A STUDY ON PRODUCTION AND MARKETING OF COIR

PRODUCTS IN TAMILNADU WITH SPECIAL REFERENCE TO

THANJAVUR DISTRICT

Thesis Submitted To Bharathidasan University

in partial fulfillment of the requirements
for the award of the degree of

DOCTOR OF PHILOSOPHY IN COMMERCE

Submitted by
A.RAMAMURTHY
Ref.No.4465/Ph.D/Part-Time /Commerce/Confirm/July2007

Research Advisor & Convener

Dr.V.RAJAGOPALAN M.Com.,Ph.D.,
Principal
Sri Venkateshwara College of Arts & Science
Peravurani-Thanjavur.(Dt)
Tamilnadu, India

JUNE-2012
Dr.V.RAJAGOPALAN M.Com.,Ph.D.,
Principal ,
Sri Venkateshwara College of Arts & Science,
Peravurani,
Thanjavur District.

CERTIFICATE

This is to certify that the thesis “A STUDY ON PRODUCTION

AND MARKETING OF COIR PRODUCTS IN TAMILNADU WITH
SPECIAL REFERENCE TO THANJAVUR DISTRICT” Submitted by
Mr.A.RAMAMURTHY for the award of Doctor of Philosophy in Commerce, to
Bharathidasan University is a record of research work done under my guidance and
supervision during the period 2000 to 2010 and the thesis has not formed the basis
for the award to the scholar of any Degree, Diploma, Associate ship, Fellowship or
any other similar titles.
Also certified that the thesis represents an independent work on the part of
the candidate.

Place :
Date :

Dr.V.RAJAGOPALAN
Research Advisor and Convener

Countersigned
A.Ramamurthy
Research Scholar,
Sri Venkateshwara College of Arts & Science,
Peravurani, Thanjavur District.

DECLARATION

I hereby declare that the thesis entitled “A STUDY ON PRODUCTION AND

MARKETING OF COIR PRODUCTS IN TAMILNADU WITH SPECIAL
REFERENCE TO THANJAVUR DISTRICT” for the award of the degree of Doctor
of Philosophy is my original work done under the guidance and supervision of
Dr.V.RAJAGOPALAN, Principal, Sri Venkateshwara College of Arts and Science ,
Peravurani and that the study has not previously formed the basis for the award of any
Degree, Diploma, Associateship , Fellowship or any other similar titles.

Place :

Date :

A.RAMAMURUTHY
 ACKNOWLEDGEMENT

I would like to place on record my grateful acknowledgements to the following

persons, friends and relatives for their support, encouragement and assistance extended

for the successful completion of my research work.

No words can adequately express my debt of gratitude to my guide

Dr. V.RAJAGOPALAN M.Com., Ph.D.,Principal, Sri Venkateshwara College of Arts and

Science,Peravurani. It was he who generated interest in me to select and study the field

of coir industry and breathed life into the topic I chose. Literally he lived through the

various stages of this research work and showed the way from the beginning to the end.

From the time when the idea for the research flashed through my mind to its completion,

he was there to keep me on the track. During my difficult times, his motherly touch,

fatherly guidance and brotherly support ensured my work went steady and made the

thesis grow from strength to strength. No amount of thanking him can ever fully record

the debt I owe to my guide.

I take this opportunity to thank the Doctoral committee member

Dr.N.Udayakumari,Associate Professor, Department of commerce, A.D.M. College for

women,Nagappattinam,for his thought provoking ideas and valuable suggestions.

 My special thanks go to Dr. V. Ramaiyan Ph.D., Research Advisor, Sri

Venkateshwara College of Arts and Science,Peravurani for the role he played in the

statistical part of my thesis. I also feel immense pleasure in thanking all my colleagues in

my Department for their continuous moral support extended during the course of my

research work.

I express my sincere gratitude to Dr.N.Palanivelu M.Com.,Ph.D.,Head ,PG and

Research Department of Commerce, Sri venkateshwara College of Arts and Science,

Peravurani, for his valuable guidance in the application of statistical tools.

I also extend my thanks to all the entrepreneurs and workers in the industry for

having spared their time in providing the required data in the course of my inquiry.

Above all, my research efforts could never been seen in the present form, without

the blessings of the ALMIGHTY. I feel very grateful and very humble upon the Divine

Grace.
 CONTENTS

Page
Chapter
I INTRODUCTION AND DESIGN OF THE STUDY ... 1

II COIR INDUSTRY - AN OVERVIEW ... 46

III PROFILE OF THE STUDY AREA AND COIR UNITS ... 87

IV COST, RETURNS AND RESOURCE-USE EFFICIENCY ... 115

V MARKET STRUCTURE, MARKETING EFFICIENCY ... 155

AND PRICE-SPREAD

VI HUMAN RESOURCE MANAGEMENT PRACTICES ... 198

IN COIR INDUSTRY

VII SUMMARY OF FINDINGS AND SUGGESTIONS ... 244

BIBLIOGRAPHY

APPENDIX- Questionnaire I to IV

ENCLOSED- Articles
 LIST OF TABLES

TABLE NO TITLE PAGE NO

1.1 Chemical composition of Coir Fibre 8

1.2 Sample Framework of workers in the Study Area 36

2.1 Growth of Coir Units in India 52

2.2 The Region – Wise Distribution of Coir Units 53

2.3 State-Wise Distribution of Coir Units in 55

Southern India

2.4 State-wise distribution of Coir Units 57

as on March 31st 2005

2.5 Growth of Coir Industry in Tamil Nadu 59

(1995-96 to 2004-05)

2.6 World Coir Production (1995-1996 to 2004-2005) 61

2.7 Trend and Growth Rate of world coir production 62

(1995-1996 to 2004-2005)

2.8 Coir Production in Major Coir producing countries 63

of the world (1995-96 to 2004-05)

2.9 Trend of coir production in India 65

(1995-96 to 2004-05)

2.10 Trend and Growth Rate of India coir production 66

(1995-96 to 2004-05)

2.11 India's Share in Global Coir Production 67

(1995-96 to 2004-05)

2.12 Production of Coir by the Major coir Producing 68

States of India (1995-96 to 2004-05)
TABLE NO TITLE PAGE NO

2.13 Coir Production in Tamilnadu 70

(1995-96 to 2004-05)

2.14 Trend and Growth Rate of Coir Production 71

in Tamil Nadu (1995-96 to 2004-05)

2.15 Growth of Employment in Coir Industry in India 72

(1995-96 to 2004-05)

2.16 Area, Production and Productivity of Coconut 74

in India (1995-96 to 2004-2005)

2.17 Area, Production and Productivity of Coconut 76

in Tamil Nadu (1995-96 to 2004-05)

2.18 Coir Exports from India (1995-96 to 2004-05) 79

2.19 Trend and Growth Rate of Coir Export from India 80

(1995-96 to 2004-05)

2.20 Growth in Export Value of Coir Sector 81

2.21 Composition of Coir Exports by Various Coir Products 83

and its Volume and Value to Total Coir Export
as on 31st March 2005

3.1 Location-Wise Distribution of Coir Units 91

3.2 Block-Wise Distribution of Coir Units in the study area 92

3.3 Year-Wise Formation of Units in the Study Area 94

3.4 Forms of Organisation of Coir Units 95

3.5 Distribution of Partners in Partnership type of Coir Units 96

3.6 Sources of Raw Material 97

3.7 Average Stocking Period of Raw Material 98

(Small and Medium Units)
3.8 Average Stocking Period of Finished Fibre 99
(Small and Medium Units)

3.9 Classification Based on Capital Investment 101

3.10 Sources of Investment 102

3.11 Source of Borrowed Funds 103

3.12 Amount of Capital borrowed 104

3.13 Investment Pattern of Fixed Capital (Small Units) 106

3.14 Investment Pattern of Fixed Capital (Medium Units) 107

3.15 Overall Pattern of Investments in Fixed Assets 109

3.16 Investment Pattern of Working Capital (Small Units) 111

3.17 Investment Pattern of Working Capital (Medium Units) 112

3.18 Overall Pattern of Working Capital 113

4.1 Input-Output Structure at Mean Levels of Manufacture 118

of Coir Small and Medium Units

4.2 Cost of Production per 100 Bundles of Coir Fibre 127

4.3 Cost of Production per 100 Bundles of Coir Fibre 128

4.4 Statement of Income from Coir Fibre Production 131

4.5 Comparative Analysis of Cost and Returns per 133

100 bundles of Coir Fibre Manufacture Small
and Medium Size Coir Units

4.6 Estimated Results of Cobb-Douglas Type Production 137

Function for Small, Medium and Pooled Category
of Units Manufacturing Coir fibre
TABLE NO TITLE PAGE NO

4.7 Equality Test between Small and Medium Coir Units 140
Manufacturing Coir Fibre

4.8 Tests of the Stability of Intercept and Slope Level For 142
Small and Medium Coir Units

4.9 Returns of Scale for Small, Medium and Overall 144

Category of Coir Units

4.10 Marginal Value Productivity of the Resource-Use 147

Efficiency of Resources for Small Units Manufacturing
Coir Fibre

4.11 Marginal Value Productivity of the Resource-Use for 148

Medium Coir Units in Manufacturing Coir Fibre

4.12 Marginal Value Productivity of Resource-Use Efficiency 150

for Pooled Category of Coir Units

4.13 Production Problems Faced by Small Coir Units 152

4.14 Production Problems Faced by Medium Coir Units 154

5.1 Choice of Middlemen by Coir Units 160

5.2 Reasons for Sale to Native Traders 162

5.3 Reasons for Sale to Market Traders 163

5.4 Marketing Cost incurred by the Manufacturers 165

(Small and Medium Units)

5.5 Marketing Cost incurred by Native Traders 168

5.6 Marketing Cost incurred by Market Traders 169

5.7 Marketing Cost incurred by Commission Agents 170

5.8 Marketing Cost incurred by Wholesalers 171

TABLE NO TITLE PAGE NO

5.9 Price-Spread for Coir Fibre 173

5.10 Marketing Margin of Intermediaries under 176

Different Channels

5.11 Price Spread under Different Channels 177

5.12 Marketing Efficiency under Shephered’s Method 179

5.13 Marketing Efficiency Analysis using Acharya and 180

Agarwal’s Method

5.14 Marketing Efficiency under Composite Index Method 182

5.15 Trend, Cyclical and Irregular Variations of Prices of 187

Coir Fibre in Alleppey Market

5.16 Average Seasonal Indices of Coir Fibre Prices in the 193

Alleppey Market during 1995-96 to 2004-05

5.17 Marketing Problems Faced by the Manufacturers of 196

Coir Fibre

6.1 The State of Presence of Human Resource 204

Department in Coir Units of the Study area

6.2 State of Human Resource Policies in Coir Units of the 206

Study area

6.3 Sources of Recruitment of Workers 208

6.4 Nature of training to workers 210

6.5 Type of Motivation Adopted in Coir Units 211

6.6 Prevailing State of Working Conditions in Coir Units 212

6.7 Welfare Facilities Provided by Coir Units 214

TABLE NO TITLE PAGE NO

6.8 Distribution of Sample Workers on the basis of 217

their Level of Satisfaction

6.9 Age and Average Satisfaction Scores of Sample Workers 218

6.10 Age and Level of Satisfaction 219

6.11 Education and Average satisfaction Scores of 221

Sample Workers

6.12 Education and Level of Satisfaction 223

6.13 Marital Status and Average satisfaction Scores of 225

Sample Workers

6.14 Marital Status and Level of Satisfaction 226

6.15 Community and Average Scores of Sample Workers 228

6.16 Community and Level of Satisfaction 229

6.17 Gender and Average Scores of Sample Workers 231

6.18 Gender and Level of Satisfaction 232

6.19 Years of Experience and Average Scores of 234

Sample Workers

6.20 Years of Experience and Level of Satisfaction 235

6.21 Basic Work Status and Average Score of Sample Workers 237

6.22 Basic Work Status and Level of Satisfaction 238

6.23 Problems of Human Resource in Coir Industry 242

 LIST OF CHARTS

FIGURE TITLE PAGE NO.

5.1 Estimate Price Trend of Coir Fibre in 1990-91 189

to 2008-2009
5.2 Cyclical Variations in Prices of Coir Fibre 190
in 1993-94 to 2006-07

5.3 Irregular Variations in Prices of Coir Fibre 191

in 1993-94 to 2006-07

5.4 Seasonal Indices of Coir Fibre Prices in 2001-02 to 194

2009-2010
 LIST OF ABBREVIATIONS

CCRI - The Central Coir Research Institute

SFURTI - Scheme to promote rural industrialization in the country,

DIC - District Industries Center

SSI - Small Scale Industries

IICPT - Indian Institute of Crop Processing Technology

TIIC - Tamilnadu Industrial Investment Corporation

MVP - Marginal Value Productivity

MFC - Marginal Factor Cost

COIRFED - State Coir Marketing Federation Limited

RSSEs - Rural Small Scale Enterprises

 CHAPTER-1

A STUDY ON PRODUCTION AND MARKETING OF COIR

PRODUCTS IN TAMILNADU WITH SPECIAL REFERENCE TO
THANJAVUR DISTRICT

1.1 INTRODUCTION

The economic development of any country demands industrialization. Though it

has got recognition in our country, it is high time we thought about balanced regional
development, an important component of industrialization. Rural development forms a
key component in a nation’s progress towards economic freedom and equality. But the
migration of rural people to cities and the ineffective utilization of rural resources stand
as hurdles to rural development. Hence it is very important to develop and to encourage
rural industry by considering its significance on the socio-economic front of the country.

Rural or traditional industry, one of the sub-sectors of small-scale industry, has a

direct and important influence on sustainable economic development.1 “Encouraging
setting up of rural industries in the small area is an instrument for not merely attaining
political freedom, but an instrument for economic freedom and a foundation of a new
social order”.2 It is a matter of common knowledge that India is a land of villages and
two-thirds of its population live in rural areas. The future of India lies in these teeming
rural million. It is only from a progressive, growing and dynamic rural society that India
could put herself on the desired developmental path. Rural small-scale industries play an
important role under the peculiar Indian conditions. They contribute about half the gross

1
Sudheesh Kaippachery, “Reforms and Its Impact on the SSIs — A Field Approach”, Journal of
Rural Development Vol.24, No.2, April – June 2005, pp.213-226.
2
N.C. Nanda, “Promotion of Rural Industries”, NABARD News Review, Vol. 26 (7), 1997, p.15.

1
value of output originating in the manufacturing sector. At present it contributes 40 per
cent to exports in the country and provides employment to 13 million.3

The Government of India, in pursuance of its announcement in the Union

Budget for 2009-10, came out with a scheme to promote rural industrialisation in the
country, called “” (SFURTI) with an initial allocation of Rs.115.25 crore.4 The scheme’s
chief objectives were to make traditional industries more competitive and to strengthen
the local governance systems of industry clusters with the active participation of the local
stakeholders. The Union Ministry of Agro and Rural Industries implement this scheme.
The target sectors and the potential beneficiaries of the scheme include artisans, workers,
machinery makers, raw material providers, entrepreneurs, institutional and private
business development service providers engaged in traditional industries and working in
selected clusters of Khadi, Coir and village industries including leather and pottery.5

1.1.2 Coir Industry

Coir Industry has to its credit a tradition and heritage of centuries. It is one of the
few rural or traditional industries’ converting the coconut husk, a waste, into wealth. This
industry is the largest producer of coir, accounting for more than 80 per cent of the
world’s production of coir fibre.6 The development of this agro-based industry is the sine
qua non for economic prosperity as it has backward and forward linkages. One of the
special characteristics of the coir industry is that it provides full time employment to
unskilled workers and part time employment opportunities to agricultural labourers. Over
six lakh employees, of whom a majority are from rural areas and economically weaker
sections of the society. Women constitute nearly 85 per cent of the work force and it

3
R.N. Chaudhary, “Problems of Rural Industry”, Jagriti, Vol.50, No.6, May 2006, p.31.
4
The Hindu, dated, Sep 10, 2005, Madurai, Tamil Nadu, p.8.
5
Ibid, p.8.
6
Mahendra Dev, “Agro and Rural Industries - India-2005”, A Reference Annual: Government of
India, New Delhi, 2005, p.482.

2
remains as a pet industry for them.7 Hence Coir industrialisation is generally considered a
vehicle for the generation of productive employment and income for the rural poor.8

It has paramount importance not only in Kerala, the home of coir, but also in the
states of Tamil Nadu, Andhra Pradesh, Karnataka, West Bengal, Maharashtra and the
union territory of Goa where the industry has spread its wings by utilizing the advantages
offered by the coconut industry. As it is growing at a fast pace in all these states, it
occupies a premier position in the national industries of India.

Till 1980, the exports from the industry were limited to a few countries, but with
the advent of globalization now its horizon has expanded. Initially India’s export trade of
coir products mainly consisted of coir and coir matting’s but at present it comprises 14
products namely curled coir, coir fibre, coir rugs, coir rope, coir yarn, coir geo-textiles,
coir pith, handloom mats and mattings, powerloom mats and mattings, rubberized coir
and tufted mats.9 Till to-day, in terms of both quantity and value export, coir and coir
products have been continuing to record an upswing. The average annual export earnings
of coir was at Rs.8 crores in 195010 but it reached the all time high of Rs.473.40 crores by
the end of March, 2005.11 The products from the industry are now slowly and steadily
capturing the foreign markets too.

Consequent on this, a steady increase in the number of coir units setup in India is
witnessed. The number of units which were a thousand in 1950 increased to 6456 in
1995-96 and it further increased to 9597 in 2004-05 and in 2009-2010 it is 13416. The

7
Forty Ninth Annual Reports, Coir Board, Kochi, 2003, p.21.
8
A.V. Arun Kumar, “Rural Industrialisation in India: Aspects of Policy, Technology and
Employment with Special reference to Kerala”, M.D Publication Private Ltd, New Delhi, 1997, p.6.

9
Fifty First Annual Report of Coir Board, Coir Board, Kochi, 2005, p.31.
10
P. Ajith Kumar, “Coir Industry in India – Problems and Prospects”, Coir News, Vol.
XXXI, No.7, pp.137-141.
11
Summary of Export of Coir Products, Coir News, Vol.XXXIV, No.5, 2005, p.72.

3
estimated annual growth between 2000-01 and 2009-10 worked out to 68.65 per cent.
The rapid expansion of coconut cultivation in non-traditional areas further accelerates the
growth of this industry in India. The products from the industry that are mainly foreign
exchange earners, besides giving large-scale employment, slowly, steadily and
successfully are capturing the foreign markets.

1.1.3 Origin of the word “Coir”

The name of coir is said to come from the Malayalam word “Kayar” (from the
verb “Kayaru”- meaning “to twist”) through the Portuguese corruption “coire”. But the
Malayalam “kayar” does not mean what the word “coir” has now come to denote the
word appears in early Arabic writings as “Kaanbar” and “Kanbaar” arising probably from
some misreading of the diacritical points (from “Kaiyer”). The first time the word
appeared in English language was in that New English Dictionary, as “COIRE” in 1697
and later as “COIR” in 1779.12 “Kayar” or “kayer” is also the word for “rope” in ancient
Tamil or ancient “Adidravidian” language.13

Coir is the fibre or thread obtained from the husk of the fruit of the coconut
(cocos nucifera).14 Thus “coir” means “the fibre” obtained from the husk of the fruit of
the coconut palm tree. In other words, it is one of the innumerable products of the
coconut palm, and is a by-product of the coconut industry.

12
P.K. Balakrishanan, “Evolution and Working of Coir Industry in Kerala”, Coir Board, Kochi,
2005, p.26.
13
T.S. Ramanathan Ayyar, C.G. Rama chandran Nair and N. Balakrishnan, “A Comprehensive
Reference Book on Coir Geo-Textiles”, Centre for Development of Coir Technology (C-DOT),
Thiruvananthapuram, 2002, p.24.
14
McGraw-Hill, Encyclopeadia of Science and Technology, McGraw-Hill Companies, Vol.6,
U.S.A, 2002, p.386.

4
1.1.4 The History of Coir

How coir industry evolved and reached great heights is an interesting episode in itself.
Coir epitomizes the concept of “wealth from waste”. Coir has been known and is in use
in India for more than 1000 years. Coir industry prospers well only in areas where
coconut production is abundant because coconut husk is the raw material for the industry.
The development of coir industry began taking root in India alongside the coconut
groves.15 So the history of coir industry can be dated back to that of the fruits of the
coconut palm. It is rightly remarked that one cannot narrate the story of coir except by
starting with the coconut tree—where it really begins.16

According to early Greek Choronicle, it was Megasthenes, the Ambassador of SeluCes

Nicotor, who told the Indian King Chandra Gupta about the coconut palm he found in
Ceylon [Sri Lanka] in 300 B.C.17 The first mentions of the coconut palm are believed to
have been generated during the circumnavigation of the globe by Ferdinand Magellan
between 1519 and 1522 and by Francis Drake between 1577 and 1580.18 Martius (1850)
claimed that South American as the origin of the coconut. Ceylon, the Philippines and the
Caribbean may have been the early stars in the history of the coconut economy but in
later years India made its mark. Coconut has a recorded history of 2000 to 3000 years in
the coastal areas of Sri Lanka and South India.19

15
Coir Board, “Coir”, Bennett Coleman and Company Ltd, Chennai, September 2005, p.23.
16
K.C. Eapen, “The Fascinating story of Indian Coir”, India International Coir Fair and Seminar on
Coir, Souvenir, Coir Board, Kochi, 2001, p.43.
17
P.C. Antenenl Vaz, “Coconut Fibre processing and Marketing”, Apcc Publications, Malaysia,
1999, p.146.
18
“Coir”, Op.cit; P.21.
19
I. Henry Lousis, “Coconut-The Wonder palm”, Coconut Corporation, Nager Coil, Tamil Nadu,
May 2002, pp.11-12.

5
Arab writers have mentioned Indian coir as early as the eleventh century, stating that coir
was used as ships’ cables and fenders.20 The remarkable international correspondent
Marco Polo’s celebrated travelogue of the twelfth century gives the first and finest
description of the various uses of coconut fibre and records how it was made out of the
fibre extracted from coconut husk.21

During the thirteenth century there was one reference to the use of coir yarn. It was being
used in the rigging of ships and used as auxiliary in the building of ships in the Persian
Gulf.22

Coir became known in Europe only by the middle of the sixteenth century when
coir fibre and ropes were introduced into Europe through the Arabs and the Portuguese.23
England had the first reference to coir industry as early as 140 years ago; three partners of
a London founded established the well-known carpet firm for the manufacture of coir
into various coir fabrics suitable for floor coverings.24 Coir attained commercial
importance in England as a result of the great international exhibition held in 1851 in
London.25 The coir manufacturing industry producing coir mats, matting’s and other floor
coverings was started in India on factory basis, over a hundred years ago when the first

20
I. Lakshiminarayanan, “Coir – from coconut husk to comedy products”, Coir Board, Kochi,
2005, p.23.
21
K.C. Eapen, Op.cit; p.45.
22
Jurgen Sweegers, “The Coir Industry in Kerala – Theoritical and Empirical Aspects of a
Traditional Industry in the Wake of Economic Development”, Working Paper, submitted to The
Center for Development Studies, Thiruvananthapuram, 1999, p.19.
23
“History and Home of Coconut”, Coconut Bulletin, The Indian Coconut Committee, Cochin,
September 1954, p.203.
24
www.coirindia.com
25
C. Chandaran, “The Indian Coir Industry”, Agriculture and Industry Survey, Vol.15, No.2,
2005, p.16.

6
factory was set up in Alleppey in 1859 by Mr. James Darragh, an Ireland born American
National.26

1.1.5 Coir - Nature’s Wonder Fibre

Nature has provided the coconut with a large outer covering made of fiberous
material to absorb shock of the fall and to save the nut from the heat of sunlight. This
covering is known as coconut husk. Coir is obtained from the fibrous husk, which lies
between the outer coverage of the coconut and the inner shell.27 The nut, which has a thin
smooth outer skin, is called the “exocarp”. The space between the nut and the exocarp is
filled with a spongy fibrous material called the “mescocarp”. It is this mesocarp part of
the coconut husk which is the central importance in the coir industry.28 Coir fibre is 100
per cent natural, biodegradable and environmental friendly. It is tough and durable,
versatile and resilient, resistant to flame and fungi. It provides insulation and helps sound
modulation.

Coir falls under the category of industrial hard fibres. Sisal, abaca, henequen,
hemp and kneaf are other hard fibres competing with coir on its uses. It has been
estimated that with about 4 months of immersion in water, coir loses only 35 to 40 per
cent of its strength while abaca loses 50 to 54 per cent and sisal even 52 to 59 per cent.29
One important aspect of a cordage fibre is its elongation before break. Coir with about 29
per cent elongation is not approached by any other bast fibre.30 The Chemical
composition of coir fibre is also worth mentioning and is presented in Table 1.1.

26
www.coirindia.org
27
Krishnan Kutty Nair, “Coir Industry”, Coir News, Vol.IX, No.10, Oct 1979, p.5.
28
T.S. Ramanatha Ayyar, C.G. Ramachandran and N. Balakrishnan, op.cit, p.24.
29
Thomas Issac, “Modernisation and Employment in Coir Industry in Kerala”, Sage
Publications, New Delhi, 1992, p.23.
30
G.N. Prabhu, “Coir Physical Properties”, Coir Quarterly Journal, July 1959, p.32.

7
 TABLE 1.1
THE CHEMICAL COMPOSITION OF COIR FIBRE

Sl. No Item Percentage

1. Water Solubles 5.25

2. Pectin & Related compounds 3.30

3. Hemi-cellulose 0.25

4. Lignin 45.84

5. Cellulose 43.44

6. Ash 2.22

Total 100.00

Source: “About Coir”, Technical Brochure on Coir, Coir Board, Kochi, 2001, P.3

1.1.6 Varieties of Coir Fibre

Depending upon the method of extraction coir fibre is of two varieties namely
“white fibre” and “brown fibre”.

1.1.6.1 White Fibre

It is obtained by retting the green husks in saline water for 6 to 9 months. This
method of extracting white fibre is practised in the coastal line areas of Kerala where
natural brackish water facilities are available in the form of lakes and lagoons. As they
are comparatively lighter and flexible, they are spun into coir yarn used for producing
value-added products like doormats, mattings, carpets, rugs and geo-textiles. This fibre is
of superior quality and is unofficially branded as “Golden Fibre”.

8
1.1.6.2 Brown Fibre

It is obtained from unretted dry or semi-dry husk. It is the result of a fully

machine-aided process. The fibre so extracted after socking the husk barely for five days
is called “Brown Fibre”. This fibre is tougher and resilient. It is used for stuffing
upholstery, manufacture of curled coir used in rubberized coir industry, needled felt, non-
woven geo-textiles and coir ply.

1.1.7 Major Coir Products

The coir yarn, when woven into fabrics, takes various forms, namely mattings,
mats, rugs, maurzouks and carpets, according to the types of the material used the pattern
of weaving, texture and thickness. These products are used for both decorative and
functional purposes. The major coir products are discussed below:

1.1.7.1 Coir Mats

Coir mat is an exemplary comfort material which is most popular and widely used
as rod mats, fibre mats, creel mats, loop mats, matting mats, sinnet mats, corridor mats,
rope mats, rubber tufted mats and P.V.C. tufted mats.

1.1.7.2 Coir Mattings

Coir matting is made on handlooms of sturdy construction and it is primarily used

as a floor furnishing material. .

1.1.7.3 Coir Rugs

Coir mattings cut to specified length and suitably finished are marketed as “Coir
rugs”. Rugs of various sizes with attractive designs are specially produced for overseas
markets.

9
1.1.7.4 Coir mourzouks

These are particularly suitable where heavy and durable floor covering is required
and are woven on special cross-weaving looms.

1.1.7.5 Coir carpets

Coir carpets are commonly known as “Alleppey carpets”. These are manufactured
by the same techniques as those of mourzouks but for the difference in the thickness and
number of the warp strands.

1.1.7.6 Pile carpet

Pile carpet is a novel item, usually manufactured in width up to 72 inches, in

different designs and colours.

1.1.7.7 Coir Bhoovastra (Coir Geo Textiles)

Coir Bhoovastra, is a natural coir fibre, holds soil in place and prevents soil
erosion. It is a biodegradable and eco-friendly product.

1.1.8 Uses of Coir Fibre and Coir Products

The fibre extracted from the husks of coconuts, coir, has been in use by man from
time immemorial. It has been put to a variety of uses integral to daily living: building of
houses, boat making, rope making, carpet making and so on. Its diversified new uses will
save the tropical forests, increase rural employment opportunities and also promote
agriculture.

Another important use of coir fibre is for making rubberised coir which is used in
bed mattresses, automobile seats, cushions, carpet underlays, pillows and packing
materials. Coir yarn apart from its main use as a semi-finished raw material finds

10
applications in agricultural operations also. Coir ropes are used for training climbers in
traditional agriculture in rural areas, even in small farms in the developed world. There
are many other coir products in use in modern agriculture. Coir fibre webs, woven coir
mesh mattings, De curled coir fibre mats and woven coir are used in modern soil
conservation, landscaping, mulching and other agro-horticultural applications, as a
biodegradable material. India exports large quantities of “hop yarn”, a special variety of
coir yarn used in the U.K and the U.S as support string for “hop cultivation”.

Even “Coir pith” (coco peat or processed coir pith), a by-product, is a money-spinner if
properly used. It is an excellent plant-growing medium and it is exported in brick form
and used as a soil conditioner and for plant growing in nurseries and indoor gardens.

“Pith plus” a fungus discovered by the Central Coir Research Institute of the Coir
Board, can convert coir pith into an organic manure. The Coir Board has developed a
wood substitute named “Coir ply”. The technology has been passed on to private
manufactures for commercialisation. This product has wide applications in the packing
industry as well. “Coco lawn” is a readymade lawn recently developed at the Central Coir
Research Institute. The lawn is hundred per cent natural and can be transported in
required measurements as rolls for laying.

Research efforts are on to oxidise lingo-sulphonate and produce “Vanillin”, a

flavouring agent used by chefs and confectioners all over the world. The cellulose in coir
pith, which remains after the lignin is removed, can be used to make cellulose enzyme in
its purest form. This, in turn, is an essential constituent in the production of “glucose-D”.

1.1.9 Production Processes in Coir Industry

The production of process of coir starts from the extraction of coir fibre involving
a lengthy process of either retting or unretting of coconut husk. Thus, the process of the
extraction of the fibre is done through two methods viz the traditional methods (retting)
and the mechanical method (unretting).
11
 The traditional method is generally followed in coastal areas where brackish water
facility is available. This method is gradually on the wane as the production of coir fibre
and coir products spreads to non-traditional areas. The advent of the mechanical method
of extraction reduces the period of retting and speeds up the products of fibre. By using
coir fibre, coir yarn, coir products and rubberisation of coir products are affected. The
following figure depicts the production process involved in the Coir Industry.

FIGURE 1
Production Process in Coir Industry

Collection of Coconut husks

Retting of husk

Fibre extraction

Spinning of coir yarn

Manufacturing of Coir Products Rubberisation of Coir Products

Dyeing

Weaving

Leveling of mats and mattings

Designing of mats and mattings

12
1.1.10 Economic Importance of Coir Industry

During the initial period, Coir Industry by and large remained the monopoly of the
State of Kerala. From the enactment of the Coir Industry Act in 1953, the control of the
Coir Industry has been taken over by the Government of India. The Coir Board turned its
attention to other coconut growing states of India also, starting with Tamil Nadu, and
later in Karnataka, Andhra Pradesh, Maharashtra, West Bengal and others..

It is common knowledge that rural India is mostly characterized by poverty,

unemployment, under-employment, low per capita income, under-utilisation of natural
resources, regional imbalances and the like. Encouraging and starting of rural industries
like the Coir Industry may hold the key to solving these problems.

The major share of the coir production is contributed by thousands of small

entrepreneurs who exploit the untapped rural resources and act as revival agents in
villages by generating employment and income in addition to standing as the backbone of
the exporters of coir products who earn valuable foreign exchange.

.The increased use of coir composites (coir with resin, coir with bamboo) and as
alternatives for wood products, plastic moldings and asbestos will encourage the concept
of sustainable development. Coir composites in all probability would become the
“Sunrise” sector of the Coir Industry.

The domestic market in India has adequate potential for coir and its products. Still
it remains unexploited. At present coir is mostly consumed for institutional needs;
promoting the manufacture of coir products to turn their attention to tapping the
unexploited household sector in the country is the need of the hour.

13
1.2 IMPORTANCE OF THE STUDY

The agro-based traditional rural industry coir is spreading itself at a fast tempo in
the southern parts of the country. Being strongly export-oriented from the very beginning,
it has been fetching enormous foreign exchange by offering more than 14 value added
products for export. The windfall opportunity offered by the global concern for the
environment generated a heat in the industry as its products are totally bio-degradable
and eco-friendly. In the changed scenario, any study on this performing sector would be
of immense help from a broader perspective.

Analyzing cost and returns, resource-use efficiency, returns to scale and problems
relating to production in the industry helps to assess the production efficiency of both the
small and the medium size units and thereby indicates efficiency and profitability on their
scale of operations. The identification of problems which apply brakes in the production
of coir fibre would help the owners to take corrective measures wherever necessary.
Specifically, the study would be of much help in convincing the entrepreneurs of the
units to move into the second phase of production as all the units of the area still confine
themselves to fibre extraction only. It is a future possibility that the entrepreneurs may
involve themselves in the manufacture of value-added coir products as they can see the
industry as a hub for innovation.

A detailed examination of marketing efficiency undertaken through marketing

costs and margins for different channels showed imperfections in the marketing of coir
fibre in the study area. The results of the price-spread analysis by disclosing the
prevailing ruling price in the terminal market, Alleppey of Kerala, make the owners of
the units aware of their share in the industrial users’ price of coir fibre. Further, the
analysis on marketing problems and channels highlighted which channels should be
chosen for placing and selling coir fibre.

14
 Coir being a highly a labour intensive industry, it is imperative to study the human
resource problems encountered by it. The present study, by analyzing the practices,
problems and satisfaction level of workers, would help the owners of the units to address
the labour issues including working condition so as to make the industry labour-friendly.
Therefore, the present study by exposing its potentiality for future growth could be help
the industry make an indelible mark in the Thanjavur district in particular and Tamil
Nadu in general.

1.3 STATEMENT OF THE PROBLEM

India being a land of villages with more than two-thirds of her population living in
rural areas, rural industrialization could play a key role in the country as it produces
forward and backward linkages in the rural economy. In this context the Rural Small
Scale Enterprises (RSSEs) based on local raw materials, skills and technology have been
identified as one of the key sectors in the country. Among the rural small-scale industries,
coir industry is the oldest agro-based rural industry, which has got the attention of both
the enterprising entrepreneurs and the government alike today.

However, in the present globalised scenario, like any other industry, coir industry
is also prone to problems and constrains. Both at the state and at the national levels the
problems like inadequate finance to meet the growing cost of production, non-availability
of raw material such as coconut husk in the years with scanty rainfalls, obsolete
production technology, difficulties in the adoption of modern technology, labour scarcity
during the harvesting periods of agricultural crops, absence of an effective marketing
system, lack of marketing infrastructure, concentration of markets and demand in select
regions, production in only sunny days, irrational selection and mismanagement of
human resources in all its functional areas, environmental problems, and unhealthy
competition between mechanized units and non-mechanised units and lastly the not-so
encouraging government support, apply brakes in the further growth of this sector in the
country.

15
 The industry in Thanjavur District, Tamil Nadu, also witnesses the major
problems seen at the macro-level but at varying degrees. Despite favourable conditions
like abundant supply of husk and labour, nearly 11 units which were started in 1990s
became sick and non-operational. It was ascertained from the preliminary study that out
of the 82 units which are operating now in the study area, generally complained the lack
of financial support from government agencies, change in attitude of workers making the
adversely less preferred works still less preferable, absence of ready market nearby and
absence of government agencies like the State Co-operative Coir Marketing Federation
and the Tamil Nadu State Coir Corporation limited. Moreover it was appalling to note
that none of the owners of existing units is prepared to go for the second stage of coir
production including the manufacture of value-added products which have a strong
export orientation. The enquiries also showed that the owners of the small units were
very much reluctant to undertake the expansion programmes for their units.

Even though the industry of the study area is facing hurdles and problems in its
functional areas, the presence of some favourable factors points to its future growth
potential. It is a fact that while 48 per cent of the available coconut husks is being used at
the state level, its utility rate is much less in the study area31 leaving the excess of
available raw material, husk unutilised.

In the light of these problems and prospects associated with the industry, it enjoys
certain inherent strengths such as low overhead cost, flexibility in production, informality
in labour relations, exploitations of local resources and skills, besides a raising demand
for coir fibre in the terminal market, Alleppey, Kerala. Therefore, the researcher intended
to make a critical appraisal of the industry in terms of its select functional perspectives,
so as to bring out the current status and to improve its operational efficiency by offering
suggestions based on the study area, Thanjavur district.

31
Fifty First Annual Reports 2004-2005, Coir Board, Kochi, 2005, p.13.

16
1.4 REVIEW OF LITERATURE

The review of literature focuses on the glimpses of earlier studies, which have
been done in the area of present study. It explores the avenues for future and present
research efforts related to the subject matter. A number of research studies have been
carried out on different aspects of the study by researchers, economists, academicians and
administrators in India and abroad. It embodies a large number of articles, working
papers and research materials covering a wide range of ideas of the study. A free and
frank review of the available literature, besides adding distinct vitality to the issues and
problems taken for the study, helps to identify the research gaps found in the earlier
efforts and thus assures objective linkage to the present study with the past. Therefore, a
review of the past studies in the field of Coir Industry was made and presented by the
researcher in this section.

K. Bhaskaran Unnithan 1968 in his study “Coir Industry in India With Special
Reference to Marketing and Trade” analysed the cost of production of different varieties
of coir and coir products in detail. He stated that mechanisation was the key to cost
reduction. He also studied in detail the marketing of coir. He stated that marketing of coir
could be studied by adopting two approaches namely the institutional approach and the
functional approach. He further stated that both approaches could be used simultaneously
to understand the problems of the marketing of coir.32

S. Divakaran, T.S. Srinivasan and S.K. Bharat(1969) in their article “Utilisation of

Slaughter House as a Retting Agent for Coir” opined that the hike in the price of yarn and
other products manufactured was caused by the increased process costs of retting and
defibring as they were more conventional. They stated that the cost and price

32
K. Bhaskaran Unnithan “Coir Industry in India with Special Reference to Marketing and
Trade”, Unpublished Ph.D Thesis submitted to University of Kerala, Thiruvananthapuram, 1968.

17
minimization would alone ensure the revival of the coir industry. The study concluded
that cost reduction was possible if the period of retting could be reduced to some extent.33

The State Bank of India in its study “Financing of Small Scale Industry” observed
that entrepreneurs of – small units were in too much hurry to buildup fixed assets even at
the expense of efficient current operations. This adversely affected the functioning of
firms and they failed to maintain the momentum, and as a result the units found it
difficult to recover from such a grave situation.34

V.T. Perumal (1988)observed that labour costs work out to 30 to 45 per cent of the
total cost in the case of yarn produced under the conventional method. The study stated
that labour cost could be kept low if mechanization was introduced in the spinning area.
The machine could not only increase the production of coir but also improve the quality
of yarn in such a way as to fetch a better price for the producers and higher wages for the
workers. He concluded suggesting research aiming at reducing the cost of production and
increasing production, productivity, quality of coir and coir products was the need of the
hour.35

Y. Gangi Reddy in his article “Growth Performance of Village and Small

Industries” analysed the growth performance of the rural industries (khadi and village
industry, handloom, sericulture, handicrafts, coir) vis-a-vis small-scale industries during
the last few decades in the light of the assistance received from time to time. In his study

33
S. Divakaran, T.S. Srinivasan and S.K. Bharat, “Utilisation of slaughter house as a retting agent
for coir”, Coir Quarterly Journal, April 1969, pp.29-31.
34
“Financing of small scale industry”, State Bank of India publication, Bombay, 1975, p.108.
35
V.T. Perumal “The Progressive Mechanisation in the Coir Industry”, Coir News, October 1988,
pp.35-44.

18
four variables—production, capital, employment and export — were considered find out
the growth of village and small industries.36

J. Jeya Balaji in his study “An Economic Study of the Coir Industry in
Kanyakumari District” pointed out that private efforts played a vital role in the marketing
of coir fibre and coir products in the district. He pointed out that limited operations,
delay in payments, lack of grading and standardisation and lack of marketing knowledge
were some of the problems identified in the internal markets of the district. He concluded
that market conditions were weakened by the inaction of government agencies.37

M. Seeni Kamal in his observations on Coir Industry in Thanjavur District, Tamil

Nadu” fitted a multiple regression type production function in coir manufacture. The
output of coir in rupees was taken as dependent variable. The values of raw material,
capital in rupees and labour in rupees have been treated as independent variables. Using
the Cobb-Douglas production function, he noticed constant returns to scale prevailed in
coir industry.38

D.G. Girdhari in his study “Development of Human Resources in Small Industry”

identified that there was considerable diversity amongst small-scale industries in relation
to their use of human resource practices. The study showed that 66 per cent of
entrepreneurs gave personnel functions the least importance, 28 per cent viewed it as

36
Y. Gangi Reddy, “Growth Performance of Village and Small Industries”, Journal of Rural
Development, Vol.8, No.4, 1989, pp.403-408.
37
J. Jeya Balaji, “An Economic Study of the Coir Industry in Kanyakumari District”,
Unpublished Ph.D Thesis submitted to Madurai Kamaraj University, Madurai, 1989.
38
M. Seeni Kamal, “A Study on Coir Industry in Thanjavur District, Tamil Nadu”,
Unpublished Ph.D Thesis submitted to Bharathithasan University, Trichy, 1992, p.152.

19
worth considerably but 6 per cent of them rejected the idea of looking at personnel
matters with scientific outlook.39

B. Vijayachandran Pillai in his study “A study on the role of Government

Agencies for the Development of Coir Industry in Kerala” analyzed the marketing costs
and price spread for coir and coir products in four marketing channels, and stated that the
channel of direct selling was the most profitable while the one through government
agencies was the least profitable for coir products.40

C.M. Kamaraj in his article “Exportable Coir Products in Tamil Nadu” pointed out
that coir pith which was usually dumped on the road side of coir factories, was a mixture
of dust, and bits and fibres of lesser strength occupied a lot of space in the vicinity of the
coir factories. Being lightweight dust, it is easily blown by wind causing air pollution and
even in the case of its burning causing continuous smoke for several days emitting
fugitive gases. He finally concluded that unless an appropriate solution was found to
control this menace, it would pose serious health problems of space.

Bindu Nair in her article “Women’s Health in a Traditional Sector: A Study of coir
yarn spinning industry is Kerala” after undertaking a study with the prime objective of
understanding the health effects and working conditions of coir women workers in the
unorganized sector of coir industry and the impact on their health and well being of
workers, reported that 90 per cent of the workforce form four categories of workers based
on four types of activities undertaken in yarn production. The study concluded that
women workers face numerous problems as they have no protection from labour laws.
She mentioned that they were made to work long hours without any extra pay and most

39
D.G. Girdhari, “Development of Human Resources in Small Industry”, (ed) M.
Madhusudhana Rao, Discovery Publishing House, New Delhi, 1993, pp.39-51.
40
B. Vijayachandran Pillai, “A Study on the Role of Government Agencies for the Development
of Coir Industry in Kerala”, Unpublished Ph.D Thesis submitted to University of Kerala,
Thiruvananthapuram, 1994, p.234.

20
workers worked standing directly under the blazing sun and the working conditions were
unhygienic and oppressive. She found that the health problems common among all of
them were chest pain, stomach ache, vomiting, allergic problems and gynecological
complaints. Further she concluded that almost all workers suffered either from work
related or general health problems associated with working conditions.41

V.R. Mathiazhagan in his study “Economics of Coir Industry in Tamil Nadu used
the Cobb-Douglas type production function to express the input-output relationship of per
tonne of coir fibre produced to work out the productivity of resources. He tconsidered the
production of coir fibre per tonne as a dependent variable. The cost of production per
kilogram in rupees, selling price in rupees, cost of living index in numbers and labourers
involved in number were considered the independent variables. He further concluded
that nearly 87 per cent of coir fibre production was dependent upon the cost of production
and the quantum of labour involved.42

Vijayachandran Pillai in his article “Government agencies and coir co-operatives

in Kerala” compared the performance of coir units in the co-operative sector with their
counterparts in the private sector by taking into account the six variables— return on
investment, capacity utilization, average annual production, average number of workers
employed, average annual man days of employment and average annual sales. He stated
that all these six variables were found to be better in the private coir sector.43

Manikandan Pillai in his article “Model Coir Village Care for Coir Workers”
stated that the model coir village scheme was an innovative and novel concept in the coir

41
Bindu Nair, “Women’s Health in a Traditional Sector: A Study of coir yarn spinning industry in
Kerala”, Journal of Indian Association of social science Institution ( IASSI Quarterly ), Vol.15,
No.4, 1997, pp.115-124.
42
V.R. Mathiazhagan, “Economics of Coir Industry in Tamil Nadu – A Study”, Unpublished
Ph.D Thesis submitted to Bharathithasan University, Trichy, 1997, p.148.
43
Vijayachandran Pillai, “Government Agencies and Coir Co-operatives in Kerala”, Economic and
political weekly, Vol.XXXII, No.31, August 1997, pp.1951-1953.

