CHAPTER I

INTRODUCTION

The high potential of industry in augmenting economic development

of a nation cannot be undermined. Industry with its multiple levels has been

playing a vital role in materialising development even at grass root levels,

though the parameters of development varies from nation to nation. This

realisation has made the managers of our economy to stick to

industrialisation at a greater pace. However, a developing economy like

India could not effect the desired development through the setting up of

large-scale industries as the people dreamt of. Hence, the panacea for

development, for that matter industrial development lies in small-scale and

tiny industrial units, which suit to the various and dialectical segments of

Indian society. Due to their unique economic and organisational

characteristics, these small-scale industries offer balanced resource

mobilisation, local employment creation and income generation and act as

the catalyst for promoting change in a gradual, dynamic and peaceful

manner.

Kerala, as one of the premier states in matters of social progress

could not effect sustainable economic development through large-scale

industrialisation. Even the southern part of the state, with its low industrial

base could not make inroads into large-scale industrial units to effect

development a reality. The plight of the erstwhile Malabar region is even

worse in terms of industrial development. With its sectoral base and inter-

regional disparities in industrial development, Malabar has always been an

underdeveloped area mainly due to its historical roots. For uplifting the

depressed regions, steps have been taken by reducing disparities in the

distribution of wealth and opportunities. In spite of the planned attempts, the

economy of Malabar has a natural tendency to get concentrated its

developmental activities among the regions, which are already better off.

Any positive attempt to reduce these disparities among the region is highly

appreciable. This implies the need for the identification of suitable small-

scale industries for the state.

This realisation has manifested itself in the mushrooming of large

number of small-scale and tiny industries across the region. This radical

shift in the approach to development needs exhaustive analysis and proper

critique. Cement-based industry is one of such small-scale industries, which

not only cater to the needs of the region, but other places too, that had

become the major catalyst for development. The multi-utilitarian products of

this industry, have, of course, altered the very conception of construction as

well as brought rapid and radical changes in the construction sector. These

developments have also made a paradigm shift in matters of development.

Hence the potential and viability of these small-scale units have to be

researched into so as to understand the problems and prospects of this

sector. Since regional studies have made little attempt to explore its linkages

with construction sector, infrastructure development, employment

generation, utilisation of local resources and locals markets etc, it is worthy

to make an exhaustive study in that direction.

The present study tries to locate the significance of this cement-based

industry in its own space and mode of operation in the unique industrial

climate and in the growing demand for building materials. In the light of the

exhaustiveness of laterites and clay in the Malabar, cement bricks have

replaced the traditional building materials.

SCOPE OF THE STUDY

The scope of the study geographically confined to the northern part of

the present day Kerala state. As the study covers the entire erstwhile

Malabar region, which was a part of the Madras Presidency during the pre-

formation period of the state, it takes viz, Kasaragod, Kannur, Wayanad,

Kozhikode, Malappuram and a part of Palakkad and Thrissur. The area

under the study is therefore, interchangeably termed as ‘Malabar’, the

‘Region’ and the ‘northern Kerala’.

Kerala seems to devote much attention for her industrial development

for the last five and half decades since independence. Even then in the

industrial growth ladder, Malabar is lagging far behind especially the districts

of Kasaragode, Kannur, Wayanad and Malappuram. Apart from the usual

constraints of industrialization, environmental considerations will increasingly

influence the future growth of industries. Another dimension to the

environmental consideration is the conversion of wastes into wealth in the

form of industrial products. Industries, which cater this facility, are highly

appreciable.

Increase in population creates additional demand for houses. The

nuclear explosion of a family into multiple families with independent houses

had an impact on the house and building construction and its allied works.

Materials used in house and building construction has been undergoing

rapid changes. Substitution is taking place in the usage of traditional

building materials like laterite, clay bricks, wooden frames etc with cement-

based materials because of ecological problems and scarcity of materials.

The shifting of demand for cement-based products results in greater

employment opportunities in the small-scale sector.

Cement-based industry in Malabar is in its infant stage. Though

cement based industry has inherited problems related to availability of raw

materials, finance, and marketing there seems to be sufficient scope for

development of this industry in Malabar area.

Several exhaustive studies have been conducted in the field of small-

scale industries. However, hitherto, studies in the Cement based Industry

were not conducted in Malabar and in the light of this research gap, the

present study will be useful to the cement based industrialists, consumers,

Govt. and policy makers as well. Hence, an attempt has been made here to

study the Problems and Prospects of Cement based Industrial units in

Malabar region.

REVIEW OF LITERATURE

The previous research studies and literature pertaining to, and to the

related sector – small-scale sector and cement industry – have been

collected and presented below.

M.A.Oommen (1972) observed the emerging pattern of

entrepreneurship in the small-scale sector of Kerala by studying the origin

and growth of firms in light-engineering industry and the impact of

Government programs like industrial estates and rural industries project on

entrepreneurship.

The Research Development of GRIHE, Madurai (1975) (Gandhigram

Rural Institute of Higher Education) conducted a descriptive and statistical

study on “Entrepreneurship in small-scale industry in the Madurai city and its

environs” among 150 industries. The study observed that a small

entrepreneur has to take advantage of the central and state assistance to

help rural and semi-urban areas. To impart suitable training to educated

youths of rural and urban area, unemployed engineers and technicians,

more ventures of this kind had to be formulated and built into the

development programs in our country because unless the right type of

entrepreneurial leadership is forthcoming, the programmes for industrial

growth would be futile and devoid of any meaningful impact on the country’s

economy.

