CHAPTER - III

3.1 ANALYSIS OF RAW MATERIAL CONSUMPTION AND

PRODUCTION AND SALES PERFORMANCE

3.1.1 INTRODUCTION

The Indian handmade paper industry produces a host of varieties of

paper by mainly recycling the waste materials such as cotton rags (in the

form of tailor cuttings) and small quantities of waste paper and agro fibres

like jute, paddy straw, banana stem, baggasse, sun hemp and other fibrous

materials'. The raw materials do not receive any harsh chemical treatment in

boiling and bleaching so that the quality of the cellulose is not degraded.

This aspect, with its co-friendly nature, earns for it an added advantage in

marketing.

Raw materials for handmade paper industry are mainly used waste

resources consisting of hosiery cuttings, waste rags, hospital wastes, waste

paper, wasted mats and fibrous agricultural wastes. The present study has

attempted to analyse the raw material pattern and whether it has used only

waste materials or any other useful fibrous materials or wood pulp.

Production and sales are the two factors that determine the economics

of any business. Given the cost and prices it is the levels of production and

sales which determine the amount of net profit of the business and thereby ,

its financial status. Moreover, performance in production and sales in

governed by many vital factors like availability of raw materials, adequacy

of management in organizing inventory, production, marketing and

competition encountered in sales.

A study of changes in production and sales will highlight problems, if

any, in the institutions under study. An analysis of trends in production and

sales will be necessary for evaluation of the economic performance.

Therefore, this chapter addresses the performance of the Tamil Nadu Kadhi

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and Village Industries Board units under study, namely, Pidagam Handmade

Paper Unit, Ponnavarayankottai Handmade Paper Unit, Senbahapudur

Handmade Paper Unit and Veeraragavapuram Handmade Paper Unit with

respect to production and sales. Production is not the application of tools to

materials but it is the application of logic to work'.

The term production in invariably taken to mean ex-factory value of

output or value to be realized by the producer on sale of output. However,

this concept of the ex-factory value of output suffers from certain

methodological limitations. It includes value of raw materials and other

materials inputs used in production, even though the business under study

has not produced those raw materials. Therefore ex-factory value does not

represent the value addition created by the business under study, and

therefore the value of material inputs which are not part of the value addition

by the business under review.

In this regard, sushi states that the value added statement emphasizes

that the performance of the enterprise represents the collective efforts of

employees, management and productivity of capital3.

Further the Accounting Standards Steering Committee of U.K.

published a paper entitled “The Corporate Report”, recommending various

expansions to financial reporting one them being publish value added

statement.

One of the major activities of any firm is production and sales.

Production refers to the transformation of resources into the outputs of goods

and services . According to A. et. Adolph al., ‘any business is viewed as a

major system having three sub-systems of production, sales and finance’.

Decision junctures exist at critical points in this dynamic system to keep it in

balance with its environment and key activities of production and sales are

so adjusted that the enterprise will yield the best combinations of return on

its assets and risk assumption5. The profitability of any business enterprise is

54

directly related to the volume of production and sales achievement in a time

frame.

Production is influenced by several factors like raw material choice,

level of technology, productivity of labour, inventory levels, capacity

utilisation and flexibility, whereas sales is influenced by the performance

characteristics of the products, market acceptability, consumer preferences,

level of competition and the market promotional measures. Marketing

activity is influenced by several factors. In the era of information

technology, marketing practices and institutions have been s h a p e d b y

changes in technology available for collecting, storing, communicating a n d

analyzing information .

To make intelligent decisions organizations need accurate and line

information about sales, customers, competitors’ activities and other events

in the market place. Marketing may be profoundly affected by the right

choice of information systems and management6. Hence, for successful

business operations, Marketing Decision Support Systems (MDSS) should

be strengthened in organisations.

Transformation of raw material into finished goods catering to the

needs of the customer in general is categorised under the terminology

“production”. Production activities are to be carried out with the association

of factors of production, namely, land, labour, capital, organisation in the

wider sense. For maximization of profit, techniques, skill of work force,

managerial efficiency, modern devices with tolerable costs are to be

concentrated on.

To give sustainable employment opportunity at the door-step of rural

artisans, in the 1960s, handmade paper units established by the Tamil Nadu

State Government through TNKVIB in different parts of the State, under the

slogan (in Tamil) Samuthaya Membattu Thittam”, which means a plan of

social development. These small units in the rural areas of Tamil Nadu not

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only paved way for economic gains to the rural unemployed and under

employed persons as the rural artisan was left without any job in the off

season in well irrigated and river belt cultivable areas but also unemployed

persons who were idle in the areas where cultivation activities are i n

dependence on the monsoon. To feed these people the TNKVIB, along w i t h

the KVIC, started a few medium type handmade paper units in Tamil Nadu

on the guidelines set forth by KVIC, an apex body functioning at the national

level.

