Chapter_6

PROBLEMS OF POWERLOOM

INDUSTRY IN MALEGAON

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RAW MATERIAL

COTTON YARN:

The textile industry plays very important role in Indian economy. It ranks

second after the agriculture. Besides the industrial production, it provides

employment to millions of the people of the country and gives a handsome earning

of foreign exchange through export. It is also source of livelihood in villages and

remote areas. Millions of people in our country depend upon it. The rapid growth

and development of this industry is remarkable.

The Indian textile industry is consisted of the following three groups

i) Mill Sector

ii) Handloom Sector

iii) Powerloom Sector

Or in terms of fabrics used namely cotton textiles, woolen textiles, man

made Textiles and Silk textiles

As far as powerloom industry of Malegaon is concerned, it is categorized in

cotton textiles. This powerloom industry is fully dependent on cotton yarn either in

the form of cone or hank. So also the powerlooms depend on the textile mills for

the supply of yarn. Generally, in Malegaon yarn is dyed for weaving coloured

sarees.

(I) AVAILABILITY OF YARN:

At Malegaon the powerloom owners had one to four powerlooms in the

beginning. According to the growth and development of powerloom industry, the

requirement and consumption also increased. But the production and supply of

yarn was not increased accordingly.

Due to non-availability and short supply of yarn, the powerloom industry

suffered a lot. Generally the powerloom owners are dependent on yarn brokers and

yarn merchants, who are usually Gujrat & Marvadee traders. They fix the price of

yarn at their own will. In other words, it can be said that the powerloom owners are

like puppets in the hands of these traders. They exploit the powerloom owners and

earn a good profit.

(II) EXPLOITATION BY YARN MERCHANTS:

The powerloom industry faces the exploitation from the yarn merchants. The

composite mills produce and supply the yarn to the powerloom weavers. For the

distribution of yarn, a circle has been formed by them.

They have installed their own sale depots at the different powerloom centres.

These depots are actually run by the relatives of the spinning mill management.

These relatives of the mill management arrange these sell depots. With their help

the sell and purchase business of yarn is carried out. In this manner, the yarn

reaches the actual users or the weavers through 5 to 6 mediators. In each hand the

profit is added. There are number of traders buying the yarn, so the prices go

higher and higher as demand increases. Ultimately artificial shortage of yarn is

created in the market.

Apart from this, the traders do not pay the sales tax to the government In this

way the Union Government loses crores of rupees. This malpractice is going on

since the yarn is produced.

Though many times this has been brought to the notice of the Government it

has failed to take effective steps in the matter. No doubt the small powerloom

owners who are financially poor, are very much in the grip of mill owners and

middlemen and are being exploited and put to hardship.

(III) MILL OWNERS AND POLITICAL LEADERS:

The mill owners and political leaders have stakes in badly affecting

powerloom owners and hence they provide funds to political parties to get their

interests protected.

(IV) THE POLICY OF THE GOVERNMENT:

Unfortunately, there is no clear cut policy of the government, as far as the

textile industry is concerned in general and for the powerloom industry in

particular . In the words of Ashok Mehta committee report, “It does not appear that

the Government had at any time, laid down a clear cut policy in regards to

powerloom”. (Ashok Mehta Committee Report P.No. 31) 1

Despite the important function played by powerloom industry it is not

receiving even normal encouragement from the Government.

1 - (IV) (A) EXCISE DUTY (1964) :

In 1961, for the first time, excise duty was introduced on mill made yarn,

Different counts of yarn were classified into two categories. Yarn of 35, count was

charged 10 n.p. per k.g., yarn of 35 counts and above was charged 15 n.p. per k.g.

In 1962, the categorization of counts was expanded according to the

following table.

Table No. 6.1

Yarn count Up to 16 10 n.p. per kg.

17 to 34 13.5 n.p. per kg.

35 to 47 18 n.p. per kg.

48 and above 27 n.p. per kg.

Ashok Mehta Committee Report Page No. 89 2

In 1963-64, a surcharge was levied on the excise duty at the rate of 20% for

yarn of counts as under.

Table No. 6.2

1 to 6 counts 10 n.p.

6 to 14 counts 15 n.p.

14 to 22 counts 25 n.p.

23 to 29 counts 35 n.p.

29 to 40 counts 45 n.p.

40 to 51 counts 60 n.p.

51 and above counts 90 n.p.

(Awami Awaz Weekly, Malegaon dt.16-3-1964) 3

In the beginning a minor relief was given to the handloom weavers. Hanks

yarn up to 40's has been exempted from excise levy and the hank yarn above 40s

was charged at a concessional rate.

“In the Finance Act 1964-65, full exemption from excise levy is allowed for

counts up to 34s”. Notification No. 29 4

A clear intention of the government is seen in the framing of Finance Act of

1964-65. The Government exempted the handloom weavers, as they use only the

yarn of up to 30s counts, so the powerloom owners suffered a lot.