Ramakrishnan (1975) conducted `a study into small entrepreneur’s

social, educational and occupational backgrounds, their motivations,

expectations and reactions to Government Schemes of assistance.

Moosa A Baker (1979) conducted a study on the Role of small-scale

industries in the economic development of Kerala. His findings shows that

all industries in Kerala acquired more capital and used more capital per

worker, there can be higher improvement in capital yields and labour

productivity. According to him, per unit of capital of small scale industries

produce more output and due to the low capital intensity per worker of small-

scale industries, they absorb more labourers than large industries.

R.A.Sharma (1980) found that strong desire to do something

independently in life, technical knowledge and/or manufacturing experience,

financial assistance from institutional sources, business experience in the

same or related lines, accommodation in the industrial estates and heavy

demand were the factors that induced the new and small entrepreneurial

class.

Choudhari (1981) made an attempt to review the entrepreneurial

activity of the North-East Region in order to find out its identity in terms of

social, local, occupational and product-wise variations. He observed that in

spite of abundant natural resources, the pace of industrial growth was slow

not only because of the lack of basic facilities and financial institutions but

also due to untapped entrepreneurial talents in the region.

Hrishikesh Bhattacharya (1984) in his study on the Problems faced by

Small-Scale Entrepreneurs, and found that the smaller the firm, the larger

the proportionate increase in finance required enabling it to effectively

respond to the demand of its product. It was also observed that smaller the

firm, the less was its chance to command finance from bank because it did

not have any track records of past years performance.

Stephen Mathews (1986) in his study as “The Marketing orientation in

cement industry, with special reference to the Travancore Cements Ltd,

Kottayam” says that cement industry is one of the areas where we have to

give more concentration. Just for the reason that this sector has not

contributed to the extent of the requirements of our country. Forward and

backward linkage is also possible in the industry as auxiliary industries and

varieties of cements.

Bedabati Mohanty (1986) found that the nature of industry and type of

product had great influence over employment generated by small industry.

Bhagawati Prasad and K.Eresh (1987) conducted a field survey in

Bellari district of Karnataka and found that the new entrepreneurs who had

come forward to start small-scale units did not have adequate experience in

the field. It was suggested that to prevent sickness in units, proper guidance

and training and consultancy services should be made available to the

entrepreneurs.

Sidhardhan (1987) examined the efficiency of entrepreneurship in

small-scale industries. He made a detailed discussion of the problems faced

by small-scale industries in Kanyakumari District. The major complaint

voiced by the entrepreneurs was the rigidity with which banks and term

lending institutions treating the entrepreneur’s proposal for loans and other

advances.

B.K.Sharma (1989) puts forth a study on “Industrial development and

regional variations.” The rationale for this was derived from the fact that the

location of industries was not only essential to generate employment and

income in the backward states, but also that a decentralized industrialization

process was an important factor in balanced regional development.

DK Kulshrestha (1989) in his work “Rural Industrialisation” pointed out

that the Indian economy is likely to face the problem of employment of a very

high magnitude and the major crisis will be in rural areas. To cater the ever-

growing population, adequate employment opportunities will have to be

explored. Rural industrialisation based on small and cottage yet village and

modern industries has not only to play a significant role in this regard, but

also to do a great deal to transform the rural infrastructure. He is positive

that rural industrialization is the key to India’s economic development.

N.Thanulingom and K.Natarajan (1989) in their study on the impact of

incentives on small-scale industrial units in Madurai District in Tamil Nadu

reveals that entrepreneurs were motivated to start small-scale units due to

the availability of financial incentives.

Damayanthi.UT. (1991) in her dissertation “An Analysis of Rural

Development in Kerala” – analysed that the role of primary sector in

employment generation has been continuously diminishing, while that of the

non-primary sector has been steadily increasing.

D.E.Gooding and T.H.Thomas (1995) in their study, “The Potential of

Cement-stabilised Building Blocks as an Urban Building Material in

Developing countries.” conducted in 7 African, 1 Asian and 1 Latin American

country established that these cement blocks are currently in common use

and are likely to be more widely used in the future.

According to Economic Times Presentation 1995, it is stated that

today, design elements, construction techniques and materials have

changes drastically from traditional norms. It is the era of new ideas, new

technology and means of communication, new geo-political relationships,

new value systems, new concepts and new life styles. Our planners and

architects are already becoming aware of this change. Modern architecture

reflects emerging international styles in function décor and efficient use of

new methods and materials.

Construction Industry Development Council (CIDC) – the apex body

by Planning Commission (Govt. of India) and the construction industry

promoted in 1996, rightly noted some of the problems and challenges that

most of the projects continue to f ace both time and cost over runs. Among

several reasons, which impede successful project implementation, an

important one, which was identified, relate to lack of order in general

construction sector. This has been a major concern for the government.

According to them, business being competitive, the construction industry has

to be responsive to the economic, technical, environmental and social

changes and public policies.

Bal Raj Mehta (1997) found that the optional optimisation of natural

resources and endowments is vital for rapid socio-economic development on

healthy lines.

D.Sakariya (1997) analysed in his paper that small-scale industries

have, in our development plans, been assigned a vital role in the

development strategy on account of three main considerations. Firstly, the

development of this sector is conceived to provide employment opportunities

for surplus labour force available in the country at a relatively smaller capital

cost. Secondly, small-scale industries for mobilising untapped resources of

capital and entrepreneurial skill that may otherwise remain unutilised in our

vast country. Thirdly, these industries are expected to ensure the diffusion

of productive industrial activity.

