per quintal of oil production was Rs 161.01 in baby expeller mills, Rs 112.24 in 2 – chamber expeller mills and Rs 83.86 in 3-chamber expeller mills.

Amrutha (1994) studied economics of processing paddy into rice, poha, murmura and popped rice in Davanegere district of Karnataka state. The results showed that the capital investment on rice mill, poha mills, murmura mills and popped rice units was Rs. 17,92,250, Rs 5,33,225, Rs. 16,740 and Rs. 20,786 respectively.

Singh et al. (1994) while studying the economics of marketing and processing of pulses in Bhundelkhand region (Uttar Pradesh), estimated that of the total cost, land/building accounted for the highest share being (51.97 %) followed by machinery and equipment (40 %), electricity fitting (4.72 %) and other fixed capitals (3.31 %) in arhar processing plant. In case of grain processing unit land/building, machinery, electricity and other fixed capital accounted for 50.26, 42.19, 4.77 and 2.78 per cent, respectively.

Maurya et al. (1995) studied on economics of production and processing of Aonla in Varanasi district of Uttar Pradesh worked out the cost of Aonla processing plant and its establishment. The total establishment cost (fixed cost) per quintal was Rs. 8.00. It was the highest for depreciation, (Rs. 3.40/q) followed by interest on fixed capital (Rs. 2.50/q), insurance (Rs. 1.00/q), maintenance cost (Rs. 0.60/q) and electricity and water charges (Rs. 0.50/q).

Kalse et al. (1996) found that the initial investment for the establishment of oil industries, dal mills and cotton ginning industries was Rs. 3.19 lakhs and 5.63 lakhs respectively. The cost of machinery was the major item contributing 61.43 per cent and 59.12 per cent in dal mill and cotton ginning industry respectively. The average capacity utilization of oil industry, dal mill and cotton ginning industry was 41.67 per cent, 71.20 per cent and 47.79 per cent, respectively.

Rachhapal and Darshan (1996) conducted the study to examine performance of co-operative sector and infrastructure in Punjab market. The study showed that the gross value of the fixed assets stood at Rs. 152.77 lakhs. The depreciation accumulated was Rs 92.13 lakhs. The present value of fixed assets was computed at Rs. 60.64 lakhs.

Sakia and Talukdar (1996) studied the economic potentialities of commercial processing firms at farm level for major spices in Nagaon district of Assam. It was observed that the average capital investments in commercial processing units were Rs. 1.20 lakhs, Rs. 0.94 lakhs and Rs. 0.78 lakhs and investment in machinery and equipment was highest followed by opportunity cost.

Dev (1998) studied on management appraisal of cashew processing industry in Uttar Kannad found that the total capital investment directly varied with the size of the unit. Further, he concluded that the total capital investment was Rs. 117.5 lakhs for large scale units and 36.32 lakhs for small scale units, wherein the marketing capital accounted for about 25 per cent of the total capital investment with the majority of the fixed capital investment of about (80%).

Joshi et al. (1999) studied the capital investment pattern in the home, cottage, small and large scale mango pulp processing units. Fixed capital accounted for 1.01, 1.6, 1.8 and 20.7 lakhs and the working capital was 2.25, 11.35, 4.34 and 21.03 lakhs, respectively. The working capital was of more proportion than fixed capital in all the categories. Analysis also indicated processing of mango pulp was more economical as indicated by higher scale efficiency than all the other categories.

Rao and Madhu (2001) studied the financial performance of dairy co-operative (URMUL) in Rajasthan. The study revealed that milk products an annual growth rate of 11.22 per cent in milk prices, the total amount paid to products per year increased form Rs. 8.40 crores to Rs. 34.39 crores over the period depicting a compound growth rate of 14.84 per cent per year. Milk products sale increased at the rate of 69.33 per cent.

Jayesh (2001) used NPV, IRR, BCR and PBP for analyzing the financial feasibility of pepper and cardamom plantations in Kerala and Karnataka. The financial feasibility analysis revealed that the investment in pepper and cardamom plantations in the stases of Kerala and Karnataka was economically sound even the risk of increase in costs and decrease in returns.

Siddaram (2004) studied the investment pattern in the processing units. It cleared showed that plan, machinery and equipments formed major component of investment accounting for 50.12 per cent of investment followed by building and civil structures 33.35 per cent and cost of land 9.02 percept and infrastructure facilities to the extent of 6.69 per cent. The investment on plant, machinery and equipments was Rs. 150.36 lakhs fallowed by building and civil structures Rs. 100.05 lakhs fallowed by cost of land to the extent of Rs. 27.05 lakhs. Investment on infrastructure facilities, office and fixtures and miscellaneous fixed assets contributed to an extent of 7.51 per cent, envisaging total investment on infrastructure facility structures, office fixtures and miscellaneous fixed assets contributed to an extent of 7.49 per cent, envisaging total investment of Rs. 500.98 lakhs in private processing units.

Gawankar et al. (2005) they conducted a study on Economic evaluation of rainfed Aonla cultivation in Konkan region of Maharashtra, the observed that cultivation of Aonla as a rainfed crop by providing drip irrigation only during the initial establishment period of three years was found to be remunerative within a period of 6 years after planting as it gave a net return of Rs. 47,684 per hectare. The igher benefit- cost ratio (2.64) suggested that there exists economic viability in cultivation of aonal crop in the region. The pay back period was found to be six years with 6.01 undiscounted and 3.42 discounted cost benfit ratios. Initial rate of return (IRR) was 30.75 per cent, which is more than the prevailing rate of interest in the market.

Ramchandra (2006) studied the financial performance of Sapota orchards in Northern Karnataka which reveled that the net present value of investment for the orchards in Belgaum and Dharwad districts was Rs. 136720.87 per ha and Rs. 165438.68 respectively at 9.5 per cent discount rate for sapota enterprise. The pay back period was found to be 6.03 years in Belgaum and 5.79 years in Dharwad. The discounted benfit cost ratio was 3.10 in Belgaum and 3.61 in Dharwad district and the internal rate of return was found to be 18 per cent and 21 per cent respectively.

Azad and Sikka (2007) studied on production and marketing of temperate fruits have adopted project evaluation measures to study the economic viability of fruits such as apples, peaches, plums and apricots. The net present value was Rs. 26257/- for apples, Rs. 89222/- for peaches, Rs. 117837/- for plums and Rs. 160541/-for apricots.

The internal rate of return was 22, 33 and 47 per cent respectively. The benefit cost ratios were 1.36, 3.87, 4.62 and 5.10 respectively.

Sundaravaradharajan and Ramanathan (2008) reported that B C ratio and IRR for new plantations were 1.42 and 34.36 per cent, while for old plantations it was 1.06 and 17.17 per cent respectively. Further, they suggested that need to create an awareness to adopt improved varieties (HYV) which not only reduce the cost of cultivation but also to increase the net income among the different size group of farmers.

Dinesh (2011) reported that the pattern of capital investment in groundnut processing units revealed a direct relationship with size of the processing units. However, total cost per quintal of groundnut oil processing was relatively more in small units (Rs. 2676/q) as compared to large (Rs. 2673.5/q) and ghanis (Rs. 2475/q). The net returns per quintal of groundnut processed was higher in case of large (Rs. 498/q) processing units compared to small (Rs. 438/q) and ghanis (Rs. 358/q). The results of financial feasibility analysis revealed that at 12 per cent discount rate, all the three indicators (IRR, BCR and NPW) revealed the investment made on the groundnut processing was financially feasible in case of different size of processing units.

2.2 Cost and Returns structure in the production of different coir products

Raju and Kakadia (1980) conducted a study on marketing of groundnut in Gujarat state observed that the marketing cost for farmers was Rs. 5.07 and Rs. 4.99 per quintal at Gondal and Rajkot markets, respectively. However, in the case of traders, the marketing cost was found to be Rs. 9.49 and Rs. 9.42 per quintal at Gondal and Rajkot markets, respectively.

Mittendof and Hertag (1982) analyzed the marketing costs and margins for major food items in developing countries and found that marketing costs and margins of rice accounts for about 30-60 per cent of consumer’s price while those for wheat were 60-80 per cent and maize 40 per cent. They suggested that marketing costs and margins should be reviewed regularly to assess their effect on producers share in consumer’s rupee.

Hassan and Raghuram (1987) studied on cashew processing and marketing in Prakasam district of Andhra Pradesh observed that drying of nuts, roasting of nuts, shelling of nuts, drying of shelled kernels, peeling of kernels, grading of kernels, conditioning of graded kernels and packing of graded kernels were the major stages in processing. The study reported that 80 kg of raw nuts when processed resulted in 22 kg of kernels (28per cent recovery). The processor incurred Rs. 87.06 as processing cost of which labour constituted 56.6 per cent and material cost stood at 42.5 per cent. Within the labour cost shelling accounted for higher proportion followed by peeling.

Veerkar (1988) conducted a study on economics of preservation of mango into different products in Ratnagiri district of Maharashtra. The cost of preservation of one quintal Alphanso mango as pulp worked out to Rs971.26. The cost of preservation of one quintal local types of mango fruits into pickle, chutney and raw slices in brine worked out of Rs 557.48, Rs 861.00 and Rs151.28, respectively. The break even production analysis showed that the actual production handled in all the factories was more than breakeven point production.

Hemachand Jain (1989) studied on economics of processing units of arhar pulse in Narasinghpur district (Madhya Pradesh) revealed that the fixed and variable costs accounted for 45 per cent and 55 per cent, respectively. The costs of processing of arhar dal worked out to Rs 61.62 per quintal.

Bawa and Kainth (1989) analyzed the cost and return of rice milling industry in Amritsar district of Punjab found that dehusking of one tones of paddy yielded a net profit of Rs 45.67. Expenses on raw material (86 %) constituted the major item. Running expenditure on machinery and repairs and maintenance costs constituted 1.96 per cent and 1.10 per cent, respectively. Net returns of the enterprise were 2.31 per cent of gross output.

Nagesh (1990) studied on investment in production and marketing of cashew of Karnataka found that the overall cost of processing per quintal of raw nuts worked out to Rs. 553.54, out of which interest on capital itself formed 53.62 per cent of the total cost. This was followed by wages for piece rate workers (20.36%). The costs incurred on other items like administrative, overheads, salaries, depreciations, utilities, factory overheads and cost of packing material were found to be the least. The overall cost of production of kernels was found to be Rs. 1976.55 per quintal of raw nuts processed. The cost of raw material (Cashewnut) was the major component in cost of production of kernels accounting 71.99 per cent (Rs. 1423.01) of total cost.

Thiruvenkatachari et al. (1991) studied the economics of groundnut production under rainfed conditions in Tamil Nadu. His study showed that cost A constituted 61.05 per cent of the total cost (cost C) in the case of marginal farmers, where it was 77.27 per cent in the case of small farms and 82.06 per cent in the case of big farms. Cost B accounted for 74.7 per cent of the total cost in the case of marginal farms, whereas it was 90.27 per cent in the case of small farms and 94.80 per cent in the case of big farms. From the study, it is found that groundnut cultivation was more profitable under small and big farm conditions.

Dalvi et al. (1992) studied economics of processing of cashewnut in Sindhudurg district of Maharashtra state and found that the cost of processing per quintal of cashewnut was Rs. 331.35 at an overall level. Out of the total cost, the major cost was the interest on fixed and working capital, accounting Rs. 21.55 (6.51%) and Rs. 148.16 (44.72%), respectively. The other items of costs were labour (13.74%) and tin containers (15.84%). The overall gross increase in the value of nuts worked out to Rs. 500.70 (45.96%) per tin and net increase was Rs. 174.50. Net added value worked out to 29.64 per cent. This was possible due to processing of raw nuts.

Subramanian and Sudha (1992) worked out the costs and returns associated with processing of one tonne finished product of tomato (ketchup). It was observed that the benefit: cost ratio was around 2.00 showing that processing is profitable. Raw material and packing were the two major items accounting for 67 per cent of the total variable cost of processing.

Venkatasheshaiah (1992) conducted a study on groundnut processing units in three different categories viz, 3-chamber, 2-chamber and baby-expeller oil mill noted that the per quintal total processing costs amounted to Rs 2696.18, Rs 2606.13 and 2536.126 for baby expeller, 2-chamber and 3-chamber oil mills respectively. The average processing cost for these three categories amounted to Rs 2551.32 per quintal. Further he revealed that of the total processing cost (average) total fixed costs accounted for about 0.53 per cent while the total variable costs accounted for about 99.47 per cent. The fixed cost was comprised of salaries, depreciation and interest costs while the variable cost was comprised of raw material, labour wages, power and fuel packaging and incidental charges.

Govinda and Ranganathan (1993) studied the cost of cultivation, gross and net returns and benefit cost ratio for cotton under different density of plants and different fertilizer level. They concluded that towards estimating the cost of cultivation, additional cost of fertilizers alone added to the actual cost of cultivation during the experimental stage and they observed that it increased seed cotton yield of 3.4 quintal per hectare and net returns of Rs. 2680 was obtained under high plant density compared to the normal. Both plant density gave more yield and net returns under highest level of fertilizer application.

Koppad (1993) studied the economics of cotton and its competing crops in Malaprabha command area. He found that the cotton was the most profitable crop of region than the maize-wheat system and also the B-C ratio was highest in cotton.

Amrutha (1994) stated that the per quintal fixed cost in large and small rice mills were Rs 16.68 and Rs 25.55 respectively. The variable cost per quintal in rice mill was Rs 477.89 and Rs 655.95 in small and large units.

Singh et al. (1994) studied the economics of marketing and processing of pulses in Bhundelkhand region (UP) and revealed that the average cost of processing per quintal including the cost of raw material worked out to Rs. 800.61. The processing cost of per quintal arhar, gram and lentil dal came to Rs. 831.67, Rs. 822.47 and Rs. 752.05, respectively.

Kunnal (1995) studied on performance of the KSSC Ltd. An economic analysis revealed that the capacity utilization of KSSC owned seed processing plant was only 35-45 per cent of its installed capacity, due to low seed production activity undertaken by the corporation.

Further it is indicated that the processing first was 11 to 12 Rs per quintal of seeds of paddy, ragi, jowar, maize and pulses. Similarly it was Rs. 16.50, Rs. 100 and Rs 300 for per quintal of seeds of sunflower, groundnut and cotton respectively.

Maurya et al. (1995) revealed that marketing of aonla and its product in Varanasi district, indicated that the per quintal processing cost of morabba, pickle and chutney came to Rs 2198.80, Rs 1750.40 and 3233.80 respectively. The processing cost was highest for aonla chutney and lowest for aonla pickle.

Raut et al. (1995) reported that economic feasibility of straw berry cultivation in Nasik district of Maharashtra observed that, the per hectare total cost of production of straw berry was Rs. 4.27 lakhs. Cost A accounted for 59.57 per cent of the total cost. Cost of runner (39.92%) and rental value of owned land (36%) were the important items of total cost. Per hectare gross income obtained from straw berry was to the tune of Rs. 10.23 lakhs.

Balasubaramanaia et al. (1996) conducted a study on pricing and transaction trend of raw cashew nut in India, observed that the cost of processing of kernel per quintal of cashew nut was maximum on raw cashew nut (70%) followed by labor (10.50%), purchase tax (5%), handling charges (5 %), packing material (4.50%).the minor item of cost was transportation cost, fuel, factory overhead, administrative over head and depreciation (0.10%) each.

Srinivasa et al. (1996) studied on economics of processing of cashewnut in Andhra Pradesh indicated that the processors have to bear the processing cost of Rs. 124.22 per 80 kg of raw nuts, out of this total cost, raw material cost of Rs. 50.77 was incurred which formed 40.89 per cent and labour cost was Rs. 72.81 accounted to 58.61 per cent of total processing cost.

Gurudev Singh and Asokan (1998) studied on management of seed production activity a case study of Gujarat state seed corporation, where it was worked out per quintal cost of processing different crop seeds. For cotton the per quintal cost of labor, chemicals, packing materials, certification and tags and inward transport cost were Rs. 60, Rs. 30, Rs. 263, Rs. 300 and Rs. 15 respectively. The total per quintal cost of processing of cotton of processing of cotton was Rs. 668.

Joshi et al. (1999) revealed that economics of processing of mango pulp in home, cottage small and large units in south region of Maharashtra state. Total processing cost for a single tin (850 g) worked out to be in home, cottage, small and large scale units were Rs. 47.13, Rs. 41.95, Rs. 42.58 and Rs. 33.70. With in different categories the cost of processing was maximum in home scale and minimum in large scale units. The profit per tin remained at Rs. 4.78 in home scale, Rs. 6.89 in cottage, Rs. 5.59 in small and Rs. 13.32 in large scale units with overall net profit of Rs. 12.28. Cost and return indicated that processing of mango pulp was profitable as indicated by input ratio, which was greater than unity.

Jayalakshmy and Abdul (2000) conducted study on cost of establishment and cost of production of cashew apple syrup in Kerala state. On an average, 750 bottles of syrup can be obtained from one tonne of cashew apple. The extracted juice can be preserved for syrup production during the off season as well. The cost involved (the labour and inputs) for processing of one tonne of cashew apple is Rs 1940. A minimum of 750 bottle of cashew apple syrup can be obtained from one tonne of cashew apple. This works out to a cost of Rs 25.80 per bottle. Of the total cost, 85 per cent forms the input cost (Chemical, bottle, sugar etc.) and 15 per cent forms the labor cost. The price of apple and interest towards non-recurring cost is not included. At sale price of Rs 40 per bottle, the net profit per bottle was Rs. 14.20.

Veena and Tajinder (2000) studied the performance analysis of Bhagpur and Jargaon sugar mills of Ludhiana district in Punjab. They found that production cost of sugar in Bhagpur sugar mill was Rs. 12.37 per kg and Rs 9.89 per kg in Jargon sugar mill. An expense on raw material was the major item 77.2 per cent and 82.86 per cent of other expenses including manufacturing expenses and maintenance were 22.78 and 17.12 per cent, respectively. Gross profit was Rs 2.67 per kg at Jargaon mill and Rs 0.58 per kg at Bhagpur mill.

Lower per unit cost coupled with relatively higher sales increased the profitability of the Jargaon sugar mill tremendously; it was Rs. 2.69 per kg compared to only 58 paise per kg for the Bhagpur mill.

Savitha (2000) conducted a study on management appraisal of spinning mills in Gadag district (Karnataka) found that the total cost incurred per quintal of cotton processed in the cooperative sector unit was more (Rs. 1531.22). Further, she found that co- operative sector unit incurred a loss of Rs. 225.08 on every quintal of cotton processed, while the private sector unit earned a profit of Rs. 29.59 on every quintal of cotton processed.

Dandin (2003) studied an empirical analysis of cost of cocoon production. The economics was worked out for a farm size of one acre mulberry garden with V1 mulberry variety under irrigated condition was Rs. 27681.00. The cost and returns structure for silk worm rearing was Rs. 73516.80 and total revenue was Rs. 113400. The cost benefit ratio worked out was 1.54.

Siddram (2004) studied the management of Dairy processing units: he observed that an average total cost of processing amounted to Rs. 6,098.25 and Rs. 5,687.88 per ton of milk processed in co-operative and private sector units respectively and an average capacity utilization 58.25 per cent of the installed capacity was utilized by co-operative sector units when compared to 46.62 per cent with respect to the private sector unit. The average gross realization per ton processed products was Rs. 17,048.93 and Rs. 16,855.39 in co-operative and private sector units respectively.

Chowda Reddy (2004) included that cost and returns structure, where the total variable cost was shown more than the total fixed cost in the cultivation of beans. The expenditure on variable inputs in the cultivation of beans formed nearly 90 per cent and remaining 10 per cent was constituted by fixed cost.

This is due to high cost incurred on inputs such as human labour, FYM, seeds and chemical fertilizers. Amoung the fixed cost, the magnitude of cost incurred on rental value of land (9.63%) was the highest because the rental value of the land was high (Rs. 8000 per cent per year) in the Belgaum District.

Rajeshwari (2004) made an attempt to study the cost and returns of coconut based farming systems in Tumkur district of Karnataka. The farmers following Farming System comprising coconut, arecanut, ragi and dairy were getting the highest net farm income of Rs. 85,600 per farm and the cost of cultivation was Rs. 1,59,645. The major components of cost of production were amortized establishment cost, operational cost, rental value of land and material cost.

Saikumar (2005) studied the cost and returns structure of major farming systems in tank commands of north eastern Karnataka. The study revealed that, of the three major farming systems identified in the study area, dairy enterprise was found to be most common as a complimentary enterprise. The highest net returns realized was Rs. 53,404.59 per hectare and per hectare cost of cultivation was Rs. 84414.21 in Farming System comprising redgram+ kharif jowar+ groundnut+ followed by bengalgram+ rabi jowar+ dairy.

Rajkumar and Burark (2005) they study the Sample survey on economic of Oyster mushroom (Pleurotus spp.) cultivation on small, medium and large mushroom farmers in Rajasthan. They examined that total cost of cultivation was higher in small farmers (Rs. 14727.19 per tonne of wheat straw) than the large farmers (Rs. 8276.76 per tonne of wheat straw) and also found that Rs. 10683.86 was the overall cost of cultivation which includes Rs. 1234.10 of labour cost, Rs. 3671.65 material cost, Rs. 5078.15 of inputted cost and Rs. 699.95 of miscellaneous cost.

Deorukhakar et al. (2007) studied in Sindhudurg district of Maharashtra, India, worked out costs and returns structure and employment potential in kokum (Garcinia indica) processing units. The study revealed that processing of kokum into kokum syrup was more profitable than kokum agal and kokum rind. The processing of kokum into kokum syrup resulted in gross returns of Rs 3780 per quintal at a cost of Rs 2440/-, thereby yielding net returns of Rs 1339.63 per quintal. On the other hand, kokum rind and kokum agal yielded net returns of Rs 604.91 and Rs 476.33 per quintal.

Sharma and Pandey (2008) studied the costs and net profits from Guava processing in Uttar Pradesh. The cost of processing guava into jam and jellies was estimated at Rs 3,96,482 per year, the gross returns obtained from selling it was worked out to Rs. 5,28,750 per year and the net returns obtained were Rs 1,32,268 per annum. It was observed that the processing of guava was more profitable than selling it raw.

Ankit Jaiswal (2009) indicated that net returns in soybean over jowar (868.72%) and maize (121.67%) were significantly higher. Similarly, benefit cost ratio over Cost C was higher in case of soybean (1.29) than that of maize (1.16) and jowar (1.05) which clearly indicated that soybean cultivation was more profitable than any of competing crops. For every rupee investment in soymilk and tofu processing, Rs. 1.42 was obtained as returns, indicating its profitability. Benefit cost ratio was more than unity (1.18) showing profitability of converting soybean into soyflour. In this regard, there is need to understand the profitability of soybean as whole pulse as well as processed soy products.


Subramanian and Sudha (1992) worked out the costs and returns associated with processing one tonne of finished product of tomato (ketchup), it was observed that the benefit cost ratio was around 2.00 showing that processing was profitable. Raw material and packing are the two major items accounting for 67 per cent of the total variable cost of processing, which was Rs. 93.76 per tonne of raw material (fresh tomatoes) was needed for producing 32.42 tonnes of finished product.

Singh et al. (1994) studied on economics of marketing and processing of pulses in Banda district (Uttar Pradesh) observed that per quintal cost of processing of arhar, gram, and lentil was Rs. 831.67, Rs. 823.47 and Rs. 752.05, respectively.

Amrutha (1994) reported that the processing cost incurred per quintal of rice production by small size mills (Rs. 93.19) was found to be lower than those of large size mills (Rs. 103-28). Similarly, total returns also increased with increase in size of mills, Rs. 405.20 and Rs. 514.40 per quintal, respectively in small and large size mills.

Srinivas and Raju (1995) study of cashew processing costs was conducted in Vetapalem, Prakash district, Andhra Pradesh, India. Data were collected from the 11 registered processing units located in the area for the year 1990-91. The eight stages involved in processing of cashew nut (drying, roasting, shelling, drying of shelled kernels, peeling, grading, conditioning and packing) are discussed briefly. The major operations involving high cost are packing of graded kernels, shelling of roasted nuts and peeling of shelled kernels.

Kalse et al. (1996) revealed that the cost of machinery was the major item contributing 61.43 and 59.12 per cent in dal mill and cotton ginning industry, respectively. The total costs per oil industry, dal mill and cotton ginning industry per year were Rs. 48.20, 69.04 and 5.03 lakhs, respectively. Net profit per oil industry, dal mill and cotton ginning industry was Rs. 8.93, 3.32 and 1.43 lakhs per year with 1.19, 1.05 and 1.39 benefit cost ratio, respectively.

Srinivas et al. (1996) study was conducted on the economics of processing of cashewnut in Andhra Pradesh indicated that the processors have to bear the processing cost of Rs. 124.22 per 80 kg of raw nuts. Out of the total cost, Rs. 50.77 was raw material cost, which formed 40.89 per cent and labour cost was Rs. 72.81 which accounted for Rs. 58.61 per cent of total processing cost.

Balappa Shivaraya (1997) studied the economics of production, marketing and processing of redgram in Gulbarga district of Karnataka. The total cost per quintal of redgram processed marginally lower in large size dal mills (Rs. 2164.29) compared to small size dal mills (Rs. 2190.37). In contrast, the net return in small size dal mills (Rs. 44.04/qtl) was considerably lower than that of large size dal mills (Rs. 74.64/qtl) eventhough, the gross returns per quintal of output (Rs. 2782) was same in both type of dal mills.

Mattigatti et al. (1997) studied the value addition in silk. He concluded that of the all the factors that contributed to the value addition, labour is the major factor contributing 52.6 per cent to value addition. The chemical inputs accounted for 30.9 per cent of the value addition in rearing.

In the post-cocoon operations, the contribution of investments to the value addition were higher for twisting (32.1%) and weaving (21.9%) operations. Silk reeling and dying processes were characterized by the utilization of labour and electriocity truly for value addition in their processes.

Geeta et al. (1998) studied value addition to cotton yarns. The study revealed that the production of agricultural products and cost involved for that products of agricultural products and cost involved for that products and profit earned from the products. The agricultural products and their cost was Hide Hagga (Rs. 29), Mugadan (Rs. 10), Kari hangada (Rs. 12), Kalli (Rs. 16), Barkol (Rs. 29), Gonde (Rs. 11), Hane Gejje (Rs. 30), Jatagi (Rs. 17) and Neluva (Rs. 28). In these products, the maximum profit for gonde (36%) followed by Kari hangada (25%), Kalli (25%) and Neluvu (25%) and minimum was for Barkol (14%).

Raman Dev (1998) studied on management appraisal of cashew in Uttar Kannada district of Karnataka found that average per quintal processing costs was Rs. 327.49 and of their labour 60.4 per cent was contributed by utilities like power, fuel and oil. Further, he revealed that per quintal processing cost for small (Rs. 326.56), medium (Rs. 322.37) and large (Rs. 333.58). Further, he revealed that the average net return for overall was Rs. 94.02 per quintal of cashew nut processed and it was more in large units (Rs. 195.25) than medium (45.56) and small (Rs. 32.16).

Chidri (1999) studied on management of agro-processing industries in Karnataka. A case study of tur dal industry found that the average per quintal cost of processing worked out to be Rs. 49.47. Among the items, cost utilities accounted for higher proportion of Rs. 24.17 (52.57%). Again, among the utilities expenditure on oil and fuel accounted for major proportion of Rs. 12.36 and Rs. 11.76, respectively. Further, he revealed that the net returns at overall average level was Rs. 53.66.

Kerutagi (1999) studied the economics of silk reeling units in Karnataka. He indicated that the average price received per kg of the charka silk (Rs. 1009.68) was less compared to the average cottage basin units (Rs. 1333) and the multi-end basin units (Rs. 1430). Net returns per kg of silk processed were high in the multi-end basin units (Rs. 195.8) followed by one cottage (Rs. 146.18) and the charka units (Rs. 47.21). Further, he reported that the value addition (72.18%) in cottage basin reeling over charakas was mainly due to technique of reelings (56.56%) and the remaining attributed for use of inputs (14.62%).

Mahesh and Nagaraja (2002) studied the value addition of cashew (Anacardium occidentale) kernel baby bits (CKBB) was attempted by coating with cane sugar, honey and salt. Optimum coating occurs at 100 degrees C for 5 min at 70 per cent concentration for cane sugar and honey and 5 per cent for salt. Sweetened 70 per cent and vanillin 0.1 per cent flavored CKBB are the most preferred. Defatting of CKBB enhances the per cent coating. Coating of cashew kernels of different grades with cane sugar at 70 per cent is dependent on the surface area. Cashew apple juice could be coated on the CKBB. Acceptability of cashew apple juice coated baby bits (BB) improves with the addition of cane sugar at 70 per cent concentration. Permitted colours and cane sugar compete with each other during coating.

Chinnappa (2002) revealed that the economics of grading which has ultimate bearing on profitability of the arecanut crop. It uses data obtained from 80 arecanut growers of 4 taluks of Karnataka, India. Results show that there are 3 major grades in arecanut such as Hasa, Bette and Gorbulu. It is suggested that grading at the farm level will result in value addition and improve the overall net returns to growers.

Lokesh and Chandrakanth (2003) described the turmeric industry in Karnataka, India, focusing on the production, marketing and processing issues of the sector. Field data obtained from a survey of 90 farmers in 3 taluks of Chamarajanagar district were used. Marketing information of turmeric was collected from 4 traders, 3 polishers, 2 processors and 4 Agriculture Produce Marketing Committees in the study area. Strengths, weaknesses, opportunities, and threats (SWOT) analysis was employed to analyse the feasibility of value addition to turmeric. Policy implications for the turmeric industry are also outlined.

Madhuri and Kamini (2003) found that in watermelon, the rind constituted 33 per cent of the whole fruit weight. Value added preserved products like pickles, tutti fruity, vadiyams and cheese were prepared using the white portion of watermelon rind. The quality of products in terms of physical parameters was evaluated.

All products were subjected to sensory evaluation test using a panel of 20 judges. Results showed that mean sensory scores for product attributes were high. There was no change in mean scores after one month storage.

Santhosh Kumar et al. (2003) examined the Indian research efforts in vegetable crops, new niches for vegetable production and the impact of pest management research. It was indicated that the ongoing research programmes on vegetables addressing many emerging challenges, there is a wide scope for innovative improvements and a sharper focus on vegetable processing, value addition and quality control.

Subasinghe (2003) studied the different innovations used by food processors to add value to aquaculture products such as shrimps, in order to survive in a highly competitive market environment. Some of these innovations were focused on the packaging and presentation of the shrimps, whereas others focused on preprocessing/ processing, such as peeling, preparation of breaded products, application of batters and production of other shrimp-based products.

Arora et al. (2004) found that vegetable washing is an important primary process unit operation for value addition of the produce at farm level. Washing is used not only to remove field soil, dust, pesticides, but also the surface microbial load. Carrots, potatoes and spinach were washed mechanically in a rotary vegetable washing machine at varying speed and time and then evaluated for their quality. The microbiological washing efficiency, which is calculated by observing the total viable count of the surface of the vegetables before and after washing ranged between 96.5- 99.8 per cent as compared to recommended 80 per cent indicating the adequacy of the vegetable washing machine.

Manjunath (2004) evaluated the performance of fruit and vegetable processing units of Bangalore district which reveled that the total cost of processing amounted to Rs. 31147.38 and Rs. 33890.37 per tonne of processed products in private and public sector units, respectively.

Ramakrishnaiah et al. (2004) attempted to study the technology package developed to retrieve the cotyledon material from the dhal mill by-products containing about 50 per cent cotyledon material amounting to one million tones and also refining the same to an acceptable/desired level. The technology consists of destoning, size separation and air classification followed by refining and thermal stabilization of edible material. About 30-35 per cent of the cotyledon material was recovered from the by-products from the commercial dhal mills and used in the preparation of traditional pulse based products. It could be substituted in pulse-based products such as vada, rasam/sambar and papads upto about 50 per cent. Adoption of this technology by dhal millers in the country would result in the recovery of about 5 lakh tonnes of cotyledon material valued at Rs. 500, which could contribute to the economic upliftment of the industry.

Marsh and Bugusu (2007) this paper describes the role of food packaging in the food supply chain, the types of materials used in food packaging and the impact of food packaging on the environment. In addition, this document provides an overview of the US Environmental Protection Agency's solid waste management guidelines and other waste management options. Finally, it addresses disposal methods and legislation on packaging disposal.

Arun Kumar et al. (2010) processing of arecanut in sub Himalayan Terai region of West Bengal- A case study. A study was conducted in Jalpaiguri district about the different way of processing of arecanut in this district. Total ten units were selected. The study reveals that the processing of arecanut depends on the availability of arecanut of different stage in all the locations. The economics was calculated on the basis of the discussion made with the processors. The demand of tipni and chikni tipni in Delhi market is more. So the processors produced more of this type of supari (about 80 per cent of total nuts). The per centage of net profit of this type of processed nut is about 83.83 per cent from tipni and it is about 69.4 per cent and 62.5 per cent for chikni tipni and rutha, respectively. Only 23.16 per cent profit is obtaind from cahlli making. Moja supari helps to get a profit of 82.93 per cent. However, only 15 per cent of the total quantity of nuts available in this region is processed in this method as the demand of this type of processed nuts is this much only. If the demand is increased then, the processor can use more nuts for moja supari and they can earn more money.

Anand (2011) reported that the co-operative unit as a whole experienced significant growth rate in procurement of quantity (56.06%), value (61.08) and sales of quantity (51.93%) and value of sales (50.26%) for rashi type of arecanut in finished produce for the period the annual growth rate of 2001-02 to 2009-10. Whereas, for the same period, the annual growth rate in private units procurement of quantity, value and sales of quantity and value of sales were 53.04, 61.39, 53.30 and 59.50 per cent, respectively in rashi type of arecanut.


Dalvi et al. (1992) studied on economics of processing cashewnut in Singhadurg district of Maharashtra found that the total marketing cost per tin was Rs. 44.05, the commission charges (50%), tax and octri (51.33%), transportation (10.53%) and handling costs (2.67%) were the important cost components.

Venkatasheshaiah (1992) studied the groundnut processing by different categories of traditional oil mills in Cuddapha district of Andhra Pradesh noticed three main channels. All the three channels were used for marketing oil while only last two were used for marketing of oil caters. These channels are;

Channel-I _ Producer – Wholesaler – Retailer – Consumer

Channel-II _ Producer – Retailer – Consumer

Channel-III _ Producer – Consumer

Vinayak Rao (1992) examined the economics of rice milling in shimoga district of Karnataka. The efficiency in milling was analyzed by examining the recovery per cent (out turn) of rice and by- products. The out turn of head rice was much higher in modern mills (69.90 %) when compared to conventional mills (64 %). The recovery of broken and bran was 3.00 and 4.21 per cent for modern rice mills whereas, it was 3.42 and 4.26 per cent for conventional mills, respectively. On the whole, the whole, the average recovery was 77.17 per cent in modern mills as against 73.95 per cent in conventional mills.

Sunil Kumar (1994) identified three marketing channels for paddy rice which were in practice.

Channel-I: Farmer - itinerate trader – miller – wholesaler – retailer - consumer

Channel-II: Farmer - miller/small processor – wholesaler - retailer - consumer

Channel-III: Farmer - miller/small processor - wholesaler/commission agents’ – retailer- consumer

The share of farmers in consumer’s rupee was found to be highest in channel-II.

Maurya et al. (1995) indicated that in marketing of anola products, highest per centage of consumer’s rupee (62.25%) was the processing cost followed by the cost of kutch anola (15.58%), retailers margin (10.87%), manufacturers margin (8.67%) and charges paid by retailer 2.63 per cent.

Malleswari (1996) reported that heavy promotion and distribution costs mark the domestic retailing of processed mango. A can containing 850 g of pulp is sold at the retail outlets at Rs. 45, whereas the processing cost is only Rs. 18 including the cost of packing. The price spread between processor and consumer is therefore Rs. 27 per can. The retailer buys from the distributor at Rs. 38 per can. The spread is therefore the widest between the processor and wholesale stockiest because branding, labeling, packing and sales promotion are done at this stage.

Singh et al. (1996) conducted a study on economics of marketing and processing of pulses in Banda district (Uttar Pradesh) observed that per quintal cost of processing of arhar, gram and lentil was Rs 831.67, Rs 823.47 and Rs 752.05, respectively.

Dev (1998) reported that management appraisal of cashew processing industry in Uttar Kannada district in Karnataka observed that cashew processing units at an overall level gained profits to the tune of Rs. 0.01/g that is Rs. 0.02 on every rupee of investment.

Large processing units gained higher profits that is Rs. 0.04/g as compared to medium (Rs. 0.008/g) and small processing units (Rs. 0.06/g).

Ramandev (1998) conducted a study on processing of cashewnut in Uttar Kannada district of Karnataka identified the following five main channels for marketing cashew kernels.

Channel-I _ Processor – Consumer

Channel-II _ Processor – Trader – Consumer

Channel-III _ Processor – Commission agent – Consumer

Channel-IV _ Processor – Exporter – Consumer

Channel-V _ Processor-cum-Exporter – Consumer

Further, it could be observed that highest quantity of cashew kernels were marketed through Channel-III (36.06%) and least was through Channel-IV (3.5%) sales. Further, it could be noticed that sales tax and turnover tax, transportation and handling costs, commission charges and export expenses were the major components of marketing cost. Total marketing costs amounted to Rs. 89.41 per tin. The highest cost of marketing was noticed in case of Channel-III (Rs. 155.19/tin) and the least was observed in case of Channel-V (Rs. 70.33/tin).

Shobha (1998) studied the performance evaluation of co-operative and private of fruit and vegetable processing units at North Karnataka, she revealed that the marketing of processed of two processing units, the following alternate channels were;

Channel-I - Processor – Wholesaler – Retailers – Consumers

Channel-II - Processor – Retailer – Consumer

Channel-III - Processor – Consumer

Channel-IV - Processor – Wholesaler – Caterer

Channel-V - Processor – Caterer

The private sector unit was marketing the produce through the two channels (IV and V) by selling their produce to wholesaler on an average at Rs. 3171.002 (64%) per quintal and at a price of Rs. 3360.63 per quintal (36%).

Asharaf Ali (2000) studied on business performance of co-operative oil mills a management appraisal in Gadag district of Karnataka state reported that, the channels used by the oil mills fro marketing of various main products and by products were common and were identified as follows:

Channel-I - Processor – Dealer - Consumer

Channel-II - Processor – Wholesaler - Retailer - Consumer

Channel-III - Processor - Consignment agent - Trading agent - Consumer

Channel-IV – Processor – Retailer - Consumer

Further, he revealed that, for marketing of de-oiled and unde-oiled cakes, the largescale unit used duly first three (I, II, and III) channels while the medium scale unit used only the first two (I and II) channels. The large-scale unit marketed a maximum quantity that is 66.63 per cent and minimum quantity that is 2.31 per cent of total quantity marketed through channel-I and channel-IV respectively. While the medium scale unit marketed a maximum quantity of 77.95 per cent and a minimum quantity of 4.81 per cent of the total quantity marketed through channel-III and channel-IV.

Mittal and Sudhakar (2000) argued that the potential of information technology is yet to be tapped fully in input marketing activity, notwithstanding the need for quality information for decision making. This evaluates the possibilities of improving the efficiency and effectiveness of marketing operations with a well conceived information technology deployment. The paper also outlines the emerging business environment with the passing of Indian technology act, 2000 and the consequent prospects for fertilizer marketing operations.

Singh (2000) studied the status of fertilizers marketing system in India and examined its potential improvement. The study focused mainly on sources and location of fertilizers supply; distribution channels; fertilizer use promotion; extent of fertilizer use and output performance; sources of information on fertilizer practices and its purchase behavior of farmers ; efficiency of marketing systems; and problems experienced by the farmers in acquiring fertilizers. It discussed important issues about the next stages of development of the fertilizer market. The basic circumstances which affect the growth of fertilizer use have changed and new challenges are emerging. The new developments which are a result of new economic environment require a new orientation of efforts and policies.

Gajanan and Subramanian (2001) studied the marketing and exports of lemongrass oil in Kerala. The processing involves filtration to remove sediments, moisture and blended for standardizing citric content, the processor observed shortage/loss of around one per cent during filtration of oil. The cost of processing of lemon grass oil was observed to be Rs 4.70 per kg.

Gajanana and Subrahmanyam (2001) studied the marketing and exports of lemon grass oil from Kerala. Lemon grass oil was observed to be marketed mainly through two channels as below.

Channel-I - Producer – Co-operative society – Processor/Exporter

Channel-II - Producer – Private traders – Processor/Exporter

Between the two channels, nearly 78 per cent of growers (including 22% selling to cooperative society also) sold 59 per cent of the oil to the private traders and 44 per cent of the growers, sold 41 per cent of the oil to the co-operative society in Kavikadava village of Kerala state.

Sawant et al. (2001) studied marketing of mushroom, the system of assembling and distribution dried mushrooms consisted of mushroom growers, commission agents and consumers including hotels and big consumers. The commodity through two main channels namely;

Channel-I - Producer – Commission agent (farm gate) – Consumers

Channel-II - Producer – Commission agent (market) – Consumers

In Channel-II, the producer directly sold mushroom to the commission agents near big city, with 77.3 per cent while in case Channel-I, the commission agent purchased mushroom from producer at their farm gate with 22.70 per cent.

Kumar et al. (2003) examined the Indian research efforts in vegetable crops, new niches for vegetable production, and the impact of pest management research. It was indicated that the ongoing research programmes on vegetables addressing many emerging challenges, there is a wide scope for innovative improvements and a sharper focus on vegetable processing, value addition and quality control.

Rane and Bafade (2006) studied the economics of production and marketing of Banana in Sindhudurg district, Maharashtra, he identified two marketing channels.

Channel- I - Producer - Village retailer - Consumer

Channel-II- Producer - City wholesaler – Retailer - Consumer

He observed that channel II is major Banana marketing channel and about 71 per cent producer is routed through this channel and remaining 29 per cent of the total produce is routed through channel

Shivkumar and Sursrk (2006) conducted a study of Marketing of Jatropa in Udaipur district of Rajasthan, he identified five marketing channels

Channel-I - Farmer - LAMPS-RTADCF - Wholesaler - Processor outside Rajasthan.

Channel-II - Farmer - LAMPS-RTADCF - Wholesaler - Seed trader - Farmer (ultimate consumer)

Channel-III - Farmer - Village trader - Wholesaler - Processor

Channel-IV - Farmer - village trader - Processor outside Rajasthan

Channel-V - Farmer - Processor

Out of these, four channels (I, II, III and IV) were found most important because 82.16 per cent quantity of Jatropa was moved through these channels. Highest quantity (39.18 per cent) was moved through channel-I more than 75 per cent of total quantity sold by the processor outside Rajasthan.

Shwetha (2010) reported that the total investment on modern rice mills was ten times higher (Rs. 379.25 lakhs) as compared to conventional rice mills (Rs. 36.97 lakhs). The net present value for modern unit and conventional unit was Rs. 408.35 and Rs. 27.55, respectively. The capacity utilization was higher (68%) in modern units in comparison with conventional units (44%). The total returns obtained from both rice milling and poha making process were higher in modern rice units (Rs. 1478) as compared to conventional units (Rs. 1381). This shows that the modern rice mills were more efficient than the conventional rice mills. Procurement costs were lower when paddy was purchased directly from farmers instead of purchasing commission agents. Thus, mills would benefit from strong contractual arrangements with paddy growers.

2.5 Problems faced by the coir industries

Nagesh (1990) found that the major problems faced by the cashew nut processor in Karnataka were existence of large number of processing units, inadequate availability of raw cashew nuts, poor quality of raw cashew nuts, rise in prices of raw cashew nut, non availability of skilled labour, increase in wage rate and high taxes. All these problems ultimately resulted in under utilization of installed capacity.

Harpal Singh et al. (1991) identified higher fluctuations in prices and absence of proper marketing facilities as the major problems faced by groundnut processors and thus suggested measures to solve the problems through co-operatives like National Co-operative Development Corporation, National Dairy Development Board.

Singh et al. (1991) identified higher fluctuations in prices and absence of proper marketing facilities as the major problems faced by groundnut processors and thus, suggested measures to solve the problems through co-operatives like National Co-operative Development Corporation and National Dairy Development Board.

Venkatasheshaiah (1992) studied on groundnut processing units in Andra Pradesh, had identified that stiff competition among the processors for getting the required raw material, frequent power shedding, high taxation, low product recovery and non-adoption of efficient technology, at an affordable costs as the major problems associated with the groundnut processing.

Vinay Rao (1992) studied economics of rice milling in shimoga district of Karnataka opinioned that the rice mills faced the problems of inadequate funds for investment and working capital, lack of availability of quality raw material, restrictions in the supply of electricity and mill point levy system. These problems were found to hamper the milling operations, encourage corruption, and contribute to increase in the price of rice and scope for government officials to harass the millers, resulting in closer of many small mills.

Subramanian and Sudha (1992) studied that the main problem faced by the small scale fruit and vegetable processing units was marketing of their produce. Besides the main constraint of low domestic household demand, these units have to face stiff competition for marketing their produce from well established big manufacturers whose brand names are familiar with common household consumers.

Amrutha (1994) found that the lack of sufficient quantity of raw material, inadequate transport facility, higher marketing charges and fees, irregular supply of power, inadequate supply of fuel and competition for custom milling as the major problems of rice mills in Karnataka.

Brahmprakash and Dineshkumar (1997) studied the infrastructural requirements for the development of agro-processing industry in rural India and concluded that lack of market information, rapid and refrigerated transport system, storage facility, banking institutions, packing and post-harvest technology were the major constraints responsible for the slow growth of agro-processing industry.

Roy (1997) concluded that the low level of processing in India was mainly due to inadequate post-harvest technology, lack of transport and marketing infrastructure, absence of linkages between processing industry and the growers and lack of domestic demand for processed products. Majority of the processing units were in cottage and tiny sector, where research and development efforts were also most non-existent and new products were rare. Lack of sophisticated packing technology further added to these problems. Poor infrastructure was the single biggest problem that affected the Indian agricultural processing sector.

Raman Dev (1998) studied on business performance analysis and appraisal of the cashew nut processing units in Uttara Kannada district of Karnataka identified high taxation, short supply of raw materials, non-availability of skilled labour, unfavourable government policies and marketing systems as the major problems as conceived by the industry.

Chidri (1999) reported that management of agro processing industry in Karnataka pointed that, the major constraints in tur processing units were high taxes, high procurement cost, irregular power supply, inadequate power supply, inadequate finance, irregular lobour supply, inadequate marketing facilities and repairs and maintenance.

Ashraf Ali (2000) studied on business performance of co-operative oil mills noticed that non-availability of raw materials in sufficient quantity and in desired quality was the most important problem faced by the large and medium scale units followed by lack of infrastructural facilities as the second in order.

Manjunatha (2000) studied on Management of food processing units – A case study of Roller flour mills in Bijapur District (Karnataka), he concluded that most important problems in roller flour mills were problems of marketing, problems regarding processing, problems regarding government policies and procurement problems.

Kavitha (2000) reported that documentation of agro-processing units/industries in different of Uttar Kannada district. Here, she stated about the number of agro-processing units/industries indifferent talukhs of Uttar Kannada district with their investment has been documentated.

Saravanan et al. (2002) reported that the constraints of cashewnut processing units in Tamil Nadu. Constraints reported by the processors, are high wage rate, exporters by most of the processors (86.67%) in Kanyakumari district more than 80 per cent of processors felt that the declining trend in imports and inadequacy in supply of raw materials from domestic market were major constitute for them. High purchase tax for raw nut at 8 per cent purchased in domestic market and increasing competition from other countries in processing were the constraints faced by more than 60 per cent of the respondents, other problems are were frequent power cuts during the processing period and wide fluctuation in the prices of cashew kernel.

Varghese and Indus Singh (2006) evaluated the prospects and problem of Agroprocessing industries in Biknner district of Rajasthan. He identified the technological factor, Resourse based factor and policy based factors are the major constraints faced by agroprocessors in the study area.

Kohler et al. (2007) examined the project which was launched in mid-2006, looking into value-addition to various camel products, especially camel milk. Ice cream made from camel milk, which was launched during an inception workshop, had generated significant interest among local hoteliers. Furthermore, it was suggested to analyze the hurdles that need to be overcome before value added products can truly contribute to improve local incomes and livelihoods.

Rangasamy and Dhaka (2007) found that the economic efficiency of dairy plants is severely influenced by a variety of constraints at 3 important value addition stages of milk procurement, processing and manufacturing and distribution of dairy products.

This study was conducted to compare the constraints faced by cooperative and private dairy plants at these vital value addition stages. Some of the members of the cooperative society selling the milk to private milk vendors and some of the collection centres taking the inadequate quantity of milk were the very serious problems faced by cooperative and private dairy plants, respectively. Underutilization of transport vehicles at milk transport, underutilization of chilling centres and underutilization of plant at milk processing and manufacturing levels were the most serious constraints faced by both the cooperative and private dairy plants.Encouraging value addition, effective sales promotion and advertisement strategy and also focusing on consumer-oriented market research and development were some of the suggested strategies.

Verma and Jain (2007) examined value addition of nutri-cereals (nutritious cereals) coarse cereals and millets. The important coarse cereals generally referred are sorghum (Sorghum bicolor), barley, pearl millet (Pennisetum glaucum) and maize. Finger (Eleusine coracana), kodo (Paspalum scrobiculatum), foxtail (Setaria italica), proso (Panicum miliaceum), barnyard (Echinochloa frumentacea) and little millets (Panicum sumatrense) are a few other common types of millets. Their production, agro-economic constraints, uses, nutritional quality, traditional processing techniques, and storage were described in the study area.

Yadav and Yadav (2007) studied the prevailing practices of post harvest handling and management (focusing on processing, pre-cooling, grading, packaging, transport, storage and marketing) of horticultural produce (including fruits and vegetables) in the northeastern region of India: Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. Postharvest handling, processing and marketing constraints were enumerated. Some thrust areas, identified in post harvest technology for value addition and employment generation, were given.

Singh (2008) found that the major problems faced by processing sector were, low productivity of raw materials leading to high unit price of final products, lack of storage infrastructure leading to wastage and increasing unit price of finally available quantity, lack of trained human resource, inadequate knowledge of material and lack of market intelligence and inadequate cold storage and refrigerated transport facility of the fresh as well as processed commodities which needs to be solved immediately for the growth of processing sector.

3. METHODOLOGY

This chapter is intended to present the climatic and economic feature of the study area, nature and sources of data collected, analytical tools and techniques employed to evaluate the objectives of the present study. This chapter is presented under the following headings.





3.5 Definition of term and concepts used in the study


Karnataka state is situated in the west central part of peninsular India. It consists of a narrow elongated belt along with the Arabian Sea and Western Ghats and enhancing coastline of about 400 kilometers. The state has an area of 1,19,257 sq. km and is situated between 115 degree and 19 degree north latitude and 74 degree and 78 degree longitudes. The state is bounded by Maharastra on the north Goa and the Arabian Sea on the west, Andhra Pradesh on the east and with Tamil Nadu and Kerala on the south. The Karnataka state has population of 5.27 crores with a decade growth rate during 1991-2001 (17.25%). Among 30 districts Bangalore urban has the largest population (65.23 lakhs) followed by Belgaum district (42.07 lakhs).

The average annual normal rainfall is the state is 1139 mm. The state receives rainfall both from southwest and northeast monsoons. The mean temperature ranges from 21.5

0C. The climatic endowments are favorable for the adoption of crossbred cattle and for

the production of crops throughout the year if water is made available.

3.1.1 Location of Tumkur district

The district headquarters is located at Tumkur town, just 60 kms from Bangalore on Pune–Bangalore National highway No 4. The main Bangalore – Miraj railway line passes through Tumkur, Gubbi and Tiptur towns (Fig. 1).

Pennar, Lower Cauvery and Lower Tungabhadra drain the district. Pennar Basin is comprised of three watersheds and is drained by Jayamangala and Kumudvathi rivers which are tributaries of North Pinakini river. River Shimsha drains the area falling in Lower Cavery Basin in the district and is comprised of five watersheds. Lower Tungabhadra Basin is drained by Vedavathi and Suvarnamukhi rivers in the district. The rivers and streams originate from small watersheds and empty into number of tanks scattered in the district. The drainage pattern in the area can be described as semidendratic to dendratic.

3.1.2 Population and literacy

The schedule tribe population constitutes 1.94 lakhs of which 1.70 lakhs live in rural areas and remaining 0.24 lakhs of schedule tribe people live in urban areas. The sex ratio in the district is 967 females for every 1000 males. But in Kunigal taluk sex ratio is 1024 females for 1000 males. Population density is 244 per sq km ( 2011 census).

3.1.3 Topography, rainfall and climate

The district is generally, an open tract except in the south of Kunigal taluk, where the area is covered with intensive thick forests with hills. The other parts consist of mainly undulating plains interspersed with clumps of tall and well grown trees. To the east of Tumkur and north of Devarayanadurga, the region presents beautiful scenery of hill ranges intersected by cultivated valleys.

Tumkur district was formed in 1966 under Nandidurga division, located between north latitudes 12

045’ to 14

020’ and east longitudes 76

020’ to 77

031’. The district is having

geographical area of 10648 sq. kms.

Fig 1. Map of Tumkur district showing the study taluks

The total population in the district is around 25, 84711 (as per 2011 census), out of which rural population constitutes 20.78 lakhs. The schedule cast population constitutes 4.74 lakhs, out of which 4.12 lives in rural areas and remaining 0.62 lakh schedule caste population lives in urban areas of the district.

3.1.4 Agriculture

Agriculture is the main activity of the population in the district. The net sown area comprises 63.6% of the total geographical area. paddy, ragi, jowar, groundnut and sunflower are the important agricultural crops and coffee and coconut are the main plantation crops. About 43.8% of the net sown area is irrigated by surface water (13.44%) and ground water (12.6%) sources. Cauvery, Jayamangala and Kumadavati are the tributorties of north Pinakini river. The district is comprised of five watersheds. Lower Tungabdhra basin drained by Vedavati and Suvarnamukhi.

3.1.5 Soil Type

Major types of soils occurring in the district are 1) Red loamy soil, 2) Red sandy soil and 3) Mixed red and black soils. Red loamy soil occurs in eastern central part of the district covering Koratgere, Tumkur, and eastern parts of Madhugiri and Kunigal Taluks. Red sandy soil covers rest of the area except very small area in the northwestern part of Chiknayakanahalli taluk are mixed red and black soil occurs.

3.1.6 General information during 2011.

Sl. No.

Particulars Tumkur taluk Gubbi taluk

1. Geographical area (sq. km) 1,026 1,221

2. Administrative division

a) Number of panchayats

33

41

3. Population

a) Rural

b) Urban

2,67,732

2,48,929

2,39,608

16,805

4. Sex ratio 925 977

5. Literacy rate 75 67.5

6. Average annual rainfall (mm) 629 618

7. Geomorphology

a) Major physiographic industries 2 -

b) Major drainages 3 -

8.

Land use

a) Forest area (hectares)

b) Net area sown (hectares)

c) Cultivable area (hectares)

45,177

5,82,687

8,05,531

10,090

78,418

2,731

9. Major soil types Red loamy, red sandy, mixed red and black

soil

Red loamy, red sandy,

mixed red and black soil

10.

Area under principal crops (hectares)

a) Cereals

b) Pulses

c) Oilseeds

d) Fruits

e) Vegetables

f) Sugarcane

g) Coconut

h) Other non-food crops

2,17,251

58,688

1,60,209

15,920

1,865

509

12,266

1,65,798

36,952

8,204

569

6,040

404

-

27,856

91,352

6.

Irrigation by different sources

a) Tanks

b) Canals

c) Wells

d) Other sources

e) Net area irrigated

10,273

2470

1,19,926

-

1,32,669

3,219

-

144

-

28,492

3.1.7 General information of Tumkur taluk

The taluk having a geographical area of 1026 sq. km in that 10090 hectare area is under forest and 582687 hectare area is under net sown, administrative divisions 33, people are living in rural 2,67,732 and peoples living in urban areas 248929.

The sex ratio was 925, literacy rate of the taluk is 75 per cent with an annual rainfall of 629 mm. The taluk has two major physiographic industries and three major drainages. Red loamy, red sandy, mixed red and black soil are the major soil types appeared in this taluk. Cereals, pulses, oilseeds, plantation crops, fruit crops and vegetables are major crop grown in this taluk. Tanks (10,273), canals (2,470), wells (144) are the major irrigation sources. In this taluka, four co-operative and six private coir units are found during 2011.

3.1.8 General information of Gubbi taluk

The taluk having a geographical area of 1221 sq. km in that 1,22,057 hectare area is under forest and 78418 hectare area is under net sown, 41 administrative divisions, 2,39,608 people are living in rural and peoples living in urban areas 16,805.

The sex ratio was 977, literacy rate of the taluk is 67.5 per cent with an annual rainfall of 618 mm. The taluk has two major physiographic industries and three major drainages. Red loamy, red sandy, mixed red and black soil are the major soil types appeared in this taluk. Cereals, pulses, oilseeds, plantation crops, fruit crops and vegetables are major crop grown in this taluk. Tanks (3219), canals, wells are the major irrigation sources. In this taluka is one co-operative and three private coir units are found during 2011.

3.1.9 Location of Hassan district

Hassan district is located on the border of the Western Ghats, in the southern part of Karnataka state (Fig. 2). It is located between 12°30’ and 13°35’ North latitude and 75°15’ and 76°40’ East longitude. Hassan town is the district headquarters and the district is divided into eight taluks viz. Alur, Arkalgud, Arsikere, Belur, Chennarayapatna, Hassan, Holenarsipur and Sakleshpur.

The district is divided into three distinct geomorphic industries i.e. the Western and north-eastern hilly terrains constituting part of the Western Ghats, the Central transition zone and the Eastern Maidan (plain) region. The major part of the district is in Cauvery main basin drained by Cauvery, Hemavathy and Yagachi rivers, which flow towards east to join the Bay of Bengal. A small part on the eastern side is falling in west flowing minor river basin.

Fig 2. Map of Hassan district showing the study taluks

3.1.10 Population and literacy

Population of the district (2011 census) is 17,21,669 of which 14,16,996 is rural and 3,04,673 is urban.

3.1.11 Topography, rainfall and climate

The average rainfall of the district is 977.62 mm. The highest (2050.3 mm) rainfall has occurred in Sakleshpur taluk, which is adjoining the Western Ghats and the lowest (733.3 mm) in Arsikere taluk, which is in Maidan (Plain) region. The topographic influence on rainfall is clear from the spatial distribution.

3.1.12 Agriculture

Agriculture is the main activity of the population in the district. The net sown area comprises 55% of the total geographical area. paddy, ragi, jowar, groundnut and pulses are the important agricultural crops and coffee, coconut and arecanut are the main plantation crops. About 20.5% of the net sown area is irrigated by surface water (11.4%) and ground water (9.1%) sources.

Hemavathy reservoir is a major irrigation project and Yagachi is a medium Irrigation Project in the district. Central ground water board has carried out systematic hydrogeological survey, reappraisal hydrogeological survey.

3.1.13 Soil type

The soils of the district display a wide diversity and are quite fertile. The main soil types are red soil, red sandy soil, mixed soil and silty clay soil. The soils in the western taluks are derived from granites, laterites and schists.

These soils are shallow to medium in depth and the colour changes with depth from red at the surface and red and yellow mottles at depth. The soils are suitable for coffee, cardamom, arecanut, coconut, paddy and sugarcane crops. In the eastern taluks, the soils are red sandy soil, which are derived from granite, gneisses and schists.

These are shallow, loamy to sandy loamy in texture and are intermixed with coarse gravel and pebbles and well drained but poor in moisture retaining capacity. These soils are suitable for crops like paddy, sugarcane, coconut, potato and vegetables under irrigated conditions and ragi, millets, groundnuts and cotton under rain fed conditions. In parts of Arsikere taluk, black soils are also seen locally.

3.1.15 General information of Channarayapatna taluk

The taluk having a geographical area of 1,03,464 sq. km in that 697 sq. km area is under forest and 64,025 sq. km area is under net sown, administrative divisions 6. Population of 2,78,105, rural population is 2,43,590 and 34,515 people living in urban areas. The sex ratio was 1021; literacy rate of the taluk is 67.3 per cent with an annual rainfall of 669 mm.

