CHAPTER VI

SUMMARY AND CONCLUSION

* Introduction

* Summary of Major Findings

* Conclusion

* Policy Implications

CHAPTER VI

SUMMARY AND CONCLUSION

This chapter summarises the key findings of the study. This also includes

a few suggestions for the general improvement of handloom industry. The

study was undertaken to examine the problems and prospects of handloom

industry in the unorganised sector. The product mix, cost of production,

general marketing practices, profitability and the problems formed the crux of

this study. The demand for handloom cloth in Tamil Nadu was also projected.

For the purpose of the study, Coimbatore district was selected. In all, 145

samples comprising 30 producer weavers, 31 master weavers, 44 independent

weavers and 40 dependent weavers were drawn on simple ramdom method

from the two major handloom regions, viz., Coimbatore and Pollachi.

In order to fulfil the first objective, viz., to estimate the demand for

handloom cloth in Tamilnadu, a Multiple linear regression model was found to

be the best fit, to project the demand for handloom production from 1991 to 1995

and the share of unorganised sector was also assessed.

The second objective was to study the product mix. To fulfil this objective,

the shares of the functionaries in the total production of sarees and in each

variety of sarees were ascertained.

The third objective was to compute the cost of production of handloom

sarees. For this purpose the cost sheets have been prepared for all the three

varieties of sarees for the different functionaries.

166

The fourth objective was to study the marketing of handloom sarees.

For this purpose, the general marketing practices prevalent in the study area

were explained. Five important marketing channels were identified and price

spread was worked out for all the channels to ascertain the share of producers

in the consumer's rupee.

To study the profitabili ty of the handloom industry was the fifth objective.

Profitability ratios were worked out and compared with that of the organised

mill sector for this purpose.

The sixth objective was to study the problems of the handloom industry.

The problems encountered by the different functionaries were analysed. Since,

raw materials being the serious problem of the handloom industry, the trend

of the yarn price behaviour was studied through Moving Average Method.

Further, by the method of Least Squares, the prices of the yarn were forecasted.

The seasonal and cyclical variations of the yam prices were also explained

through seasonal indices by Trend-to-Moving Average method.

Summary of major findings

6.2.1 Profile of the Study area and the Respondents

i) The humid climate of Coimbatore is very condusive for the weaving of fine

and superfine sarees which could not be possible in any other parts of

Tamilnadu State.

167

ii) Coimbatore, Pollachi, Tiruppur and Mettupalayam are the four major

regions in the study area. There were 24347 handlooms in the district of which

86 percent were in the co-operative fold.

iii) Producer weavers, Master weavers, Independent weavers and

Dependent weavers numbering 145 in all, with 20.69 percent, 21.38 percent,

30.34 percent and 27.59 percent respectively, formed the distribution of

respondents. Out of the 4155 looms, covered in the study, 83.51 percent were

under the control of producer weavers and just 3.13 percent of the total looms

were with the respondents of who were dependent weavers.

iv) Middle aged persons in the age group of 36 to 55 were found in large

numbers (70.24%) in the total sample while youngsters and Aged persons

accounted for 15.48 percent and 14.28 percent respectively. Most of the

respondents were having over 20 years of experience.

v) Around 80 percent of the respondents were literates. The illeterates

were found in large numbers in the Dependent weavers sector than the

independent weaver sector.

vi) A higher percentage of male members of dependent weavers sector

and female members in Independent weavers sector as to the size of their family

were engaged in the handloom industry. The employment of children in the

handloom sector accounted for around 38 percent as to the size in both the

sector.

168

vii) In vestment in building was the single largest item of Assets for all the

functionaries excepting producer weavers for whom, investment in raw

materials and finished goods was the largest item forming 51 percent of the total

investment in the industry.

viii) Around one-third of the respondents were still maintaining their

membership with the weaver's co-operative societies. While the partnership

type of business was becoming popular with the producer weavers group,

proprietory type prevailed with all other functional groups.

6.2.2 Demand Projections

i) It was found that Production of handloom cloth was influenced by

two independent variables, viz., wholesale price index of textiles and index of

Agricultural production in Tamil Nadu and their scatter diagram had exhibited

a linear relationship.

ii) The linear function of the form, Y = a + b,x. + b,x, was used in

estimating the linear demand function and it indicated that 92 percent of the

variation in the production of handloom cloth has been influenced by the two

independent variables.

iii) The variable x,, wholesale index of textiles had a logical sign as

expected a prioric and highly significant. An increase in the wholesale price

by one per cent would result in an increase in the demand for the handloom

production of 1359.441 metres. The production ofhandloom cloth ofTamilnadu

in 1994-95 would be 994783.35 metres.