N.Sreenivasan (1997) in his paper “Cement Expansion: Infrastructural

Support Vital” says that India attained self sufficiency in cement in 1989, 75

years after its first plant was commissioned in 1914. The industry is banking

on the Government to create a suitable environment and provide greater

infrastructure support so that production is always ahead of demand.

R.Gopalakrishnan (1997) in his study “Cement: Some Basic Growth

Issues”, Deep & Deep, VolII.P.379 says that cement industry is one of the

few core sector industries that have for the most part been nurtured by

private investment but have been heavily dependent on the public sector for

major inputs, such as coal, power, and freight wagons.

Carmel .L. (1998-99), in her work, “Which Size Sand Particle Used to

Make Bricks Makes The Most Durable Brick? & Which Brick Is The Most

Durable Clay, Cement or Cement Paver?” explained about the experiment

conducted to see which type of brick is the strongest. The result of the

experiment was that the average strength of the #8 silica was stronger than

#30 silica. The #8 silica in all the tests except for one was stronger. In the

compression test the average on the #8 silica was 6610 Kgs, but the #30

silica was only 4280.6 Kgs, for its average. On the durability test #8’s

average of times dropped before breaking was 1.4 and the #30 silica was

only 1.2. For the weight Hang Test, none of the brick broke, at the highest

weight.

In the experiment it was found that the larger particles of sand will

make the strongest brick because the larger sand particles will hold together

better than the small size because it takes up more room to hold together for

making bricks.

The result of the experiment of Durability test, Compression test and

Weight Hang test were that the average strength of the cement paver was

stronger, and the clay brick come next and lastly the cement.

Vasant Desai (1999) in his work “Small Scale Industries and

Entrepreneurship” rightly marked that location- wise, small scale units would

be established outside the metropolitan areas and mainly in small towns or

large villages, thus providing more opportunities for convergence of

agriculture and industry.

Gabriel Simon in a study revealed that lack of industrial investment in

the state is paradoxical considering the fact that Kerala has all the

ingredients for industrialisation - totally literate population, a highly skilled

and enlightened workforce, abundant hydel reservoirs, a calm and peaceful

society, location of one of the most strategic ports, a new industrial policy

besides possessing social and health standards equating those of the

developed nation.

Centre for Development Studies, Thiruvananthapuram in their report

in 1999-2000, also stressed the same points. The report says that though

Kerala is an industrially backward state, its potential industrial development

is quite large given the inflow of large amount of money by way of foreign

remittances, availability of educated and skilled manpower, well developed

economic infrastructure and affable climatic conditions.

Subramanian KK and Azeez EA, CDS- Kerala, (2000) in their study

“Industrial growth in Kerala: trends and explanations”, argue that if the

economy is growing without significant growth in manufacturing, Kerala

should abandon the old idea of industrialisation based on manufacturing.

The study also finds that the manufacturing industry in Kerala is

having a low growth rate when the rest of the economy is growing well.

They argue that this is due to the inadequate growth of capital investment.

Planning Commission (Govt. of India), projected the construction

industry in India is highly labour intensive. From a work force of 15 million in

1995, it is expected to exceed a figure of 32 million by year 2005.

Construction activities cover various categories of construction such as

building, industries, infrastructure and other special purpose projects.

Whether the projects are small, medium, and large or mega, every project is

unique and involves deployment of scarce available resources in an efficient

manner.

Ramachandran.K.V (2001) analysed the demand for the low cost

building materials and technology in the context of increasing international

interest when the third world countries have been experiencing population

explosion and the resultant problems of higher pressure on the land and

huge inadequacy of housing facilities. All countries in the world are making

sustained efforts to overcome such problems through their national plans.

According to him, these problems can be solved only by the means of

effective management and rational application of building materials and

technology on a countrywide scale. Hence, there is much need for

innovating cost effective technology and building materials as a strategy for

realising the goal of shelter to all.

He also says that by the influence of traditional construction culture

and wrong notions towards cost effective technology, houses and other

building and related construction would become a colossal task to many. To

change this attitude, a clear-cut idea regarding the relative cost, durability,

echo-friendliness, easy availability of the non-conventional building material

is a must. He suggests making use of locally available building materials

and avoiding high priced scarce materials. By doing so, one can avoid

unnecessary costs and delay in construction.

Concord Groups (2001) Building Product Manufactures power by

EMKAY INFOWAY in their study reveals that compressed and cement-

stabilised blocks are now recognized as important walling units for building

exposure conditions in the humid tropics has become a major matter of

concern, it has low cost dwellings in developing countries.

The Sixth National Conference on “Global Challenges in Project

Design and Construction Management”, November 2003, New Delhi,

reviewed the impact of size of the construction industry both in terms of

monetary value and the employment generation potential importance of the

industry to the pursuit of better economic growth rate and for an overall

upliftment of living standards.

G.S. Batra (2003) in his work on “Development of Entrepreneurship”

described that 21st century is the century of entrepreneurship, and every

individual can be an agent for innovation and change.

A.N.Agrawal (2004) in his paper Small-Scale and Cottage Industries –

“Indian Economy – Problems of Development and Planning,” says that the

most important single argument in favour of the Small-Scale Industries is

that it provides ample scope for employment on a massive scale.