This excise duty was enforced from 1-3-1964. Due to this duty many sizing

were locked. As a result the grey cloth producers had to shut down their mills.

Thousands of labourers became jobless. In protest of excise duty processions were

arranged on 17th April 1964. A delegation of eminent political leaders was sent to

New Delhi to put their grievances before the Union Minister like. Shri Y. B.

Chavan the Defence Minister, Commerce and Industries Minister Shri. Kanugo, T.

T. Krishnammchari Finance Minister, but the government did not pay any

sympathetic attention to the matter.

Apart from this, all parties meeting was called. It decided to observe a

complete “Malegaon Bandh” organised by “Malegaon Textile Board”. A morcha

was taken to the Deputy Collector's office against the Excise duty. All these

agitations were fruitless. Even political leaders could not do anything.

FLUCTUATION IN YARN PRICES :

One more problem of fluctuating prices of yarn was very troublesome. The

prices of yarn were fixed by the capitalists, Mill owners and the middlemen by

creating artificial shortage of yarn. Instead of this the following factors caused to

make the yarn available on a high cost.

1) The Government exports the raw cotton as well as finer yarn to earn foreign

exchange.

2) As a result, the shortage of raw cotton and yarn is created and ultimately the

prices of yarn go up.

The Government has provided loan to the spinning mills. These spinning

mills are in great loss.

The capital of Government is blocked in these spinning mills. So that the

government forced them for the production of finer yarn in order to get back

the blocked capital in spinning mills.

3) Apart from excise duty and taxes by the State Government, the local and

municipal octroi is an additional factor. At Malegaon 2% octroi is charged

on the yarn.

ABOLITION OF OCTROI :

The Government of Maharashtra Shasan Patra Kramank Nagar Vikas

Vibhag abolished the octroi in the State by its notification No. GEN

1099/Letter No. 70/99/ No. 14 dated 26-03-1999. Almost all the weavers and

businessmen of Malegaon appreciated the decision of the Government. The

weavers were comforted by the abolition of the octroi. Due to this step time,

money and energy are saved. Some how the cloth of Malegaon shall be cheaper

than the other centres and it shall compete with them. The yarn shall be available

cheaper by up to 5 n.p. per meter.

(a) ABOLITION OF SOCIAL EVIL :

Not only at Malegaon but powerloom owners at other centres like Bhiwandi,

Dhule, Ichalkaranji and Solapur many corrupt practices were prevailent. As such

the fairly large amount of collected octri was channeled into the hands of gundas.

These gundas some times were councilors and some times the employees of the

municipalities themselves.

The way of business is that they contact either weavers or yarn merchants

for the delivery of yarn. After the arrival of yarn in the Malegaon Municipal

corporation area, these goondas deliver the yarn bags by small trolley without

paying the octroi. If anybody comes in their way, they were ready to beat them

with such weapons as sword, iron rods, sticks and hockey sticks. Sometimes they

killed them.

After the delivery they receiveed the fifty percent of the actual octroi of

Municipal council. In this way these goondas earned 5 to 7 lacs every week. It was

loss to public institution. With this black money several social evils like rape,

murder, drinking, terror etc. were in full swing.

Apart from this, black money was used on the occasion of political activities

like Municipal election and particularly in the election of President of Municipal

council. It is learnt that the candidate in the race of president purchased the

Municipal Councilors with one to 2 lacs of rupees each. In other words one could

get the chair of President by paying near about 50 lacs. After getting the chair, only

one programme there remained and it was to get back their invested money in the

race of election. So he too used to get involved in the corruption of octroi. The

activities of the development of city were neglected. The above mentioned

business is called as “Alter” especially in Malegaon.

4) The powerloom owners of Malegaon have no faith in co-operative

movements. Therefore the industry has not made much progress in the

co-operative movement. The majority of the powerloom owners have been

totally dependent, from Yarn purchasing to cloth selling. All the

transactions are done on credit basis. So at every stage the powerloom

owners are exploited.

(a) A powerloom owner purchases yarn on one week’s credit. If the money is

not paid within 8 days, extra 2 rupees per 5 Kg is charged on whole yarn. It

is called L.P. that means “Late Payment”. In this way the yarn becomes

costlier than cash purchasing.

(b) Ultimately the cloth prepared with L.P. is dearer than prepared on cash

payment. As a result, the powerloom owner has to sell his cloth according to

market rate which is lower than his actual cost of production. Also he is

forced to get the cheques of a date of almost 7 to 8 days later. To cash the

cheque he goes to commission agents who exploit him by deducting

commission of four percent per day. At all stages, a weaver is exploited by

them.

There were 66 spinning mills in Maharashtra. Out of sixty six, ten mills are

fair and remaining 56 mills were in difficulty of paying 548 crore 49 lac rupees.

