chapter six managerial problems of sick textile mills...

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CHAPTER SIX MANAGERIAL PROBLEMS OF SICK TEXTILE MILLS OF UTTAR PRADESH 1. PROFILE OF U.P. SICK TEXTILE MILLS 2. PROBLEMS OF U.P. SICK TEXTILE MILLS ( I) CORPORATE MANAGEMENT (II) FINANCIAL MANAGEMENT (III) PRODUCTION MANAGEMENT ( IV) PERSONNEL MANAGEMENT ( V) MARKETING MANAGEMENT 3. EXTERNAL PROBLEMS

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Page 1: CHAPTER SIX MANAGERIAL PROBLEMS OF SICK TEXTILE MILLS …shodhganga.inflibnet.ac.in/bitstream/10603/52988/12/12_chapter 6.… · composite mills and the remaining six are spinning

CHAPTER SIX

MANAGERIAL PROBLEMS OF SICK TEXTILE MILLS OF UTTAR PRADESH

1. PROFILE OF U.P. SICK TEXTILE MILLS

2. PROBLEMS OF U.P. SICK TEXTILE MILLS

( I) CORPORATE MANAGEMENT

(II) FINANCIAL MANAGEMENT

(III) PRODUCTION MANAGEMENT

( IV) PERSONNEL MANAGEMENT

( V) MARKETING MANAGEMENT

3. EXTERNAL PROBLEMS

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The previous chapter dealt with the various problems

of textile mills of India. The present study relates to the

problems particular to sick textile mills of Uttar Pradesh.

The cotton textile industry of Uttar Pradesh is more

than a century old. At present there are fifty textile mills

in Uttar Pradesh. Twenty five are spinning mills and fifteen

are composite mills having 4104 thousand spindles and 11

thousand looms. The first mill was established at Kanpur in

1864 and than Kanpur which was once a small town gradually

grew as the biggest cotton textile centre in Uttar Pradesh.

In spite of the above progress, the cotton textile

industry of Uttar Pradesh (U.P.) is working under heavy odds

due to which it is incurring heavy losses. Right from the

U.P. Labour Enquiry Committee of 1946 to Pandey Award in

1988, a number of committees were appointed to examine the

problems of the industry and to make suitable recommendations

for its reorganisation on sound lines, but non of these

committees could suggest suitable reforms acceptable both to

labour and management resulting that no programme of rehabi­

litation and modernisation has been fully implemented.

On account of continuous losses^ the industry is facing

grave crisis these days. A number of mills in U.P. have

become sick. Eleven mills have been taken over by the National

1. Annual Report of Northern India Employer's Association for the year 1988.

160

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Textile Corporation Ltd. The management of British India

Corporation units comprising three textile mills have also

been taken over by the Government of India due to their

sickness.

The profile of all the sick mills of Uttar Pradesh

is as follows:

( TABLE ON NEXT PAGE )

161

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The above factual position would reveal that out

of total fourteen sick mills in Uttar Pradesh, eight are

composite mills and the remaining six are spinning mills.

The total composite mills in Uttar Pradesh are fifteen,

out which eight are sick. It means 53 percent composite

sector is sick. On the other hand sickness in spinning

sector is only 20 percent. It shows that composite units

are under greater stresses and strains and more prone to

sickness than spinning mills.

The composite sector of textile industry of Uttar

Pradesh faces the following problems.

(i) CORPORATE MANAGEMENT;

(a) Objective and Corporate Planning;

The chronic ailment from which the management of sick

textile mills of U.P. suffers is the lack of objective and

corporate planning. The management fails to set up a target

because it is incapable in comprehending the key factors of

the unit. The coordination between different segments of

the undertaking do not take place. In order to be economi­

cally successful production and sales must go hand in hand,

financial resources should be adequate to meet planned requi-

163

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rements, material purchases should be related to current

needs, planned capital expenditure and future expansion has

to be coordinated. Sometimes it is seen that the management

fails to view this total requirement and as a consequence

either production goes up without increase of sales or money

is not available at the right time to purchase the raw

material. The manager of a sick unit has to strike a proper

balance between liquidity and profitability. The manifesta­

tion of overtrading or undertrading is dangerous. The Mana­

gement of working capital of a sick textile unit is not only

the responsibility of the Finance Manager but the total team

must keep a careful watch on the movement of the cycle.

Corporate objectives serve as a basis against which

the performance of an organisation can be evaluated. In the

public sector undertakings including the sick mills of NTC

one is not very clear about their objectives. Is it profit?

Is it employment? Obviously, the managerial strategy would

depend on the stated objective of an organisation. It appe­

ars that the N.T.C. particularly in the states of Uttar

Pradesh, the overriding objective is to give employment.

It is estimated that if the workers would have accepted

the norms laid down by any of the textile research association

like ATIRA, BTRA and SITRA or even the practice followed by

164

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other healthy mills about 20 percent labour would have been

redundent in these mills accounting for about 30 to 45 per­

cent of their losses. However, if it is in accordance with

the national objective, then it would be the inevitable

price of treating these mills as social welfare organisations.

On the other hand if the corporate objective is to run these

mills on the principle of fair return on capital competing

with the private sector, then it follows the decisions, how­

soever, ruthless they may appear, have to be taken to ration­

alise each item that goes into the cost structure. This,

however, can not be done by the managerial intervention alone,

unless there is political will to do so.

Lack of motivation is another basic managerial problem

in sick mills. Normally, objectives are not set up and even

if a plan is drawn up, it remains as a paper-plan for obtain­

ing the "Resource gap" from the financial institution and

does not percolate down below. Due to lack of communication

remedial actions on the variances are not taken. In the

absence of any definite goal and due to constant failure to

effect improvement the employees gradually became frustrated

and the degeneration of the human resources start.

(b) TOP LEVEL MANAGEMENT;

Sick textile mills require devoted and knowledgeable

personnel for manning the key posts. This indeed the most

165

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difficult task and sometimes may appear to be impossible

for which the concerned appointing authorities shall have

to continuously endeavour without much satisfactory result.