Additionally because these can be set up in no time, these provide, so to

say, immediate employment. This is of great significance for a country like

India, which is a labour surplus economy, and where labour force is

increasing at a very rapid rate. These attributes of the industries are due to

the reason that they are highly labour intensive industries.

At another place he says that the first and foremost thing is to ensure

that only those lines of production are taken care of which hold out a

promise of good performance and that those small-scale and cottage

industries be selected for development which hold out promise of further

growth and which can, in the long run, stand on their own feet.

Economic Review, 2004 reveals that unemployment continued to be a

serious problem of the state. The number of job seekers on the live

registers of employment exchanges continued to be very large; it came to

37.90 lakhs in 1999, of which 58.4 per cent were women. The Government

of Kerala has targeted creation of employment of 15 lakhs persons

(including self-employment) over a period of 5 years. The Department of

Commerce and Industries has been traditionally Implementing various

schemes to provide subsidy/other incentives and also to train entrepreneurs.

B.A.Prakash (2004) in his paper “Economic Backwardness and

Economic Reforms in Kerala” observed that in spite of the economic

development for the last four-and-a-half decades, Kerala has remained a

backward economy with underdeveloped productive sectors, an employment

structure characterized by casual and self-employment, low levels of

technology, inadequate infrastructure, slow pace of urbanisation and

structural transformation, and high incidence of poverty and unemployment.

B.A.Prakash and M.P.Abraham (2004) in their study “Employment

and unemployment in Kerala” says that the high incidence of unemployment

in rural Kerala may be attributed to factors such as the price fall of

agricultural commodities, the shift in the occupational pattern from

agricultural to non-agricultural avenues, small and tiny nature of agricultural

holdings, decline in all traditional, labour intensive industries, and the

economic consequences created due to the exodus of Kerala emigrants

from the Gulf countries.

At another place, they said that the unemployment of a large section

of the active labour force has been the most serious socio-economic

problem of Kerala during the last four decades. Due to the enormous –and

alarming- increase in unemployment, the unemployment issue has emerged

as the foremost political issue of Kerala today.

They also viewed that Kerala’s labour market – both rural and urban –

is still dominated by self-employment and casual labour with a small share of

regular employment. Though economic reforms have been implemented at

the national level since 1991, it has not succeeded in promoting more private

investment or generation of substantial employment in the organised public

and private sectors.

CP John (Ex-Member, Planning Board, Kerala) in his study “Vision

Kerala – 2025 - A new development agenda” assessed the state potential in

terms of its inherent strengths and weaknesses through SWOT analysis.

Being one of the strength, the Non Resident Indian population (Numbering

13.86 lakhs) constitutes around 4.4 per cent of the Kerala population and the

people working abroad amounts to 10 per cent of workforce of Kerala. The

NRI remittances constituted 22 per cent of the state income and 179 per

cent of value added in manufacturing. Major threats revealed in the analysis

say that declining opportunities for migration in the Middle East will affect the

state labour class and also the foreign remittances. Not only that, the

environmental problems including deforestation, destruction of wet land

ecosystems and water bodies, and pollution will affect the sustainability of

the development efforts.

Satya Sundaram.I (2004) in his study “Cement Industry:

Consolidation Phase” states that India is the world’s biggest producer of

cement after China. Housing accounts for about 60 per cent of cement

consumption in India and infrastructure another 20 per cent. The easy

availability of house loans at low interest rates has encouraged people to

buy/make their own houses. This fuelled the demand for cement. The per

capita consumption of cement in the country stands at around 100 kg

whereas it is 500 kg in other developing East Asian countries including

China. This low level of cement consumption has to be boosted up by

stepping up investment in infrastructure and also by focusing on the housing

sector.

The healthy signs exhibited by the cement industry in 2002 were

attributed to a boom in construction activities in such states as Gujarat,

Maharashtra and Kerala.

According to Housing Development Finance Corporation (HDFC),

India has just 170 million concrete houses for a population of more than one

billion – a shortage of nearly 70 million.

SK Misra & VK Puri (2004) opined that the differences in industrial

growth, disparities in agricultural growth, level of literacy, percentage of

workers in manufacturing industries to total workers etc can all be

considered indicators for purposes of studying imbalances and inequalities

in regional development.

They also noted that the historical processes of growth reflected in

the interest of the British rulers determined the initial distribution of industries

in India. As a result, most of the industries got concentrated at a few

centers. This pattern continued in the post-independence period as well.

This pattern of concentration has not changed substantially during the

planning period despite all attempts made at regional dispersal of industries.

S.K.Misra & VK Puri (2004) in another work stated that as far as

mobilisation of capital and entrepreneurial skill are concerned; the small-

scale industries are at a distinct advantage. A number of entrepreneurs are

spread over small towns and villages of the country. Obviously, large-scale

industries cannot utilise them as effectively as the small-scale and village

industries distributed over the entire length and breadth of the country.

Similarly, large-scale industries cannot mobilise the savings done by the

people in areas far flung from the urban centers. But setting up a network of

small-scale and cottage industries can effectively accomplish this task. In

addition, a large number of other resources spread over the country can be

put to an effective use by the small-scale and cottage industries. The rapid

development of small-scale industries in the post independence period is a

proof that given the necessary credit, power and technical knowledge, a

large quantity of latent resources of the economy can be mobilised for

purposes of industrial development.