It was reported that the minimum loss of Jawahar mills of Dhule is Rs. 26

Lacs while the maximum loss was Rs. 11 crores. It was also said that this year no

mill could earn profits. The rate of cotton increased by Rs. 5.53 to Rs. 6.18 while

the rate of yarn by Rs. 3.52 to Rs. 5.54 only. In 1997-98, 771 lac kg yarn was

produced by all the spinning mills.

COLOUR, CHEMICAL AND ACCESSORIES :

In our country, the first powerloom unit was established in 1909. In

Malegaon the first powerloom unit was introduced by Seth Abdur Razzaque

Faqeer Mohammed, residing in Islampura, in 1936. It was costing Rs. 50/- per

loom. The loom was run by diesel engine. In 1938, after the use of electricity the

growth of powerloom accelerated. Generally, in Malegaon, the looms were

supplied by the cotton Textile Mills of Mumbai and Ahmedabad.

According to Ashok Mehta Committee report 7500 looms were replaced or

provided every year to the powerloom industry. Scraped and discarded looms were

brought in Malegaon by the loom suppliers and made them capable of use in the

powerloom industry. Cent percent rejected looms were running in Malegaon. This

is one of the most important reasons that the powerloom industry of Malegaon was

not able to compete in cloth production with other centres. Despite this drawback,

the mechanics and skill of weavers is praiseworthy for manufacturing coloured

sarees and grey cloth by using the out dated looms.

Now a days a loom of 52” was available at Rs. 7000/- to 14000/- whereas,

the price of new brand loom was to Rs. 20,000/- (Plain loom), while the modern

automatic loom was available at Rs. 1 to 40 or 50 lacs for one loom.

AUTOMATIC POWERLOOM :

Recently With the effort of Shri Momin Mujeeb Ahmed (Representative of

All India Textile Board), a seminar took place in Sabir Sattar Town Hall at

Malegaon on 24th July 1999. It was the first occasion that any Textile

Commissioner, Shri B.C. Khatua, visited Malegaon and guide the weavers about

the problems faced in the installation of automatic looms. Additional Textile

Commissioner, Shri Shetty and Shri Bandu Upadhyay director of BTRA (Bombay

Textile Research Association) and Mithuanun, Chairman of PDEXIL, also

attended the Seminar.

In the Seminar it was emphasized to install modernized powerlooms. After a minor

alteration by changing some parts in "Symco Gawaliar Loom", it would become an

automatic loom. The cost of alteration was certainly 20000/- rupees which would

be beyond the capacity of the powerloom owners of Malegaon. In this regard one

recommendation of Ashok Mehta Committee could be given “Research in the

matter of improvement of weaving techniques should be such as to fit in with the

small scale nature of operation of the powerloom and should not be focused only

on the application of modem automatic techniques which are conductive to

centralize and mass production”. 5

(Page 123)

COLOUR AND CHEMICALS :

The powerloom industry of Malegaon is well known for its coloured sarees.

Colour and chemicals are required for dying and bleaching the yarn. These

materials were supplied by the dealers, wholesalers and agents in the market. There

were no shortages of these materials. It never created any problem for the industry.

The artificial shortage was created to get the huge profit. Most of the Muslims

started business of colour and chemicals. But due to lack of sufficient knowledge

and capital, they could not succeed.

Owing to the growth of production of grey cotton, roto, polyester and P. C.

cloth and ban on the production of coloured sarees by the government, the

production on powerlooms diminished. Somehow, about 5000 looms are

manufacturing coloured sarees at present, so the colour and chemicals are not

required on large scale. With the diminishing of coloured sarees, the colour and

chemicals demand reduced.

With the growth of manufacturing in grey cotton cloth, the sizing work

increased for making beams. The need of sizing material increased. But it also had

no problem. In the present age the manufacturing of non-cotton cloth like P. C.

Polyester, roto etc. doesn't require any material for sizing and processing.

ACCESSORIES AND SPARE PARTS :

The powerloom industry of Malegaon totally depends on rejected looms by

mills of Bombay and Ahmedabad. Most of the spare parts also are brought from

mills at a cheaper rate. Some parts and components are manufactured in the local

place itself. In Malegaon, there are many textile accessories shops which supply

these spare parts. Some wooden parts like shuttle frame etc. are provided from

Ludhiana.

CAPITAL :

Fixed Capital and Working Capital - Marketing Finance

During the survey and discussion with different powerloom owners, it is

noticed that the powerloom sector in Malegaon is completely ignorant in the matter

of provision of finance. There is no financial help from the government to the

powerloom industry. For capital equipment preparatory and other processing

machines and working capital including marketing finance is required for cotton or

non-cotton industry.

Fixed Capital:

Fixed capital includes land, construction of shed, powerlooms etc. At present

one powerloom is available at a rate from 7000/- to 12000/- rupees. The shed is

generally contains 20 to 24 powerlooms.