21
sector focusing on the welfare of coir workers. The scheme laid more emphasis on the
provision of basic services such as sanitation, drinking water and electrification of houses
in the coir villages. He suggested that for improving the efficiency of workers it was
necessary to understand the general health problems and work- related health problems of
the workers. 44

Shinny Philip in her study titled “A study of Manpower Resource Management in

Coir Industry— Kerala, with special reference to Alapuzha District” observed the human
resource management practices and the level of satisfaction of workers in private, the
public and co-operative sectors of coir industry. The study showed that due to lack of
manpower, planners the coir units were unable to utilise human resources effectively.
Further, on the level of job satisfaction of workers, he found that 24.72 per cent of the
workers were fully satisfied were as, 44.20 per cent partially satisfied and the rest
dissatisfied. The study also noticed that the reasons for this dissatisfaction were poor
working conditions, low wages, inadequate amenities, strained relationship with the
manager, and non-participation in management.45

P.T. Joseph in his article “Schemes Implemented by Coir Board with special
reference to public service facilities” stated that the production of coir fibre, coir yarn and
the production of value-added products like door mats and floor coverings were
undertaken on a limited scale.

K.T. Ram Mohan in his study “Technological Change in Kerala Industry: Lessons
from Coir Yarn Spinning” observed that the ongoing technological change in the coir
industry addressed some important issues such as physical conditions of work,

44
Manikandan Pillai, “Model Coir Village Care for Coir Workers”, Coir News, Vol.XXVII, July
1998, pp.27-30.
45
Shinny Philip, “A Study of Manpower Resource Management in Coir Industry- Kerala with
Special Reference to Alapuzha District”, Unpublished Ph.D Thesis submitted to Gandhigram Rural
Institute Deemed University, Gandhigram, Tamil Nadu, December 1998, p.186.

22
environmental implications of the production process and possibilities of value- addition.
His study showed that new technology resolved these issues with varying degrees of
success. He also discussed the positive and negative aspects of the technological change
in coir industry. He concluded that the ongoing technological change appeared to have
been more successful in improving the physical conditions of work and reducing
ecological consequences but less successful in increasing productivity and workers’
income.46

Jurgen Sweegers in his working paper “The coir industry in Kerala (India):
Theoretical and Empirical aspects of a Traditional Industry in the Wake of Economic
Development” while expressing his view on the modernisation of coir units, contrary to
the common belief, opposed it by citing the following four reasons: (i) The modernization
process may turn out to be less efficient or as efficient as the labour intensive method,
given the local circumstances in India. (ii) The expected reduction in the labour cost may
be offset by gaining of importance of factors working against this change like payment of
huge wages to people who are about to operate new machines. (iii) The cost of its
introduction may also be too high to make the mechanized units a promising alternative,
(iv) The process also has an adverse impact on rural employment.47

R. Ramkumar in his article “Costs and Margins in Coconut Marketing: Some

Evidences from Kerala”which analysing the three marketing channels, observed that
Channel III (Producer–Co-operative Society–Kerala Coconut Marketing Federation–
Consumer) was the most efficient and cost-effective compared to costs found in Channels
II (Producer–Oil miller–Consumer) and Channel I (Producer Copra Maker–Oil Maker–

46
K.T. Ram Mohan, “Technological Change in Kerala Industry: Lessons from Coir Yarn
Spinning”, Working Paper, No.4, submitted to Center for Development Studies, Thiruvananthaputam,
October 1999, pp.5-44.
47
Jurgen Sweegers in his working paper “The Coir Industry in Kerala (India): Theoretical and
Empirical Aspects of a Traditional Industry in the Wake of Economic Development”, Working
Paper, No.68, Centre for Development Studies, Thiruvananthapuram, 2000, pp.1-33.

23
Consumer). He concluded that the presence of the intermediaries in the channels led to a
low price realization to the producers.48

P. Kumar in his observation on “Coir Industry in India: problems and prospects”

has pointed out that the domestic market in India still remains unexploited. He further
concluded that the organized selling channels of coir products in the country at present
may not sufficient to tap the unexploited house hold sector in India.49

K. Eresi in his article “Personnel Practices in Small-scale Industries of Bangalore

City–A Survey” stated that a large majority of the units did not have personnel
departments and Human Resource Policies. He suggested that walk-ins may be the
sources of recruitment, that too on a temporary basis without any policy on their training
and development and he concluded that informality and ad hocism pervaded the units
with respect to selection, compensation and promotions.50

M. Soundarapandian and S. Jagadees Pandi in their article “on Prospects and

problems of coir Industry”,have mentioned that the introduction of the Minimum Export
Price (MEP),may ensure better export realisation for the exporters, but several non-tariff
barriers such as allegations of child labour, restrictive banking facilities, import quota
restriction and anti-dumping measures were are likely to impede the growth of the export
market for coir products. However they concluded that the present liberalization policy of

48
R. Ramkumar “Costs and Margins in Coconut Marketing: Some Evidence from Kerala”, Indian
Journal of Agricultural Economics, Vol.56, No.4, October-December 2001, pp. 668-681.
49
P. Kumar, “Coir Industry in Industry in India-Problems and Prospects”, International Coir Fair
and Seminar on Coir, October 11-13, 2001, pp.137-138.
50
K. Eresi, “Personnel Practices in Small-scale Industries of Bangalore City – A Survey”, SEDME,
Vol.28, No.2, 2001, pp.1-15.

24
he government was certainly a boost and should be continued in the interest of the coir
trade.51

K. Thiripurasundari in her article on“Coconut Fibre Units in Tenkasi Taluk – A

case study” after surveying 30 fibre units in Tenkasi taluk, pointed out that the major
problems faced by the coir fibre units were less amount of subsidy, higher electricity
charges and inadequate water supply during summer season. She has also pointed out that
the season (January–May) was the best-suited for the coir fibre units. Highlighting that
the coir business was a lucrative business in Tenkasi Taluk.52

Christy Fernandez in his article on “Strategic Alliance for the Development of

Coir Industry in the APCC countries has enumerated the eco-friendly applications”
mentioned that the stiff competition from synthetic barriers hurdles for the prospective
global market. He further concluded stating that an institutionalized mechanism should
be set up for bringing the coir producing countries of the world together under an
international agreement similar to such arrangements existing for commodities like
coffee, rubber, and spices for promotes their export.53

M. Murugesan in his study on “A Study on Production and Marketing of Cotton in

Virudhunagar District, Tamil Nadu”has stated that the concurrent margin method could
be used as a tool to calculate marketing cost and margins. He further suggested that the
variations in cost and returns of different intermediaries at different markets could be
smoothened by averaging them over the same point of time.54

51
M. Soundarapandian and S. Jagadees pandi “Small Scale Industries Prospects and Problems of
Coir Industry”, Vol.1, Concept Publishing Company, New Delhi, 2002, pp.95-104.
52
K. Thiripurasundari, “Coconut Fibre Units in Tenkasi Taluk – A case Study”, Vol.I, (Ed)
Soundarapandian, Concept Publishing Company, New Delhi, 2002, pp.105-116.
53
www.coirindia.org/artilcles/htm.
54
M. Murugesan, “A Study on Production and Marketing of Cotton in Virudhunagar District,
Tamil Nadu”, Unpublished Ph.D Thesis submitted to Bharathiar University, Coimbatore, 2003.

25
 P.D. Esthappanu in his article “Coir Geo-textiles” states that the total cost of
production consists of fixed cost and variable cost. Fixed cost includes depreciation on
building and machinery and interest on fixed capital. Variable cost reflects material cost,
wages, power, stream and watter.55

Chilar Mohamed and Shahul Hameed in their article “Indian Coir Industries
Challenges and Future Prospects”have stated that with the advent of synthetic fibres in
European countries, Indian exports of coir and coir products have met with a serious set
back. They concluded that some form of technological improvement in the coir industry
is the need of the hour so as to maintain its position in the world market for its products
and sought innovative marketing methods including development of new products which
alone could reverse the stagnation in India’s coir exports.56

R. Sundaresan in his article on “Globalisation, Technological Change and

Traditional Industries: A Study on Coir Yarn Spinning Industry in Kerala” has attempted
to compare the traditional and modern technologies in coir industry and evaluated the
impact of technological change under the globalised regime. He has mentioned that the
modernization of coir industry in the global regime has neither in succeeded bringing
more benefits to the workers nor a better prospect to the industry.57

An English daily The Hindu stated that the coir fibre manufacturing units in
Dindigul district of Tamil Nadu raw materials, power supply and hi-technology. The
problem of shortage of raw materials was associated with pest attack and acute drought in

55
P.D. Esthappanu, “Coir Geo-textiles”, Coir News, Vol. XXXII, No.2, February 20, 2003, p.45.
56
Chilar Mohamed and Shahul Hameed, “Indian Coir Industries Challenges and Future Prospects”,
Southern Economist, Vol.42, No.1, May 1, 2003, pp.33-34.
57
R. Sundaresan, “Globalisation, Technological Change and Traditional Industries: A Study on
Coir Yarn Spinning Industry in Kerala”, Review of Social Sciences, Vol.IV, No.2, July-December 2003,
pp.46-55.

26
the region. But the other major problems of production come from erratic power supply
causing increased labour cost and slump in productivity.58

Maheswari et.al. in their article on “Marketing Strategies for Coconut” stated that
the production of coconut was high from March to June but it was low from August to
January which ultimately affected not only the coconut industry but also the coir industry.
They further stated that the rainfall had the maximum influence on the seasonal variations
in the yield not only in the coconut industry but also in the coir industry.59

Sugata Ghose in his article on “Present Status of Coconut Processing Industry in

India” observed that the owners of the private coir units were not employing government
coir agencies to market their various coconut diversified products and coir and coir
products and hence local traders played a vital role in the marketing of coconut processed
products.60

Christy Fernandez in his article on “Revitalisation and Cost Management of Small

Scale Units through a Consortium approach in the Alleppey Coir Cluster” identified the
problems faced by the primary fibre extraction sector— such as high cost of market and.
Further he stated that the small producers are at the mercy of middlemen for the supply
of raw material and credit as well as for the sale of their products. In this context the
author identified the importance and relevance of revitalization and cost management
essentials and part of the strategic inputs for revitalizing the small-scale sectors.61

58
The Hindu, dated, August 18, 2003, Madurai, Tamil Nadu, p.3.
59
P.C. Maheswari Rathina and Edwin Gnanadhs, “Marketing Strategies for Coconut”, Indian
Journal of Marketing Vol.XXXIII, No.3, March 2003, pp.10-11.
60
Sugata Ghose, “Present Status of Coconut Processing Industry in India”, Vision, Vol.XXII,
No.324, January-June 2003, pp.16-27.
61
Christy Fernandez, “Revitalisation and Cost Management of Small Scale Units through a
Consortium Approach in the Alleppey Coir Cluster”, Coir News, Vol.XXXII, No.3, March 2003, pp.17-
23.

27
 K. Manoharan Nair and R. Ramesh Chandran in their article on “Cluster
Approach—A new paradigm for the sustainable development of SSIs in Kerala”
suggested that clusters could be successfully developed in different sectors such as
rubber, handloom, cashew, ethnic food processing, garments and coir. The cluster
approach could bring the entrepreneurs engaged in manufacturing similar products
belonging to the same locality together and providing them common facilities, which
would remedy the entire problems faced by the existing industries.62

P. Chillar Mohamed in his article on “Sickness in Coir Industries in Tamil Nadu:

A scenario” presented an overall picture of the industrial sickness of coir industries in
Tamil Nadu. He pointed out that out of the 5209 coir units taken for study, 3756 became
sick on account of various reasons such as financial incapacity, lack of demand, revenue
realization problem, managerial weakness and mismanagement in financial, technical and
operational areas. Further, the author identified the sickness problem-wise and stated that
financial problems caused 50 per cent of the sickness in coir units. Production problems
caused 29 per cent, marketing problems 15 per cent and pith disposal, lack of Coir Board
involvement and miscellaneous problems were responsible for 6 per cent of sickness.63

V. Richard Paul in his study on “A Study on Production and Marketing of

Coconut in Theni District” examined the nature of returns to scale and analysed the
resource-use efficiency in the production and marketing of coconut with the help of the
marginal value product using the Cobb-Douglas production function. He observed that

62
K. Manoharan and R. Ramesh chandran, “Cluster Approach – A New Paradigm for the
Sustainable Development of SSIs in Kerala “, Journal of Business Studies, Vol.1, No.2, July, 2004,
pp.47-50.
63
P. Chillar Mohamed, “Sickness in Coir Industries in Tamil Nadu: A Scenario”, Southern
Economist, Vol.43, No.5, July 1, 2004, pp.8-10.

28
the sum of the production elasticity for the yield of small, large and overall growers
indicated a decreasing return to scale.64

K.R. Gouri Amma in her article on “Modernization of Coir Industry” stated that in
the last financial year the industry earned more than Rs.450 crore as foreign exchange
and created more employment in the rural areas. The industry had its root in the rural area
and since mostly women workers were involved at different stages of production, this
industry had an added relevance in the national income. He concluded that coir workers,
small and large manufacturers, industrialists and exporters should work together and
render their whole hearted support to the government for strengthening the industry.65

S.J. Pandi in his article on “Problems and Challenges of Industrial

Co-operatives with special reference to Coir Co-operative Units in Tamil Nadu” pointed
out that the causes for losses of the co-operative coir units were the problems of
production, labour, marketing, finance and supervision. He identified the high cost of
production.AS the main problem of power and fuel supply were the main reason for the
high cost of production.66

M. Kumarasamy Pillai in his article “Towards self-reliance in Coir Fibre

Production” stated that it might not be possible to utilise the entire coconut husks
produced in the country for coir production due to a variety of reasons such as lack of a
well-defined mechanism for collection of husks, increased cost of transportation, lack of

64
V. Richard Paul, “A Study on Production and Marketing of Coconut in Theni District”,
Unpublished Ph.D Thesis submitted to Madurai Kamaraj University, Madurai, 2004, p.167.
65
K.R. Gouri Amma, “Modernisation of Coir Industry”, Journal of Kerala Calling, Vol.XV,
No.3, April 2005.
66
S.J. Pandi “Problems and Challenges of Industrial Co-operatives with Special Reference to Coir
Co-operative Units in Tamil Nadu”, Indian Co-operative Review, Vol.42, No.3, January 2005, pp.197-
202.

29
awareness among the coconut producers, dealers and domestic households about the
economic value of husk.67

C. Chandaran in his article on “The Indian Coir Industry” pointed out that the high
labour cost in Kerala forced the manufacturers to take the coconut husk to the
neighbouring state for defibring and bring it back as fibre to Kerala which was another
reason for the increase in the price of fibre. Further, he observed that when demand had
gone up on account of short supply of fibre to the production centers, there had been an
unprecedented increase in the price of fibre.68

The Hindu The English daily reported that coir pith, once considered a waste
product and whose disposal was a problem, today had a booming market in the United
States, Europe and Australia. In 2005, coir pith worth Rs.30 crores was exported to these
countries, out of which Tamil Nadu’s share was Rs.10 crore.69

The Working Group for the Tenth Plan (2002-2007) on the coir sector framed the
following terms and references. (i) Evolving strategies to substantially increase the
utilization of coir husk in the country from its existing level of around 30 per cent to 45
per cent. (ii) Turning the attention of the non-traditional states to coir producing,
enhancing the post-fibre extraction activities introducing modernization, improving
capacity building and infusing the professional outlook in marketing efforts. (iii)
Improving the quality of the working conditions as well as generating new jobs in the
coir sector. (iv) Identifying the problems relating to technology upgradation, marketing

67
M. Kumarasamy Pillai, “Towards Self-Reliance in Coir Fibre Production”, Coir News,
Vol.XXXIV, No.6, June 2005, pp.37-39.
68
C. Chandaran, “The Indian Coir Industry”, Agriculture and Industry Survey, Vol.15, No.2,
February 2005, pp.16-19.
69
The Hindu, dated January 4, 2006, Thiruvananthapuram, Kerala, p.8.

30
information, innovation and design and suggesting measures to improve the infrastructure
facility and extension services.70

M. Srimannarayana after conducting a study in small business units of the

Adityapur Industrial Area located at Jamshedpur of Jharkand State in his article titled
“Human Resource Management in Small Business” observed that the small units did not
have formal Human Resource Management policies in place, but they did have Human
Resource Management practices which were characterized by therespect of recruitment
and selection, training and performance appraisal, informality and flexibility on finding
the constraints and opportunities of small business units.71

R. Bagavathi Muthu in his article on “Performance of Tamil Nadu Manufacturing

Sector” recommended that in a manufacturing sector like traditional and rural industry,
compound growth rate was more appropriate for analyzing the growth rate over a period
of time.72

K.N. Ramanujam and K. Rajesh Kumar in their article titled on “Human Resource
Management Practices in Co-operative Organisations” observed a close relationship
between the socio-economic factors and employees’ level of

70
Working Group’s Report on 10th Plan, Ministry of SSI and ARI, Planning Commission, 2001,
p.101-131.
71
M. Srimannarayana, “Human Resource Management in Small Business”, Indian Journal of
Industrial Relations, Vol.41, No.3, January 2006, pp.313-327.
72
R. Bagavathi Muthu, “Performance of Tamil Nadu Manufacturing Sector”, Indian Economic
Panorama, January 2007, p.42.

31
1.5 OBJECTIVES OF THE STUDY

For the critical analysis on the performance of coir industry inThanjavur district,
five performance indicators such as — growth, production cost analysis, returns and
resource–use efficiency, marketing and human resource management— are used. The
objectives framed for the present study are:

1. To trace the origin, growth and development of coir industry at the national
and state levels.

2. To find the profile of the study area, and the organizational and financial
set-up of the coir units.

3. To estimate the production cost and returns and to analyse the resource-use
efficiency of the units in the production of coir fibre for the small and the medium coir
units respectively.

4. To identify the existing marketing channels and to evaluate the marketing

cost, marketing margin, price-spread and marketing efficiency of different channels.

5. To study the human resource practices of the industry in the study area and
to measure the level of satisfaction of the workers on the prevailing working conditions
across their socio-economic factors.

6. To study the major problems in production, marketing and managing

human resources of the units in the study area.

7. To offer suggestions for improving the overall performance of coir industry

based on the findings of the study.

32
1.6 METHODOLOGY

Designing a suitable methodology the selection of analytical tools are important

for a meaningful analysis of any research problem. In this section, reasons for the choice
of the study area, the collection of data, the sampling design and the Tools of analysis are
described.

1.6.1 Choice of the Study Area

The study area of the present research work is Thanjavur District, Tamil Nadu.
Though it is predominantly an agricultural district, now, it stands at the ninth place in the
state in terms of industrial production.

The vast stretches of utilized for coconut cultivation, and the presence of adequate
agricultural labourers artisans, the emergence of an ambitious new generation of
entrepreneurs and the gradual shift of the people from agriculture to business and
industry, have changed the direction and complexion of the district into an industry-
friendly region. It is one of the pioneer districts of coir production, experiencing a steady
increase in coir units over the years due to ready market for the produced coir fibre in the
nearby state of Kerala. It indicates a vast potential for the growth of this industry in the
region.

Further, in the district no study or probe has been undertaken so far by any
individual researcher or by an institution or a university about coir industry. It sowed the
seeds of coir industry in him and finally leads to the selection of this district as the study
area for his present topic.

33
1.6.2 Collection of Data

The researcher has relied both on primary and secondary data for this study. This
study is an empirical research based on the survey method. The researcher adopted
interview schedules for collecting primary data.

1.6.2.1 Primary Data

The primary data were collected from three sources. The data on coir units, about
their organization, investments— sources and pattern, human resource practices, and
sales, cost and return on coir fibre manufactured from the owners of the units and for the
measurement of satisfaction level of workers, the required data collected from workers.
Information relating to price paid and received and a cost incurred in marketing of coir
fibre was also collected from market intermediaries. Separate interview schedules were
prepared and used to elicit this required data from owners, workers, and market
intermediaries. As an initial step, the drafted interview schedules were pre-tested by
taking into account 5 owners of coir units, 25 coir workers and 10 intermediaries. Their
opinions and suggestions were sought on its construction. In the light of the experience
gained in the pre-test, the originally prepared interview schedules were modified and the
final draft prepared.

1.6.2.2 Secondary Data

The secondary data relating to coir in respect of its production export, and
growth in units and employment for India and Tamil Nadu, and other required
information were collected directly from:

i) The Head Office, the Coir Board, Kochi.

ii) The Coconut Development Board, Kochi.

iii) The Coir Research Institute, Kalavoor, Alleppey, Kerala.

34
 iv) The Centre for Development of Coir Technology (C–DOT), Trivandrem

v) The Regional Coir Board, Thanjavur, Tamil Nadu.

The researcher also collected some relevant information from annual reports of the
Coir Board, the Coir News Journal, Coir Board magazines, various books written by the
Coir Board, Reports published by the State Planning Commission, Thiruvananthapuram,
the Centre for Development Studies, Thiruvananthapuram, the Centre for Development
Studies, Surat, Gujarat, the Madras Institute of Development Studies, Chennai, and
information down loaded from various websites.

1.6.3 Sampling Design

A list of coir units in Thanjavur District was obtained from the District Industries
Centre, Thanjavur. It was ascertained that a total of 52 units were functioning as on 31st
March 2010 in the study area. These units precisely constituted the population.

These 52 coir units taken for present study were stratified into two groups-namely
small and medium size units. The norms prescribed on capital investment by the District
Industries Centre (DIC), Thanjavur, have been considered to categorise these units. The
units with investment upto Rs.25 lakhs were grouped as small units, and the units with
investment between Rs.25 Lakhs toRs.5 crores as medium units. According to post-
stratification, 29 coir units (55.77 per cent) were small size units and the remaining 23
(44.23 per cent) were medium size units. 20 intermediaries, 5 in each category namely
native traders, commission agents, market traders and wholesalers, were randomly
selected from Thanjavur district.

For the selection of the sample workers, the stratified random sampling technique
was adopted. Thanjavur district, the study area, has 8 Taluks namely Kumbakonam,
Orathanadu, Papanasam, Pattukkottai, Peravurani, Thanjavur, Thiruvaiyaru,
Thiruvidaimarudur.Each taluk in the district is treated as a stratum. Then the total number

35
of workers for the district was obtained and the taluk-wise distribution of workers was
also obtained from the owners of coir units. The researcher selected 5 per cent of the
workers from each stratum at random to form the sample size which worked out to 300
(Table 1.2). The satisfaction level of the workers was measured across their socio-
economic factors on the working condition prevailing in the units by taking into account
the sample of 300 workers.

TABLE 1.2

SAMPLE FRAMEWORK OF WORKERS IN THE STUDY AREA

Workers’ Sample
Sl. No Name of the Taluk Total Workers
Size (at 5 per cent)

1. Kumbakonam 203 10

2. Orathanadu 702 35

3. Papanasam, 698 34

4. Pattukkottai 1850 94

5. Peravurani 1986 98

6 Thanjavur 227 12

7 Thiruvaiyaru 141 07

8 Thiruvidaimarudur 202 10

Total 6009 300

Source: Primary data

36
1.7 PERIOD OF STUDY

The present study covers a period of 10 years starting from 2000-2001 and ending
with 2009-2010 for the collection of secondary data. The field survey was carried out
from December 2010 to June 2011 to collect primary data. This period December to June
is considered the main season for the coir industry of the study area. The reference period
for the study is the financial year 2010-2011. Which is considered for the analysis of
primary data only. The period taken for the present study is felt sufficient to fulfill the
objectives of the study.

1.8 FRAMEWORK OF ANALYSIS

The performance of the coir industry of the study area has been analysed on the
basis of secondary and primary data collected. In this study the following tools are used
to analyse the data.

Trend analysis

To study the trends in coir production and export of coir a simple regression
equation of the following form has been used:

Y = a + bt

Where,

Y = Coir Production and export in year t.

a = Constant

b = Regression Co-efficient

t = Time in years

37
Compound Growth Rate

The compound growth rates with regard to coir production and coir export have been
estimated on the basis of the semi-log or exponential function.73

ln Y = a + bt

Where,

Y = Coir Production and Coir exported

t = Time periods

‘a’ and ‘b’ are the parameters to be estimated.

The Compound Growth Rate (CGR) = [(Anti ln (ln b) – 1) x 100]

Cobb-Douglas

To find out the input variables which influence the gross revenue of coir fibre and
thereby resource productivity of coir fibre production at small, medium and pooled
category of coir units, a Multiple Log-Linear Regression Model of the Cobb-
Douglas type production function of the following form has been used:

ln Y = 0 + 1 ln X1 + 2 ln X2 + 3 ln X3 + 4 ln X4 + 5 ln X5 + U

Where,

0 = intercept

y = Estimated gross revenue of coir fibre in rupees

73
R. Bagavathi Muthu, “Performance of Tamil Nadu Manufacturing Sector”, Indian Economic
Panorama, January 2007, p. 42.

38
 X1 = human labour in rupees

X2 = raw material (Husk) in rupees

X3 = unretting in rupees

X4 = Power in rupees

X5 = Machine running in rupees

U = Disturbance term

i = regression (slope) co-efficients

i = 1, 2, ……..5.

The return to scale is estimated by the elasticity co-efficients at the production

function for the small, medium and pooled category of units.

Chow’s F-test

To examine the structural differences between the small and medium size coir

units, Chow’s F-test of the following form has been used.

Σ e2  ( Σ e12  Σ e22 ) / K
F
( Σ e12  Σ e 22 ) / n1  n2  2k

Where,

Σe 2 = Unexplained or Residual sum of squares of the pooled sample of both

small and medium coir units.

Σ e12 = Unexplained or Residual sum of squares of the units corresponding to

small size coir units.

Σ e 22 = Unexplained or Residual sum of squares of the units corresponding to

medium size coir units.

39
 K = The number of parameters included in the regression equation.

n1 = Number of small size coir units

n2 = Number of medium size coir units.

Regression Analysis using Dummy Variable

In order to find out the structural differences that existed at the slope level and or

at the intercept level, a multiple log-linear regression model with slope and intercept

dummy variables was used.74 The estimated regression model is given below:

5
ln Y  β 0  βD
d
 Σ ( β i  ΓD
i
) ln X i  U
i 1

Where,
βd = Co-efficient of intercept dummy

Γi = Co-efficient of slope dummy of ith input variable.

D = Dummy variable representing 0 and 1 for the small coir units and medium
coir units respectively.

Marginal Value Productivity

To evaluate the resource-use efficiency in coir fibre production the marginal value
product of each of the input variables (X1, X2,…X5) for small and medium size coir units
was equated with their acquisition cost by using the following formula:

Y
Marginal Value Product of the ith variable = β i
Xi
Where,

74
D. Gujarati, “Use of Dummy Variables in Testing for Equality Between two sets of Co-
efficients in Linear Regression: A Generalisation”, The American Statistician, No.5, pp.18-22.

40
 Y = Geometric mean level of gross revenues of coir fibre
X = Geometric mean level of ith independent variable
βi = The regression co-efficient of ith independent variable
i = 1,2,…5

To examine the marketing efficiency of the various marketing channels in the

marketing of coir fibre, Shephered’s formula, Acharya and Agarwal’s formula and the
composite Index Method have been used.

The Price-spread analysis has been carried out to ascertain the share of different
market functionaries in the price of industrial users and would often throw light on the
relative efficiencies of the alternative channels of marketing of coir fibre. In the present
study, price-spread is measured by using the concurrent margin method where the margin
was derived as the difference between the price paid by the industrial users and price
received by the manufacturers of coir fibre.

Multiplicative Model

Time series analysis has been carried out to study the temporal variations in the
prices of coir fibre. In the present study one major market, namely the Alleppey Market,
was selected to study the temporal variations in the prices of coir fibre since it is one of
the major coir export markets in India and records higher arrivals of coir fibre than any
other markets in India.

Thus, in order to study the behaviour of the prices of coir fibre over a period of
time, a multiplicative model75 of the following type has been used:

Yt = T  S  C  I

75
P.S. Grewal, “Numerical Methods of Statistical Analysis”, Sterling Publishers Private Ltd,
New Delhi, 1987, p.555.

41
Where,
Y = Time Series data on prices
T = Trend Components
S = Seasonal Variations
C = Cyclical Variations
I = Irregular Variations

The trend of the time series of prices recorded in the Alleppey Market has been
estimated with the linear regression equation for analysing the secular trend behaviour of
the prices. Further, to study the variations in trend, cyclical, seasonal and irregular
fluctuations, were worked out.

Chi-Square Test

The satisfaction level of the workers with prevailing working conditions of the
industry has been measured in relation to their select eight socio-economic factors
namely age, gender, marital status, educational qualification, community, family size,
basic work status and experience. To study the relationship between these independent
variables and the level of satisfaction of the workers (dependent variable), hypotheses
were framed and tested with the help of the chi-square test.

The formula used for the analysis is

Σ (O  E) 2
Chi-square Value =
E
Where,
O = Observed Value
E = Expected Value

Garrett’s Ranking Technique

42
Garrett’s Ranking Technique is used to identify and rank the problems in production and
marketing of coir fibre, and the factors that influence the owners of the units in selecting
a particular market intermediary. Similarly, the same technique is also adopted to identify
and rank the problems in managing the human resources of the coir units.

The ranks assigned by the respondents were converted into scores by using Garrett’s
Ranking Technique

100 (R ij  0.50)
Per cent Position =
Nj

Where,
Rij = Rank given for the ith factor by jth individual

Nj = Number of problems ranked by jth individual

The present position of each rank was converted into scores using the table given by
Garrett.76 The scores of various respondents were added and mean values were
calculated. The mean values were arranged in the descending order.

1.9 LIMITATIONS OF THE STUDY

The present study has the following limitations:

The study covers only the private coir units located in the study area. They
are all engaged in the extraction of fibre only. Since their target of production was the
extraction of fibre only. The only coir unit run by a co-operative society in the study area
is not considered for the study.

76
Garrett E. Henry, “Statistics in Psychology and Education”, Vakils, Fetter and Simons Private
Limited, 1969, pp.328-331.

43
 The primary data relating to workers were collected when they were in the
working spot. They generally did not give their opinions categorically on the working
conditions prevailing in the units. In such cases, further questions were asked and logical
conclusions were drawn based on their replies.

Five performance indicators namely growth, cost, revenue and market margin and
human resource management were selected for the present study and the analysis was
carried out accordingly. Among the selected indicators, the growth alone was used to
study the performance of the industry at the International, National and state levels.

The generalizations derived from the study are based on the socio-economic
conditions of the study area, the coir units considered, the size of the sample workers and
the availability of the authentic data, and hence the findings of the study may or may not
apply to the situations elsewhere. Anyhow utmost care has been exercised by the
researcher to reduce the implications of these limitations so as to make the present study
more reliable and meaningful.

1.10 Chapter Scheme

The result of the present study, A STUDY ON PRODUCTION AND

MARKETING OF COIR PRODUCTS IN TAMILNADU WITH SPECIAL
REFERENCE TO THANJAVUR DISTRICT are presented in seven chapters.

The first chapter provides the introduction to the study, the importance of small
scale and rural industry in India, and the coir industry and its economic importance and
the uses of coir and coir products. This chapter also describes the statement of the
problem, the objectives and the importance of the study, the review of previous studies,
the methodology, adopted the period of the study and the framework of analysis besides,
the limitations of the present study.

44
 The second chapter discusses the origin, growth and development of coir industry
during the pre- and post-independence periods, and the role of the Coir Board in India. It
also describes world coir production, major coir producing countries, production in India,
growth in coir industry and its employment potential, the area, production and
productivity of coconut, and export of coir.

The third chapter presents the profile of the study area and the organizational and
functional setup of the coir units.

The fourth chapter analyses the cost and returns structure of coir fibre
manufacture. The resource-use efficiency of various resource inputs used in coir fibre
production and the production problems encountered by the owners of the units are also
analyzed.

The fifth chapter analyses the market structure, marketing channels of distribution,
marketing cost, marketing margin, price-spread, marketing efficiency of channels and
marketing problems faced by the owners of the coir units. It also deals with the temporal
variations in prices of coir fibre in the Alleppey market.

The sixth chapter highlights the human resource management practices in the coir
industry of the study area. It also analyses the satisfaction level of workers on the
working conditions of the coir units across their socio-physiological factors by using the
chi-square test.

The last chapter summaries the findings recorded in the preceding chapters and
offers suitable suggestions to improve the performance of the coir industry.

45
 CHAPTER-2

2.1 INTRODUCTION

Coir industry is one among the few rural industries. It converts coconut husk, a
waste, into wealth. It occupies a socially and economically paramount importance in
states like Kerala where one third of the villages are coir villages. It is also a fast growing
industry in Tamil Nadu, Andhra Pradesh, Karnataka, West Bengal and Orissa where
coconut cultivation is extensive followed by their staple crops. It provides employment to
thousands of people who belong to socially and economically weaker sections of the rural
population. The industry also has a strong export orientation from the very beginning. As
it is growing at a faster pace in all the southern states of the country, it is considered a
National industry not only under law but also in its extent.

By considering its impact on the rural economy of the costal regions of South
India and its future potentiality, any patronage extended either by the central or the state
government would result in strengthening the industry in particular and the rural
economy of India in general. In the present chapter, an attempt has been made to present
the overview of the coir industry by discussing its growth, production, employment and
exports along with its recent developments so as to provide enough setting for further
discussion.

2.2 GROWTH OF COIR INDUSTRY IN INDIA

“Coir” is a household word in the state of Kerala. It started its journey on the
sands of the seashore villages of the state and continues to hold its grip over her till date.
It would be difficult to date exactly the beginning of coir yarn and rope production on the
Kerala coast, but the activity received a major boost during the sixteenth century. The
second phase of coir expansion in coir production occurred in the nineteenth century with
the entry of the British trading capital. The power loom mats and matting, coir rugs, coir

46
geo-textiles, carpets, coco lawn and other coir products produced by the coir factories of
India are in great demand all over the world. They are being found nowadays decorating
the walls and floors of the houses and corridors of business establishments in countries
like the United States, England, Western Europe and Latin America. The fascinating
story of coir is narrated in the present chapter passing through two periods, viz: the pre-
independence period and the post-independence period.

2.2.1 Pre-Independence Period

The first coir factory was established in Alleppey beach in 1859 by James Darrah,
an Ireland-born American.77 It was the first of its kind on the Malabar Coast. Alleppey
was known for its port and allied commercial establishments where the chief industrial
activity centered on coir weaving. Since the weaving of coir-mat and matting had no
indigenous tradition on the Malabar Coast a new labour force had to be trained in this
unknown art. Europeans gave the training. In Darragh's coir manufacturing a number of
Bengali workers trained the local workers.78 The success of this first unit inspired many
and brought more entrepreneurs into the field and made the entire region coir-friendly.
The coir industry shared the characteristic feature of the various primary processing
industries that developed in Kerala from the late nineteenth century.79 The pioneering
firm of James Darnagh & Co [Darnagh Smail & Company] had 1170 workers on its roll
in 1900.80

77
K. Bhaskaran Unnithan, "Coir Industry in India with Special Reference to Marketing and
Trade", Coir Board, Kochi, 1970, p.10.
78
N. Raveendran, "Trade Union Movement: A social History", CBH Publications,
Thiruvananthapuram, 1992, p.16.
1
79
T.M.Thomas Issac, P.A. Van Stuijverberg and K.N. Nair, "Modernisation and Employment:
The coir industry in Kerala", Sage Publications, New Delhi, 1992, p.29.
80
N. Raveendran, Op.cit., p.17.

47
Followed by Darnah Smail, many other Europeans ventured into coir industry in 1908
and started 7 units81 by employing workers trained in Bengal. European countries
remained the main importers of the fabric of these factories and used them for floor
coverings.82 Coir industry slowly spread to other coastal towns such as Colachal, Quilon,
Cochin and Calicut.83 However the exact figures regarding the total number of coir units
that existed during the first half of the nineteenth century is not available on records.
During 1908-09, the total export of coir fibre from the Travancore region was only 12930
quintals.84 This was used by Europeans mainly for making floor coverings at that time.85

A number of Indian enterprises also came into being. Expansion took place at a
faster pace all around and the small factories became large-scale manufacturing units.

In 1921 about 36 coir manufactories were established in Alleppey of which 12

units had more than 100 workers each. In the same year, out of the 44 total industries
found in Quilon district, the coir factories alone numbered around 21. In 1924, the coir
factories accounted for more than 48 per cent of the total factories in Travancore region.
The year would also be remembered by the workers of this industry for the
implementation of the Minimum Wages Act. This might be the reason for the large chunk
of labourers preferring coir industry for their livelihood in the state.86

The year 1931 saw the growth of large-scale coir manufacturing on the one side
and increased exports on the other. In fact the exports by coir factories nearly doubled
from 91,826 quintals to 1,67,358 quintals during the year 1931-32. The number of
workers in the coir industry also increased by around 40 per cent. It rose to 7132 in 1931

81
K.C. Eapen, "The Fascinating Story of Indian Coir", Souvenir, Coir Board, Kochi, 2001, p.43.
82
George Committee Report, 1939, Thiruvananthapuram, 1953, p.70.
83
N. Raveendran, Op.cit., p.16.
84
N. Raveendran, Op.cit., p.19.
85
“Coir Industry in Tamil Nadu – Survey 2001-02”, Coir Board, Kochi, 2002, p.22.
86
Ibid, p.20.

48
from 5101 in 1921. The production of coir and its products during the same period was
also increased remarkably. Followed by the positive trends in the production as well as
exports, it was a success story for coir exports thereafter, which touched the level of
40,000 tonnes by the end of 1938.87

From 55 units in 1939, it rose to 211 in 1942. Further, the number of coir factories
rose to 266 in 1944 and to 474 at the end of 1948.88 Before independence, the state of
Kerala accounted for more than 80 per cent of India's share of the total area of coconut
cultivation, production and productivity of nuts. The growth of coir industry was steady
to a great extent in that state.89 However during the period of 1939 to 1948 the growth
and development of coir industry was not uniform throughout the country.90

2.2.2 Coir Industry under Plan Periods

After independence, the Government of India wanted to make the Nation

industrially strong and vibrant. Concerted and consistent efforts were made especially
through the Five Year Plans. The development of village and small industries was one of
the key programmes under the Five Year Plans. The Government launched major
schemes and extended financial assistance for the growth of the promising village coir
industry.

The performance of coir industry during the Second Five Year Plan was
considerable after the establishment of the Coir Board. In this plan Rs.1.7 crores was
earmarked for the industry.91 A record number of coir units— 929 with 10992 looms—

87
T.M. Thomas Issac, P.A. Van Stuijenberg and K.N. Nair, Op.cit., p.29.
88
J.V. Bhat, “The Fibre from Coconut Fruits”, The Coconut Research and Development, Wiley
Eastern Public Ltd, New Delhi, 1983, p.9.
89
K.C. Eopen, "The Fascinating Story of Indian Coir", Coir News, Vol.XXIX, No.10, Oct 2001,
p.43.
90
K. Bhaskaran Unnithan, Op.cit., p.12.
91
Economic Survey, 1982-83, Op.cit., p.124.

49
was established in 1958.92 The number of export of coir products also rose to 6 from 2.
The development of coir industry in India began in an organised way only since 1959.
The survey in 1960 showed that there were a further 100 coir units set up and the total
exports of coir and coir products was 358474 tonnes during this plan period.

The Third Five Year Plan witnessed increased financial assistance provided by the
Government of India, which stood at Rs.3.0 crores, though financial difficulties were
noticed during this period. In the three annual plans of 1966-67, 1967-68 and 1968-69,
Rs.2 crores was spent on the development of coir industry. The exports of coir and its
products for the whole plan period was 3,24,500 tonnes and 5,63,445 metric tones
respectively.

Under the Fourth Five Year Plan, Rs.53 crores was allotted for the development of
the Industry. The major objective of the fourth plan was to improve progressively the
production techniques of coir so as to enable the owners of the coir industry to produce
quality goods and to bring them to a viable level to promote decentralisation and
dispersal of coir units. Rapid growth of units was a significant feature during the plan
period. The number reached by the coir industry stood at 2448 and the industry achieved
a coir production of 600000 tonnes.93

The progress in the Fifth Plan showed that the production of coir and its products
increased to 353740 tonnes94 and the exports rose to 2,08,985 tonnes.95 It was the

92
K. Bhaskaran Unnithen, Op.cit., p.13.
93
“India's Production, Exports and Internal Consumption of Coir and Coir Goods”, Coir
Board, Kochi, 1972, p. 24.
94
T.M. Thomas Isaac, P.A Van Stuijrenberg and K.N. Nair, Op.cit., p.45.
95
Coir Board, “India's Production Exports and Internal Consumption”, Coir House, Kochi,
1979, p.14.

50
outcome of the operation of 2,673 coir units. The Fifth Plan allocated a sum of Rs.15.5
crores for the development of the industry.96

Having fixed the growth rate of 10 per cent for coir fibre, the Coir Board estimated
the requirement of white and brown fibre at 7,25,212 tonnes for the three years 1985 to
1988 in the Seventh Five Year Plan period.97 Due to rapid increase in the internal
consumption of coir, almost the entire production of fibre was consumed in India, mostly
for the spinning of coir yarn. Therefore exports were negligible.98 The Seventh Plan
provided Rs.39 crores for the development of the industry.99

During the Eighth Five Year Plan, the production of coir was 6,11,300 metric
tonnes, registering an increase of 40 per cent over the plan period.100 These industries
used modern technology and produced a large variety of coir goods ranging from
traditional goods to most sophisticated items like coir geo-textiles, and coir pith plus.

2.2.3 Growth of Coir Units under Study Period

The rapid expansion of coconut cultivation in non-traditional areas increased the

availability of coconut husk which acted as a boost for starting new units. Large numbers
of units were started in Co-operative, Private and Public sectors. The growth and number
of coir industries during the period under study is presented in

96
Y. Gangi Reddy, Growth Performance of Village and Small Industries, Journal of Rural
Development, Vol.8, No.4, p.403.
97
31st to 35th Annual Report of Coir Board, Kochi, 1984-85 to 1988-89.
98
T.M. Thomas Issaac, P.A. Van Stuijeberg, and K.N. Nair, Op.cit., p.97.
99
Ruddar Dutt and K.P.M. Sundharam, "Indian Economy", Sultan Chand & Co., 1989, p.593.
100
Ibid, p.103.

51
 TABLE 2.1

GROWTH OF COIR UNITS IN INDIA

Year Number of Units Increase/Decrease Percentage

Increase/Decrease
2000-01 6456 -- --
2001-02 6531 75 1.61
2002-03 7295 764 11.70
2003-04 7372 78 1.07
2004-05 7541 144 1.95
2005-06 7938 397 5.26
2006-07 9078 1140 14.36
2007-08 9273 195 2.15
2008-09 9458 185 2.00
2009-10 9597 139 1.47

Source: Annual Report of Coir Board, Coir Board, Kochi, 2000-01 to 2009-10.

It could be seen from Table 2.1 that there was a steady increase in the number of
coir units setup in India except during the periods 2002-03, 2005-06 and 2006-07 where
the increase of units was abnormal. The number of units had increased to 9078 in 2006-
07 from 7938 in 2005-06, the annual growth being 14.36 per cent when compared to
2005-06. The higher rate of growth might be due to the extensive cultivation of coconut
besides the concerted efforts taken by the Coir Board and the respective state
governments. As a result the coir industry has come up in a big way in Tamil Nadu,
Andhra Pradesh, Karnataka, Orissa, West Bengal and Assam.101

101
Forty Eighth Annual Report of Coir Board, Kochi, 2001-02, p.16.

52
 The next highest increase in the number of coir units was noticed in 2002-
03, which had the annual growth of 11.70 per cent, when compared to the previous year.
It was due to the Government of Kerala, which started 100 and more defibring mill units
under the Integrated Coir Development Project so as to provide more days of
employment to workers and also to solve the fibre scarcity in yarn making societies in the
state. Further, 81 coir units were also set up in the four districts of Andhra Pradesh.102
During the year 2009-10, the increase was marginal. This was mainly due to 40.2 per cent
of the coir units in the state of Orissa becoming defunct in the post-super cyclone
period.103

2.2.3.1 Region-Wise Distribution of Coir Units

The region-wise distribution of coir units is presented in Table 2.2.