S.K.Misra & V.K.Puri (2004) found that Britain had exploited India

over a period of two countries of its colonial rule, but the form of exploitation

was not the same throughout the period. In this period, there was massive

drain of wealth from India to England and it resulted in pauperisation of this

country. There was hardly any economic development under the British

rule. The constant per capita income over a long period, increasing

dependence of population on agriculture, the traditional methods of

cultivation, high-frequency of famines, decay of handicrafts and inadequate

industrialisation thereafter are clear proofs of economic underdevelopment

during the British period.

At another place they noted that whatever be the criteria, the Indian

economy is presently an underdeveloped economy. Almost all important

characteristic features of an underdeveloped economy were present in the

Indian economy at the time of independence and have not changed much

since then notwithstanding the Central Government’s ‘India Shining’

propaganda.

With regard to industrial development during the planning period, their

paper says that before the arrival of Britisher’s, India was industrially more

advanced as compared to the economies of the West European countries.

The Britishers systematically destroyed the industrial base of India. As a

result, India inherited a weak industrial base, underdeveloped infrastructural

facilities and a stagnant economy at the time of independence.

Sridhar, Kala.S (2004) in a study on the “ Impact of the Enterprise

Zone” discussed that the place-oriented policies recognise that there are

likely to be a large number of people that are immobile because of the

social, psychological or economic costs of moving. So the areas themselves

have to be developed rather than encouraging out-migration to where jobs

exist.

K.Manoharan Nair and R.Ramesh Chandran (2004) in their study “

Cluster Approach – A new paradigm for the sustainable development of

small scale industries in Kerala “ says that small scale industrial units have

the advantage of lower overheads and infrastructure needs, flexibility in

respect of product mix and the ability to customize. They create more

employment opportunities per unit of investment and support the economy in

the removal of regional imbalances.

Narayana and M.Ramanjaneyulu (2004) evaluated in their study that

rural housing under the employment programme has to satisfy the schematic

norm of achieving the minimum of 50 per cent of the total cost as wage cost.

Therefore, the specialization should be labour intensive and cost effective.

Besides, the house should be durable. This can be achieved only through

such low cost technologies that can respond to the requirements of housing.

Low-cost technology does not mean sacrifice of quality and durability. It only

means avoidance of extravagance and minimising the use f costly materials

like cement, steel and wood. The approach is to use locally available

materials avoiding long distance transportation.

According to the National Sample Survey Organisation, 2004 survey,

Kerala is identified as the state with highest rate of rural unemployment and

the second highest rate of urban unemployment among the states in India.

Area Investors Meet – 2005 (AIM-2005) organized under the

auspicious of Malappuram District Panchayat on 15 th and 16th April 2005 at

Kottakkal in association with SISI & MIED was aimed to bridge the gulf of

intra district disparities in industrialization sector. Malappuram district is

having the highest density of population in Kerala. Scarcity of power was

the main hindrance of development of the district. Interests of the new

generation to enter into the small-scale industrial sector are showing a

positive trend. The ultimate aim of the AIM-2005 was to locate the

prospective and suitable projects that can be implemented and also to give

proper guidelines in this respect. AIM expected that the conclave of

entrepreneurs, KINFRA Park Kakkencherry and Panakkad growth center

would pave way to a new industrial culture in the district, which will provoke

the remaining districts of Malabar to think in this line.

Guana Desigan (2005), the Economic Survey tabled in Parliament on

February 25, 2005 suggests that, in order to overcome the problem of

unemployment, it is essential to increase the link between agriculture and

rural industrialisation, raising the credit flow to the small-scale sector,

opening the retail trade to foreign investment and greater value addition in

the farm sector to create more jobs.

H.M.Desarda (2005) revealed in his study rehabilitation of earth

quake victims, says that there is near unanimity among seismologist,

geologists, earth-scientists, structural engineers and architects that it is

economically and ecologically wise to build houses with the local material

with due care of structure, safety and energy efficiency.

The Hindu, National daily, (May 7, 2005) observed that Kerala has

scored over other southern states in terms of consumption of top-end

products as per the Household Premiumness Index (HPI) category in the

latest Indian Readership Survey (IRS). Three cities in Kerala figured among

the top nine ‘well off’ cities in the survey. They were Thiruvananthapuram,

Cochi and Kozhikode.

Gopalakrishnan (2005) in his “notes on our development experience

in Independence 1950-1985 gives a vivid picture on housing and stresses

the need for alternative techniques, which will reduce the cost of

construction.

United Nations (2005) declared the year 2005 as the Micro Financing

year. Both the traditional banks as well as New Generation banks in Kerala

are now a days concentrating in micro financing of industries. As per the

Bankers study, Wayanad is badly in need of such money compared to any

other districts in Kerala.

Gopikuttan .G. (2006) in his study examines the recent trend in the

field of house building and the consequent cause and effects on Kerala

economy. He says that a construction boom is going on everywhere of the

state.

G.Prabhakaran (2007) in his study on ‘Alternatives to river sand’

pointed out that an acute shortage of river has been affecting the

construction sector. The scarcity has led to the skyrocketing price of sand,

escalating construction costs. Following the shortage of river sand, the

Faculty of Civil Engineering of the Government College of Engineering,

Thiruvananthapuram has developed a technology, to produce sand from

hard granite called manufactured sand (M-sand); it is made by Poabs Group

in its plants at Ernakulam, using what the company calls a state-of-the-art

manufacturing process. It is meant for concreting and plastering. The

cubical-shaped M-sand has a surface that gives better binding strength and

saves cement, labour and water. One of the pioneers of M-sand in

Palakkad, Sainudheen Pathiripala says it is cheaper than river sand. But the

government is not promoting it, though it is of great importance to the state.