Table No. 6.3

No. Particulars Wooden Shed R.C.C. Shed

1

2

3

4

5

Capital cost of land 40’ x 50’

Capital cost of construction for the shed

Capital cost of powerloom including

motor and switches of 20 powerlooms

Electric Installation

Equipment

10,000

1,50,000

2,12,000

15,000

25,000

1,00,000

3,00,000

2,12,000

15,000

25,000

Total Fixed Capital 5,02,000 6,52,000

In 1984-85 an eminent Saree Commission Agent started a shop to satisfy the

manufacturing needs with the name of Kushal Textile Industries. Of course it was

a unique step but taken by a non weaver.

The following table shows the investment for the fixed capital including

working finance. (According to survey report in Malegaon)

At present about 25,000/- to 30,000/- rupees are required to install one

powerloom. All the cost mentioned above differ from the price index and

fluctuation of the market. Since the independence of India the prices are going up

day by day. Hence it is very difficult for the poorer section and middle class people

to install powerlooms.

(a) The general Practice in Malegaon :

The general practice to install a powerloom in Malegaon is that a common

man saves some money in group which is known as bissi. Suppose some 20 person

come together and deposit 100/- rupees each with the convener per week. The sum

of rupees 2000/- is given to the needy person or the name is drawn out by lots. It

goes on for 20 weeks. In the local language it is called “bissi”.

This type of bissi is common from 500/- rupees to one lakh rupees. It is a

financial help from the common pool of money. Another type of bissi is that there

are some organizations which collect the money every Friday. A diary is given to

the man. The saving amount is mentioned with date sign and stamp. The diary

holder can withdraw the amount when required otherwise the collected amount is

distributed to the diary holders on the occasion of “Shab-eBarat”. The diary holder

generally uses the amount for "Ramzan Idd" cloth. Some persons use it for

marriage, land purchase, house making and for installation of powerlooms or

working capital. It is just like saving account without interest. The whole business

of Bissi goes on credit basis. Of course it is a unique thing in Malegaon for poor

laboures. It doesn't differentiate in men, women, poor, rich labourers and

powerloom owners. Almost all the persons save money as per their capacity.

In this way a common man saves money to enable himself to buy a

powerloom. Sometimes a person gets the amount through mortgage or by selling

the ornaments for purchasing the powerloom. That powerloom is installed in a

rented shed. Beem and welfare are taken from master weavers. Day by day,

through hard work and by saving the amount, he increases the looms without

taking any help from financial institution and from Mahajan without interest.

Being from Muslim community, people keep themselves away from banking

system or financial institution in order to keep themselves away from interest.

(b) Rental Basis :

The another practice of setting up powerloom is on the rental basis. The

employees, widows or persons who are not interested in their powerloom give it on

rent. At present the rent is Rs. 150/- per powerloom per month. The agreement is

done for eleven months. The whole amount of rent (Rs. 1650/-) is received by

powerloom holder at a time. In this way the runner of the powerloom saves money

for purchasing the powerloom.

Sometimes a powerloom owner who becomes bankrupt, gives his shed on

rent. Sometimes a person who returns from foreign countries like United Arab

Emirates, Dubai, Saudi Arabia, Kuwait, Masqat etc. by earning lakhs of rupees,

invest them in by setting up powerloom shed and gives it to others on a rental

basis.

In this situation, only working capital is sufficient to run the powerloom.

Sometimes the yarn is also available on the credit basis. There are many

powerloom owners who run the powerloom without investing money. But such

persons are exploited at every stage in the business. This is very risky not only for

the yarn dealers but also for the powerloom owners. In a year or two, it is common

that a powerloom owner declares himself bankrupt due to continuous slack in the

market, fluctuation of yarn and cloth prices or the bankruptcy of yarn dealers and

cloth merchants.

Sometimes, if the luck is with the powerloom owner, he earns a lot and

becomes a big businessman. There are several examples of such powerloom

owners in Malegaon.

WORKING CAPITAL :

The matter of finance, the working capital is totally ignored in Malegaon.

Generally, one powerloom requires 20 kg cotton yarn for coloured sarees, for one

shift, while 48 kg cotton yarn in the form of cones for grey cloth working in two

shifts. In case of P.C. and roto, it is 40 kg for those working in double shifts. All

the required yarn is given for one week.

Finance is required for capital equipment, preparatory and other processing

machines. Working capital including marketing finance for coloured sarees can be

seen in the following table.

Working capital required for coloured sarees of cotton yarn.

Table No. 6.4

Capital Cost of

one powerloom

Silk

Border

Zari

Border

Kasab

Border Boutique

(1) Capital cost of yarn preparatory

widing, warping etc.

(2) Proportion capital cost of

finishing, lable, folding & press etc.

15,000

2.0

13,000

2.0

17,000

2.0

20,000

2.0

Total Capital Cost 15002/0 13002/0 17002/0 20002/0

For Per Month

Table No. 6.5

(1) To cover yarn consumption

stock, stock of finished cloth

(2) Other Miscellaneous including

50,000

18,000

5,000

40,000

15,000

5,000

50,000

18,000

5,000

50,000

18,000

5,000

wages etc.