TABLE 2.2

THE REGION – WISE DISTRIBUTION OF COIR UNITS

S. No. Region Number of Units Percent to Total

1. Central Region 17 0.18
2. North Region 26 0.27
3. Western Region 26 0.27
4. Eastern Region 486 5.07
5. North Easter Region 31 0.32
6. Southern Region 9011 93.89
Total 9597 100.00

Source: Annual Reports of Coir Board, Coir Board, Kochi, 2000-01 to 2009-10

102
Forty Fourth Annual Report of Coir Board, Kochi, 2002-03, pp.18-23.
103
Fifty First Annual Report of Coir Board, Kochi, 2004-05, p.16.

53
From Table 2.2 it is evident that the maximum numbers of coir units are located in the
Southern Region of India. Which is mainly due to the coastal orientation of the Palms in
high density and exceptionally adaptable nature of coir industries in the southern region
as against the coconut areas of other regions?104

The highest diminution in the number of units is found in the central region during the
study period. However North and western regions have a moderate and equal number of
units each.

2.2.3.2 Distribution of Coir Units in Southern India

The distribution of coir units in Southern India is presented in Table 2.3.

104
E.B. Unni, "Some Reflections on Coir", India International Coir Fair and Seminar on
Coir 2001, Coir Board, Kochi, Oct 11-13, 2001, p.71.

54
 TABLE 2.3

STATE-WISE DISTRIBUTION OF COIR UNITS IN SOUTHERN INDIA

Year Kerala Tamil Andhra Karnataka Puduchery Total Units

Nadu Pradesh in
Southern
India
5150 728 236 201 6 6321
2000-01
(81.47) (11.52) (3.74) (3.18) (0.09) (100.00)
5124 762 265 217 6 6374
2001-02
(80.39) (11.96) (4.16) (3.40) (0.09) (100.00)
5598 997 264 204 6 7069
2002-03 (0.08)
(79.19) (14.10) (3.74) (2.89) (100.00)
5598 1033 278 217 6 7132
2003-04
(78.49) (14.49) (3.90) (3.04) (0.08) (100.00)
5591 1070 292 251 6 7210
2004-05
(77.55) (14.87) (4.05) (3.48) (0.08) (100.00)
5913 1098 294 262 7 7574
2005-06
(78.07) (14.50) (3.89) (3.46) (0.08) (100.00)
6770 1188 296 290 7 8556
2006-07
(79.13) (13.94) (3.46) (3.39) (0.08) (100.00)
6927 1201 297 295 7 8727
2007-08
(79.37) (13.77) (3.40) (3.38) (0.08) (100.00)
7050 1235 297 305 7 8894
2008-09
(79.27) (13.89) (3.33) (3.43) (0.08) (100.00)

55
 7105 1260 305 318 7 8995
2009-10
(78.99) (14.01) (3.09) (3.53) (0.08) (100.00)
Increase in 37.96 73.08 29.24 58.21 16.67 42.30
%

Source: Annual Reports of Coir Board, Coir Board, Kochi, 2000-01 to 2009-10

Figures in brackets are Percentages to the total.

From Table 2.3 it is clear that units of 6321units in 2000-01, the state of Kerala
accounted for 5150 units and registered a whopping share of 81.47 per cent and the rest
of the states registered only 18.53 per cent as they stood with 1171 units. All the states of
the region with the exception of Puduchery showed a steady increase while comparing
the number of units over the previous years. But the States of Tamil Nadu and Karnataka
by registering an overall increase of 73.08 per cent and 58.21 per cent respectively,
showed a remarkable increase in the establishment of new units during the period under
review.

Thus, in respect of the number of units and the growth of coir industry, the State of
Tamil Nadu has shown a steady progress among the southern states as evidenced by the
Table 2.3.

2.2.3.3 State-wise Distribution of coir Units in India:

India has made noticeable progress in coir industry over the years by starting coir
units in almost all of its states. The State-wise distribution of coir units as on March 31,
2010 is given in Table 2.4.

56
 TABLE 2.4

STATE-WISE DISTRIBUTION OF COIR UNITS

AS ON MARCH 31ST 2010

S. No State No. of Units Percentage

1. Kerala 7105 74.03

2. Tamil Nadu 1260 13.13
3. Maharashtra 18 0.19
4. Orissa 463 4.82
5. West Bengal 23 0.24
6. Northern Eastern Region 31 0.32
7. Pondicherry 7 0.07
8. Goa 3 0.03
9. Gujarat 1 0.01
10. Andaman & Nicobar 1 0.01
11. Union Territory Lakshadweep 15 0.16
12. Rajasthan 4 0.04
13. Haryana 2 0.02
14. Andhra Pradesh 305 3.18
15. Punjab 5 0.05
16. Karnataka 318 3.32
17. Uttar Pradesh 14 0.15
18. Madhya Pradesh 3 0.03
19. Delhi 17 0.18
20. Jammu & Kashmir 2 0.02
Total 9597 100.00

Source: Annual Reports of Coir Board, Coir Board, Kochi, 2009-10.

It is clear from Table 2.4 that the states of Kerala and Tamil Nadu have the maximum
number of coir units in India. The highest number of units, (7105) are found in Kerala

57
and the lowest (1) in Gujarat. Kerala state, the “Home of Coir in India”, continues to
enjoy the leading position till date.105 The State of Kerala stands with the largest share of
74.03 per cent followed by Tamil Nadu with 13.50 per cent as on 31st March 2010.

2.2.4 Growth of Coir Industry in Tamil Nadu

The growth of coir industry in Tamil Nadu could be traced back from 1940. Coir
units were first started in 1940 in Kanyakumari District, which was then in the erstwhile
Trivancore-Cochin State. After the linguistic division of states, Kanyakumari district, the
venue of the first coir unit, fell to the state of Tamil Nadu. The Government of Tamil
Nadu started a coir school at Ethamozhi in Kanyakuamri District in 1956 for imparting
training in coir yarn spinning, weaving and dyeing. Later the coir units slowly spread to
other districts of the state.

Almost all the coir units of the industry in 1960s were confined to Kanyakumari District,
Cuddalore in South Arcot district and some parts of Thanjavur district, where backwater
facilities were available. After the initiatives by the Coir Board aiming at the betterment
of the sector, brown fibre was first produced in 1967 in Tenkasi by the Government
Bristle Fibre Unit started by the Industries and Commerce department. The
manufacturing of Coir using indigenous machinery for defibring of coir fibre was started
in 1973 in Kumbakonam and Thanjavur in Thanjavur District.

Now the coir industry has its strong presence not only in Kanyakumari and
Thanjavur districts but also in districts like Madurai, Salem, Theni and Tirunelveli.106
The growth in the number of units, its increase/decrease over the years and percentage of
increase/decrease starting from 2000-01 are shown in Table 2.5.

105
C. Chandran, "The Indian Coir Industry", Agriculture and Industry Survey, Vol.15,
No.2, February 2005, p.16.
106
Forty Ninth Annual Report of Coir Board, Op.cit., p.22.

58
 TABLE 2.5
GROWTH OF COIR INDUSTRY IN TAMIL NADU
(2000-01 to 2009-10)
Year Number of Units Increase / Decrease Percentage
Increase / Decrease
2000 – 01 728 -- --
2001 – 02 762 34 4.67
2002 – 03 997 235 30.84
2003 – 04 1033 36 3.61
2004 – 05 1070 37 3.58
2005 – 06 1098 28 2.55
2006 – 07 1188 90 8.20
2007 – 08 1201 13 1.09
2008 – 09 1235 34 2.83
2009 – 10 1260 25 2.02

Source: Annual Reports of Coir Board, Coir Board, Kochi, 2000-01 to 2009-10

From Table 2.5, it could be understood that the number of coir units set-up in Tamil Nadu
has increased from 728 in 2000-01 to 1260 in 2009-10. The maximum increase in coir
units was witnessed during the years 2002-03 and 2006-07 with 235 (30.84 per cent) and
90 (8.20 per cent) respectively. No unit was closed down during the entire study period;
instead it showed steady increase year after year. The growth of coir industry in Tamil
Nadu has been making rapid strides.

2.3 COIR PRODUCTION

Among natural hard fibres serving human utilities, coir has some unique
characteristics. It is the only natural fibre that does not get cultivated solely to extract
coir. Coir cannot be really termed a by-product of the coconut industry. It is a waste

59
product recycled for beneficiation to produce the fibre and spun/woven products from
there.107 It is one of the innumerable products of the coconut palm known to India since
time immemorial. The renowned International correspondent of ancient times Marco
Polo mentioned the method of fibre extraction from the coconut husk.108 India is the
home of coir where coir weaving started developing since 1859 in Alleppey from where
it spread to different parts of India.109

Coir is manufactured from the husk of the coconut and hence the industry is not
only localised in the large coconut growing areas in India but also in countries where the
conditions are conducive for its growth.

2.3.1 World Coir Production

Coir is manufactured only in few countries of the world. India, Sri Lanka,
Thailand, Malaysia, Philippines and Indonesia are the important coir-producing countries
of the globe.

The total Coir Production in the World and its growth trend is shown in Table 2.6.

107
E.B. Unni, "Some Reflections on Coir", Coir News, Vol. No.9, 2001, p.15.
108
"History and Home of Coconut", Coconut Bulletin, Indian Coconut Committee, Kochi,
September 1954, p.203.
109
Kumaraswamy Pillai, "Coir: Nature's Boundary for Sustainable Development", India
International Coir Fair and Seminar on Coir 2001, Coir Board, Kochi, 2001, p.85.

60
 TABLE 2.6
WORLD COIR PRODUCTION
(2000-01 to 2009-10)
(in thousand metric tonnes)
Year Production Increase/ Decrease Percentage Trend Value
Increase/Decrease
(in tonnes)
2000 – 01 1042.99 - - 987.63

2001 – 02 983.61 -59.38 -5.69 979.86

2002 – 03 931.12 -52.49 -5.34 972.09

2003 – 04 970.99 +39.87 +4.28 964.33

2004 – 05 945.09 -25.90 -2.67 956.56

2005 – 06 915.09 -30.00 -3.17 948.80

2006 – 07 906.58 -8.51 -0.93 941.03

2007 – 08 929.09 +22.51 +2.48 933.26

2008 – 09 947.94 +18.85 +2.03 925.50

2009 – 10 954.29 +6.35 +0.67 917.73

Source: http: //www.fao.org/es/ess/toptrade.asp.com

The trend in world production of coir is shown in Table 2.6. The highest
production was 1042.99 thousand tonnes in 2000-01and 954.29 thousand tonnes in 2009-
10. The world coir production has shown a negative trend excepting during the years
2003-04, 2007-08, 2008-09 and 2009-10. The periods which witnessed positive trends
showed increased production of 39.87 thousand tonnes, 22.51 thousand tonnes, 18.85
thousand tonnes and 6.35 thousand tonnes respectively over their immediate preceding
years. The highest negative growth was registered in 2001-02 with 5.69 per cent over the

61
previous year. The substantial decline in the world trade of coir and coir products is due
to stiff competition from synthetic and other natural fibres.110

It is also seen that the trend value of world coir production over the period under
review was decreasing. The trend value decreased from 987.63 thousand tones in 2000-
01 to 917.73 thousand tones in 2009-2010. The trend and growth rate of world coir
production during the period of study are presented in table 2.7.

TABLE 2.7
TREND AND GROWTH RATE OF WORLD COIR PRODUCTION
(2000-01 to 2009-10)
Variable Constant Trend Co-efficient R2 CGR

(a) (b) (Per cent/annum)

World Coir 6.90211 -0.00792NS

0.348 -0.79
Production (289.7987) (-2.06454)

Source: Computed data

Figures in percentages indicate t-values.

NS = Not Significant.

Table 2.7 shows that the trend co-efficient is negative showing a decreasing trend
in world coir production during the period under study. The reason for such a decrease
may perhaps be due to the increased use of synthetic fibre as an alternate. Thus the
analysis of world coir production shows a negative annual growth rate of 0.79 per cent
per annum in the world coir production during the period under review.

110
Vikas Singhal, "Indian Agriculture 2003”, Indian Economic Data Research Centre, New
Delhi, 2003, p.309.

62
2.3.1.1 Coir Production in the Major Coir Producing Countries of the World

India, Sri Lanka, Vietnam, Thailand, Bangladesh, Ghanna and Malaysia are the
major coir producing countries of the world. At present India and Sri Lanka account for
90 per cent of the world production of coir and coir products. The major coir producing
countries and their respective ranks in the world's coir production are presented in Table
2.8.
TABLE 2.8
COIR PRODUCTION IN MAJOR COIR PRODUCING COUNTRIES
OF THE WORLD (2000-01 to 2009-10)

(in thousand Metric tones)

Year Bangladesh Ghanna India Malaysia Sri Lanka Thailand Viet Nam
2000 – 01 11.39 37.00 485.00 37.10 135.00 8.00 329.50
2001 – 02 11.41 36.90 472.50 35.60 140.00 8.00 277.70
2002 – 03 11.39 38.80 465.70 30.20 134.00 8.00 241.00
2003 – 04 11.39 38.80 454.00 29.80 150.00 9.00 276.00
2004 – 05 11.39 39.40 468.00 29.40 164.70 9.00 221.20
2005 – 06 11.39 39.40 450.00 28.00 147.30 14.00 223.00
2006 – 07 11.39 39.40 450.00 28.00 127.25 20.00 228.80
2007 – 08 11.39 39.40 450.00 28.00 136.30 32.00 230.00
2008 – 09 11.39 39.40 450.00 28.00 136.50 32.00 230.00
Average 11.39 38.72 460.58 30.68 141.23 15.56 250.80
Rank 7 4 1 5 3 6 2

Source: http://faostat.fao.org.

From table 2.8, it is clear that India is well ahead of all the other coir producing countries
in the world ranking first in production followed by Vietnam, Sri Lanka, Ghanna and
Malaysia. The availability of cheap labour, presence of backwater lagoons, cent percent
natural and biodegradable quality of the fibre the high percentage of unemployment

63
under employment among rural masses, the low capital investment and their utility
against soil erosion are some of the principal reasons which keep the industry going
steady making it a prospering industry in these countries.

2.3.2 Coir Production in India

Coir industry, the oldest traditional industry of India, occupies a special place in
the rural economy of India. The production of coir and its products still remains as a
small scale and cottage industry in India. From the inception of the industry, India has
been leading in coir production in the world. The industry has its roots deep in the rural
India mostly women workers in the different stages of production. Kerala has a
monopoly in the production of white fibre, whereas the brown fibre is produced in the
states of Tamil Nadu, Karnataka, Andhra Pradesh and Orissa. The trend of coir
production in India over the study period is presented in Table 2.9.

64
 TABLE 2.9
TREND OF COIR PRODUCTION IN INDIA
(2000-01 to 2009-10)
(in thousand metric tonnes)
Year Production Increase/Decrease Percentage Trend
Value
(in tones) Increase/Decrease
2000 – 01 485.00 -- -- 475.37
2001 – 02 472.50 -12.50 - 2.58 471.84
2002 – 03 465.70 - 6.80 - 1.44 468.32
2003 – 04 454.00 -11.70 - 2.51 464.80
2004 – 05 468.00 +14.00 +3.08 461.28
2005 – 06 450.00 -18.00 +3.85 457.76
2006 – 07 450.00 -- -- 454.24
2007 – 08 450.00 -- -- 450.72
2008 – 09 450.00 -- -- 447.20
2009 – 10 450.00 -- -- 443.67

Source: http://www.fao.org/es/ess/toptrade.asp.

It is understood from Table 2.9, that coir production in India shows a decreasing
trend over the study period. It was 485.00 thousand metric tonnes in 2000-01 and came
down to 450.00 thousand metric tonnes in 2010. The decrease of 35.00 thousand metric
tonnes over the period might have resulted in a negative growth of 7.22 per cent.

The production in 2003-04 which stood at 454.00 thousand metric tonnes, is less
than the previous years, but the production had increased by 14.00 thousand metric
tonnes in the subsequent year, 2004-2005.A negative annual growth of the coir is evident
from the year 2001-02 to 2006-07 with the exception of 2004-2005. Their percentages are

65
in the order of 2.58, 1.44 and 2.51 respectively. The trend and growth rate of India’s coir
production during the period under review are presented in Table 2.10.

TABLE 2.10
TREND AND GROWTH RATE OF INDIA COIR PRODUCTION
(2000-01 to 2009-10)
Variable Constant Trend Co-efficient R2 CGR

(a) (b) (Per cent/annum)

Coir Production 6.17160 -0.00759** 0.72761 -0.76

in India (605.537) (-4.623)

Source: Computed data

Figures in parenthesis indicate t-values.

** indicates significant at one per cent level.

Table 2.10 shows that the trend co-efficient of India’s coir production was negative and
significant at the one per cent level, showing a decreasing trend in coir production during
the period under review. The analysis thus indicates that coir production in India
decreased at the rate of 0.76 per cent per annum.

2.3.3 Global Coir Production and India's Share

The golden textured Indian coir fibre which earned the unofficial brand name
“golden fibre” captured the European and world markets in the 1960s. The total coir
production in the world and India’s share therein are presented in Table 2.11.

66
 TABLE 2.11
INDIA'S SHARE IN GLOBAL COIR PRODUCTION
(2000-01 to 2009-10)
(in thousand metric tones)
Year World Production India’s Production Per cent share in world
Production
2000 1042.99 485.00 46.50
2001 983.61 472.50 48.04
2002 931.12 465.70 50.01
2003 970.99 454.00 46.76
2004 945.09 468.00 49.52
2005 915.09 450.00 49.18
2006 906.58 450.00 49.64
2007 929.09 450.00 48.43
2008 947.94 450.00 47.47
2009 954.29 450.00 47.16

Source: http://www.faostat.fao.org

Table 2.11 depicts the percentage of India's share in coir production as against the
world’s coir production. During the study period, India’s share in 2001 was 46.50 per
cent, registering a lowest, but the highest share of 50.01 per cent was recorded in 2003.
For the overall period a fluctuating trend was observed. By reaching towards 50 per cent
mark in world’s share, India is in the premier position in world coir.

2.3.4 Coir production among Major Coir Producing States in India:

Coir Industry has been making rapid strides in most parts of India. Among the
significant coir producing states, Kerala, Tamil Nadu, Karnataka, Andhra Pradesh and
Orissa are the leaders in coir production. The State-wise figures showed that 47 per cent
is confined to Kerala, 31 per cent to Tamil Nadu, 10 per cent to Karnataka, 7 per cent to

67
Andhra Pradesh and the remaining 5 per cent to other states. The production of coir by
the major coir producing states during the period of study is presented in Table 2.12.

TABLE 2.12
PRODUCTION OF COIR BY THE MAJOR COIR PRODUCING
STATES OF INDIA (2000-01 to 2004-05)
(in thousand Metric Tonnes)
Year Andhra Karnataka Kerala Orissa Tamil Nadu
Pradesh
2000 – 01 18.50 28.98 144.50 176 80.00

2001 – 02 18.95 22.16 162.00 244 80.85

2002 – 03 20.60 23.25 179.00 310 81.25

2003 – 04 21.40 31.60 160.00 448 90.40

2004 – 05 22.00 35.20 168.00 200 118.70

2005 – 06 24.00 38.00 164.00 100 133.00

2006 – 07 24.00 38.00 164.00 100 131.00

2007 – 08 25.20 35.15 166.50 110 110.00

2008 – 09 28.90 36.90 180.00 166 101.20

2009 – 10 32.90 40.90 180.00 170 122.20

Mean 23.65 33.02 166.80 20.24 104.86
Rank 4 3 1 5 2

Source: Annual Reports of Coir Board, Coir Board, Kochi, 2000-01 to 2009-10

Table 2.12 clearly shows that Kerala ranked first in the production of coir during the
period under study, followed by Tamil Nadu, Karnataka, Andhra Pradesh and Orissa
which ranked second, third, fourth and fifth respectively.

68
2.3.5 Coir Production in Tamil Nadu

Coir production is widely spread in all the districts of Tamil Nadu and is one of
the important rural industries upon which much hope is placed as it has the potential to
create more employment opportunities for the rural people. As this industry does not
require huge capital and sophisticated technology, a large number of small entrepreneurs
are entering into coir production and they have come in a big way recently in Tamil
Nadu.

The state has been in the forefront of coir development during the past two
decades. It has a diversified production structure and technology upgradation. It produces
both brown fibre and white fibre as well as turning out various coir products. The white
fibre production is confined to Kanyakumari and South Arcot districts. From 1970 to
1990-91, the state witnessed increased production at the growth rate of 40 per cent,111
which resulted in the industry recording 30 per cent growth every year.112

The total production of coir fibre (both white and brown) in Tamil Nadu during the
period under study is presented in Table 2.13.

111
“A Survey of Coir Industry in Tamil Nadu”, Coir Board, Kochi, 2002, p.6.
112
The Hindu, Madurai, January 4, 2006, p.5.

69
 TABLE 2.13
COIR PRODUCTION IN TAMIL NADU
(2000-01 to 2004-05)

(in thousand metric tones)

Year Production Increase/ Percentage Trend

Decrease Increase/Decrease
(in tonnes) Value
2000 – 01 80.00 -- -- 82.98
2001 – 02 80.85 +0.85 +0.31 87.85
2002 – 03 81.25 +0.40 +0.50 92.71
2003 – 04 90.40 +9.15 +11.26 97.57
2004 – 05 118.70 +28.30 +31.30 102.43
2005 – 06 133.00 +14.30 +12.05 107.29
2006 – 07 131.00 - 2.00 - 0.15 112.15
2007 – 08 110.00 - 21.00 - 16.03 117.01
2008 – 09 101.20 - 8.80 - 8.00 121.87
2009 – 10 122.20 +21.00 +20.75 126.74

Source: Annual Reports of Coir Board, Coir Board, Kochi, 2000 -01to 2009-10

From Table 2.13 it is understood that the increase in coir fibre production in Tamil Nadu
has been nearly one and half times at the end of the study period than what it was in the
beginning. The highest increase was recorded in the year 2004-2005 with 28.30 thousand
metric tonnes. It could be observed from the Table that the trend value of Tamil Nadu
coir production increased from 82.98 thousand tonnes in 2000-01 to 126.74 thousand
tonnes in 2009-2010. Trend and growth rate of coir fibre production during the period of
study is presented in Table 2.14.

70
 Table 2.14
TREND AND GROWTH RATE OF COIR PRODUCTION
IN TAMIL NADU (2000-01 to 2009-10)
Variable Constant Trend Co-efficient R2 CGR

(a) ( (Per cent/annum)

b)
Coir production 4.36333 0.049246* 0.536 5.05*
in Tamil Nadu (43.454) (3.0431)

Source: Computed data

Figures in parenthesis indicate t-values.

* indicates significant at five per cent level.

Table 2.14 shows that the co-efficient is positive and significant at the five per
cent level, indicating an increasing trend in Tamil Nadu coir production during the period
of study. It is because of the result of the increased number of coir units in Tamil Nadu
during the period of study from 2000-01 to 2009-2010 (Vide table 2.5). It shows a
positive annual growth rate of 5.05 percent.

2.4 GROWTH IN EMPLOYMENT

The significance of the coir industry is primarily due to the fact that a large
number of people from the economically weaker sections of society depend on this
industry. The industry, occupying an important place among the rural and traditional
cottage industries in India, provides direct employment to more than 6 lakh rural people
of whom a majority are women. The number of people employed in coir sector during the
period under study, their increase or decrease over the corresponding previous year and
the percentage of increase or decrease are slows in Table 2.15.

71
 TABLE 2.15
GROWTH OF EMPLOYMENT IN COIR INDUSTRY IN INDIA
(2000-01 to 2009-10)
Year Employment Increase/Decrease Percentage

(in Lakhs) Increase/Decrease

2000 – 01 3.98 -- --

2001 – 02 4.15 0.17 4.27

2002 – 03 4.30 0.15 3.16

2003 – 04 4.63 0.33 7.67

2004 – 05 4.83 0.20 4.14

2005 – 06 5.34 0.51 10.56

2006 – 07 5.43 0.09 1.69

2007 – 08 5.56 0.13 2.39

2008 – 09 5.87 0.31 5.58

2009 – 10 6.06 0.19 3.24

Source: Coir Statistics Records, Coir Board, Kochi, 2005, P.104

Table 2.15 shows that the growth of employment in the coir sector steadily
increase over the years under study except during 2006-07 in which the percentage of
increase was exceptionally high (10.56 per cent). But in the successive two financial
years the rates of employment generation decreased. For the overall impressive growth
in employment in the sector is due to the establishment of coir units in large numbers
during the study period.

72
2.5 COCONUT PRODUCTION IN INDIA

Coconut is grown in 93 countries of the world spread over 12.78 million hectares
producing more than 54,000 million nuts every year. Among the coconut producing
countries India and Sri Lanka are the major countries contributing 78 and 78.4 per cent
respectively in area as well as in production.113

Coconut husk is an important raw material from which coir is manufactured by the
industry. Of the varied products of coconut, only husk and copra are commercially
exploited in India

2.5.1 Area, Production and Productivity of Coconut in India

With an area of about 1.94 million hectares and an annual production of 12833
million nuts, the country ranks third on the world map of coconut

The four southern states namely Kerala, Karnataka, Tamil Nadu and Andhra
Pradesh114 account for the major part of the production of coconut. Table 2.16 shows the
area, production and productivity of coconut in India from 2000-01 to 2004-2005.

113
H.P. Sing and Remany Gobalakrishnan, "Approaches for Increasing the Farm Income
through Product Diversification and Product Utilisation", Coconut Development Board, Kochi, p.32.
114
S. Mathews, Coconut Marketing in Southern States, Indian Coconut Journal, Kochi,
Vol.XXXIII, No.5, 2002, p.30.

73
 TABLE 2.16
AREA, PRODUCTION AND PRODUCTIVITY OF COCONUT IN INDIA
(2000-01 to 2009-2010)
Area
Production (in Productivity (nuts
Year
million nuts) per hectare)
(in thousand hectares)
2000 – 01 1850.9 12952.3 7074

2001 – 02 1890.8 13061.0 6908

2002 – 03 1861.0 12717.3 6834

2003 – 04 1754.5 12535.9 7145

2004 – 05 1747.7 12251.6 6892

2005 – 06 1823.9 12678.4 6951

2006 – 07 1892.3 12821.7 6776

2007 – 08 1913.5 12141.2 6345

2008 – 09 1933.7 12178.2 6298

2009 – 10 1935.0 12832.9 6632

Source: 1. Coconut Development Board, Coconut Statistics

(supplement), publication 86, 87 and 88, Kochi 2001 and 2003 and 2005
Ministry of Agriculture Government of India.

2. Indian Coconut Journal, Vol. XXXIV No 5, September, 2003, P.13.

Table 2.16 shows that the expansion of land under coconut cultivation in India
recorded an increasing trend through out the study period excepting in 2002-03, 2003-04
and 2004-2005. The reason for this fall in the total area was due to the super cyclone in
the state of Orissa. It brought massive and irreparable loss and damages to the coconut

74
trees, coir units and houses of coir workers in the state particularly in the coastal
districts.115

A steady and constant increase in the area under coconut is noticed since 2005-06.
The year started with 1823.9 thousand hectares and ended with 1935 thousand hectares of
area in 2009-10. This rise in area under coconut is due to the extension of the area of
cultivation in Orissa and the northeastern region.116

It is also clear from the table that the production of coconut in India over the years
shows a fluctuating trend. It reached a maximum of 13061 million nuts in 2001-01 from
12952.3 million nuts in 2000-01. But production declined from 12717.3 million nuts in
2002-03 to 12678 million nuts in 2001-02. In the last three years, the production showed
an increasing trend except during the year 2007-08.

The national productivity of coconut in 1967 was 5814 nuts per hectare but it
increased to 6908 nuts per hectare in 2007. However the growth rate was only 0.55 per
cent. Notably the states of Andhra Pradesh, Maharashtra, Tamil Nadu, West Bengal and
Pondichery have recorded significant increase in productivity during this period while the
major states of Kerala and Karnataka showed very little improvement in productivity.117

It is clear from the table that the yield of coconut nuts per hectare fluctuates from
2000-01 to 2005-06. the highest being in 2003-04 and the lowest with 6,298 nuts per
hectare in 2003-04. In the last four years, the productivity of nuts per hectare decreased
from 6776 in 2006-07 to 6632 nuts per hectare in 2009-10. The reason for such a
decrease is mainly attributed to a root wilt desease coupled with the traditional cropping
system under rain-fed conditions in Kerala.118

115
Forty Seventh Annual Report of Coir Board, Kochi, 2000, p.14.
116
Fifty Second Annual Report of Coir Board, Kochi, 2005, p.11.
117
H.P. Sing, V.T. Markose and Remany Gopalakrishnan, Op.cit., p.10.
118
Ibid, p.11.

75
2.5.2 Area, Production and Productivity of Coconut in Tamil Nadu

Among the significant coconut growing southern states, Tamil Nadu occupies the
second rank in terms of the production of coconut occuping the third place in the area
under cultivation. In 18.45 per cent of the total area, 25.29 per cent production is
confined to Tamil Nadu. It has a rich tradition of successful coconut cultivation.
Productivity in Tamil Nadu has been improving over the years is mainly due to better
varieties of coconut, improvement in irrigation facilities, adoption of improved modern
technology and availability of cheap farming labour. Area production and productivity of
coconut in Tamil Nadu during the period under study is analysed and presented in Table
2.17.

TABLE 2.17

AREA, PRODUCTION AND PRODUCTIVITY OF COCONUT

IN TAMIL NADU (2000-01 to 2009-10)

Area Production Productivity

Year
(In .000 Hectares (In million nuts) (Nuts per hectare)
2000 – 01 322.5 3257.6 10101
2001 – 02 327.9 3811.0 11622
2002 – 03 351.84 4356.8 11620
2003 – 04 274.88 3335.3 11703
2004 – 05 304.0 3222.0 10599
2005 – 06 323.5 3192.0 9867
2006 – 07 335.8 3293.6 9808
2007 – 08 345.9 2860.7 8270
2008 – 09 352.7 2560.5 7260
2009 – 10 357.1 3243.5 9083

76
 Source: 1. Coconut Development Board, Coconut statistics
(supplement), Publication 86, 87 and 88, Kochi, 2001, 2003 and 2005,
Ministry of Agriculture Government of India.

2 .Indian Coconut Journal Vol. XXXIV, No. 5, September, 2003, P.13

3. Directorate of Economics & Statistics Ministry of Agriculture,

Government of India, 2005.

It is apparent from Table 2.17 that the area under coconut cultivation in Tamil
Nadu was 322.5 thousand hectares in 2000-01 which increased subsequented to 351.84
thousand hectares in 2002-03. It was found that during the year 2003-04 the area of
cultivation decreased but from there on the total area of cultivation started increasing
steadily reaching to 2004-05. It was 274.88 thousand hectares in 2008-09 and ended with
357.1 thousand hectares in 2009-10. Many reasons were cited, for the increase however
the adoption of improved modern technology was the foremost among them.

It could also be understood from the table that coconut production reached a
maximum of 4356.8 million nuts in 2002-03. From there on the production of nuts shows
both increasing and decreasing trends over the period under review giving a negative
growth of 25.55 per cent. Which is mainly due to the hostile climatic condition prevailed
for coconut production during the period.119

There is a steady increase in productivity from 2000-01 to 2003-04. It started at

10101 nuts per hectare and increased to 11703 nuts per hectare for the same period but
this tendency became extinct from 2000-01 to 2003-04 as shown by the table.

119
N. Namasivayam, and V. Richard Paul, "Trend Analysis of Coconut Production in India",
Journal of Plantation Crops, Vol.32, No.3, 2004, pp .64-67.

77
2.6 COIR EXPORTS IN INDIA

Export trade is not a mere extension of the domestic trade activity. It has
nowadays become a highly specialized business and is of vital importance to the
country’s economy as it helps in getting the most valuable foreign exchange earning.120
Coir and its products are being exported to nearly 89 countries all over the world and the
U.S.A. is the largest importer of coir products from India followed by the U.K. and
countries in Western Europe. There are 199 registered exporters on the rolls as on
31.03.2010.

Initially India's export trade of coir and coir products mainly consisted of coir rope
and coir mattings121 but at present it comprises of fourteen products namely handloom
mat, tufted mat, coir yarn, coir pith handloom mattings, geo-textiles, coir rugs & carpet,
power loom mat, rubberized coir, coir of other sorts, coir fibre power loom matting, coir
rope and curled coir.122 And the credit for this development entirely goes to the research
and development wing of the Coir Board. The coir exports from India from 2000-01 to
2009-2010 are presented in Table 2.18.

120
K.L. Bhatia and Kewal Khanna, "Export Management", Raj Publishing House, Jaipur,
1998, p.1.
121
K. Bhaskaran Unnithan, Op.cit., p.169.
122
Fifty First Annual Report, Op.cit., p.32.

78
 TABLE 2.18

COIR EXPORTS FROM INDIA (2000-01 to 2009-10)

(in thousand Metric Tonnes)

Year Quantity Increase/Decrease Percentage Trend

Increase/Decrease Value
2000 – 01 48.28 -- -- 35.77
2001 – 02 46.37 -1.91 - 3.95 43.58
2002 – 03 49.85 +3.48 +7.50 51.39
2003 – 04 55.49 +5.64 +11.31 59.21
2004 – 05 61.03 +5.54 +9.98 67.02
2005 – 06 67.49 +6.46 +10.59 74.83
2006 – 07 71.34 +3.85 +5.70 82.64
2007 – 08 84.18 +12.84 +18.00 90.45
2008 – 09 102.25 +18.07 +21.47 98.26
2009– 10 122.93 +20.68 +20.23 106.27

Source: Annual Reports of Coir Board, Coir Board, Kochi, 2000-01 to 2009-10

From Table 2.18, it is clear that coir exported from India has shown a steady increase for
all the years except 2002-03. The export of coir stood at 48.28 thousand metric tonnes in
2001-02 registering a negative growth of 3.95 per cent. The highest increase in the
quantity amounted to 20.68 thousand metric tonnes recorded in 2009-10 and the lowest
3.48 thousand metric tonnes in 2003-04. Further, the total quantity of coir exported which
stood at 48.28 thousand metric tonnes in 2000-01 had risen to 122.93 thousand metric
tonnes in 2009-10, thus registering an increase of 1.54 times during the period under

79
study. It is observed in the annual report of the Coir Board that coir was exported to 89
countries in 2009-10 from the 62 countries in 2000-01.123

It is observed from the table that the trend value of coir export showed an
increasing trend during the period under review. The trend value of coir export increased
from 35.77 thousand tonnes in 2000-01 to 106.27 thousand tonnes in 2009-2010. The
trend and the growth rate of coir exported from India during the period under review are
presented in Table 2.19.

TABLE 2.19

TREND AND GROWTH RATE OF COIR EXPORT FROM INDIA

(2000-01 to 2009-10)

Particulars Constant Trend Co- R2 CGR

efficient
(a) (Per cent/annum)
(b)
Coir Export 3.6294 0.105586** 0.941 11.14
from India (62.579) (11.2961)

Source: Computed data

Figures in parenthesis indicate t-values.

** indicates significant at one per cent level.

Table 2.19 shows that the trend co-efficient of coir export from India was positive and
significant at the one per cent level, indicating an increased trend in coir export during the

123
Forty First and Fifty First Annual Report of Coir Board, 2005, p. 31.

80
period under review. The analysis shows that coir export increased at the rate of 11.14
per cent per annum.

The growth in the export value of coir, absolute increase/decrease over the corresponding
previous year and its percentage increase/decrease are presented in Table 2.20.

TABLE 2.20

GROWTH IN EXPORT VALUE OF COIR SECTOR

Export Value
Absolute Percentage
At Current price At Constant price
Year Increase / Increase /
Decrease Decrease
(Rs. in Lakhs) (Rs. in Lakhs)
2000 – 01 20684.64 15801.86

2002 – 03 21258.26 15758.53 - 43.33 0.27

2003 – 04 23892.99 16242.69 +484.16 3.07

2004 – 05 29218.88 19427.45 +3184.76 19.61

2005 – 06 30305.35 19526.64 +99.19 0.51

2006 – 07 31366.22 19628.42 +101.78 0.52

2007 – 08 32058.35 20898.53 +1270.11 6.47

2008 – 09 35270.57 20686.55 -211.98 -1.02

2009– 10 40749.67 21301.45 +614.9 2.97

2009– 10 43340.27 20167.65 -1133.8 -5.32

Source: Annual Reports of Coir Board, Coir Board, Kochi, 2000-01 to 2009-10

Note: Export Value of Coir in rupees terms are deflated by the whole sale price index by
keeping 1993-94 as base year. (http://www.eaindustry.nic.in/asp2/list_d.asp)

Table 2.20 shows that the export value of coir at constant prices over the last one decade
has reached a maximum of Rs.20167.65 lakh in 2009-10 from Rs.15801.86 lakh in 2000-

81
01, registering a positive growth of 27.63 per cent. In the years 2001-02, 2002-03 and
2004-05 the growing tendency became extinct and fell by Rs.43.33 lakh, Rs.211.98 lakh
and Rs.1133.8 lakh respectively. The giant leap in the value of coir exports at constant
prices with 19.61 per cent in 2008-09 was the highest. Further the Indian coir sector has
experienced a marginal growing tendency as regards coir exports value at constant prices
for the five years since 2002-03.

2.6.1 Composition of Export

Fourteen products are exported mainly to 89 countries out of which USA

continues to be the major importer of coir and coir products with its share of 26.90 per
cent in volume and 36.99 per cent in value. European countries imported 57.29 per cent
in terms of volume and 48.84 per cent in terms of value from India.124

Table 2.21 shows the composition of coir exports in terms of volume and value to the
total coir exports for the period April 2004 to March 2005.

124
Ibid, p.37.

82
 TABLE 2.21

COMPOSITION OF COIR EXPORTS BY VARIOUS COIR PRODUCTS

AND ITS VOLUME AND VALUE TO TOTAL COIR EXPORT

AS ON 31ST MARCH 2005

Percentage of Total Coir Exports

Composition

Name of the Item

Volume Value Volume Value at
current price
(in Metric
tonnes)
Handloom mats 32.64 53.08 40127.35 25129.27
Tufted mats 13.42 20.06 16502.26 9499.05
Coir Yarn 8.94 7.09 10987.59 3358.16
Coir pith 35.32 6.43 43420.54 3042.41
Handloom Mattings 2.86 4.93 3518.90 2334.04
Geotextile 1.89 2.22 2323.19 1049.76
Coir rugs & carpets 1.40 2.12 1727.34 1002.64
Power loom mats 1.16 1.97 1433.22 931.16
Rubberised coir 0.40 0.72 475.92 340.57
Coir other sorts 0.41 0.42 502.40 199.38
Coir Fibre 1.10 0.40 1350.45 186.03
Power loom Mattings 0.15 0.29 188.94 138.92
Coir Rope 0.24 0.25 299.67 116.91
Curled coir 0.06 0.02 69.00 11.97
Total 100.00 100.00 122926.77 47340.27

Source: Fifty-First Annual Report of Coir Board, Coir Board, Kochi, 2005.

From Table 2.21 it is clear that out of the total value of coir exported, coir yarn, coir pith,
handloom matting, geo-textile, coir mugs and carpet, power loom mat, rubberized coir,

83
coir fibre and coir rope together stood at Rs.12, 711.95 lakhs constituting 26.86 per cent,
while the export value of handloom mat and Tufted mat together constitute 73.14 per cent
of the total value of coir exports amounting to Rs.34,628.32 lakhs.

As far as the export volume is concerned the proportion of handloom mat and
tufted mat together stood at 46.06 per cent during the period under review and it is the
major item of export among coir products exported from India. Other coir products
constituted 53.94 percent for the said period.

2.7 COIR BOARD

The coir industry has a long tradition and heritage of centuries. But there is no
unified and systematic effort directed towards the development of this industry. Its
development in India began in an organised way only after the establishment of the Coir
Board. It is a Commodity Board set up by the Government of India by passing an Act in
the Parliament. It was called the Coir Industry Act 1953. The Coir Board started
functioning with its head quarters at Ernakulum (now called Kochi) in Kerala with effect
from July 1954. This Board was set up for the main purpose of promoting the domestic as
well as the export trade of coir and coir products.

2.7.1 Role of Coir Board

The principal functions of the Board are to encourage rural development, domestic
market development, training, extension, product development, price checking and
enforcement, quality control, welfare activities, collection of data, marketing, and
promotion of exports. The Board opened various regional offices at Pollachi in Tamil
Nadu, Bangalore in Karnataka and Visakhapatnam in Andhra Pradesh for promoting the
development of the brown fibre sector in the coir industry. A National Level Training
Centre at Kalavoor, Kerala, was also started. Training centres were started for coir
workers and product diversification efforts were also made on a faster scale.

84
2.7.2 The Constitution of the Board

Section 4 of the Coir Industry Act, 1953, empowers the Central Government to
constitute the Coir Board. The sub-rule 4 of the Coir Industry Rules, 1954, provides
guidelines to be followed in the appointment of its chairman and the members to be
nominated to the Board. At present the Board consists of a Chairman and thirty
members.125 All the different sections of the industry are represented in the Board.

There is further provision for the constitution of a Standing or Ad hoc Committee

for discharging the functions of the Board apart from executive committee such as

1. The Research and Development Committee,

2. The Export Promotion Committee,

3. The Marketing and Publicity Committee,

4. The Brown Fibre Development Committee,

5. The Hindustan Coir Advisory Committee.

125
Forty Ninth Annual Report of Coir Board, Kochi, 2002-03, p.6.

85
2.7.3 Ongoing Research and Development on Coir and Coir Products

The Central Coir Research Institute (CCRI) at Kalavoor in Kerala and the Central
Institute of Coir Technology at Bangalore are the two research centers which implement
the Science & Technology programs of the Coir Board.

The Science & Technology Program of the Coir Board now lays stress on the
following aspects to make the industry fall in line with the latest developments.

Process improvement and the elimination of drudgery

o Product diversification
o Product development and new uses of coir
o cost packing material and to maintain the optimum electrical conductivity
of raw material and composted coir pith.

86
 CHAPTER 3

3.1 INTRODUCTION

For a proper appreciation of the problem selected for the study, a discussion on the
socio-economic background of the study area, Thanjavur District, and the profile of coir
units have to be outlined. They are discussed in order by decomposing the present chapter
into two sections.

3.2 PROFILE OF THE STUDY AREA— THANJAVUR DISTRICT

Thanjavur District is the Rice Bowl of Tamil Nadu. The Big Temple and the other
famous temples in the district are known all over the world. Thanjavur was the cultural
capital of the country in 1790. Thanjavur gained prominence during the period of Chola
Kings, who made it as their capital. Thereafter, it was ruled by Nayaks and Maratta
Kings, who nurtured art and culture. The cultural, the architectural and the scholarly
pursuits of these rulers are reflected in the great monuments like Grand Anaicut, Big
Temple and Serfoji Mahal Library etc. in the district.

Thanjavur, formerly known as Tanjore, is a municipality and the headquarters of

the Thanjavur District in the Indian state of Tamil Nadu. The name Thanjavur is derived
from "Tanjan", a legendary asura in Hindu mythology. Thanjavur is one of the ancient
cities in India and has a long and varied history dating back to the Sangam period. The
town was founded by Mutharayar king Swaran Maran and rose to prominence during the
rule of the Later Cholas when it served as the capital of the Chola empire. After the fall
of the Cholas, the city was ruled by various dynasties like Pandyas, Vijayanagar
Empire, Madurai Nayaks, Thanjavur Nayaks, Thanjavur Marathas andBritish. It has been
a part of independent India since 1947.

Thanjavur is an important center of South Indian art and architecture. Most of

the Great Living Chola Temples which are UNESCO World Heritage Monuments are
87
located in and around Thanjavur. The foremost among the Great Living Chola temples,
the Brihadeeswara Temple, is located in the center of the city. Thanjavur is also the home
of Tanjore painting, a painting style unique to the region. The city is an important
agricultural center located at the heart of the region, known as the Rice bowl of Tamil
Nadu. South Zone Culture Centre in Thanjavur is one among several regional cultural
centres established by Indian Government to preserve and promote traditional cultural
heritage of India. It had a population of a 2,90,732 in 2011

3.2.1 Infrastructure Facilities

Thanjavur is located at 10.8°N 79.15°E[10] It is situated in the Cauvery delta, at a

distance of 314 kilometres (195 mi) south-west of Chennai and 56 kilometres (35 mi) east
of Tiruchirappalli. Though most ofThanjavur District is a level plain watered by
the Cauvery and tributaries, the taluk of Thanjavur is made up of mostly barren
uplands[11] sloping towards the east.[12][13] To the south of Thanjavur town, is
the Vallam tableland, a small plateau insterspersed at regular intervals by ridges
of sandstone.[13] The nearest seaport is Nagapattinam which is 84 kilometres (52 mi)
east of Thanjavur. The nearesta International Airport is Tiruchirapalli located at a
distance of 56 kilometres. The town has an elevation of 57 metres above mean sea level.
The total area of the city is 36 km2.