In India, there appears to be a shortage of top level

management personnel. Sick units of Uttar Pradesh become

a victim of this acute shortage. Managers of proven abili­

ty are absorbed by the healthy units. The sick unit either

gets an inexperienced lower level person or a super annuated

person with practically no stake for his career. Sometimes

public sector enterprises are approached for management

personnel. They also may not show the desired degree of bene­

volence in deputing a good management personnel to the sick

unit. The sick unit essentially needs a manager with some

vision. The public sector units management was, in the ini­

tial stage was dominated by bureauctrat who were drafted on

deputation in various Government Departments. They have set

up a bureaucratic tradition from which the public sectors

still continue to suffer and this trend may be in vogue in

future too. The public sector can be efficient, atleast

when reasonable free from excessive bureaucratic interferen­

ces. The sick mills of Uttar Pradesh since run by Government

under its direct control or through National Textile Corpora­

tion suffer from these vices of public sectors. N.T.C. (U.P.)

is headed by a civil servant and other sick mills are headed

by retired politicians.

166

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The Government should seriously consider the afore­

said handicaps before taking over the management of a sick

unit. Very often, after the decision for the take over of

management has been finalised the concerned authorities

start searching for 'Manager' for running the unit.

(c) MANAGERIAL EFFECTIVENESS;

While discussing managerial effectiveness in public

sector undertakings of which the NTC mills are constituents,

a distinction has to be made between effectiveness of the

basic management philosophy which the government had evolved

for the public sector undertakings and the managerial effec­

tiveness of the professional managers who manage this mills.

Very often, while evaluating the performance of these units,

management philosophy is taken to back ground and all efforts

are directed to link the operating results with the compe­

tence or incompetence of the professional managers. As a

matter of fact, managerial effectiveness in public sector,

to a very great extent, is cercumscribed by the management

philosophy itself.

Like any other public sector undertakings, decision

making in the N.T.C. is also not well defined. The unit

in the N.T.C., the subsidiaries and even the corporate office

are not completely autonomous whereby they can take all the

167

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decisions and face the brunt of the resulting consequences.

Instead they are part of a larger system with many levels

of decision making, Government beina the final fate arbitra­

tor. In such a huge decision making machinery uncertainity

and delays are inevitable.

It is taken for granted in our country that any size

of a organisation is managerially viable and would not

jeopardise the effectiveness of the system. It is admitted

that there is no standard formula to determine the managerial

viability. It would depend, to a large extent, upon the

effectiveness of the system enabling the decision makers to

take timely decisions which in turn would depend upon the

information base and the speed with which this information

is retrieved and used. This being so it is not practicable

to effectively manage (howsoever indirect it may be) more

than 125 units spread all over the country by a single hold­

ing company with practically no sophisticated office equip­

ments like the computer.

This then is the system within which sick mills under

NTC have been functioning. Obviously any remedy can do very

little to change the system unless the government, which is

the owner realises the importance of running these units not

like a Government Department but on commercial lines. Profe­

ssionalized management equipped with adequate power appear

168

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to have held the key to successful functioning of sick mills

under N.T.C.

(d) ORGANISATIONAL STRUCTURE;

The sick textile mills are not efficiency and effec­

tively organised. The organisation has been taken in broader

sence, both from the point of view of industrial organisation

and the framework of management.

Sick cotton mills of Uttar Pradesh are vertically

organised. Vertical organisation is the union of the succe­

ssive stages or process of manufacture of the finished pro­

duct, beginning from the raw material to the finished

product and distribution. In a cotton mill of composite

nature, there are a number of processes which are vertically

integrated in the following manner.

Cotton Trading Centres — SPINNING

Blow Room opening cleaning blending

I t I

Carding

I

Draw Frames and combers

I I I

Fly Frames

169

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WEAVING I I I

Winding I I I

Warping I I I

Sizing I I I

Loomshed I I

PROCESSING I I I

Dying Printing Various finished

SALES AND MARKETINGS t I I

Folding I I >

Packing I I

MARKET

These processes are so vertically integrated that they ensure

easy flow of material from one process to another. By virtue

of large scale production involving a number of processes,

the industry needs no change in vertical organisation what

is indeed desirable is to improve the internal organisation

of the mills.

A proper study of the responsibilities of and formal

relationships between members of the organisation can be made

170

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with the help of organisation chart. But in Uttar Pradesh

mills management did not have information regarding their

organisation as they do not keep any printed chart of orga­

nisation. However, we have drawn the chart of Elgin Mills

Limited Kanpur and the other mills have more or less the

similar pattern of organisation:

( ORGANISATION CHART OF ELGIN MILLS LTD. ON NEXT PAGE)

171

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The above chart shows that the organisation of Elgin Mills

Co. Ltd. At the top of the organisation is the Chairman of

BIC Group. Below the rank of the Chairman is General Manager

who looks after the entire mills who is assisted by Mill

Manager.

At the executive level, the organisation has been di­

vided into five broad groups. The Manager has various super­

intendents of Spinning, Weaving, Dyeing, and Bleaching and

Warehousing. The Spinning Superintendents is assisted by

Spinning master followed by Spinning Assistant, Supervisors,

Jobbers and workers at the lowest level. The same pattern

is maintained in weaving, dyeing and bleaching departments.

The Technical Manager has Cotton Purchase Officer and Store

Purchase Officer and their Assistants and Clerical staff.

In the non-technical side there is a Chief Marketing

Manager assisted by Deputy Sales Manager and Sales Officer.

Under Finance Controller their is Manager Finance and AccountSj

assisted by Assistant Accounts Officer and Clerks. There is

also a Personnel Manager who is assisted by Senior Labour

Officer, Welfare Officer and Chief Security and their respec­

tive Assistants deal with the clerical staff.

The mill also has departments of Engineering and

designing, efficiency time and Motion study. Work Study and

1 n^

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Quality Control. But their placement has not been specified

in the organisation. The heads of these departments are

directly reporting to the Technical Manager.

From the organisation chart of the mill it is clear

that the organisation of the mill is based on the line and

staff pattern. But the pattern of organisation has same

obvious defects. The major defect in the organisation struc­

ture is that the duties and responsibilities are not well

defined. They often overlap each other and are responsible

for management bottleneck. The Technical side of the mill

seems to be unsatisfactory. Officer incharge of Engineering

and design should report to Technical Manager instead to

General Manager because it concerned with research and

improvement in equipments and processes.

One of the glaring defects in the organisation of all

sick mills in Uttar Pradesh is that costing which is impor­

tant function of management is done in Accounts section with­

out engaging the services of trained and qualified cost

accountants. So there is a need for a separate costing department

and the cost analysts should report directly to the General

Manager of the Mills.