Total Working Capital Required

would be.

73,000 60,000 73,000 73,000

Working Capital Required for Grey Cloth of

Cotton Yarn for One Powerloom

Table No. 6.6

Capital Cost of One Powerloom Cambric Poplin

(1) Capital cost of yarn preparatory widing,

warping, sizing etc.

(2) Proportional capital cost of finishing etc.

9,000

5.0

9,000

5.0

Total Capital Cost 9005.0 9005.0

For 15 Days

Working Capital Required for PC Roto or Synthetic Yarn

Table No.6.7

(1) To cover yarn consumption stock,

stock of finished cloth

(2) Other miscellaneous required would be

72,000

13,000

72,000

13,000

Total Working Capital Required would be 85,000 85,000

For 4 Months

Working Capital Required for P.C. or Roto Synthetic Yarn for One

Powerloom

Table No. 6.8

Capital Cost of One Powerloom P.C. Roto

(1) Capital cost of yarn preparatory

widing, warping etc.

(2) Proportionate capital cost of finishing etc.

7,810

10

7,810

10

Total Capital Cost 7,820 7,820

For 15 Days

Table No. 6.9

(1) To cover yarn consumption stock,

stock of finished cloth

(2)Other miscellaneous items including wages etc.

56,000

6,500

56,000

6,500

Total Working Capital Required would be 62,560 62,560

For 4 Months

MARKETING FINANCE :

Marketing finance is as important as the fixed capital and working capital.

The Marketing finance covers the supply of funds for the fulfillment of different

marketing functions which include purchasing of raw materials and selling of

finished goods. Credit facilities can be provided to the consumers like many other

business and industries. The powerloom industry of Malegaon also needs the

marketing finance. In Malegaon there are very few powerloom owners who sell

their production at their own will. They stock their goods in the depression period.

They buy the required materials on cash but sell their finished goods on credit at

high margin. They enjoy a handsome profit, because they are financially strong.

They have sufficient capital for inventories and requirement.

In respect of marketing finance, the weaker section i.e. small powerloom

owners have not enough money to run their powerlooms in a good manner. They

are not in position to stock the yarn and other requirement. They cannot sell their

sarees on credit for more than one week. They are usually the small powerloom

owners. So they take loans from their friends and relatives.

Thursday is the day of harassment for such powerloom owners because they

have to pay the wages of workers, payment of textile stores and the expenses of his

households. In such a situation he has to sell his product at under-cast, helplessly.

On these occasions there is no organization to help them. The role of government

is totally absent.

Neither the government nor the political parties are interested in helping the

powerloom industry. The powerloom owners are particularly divided into two

political parties i.e. one is Congress Party (I) and another is Janata Dal (S) lead by

Nihal Ahmed. The political parties are opportunist who get the advantage of the

occasion to strengthen their votes for the election. The government, the political

parties and powerloom owners and labourers all are passive in this regard. They do

not set up any financial organization for the industry. Being from Muslim religion,

they do not take any interest in the banks. The nationalized banks and the State

Government should come forward with a time bound programme to free weavers

from the clutches of Master weavers.

According to the federation of the cotton Powerloom Association of

Maharashtra, generally the powerloom establishments are unable to obtain

facilities from banks or any other financial institutions for working capital as well

as for marketing capital. Some of powerloom owners have their own finances or

resources.

CONCLUSION :

After an overall study of the financial condition of the Malegaon powerloom

industry, it is concluded that, financial institutions should be set up for working as

well as marketing capital.

Taking into consideration the importance of small scale powerloom industry

which is playing a vital role in the economy of the country, efforts should be made

to ensure the powerloom owners to obtain the necessary finance.

The State Finance Corporation, Commercial Banks, particularly the State

Bank of India may have to step up in the field.

ELECTRICITY :

Malegaon has a very long his of electricity supply. Initially the

Amalgamated Electricity encouraged the powerloom industry. But its stance was

changed in later period. Not different was the case of the MSEB (establisher) in

1960.

(a) Electric Charges :

Besides the budget, sometimes the electricity charges are increased two or

three times in a year and that is unbearable for powerloom owners. Due to the

increase in the cost of production of cloth the industry suffered huge losses. In such

circumstances the political parties and their leaders took advantage of situation.

Thus the chain of action and reaction is going a since the establishment of electric

company.

The electric charges increased gradually as given below. 6

Table No. 6.10

1938 The electricity was provided almost free of cost.

1959 0.17 N. P. per Unit

1962 0.03 N.P. per Unit Electric Tax

1963 0.44 to 0.50 N. P. per Unit

1964 Increased by 0. 19 to 0.22 N. P. per Unit

1969 Increased by 0. 18 to 0.31 N. P. per Unit

1985 MSEB 0.35 to 0.70 paise increased up to 120 unit 0.58 paise

increased to 0.88 paise.