The urban agglomeration encompasses Vallam to Mariamman Koil (west - east)

and Vayalur to the Air Force Station (north-south) for an area of about 100 km2.

88
3.2.2 Industrial Scenario in the District

Infrastructure and support services are conductive enough for setting up industrial
units in the district. There are 14 large and medium scale industries in the district which
are mostly concern with the textiles and sugar sectors. Small scale sector industrial units
numbering 6698 are found in the district and the sector is next to agriculture in providing
livelihood to the people of this region.

The establishment of the District Industries Center (DIC) in the district on

05.06.1997 was a landmark for the development of cottage and small industries, tiny and
household sectors in the district. The DIC helps the new generation entrepreneurs for the
establishment of the industrial development in the district. It extends credit facilities,
marketing assistance, extension services besides quality control. The DIC has issued 388
permanent registrations and 374 provisional registrations for SSI units during 2005-06.

Economy

Agriculture in Thanjavur is the main source of livelihood for most of its people.
Agricultural Cultivation has been the major occupation of the local inhabitants of
Thanjavur as the land is ideal for growing crops like rice. The maximum portion of
Thanjavur land is used for cultivation and agriculture. The total percentage of land fit for
cultivation is 58%.[17] The city of Thanjavur consists of
tertiary, alluvial ancretaceous types of soil. The major portion of Thanjavur land consists
of alluvial deposits. The eastern region of Thanjavur abounds in alluvial type of soil fit
for agriculture. This region thereby producing the maximum number of crops. Organic
farming is gradually being implimented to the farmers of Thanjavur. In order to
maximize the agricultural produce organic farming is being implemented.

Thanjavur is known as the Rice bowl of Tamil Nadu. The Major crops other
than Paddy are blackgram, banana, coconut, gingelly, ragi, redgram, Green
gram,Sugarcane, maize. Indian Institute of Crop Processing Technology (IICPT) is
89
located in Thanjavur on Madurai National Highway (NH 226). The Institute tests a
variety of Food Processing Technologies that suit cultivation of
the crops and Consumers. The institute conducts many training programs and also
delivers training to Research scholars every year.

3.3 PROFILE OF STUDY UNITS

This section has been devoted to discuss the organisational aspects of the coir
units, focusing on their location, age, type, sources of raw material, period of stocking
raw material and finished fibre, sources of capital and its pattern of investment based on
the primary data collected through a well-structured interview schedule.

3.3.1 Location of units

The selection of an appropriate location ensures smooth and efficient functioning

of units with less of operational expenses. Location plays an important role in
determining the type of diversification and the nature of linkages generated. It is
estimated that production and distribution cost may vary to an extent of 10 per cent
simply by virtue of the choice of the enterprise location.126 The location-wise distribution
of coir units in the study area is presented in Table 3.1.

126
Mirtul Eapen, “Rural Industrialisation in Kerala: Re-examining the Issue of Rural Growth
Linkages”, Working Paper, No. 348, Centre for Development Studies, Thiruvananthapuram, July 2003,
p.34.

90
 TABLE 3.1

LOCATION-WISE DISTRIBUTION OF COIR UNITS

Location Small Units Medium Units Total Units

Urban 5 17 22
(17.24) (73.91) 42.31)
Rural 24 6 30
(82.76) (26.09) (57.69)
Total 29 23 52
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are percentages to the total.

Table 3.1 discloses that nearly 58 per cent of the total units of the district are
concentrated in rural areas where as. 42 per cent of the units are located in urban areas.
With regard to the size of the units, nearly 83 per cent of the small units are located in the
rural areas and only 17 per cent of them are located in urban areas. In the medium group
units, 73.91 per cent are located in urban areas, followed by 26.09 per cent in rural areas.

91
 TABLE 3.2

BLOCK-WISE DISTRIBUTION OF COIR UNITS IN THE STUDY AREA

Name of Name of the Taluk Name of the Block Number Total

the of Units
District in Block
2
Thanjavur Thanjavur Thanjavur 2
(3.85)
4
Tiruvaiyaru, Tiruvaiyaru, 4
(7.69)
6
Thiruvidaimarudur Thiruvidaimarudur 6
(11.54)
Papanasam, Papanasam,
2 4
2 (7.69)
Kumbakonam Kumbakonam
Pattukkottai, Pattukkottai,
14
36
Peravurani Peravurani 18
(69.23)
4
Orathanadu Orathanadu
52
Total
(100.00)

Source: District Industries Centre, Thanjavur, 2008

Figures in brackets are percentages to the total

It is learnt from Table 3.2 that out of the total 52 Units, the Pattukkottai,
Peravurani,Orathanadu blocks in the district accounts for 36 units (69.23 per cent). Out of
these Peravurani, Pattukkottai and Orathanadud units have 18, 14 and 4 units

92
respectively. Next to this block, Thiruvidaimarudur accounted for 6 units by registering
11.54 per cent followed by the Tiruvaiyaru, block with 4 units, (7.69 per cent),
Kumbakonam 4 units (7.69 per cent) and Papanasam, 2 units (3.85 per cent).

3.3.2 Age of the Unit

The age of the unit has been the most important factor that determines the
experience and performance in coir fibre making. The year-wise formation of the units of
the study area is presented in Table 3.3.

93
 Table 3.3
YEAR – WISE FORMATION OF UNITS IN THE STUDY AREA
Year of Small Units Medium Units Total Cumulative
Formation Total
Before 1990 7
- 7 7
(24.14)
1991 – 1995 10 3 13
20
(34.48) (13.04) (25.00)
1995 – 2000 7 5 12
32
(24.14) (21.74) (23.08)
2001 – 2005 3 9 12
44
(10.34) (39.13) (23.08)
2006 – 2009 2 6 8
52
(6.90) (26.09) (15.38)
Total 29 23 52
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are percentages to the total

From Table 3.3 it is clear that out of the total 52 units, 13 (25 per cent of the total
units) were started between 1986 and 1990. Between 1991 and 2000, 24 (46.16 per cent)
units were started. In group-wise formation, only 7 small (24.14 per cent) units were
started prior to 1985. The table further shows that out of 23 medium units, 15 (65.22 per
cent) were started after 1996. The lowest number of 3 (13.04 per cent) units were started
during 1986-90. However, it is noted that out of the total 20 medium units, 15 were
started after 1996.

94
3.3.3 Type of Organisation

The Selection of the right type of organisation is one of the basic inputs for any
business. The details of coir units and their types of organisation are given in Table
3.4.

TABLE 3.4

FORMS OF ORGANISATION OF COIR UNITS

Type of Organization Small Units Medium Units Total Units

Sole Trading Concern 27
6 33
(35.29) (63.46)
(93.10)
Partnership Concern 2 17 19
(6.90) (64.71) (36.54)
Total 29
23 52
(100.00) (100.00)
(100.00)

Source: Primary data

Figures in brackets are percentages to the total

From Table 3.4, it is evident that the coir units located in the study area are
managed by two types of organizations namely sole proprietorship and partnership.
63.46 per cent of the coir units are sole trading concerns and the remaining 36.54 per cent
belong to the partnership type of organization.

The coir units in the study area are either sole proprietorship or partnership type.
Among 52 units 33 are sole trading concerns whereas 19 are of the partnership type.
Table 3.5 shows the total number of partners in the partnership type of coir units.

95
 TABLE 3.5
DISTRIBUTION OF PARTNERS IN PARTNERSHIP
TYPE OF COIR UNITS
Number of Number of Units Total Total no. of
partners Small Medium Units Partners
2 Partners 2 5 7 14
(36.84)
3 to 4 Partners - 11 11 35
(57.90)
5 to 6 Partners 1 1 5
(5.26)
Total 2 17 19 54
(100.00)

Source: Primary data

Figures in brackets are Percentages to the total

Table 3.5 shows that out of the 19 partnership type of coir units, 7 units (36.84 per
cent)are managed by 2 partners, where as11 units (57.90 per cent) by 3 to 4 partners and
the remaining 1 unit (5.26 per cent) has 5 to 6 partners. The medium firms with 3 to 4
partners are 11 in number and in total they have 35 partners out of the total 54 partners in
the coir units which are the highest. It is also clear that 2 small units have only 2 partners
each.

96
3.3.4 Sources of Raw Material

The raw material is considered as the flesh and blood for any industry. The fibrous
husk surrounding the coconut palms basically feeds the coir units. Husks are generally
available at rock bottom prices Rs.200-Rs.300 per thousand pieces. The sources from
which they meet their requirement is presented in Table 3.6.

TABLE 3.6
SOURCES OF RAW MATERIAL
Number of Units
Sl. No Sources Total
Small Medium
1. Coconut Groves 9
2 11
(own source)
(6.89) (21.15)
(39.13)
2. Coconut Merchants 8 11 19
(27.59) (47.83) (36.54)
3. Intermediaries / Husk 19 3 22
Dealers (65.52) (13.04) (42.31)
Total 29 23 52
(100.00) (100.00) (100.00)

Source: Primary data

Figures in the brackets are Percentages to the total.

It is observed from Table 3.6 that out of the 52 units, 22 (42.31 per cent) depend
on husk dealers as their source followed by 19 units (36.54 per cent) who depend on
coconut merchants. Only 11 units (21.15 per cent) got husk from their own source
(Coconut Groves).

97
3.3.5 Average Stocking Period of Raw material

The average stocking period of raw material in the small and medium units is
presented in Table 3.7.

TABLE 3.7

AVERAGE STOCKING PERIOD OF RAW MATERIAL

(SMALL AND MEDIUM UNITS)

Small Units Medium Units

Average Stocking Number of Total Number of Units Total
Period (in days) Units Average Period Average Period
(in days) (in days)
17.5 6 105 4 70.0
22.5 14 315 7 157.5
27.5 9 247.5 12 330.0
Total 29 667.5 23 557.5
Average Stocking 23.02 24.24
Period

Source: Primary data

It is understood from Table 3.7 that the prevailing stocking period of raw material
for coir units in the study area ranges from a minimum of 17.5 days to a maximum of
27.5 days. Among the 29 small units, 9 have a maximum stocking period of 27.5 days,
whereas 6 units have a minimum stocking period of 17.5 days. In between, a maximum
of 14 units have a stocking period of 22.5 days. Overall, the average stocking period of
raw material for the small unit, worked out to 23.02 days.

In the case of the medium-size units of 23, a maximum of 12 units have a

maximum stocking period of 27.5 days, followed by 7 and 4 units which have 22.5 and
17.5 days respectively. Overall, the average stocking period of raw material for these
units worked out to 24.24 days.

98
3.3.6 Average Stocking Period-Finished Fibre

The average stocking period of finished fibre by both small and medium units is
presented in Table 3.8.

TABLE 3.8

AVERAGE STOCKING PERIOD OF FINISHED FIBRE

(SMALL AND MEDIUM UNITS)

Small Units Medium Units

Average Stocking Number of Total Average Number of Total Average
Period (in days) Units Period (in Units Period (in
days) days)
4.5 8 36 3 13.5
7.5 10 75 5 37.5
10.5 11 115.5 15 157.5
Total 29 226.5 23 208.5
Average Stocking
7.81 9.07
Period

Source: Primary data

It is understood from Table 3.8 that the prevailing period of finished stock of fibre
for coir units in the study area ranges from a minimum of 4.5 days to 10.5 days. Among
the 29 small units, 11 have a maximum stocking period of 11 days, whereas 8 units have
a minimum stocking period of 4.5 days. In between 10 units have a stocking period of 7.5
days. Overall, the average stocking period of the finished coir fibre for the small-size
units worked out to 7.81 days.

In the case of 23 medium-sized units, a maximum of 15 units have a maximum

stocking period of 10.5 days, followed by 5 and 3 units which have 7.5 and 4.5 days
respectively. Overall, the average stocking period for these medium-size units worked out
to 9.07 days.
99
3.3.7 Capital Investment Pattern of Units

Like any other sector, the investment required and the pattern of investment vary
from unit to unit in the coir sector.How ever by following the norms prescribed by the
District Industries Centre (DIC), Thanjavur, on capital invested, the units of the study
area have been categorized. As per the norms, the units with capital investment up to
Rs.25 lakhs are termed as “Small Enterprises” or “Small units”, units with investment
between 25 lakhs and 5 crores are termed “small-scale industries” and units with
investment of more than Rs.5 crores but less than Rs.10 crores are termed Micro
enterprises.127 As per the norms prescribed by the DIC, Thanjavur, the units of the study
area fall under two categories only as “Small units” and “Medium units”. It is because the
data related to on their investment showed that none of the units of the study area has
investment more than Rs.5 crores and thus the third category of classification as “large-
size” units becomes irrelevant for the present study.

3.3.7.1 Classification of Units Based on Investment

Based on capital investment, the units of the study area are classified and their
respective total numbers are presented in Table 3.9.

127
“A Guide to Entrepreneurs” Complied by General Manager, DIC, (Thanjavur), Department of
Industries and Commerce, Government of Tamil Nadu, 2006.

100
 TABLE 3.9
CLASSIFICATION BASED ON CAPITAL INVESTMENT
Sl. Capital Investment Ceiling Total number Category
No of Units Small Medium
1. Below Rs.15,00,000 7 7 -
(13.46)
2. Rs.15,00,001- Rs.20,00,000 13 13 -
(25.00)
3. Rs.20,00,001 – Rs.25,00,000 9 9 -
(17.31)
4. Rs.25,00,001 – Rs.30,00,000 4 - 4

(7.69)
5. Rs.30,00,001 – Rs.35,00,000 11 - 11

(21.15)
6. Above Rs.35, 00,000 8 - 8
(15.39)
Total 52 29 23

Source: Primary data

Figures in brackets are Percentages to the total.

From Table 3.9, it is clear that out of the total number of 52 coir units in the study
area, small sized units are 29 constituting 55.79 per cent, while medium sized units are 23
constituting 44.21 per cent.

It could also be understood from the Table that more than 50 per cent of the small
units (13 out of 29) fall in the investment range of Rs.15 lakhs to Rs.20 lakhs. followed
by 9 units (17.31 per cent) which have invested between Rs.20 lakhs and Rs.25 lakhs and
101
the remaining 7 units (13.46 per cent) have investment of less than Rs.15 lakhs. In the
medium size units of 23, 50 per cent of the units (11 out of 23) fall in the investment
range of Rs.30 to Rs.35 lakhs followed by 8 units (15.39 per cent) whose investment
range is above Rs.35 lakhs. Only 4 units (7.69 per cent) of that size fall in the investment
range of Rs.25 lakhs to Rs.30 lakhs.

3.3.8 Sources of Investment

The sources of investment in coir units are generally of two types, namely “Own
Funds” and “Both Own and Borrowed Funds”. The details of the source of investment
made in coir units are presented in Table 3.10.

TABLE 3.10
SOURCES OF INVESTMENT
Sl. Number of Units
Sources of Investment Total
No Small Medium
1. Own 2 (10.34) 1 3
(9.62)
(8.70)
2. Own as well as 27 (89.66) 22 49
Borrowed (91.30) (90.38)
Total 29 23 52
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total.

It is understood from Table 3.10 that out of the total 52 units, 49 (90.38 per cent)
have their funds from both sources, which stood highest, followed by 3 units (9.62 per

102
cent) which have their own sources to run their coir units. The same trend prevails
irrespective of the size of the units operating in the study area.

3.3.9 Sources of Borrowed Funds

The funds borrowed by units are raised through various sources. It is found (vide
Table 3.20) that more than 90 per cent of the coir units thrive on both own and borrowed
funds. The financial support extended by the commercial banks, co-operative
banks and financial institutions like the TIIC, the SSIDC constitute the major source of
borrowed funds. The external sources from which they meet their financial requirement
are presented in Table 3.11.

TABLE 3.11

SOURCE OF BORROWED FUNDS

Number of Units
Sl. No Sources
Small Medium Total
1. Commercial Banks 22 20 42
2. Co-operative Banks 2 1 3
3. Financial Institutions 25 22 47
4. Friends & Relatives 15 4 19
5. Money Lenders 2 - 2

Source: Primary data

Table 3.11 shows that out of the total 49 coir units, 47 unis have borrowed funds
from financial institutions followed by 42 units which raised their funds from commercial
banks. The sources of friends and relatives and money lenders are used by 19 and 2 units
respectively.

103
3.3.9.1 Amount of Capital Borrowed

Table 3.12 shows the extent of capital borrowed by coir units of the study area.

TABLE 3.12

AMOUNT OF CAPITAL BORROWED

Sl. Amount Number of Units

Total
No Borrowed Small Medium
1. Below Rs.5, 00,000 4 4
-
(14.82) (8.16)
2. Rs.5,00,000 – Rs.10,00,000 9 2 11
(33.33) (9.09) (22.45)
3. Rs.10,00,000-Rs.15,00,000 11 2 13
(40.74) (9.09) (26.53)
4. Rs.15,00,000-Rs.20,00,000 3 8 11
(11.11) (36.36) (22.45)
5. Above Rs.20, 00,000 10 10
-
(45.46) (20.41)
Total 27 22 49
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total.

It is understood from Table 3.12 that among the total 49 units, 13 units (26.53 per
cent) have borrowed capital between Rs.10 lakhs and Rs.15 lakhs.whereas11 units (22.45
per cent) have borrowed between Rs.15 lakhs and Rs.20 lakhs. The same numbers of

104
units have borrowed capital between Rs.5 lakhs and Rs.10 lakhs. However Only 4 (8.16
per cent) units have borrowed capital less than Rs.5 lakhs.

3.3.10 Investment Pattern of Fixed Capital

Funds required to acquire fixed assets are termed fixed capital. It is invested on
items like land, building, machinery, furniture and fixtures and vehicles. The fixed capital
requirements vary from one unit to another and generally are influenced by the scale of
operation. All the owners of the coir units operate their units on their own land and have
constructed their own buildings to run such units. It is also found in the study area that no
unit runs on leased land.

A reasonable amount of funds is required for purchasing vehicles for transporting

the husk the factory, disposing of the coir dust and transporting workers from nearby
villages to work sites. The details of the investment pattern of the fixed capital for the
small and medium coir units of the study area are presented in Tables 3.13

105
 TABLE 3.13
INVESTMENT PATTERN OF FIXED CAPITAL
(SMALL UNITS)

(Rs in Lakhs)

Range of Investments
Upto Rs.15 Lakhs Between Between
(7 Units)
Sl. Rs.15 Lakhs- Rs.20 Lakhs Rs.20 Lakhs-Rs.25
Particulars
No. (13 Units) Lakhs (9 Units)
Total Average Total Average Total Average
Investment investment Investment investment Invest investment
Per Unit Per Unit ment Per Unit
1. Land 14.35 2.05 29.38 2.26 26.19 2.91
(20.10) (16.24) (16.02)
2. Buildings 10.43 1.49 25.48 1.96 22.23 2.47
(14.61) (14.08) (13.60)
3. Machinery & 37.31 5.33 107.51 8.27 99.90 11.10
Equipments (52.26) (59.41) (61.12)
4. Vehicles 8.75 1.25 16.90 1.30 13.50 1.50
(12.5) (9.34) (8.26)
5. Tools & 0.56 0.08 1.69 0.13 1.62 0.18
Appliances (0.78) (0.93) (1.00)
Total 71.40 10.20 180.96 13.92 163.44 18.16
(100.00) (100.00)
(100.00)

Source: Primary data

Figures in brackets are Percentages to the total.

106
 The average investment per unit on Machinery and Equipment, Land and
Buildings (combined) and Vehicles and Tools and Appliances (combined) stand at 52.26,
34.71 and 13.28 per cent respectively for units in the first range.

TABLE 3.14
INVESTMENT PATTERN OF FIXED CAPITAL
(MEDIUM UNITS)

(Rs in Lakhs)

Range of Investment
Between Between
Above Rs.35 Lakhs
Sl. Rs.25 Lakhs –Rs.30 Rs.30 Lakhs–Rs.35 Lakhs (8 Units)
Particulars
No. Lakhs (4 Units) (11Units)
Total Average Total Average Total Average
Invest Investment Investment Investment Investment Investment
ment
1. Land 13.20 3.30 42.90 3.90 33.60 4.20
(15.64) (15.30) (13.19)
2. Building 11.40 2.85 37.18 3.38 30.00 3.75
(13.51) (13.27) (11.77)
3. Machine & 52.00 13.00 174.90 15.90 172.00 21.50
Equipments (61.61) (62.40) (67.50)
4. Vehicles 7.00 1.75 22.00 2.00 16.00 2.00
(8.29) (7.85) (6.28)
5. Tools & 0.80 0.20 3.30 0.30 3.20 0.40
Appliances (0.95) (1.18) (1.26)
Total 84.40 21.10 280.28 25.48 254.80 31.85
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total

107
 It is clear from Table 3.14 that in respect of the medium-size units, the average
investment on fixed assets per unit varies on the basis of their total investment ranges
which are of three types, namely- 1) Rs.25 to Rs.30 lakhs, 2) Rs.30 lakhs to Rs.35 lakhs
and 3) Above Rs.35 lakhs.

The average investment per unit on Machinery and Equipment, Land and Building
(combined) Vehicles and Tools and Appliances (combined) stand at 61.61 per cent, 29.15
per cent and 9.24 per cent respectively for units in the first range. For the units in the
second range, their percentages are 62.40, 28.57 and 9.03 and for the units in the third
range their percentages are 67.50, 24.96 and 7.54 in the order of the aforesaid fixed
assets.

It is further noted that when the range of investment of the units increases the
average investment on machinery and equipment also increases. This trend is uncommon
on other fixed assets.

3.3.10.1 Overall Pattern of Investment in Fixed Assets

The overall pattern of the investment in fixed assets of both the small and medium
size units is presented in Table 3.15.

108
 TABLE 3.15

OVERALL PATTERN OF INVESTMENTS IN FIXED ASSETS

(Rs in lakhs)

Sl. No Particulars Small Medium Total

(29 Units) (52 Units)
(23 Units)
1. Land 69.92 89.70 159.62
(16.82) (14.48) (15.42)
2. Buildings 58.14 78.58 136.72
(30.80) (12.68) (13.20)
3. Machines & Equipments 244.72 398.90 643.62
(58.85) (64.39) (62.17)
4. Vehicles 39.15 45.00 84.15
(9.42) (7.27) (8.13)
5. Tools & Appliances 3.87 7.30 11.17
(1.35) (8.45) (1.08)
Total 415.80 619.48 1035.28
(100.00) (100.00) (100.00)

Source: Compiled data.

Figures in brackets are Percentages to the total.

The overall pattern of investment on fixed assets by coir units shown in Table 3.15
indicates that on an average 62.17 per cent of the investment on fixed assets goes to
Machinery and Equipment, 28.62 per cent to Land and Building (combined) and 19.21 to
Vehicles and Tools and Appliances (combined).

It is further understood that nearly 59 per cent of the investment is made on

machinery and equipments 30 per cent on land and building (combined) and 10 per cent
on Vehicles and Tools and Appliances (combined) by the small size units but it is around
109
65 per cent, 27 per cent and 8 per cent respectively for the medium size units. However
the overall pattern of investment indicated that the investment on machinery and
equipment tends to increase when the size of the unit expands.

3.3.11 Pattern of Working Capital

In coir units, the working capital is calculated by taking into account the value of
the purchase of husk, the payment on wages, electric charges, and the interest on
borrowed capital, and the maintenance of machines, equipments and vehicles. In working
capital estimation, the purchase of husk, the payment of wages and the maintenance of
machinery assume greater importance. The coir units follow the practice of procuring a
large quantity of green husk or dry husk on the basis of either immediate payment or
advance cash payment. The average investment pattern of the working capital for the
small and medium units is presented in Tables 3.16 and 3.17.

110
 TABLE 3.16

INVESTMENT PATTERN OF WORKING CAPITAL

(SMALL UNITS)

(Rs in Lakhs)

Investment Range
Between Between
Elements
Upto Rs.15 Lakhs
Sl. of
(7 Units) Rs.15 Lakhs-Rs.20 Lakhs Rs.20 Lakhs-Rs.25 Lakhs
No. Working
(13 Units) (9 Units)
Capital
Total Average Total Average Total Average
Investment Investment Investment Investment Investment Investment
1. Raw 8.61 1.23 21.84 1.68 17.37 1.93
Materials (39.05) (38.71) (36.08)
2. Finished 6.44 0.92 15.08 1.16 12.78 1.42
Fibre (29.20) (26.73) (26.54)
3. Cash 7.00 1.00 19.50 1.50 18.00 2.00
(31.75) (34.56) (37.38)
Total 22.05 3.15 56.42 4.34 48.15 5.35
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total.

It is clear from Table 3.16 that in respect of the small units the average working
capital investment on its elements varies based on the total investment ranges of units
which are generally of three types viz: 1) Upto Rs.15 lakhs, 2) between Rs.15 lakhs and
Rs.20 lakhs and 3) between Rs.20 lakhs and Rs.25 lakhs.

The average amount of the working capital locked up on raw material, finished
fibre and cash are estimated to be 39.05 per cent, 29.20 per cent and 31.75 per cent

111
respectively by the units in the first category, whereas for the units in the second category
their percentages are 38.71, 26.73 and 34.56 and for the units in the third range their
percentages are 36.08, 26.54 and 37.38 on the order of aforesaid current assets.

TABLE 3.17

INVESTMENT PATTERN OF WORKING CAPITAL

(MEDIUM UNITS)

(Rs in Lakhs)

Medium Units
Rs.25 Lakhs-Rs.30 Lakhs Rs.30 Lakhs-Rs.35 Lakhs Above Rs.35 Lakhs
Sl. Elements of Working (4 Units) (11 Units) (8 Units)
No. Capital Total Average Total Average Total Average
Investment Investment Investment Investment Invest Investment
ment
1. Raw Material 7.08 1.77 21.67 1.97 17.12 2.14
(33.02) (32.24) (30.62)
2. Finished Fibre 5.36 1.34 18.04 1.64 14.80 1.85
(25.00) (26.84) (26.47)
3. Cash 9.00 2.25 27.50 2.50 24.00 3.00
(41.98) (40.92) (42.91)
Total 21.44 5.36 67.21 6.11 55.92 6.99
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total.

It is clear from Table 3.17, that in respect of the medium-size units the average
working capital investment on its elements varies on the basis of the total investment
ranges of units which are generally of three types viz 1) between Rs.25 lakhs and Rs.30
lakhs, 2) between Rs.30 lakhs and Rs.35 lakhs and 3) above Rs.35 lakhs.

112
 The average amount of working capital locked up on raw materials, finished fibre
and cash are estimated to be 33.02 per cent, 25 per cent and 41.98 per cent respectively
for the units in the first range, whereas for the units in the second range their percentages
are 32.24, 26.84 and 40.92 and for the units in the third range, their percentages are
30.62, 26.47 and 42.91 on the order of the aforesaid current assets.

3.3.12 Overall Pattern of Working Capital

The overall pattern of the working capital invested on its elements is presented in
Table 3.18

TABLE 3.18

OVERALL PATTERN OF WORKING CAPITAL

Sl. No Elements of Small Units Medium Units Total

Working Capital (29 Units) (23 Units) (52 Units)
1. Raw Material 47.82 45.87 93.69
(37.77) (31.73) (34.55)
2. Finished Fibre 34.30 38.20 72.50
(27.09) (26.42) (26.73)
3. Cash 44.50 60.50 105.00
(35.14) (41.85) (38.72)
Total 126.62 144.57 271.19
(100.00) (100.00) (100.00)

Source: Compiled data

Figures in brackets are percentages to the total

113
 The overall pattern of investment on working capital by coir units shown in Table
3.18 indicates that an average 34.55 per cent of the working capital goes to raw material,
26.73 per cent to finished fibre and 38.72 per cent to cash.

It is further understood that nearly 38 per cent of the working capital is locked up
on raw material, 27 per cent on finished fibre and 35 per cent on cash in hand and in
banks by the small-size units but it is around 32 per cent, 26 per cent and 42 per cent
respectively for the medium-size units.

114
 CHAPTER 4

4.1 INTRODUCTION

As far as coir units of the study area are concerned, invariably all of them are
engaged in the manufacture of brown fibre only. The production related functions
analysed in this present chapter are for brown fibre only.

The analysis on cost, returns and resource-use efficiency of coir fibre production
assumes great significance as it determines the overall profitability of the coir industry in
the study area. The size of the unit, the type of coir fibre manufactured and the method of
decorticating adopted are the major influencing factors in the cost of the production of
fibre. For the purpose of analysis the present chapter has been divided into three sections.
The first section deals with the production practices adopted by the units of the study
area. The second section analyses the cost of production of the fibre manufactured and
the returns from its production. The productivity and the resource-use efficiency are
discussed in the third section. The last section deals with the production problems faced
by the coir units of the study area.

4.2 PRODUCTION PRACTICES IN THE COIR UNITS OF THE STUDY

AREA

Knowledge on the production practices followed by the units of the study area in
the extraction of coir fibre is of vital importance as it helps to understand the various
costs involved in its manufacture. There are generally two methods popular in the
extraction of fibre namely the natural method and the mechanical method. The units of
the study area could not employ the natural method of fibre extraction as it did not enjoy
the natural coastal advantage in the region. The mechanical process of extraction
involves two methods— the combing/ Defibring method and the beating/Decorticating
method.

115
 The units of the study area generally follow the mechanical process for the
extraction of the fibre. But none of the units either fully employ the defibring or the
Decorticating methods. The process that is followed is a matter of convenience and
mostly based on size of units and the resources in hand. The method includes partly
defibring and partly decorticating.

Then to separate the fibre from the crushed husk the unretting of fibre is carried
out by pouring water daily. Which is done for reducing the retting period? The dry husk
is soaked with water for a period of maximum of 10 to 15 days, while green husk is
soaked only for 4 hours. Which is called the process of soaking? The specified period of
soaking is neither reduced nor increased in order to gain the maximum output of fibre
from the crushed husk. In the medium sized units the conveyor belts are used for
transporting both the raw husk and the soaked husk to the burster machine in order to
reduce the number of workers involved in the process.

The husks so soaked or unretted are fed into the Defibring machine and the
Beating machine without allowing dry and green husks to undergo a process of retting.
The fibre obtained from the decordicator or the defibring machine is fed into the sifter or
turbo cleaner to remove the pith and the husk from the fibre. The resultant fibre is called
the mixed fibre. It is then dried and baled into bundles of 35 kilograms each. The fibre
thus obtained is called brown fibre or bristle fibre. Though another variety of white fibre
is extracted in Kerala and some parts of Tamil Nadu, the units of the study area engage
only in the manufacture of brown fibre.

Under the decorticating method, the use of machinery is limited to beating,

cleaning and shifting activities. As many of the activities are carried out manually, it
considerably increases the cost of production of fibre.

116
4.3 COST OF PRODUCTION

Cost refers to the amount of expenditure incurred or value of resources sacrificed

either to manufacture a product or to render a service. The cost of production means the
total expenditure incurred in manufacturing a product and becomes the preponderant
portion of the total cost. It includes the cost of raw material, labour and manufacturing
overheads. The cost of production being a parameter in determining the production
efficiency of an industry its analysis is of vital importance. and thus the consideration
enters into every business decision.

The cost of production in coir industry of the study area means the expenses
incurred in the sequence of manufacture of coir fibre. The costs which are incurred on
manufacturing of coir fibre are placed in two broad categories namely variable cost and
fixed cost. Variable costs vary in direct proportion to changes in output and an increase in
output means a proportionate increase in the total variable cost. thus is a linear
relationship between the output and the variable cost. These costs are incurred on the
employment of the variable factors of production like labour and raw material. Fixed
costs, on the other hand, remain constant in total regardless of the changes in volume up
to a certain level of output further they are not affected by changes in output. There is an
inverse relationship between the output and the fixed cost per unit. These costs will exist
even if no output is produced.

4.3.1 Input-output structure

The input-output structure shows a significant variation in the terms of gross

revenue between the small and medium sized units in the use of resources in the
manufacture of coir fibre. The resource inputs namely labour, material (husk), unretting,
power and machine running are taken to have formed the input resources per 100 bundles
of coir fibre. Similarly, the gross revenue of 100 bundles is considered as a measure of

117
the output. The input-output structure per 100 bundles of coir fibre for the small and
medium size coir units is presented in Table 4.1.

TABLE 4.1

INPUT-OUTPUT STRUCTURE AT MEAN LEVELS OF MANUFACTURE OF

COIR FIBRE FOR SMALL AND MEDIUM UNITS

Particulars Small Medium t–Value

Units Units
Gross revenue (in Rs Per 100 bundles) 23857.60 25288.10 8.809*
Labour (in Rs Per 100 bundles) 7542.70 7182.12 3.876*
Material (Husk) (in Rs Per 100 bundles) 4397.62 4095.35 4.254*
Unretting (in Rs Per 100 bundles) 328.08 328.21 0.026
Power (in Rs Per 100 bundles) 2502.17 2244.97 6.935*
Machine running (in Rs Per 100 bundles) 820.39 319.58 77.589*
Number of Units 29 23

* The differences is significant at the 5 per cent level

Source: Primary data

It could be observed from Table 4.1 that the gross revenue of the output per 100
bundles of coir fibre for the small and medium units was Rs.23857.60 and Rs.25288.10
respectively. The difference in gross revenue between the two sizes of units stood at
Rs.1430.50 and the difference was statistically significant at the 5 per cent level. Among
the five variable inputs, the four inputs namely labour, material, power and machine
running are found to be significantly different between the small sized and medium sized
units. The amount spent on these variables by the small sized units stood at Rs.7542.70,
Rs.4397.62, Rs.2502.17 and Rs.820.39 while it was Rs.7182.12, Rs.4095.35, Rs.2244.97
and Rs.319.58 for the medium sized units. The only input variable which is found to be
not significantly different between the small and medium sized units is the unretting cost.

118
The small coir units spent on this input variable is Rs.328.08 but it was Rs.328.21 for the
medium sized units.

It could be concluded that the significant difference between the two sized coir
units was found in the application of the four variable inputs namely labour, material,
power and machine running.

4.3.2 Cost Components

A study on various costs involved in the manufacturing of coir fibre plays a

significant role in the price and output determination of a coir unit. A unit that produces
the maximum output with the minimum cost is considered to be the most efficient and
productive Therefore, the cost incurred in the manufacture of coir fibre is an important
factor for decision making. In order to maximize the profit, all the endeavors are to
increase the revenue and lower the cost. The manufacturing cost of any industry basically
falls under three elements namely cost material, labour and overheads. But the division of
costs on the criterion of variability depends upon the nature of industry. The cost
components in the coir industry are grouped under two heads namely variable and fixed
by taking into account the nature of the distinct characteristics of production prevailing in
the industry. Accordingly, the items which constitute the variable costs in the
manufacturing of coir fibre are husk cost, that is raw material, labour cost, unretting cost,
power cost, machine running cost, interest on working capital and pith disposal cost. The
fixed costs include depreciation and interest on long-term borrowings.

The categories and their elements of cost components are given below.

4.3.2.1 Variable Cost

The major break-up of variable cost that relates to the manufacturing of coir fibre
is raw material cost, labour cost, unretting cost, power cost, machine running cost, pith
disposal cost and interest on working capital.

119
4.3.2.1.1 Cost of Labour

The cost of labour is the most visible and decisive element of cost in a
manufacturing unit. In an industry like coir, right from the process of the unretting of the
husk to the extraction of the fibre, labour plays a dominant role in every stage of
production. It is the foremost major cost in the manufacture of fibre which takes more
than 50 per cent share in the total cost. The labourers are employed in the industry either
on a permanent or temporary basis.

The status survey of coir industry in Orissa(odisha) classifies the workers into
regular and casual workers. The regular workers work for about 7 hours, while the casual
workers work for 8 to 9 hours depending upon the production demand of the unit.128
Irrespective of sex, a worker is required to work in a coir unit for eight hours of a shift.
Two or three shifts may be undertaken in a day. The workers get work on an average of
fifteen days to twenty-five days in a month. Shangri measured labour in terms of man-
day units of eight hours of work done by one adult man. For the purpose of standardizing
the work, units of different categories of labour as men and women labourers were
formed.129 Sundaresan observed that for the estimation of the cost of production, the
wages paid to workers could be taken asthe rate prevalent in the locality where the coir
unit was located.130 Vijayachandran Pillai pointed out that labour productivity is the
output per worker in eight hours per shift. Labour being a part of variable cost, is an
important factor of production in the provision of the various elements of cost.131 Suganta

128
“Status Survey of Coir Industry in Orissa”, Coir Board, Kochi, 2002, p.46.
129
P. Shangri, “Surplus Man power in Agricultural and Economic Development”, Asia
Publishing House, Bombay, 1969, p.7.
130
R. Sundaresan, “Technology, Labour and Capital: A study of Inter Linkages in Coir
Yarn Spinning Industry in Kerala”, Unpublished Ph.D Thesis submitted to University of Kerala,
Trivandrum, 2002.
131
B. Vijayachandran Pillai, “A study on the Role of Government Agencies for the
Development of Coir Industry in Kerala”, Unpublished Ph.D Thesis submitted to University of Kerala,
Trivandrum, 1994, p.164.

120
Ghose stated that out of the total workers engaged in the industry, 80 per cent were
women. The number of female workers in the labour force overwhelmingly surpasses
that of male workers. The majority of such workers are from agriculture. Further, he
stated that the female worker gets lower wages than male workers in the coir industry.132

In the present study, labour cost included wages paid to both male and female
workers. Even though the coir industry is not seasonal in nature, the availability of
workers depends upon the agricultural seasons. Thus, some workers are employed on a
casual and contract basis while the others are on a permanent basis. The cost of labour
was calculated at the rate of Rs.80 per man-per shift of 8 hours which was the prevailing
wage rate during the period of study. In the case of female workers, the prevailing wage
rate was Rs.60 per man-day-per shift of 8 hours. No family labour was considered; it was
not involved in the manufacturing of coir fibre. The commonly accepted method of wage
payment in the study area is on time basis.

4.3.2.1.2 Cost of Raw Material (Husk)

Coconut husk which is considered a waste material is used as raw material by the
coir industry. It is generally available in plenty. The raw material cost is the major
portion of cost next to labour. Dr. P.K Balakrishnan, observed that for estimating the cost
of production of fibre, the price of husk is determined for a lot of 1000 numbers by
market forces in each locality.133 Sivaramana Reddy and P.K. Thampan, pointed out that
nuts from coastal belts contain a comparatively higher percentage of husks, valued at the
market price prevailing in that locality.134

132
Suganta Ghose, “Present Status of Coconut Processing Industry in India”, Vision,
Vol.XXII, No.3-4, Jan – June 2003, p.19.
133
P.K. Balakrishnan, “Evolution and Working of Coir Industry in India”, Coir Board,
Kochi, 2005, p.194.
134
L. Sivaramana Reddy and P.K. Thampan, “Commercial Exploitation of Coconut Husk in
Orissa”, Indian Coconut Journal, Vol.XIX, No.4, 1998, p.14.

121
 In the present study, the husks procured from own source was valued at the price
prevailing in that locality whereas the husk purchased from outside was valued at the
purchase price. Normally, the husks are purchased in lots of 1000 numbers. The price of
husks ranges from Rs.185 to Rs.220. The price is normally higher during the period
between September and January, because of short supply of husk due to the monsoon rain
which affects its free movement. How ever price is low during the rest of the year where
the supply of husks is abundant.

4.3.2.1.3 Cost of Unretting

The watering cost is incurred for unretting of husk in order to soften it making it
suitable for subsequent operation. During the unretting, the dry husks or green husks are
first soaked in water and then it is beaten with the help of the decorticator machine. The
dry husk is normally soaked after it is beaten by that machine. The dry husk so beaten is
soaked by pouring water for a minimum of 10 days. But the process of defibring of green
husk is carried out usually four hours after it is beaten. The whole process is done with
the help of watering. Therefore, the cost incurred in connection with water is another
major component of the variable cost in coir industry. Invariably all the owners of coir
units have bore wells of their own. Watering cost is mainly incurred by way of expenses
on oil and grease used by motor pumps while pumping water. Depending upon the
volume of the extraction of fibre, the watering expense may either increase or decrease as
it is closely linked with the consumption of oil and grease. However while estimating the
watering cost, the labour involved in the unretting process and the cost of power are not
taken into consideration.

4.3.2.1.4 Cost of Power

Electrical Power is the backbone of coir industry and plays a vital role in fostering
its industrial activity. The cost of consumption of electricity is a decisive factor in
determining the cost of production of coir fibre. In coir industry all operations like

122
unretting of husks, defibring of fibre, separation of fibre and pith, drying and bundling of
coir fibre, are all carried out with the help of electricity. The adoption of the shift system,
work during nights and the increasing process of mechanization in the industry lead to
increased consumption of power.

Power is the major item of cost, which takes more than 10 per cent of the total
cost of production. For the present study the power consumed was valued at the rates
charged by the local electricity board. The Board charges Rs.4.84 for one unit of
electricity.

4.3.2.1.5 Cost of Machine running

Another important variable cost component in manufacturing of coir fibre is

machine running cost. Kalpana observed that the machine running cost was an important
part of the production cost and as such, for the purpose of her study the cost included the
amount spent on fuel oil and lubricants, power, chemicals, consumables, packing material
and water. She valued that cost at the purchase price.135 The unique feature of
manufacturing in the industry is the frequent change of fuse carriers. The change of fuse
carrier is required as and when it gets burnt. This occurs very often, once in two or three
days. The cost of a fuse carrier ranges from Rs.2000 to Rs.4000. Therefore a sizeable
amount is invested in the purchase of fuse carriers. The continuous operation of machines
increased the extraction of fibre on the one side, but it leads to frequent change of fuse
carriers on the other. As a result every coir unit has to stock a large number of fuse
carriers causing heavy machine operating cost.

The amount spent on fuel, oil and lubricants, spares and parts, consumables
and packing material (rope) are also included in this cost. In the present study the costs
were valued at the purchase price. Since fuse carriers are generally used frequently, the

135
T. Kalpana, “A Study of Sugar Mills in the Southern Districts of Tamil Nadu”,
Unpublished Ph.D Thesis submitted to Madurai Kamaraj University, Madurai, 2004, p.193.

123
actual cost price of the number of fuse carriers used was considered in calculating the
cost of power.

4.3.2.1.6 Cost of Pith Disposal

The need for the disposal of coir pith arises when it accumulates enormously in the
vicinity of the coir units. After the separation of husk from fibre, the coir dust is to be
disposed of properly, as it is capable of causing more environmental hazards to the areas
where coir units are located. The expenses incurred in respect of the disposal of coir dust
by way of transportation forms a significant part in the total cost of fibre.

Generally, it is estimated that from producing one k.g. of coir fibre, two k.g. of
coir dust arises. It is usually dumped in the factory premises and it occupies a lot of space
in the vicinity of the coir industry. It is disposed of every day in the early morning after
night shift is over. The transport cost depends upon the load of the coir pith and the dust
that has to be cleared off every day.

In the present study the expenses incurred on the consumption of diesel and oil for
transporting the disposal of coir pith on owned tractor are calculated at the purchase
price. In the case of a hired tractor, the actual hire charge paid was taken.

4.3.2.1.7 Interest on Working Capital

The working capital is more relevant than the fixed capital in the coir industry
because of its possible impact on production. Balakrishnan observed that for all practical
purposes the incidence of the depreciation is charged by taking into account the total cost
of yarn. Similarly the volume of working funds required in the fibre extraction sector is
much more than that of the product sector and that too only in the retting sector.136 The
amount of the working capital available ensures the uninterrupted production of fibre in

136
P.K. Balakrishnan, Op.cit, pp.193-194.

124
the industry. The cost of working capital is another important factor to be considered in
the cost of the production of fibre.

Therefore, the interest on the working capital was taken into account for the
present study. It was charged at the rate of 11.5 per cent per annum which was the on-
going rate charged by the commercial banks during the period of survey in the study area.

4.3.2.2 Fixed Cost

The break-up of the total fixed cost of manufacturing of coir fibre are office and
administrative expenses, depreciation on building and machinery and interest on long
term borrowings.

4.3.2.2.1 Office and Administrative expenses

The office and administrative expenses of coir units include expenses on telephone
charges, stationery purchased, lighting expenses and property tax paid.