3.2 ANALYSE OF RAW MATERIAL CONSUMPTION

3.2.1 Handmade Paper Unit, Pidagam

Table 3.1 indicates the raw materials used by the handmade paper

unit, Pidagam for 10 years. The unit produced mainly paper boards f i l e

covers and paper carry bags having a gsm of about 120 - I 50 gsm/. The unit

used hosiery cuttings as major raw material 5gms in the span of ten years.

The percentage of waste hosiery cuttings in the raw material mixture range

from 80 percent to 61 percent. Hosiery cuttings are obtained from Tirupur, a

town having 3000 hosiery knitting units and a leading export centre. Hosiery

cuttings are obtained in white and colour shades. White hosiery cuttings are

costlier than colour hosiery cutting. For the preparation of white paper

boards and other plain carry bags, white hosiery cuttings are used white the

colour hosiery cuttings are used for making colour boards and bags. The

hosiery waste consists of low twisted cotton yarn that yield staple fibres

upon repeated beating in the beater. These fibrous staple have anglings to

facilitate inter fibre banding to provide sufficient strength to the output.

Hence hosiery cuttings a waste by product of knitted garment making unit

has been used as major raw material by the unit.

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The unit also used waste paper cuttings obtained as the by product

from printing press, book binding shops etc. The waste paper bits with the

addition of sodium hydroxide and soaking and repeated beating yield paper

pulp. This pulp will help to produce cleaner handmade paper. The unit used

waste paper cuttings ranging from 20 percent to 39 percent in the period of

10 years. In 1997-98 it has used low percentage of paper cuttings in the

mixing and in 1996-97 the percentage of waste paper was at highest at 39

percent.

The unit has used only two types raw materials namely waste hosiery

cuttings and waste paper cuttings and it did not use any wooden based

fibrous raw materials affecting the forest wealth.

3.2.2 Handmade Paper Unit, Ponnavarayankotii

Table 3.2 deals with the pattern of raw materials used by the

handmade paper unit, Ponnavarayankottai for a period often years. The unit

mainly produced hard boards, shoe boxes, tools boxes and sweet boxes that

are stiff and having higher grams per square meter materials.

The unit used four varieties of raw materials, namely waste paper

cuttings, sterilized hospital wastes, hosiery cuttings and worn out jute gunny

bags use of hospital waste in the raw material yield unopened long yarn in

the output generating higher strength. Boxes are to hold sufficient weights

and therefore use of hospital waste is inevitable in this unit raw material

pattern.

It also used worn out gunny jute bags that yield more fibres substance

in dull brown colour. Whenever the outer appearance of the board is not a

major concern and when the surface of the board has to be covered with

printed product display sheets, the use of jute based raw material is

preferred. This is quite cheaper than all other raw materials. The availability

of linguine in the jute waste yield sufficient strength to the board.

Handmade paper unit, Ponnavarayankottai used waste paper cuttings

as major raw material during the study period. It has used waste paper

ranging from 50 per cent to 59 per cent, in 1991-92, 1999-2000 and 2000-01,

the use of waste paper in the raw material mixing was at low (50%). During

these years, the unit manufactured mainly shoe boxes and hard boards. In

1994-95 and in 1995-96, the unit had used higher percentage (59%) of waste

paper in the raw material mixing. During these years, the unit produced

mainly file boards which are finish without any coverings on the board

surface.

The unit used hospital wastes ranging from 13 percent to 20 percent.

The proportion varied according to the final product variety and quality.

Whenever load bearing boxes are to be made the percentage mix of the

hospital waste has been increased to yield more strength.

The unit used hosiery cuttings ranging from 10 percent to 21 percent

with an average of 12 percent per annum. Among the raw materials, tlie

waste hosiery cuttings are costlier and used wherever the quality of the final

product is stressed. The unit used higher percentage of hosiery cuttings in

1991-92 and in 2000-01. During these years, the unit has produced higher

share of file boards as final products.

The unit used jute gunny bags in the proportion ranging from 10 to 18

percentage in the study period. Worn out jute bags are cheaper source of raw

material and used in producing thick boards and boxes where the outer

surface is covered with product characteristics and logos. The unit used

higher percentage of jute wastes in 1993-94 and in 1996-97 and during these

years, the manufacture of thick boards hard boards, and shoe boxes were

dominant.

Thus, the handmade paper unit, Ponnavarayankottai used waste

materials only in their raw material plan.

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3.2.3 Handmade Paper Unit, Shenbagatpudur

Table 3.3 present the pattern of raw material varieties used by the

handmade paper unit, Shenbagapudur for the period of 10 years. The unit

mainly used two types of raw materials namely, hosiery cuttings and waste

paper cuttings. The unit manufactures high grade paper, tissue paper and file

boards. Thus it has used higher grade, envelopes, covers etc. The unit has

utilized cotton hosiery cuttings with the proportion ranging from 71 percent

to 86 percent in the study period. One reason for using higher percentage of

hosiery cuttings were attributed to the final output namely the low gsm high

quality papers and the other reason is that the unit is located very near to

Tirupur, the major source of hosiery cuttings.