The need for a market research staff is highly felt

in most of the mills.This may be attached with the sales

officer.

174

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(II) FINANCIAL MANAGEMENT;

(a) CAPITAL PLANNING:

The sick textile mills of Uttar Pradesh over the last

several years have been incurring huge losses owing to uneco­

nomic working. Due to the accumulated losses, the entire

capital and the reserves of the company has been wiped out

and the concerns have negative net worth. The accumulated

losses during the period from 1974-75 to 1985-86 are as

follows:

Rs.in^crores

1. Muir Mills

2. Swadeshi Cotton Mills

3. Atherton Mills

4. New Victoria Mills

5. Laxmi Rattan Cotton Mill _ 33j.89_ 154.90

18,

45,

33,

22,

.84

,48

.89

.80

(All managed by N.T.C.)

6. Elgin Mills No. 1 & 2 41.00

7. Cownpore Textile Ltd. 3.6

The details profit and loss account for the last seven

years of these concerns has been as under:

175

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176

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It would be seen that all these mills are sustaining

losses and the amount of loss in all mills have been incre-

sed during the last seven years. The percentage increase in

losses of Elgin Mills is highest e.g. 641.25 followed by

Swadeshi Mills; 629.12.

The proportion of current assests to total net assests

of the textile mills managed by N.T.C. decreased from 60.26

percent in 1979-80 to 52.33 percent in 1982-83 and 50.74 per­

cent in 1985-86. The percentage of current assests to current

liabilities (including provisions) varied from 240.20 in

1979-80 to 190.02 in 1982-83 and 171.51 in 1985.86. The per­

centage of current assests (sundry debtor, advances, cash and

bank balances) to current liabilities (excluding provisions)

varied from 153.80 in 1979-80 to 97.75 in 1982-83 and 70.81

in 1985-86? Debt equity Ratio was 2.64:1 in 1979-80, 2.05:1

in 1982-83 and 2.53:1 in 1985-86 as compared to the normal

of 1.1.

(b) INTEREST BURDEN;

The existing procedures with regard to capital accoun­

ting in sick mills are having some basic defects. Under the

present system 'Paper Capital' is being created by converting

losses of the mill into fixed loans thereby increasing their

interest burden. More losses means more loans and more inte-

2. National Textile Corporation (U.P.) 12th Annual Report.

177

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rest - this has created a vicious circle. Interest burden

of sick mills of Uttar Pradesh are as follows:

TABLE 6.3

1975-76 1980-81 1985-86

Value %age Value %age Value %age

1. Cownpore Texti- 25.00 4.48 20.86 2.63 72.25 5.60 les Ltd.

2. Elgin Mils Ltd. 68.51 4.88 94.92 2.90 418.80 12.15 No.l & 2

3. New Victoria 27.06 4.55 63.17 5.88 94.70 6.16 Mills

4. Muir Mills 37.95 6.05 79.20 7.94 73.47 4.45

5. Laxmi Rattan 17.13 5.01 194.20 14.23 220.00 30.20 Mills

6. Atherton Mills 4.07 7.02 77.14 13.76 276.26 24.29

7. Swadeshi Cotton 131 8.1 161 10.3 588 28.5

Source: Compiled from Annual Reports of Individual Mill.

From the above table it is clear that the interest bur­

den on sick mills is very high. It ranges between 6 to 30.20%

Whereas in case of healthy mill interest burden does not exceed

3 or 4 percent. In a situation of scarcity of working capital

and unremitting heavy losses being faced by sick mills mere

recoupment of losses by way of loans with attendant interest

liability would further aggravate rather than ease the situa-

178

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ation. The cash losses can only be reimbursed after the cash

losses have occured. In the meanwhile there is shortage of

working capital. When the losses are reimbursed, it looks

that there is no shortage of working capital. In fact, under

the present system 'paper capital' is being created by conver­

ting losses of the subsidiaries into fixed loans. Since it

is only a book entry it does not directly affect the working

of the mills except that it magnified their losses. It is

therefore necessary to restructure the financial system of

sick mill. It will be desirable that instead of converting

losses into fixed loans and thereby making the subsidiaries

to bear the huge interest burden, the losses should be written

off treating them as an inevitably price of running the sick

mills.

(c) PROVISION FOR FUNDS;

The very fact that these mills were taken over because

they were sick, implies that like any sick person they first

to be cured and then need proper care during the convalescent

period so that they return to normalcy in the short-est possi­

ble time. It will, therefore be counter productive if the

banks and other term lending institutions, treat these mills

at par with other industrial units. For the early recovery of

these mills, it is imperative that their funds requirements both

179

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for modernization and working capital are adequately met in

time. Instances are not lacking where because of shortage

of funds, these mills were made to pay huge sums of interest

to various organisations including the Government agencies

adding further to their already higher cost of production.

The non availability of required funds in time would not only

adversely affect the work and cost efficiency of these mills

but would also prevent these mills to have a desirable stock

of materials. It is therefore imperative that once the capital

budgets of these sick mills are finalised and approved, the

funds should be made available to them as per their require­

ments. It would be impossible to overcome sickness by under

rationing or mis-timing their funds requirements. The shor­

tage of funds is not unique to sick textile mills but the

method of dealing with this shortage should be left with the

management while the Government should do its job by providing

equity capital in the same proportion as one notices in pri­

vate units. This also means that, to the extent, possible,

Government contribution should come more by way of equity

than loans.

(Ill) PRODUCTION MANAGEMENT;

(a) SIZE OF UNITS;

The cotton mills of Uttar Pradesh are sick also because

of small in size of operation. Large sized units enjoy the

180

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benefits of lower cost and consequently lower prices by

economy of scale in production of cloth. On the contrary,

since overhead costs and other expenses in small sized

units are not spread over to the large quantum of output,

cost per unit of output increases, resulting in low produc­

tivity. It has been observed that most of the sick cotton

textile mills of Uttar Pradesh are weak, uneconomic and un­

balanced in size. Therefore, beside other things, this

factor has been responsible for low productivity in the sick

cotton textile mills.