4.3.2.2.2 Depreciation

In the case of the coir industry, the block of fixed assets are plant and machinery,
furniture and fixtures, tools and implements, vehicles, and the like, acquired and used
over a number of years. The machines used for different functions in the coir industry are
highly depreciable assets. When these assets are used for the extraction of fibre, their
value diminishes because of wear and tear. In the coir industry the depreciation is
calculated based on number of shifts operated per day.

125
 The depreciation amount on assets was calculated by the diminishing balance
method. as per the rates prescribed under section 32 of the Income Tax Act 1961.
Depreciation was charged at the rates specified below.137

Buildings – 10 per cent

Crusher Machine – 15 per cent

Defibring Machine – 15 per cent

Turbo Cleaner Machine – 15 per cent

Bailer Machine – 15 per cent

Welding Machine – 15 per cent

4.3.2.2.3 Interest on long term borrowings

The owners of coir units of the study area have borrowed from commercial banks,
financial institutions and also from co-operative banks. The interest payable on such
borrowings is also considered for computing the total cost of production. Interest on long
term borrowings was calculated at the rate of 10 per cent, which is usually charged by
lending institutions.

4.3.3 Total Cost of Production of Coir Fibre

After having discussed the major break-up of the total cost of production of coir
fibre, an attempt is made to present the total cost of production according to total cost as
well as components-wise , in the present section.

137
V.P. Gaur, and D.B. Narang, “Income Tax Law and Practice”, Kalyani Publishers,
New Delhi, 2006, p.2/225.

126
4.3.3.1 Cost of Production According to Total Costs

The details of the average cost of production per 100 bundles of coir fibre for the
small and medium sized units according to the total costs were computed and shown with
the break-up of costs viz, Variable and Fixed, in Table 4.2.

TABLE 4.2
COST OF PRODUCTION PER 100 BUNDLES OF COIR FIBRE

Variable Cost Fixed Cost Total Cost

Size of the
Unit Amount Percentage Amount Percentage Amount Percentage
in Rs in Rs in Rs
Small 16,808.49 90.40 1786.36 9.60 18,594.85 100.00

Medium 14,917.92 82.11 3250.87 17.89 18,168.79 100.00

Overall 15,983.44 86.58 2477.01 13.42 18,460.45 100.00

Source: Primary data

Table 4.2 presents the cost of production of coir fibre per 100 bundles for the
small and medium size units of the study area by taking into account the major
components of cost namely the variable and fixed costs. The total cost for the small and
medium units were Rs.18594.85 and Rs.18168.87 respectively.

The variable and fixed costs for small units were Rs.16,808.49 and Rs.1786.36
which constituted 90.40 per cent and 9.60 per cent of the total cost respectively. In the
case of the medium sized units these costs were Rs.14,917.92 and Rs.3250.87
constituting 82.11 per cent and 17.89 per cent respectively. In the overall category, the
variable and fixed costs stood at Rs.15,983.44 and Rs.2477.01 constituting 86.58 per cent
and 13.42 per cent respectively in the overall total cost.

127
4.3.3.2 Cost of Production Components-Wise

Further the production efficiency of the respective size of units of industry may
also be analysed and reported. Therefore, the total cost was computed components-wise
per 100 bundles of coir fibre and the results are present in Table 4.3.

TABLE 4.3
COST OF PRODUCTION PER 100 BUNDLES OF COIR FIBRE
Sl. Small Units Medium Units
Cost Component Amount Amount
No Percentage Percentage
in Rs. in Rs.
VARIABLE COST
1. Cost of Labour 7842.96 42.19 7182.12 39.53
2. Cost of Material (Husk) 4397.62 23.65 4095.35 22.54
3. Cost of Unretting 328.08 1.77 328.21 1.81
4. Cost of Power 2502.17 13.46 2244.97 12.36
5. Cost of Machine running 820.39 4.41 319.58 1.76
6. Cost of Pith Disposal 315.69 1.69 340.65 1.87
7. Interest on Working
601.58 3.23 407.03 2.24
Capital

TOTAL
(VARIABLE COST-1 to7) 16,808.49 90.40 14,917.92 82.11
FIXED COST
8. Office and administrative 143.86 0.77 269.98 1.49
9. Depreciation on Building
1122.00 6.03 1805.75 9.94
& Machinery

10 Interest on long-term 520.50 2.80 1175.14 6.46

Borrowings
TOTAL
1,786.36 9.60 3250.87 17.89
(FIXED COST- 8 to 10)
11. TOTAL COST
(VARIABLE COST + 18,594.85 100.00 18,168.79 100.00
FIXED COST- 1 to 10)

128
Source: Primary data

Table 4.3 shows the cost of manufacturing production of 100 bundles of coir fibre
for the small and medium units. It is understood from the table that the total costs were
Rs.18,594.85 and Rs.18,168.79 for the small and medium sized units respectively. It is
further understood that the total variable costs which stood at Rs.16,808.49 and
Rs.14,917.92 for the small and medium size units recorded 90.40 per cent and 82.11 per
cent respectively in their respective total costs.

In the case of small units, the element-wise analysis of the variable costs showed
that the labour cost (Rs.7842.96) constituted 42.19 per cent in its total cost. followed by
raw material-husk which accounted for 23.65 per cent by incurring Rs.4397.62. It is
followed by other variable costs like power Rs.2502.17 (13.46 per cent), machine running
Rs.820.39 (4.41 per cent), interest on working capital Rs.601.58 (3.23 per cent), unretting
Rs.328.08 (1.77 per cent) and pith disposal cost Rs.315.69 (1.69 per cent).

In the case of the medium sized units, the analysis of the variable costs showed
that the cost of material, Rs.7182.12, constituted 39.53 per cent in its total cost. It is
followed by the cost of material [Rs.4095.35 (22.54 per cent)], power [Rs.2244.97 (12.36
per cent)], interest on the working capital [Rs.407.03 (2.24 per cent)], cost of pith
disposal [Rs.340.65 (1.87 per cent)], cost of unretting [Rs.328.21 (1.81 per cent)] and
cost of machine running [Rs.319.58 (1.76 per cent)].

As far as fixed costs are concerned, the small units and medium units had a share
of 9.60 per cent and 17.89 per cent each by spending Rs.1786.36 and Rs.3250.87
respectively. In the case of small units, the fixed costs on depreciation for building,
machinery and interest on long-term borrowings were Rs.143.86 (0.77 per cent) Rs.1122
(6.03 per cent) and Rs.520.50 (2.80 per cent) respectively. In the case of the medium size
units these costs were 269.98 (1.49 per cent), 1805.75 (9.94 per cent) and 1175.14 (6.46
per cent) respectively.

129
 However, a close perusal of the table shows that:

The costs of labour, material, power, machine running and interest on working
capital were less by 2.66 per cent (49.19 per cent-39.53 per cent), 1.11 per cent (23.65 per
cent-22.54 per cent), 1.10 (13.46 per cent-12.36 per cent) 2.65 per cent (4.41 per cent-
1.76 per cent) and 0.99 per cent (3.23 per cent-2.24 per cent) are in the medium size units
when compared to the small size units. It is because of the economics of large-scale
production. The costs of unretting and the cost of coir pith disposal were more by 0.04
per cent (1.81-1.77) and 0.18 per cent (1.87-1.69) respectively in the medium size units.
It is because of the effect of huge extraction of coir fibre by such units.

With regard to fixed costs the medium size units were not in an advantageous
position. The depreciation on building, machinery and interest on long term borrowings
were more by 0.72 per cent (1.49-0.77), 3.91 (9.94-6.03) and 3.66 per cent (6.46-2.80)
respectively when compared with small-size units. It is because of the reason that the
medium size units generally borrowed heavy funds from outside sources and invested
their major funds in their block of fixed assets.

It could be concluded that the total cost of production per 100 bundles of coir fibre
was less by Rs.425.06 (Rs.18,594.85-Rs.18,168.79) in the medium sized units indicating
their efficiency in production when compared to small sized units of the study area.

130
4.3.4 Returns from Coir Fibre Production

The gross and net return per 100 bundles of coir fibre for the small and the
medium size units in the study area were worked out and presented in Table 4.4.

TABLE 4.4

STATEMENT OF INCOME FROM COIR FIBRE PRODUCTION

(Per 100 bundles)
Small Units Medium Units
Sl. No Particulars
Amount Amount

1. Gross Revenue 23,857.60 25,288.10

2. Less: Marketing Cost 3,407.60 3,152.62

3. Gross Returns 20,450.00 22,135.48

4. Less: Variable Cost 16,808.49 14,917.92

5. Net Return 3,641.51 7,217.56

6. Less: Fixed Cost 1,716.36 3,250.87

7. Net Profit 1,855.15 3,966.69

Source: Primary data

It is understood from Table 4.4 that the gross revenue per 100 bundles of coir fibre
was Rs.23,857.60 and Rs.25,288.10 for the small and medium sized units respectively.
The net profit stood at Rs.1,855.15 and Rs.3,966.69 for the small and medium units
respectively. The medium sized units by showing an increased net profit of Rs.2111.54

131
(Rs.3966.69-Rs.1855.15) indicating enhanced profitability than the small units in the
study area.

The gross returns worked out after deducting the marketing costs were
Rs.20,450.00 and Rs.22,135.48 for the small and medium sized units respectively. After
deducting the variable costs the net return came to Rs.3,641.51 and Rs.7,217.56 for the
small and medium sized units respectively. It shows that a huge difference existed in net
return earned per 100 bundles of coir fibre in the study area between the small and
medium sized units. The net return earned by the medium sized units was more by
Rs.3576.05 (Rs.7217.56-Rs.3641.51).

It may be finally concluded from the Table that on account of the advantages of
size, the medium size coir units of the study area have an edge over the small size units
on profitability.

4.3.5 Comparative Analysis of Cost and Returns for Small and Medium Sized Coir
Units

In order to findout the better economic prosperity of the coir units in the study
area, a comparative analysis of the cost and return of the small and medium coir units is
presented in Table 4.5.

132
 TABLE 4.5
COMPARATIVE ANALYSIS OF COST AND RETURNS PER 100 BUNDLES OF
COIR FIBRE MANUFACTURE SMALL AND MEDIUM SIZE COIR UNITS
Sl. No Particulars Small Medium
Units Units
1. Gross Returns 20,450.00 22,135.48
2. Total Variable Cost 16,808.49 14,917.92
3. Net Returns Over Variable Cost 3,641.51 7,217.56
4. Total Cost 18,524.85 18,168.79
5. Net Return Over Total Cost 1,925.15 3,966.69
6. Variable Cost Per k.g 4.80 4.26
7. Total Cost Per k.g 5.29 5.19
Input – Output Ratio
8. 1.22 1.48
(Gross Return / Variable Cost)
Input – Output Ratio
9. 1.10 1.22
Gross Return / Total Cost)
Cost Benefit Ratio
10. 0.10 0.22
(Net Return Over Total Cost/Total Cost)

Source: Primary data

From Table 4.5, it could be evident that the input-output ratio in terms of the
variable cost is the highest in the case of the medium sized coir units. The ratio for the
medium units was 1.48 whereas it is1.22 for the small units. In the case of the total cost,
the input-output ratio for the small units worked out to 1.10 whereas it is1.22 for the
medium sized coir units. It also shows that each rupee spent leading to a benefit of
Rs.0.10 and Rs.0.22 for the small and the medium sized units respectively.

It could be observed from the analysis that the benefit of higher revenues and
profit per 100 bundles of coir fibre by the medium size coir units of the study area put
these units in a better economic and institutional position. On the other hand, the

133
small sized units did not enjoy better economical return and thus they could be
considered to have less profitability.

4.4 RESOURCE-USE EFFICIENCY

Resource-use efficiency refers to the efficient use of factors inputs, namely human
labour, material, capital and the enterprise. Technical efficiency measures are related to
human labour use efficiency and machinery efficiency, whereas economic efficiency
measures are concerned with the analysis of cost ratios, capital ratios and income ratios.
Hence it is important to understand the resource-use efficiency of different factors of
production.

In the present study, an attempt has been made to analyse the input variables
influencing the gross revenue of fibre manufacture. The resource productivity by the
small, medium and pooled category of coir units was also taken for the study. The
structural differences were examined between the small and medium units. Further, an
attempt is also made to examine the resource-use efficiency from the production
functions by equating the Marginal Value Productivity (MVP) of each resource input to
its Marginal Factor Cost (MFC), for small, medium and pooled categories of coir units.
This helps to determine whether the resource inputs are used optimally in the
manufacture of coir fibre in the coir industry of the study area.

4.4.1 The Analytical frame work

The production function analysis helps to identify the uneconomic use of

resources by the units. The production function is the result of the co-operation between
different factors of production and output. It may be defined as a mathematical
expression of the technical relationship between input and output, which would remain

134
constant as long as technology remained invariant.138 The production function refers to
the technical relationship between the input and the output of a firm. An input is simply
anything which the firm buys for use in its production or other processes.

There are several production functions developed by economists. Amongst them

the Cobb-Douglas Production Function is well known and popular production function.
It is an outcome of the statistical investigations conducted by C.W. Cobb and P.H.
Douglas in the field of manufacturing industries in the U.S.A. and other industrial
countries of the world. It is convenient for the comparison of partial elasticity co-
efficients. It is a multiplicative type and is a non-linear in function in its general form. It
is easier to compute the Cobb-Douglas type production function when expressed in the
log-linear form. The marginal product of factors, marginal rate of substitution, factor
intensity and the efficiency of production can be calculated from the parameters in the
Cobb-Douglas type production function.

T.V. Moorti and M.S. Pathania139 have used a Cobb Douglas type of production
function for estimating the resource-use productivity in their studies. Hence, this study
also uses the Cobb-Douglas production function to estimate resource returns, returns to
scale and resource-use efficiency in the coir fibre production by the industry of the study
area. The gross revenue of coir fibre has been taken as a dependent variable. Labour in
rupees, raw material in rupees, unretting in rupees, power in rupees and machine running
in rupees have been taken as dependent variables.The analysis has been used for
estimating the relationship between the coir fibre production and other explanatory
factors computing the resource use efficiency for the small, medium and pooled

138
Lawrence R. Klein, “An Introduction to Econometrics”, Prentice Hall of India Private
Limited, New Delhi, 1973, p.84.
139
T.V. Moorti and M.S. Pathania, “Resource-use Efficiency of Tea Cultivation in Kangra
District (Himachal Pradesh)”, Indian Journal of Economics, Vol. LXXV, No 297, Oct 1994, pp.243-
248.

135
categories. One dependent and five independent variables have been used in the log-
linear regression model. The estimated production function is of the following form:

ln Y = 0 + 1 ln X1 + 2 ln X2 + 3 ln X3 + 4 ln X4 + 5 ln X5 + U …(4.1)

Where,

0 = intercept
y = Estimated gross revenue of coir fibre in rupees
X1 = labour in rupees
X2 = raw material (Husk) in rupees
X3 = unretting in rupees
X4 = Power in rupees
X5 = Machine running in rupees
U = Disturbance term
i = regression (slope) co-efficients
i = 1, 2, ……..5.
4.4.2 Estimated Results of Cobb-Douglas Production function

The researcher has identified five inputs factor such as labour, material (husk),
unretting, power and machine running as most important independent variables which
influence the gross revenue of coir fibre production in the study area. Therefore an
attempt is made to estimate the production function and to analyse the estimated results
by using the method of the least squares for the small, medium and pooled category of
units in Thanjavur District with special reference to resource returns.

The estimated results of the regression model for the small, medium and the
pooled category of units are presented in Table 4.6.

136
 TABLE 4.6
ESTIMATED RESULTS OF COBB-DOUGLAS TYPE PRODUCTION
FUNCTION FOR SMALL, MEDIUM AND POOLED CATEGORY OF
UNITS MANUFACTURING COIR FIBRE
Parameter Estimates
Sl.
Variables Small Medium Pooled
No.
Units Units Category
1. Intercept -1.8479 1.1519 1.2107
2. LnX1 0.6109* 0.5462* 0.6583*
(7.9977) (6.7298) (9.2470)
3. LnX2 0.2729* 0.2143* 0.1980*
(4.7004) (3.3611) (3.5391)
4. LnX3 0.0387 0.0135 0.0805
(0.7140) (0.1955) (1.4562)
5. LnX4 0.2510* 0.2105* 0.2206*
(4.1651) (3.5495) (3.9648)
6. LnX5 0.2939* 0.1091* 0.1320*
(2.5334) (2.2476) (10.9048)
7. R2 0.8223 0.8169 0.8000
8. F–value 21.2925 15.1731 36.8019
9. Residual sum of
0.0052 0.0043 0.01922
squares - ∑e2
10. No. of observations 29 23 52

Note: 1. * indicates that the co-efficient are statistically significant at the 5 per cent
level.
2. Figures in bracket are t-values.

It is understood from Table 4.6 that the explanatory variables taken for the
analysis (model) for the small units, medium units and the pooled category have indicated
greater variation in the gross revenue of coir fibre. In the case of the small units the co-
efficient of multiple determination of (R2) was 0.8233 indicating 82.33 per cent variation

137
in gross revenue in relation to the variables namely labour, material, power and machine
running which were significant at the five per cent level, and that means that for every
one per cent increase in the investment of these resources, the gross revenue could be
increased to0.6109, 0.2729, 0.2510 and 0.2939 per cent respectively. The regression co-
efficient of the variable “unretting” is positive but found to be non-significant. Among
the significant variables of small units labour had a greater influence on gross revenue of
coir fibre. The F-value shows that the regression model is found statistically significant at
one per cent level.

As far as the medium coir units are concerned, all the five explanatory variables
are jointly responsible for 81.69 per cent of the gross revenue of coir fibre. The co-
efficients of labour, material, power and machine running were statistically significant at
the five per cent level and they had a positive impact on the gross revenue of coir fibre. It
implies that every one per cent increase in these variables would lead to 0.5462, 0.2143,
0.2105 and 0.1091 per cent increase in gross revenue respectively. The co-efficient of
variable of unretting has been found to be positive but statistically insignificant. The F-
value shows that the regression model fitted is found to be significant at one per cent
level.

For the pooled category, R2 indicates that 80.00 per cent in the dependent variables
are explained by all the explanatory variables taken in the model. The variables labour,
material, power and machine running were statistically significant at the five per cent
level but they had a positive impact on the gross revenue of coir fibre. Which implies that
every additional percentage of these variables would increase gross revenue by 0.6583,
0.1980, 0.2206 and 0.1320 per cent respectively. It could be noted that in the case of the
pooled category also labour had a greater influence on the gross revenue of coir fibre in
the study area. The F-value indicates that the estimated regression model is statistically
significant at one per cent level.

138
 Thus it may be concluded from the analysis that among the significant variables,
labour, material, power and machine running were more important resource inputs for the
small, medium and pooled categories of units in the study area. The variable “labour” had
a greater influence on the gross revenue of coir fibre than all other variables.

4.4.3 Test for Structural Difference

The structural differences between the small and the medium units are tested by
using Chow’s140 F-test.

Σ e2  ( Σ e12  Σ e22 ) / K
F ...(4.2)
( Σ e12  Σ e22 ) / n1  n2  2k

Where,

Σe2 = Unexplained or Residual sum of squares of the pooled sample of both

small and medium coir units.

Σ e12 = Unexplained or Residual sum of squares of the units corresponding to

small size coir units.

Σ e 22 = Unexplained or Residual sum of squares of the units corresponding to

medium size coir units.

K = The number of parameters included in the regression equation.

n1 = Number of small size coir units
n2 = Number of medium size coir units.

140
G.C. Chow, “Test of Equality Between Sets of Co-efficients in Two Linear Regressions”,
Econometrica, Vol.28, No.3, July 1960.

139
 Under the F-test, if the computed value of F is less than table value at one per cent
level of significance at (K, n1 + n2 – 2k) degrees of freedom, the null hypothesis of no
structural difference between the two groups of units may be accepted.

Therefore, Chow’s test has been applied to examine whether structural differences
existed between the small and the medium coir units and the results obtained are
presented in Table 4.7.

TABLE 4.7
EQUALITY TEST BETWEEN SMALL AND MEDIUM COIR UNITS
MANUFACTURING COIR FIBRE

Σe2 Σe12 Σe 22 (n1+n2-2k) F* F (6, 40) at Inference

1 per cent
level

0.01922 0.0052 0.0043 40 74.49 3.2910 Structural

difference exists
between Small
and Medium
coir units

It could be seen from Table 4.7 that the computed F-value (F*) is greater than the
table value of F at one per cent level with (6, 40) degrees of freedom. Thus it can be
concluded that there existed a structural difference between the small and the medium
coir units in the study area.

140
4.4.4 Test for Structural Difference at intercept and Slope Level

If the null hypothesis is rejected it means that structural differences between the
small and medium size coir units. The intercept and slope dummies are introduced in the
regression model (Equation 4.1) to find out whether the differences occurred at the
intercept level or at the slope level or at both.141

The regression model (equation 4.1) becomes

5
ln Y  β 0  β D
d
 Σ ( β i  ΓD
i
) ln X i  U …(4.3)
i 1

Where,

βd = Co-efficient of intercept dummy

Γi = Co-efficient of slope dummy of ith input variable.

In the equation 4.3, D is the dummy variable representing 0 and 1 for the small
units and medium units respectively.

The methods of the least squares are used for estimating the regression equations
4.1 and 4.3.

In this section, an attempt is made to find out whether the structural difference
between the small and medium coir units existed at the slope level or at the intercept
level. The regression model (Equation 4.3) is estimated by using the method of the least
square and the results obtained are presented in Table 4.8.

141
D. Gujarati, “Use of Dummy variables in Testing for Equality Between Two Sets of Co-
efficients in Linear Regression: A Generalisation”, The American Statistician, No.5, PP.18-22, cited in T.
Jothi Murugan, “Production and Marketing of Groundnut in Viruthunagar District”, Unpublished
Ph.D Thesis submitted to Madurai Kamaraj University, Madurai, 2004, p.166.

141
 TABLE 4.8
TESTS OF THE STABILITY OF INTERCEPT AND SLOPE LEVEL FOR
SMALL AND MEDIUM COIR UNITS
Sl. No Variables Parameter t - Value
Estimates
1. Intercept 0.1928
2. Intercept dummy 0.9189 0.4395
3. ln X1 0.6916* 8.0198
4. ln X2 0.2401* 3.5530
5. ln X3 0.0840 1.3509
6. ln X4 0.2624* 3.7022
7. ln X5 0.1294* 5.5480
8. Dln X1 -0.1446 -1.1522
9. Dln X2 -0.0242 -0.2441
10. Dln X3 -0.0682 -0.6727
11. Dln X4 -0.0516 -0.5314
12. Dln X5 0.2393* 4.0130
13. Adjusted R2 0.8331
14. F – Value 24.1462
Residual Sum of 0.0126
15.
Squares
16. No. of observations 52

Source: Primary data

* Indicates that the co-efficients are statistically significant at 5 per cent level

Table 4.8 shows that the co-efficient of the dummy variable at the intercept level
is statistically in significant. which indicates that there is no difference between the small
and medium-sized coir units with regard to technical change in the study area.

142
 For small units (except machine running) all the explanatory variables have a
positive impact on the gross revenue of coir fibre. How ever variables such as human
labour, material (husk) power and machine running are statistically significant at the five
per cent level. It means that if these variables are increased by one per cent, the gross
revenue could be increased by 0.6916, 0.2624 (and 0.1294) per cent respectively. Human
labour was the most influential variable in relation to gross revenue, followed by power.

Further, it indicates that a one per cent increase in the variable machine running
May enhance the gross revenue of small units by 0.1294 per cent and that of the medium
units by 0.3687 per cent.

Thus, it may be finally concluded from the analysis that there is no structural
difference at the intercept level but exists only at the slope level. The resource input
which cause the difference may be perhaps be due to machine running.

4.4.5 Return to Scale

The sum of the regression co-efficient in the Cobb-Douglas type production

function refers to return to scale. The return to scale is estimated employing the elasticity
co-efficients at the production functions. The magnitude of the return to scale indicates
the per cent increase in coir fibre production when all variables (human labour, material,
unretting, power and machine running) are increased simultaneously by one per cent.
This concept seeks to explain the behaviour of output in response to changes in the scale
of production.

The returns to increase in scale may either be equal or more than equal or less than
equal in proportion. If the increase in all variables leads to more than proportionate
increase in the output, the gross revenues of returns to scale are said to be increasing. If
the increase in all factors inputs in a given proportion and the output/gross revenue
increases in the same proportion, returns to scale are said to be constant. If the increase in

143
all variable inputs leads to a less than proportionate increase in the output, returns to scale
are said to be decreasing.

The estimated return to scale for the small, medium and overall categories of coir
units is presented in Table 4.9.

TABLE 4.9
RETURNS TO SCALE FOR SMALL, MEDIUM AND OVERALL
CATEGORY OF COIR UNITS
Sl. No Size of Sum of the Elasticity Co-efficients Nature of
Units (Return to Scale) Return to Scale
1. Small 1.4674 Increasing Returns

2. Medium 1.0936 Increasing Returns

3. Overall 1.2894 Increasing Returns

Source: Computed data

It could be observed from Table 4.9 that the return to scale are 1.4674, 1.0936 and
1.2894 for small, medium and overall categories of units respectively. The magnitude of
the return to scale indicates the increasing return to scale for all these units irrespective of
their size. Further, the table shows that the return to scale to the gross revenue of coir
fibre is expected to increase by 1.47 per cent, 1.09 per cent and 1.29 per cent for these
units when the variables human labour, material (husk), unretting, power and machine
running in the production functions are simultaneously increased by one per cent.

Therefore, it could be concluded from the analysis that the coir industry in the
study area operates in an efficient manner.

144
4.4.6 The Marginal Value Productivity and Resource-Use Efficiency:

The marginal value productivity explains how the amount of extra output could be
achieved by making a change in an input factor by keeping all the other inputs factors
constant. This analysis also helps to assess which input factor is more important than the
other input factors. The marginal value productivity of resources and the cost of that
resource would help us to evolve a suitable proportion of reallocation of resources and its
best returns

The efficiency of resource-use is studied with the help of the Marginal Value
Product-Marginal Factor Cost ratio using the Cobb-Douglas production function. The
Marginal Value Product (MVP) to the factor of cost ratio is the measure of the resource-
use efficiency. By the use of resource-use efficiency, the ratio of the Marginal Value
Product (MVP) of each resource input to the price of that resource namely Marginal
Factor Cost (MFC) is worked out. The equality of the Marginal Value Product (MVP)
and the Factor Cost (MVP/MFC = 1) indicates the optimum resource-use efficiency of a
particular input. If the ratio (MVP/MFC >1) is more than unity the resource input is said
to be used efficiently. If the ratio (MVP/MFC <1) is less than unity, the resource input is
not utilized efficiently or is used improperly. But the resource input is said to be
overutilised, where the ratio is negative.

The most reliable and perhaps the most useful estimate of the marginal value
productivity is obtained by taking the resources (Xi) as well as the output (Y) at their
geometric mean. The marginal value productivities of each of the resource inputs are
calculated at the geometric mean levels of independent variables by using the following
formula:

Y
Marginal Value Product of the ith variable = β i ...(4.4)
Xi
Where,

145
 Y = Geometric mean level of gross revenues of coir fibre

X i = Geometric mean level of ith independent variable

i = The regression co-efficient of ith independent variable

i = 1,2,…5

After computing the marginal value product of the various resource inputs, it is divided
by the marginal factor cost to arrive at the ratio of the marginal value product to the
factor cost. In the present study, the marginal value product of the inputs X1, X2,…….X5
for both the small and medium size coir units are calculated by using the following
formula (Equation 4.4)

Y
MVP X1 - Labour = 1
X1
Y
MPV X2 - Material (Husk) = 2
X2
Y
MVP X3 - Unretting = 3
X3
Y
MVP X4 - Power = 4
X4
Y
MVP X5 - Machine running = 5
X5
Where,
Y = Geometric mean level of gross revenues of coir fibre

Xi = Geometric mean level of ith independent variable

 = The regression Co-efficient of ith independent variable
i = 1,2,……..5

The marginal value products of resource inputs and the ratio of marginal value products
to the respective cost of the factor inputs for the small coir units are estimated and the
results are presented in Table 4.10.
146
 TABLE 4.10
MARGINAL VALUE PRODUCTIVITY OF THE RESOURCE-USE
EFFICIENCY OF RESOURCES FOR SMALL UNITS MANUFACTURING COIR
FIBRE
Variable Geometric Elasticity Marginal Marginal Ratio of
Mean of Output Value Factor MVP to
Product Cost MFC
(MVP) (MFC)
Labour 7542.70 0.6109* 1.86 1.00 1.86
(Rs / 100 bundles)
(X1)
Material (husk) 4397.62 0.2729* 1.48 1.00 1.48
(Rs / 100 bundles)
(X2)
Unretting 328.08 0.0387 2.81 1.00 2.81
(Rs / 100 bundles)
(X3)
Power 2502.17 0.2510* 2.39 1.00 2.39
(Rs / 100 bundles)
(X4)
Machine operating 820.39 0.2939* 8.55 1.00 8.55
(Rs / 100 bundles) (X5)
* indicates that the co-efficients are statistically significant at the 5 per cent level.

Table 4.10 shows the ratios of Marginal Value Productivity to the Marginal Factor
Cost for the small coir units and they were 1.86, 1.48, 2.39 and 8.55 for the significant
resource inputs such as labour, material (husk), power and machine running respectively.
All these variables show more than unity suggesting that these variable inputs are utilized
efficientlyThe marginal value productivity of the resource inputs and the ratio of
marginal value products of the variable inputs for the medium sized coir units are
estimated and presented in Table 4.11.

147
 TABLE 4.11
MARGINAL VALUE PRODUCTIVITY OF THE RESOURCE-USE FOR
MEDIUM COIR UNITS IN MANUFACTURING COIR FIBRE
Variable Geometric Elasticity Marginal Marginal Ratio of
Mean of Output Value Factor MPV to
Product Cost MFC
(MVP) (MFC)
Labour 7182.12 0.5462* 1.85 1.00 1.85

(Rs / 100 bundles)

(X1)
Material (husk) 4095.35 0.2143* 1.32 1.00 1.32

(Rs / 100 bundles)

(X2)
Unretting 328.21 0.0135 1.04 1.00 1.04

(Rs / 100 bundles)

(X3)
Power 2244.97 0.2105* 2.37 1.00 2.37

(Rs / 100 bundles)

(X4)
Machine running 319.58 0.1091* 8.63 1.00 8.63

(Rs / 100 bundles)

(X5)

* indicates that the Co-efficient are statistically significant at the 5 per cent level.

It is observed from Table 4.11 that the ratios of Marginal Value Product to the
Factor Cost for the medium sized coir units were 1.85, 1.32, 2.37 and 8.63 for the

148
significant resource inputs such as labour, material (husk), power and machine running
respectively. All these variables show more than unity and suggesting that these resource
inputs were utilized efficiently. Among the significant marginal resource inputs, machine
running is found to be the most important factor input in the manufacture of coir fibre
followed by power, labour and material (husk). Further, the ratio also explains that for
every additional rupee spent on these variables, the gross revenue of coir fibre could be
increased to Rs.8.63, Rs.2.37, Rs.1.85 and Rs.1.32 respectively. Thus, it may be finally
concluded that there is adequate scope to increase all these variable inputs to maximize
the revenue.

The marginal value products of the resource inputs and the ratio of such marginal
value products are also worked out from the production functions for the overall
categories of coir units to find out the general behaviour of the resource inputs to the
revenue of coir fibre not withstanding the size of the coir units. The results are presented
in Table 4.12.

149
 TABLE 4.12
MARGINAL VALUE PRODUCTIVITY OF RESOURCE-USE EFFICIENCY
FOR POOLED CATEGORY OF COIR UNITS
Variable Geometric Elasticity Marginal Marginal Ratio of
Mean of Value Factor MPV to
Output Product Cost MFC
(MVP) (MFC)
Labour 7681.41 0.6583* 2.10 1.00 2.10
(Rs / 100 bundles)
(X1)
Material (husk) 4261.27 0.1980* 1.14 1.00 1.14
(Rs / 100 bundles)
(X2)
Unretting 328.14 0.0805 6.00 1.00 6.00
(Rs / 100 bundles)
(X3)
Power 2384.96 0.2206* 2.26 1.00 2.26
(Rs / 100 bundles)
(X4)
Machine running 540.65 0.1320* 5.98 1.00 5.98
(Rs / 100 bundles)
(X5)
* indicates that the co-efficient are statistically significant at the 5 per cent level

Table 4.12 shows that the ratios of the marginal value product to the marginal
factor cost for the pooled category were 2.10, 1.14, 2.26 and 5.98 for the significant
resource inputs namely labour, material (husk), power and machine running respectively.
All these variables show more than unity suggesting that these resource inputs are
utilized efficiently. Among the significant marginal resource inputs, machine running was
found to be the most important input factor in the manufacture of coir fibre followed by
power, labour and material. It is also clear from the table that every additional rupee
spent on these marginal resource inputs could result in the increase of revenue by
Rs.5.98, Rs.2.26, Rs.2.10, and Rs.1.14 respectively. As the ratios of these significant

150
variables were more than unity, there is scope to increase all these resource inputs to
maximize their revenue.

4.5 PRODUCTION PROBLEMS

Coir industry has been encountering a number of production problems. The

industry is said to be localized as it is mostly located in coastal regions and areas where
coconut cultivation is high. Therefore, the problems may be industrially related but
location-oriented. The problems of finance, labour, materials and the problem of
modernization are regarded as industrially related problems, whereas the problem of short
supply of labour during peak agricultural seasons and the problem of drying fibre during
rainy seasons may be taken to form the location-oriented problems.

The study also indicates that a difference existed in facing the problems between
the small and medium sized units. The production problems which are generally faced by
the owners of the units are raising the required finance, procuring the raw material,
finding the skilled labour, problem in power supply and problem of obsolescence and
modernization.

Taking into account the general as well as the location-oriented problems

prevailing in the industry, the researcher prepared a list of problems that are faced by the
units and supplied these to the owners of units to seek their opinion. The problems which
were so identified and ranked by them were shortage of labour, inadequate supply of
green husks, heavy machine maintenance expenses, inadequate finance, erratic power
supply, traditional methods of production and problem of drying fibre during rainy
seasons.

151
 In this section, the problems so identified and ranked by the owners of the coir
units were converted into scores by using the Garrett Ranking Technique.142 The mean
scores were worked out for each problem and arranged in a descending order.
Accordingly the ranks were given and the important problems were identified. The ranks
for such problems were worked out separately for the small as well as the medium sized
units and presented in Tables 4.13 and 4.14.

TABLE 4.13

PRODUCTION PROBLEMS FACED BY SMALL COIR UNITS

Sl. No Problem Mean Score Rank

1. Inadequate finance 60.86 I
2. Shortage of workers 59.07 II
3. Inadequate supply of green husks (Raw 58.52 III
Material)
4. Heavy Machine maintenance expenses 44.91 IV
5. Traditional method of fibre production 42.83 V
6. Erratic power supply 41.31 VI
7. Problems of drying fibre during rainy 40.76 VII
seasons

Source: Primary data

Table 4.13 shows the production problems faced by the small coir units of the
study area. It is understood from Table 4.13 that the problem of inadequate finance with
the mean score of 60.86 was ranked first. It is because a huge amount of funds has to be
locked in purchasing and stocking of raw materials, advance payment to workers besides

142
Garrett E. Hentry, “Statistics in Psychology and Education”, Vakils, Fetter and Simons
Private Limited, 1969, pp 328-331.

152
their regular wages and on machine maintenance. Hence the owners of the units faced
severe scarcity of funds to meet those expenses and considered the inadequate finance the
major and foremost production problem.

The shortage of workers was very much felt by owners of the coir units during the
peak agricultural seasons in the area. Most of the workers of the coir units are basically
agricultural workers and they are mostly casual. Therefore the coir units found the short
supply of workers for nearly four months in a year where agriculture seasons were peak
in the study area. This affects the production of the coir units during those months. The
problem with a mean score of 59.07 is ranked second.

Though coconut husk is the basic raw material for coir industry, the green husk is
mostly preferred by the coir units as the fibre from such husk fetched a higher price
besides yielding more output. But green husk was always in heavy demand and the
inadequate supply of green husk was another problem that affected production adversely.
Hence, the problem with the mean score of 58.52 ranked third.

The other production problems identified by the small units are heavy machine
maintenance expenses, traditional method of fibre production, erratic power supply and
problem of drying fibre during rainy seasons. They had the mean scores of 44.91, 42.83,
41.31 and 40.76 and ranked fourth, fifth, sixth and seventh respectively.

153
 TABLE 4.14

PRODUCTION PROBLEMS FACED BY MEDIUM COIR UNITS

Sl. No Problem Mean Score Rank

1. Shortage of workers 61.57 I
2. Inadequate supply of Green husks 59.35 II
3. Heavy Machine maintenance Expenses 57.39 III
4. Inadequate finance 43.52 IV
5. Traditional method of production 43.26 V
6. Erratic power supply 41.09 VI
7. Problem of drying during rainy season 40.83 VII

Source: Primary data

Table 4.14 shows the production problems faced by the medium sized coir units of
the study area. It is seen from the table that like the smaller units the shortage of labour
was very much felt by the medium sized units also. its mean score being 61.57 ranked
first. The medium units are generally capable of procuring huge quantity of green husk
but it was not sufficient to achieve their production target. Hence, this problem was
considered another major production problem and it ranked second with a mean score of
59.35.

The other production problems faced by the medium sized units were inadequate
finance, the traditional method of production, erratic power supply and the problem of
drying fibre during rainy seasons. They had mean scores of 43.52, 43.26, 41.03 and
40.83, ranking fourth, fifth, sixth and seventh respectively.

154
 CHAPTER 5

5.1 INTRODUCTION

A product becomes popular through the medium of marketing. For small

entrepreneurs marketing is a necessity and a challenge too. Marketing is indispensable for
any business or industry.143 Therefore, of all the functions of any industry or business,
marketing is the most dynamic function and it is considered the “pace-setter” of the
business or industry as a whole.144 The future of the traditional industries of India like
coir which has potential of domestic as well as foreign market depends not only on the
improvement of technology but on the adoption of modern marketing methods more than
anything.145 Thus the prevalence of a healthy and efficient marketing system not only
assures a fair amount of return to the manufacturers of coir but also supplies the products
at a quality desired by the industrial users.

In the present chapter, it is aimed to study the different facets of the marketing of
coir fibre in the study area. For the purpose of the analysis, the present chapter is
organized and presented under the following heads:

i) Practices and systems in marketing of coir

ii) Marketing structure and channels of distribution

iii) Marketing cost, marketing margin and price spread

iv) Marketing efficiency

143
Laxmidas, “Marketing–A Challenge”, Jagriti, Vol.47, No.3, September 2003, p.1.
144
S.J. Bedekar, “Marketing: Concepts and Strategies”, Oxford University Press, 1994,
Bombay, p.2.
145
K. Bhaskaran Unnithan, “Coir Industry in India with Special Reference to Marketing
and Trade”, Coir Board, Kochi, 1970, p.71.

155
 v) Price analysis, and

vi) Marketing problems.

5.2 PRACTICES AND SYSTEMS IN MARKETING OF COIR

Marketing practices start from where production ends. They are referred to as a
bundle of procedures and systems initiated and performed between the points of
production and consumption. The marketing practices of coir fibre starts after its
extraction is over and ends when it reaches the industrial users who mostly operate in the
terminal markets of Alleppey and Kochi towns of Kerala state, where it is further
processed and used for preparing different varieties of coir products. The products
produced are generally exported after meeting the limited domestic market demand.

The extracted fibre of the coir units of the study area is generally of two common
sizes. One is lengthened fibre with a measurement of over and above 15 cm and the
another one is shortened usually measuring over 5 cm and up to 10 cm. Based on other
specifications and characteristics of fibre like moisture content, salt content and
impurities, the limits fixed by the Coir Board are generally accepted and followed by
both the parties to the sale. Coir fibre is suitably packed in bales or as agreed on between
the parties. The fibre is bundled and tied by arranging the shortened fibre inside and the
lengthened fibre on the outer side of the bale. A bale or bundle is expected to have a
weight of 35 kg of fibre which is strictly followed by all manufacturers.

Native traders who accumulate considerable stock of fibre by purchasing in small

as well as in large lots usually do not stock for a long period. During the period of their
purchase itself they start contacting market traders to learn the movement of prices in the
terminal markets so as to effect the sales at the appropriate time. Though the price of
fibre has ups and downs, the demand persists continuously. A minimum lorry load of
fibre containing an average of 150 bundles weighing a total of 5.25 tonnes is transported
to the terminal markets so as to effect savings in transport cost and to sell it to market
156
traders. However, transport cost would be exceptionally high not only for manufacturers
while they skip the native traders but also for the native traders as the fibre has to travel
all along the hilly tracks of Kerala covering a long distance of nearly 280 kms to reach
the Alleppey and Kochi markets where market traders operate. For effecting sales, the
native traders contact market traders through commission agents and pay commission
around 2 per cent to them on the basis of sales value effected.

Market traders generally stock the fibre and perform certain functions to make the
fibre suitable to wholesalers who insist on certain specifications depending upon the
requirements of the industrial users to whom they sell. In anticipation of a better price
they have to stock the fibre for a reasonable time which does not normally exceed one
month. During the period of stocking, market traders undertake the function of cleaning
and polishing the fibre, cutting them into common sizes or two sizes required by the
wholesalers. Moisture content if any is reduced and impurities are removed and finally
the fibres graded. This process fetches them a reasonably higher price and consequently
gives them a good margin of sales. The order books of market traders always overflow
with advanced orders through commission agents or by wholesalers. They are always in
touch with the wholesalers and at no point of time they contact or are contacted by the
industrial users.

The wholesalers directly or through agents purchase the fibre from market traders
and stock it for a period not exceeding two weeks. Being a final link in the channel of
distribution they are in all probability likely to take advantage of the price prevailing in
the market for coir fibre. The industrial users do not engage in the manufacture of sterio-
type coir products. So the quality, size, colour and other specifications required by them
differ from user to user. Depending upon the requirements of the industrial users, the
wholesalers carry out some reprocessing activity which may include resizing, retting and
processing using chemicals. The fibre which is remodified and reprocessed is sold to
industrial users at a price generally fixed by the wholesalers. The industrial users who

157
purchase this fibre further process and use it in the manufacture of products like coir
mats, rugs, mattings, rubberized coir and composite coir products which are finally
exported to importing countries.

5.3 MARKET STRUCTURE AND CHANNELS OF DISTRIBUTION

The purpose of all production is to sell the goods produced and make profit
thereof. Thus, the next step for the manufacturer is to decide the ways and means to place
the products in the hands of the consumer at a proper place, time and price. Therefore,
every manufacturer would seek specialized middlemen in performing such marketing
functions so as to achieve the objectives of the firm. This set of marketing intermediaries
is called marketing channel.146

In this section, an attempt is made to identify the marketing channels that exist for
coir fibre in the study area.

In the study area, marketing channels refer to the collection of intermediaries and
movements associated with the exchange of coir fibre from the fibre manufacturers to the
industrial users. Some channels are straight, short and direct, while others are long and
indirect. There is no premier central agency like the Coir Board and the Marketing Body
of the Coir Co-operative (the State Coir Marketing Federation Limited (COIRFED))
operating in the study area to undertake the marketing of coir. Generally the coir fibre
passes from the manufacturers to the industrial users through a series of middlemen.

The information collected from entrepreneurs, village traders, market traders and
wholesalers who are involved in the process of the marketing of coir was pooled together
to trace the movement of coir and to identify the various marketing channels prevailing in
the coir trade in the study area. Most of the entrepreneurs of the small units perform one

146
Philip Kotler, “Marketing Management”, Pearson Education (Singapore) Private
Limited, Indian Branch, New Delhi, 2003, p.504.

158
or two marketing functions. They preferred to sell their fibre in the village itself to the
village coir traders because of their limited scale of production.

The village coir traders transported the coir fibre up to the Alleppey markets and
sold it to the market trader. The market trader in turn, disposes the fibre directly to the
wholesaler in various wholesale markets in and around Alleppey, Kerala. Finally, it
reaches the industrial user. The most common marketing channels identified for coir fibre
in the study area are given in the following figure.

The different marketing channels identified in the marketing of coir are presented
below:

Channel I: Manufacturer Native Trader Commission Agents

Market Trader Wholesaler Industrial Users.

Channel II: Manufacturer Commission Agent Market Trader

Wholesaler Industrial User.

Channel III: Manufacturer Market Trader Wholesaler

Industrial User.

5.3.1 Choice of the Middlemen

A producer generally chooses the appropriate middlemen to get all types of

marketing services which he himself cannot perform economically. The channel which
would give him the largest sales volume at a lower unit cost is chosen. The role of the
intermediaries is a deciding factor for the coir producer in the net price realized by him.
Middlemen and their selection by coir units are presented in Table 5.1.