120 unit and above 0.60 paise increased by 0.98 paise.

1997 Fixed rate Rs. 120.00 per powerloom

1998 Fixed increased to Rs. 180.00 per powerloom

2000 Proposed Rs. 300.00 per Powerloom.

In near future the proposal of electric charges per powerloom would be

almost Rs. 700/per month. It is because of the Enron Project. An American

Company, at Dabhol would supply the electricity at a rate of Rs. 4.60 per unit. At

such a horrible rate not only the powerloom industry but also other industries

would be locked up.

A summary of H. T. Tariff for the year 2000-2001 is given below.

(b) Maharashtra State Electricity Board (MSEB) :

In June 1963, when electric charges were increased from 0.44 to 0.50 paise

by the Amalgated Electric Company (AEC) the power consumers association

protested against it and demanded the electricity supply from “Koena Project" of

the Maharashtra Government. The electricity produced there cheaper. The

Maharashtra Government was politically pressurized to take over the charge from

AEC. It was pointed out that 4000 powerlooms were running on electricity

whereas 150000 were working on diesel engines, as electricity was costly. In

respect of thermal energy an enquiry was made by the M.L.A. Shri Nihal Ahmed

in Maharashtra Assembly. But it seemed that Government was not interested in the

matter. The Government failed to keep promises made by it in 1965, 1966, 1967

and 1968 about supply of Thermal Electricity to Malegaon.

After several agitations and strikes the Government of Maharashtra started

to supply Thermal Electricity in Malegaon on 22nd

Aug. 1969 at the old rate. It was

protested by consumers and they opposed to pay the bill.

In March 1970, a new condition was imposed by the Government that the

consumers must produce a certificate of small scale industries registration to install

the fresh motive power. Due to new condition the fresh applications were not

eligible without certificate and such applications were not accepted by the

company.

The agitation was continued to reduce the electric charges of thermal

electricity. Helplessly, the Government made a little reduction in the rate.

According to new rate, for the first 150 units, charge will be 0.19 paise per unit for

motive power. It was still more than the M.S.E.B. rate. Now the rate enforced

from. 1st April 1971 was again not accepted by consumers.

In course of time due to the undertaking of electric supply by the AEC come

to an end. The company was trying to continue their services. 1976-77 was the

worst period in the history of electric supply in Malegaon Electricity was supplied

only for 10 to 12 hrs. a day that resulted in the low production of cloth the small

powerloom owners having up to 6 to 8 loom locked up their units for not having an

alternative to run the looms. As a result most of the labourers became jobless. Such

labourers migrated to Surat, Bhiwandi, and Ahmedabad to earn their livelihood.

The situation was so critical that Government, municipal council and

political parties couldn't do anything. The powerloom owners as well as labour

organizations were helpless.

There was no solution. It was a great shock to Malegaon Powerloom

Industry. Inspite of this great crisis the powerloom owners neither united nor tried

to find out solution for the future. This crisis provided a golden chance to big

powerloom owners to manufacture their product with diesel engine. They earned

handsome money by selling their product on higher margin due to short supply. So

they didn't want to solve the problem.

ROLE OF M.S.E.B. :

From 1938 to 1975, a span of 37 years, the A.E.C. was sole enterprise for

supply of electricity in Malegaon. The service of A.E.C. was never in the favour of

powerloom industry. After the establishment of Maharashtra State the Government

encouraged the co-operative movement especially in the industrial field. As a

result the private companies were discouraged and their services were taken over

by the Government. Hence MSEB took place of AEC in supply of electricity to

Malegaon in 1975. The people of Malegaon took breath of relief that they got rid

of AEC and thought MSEB would do something good for their industry.

But it proved to be a dream only. When MSEB came started to work actually

it was disclosed that previous supplier was better than the present one. The

drambacks of the MSEB are given below which are observed over 25 years service

in supply of electricity to Malegaon. 7

i) In MSEB, without taking bribe the technicians do not remove the faults

of the individual consumers. Otherwise the faults are repaired after a day

or two when complaint is lodged in the office.

ii) Repeated failure of power is common practice of MSEB.

iii) Several bill collection offices were there for the convenience of the

consumers. MSEB stopped the practice and started collection through the

banks on contract basis by paying them commission. At present the bill is

collected by NDCC Bank. It is the wastage of time and money.

iv) The head office was in the heart of the city at Old Agra Road, but MSEB

transferred its office to Moti Bhawan behind the State Bank. For a minor

and simple mistakes the consumers have to suffer alot.

v) Meter reading, calculation, distribution and collection of bills were done

monthly. The system was easier, suitable and convenient for the small

powerloom owners as well as labourer community and domestic users,

On the contrary, the MSEB adopted the policy of two months billing. A

long and lengthy procedure was followed which created several

problems.

vi) MSEB never supplies voltage of 460 volts. The low voltage of 200 to 300

damages the powerloom motors, tube lights, T. V. tubes Computers, etc.