An appraisal of the loomage and spindleage capacity

of the individuals cotton mills in U.P. shows that almost

all the existing sick composite units are not balanaced and

of economic size. In India opinions on the economic size

of the units have been changed. Formerly a mill havinq

25,000 spindles and 500 looms were considered as optimum

unit. Now the size of economical unit has gone up. The

textile Reorganisation Committee appointed by Government of

Gujrat in 1968 opined that all existing mills having less

than 50,000 spindles should be raised to that size and new

spinning units only of 50,000 spindles or 1000 looms should

be licenced. Capacity below that is uneconomic. This because

that in a small unit, overhead cost and other expenses which

is more or less the same as in the large unit it can not

181

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spread over the larqe quantum of output cost per unit of

output increases resulting in low productivity. Capital

investment on machinery is too high for a smaller unit

less than 50,000 spindles.

In view of the above standards the size of the sick

cotton textile units in U.P. can be judged from the

following table:

TABLE 6.4

Commissioned spindles thousand

Looms

1. The New Victoria Mills

2. Muir Mills

3. Swadeshi Cotton Mills

4. Atherton West Mills

5. Laxmi Rattan Cotton Mills

6. Elgin Mills Co. Ltd.

7. Elgin Mills Co. Ltd.

8. Cownpore Textile

30,272

43,376

41,496

31,528

40,616

47,092

41,384

33,224

792

1106

1096

697

819

1194

958

604

Source: Compiled from the Annual Report of diffe­rent mills for the year ending 1988.

18 2

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Taking the spinning section the table indicates that

out of eight sick mills five are equipped with spindles ran­

ging between 40 and 50 thousand. This category has the

highest number of mills. The remaining three are opera­

ting with spindles ranging between 30 to 40 thousand.

These all sick mills does not come up to the economic size

normally fixed at 50,000 spindles. It appears from the

above size pattern of spindlage that the spinning section of

the Uttar Pradesh sick cotton mills is weak if 50,000 spind­

les are accepted as economic size.

Taking the loomage of the industry three mills fall

within the size group of 1000 - 1200 looms and another two

mills within 800- 1000 looms. The rest of the 3 mills are

equipped with less than 800 looms.

From the above analysis it is clear that the operating

units in Uttar Pradesh Cotton Textile Industry is not eco­

nomically viable. The size of its operating units needs to

be expanded so as to reap the economies of large scale.

Therefore, the sick textile mills should be allowed to incre­

ase the capacity so as to become viable and economic units.

(b) WORK LOAD;

The most serious problem faced by the sick mills of

Uttar Pradesh is inadequate work load. The work load of the

183

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workers are very low in comparison to mills in Bombay and

in some categories work load was so much less than the

job of these categories.hasto combine with other jobs for

the proper work load. It will be clear from the following

table regarding the workload of some important jobs. We

have choosen some selected categories where substantial

work force is involved.

184

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185

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From the above table it is evident that the number

of operations for piecer in the sick mills of Uttar Pradesh

ranges between 700 to 850 whereas a piecer attends more than

1650 operations per shift of 8 hours in Bombay. Similarly

the number of operations of doffers vary between 1900 to 2700

spindle doff in Bombay against only to 1100 to 1800 in most

of sick mills in Uttar Pradesh. The operations of cone winder

in all the N.T.C. mills are from 1100 to 1700 against 1800 to

2000 in Bombay. Similarly time utilization for Ring Frame

Piecer, Ring doffer is 30 to 50% against 85% in Bombay.

The average number of operations of weavers are 50

operations for two looms weaver and 70 to 80 operations for

four loom weavers against 96 operations per hour in the Bombay

mills. The breakage rate is more than three times as com­

pared to Bombay mills.

The above figures show that the workers of Uttar

Pradesh mills have less work load than their counterpart in

Bombay and they are averse to any increase in work load.

Apart from this, in sick textile mills of U.P. there

has been no standardisation of nomenclature of various cate-

cogries of jobs. Job assignment to a particular post differs

from mill to mill and similar is the case in number of cate­

gories in each department which too varies from one unit to

186

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another. There may be historical and other factors respon­

sible for the same and as this aspect has also not been

touched by the two textile Wage Boards appointed by Govern-

ment of India, the problem has steadily increased with the

passage of time. In Bombay as well as in other states, this

exercise had been under-taken much earlier with the close

cooperation of both the parties. It is high time that similar

effort be made in Uttar Pradesh because unless the jobs and

nomenclatures are standardised, the question of standardisa­

tion of wages will always be a very difficult job.

(c) LABOUR COMPLEMENT;

Many efforts have been made constantly for rational­

isation of Uttar Pradesh Textile Mills but due to labour re­

sistance no headway has been made till now. There is no re­

organization of the mills and fixation of workload with wages.

The labour complement per spindles and loom is very high in

comparison to Bombay or Ahmadabad mills. Bombay textile

Research Association (BTRA) has given standard norms for every

work in textile mills. Not a single Uttar Pradesh sick mill

reaches upto that marks.

As per factual study conducted in sick textile mills

of Uttar Pradesh the range of counts spun average count,

labour complement per 1000 spindles and labour complement per

187

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100 looms of the 8 sick textile mills of Uttar Pradesh are

as under:

TABLE 6.6

Name of the Mills

Range of count spun

Average Labour Labour count comple- comple­

ment ment per 1000 per 100 Spindles looms

1. Muir Mills 6^ to 30^ 24^ 10.1

2. New Victoria Mills 18^ to 42^ 28.90^ 11.7

4. Laxmi Rattan

5. Atherton Mills

6. Elgin Mills, 1

7. Elgin Mills. 2

10^ to 36^ 19.9^ 11.2

16^ to 36S 25.13S 9.2

6" to 40'' 19.95'

8. Cownpore Textile Ltd. 6^ to 34^ 21.7"

58.3

55.4

3. Swadesh Cotton " 14̂ = to 16^ 22.61^ 12.73 101.43

60.99

53.3

6^ to 34^ 16.17^ 12.79 52.64

9.27 46.65

9.97 54.18

Source: Compiled by the researcherdirectly from the mills,

From the perusal of the above chart of textile mills

of Uttar Pradesh the range of counts spun varies from 6^ to

42^ i.e. course and medium counts only. The average count

varies between 16^ to 28.90^.

188

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The labour complement per 1000 spindles varies bet­

ween 9.2 to 12.79 which produced coarse and medium counts

whereas the labour complement per 1000 spindles in such mills 3

in Bombay varies between 3.823 to 5.6.

Similarly the labour complement per 100 looms in

textile mills of Uttar Pradesh varies between 46.65 to 101.43

whereas labour complement in textile mills of Bombay varies 4

between 23.14 to 48.48. From the above study it may be

observed that workman employed as per thousand spindles and

100 looms 'in Uttar Pradesh is much higher than as it exists

in Bombay, on the bases of the above facts, there is an indi­

cation that there is an ample scope of improvement in work

assignment in sick textile mills of Uttar Pradesh - Bombay

textile research Association has studied the work load of

different categories and suggested the following reduction

in labour complement.

TABLE 6.7

Present Proposal for Name of the mills labour reduction by

complement BTRA

1. Elgin Mills No. 1

2. Elgin Mills No. 2

3. New Victoria Mills

4. Cawnpore textile mills ltd.

5. Atherton Mills

6. Swadeshi Cotton Mills

7. Laxmi Rattan Cotton Mills

8. Muir Mills

3. B.T.R.A.Report regarding work load 1987 of different section. 4. Ibid.

189

4669

4246

3560

2800

2245

4647

2666

3061

1,507

1,166

1,818

1,002

1,080

2,702

1,343

1,021

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OUT DATED MACHINE;

During the last few years there has been a consi­

derable amount of discussion and debate on the problems and

consequences of modernisation of textile industry. A number

of committees have gone into the question during the last

years and made various recommendations. But for one reason

or another these suggestions have not been implemented with

the result that the textile industry today is in greater

and more urgent need of modernisation thatn ever before.

Most of the machines in Uttar Pradesh textile mills are more

than 70 years old and in some cases 100 years old. The con­

ditions have further deteriorated due to improper mainte­

nance. Frequent machine stoppages and breakdown are found

in all the sick mills which disrupts chain work as well as

reduce output per man hour. The sick mills incurring heavy

expenses on the repairs of the machines. Although cost of

repairs is essential for the proper upkeep and maintenance

of the machines, it is however justified upto a point where

the cost incurred on repairs does not exceed or at least

equals, the gains accrued out of it. Beyond that point it

is neither gainful nor indeed desirable.

It has been estimated that machinery prior to 1910

is obsolete in design and completely worn out and should be

replaced by modern ones at the earliest. For instance, in

the spinning section of the Muir mill they have old Motor

Ring machine of 1940 make and out of 29 motor Ring Machine,

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only 12 are in working order and the rest are lying idle.

In the weaving section, no new looms have been installed

after 1943. In another sick mill i.e. Laxmi Rattan Cotton

mill 25 ring frames were installed in 1964 and the rest

are of pre 1950.

As regards modernisation all attempts should be

directed towards an increase in machine productivity at

ring spinning and loom stage because only higher producti­

vity and production can convert a loss of makinq sick unit

into a profitable one. For achieving this prooer weahtaae

should be given to cost reduction.

The mills have to fit Pneumafiles in all the ring

frames, in spinning all conventional spindles have to be

replaced by Hiah speed plus type, flexible cards may be con­

verted to metellic card, conventional speed frame into High

speed frame and simplex frames. Old Blow line must be over­

hauled and single processes line has to be installed and

new winding machine, doubling frame and cheese winders have

to be installed.

(IV) PERSONNEL MANAGEMENT;

(a) WAGES; Wages hold the key to the solution of many

labour disputes. In Uttar Pradesh investigation exclu­

sively about textile worker in Kanpur was first made

by Dr. Rajendra Prasad Committee in 1983. The Committee while

191

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discussing the wage structure and standardisation of wage

has observed "the only sound method in our opinion is to

standardise the rates which will enable an operative to

earn according to his efficiency without arbitrary limita­

tions. "

In 1944 another committee as Labour Investigation

Committee was appointed. It is known as Rege Committee,

According to report, there has been no stadardisation of

wages in industry and rates of wages in different unit

showed considerable variations. The Committee observed

that though attempt were made to standardise wages in

textile since 1929 but no final action was taken in the

matter.

After the end of second world war, a number of strikes

took place in Uttar Pradesh. The Government realised the

situation and appointed a committee in June 19 46 which is

popularly known Nimbkar Enquiry Committee. The Committee

for the first time made an attempt for standardization of

wages and suggested a duty list for various occupations and

scheme of rationalisation.

After 1948, the first Wage Board of Cotton Textile

Industry was appointed by Government of India in Marh 1957.

In its report, the Wage Board recommended a flat increase

192

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in wages to the workers, which was implemented in January

1960.

The Government of India again appointed a second

Wage Board for textile industry in August 1964 which submi­

tted its recommendations in December 1968. The second Wage

Board recommended narrowing down the disparity in dearness

allowance merger of dearness allowance with basic pay, annual

increments, fall back wages etc. In 1974 and again in 1979

there was great discontentment among the textile workers of

Kanpur. The State Government apprehending worsening of the

situation due to strike notice, discussed the issue with the

representatives of employers and workers and decided to

change the base year for calculating the rate of dearness

allowance from 1939 to 1960. Further in 1979 a flat increase

of Rs.4 5/- per month to all the workers was sanctioned. Again

in the year 1981 a Tripartite Committee was constituted for

examining the revision of work load including rationalisation.

Following the increase given to the workers employed

in other textile centres of India, workers of Kanpur Textile

mills agitated for wage revision and eventually government

allowed an interim increase of Rs.60/- to workers with effect

from 1st October 1985. This is in short the history of wage

increase in the textile units of Kanpur.

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The following table gives the percentage value of

salaries and wages to cost of production as well as to the

value of production:

TABLE 6.8

PERCENTAGE OF WAGES TO COST OF PRODUCTION AND VALUE OF PRODUCTION FOR THE YEAR 1985-86

„ %age of salary/ %age of salary/ ^Q' Name of concern wage to cost wage to value

of production of production

1. Atherton Mills 33.26 48.35

2. Swadeshi Cotton Mills 36.65 51.00

3. New Victoria Mills 35.86 58.00

4. Muir Mills 34.89 43.51

5. Cownpore Textile Ltd. 31.41 43.00

6. Elgin Mills No.l & 2 32.70 44.38

7. Laxmi Rattan Cotton Mills 41.15 52.33

Source: Compiled by Researcher from individual mills

In the column of cost of production, the minimum is

31.41 in Cownpore Textile Ltd. and the maximum is 41.15 in

Laxmi Rattan Cotton Mills. The other mills indicate the

ratio between 31 and 36 per cent. This percentage is very

high and is increasing year after year. In the case of

standard healthy private units in Bombay it is around 20%

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which is much less than in sick units of Uttar Pradesh.

This obviously affects the margin of profit and create the

maintaining problems. The percentage of salaries and wages

to the value of production as given in the last column is

also very high with a maximum of 58 percent in New Victoria

Mills and 43 percent in Cownpore Textile Ltd. The average

of the sick units would come around 48 percent. This is

again much more high than in the private textile mills of

Bombay and other textile centres. The most striking fea­

ture is that the percentage of salaries and wages in the

cost of production and value of production is high despite

the fact that the wage level is lower in Kanpur than the

wages paid by textile units of Bombay. This factor has an

important bearing on marketing of the production of sick

units.

The management has also contended that there has

been continuous wage rise to the workers on adhoc basis with­

out any corresponding obligation on workers to increase pro­

ductivity and defining the work norms in accordance with

the standard prevailing in textile industry of Bombay. It

has been alleged that while the wage Board Tripartite

Conference have given wage increase, the work load of the

workers in industry remained unattered and according to them

the workers are under loaded. The various adhoc increases

affected in different years have been summarised below:

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1962 to 1972 — Rs. 50

1972 to 1974 ~ Rs. 37.51

1974 to 1979 — Rs. 45.00

1979 to 1984 — Rs. 30.00

1984 to 1986 — Rs. 60.00

Source: Compiled from K.K. Pandey report on work­load and wages 1988.

The minimum wages payable to unskilled workers in

textile mills in Kanpur is shown in the chart:

1960 — 95.97

1972 228.00

1979 — 235.00

1980 ~ 524.51

Jan. 1984 — 790.16

Oct. 1985 -- 943.31

Dec. 1986 — 1043.16

Jan. 1988 — 1136.71

Source: Compiled from K.K. Pandey Report on workload and wages of Kanpur textile workers 1988.

From the above, it would be clear that from the year

1960 to the year 1988, the minimum wages of the unskilled

workers in Kanpur textile mills has gone up from Rs.97 to

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1137.71, an increase of about 1172.89 percent. Meanwhile

the average sale value was 1.36 per meter which is 6.50

per meter now an increase of about 477.94 percent.

If ̂ he workload as laid down by the management is

fixed then the loss per year would decrease by about Rs.2

crores on an average in every sick mill of Uttar Pradesh.

These mills are not in a position to bear any further in­

crease in wages. Since the increase of Rs.60 per month

from 1,10.85 the burden on every mill is about 1 crore rupees

per year. If the percentage of wages and salary to value

of production would fall from 50 percent to 20 percent there

will be a difference of about 7 crore rupees in every sick

mill^

(b) INDUSTRIAL RELATION;

Equally important for curing the maladies that plague

the sick units is to evolve clear policy directives for re­

gulating the industrial relations. In an equlitarian society

like ours it is imperative that an organisation whether sick

or healthy, ensure economic and social justice to its workers.

But it can not afford to allow itself to be a playground for

indisciple and coersion of highly politicalised trade union

6. K.K. Pandey Report on workload and wages 1988,pp.55

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movement pampered by the local politicians of all shades

and parties.

Society, over the years has evolved a whole range

of legal pharmacopoeia to cure the socially defiant behavi­

our. Similarly the industries have also been provided with

legal framework to take care of industrial delinquency. To

take recourse to it, however requires not only management

decisions but also political will when it comes to the public

sector undertakings. That this political will has been

lacking is a sad commentary on the existing industrial re­

lations situation in these sick mills of Uttar Pradesh. The

state of industrial relation in the Uttar Pradesh cotton

textile mills can hardly set to be satisfactorily. Strike

on one issue or the other are common accurance. The workers

are resenting implementation of scheme of rationalisation

and at times even the process of modernisation which is

vital for the existence and survival of this industry. The

Kanpur textile units witnessed the biggest post war strike

in 1955 when textile mills made efforts to introduce ration­

alisation, though it was in persuance of the notification

issued by the Government after the Tripartite conference

held in June 1956. The labour launched compaign against the

determination of the mills to introduce rationalisation. This

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resulted in a prolonged strike for 81 days, from May 21 to

July 21 which caused tremendous loss to the industry and

the labour. After this Government of Uttar Pradesh appointed

an Enquiry Committee in 1955 and again 1960 and 1981 but no

unanimous decision regarding wages and rationalisation has

been arrived.

Following the increase given to the workers employed

in similar industries in other states, workers of Kanpur

Textile Mills again started agitation for wage revision in

1985 and gave a strike notice in October 1985. On the in­

tervention of the government the workers withdraw the strike

notice and government allowed an interim increase of Rs.60/-

to workers with effect from October 1985 and it was agreed

that the matter of wage increase and workload of the emplyees

be referred for adjudication and government appointed a

tribunal under Shri K.K. Pandey while submitted its report

in December 1988. The Report was unacceptable to workers

and they launched an agitation of Rasta Roko in January 1989.

The government withdrew the report, and no headway has been

made for introducting rationalisation scheme along with wage

increases. Added to it workers have even refused to operate

four looms and there is high rate of absenteeism and no

regard to discipline in most of Uttar Pradesh sick mills.

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This is the situation that exists in most of the mills in

Uttar Pradesh.

The methods of settlement of strikes are generally

through mediation by government labour officer, direct nego­

tiation, unconditional return of workers to jobs and arbi­

tration. The following table indicates the settlement of

some of the disputes by different methods as stated above.

TABLE 6.9

S.No. Method of settlement No.of strikes %age of Total

1. Mediation by Govt. 16 44.4 Officer

2. Direct negotiation 10 27.7

3. Unconditional return of 7 19.4 workers to jobs

4. Arbitration 3 8.3

Source: Compiled from the monthly returns of individual mill companies.

It can be observed from the above table that out of

total strikes, 44.4 percent by mediation, 27.7 percent by

direct negotiation 19.4 by unconditional return of workers

to their jobs and 8.3 by arbitration. This follows that

mostly the strikes are settled through mediation by the

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government labour officers which shows there is lack of

cooperation between labour and management.

WORKING CONDITON;

The working condition under which a worker has to work

is very important for the productivity of labour. If a per­

son works under ill lighted and ill ventilated shed and in

an uncomfortable temperature and humidity his performance is

bound to be hampered. His efficiency will be seriously

impaired. In Uttar Pradesh textile mills the working condi­

tions are too poor to make any noteworthy effect on the

efficiency of the workers. Factory buildings are very old

and the walls inside the mills have not been white washed

for years.