159
 TABLE 5.1
CHOICE OF MIDDLEMEN BY COIR UNITS
Sl. No Middlemen Small Medium Total
1. Native Traders 24 10 34
(82.76) (43.48) (65.39)
2. Commission Agents 3 5 8
(10.34) (21.74) (15.38)
3. Market Traders 2 8 10
(6.90) (34.78) (19.23)
Total 29 23 52
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are the Percentages to the total.

Table 5.1 points out that out of the total 52 units taken for the study, 34
(65.39 per cent) market their coir through native traders in the study area. Here the native
traders do the packing, loading and unloading besides transporting the coir to Alleppey
market on their own. They sell it to the market traders from whom the wholesalers buy
the fibre and finally it reaches the industrial users. The reason for preferring the native
traders is that he makes advance payment to the entrepreneurs of the units who use that
amount as the working capital for their units.

10 owners (19.23 per cent) of the units prefer market traders and 8 owners
(15.38 per cent) sell through commission agents. They market coir fibre directly to
Alleppey market as it allows a considerable margin to them. Here the entrepreneur has to
do all the work relating to marketing.

160
 Among the group, the native traders who constitute 82.76 per cent are the most
preferred middlemen by the owners of the small units followed by commission agents
and market traders who constituted 10.34 per cent and 6.90 per cent respectively. In the
case of the owners of the medium size units, the native traders (43.48 per cent) again
become the most preferred middlemen. Which is followed by market traders (34.38 per
cent) and commission agents (21.74 per cent). Overall, it is noticed that the owners of the
small units did not prefer market traders much but commission agents were not preferred
much by the owners of the medium-size units.

Thus, it is known from the table that the manufacturers prefer various
intermediaries like native traders, commission agents and market traders to sell their coir
fibre. In order to rank the reasons for preferring different intermediaries, Garrett’s
ranking technique147 was used. The reasons for selling the coir fibre through native
traders are given in Table 5.2.

5.3.1.1 Sale to Native Traders

Native traders are those who operate in and around the areas of production centers.
They are the main intermediaries for the manufacturers of the study area. It is estimated
that 65.39 per cent (Vide Table 5.1) of the manufacturers market their coir fibre to native
traders. The reasons behind preferring them are analysed and presented in Table 5.2.

147
Henry E. Garrett and P.S. Woodworth, Statistics in Psychology and Education, Vakils
and Simons and Private Limited, Bombay, 1969, p.329.

161
 TABLE 5.2
REASONS FOR SALE TO NATIVE TRADERS
Sl. No Reasons Garrett’s mean Rank
Score
1. Advance Payment 62.08 I
2. Long term Practice 58.21 II
3. Immediate Sales 57.38 III
4. Absence of Commission Agents 56.50 IV
5. No Transport Cost 45.77 V
6. Convenient to sell in small lots 36.54 VI
7. Less Rejection Loss 30.52 VII

Source: Primary data

Native traders operate near the manufacturing centers. The manufacturers can sell
their coir fibre at any time and on any day to the native traders. Table 5.2 shows that
advance payment is considered the major reason for selling to native traders which
showed a mean score of 62.08. The native traders are generally interested in advance
payment to most of the manufacturers as they have a ready market for the fibre in the
nearby state of Kerala throughout the year. It is graciously accepted by the manufacturers
and thus they have no option but to sell to the native traders. The second reason is the
long-term practice with a mean score of 58.21. From the very beginning it has been a
practice to sell the fibre to native traders as the relationship between the two is old.
Immediate sale is found to be the third reason with a mean score of 57.38. As the native
traders are easily approachable and available always near the production centers,
immediate sales can be effected and thus it leads to their being preferred.

The other reasons like no transport cost, convenient to sell in small lots and
rejection loss have the mean scores of 45.77, 36.54 and 30.52 respectively and are found
to be the other reasons for preferring the native traders.

162
5.3.2 Sale to Market Traders

Market traders operate at the Alleppey market, Kerala. Generally they prefer bulk
purchases from manufacturers and in turn sell to wholesalers who are present in and
around Alleppey and Cochin. It is estimated that 19.23 per cent of (vide Table 5.1)
manufacturers prefer market traders to sell their fibre. The reasons for preferring market
traders were analysed and are presented in Table 5.3.

TABLE 5.3

REASONS FOR SALE TO MARKET TRADERS

Sl. No Reasons Garrett’s Rank

Mean Score
1. Better Price 58.87 I
2. Bulk Sales 55.54 II
3. Immediate Payment 52.31 II
4. Absence of Fibre extraction at 42.37 IV
Terminal markets
5. Less local demand 38.00 V
6. Awareness of current industry trends 28.93 VI

Source: Primary data

It is seen from Table 5.3 that better price is found to be the first and foremost
reason for preferring market traders to sell their coir fibre. It takes the first rank with the
mean score of 58.87. As manufacturers are able to get a price as close as the
wholesaler’s, they consider price as a better reason and prefer the market traders. The
manufacturers who extract large quantities of fibre generally want to effect bulk sales,
and hence this becomes another reason for preferring the market traders. It is ranked
second with a mean score of 55.54. Followed by immediate payment with a mean score
163
of 52.31. The market traders are the reputed merchants who always follow the cash and
carry principle which benefits the manufacturers with immediate payment.

The reasons like the absence of fibre extraction at terminal markets, less local
demand and awareness of current industry trends with the mean scores of 42.37, 38.00
and 28.93 which stood in the fourth, fifth and sixth ranks respectively are found to be the
other reasons for preferring market traders.

5.4 MARKETING COST

Marketing cost is the sum of all expenses incurred in the various stages of
marketing including the cost of such diverse market services as assembling, processing,
storage, transportation, handling, financing, risk-bearing, wholesaling, retailing and the
like. Marketing cost is the cost and charges paid for various functions performed during
the process of marketing. It is directly incurred by the manufacturers for loading and
unloading, bundling, weighing, transporting, brokeraging, establishment and other
incidental charges. It is the sum of the actual costs incurred by each agency involved in
the marketing channel for bringing goods and services from the manufacturer to the
consumer or industrial user148. The items of the cost vary with the place of marketing.
The direct estimation of real marketing cost is a complex statistical exercise as it involves
the calculations of various elements of such cost. Therefore, the total marketing costs are
often estimated indirectly, via price spread or marketing margin.

The costs incurred by the manufacturers and other intermediaries in different

channels are presented in this section.

148
R.S. Tripathi, “Production and Marketing of Pulses”, Mittal Publications, New Delhi,
1998, p.204.

164
5.4.1 Marketing cost incurred by manufacturers

The coir units in the study area market their coir fibre through different channels.
The marketing cost incurred by the manufacturers per 100 k.g of fibre in all the three
channels is worked out for both the small and medium units and the results are presented
in Table 5.4.

TABLE 5.4
MARKETING COST INCURRED BY THE MANUFACTURERS
(SMALL AND MEDIUM UNITS)

(Rupees per 100 kg)

Small Medium Average

units
Items of cost Units
Channel Channel Channel Channel Channel
II II III II III
Loading & Unloading 10.28 10.28 10.28 10.28 10.28
(10.56) (11.28) (11.55) (10.91) (11.55)
Packing Cost 1.90 1.90 1.90 1.90 1.90
(1.95) (2.09) (2.14) (2.01) (2.14)
Weighing Charges 1.33 1.33 1.33 1.33 1.33
(1.37) (1.46) (1.49) (1.41) (1.49)
Transport Cost 50.57 46.83 53.31 48.70 53.31
(51.94) (51.38) (59.89) (51.67) (59.89)
Commission 17.02 17.01 - 17.02 -
(17.48) (18.66) (18.06)
Rejection Loss 12.12 9.98 14.76 11.05 14.76
(12.45) (10.95) (16.58) (11.72) (16.58)
Incidental Charges 4.14 3.81 7.43 3.98 7.43
(4.25) (4.18) (8.35) (4.22) (8.35)
Total 97.36 91.14 89.01 94.25 89.01
(100.00) (100.00) (100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total.

165
 It is understood from Table 5.4 that the manufacturers prefer different channels for
marketing of coir fibre. They have to incur marketing cost when they skip the native
traders in the channels of distribution. The total marketing cost incurred by the
manufacturers who run small units worked out to Rs.97.36 per hundred kilogram of fibre
in channel II. Rs.91.14 and Rs.89.01 were incurred in channels II and III by the
manufacturers of the medium-size units as they prefer both the channels with an overall
average marketing cost of Rs.94.25 in channel II and Rs.89.01 in channel III.

Among the total marketing costs incurred by the manufacturers (small units) in
channel II, transport cost had a major share of 51.94 per cent followed by commission
charges and rejection loss with 17.48 per cent and 12.45 per cent respectively. The
combined costs of loading and unloading and packing worked out to 12.51 per cent. The
other two marketing costs like incidental charges and weighing charges together worked
out to 5.62 per cent.

Among the total marketing costs incurred by the manufacturers (medium units) in
channel II and III showed that the share of transport cost in channel II was 51.38 per cent
but it had an increased share of 59.89 per cent in channel III. The commission charges in
channel II were 18.66 per cent but there was no such charge in channel III as the
manufacturers skip the commission agents and sell through market traders directly in that
channel. The loading and unloading charges worked out to 11.28 per cent and 11.55 per
cent in channels II and III respectively were more or less equal. The rejection loss which
had a share of 10.95 per cent in channel II rose to 16.58 per cent in channel III. It is on
account of functions like cleaning, polishing and cutting of fibre undertaken by the
market traders at the time of purchase. The incidental charge was 4.18 per cent in channel
II but was nearly doubled in channel III and touched a percentage of 8.35. The remaining
charges like packing cost were 2.09 per cent in channel II and 2.14 per cent in channel III
and weighing charges were 1.46 per cent in channel II and 1.49 per cent in channel III.

166
 It is further shown in the table that among the total marketing costs of coir
irrespective of the channels, transport cost had higher percentage with an overall average
percentage of 59.89 followed by rejection loss with 16.58 per cent and loading and
unloading with 11.55 per cent.

The analysis showed that the marketing cost incurred by the manufacturers of coir
fibre (medium units) in channel III is the lowest because of the non-payment of
commission charges. It is the most economical channel with the least marketing costs
among all the channels. It is followed by channel II also for the manufacturers of the
medium-size units.

5.4.2 Marketing Cost incurred by the Native Traders

Those who operate near the production centres and buy fibre directly from the
manufacturers are called Native Traders. They usually sell the fibre to the market traders
after accumulating considerable stock in their possession. A majority of the small and
medium units prefer them for selling their coir fibre. They contact market traders who
are in the Alleppey market and sell the fibre to them after incurring various marketing
costs. An analysis of the marketing costs incurred by them was done and presented in
Table 5.5.

167
 TABLE 5.5

MARKETING COST INCURRED BY NATIVE TRADERS

(Rupees per 100 kg)

Sl. No Items of Cost Cost Percentage

1. Loading & Unloading 7.29 7.17
2. Packing Cost 3.28 3.23
3. Weighing Charges 3.00 2.95
4. Commission 18.91 18.61
5. Transport Cost 37.25 36.66
6. Rejection Loss 11.42 11.23
7. Establishment Charges 8.18 8.05
8. Staffing 12.29 12.10
Total 101.62 100.00

Source: Primary data.

Table 5.5 shows that the total marketing cost incurred by the native trader was
Rs.101.62 per 100 kg of coir fibre. The highest marketing cost was incurred on transport
which was 37.25 per cent followed by commission charges worked out to 18.91 per cent.

Staffing and establishment charges accounted for 12.29 per cent and 8.05 per cent
respectively. Loading at the factory gate and unloading at the Alleppey market including
packing and weighing charges together constituted a share of 13.35 per cent whereas the
rejection loss was estimated to 11.23 per cent of the total charges paid by the native
traders. Among the different components of marketing cost incurred, transport including
loading and unloading and packing, commission and rejection loss put together
constituted 80 percent of the total marketing cost.

168
5.4.3 Marketing Cost incurred by Market Traders

The market trader is one who buys coir either through commission agents or from
manufacturers directly and sells it to the wholesalers who are located in and around the
Alleppey coir market. Usually, he performs certain functions like drying and removing of
pith from the coir fibre before selling it to the wholesalers. They own the title of the
goods and bear the risk associated with it. The costs incurred by the market trader in
marketing of coir were estimated and the results obtained are presented in Table 5.6.

TABLE 5.6
MARKETING COST INCURRED BY MARKET TRADERS
(Rupees per 100 kg of fibre)
Sl. No Items of Cost Cost Percentage
1. Fibre cleaning & Polishing 22.57 21.23
2. Drying and Bundling 12.30 11.57
3. Loading & Unloading 6.62 6.23
4. Transport 15.08 14.19
5. Brokerage 22.22 20.91
6. Rejection Loss 4.91 4.62
7. Staffing 13.27 12.48
8. Establishment Charges 9.32 8.77
Total 106.29 100.00

Source: Primary data.

It is understood from Table 5.6 that the total marketing costs incurred by market
traders was around Rs.106.29 per 100 kg of fibre. The cost of Fibre cleaning and
polishing with a share of 21.23 per cent was the highest amount of marketing cost
incurred by the market traders. It was closely followed by commission charges with

169
20.91 per cent. The remaining two marketing costs of loading and unloading and
rejection loss were moderate and they were 6.23 per cent and 4.62 per cent
respectively.Among the total marketing cost incurred by the market traders, fibre
cleaning, polishing and drying and bundling together amounted to 39.03 per cent whereas
transport, loading and unloading and brokerage together amounted to 41.33 per cent.

5.4.4 Marketing Cost incurred by Commission Agents

The commission agents, who facilitate the movement of fibre from the primary
market to the terminal market, operate in both the markets. They are few in number in the
primary market and more in the terminal markets. The marketing cost incurred by the
commission agents was worked out and presented in Table 5.7.

TABLE 5.7
MARKETING COST INCURRED BY COMMISSION AGENTS
(Rupees per 100 kg)
Sl. No Items of Cost Cost Percentage
1. Commission Charges 15.00 39.47
2. Traveling Expenses 12.28 32.32
3. Staff Salary 5.25 13.82
4. Office Expenses 5.47 14.39
Total 38.00 100.00

Source: Primary data

Table 5.7 shows that out of the total marketing cost of Rs.38 per 100 kg of coir
incurred by commission agents, commission charge had a share of Rs.15 (39.47 per cent),
followed by traveling expenses with Rs.12.28 (32.32 per cent). The other two marketing
costs such as staff salary and office expenses had meagre percentages of 14.39 and 13.82
per cent respectively.

170
5.4.5 Marketing Cost incurred by Wholesalers

The various items of marketing cost incurred by the wholesalers were worked out
and they are presented in Table 5.8.

TABLE 5.8
MARKETING COST INCURRED BY WHOLESALERS
(Rupees per 100 kg)
Sl. No Items of Cost Cost Percentage
1. Grading 9.52 9.91
2. Storage 2.54 2.64
3. Loading & Unloading 3.81 3.94
4. Bundling 5.71 5.94
5. Transport 11.43 11.90
6. Staffing 9.50 9.89
7. Establishment & License 7.14 7.43
8. Sales tax at 4 % 46.43 48.32
Total 96.08 100.00

Source: Primary data

It is evident from Table 5.8 that the total marketing cost incurred by the
wholesaler was Rs.96.08 per 100 kg of coir. Out of the wholesalers’ charges, sales tax at
48.32 per cent was the highest expenses in their total marketing cost and the lowest was
storage expenses with 2.64 per cent. Sales tax is levied at the rate of 4 per cent of the total
value of the price realized in the terminal market at Alleppey. No brokerage is paid to
commission agents. The transport including loading and unloading was the other major
marketing cost incurred and it constituted 15.87 per cent of the total marketing cost,
followed by the cost of grading which accounted for 9.91 per cent. Among the other
components of the marketing cost, staffing and establishment put together had a major

171
share of 17.32 per cent. The cost of bundling worked out to 5.94 per cent of the total
marketing cost.

5.5 PRICE-SPREAD

Price-spread is a key factor in determining the marketing margins and efficiency in

marketing system. It is the difference between the price paid by the final user for one unit
of the product and the price received by the manufacturer for the final product he
manufactures. It is made up of marketing costs and marketing margins of different
intermediaries in the movement of the product from the manufacturer to the industrial
user.

The study of the price-spread in the marketing of coir in the study area is
considered an important aspect as it shows the domination of the middlemen in depriving
the small manufacturer of adequate profit. The price-spread differs from channel to
channel depending upon the number of agents involved in the process of marketing.
Hence, the more the intermediaries, the higher the price-spread and vice-versa. There is a
substantial difference between the price paid by the industrial users and the amount
received by the manufacturer of coir. This is apportioned by the intermediaries.
Therefore, in order to evaluate the marketing efficiency of the different market channels,
a study of the price spread is highly relevant. Hence an attempt is made to study the price
spread in the marketing of coir fibre.

The price-spread is worked out for every 100 kg of coir sold by the units. As far
as the marketing cost of units is concerned the marketing costs incurred by the small and
medium units were estimated channel-wise and the average was taken for calculation.
The gross and net price received along with the marketing cost incurred by each
intermediary is presented in Table 5.9

172
 TABLE 5.9
PRICE-SPREAD FOR COIR FIBRE
(Rupees per 100 kg)
Particulars CHANNELS
I II III
Amount Percent- Amount Percent- Amount Percent -
age age age
MANUFACTURER
680.81 52.01 820.52 65.01 856.22 65.41
Net Price received - - 94.25 7.20 89.01 6.80
Marketing Cost

Gross Price received or paid

by Native traders/ Market 680.81 52.01 914.77 72.21 945.23 72.21
traders/

Wholesalers
NATIVE TRADER
- - - -
680.81 52.01
Price paid
- - - -
101.62 7.76
Marketing Cost
- - - -
162.80 12.44
Marketing Margin
Price received 945.23 72.21 - - - -
MARKET TRADER

945.23 72.21 914.77 69.88 945.23 72.21

Price paid

106.29 8.12 106.29 8.12 84.07 6.42

Marketing Cost

59.82 4.57 90.28 6.90 82.04 6.27

Marketing Margin
Price received 1,111.34 84.90 1,111.34 84.90 1,111.34 84.90
WHOLESALER 1,111.34

173
Price Paid 1,111.34 84.90 1,111.34 84.90 96.08 84.90

Marketing Cost 96.08 7.34 96.08 7.34 101.58 7.34

Marketing Margin 101.58 7.76 101.58 7.76 7.76

Price received or paid
1,309.00 100.00 1.309.00 100.00 1,309.00 100.00
by the Industrial user

Source: Primary data

From Table 5.9 it is clear that the share of the manufacturer in the industrial user’s
price was highest in channel III which is 65.41 per cent compared to 52.01 per cent and
65.01 per cent in channels I and II respectively. Further, it is noticed that there is a slight
variation in the net price received by the coir manufacturer between channel II and
channel III even though the gross price received is equal in the movement of coir in the
respective channels. It is evident from the Table that the manufacturer’s share is the
minimum in channel I even though no marketing cost is incurred. This is due to the fact
that the lion’s share of the marketing margin is retained by the native trader. If the
manufacturer of the study area avoids the intermediacy of the local/native trader, he can
earn a higher margin apart from incurring marketing cost. No marketing cost is incurred
by the manufacturers in channel I but it is incurred and that too is higher in channel II as
compared to channel III, which constitute 7.20 per cent and 6.80 per cent respectively in
the industrial user’s price in the channels. The marketing cost incurred by the native
trader constituted 7.76 per cent in channel I and for the market trader it was 8.12 per cent
in channels I and II, which was the maximum among the cost incurred by all the
intermediaries. This was due to the fibre cleaning and polishing performed by them. But
the marketing costs incurred by the wholesalers constitute 7.34 per cent and it is found to
be the same whenever they purchase the fibre in the process of marketing.

Table 5.9 further showed that a lion’s share of the marketing margin was retained
by the native traders which accounted for 12.44 per cent when they purchased coir
174
directly from the manufacturers. Further, it is found that a higher margin was earned by
all the other intermediaries. The market margin earned by the market trader remains the
same for channels I and II and it rises to 6.27 per cent in channel III. This was due to the
absence of the payment of commission charges and is found to be more beneficial when
they purchase the coir directly from the market trader. The wholesalers earned the same
percentage of margin (that is 7.76 per cent) from all the channels when they purchase
from any other intermediaries.

It is evident from Table 5.9 that the overall price spread analysis shows that of all
the routes, channel III is the more beneficial to the manufacturers.

5.6 MARKETING MARGIN

The marketing system is a chain of personal integration with various functions

performed by the intermediaries in order to transfer the goods from the manufacturer to
the industrial user. The marketing margin is the difference between the price paid by the
ultimate consumer and the price received by the producer often in the market and such
difference is the share due to middlemen.149 Marketing margin involves the costs and
charges paid by the market functionaries during the process of marketing and the profit of
such market functionaries. The middlemen add their margin before a final price is to be
paid by the industrial users. The margin of the intermediaries is a key factor in
determining the efficiency of the marketing system. The details of the marketing margin
of the various intermediaries is calculated and presented in Table 5.10.

149
S.K Raha and M.A. Beten, “Vegetables Marketing in Bangladesh: Do Consumers Pay
Higher Price”, Economic Affairs, Vol.40, No.1, 1995, p.42.

175
 TABLE 5.10

MARKETING MARGIN OF INTERMEDIARIES UNDER DIFFERENT

CHANNELS

(Rupees per 100 kg of coir fibre)

CHANNELS
Sl. No Particulars
I II III
1. Native Traders 162.80 - -
2. Market Traders 59.82 59.82 82.04
3. Wholesalers 101.58 101.58 101.58
Total Marketing Margin 324.20 161.40 183.62

Source: Primary data.

It is evident from Table 5.10 that per 100 kg of coir sold, the margin for the native
traders is the highest in channels where they are present. There is no change in the
marketing margin earned by the market traders in channel I and channel II but their share
increases in channel III. It is due to the absence of commission agents. The wholesalers
earned the same rate of margins irrespective of the channels.

5.6.1 An Overview of Channels and Price Spread

Price spread analysis which shows the details of the industrial user’s price,
manufacturer’s price, marketing margin and marketing cost in three marketing channels
is consolidated and presented in Table 5.11.

176
 TABLE 5.11
PRICE SPREAD UNDER DIFFERENT CHANNELS

(Rupees per 100 kg of fibre)

CHANNELS
Sl. No Particulars
I II III
1. Industrial user’s Price 1,309.00 1,309.00 1,309.00
2. Manufacturer’s Price 680.81 850.98 856.22
3. Price Spread 628.19 458.02 452.78
4. Marketing Cost 303.99 296.62 269.16
5. Marketing Margin 324.20 191.86 183.62

Source: Primary data.

It is found from Table 5.11 that the less price spread with Rs.452.78 per 100 kg of
coir fibre was found in channel III because of less marketing cost and marketing margin.
It resulted in the highest manufacturer’s price in that channel. It is followed by channel II
where the price spread was Rs.458.02 with the marketing cost of Rs.296.62 and
marketing margin of 191.86. The manufacturer’s price in that channel was Rs.850.98
which stood the second highest among all the channels.

The price spread was Rs.628.19 in channel I which was the highest because of the
higher marketing cost and the marketing margin due to the presence of more
intermediaries. As a result, the net price received by the manufacturer was lower.

177
5.7 MARKETING EFFICIENCY

Marketing efficiency helps to achieve economic efficiency by the minimization of

the price spread. Marketing is said to be efficient if the total marketing margin is reduced
for a given marketing cost. Marketing efficiency is directly related to the cost involved in
the movement of the goods from the manufacturer to the industrial user. The lower the
marketing cost the higher the marketing efficiency, and vice-versa. Similarly the larger
the price spread, the greater the inefficiency in the market system and vice-versa.
Therefore the improvement in marketing efficiency means the reduction of the marketing
cost without reduction of the quantum of services offered to the consumers. In the present
section marketing efficiency is studied for the three channels using Shepherd’s Method,
Acharya and Agarwal’s Method and the Composite Index Method.

5.7.1 Marketing Efficiency by Shepherd’s Method

Under this method, marketing efficiency is measured as the ratio of industrial user
price per kilogram of coir fibre to the marketing cost per kilogram. The higher the ratio,
the higher the efficiency of the marketing system. The marketing efficiency is examined
with the help of the following formula given by Shepherd.150

V
ME  1
I
Where,
ME = Marketing Efficiency
V = Value of goods sold or Consumer Price per kilogram of coir fibre
I = Total marketing cost or Marketing of cost per kilogram.

The computed values under Shephered’s Method are shown in Table 5.12.

150
G.S. Shepherd, Marketing Farm Products – Economic Analysis, IOWA State
University Press Ltd., U.S.A., 1965, p.254.

178
 TABLE 5.12
MARKETING EFFICIENCY UNDER SHEPHERED’S METHOD
(Rupees per K.g)

CHANNELS
Particulars
I II III

Industrial user’s price (V) 13.09 13.09 13.09

Total Marketing Cost (I) (Rs per kg) 3.04 2.97 2.69

Marketing efficiency ME=(V/I)-1 3.31 3.41 3.87

Source: Primary data

It is seen from Table 5.12 that channel III operates more efficiently than channels I and
II. The reason for the efficiency in channel III is the incurring of less marketing cost. The
efficiency in terms of rupees per kilogram is maximum with Rs.3.87, followed by
channel II with Rs.3.41. The marketing efficiency of channel I is poor because of its
higher marketing cost which stood at Rs.3.31 per kilogram of coir fibre.

5.7.2 Acharya and Agarwal’s Method

Under this method, the efficiency of the marketing can be measured as the ratio of
value added (the difference between the consumer’s price and the producer’s price) to the
inputs (marketing costs) used in the process of marketing. A change that reduced the
marketing cost without reducing consumer service is viewed as efficient marketing and
vice-versa. The marketing efficiency is measured by using the following formula given
by Acharya and Agarwal.151

151
S.S. Acharya and N.L. Agarwal, “Agricultural Marketing in India”, Oxford & IBH
Publishing Company, New Delhi, 1987, pp 309-314.

179
 O
E  100
I

Where,

E = Marketing efficiency

O = Value added per unit (or) [consumer’s price – Producer’s price]

I = Inputs used (Marketing Cost) in the process of marketing.

The results of the marketing efficiency using Acharya and Agarwal’s Method are
shown in Table 5.13.

TABLE 5.13
MARKETING EFFICIENCY ANALYSIS USING ACHARYA AND AGARWAL’S
METHOD
(Rupees per kg)

CHANNELS
Particulars
I II III

Total Marketing Cost (I) 3.04 2.97 2.69

Value added (O) 6.28 4.58 4.53

Marketing Efficiency
2.065 1.542 1.684
ME=(O/I)

Marketing Efficiency Index

206.50 154.20 168.40
(ME*100)

Source: Primary data.

180
 It is seen from Table 5.13 that the marketing efficiency index of channel I is
greater than that of channel II and channel III. The result showed that the coir fibre had
higher value added in channel I and achieved higher marketing efficiency in that channel.

5.7.3 Composite Index Method

The composite index method is adopted to get the final ranks which provide an
indication of the marketing efficiency in various channels. This method is a
comprehensive method comprising the producer’s price, the marketing cost and the
marketing margin to analyse the marketing efficiency. The percentage of the
manufacturer’s price, the marketing cost and the marketing margin to the industrial user’s
price per kilogram were calculated and were assigned ranks. The scores were given based
on the highest manufacturer’s share in the consumer price, the lowest marketing cost
incurred by the manufacturer as well as by the intermediaries and the highest margin
earned by the intermediaries. Total scores were found by adding the respective ranks in
each channel. The mean score was calculated for each channel and on the basis of this
mean score the efficiency of a market channel is evaluated. The channels which obtain
the lowest mean score is considered the most efficient under the composite index method.

The Composite Index Method152 is used to get the final ranks for measuring the
marketing efficiency and the formula is

Ri
R
Ni

Where,

R = Composite Index Method

Ri = Sum of ranks in each channel

152
H. Ideen, “Marketing Efficiency and Paddy Farm Economy in Alternative Channels”,
Indian Journal of Agricultural Marketing, Vol.4, No.1, 1973, pp 71-77.

181
 Ni = Number of performance indicators

The analysis on marketing efficiency and the results obtained under this method

are presented in Table 5.14.

TABLE 5.14
MARKETING EFFICIENCY UNDER COMPOSITE INDEX METHOD

SCORES AS INDICATOR
Producer’s Marketing Marketing Mean Rank
Marketing share in Cost Margin Score
Channel Consumer Price (per cent of (per cent of
(per cent of consumer consumer
consumer price) price) price)
I 3 3 1 2.33 III
II 2 2 2 2.00 II
III 1 1 3 1.67 I

Source: Primary data

It is understood from Table 5.14 that out of the three channels, channel III is the
most efficient as its mean score is the lowest with 1.67. The marketing margin in channel
I is greater than in channel II but the marketing efficiency of channel I is less than that at
channel II. The mean scores of the other two channels, I and II, are 2.33 and 2.00.

5.8 PRICE ANALYSIS

India is the largest producer of coir in the world and is the second largest exporter
after Sri Lanka. The utility of coir is duly recognized by people all over the world. Coir
being a foreign exchange earner, its price always depends on the international demand
and supply position. The wider fluctuation in the prices of coir is not only due to local
demand but also due to the level of utilization at the international level. It helps in

182
definite forecasting and the adjustment of supply to possible demand. It has year-wise
and season-wise variations. Hence, an attempt is made to highlight the price fluctuation
in the price of coir.

The Analytical Framework

The analysis of time series is used to study the movement of the price of coir over
a period of time. Aiming at identifying, isolating and studying them individually, a
multiplicative model153 of the following type is used.

Yt = T  S  C  I

Where,

Y = Original or Actual price in Rupee per 100 kg of fibre

T = Secular Trend

C = Cyclical Variation

I = Irregular Variation

Components of Time Series

The components of time series are:

1. Secular Trend

2. Seasonal Variations

3. Cyclic Variations

4. Irregular Variations

To analyse the price variations in the price of coir, only three components namely,
the secular trend, the cyclical variations and the irregular variation have been employed.

153
S.P. Gupta, “Statistical Methods”, Sultan Chand & Sons, New Delhi, 1990, p14.4.

183
Since the monthly wholesale average price is not available, the time series component of
seasonal variations for coir export is separately analysed with ten years’ monthly data.

Secular Trend

The Secular Trend shows the definite and basic tendency of prices with the
passage of time. In simple words, it refers to the general tendency. In the present study,
the trend of time series of fibre prices was estimated with the linear regression equation
as the prices exhibited a linear relationship with time. A trend equation fitted for the price
of fibre is:

Y = a + bt

Where,

Y = Price of coir fibre rupees per 100 kg

a = Constant

b = Regression co-efficient

t = Time in years.

Cyclical Variation

Cyclical variation refers to a recurring pattern of changes in events over the period
extending beyond a year. The forces which result in cyclic fluctuations are economic in
nature and reflect the varying levels of business activity (prosperity, recession,
depression, recovery) from time to time. The knowledge of cyclical fluctuation helps to
face the period of recession with caution and to reap the benefits during booms. The
information is of vital importance in stabilizing the business activity. In the present
section, the cyclical variation in annual wholesale prices of coir fibre was studied through
the moving average method. It involves the following steps:

184
Step I – Divide the actual wholesale yearly price by the corresponding trend values.
The resultant figures are detrended.

Step II – Compute the centered six yearly moving averages for the detrended data and
this forms the cyclical variation.

Seasonal Variation

Almost every economic and business activity is susceptible to seasonal variations.

Seasonal variations are those variations which occur, with some degree of regularity,
within a specific period of one year or less. This is an important component of the time
series. Seasonal Variations are quite regular and uniform and can be predicted with some
amount of accuracy. In the present section, the seasonal variations in the monthly average
prices of coir export were studied for ten years by applying the moving average method.
The method involves the following steps:

Step I - Calculate 12 months’ moving average of the monthly average price of coir
fibre.

Step II - Find the percentages of actual prices to the corresponding

moving average prices and arrange them by month.

Step III - Calculate median for each month and eventually arrive at the seasonal
(monthly) indices through the adjustment factor.

Irregular Variation

The fourth important component of time series is the irregular or residual

variations. It causes a sudden transition of affairs from one state to another. It is different
from the other components because it does not reveal any definite, regular or uniform
pattern of change. It is the irregular movement of price over a period of time due to
random factors.

185
5.8.1 Temporal Variation

A study of the temporal variation of price would be useful in forecasting the future
changes in price. This would help the manufacturers in decision making on production
and marketing to some extent. A knowledge of the past price movement would also help
the government to formulate an effective price policy.

Alleppey, a port town, is the major wholesale market for the export trade in coir in
India. Moreover, this market is highly integrated and acts as factors in the dealings
between local traders and metropolitan firms. Therefore, the Alleppey market was
selected to study the temporal price variation of coir fibre since the price effect in this
market would be reflected in all the other markets. The annual average prices of coir fibre
for the period from 1985-86 to 2004-05 were put into analysis to estimate the influence of
trend, cyclical and irregular variations of prices in the Alleppey market and are presented
in Table 5.15.

186
 TABLE 5.15
TREND, CYCLICAL AND IRREGULAR VARIATIONS OF PRICES OF COIR
FIBRE IN ALLEPPEY MARKET
(Rupees per 100 kg)
Index of Index of
Actual Trend
Sl. No Year
Cyclical Irregular
Price Price
Variations Variations
1. 1990 – 91 157 11.77 - -
2. 1991 – 92 185 67.93 - -
3. 1992 – 93 196 124.08 - -
4. 1993 – 94 214 180.24 2.40 1.44
5. 1994 – 95 229 236.39 1.19 1.14
6. 1995 – 96 257 292.55 0.96 1.07
7. 1996 – 97 271 348.71 0.87 1.03
8. 1997 – 98 314 404.86 0.83 1.01
9. 1998 – 99 380 461.02 0.83 1.00
10. 1999 – 00 432 517.17 0.84 0.98
11. 2000 –01 497 573.33 0.87 0.98
12. 2001 – 02 554 629.48 0.89 0.99
13. 2002 – 03 641 685.64 0.92 0.99
14. 2003– 04 703 741.79 0.93 1.00
15. 2004 – 05 768 797.95 0.94 0.99
16. 2005 – 06 839 854.11 0.97 0.98
17. 2006 – 07 816 910.26 1.01 0.98
18. 2007 – 08 964 966.42 - -
19. 2008 – 09 1,179 1022.57 - -
20. 2009-2010 1,309 1078.73 - -

187
Source: Coir Statistics, Coir Board, Kochi, 2009.

5.8.1.1 Secular Trend

For describing the underlying pattern of behaviour which has characterized the
series in the past, a study of the secular trend is useful to ascertain the trend of the growth
or decline. It is the smooth, regular and long-term movement of price that does not
include short-range oscillations in prices. To identify the trend movement in the prices of
fibre in the Alleppey market during the years between 1985-86 and 2004-05, the linear
regression equation was fitted and the estimated trend function was

Y = - 44.3842 + 56.16**

(-0.9744) (14.7682)

R2 = 0.92

Figures in brackets denote t-values.

** Significant at the one per cent level.

It could be observed from the function that the Co-efficient of determination (R2)
was 0.92 which indicated that 92 per cent of variation in the price of fibre was explained
by the dependent variable.

The result also indicates that there was an increasing trend in the prices of fibre
during the period under study. The price movement is positive and is increasing at the
rate of Rs.56.16 per 100 kilogram per annum. The results obtained are presented in Table
5.15 and plotted in Figure 5.1.

188
 Figure 5.1
Estimated Price Trend of Coir Fibre in 1990-91 to 2008-09
1400

1200

1000
PRICE IN RUPEES

800

600

400

200

0
1990 – 1991 1993 – 94 1997 – 98 2001 – 02 2004 – 05 2008 - 09
Actual Value
YEARSTrend Value

189
5.8.1.2 Cyclical Variation

The cyclical variation in prices of fibre is analysed by moving the average method
and the results obtained are presented in Table 5.15. Indices worked out are also shown in
figure 5.2. It is observed from the analysis shown in Table 5.15 that there was no regular
cycle in the prices of fibre. The indices of the cyclical variation reached the maximum in
1988-89 and thereafter it declined upto 1993-94 and again started increasing steadily and
reached the peak level in 2001-02.

Figure 5.2
Cyclical Variations in Prices of Coir fibre
in 1993-1994 to 2006-2007

2.4

2.2
INDICES OF CYCLICAL VARIATIONS

1.8

1.6

1.4

1.2

0.8
1993-1994 1996-1997 1999-2000 2003-2004 2005-2006 2006-2007
YEARS

190
5.8.1.3 Irregular Variation

All types of fluctuations which are not accounted for by the trend, such as seasonal
and cyclic variations are included under this category. The effects of all these forces
make it impossible to completely isolate the cyclical movements from the irregular
fluctuations. By their nature the movements are irregular and unpredictable. An analysis
of the irregular variations in the price of fibre in the Alleppey market was carried out and
the results are presented in Table 5.15 and the indices found in the Table are also
depicted in Figure 5.3.

Figure 5.3
Irregular Variations in Prices of Coir fibre
in 1993-94 to 2006-07

1.5

1.4
INDICES OF IRREGULAR VARIATIONS

1.3

1.2

1.1

0.9

0.8
1993-94 1996-97 1999-00 2002-03 2004-05 2006-07
YEARS

191
 It is understood from Table 5.15 that the indices of irregular variation in the price
of coir fibre at the Alleppey market ranged from 0.98 to 1.44. The co-efficient of
variation of irregular variation is 11.71 per cent which confirms price variations from
1994-95 to 1997-98 continuously and again from 1999-2000 to 2001-02 which were due
to irregular factors. The reason for such variation in the price of fibre may be perhaps due
to the increased use of synthetic fibre, sudden changes in demand and fall in the volume
of export business.

5.8.1.4 Seasonal Variation

Seasonal variation impacts on different products differently. Coir, being an

exportable commodity, is also subjected to seasonal variation in prices. This variation in
the prices of fibre was influenced during the period when export business was at its peak.
Hence a study of the seasonal variations is useful to eliminate the seasonal factors and
thus the effect of cyclic and irregular forces affecting the series can be studied. To
identify the seasons in which the maximum and minimum prices prevail in the Alleppey
market, seasonal variations in the monthly average wholesale prices of fibre are studied
for 10 years from 1995-96 to 2004-05 based on the 12 months’ moving average and the
results obtained are presented in Table 5.16 and are shown in Figure 5.4

192
 TABLE 5.16

AVERAGE SEASONAL INDICES OF COIR FIBRE PRICES IN THE

ALLEPPEY MARKET DURING 2001-2002 TO 2009-2010

Sl. No Month Seasonal Index

1. April 102.79
2. May 105.85
3. June 98.91
4. July 99.21
5. August 97.85
6. September 97.08
7. October 108.66
8. November 109.99
9. December 97.84
10. January 96.82
11. February 95.85
12. March 89.15

Source: Coir Statistics, Coir board, Kochi, 2009.

193
 Figure 5.4
Seasonal Indices of Coir Fibre Prices
in 2001-02 to 2009-10
112

110
108

106
SEASONAL INDICES

104

102
100

98
96

94
92

90
88
April May June July August Sept Oct Nov Dec Jan Feb Mar
MONTHS

194
 Table 5.16 shows the existing price variations of coir in the Alleppey market
during different months of a year. It could be ascertained from the seasonal indices that
the lowest price started prevailing from the month of December continuing up to the
month of March. This is due to the heavy extraction of fibre during the period on account
of the excessive supply of coconut husk due to the peak coconut season, followed by the
slump in the export market also. The highest price index prevailed during October and
November followed by April and May which showed a decline in the supply of the coir
because of the short-supply of husk and a busy export market.

5.9 MARKETING PROBLEMS

The marketing problem of the coir units of the study area mainly stems from the
nature of the process of production they follow. Fibre extraction being the only activity of
the units, the problem of marketing the fibre becomes more tricky and poses several
problems as it has no local consumption. This puts much pressure on the majority of the
manufacturers to look for different channels for placing and selling it in that market.

An attempt has also been made to identify the problems faced by the
manufacturers in the marketing of fibre in the study area. The identified problems are
ranked by using the Garrett Ranking Technique and the details are shown in Table 5.17.

195
 TABLE 5.17

MARKETING PROBLEMS FACED BY THE MANUFACTURERS OF COIR

FIBRE

Sl. No Nature of Problem Garrett’s Rank

Mean Score
1. Heavy Transport Cost 61.42 I
2. Lack of Government Support 59.38 II
3. Inadequate Market Information 58.13 II
4. Heavy Commission 54.88 IV
5. Lack of Finance 45.08 V
6. Lack of Storage facilities 34.62 VI
7. No direct contact with industrial users 33.50 VII

Source: Primary data

It could be seen from Table 5.17 that the heavy transport cost, lack of government
support, inadequate market information and heavy commission are the major problems
faced by coir manufacturers in the study area. As the fibre has to be marketed in
Alleppey, they have to incur heavy transport expenses. Therefore, it is found to be the
first and foremost problem which had a mean score of 61.42. The lack of government
support is the next important marketing problem faced by the manufacturers which has
the mean score of 59.38. There is no government agency to look after the functions of
marketing in the study area.

Most of the coir manufacturers are moderately educated and every information
about production, recent trends in export and the like has to come from the Alleppey
market which is far away from the production centres. Hence the lack of market

196
information ranked third with the mean score of 58.13. The high comm5ission paid is
also another major problem, as more intermediaries were involved in the channels of coir
which stood fourth with a mean score of 54.88.

The remaining problems like lack of finance, lack of storage facilities and lack of
direct contact with industrial users, with the mean scores of 45.08, 34.62 and 33.50, are
ranked fifth, sixth and seventh respectively.

197
 CHAPTER 6

6.1 INTRODUCTION

Various organizational resources have their distinct nature and characteristics.

Each resource contributes in a specific way to the operation of an organization as an
input-output system. Amongst all the resources, “Human Resource” is one of the most
vital assets of an organization. It is the people who use the other resources moving and
they perform various activities in difficult functional areas like production, marketing and
finance.154 Every industrial organization to be successful must perform all the human
resource functions effectively. Therefore, in the present day, the onus on industries is in
extracting the best possible performance from all its employees. In this context, human
resource management has assumed greater importance in traditional industries like coir as
it has been growing in breadth and length.

In the present chapter, the main focus has been on understanding the human
resource management practices followed in the Coir Industry of the study area. The
discussion has been carried out by dividing the chapter into five sections. The first
section outlines the significance and planned approach needed in the human resource
management practices of the industry. The second section deals with the general scenario
of human resource management practices whereas in the third section, an attempt has
been made to present the human resource management practices prevailing in the coir
units of the study area. In the fourth section an analysis has been carried out to measure
the level of satisfaction of the coir workers of the industry by taking into account the
different variables which are likely to influence this satisfaction level in the industry. In
the final section the human resource problems faced by the entrepreneurs of the units are
discussed.

154
L.M. Prasad, “Human Resource Management”, Sultan Chand & Sons, New Delhi,
2003, p.6.

198
6.2 HUMAN RESOURCE MANAGEMENT–SIGNIFICANCE IN COIR
INDUSTRY

Human Resource is the only resource which appreciates in value with the passage
of time. As time passes people become more skilled and experienced. It is not so with
other resources, which generally depreciate in value as time goes on.155 Of all the
resources employed in an organisation, human resource represents the most vital source.
The function of managing the human resource in the industry has become a job, not
simply of managing men or work, but of administering a group based on the social
system.

It is unquestionably accepted that without efficient human resource management,

the coir industry cannot prosper. Mere realization of the significance of human resource
functions in the industry would not touch the crux of the problem and in no way helpful
to manage the human resources along the most rational lines. It calls for an approach
based on the nature of the industry and its implementation in letter and spirit. The
approach so developed is expected to take note of the peculiarities and uniqueness of the
industry which are detailed below:

 Labour–intensive nature of the industry.

 Heavy presence of unskilled and women workers in the work force.
 Localisation of the Industry in coastal and rural areas.
 Unhygienic and open places of work.
 Seasonal nature of the production.
 Non–implementation of the Labour Laws.
 Absence of labour unions.
 Loosely built organizational set-up.
 Non-adherence to safety measures.
155
P.C. Tripathi, “Human Resource Development”, Sultan Chand & Sons, New Delhi, 2005, p.1.

199
  Absence of permanent and continuous employment of workers.

Informality and flexibility pervade every aspect of human resource management in

the industry. It is an unambiguous fact that the productivity is directly related to the
attitude to the human resources in the industry and therefore the effective management of
such resources by redefining the existing practices to the changing conditions alone
would solve the problems of the industry, which are mostly human and social rather than
physical, technical or economic.