The use of hosiery cuttings was at higher share during 1995-96, and

1998-2001. During these years the unit has produced white paper varieties in

bulk quantities. The unit has also used waste paper as one of the raw

materials in their production. The waste paper use ranged from 14 percent to

29 percent. Thus, the handmade paper unit, Senbagapudur used only waste

materials as its raw material during the study period.

3.2.4 Handmade Paper Unit, Thiruchengodu

Table 3.4 presents the raw material pattern utilized by the handmade

paper unit, Thiruchengodu for a period of 10 years. The unit used only two

raw material sources namely, hosiery cuttings and the waste paper cuttings

for producing the handmade paper products. The unit produced mainly

handmade paper envelopes, file boards, paper articles, craft boards and paper

carry bags. The unit has utilized hosiery cuttings with percentages ranging

from 75 percent to 88 percent. The unit has consumed higher percentage of

hosiery cuttings in 1995-96 and 1999-2000. During these years the unit has

produced mainly the white paper, craft paper than files, flap boards and carry

bags. The consumption percentage of hosiery cuttings showed fluctuation

due to fluctuation in the demand for handmade paper products.

The consumption of waste paper cuttings ranged from 13 percent to 25

percent with an average of 20 percent per annum.

Thus, the handmade paper unit, Thiruchengodu used only waste

materials as its raw materials in the manufacture of handmade paper products

during the study period.

3.2.5 Handmade Paper Unit, Veeraragavapuram

Table 3.5 presents the list of raw material used by the handmade paper

unit, Veeraragavapuram during the study period of 10 years. The unit used

mainly three types of raw materials namely waste paper cuttings, hospital

wastes and worm out jute gunny bags. The unit is located near to the capital

city, Chennai and the locational advantage offers wide scope for gelling

waste paper cuttings, hospital wastes and jute wastes. The unit has not u s e d

hosiery cuttings in their raw material plan due to the fact that Tirupur is far

away from this unit. The unit mainly produce hard boards, file boards, thick

brown colour envelopes, shoe boxes and other colour carry bags of higher

gsm. Hence the unit was good at managing the raw materials available from

Chennai and it has planned the output pattern using the three raw material

sources.

The unit has used waste paper cuttings ranging from 39 percent to 52

percentage with an average of 47 percent per annum Chennai city has

numerous printing press, paper cutting shops and book publishers that

yielded better raw material source to this unit. From 1999-2000 awards, the

share of waste paper cuttings showed. Tremendous improvement due to its

proximity to the raw material source.

The unit used hospital wastes ranging from 29 percent to 39 percent

with an average of 41 percent per annum. Hospital wastes are used when

white carry bags, file boards and shoe boxes are produced by the unit.

During 1999-2000, the share of hospital waste was at its highest waste was at

its highest of 41 percent and during this period the unit produced higher

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volume of paper carry bags which is an alternative to plastic carry bags and

sudden increase in demand for paper based carry bags.

The unit also used worn out jute waste as one of the raw material. The

share of jute waste ranged from 8 percent to 25 percent in the study period.

In 1995-96 the jute waste was consumed at higher share due to production of

thick boards and shoe boxes undertaken by the unit.

Thus, the handmade paper unit, Veeraragavapuram raw material used

waste materials as raw material for the production of handmade paper

products.

3.3 ANALYSIS OF PRODUCTION AND SALES PERFORMANCE

3.3.1 Pidagam Handmade Paper Unit

Product ion Performance

The production values of Pidagam Handmade Paper Unit are

furnished in Table 3.6 for the years from 1091-92 to 2000-01.

The value of production ranged from Rs.2.68 lakhs in 1994-95 to

Rs.27.16 lakhs in 1999-2000 in current prices. The unit recorded fluctuating

trends in production upto 1997-98. From 1998-99 onwards has shown

increasing trends. From the primary data, it could be seen that the unit was

concentrating on white paper, ordinary board and file boards items of paper

during the initial years.

During this period, the unit was using beater machine and dipping vat

to produce papers and boards. After 1998-99, the unit introduced an

improved technology using cylinder moulds and auto vats to produce

handmade paper items. Adoption of improved technology helped the unit to

produce diversified handmade paper products - bags and bond sheets. The

ban on plastic based carry bags and packages imposed by the Government of

Tamil Nadu has helped the unit to concentrate on handmade paper based

cany bags which are considered to be diversified products. At present the

71

(a) Improving the capacity utilization. At present the unit has achieved a

capacity utilization of 65% in 1999-2000. When the capacity

utilization improves to 90 per cent it can produce hand made paper

worth more than Rs.40 lakhs. This will result in improvement in

profits, reduce the costs and enable better labour utilization;

(b) Improving the quality of the paper products;

(c) Training to the operatives in value added products and diversified

products; and,

(d) Reducing wastages from 15 per cent to 5 per cent.