The taluk has three major physiographic industries viz., western malnad, central semi-malnad and eastern plain area, major drainages are Cauvery, Hemavati and Yagachi. Ragi, paddy, maize, oilseeds and horticultural crops are major crop grown in this taluk. This taluk consists of 16,424 irrigation sources (dug wells 14,068 and tube/borewells 242). The taluka is having three co-operative and seven private coir units during 2011.

3.1.16 General information of Arsikere taluk

The taluk having a geographical area of 12,3452 sq. km in that 15,049 sq. km area is under forest and 64,783 sq. km area is under net sown, administrative divisions 6. Population of 3,03,044 rural population is 2,57,879 and 45,166 people living in urban areas.

The sex ratio was 992, literacy rate of the taluk is 71.5 per cent with an annual rainfall of 1043 mm. Ragi, paddy, maize, oilseeds and horticultural crops are major crop grown in this taluk. This taluk consists of 11167 irrigation sources (dug wells 11121 and tube/borewells 249). The taluka is having ten co-operative and eight private coir units during 2011.

3.1.14 General information during 2011

Sl. No. Particulars Channaraya patna taluk

Arsikere taluk

1. Geographical area (sq. km) 103,464 123,452

2. Administrative division

Number of panchayats

6

5

3. Population 278,105 303,044

a) Rural 243,590 257,878

b) Urban 34,515 45,166

4. Sex ratio 1,021 992

5. Literacy rate 67.3 71.5

6. Average annual rainfall (mm) 669 1,043

7.

Land use (sq. km.)

a) Forest area

b) Net area sown

697

64,025

15,049

64,783

8.

Area under principal crops (hectares)

a) Ragi

b) Paddy

c) Maize

d) Oilseeds

e) Coconut

f) Horticultural crops

20,305

3,825

9,005

2,035

23,530

74,825

14,361

352

2,240

12,820

26,140

74,915

9.

Irrigation by different sources (hectares)

a) Dugwells

b) Tube / borewells

c) Tanks / ponds

d) Canals

e) Other sources

f) Lift irrigation

g) Net irrigated area

16,424

14,068

242

41.6

-

-

22

11,167

11,121

249

-

-

-

-


To fulfill the objectives of the study, four taluks namely Tumkur, Gubbi, Channarayapatna and Arsikere were purposively selected from the two districts namely Tumkur and Hassan. However, due to the difficulty in eliciting required information from the integrated coir units, the present investigation was confined to the co-operatives and private coir units. The sample included four co-operatives and four private coir units selected from each of the above taluks. Gubbi coir clusters industry was established in the year 1995, Basaveshwara coir industry at Tumkur and it was established in the year 1998, SMS coir industry at Channarayapatna and it was established in the year 1997 and Jenukal coir industry at Arsikere and it was established in the year 1992. There are four private coir processing units namely Veerabhadra coir industry at Tumkur it was established in the year 1990, Kumara coir units at Gubbi and it was established in the year 1993, Adihalli coir industry at Channarayapatna and it was established in the year 1989 and Kalyadi coir industry at Arsikere and it was established in the year 1991. Four wholesalers, four commission agents, four traders and four retailers were selected by choosing four co-operatives and four private coir units from each of the talukas. Selection of districts, talukas, co-operatives and privates are shown hereunder.

Total liabilities

Owned funds

Samples Districts Taluks

Co-operatives Privates

Hassan 1. Arsikere

2. Channaraypatna

1

1

1

1

Tumkur 1. Tumkur

2. Gubbi

1

1

1

1

Total 4 4

Grand total 8


The data required for accomplishing the objectives of the study were collected both from primary and secondary sources in the year 2011-12

The primary data were collected from the coir industrial owners related to coir procurement cost, processing cost, inventory costs, management issues in procurement, processing and marketing returns from the sale of main products and by-products and also problems encountered in the coir processing operations.

Secondary data were collected from the records maintained by the coir industry owners. These data pertained to the details of assets and liabilities, extent of investment made at different points in time, cash inflows and cash outflows. The data were collected for a period of eight years from 2001-2008.


In order to analyze the objectives of the study, the data collected subjected to analysis through appropriate techniques as follows:

1. Tabular analysis

2. Financial ratio analysis

3. Financial feasibility analysis

3.4.1 Tabular analysis

The data collected were presented in tabular form to facilitate easy comparisons. The investment pattern cost of procurement, inventory costs, value addition, costs and returns in coir processing and problems faced by the processors were studied using tabular analysis. The data were summarized with the help of statistical tools like averages and percentages to obtain meaningful inferences.

3.4.2 Financial ratios analysis

The financial ratio analysis technique was considered useful in evaluating the performance of the coir units. The ratio analysis technique was employed to study the solvency, liquidity, profitability, and sales of the processing units. The ratios used in the analysis are described below.

Test of solvency

The solvency ratios would indicate the ability of the processing units to meet its medium and long term obligations. They would also provide a basis for measuring the solvency position of the coir units. Ratios such as total liabilities to owned funds and fixed assets to own funds were employed.

a) Total liabilities to owned funds

The ratio reflects the total commitments which the coir processing units owed to the creditors in relation to their owned funds. This ratio is computed using the equation given below.

Total liabilities to owned funds =

Fixed assets

Owned funds

Liquid assets

Total assets

Current assets

Current liabilities

Net profits

Fixed assets

The total liabilities refer to all the items under the liability column of balance sheet except the net profits, subsidies, and owned funds. The paid-up share capital, depreciation fund, reserve funds and net profits were included under the owned funds of the coir units.

b) Fixed assets to owned funds ratio

This ratio would indicate the extent of owned funds invested in fixed assets obtained using following equation.

Fixed assets to owned funds ratio =

Fixed assets include the value of sites, buildings, furniture, fixtures, vehicles etc.

Test of liquidity

These measure the ability of the coir units to meet their maturing obligations. These ratios are also called balance sheet ratios. Current ratio and liquid assets to total assets ratio were employed to measure the liquidity position of the coir units.

(a) Liquid assets to total assets ratio

Liquid assets included cash in hand, cash at bank, short term deposits, value of closing stock adjusting heads due to, sundry debtors, deposits with banks etc. The total assets included all items under the assets column of the balance sheet, viz, sum of current assets and fixed assets.

Liquid assets to total assets ratio =

(b) Current ratio

The ratio would measure the number of industries of current assets owned by the coir units to meet each of the short term obligations. It is given by the following equation.

Current ratio =

If the ratio was more than one, it is suggested that current assets were adequate to pay off all current liabilities. If it was one, they were just sufficient and if less than one, coir units are unable to pay current dues when asked for. Current liability was obtained by deducting long term loans and long term deposits from the total liabilities.

Test of profitability

The profitability ratios would provide a fairly sound method of diagnosis of the financial status of the coir units and its overall efficiency. These ratios compared the returns over the amount sunk into the business by the coir units. Thus, these ratios indicated the profitability of sales and investments made in the business. The ratios employed for the study are discussed below.

(a) Ratio of net profit to fixed assets

This ratio would indicate the earning capacity of the fixed assets of the coir units. It was computed as follows.

Net profits to fixed assets =

An increase in the ratio over the years would show improved overall efficiency of the coir units. Net profits included the amount of income by the coir units after meeting all its expenses at the end of the year.

Net profits

Owned funds

Discounted net return

Initial investment

(b) Net profits to owned funds ratio

This ratio indicates the profit earned by the processing industry on the owned funds invested in the business. Higher ratio would indicate higher percentage of income generated on the equity

Net profit to owned funds ratio =

A higher ratio indicates the higher overall efficiency of business of the coir units and fuller utilization of its total resources and vice versa.

3.5.3 Financial feasibility analysis

Investment analysis techniques were carried out to evaluate the feasibility of investment in coir units. The discounted cash flow technique which has an advantage of reducing the cash flows to a single point of time was used to facilitate the comparison.

Financial feasibility analysis was conducted for representative co-operatives and private coir processing units. These representative industries - two co-operative and two private were created based on the information collected by the research work. The feasibility analysis conducted for the representative industries were based on certain assumptions mentioned hereunder.

Four conventionally used project evaluation techniques were adopted in the study to evaluate the feasibility of the investment in coir processing units. They are as follows.

a) Net present value (NPV)

b) Benefit cost ratio (BCR)

c) Payback period (PBP)

d) Internal rate of return (IRR)

(a) Net Present Value

This indicates the present value of expected or realized net cash flows or returns of the project over its life time when discounted at the opportunity cost of capital. The opportunity cost of capital considered in this study was 12 percent per annum.

The NPV was worked out as follows:

( )t

t

YNPV= -I

1+r∑

Y = Net returns in period t

t = 1…………….20

r = Discount rate

I = Initial investment

(b) Benefit Cost Ratio

The benefit cost ratio was worked out by discounting the net returns during the life period of the coir processing industry at a discount rate of 12 percent per annum. The formula used was:

Benefit cost ratio =

(b) Internal Rate of Return

It is the discount rate which makes the net present value of the project benefits equal to zero. It is usually determined by trial and error method. In this study also IRR was computed by trial and error method.

For this, the discount rate was too low and which the NPV positive and another discount rate which was too high and which made the NPV negative were ascertained. Then the IRR was estimated as follows:

Present worth of cash flows at lower discount rate

IRR = Lower discount rate + × [difference between Sum of the two NPVs worth of cash flows ignoring the negative sign stream at 2 rates]

The project is considered to be feasible if the IRR is higher than the prevailing interest rate.

(c) Payback Period

It indicates the number of years required to recover the initial investment made in coir units. The method followed is to successively add the net returns from each production year until the investments are completely recovered. Since, the cash flows from coir units were not uniform; the payback period was calculated by successively reducing the net cash flows from outstanding investments.

Description of coir

Coir is a natural fibre extracted from the husk of coconut and used in products such as floor mats, doormats, brushes, mattresses, etc. Technically, coir is the fibrous material found between the hard, internal shell and the outer coat of a coconut. Uses of brown coir (made from ripe coconut) are in upholstery padding, sacking. White coir is harvested from unripe coconuts, is used for making finer brushes, string, rope and fishing nets.

Ropes and cordage made from coconut fibre have been in use from ancient times. Indian navigators who sailed the seas to Malaya, Java, China, and the Gulf of Arabia centuries ago used coir for their ship ropes. Arab writers of the 11th century AD referred to the extensive use of coir for ship ropes and rigging. A coir industry in the UK was recorded before the second half of the 19th century. During 1840, Captain Widely, in co-operation with Captain Logan and Mr. Thomas Treloar, founded the well-known carpet firms of Treloar and Sons in Ludgate Hill, England, for the manufacture of coir into various fabrics suitable for floor coverings.

Structure

Coir fibres are found between the hard, internal shell and the outer coat of a coconut. The individual fibre cells are narrow and hollow, with thick walls made of cellulose. They are pale when immature, but later become hardened and yellowed as a layer of lignin is deposited on their walls. Each cell is about 1 mm (0.04 in) long and 10 to 20 µm (0.0004 to 0.0008 in) in diameter. Fibres are typically 10 to 30 centimetres (4 to 12 in) long. The two varieties of coir are brown and white. Brown coir harvested from fully ripened coconuts is thick, strong and has high abrasion resistance. It is typically used in mats, brushes and sacking and mature brown coir fibres contain more lignin and less cellulose than fibres such as flax and cotton is a stronger but less flexible. White coir fibres harvested from coconuts before they are ripe are white in colour and are smoother finer, but also in weaker and they are generally spun to make yarn used in mats.

The coir fibre is relatively waterproof, and is one of the few natural fibres resistant to damage by saltwater. Fresh water is used to process brown coir, while seawater and fresh water are both used in the production of white coir.

Processing

Coconuts are the seeds of a species of palm, Cocos nucifera. These palms flower on a monthly basis and the fruit take one year to ripen. A palm tree may have fruit in every stage of maturity. A mature tree can produce 50 to 100 coconuts per year. Coconuts can be harvested from the ground once they have ripened and fallen.

A human climber can harvest about 25 trees in a day, while a knife attached to a pole can up the number to 250 trees harvested in a day. Monkeys can also be trained to harvest the coconuts, but this practice is less efficient than other methods. Green coconuts, harvested after about six to 12 months on the palm, contain pliable white fibres. Brown fibre is obtained by harvesting fully mature coconuts when the nutritious layer surrounding the seed is ready to be processed into copra and desiccated coconut. The fibrous layer of the fruit is then separated from the hard shell (manually) by driving the fruit down into a spike to split it (dehusking). A well-seasoned husker can manually separate 2,000 coconuts per day. Machines are now available which crush the whole fruit to give the loose fibres and they can process up to 2,000 coconuts per hour.

Brown fibre

The fibrous husks are soaked in pits or in nets in a slow-moving body of water to swell and soften the fibres. The long bristle fibres are separated from the shorter mattress fibres underneath the skin of the nut, a process known as wet-milling. The mattress fibres are sifted to remove dirt and other rubbish, dried in the sun and packed into bales. Some mattress fibre is allowed to retain more moisture so it retains its elasticity for twisted fibre production. The coir fibre is elastic enough to twist without breaking and it holds a curl as though permanently waved. Twisting is done by simply making a rope of the hank of fibre and twisting it using a machine. The longer bristle fibre is washed in clean water and then dried before being tied into bundles. It may then be cleaned and 'hackled' by steel combs to straighten the fibres and remove any shorter fibre pieces. Coir bristle fibre can also be bleached and dyed to obtain hanks of different colours.

White fibre

The immature husks are suspended in a river or water-filled pit for up to ten months. During this time, micro-organisms break down the plant tissues surrounding the fibres to loosen them a process known as retting. Segments of the husk are then beaten by hand to separate out the long fibres which are subsequently dried and cleaned. Cleaned fibre is ready for spinning into yarn using a simple one-handed system or a spinning wheel.

Researchers at CSIR's National Institute for Interdisciplinary Science and Technology in Thiruvananthapuram have developed a biological process for the extraction of coir fibre from coconut husk without polluting the environment. The technology uses enzymes to separate the fibres by converting and solubilizing plant compounds to curb the pollution of waters caused by retting of husks.

Uses of fibre

Brown coir is used in floor mats and doormats, brushes, mattresses, floor tiles and sacking. A small amount is also made into twine. Pads of curled brown coir fibre, made by needle-felting are shaped and cut to fill mattresses and for use in erosion control on river banks and hillsides. A major proportion of brown coir pads are sprayed with rubber latex which bonds the fibres together

The major use of white coir is in rope manufacture are mats of woven coir fibre are made from the finer grades of bristle and white fibre using hand or mechanical looms. White coir also is used to make fishing nets due to its strong resistance to saltwater.

Description of the coir industry

Indian coir industry is an important cottage industry contributing significantly to the economy of the major coconut growing states and union territories i.e., Kerala, Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, Goa, Orissa, Assam, Andaman and Nicobar, Lakhsadweep, Pondicherry etc. About 5.5 lakh persons get employment generated in this country. The export from this country is around Rs. 70 crores. Coconut husk is the basic raw material for coir products. Around 50 per cent of the available coir husk is used to produce coir products. In Karnataka 176 co-operative coir units and 333 private coir units are existed. Tumkur district producing 9,715 lakh coconut nuts production and out of these nuts 30 per cent of coconut husk using for household purpose and 30 per cent used by the coir units. Similarly, in Hassan district 4,656 lakh coconut nuts are producing from this 30 per cent used for household and 50 per cent used by the coir units.

3.5 Definition of terms and concepts used in the study

Transportation and handling cost: This cost incurred on hiring the transport facilities and loading and unloading of raw materials.

Packaging cost: It was the expenses incurred on packing materials like gunny bags, sutli or any such materials.

Inventory: It is defined as usable but idle resource at different stages.

Raw material: It means that the products brought by the farmers and others that were processed but not packed.Cost of carrying inventory: This is expressed in rupees per item held in stock per unit time. It was worked out by adding the items of packaging material cost, labour charge and cost of wastage.

Fixed capital: The items included under the fixed capital are the cost of land, building, machinery and equipments and other fixtures.

Working capital: The working capital includes cost of raw materials, utilities (like power, oil and water charges), processing material (cloth bags, tags) cost, wages, salaries, company overheads (repair and maintenance cost) and administrative overheads (stationeries expenses, office communication), interest on working capital, chemical cost, license fee, cost of processing and advertisement expenses.

Investment on building: This included investment on building for processing/value addition, storage, and office and drying yard.

Investment on machinery and equipments: Investment made on display cases and weighing machines etc.

Investment on other fixtures: Included investment on fan, tube lights, furniture and computers in the retail outlets.

Investment on infrastructure: Included investment on power generator, trolleys and transport vehicles.

Pre-cleaning: It referred to the removal of particles such as pieces of trash, removal of foreign materials, other products etc., larger in size than desirable products from threshed products lot. In the case of fruits and vegetables, it was the washing of fruits and vegetables to remove dusts, removal of decayed material etc.

Grading: It referred to the actual cleaning and grading of products based on the quality preferences.

Bagging and weighing: It referred to filling of products in bags to an exact weight.

Cost and returns: The total marketing cost incurred by the coir units owners were calculated by adding rent, transportation cost, packaging cost, labour charge, loading and unloading charge and miscellaneous charges like repair and maintenance and electricity charges. The percentage share of the value of the total value has been worked out.

Gross return: Gross returns was worked out by deducting the total purchase value from total sale value

Gross returns = Total sale value – Total purchase value

Net returns: Net returns was arrived at by deducting the total marketing costs from gross returns

Net returns = Gross returns – Total cost

Value addition: Value addition is the process of enhancing value of any commodity by doing many activities. Value of the commodity can enhance by change in the form of raw materials to finished produce

Cash inflow: Money received by an organization as a result of its operating activities, investment activities and financial activities

Cash outflow: Money paid out by an organization as a result of its operating activities, investment activities and financial activities

Discounted cash flow: A valuation method used to estimate the attractiveness of an investment opportunity.

4. RESULTS

The findings of the study pertaining to investment pattern, financial feasibility, sales, value addition, cost and returns structure, processing and marketing of coir products results of the study are presented under this chapter. For purpose of clarity in presentation, the findings are presented under the following headings.




4.4 Marketing cost of coir products



4.1.1 Investment pattern in coir products

From the Table 4.1, it can be seen that the total fixed capital investment of Rs. 48.30, 52.90, 70.30, 66.75 and 59.56 lakhs for co-operative coir unit in Tumkur, Gubbi, Channarayapatna, Arasikere and overall average respectively. Similarly, the total fixed capital investment of Rs. 35.25, 32.15, 56.25, 60.36 and 46.00 lakhs for Private coir unit in Tumkur, Gubbi, Channarayapatna, Arasikere and overall average respectively.

The investment on machinery and equipments was the highest followed by buildings, land, infrastructures and miscellaneous. The proportion of investment on land in the total investment was found to be highest in Channarayapatna Co-operative coir unit (Rs. 17.00 lakhs) while in private coir unit, Arasikere was found highest (Rs. 18.26 lakhs). Similarly the proportion of fixed capital invested on building was higher in Channaraypatna Co-operative coir unit (Rs. 14.50 lakhs) and in Arasikere private coir unit (Rs. 12.10 lakhs). The proportion of investment on machinery and equipment was higher in Arasikere private coir unit (Rs. 17.25 lakhs) compared to Channaraypatna co-operative coir unit (Rs. 24.00 lakhs). In respect of infrastructures, investment was more in co-operative coir unit (Rs. 10.25 lakhs) than in private coir unit (Rs. 7.75).

The comparison of investment between the co-operative coir unit and private coir unit revealed that the fixed capital requirement in the case of co-operative coir unit was higher than that of private coir unit.

4.1.2 Financial feasibility of coir processing units

Table 4.2, 4.3 and 4.4 presents the cash flows in representative co-operative coir unit and private coir unit respectively. As can be seen from the tables, cash inflows and cash outflows varied widely over the years during the life of the project. The net discounted cash flow of co-operative coir unit worked out to be Rs 47.86 lakhs, 54.19 lakhs, 34.80 lakhs, and 33.56 lakhs in Tumkur, Gubbi, Channaraypatna and Arasikere respectively. Similarly, The net discounted cash flow of co-operative coir unit worked out to be Rs 46.63 lakhs, 58.10 lakhs, 20.81 lakhs, and 23.29 lakhs in Tumkur, Gubbi, Channaraypatna and Arasikere respectively

The table showed four discounting measures of financial feasibility, namely, Net present value, Benefit cost ratio, Internal rate of return and Pay back period for both co-operative coir unit and private coir units. The net present value of all the cash flows during the life of the coir unit was Rs 39.99, 29.93, 54.95 and 61.38 lakhs in Tumkur, Gubbi, Channaraypatna and Arasikere for co-operative coir unit and 50.40 , 61.58, 26.82 and 30.12 lakhs in Tumkur, Gubbi, Channaraypatna and Arasikere for private coir unit unit, respectively. This showed that the coir unit, whether co-operative or private unit found to be highly feasible. The benefit cost ratio worked out to be 1.15, 1.10, 1.14 and 1.17 of Tumkur, Gubbi, Channaraypatna and Arasikere for co-operative coir unit and 1.21, 1.29, 1.08 and 1.08 of Tumkur, Gubbi, Channaraypatna and Arasikere for private coir unit. This implied that, for every one rupee invested in co-operative coir unit, the net returns was 15.00, 10.00, 14.00 and 17.00 paisa of Tumkur, Gubbi, Channaraypatna and Arasikere in present value terms.

Table 4.1: Investment pattern in different coir processing units

(Rs in lakhs)

Co-operative coir processing units Private coir processing units

Particulars

Tumkur Gubbi Channaraya

patna Arasikere Average Tumkur Gubbi

Channaraya patna

Arasikere Average

Land 13.00

(26.92) 14.00

(26.47) 17.00

(24.18) 16.25

(24.34) 15.06

(25.29) 16.00

(45.39) 15.00

(46.66) 18.00

(32.00) 18.26

(30.25) 16.81

(36.55)

Building 10.50

(21.74) 11.75

(22.21) 14.50

(20.63) 13.25

(19.85) 12.50

(20.99) 5.00

(14.18) 4.75

(14.77) 11.00

(19.56) 12.10

(20.05) 8.21

(17.85)

Machinery & Equipments

16.00 (33.13)

17.15 (32.42)

24.00 (34.14)

23.65 (35.43)

20.20 (33.91)

10.00 (28.37)

8.50 (26.44)

16.00 (28.44)

17.25 (28.58)

12.93 (28.12)

Infrastructures 6.25

(12.94) 7.00

(13.23) 10.25

(14.58) 9.75

(14.61) 8.31

(13.95) 4.00

(11.35) 3.80

(11.82) 7.00

(12.44) 7.75

(12.84) 5.63

(12.25)

Miscellaneous* 2.55

(5.27) 3.00

(5.67) 4.55

(6.47) 3.85

(5.77) 3.48

(5.86) 0.25

(0.71) 0.10

(0.31) 4.25

(7.56) 5.00

(8.28) 2.40

(5.22)

Total 48.30 52.90 70.30 66.75 59.56 35.25 32.15 56.25 60.36 46.00

*Miscellaneous include almeras, lockers, electrical installations etc.

Figures in the parentheses indicate percentages of the total.

In respect of private coir units, the net returns for one rupee investment was 21.00, 29.00, 08.00 and 08.00 paisa of Tumkur, Gubbi, Channaraypatna and Arasikere. The internal rate of return of co-operative coir unit of Tumkur (31.00%), Gubbi (26.00%), Channaraypatna (31.00%) and Arasikere (33.00%), respectively. The IRR of private coir unit of Tumkur (51.00%), Gubbi (61.00%), Channaraypatna (26.00%) and Arasikere (26.00%), respectively. Since these values of Internal rate of return are considerably higher than the prevailing rate of interest, both coir processing units were highly financially feasible.

The results pertaining to Payback period were in line with the estimated values of NPV, BC ratio and IRR. The Payback period for co-operative coir unit of Tumkur was (1.51 years), Gubbi was (1.78 years), Channaraypatna was (1.55 years) and Arasikere (1.43 years) respectively. The PBP for private coir unit of Tumkur was (1.20 years), Gubbi was (0.98 years), Channaraypatna was (2.03 years) and Arasikere was (1.97 years) respectively. This implied that the initial investment made in co-operative coir unit were completely paid off in around one and half years. In respect of private coir unit, the period required for the capital recovery found to be on around two years.

4.1.3 Financial ratios of coir processing units

Table 4.5 and 4.6 presents the financial ratios computed in respect of co-operative and private coir units for eight years. The solvency ratios analyzed included total liabilities to owned funds ratio and fixed assets to owned funds ratio. Total liabilities to owned funds ratio showed increasing trend in respect of both co-operative and private coir units.

Solvency ratios included total liabilities to owned funds ratio and total assets to owned funds ratio, the values of these ratios were 1.20, 1.15, 1.03, 1.20, 1.11, 1.04, 1.08 and 1.25 during the year 2001-08. The average ratio for the eight years was 1.13. The corresponding numbers for the private coir units 1.06, 1.20, 1.15, 1.13, 1.05, 1.16, 1.07 and 1.16 with an average of 1.12. The other solvency ratio, namely, fixed assets to owned funds ratio turned out to be 1.01, 1.04, 1.07, 0.98, 0.93, 1.02, 0.95 and 0.99 for 2001-08 with an average for the eight years of 0.99. These numbers in respect of private coir units were at 1.07, 1.09, 1.15, 1.00, 0.95, 1.05, 0.95 and 1.00 for the corresponding years.

The computed liquidity ratios included liquid assets to total assets ratio and current assets to current liabilities ratio. The former was 1.14, 1.0, 1.00, 1.08, 2.50, 2.00, 2.05 and 3.5 for 2001-08, respectively. While they were of the order of 1.34, 1.22, 1.15, 1.26, 2.20, 1.99, 2.56 and 3.50 for private coir units. The current assets to current liabilities ratio was found to be 2.14, 1.32, 1.28, 1.48, 3.00, 2.95, 3.50 and 4.01 for the corresponding years. The average ratio was 2.46. This ratio took the higher value in the case of private coir units with an average of 2.55 for eight years.

Under profitability ratios, net profits to fixed assets and net profits to owned funds ratio were calculated. The first ratio ranged from 0.16, 0.18, 0.15, 0.22, 0.29, 0.32, 0.39 and 0.44 for eight years in respect of co-operative coir units and from 0.26, 0.38, 0.25, 0.42, 0.49, 0.42, 0.55 and 0.59 in respect of private coir units. The net profits to owned funds ratio was considerably higher in 2008 (0.61) when compared to previous years in the case of co-operative coir units. The similar pattern was observed in the case of private coir units, where the value in 2008 was much higher at 0.66 compared to previous years.

4.1.4 Staffing pattern in coir processing units

Table 4.7 presented staffing pattern in different coir processing units. From the table, it can be seen that in the case of private coir units, do not have purchaser/ helper to assist in procurement and other processing activities.

Since the size of the co-operative coir unit is larger than private coir unit. The co-operative and private coir unit had maintained one security guard. It is evident from the Table that the total manpower requirement in co-operative coir unit (20) is higher as compared to private coir unit (16). This increase in manpower is attributed to the increased size of the co-operative coir unit and the higher output. The results pointed out that the employment generation is higher in co-operative coir unit in comparison with private coir unit.

Table 4.2: Cash flows in different co-operative coir processing units

(Rs in lakhs)

Cash inflows (Rs)

Cash outflows (Rs)

Net cash flows (Rs)

Net discounted cash flows (Rs)

Cash inflows (Rs) Cash outflows (Rs) Net cash flows (Rs) Net discounted cash

flows (Rs)

Years

Tumkur Gubbi Tumkur Gubbi Tumkur Gubbi Tumkur Gubbi Channaraya

patna Arasikere

Channaraya patna

Arasikere Channaraya

patna Arasikere

Channaraya patna

Arasikere

0 - - 48.30 52.90 - 48.30 -52.90 -70.30 -66.75 - - 70.30 66.75 - 70.30 -66.75 -48.30 -52.90

1 59.15 63.75 49.50 55.10 9.65 8.65 13.87 14.23 89.15 85.60 71.75 67.75 17.40 17.85 7.69 7.72

2 64.40 69.00 50.15 55.75 14.25 13.25 15.05 15.37 93.40 89.85 72.25 68.25 21.15 21.60 10.14 10.56

3 69.74 74.34 51.30 56.90 18.44 17.44 15.46 15.78 97.74 94.19 73.40 69.35 24.34 24.84 11.72 12.42

4 73.12 77.72 52.23 57.72 20.89 20.00 15.20 15.52 101.12 97.57 74.33 70.2 26.79 27.37 11.85 12.72

5 77.00 81.67 53.05 58.67 23.95 23.00 15.12 15.45 105.00 101.45 75.15 70.95 29.85 30.50 12.13 13.05

6 78.35 83.02 54.00 60.90 24.35 22.12 15.04 15.40 109.35 105.80 76.10 71.75 33.25 34.05 11.01 11.20

7 79.20 83.87 55.23 62.05 23.97 21.82 14.51 14.90 113.20 109.65 77.25 72.75 35.95 36.90 9.68 9.86

8 81.00 85.67 56.38 63.55 24.62 22.12 13.91 14.29 117.00 113.45 78.40 73.80 38.60 39.65 8.88 8.93

Total 47.86 54.19 Total 34.80 33.56

Table 4.3: Cash flows in different private coir processing units

(Rs in lakhs)

Cash inflows (Rs)

Cash outflows (Rs)

Net cash flows (Rs)

Net discounted cash flows (Rs)

Cash inflows (Rs) Cash outflows (Rs) Net cash flows (Rs) Net discounted cash

flows (Rs)

Years

Tumkur Gubbi Tumkur Gubbi Tumkur Gubbi Tumkur Gubbi Channaraya

patna Arasikere

Channaraya patna

Arasikere Channaraya

patna Arasikere

Channaraya patna

Arasikere

0 - - 35.25 32.15 -35.25 -32.15 -35.25 -32.15 - - 56.25 60.36 -56.25 -60.36 -56.25 -60.36

1 57.25 54.15 38.25 34.65 19.00 19.5 15.15 15.54 77.25 81.36 59.25 62.86 18.00 18.50 14.35 14.74

2 60.05 56.95 41.15 36.90 18.90 20.05 13.45 14.27 79.05 83.16 62.15 65.36 16.90 17.80 12.03 12.67

3 63.40 60.30 44.45 39.65 18.95 20.65 12.04 13.12 81.40 85.51 64.45 67.36 16.95 18.15 10.77 11.53

4 64.32 61.22 46.35 41.15 17.97 20.07 10.20 11.38 83.32 87.43 66.35 68.86 16.97 18.57 9.63 10.53

5 67.30 64.20 49.05 43.65 18.25 20.55 9.25 10.41 86.30 90.41 68.05 70.36 18.25 20.05 9.25 10.15

6 69.25 66.15 51.15 45.40 18.10 20.75 8.19 9.38 89.25 93.36 71.15 73.16 18.10 20.20 8.19 9.13

7 72.35 69.25 54.05 47.70 18.30 21.55 7.39 8.7 91.35 95.46 74.05 75.66 17.30 19.80 6.99 7.99

8 73.23 70.13 56.02 49.45 17.21 20.68 6.21 7.45 93.23 97.34 77.02 78.16 16.21 19.18 5.85 6.91

Total 46.63 58.10 Total 20.81 23.29

Table 4.4: Financial feasibility in different coir processing units

Co-operative coir processing units Private coir processing

units Sl. No.

Particulars



Channaraya patna

Arasikere Average

1 Net present value (lakh rupees)

39.99 29.93 54.95 61.38 46.56 50.40 61.58 26.82 30.12 42.23

2 Benefit cost ratio 1.15 1.10 1.14 1.17 1.14 1.21 1.29 1.08 1.08 1.17

3 Internal rate of return (%)

31 26 31 33 30.25 51 61 26 26 41.00

4 Payback period (years)

1.51 1.78 1.55 1.43 1.56 1.20 0.98 2.03 1.97 1.55

Plate 1. Manual method of rope making

Table 4.5: Financial ratios in respect of co-operative coir processing units

Ratios 2001 2002 2003 2004 2005 2006 2007 2008 Average

Solvency ratios

Total liabilities to owned funds 1.20 1.15 1.03 1.20 1.11 1.04 1.08 1.25 1.13

Fixed assets to Total assets 1.01 1.04 1.07 0.98 0.93 1.02 0.95 0.99 0.99

Liquidity ratios

Liquid assets total assets 0.32 0.33 0.36 0.42 0.56 0.48 0.61 0.65 0.46

Current assets to current liabilities 1.14 1.0 1.00 1.08 2.50 2.00 2.05 3.5 1.78

Profitability ratios

Net returns to fixed assets 0.16 0.18 0.15 0.22 0.29 0.32 0.39 0.44 0.26

Net returns to owned funds 0.18 0.16 0.28 0.36 0.40 0.49 0.52 0.61 0.37

Table 4.6: Financial ratios in respect of Private coir processing units

Ratios 2001 2002 2003 2004 2005 2006 2007 2008 Average

Solvency ratios

Total liabilities to owned funds 1.06 1.20 1.15 1.13 1.05 1.16 1.07 1.16 1.12

Fixed assets to Total assets 1.07 1.09 1.15 1.00 0.95 1.05 0.95 1.00 1.03

Liquidity ratios

Liquid assets total assets 0.38 0.35 0.40 0.44 0.59 0.58 0.66 0.69 0.42

Current assets to current liabilities 1.34 1.22 1.15 1.26 2.20 1.99 2.56 3.50 1.90


Net returns to fixed assets 0.26 0.38 0.25 0.42 0.49 0.42 0.55 0.59 1.39

Net returns to owned funds 0.38 0.47 0.68 0.56 0.60 0.62 0.58 0.66 1.03

Plate 1 Contd….

4.2 Costs and returns structure in coir processing units

4.2.1 Cost and return structure of co-operative coir fibre units

The cost and returns structure of coir fibre was presented in Table 4.8. It depicts the cost of production, marketing cost, total costs, gross returns and net returns. The cost of production was divided into direct and indirect expenses. In case of direct expenses the cost such as material cost, labour cost and miscellaneous cost were considered, while in case of indirect expenses, the costs such as rent, depreciation and miscellaneous cost were considered. The cost on transportation, storage, commission, advertisement, inspection and grading and packaging were included in the marketing cost.

The total cost of Tumkur co-operative coir fibre unit for per tonne was found to be Rs. 19,145 and marketing cost 2,280 (11.90%). In case of direct expenses, material cost constituted 16,000 (83.57%) followed by labour cost 500 (2.61%) and miscellaneous cost 60 (0.31%). In case of indirect expenses, rent constituted of Rs. 60 (0.31%), depreciation cost 200 (1.04%) and miscellaneous cost 45 (0.23%). In case of marketing cost such as transportation cost of Rs. 1,000 (5.22%) followed by storage 1,050 (5.48%), commission 55 (0.28%), advertisement 65 (0.33%), inspection and grading 75 (0.39%) and packaging 35 (0.18%). The gross return was found to be Rs. 35,000 while net returns was Rs. 15,855.

The total cost of Gubbi co-operative coir fibre unit for per tonne was found of Rs. 20,545 and marketing cost of Rs. 2060 (11.56%). In case of direct expenses, material cost constituted 15,000 (84.15%), labour cost 400 (2.24%) and miscellaneous cost 60 (0.34%). In case of indirect expenses, rent constituted 65 (0.36%), depreciation cost 200 (1.12%) and miscellaneous cost 40 (0.22%).

In case of marketing cost such as transportation of Rs. 900 (5.05%) followed by storage charge 950 (5.33%), commission charge of Rs. 50 (0.28%), advertisement of Rs. 60 (0.34%), inspection and grading of Rs. 70 (0.39%) and packaging of Rs. 30 (0.17%). The gross return was found to be Rs. 30,000 while net returns was Rs. 9,455.

Similarly in case of Channaraypatna co-operative coir fibre unit for per tonne was found of Rs. 20,545 and marketing cost 2,520 (12.26%). In case of direct expenses, material cost constituted Rs. 17,000 (82.74%), labour cost Rs. 600 (2.92%) and miscellaneous cost 75 (0.36%). In case of indirect expenses such as rent constituted of Rs. 75 (0.36%), depreciation cost of 220 (1.07%) and miscellaneous cost of 55 (0.26%). In case of marketing cost were included transportation accounted of Rs. 1,100 (5.35%) followed by storage charge of Rs. 1,150 (5.59%), commission charge of Rs. 65 (0.31%), advertisement of Rs. 75 (0.36%), inspection and grading of Rs. 85 (0.41%) and packaging of Rs. 45 (0.21%). The gross return was found of Rs. 38,400 while net returns was Rs. 17,855.

In case of Arasikere co-operative coir fibre unit for per tonne was found of Rs. 21,860 and marketing cost of Rs. 2,670 (12.21%). In case of direct expenses like material cost constituted of Rs. 18,050 (82.57%) followed by labour cost 700 (3.20%) and miscellaneous cost of 65 (0.30%).

In case of indirect expenses like, rent constituted Rs. 70 (0.32%), depreciation cost 240 (1.10%) and miscellaneous cost 65 (0.35%). In case of marketing cost, transportation accounted for about Rs. 1,200 (5.49%) followed by storage charge 1,200 (5.49%), commission charge 65 (0.30%), advertisement of 75 (0.34%), inspection and grading of 85 (0.38%) and packaging of 45 (0.21%). The gross return was found of Rs. 40,500 while net returns of Rs. 18,640.

The total average cost of co-operative coir fibre units for per tonne were found of Rs. 20,523.75, and marketing cost 2,382 (11.60%). In case of direct expenses such as material cost constituted Rs. 16,512.50 (80.45%), labour cost 550 (2.67%) and miscellaneous cost 65 (0.31%). In case of indirect expenses were included rent constituted Rs. 67.50 (0.32%), depreciation cost 215 (1.04%) and miscellaneous cost 51.25 (0.24%).

In case of marketing cost, transportation accounted for about Rs. 1050 (5.11%) followed by storage charge 1087.50 (5.29%), commission charge 58.75 (0.28%), advertisement 68.75 (0.33%), inspection and grading 78.75 (0.38%) and packaging 38.75 (0.18%). The gross return was found to be Rs. 35,975 while net returns was Rs. 15,451.25

Table 4.7: Staffing pattern in different coir processing units

Co-operative coir processing units Private coir processing units

Staff particulars



Channaraya patna

Arasikere Average

Manager 1 1 1 1 1 1 1 1 1 1

Technician 2 2 2 2 2 1 1 1 1 1

Supervisor 1 1 1 1 1 1 1 1 1 1

Accountant 1 1 1 1 1 1 1 1 1 1

Purchaser/helper 1 1 1 1 1 - - - - -

Clerk 1 1 1 1 1 - - - - -

Security guard 1 1 1 1 1 1 1 1 1 1

Skilled labour 5 5 3 3 4 4 4 4 4 4

Unskilled labour 10 10 6 6 8 7 7 7 7 7

Total 23 23 17 17 20 16 16 16 16 16

Table 4.8: Production cost and returns structure of coir fibre processing units (Rs./tonne)

Co-operative coir units Private coir units Sl. No.

Particulars

A Cost of production

I Variable cost

Tumkur Gubbi Channaray

apattana Arasikere

Average Tumkur Gubbi

Channaraya patna

Arasikere Average

i Material 16,000.00

(83.57) 15,000.00

(84.15) 17,000.00

(82.74) 18,050.00

(82.57) 16,512.50

(80.45) 21,000 (90.61)

23,000 (90.39)

23,000 (90.64)

25,000 (90.33)

23,000 (92.57)

ii Labour 500.00 (2.61)

400.00 (2.24)

600.00 (2.92)

700.00 (3.20)

550.00 (2.67)

600.00 (2.58)

650.00 (2.55)

650.00 (2.56)

750.00 (2.71)

662.50 (2.66)

iii Miscellaneous 60.00 (0.31)

60.00 (0.34)

75.00 (0.36)

65.00 (0.30)

65.00 (0.31)

70.00 (0.30)

70.00 (0.28)

75.00 (0.29)

75.00 (0.27)

72.50 (0.29)

II Fixed cost

i Rent 60.00 (0.31)

65.00 (0.36)

75.00 (0.36)

70.00 (0.32)

67.50 (0.32)

65.00 (0.28)

65.00 (0.26)

70.00 (0.27)

70.00 (0.25)

67.50 (0.27)

ii Depreciation 200.00 (1.04)

200.00 (1.12)

220.00 (1.07)

240.00 (1.10)

215.00 (1.04)

250.00 (1.07)

270.00 (1.06)

300.00 (1.18)

300.00 (1.08)

280.00 (1.13)


40.00 (0.22)

55.00 (0.26)

65.00 (0.30)

51.25 (0.24)

50.00 (0.71)

50.00 (0.20)

65.00 (0.25)

65.00 (0.23)

57.50 (0.23)

Total Cost 16,865 (88.09)

15,765 (88.44)

18,025 (87.73)

19,190 (87.79)

17461.25 (85.07)

22,035.00 (95.08)

22,035.00 (94.73)

24,160.00 (95.21)

26,260.00 (94.89)

23,622.50 (95.07)

Contd…..

Table 4.8 contd…..


Particulars

B Marketing cost Tumkur Gubbi

Channaray

apattana Arasikere


Channaraya patna

Arasikere Average

i Transportation

(loading & unloading)

1000.00 (5.22)

900.00 (5.05)

1100.00 (5.35)

1200.00 (5.49)

1050.00 (5.11)

500.00 (2.15)

700.00 (2.75)

500.00 (1.97)

700.00 (2.53)

600.00 (2.41)

ii Storage 1050.00 (5.48)

950.00 (5.33)

1150.00 (5.59)

1200.00 (5.49)

1087.50 (5.29)

550.00 (2.37)

550.00 (2.16)

600.00 (2.36)

600.00 (2.17)

575.00 (2.31)

iii Commission 55.00 (0.28)

50.00 (0.28)

65.00 (0.31)

65.00 (0.30)

58.75 (0.28)

30.00 (0.12)

30.00 (0.11)

45.00 (0.17)

45.00 (0.16)

37.50 (0.15)

iv Advertisement 65.00 (0.33)

60.00 (0.34)

75.00 (0.36)

75.00 (0.34)

68.75 (0.33)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

v Inspection and grading

75.00 (0.39)

70.00 (0.39)

85.00 (0.41)

85.00 (0.38)

78.75 (0.38)

60.00 (0.25)

60.00 (0.24)

70.00 (0.27)

70.00 (0.26)

65.00 (0.26)

vi Packaging 35.00 (0.18)

30.00 (0.17)

45.00 (0.21)

45.00 (0.21)

38.75 (0.18)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

Total Cost 2280.00 (11.90)

2060.00 (11.56)

2520.00 (12.26)

2670.00 (12.21)

2382.50 (11.60)

1140.00 (4.91)

1140.00 (5.27)

1215.00 (4.78)

1415.00 (5.11)

1227.50 (4.93)

C Total cost (A+B) 19,145.00 20,545.00 20,545.00 21,860.00 20,523.75 23,175.00 25,455.00 25,375.00 25,375.00 24,845.00

D Gross returns 35000.00 30000.00 38400.00 40500.00 35975.00 41500.00 43600.00 48600.00 51260.00 46240.00

E Net returns (D-C) 15855.00 9455.00 17855.00 18640.00 15451.25 18325.00 18145.00 23225.00 25885.00 21395.00

Note: Figures in parentheses indicate percentage to the total cost of production

4.2.2 Cost and return structure of private coir fibre units

Cost and returns of private coir fibre was presented in Table 4.8. Tumkur private coir fibre unit for per tonne was found Rs. 23,175 and marketing cost of Rs. 1,140 (4.91%). In case of direct expenses, cost like material cost constituted of Rs. 21,000 (90.61%), labour cost 600 (2.58%) and miscellaneous cost 70 (0.30%). In case of indirect expenses cost were included of rent constituted of Rs. 65 (0.28%), depreciation cost 250 (1.07%) and miscellaneous cost 50 (0.71%). In case of marketing cost like transportation cost of Rs. 500 (2.15%) followed by storage charge of Rs. 550 (2.37%), commission charge of Rs. 30 (0.12%) and inspection and grading of Rs. 60 (0.25%). The gross return were found of Rs. 41,500 while net returns was Rs. 18,325.

In case of Gubbi coir fibre unit for per tonne was found of Rs. 25,455 and marketing cost of Rs. 1,140 (5.27%). In case of direct expenses like material cost constituted of Rs. 23000 (90.39%), labour cost 650 (2.55%) and miscellaneous cost 70 (0.28%). In case of indirect expenses were rent constituted Rs. 65 (0.26%), depreciation cost 270 (1.06%) and miscellaneous cost 50 (0.20%). Similarly in case of marketing cost were transportation cost Rs. 700 (2.75%) followed by storage charge of Rs. 550 (2.16%), commission charge of Rs. 30 (0.11%) and inspection and grading of Rs. 60 (0.24%). The gross return was found of Rs. 43,600 while net returns was Rs. 18,145.

But in case of Channarayapatna coir fibre unit for per tonne was found of Rs. 25375 and marketing cost of Rs. 1,215 (4.78%). In case of direct expenses were material cost constituted of Rs. 23,000 (90.64%) followed by labour cost of Rs. 650 (2.56%) and miscellaneous cost of Rs. 75 (0.29%). In case of indirect expenses were rent constituted of Rs. 70 (0.27%) followed by depreciation cost of Rs. 300 (1.18%) and miscellaneous cost of Rs. 65 (0.25%). In case of marketing cost like transportation accounted of Rs. 500 (1.97%) followed by storage charge of Rs. 600 (2.36%), commission charge of Rs. 45 (0.17%) and inspection and grading of Rs. 70 (0.27%). The gross return was found to be Rs. 48,600 while net returns was Rs. 23,225 .

Simialrly in case of Arasikere private coir fibre unit for per tonne were found of Rs. 25,375 and marketing cost of Rs. 1,415 (5.11%). In case of direct expenses, material cost constituted Rs. 25,000 (90.33%) of total cost of coir fibre production followed by labour cost Rs. 750 (2.71%) and miscellaneous cost of Rs. 75 (0.27%). In case of indirect expenses, rent constituted Rs. 70 (0.27%), depreciation cost of Rs. 300 (1.08%) and miscellaneous cost of Rs. 65 (0.23%). In case of marketing cost, transportation accounted for about Rs. 700 (2.53%) followed by storage charge of Rs. 600 (2.17%), commission charge of Rs. 45 (0.16%) and inspection and grading of Rs. 70 (0.26%). The gross return was found to be Rs. 51,260 while net returns was Rs. 25,885.

In case of total average cost of private coir fibre units for per tonne were found of Rs. 24845 and marketing cost 12,27.50 (4.93%). In case of direct expenses were included material cost constituted Rs. 23,000 (92.57%) of total cost of coir fibre production followed by labour cost 662.50 (2.66%) and miscellaneous cost 72.50 (0.29%). In case of indirect expenses, rent constituted 67.50 (0.27%), depreciation cost 280 (1.13%) and miscellaneous cost 57.50 (0.23%). In case of marketing cost, transportation accounted for about Rs. 600 (2.41%) followed by storage charge 575 (2.31%), commission charge 37.50 (0.15%) and inspection and grading of Rs. 65 (0.26%). The gross return was found to be Rs. 46,240 while net returns was Rs. 21,395.

4.2.3 Cost and return structure of co-operative curled coir units

The total cost of Tumkur co-operative curled coir unit for per tonne were found of Rs. 19529 and marketing cost 2,179 (11.15%). In case of direct expenses, material cost constituted Rs. 16,500 (84.48%), labour cost 500 (2.56%) and miscellaneous cost 55 (0.28%). In case of indirect expenses, rent constituted Rs. 60 (0.30%), depreciation cost 190 (0.97%) and miscellaneous cost 45 (0.23%). In case of marketing cost, transportation accounted for about Rs. 950 (4.86%) followed by storage charge 1,020 (5.22%), commission charge 50 (0.25%), advertisement 60 (0.30%), inspection and grading 67 (0.34%) and packaging 32 (0.16%). The gross return was found to be Rs. 40,690.50 while net returns was Rs. 21,161.50 from Table 4.9.

Table 4.9: Production cost and returns structure of curled coir (Rs./tonne)


Particulars

A Cost of production

I Variable cost

Tumkur Gubbi Channaray

apattana Arasikere


Channaraya patna

Arasikere Average

i Material 16,500.00

(84.48) 17000.00 (82.33)

17,500.00 (84.34)

19,600.00 (83.17)

17,650.00 (83.64)

23,000.00 (91.6)

26,000.00 (90.43)

24,500.00 (91.43)

26,500.00 (91.08)

25,000.00 (91.12)

ii Labour 500.00 (2.56)

550.00 (2.66)

550.00 (2.65)

580.00 (2.47)

545.00 (2.58)

625.00 (2.49)

675.00 (2.35)

675.00 (2.51)

775.00 (2.66)

687.50 (2.50)


57.00 (0.28)

57.00 (0.27)

60.00 (0.26)

57.25 (0.27)

68.00 (0.27)

78.00 (0.27)

73.00 (0.27)

73.00 (0.25)

73.00 (0.26)

II Fixed cost

i Rent 60.00 (0.30)

65.00 (0.31)

65.00 (0.31)

65.00 (0.28)

63.75 (0.30)

59.00 (0.23)

59.00 (0.21)

65.00 (0.24)

65.00 (0.22)

62.00 (0.22)

ii Depreciation 190.00 (0.97)

200.00 (0.97)

200.00 (0.96)

200.00 (0.85)

197.50 (0.94)

240.00 (0.95)

240.00 (0.83)

255.00 (0.95)

455.00 (1.56)

297.50 (1.08)


50.00 (0.24)

50.00 (0.24)

50.00 (0.21)

48.75 (0.23)

45.00 (0.17)

45.00 (0.16)

55.00 (0.20)

55.00 (0.19)

50.00 (0.18)

Total Cost 17,350 (88.84)

17,922 (86.80)

18,422 (88.78)

20,555 (87.54)

18562.30 (87.97)

24,037.00 (95.79)

27,097.00 (94.25)

25,623.00 (95.62)

27,923.00 (95.97)

26170.00 (95.39)

Contd…..

Table 4.9 contd…..


Particulars

B Marketing cost Tumkur Gubbi

Channaray

apattana Arasikere


Channaraya patna

Arasikere Average

i Transportation (loading & unloading)

950.00 (4.86)

1200.00 (5.81)

1000.00 (4.81)

1300.00 (5.54)

1112.50 (5.27)

430.00 (1.71)

730.00 (2.54)

465.00 (1.73)

465.00 (1.60)

522.50 (1.90)

ii Storage 1020.00 (5.22)

1300.00 (6.30)

1100.00 (5.30)

1400.00 (5.96)

1205.00 (5.71)

525.00 (2.09)

825.00 (2.87)

590.00 (2.20)

590.00 (2.03)

632.50 (2.30)

iii Commission 50.00 (0.25)

55.00 (0.27)

55.00 (0.26)

55.00 (0.23)

53.75 (0.25)

37.00 (0.14)

37.00 (0.143)

48.00 (0.17)

48.00 (0.16)

42.50 (0.15)

iv Advertisement 60.00 (0.30)

62.00 (0.30)

62.00 (0.29)

62.00 (0.26)

61.50 (0.29)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

v Inspection and grading

67.00 (0.34)

72.00 (0.35)

72.00 (0.34)

72.00 (0.31)

70.75 (0.34)

62.00 (0.24)

62.00 (0.22)

70.00 (0.26)

70.00 (0.25)

66.00 (0.24)

vi Packaging 32.00 (0.16)

37.00 (0.18)

37.00 (0.17)

37.00 (0.16)

35.75 (0.17)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

Total Cost 2179.00 (11.15)

2726.00 (13.20)

2326.00 (11.21)

2926.00 (12.46)

2539.25 (12.03)

1054.00 (4.20)

1654.00 (5.75)

1173.00 (4.37)

1173.00 (4.03)

1263.50 (4.60)

C Total cost (A+B) 19,529.00 20,648.00 20,748.00 23,481.00 21,101.50 25,091.00 28,751.00 26,796.00 29,096.00 27,433.50

D Gross returns 40690.50 38500.00 38000 44000 40297.63 45650.00 44800.00 52000.00 48000.00 46487.50

E Net returns (D-C) 21161.50 17852.00 17252.00 20519.00 19196.13 16899.00 18004.00 22904.00 18904.00 19054.00


The total cost of Gubbi co-operative curled coir unit for per tonne were found to be Rs. 20648 and marketing cost of Rs. 2,726 (13.20%). In case of direct expenses, material cost constituted Rs. 17,000 (82.33%), labour cost 550 (2.66%) and miscellaneous cost 57 (0.28%). In case of indirect expenses, rent constituted Rs. 65 (0.31%), depreciation cost 200 (0.97%) and miscellaneous cost 50 (0.24%). In case of marketing cost, transportation accounted for about Rs. 1,200 (5.81%) followed by storage charge 1300 (6.30%), commission charge 55 (0.27%), advertisement 62 (0.30%), inspection and grading 72 (0.35%) and packaging 37 (0.18%). The gross return was found to be Rs. 38,500 while net returns was Rs. 17,852.

The total cost of Channaraypatna co-operative curled coir unit for per tonne were found to be Rs. 20,748 and marketing cost of Rs. 2,326 (11.21%). In case of direct expenses, material cost constituted Rs. 17,500 (84.34%), labour cost 550 (2.65%) and miscellaneous cost 57 (0.27%). In case of indirect expenses, rent constituted Rs. 65 (0.31%), depreciation cost 200 (0.96%) and miscellaneous cost 50 (0.24%). In case of marketing cost, transportation accounted for about Rs. 1,000 (4.81%) followed by storage charge 1,100 (5.30%), commission charge 55 (0.26%), advertisement 62 (0.29%), inspection and grading 72 (0.34%) and packaging 37 (0.17%). The gross return was found to be Rs. 38,000 while net returns was Rs. 17,252.

The total cost of Arasikere co-operative curled coir unit for per tonne were found to be Rs. 23481 and marketing cost 2,926 (12.46%). In case of direct expenses, material cost constituted Rs. 19,600 (83.17%), labour cost 580 (2.47%) and miscellaneous cost 60 (0.26%). In case of indirect expenses, rent constituted 65 (0.28%), depreciation cost 200 (0.85%) and miscellaneous cost 50 (0.21%). In case of marketing cost, transportation accounted for about Rs. 1300 (5.54%) followed by storage charge 1400 (5.96%), commission charge 55 (0.23%), advertisement 62 (0.26%), inspection and grading 72 (0.31%) and packaging 37 (0.16%). The gross return was found to be Rs. 44,000 while net returns was Rs. 20,519.

Similarly the total average cost of co-operative curled coir unit for per tonne were found of Rs. 21,101.50 and marketing cost of Rs. 2,539.25 (12.03%). In case of direct expenses, material cost constituted Rs. 1,7650 (83.64%), labour cost Rs. 545 (2.58%) and miscellaneous cost 57.25 (0.27%). In case of indirect expenses, rent constituted Rs. 63.75 (0.30%), depreciation cost 1,97.50 (0.94%) and miscellaneous cost 48.75 (0.23%). In case of marketing cost, transportation accounted for about Rs. 1,112.50 (5.27%) followed by storage charge 1,205 (5.71%), commission charge 53.75 (0.25%), advertisement 61.50 (0.29%), inspection and grading 70.75 (0.34%) and packaging 35.75 (0.17%). The gross return was found to be Rs. 40,297.63 while net returns was Rs. 19,196.13.

4.2.4 Cost and return structure of private curled coir units

The total cost of Tumkur private curled coir unit for per tonne were found to be Rs. 25,091 and marketing cost 1054 (4.20%). In case of direct expenses, material cost constituted Rs. 23,000 (91.60%), labour cost 625 (2.49%) and miscellaneous cost 68 (0.27%). In case of indirect expenses, rent constituted Rs. 59 (0.23%), depreciation cost 240 (0.95%) and miscellaneous cost 45 (0.17%) (Table 4.9). In case of marketing cost, transportation accounted for about Rs. 430 (1.71%) followed by storage charge 525 (2.09%), commission charge 37 (0.14%) and inspection and grading 62 (0.24%). The gross return was found to be Rs. 43,500 while net returns was Rs. 18,409 from table 4.9.

In case of Gubbi private curled coir unit for per tonne were the total cost found of Rs. 28,751 and marketing cost 1,654 (5.75%). In case of direct expenses, material cost constituted Rs. 26000 (90.43%), labour cost 675 (2.35%) and miscellaneous cost 78 (0.27%). In case of indirect expenses, rent constituted Rs. 59 (0.21%), depreciation cost 240 (0.83%) and miscellaneous cost 45 (0.16%). In case of marketing cost, transportation accounted for about Rs. 730 (2.54%) followed by storage charge 825 (2.87%), commission charge 37 (0.14%) and inspection and grading 62 (0.22%). The gross return was found to be Rs. 45,650 while net returns was Rs. 16,899.

Similarly the total cost of Channarayapatna private curled coir unit for per tonne were found to be Rs. 26796 and marketing cost of Rs. 1,173 (4.37%).

Husk Procurement

Husk Decorticator

Crushed husk

Plate 2. Production process of coir fiber in the study area

Plate 2 Contd………

Screened fibre

Husk Screener

Cleaning beater

In case of direct expenses, material cost constituted Rs. 24,500 (91.43%), labour cost 675 (2.51%) and miscellaneous cost 73 (0.27%). In case of indirect expenses, rent constituted Rs. 65 (0.24%), depreciation cost 255 (0.95%) and miscellaneous cost 55 (0.20%). In case of marketing cost, transportation accounted for about Rs. 465 (1.73%) followed by storage charge 590 (2.20%), commission charge 48 (0.17%) and inspection and grading 70 (0.26%). The gross return was found to be Rs. 52,000 while net returns was Rs. 22,904.00.

But in case of Arasikere private curled coir unit for per tonne were the total cost found of Rs. 29096 and marketing cost of Rs. 1,173 (4.03%). In case of direct expenses, material cost constituted Rs. 26,500 (91.08%), labour cost 775 (2.66%) and miscellaneous cost 73 (0.25%). In case of indirect expenses, rent constituted Rs. 65 (0.22%), depreciation cost 455 (1.56%) and miscellaneous cost 55 (0.19%). In case of marketing cost, transportation accounted for about Rs. 465 (1.60%) followed by storage charge 590 (2.03%), commission charge 48 (0.16%) and inspection and grading 70 (0.25%). The gross return was found to be Rs. 48,000.00 while net returns was Rs. 18,904.00.

The total average cost of private curled coir unit was found to be Rs. 27,433.50 and marketing cost 1,263.50 (4.60%). In case of direct expenses, material cost constituted Rs. 25,000 (91.12%), labour cost 687.50 (2.50%) and miscellaneous cost 73 (0.26%). In case of indirect expenses, rent constituted 62 (0.22%), depreciation cost 297.50 (1.08%) and miscellaneous cost 50 (0.18%). In case of marketing cost, transportation accounted for about Rs. 522.50 (1.90%) followed by storage charge 632.50 (2.30%), commission charge 42.50 (0.15%) and inspection and grading 66 (0.24%). The gross return was found to be Rs. 46,487.50 while net returns was Rs. 19,054.


Value addition is the process of enhancing value of any commodity by doing many activities. Value of the commodity can enhance by change in the form of raw materials to finished produce.

4.3.1 Value addition to coir fibre in co-operative coir units

The value addition to coir fibre is presented in Table 4.10. The cost incurred on coir fibre is divided into various costs such as cost for cleaning, softening, drying, grading, miscellaneous, marketing cost, manufacturing cost and value addition cost, raw material cost, total cost, gross return and net return. The cost incurred per tonne in Tumkur co-operative unit were in cleaning Rs. 200 (0.98%), softening 200 (0.98%), drying 300 (1.47%), grading 200 (0.98%), miscellaneous 200 (0.98%), marketing cost 2,280 (11.20%), manufacturing cost 16,865 (82.89%), value addition 2,0345 (100%), raw material cost 1,000, total cost of production Rs. 21,345, gross return 39,000 and net return of Rs. 17,655. In Gubbi co-operative the cost incurred on cleaning was 250 (1.29%), softening 200 (1.03%), drying 350 (1.79%), grading 250 (1.29%), miscellaneous 300 (1.54%), marketing cost 2360 (12.13%), manufacturing cost 15745 (80.93%), value addition 19,455 (100%), raw material cost 950, total cost of production 20405, gross return 35,000 and net return Rs. 14,595. Similarly, in Channaraypatna co-operative, the cost incurred on cleaning was Rs. 600 (2.61%), softening 400 (1.74%), drying 500 (2.17%), grading 500 (2.17%), miscellaneous 400 (1.74%), marketing cost 2,520 (10.98%), manufacturing cost 18,025 (78.55%), value addition 22,945 (100%), raw material cost 1400, total cost of production 23,345, gross return 40,000 and net return 16,655. In Arasikere co-operative, the cost incurred on cleaning was 650 (2.67%), softening 450 (1.85%), drying 550 (2.26%), grading 550 (2.26%), miscellaneous 500 (2.05%), marketing cost 2,650 (10.88%), manufacturing cost 19,000 (78.00%), value addition 24,350 (100%), raw material cost 1,500, total cost of production 25850, gross return 44,350 and net return Rs. 18,500 (Table 10).

But in Arasikere co-operative coir unit was found highest net profit compared to other coir units. The overall average cost of these co-operative coir unit was found to be of Rs. 16,851.30. The average cost of different co-operative units of coir fibre, the total value addition cost incurred of Rs. 27,73.80 and total average cost increased net profit of Rs. 16,851.30.

Table 4.10: Value addition to coir fibre in different co-operative coir processing units (Rs./tonne)

Sl. No Particulars Tumkur Gubbi Channarayapatna Arsikere Average

1 Cleaning 200

(0.98)

250

(1.29)

600

(2.61)

650

(2.67)

425

(1.95)

2 Softening 200

(0.98)

200

(1.03)

400

(1.74)

450

(1.85)

312.5

(1.44)

3 Drying 300

(1.47)

350

(1.79)

500

(2.17)

550

(2.26)

425

(1.95)

4 Grading 300

(1.47)

250

(1.29)

500

(2.17)

550

(2.26)

400

(1.84)

5 Miscellaneous cost 200

(0.98)

300

(1.54)

400

(1.74)

500

(2.05)

350

(1.61)

6 Marketing cost 2280

(11.20)

2360

(12.13)

2520

(10.98)

2650

(10.88)

2452.50

(11.26)

7 Manufacturing Cost 16865

(82.89)

15745

(80.93)

18025

(78.55)

19000

(78.03)

17408.80

(79.95)

8 Value Addition cost (A) 20345

(100)

19455

(100)

22945

(100)

24350

(100)

21773.80

(100)

9 Raw material cost (B) 1000 950 1400 1500 1212.50

10 Total cost (A+B) 21345 20405 23345 25850 22986.30

11 Gross returns 39000 35000 40000 44350 39587.50

12 Net returns 17655 14595 16655 18500 16851.30

Note: Figures in parentheses indicates percentages to respective total

Table 4.11: Value addition to coir fibre in different private coir units (Rs./tonne)

Sl. No Particulars Tumkur Gubbi Channarayapatna Arsikere Average

1 Cleaning 600

(2.30)

550

(2.09)

700

(2.44)

750

(2.47)

650

(1.95)

2 Softening 500

(1.92)

450

(1.72)

600

(2.09)

635

(2.09)

546.25

(1.44)

3 Drying 600

(2.30)

500

(1.91)

700

(2.44)

750

(2.47)

637.50

(1.95)

4 Grading 600

(2.30)

600

(2.29)

700

(2.44)

700

(2.31)

650.00

(1.84)


(1.92)

550

(2.09)

600

(2.09)

750

(2.47)

600

(1.61)


(4.30)

1240

(4.73)

1215

(4.23)

1500

(4.94)

1273.75

(11.26)


(84.83)

22335

(85.16)

24160

(84.25)

25280

(83.25)

23452.50

(79.95)


(100)

26225

(100)

28675

(100)

30365

(100)

27810.00

(100)


10 Total cost (A+B) 27475 27925 30275 32065 29435.00

11 Gross returns 45600 41600 51600 56500 48825.00

12 Net returns 18125 13675 21325 24435 19390.00


30Kg Bailing

Finished coir Product

Bundle of coir Product

Plate 3. Finished fibre in the study area

4.3.2 Value addition to coir fibre in private coir units

The value addition to coir fibre is presented in Table 4.11. The cost incurred on cleaning coir fibre in Tumkur private coir unit per tonne it was Rs. 600 (2.30%), softening 500 (1.92%), drying 600 (2.30%), grading 600 (2.30%), miscellaneous 500 (1.92%), marketing cost 1140 (4.30%), manufacturing cost 22,035 (84.83%), value addition 25,975 (100%), raw material cost 1,500, total cost of production of coir fibre per tonne was 27,475, gross return 45,600 and net return 18,125. In case of Gubbi private coir unit the cost were incurred on cleaning was 550 (2.09%), softening 450 (1.72%), drying 500 (1.91%), grading 600 (2.29%), miscellaneous 550 (2.29%), marketing cost 1240 (4.73%), manufacturing cost 22,335 (85.16%), value addition 26,225 (100%), raw material cost 1700, total cost of production 27925, gross return 41,600 and net return 13,675. In Channaraypatna private coir unit, the cost incurred on cleaning was 700 (2.44%), softening 600 (2.09%), drying 700 (2.44%), grading 700 (2.44%), miscellaneous 600 (2.09%), marketing cost 1,215 (4.23%), manufacturing cost 24,160 (84.25%), value addition 28,675 (100%), raw material cost 1,600, total cost of production 30,275, gross return 51,600 and net return 21,325. But in Arasikere private coir unit, the cost incurred on cleaning was 750 (2.47%), softening 635 (2.09%), drying 750 (2.47%), grading 700 (2.37%), miscellaneous 750 (2.47%), marketing cost 1,500 (4.94%), manufacturing cost 25,280 (83.25%), value addition 30,365 (100%), raw material cost 1,700, total cost of production 32065, gross return 56,500 and net return Rs. 24,435. The average cost of different co-operative units of coir fibre, the total value addition cost incurred of Rs. 27,810.80 and average total cost increased net profit of Rs. 19,390.30.

4.3.3 Value addition to curled coir in different co-operative coir units

The value addition to curled coir in co-operative units is presented in Table 4.12. The cost incurred on curled coir is divided into various costs such as cost for cleaning, softening, drying, grading, threading, miscellaneous, marketing cost, manufacturing cost and value addition cost for raw material cost, total cost, gross return and net return. The cost incurred on cleaning in Tumkur co-operative coir unit for per tonne were 500 (2.25%), softening 400 (1.80%), drying 500 (2.25%), grading 500 (2.25%), threading 300 (1.35%), miscellaneous 400 (1.80%), marketing cost 2179 (9.84%), manufacturing cost 17,350 (78.40%), value addition 22,129 (100%), raw material cost 1,300, total cost of production 23,429, gross return 43,600 and net return 20,171. The cost incurred on cleaning in Gubbi co-operative coir unit for per tonne were of Rs. 450 (1.87%), softening 350 (1.45%), drying 500 (2.07%), grading 500 (2.07%), threading 300 (1.25%), miscellaneous 600 (2.50%), marketing cost 2370 (9.85%), manufacturing cost 19000 (78.95%), value addition 24,070 (100%), raw material cost 1400, total cost of production 25,470, gross return 41580 and net return 16,110. The cost incurred on cleaning in Channarayapatna co-operative coir unit tonne were 600 (2.50%), softening 500 (2.08%), drying 600 (2.50%), grading 600 (2.50%), threading 400 (1.67%), miscellaneous 500 (2.08%), marketing cost 2,326 (9.71%), manufacturing cost 18422 (76.92%), value addition 23,948 (100%), raw material cost 1400, total cost of production 25,348, gross return 42,000 and net return 16,652. The cost incurred on cleaning in Arasikere co-operative coir unit per tonne were of Rs. 650 (2.43%), softening 525 (1.96%), drying 650 (2.43%), grading 600 (2.24%), threading 400 (1.50%), miscellaneous 700 (2.62%), marketing cost 2,613 (9.77%), manufacturing cost 20,610 (77.05%), value addition 26,748 (100%), raw material cost 1,500, total cost of production 28428, gross return Rs. 50,500 and net return Rs. 22,252. The average cost of different co-operative units of coir fibre, the total value addition cost incurred of Rs. 24,223.80 and total average cost increased net profit of Rs. 18,796.25.

4.3.4 Value addition to curled coir in private coir units

The value addition to curled coir in private coir units is presented in Table 4.13. The Tumkur private coir unit for per tonne were incurred on cleaning of Rs. 600 (2.12%), softening 500 (1.76%), drying 600 (2.12%), grading 600 (2.12%), threading 400 (1.41%), miscellaneous 500 (1.76%), marketing cost 1054 (3.72%), manufacturing cost 24,037 (84.96%), value addition 28,291 (100%), raw material cost 1,400, total cost of production 29,691, gross return 48,200 and net return 18,509. In the case of Gubbi private coir unit for per tonne the cost were incurred on cleaning of Rs. 500 (1.63%), softening 400 (1.32%), drying 500 (1.63%), grading 500 (1.63%), threading 350 (1.15%).

Table 4.12: Value addition to curled coir in different co-operative coir units (Rs./tonne)

Sl. No

Particulars Tumkur Gubbi Channarayapatna Arsikere Average

1 Cleaning 500

(2.25)

450

(1.87)

600

(2.50)

650

(2.43)

550

(2.27)

2 Softening 400

(1.80)

350

(1.45)

500

(2.08)

525

(1.96)

443.75

(1.83)

3 Drying 500

(2.25)

500

(2.07)

600

(2.50)

650

(2.43)

562.50

(2.32)

4 Grading 500

(2.25)

500

(2.07)

600

(2.50)

600

(2.24)

550

(2.27)

5 Threading 300

(1.35)

300

(1.25)

400

(1.67)

400

(1.50)

350

(1.44)


(1.80)

600

(2.50)

500

(2.08)

700

(2.62)

550

(2.27)


(9.84)

2370

(9.85)

2326

(9.71)

2613

(9.77)

2372.00

(9.79)


(78.40)

19000

(78.94)

18422

(76.92)

20610

(77.05)

18845.50

(77.80)


(100)

24070

(100)

23948

(100)

26748

(100)

24223.80

(100)

10 Raw material cost (B) 1300 1400 1400 1500 1400

11 Total cost (A+B) 23429 25470 25348 28428 25668.80

12 Gross returns 43600 41580 42000 50500 44420.00

13 Net returns 20171 16110 16652 22252 18796.25


Table 4.13: Value addition to curled coir in different private coir units (Rs./tonne)

Total Amount (Rs) Sl. No

Particulars Tumkur Gubbi Channarayapatna Arsikere

Average

1 Cleaning 600

(2.12)

500

(1.63)

700

(2.28)

750

(2.26)

637.50

(2.08)

2 Softening 500

(1.76)

400

(1.32)

600

(1.96)

650

(1.96)

537.50

(1.75)

3 Drying 600

(2.12)

500

(1.63)

700

(2.28)

700

(2.11)

625.00

(2.04)

4 Grading 600

(2.12)

500

(1.63)

700

(2.28)

700

(2.11)

625.00

(2.04)

5 Threading 400

(1.41)

350

(1.15)

500

(1.63)

500

(1.51)

437.50

(1.43)


(1.76)

600

(1.96)

600

(1.96)

800

(2.41)

625.00

(2.04)


(3.72)

1250

(4.08)

1173

(3.93)

1345

(4.05)

1205.50

(3.93)


(84.96)

26500

(86.60)

25623

(83.74)

27750

(83.59)

25977.50

(84.69)


(100)

30600

(100)

30596

(100)

33195

(100)

30670.50

(100)


11 Total cost (A+B) 29691 32200 32096 34795 32195.50

12 Gross returns 48200 48200 45600 54500 49125.00

13 Net returns 18509 16000 13504 19705 16929.00


Curling

Winding

Curled coir

Plate 4. Production process of curled coir in the study area

Plate 5. Value added coir Products

Miscellaneous 600 (1.96%), marketing cost 1,250 (4.08%), manufacturing cost 26,500 (86.60%), value addition 30,600 (100%), raw material cost 1,600, total cost of production 32,200, gross return 48,200 and net return of 16,000. But in case of Channarayapatna, cost incurred on cleaning Rs. 700 (2.28%), softening 600 (1.96%), drying 700 (2.28%), grading 700 (2.28%), threading 500 (1.63%), miscellaneous 600 (1.96%), marketing cost 1,173 (3.93%), manufacturing cost 25623 (83.74%), value addition 30,596 (100%), raw material cost 1500, total cost of production 32096, gross return 45600 and net return of 13,504. Similarly in case of Arasikere coir unit for per tonne were of Rs. 750 (2.26%), softening 650 (1.96%), drying 700 (2.11%), grading 700 (2.11%), threading 500 (1.51%), miscellaneous 800 (2.41%), marketing cost 1,345 (4.05%), manufacturing cost 27,750 (83.59%), value addition 33195 (100%), raw material cost 1,600, total cost of production 34,795, gross return 54,500 and net return of 19,705. The total average cost of different curled coir units was incurred of Rs. 30,670.50, total cost was Rs. 32,195.50, gross returns Rs. 49,125.00 and net returns Rs. 16,929.00


4.4.1 Marketing cost incurred by different coir units

The marketing cost incurred by different coir units `is elucidated in Table 4.14. It can be seen from table that, the total average cost of marketing were including coir fibre and curled coir incurred through this cost in Tumkur co-operative coir fibre unit of Rs. 4,459 followed by Gubbi of Rs. 4,786, Channarayapatna of Rs. 4,846 and Arasikere of Rs. 5,596.

But in case of marketing cost per tonne incurred in Tumkur coir unit of Rs. 2,280 (51.13%) followed by Gubbi coir fibre unit of Rs 2,060 (43.04%), Channarayapatna of Rs. 2,520 (52%) and Arasikere of Rs. 2,670 (48.71%). Similarly, the marketing of curled coir cost incurred in Tumkur curled coir unit for per tonne were of Rs. 2,179 (48.87%) followed by Gubbi coir cost is Rs 2,726 (56.96%), Channarayapatna of Rs. 2,326 (48%) and Arasikere of Rs. 2,926 (52.29%).

The marketing cost followed in private coir fire and curled coir units is from producer to unit to consumer. It can be seen from table that, the total average of marketing cost including coir fibre and curled coir incurred in Tumkur private coir fibre unit for per tonne of Rs. 2,194 followed by Gubbi of Rs. 2,794, Channarayapatna of Rs. 2388 and Arasikere of Rs. 2,588. The marketing cost incurred in Tumkur coir fibre unit was Rs. 1,140 (51.96%) followed by Gubbi coir fibre unit of Rs 1,140 (40.80%), Channarayapatna of Rs. 1,215 (50.88%) and Arasikere of Rs. 1,415 (54.68%). Similarly, the marketing cost incurred in Tumkur curled coir unit was Rs. 1054 (48.04%) followed by Gubbi curled coir unit of Rs 1654 (59.20%), Channarayapatna of Rs. 1173 (49.12%) and Arasikere of Rs. 1173 (45.32%).

4.4.2 Marketing cost incurred by intermediaries in different coir units

The marketing incurred by different intermediaries is presented in Table 4.15. The producer of co-operative coir unit incurred cost of Rs. 974.25 followed by Rs. 984.50 in case of curled coir. Similarly, co-operative unit cost incurred of Rs. 545.25 in coir fibre and curled coir of Rs. 686.75. The consumers incurred cost of Rs. 863.00 in coir fibre and curled coir of Rs. 868.00. The of private coir unit incurred cost of Rs. 566.25 in coir fibre followed by curled coir of Rs. 518.75.


The problems faced by coir units in manufacturing and marketing operation were presented in Table 4.16. Nearly 50.00 per cent of the co-operative coir units expressed the problem with regard to lack of power supply, difficulty in labour availability, transporting problem, high cost of working capital, high processing cost, problem regarding repairs and maintenances and problem regarding grading. Almost 75.00 per cent of private coir units expressed the problem of high cost of working capital. Nearly 50.00 per cent of the private coir units expressed the problem with regard to lack of power supply, difficulty in labour availability and lack of market intelligence and information and 25.00 per cent of private coir units opined the transportation problem. But in case of privates coir units nearly 100 per cent of high cost of working capital and problems regarding repairs and maintenance.

Table 4.14: Marketing cost incurred by different coir units

(Rs./tonne)

Co-operative Private

Sl. No

Particulars


patna Arasikere


Channaraya patna

Arasikere Average

1 Coir fibre 2280

(51.13)

2060

(43.04)

2520

(52.00)

2670

(48.71)

2382.50

(48.41)

1140

(51.96)

1140

(40.80)

1215

(50.88)

1415

(54.68)

1227.50

(49.28)

2 Curled coir 2179

(48.87)

2726

(56.96)

2326

(48.00)

2926

(52.29)

2539.25

(51.59)

1054

(48.04)

1654

(59.20)

1173

(49.12)

1173

(45.32)

1263.50

(50.72)

Total 4459 4786 4846 5596 4971.25 2194 2794 2388 2588 2491


Table 4.15: Marketing cost incurred by intermediaries in different coir processing units

Co-operative Private

Sl. No Intermediaries Coir fibre

(Rs/tonne)

Curled coir

(Rs/tonne)

Coir fibre

(Rs/tonne)

Curled coir

(Rs/tonne)

1 Wholesaler 974.25

(40.89)

984.50

(38.77)

566.25

(46.13)

518.75

(41.06)

2 Commission agent 545.25

(22.89)

686.75

(27.05)

- -

3 Trader - - 261.25

(21.28)

324.75

(25.70)

4 Retailer 863.00

(36.22)

868.00

(34.18)

400.00

(32.59)

420.00

(33.24)

Total 2382.50

(100)

2539.25

(100)

1227.50

(100)

1263.50

(100)

Note: Figures in parentheses indicate percentage to the total cost of production Table 4.16: Problems faced by different coir processing units

Sl. No.

Particulars Co-operative coir units (%)

Private coir units (%)

1 Lack of power supply 50.00 50.00

2 Difficulties in labour availability 50.00 50.00

3 Transportation problems 50.00 25.00

4 High cost of working capital 50.00 75.00

5 High processing cost 50.00 100.00

6 Problems regarding repairs and maintenance 50.00 100.00

7 Lack of market intelligence and market information 0.00 50.00

8 Grading problem 50.00 0.00

5. DISCUSSION

The discussions of the study are presented under the following heads.

5.1 Investment pattern and financial feasibility in coir products manufacturing units





5.1 Investment pattern and financial feasibility in coir products in manufacturing units

Table 4.1 indicated that there was a direct relationship between the total capital investment and size/capacity of the coir processing units. The total cost of capital investment was higher in co-operative coir units than in the private coir units. The requirement of capital investment increased with the increase in size of the units, because of the increased requirement of land, building, machinery and other fixtures on the one hand and increased requirement of working capital on the other. It can be seen from that table the total fixed capital investment was Rs 48.30, 52.90, 70.30, 66.75 and 59.36 lakhs for co-operative coir unit in Tumkur, Gubbi, Channarayapatna, Arasikere and Overall average respectively. Similarly, the total fixed capital investment was Rs 35.25, 32.15, 56.25, 66.36 and 46.00 lakhs for Private coir unit in Tumkur, Gubbi, Channarayapatna, Arasikere and Overall average respectively.

The investment on machinery and equipments was the highest followed by buildings, land, infrastructures and miscellaneous. The proportion of investment on land in the total investment was found to be highest in Channarayapatna co-operative unit (Rs. 17.00 lakhs) while in Private coir unit, Arasikere was found highest (Rs.18.26 lakhs). Similarly, the proportion of fixed capital invested on building was higher in Channaraypatna co-operative unit (Rs.14.50 lakhs) and in Arasikere private coir unit (Rs. 12.10 lakhs). The proportion of investment on machinery and equipments was higher in Arasikere private coir unit (Rs.17.25 lakhs) compared to Channaraypatna co-operative coir unit (Rs.24.00 lakhs). In respect of infrastructures, investment was more in co-operative coir unit (Rs. 10.25 lakhs) than in private coir unit (Rs. 7.75). This is in accordance with the findings of Bawa and Kainth (1989) and Kalse et al. (1996). Higher investment on land and buildings in the case of co-operative coir units when compared to private coir units was due to more working space required for processing units. Since the size of the co-operative coir units is very large because of more working space is required for machineries installation and storage structures of raw materials and final products.

Since the size of the private coir unit is very small, while investment on machineries and land was found to be less compared to co-operative coir units. The fixed capital investment was lowest on miscellaneous like almeras, lockers and electrical installations in the case of private coir units due to less administrative staff required in these units as compared to co-operative coir units. Because in the private coir units, the production of the coir products is high as compared to co-operatives. Hence, in the co-operative coir units not much concentrate on other coir products rather than value addition of coir products.

5.1.2 Financial feasibility of coir processing units

The results depicted in the Table 4.3 and 4.4 showed that the initial investment was found to be higher in private coir units as compared to co-operative coir units. In both the cases, it was found that cash outflows would increase over the years during the life of the project; this is mainly due to the expected increase in the costs associated with more raw materials like coconut husk, labour, power charges etc. In a similar way, there would also an increase in cash inflows over the life of the project. This is due to the fact that the capacity of the coir processing units used to the larger extent with the passage of time and that there was continuous increase in the demand as well as prices of the coir products.

The net cash flows found to be lowest in the first and second year; it was mainly due to the non availability of adequate quantity of raw materials. The main reason for increasing net cash flows over the years as predicted by most of the coir units was high demand for coir products by some of major units like Kurl-on, Betsey etc..

Table 4.4 presents the financial feasibility analysis for coir processing units. This analysis was carried out using analytical techniques viz., the Net Present Value, Benefit Cost Ratio, Internal Rate of Return and Payback Period.

5.1.3 Net present value

The net present value in co-operative coir units was higher than the private coir units. It was Rs 46.56 lakhs for co-operative coir units and Rs 42.23 lakhs for private coir units. It mainly due to so many factors in co-operative coir units viz., relatively lower maintenance costs and higher returns.

5.1.4 Benefit cost ratio

The benefit cost ratio was co-operative coir unit 1.14 and private coir unit 1.17. This implied that for every one rupee invested in co-operative coir unit, the net returns was of 14 paise in present value terms. In respect of private coir unit, the net returns for one rupee investment was 17 paise. The magnitude of the ratio also indicated the priority to be assigned for investment in co-operative coir units. However, since the ratio were greater than unity for both the types of coir units, the investment in coir processing units were respectively of the installation capacity and economically viable.

5.1.5 Internal rate of return

The internal rate of return indicates the rate of returns that accrues to the investment. The internal rate at which the net present worth of the project is zero. The average internal rate of return for both co-operative and private coir units happened to be 30.25 per cent and 41.00 per cent, respectively. Since, both coir units values are considerably higher than the cost of capital (12%), both coir units were economically viable and financially feasible.

5.1.6 Payback period

The payback period refers to the time required to recover the initial investment in the coir processing units. The results pertaining to payback period were in line with the estimated values of NPV, B-C ratio and IRR. While the payback period happened to be 1.55 years for co-operative coir units and 1.55 years for private coir units.

Thus, all the criteria of financial feasibility of the project indicated that, irrespective of the type of coir units, investment in coir units was economically viable and financially feasible in all four talukas viz., Tumkur, Gubbi, Arsikere and Channarayapatna of Karnataka. The general inference of the findings was that, investment in private coir processing unit was economically more profitable than that in co-operative processing unit. This is obvious due to the adoption of advanced technology and the economy in scale of processing.

5.1.7 Financial ratios of coir processing units

Various financial ratio were worked out to assess the financial performance and are presented in Table 4.5 and 4.6. These ratio are solvency ratios, liquidity ratio, profitability ratio and turnover ratio.

Solvency ratio

To determine the solvency position of the coir processing units, two ratios namely, total liabilities to owned funds and fixed assets to owned funds were worked out. The ratio of total liabilities to owned funds reflected the amount of money coir processing units owe to its creditors as against the money invested by the owners of the units that is the extent of debits per rupee of owned funds. Solvency ratios included total liabilities to owned funds ratio and total assets to owned funds ratio. The values of total liabilities to owned funds ratio were 1.20, 1.15, 1.03, 1.20, 1.11, 1.04, 1.08 and 1.25 during the year 2001-08. The average ratio for the eight years was 1.13. The corresponding numbers for the private coir units 1.06, 1.20, 1.15, 1.13, 1.05, 1.16, 1.07 and 1.16 with an average of 1.12.

These ratios were found to be higher in the case of co-operative coir units compared to private coir units, this indicated that large amount of external funds were borrowed and used by the co-operative coir units. This may be due to low financial base of these units to carry out the various operations in the unit. To know the extent of owned funds tied up in fixed assets, the ratio of fixed assets to owned funds was worked out, which was found within the acceptable limits of 1:1. The ratio turned-out to be 1.14, 1.0, 1.00, 1.08, 2.50, 2.00, 2.05 and 3.5 for 2001-08, respectively. These numbers in respect of private coir units were at 1.34, 1.22, 1.15, 1.26, 2.20, 1.99, 2.56 and 3.50 for the corresponding years. The values of the ratio here meant that the claims of the creditors on the fixed assets of the co-operative coir units were greater than in the private coir units. Thus it can also be said that both type of units have maintained the ratio below the 3, indicating that the units external liabilities are almost in accordance with the better business norms of 3:1, of total liabilities to owned funds. Hence, these units have maintained good financial structure. Reddy Indrasena (1994) has indicated that, a higher value of this ratio was associated with problems of liquidation, because the claims of the creditor have to be met by sale of fixed assets, which are in non-liquid form. Hence the small units make concentrated efforts to increase their owned funds.

Liquidity ratios

Liquidity ratios were worked out to test the ability of the coir processing units to meet the financial obligations. Liquidity plays a prominent role in any business enterprise for meeting immediate financial demands. Two ratios viz., liquid assets to total assets and current assets to current liabilities were worked.

The liquid assets to total assets ratios worked out to be 0.32, 0.33, 0.36, 0.42, 0.56, 0.48, 0.61 and 0.65 for 2001-08, respectively with an average of 0.46 in the case of co-operative coir units. And it was 0.38, 0.35, 0.40, 0.44, 0.59, 0.58, 0.66 and 0.69 for private coir units for the corresponding years with an average of 0.42 in the case of private coir units. Generally the ratio of 0.42 to 0.46 is acceptable for a processing unit, in order to meet immediate financial requirement, for purpose of procuring raw material, payment of wages and other expenses. Co-operative coir units had maintained somewhat less of their total assets in the form of liquid assets as compared to private coir units. Hence, the performance of co-operative coir units with respect to liquidity is found to be not satisfactory. Hence, these units should increase liquid assets to meet the immediate financial requirement to achieve higher level of production.

The current condition of the business is indicated by the current ratio i.e. the ratio between current assets and current liabilities. The ratio worked out to 0.32, 0.33, 0.36, 0.42, 0.56, 0.48, 0.61 and 0.65 for 2001-08 with an average of 0.46 in co-operative coir units which indicated that for every rupee of current liability, the amount of current assets available was 0.38, 0.35, 0.40, 0.44, 0.59, 0.58, 0.66 and 0.69 for private coir units. This showed that the private coir units are not much dependent on short term borrowings and hence possessed a good liquidity position when compared to co-operative coir units. Shwetha (2011) considered that a current ratio was ideal (3).


The liquidity analysis of the coir processing units reveals the ability to meet its financial obligation and as such do not reflect the profitability aspects. Hence, the profitability ratios were used to analyze the overall profitability or efficiency of the business organizations. Two different ratios namely, net profit to fixed assets and net profits to total assets were worked out and compared with selected units.

To determine the income yielding capacity of the fixed assets, the ratio of net profit to fixed assets were worked out to 0.16, 0.18, 0.15, 0.22, 0.29, 0.32, 0.39 and 0.44 for eight years in respect of co-operative coir units and from 0.26, 0.38, 0.25, 0.42, 0.49, 0.42, 0.55 and 0.59 in respect of private coir units.

Net profit to owned funds ratio was used to examine the extent of net profit gain for each rupee of investment. The ratios were found to be 0.18, 0.16, 0.28, 0.36, 0.40, 0.49, 0.52 and 0.61 with an average of 0.37 in the case of co-operative coir units as compared to private coir units 0.38, 0.47, 0.68, 0.56, 0.60, 0.62, 0.58 and 0.66 with an average of 1.03. This indicates that the private coir units were in a position to protect their equity and they had generated the income on the equity when compared to private coir units.

5.1.8 Staffing pattern in coir processing units

As observed from the Table 4.7, there were 16 staff members in the case of private coir units as compared to 20 staff members in co-operative coir units. This indicated that the manpower requirement was higher in co-operative coir units as compared to private coir units. It can be seen from the table that manager, technician and supervisor were appointed by the co-operative coir units and the private coir units were not appointed any technician and supervisors, because of large size of the co-operative coir units, range of activities involved in the coir processing, larger quantity of input and output, involvement of different types of machineries etc. We can also see that in co-operative coir units, helper/purchaser was appointed additionally, to assist the procurement of large quantity of raw materials and other processing activities.

Since the size of the private coir units was very small compared to co-operative coir units, the owner of the unit himself performed the activities of manager, supervisor and helpers/purchaser along with his family members. Since the private coir units were operated manually i.e. the activities like cleaning, softening, drying, threading etc., were done manually, the unskilled labour requirement was more in the case of co-operative coir units as compared to private coir units. Thus, the results pointed out that the overall employment generation was higher in co-operative coir units where value addition and more production of coir products.

5.2 Cost and returns structure in different coir units

The costs and returns structure of coir products showed that the direct expenses incurred in production of curled coir was more as compared to coir fibre. The cost on direct expenses was high because of high cost of material in curled coir co-operative unit as compared to coir fibre unit. However, the indirect expenses made in production of coir fibre was more as compared to curled coir unit because of more expenses on rent, depreciation and miscellaneous cost. Hence, the cost of production was found to be more in curled coir unit as coir fibre unit because of high cost incurred on direct expenses as compared to indirect expenses (Table 4.8).

The marketing cost incurred in the curled coir was very high as compared to coir fibre. As such, the cost incurred on transportation and storage was more in curled coir as compared to coir fibre unit. However the cost incurred on commission, advertisement, inspection and grading and packaging were less in coir fibre unit. The cost made on advertisement and packaging was very less in both the coir fibre units. Hence, marketing cost in private curled coir unit was marginally more as compared to coir fibre units. Hence, the gross returns and net returns obtained were more in curled coir unit as compared to coir fibre unit (Table 4.9). Hence, the curled coir is have very much demand by the bed making units like Betsey, Kurl-on etc. So, the production was very high in curled coir units.


5.3.1 Value addition to coir fibre in coir units

The value addition to coir fibre is presented in Table 4.10, 4.11. It was seen that, cost incurred on cleaning, softening, drying and grading was found to be high in private coir unit as compared to co-operative coir unit. The private coir units add high value to the coir fibre as compared to co-operative coir unit. Hence, the total cost of production of private coir fibre unit was found to be more as compared to co-operative unit. However, the marketing cost incurred was more in co-operative coir unit as compared to private coir unit. Hence, the gross returns and net returns obtained was more in private coir unit as compared to co-operative coir unit. Hence, the private coir units the value addition of coir products like coir fibre and curled coir was highly produced but in case of co-operative coir units was very less. So, the gross returns and net returns obtained by the private coir units will be more as compared to co-operative.

5.3.2 Value addition to curled coir in coir units

The value addition to curled coir is presented in Table 4.12 and 4.13. It was seen that, cost incurred on cleaning, softening, drying, grading and threading was found to be high in private coir unit as compared to co-operative coir unit. The private coir units add high value to the curled coir as compared to co-operative coir unit.

Hence, the total cost of production of private curled coir unit was found to be very high as compared to co-operative unit. However, the marketing cost incurred was also high in co-operative coir unit as compared to private coir unit. The raw material cost and manufacturing cost was also very high in private coir unit. Hence, the gross returns and net returns obtained was very high in private coir unit as compared to co-operative coir unit.

Hence, as compared to co-operative coir units will not produce high production of curled coir. So that the gross returns and net returns was found very less in co-operative coir units.


The marketing channel is the media through which products are moved from the production place to consumption place. In the study area, the marketing channels were limited. The marketing channels followed in co-operative coir unit from producer to co-operatives and finally to consumers which showed that co-operatives play an active role, most of the producers do not undertake any of the marketing functions. Therefore, services of co-operatives who look after the marketing of coir products to consumers, acts as intermediaries between producers to consumers (Table 4.14).

The marketing cost incurred by different intermediaries is shown in Table. 4.15. The results revealed that, the producer incurred very high cost in co-operative coir unit as compared to private coir unit. The marketing channels followed by different coir units is presented in the table. It can be seen that, in both the channels storage occupied major share in marketing cost followed by transportation, inspection and grading, advertisement, commission and packaging. However, private coir units have not much incurred any cost on advertisement and packaging. Hence, intermediaries play vital role in the marketing of the coir products due to the fair commission charges on the sale of these coir products. Similar results was found by (Anand S kolur,2011).

5.5 Problems faced by the coir units in manufacturing and marketing operation-

The problems faced by coir units in manufacturing and marketing operation showed that almost 75.00 per cent of coir units expressed the problem of high cost of working capital (Table 4.16). Nearly 50.00 per cent of the co-operative coir units expressed the problem with regard to lack of power supply, difficulty in labour availability, transporting problem, high cost of working capital, high processing cost, problem regarding repairs and maintenances and problem regarding grading. Nearly 50.00 per cent of the private coir units expressed the problem with regard to lack of power supply, difficulty in labour availability and lack of market intelligence and information and nearly 25.00 per cent of private coir units opined the transportation problem.

The prevalence of problems of different coir units is quite common. The above mentioned problems are major problems was found in the different coir units during the production of the coir products. Majority of the producers viewed the major problems faced by them in coir product processing. All the products (100%) expressed that the existing manufacturing and marketing operation showed that almost 75 per cent followed by the high cost of working capital nearly 50 per cent. Similar were the observations of Jain Hemachand (1989) and Amruta (1994) and Anand (2011).

6. SUMMARY AND POLICY IMPLICATIONS

Coir is one of the important sectors as far as economy of the country is concerned. The units is a traditional one, with tradition and in some ways, outmoded practices and had a chequered history. Most of the coir workers are coming from socially and economically backward classes. The units provides direct employment to more than 6.4 lakh workers and majority of the female. It is mainly concentrated in coastal districts of the state. The major constituents in the coir sector are cooperatives, private, public, government undertakings and unorganized manufacturing units.

Coir units in India consists of two distinct segments namely: (1) White fibre based and (2) Brown fibre based. White fibre is extracted from husk of matured coconut after a unique process known as Retting. For retting, the green husk is kept in saline water for a period of six to eight months. Then it is taken out and beaten by hand. This process removes the 'lignin' and 'tannin' and gives coir the white colour from which white fibre is extracted by hand.

In this context, the present study would critically analyze the efficiency aspects of co-operatives and private coir processing units. It attempts to compare different types of coir units with different efficiencies. It compares the efficiency of different types of coir units by employing certain business ratios. The study further attempts to bring out the attention pertaining to capacity utilization of each type of processing unit, which would help in modernizing the processing units. Finally, the study aims at identifying the problems in coir processing units into different products so that suitable policy measures are suggested to improve the conditions of coir processing units through necessary financial and marketing facilities.

The study was undertaken with the following objectives;

1. To analyse the investment pattern and financial feasibility of coir products in manufacturing units.

2. To analyze the cost and returns structure in the production of different coir products.

3. To study the value addition in different coir products.

4. To analyze the marketing management of coir product in the selected coir units.

5. To study the problems faced by coir units in manufacturing and marketing operations.

Methodology

To fulfill the objectives of the study, four taluks namely Tumkur, Gubbi, Channarayapatna and Arasikere were purposively selected from the two districts namely Tumkur and Hassan as these taluks had a considerable number of coir units with varying level of integration of processing operations. However, due to the difficulty in eliciting required information from the integrated coir units, the present investigation was confined to the co-operatives and private coir units. The sample included four co-operatives and four private coir units selected from each of the above taluks. However, for ascertaining the problems faced by the coir units, a larger sample of four co-operatives and four privates coir units were selected by choosing from each of four taluks. The market intermediaries also collected for the study, that are four wholesalers, four commission agents, four traders and four retailers.

The primary data were collected from the coir industrial owners related to coir procurement cost, processing cost, inventory costs, management issues in procurement, processing and marketing returns from the sale of main products and by-products, and also problems encountered in the coir processing operations.

Secondary data were collected from the records maintained by the coir units owners. These data pertained to the details of assets and liabilities, extent of investment made at different points in time, cash inflows and cash outflows. The data were collected for a period of eight years.

Findings of the study

The following findings of the present study are presented as under.

Investment in coir products showed that there was a direct relationship between the total capital investment and size/capacity of the coir processing units. The total capital investment was higher in co-operative coir units than in the private coir units.

The investment on machinery and equipments was the highest followed by buildings, land, infrastructures and miscellaneous. The proportion of investment on land in the total investment was found to be highest in Channarayapatna Co-operative units (Rs. 17.00 lakhs) while in Private coir units.

There are 16 staff persons in the case of private coir units as compared to 20 in the case of co-operative coir units. This indicated that the manpower requirement was higher in co-operative coir units as compared to private coir units.

The net present value in co-operative coir units was higher than the private coir units. It was Rs. 46.56 lakhs for co-operative coir units and Rs. 42.23 lakhs for private coir units. The benefit cost ratios were 1.14 for co-operative coir units and 1.17 for private coir units.

The cost incurred on curled coir in case of cleaning, softening, drying, grading and threading was found to be more in private coir units as compared to co-operative coir units.

The costs and returns structure of coir products showed that the direct expenses incurred in production of curled coir was more as compared to coir fibre. The cost on direct expenses was high because of high cost of material in curled coir co-operative units as compared to coir fibre units.

The marketing channels followed in co-operative coir units was from producer to co-operatives and finally to retailers which showed that co-operatives play an active role, most of the producers do not undertake any of the marketing functions.

The problems faced by coir units in manufacturing and marketing operation showed that all the co-operative coir units and private coir units opined the problem regarding taxation, high processing cost and problem regarding repairs and maintenances.

Policy implications

1. The financial feasibility analysis revealed better financial performance in respect of private coir units compared to co-operative coir units. This finding suggests that the co-operative coir units owners could modernize their units and get larger profits.

2. Invariably all the coir units owners opined that the high rates of machineries and equipments, while producing and selling coir products. Since coir is an important product for units, it was advisable to the government to provide subsidies on machineries and equipments.

3. The results indicated that investment in co-operative coir units was high as compared to private coir units. The private coir units should also update the production technology through additional investment to harness economies of scale in their operations.

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PERFORMANCE OF COIR INDUSTRIES IN

KARNATAKA – A MANAGEMENT APPRAISAL

VISHWANATH D. S. 2012 Dr. C. MURTHY

MAJOR ADVISOR

ABSTRACT

Coir is an unique natural fibre produced by coconut (Cocos nucifera) used in diverse applications. It is an important sector as far as economy of the country is concerned. Most of the coir workers are coming from socially and economically backward classes. The industry in India provides direct employment to more than 6.4 lakh workers and majority are women’s. To fulfill the objectives of the study, four taluks namely Tumkur, Gubbi, Channarayapatna and Arsikere were purposively selected from the two districts namely Tumkur and Hassan. The primary data were collected from the coir industrial owners. Secondary data were collected from the records maintained by the coir industry owners. These data pertained to the details of assets and liabilities, extent of investment made at different points in time, cash inflows and cash outflows. The data were collected for a period of eight years.

The results showed that on an average total capital investment was highest in co-operative coir units (59.56 lakhs) than in private coir units (46.00 lakhs). Average Net present value (NPV) in co-operative coir units was higher than that of private coir units. The internal rate of returns of all other units in both the units was higher than the discount rate (12 per cent) considered in the analysis, B:C Ratio was higher in private coir units (Rs.1.17) as compared to co-operative coir units (Rs.1.14). Similarly co-operative coir units took higher time to recover the investment (1.56 years) compared to private coir units (1.55years). Average total cost of producing one tonne of coir fibre is (Rs.29435.00) was high in private coir units and in co-operative coir units is (22986.30). In case of private coir units the gross return per tonne was Rs.19390.00 and co-operative coir units is Rs.16851.30. The results indicated that investment in co-operative coir units was high as compared to private coir units. The private coir units should also update the production technology through additional investment to harness economies of scale in their operations.

performance of coir industries in karnataka – a … · 2018-12-07 · review of literature ......

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