Mani Sankar (2007) founder general-secretary of Licensed Engineers

and Supervisors Federation (LENSFED) says that M-sand manufacturing

units should be started in every district in the co-operative sector.

S.R.C.Nayar, (2007) General Manager, Kunel Engineers – Patience

pays in construction processes- says that concrete blocks are being widely

used in place of brick. These blocks should be cured for 28 days for

attaining full strength. It is now a common practice to use it much earlier.

The impact to which the blocks, which have not attained full strength are

subjected during loading into the trucks, transportation to building site,

unloading and handling at site greatly reduce the strength of the blocks and

causes development of crack. This is further aggravated when grooves are

cut in the wall for taking electrical circuits.

The Hindu-Business Line (April 24, 2007) in a write up “Cement: The

hardening impasse” pointed out that in India cement consumption has been

growing at over 10 per cent over the last three years because of which most

cement manufacturers are working to full capacity. However, with about 100

million tones of capacity likely to be added over the next four years, a

prevailing view is that supply will exceed demand in 2008-09 itself at least a

year earlier than anticipated. In 2006-07, the industry dispatched 155 million

tones, the highest so far. Once the additional capacity comes on stream

utilisation is expected to come down to about 85 per cent across the

industry, resulting in price dropping. However, manufacturers discount this

argument and say that capacity addition will not be bunched and would be

staggered, because of which there would still be a shortfall in cement supply.

For instance, the manufacturers point out that even a 10 per cent growth in

consumption over the n ext 2 years would mean 35 million tones of

additional capacity, which addition is not likely to happen with in that period.

From a 79 per cent capacity utilisation in 2001-02, the industry ended last

year (2005-06) with a capacity utilisation of 94 per cent.

Selja, The Union Minister for Housing and Urban Poverty Alleviation

(2007) propounded a centrally sponsored interest rate subsidy scheme to

make housing more affordable for the economically weaker section (EWS)

and lower income group (LIG) in the society. For this a provision has been

made in the 2007-08 Budget. The Minister also revealed that the shortage

in housing, at the beginning of the Eleventh Five Year Plan (2007), was

estimated at 24.7 million dwelling units in urban areas. This was expected to

rise to over 26.53 million units by 2012 with over 95 per cent shortage in the

EWS and LIG segments alone, the sector would need and investment of

Rs.3.6 lakh crore to fill the gap.

NIT, Kozhikode and Kerala Sastra Sahitya Parishath (2007) in a joint

study conducted at Mukkom in Kozhikode District scientifically tested and

proved that crushed stone screenings cleaned by air or water (manufactured

sand) is having high standard than ordinary sand.

The review of literature in the above pages shows the position and

problems of small-scale industries in general. The declining opportunities of

employment in the Middle East will adversely affect the economy of the state

especially the Malabar region in the near future. Hence alternative ways

must be chalked out to solve the situation. Cement based industries, which

require comparatively less investment is one solution. Thus this work

devotes on the problems and prospects of cement-based industries with

special reference to bricks production in Malabar area.

STATEMENT OF PROBLEM

In spite of the various developmental measures taken by the state

authorities and other developmental agencies, cement based industries

have not received due attention for the years past in the area. Consequently

there are certain problems prevailing in this sector, which fall under two

types. One is the mismatch between the demand for and supply of cement

based products; the industry finds it difficult to supply the building materials

according to the increasing demand from the building and house

construction sector. The other is the socio-economic problem of the

entrepreneurs.

In this study it is proposed to explore and analyse the demand and

supply of products as well as the socio-economic conditions of the

entrepreneurs.

OBJECTIVES OF THE STUDY

The basic objectives of the present study are to focus attention on the

problems of cement-based industries in Malabar area and to examine the

economy and the future prospects of the cement products in the field of

housing and other construction sectors. Against this background the study

lays down the following objectives.

1. To know whether there is mismatch between demand and supply and

to locate the reasons for mismatch between demand and supply, if

any.

2. To explore the socio-economic conditions of the cement based

industrialists in the study area.

3. To study the employment opportunities in the cement based industry

– directly and indirectly.

4. To investigate the hindrances in the growth of cement based

industries

5. To suggest appropriate measures for improvement and expansion

based on findings of the study.

HYPOTHESES

Based on the above objectives the following hypotheses are

formulated.

H1 Cement-based industrial units are not able to supply the products

according to the demand.

H2 Cement-based industry has significant role in the socio-economic

upliftment of the cement-based industrialists

H3 Most of the units are dependent of loan capital.

H4 Cement-based industry has high potential in employment generation.

H5 Cement-based products are widely used in house construction sector.

H6 Quality and uniformity in size are important concerns in determining

the demand for cement-based products.

H7 Cement-based products are facing severe competition from wooden

as well as laterite and clay brick products.

H8 Cement-based products are eco-friendly.

RESEARCH METHODOLOGY

In order to attain the objectives of the study, the following

methodology had adopted.

Collection of data

The study makes use of both primary and secondary data. However,

the number of studies conducted on cement-based industries is few; the

scope of published secondary data is limited. Primary data were collected

by visiting the production units and interviewing producers, dealers and

consumers from the population under study with structured and pre-tested

interview schedules.