Therefore, a well-defined system of human resource practices and its

implementation in the industry is the need of the hour.

6.3 HUMAN RESOURCE PRACTICES IN COIR INDUSTRY – GENERAL

SCENARIO

A description of the general scenario of the human resource practices prevailing in

the industry as a whole would be of great help in understanding its pressing problems and
issues that deserve to be attended.

Generally human resource practices followed in the industry mainly depend upon
the size of the coir units and the attitude of the owners of such units. Unfortunately, coir
units are notoriously deficient in the practices of human resource management to-day.
They do not have a systematic policy of recruitment and selection of qualified persons.
Many a time haphazard and casual decisions are taken. Small entrepreneurs are also less
serious about the wage determination and fixation of the working hours. They give scant
respect to the provisions of the Factories Act, the Workmen’s Compensation Act, the
Employees State Insurance Act, the Industrial Disputes Act and the like Acts.

The maintenance of harmonious industrial relations and motivation of employees

were not given due consideration in the industry. Many a time small entrepreneurs
consider the business as their personal affair and the intercession even in the form of

200
suggestions by the workers is treated as sin. Because of the peculiar nature of the
industry, labour unions were unable to thrive and in some places they were totally non-
existent. The government officials who are supposed to oversee the welfare and safety
measures in the units are mostly reluctant and inactive. Any grievances or issues
concerning workers when brought to their notice were not properly addressed.

However, it is heartening to note that the large-scale coir units and units run by
quasi-government bodies comply with some of the provisions of the labour acts relating
to matters of wages, salaries, safety measures and working conditions to the extent
possible. A well defined organizational set-up exists in these units. But invariably in all
private, small and medium units, only a loosely built organizational set-up exists. The
salaries and wages are mostly determined by convenience not by bargaining of the
workers or by the law. All these are deep rooted problems in the industry leading to
problems including absenteeism, high labour turnover and lack of commitment on the
part of the workers.

It could be observed that the prevailing human resource management practices

benefit neither the owners nor the workers. Considering the trends in the industry, more
attention has to be paid to the issues of employees’ health, safety and legal rights. As
technological advances are introduced into the workplace there will be need to evaluate
them in terms of potential health hazards. The diversity of lifestyles and households will
necessitate changes in the current patterns of employment, compensation and benefits. It
is time the industry addressed the human resource problems relating to recruitment and
training of workers with all their earnestness and seriousness. Introducing appropriate and
sufficient educational programmes and rational compensation and benefits packages are
needed to meet individual needs making the industry alive in the years to come.

201
6.4 ORGANISATIONAL SET–UP OF COIR UNITS IN THE STUDY AREA

The existence of a sound organizational setup is a necessity in a business or

industry for the effective management of human resources. It defines the authority and
responsibility of the relationships of employees in a formal manner.

Generally the entrepreneurs of the coir units of the study area have devised their
own organizational setup for the units. Mostly human resource functions are looked after
by the owners or partners. Managers and supervisors are invariably found in all the units.
But their powers and duties differ from unit to unit. Functions like the procurement of
raw material, recruitment of workers and payment of wages are considered the major
human resource functions in the units. Other functions relating to the working conditions
and welfare of workers are given little consideration and attention.

The following organizational chart shows the Human Resource set-up in the coir
units of the study area.

Owners / Partners

(Looking After Financial Matters and Marketing Functions)

Office Manager

(Looking after Procurement of Raw Material, Production

Schedules and Human Resource Functions)

202
 Supervisor

(Looking after production related functions)

Workers at Operational Level

6.5 HUMAN RESOURCE MANAGEMENT PRACTICES IN COIR INDUSTRY

OF THE STUDY AREA

Human resource management practices refer to a set of programmes, functions,

and activities designed and carried out in order to maximize the employee’s efficiency as
well as the organization’s effectiveness. It is a management function to engage the
owners or managers to recruit, select, train the employees and develop the organization to
yield the desired result as one of its largest investments of the industry is on its human
resource. Therefore, a sound and effective human resource management practice
followed in the industry is the key to its success.

An overview of the human resource practices followed in the coir units of the
study area showed that a majority of the entrepreneurs of the units manage their human
resources with the knowledge and experience they inherited from their elders which
mostly lack in scientific outlook and modern approach. Here, an attempt is made to throw
light on such practices prevalent in the industry. The present section discusses the
presence or absence of a human resource management department, policies and planning,

203
recruitment and selection, training, motivation, working conditions and welfare measures
adopted.

6.5.1 Human Resource Department

Units operating on industrial lines are expected to have a separate department to

look after the human resource functions like acquisition, development and maintenance
of the labour force. It is tried here to see how many coir units have such a department.
Table 6.1 shows the state of existence of human resource department in the coir units of
the study area.

TABLE 6.1
THE STATE OF PRESENCE OF HUMAN RESOURCE DEPARTMENT
IN COIR UNITS OF THE STUDY AREA

Number of Units
Sl. No The State of Presence Total
Small Medium
1. Present 2 9 11
(6.90) (39.13) (21.15)
2. Not Present 27 14 41
(93.10) (60.87) (78.85)
29 23 52
Total
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total

204
 It is understood from Table 6.1 that out of the 52 units, 11 (21.15 per cent) have a
separate Human Resource Department whereas 41 units (78.85 per cent) did not have
such a separate department.

Among the 23 medium units only 9 units (39.13 per cent) have a separate human
resource department and 14 units (60.87 per cent) did not. In respect of the 29 small
units, only 2 (6.90 per cent) have a separate department and the remaining 27 units (93.10
per cent) do not.

6.5.2 State of Human Resource Policies

The formulation and execution of well-defined human resource practices ensure a

harmonious employer-employee relationship in the organization. As a majority of the coir
units did not possess a separate Human Resource Department, it could be observed that
the formulation and execution of well-defined human resource policies generally do not
exist. The responses and opinions collected from the entrepreneurs showed that though a
well-defined human resource policy did not exist, they plan and execute policies
informally. Table 6.2 shows the state of the human resource policies followed in the coir
units of the study area.

205
 TABLE 6.2
STATE OF HUMAN RESOURCE POLICIES IN COIR UNITS OF THE STUDY
AREA
State of Human Number of Units Total
Resource Policies Small Medium
Formal - 14 14

(60.87) (26.92)
Informal 29 9 38

(93.10) (39.13) (73.08)

Total 29 23 52

(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total

It is clear from Table 6.2 that out of the total 52 units, 14 (26.92 per cent) have
formal human resource policies but the remaining 38 units (73.08 per cent) follow human
resource policies informally.

Further, the table shows that among the 23 medium units, 14 (60.87 per cent)
formulate and execute human resource policies formally in their units, whereas 9 units
(39.13 per cent) do not show interest in the formal formulations and execution of such
policies. All the small units of the study area also followed know well-defined human
resource policy to guide their units on matters concerning their human resources.

206
6.5.3 Human Resource Planning

Human resource planning is a difficult task to perform in a traditional industry like

coir. It is because of the nature of the industry and the type of workers involved therein. It
has assumed greater significance in the coir units of the study area because of the
following conditions:

1. Permanent workers on their rolls are limited in number whereas the casual
workers are more.

2. The production of fibre is at peak for six months from January to June in a
year. It is because of the easy availability of green/dry husk during that
period. The three months following i.e; July, August and September are off
season and for the remaining three months the supply of husk is at the lowest
ebb and the extraction of fibre is below normal.

3. The requirement of workers is more for the six months of the peak seasons.
It is not the case for the rest of the year.

4. The agricultural peak seasons of the area lead to scarcity of workers during
that period.

5. The requirement of employing huge female workers who are characterized by

high degree of mobility.

6. The long duration of the rainy seasons of the area. The periods are from June
to August and November to January. It affects the production schedule of
fibre which results in the requirement of a smaller work force.

It is understood from the survey that almost all the medium size coir units of the
study area are very alert to the future requirements of human resources and are prepared
to meet any contingencies that would arise during the peak seasons of the production of
207
fibre. However for the small size units, the job of human resource planning is not as easy
as it is for the medium size units. They are always in the state of mind of crossing the
bridge when it comes. It implies that they solve the human resource problems when they
arise.

6.5.4 Recruitment and Selection

Employees well-selected and well-placed would not only improve the operational
efficiency of the organization but offer significant potential for future replacement. The
efficiency of a worker depends upon the quality of the process of recruitment and
selection followed and hence a sound recruitment and selection process is vital for the
industry. It is to be noted here that workers being mostly casual, a scientific and well
planned system of recruitment and selection was not in use in the coir units of the study
area. Table 6.3 shows the sources of recruitment of workers in the industry.

TABLE 6.3
SOURCES OF RECRUITMENT OF WORKERS
Number of Units Total
Small Medium (52 Units)
Sl. No Sources
(23 Units)
(29 Units)
1. Through existing workers 26 23 49
(89.66) (100.00)
(94.23)
2. Through Supervisors 28 22 50
(96.55) (95.65)
(96.15)
3. Through friends and relatives 2 1 3
(6.90) (4.35)
(5.77)
4. Through Partners 2 7 9
(6.90) (30.43)
(17.31)
5. Direct application 2 6 8
(6.90) (26.09)
(15.38)

208
Source: Primary data

Figures in brackets are Percentages to the respective total.

Table 6.3 shows the sources of recruitment of workers in the industry. It is seen
from table that all the coir units exploit all the five sources available for the recruitment
of workers. However a majority of the units recruit their work force with the help of the
existing workers (94.23 per cent) and through their supervisors (96.15 per cent). Other
sources are minimally used. The direct application method is the last source.

6.5.5 Training

Training is an all-pervasive and universal process taking place all the time and in
all organizations. Training is a tool for imparting skills to workers. A worker needs skills
to operate machines and to use other equipment with least damage and risk. Training is
imparted to both new and old employees.

The coir workers of the study area do not have the chance of attending training
programmes offered by the Coir Board and the Coir Research Centres as they are located
in Cochin and Bangalore. Most of the owners of the units provide training to new
workers after they are placed. The nature of training given after their placement is
presented in Table 6.4.

209
 TABLE 6.4
NATURE OF TRAINING TO WORKERS
Number of Units
Nature of Training Total
Small Medium
On the job training 26 12 38
(89.66) (52.17) (73.08)
Off the job training 3 11 14
(10.34) (47.83) (26.92)
Total 29 23 52
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total

It is evident from Table 6.4 that out of the total 52 units, 38 (73.08 per cent)
provide on the job training to their workers which means workers have undergone
training after they are placed. 14 units (26.92 per cent) give off the job training before
they are placed; however it is not systematic.

In the case of the medium size units, it could be found that both types of training
are imparted to their workers whereas in the case of the small units a majority of 26 units
(89.66 per cent) prefer on the job training for their workers.

6.5.6 Motivation

Motivated employees always look for better ways to do a job and improve their
efficiency. The types of motivation used by the owners of coir units are presented in
Table 6.5.

210
 TABLE 6.5
TYPE OF MOTIVATION ADOPTED IN COIR UNITS
Number of Units
Sl. No Type of Motivation Total
Small Medium
1. Financial 21 20 41
(72.41) (86.96) (78.84)
2. Financial and Non-financial 8 3 11
(27.59) (13.04) (21.16)
Total 29 23 52
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total

It is understood from Table 6.5 that out of the total 52 units, 41 units (78.84 per
cent) and 11 units (21.16 per cent) follow financial and both financial and non-financial
methods of motivating workers.

The Table also shows that 21 small units (72.41 per cent) and 20 medium units
(86.96 per cent) follow the financial type of motivation to induce their workers. The
financial motivation is mostly in the form of payment of bonus and advance to workers.
Only a few units belong to both the categories of units following the non-financial
motivating methods besides the financial.

6.5.7 Working Conditions

The conditions under which workers have to work got a marked influence on their
health, efficiency, attitude and the quality of the work they do. It is not possible to carry
on hard work under unhealthy surroundings. It is a matter of common knowledge that a
healthy, bright and inspiring atmosphere leads to work more than a dirty, sullen and

211
unhealthy atmosphere. As per the Factories Act 1948, industrial units are expected to
provide facilities like rest rooms, drinking water, ventilation, sanitary arrangements,
lighting and lavatory facilities. The prevailing state of working conditions in the coir
units of the study area is presented in Table 6.6.

TABLE 6.6

PREVAILING STATE OF WORKING CONDITIONS IN COIR UNITS

Number of Units
Small Medium Total
Sl. No Working Conditions
(23 Units) (52 Units)
(29 Units)
1. Provision of Masks 29 23 52
(100.00) (100.00) (100.00)
2. Fire Protection guard 25 21 46
(86.21) (91.30) (88.46)
3. Disposal of Effluents 11 17 28
(37.93) (73.91) (53.85)
4. Rest rooms - 12 12
(52.17) (23.08)
5. Uniforms 15 23 38
(51.72) (100.00) (73.08)
6. Drinking Water facilities 29 23 52
(100.00) (100.00) (100.00)
7. Lavatory facilities 12 19 31
(41.38) (82.61) (59.62)

Source: Primary data

Figures in brackets are Percentages to the respective total

212
 Table 6.6 shows that all the units of the study area provide masks and drinking
water facilities to their workers. 88.46 per cent, 93.08 per cent, 59.62 per cent, 53.85 per
cent and 23.08 per cent units provide fire protection guard, uniforms, lavatory facilities,
disposal of effluents and rest room facilities respectively.

The table also shows that 86.21 per cent of the small units and 91.30 per cent of
the medium units provide fire protection guards. 51.72 per cent of the small units and all
the medium units provide uniforms to their workers.

The working conditions of 37.93 per cent of the small units and 73.91 per cent of
the medium units include facilities for the disposal of the effluents like dirt water and coir
pith emanating from their production processes. Lavatory facility is provided by 41.38
per cent of the small units and 82.61 per cent of the medium units. More than 50 per cent
of the medium units provide rest room facility, but in case of the small units, it was
totally absent.

6.5.8 Welfare Measures

Industrial prosperity depends upon the welfare of labour. Dealing with labour is
dealing with feelings. The welfare facilities provided by the management of the
organizations motivate workers and improve their productivity.

According to the Factories Act 1948, the Workmens’ Compensation Act, 1923 and
the Employees State Insurance Act, 1948, industrial units are expected to provide
facilities such as first aid, canteen, insurance, medical, maternity and crèche so as to keep
the workers highly satisfied.

The welfare facilities provided by the coir units of the study area are presented in
Table 6.7.

213
 TABLE 6.7
WELFARE FACILITIES PROVIDED BY COIR UNITS
Number of Units
Total
Sl. Small Medium
Welfare Facilities
No (23 Units) (52 Units)
(29 Units)
1. Compensation for accidents/ 14 18 32
death (48.28) (62.07) (61.54)
2. First aid 29 23 52
(100.00) (100.00) (100.00)
3. Crèche Facilities - 7 7
(30.43) (13.46)
4. Insurance Coverage 29 23 52
(100.00) (100.00)
(100.00)
5. Refreshment 24 21 45
(82.76) (91.30) (86.54)
6. Canteen Facilities - - -
7. Vehicle Shed - 23 23
(100.00) (44.23)
8. Maternity Benefits - 7 7
(30.43) (13.46)
9. Transport Facilities 29 23 52
(100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total

214
 Table 6.7 shows the various welfare facilities offered by the coir units of the study
area to their workers. The table indicates that first aid, insurance coverage and transport
facilities are provided invariably by the all units of the study area. 82.76 per cent of the
small units and 91.30 per cent of the medium units provide refreshments like tea, coffee
and snacks to their workers.

Compensation to workers in case of disability and death due to accident is given

by 48.28 per cent and 62.07 per cent of the small and medium size units respectively. The
facilities like crèche, canteen, vehicle shed and maternity benefits are totally absent in
small unit, whereas these facilities are considerably found in the medium size units.

6.6 WORKERS SATISFACTION IN COIR UNITS

Work is a form of social activity that has social approval. Work as a social security
is part of man’s life. Every man seeks satisfaction in the work he performs. In coir
industry, job satisfaction assumes significance from the stand point of employee morale.
It is a complex of different attitudes possessed by an individual. These attitudes relate to
several aspects of the job in the industry such as wages, supervision, job security,
working hours, incentives and working conditions. Job satisfaction describes how
contented an individual is with his or her job. The happier people are within their job, the
more satisfied they claim to be.

In this section, an attempt has been made to measure the level of satisfaction of
workers of the coir units in the study area.

6.6.1 Measurement of Level of Satisfaction of Coir Workers

Here, an attempt has been made to study the level of satisfaction of the coir
workers in the study area across their select socio-economic factors keeping them as
independent variables. It is believed that the socio-economic characters of workers play a
significant role in determining their level of satisfaction with the job they perform.

215
Accordingly the factors age, gender, marital status, educational qualification; community,
basic work status and work experience are taken to measure the level of satisfaction of
the workers.

6.6.2 Satisfaction Scale

Satisfaction is qualitative in nature which cannot be measured directly. In order to

measure the level of satisfaction of the workers in the coir units of the study area, a scale
called “Workers’ Satisfaction Scale” has been constructed. The workers’ satisfaction
scale consists of 18 items relating to wages, incentives, safety and health measures,
working conditions, supervision and motivation prevailing in the units. By using the
Likert Five Point Scale, the responses of the workers were recorded for their varying
levels of satisfaction denoted as below:

1. Highly Dissatisfied

2. Dissatisfied

3. Neither satisfied nor dissatisfied

4. Satisfied

5. Highly satisfied.

The maximum score for the satisfaction scale is 90. The sample workers are then
grouped into three categories as “Poor”, “Medium” and “High”. Workers who scored less
than 50 were treated as poorly satisfied, workers with a total score between 50 and 57
were classified as more or less satisfied and the workers with score above 57 under the
highly satisfied category.

216
6.6.3 Distribution of Sample Workers and Their Overall Level of Satisfaction

The distribution of the sample workers by their overall level of satisfaction is

presented in Table 6.8.

TABLE 6.8

DISTRIBUTION OF SAMPLE WORKERS ON THE BASIS OF THEIR LEVEL

OF SATISFACTION

Sl. No Level of Satisfaction No. of Workers Percentage Mean

1. Poor 136 45.30 48.77
2. Medium 125 41.70 56.72
3. High 39 13.00 58.59
Total 300 100.00 53.36

Source: Primary data

Table 6.8 shows the overall satisfaction level of the sample workers. Out of the
300 sample workers, 136 (45.3 per cent) are poorly satisfied. 125 workers (41.7 per cent)
are satisfied at the medium level and the remaining 39 workers (13 per cent) are highly
satisfied.

It is further understood from the Table that the average satisfaction score works
out to 53.36. Out of the total 300 sample workers, 144 (48 per cent) have above average
scores and 156 workers (52 per cent) below average scores.

6.6.4 Age and Satisfaction

Age is an important factor which determines the quantum of work undertaken and
the speed at which it is finished. Physical fitness and mental toughness are the qualities of

217
workers who are of the low age group. Fatigue, aversion and working at snails pace
characterized workers who are getting old. The age factor also influences the job
involvement, and the quality of work done by the workers because of the experience and
maturity they have gained over the years. Here an attempt is made to study the level of
satisfaction of the workers based on their age.

6.6.4.1 Age and Average Satisfaction score of Sample Workers

The details regarding the average satisfaction score of the workers according to
their level of age is presented in Table 6.9.

TABLE 6.9
AGE AND AVERAGE SATISFACTION SCORES OF
SAMPLE WORKERS
Number of Average
Sl. No Age Group Range
Respondents Satisfaction Score
1. 16 – 30 115 52.39 48 – 58
2. 30 – 45 102 53.26 48 – 62
3. Above 45 83 54.82 48 - 65
Total 300 53.36

Source: Primary data

It is observed from Table 6.9 that the average score of the different age groups of
workers varies from 52.39 to 54.82. Out of the 300 sample workers the age level of 115
workers is between 16 and 30, and their scores range from 47 to 58 and their average
score is 52.39. Among them 67 workers (58.26 per cent) have below average score and
48 (41.74 per cent) have above average score.

102 sample workers whose age level is between 30 and 45 years have scores
between 48 and 62 and their average score is 53.26. Among them 49 workers (48.04 per

218
cent) have their below average score and 53 workers (51.96 per cent) have above average
score.

83 sample workers whose age level is above 45 years have scores ranging from 48
to 65 and their average score is 54.82. Among them 27 (32.53 per cent) have below
average score and 56 (67.47 per cent) above average score.

It is also understood from the Table that the average score of the workers is higher
among the age group of workers who are above 45 years, compared to the other age
groups.

6.6.4.2 Age and Level of Satisfaction

For finding the extent of variation in the satisfaction level, the different levels of
satisfaction of the worker was studied and analysed according to their levels of age. This
is shown in Table 6.10.

TABLE 6.10
AGE AND LEVEL OF SATISFACTION
Level of Age Poor Medium High Total
66 41 8 115
16 – 30
(48.53) (32.80) (20.51) (38.33)
45 47 10 102
30 – 45
(33.09) (37.60) (25.64) (34.00)
25 37 21 83
Above 45
(18.38) (29.60) (53.85) (27.67)
136 125 39 300
Total
(100.00) (100.00) (100.00) (100.00)

Source: Primary data

219
Figures in brackets are Percentages to the total.

It is evident from the table that out of the 300 sample workers, 115 (38.33 per
cent), 102 (34 per cent) and 83 (27.67 per cent) workers belong to the age groups of 16 to
30, 30 to 35 and above 45 years of age.

Among the highly satisfied group of workers, 53.85 per cent belong to the age
group of above 45 years and they have the highest number of highly satisfied workers.
20.51 per cent workers belong to the age group of 16 to 30 and they have the fewest
number of the highly satisfied workers. Among the poorly satisfied group of workers,
48.53 per cent belong to the age group 16 to 30 and they have the highest number of
poorly satisfied workers and 18.38 per cent workers belong to the age group of above 45
years and they have fewest number of poorly satisfied workers.

It clearly indicates that the workers who belong to the age group of above 45 years
are highly satisfied and the workers who belong to the age group of 16 to 30 are poorly
satisfied with the working conditions of the coir units.

6.6.4.3 Chi-square Test

The Chi-square analysis is applied to test the association between age and the level
of satisfaction of the workers by framing the null hypothesis that “There is no association
between the age and the level of satisfaction of the workers”.

The result of the analysis is given below:

Calculated value of chi-square : 23.296

Degrees of freedom : 4

Level of significance : 5 per cent

220
 Table value of chi-square : 9.49

Since the calculated value is more than the table value, the null hypothesis does
not hold true. Age and the level of satisfaction are positive that is, when the age
increases, the level of satisfaction of the worker also increases. Hence it is clear that the
association between the age of the workers and their level of satisfaction is statistically
significant.

6.6.5 Education and Satisfaction

The variation in the level of education may cause difference in the level of
satisfaction. Here an attempt has been made to measure the level of satisfaction of the
workers based on their educational level.

6.6.5.1 Education and Average Satisfaction Scores of Sample Workers

The average satisfaction scores of the workers based on their level of education is
presented in Table 6.11.

TABLE 6.11
EDUCATION AND AVERAGE SATISFACTION SCORES OF
SAMPLE WORKERS
Sl. No Education Level No. of Average Score Range
Workers
1. No Formal Education 113 54.88 48 – 65
2. 10th Standard 106 54.15 48 -62
3. Higher Secondary 81 50.20 48 – 58
Total 300 53.36

Source: Primary data

221
 Table 6.11 shows that the average satisfaction score of workers who belong to
different levels of education vary from 50.20 to 54.88. Out of the 300 sample workers the
satisfaction score of 113 workers with no formal education ranges from 48 to 65 and their
average score is 54.88. Among the workers of that group 38 workers (33.63 per cent)
have score below the average and 75 workers (66.37 per cent) are above the average.

The score of 106 workers educated upto the 10th standard ranges from 48 to 62
and their average score is 54.15. Among these workers 40 workers (37.74 per cent) have
their score below average and 66 workers (62.26 per cent) are above average.

81 workers who are educated upto the higher secondary level have score ranging
from 48 to 58 and their average score is 50.20. Among them 65 workers (80.25 per cent)
have their score below average and 16 workers (19.75 per cent) are above average.

It is also understood from the table that the average satisfaction score of the
workers is higher among the group of workers who have had their education upto 10th
standard compared to the other groups of workers.

6.6.5.2 Education and Level of Satisfaction

The different levels of satisfaction among the workers based on their level of
education are presented in Table 6.12.

222
 TABLE 6.12
EDUCATION AND LEVEL OF SATISFACTION
Education Level Poor Medium High Total
No Formal Education 35 51 27 113
(25.74) (40.80) (69.23) (37.67)
10th Standard 36 63 7 106
(26.47) (50.40) (17.95) (35.33)
High Secondary 65 11 5 81
(47.79) (8.80) (12.82) (27.00)
Total 136 125 39 300
(100.00) (100.00) (100.00) (100.00)
Source: Primary data

Figures in brackets are Percentages to the total.

It is observed from Table 6.12 that out of the 300 sample workers, 113 (37.67 per
cent), 106 (35.33 per cent) and 81 (27 per cent) workers belong to the group of no formal
education, 10th standard and higher secondary levels respectively.

Among the highly satisfied group of workers, the number of workers who have no
formal education (69.23 per cent) are the majority and the lowest number of the highly
satisfied group belong to the education level of higher secondary (12.82 per cent). It is
also observed that among the poorly satisfied group of workers, the workers whose
educational level is higher secondary (47.79 per cent) are the majority and the workers
who have no formal education (25.74 per cent) are the fewest

This clearly indicates that the workers who have no formal education are highly
satisfied and the workers whose education level is higher secondary are poorly satisfied
with the working conditions of the units.

223
6.6.5.3 Chi–Square Test

The Chi-square analysis is applied to test the association between the education
level and the level of satisfaction of the workers by framing the null hypothesis that
“There is no association between the level of education and level of satisfaction of the
workers”.

The result of the analysis is given below:

Calculated value of chi-square : 70.191

Degrees of freedom : 4

Level of significance : 5 per cent

Table value of chi-square : 9.49

Since the calculated value is more than the table value, the null hypothesis does
not hold true. It is clear from the analysis that the association between the workers’
education level and their level of satisfaction is statistically significant.

6.6.6 Marital Status and Satisfaction

Generally, the workers of the coir units consist of both married and unmarried.
Though marital status is a universal feature it has an especially considerable impact on
the workforce of rural background. Here an attempt is made to measure the level of
satisfaction of the workers based on their marital status.

6.6.6.1 Marital Status and Average Satisfaction Scores

The average satisfaction scores of workers based on their marital status is

presented in Table 6.13.

224
 TABLE 6.13

MARITAL STATUS AND AVERAGE SATISFACTION SCORES OF SAMPLE

WORKERS

Sl. Marital Status No. of respondents Average Range

No Satisfaction
1. Married 195 53.38 48 – 66
2. Unmarried 105 53.32 48 - 58
Total 300 53.36

Source: Primary data

It is observed from Table 6.13 that the average satisfaction scores of the married
and the unmarried workers vary from 53.32 to 53.38. The 195 sample workers, who are
married, have scores ranging from 48 to 66 but their average score is 53.38. Among them
94 workers (48.21 per cent) have their score below average and 101 (51.79 per cent)
above average.

105 sample workers are unmarried, and their scores range from 48 to 58 and their
average score is 53.32. Among them 49 workers (46.67 per cent) have their score below
the average and 56 workers (53.33 per cent) above the average.

It is also understood from the table that the average satisfaction scores of the
workers is higher among the group of married sample workers compared to other groups
of workers in the study area.

225
6.6.6.2 Marital Status and Level of Satisfaction

For finding the extents of the variation in the satisfaction level, the different levels
of satisfaction of the workers between the married and the unmarried, are analysed and
shown in Table 6.14.

TABLE 6.14

MARITAL STATUS AND LEVEL OF SATISFACTION

Marital Status Poor Medium High Total

Married 92 80 23 195
(67.65) (64.00) (58.97) (65.00)
Unmarried 44 45 16 105
(32.35) (36.00) (41.03) (35.00)
Total 136 125 39 300
(100.00) (100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total.

It is apparent from Table 6.14 that out of the 300 sample workers, 195 (65 per
cent) belong to the married category and 105 (35 per cent) to the unmarried category.

Among the highly satisfied group of workers, 58.97 per cent belong to the married
category and they have the highest number of highly satisfied workers. 41.03 per cent
workers belong to the unmarried category and they have the fewest number of highly
satisfied workers. Among the poorly satisfied group of workers 67.65 per cent belong to
the unmarried category and they have the highest number of poorly satisfied workers and
32.35 per cent workers belong to the unmarried category, and they have fewest number of
poorly satisfied workers.
226
 The table clearly indicates that the workers who belong to unmarried category are
highly and poorly satisfied with the working conditions of the coir units of the study area.

6.6.6.3 Chi-Square Test

The Chi-square analysis is applied to test the association between the marital
status of the sample workers and their level of satisfaction by framing the null hypothesis
that “There is no association between the marital status of the workers and their
satisfaction level”.

The result of analysis is shown below:

Calculated value of chi-square : 1.096

Degrees of freedom : 2

Level of significance : 5 per cent

Table value of chi-square : 5.99

Since the calculated value is less than the table value, the null hypothesis is
accepted. It is clear from the analysis that the association between the marital status of the
workers and their level of satisfaction is statistically insignificant.

6.6.7 Community and Satisfaction

Community still plays an important element in the social fabric of our country.
Especially in rural areas, its impact is felt deeply. It is widely accepted that the majority
of work force in rural areas comprises of the lower and oppressed classes of society. The
study area, Theni district, is basically a rural district, and the study on the influence of the
community of the workers on the level of satisfaction is quite useful.

227
6.6.7.1 Community and Average Satisfaction Score

The average satisfaction score of the sample workers is presented in Table 6.15.

TABLE 6.15

COMMUNITY AND AVERAGE SCORES OF SAMPLE WORKERS

Sl. Community No. of Respondents Average Range

No Score
1. SC 168 54.38 48 – 65
2. Non-SC 132 52.07 48 – 58
Total 300 53.36

Source: Primary data

It is observed from Table 6.15 that the average score of the different communities
of sample workers varies from 52.07 to 54.38. 168 sample workers who belong to the
scheduled castes have their score ranging from 48 to 65 and their average score is 54.38.
Among them 61 workers (36.31 per cent) have their score below average and 107 (63.69
per cent) above average.

The 132 sample workers who belong to the non-sc communities have their scores
ranging from 48 to 58 and their average score is 52.07. Among them 82 workers (62.12
per cent) have their score below average and 50 workers (37.88 per cent) above average.

It is also understood from the table that the average scores of the workers is higher
among the workers who belong to the scheduled castes compared to the workers who
belong to the non-scheduled caste communities.

228
6.6.7.2 Community and Level of Satisfaction

The different levels of satisfaction of the workers according to their community

are presented in Table 6.16.

TABLE 6.16

COMMUNITY AND LEVEL OF SATISFACTION

Community Poor Medium High Total

SC 61 98 29 188
(44.85) (78.40) (74.36) (62.67)
Non-SC 75 27 10 112
(55.15) (21.60) (25.64) (37.33)
Total 136 125 39 300
(100.00) (100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total.

It is ascertained from Table 6.16 that out of the 300 sample workers, 118 (62.67
per cent) belong to the scheduled castes and 112 workers (37.33 per cent) belong to the
non-scheduled castes.

Among the highly satisfied group of workers, 74.36 per cent belong to scheduled
castes and they have the highest number of highly satisfied workers. 25.64 per cent
belong to the non-scheduled castes and they have the fewest number of highly satisfied
workers. Among the poorly satisfied group of workers, 55.15 per cent belong to the non-
scheduled castes and they have the highest number of poorly satisfied workers and 44.85
per cent belong to scheduled castes and they have fewest numbers of poorly satisfied
workers.
229
 The table clearly indicates that the workers who belong to the scheduled castes are
highly satisfied and the workers who belong to the non-scheduled castes are poorly
satisfied with the working conditions of the coir units.

6.6.7.3 Chi-Square Test

The Chi-square analysis is applied to test the association between the different
communities of the sample workers and their levels of satisfaction by framing the null
hypothesis that “There is no association between the community of the workers and their
satisfaction level in the coir units”.

The result of analysis is shown below:

Calculated value of chi-square : 14.271

Degrees of freedom : 2

Level of significance : 5 per cent

Table value of chi-square : 5.99

Since the calculated value is more than the table value, the null hypothesis does
not hold true. It is understood from the analysis that the association between the
community of the workers and their level of satisfaction is statistically significant.

6.6.8 Gender and Satisfaction

The gender of workers plays a quite significant role in the coir industry as the
major chunk of its workers are female. The analysis on the level of satisfaction based on
the gender of workers would help the coir units to make adjustments in their working
conditions wherever necessary.

230
6.6.8.1 Gender and Average Satisfaction Score

The average satisfaction score of the sample workers based on their gender is
presented in Table 6.17.

TABLE 6.17

GENDER AND AVERAGE SCORES OF SAMPLE WORKERS

Sl. No Gender No. of respondents Average Range

Satisfaction
1. Male 60 56.07 48 - 62
2. Female 240 52.68 48 - 65
Total 300 53.36

Source: Primary data

It is observed from Table 6.17 that the average scores of the sample workers based
on gender vary from 52.68 to 56.07. The 240 sample male workers have scores ranging
from 48 to 65 and their average score is 52.68. Among them 130 workers (54.17 per cent)
have scores below average and 110 workers (45.83 per cent), above average.

For the 60 sample male workers their scores range from 48 to 62 and their average
score is 56.07. Among them 13 workers (21.67 per cent) have score below average scores
and 47 workers (78.33 per cent) have above average scores.

It is also understood from the Table that the average scores of the workers is
higher among the male workers compared to the female workers in the study area.

231
6.6.8.2 Gender and Level of Satisfaction

The different levels of satisfaction of the workers according to gender are

presented in Table 6.18.

TABLE 6.18

GENDER AND LEVEL OF SATISFACTION

Gender Poor Medium High Total

Male 13 18 29 60
(9.56) (14.40) (74.36) (20.00)
Female 123 107 10 240
(90.44) (85.60) (25.64) (80.00)
Total 136 125 39 300
(100.00) (100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total.

It is clear from Table 6.18 that out of the 300 sample workers, 60 (20 per cent)
and 240 workers (80 per cent) belong to the male and the female categories.

Among the highly satisfied group of workers, 74.36 per cent belong to the male
category and they have the highest number of highly satisfied workers. 25.64 per cent
workers belong to the female category and they have the fewest number of highly
satisfied workers. Among the low satisfaction group of workers, 90.44 per cent belong to
the female category and they have the highest number of poorly satisfied workers and
9.56 per cent belong to the male category and they have fewest number of poorly
satisfied workers.

232
 It clearly indicates that the male workers are highly satisfied and the female
workers are poorly satisfied with the working conditions of the coir units.

6.6.8.3 Chi – Square Test

The Chi-square analysis is applied to test the association between the different
gender groups of the sample workers and their level of satisfaction is tested by framing
the null hypothesis “There is no association between the gender of the workers and their
satisfaction level”.

The result of analysis is shown below:

Calculated value of chi-square : 83.742

Degrees of freedom : 2

Level of significance : 5 per cent

Table value of chi-square : 5.99

Since the calculated value is more than the table value, the null hypothesis does
not hold true. It is clear from the analysis that the association between the gender of the
workers and their level of satisfaction is statistically significant.

6.6.9 Years of Experience and Level of Satisfaction

The casualness and informality being common features in all aspects of the
working force in coir industry, the experienced workers are considered vital assets in the
industry. They act as trainers for beginners on the one side and production guides on the
other. Therefore, measuring the level of the satisfaction of workers in relation to their
experience is of immense help to the industry people.

233
6.6.9.1 Years of Experience and Average Satisfaction Score

The average satisfaction score of workers according to their years of service is

presented in Table 6.19.

TABLE 6.19

YEARS OF EXPERIENCE AND AVERAGE SCORES OF

SAMPLE WORKERS

Sl. No Experience No. of respondents Average Range

Scores
1. Below 3 years 120 52.15 48 - 65
2. Between 3 and 5 132 53.62 48 - 58
3. Above 5 48 55.67 48 - 58
Total 300 53.36

Source: Primary data

It is observed from Table 6.19 that the average scores of the different category of
sample workers based on their experience vary from 52.15 to 55.67. 120 sample workers
whose experience is below 3 years have scores ranging from 48 to 65 and their average
score is 52.15. Among them 75 workers (62.50 per cent) have below average and 45
workers have (37.50 per cent) above average scores.

132 sample workers who have experience between 3 and 5 years, have scores
ranging from 48 to 58 and their average score is 53.62. Among them 57 workers (43.18
per cent) have their score below average and 62 workers (56.82 per cent) above average.

234
 48 sample workers who have experience above 5 years have scores from 48
to 58 and their average score is 55.67. Among them 11 workers (22.92 per cent) have
below average score and 37 workers (77.08 per cent) above average score.

It is also understood from the Table that the average score of the workers is higher
among the category of workers who have more than five years of experience compared to
the other categories of workers.

6.6.9.2 Years of Experience and Level of Satisfaction

The different levels of satisfaction of the workers according to their years of

experience are presented in Table 6.20.

TABLE 6.20

YEARS OF EXPERIENCE AND LEVEL OF SATISFACTION

Experience Poor Medium High Total

Below 3 years 72 41 7 120
(52.94) (32.80) (17.95) (40.00)
Between 3 and 5 53 71 8 132
(38.97) (56.80) (20.51) (44.00)
Above 5 years 11 13 24 48
(8.09) (10.40) (61.54) (16.00)
Total 136 125 39 300
(100.00) (100.00) (100.00) (100.00)

Source: Primary data

Figures in brackets are Percentages to the total

235
 It is seen from Table 6.20 that out of the 300 sample workers 120 (40 per cent),
132 (44 per cent) and 48 (16 per cent) workers belong to the category of experience less
than 3 years, between 3 and 5 years and more than 5 years respectively.

Among the highly satisfied group of workers, 61.54 per cent had more than 5
years of experience and they have the highest number of highly satisfied workers. 17.95
per cent had less than 3 years of experience and they have the fewest number of highly
satisfied workers. Among the poorly satisfied group of workers, 52.94 per cent had less
than 3 years of experience and they have the highest number of poorly satisfied workers
and 8.09 per cent workers had more than 5 years of experience and they have the fewest
number of poorly satisfied workers.

This clearly indicates that the workers who had more than 5 years of experience
are highly satisfied and the workers who had less than 3 years of experience are poorly
satisfied with the working conditions of the coir units.

6.6.9.3 Chi-Square Test

The Chi-square analysis is applied to test the association between the different
years of the experience of the sample workers and their level of satisfaction by framing
the null hypothesis that “There is no association between the experience of the workers
and their satisfaction level”.

The result of analysis is shown below:

Calculated value of chi-square : 80.699

Degrees of freedom : 4

Level of significance : 5 per cent

Table value of chi-square : 9.49

236
 Since the calculated value is more than the table value, the null hypothesis does
not hold true. It is clear from the analysis that the association between the years of
experience of the workers and their level of satisfaction is statistically significant.

6.6.10 Basic Work Status of Workers and Satisfaction

The majority of workers working in the coir units of the study area are not full
fledged industrial workers. Most of the workers on the rolls are basically agricultural
labourers. Therefore, the total working force of the industry can be categorized on their
basic status as agri-based workers and industry-based workers. Hence, the basic work
status of the sample workers is considered an important variable which may influence
their level of satisfaction in the industry. It is analysed and presented in Table 6.21.

6.6.10.1 Basic Work Status of workers and Average Satisfaction Scores

Table 6.21 presents the average satisfaction scores of the sample workers on the
basis of their basic work status.

TABLE 6.21

BASIC WORK STATUS AND AVERAGE SCORE OF

SAMPLE WORKERS

Sl. Basic Work No. of Average Score Range

No Status respondents
1. Agri-based 161 53.96 48 - 65
2. Industry based 139 52.66 48 - 63
Total 300 53.36

Source: Primary data

237
 It is observed from Table 6.21 that the average satisfaction scores of the different
category of workers status according to their work vary from 52.66 to 53.96. 161 sample
workers whose basic work status is agri-based, have scores between 48 and 65 and their
average score is 53.96. Among them 64 workers (39.75 per cent) have below average
scores and 97 workers (60.25 per cent) have above average scores.

The scores of 139 sample workers whose basic work status is industry- based
range from 48 to 63 and their average score is 52.66. Among them 79 workers (56.83 per
cent) have their score below average and 60 workers (43.17 per cent) above average.

It is also understood from the table that the average scores of the workers is higher
among the workers whose basic work status is agriculture compared to the industry-based
category of workers in the study area.

6.6.10.2 Basic work Status and Level of Satisfaction

The different level of satisfaction of workers according to their basic work status
is presented in Table 6.22.

TABLE 6.22

BASIC WORK STATUS AND LEVEL OF SATISFACTION

Basic Work Poor Medium High Total

Status
Agriculture 61 72 28 161
(44.85) (57.60) (71.79) (53.67)
Industry 75 53 11 139
(55.15) (42.40) (28.21) (46.33)
Total 136 125 39 300
(100.00) (100.00) (100.00) (100.00)

238
Source: Primary data

Figures in brackets are Percentages to the total.

Table 6.22 shows that out of the 300 sample workers, 161 (53.67 per cent) and 139
(46.33 per cent) belong to the categories of agri workers and industrial workers.

Among the highly satisfied group of workers, 71.79 per cent belong to the
agricultural workers category and they have the highest number of highly satisfied
workers. 28.21 per cent belong to industrial work category and they have the fewest
number of highly satisfied workers. Among the poorly satisfied group of workers, 55.15
per cent belong to the industrial work category and they have the highest number of
poorly satisfied workers and 44.85 per cent belong to agricultural workers category and
they have fewest number of poorly satisfied workers.

The table clearly indicates that the workers who belong to agricultural workers
category and are highly satisfied and the worker who belong to the industrial work status
category are low satisfied on the working conditions of the coir units.

6.6.10.3 Chi-Square Test

The Chi-square analysis is applied to test the association between the basic work
status of the sample workers and their level of satisfaction by framing the null hypothesis
that “There is no association between workers’ basic work status and their satisfaction
level”.

The result of analysis is shown below:

Calculated value of chi-square : 10.181

Degrees of freedom : 2

239
 Level of significance : 5 per cent

Table value of chi-square : 5.99

Since the calculated value is more than the table value, the null hypothesis does
not hold true. It is understood from the analysis that the association between the basic
work status of the workers and their level of satisfaction is statistically significant.

6.7 PROBLEMS OF HUMAN RESOURCES IN COIR INDUSTRY

Coir industries being labour intensive, labourers always remain a significant input
in the process of production. The data collected by the survey and the discussion with the
owners of the units by the researcher have brought to the fore the major problems faced
by the industry in respect of its human resources. By far, the most problems originate
from the peculiarities and uniqueness of the labour force engaged in the industry.

A majority of the workers are women and generally they are not prepared to work
night shifts. Most of them are illiterates and basically farm workers. They seek
employment in coir units mostly during agricultural off-seasons only. As a result casual
and contract workers are all pervasive in the industry. During the peak agricultural
seasons, workers are in short-supply which made owners either to adjust the production
schedules or to stop production for the time-being. The off shoot of this situation,
affecting continuous and steady extraction of fibre in the peak agri seasons remains a day
dream especially for the smaller units. During the off-seasons, the supply of labour is
abundant and the owners of the units have to make use of this excess supply of workers
to their advantage, even if other factors of production seem unfavourable.

Inculcating the industrial work culture becomes a big problem to owners because
of the intermittent nature of the employment and their rural mind set. Moreover, most of
the workers are in the age group of 20 to 30. As such their expectations are very high on
the working conditions and welfare measures of the industry, which could hardly be met

240
by the owners of the units. A major problem which most owners feel bad about is that
they could come to know the pressing problems of the workers often very late. It is
because of the total absence of worker unions. Absenteeism of the workers is also
disturbing in the industry. The workers hailing mostly from rural areas are always
unwilling to skip local functions and participate in them in large numbers, even in
ordinary family ceremonies, local festivals, small functions and political meetings and
processions. These are considered some of the reasons for mass absenteeism in the
industry.

Moreover, the introduction of sophisticated and modern machinery in the medium

units requires imparting of new skills to workers leading to compulsory training. This
idea met with stiff resistance from workers’ side as most of them are unwilling to attend
training. Above all, they are always contented with the status of an ordinary worker and
are not prepared to play the full fledged role of an industrial worker. Therefore, it could
be understood that it was the root cause for all the problems confronting the industry to-
day.

The researcher made an attempt to identify the human resource problems faced by
the owners of the coir units of the study area. The identified problems are ranked by
making use of Garrett’s Ranking Technique and the details are presented in Table 6.23.