Sales Performance

The value of sales recorded by the Pidagam Handmade Paper Unit is

furnished in Table 3.7.

The values of sales ranged from Rs.2.98 lakhs in 1991-92 to Rs. 12.25

lakhs in 1999-2000 in respect of current prices. The sales values showed

increasing trends upto 1995-96 and from 1997-98 to 1999-2000. Only in

1996-97 and 2000-01, the unit recorded declining sales. The unit was

making paper and related products just to employ the available workers and

not against orders or demand. Thus, when the unit produced goods work

Rs. 14.85 lakhs only and when production was at Rs.27.16 lakhs it recorded a

sale of Rs.12.25 lakhs in 1999-2000. Such unwarranted production of goods

lead to inventory build up which will affect the profitability and increase

costs. The unit should plan its production operations based on market

demands and not on the available labour force or the plant and machinery.

Hence the unit should explore new marketing avenues to improve

sales and support the production activities. Primary sources reveal that the

unit makes 75% of its total sales to Government of Tamil Nadu and the

remaining is supplied to those who come voluntarily to procure handmade

74

Iki

77

3.3.2 Handmade Paper Unit, Ponnavarayankottai

Production Performance

The values of production recorded by the handmade paper unit at

Ponnavarayankottai are furnished in Table 3.8. The production values in

current prices ranged from Rs.0.45 lakhs to lakhs with fluctuations in

between the years. The unit concentrated only on the manufacture of file

boards and flap pads for supplying to Government Offices in Tamil Nadu.

As the unit concentrated on mono products like files, it could not raise the

production beyond Rs.3.20 lakhs. The unit is equipped with a beater machine

having a production capacity of 150 kg per day. Based on the above

capacity, the unit has the capability to produce about Rs. 12.00 lakhs worth

handmade paper goods. It has achieved only a maximum of Rs.3.20 lakhs

worth of production, which is 25% of the installed capacity. Such low

capacity utilization of the production facilities will affect the growth and

sustenance of the unit.

In terms of constant prices, the values of production ranged from

Rs.0.36 lakhs to Rs.2.01 lakhs in the span of ten years. The peak

performance occurred during 1997-98 and thereafter showed a declining

trend. The unit should ensure a stable production plan based on the capacity

of the plant and Government orders for products.

The lacklustre performance in production in constant prices was also

reflected in linear and polynomial equations recorded as below:

values have shown positive trends, the rate of growth were found to be very

meager. This confirms that the unit has not shown any major growth is

Production. The unit has to expend production of value added Hand Made

Paper products to stabilize the operations and earn stuffiest profits. Low

growth rates have indicated that the unit could not enhance the value of

production sufficiently.

Sales Performance

The sales values recorded by hand made paper unit,

Ponnavarayankottai are furnished in Table 3.9. The sales values ranged from

Rs.0.14 lakhs to Rs.3.62 lakhs in the span often years. In 1993-94 the unit

recorded the lowest sale of Rs.0.14 lakhs due to sales returns as they had

supplied inferior quality of hand made paper products to the customers. It

recovered from the fall in the subsequent year and made a sale of Rs.2.10

lakhs. The park performance was recorded during the year 1997-98 which

was due to the buck order secured by TNKVIB, Chennai. In the following

years the sales made successive dips reaching a sale of Rs 1.27 lakhs in

2000-01. In terms of constant prices, the sales values ranged between

Rs. 0. 12 lakhs and Rs 2.28 lakhs with an average of Rs 1.44 lakhs per annum,

The unit has recorded a linear equation Ys=l .284-0.0016x the ‘M value for

sales equation is (-) 0.0016 increasing the declining trend in sales.

In terms of polynomial equations, the unit, has recorded the following

Mo d e l .

ys = 0.705 + 0.2675x - 0.0187x2 - 0.0006x3

After differentiation and substituting the values of x=l and x=10 in

the differenced equation, value of y]sl = 0.2286 and yl

slo=(-)0.2882. As

y1s10<y1

s1 the unit has recorded declining sales. The unit has to undertake

strategies to improve sales and identify right market seafront to affect the

sales Value added hand made paper product must be undertaken instead of

producing plain hand made paperboards. Market for such boards is very

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competitive and unit has to compete with the large scale units sales

trend and models have confirmed that the unit has shown declining trends

Meeting the future of the unit.

3.3.3 Hand Made Paper Unit, Senbagapudur

Production Performance

The production values of the handmade paper unit Senbagapudur are

furnished in Table 3.10.