Most important items which is necessary for good

working conditions are temperature, humidity and illumination

Dr. Sampurnand award laid down standard of physical, opera­

tional and mechanical working conditions for the workers in

weaving and spinning section on rationalised basis. Some of

the main physical, operational and mechanical working condi­

tions as stated are as under:

PHYSICAL WORKING CONDITONS;

(1) Relative humidity : 75 percent to 85 percent

(2) Air changes : At least 8 per hour

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(3) Temperature winter : 80°F to 87°F(15 Oct to 14 Feb)

(3) Temperature Summer : 80°F to 90°F(15 Feb. to 14 Jun)

(5) Temperature Rain : 80°F to 92°F(15 Jun to 14 Oct)

Source: Dr. Sampurnanand Arbitration Award 1961, pages 30-35.

For humidity control all sick mills have necessary ,

equipments like decentralised carrier plants, air compressers

spray jets,steam boiler etc. which are sufficient to maintain

relative humidity. But these instruments are not properly main­

tained resulting not properly controlled humidity which effects

the health of the workers.

Illumination in most of the mills is inadequate and in

some cases> it is below the prescribed limit. In most of the

sick mills it varies between 4-9 F.C. which is much below the 7

prescribed limit i.e. 10 F.C.

The range of temperature is much lower than the standard

laid down. Low temperature and humidity affect not only the

comfort of workers but also production. They cause breakage

of yarn and retard production and wages.

The comfort of the workers depends not only on the

temperature and humidity, but also on the number of air changes

per hour. Dr. Sampurnand committee has prescribed 8 minimum

7. Based on presonal investigation.

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air changes per hour. But most of the mills do not have

adequate equipment to regulate air changes satisfactorily.

In Muir mill and Cawnpore Textile Company air changes is g

only 3 and 5 per hour.

WORKING ON SUNDAY;

Onq of the reasons for the bad financial condition

and for the bad working of these mills is six day work in

a week and on Sundays these mills are closed and no produc­

tion is carried out on that day except some maintenance of

work. In other textile centres of India including Bombay,

all textile mills work on all the seven days a week and the

workman are given weekly holidays of rest as enjoined in the

factories Act. Whenever there has been any effort to start

Sunday working, the Kanpur labour raised serious agitation

and has always opposed this move. The question of Sunday

working was considered by Kanpur Textile mills rationalisation

Enquiry Committee in context of absorption of surplus labour

(Para 272 - 278) and it held that it would be desirable both

for providing employment to surplus labour and for ensuring

production in the industry to allowed.Sunday working with g

certain conditions. It was also mentioned therein that it

8. Ibid.paae 19 4.

9. Kanpur Textile Mills Rationalisation Enquiry Committee Report (1986) Page 130.

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would be admissible to allow mills to work on Sunday in lieu

of unpaid festival holiday in order to compensate the mills

for the loss of production and the workmen for the loss of

their wages. Dr. Sampurnanand award also recommended Sunday

working for absorption of surplus labour subiect to certain 10

conditions (Para 131 of the award).

In the context of the present condition of textile

industry in Kanpur, it is high time that the question of

Sunday working should be seriously considered. This will not

only ensure increase in productivity but also result in emp­

loyment of a number of new workmen. If it is done, there

could not be any possibility of retrenchment because of

rationalisation but on the other hand, not only surplus

hands will be absorbed but also new hands may also be required

for this. This matter is sensitive for Kanpur but we think

that it is high time that unions respond to the call of the

time and save this industry from being wiped out from the

textile map of India.

(V) MARKETING MANAGEMENT;

(a) SALES ORGNISATION;

Marketing and sales do not seem to have been well in

sick mills now run by N.T.C., which may be considered as a

10. Dr. Sampurnanand - Arbitration Award - 1964.

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holding company having suubsidiaries in different states.

Prior to nationalisation in 1978 the mills themselves orga­

nised their sales. There was very little control by the

holding company over sales policies of the subsidiaries

though there was a marketing division under it. According

to the guidelines of the holding company centralised sales

committees should be set up at the subsidiary level.

Apart from the fact that the quality of cloth of sick

mills is not as good as that of private mills, there is also

less realization on account of certain amount of weaknesses

in the sales organisation and distress sales at low price

on account of liquidity problems as in the case of N.T.C.,

(Uttar Pradesh). The marketing division is not headed and

manned by competent and well qualified persons. The market­

ing division of the holding company is more or less confin­

ing itself to running the retail outlets which do not account

for much of sales and which are running into serious losses.

The holding company should rationalise the system of selec­

ting and appointing whole sale / agents by the

subsidiaries and review the system periodically as at present

there appears to be scope for malpractices. Though it may

not be possible to organise direct central marketing as such,

all indents/contracts for Government and other public sector

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supplies should be handled centrally by the holding company.

There should also be centralised market intelligence set up.

The holding company should ensure that needless competition

between NTC companies is avoided and the transport cost is

minimized.

EXTERNAL PROBLEMS; (a)PAW MATERIAL PROBLEM;

One of the important factors that led to the creation

of crisis condition in textile industry is raw material, past

experience has shown that working of the mills get severaly

affected if supply of cotton and other raw materials is not

ensured at stable and reasonable prices. The present short­

age of cotton and the rise in prices to dizzing heights have

accentuated the sickness in mills. A large majority of

mills are caught in the grim battle for survival in Uttar

Pradesh. The sustained progress of the cotton mill industry

depends to a very large extent on how they succeed in geting

right type of cotton at right price.

The mills in Uttar Pradesh manufacture mostly coarse

and medium quality of cloth. Cotton is grown in Uttar Pradesh

in small quantity. Most of the cotton grown in the state

previously was of short staple. The mills in Uttar Pradesh

therefore originally designed to manufacture coarse cloth.

Lately the mills has changed their pattern of production and

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started manufacturing medium varieties of cloth. For medium

varieties of cloth, they obtained cotton from Punjab and

other Government agencies.

The cotton has been grown in Uttar Pradesh but the

production is very limited and the area under cotton culti­

vation is declining. This is evident from the following

table:

TABLE 6.10

AREA AND PRODUCTION OF COTTON IN UTTAR PRADESH

Year Area Production

(000 hectores) (000 bales of 170Kg.each

1979-80 41 38

1980-81 41 31

1981-82 30 22

1982-83 35 28

1983-84 30 20

1984-85 20 22

1985-86 28 27

1986-87 21 23

Source: Compiled from Handbook of statistics on Cotton textile industry, I.C.M.F. Bombay, 21st edition, 1989.

