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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.
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.
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.
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.