The unit was established in 1957 and has a production capacity of 150

kg of boards/files per day. The production of hand made paper requires

ample quantities of soft water, which is the major ingredient. The unit had a

well for supplying the water to the production process. After the 1980s, the

well dried up and a bore well was sunk to ensure adequate water supply,

This too got dried up during monsoon failures and summer period. Thus, the

unit’s production was dependent on the water availability in their well,

Hence, the values of production in current prices ranged from Rs. 1.33 lakhs

to Rs.8.81 lakhs and after 1996-97, the unit ha?- shown declining production.

The water problem was a major impediment in ensuring full capacity

utilization and achieving high production. Primary sources indicate that the

unit has often procured water from outside on payment basis, which also

affected their performance.

Similar trends could also be noticed in respect of production values at

constant prices. The production values at constant prices ranged between

Rs. 1.33 lakhs and Rs.6.99 lakhs with an average ofRs.3.07 lakhs per annum.

Declining trends indicate that the unit has to ensure adequate revival

measures to improve the performance.

The production values at constant prices have been fit into linear and

polynomial equations to assess the trends. The unit recorded linear equations

of yp=3.834 (-) 0.1764x with negative ‘M’ value of 0.1764. As the slope (M

value) is negative, the production trend is found to be destining. Further the

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same was confirmed by the polynomial equation yp=(-) 4.6227 + 5.8629x (-)

1.07x2 -l- 0.0545x3 and y'p= 5.8629 (-) 2.14x + 0.163x2 substituting the x

values with x=i and x--10, it was found that ylpio<y'pi- also confirmed,

the declining nature of production performance. Hence, the unit should

stabilize production operations through adequate water supply. New water

sources have to be ‘identified by the unit within its premises or the entire

production using has to be shifted to a nearly place where copious water

supply is ensured. River Bhavani Sagar is flowing near to the unit at a

distance of 9 km. Laying pipe lines to get continuous water supply is one of

the options to sustain production operations. Detailed cost-benefit analysis

has to be undertaken by the authorities of the unit to decide on die right

choice of getting water continuously for production pui poses.

Sale s Performance

The value of sales recorded by the handmade paper unit of

Senbagapudur in current and constant prices are furnished in Table 3.11 The

sales values in current prices ranged between Rs. 1.10 lakhs in 1992-93 to

Rs.8.85 lakhs in 1994-95. The sales values showed high fluctuations and

there is a declining after 1996-97. Perusal of productions and sales values in

the respective years yield certain discrepancies in its management of

production and sales. In 1991-92 the value of production was at Rs.i.33

lakhs against a sales of Rs.7.71 lakhs and in 1995-96, when the production

was at Rs.7.88 lakhs, the sales was .at Rs.3.18 lakhs indicating its lack of

planning of operations. Hand made paper production ought to be undertaken

under batch production system. In such productions method, production of

the goods will be entirely dependent on the sales orders. As per the above

contrary values in production and sales, the unit do not undertake any

production plan and sales plan. In the absence of sound planning system the

unit has to bear the cost of excess inventories, wastages, under utilization of

the plant capacity and low manpower utilization. Hence, the immediate

Hence, the Senbagapudur unit has to ensure stable production and

sales plan, improve sales thro’ production of quality oriented paper products

in addition to more value added products instead of writing paper and bond

papers production undertaken by the unit. It is worth while to mention that

the quality of the writing paper is not performing well and it absorbs more

ink while writing. Thus, the unit has to improve quality of the paper through

use of quality inputs and chemicals and standardization of ph value of the

water. Further, the unit should establish market linkages with the paper

merchants and box manufactures. The unit is very near to Tirupur, the

leading hosiery centre in Tamil Nadu with annual exports of around

Rs.42000 millions. This proximity of market should be explored properly to

expand the marketing of this unit.

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strategy of the unit is to introduce a sound production and sales plan and

implementation of production schedules against the available sales orders.

In terms of constant prices also, the sales values have shown declining

trends similar to trends in current prices.

The sales performance of the units in terms of constant prices was

found to be meager and exhibited stagnant trends. The linear equation

showed a declining trend as below:

3.3.4 Handmade Paper Unit, Thiruchengodu

Production Performance

This handmade paper unit was established by Khadi Village

Industries Commission and Tamil Nadu Khadi and Village Industries Boat'd

as a model handmade paper unit. Later on the entire assets were transferred

to the management of Gandhi Ashram, Thiruchengodu, for sustaining the

production, sales, research and development activities. At present the

management of this unit is carried out by Gandhi Ashram, Thiruchengodu.

The production values of hand made paper unit, Thiruchengodu is

furnished in Table 3.12. The values of production ranged between

Rs.1.99 lakhs in 1991-92 and Rs.9.82 lakhs in 1998-99. There was a gradual

increase in the value of production from 199.1-92 to 1.996-97 and from

1997-98 onwards the production values increased by about 100 per cent to

Rs.7.68 lakhs from Rs.3.8l lakhs. This sudden increase in the value of

production was attributed to the ban imposed on plastic based polyethylene

carry bags by many state Governments in India and subsequent demand for

handmade paper based carry bags as a substitute for plastic bags.