Primary Data:

Primary data have been collected from the population under study,

which includes producers, dealers and consumers of cement-based

industrial products. .

The field survey was conducted using structured interview schedules.

The schedules were pre-tested with the help of a pilot survey in Anakkayam

Panchayath and Malappuram Municipality of Malappuram District. On the

basis of the experience of the pilot survey, the schedules were redrafted.

Primary data was collected by

• Personal interview with producers

• Personal interview with consumers

• Personal interview with dealers

• Personal interview with builders and contractors

Interview Schedule for the producer is designed in view of the

identified indicators and variables. The Schedule of Indicators and Variables

are given in the following table.

Schedule of Indicators and Variables for the Producer

No. Indicator No. Variable

1. Socio-economic status 1.1 Ownership status

1.2 Main economic source

1.3 Nature of Land &

Building ownership.

1.4 Motivational force for starting the

unit.

2. Finance 2.1 Capital outlays

2.2 Source of capital

3. Labour 3.1 No. of labourers employed

3.2 Wage payment policy

4. Product 4.1 Category of products

4.2 Technology/Method used

4.3 Pollution complaint

4.4 Business linkage.

5. Marketing 5.1 Methods of sales

5.2 Competition.

5.3 Pricing the product.

5.4 Marketing problems.

Interview Schedule for the consumer has two parts. Part A consists

of general information and Part B with two identified indicators and eight

variables. The identified indicators and variables are given below.

Schedule of Indicators and Variables for the Consumer

No. Indicators No Variables

1. Product consumption 1.1 Category of products

1.2 Purpose of usage

1.3 Order of preference

1.4 Supplier selection criteria

2. Product Evaluation 2.1 Work progress.

2.2 Quality of the product.

2.3 Comparative cost.

2.4 Weight resistance capacity.

Interview Schedule for the dealer is also designed in view of the

identified variables. They are given below.

Schedule of Variables for the Dealer

No. Variable

1.1 Ownership of cement-based industrial unit.

1.2 Experience in Marketing

1.3 Sales trend.

1.4 Advantages of this business.

1.5 Procurement methods

1.6 Mode of sales

1.7 Credit period

1.8 Main problems.

Sample Design:

Representative samples drawn from the population using simple

random sampling method. Of the total cement-based industries in the study

area, 15 per cent has been taken as samples on pro-rata basis. The total

numbers of registered cement based industrial units under the study area

are 1487. Information from reliable sources says that the number of

unregistered units comes to 693. Hence the total number of producers

comes to 2180. Respondents from the erstwhile Malabar area comprised of

327 producers, 352 dealers and 700 consumers.

Sampling Area:

This study covers 7 districts namely Thrissur, Palakkad, Malappuram,

Kozhikode, Wayanad, Kannur and Kasaragode. At the first stage, one Taluk

has been selected from each district on simple random sampling technique.

At the second stage, one Municipality and one Grama Panchayath

each have been taken from the selected 7 taluks at random.

At the third stage, a ward is chosen from each selected Municipality

and Grama Panchayath at random. The collection of data ensured the

representation of the whole area of the study. The details are as follows.

DISTRICT Taluk Municipality Ward Panchayath Ward

KASARAGOD Kasaragod Kasaragod VIII Manjeswar II

KANNUR Thalipparamba Payyannur XIV Chirakkal XI

KOZHIKODE Vadakara Vadakara X Thamarassery XVIII

WAYANAD Mananthavady Kalpetta V Panamaram XV

MALAPPURAM Ernad Malappuram VII Anakkayam XVII

THRISSUR Thalappilli Kunnamkulam XI Kadavallur IX

PALAKKAD Ottappalam Shoranur III Thiruvegappura XI

Selection of Producers

Total numbers of registered producers are 1487 in the study area

along with 693 unregistered units as on 31 December 2005. A sample of 15

per cent has been drawn from each selected ward using simple random

technique.

TABLE 1.1

Frequency distribution of Production units in Malabar area(Up to 31.12.2005)

District RegisteredUn-

registeredDistrict

Total

15 Percent of the

Registered units

15 Percent of the un-

Registered units

Total

Wayanad 180 73 253 27 11 38

Kasaragod 124 47 171 19 7 26

Kannur 283 140 423 42 21 63

Kozhikkode 427 203 630 64 30 94

Malappuram

327 197 524 49 30 79

Thrissur 69 13 82 10 2 12

Palakkad 77 20 97 12 3 15

Total 1487 693 2180 223 104 327

Sources: District Industries Centre Records, various, Khadi & Village Industries, and Kudumbasree records, various.

Selection of Consumers

Samples have been drawn from rural as well as urban area.

Reference to the voters list revealed that the number of households of each

ward on an average is approximately 500. A sample of 10 per cent of the

number of households was drawn from each selected ward on the principle

of systematic sampling, taking every 10th item. Thus from 7 districts, 350

rural consumers and 350 urban consumers were selected. (Total 700

respondents).

Selection of Dealers

One of the important features of the cement-based products is that all

the producers are its dealers also. They themselves market lion share of

their products. The discussion with the producers reveals that in addition to

these producers cum dealers, 19 among them are selling products to 25

dealers also. They are not producing any kind of cement products.