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The area has declined to 21 thousand hectares in

1986-87 from 41 thousand hectares, a decline of about 47%.

The production has also reduced from 38 thousand bales in

1979-80 to* only 23 thousand bales which is far from suffi­

cient for the mills in Uttar Pradesh.

At present cotton is grown mostly in the ten Western

districts of the state. The reason for the decline in the

area under cotton was the development of the sugar industry

from 1928. Besides, the unfavourable weather conditions for

cotton during these years have also contributed to some

extent to the shrinkage of the area under cotton particular­

ly in the unirrigated tracts. The acreage under cotton in

the Meerut, Agra, Rohilkhand, Allahabad and Jhansi Division

which were the cotton growing tracts rapidly began to

decline and more land under cotton was diverted to sugar

cane. In Uttar Pradesh cotton is generally sown exclusive­

ly which in other states is mixed with other crops. The

area under cotton crop only is of the order of about 87 per

cent of the total area under cotton. In some areas it is

also grown mixed with other crops, subsidiary crop being

mostly Arhar. About two third of the total cotton acreage

in the state is sown with desi variety the remaining one-

third being under the American variety. Consumption of

cotton in the state is much more than its production and the

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gap is met by purchases from other states. The system of

purchasing cotton by the Uttar Pradesh sick mills is not

at all organised. The sick mills purchase cotton mostly

from Government agency i.e. Cotton Corporation of India.

They also purchase some cotton from cotton brokers and they

have to pay extra commission to them which adds to the

total cost of production.

The Uttar Pradesh mills generally use the following

quality of cotton. G-12 of Gujarat, Punjab American of

Haryana, Rajasthan and Uttar Pradesh, Desi of Uttar Pradesh

Digvijay of Gujrat, Bengal Desi, V-797 of Gujrat, J-34. F-414.

Therefore, the bulk of the cotton consumed by the Uttar

Pradesh Mills is Indian, most of its is purchased from other

states notably Maharashtra and Gujrat. The mills have there­

fore, to pay extra frieght charges for purchasing cotton.

The extra freight charges increase the cost of manufacture

and therefore, productivity is affected adversely.

In order to ensure that cotton is supplied as per

specified quality and would reach the mills exactly in accord­

ance with the required quantities at fair market price, it

is desirable that Uttar Pradesh Government should also take

a financial and supervisory or regulatory interest in it.

This will reduce substantially the production costs because

cotton accounts for about 4 0% of the aggregate production cost.

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(b) ENERGY;

The textile mills consume substantial quantities of

both electrical and thermal energy. Steam is by and large

the major medium of thermal energy used in the Uttar

Pradesh textile industry. Thermic fluid and electrical

heating are also employed to some extent. Steam is genera­

ted employing boilers by using either coal or furnance oil

and lately low sulphur heavy stak. (L.S.H.S.) oil available

from the refineries as fuel. On the other hand, electric

power required for the industry is generally made available

by the state authorities. Sometimes, however diesel genera­

tors and steam turbines are also employed for supplementing

the requirements of power.

Since the main source of electrical energy to textile

mills is still dependent on the State electricity boards,

there is a major power shortage for the industry. The

critical situation on the power front has made the textile

mills to maintain the productions at the optimum level more

difficult. The seriousness of the problem in Uttar Pradesh

actually started in August 1972 and still continues and

remains unsolved by the states electricity board. There

has been tremendous loss of production due to the failure

of the Uttar Pradesh State Electricity Board in supplying

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even the power according to the contracted obligation.

There is need for the highest priority to be given for

continuous and uninterrupted supply of power which is the

essential requirement for running industries economically

and efficiently. Though there has been a general reali­

sation of the necessity to increase the power availability

by expansion and/or construction of power plants but their

is still substantial gap between the actual requirement and

generation of power. The industry is getting 50 percent

of the power sanctioned to the them resulting in a drastic

cut in production, and mounting unemployment among organised

workers. The industries in Uttar Pradesh received only 20

million units of power per day which was only one third of

the actual requirement. The total installed capacity of

power system at present does not exceed 3000 mw. The daily

generation of power goes on rising and falling, depending

on the quality of coal and machine oil available and the

state of the overworked machines which could not be over

hauled, oiled and closed down for repairs on account of the

need for their continued operation.

At present the average production of power does not

exceed 50 million units per day and is not likely to increase

more than 75 million units per day. Thus there will still

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remain a gap of 18 million units between the daily minimum

supply and the demand for power. This would therefore,

still require a controlled and more rational reduction in

the supply of power to consumers either by rostering supp­

lies to industries or by block closure.

While the textile industry has remained hard pressed

and crying for financial relief, it is shocked by the increa­

se in tariff of electricity by U.P. State Electricity Board

from 1st January 1990. According to the revised tariff

not only the rate of per unit has been increased from 65

paise to 90 paisa but the slabs have also been so modified

that large consumers are deprived of the benefit usually

given to bulk power consumers. This has the affect of infla­

ting the electricity bills. Electricity is also a raw

material and plays a vital role in the manufacturing cost

and this revision of tariff will substantially increase the

cost of production.

Apart from this the textile industry of Uttar Pradesh

has been exposed to severe hardships for want of coal, Goal

supplies are far more short of its demand and often irrita-

tingly irregular. The importance of coal to textile industry

can be gauged from the fact that about 80 percent of steam

generation is thermal based.

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Thus the critical situation obtaining on the energy

front has indeed made the textile managements diffident

about the feasibility of maintaining the productions at the

optimum level.

This chapter was mainly concern with the projection

and analysis of managerial problems of sick textile mills

of Uttar Pradesh. The indepth study of the sick units of

Uttar Pradesh reveals that the problems faced by the industry

can be classified into three broad categories:

(a) the problems which are, by and large, the outcome of

the National and State Govt. Industrial and Textile

Policies;

(b) the problems which are essentially external in nature

and need administrative decisions jointly made by the

management and the Government;

(c) the problems which are basically of internal nature

and fall within the perview of the management, for

which the management has to be given fair amount of

autonomy both procedural and directive.

This categorisation implies that the sickness of the

industry is not the exclusive responsibility of the industry

itself and the remedial measures do not necessarily lie with

the industry.

253