The production value reached a peak of Rs.9.82 lakhs in 1998-99 and

thereafter showed a decline reaching a production of Rs.9.23 lakhs in

2000-01. The unit is equipped with cylinder mould vat that has more

productivity than auto vats and ensure quality outputs. This resulted in

higher production in the later years.

In terms of constant prices, the production values ranged from Rs. 1.86

lakhs in 1993-94 to Rs.5.79 lakhs in 1998-99. The trends in production

values have been fit into linear and polynomial equations to assess the nature

of the growth.

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Sales Performance

The sales values of the hand made paper units, Thiruchengodu are

furnished in Table 3.13. The sales values in current prices ranged from

Rs.1.99 lakhs in 1991-92 to Rs.8.12 lakhs in 1996-97 with an average sale of

Rs.4.65 lakhs per annum. During the initial periods, from 1991-92 to

1995-96, the sales values commensurate with the production values and alter

1995-96, the increase in production has not yielded corresponding increase

in sales. From 1996-97 to 2000-01 the total value of production for five

years was found to be Rs.40.00 lakhs and in the corresponding periods, the

total value of sales in five years was at Rs.32.00 lakhs leaving an inventory

of Rs.8.00 lakhs. This indicates that the unit has not planned its production

against sales or the sales could not be expanded due to the absence of not be

expanded due to the absence of marketing network. lienee, the unit should

ensure a production plan based on sales or market demands and not an the

available plant capacity or the skills of the labours.

In terms of constant prices the sales values ranged from Rs.l .98 lakhs

in 1997-98 to Rs.3.47 lakhs in 1999-2000. Fluctuation and declining sales

could be observed in constant prices. The unit recorded a linear equation of

ys = 2.1933 + 0.1356 x and has shown lower growth rate of 0.1356 against

the growth rate recorded in production at 0.4354.

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In order to stabilize and improve sales, the unit has to establish

marketing linkages with private traders and ensure a-production plan based

on market demands. Though the quality of the paper products of this unit is

good, it could not generate adequate sales due to absence of marketing

efforts. Developing appropriate markets is the prime strategy of this unit as it

has potential to produce quality goods in bulk quantities.

3.3.5 Handmade Paper Unit, Veeraragavapuram

Production Performance

The values of production for the hand made paper unit,

Veeraragavapuram are furnished in Table 3.14. The production values

ranged from Rs.2.37 lakhs to Rs. 14.00 lakhs in the span often years. The

unit recorded stable operations during 1991-92 to 1995-96 and afterwards

the production values plunged to a value of Rs.2.37 lakhs and from

1999-2000 onwards, it made an upsurge reaching the record performance of

Rs. 14.00 lakhs in 2000-01. The unit is located near to the Head Office of

Tamil Nadu Khadi and Village Industries Board and TNKVIB wanted to

improve the performance of the unit during 1998-99. Accordingly sufficient

working capital fund was sanctioned to procure the inputs and to enhance the

production. This resulted in sudden increase in the value of production

during 1999-2000 and 2000-01. From the above occurrences, two major

findings could be drawn on production performance.

1. From 1991-92 to 1998-99, the unit has produced hand made paper

goods worth 2.37 lakhs to Rs.5.35 lakhs when it was capable of

producing goods worth Rs.1500 lakhs per annum. For about eight

years, the unit was kept under utilized and the capacity utilization was

around 40 per cent.

2. The unit has gone for increased production of Rs. 13.44 lakhs in

1999-2000 from Rs.2.40 lakhs in 1998-99 without ensuring adequate

orders and markets. Such quantum jumps in the production may result

in heavy inventory built up affecting the margins.

In terms of constant prices, the productions values gradually declined

from Rs.5.04 lakhs in 1992-93 to Rs.1.41 lakhs in 1998-99 and increased to

Rs.7.69 lakhs in 1999-2000. This indicates the inconsistencies in productions

plan and operations. High values of production in the last two years iiave

boosted the overall performances of the unit in the span o f t e n years. This

was confirmed by the linear and polynomial equations plotted for the

production values at constant prices.

The linear equation for the unit was as below: yp = 3.603 + 0.97x with

very low value of positive growth rate of 0.097.

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However, it is suggested that the unit should undertake measures to

stabilize their production operations and to utilize the plant’s capacity

optimally. If these measures are undertaken care should also be given to

creating appropriate markets for their products.

Sales PerformanceThe sales values of rhe hand made paper unit, Veeraragavapuram are

furnished in Table 3.15. The sales values were quite low and all through the.

years and it ranged between Rs.!.12 lakhs in 2000-01 and Rs.4.05 lakhs in

1994-95. There was a continuous decline in the sales value from 1995-96 -

on wards reaching a bottom of Rs. 1.12 lakhs in 2000-01 in current prices.