169

6.23 Product Mix

i) The average value of production per respondent was high with

Rs.27.83 lakhs for producer weavers; Rs.9.17 lakh for Master weavers; and

Rs.1.13 lakh for Independent weavers. Among the three categories of

respondents, the producer weavers were the rich and found to be economically

sound. Their investment was o73 also high when compared to other

functionaries.

ii) The averagevalue of production per loom varietywise was found to

be the highest with pumper sarees (Rs.4.48 lakhs) and the lowest was with sico

sarees (Rs.2.5 laksh) per respondent.

iii) In the product mix of producer weavers, nearly 42 percent preferred

the cotton sarees, while master weavers and independent weavers, the maximum

preference was pumper sarees (58.08 percent and 43.33 percent). The preference

for difficult varieties of sarees was mainly attributed to the availability of raw

materials, marketability and profitability.

iv) The productivity per cotton loom per annum was the highest in the

case of producer weavers with 212 sarees and the lowest was in the case of

Master weavers with 184 sarees. The productivity per pumper loom was the

highest with Independent weaver (187 sarees) while it was the lowest with

producer weavers (168 sarees). The variation in productivity of the different

functionaries was due to the difference in efficiency and the nature of design.

170

v) The average annual value of production per loom was the highest in

the case of sico sarees and the lowest was with cotton sarecs for all the

functionaries.

vi) The share of producer weavers in the total value of production was

81.15 percent in cotton sarees, 60.29 percent in pumpersarees and 75.15 percent

in sico sarees. They were in the order of 3.2,4.6 and 5.5 percents for independent

weavers.

6.2.4 Cost of Production

i) In the production of cotton sarees as well as sico sarees, raw material

formed the single major element of cost accounting for over 55 percent and 52

percent respectively of the total cost for all the functionaries. However, labour

had been emerged as the major element in the production of pumper sarees.

ii) The indirect cost of producer weavers was worked out to be the

minimum for all the varieties of sarees and formed less than two percent in the

total cost while for master weavers it ranged between 1.68 percent and 2.13

percent. It was the maximum of all for Independent weavers ranging between

3.58 percent and 4.85 percent. The increased share of Indirect-cost of

Independent weavers was due to the increased use of fixed assets and investments

considering the size of operation.

171

iii) The cost per cotton saree of 5.5 standard metres was the minimum

(Rs.100) for producer weavers and the maximum for independent weavers

(Rs.l 15.04). The cost per pumper and sico sarees was the highest of all for

independent weavers while master weavers produced the same at the lowest

cost. The difference in the cost was due to the use of quantity yam, increased

workmanship^attractive designs and borders.

6.2.5 Marketing

i) Before the sarees were sold to consumers, the sarees were subjected

to some preparations like folding, labelling, branding, wraping and packing.W

Most of the processing were done at the point of production.

5ii) All the transportation means viz., Road, Rail and Air excepting gea,

were used in moving the sarees to the different marketing points. Insurance of

cargo of sarees during transportation was not familiar in the study region.

iii) Mostly cost plus pricing method was followed. Only 36.37 percent

of the Independent weavers adopted market price strategy.

iv) Producer weavers having retail outlets alone were resorting to

advertising and the media was Radio.

v) While 91.27 percent of the sarees produced by the producer weavers

were sold to other states outside the Tamil Nadu, 77.63 percent of the sarees of

independent weavers were sold within Tamil Nadu itself.

172

vi) Nearly 50 percent of sarees of producer weavers and 6.11 percent

of independent weavers were sold through wholesalers and retailers and 36.51

percent of the former and 61.38 percent of the latter passed through retailers.

Direct sales *o consumers were 16.73 percent and 32.51 percent respectively..pa

6.2.6 Price spread

i) The share of Producer weavers was worked out to be 66.34 paise in

the consumer rupee when the pumper sarees sold to consumers through

wholesalers and retailers. This low share was due to the long route.

ii) The share of producer weavers in the sale of cotton sarees through

retailers, was 75.61 percent mainly due to the short route and in the direct sale

to consumers, it was 73.84 percent.

iii) In the case of independent weavers, on the sale of sico sarees, the

share was 69.84 percent through retailers and on the sale of pumper sarees

directly to consumers, the share was 72.62 percent..ps*-

6.2.7 Profitability

i) The average profit of producer weavers was the maximum with

Rs.4283 per annum and that of master weavers was the minimum with Rs.837.

It was Rs.2636 for independent weavers.

173

ii) The variety wise profits was also formed to be the maximum to the

producer weavers. The yield per sico saree to the producer weavers was the

highest of all (Rs.32.74)

iii) Excluding master weavers, the gross profit ratio was much above

the average gross profit ratio of All Industries and Oganised Cotton Textile

Industry in all India level.

iv) The return on fixed assets and return on capital employed ratios

were very high to the producer weavers and independent weavers indicating

the effective utilisation of the assets in relation to profits.

v) The working capital turnover ratio of master weavers was very high

(50.7 times) as compared to producer weavers and independent weavers indicating

higher utilisation of working capital. But with regard to the utilisation of fixed

assets in relation to sales, producer weavers were doing the best.

vi) The combined effect of working capital and fixed assets reflected on

the capital employed turnover ratio. In making their capital into sales, master

weavers stood first followed by producer weavers and independent weavers,

11.2 times, 10.9 times and four times respectively.