The low voltage creates several problems in the city.

vii) Wrong reading of meter and miscalculation of charges is a common

practice. A poor hutment was charged Rs. 70000/- for two months. In

such cases complaint could be filed only after the payment of the bill.

How is it possible a hutment dweller to pay such a huge amount?

viii) In the name of load shedding the electricity is discontinued every Friday

from 6 a.m. to 10 p.m. since March 2000. The discontinuation of 16

hours had created several problems.

ix) In discontinuation of supply of the electricity communal attitude played a

crucial role in the workers of MSEB. In Sangmeshwar, Sapati Bazar and

Camp area electricity is supplied throughout the day.

x) The farmers are provided electricity at concessional rate. Inspite of it, the

farmers do not pay their bills. At any natural disasters such as heavy rain,

no rain, flood, bad weather, cyclones and crop ruin the bills are called

off. The cloth production is one of the basic needs but powerloom owners

are charged double and the bill is collected at will, otherwise the supply

is disconnected. Due to the dual policy of the Government the electricity

board is always in loss of crores of rupees.

In March 1999, the Government of Maharashtra announced several facilities

to the farmers. Their 50% arrears were called off if they paid their bills. First April

1999. The farmers were to get electricity at half the rate. From the power and

energy minister disclosed that the bill to be received stood at Rs. 50 crores from 11

lakh farmers. The farmers were to get facility according to the table given below. 8

Table No. 6.11

No. Particulars Old Rate Proposed Rate

1

2

3

4

3 Horse power motor pump

3 H.P. to 5 H.P.

7.5 H.P. to Motor pump

More than 7.5 H.P.

Rs. 500

Rs. 500

Rs. 750

Rs. 1000

Rs. 250

Rs. 400

Rs. 600

Rs. 7000

Despite of 50% concession, if the farmers did not pay their bills still their

supply was continued.

xi) The Government was advised by Electricity commission in respect of

overtime duty of the employees. In all, one lakh 11 thousand employees

were working in the State. These employees received Rs. 80 crore as

overtime. The amount was more than any other state of the country. 13%

of the total amount was spent on their payments and other facilities. The

employees used to keep the work pending during duty hours and then

they recorded their extra work as overtime.

xii) A new format was enforced over domestic, non-domestic and industrial

users of electricity in the name of Security Deposit. Every consumer had

to pay an average amount of three months bill as a security deposit. The

three month’s bill would remain with MSEB as S.D. Ten years ago it was

only Rs. 50. Then it increased up to Rs. 300 per horse power. Such steps

proved bankruptcy of the MSEB. The loss of MSEB was collected by

various means. Obviously, the Maharashtra Government was like an

enemy of powerloom industry.

ELECTRIC ARREARS ON POWERLOOM INDUSTRY IN MALEGAON :

Due to continuous crisis at all powerloom centres in Maharashtra, the

Government decided to give 55% concession in electric bills of powerloom

owners. But the matter became controversial between ruling parties and opposition

(BJP, Shivsena) parties. The opposition parties and MSEB severely opposed the

decision. It locked more communal than political parties. In March 1999 a proposal

of 50% exemption was not accepted by the opposition and now by the ruling party.

It was proposed by then ruling party Shivsena B.J.P. combine. So, it was not

possible for them to accept the proposal for powerloom owners who are generally

Muslims. Almost 80% Muslims are working in powerloom industry. It was a

matter of Rs. 80 crore. Fifty five percent exemption means Rs. 45 crores. After the

independence, the Government of Maharashtra exempted the farmers of paying

electricity bills several times. Almost the same amount has been received by the

corrupt and dishonest employees and officers of MSEB as bribe. Two years ago,

the communal leaders exempted 200 crore rupees of electric bill of a co-operative

Sugar factory in Dist. Ahmednagar. Due to this exemption the chief of that sugar

factory resigned from Congress Party and joined Shivsena. It is a significant

example of immorality of politicians of India. To strengthen their political power

they destroy the nation.

In May 1999, the Minister of Power and Energy disclosed that, the

electricity was stolen by four lakh farmers with “Ankdi” Due to this ill practice

transformers are destroyed. It was also accepted that it is very difficult to control it.

It is a fact that 60% farmers steal electricity.

To collect the bills of Rs. 1600 crores from farmers the Maharashtra

Government wasted of Rs. 50 crores on campaign of advertisement. The scheme

failed badly.

It seemed that govt. was only for the farmers. The farmers were exempted

from paying bills, inspite of stealing electricity, no action was taken against them.

Despite of non-payment, their electricity supply was continued. Besides these, they

were provided several facilities and given preference in all walks of life by the

Government. On the other hand as regards powerloom industry, the behaviour of

Maharashtra Government is just like step mother.