Comparing the total value of production and sales for ten years, the .

overall production value stood at Rs.60.30 lakhs and the overall sales value

stood at Rs.22.90 lakhs leaving an inventory of unsold stocks at Rs.30.00

lakhs. Thus the unit met with inadequate sales and when the value of

production has been increased to Rs. 14.00 lakhs in 2000-01 it could make a

sale of Rs. 1.12 lakhs. Identification of right choice of products based on

market demands and establishing appropriate marketing linkages could alone

help the unit from its declining sales performance. The unit is located near to

the capital city Chennai and there is ample scope for marketing of handmade

paper products produced by the unit. Thus, the unit should earmark effective

marketing in Chennai alone to improve the sales performance by meeting

various wholesaler of handmade paper goods and other consumers of

handmade paper based cartons and sweet boxes.

In terms of constant prices, the unit recorded sales values ranging from

Rs.0.58 lakhs in 2000-01 to Rs.3.21 lakhs in 1994-95. The sales values in

constant prices declined continuously from Rs.3.21 lakhs in 1994-95 to

Rs.0.58 lakhs in 2000-01. This declining trends were also confirmed by the

linear and polynomial equations.

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Thus, the unit has to enlarge sales through introduction of aggressive

marketing and utilize the potential of nearness to the capital city Chennai

markets to its advantage to arrest the declining sales trend both at current and

constant prices.

3.4 SUMMARY

3.4. 1 Raw Material Consumption Pattern

The f ive handmade paper units under review have used only waste

materials as their raw material for the production of handmade paper

products . Of the f ive units , three units , namely, the handmade paper unit at

Pidagam, handmade paper unit at Thiruchengoclu and the handmade paper

unit at Senbagapuram used only the hosiery cutt ings and paper cutt ing their

raw' materials during the study period. These units produce high grade

outputs namely, low gsm paper, wri t ing paper, f lap covers, paper envelopes

and craft papers.

Of the remaining units namely, the handmade paper unit

Ponnavarayankottai used four types of raw material namely, hosiery

cuttings, waste paper, hospital wastes and jute wastes. The unit produced

shoe boxes, sweet boxes, thick boards and file boards in the study period.

The handmade paper unit at Veeragavapuram, used three types of raw

materials namely paper wastes, hospital wastes and jute wastes for

production of the handmade paper products. Due to its proximity to waste

paper market and hospital waste sources, the unit managed its production

without using hosiery cuttings to be purchased from a far off source namely

Tirupur city.

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Thus, the analysis of raw material used by the handmade paper units

under review has confirmed the first hypothesis that the handmade paper

units used only waste materials as raw material for production of handmade

paper products.

3.4.2 Production and Sales

Production and sales of the handmade paper units under review have

shown lacklustre performance in all years during the study period. The units

could not raise production due to adoption of out dated production

technologies in hand made paper production. The bottleneck process in the

flow of hand made paper making is the couching and sheet formation. For

couching work, Senbagapudur hand made paper unit Ponnavarayankottai

hand made paper unit, and Veeraragavapuram hand made paper units adopt

hand operated dipping vats and foot operated auto vats. Use of dipping and

auto vast is a slow process and require excessive manpower. This will affect

productions and quality of the outputs. The alternative upgraded technology

is the use of cylinder mould for couching. The use of cylinder mould unit

motor has been approved by KVIC, Mumbai the apex body for certifying

KVI units in the year 1990-91. The cylinder mould enhances production

rates and ensures quality output unit uniform thickness throughout the sheet

of paper/board. Hand made paper units using cylinder mould technology like

Pidagam handmade paper unit and Thiruchengodu hand made paper units

have produced paper and boards to the prove of Rs. 104.50 lakhs and

Rs.53.10 lakhs in the span of ten years. HMP units adopting dipping and

auto vats like Ponnavarayankottai and Senbagapudur showed values of

Rs. 17.70 lakhs and Rs.41.80 lakhs respectively in the span of ten years.

Veeraragavarpuram hand made paper unit used dipping/auto vats. It had

achieved a total production of Rs.60.30 lakhs in ten year as it is mainly

concentrating on paper conversions w'orks than production of hand made

paper or boards. Hence it is suggested that hand made paper units at

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Ponnavarayankottai, Senbagapudur and Veeraragavapuram should

modernize their plants with cylinder mould technology in place of

dipping/auto vats for cinching. Such measure will help to revive their

production performance.

Most of the units do not have a sound production plan based on

market demands and had witnessed fluctuating trends in productions. Lack

of production plan will lead to excessive inventories, under utilizations of

plant and machinery and generate more wastages. The unit incharges or the

managers may be given training in production planning, inventory control

and quality control techniques related to hand made paper technology. It is

learnt that the unit incharges have qualification and training in different

disciplines which are not related to hand made paper manufacturing. Tamil

Nadu KVIB, Chennai should ensure that persons with right qualifications

and training are placed as unit incharges instead of mere shifting/transfers

among the existing cadres.