241
 TABLE 6.23

PROBLEMS OF HUMAN RESOURCE IN COIR INDUSTRY

Sl. Nature of Problem Garrett’s Rank

No Mean Score
1. Scarcity of workers during peak agri-season 60.23 I
2. Lack of industrial work culture 58.19 II
3. Absenteeism 54.94 III
4. Absence of workers union 51.29 IV
5. Hesitation to undergo training 43.17 V
6. Mobility of workers from unit to unit 33.73 VI
7. Frequent advance sought 31.83 VII

Source: Primary data

It could be seen from Table 6.23 that the scarcity of workers during the peak agri-
season, the lack of an industrial work culture among the workers, absenteeism and
absence of workers union are the major human resource problems faced by the coir units
of the study area.

To meet the increased demand for coir fibre, coir units of the study area generally
work two shifts a day. This can be ensured only by the steady and continuous supply of
workers. As the major chunk of the workers of the industry are agricultural and casual,
they always look for their employment in agriculture- related work during its peak
seasons. As a result a heavy exodus of workers is a regular feature found in the industry.
It is especially more among women workers as they mostly preferred operations like
sowing, weeding and harvesting of paddy. Hence the problem of scarcity of workers

242
during the peak agriculture seasons seemed to be a major problem of the industry. Hence
this problem with the mean score of 60.23 was ranked first.

The deep rooted rural mind-set coupled with the vast illiteracy upset the efforts to
inculcate the industrial culture among the workers by the industry people. This secured
the second rank which has the mean score of 58.19.

A majority of workers are women, and ceremonies and festivals are part of their
life. This lead to them abstaining from work now and then. Hence the problem of
absenteeism was ranked third with the mean score of 54.94.

As the workers of the industry are not organised through unions, the benefits that
could be derived from the presence of unions could not be availed of by the owners of the
units. Hence the problem of the absence of workers’ unions was considered another
major problem and it was ranked fourth with a mean score of 51.29.

The remaining problems found in the table – workers’ hesitation to undergo

training, mobility of workers from unit to unit, and frequent advances sought by
workers—are considered some of the other major problems present in the industry and
they were ranked fifth, sixth and seventh respectively.

243
 CHAPTER 7

7.1 INTRODUCTION

Indian coir industry has come a long way from manufacturing simple ropes to
various heightened lifestyle products. The establishment of the first coir factory in 1859
in Alleppey, Kerala, by an Ireland born American initiated the process of coir making in
India from an unorganized cottage industry to a professional and modernized industrial
activity. Once the first coir factory was set up, the unique quality of the Indian coir did
the rest.

Today, India is the leading coir manufacturer in the world. Coir is in great demand
on account of its natural, bio-degradable and environmental friendly qualities. It has
acquired an important position in International markets, the reason for which could not be
solely its value as a commodity but also its value in trade. The golden textured Indian
coir fibre, which has earned the unofficial brand name “Golden Fibre” captured the
European and world markets in no time. At present, coir industry has a phenomenal share
of 89 per cent of the global market for value-added coir products. World production of
coir fibre is estimated at 3,85,000 tonnes whereas the combined world production of
other similar hard fibres such as sisal, henequen and abaca have two to three times that of
coir fibre.

Coir industry emerges as the largest employment generator industry employing a

staggering more than half million people in the country. Equally significant is the fact
that most of these people are from the economically disadvantaged classes and as much
as 80 per cent of the workers are women in the industry. Moreover, thousands of
entrepreneurs are directly and indirectly involved in activities ranging from the
manufacture of coir fibre to producing and marketing of value-added products of coir.

244
These new breed of entrepreneurs find the scope offered with comparatively low
investment by the industry exciting an opportunity.

The industry has a strong presence and footing in the state of Kerala, India, owing
to the presence of brackish backwaters and lagoons suitable for large production of
coconut. Out of a total 9597 units found in India by the end of 2005, the highest number
of (7105) units are situated in Kerala alone. The state is considered the “home of coir” in
India and continues to enjoy the leading position till date. Now, the domestic coir
industry has spread its wings, with small and large coir factories coming up in several
non-traditional areas such as Karnataka, Tamil Nadu, Andhra Pradesh, Odisha and Goa.

The growth of coir industry in Tamil Nadu could be traced back to 1940. By the
end of 2006, 1260 coir units were found in the state and the state is the second largest
producer of coir fibre in the country. Occupying the pride place, being the single largest
supplier of coir fibre to Kerala, it corners a share of 70 per cent in the total brown fibre
production of our country. This brown fibre sector continues to show a spectacular
progress at a rapid pace in Tamil Nadu. The main products being manufactured in the
state are coir ropes acurled coir, but a few units also concentrate on geo-textiles. The
districts of Kanyakumari and Salem have a traditional base for coir industry. But now it
has spread to other districts like Coimbatore, Theni, Dindigul and Thanjavur. Thanjavur
district, taken for the present study, shows signs of noticeable growth of this industry due
to its locational and industrial advantages. It has accounted for 52 registered and 115
unregistered coir units

Considering the socio-economic prospects of the industry in the state in general

and Thanjavur District in particular, higher output, improved mechanization, higher
return and pertinent policy measures for better results are the need of the hour especially
to promote the industry in non-traditional areas like the study area. In this regard a study
of the factors which influence the performance of this industry, if identified, would help
in assisting the government in policy formulation. The analysis shows the strengths and

245
weaknesses of coir production, which are to be borne in mind by the entrepreneurs. This
present study is an attempt in this direction.

The present study was carried out with the following as its major objectives

1. To trace the origin, growth and development of coir industry at the National
and state levels.

2. To learn the profile of the study area and the organizational and financial set-
up of the coir units.

3. To estimate the production cost and returns and to analyse the resource-use
efficiency of the units in the production of coir fibre for the small and
medium sized coir units respectively.

4. To identify the existing marketing channels and to evaluate the marketing

cost, marketing margin, price-spread and marketing efficiency of different
channels.

5. To study the human resource practices of the industry in the study area and to
measure the level of satisfaction of workers on the prevailing working
conditions across their socio-economic factors.

6. To study the major problems in production, marketing and managing human

resources of the units in the study area.

7. To offer suggestions for improving the overall performance of coir industry

based on the findings of the study.

The study also attempted to test certain hypotheses especially on the socio-
economic factors influencing the level of satisfaction of the workers in the units of the
study area, besides the above objectives.

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 The present study area, Thanjavur District, comprises of 8 taluks. A list of all the
coir units in all the eight taluks was obtained from the District Industries Centre,
Thanjavur. The study covers all the units which were registered before 31st March 2005.
It was ascertained that a total of 52 units were functioning as on 31st March 2005 in the
district. No unit from the co-operative sector was selected for the study. All these 52
private coir units were stratified into two groups namely small and medium sized units
based on the norms prescribed by the District Industries Centre, Thanjavur. According to
post-stratification, 29 units with investment upto Rs.25 lakhs were grouped as small units
and 23 units with investment ranging between Rs.25 lakhs and Rs.5 crores were
categorized as medium units.

A list of workers was obtained from the owners of all the units. It was realized that
a total of 6009 workers were on the rolls of the units. The stratified sampling method was
adopted and a sample of 5 per cent of the total workers was taken to measure the level of
satisfaction of workers. 20 intermediaries, 5 each from the categories namely native
traders, commission agents, market traders and wholesalers were randomly selected from
the study area.

The study being an empirical one, the performance of the industry was critically
analysed by using both primary and secondary data. The secondary data covers a period
of 10 years whereas primary data was related to the financial year 2005-06. The study is
divided into five major parts. The first part deals with the growth of coir industry at the
National, state and district levels. The second part deals with the socio-economic
background of the study area, the profile of the coir units and the sample workers. Cost,
returns, the returns to scale, resource-use efficiency and problems in production have
been discussed in the third part. The fourth part is devoted to presenting the market
structure, marketing efficiency, price-spread, price trend of coir fibre, and problems in
marketing. The last part discusses the human resource management practices followed in

247
the units along with a statistical analysis of the socio-economic factors influencing the
level of satisfaction of the workers.

For the purpose of analysis, Trend analysis using the simple regression equation,
the compound growth rate using the (natural) semi-log function, the Cobb-Douglas
production function, the Garrett Ranking Technique, Shepherd’s formula, Acharya and
Agarwal’s formula, the Composite Index Method and the Chi-square Test have been
used.

In the present chapter, the findings recorded in the preceding chapters of the study
are summarized and presented. The researcher also offers suggestions based on the
findings of the study

7.2 FINDINGS

The following are the major findings of the study:

1. It is ascertained that the first coir factory was established in 1859 in India in
Alleppey of Kerala state. The total number of coir units in the country
increased from 7 in 1908 to 474 in 1948. Considerable growth was noticed
during the pre-independence period as a result of tens of thousands of
households in hundreds of villages in the coastal areas of Kerala taking to
coir spinning work. It is also observed that the growth of coir factories
registered a significant growth during the post-independence period. By the
end of 1994-95, 6286 coir units were found at the National level.
2. It is found that there was good progress in the number of coir units set-up in
India during the period under study. The number of units found in 1995-96
was 6456 and increased to 9597 in 2004-05, by registering an annual growth
of 48.65 per cent.
3. It is observed from the region-wise distribution of the coir units those that
set-up in the southern-region registered a whopping share of 93.89 per cent
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 and the highest diminution was found in the central region during the study
period.
4. It is known that among the state-wise distribution of coir units in Southern
India, the state of Kerala has the major share of 81.47 per cent, followed by
the other states which accounted for 18.53 per cent. But the State of Tamil
Nadu showed a remarkable increase with 73.08 per cent in the establishment
of new units during the period under review.
5. It is found that the growth of the coir units in Tamil Nadu showed a steady
increase year after year and has been making rapid strides during the period
under review. As on March 31, 2005, there were 1260 coir units functioning
in Tamil Nadu.
6. The researcher has found that the trend of World Coir Production showed a
decreasing trend during the period of study. The analysis of the compound
growth rate showed a negative annual growth rate of 0.79 per cent per annum
in world coir production during the study period.
7. It is found that India is well ahead of all the other major coir producing
countries in the world and ranked first in world coir production followed by
Vietnam, Sri Lanka, Ghana and Malaysia. Its average contribution during the
period under review was 460.58 thousand Metric Tonnes.
8. It is found that coir production in India shows a decreasing trend. The
compound growth rate indicated that the production of coir in India has
decreased by 0.76 per cent per annum during the study period.
9. It is apparent from the analysis that though India’s share in world coir
production shows a fluctuating trend, it ranged between 46.50 per cent and
47.16 per cent, reaching 50 per cent mark in the world’s share.
10. It is found that among the significant coir producing states, Kerala occupies a
very prominent place, followed by Tamil Nadu, Karnataka, Andhra Pradesh
and Orissa with the average production of 166.80, 104.86, 33.02, 23.65 and

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 20.24 thousand Metric Tonnes ranking first, second, third, fourth and fifth
respectively.
11. It is observed that coir fibre production has increased in Tamil Nadu from
82.98 thousand tonnes to 126.74 thousand tonnes. The increase was nearly
one and a half times more at the end of the study period than what it was in
the beginning. The analysis of the compound growth rate showed an annual
growth of 5.05 per cent during the period under review.
12. It is ascertained that the area, production and productivity of coconut in India
generally shows an increasing trend for the period under study. The area of
cultivation of 1850.90 thousand hectares in the year 1995-96 increased to
1935 thousand hectares in 2004-05. Though the production of coconut nuts
shows a fluctuating trend, the last two years of the study witnessed an
increasing trend. In the case of productivity, states like Andhra Pradesh,
Maharastra, Tamil Nadu, West Bengal and Pudhuchery showed a significant
increase whereas Kerala and Karnataka showed very little improvement in
productivity.
13. It is observed that in Tamil Nadu the land under coconut cultivation which
stood at 322.5 thousand hectares in 1995-96 increased to 357.1 thousand
hectares in 2004-05 showing a growth of 10.73 per cent during the period
under review. The production of nuts showing both increasing and decreasing
trends resulting in an annual negative growth of 25.55 per cent. As far as
productivity was concerned, a steady increase was noticed during the period
from 1995-96 to 1998-99 but this tendency became extinct from 2000-01
to 2003-04.
14. It is seen from the analysis of coir exports from India that the trend value for
coir exports in quantitative terms showed an increasing trend during the
period under review. The trend value of export increased from 35.77
thousand Metric Tonnes in 1995-96 to 106.27 thousand Metric Tonnes in

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 2004-05 registering an increase of 3 times during the period under study. The
compound growth was 11.14 per cent per annum during the study period.
15. It is found that the value of the export of coir products at constant prices
reached a maximum (Rs.20167.65 lakh) in 2004-05 from Rs.15801.86 lakh in
1995-96, registering a positive growth of 27.63 per cent. It further, may
perhaps be due to the minimum export price administered by the Coir Board.
It is also learnt from the analysis of the composition of coir export that 14
coir products were exported. Among them handloom mats and tufted mats
together constituted 73.14 per cent in value and 46.06 per cent in quantity
during the period under review.
16. It is found that out of 52 coir units, 63.46 per cent units were managed by
sole proprietorship while the remaining 36.54 per cent under partnership.
17. It is also observed that 21.15 per cent of the units procured their raw material
husk from their own source whereas the remaining 78.85 per cent from
coconut merchants and husk dealers.
18. It is understood from the prevailing stocking period of the raw material husk
ranged from 17.5 days to 27.5 days. The average stocking period was 23.02
days for the small units and 24.24 days for the medium units. It is further
ascertained that the average stocking period of the finished coir fibre for the
small and medium units worked out to 7.81 days and 9.07 days respectively.
19. It is noticed that 90.38 per cent of the units depended on own as well as
borrowed sources for their financial requirements whereas 9.62 per cent of
the units were run wholly on private own funds. It is also observed that out of
the total 49 units, the majority had borrowed from financial institutions and
commercial banks. A limited number of units exploited the sources of friends
and relatives and money lenders to meet their financial requirements. The co-
operative societies were not much approached by the units of the study area.

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20. It is also found that in all the small units the borrowed capital was less than
Rs.20 lakhs. Whereas In the medium units, 45.46 per cent of the units had
borrowed capital of more than Rs.20 lakhs.
21. It is found that the fixed capital was invested mostly on machinery and
equipment, land and buildings, vehicles, generators, welding machines and
tools and appliances. It is further observed that the overall pattern of
investment on fixed assets was that 62.17 per cent, 28.62 per cent and 19.21
per cent on Machinery and Equipment, Land and Buildings (combined) and
Vehicles and tools and appliances (combined) respectively. It is further
obsorved that when the range of investment of units increased, the average
investment on machinery and equipment also increased. This trend was
uncommon for other fixed assets.
22. It is ascertained from the study that the investment of the working capital on
raw material (husk), finished fibre and cash were 34.55 per cent, 26.73 per
cent and 38.72 per cent respectively. For the small units, it was 65 per cent
for both raw material and finished fibre and 35 per cent for cash in hand but it
was 58 per cent and 42 per cent respectively for the medium units.
23. The input-output structure showed a significant variation in terms of the gross
revenue of output per 100 bundles of coir fibre manufactured between the
two sized units. The gross revenue for the medium and small units were
Rs.25288.10 and Rs.23857.60 respectively resulting a difference of
Rs.1430.50. Hence, it is concluded that the medium-size units had higher
revenue than the small units. Among the five variable inputs, the significant
difference between the two groups of units was found in four inputs namely
labour, material, power and machine running. The only input variable, the
unretting cost, was found to be not significant for both the groups of units.
24. It is found that in the total cost of manufacture of coir fibre per 100 bundles,
the share of the variable and fixed costs for the overall category of units were
86.58 per cent and 13.42 per cent respectively. It is further ascertained that in

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 respect of the size of units, the share of the variable and fixed costs were
90.40 per cent and 9.60 per cent for the small units and 82.11 per cent and
17.89 per cent for the medium units respectively. Hence, it is concluded that
the medium-sized units incurred less total cost of production compared to the
small-sized units.
25. It is observed that in the total variable cost per 100 bundles of coir fibre for
the small units, the share of labour cost (42.19 per cent) was the highest
followed by raw material (23.65 per cent), power (13.46 per cent), machine
running (4.41 per cent), interest on working capital (3.23 per cent), unretting
(1.77 per cent) and pith disposal cost (1.69 per cent). In the total fixed cost,
the share depreciation (6.88 per cent) was the highest followed by the interest
on borrowings (2.80 per cent). For the medium-sized units, the share of
labour cost was also the highest (39.53 per cent) followed by raw material
(22.54 per cent), power (12.36 per cent), machine running (2.24 per cent),
interest on working capital (1.87 per cent), unretting (1.81 per cent) and pith
disposal cost (1.76 per cent) in the total variable cost. In the total fixed cost,
the share of depreciation was the highest followed by interest on borrowings.
Therefore it is concluded that any effort towards the efficient use of labour
and material in both small and medium units would result in the reduction of
the cost of production.
26. It is found from the analysis of the total cost of production that the medium-
sized units had a total cost of Rs.18168.79 and the small-size units had
Rs.18594.85 per 100 bundles of manufacture of coir fibre. Therefore, it is
concluded that the total cost for the medium-sized units was less by
Rs.425.06 compared to the small-sized units which indicated the efficiency of
the medium-size units over the small-size units in the study area.
27. It is found that the gross revenues realized per 100 bundles of coir fibre were
Rs.23,857.60 and Rs.25,288.10 for the small and medium size units
respectively. It is also found that the net profits after deducting marketing

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 cost, variable and fixed cost worked out to Rs.1,855.15 and Rs.3,966.69 for
the small and medium-size units respectively. It is further ascertained that the
medium size showed a higher net return (Rs.7,217.56) compared to the small
size units which had Rs.3,641.51 only.
28. It is apparent from the analysis of the cost benefit ratio that each rupee spent
by the small and medium sized units led to a benefit of Rs.0.10 and Rs.0.22
for these units respectively. It is further seen that the more gross revenue
earned by the medium-sized units put them in a better economic and
institutional position than the small sized units.
29. The results of the regression model fitted to the different categories of units
as well as the pooled category significantly explains that among the
significant variables labour, material, power and machine running influenced
the gross revenue of coir fibre. Among these significant variables, the
variable labour had a greater influence on the gross revenue of coir fibre.
Further, the results indicated that every additional increase in the percentage
of these variables would result in an increased gross revenue by the same per
cent. The regression model fitted was highly significant at one per cent level
for the small and medium sized units as well as the pooled category.
30. The researcher has observed from Chow’s test that there was a structural
difference between the small and medium-sized units only at the slope level
and not at the intercept level. At the slope level, the resource input causing
the difference only by machine running. The results indicated that a one per
cent increase in the variable machine running could increase the gross
revenue of the small units by 0.1294 per cent and that of the medium units by
0.3687 per cent. Further, the analysis showed that the co-efficient of the
dummy variable was statistically insignificant at the intercept level. This
indicated that there was no difference with regard to technical change in both
groups of units in the study area.

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31. It is found from the analysis of the production function that the sums of the
regression co-efficient for the gross revenue of coir fibre for the small,
medium and pooled categories of units were 1.4674, 1.0936 and 1.2894,
indicating increased returns to scale. Hence, it could be concluded that the
coir industry in the study area operates in an efficient manner.
32. The analysis of the marginal value productivity disclosed that the ratios of the
marginal value products to the factor cost with respect to labour, material,
power and machine operating for the small, medium and pooled categories of
units were more than unity. It indicated that there was scope for increasing
the use of such resource-inputs to maximize their returns for both the groups
of coir units in the study area.
33. It is ascertained from Garrett’s ranking technique that the problems such as
shortage of workers and inadequate supply of green husks were the major
production problems encountered by the coir units of the study area
irrespective of the sizes. It is followed by two other major problems namely
inadequate finance and heavy machine maintenance expenses.
34. It is evident from the analysis that 65.39 per cent of the units market their
coir fibre to native traders who made advance payment to the entrepreneurs
who utilized that amount as the working capital. 19.23 per cent and 15.38 per
cent of the units market their coir fibre in the Alleppey market as it fetches a
considerable margin to them. Overall, it is clear that the owners of the small
units did not prefer market traders much whereas the commission agents were
not preferred much by the owners of the medium-sized units.
35. The analysis of the marketing cost incurred by the manufacturers per hundred
kilogram of coir fibre disclosed that the average marketing cost incurred was
Rs.94.25 in channel II and Rs.89.01 in channel III. Among the total
marketing costs incurred, irrespective of the channels, transport cost had a
higher percentage with an overall percentage of 59.89 followed by rejection
loss with 16.58 per cent and loading and unloading with 11.55 per cent.

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 Further, the analysis showed that marketing channel III was found to be
cheaper because of the non-payment of commission charges.
36. The analysis disclosed that the marketing cost incurred by the native traders
was Rs.101.62 per 100 kg of coir fibre. Among the different marketing costs
incurred by them transport cost including loading and unloading and packing,
commission and rejection loss together accounted for 80 per cent of total
marketing cost.
37. The analysis showed that the total marketing costs incurred by market traders
was Rs.106.29 per 100 kg of fibre which was higher than that of the native
traders. It was due to the cost of cleaning, polishing, drying and bundling of
fibre incurred by them in the terminal market in order to realize a better price,
which constituted 39.03 per cent of their total marketing cost.
38. It is found from the price-spread analysis that the net price received by the
owners of the units in the study area was the maximum in channel III and
minimum in channel I despite the options of marketing cost in that channel.
The owner’s share in channel I and channel III was about 66 per cent and 52
per cent respectively of the price paid by the industrial users.
39. The analysis of marketing efficiency using the Shephered Method as well as
the Composite Index Method disclosed that channel III was more efficient
than channel I and channel II. Which may perhaps be due to the lower
marketing cost on account of the least participation of intermediaries. The
results of Acharya and Agarwal’s formula revealed that channel I was the
most efficient as it added higher value to the coir fibre.
40. It is evident from the analysis of time-series that the secular trend analysis of
the prices showed an increasing trend in the prices of coir fibre in the
Alleppey market. The annual average price of coir fibre per 100 kg increased
at the rate of Rs.56.16 per year and the price movement was positive. The co-
efficient of determinant (R2) was 0.92 which indicated that 92 per cent of the
variation in the prices of fibre was explained by the dependent variable. The

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 result of the cyclical variation indicated that there was no regular cycle in the
price of fibre. It reached the maximum in 1988-89 and thereafter it declined
during 1993-94 and again started increasing steadily and reaching the peak
level in 2001-02.
41. It is found from the analysis of indices of irregular variation that the indices
of prices of coir fibre varied from 0.98 to 1.44. The co-efficient of the
irregular variation was 11.71 per cent which confirmed price variation from
1994-95 to 1997-98 continuously and again from 1999-2000 to 2001-02
which were due to irregular factors. Analysis of seasonal variations showed
that the lowest price index prevailed from December to March and the
highest price index prevailed from October to November followed by April
and May.
42. Garrett’s ranking technique was adopted to identify the major problems in the
marketing of coir fibre in the study area. It was found that the problems such
as heavy transport expenses, lack of government support, inadequate market
information and heavy commission were the major problems ranking first,
second, third and fourth respectively.
43. It is found from the analysis of human resource practices followed by the coir
units that 78.85 per cent of the units did not have a separate human resource
department and 73.08 per cent of the units had informality in the formulation
and execution of human resource policies.
44. It is observed that regarding recruitment of workers, 94.23 per cent of the
units recruited through existing workers and 96.15 percentages of units
through supervisors. It is further observed that a majority of the units in the
study area did not follow any formal method for recruiting workers.
45. It is further seen that 73.08 per cent of the units provided Job Training to the
workers and 78.84 per cent motivated their workers through financial
incentives.

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46. It is also evident from the analysis that regarding the working conditions
prevailing in the units of the study area all the units provided masks and
drinking water facilities to the workers. 88.46 per cent, 73.08 per cent, 53.85
per cent of the units provided fire protection guard, uniforms and facilities for
disposal of effluents respectively. Further, the analysis showed that none of
the small units provided rest room facilities to their workers.
47. It is apparent that the welfare facilities such as first aid, insurance coverage
and transport facilities were provided invariably by all the units of the study
area. 86.54 per cent, 61.54 per cent and 44.23 per cent units provided
refreshment, compensation for accidents/death and vehicle shed facilities to
its workers respectively. Further, it is ascertained that other facilities such as
creche, canteen, vehicle shed and maternity benefits were totally absent in
small units.
48. It is found from the overall analysis of the level of satisfaction of the sample
workers that 45.30 per cent were “poorly satisfied” and 41.70 per cent were
“medium satisfied” with the working conditions of the coir units. Only 13 per
cent of the sample workers were highly satisfied.
49. It is found that 53.85 per cent of the sample workers belonging to the age
group of above 45 years were highly satisfied and 48.53 per cent who belong
to the age group between 16 and 30 years were poorly satisfied with the
working conditions of the coir units of the study area.
50. It is ascertained that 69.23 per cent of the sample workers who had no formal
education were highly satisfied and 47.79 per cent who had education upto
the higher secondary level were poorly satisfied with the working conditions
of the coir units.
51. It is realized that 74.36 of the sample workers who belonged to the scheduled
castes were highly satisfied and 55.15 per cent who belonged to the non-
scheduled castes were poorly satisfied with the working conditions of the coir
units. It is further evident that 74.36 per cent of the sample male workers

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 were highly satisfied and 90.44 per cent of the sample female workers were
poorly satisfied.
52. It is found that 61.54 per cent of the sample workers who had experience of
above 5 years were highly satisfied whereas 52.94 per cent of the sample
workers who had less than 3 years of experience were poorly satisfied.
53. It is ascertained that 71.79 per cent of the sample workers belonging to the
basic agricultural work status were highly satisfied and 55.15 per cent of the
sample workers belonging to the category of industrial work status were
poorly satisfied.
54. It is found from the chi-square analysis that the factors age, education,
marital status, gender, experience and basic work status had a significant
influence on the satisfaction level of the workers on the working conditions
of the coir units in the study area. However, the factor marital status did not
have a significant relationship on the satisfaction level of the workers in
respect of the working conditions of the units of the study area.
55. It is ascertained from the analysis of Garrett’s ranking technique that most
crucial problems faced by the coir industry in respect of human resources
were scarcity of workers during the peak agri-season, the lack of an industrial
work culture, absenteeism and absence of workers’ union which ranked first,
second, third and fourth respectively.

7.3 SUGGESTIONS

The researcher offers the following suggestions for the sustenance and improved
performance of the coir industry based on the present study.

1. Since the coir fibre is the chief raw material for the production of coir and
coir products, the state government as well as the Coir Board may encourage
the entrepreneurs to go for another stage of coir production involving the
manufacture of value-added coir products.

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2. The high cost of production of fibre may greatly be reduced if technological
up gradation is favoured in the areas such as dehusking and quality of fibre.
Low cost machines of reasonable productivity have to be introduced to
replace the process of dehusking done manually now. To improve the quality
of the fibre and its length, a bio-technological study should be undertaken by
the Research Institute of the Coir Board by taking the genetic study of
coconut. Though it seems a time consuming and expensive study, it would be
beneficial in the long term survival and growth of the industry. Therefore,
cost reduction through modernization and professionalism are the need of the
hour.
3. In order to make them fully informed on the current trends of the industry
and to provide them a platform to discuss the day-to-day problems
confronting their coir units, the entrepreneurs of the study area may be
encouraged to form a manufacturer’s guild. The DIC and non-governmental
organizations have a role to play in this regard.
4. As the study area has abundant raw material—husk supply with low price—
the large units make bulk purchases and stock them in their units, thereby
effecting continuous production of fibre. The small units on the other hand,
due to inadequate storing facility, could not reap the benefits enjoyed by the
large units. It is suggested that to lessen the burden of stocking the procured
raw material, the small units may be allowed to make use of the market yards
of the regulated markets spread over acres of land which are lying unutilized.
This service may be provided charging a reasonable storage fee.
5. The survival of the industry amidst other factors mainly depends on the
steady availability of skilled artisans and workers. Moreover the workers of
the study area lack industrial work culture and cause numerous labour
problems to the units. Therefore, in this context, it is suggested that training
programmes should be organized at frequent intervals for the workers by the
Coir Board with the co-ordination of the Small Scale Industries Board at the

260
 block level of the district with the twin objectives of imparting coir making
skills on the one side and creating a huge chunk of uneducated teenagers who
are devoted to the art of coir related work. This ensures a generation of
workers who have to depend on the coir units for their livelihood.
6. The months of January-April being the peak season for coir fibre, that the
commercial banks and financial institutions should conduct “Coir Loan
Melas” to meet their working capital requirements during the period.
7. To overcome the problem of the disposal of coir pith which causes
environmental hazards occupying huge space in the vicinity of the coir
units, the government lands (porambouke) located at far off places may be
leased by the entrepreneurs of the coir units for the dumping of such coir
dust.
8. As the value addition to coir pith has a growing international market, it is
suggested that a Coir Pith Research Institute as demanded by the Coir Pith
Allied Products Manufacturers and Exporters Association may be set up by
the Coir Board. Efforts may be initiated in this regard to establish such an
Institute in the study area.
9. For eliminating the mafia-mentality of middleman in the channel of
marketing, the Coir Board should open offices of the Coir Marketing
Federation (COIRFED) to relieve the entrepreneurs from the burden of the
marketing of coir fibre.
10. It is suggested that to popularize the unique properties of coir fibre and
products, the Coir Board should open showrooms and conduct road shows
besides organizing seminars, symposia and workshops in the study area. The
entrepreneurs of the study area with the support of government assistance
should also be encouraged to participate in the major exhibitions held at the
National and International levels.

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11. The Coir Board should take earnest steps to open its office in the district head
quarters, in order to make the entrepreneurs fully informed of coir schemes
and programmes from time to time.
12. The investment subsidy extended by the Coir Board as well as the state
government through the District Industries Centre should be linked with the
output of the coir units.
13. It is further suggested that a separate cell named “Coir Development Cell”
may also be opened at the premises of the District Industries Centre to attend
exclusively to coir related issues.
14. Self help groups who have a strong presence in the study area may be
motivated and organized to undertake the manufacturing of traditional coir
products like mats, mattresses, coir ropes, carpets and innovative coir
products like coir composites, coco-lawn, coir bricks and coir geo-textiles.
15. The Coir Board implements a project entitled “Technology Transfer,
Modernisation and Capacity Building” in the Indian Coir Sector with funding
from the UNDP. Under the project, the Board covers six coir clusters in
Tamil Nadu, Andhra Pradesh, Karnataka and Kerala. Based on the
experience, a replicable strategy for all-round development of the industry
could be formulated and extended to individual coir units.
16. Workers, especially women, work under unhygienic working conditions and
the small units are unable to provide even some basic amenities like the
provisions of drinking water, latrines, health centres and rest rooms to their
workers because of financial crunch. Therefore, the panchayats or
municipalities concerned could help the entrepreneurs with the advances for
creating such facilities.

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7.4 CONCLUSION

The coir industry was chosen for the present study because of its social and
economic importance to the area. The industry employs a vast number of the
disempowered social sections, mostly of the “lower castes” and “outcastes”, an
overwhelming majority of them women. The coir industry employs more than six lakhs
of people directly and indirectly earnings a foreign exchange to the tune of Rs.300 crores
per annum. Coir and coir products make good progress in the domestic as well as
International market & because of their unique qualities of durability, bio-degradability
and eco-friendliness. At present, the industry gets a phenomenal share of 89 per cent of
the global market for the value added coir products.

After the heady day’s right from the time the first factory was established in the
second half of the nineteenth century to the middle of the twentieth century, the industry
has gone through some upheavals. Now the Indian industry is on the comeback trail and
keeping pace with the changing technology and imbibing the latest developments in
production techniques and designs.

In the prevailing scenario of the industry, the present research is a humble attempt
to throw light on certain specific areas of the working of the coir units located in
Thanjavur District of Tamil Nadu. The findings of the present study are not exclusive in
nature, but are common to a majority of the units in India. Several new factories have
come up especially in the private sector. The small and medium manufacturers are also
rising to the occasion. The study highlights the problems confronting the industry of the
study area. Which are not amenable to any quick-fix solutions. But improving value
addition and access to technology and information would solve most of their operational
problems. The industry has good scope to make an indelible mark in the industrial map of
Tamil Nadu and could finally contribute to the development of the country. Therefore, a
right step forward in this connection by the parties concerned lies in the consideration of
suggestions offered in the study both in letter and spirit.

263
 Realizing its growth potentional, the Government of India also provides funds
annually for the development of coir industry through various plan programmes with
special emphasis on rural employment generation and modernization. The Coir Board
also during its Golden Jubilee Year (2003) formulated a theme— “Expand, Employ and
Export” and worked on it vigorously. It is apt to conclude with the words of the
Chairman of the Coir Board; “The Coir Board Millennium Development Mission, a
vision for the future, is an ambitious vision. I am sure that there will be visible impact on
coir industry which I hope could be seen in the next five years. The Coir Board schemes
will be revamped on the basis of this vision and this will be a milestone in the history of
Indian Coir Industry”.

264
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REPORTS

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Bank Cell, Chennai, 2006.

Coconut Development Board, Coconut Statistics, Directorate of Economics &

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2002.

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Coir Board, Fifty Second Annual Report, Kochi, 2005.

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Manager Government of Tamil Nadu, Department of Industries and
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Agriculture, Thanjavur.

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and Seminar on Coir, Souvenir, Coir Board, Kochi, 2001.

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Annual, New Delhi, 2005.

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District.

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Cochin, September 1954.

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and ARI, 2001

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2006-07, Tamil Nadu, NABARD Tamil Nadu Regional Office, Chennai,
2005.

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Publication, Bombay, 1975.

274
WORKING PAPERS

Jurgen Sweegers, “The Coir Industry in Kerala – Theoritical and Empirical

Aspects of a Traditional Industry in the Wake of Economic
Development”, Working Paper, No.68, submitted to The Center for
Development Studies, Thiruvananthapuram, 1999.

Mirtul Eapen, “Rural Industrialisation in Kerala: Re-examining the Issue of

Rural Growth Linkages”, Working Paper, No. 348, Centre for
Development Studies, Thiruvananthapuram, July 2003.

Ram Mohan, K.T., “Technological Change in Kerala Industry: Lessons from

Coir Yarn Spinning”, Working Paper, No.4, submitted to Center for
Development Studies, Thiruvananthaputam, October 1999.

WEBSITES

http://www.eaindustry.nic.in/asp2/list_d.asp

www.coirindia.com

www.coirindia.org

www.coirindia.org/artilcles/htm

www.tn.gov.in.com

275
 APPENDIX I

“A STUDY ON THE PERFORMANCE OF COIR INDUSTRY

IN THANJAVUR DISTRICT, TAMILNADU”

INTERVIEW SCHEDULE FOR THE OWNER

1. PROFILE OF THE UNIT

1.1 Name and Address of the Unit :

1.2 Year of formation of the Unit :

1.3 Location of the present Unit : Urban Rural

1.4 Type of organization :

a. Sole trading concern c. Co-operative

b. Partnership Firm d. Company

1.5 If partnership firm, mention the number of partners:

1.6 Have you registered the unit? : Yes No

1.7 If ‘yes’, the unit registered under :

a. SSI c. Coir Board

b. District Industries centre

1.8 Mention the Block in which unit located :

1.9 Mention the average stocking period of Raw Material : From To

1.10 Mention the average stocking period of Finished Fibre : From To

2. PRODUCTION PRACTICES

2.1 Specify the main source of raw material :

a. Own field b. Purchased from other source
(Specify)
2.2 Type of raw materials used :
a. Green husk only c. Both

b. Dry husk only

2.3 Indicate the final products of your manufacture :

a. Coir Fibre c. Coir rope

b. Coir yarn d. Others

2.4 Do you have your own drying yard? Yes No

2.5 If ‘No’, specify the reason :

2.6 Number of shifts worked during a day

a. One shift c. Three shifts

b. Two shifts

2.7 Cost of raw material per month

Sl. No Type of Husk Quantity Cost (Rs.)

1. Green Husk
2. Dry Husk

2.8 Details of work force employed :

Sl. No Type of Employee / Worker Numbers Salary Per Month (Rs.)

1. Manager
2. Accountant
3. Supervisor
4. Driver/operator
5. Watchman
2.8.2 Details of cost of labour engaged in the production process :
Sl. Men Women
Process Wages per Wages per
No Number Number
month month
A. Crushing
B. Soaking / Unretting
C. Separation
D. Drying and Cleaning
E. Bundling

2.9 Details of Cost of unretting per month :

a. Watering Rs. :

b. Oil and Grease Rs. :

2.10 Details of Cost of power per month : Units consumed Total cost (Rs.)

2.11 Details of cost of machine running :

Sl. No Particulars Amount per month (Rs.)

1. Cost of Fuse carrier
2. Fuel, Oil and Lubricants
3. Spares and Parts
4. Consumables and Packing
5. Shed Maintenance

2.12 Details of cost of pith disposal per month :

2.12.1 Disposal of pith through owned tractor

a. Consumption of diesel Rs. :
b. Consumption of oil Rs. :

2.13 Details of office and Administration Expenses (Per month):

Sl. No Particulars Amount per month (Rs.)
1. Telephone
2. Stationery
3. Lighting
4. Property tax
2.14 How many hours are the machines run per shift? :

2.15 Specify the life of machines in years :

2.16 Have you insured your unit? : Yes No

2.17 Mention the annual premium paid (Rs.) :

2.18 Do you face any problem in production? : Yes No

2.19 If ‘Yes’, rank the problems :

a. Shortage of workers e. Inadequate supply of

green husk

b. Inadequate finance f. Traditional method of

production

c. Heavy machine maintenance g. Problems of drying fibre

expenses during rainy reason

d. Traditional method of
production

3. HUMAN LABOUR

3.1 Do you have adequate supply of workers? : Yes No

3.2 Specify the mode of payment : Time Work

Basis Basis

3.3 Specify the organisational set up of your unit :

3.4 Do you have a separate HRM department? : Yes No

3.5 Do you follow formal HR policies? : Yes No

3.6 Do you have the practice of estimating the : Yes No

required work force in advance?
3.7 Specify the source of recruitment of workers :

(a) Through Existing workforce (d) Through partners

(b) Through Supervisors (e) Direct applications

(c) Through friends and relatives

3.8 Specify the type of training imparted to your workers :

(a) On the job training (b) off the job training

3.9 Specify the type of motivation :

(a) Financial (b) Financial & Non-financial

3.10 Please tick the facilities available in your unit :

a. Provision of Masks e. Uniforms

b. Fire Protection Guard f. Drinking Water Facilities

c. Disposal of Effluents g. Lavatory Facilities

d. Rest Rooms

3.11 Please tick the welfare facilities you offer your workers:

a. Compensation for accidents/ f. Canteen Facilities

death
b. First aid g. Vehicle Shed

c. Crèche Facilities h. Maternity Benefits

d. Insurance Coverage i. Transport Facilities

e. Refreshment
3.12 Do you face any labour problems? : Yes No

3.13 If ‘Yes’, rank the following :

a. Scarcity of workers during e. Hesitation to undergo

Peak agri-season training
b. Lack of industrial work culture f. Mobility of workers from
unit to unit
c. Absenteeism g. Frequent advance sought
d. Absence of workers’ union

4. MARKETING

4.1 Do you have sufficient demand for your fibre? : Yes No

4.2 Through whom do you sell your fibre ? :

a. Native Trader c. Market Trader
b. Commission Agent d. Wholesaler

4.3 On an average how much you sell in a month? :

4.4 Specify the reasons for selling through native traders:

(Rank the reasons)

a. Immediate sales e. Absence of commission

agent
b. Advance payment f. Less rejection cost
c. Convenient to sell in g. No transport cost
small lots
d. Long term practice

4.5 Specify the reasons for selling through Market Traders:

a. Better Price d. Absence of Fibre extraction
at Terminal markets

b. Bulk Sales f. Less local demand

 c. Immediate Payment g. Awareness of current
industry trends

4.6 Does any co-operatives or government body: Yes No

help in marketing?

4.7 If ‘Yes’, how and how far?

4.8 Do you face any problem in marketing your product? Yes No

4.9 If ‘Yes’, rank the reasons in order of importance:

a. Lack of Government Support e. Heavy Commission

b. No direct contact with f. Lack of Storage facilities

industrial users

c. Heavy Transport Cost g. Inadequate Market

Information
d. Lack of Finance

4.10 Mention the amount of marketing cost incurred (Per lorry load of fibre):

Sl. No Items of Expense Amount (Rs.)

1. Loading & Unloading
2. Packing
3. Weighing
4. Transport
5. Commission
6. Rejection Loss
7. Incidental Charges

4.11 Details of sales during the past three years:

Sl. No Year Quantity (in bundles) Value Rs.

1. 2007-08
2. 2008-09
3. 2009-10
5. FINANCE

5.1 Specify total capital investment for your unit: Rs.

5.2 Mention the sources of investment:

a. Own fund c. Both

b. Borrowed fund

5.3 If borrowed, state the sources of the amount borrowed and the rate of interest:
Sl. Amount Borrowed Rate of
Sources
No (Rs.) Interest
1. Commercial Banks
2. Financial Institutions
3. Subsidised Loan from government
4. Money lenders
5. Friends & relatives

5.4 Specify the Amount of Fixed capital investment (Rs.):

5.5 Specify the Amount of working capital required (Rs.):

5.6 Specify the rate of interest on working capital:

5.7 Details of Investment Pattern of Fixed Capital:

Value Value Value of Value Value of
S. of of Machinery & of Tools &
Year
No Land Buildings Equipment Vehicles Appliances
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
1. 2007-08
2. 2008-09
3. 2009-10
5.7 Details of Investment Pattern of Working capital:
S. No Year Value of Raw Value of Value of
Materials Finished Fibre Cash
(Rs.) (Rs.) (Rs.)
1. 2007-08
2. 2008-09
3. 2009-10

5.8 What are the future prospects for the coir industry?

5.9 Give your suggestions for improving the performance of coir industry:
 APPENDIX II

“A STUDY ON THE PERFORMANCE OF COIR INDUSTRY

IN THANJAVUR DISTRICT, TAMILNADU”

INTERVIEW SCHEDULE FOR THE WORKER

1. Name of the respondent :

2. Age :

3. Literacy level : No formal education

: 10th Standard

: Higher secondary

4. Gender : Male Female

5. Marital status : Married Unmarried

6. Community : SC / Non-SC

7. Years of experience : Below 3 years

8. Basic work status : Agri Based / Industry Based

9. Please tick in the appropriate box:
S. Particulars HS S NSND DS HDS
No
I. Wages
1. Just and fair considering my workload
2. Overtime wages are reasonable
3. Considering my experience, the wage is
reasonable.
II. Working Conditions
1. Machines and Equipment are in good
condition
2. Rest pauses are adequate.
3. Work places are hygienic.
III. Financial and Non-financial incentives
1. Satisfied with leave facilities
2. Satisfied with payment of Bonus
3. Loan and advance facilities adequate
IV. Health and Safety measures
1. Insurance facilities adequate
2. Safety accessories provided adequately
3. Compensation package is just and fair
V. Supervision
1. My supervisors are cordial and friendly
2. I can trust what my superior says
3. Supervisor handles work-related issues
satisfactorily.
VI. Motivation
1. Get appreciation for the work done from
my owners
2. My skills and experience are adequately
used
3. My suggestions and views are always
accepted
 APPENDIX III

“A STUDY ON THE PERFORMANCE OF COIR INDUSTRY

IN THANJAVUR DISTRICT, TAMILNADU”

INTERVIEW SCHEDULE FOR THE NATIVE TRADERS

1. Name :

2. Address :

3. Age :

4. Quantity transacted per month (Per load) :

5. Price received / paid during a month (Per load) : Maximum -

Minimum -
Average -
6. Marketing Cost (per load)

Cost
Sl. No Items of Cost
(in Rs.)
1. Loading & Unloading
2. Packing
3. Weighing
4. Commission
5. Transport
6. Rejection Loss
7. Establishment Charges
8. Staffing

7. Give your suggestions for the efficient marketing of coir:

 APPENDIX IV

“A STUDY ON THE PERFORMANCE OF COIR INDUSTRY

IN THANJAVUR DISTRICT, TAMILNADU”

INTERVIEW SCHEDULE FOR THE MARKET TRADERS/

COMMISSION AGENTS/WHOLESALERS

1. Name :

2. Address :

3. Age :

4. Quantity transacted per month (Per load) :

5. Price received / paid during a month (Per load) : Maximum -

Minimum -
Average -
6. Marketing Cost (per load)

Cost
Sl. No Items of Cost
(in Rs.)
1. Fibre Cleaning & Polishing
2. Drying & bundling
3. Loading & Unloading
4. Transport
5. Brokerage
6. Rejection Loss
7. Staffing
8. Establishment Charges

7. Give your suggestions for the efficient marketing of coir: