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CHAPTER III PURCHASE OF INPUTS AND PROCUREMENT OF CLOTH 3.1 Introduction 3.2 Production Plan 3.3 Production Function 3.4 Varieties of Co-optex Fabrics 3.5 Purchase of Raw Material 3.6 Sale of Yarn 3.7 Dyes and Chemicals 3.8 Handloom Department Centres and Quality Dyeing Units 3.9 Procurement of Cloth 3.10 Quality Control 3.11 Conclusion

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CHAPTER III

PURCHASE OF INPUTS AND PROCUREMENT OF CLOTH

3.1 Introduction

3.2 Production Plan

3.3 Production Function

3.4 Varieties of Co-optex Fabrics

3.5 Purchase of Raw Material

3.6 Sale of Yarn

3.7 Dyes and Chemicals

3.8 Handloom Department Centres and Quality Dyeing Units

3.9 Procurement of Cloth

3.10 Quality Control

3.11 Conclusion

60

3.1 INTRODUCTION

The Tamil Nadu Handloom Weavers' Co-operative Society Limited

widely known as Co-optex is the apex institution consisting of Primary

Weavers' Co-operative Societies.

There are at present a total of 1386 Primary Weavers' Co-operative

Societies in Tamil Nadu, accounting for 3.67 lakh looms'. The average annual

production of various varieties of handloom goods by these societies is 1200

lakh metres. The sales turn-over is around Rs. 431crores. The working

performance of the Weavers' Co-operative Societies during 1997-'98

indicated that about 50.2 per cent of these societies were working on profit2.

One of the important objects of Co-optex is to purchase raw material like

pure silk yarn, polyester filament yarn, blended cotton yarn in all counts and

viscose yarn, in all denier and supply the same either for cash or on credit to the

affiliated societies and others.

In this chapter the issues connected with procurement and supply of raw

material and cloth are discussed.

1. Handloom, Handicrafts, Textiles and Khadi Department, PerformanceBudget, 1999-2000, Government of Tamil Nadu.

2. "Achievements in Handloorns and Textiles", The Tamil Nadu Journal of

Co-operation, Vol.88, No.8, November 1996, p.12.

61

In handlooms, supply of raw material to primary Co-operatives is the most

important function. Yarn, dyes and chemicals are the raw material5wh ich are

used in manufacturing handloom cloth. The survival of the handloom industry as

a whole depends on the supply of cotton and other yarn requirements by the

Co-operative Spinning Mills.

While purchasing raw material from spinning mills, Co-optex has to incur

additional costs in the form of transportation, reeling, bundling and bailing.

Moreover Co-optex has to meet the profit margin fixed by the mills. Finally the

yarn purchased is subject to the levy of sales tax and other duties.

A constant uniform flow of raw material is necessary to ensure smooth

and uninterrupted production. The assurance of constant supply of raw material

to primaries is the primary responsibility of Co-optex.

3.2 PRODUCTION PLAN

In order to produce the required designs and colour combinations taking

into account the preferences of the customers, Co-optex issues production plans

to Primaries, for a specified period, for specified designs and colour

combinations. This work is done under the supervision of the Technical Staff of

Co-optex who have completed the three-year course of Handloom Technology,

either at Salem or at Varanasi.

62

Co-optex estimates the variety-wise requirements for all the showrooms

based on previous sales in respect of the three main sales periods, namely

Deepavali, Pongal and the Handloom festival season Then production of the

varieties as per market needs, is planned by Co-optex.

Subsequently the varieties are produced by the Primary Weavers'

Co-operative Societies and are procured by Co-optex subject to colour

fastness, quality and cost verifications.

The production orders are placed to synchronise with specific sales

periods as under.

TABLE 3.1

Production Plan

Prodsicijon Plan P,oduciion Month Sales Season

15th December January to March Hand Loom Week

16 tMarch April to December Deepavali & Pongal

Source: Official Records 01 uo-optex, tnenr'i.

The net requirements for the current festival sales are estimated by

considering the product-wise sales figures for the same period during the

previous year and also the existing level of stock. Additional requirements are

processed on merit and the approved quantity procured. The procurement order

is sent to the Regional Senior Manager (Design and Production ). Every month

63

a meeting is convened to review the progress of procurement. Co-optex

prepares the production plan with the object of avoiding the production of

unwanted varieties by Primaries and to ensure the smoother supply of required

varieties to the showrooms.

The Production Division is operated by 11 senior Managers ( Design and

Production) placed at the regional level. The details of area covered by them,

the number of production supervisors and the societies working under their

control are presented in Table 3.2.

64

TABLE 3.2

Production Managers and Jurisdictions

Senior Manager/

Manager (DesignP'o. OJ

% %10 Vo qJ toS/No. Jurisdiction Production

& Production)- 7otal Societies TotalSupervisors

Location

1. Coimbatore Coimbatore and 5 7.80 75 5.41Nilgiris District

2. Cuddalore South Arcot, 4 6.26 86 6.20Thanjavur, andNagai Districts

3. Erode Erode Distict 9 14.06 177 12.77

4. Kancheepuram Kancheepuram 5 7.80 42 3.13(Silk) and Arani area

Silk Societies

5. Madurai-1 Virudhunagar 7 10.94 102 7.36and TheniDistricts

6. Madurai-11 Dindigal, Ramnad 5 7.81 162 1169and MaduraiDistricts

7. Trichy Trichy and 6 14.06 163 11.76PudukottaiDistricts

8. Salem Salem and 6 9.38 170 12.27DharmapuriDistricts

9. Tirunelveli Tuticorin, Nellai 5 7.81 168 12.12and KanyakumanDistricts

10. Vellore Chennai, 7 10.95 241 17.39Chengalpattu andThiruvannmalaiDistricts

65

Senior Manager' No. of . Of % toS/No. Manager (Design Jurisdiction Production Total Societies Total

& Production)- SupervisorsLocation

11. Contract Government 2 313 - -

Production at Supply andErode Tamil Nadu

Co-operativeTextilesProcessing Mills

Total 64 10000 1386 10000

Source: Official Records of Co-optex, Chennai.

From Table 3.2, it is understood that the Erode region has the highest

number of production supervisors (9) Vellore region has the maximum of 241

societies, followed by Erode (177 societies).

3.3 PRODUCTION FUNCTION

In Co-optex the production function is undertaken at three levels, namely

The Head Office, The Regional Office and the Production Supervisor's Office.

HEAD OFFICE

The Head Office prepares the production plan, after collecting indents for

handloom fabrics needed by all the regional showrooms through the regional

office. It is sent to the Senior Manager and Manager (Design and Production).

The senior manager prepares the procurement orders based on the production

66

plan. The procurement is ordered according to the seasonal requirements.

According to the requirements of the societies the supply of yarn and raw

material is arranged.

Silk eligibility is worked out for all silk-dealing showrooms and

procurement is permitted. Review of pure silk sales is made every month and

sent to the Senior Manager, Silk Production. He prepares the procurement

order and sends it to the Regional Manager at Kancheepuram for procurement,

from silk co-operative societies. The progress in the procurement of silk

handloom fabrics is reviewed every month and the necessary corrective

measures are taken by the Regional Manager at Kancheepuram.

REGIONAL OFFICE

At the Regional Level, the production plan received from Head Office is

converted into a society-wise production programme and orders are placed with

the societies in their region. As per the plan of production supplied by the Head

Office procurement of finished cloth is made from the societies. The actual

procurement and the procurement rate are intimated to the primary societies

regularly. Regional Offices ensure the proper receipt and supply of yarn and

raw material to the societies as per their requirements. The regional managers

play a significant role in providing continuous employment to weavers. They

perform their functions in co-ordination with the Circle Assistant Director of

67

Handlooms and Textiles, and ensure that the co-operative handloom weavers

receive the benefit of the Welfare Schemes as offered by the Government of

Tamil Nadu

PRODUCTION SUPERVISORS

The Production Supervisors arrange for production as per the production

plan. They check the quality of the cloth to be produced and arrange for

procurement of stock with relevant documents. Costing and procurement of

stock at approved rates are prepared by them. Production supervisors maintain

the co-ordination with societies for development works. They act as a link

between the societies and Co-optex. They provide technical guidance to

societies. They also play a key-role in the modernisation of looms.

3.4 VARIETIES OF CO-OPTEX FABRICS

The following varieties of fabrics are procured and sold by Co-optex.

Silk Fabrics (A-item)

a) Sarees (traditional and printed)

b) Dhoties

c) Shirtings

d) Angavasthrams

e) Pavadai (Skirts)

68

Polyester fabrics: (B-item) Sarees, Dhoties, Shirtings and Suitings.

Cotton:- (C item) Dhoties, Shirtings, Suitings, Bed-sheets, Furnishings,

Jammakkalams, Lungies, Towels, Pillowcovers, Hand-kerchiefs, Napkins,

Tern-towels, Table cloth.

Janatha:- (BNJ item) Sarees, Dhoties, and colour gada form the Janatha

varieties (D item) Sarees, Dhoties, Shirtings, Suitings, furnishings, colour gada,

and the like are the power loom varieties dealt by Co-optex.

The handloom goods are renowned for their artistic designs and textures.

But of late there has been a powerful competition from powerlooms, supported

by the State Government Policy. Since, 1991-'92, the Tamil Nadu Government

has been following a scheme for converting handlooms into powerlooms in a

phased manner over a period of ten years. Even though the Government has

introduced the scheme to reduce human drudgery and to increase productivity

and the earnings of weavers, this has not helped the handloom weavers and the

industry much. Until 1991-'92, Co-optex procured fabrics only from the

Handloom Weavers' Co-operative Societies. Since 1992-'93, it started

procuring fabrics produced by powerlooms also. The shift in policy has been

due to the low cost of powerloom fabrics. This policy was introduced to improve

the financial viability of Co-optex. But this is against the principles of Handloom

Co-operatives.

69

3.5 PURCHASES OF RAW MATERIAL

Yarn is the main raw material in the production of handloom fabrics.

Co-optex undertakes the main function of purchasing the raw material and

supplying it to the Primary Co-operative Societies. The purchase and supply of

yarn by Co-optex are discussed in the following pages.

3.5.1 Cotton Yam

In Co-optex, the Primary Co-operative Weavers' Societies furnish their

requirements of raw-material to the yarn units in their jurisdiction. The yarn units

consolidate their requirements and submit it to the Head Office at Chennai

through the Senior Manager and Manager (Design and Production). On receipt

of the requirements, the Head Office consolidates the requirements and sends it

to the Commissioner of Handlooms and Textiles at Chennai. It is for the issue of

mill-wise allotment. Based on the mill-wise allotment from the Commissioner of

Handlooms and Textiles, Chennai, Co-optex issues purchase orders of yarn to

the spinning mills concerned, for the despatch of yarn to the units which require

it

On the receipt of yarn from the Co-operative Spinning Mills at the yarn

unit, the Primary Weavers' Co-operative societies procure their requirement of

yarn and produce the cloth as per the production plan.

70

The requirements of cotton yarn of the primary Weavers Co-operative

Societies are met through yarn depots of Co-optex situated in Arakonam,

Arupukottai, Coimbatore, Cuddalore, Dharmapuri, Erode, Jeyamkondan,

Kanjeepuram, Chennai, Madurai, Nagercoil, Salem, Srivi!liputhur,

Thiruchencode, Thiruchirapalli, Tirunelveli, Vellore and Chennimalai.

Normally the yarn committee fixes the yarn rates for every month. The

Managing Director of Co-optex, The Director of Handlooms and Textiles, The

Managing Directors of Co-operative Spinning Mills and representatives from

Weavers' Co-operative Societies are the members of the yarn committee.

Purchase of cotton yarn is made on an outright basis from 18

Co-operative Spinning Mills of Tamil Nadu. Such of those counts of yarn which

are not produced by them are procured from the Tamil Nadu Textile Corporation,

and other State Co-opertative Spinning Mills. Almost the entire production of

yarn of the Co-operative Spinning Mills in the State is being distributed to the

handloom weavers.

The Sivaraman Committee on Handlooms has pointed out that only 56 per

cent of the yarn requirements of handloom weavers had been met by

71

Co-operative Spinning Mills. 3 There is a heavy short supply of yarn and

Co-optex plays an important role in the procurement and distribution of yarn

needed by the Weavers' Co-operative Societies in Tamil Nadu. For this

purpose, there is a senior manager who procures the yarn from the spinning

mills. He despatches it to the Regional Senior Managers to be supplied to the

Handloom Weavers' Societies.

In Tamil Nadu 4 lakh handlooms annually need 1.87 Iakh bales of

hank-yarn. Weavers' Co-operative Societies, 1380 in number, are supplied with

about 80,000 bales of hank yarn by the Co-operative Spinning Mills per annum.4

The details of cotton yarn purchased by Co-optex in the last 10 years are

given in Table 3.3.

3. G.S. Kamat, "Handlooms Sector Needs a Strong Integrated Structure",National Banks News Reivew, June- August 1993, p.54.

4. T.R. Gurumoothy, "Arms to Safeguard Handlooms in Co-operative Sector"Indian Co-operative Review, Vol.30, No.3, January 1993, p.210.

72

TABLE 3.3

Cotton Yarn Purchased(Rs. in Crores)

YearPurchase of 16tal Purchase of Yarn

Percentage (to 1 otal

Cotton Yarn Purchase of Yarn,)

1988-89 27.05 35.17 76.91

1989-90 54.34 57.58 94.37

1990-91 55.71 64.31 86.63

1991-92 51.74 65.65 78.81

1992-93 46.14 56.18 82.13

1993-94 35.95 43.09 84.43

1994-95 79.69 85.25 93.47

1995-96 68.23 90.82 97.15

1996-97 33.54 33.87 99.03

1997-98 31.38 32.54 96.44-

Source: official Kecoras or .,o-opttx, iei ii ii.

From Table 3.3, it is clear that the total purchase of yarn consists mainly

of cotton yarn. In the year 1997-'98, the cotton yarn purchased is 96.44 per

cent of the total yarn purchased.

The Handloom industry mainly depends on the hank-yarn produced by

the mill sector. In India there are about 1117 spinning mills of which nearly 43

73

per cent are in Tamil Nadu. The hank yarn production in the country is 152.3

crore kgs. Tamil Nadu contributes nearly one-third of the yarn production in the

country.5

Weavers generally both in private sector and co-operative sector face the

problem of inadequate availability of yarn. This is due to the policy of

Government of India, which allows export of yarn and diversion of yarn to the

powerloom sector.

Table 3.4 gives the percentage of cotton yarn purchased by Co-optex in

its total purchase for the last ten years.

5. "Achievements in Handloom Sector in Tamil Nadu", The Tamil Nadu Journalof Co-operation, September 1992, Vol.84, No.6, p.311.

74

TABLE 3.4

Purchase of Cotton Yarn in Total Purchase

(Rs. in Crores)

YearCotton Yarn Total Purchase of Co-optex Percentage (to Total

Purchased Inclusive of Yarn Purchase)

1988-89 27.05 118.53 22.82

1989-90 54.34 103.64 52.43

1990-91 55.71 175.58 31.73

1991-92 51.74 196.17 26.38

1992-93 46.14 183.70 2512

1993-94 35.95 202.01 17.80

1994-95 79.69 281.14 28.35

1995-96 88.23 300.46 29.36

1996-97 35.54 233.85 15.20

1997-98 31.38 260.70 12.04

Source: Official Records at uo-optex, unennai.

From Table 3.4, it can be stated that only in the year 1989-90 more than

50 per cent of the total purchase was in the form of cotton yarn The total0

purchase of Co-optex as shown in the table, includes the purchase of other

necessary materials besides yarn, like dyes and chemicals. Dur i ng the year

75

1994-'95 and 1995-'96, the amount spent for cotton yarn was more when

compared with other periods. This was mainly due to the subsidy granted for the

purchase of hank yarn. In the year 1997-'98, only 12.04 per cent of the total

purchase was in the form of cotton yarn in response to the market needs.

The cost of cotton yarn purchased by Co-optex per bale is given in the

following Table 3.5.

TABLE 3.5

Cost of Cotton Yarn

Year Cost per Bale In Rupees)

1988-89 6320

1989-90 6971

1990-91 7872

1991-92 9201

1992-93 10449

1993-94 12389

1994-95 17238

1995-96 17447

1996-97 18200

1997-98 16345

Source: Official Records of Co-optex, Chennal.

Price of Cotton YarnPurchased per Bale

8.6310.129*(9.864)

13.78

76

From Table 3.5, it is clear that the cost of cotton per bale purchased has

registered an increasing trend, except in 1997-'98.

The Computed Results of trend and growth rate of the price of cotton yarn

purchased are presented in Table 3.6.

TABLE 3.6

Trend and Growth Rate of Price of Cotton Yarn Purchased

Trend Co-efficientGrowth Rate

Particulars

A

IWA

(Percentage)

*:Significant at 5% Level

Figures in bracket are '1' values

It is observed from Table 3.6 that the trend co-efficient of price of cotton

yarn purchased was found to be statistically significant at 5 per cent level. It

indicates that there is a significant change in the price of cotton yarn purchased

during the period under study. The compound growth rate of purchase of yarn

is found to be 13.78 per cent per annum.

The trend of price of cotton yarn purchased per bale by Co-optex in ten

years from 1988-'89 to 1997-'98 is shown in Figure 3.1.

77

00

C'C'

'C

C'

I-

rl

C'

=

I -

- ( dnN U !) d JcO)

HANK YARN SUBSIDY SCHEME

To tide over the critical situation caused by the steep increase in the price

of hank yarn, the Government of India introduced the Hank Yarn Price Subsidy

Scheme during 1994-'95 under which Hank yarn was made available at

Rs.15/- less per kg. in respect of all counts to the weavers .6 A target of 52 lakh

kgs of various counts of yarn was fixed for Tamil Nadu in 1994-'95.

The scheme was extended up to March 31 1996 with an enhanced

subsidy of Rs. 20/- per kg. but restricted to 40 counts and below. The scheme

enabled the poor weavers to get adequate and uninterrupted supply at

reasonable prices.

The main problem faced by Co-optex was not the subsidy for hank yarn

but the delayed payment which resulted in the want of sufficient working capital.

When the Government decided to give subsidy, it could very well estimate the

amount of total subsidy needed and out of that at least 70 to 75 per cent could

have been released to Co-optex, in the form of an advance.

Mill Gate Price Scheme

The Mill Gate Price Scheme was introduced in 1992-93 with the object of

supplying yarn at the Mill Gate Price to the Handloom Weavers through the

78

6. "Achievements in Handlooms and Textiles" Op-cit., p.14.

79

National Handloom Development Corporation (NFIDC). Under the scheme, till

the year 1994-95, the rate of reimbursement to the NHDC was at 2 per cent of

the value of yarn supplied, which was enhanced to 3.5 per cent from 1995-96

and to 4 per cent from 1997-'98 onwards. Co-optex has also been covered under

this scheme.

3.5.2 Polyester Yarn

In keeping with the demand for manmade fibers, Polyester-blended yarn

and 100 per cent polyester filament yarn are supplied to select Weavers'

Co-operative Societies through select yarn units of Co-optex. Nearly 200

primaries are engaged in the production of polyester products .7

Co-optex procures polyester yarn from three co-operative spinning mills

namely,

1) South India Co-operative Spinning Mills Ltd., Tirunelveli

2) Salem Co-operative Spinning Mills Ltd., Salem, and

3) Bharathi Co-operative Spinning Mills Ltd., Ettayapuram

The first two Co-operative Spinning Mills produce cotton yarn on a large

scale and polyester yarn on a small scale. The third mill specializes in the

manufacture of polyester yarn. But no concentrated effort has been made by any

of the private sector manufacturers to introduce the synthetic fibre yarn in the

handloom and powerloom sectors. It was in this context the government decided

7. Official Records of Co-optex, Chennai.

80

1:0 set up a Petrofiles Co-operative. Petrofiles Co-operative started the

production of polyester filament yarn in December 1977.

The details of polyester yarn purchased in the last ten years by Co-optex

and the percentage on totai purchase are given in Table 3.7.

TABLE 3.7

Purchase of Polyester Yarn

(Rs. in Crores)

Year Polyester Yarntotal Purchase of YarnPurchased I

1988-89 5.51 35.17

1989-90 2.39 57.58

1990-91 6.79 64.31

1991-92 13.72 65.65

1992-93 5.76 56.18

1993-94 6.85 43.09

1994-95 10.78 85.25

1995-96 2.12 90.82

1996-97 0.32 33.87

1997-98 1.16 32.54

Source: Official Records of Co-optex, Chennai.

Percentage ('to TotalPurchase of Yarn)

15.67

4.15

10.56

20.90

10.25

15.90

12.65

2.33

0.94

3.56

From Table 3.7, it is seen that the purchase of polyester yarn was nearly

10 to 15 per cent of the total purchase of yarn. In 1991 -'92 a maximum of 20.95

81

per cent of total purchase of yarn consisted of polyester yarn . In 1996-'97 a

very meagre percentage was in the form of polyester yarn (0.94).

3.5.3. Art Silk Yam

Co-optex was not supplying art silk yarn to Primary Weavers' Societies till

February 1988. Then it started supplying it at the rate of 33.3 tonnes per month.

CD-optex procures art silk and raw silk yarns based on its requirement from time

to time. The requirements of art silk yarn of the Primary Weavers Co-operative

Societies are met through the purchases made from South India Viscose and

National Development Corporation, Coimbatore and Petrofiles Limited in

Maharashtra State.

The value of art silk yarn purchased by Co-optex is given in Table 3.8.

Art Silk YarnThtaI Purchase of Yarn

PurchasedYear Percentage to Total

TABLE 3.8

Purchase of Art Silk Yarn

82

(Rs. in Lakhs)

1988-89 261.33 3517.58

1989-90 84.67 5758.93

1990-91 180.34 6431.41

1991-92 17.93 6565.48

1992-93 31.77 5618.17

1993-94 28.13 4308.56

1994-95 76.45 8524.52

1995-96 45.71 9082.08

1996-97 - -

1997-98 - -

Source: Official Records of Co-optex, Chennai.

7.43

1.47

2.80

0.27

0.57

0.65

0.90

0.50

From Table 3.8, it is clear that the percentage of art silk yarn purchased

on total purchase of yarn is very negligible. Only in the year 1 988-'89 it

amounted to 7.43 percent.

3.5.4 Raw Silk Yam

In respect of raw silk yarn, Co-optex procures it only as per the direction

of the Government of India and distributes it to Primary Weavers' Co-operative

Societies. Co-optex supplies only a limited quantity of raw silk yarn to affiliated

silk Co-operatives in Tamil Nadu. The Tamil Nadu Silk Federation which is

83

situated at Kanjeepuram mainly caters to the raw silk yarn requirements of the

silk yarn co-operatives.

The number of looms engaged in silk weaving is about 60,000 of which

68 per cent are in rural areas. Ninety per cent of looms are in the co-operative

sector. The average annual production of handloom silk varieties is around 20

lakh metres, valued at an average sales turnover of Rs.130 crores. 8 The

working performance of these societies during 1996-'97 shows that about 67.42

per cent of the Silk Weavers' Co-operative Societies were working on profit.9

From October 1997 onwards, the Government permitted the Silk Weavers'

Co-operative Societies to purchase silk yarn directly from Anna Silk Exchange

Kancheepuram, by participating in open auction, apart from making purchases

from TENSILK. The total consumption of silk by these societies was estimated

around 300 lakh kgs. per annum.1°

3.6 SALE OF YARN

The procured raw materials are sold to the primaries for the purpose of

production. Details of supply of raw-materials to Primary Co-operative Weavers'

Societies by Co-optex are given in thefollowing pages.

8. "Welfare and Development Schemes for Handloom Weavers", The TamilNadu Journal of Co-operation, Vol.90, No.5, August 1998, p.20

9. Ibid., p.21.

10. Ibid., p.21.

.3.6.1 Sale of Cotton Yam

The cotton yarn supplied to Primaries from 1989 to 1998 is given in Table

3.9.

TABLE 3.9

Cotton Yarn Sales to Primaries

(Rs. in Crores)

84

Year Sale to Primaries b/cu Sa/e of ) 'urn(all varieties)

1988-89 27.70 37.06

1989-90 56.41 59.70

1990-91 54.43 63.81

1991-92 54.38 70.52

1992-93 47.12 58.55

1993-94 38.22 46.64

1994-95 71.10 81.73

1995-96 95.92 100.82

1996-97 34.16 34.91

1997-98 32.42 34.03

Source: Official Records of Co-optex, Chennai.

Percentage In 1 olaf

74.74

94.49

85.30

77.11

80.48

81.95

86.99

95.14

97.85

95.27

From Table 3.9, it is clear that the maximum percentage of yarn sales

consists only of cotton yarn. In 1996-'97 a maximum percentage of sales was of

85

cotton yarn (97.85%). It is so because of the introduction of subsidy to hank

yarn purchases.

The sale price of cotton yarn per bale is given in Table 3.10.

TABLE 3.10

Sale Price of Cotton Yarn per Bale

Source: Official Records of Co-optex, Chennai.

From Table 3.10, it is clear that the sale price of cotton yarn has shown a

decreasing trend after 1995-'96, when the maximum sale was effected

(Rs. 18377)

86

TREND AND GROWTH RATE

The trend and growth rate of the price of cotton yarn sold are calculated

and presented in the following Table 3.11

TABLE 3.11

Trend and Growth Rate of Price of Cotton Yarn Sold

Trend Co-efficient Growth RateParticulars (Percentage)

A B

143*Sale Price of Cotton Yarn 8.544

0.15.418

(8.085)

*Significant at 5% Level

Figures in bracket are 'T' values

It is understood from Table 3.11 that the trend co-efficient of the price of

cotton yarn sold is statistically significant at 5 per cent level. It shows that there

is a significant change in the price of cotton during the period under study. The

compound growth rate of price of cotton yarn sold is 15. 418 per cent per

rnnum.

The trend of price of cotton yarn sold per bale by Co-optex in ten years

from 1988-'89 to 1997-'98 is given in Figure 3.2.

N

1)

IIC

C'C'

C'

2 oC '0

(;thrj u .d) hIIO) C) 3ij

C

87

3.6.2 Polyester Yam Sold to Primaries

Details of polyester yarn sold to Primaries during the period of 10 years

from 1988-89 to 1997-98 are given in Table 3.12.

TABLE 3.12

Polyester Yarn Sales(Rs. in Crores)

YearPolyester Yarn Sold to i ótai Sale qf Yarn Percentage to iota!

Primaries

1988-89 7.94 37.06 21.43

1989-90 2.70 59.70 4.50

1990-91 7.75 63.81 12.15

1991-92 15.70 70.52 22.26

1992-93 7.71 58.55 1317

1993-94 8.00 46.64 17.15

1994-95 9.75 81.73 11.93

1995-96 4.43 100.82 4.39

1996-97 0.75 34.91 2.15

1997-98 1.61 34.30 4.69

Source: Official Recoras OT o-optex, LRF1FIdI.

Table 3.12 shows the percentage of sale of polyester yarn on the total

sale of yarn. In 1996-97 the minimum percentage of sale was 2.15, and in 1991-

92 the maximum percentage of sale was 22.26.

88

3.6.3 Sales of Ark Silk

Details of art silk yarn sold are given in Table 3.13.

TABLE 3.13

Sale of Art Silk Yarn

(Rs. in Crores

Year FArtkSilk Supplied Art Silk Yarn lb/al Sale of Yarn I Percentage toOnly I (all varieties) Total

89

1988-89 1.42 -

1989-90 0.59 -

1990-91 1.63 -

1991-92 0.45 -

1992-93 - 3.32

1993-94 - 0.17

1994-95 - 0.82

1995-96 - 0.31

1996-97 - 0.003

1997-98 - -

Source: Official Records of Co-optex, Chennai

37.06

3.83

59.70

1.00

6382

2.55

70.52

0.64

58.55

5.67

46.64

0.36

81.73

1.00

100.82

0.31

34.91

0.01

In Table 3.13, the sales figures shown in the second column include the

sale of both raw silk and art silk yarns upto 1991-'92. The Table shows that raw

silk and art silk yarns sold reached, 3.83 per cent in 1988-'89. The maximum

sale of art silk yam alone was in 1992-'93. (5.67%). in the year 1996-'97 even

90

though there was no fresh purchase of art silk yarn, the stock in hand had been

sold (0.01%).

:3.6.4 Sale of Raw Silk

The following Table 3.14 gives the pecentage of raw silk yarn sold on

total yarn sales.

TABLE 3.14Raw Silk Yarn Sales

Year Raw Silk SoldTotal Sale of Yarn

(all varieties)

1988-89 - 3705.52

1989-90 - 5969.47

1990-91 - 6381.11

1991-92 - 7052.37

1992-93 3.32 5854.64

1993-94 25.26 4663.73

1994-95 6.19 8172.96

1995-96 15.59 10081.81

Source: Official Records of Co-optex, Chennai.

(Rs. in Lakhs)

Percentage to Total

0.06

0.54

0.08

0.16

From Table 3.14, it is seen that the sale percentage of raw silk yarn on

the total sales has been very negiligble.

9

The quantity of yarn sold by Co-optex to its Primary Weavers' Societies is

given in Table 3.15.

TABLE 315

Quantity of Yarn Sold by Co-optex

Year Cotton (Bales) Raw Silk (Kgs.) Art Silk (Kg.-;.)

1988-89 62505 - -

1989-90 73438 - -

1990-91 67281 - -

1991-92 53332 290 39523

1992-93 43343 21501 24727

1993-94 31277 1982 9750

1994-95 42800 715 49450

1995-96 52195 1812 24600

1996-97 20043 - -

1997-98 18455 - - -

Source: Official Records of Co-optex, Chennai.

N.A. Not Available.

Polyester (Kg.,;.)

N.A.

N.A.

N.A.

856304

434871

475691

539134

226948

34306

92975

From Table 3.15, it is clear that the cotton yarn sold to primaries by Co-

optex is considerable. The maximum sale was 73438 bales in 1989-90. The

boost in cotton sales is because of the subsidy granted. The subsidy was

92

Rs.15/- per kg. for hank yarn upto 1994-95, which was raised to Rs.201- per kg.

in the year 1995-96.

Purchase of yarn includes purchase of cotton yarn, polyester yarn art silk

yarn and raw silk yarn. The total yarn purchased by Co-optex is given in Table

3.16 along with percentage on the total purchase.

TABLE 3.16

Purchase of Yarn

(Rs. in Crores)

Purchase of Yarn Total Purchase ofYear .L

..i

Percentage to Total(all varieties,) o-optex inclusive of yarn

1988-89 35.17 118.54 29.67

1989-90 57.58 161.24 35.71

1990-91 64.31 175.59 36.63

1991-92 65.65 196.17 33.47

1992-93 56.18 183.70 30.58

1993-94 43.09 202.01 21.33

1994-95 85.25 281.15 30.32

1995-96 90.82 300.46 30.23

1996-97 33.87 233.86 14.48

1997-98 32.54 260.70 12.48

Source: Official Records of Co-optex, Chennai.

93

From Table 3.16, it is understood that about 30 to 35 per cent of the total

purchase each year consisted of yarn purchased in the years 1988-89 to 1992-

93 and 1994-95 to 1995-96. But in 1993-94 the percentage came down to

21.33. In 1996-97 the percentage was 14.48 and next year it came down further

to 12.48.

The percentage of sale of yam in total sales is given in Table 3.17.

TABLE 3.17

Sales of Yarn

(Rs. in Crores)

YearSale of Yarn Total Sales of

(Pall varieties) Co-optex inclusive of yarn

1988-89 37.06 137.65

1989-90 59.70 243.89

1990-91 63.81 201.53

1991-92 70.52 242.74

1992-93 58.55 253.82

1993-94 46.65 279.64

1994-95 81.73 309.27

1995-96 100.82 358.36

1996-97 34.91 299.61

1997-98 34.03 361.37

Source: Official Records of Co-optex, Chennai.

Percentage 10 1 ota/

26.92

24.48

31.66

29.05

23.07

16.68

26.43

28.13

11.65

9.42

04

From Table 3.17, it is clear that in the total sales, yarn sales fluctuated.

The maximum percentage was in 199192, but in 199798, the minimum

percentage (9.42) was reached.

3.7 DYES AND CHEMICALSDyes and Chemicals constitute 5% to 10% of the cost of production by

handlooms. But a few Primary Weaver3Co-operative Societies/Weavers dye the

yarn themselves thus bringing down the cost. Other weavers use the readily

available dye yarn for weaving. Apart from dyeing and processing by mills under

the co-operative sector, private dyers also take care of the requirements of the

Handloom industry.

The Tamil Nadu Co-operative Processing mills at Erode provides the

facilities for processing hank yarn, for dyeing and bleaching, mercerizing and

screen printing. The weavers of the co-operative and private sectors make use

of the facilities.

There are seven modern dye houses in the State-operated unit of the

Erode processing Mills. The Primary Weavers Co-operative Societies have 223

small and medium dye houses. In addition the State has 117 dye houses

approved by the Commissioner of Handlooms and Textiles.

In order to provide dyeing and processing facilities for yarn and cloth

produced by the handloom weaver's co-operative societies and private sector

hand looms, the Tamil Nadu Co-operative Textile Processing Mills was started in

95

the year 1973.This was the only processing mill under the co-operative sector. R

provides continuous employment to nearly 350 workers.

In order to make handlooms more competitive and to improve their

marketability, pre-loom and post-loom processing facilities are provided with a

provision of 100 per cent loan to the State Governments, under a Centrally

sponsored scheme. Under the schemes, processing facilities such as yarn

mercerising, dyeing, calendering, sizing, heat-setting and printing are covered."

The private merchants meet the requirements for dyes and chemicals.

Moreover, the Tamil Nadu Industrial Development Corporation has set up the

Vanavil Dyes and Chemicals Project at Cuddalore in South Arcot district in the

joint sector to help the co-operative sector.

:1.8 HANDLOOM DEVELOPMENT CENTRES AND QUALITYDYEING UNITSIn order to provide complete package to the handloom weavers,

Government of India introduced the scheme of Handloom Development Centres

and Quality Dyeing units during the year 1993-94 and established 3000

handloom development centres and 500 quality dyeing units.12

11. Tmt. Pupul Jayakar, "Handlooms: Integral Part of Rural Life', The TamilNadu Journal of Co-operation, Vol.80, No.4, October 1988, p.192.

12. "Welfare and Development Schemes for Handloom Weavers" The TamilNadu Journal of Co-operation, Vol.90, No.5, August 1998, p.23.

The Government of India has sanctioned Rs.14.94 crores for the

establishment of 286 handloom development centres and 32 quality dyeing units

in Tamil Nadu. 13

Tamil Nadu was allotted 58 units for 1996-97, for setting up quality

Dyeing units. The cost of each unit worked out to Rs. 7.83 lakhs. 14 The

required financial assistance was provided as grant from Government of India

and as loan portion from NABARD.

19 PROCUREMET OF CLOTH

Co-optex arranges procurement of cloth from various societies in Tamil

Nadu for its sales for various seasons. The goods so procured are being sent to

the 21 warehouses of Co-optex which in turn supply the goods to the selling

units in the regions.

For marketing purposes, Co-optex has divided the entire area of Tamil

Nadu into nine regions and it has six more regions outside Tamil Nadu. To

assess the requirement of products for sales in each region, the following

procedure is normally followed. In each region, quantity of the sales for the

previous year is taken as the base. It is increased by 20 per cent in expectation

13. Ibid., p.24

14. "Achievements in 1-tandlooms and Textilex", Op-cit., p.15.

I)-

of higher sales. If there is any stock, the stock is adjusted and the quantity to be

procured for each region is fixed.

The following arrangements have been made to supply only the required

designs and colours to the selling units.

The Sales Managers of Warehouses are requested to select the designs

and colour combinations for various items as per the requirements of the region.

These designs are given in the form of fabric samples to primary societies by the

warehouse managers, retaining counter samples with them. The societies

arrange for production as per these samples in consultation with the Manager

(Design and Production) and the Production Supervisors concerned. The

societies arrange production of cloth using these designs.

Co-optex has the technical wing to control the production and

procurement activities at the Primary Weavers' Co-operative Societies. It has an

Organizational set up of a technical team in the District Headquarters all over

Tamil Nadu. Often, a short period of training is given through management

institutions and textile institutions like the Indian Institute of Handloom

Technology to improve individual skills in the field of trade. At the time of

procurement, the Warehouse Managers visit societies, along with skilled

salesmen and the Managers (Design and Production). The production

supervisors are expected to ensure that the goods as per the selected design

Os

are packed and dispatched to the warehouses concerned. This arrangement

enables the selling units to get the required type of goods and avoid stagnation

of stocks. Besides, efforts are made to increase the sales. Co-optex is primarily

obliged to procure not less than 50 per cent of the production of Primary

Weavers' Co-operative Societies. As regards the production of Janatha and

Polyester varieties, the entire production by Primaries is procured by Co-optex.

3.9.1. Procurement of Cotton Varieties

Co-optex has been procuring goods from the Primaries. It supplies the

same to its showrooms. The number of primaries and the major product

produced by them are shown in Table 3.18.

TABLE 3.18

99

Area

Coimbatore

Erode

Salem

Trichy

Madurai

Tirunelveh

Vellore

Procurement of Cotton Products by Co-optex

INumber of Primaries Major Products produced

76 Kora Cotton, Cotton Sarees, NagamamSarees, Bumbering Sarees

172 Bed Sheets, Pillow Covers, FurnishingCarpets and Towels

45 Higher count Sarees, Dhoti es, Carpets,Towels, and Upper Cloth.

95 Higher count Dhoties, Cotton Sarees,Bed Sheets, Pillow Covers, Towels,Furnishing and Upper Cloth.

257 Kodambackkam Sarees, Paramagudi

Sarees, Hanger Towels, 2 yard Dhoties.

169 Bed Sheets, Dhoties, Pillow Covers,

Lungies, Low Cost Sarees.

178 Dhoties and Upper Cloth, Low CostSarees, Lungies, Towels, Dhoties andDhorthu

Cuddalore 96 Lungies and Mosquitto nets

Source: Production Details, Co-optex, Chennai.

3.9.2 Reciprocal Purchase

In order to cater the needs of customers of showrooms situated in

different parts of the country, Co-optex procures goods from other State Apex

100

Institutions and societies, on mutually agreed terms and conditions. The

transaction is done by exchange of goods and not by cash and carry basis.

3.9.3 Procurement of Silk

With regard to silk, Co-optex issues production planning to the Silk

Weavers' Co-operative Societies in Tamil Nadu to meet their sales

requirements. Co-optex is marketing silk items through its retail outlets which are

classified as category I, II, Ill, & IV showrooms. These classifications are on

sales turnover basis. The silk production plan to Primary Weavers' Co-operative

Societies is issued on the basis of actual onward requirements of silk items,

taking into account the following factors.

1) Previous year sales.

2) 50 per cent base stock on previous year sales.

3) 20 per cent increase to meet anticipated sales.

4) Less, stock on hand.

Based on the actual onward requirements, the production plan is issued

to the Weavers' Co-operative Societies per annum on monthly basis. This

production plan issued to each silk producing region is split up and given to

each Weaver Co-operative Society by the Manager (Design and production),

based on the production capacity of the Societies, in consultation with the

Assistant Director of Handlooms and Textiles concerned.

101

Kancheepuram, Kumbakonam, Salem, Arani and Coimbatore are the

main silk producing areas in Tamil Nadu. These areas produce silk items like

silk sarees, silk pavadai, silk dhoti, silk upper cloth and silk shirting. The other

silk products produced according to the requirements of Co-optex are:

1) Plain silk-woven sarees

2) Printed silk sarees

3) Grapesilk woven sarees

4) Grapesilk printed sarees

5) Ponnadai

6) Silk scarf and

7) Silk tyes

Among the Primary Weavers' Co-operative Societies, some are big

having high production capacity. Such societies set their own marketing outlets

and Co-optex procures goods from these societies at a less percentage. It

procures more goods from other Primary Weavers' Co-operative Societies which

have less production capacity. Even at times, Co-optex procure 100 per cent

of the goods produced by the Primary Weavers' Co-operative Societies in rural

areas which have less production, and which are financially weak. By doing so,

Co-optex helps such societies by giving continuous employment to its members.

The total procurement of cloth by Co-optex for Ten Years from 1988-'89

to 1997-'98 is given in Table 3.19.

102

TABLE 3.19

Procurement of Cloth

(Rs. in Crores)

Source: Official Records of Co-optex, Chennai.

From Table 3.19, it is clear that the cloth procurement has registered an

increasing trend, except in the years 1992-'93 and 1996-'97.

Trend and Growth Rate

The computed results of Trend and Growth rate of procurement of cloth

by Co-optex is given in Table 3.20.

TABLE 3.20

Trend and Growth Rate of Procurement of Cloth

Trend Co-efficient Growth Rate

Parliculars (Percentage)

103

4.8310.1105 11.689

1 (13.003)Procurement of Cloth

*significant at 5% Level

Figures in bracket are 'T' values

Table 3.20 shows that the trend co-efficient of procurement of cloth is

statistically significant at 5 per cent level. The compound growth rate of

procurement of cloth is 11.689 per cent per annum. So, in a longer period of

time there is significant growth in the procurement of cloth by Co-optex.

The trend of procurement of cloth by Co-optex in ten years from 1988-'89

to 1997-'98 is presented in Figure 3.3.

(I2) UI c) Pfl0Id luolD

104

C

=

eel

.E

105

The different varieties of cloth procured in ten years, 1988-89 to

1997-'98, is given in Table 3.21.

TABLE 3.21

Different Varieties of Cloth Procured by Co-optex

Polyester Janatha Silk Contract Cloth OthersYear (in Percentage) (in Percentage) (in Percentage) (in Percentage) (1,1 Percentage)

1988-89 11.5 19.56 23.81 6.93 38.2

1989-90 5.75 47.38 14.88 2.25 29.74

1990-91 9.59 23.49 21.39 5.22 40.31

1991-92 12.66 16.78 30.36 5.54 34.66

1992-93 7.21 27.05 25.69 8.80 31.25

1993-94 8.67 20.12 20.46 15.00 35.75

1994-95 4.97 21.85 20.86 14.06 38.26

1995-96 4.38 23.92 11.29 37.29 23.12

1996-97 1.84 19.19 17.30 25.44 36.23

1997-98 0.83 2.70 10.92 67.34 18.21

Source: Official Records of Co-optex, Chennai.

The Table 3.21 shows the pecentage of different varieties of cloth

procured by Co-optex. The procurement of polyester variety of cloth shows

fluctuations. The procurement is very low (0.83%) in 1997-98. The percentage

of procurement of silk variety and Janatha shows similar fluctuations, the highest

percentage for silk was in 1991-'92 (30.36%) and for Janatha variety was in

106

1989-'90. Generally, polyester, Janatha, and silk varieties show a decreasing

trend, though fluctuating. The contract cloth variety has also fluctuating

percentages but the maximum percentage has been in 1997-'98 (67.34%),

Other varieties have also not been constant. The lowest percentage has been

recorded (18.21%) in 1997-'98.

.10 QUALITY CONTROL

The production manager is responsible for the quality of fabrics, whereas

the quality of yarn is the prime responsibility of quality control supervisor. The

Design and Production Manager is appointed for every region. The quality

control supervisor checks the yarn and other raw materials at the time of their

receipt in the godown. Co-optex has a separate wing to check the quality of the

fabrics. The testing organizations like the Institute of Handloom Technology,

Salem, The Tamil Nadu Laboratory and Research and Development Wing of

Sitra of Coimbatore and Sasmina of Mumbai, provide useful services in quality

control. The (Design) Production Managers and Supervisors utilize the services

of these organizations.

If any complaint is received from any Primary Weavers' Co-operative

Society regarding the quality of yarn like short length, the same is sent . to

the mill with a copy to the Head Office at the Quality Control division.

107

The quality control supervisor receives all the complaints and classifies

the details of complaints mill-wise and stores them in the computer. He reports

the same in the yarn committee meeting. He sends a report to the Director of

Handlooms and Textiles, if the complaints are repetitive in nature.

In co-optex it is permitted to buy a small quantity of yarn (sample) in the

open market and to compare it with the yarn supplied to the yarn depots of

Co-optex, supplied by the same mill. If any variations are found in the test, it is

reported to the Managing Director of the mill concerned.

The quality control supervisor makes periodical visits to the societies and

ascertains whether the yarn supplied is fit for weaving in respect of

a) Softness and absorbing for Terry Towels.

b) Sharpness for Lungies.

c) Luster for finer counts dhoties.

It is the duty of the quality control supervisor to collect both adverse and

favourable reports from the societies in respect of lesser weight, short length,

extent of twist and the like. All such information is stored in the computer

mill-wise, society-wise and product-wise. Such information stored indicates the

details of inspection regarding the quality - country-wise, the nature of defects,

the extent of variations and corrective actions taken and the like. The report is

received by the Quality Control Manager periodically.

108

Co-optex maintains a very good quality of raw material whenever it

purchases from Co-operative Spinning Mills. Sometimes, the purchases effected

in the open market or from the private sector mills prove to be sub-standard.

But the credit policy namely abnormally delayed payments of Co-optex, affects

the weavers and their work. So, Co-optex must take proper steps to effect

prompt payment to the suppliers so that the required quantity and desired quality

of raw material can be maintained at all levels.

Even though there is a strict quality control system in Co-optex and the

yarn supplied to the members of the societies are of good quality, they are in

short supply.

However, the quality can not be inspected cent percent by the Production

Mangers or Quality Control Supervisors. The quality must be built in. So, the

Primary Weavers' Co-operative Societies and quality control supervisors must

be educated in the salient features of quality control through training

programmes organized by Co-optex.

3.11 CONCLUSION

One of the important functions of Co-optex is the supply of raw material

to its member co-operative societies. Co-optex supplies the raw material by

purchasing it from Co-operative Spinning Mills. If it is inadequate, Co-optex

M

makes purchase from outsiders also. There are cotton, polyester, raw and art

silk yarn varieties. The production plan is prepared and specifications are

decided and production is allotted to all the Primary Weavers Co-operative

Societies by the regional office concerned. The produced goods are procured by

Co-optex after making verifications with regard to quality, design and the like.

Then Co-optex provides marketing facilities to sell the goods produced by

Primary Weavers' Co-operative Societies through the sales depots.