Despite the patronage extended by Tamil Nadu Khadi and Village

Industries Board, Government of Tamil Nadu, these units have never

ventured to undertake private sales. This dependency syndrome on Tamil

Nadu Khadi and Village Industries Board has affected the sales performance

of all the units and they have shown declining trend in sales. In the span of

ten years, the cumulative value of sales by all units was less than the total

value of production by Rs.77.70 lakhs. Inadequate sales coupled with

absence of marketing linkages and network have affected the sales

performance. These hand made paper units have vast scope due to the ban on

HDPE carry bags and the right alternative to the plastic carry bags is the

hand made paper carry bags. It is high time that these units should pull up

their socks to make entry into the carry bag manufacturing with their own

hand made paper. The Tamil Nadu KVIB should ensure that these units

capitalize on the vast opportunities available to them and adequate technical

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and monetary inputs may be assured for successful operations and

marketing.

Another reason for the declining sales was the poor quality of the

handmade paper and boards produced by these units. Quality related to

handmade paper should have the following attributes or characteristics.

(1) Correct Grams per sq.metre (GSM) of all pieces in a lot;

(2) Absence of patches and specks on the surface;

(3) Even and uniform cross section or thickness at all places in a sheet;

(4) Particle size during beating should be made even;

(5) Binding and rosin sizing should be added in right proportion to get

better strength;

(6) Use of salt free water for beating and coaching;

(7) Uniform sizes for the papers/boards produced in one lot;

(8) For drying the papers/boards, shadow drying is advantageous as sun

drying may affect the colour yield of the papers.

Hence, the staff managing the handmade paper units and the workers

engaged in production operations may be given training in the production of

quality paper boards to meet the competition from mill boards and papers.

Mill made paper and craft boards lack bond strength due to the use of fibrous

material in the productions process. Better quality of handmade paper may

be ensured through the following practices.

(1) Complete removal of sand, impurities and dust from the raw material

by using adjusting box and ensuring cent percent removal of dust;

(2) Rag chopping of the hosiery cuttings into even pieces;

(3) Before feeding the raw material to the beater machine, it is advisable

to undertake a bleaching and scouring process in a boiler with caustic

soda treatment. These measures will ensure high quality paper

production;

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(4) Care in beating and couching for quality production;

(5) Maintenance of uniform pressure in calendaring and sizing.

Adoption of the above right practices in the production process and

establishing a scheme of on process quality control techniques such as pulp

formation, ph of the water, use of chemicals and other ingredients, right

method of couching and shadow drying. For ensuring quality of the paper

products produced by these units, a centralized testing laboratory may be

established at Chennai or at Pidagam hand made paper unit. The testing wing

may have (1) precision weghing balances, to measure GSM, (2) opaqueness

testing, (3) tearing strength testing, (4) bursting strength testing, (5) flex test

and water absorbency testing etc. The results of these tests are supplied to

the respective hand made paper units to rectify the defects if any, and to

control the processing by having appropriate mixing of ingredients.

However, quality of output has to be ensured to improve the sales and

marketing.

Consolidating the above, it is necessary, that the handmade paper units

under review should ensure the following: adoption of cylinder moulds in

place of dipping vats and auto vats, enhancing the machine and labour

productivity adoption of production planning and maintenance, appropriate

inventory systems, establishing market linkages and improving the quality of

the outputs for sustaining their operations in future.

Thus, the hypothesis status that the handmade paper units have shown

meagre growth rate in production have been proved as three units using

lower level of technologies in couching and sheet formation have shown

declining trends in production. Two units namely, the handmade paper unit,

Pidagam and the handmade paper unit, Tiruchegodu using cylinder mould

technologies have shown increasing trends and their growth rates are quite

reasonable.

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In respect of sales, use of improved technologies has produced better

quality of paper facilitates better sales and the only one unit which has better

marketing linkages has posted reasonable success in marketing. All other

units suffered in terms of growth rates in sales.

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REFERENCE

1. PETER. F, DRUCKER “The practice of management5’, Allied

Publishers, Madras 1977, P. 13.

2. SUSHI, JAINK. “How much value are you adding” Management

account vol.29, No.8, August 1994.

3. SALVATORE AND DOMINICK “Micro Economics”, Harper Colling

Publication Inc, New York 1991, P. 172.

4. A. ADOLPH, GRANEWALD AND RE WIN ESSAR ANEMMERS

“Basie Managerial finance” Flo It Rinechest and Winston Inc., New

York 1970, P.31.

5. J. MICHAEL BAKER., “Companion Encyclopedia of marketing”,

Routledge London 1995, P.30.1.

6. SINGLI S.N. et.at, “Emerging Raw Materials for the Hand Made

Paper Industry and its end products*’, Seminar on HMP Industry,

Conducted by NIRD and KVIC, June 1998, P.3.

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