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
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
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
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
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
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
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
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
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
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
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^
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
(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
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
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
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
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
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
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
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
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
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
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
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
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
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,
190
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
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
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.
193
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%
194
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:
195
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
196
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
197
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
198
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.
199
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
200
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.
203
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.
207
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.
2 09
(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.
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