174

6.2.8 Problems

i) Raw material was the important problem affecting the functioning of

the handloom industry. Short supply, lack of standardisation, and the increase

of yarn prices were the specific problems relating to raw material

ii) Labour was a serious problem for master weavers. Frequent

demand for increased wages, Irregular call on labour turnover were the

different facts of labour problem. The magnitude of this problem was less for

other functional groups.

iii) The degree of other problems like production,finance and

marketing was less. However, independent weavers were having such

problems also.

iv) The inadequacy of finance coupled with the inability to market,

made Dependent weavers 'ever dependent7 on the Producer weavers or

master weavers for the job and livelihood. They remained unemployed for

more than three months in an year and their wage rate was also less compared

to the organised sector ofhandlooms. They were physically and mentaly unfit

to take up other jobs and their average monthly income was Rs. 580. The

younger generations hate weaving and moved out of weaving in a big way.

175

v) The decrease in the demand for handloom cloth, increasing prices

of yarn, change of design, inclement weather conditions etc., led to the stoppagefro-r

of work by the Dependent weavers sector. To compensateethe loss of income

during such periods, they borrowed form Producers weavers or Master weavers

and easily fell in their clutches.

vi) Some times the yarn supplied to the Dependent weavers were of poor

quality and took two to three times of the normal weaving time to complete for

the same wage.

vii) Tlmugh Dependent weavers were working for the Producers weavers

or Master weavers for years together, they were not considered to be their

employees and denied^some benefits like bonus and retirement benefits.

viii) The trend of moving averages of yarn prices had different peaks and

troughs and the trend was found to be increasing linearly for all varieties of

yarn.

ix) Trend-lo-Moving Average Method was used to study the seasonal

indices of yarn prices. The period of September to December was favourable

while July and August seemed to be unfavourable periods for the industry.

176

6.3 Conclusion

The study led to the inevitable conclusions that Handloom Industry in

the unorganised sector is sound and highly profitable one as against the general

belief that it is a perennial sick child requiring constant patronage and motherly

treatment from the government. However, the Dependent weavers, who are

the vulnerable section of the handloom industry definitely require a better

treatment from the other functionaries on whom they are dependent and from

the government. The employment in this sector is highly restricted to the

traditional weaving communities only, and hence the possibility of others

joining the labour force is impossible. Thus, the handloom industry is

witnessing both prosperity and problems. But still there are unemployed

weavers in this industry. Yet, it is sure, that the industry as a whole will avail

itself of the opportunities provided by the government for its development and

prosperity.

6.4 Policy Implications

i) Since the yarn is posing much difficulty to the industry with respect

to quality, availability and prices, it would be necessary to establish YARN

BANKS in the important handloom centres and they must be entrusted with

the tasks of inspecting the quality of yarn required and the procurement and

supply to genuine weavers at fair prices. It should also watch the price

behaviour of the yarn closely for taking appropriate measures to control them.

ii) Small scale spinning plants in co-operative and private sector should

be established in rural areas to cater to requirements of handloom sector.

177

iii) Lack of consumer preference due to absence of standardisation of the

handloom products is the major obstacle in marketing the handloom products.

Though the Indian standards Institute has drawn up some standards for

handloom items in India, producers of this industry are not aware of such

standards. Steps should be taken to disseminate and popularise such information

to them so that they can standardise their products.

iv) A large number of expositions and exhibition-cum-sales should be

organised to boost the demand for handloom products in big cities of India as

well as in foreign countries. Expansion of foreign markets for all handloom

textiles may be given a patriotic consideration.

v) The general feeling of the public about the 'Rebate' scheme is that, the

products offered under such scheme is sub-standard, highly priced and old

stock. Further, the scheme ment for co-operative sector makefile marketing of

handloom products a seasonal one. The scheme may either be discontinued

permanently or be extended throughout the year. It may also be extended to the

handloom sector outside the co-operative sector also.

vi) In view of the smaller size of operation and financial constraints,

Independent weavers were resorted to distress sales to producer weavers. This

can be prevented, if the Independent weavers organise a consortium among

themselves for the sale of their products. By this, they can free themselves

from the exploitation of producer weavers.

178

vii) The Directorate and Assistant Directorate of the Handloom may

maintain a complete register of the dependent weavers in the private sectortr> tt%m Gto Vest n-

and any benefits accruing may be passed on to them directly.

viii) In order to emancipate the dependent weavers from the clutches

of the producer weavers and Master weavers, they may be granted adequate

loan without insisting the security.

Mix) Arrangements should be made by the producer weavers and master

weavers to provide continuous employment throughout the year to the

dependent weaver. They should also be provided with the financial support to

meet their minimum needs during the lean seasons ie., June to August.