Therefore, total number of dealers comes to 2346 numbers

[1487+693+166(estimated)]. Hence 15 per cent of the dealer population

under study has been taken as samples, which comes to 352 in number.

Secondary Data

Secondary data have been collected from the following sources.

1. District Industries Centers’ records.

2. Khadi & Village Industries.

3. Kudumbasree Office.

4. Studies of Centre for Development Studies, Thiruvananthapuram.

5. Economic Review

6. Census of India, 2001 – Report

7. Voters’ lists from concerned local self-government.

8. Journals and Magazines of organizations,

9. News papers and periodicals and

10. Records of District Panchayaths, various.

Tools of Analysis:

The collected data have been codified, edited, tabulated and

analysed by employing both mathematical and statistical techniques, which

are as follows.

1. Simple arithmetic averages.

2. Ratios and Percentage.

3. Correlation analysis.

4. Variance analysis.

5. Chi-Square test.

Karl Pearson’s formula for Correlation Analysis is employed to study

relationship between capital size and employment.

Karl Pearson’s r = ( ) ( )

( ) ( )2 22 2

N dxdy dx dy

N dx dx N dy dy

−� � �

− −� � � �

Where

r = Coefficient of Correlation

N = Number of observation

∑dx = Sum of deviations of x series from its assumed mean.

∑dy = Sum of deviations of y series from its assumed mean.

Correlation Significance test: The calculated correlation coefficient is

tested as to its significance, using probable error of r

PEr = 0.6745 21 r

N

−

Where N = Number of pairs of observations. The obtained r-value is

compared with six times the probable error, and the significance determined.

Analysis of Variance:

The data with regard to capital investment, wage rates, marketing

problems and fund generation for expansion have been analysed by ANOVA

Technique. In this ANOVA, two-way classification model is applied along

with coding 0.

F data technique

21

1 23

SF

S=

22

2 23

SF

S=

Where S² = Variance between the samples

S2² = Variance with in the samples.

S3² = residue variation

F, F2 = Calculated F ratios.

χ² Test for Independence of Attributes:

To analyse the two-way frequency tables, the statistical technique χ²

has been applied.

The χ² value is computed as follows.

χ2 = 2(O E)

E

−￥

Where χ² = Computed chi-square value

O = Observed or actual number of frequencies.

E = Expected frequencies.

The high value of χ² rejects the hypothesis that the two attributes are

independent. If P value is less than 0.01 the association is highly significant

(significant at 1 per cent level). If P value is between 0.01 and 0.05 the

association is significant at 5 per cent level. If P value is greater than 0.05

the association is insignificant.

If the association is significant, assuming the sample is a

representation of the population, we can generalise the findings to the entire

population.

Period of Study:

The period of study has been taken as 10 years from 1995 to 2005.

Although the study is limited to 10 years, a longer period also has been

taken into consideration whenever it is found necessary.

Limitation of the study:

Being a social science research, this study is also not free from

certain inherent limitations, which are stated below.

1. This study highly relied on sampling techniques and hence sampling

errors are expected.

2. Both primary and secondary data are used for analysis. Some of the

primary data collected from the respondents of unregistered units are

based on their memories, which may subject to memory errors.

3. Good amount of entrepreneurs have not registered their industrial

units, which restricted the secondary data collection.

4. Entrepreneurs who have invested their own money in the industry are

reluctant to disclose their actual investment either due to the fear of

government interventions like tax problems, or they need not want

any financial assistance like bank loan etc. So the reliability of the

statistics derived from them is having some limitations.

5. The emergence of new districts, viz Wyanad and Kasargod during

1980 and the consequent division of the geographical area,

demographic factors and wealth of the districts disturbed the

availability of secondary data and thereby the study.

However, all possible efforts have been taken to make the study

relevant and appropriate.

Practical Utility

Academically the study throws light on the performance of cement-

based industrial units. It is expected that the demand pattern of cement-

based products projected in the study will be of practical utility to the

planners and policy makers of the state. It is hoped that the study will serve

a useful purpose for the manufacturers in understanding their problems in a

true and proper perspective.

Conceptual Clarifications

For better understanding of terms used in the study, their definitions

are given below.

1. Household

A group of related persons who normally live together and take their

meals from a common kitchen.

2. Nuclear family

A nuclear family is a family consisting of only parents and their

children.

3. Small Units

Small unit is defined as a unit, which is using only single/double

vibrator or manual methods of production.

4. Large unit

Large unit is defined as a unit, which is using hydraulic machine/s for

production.

The Plan of Study:

The study is presented in six chapters.

The first chapter deals with the design of the study which include,

introduction, importance and scope of the study, review of literature,

problems, objectives, methodology, sample design, period of study, source

of data, tools and limitations of the study etc.

The second chapter is divided into two parts. The first part gives the

profile of the study area in which an overall view of the socio-economic

conditions of the Malabar area is presented in the light of its historical

background. The second part presents the growth of small sector in the

study area.

The third chapter portrays the profile of the cement-based industries

in Malabar area, which include introduction, registration, growth, products

etc in the first part. Second part gives the profile of cement bricks.

Chapter four explores the profile of cement based industrial

entrepreneurs and consumers of the study area.

Fifth chapter is an attempt to analyse the problems and prospects of

cement-based industries. The analysis covers the impact of cement-based

industries, especially bricks, on producers, dealers and consumers.

Chapter six summarises and highlights the important findings of the

study and suggests possible avenues for its production and usage as well as

for establishing strong consumer awareness.

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