Ashok Basak, the chairman of MSEB, opposed the 55% exemption to

powerloom owners, though it was accepted by him that the record of powerloom

owners from Malegaon was better than other powerloom centres. Some more facts

and figures provided by the head of MSEB of Nashik Division are given below.

The facts are given as on 1st January 2000.

Table No. 6.12

i)

ii)

iii)

iv)

v)

Number of powerlooms

Number of powerloom sheds

bills are given by meter system on which

10,436 K.V. load is supplied.

The electric load supplied for powerlooms

Electric bill due on 1st January 2000 in Electric

bill due only on powerloom.

66,541

5,595

1,292

48380 K.V.

13 crore 60 lakh Rs.

6 crores 15 lakh Rs.

vi) Electric bill due only on powerloom Out of Rs. 6 crores 15 lakhs two crores

forty lakhs rupees are blocked due to court matter. The original amount to be

received is only Rs. 3 crores 75 lakhs from 519 powerloom owners.

vii) Number of cases in court are 438

viii) Most of the matters are related to, overload, wrong meter reading and wrong

calculation of the bill.

ix) Monthly income from Malegaon powerloom owners is Rs. One crore 12

lakh rupees out of which 80% is permanent.

x) Bills of Rs 2.50 crores are due on business organizations, and shops offices

xi) Some powerloom owners delay payment of electricity bill is because of

wrong entry, penalty of overload, short duration of payment, improper

facilities in banks etc.

xii) Domestic bill of Rs. 4.5 crore is due. Taking into consideration the facts and

figures the 55% exemption (Proposed) shows no advantage for powerloom

owners of Malegaon. 9

Source : Shamnama Daily, Malegaon dt. 10/2/2000

It is assumed that the MSEB has adopted the policy to give the concession

up to September end in the electric bill exemption scheme. The officers from

MSEB put pressure and gave warning for discontinuation of electricity which

resulted in powerloom owners selling their lands and valuables and properties to

pay their bills.

A CRUEL STEP OF MSEB (2000) :

The powerloom owners from all the centres of Maharashtra such as

Ichalkaranji, Dhule, Solapur, Bhiwandi and Malegaon were protesting against the

fixed rate of Rs. 180/- per loom per month. Meanwhile the MSEB imposed the

new tariff of electric charges in the State from June 2000. In all the categories the

charges were doubled. The charges to be received would be Rs. 320 for general

motive power while the flat rate of powerloom Rs. 300/- per month. The domestic,

non-domestic and agricultural categories were also subjected to the new tariff of

electric charges.

The summary of HT tariff for 2000 is given below which has came into

practice from 1st June 2000.

11

Summary of LT Tariff for the year 2000-01

Table No. 6.13

Proposed Category of

Consumers

Demand Charge (Rs/KVA/month)

Rs/HP/month

Energy

Charge Ps/U

Domestic (LD 1)

0 – 30 Units Rs. 20 per service connection for single phase.

Rs. 50 per service connection for three phase.

Additional Fixed charges of Rs. 50 per 10 KW.

Load of part thereof above 10 KW load shall be

payable.

75

31 – 100 Units 250

101 – 300 Units 300

Above 300 Units 460

Non Domestic (LD 2)

0 – 100 Units Rs. 50 per service connection for single phase.

Rs. 100 per service connection for three phase.

Additional Fixed charges of Rs. 100 per 10 KW.

Load of part thereof above 10 KW load shall be

payable.

250

101 – 200 Units 460

Above 200 Units 600

General Motive Power (LTP-G)

0 – 300 Units Rs. 60 per HP per month.

Optional MD based tariff will be available at

Rs. 220 KV per month

210

301 – 1000 Units 280

1001 – 15000 Units 320

15001 – above Units (only

balance units) 160

Powerloom Flat Rate 300 0

Public Water Supply

Urban P. W. Schemes

For Connected Load 0 - ??? HP 40 200

For Connected Load 0 - ??? HP 40 300

Rural P. W. Schemes

Flat Rate Tariff(RS/HP/month)

Grampanchayat 88 0

‘C’ class Municipal Council 116 0

Metered Tariff 20 100

Summary of HT Tariff for the year 2000-01 11

Table No. 6.14

Proposed Category of Consumers

Demand Charge

(Rs/KVA/month)

Rs/HP/month

Energy Charge

Ps/U

HTP – I (Industrial – BMR/PMR) Base Tariff 300 335

TOD Tariff

2200 hrs. – 0600 hrs. 0 50

0600 hrs. – 0900 hrs. 0 0

0900 hrs. – 1200 hrs. 0 30

1200 hrs. – 1800 hrs. 0 0

1800 hrs. – 2200 hrs. 0 60

HTP – II (Industrial – Other) Base Tariff 280 325

TOD Tariff

2200 hrs. – 0600 hrs. 0 50

0600 hrs. – 0900 hrs. 0 0

0900 hrs. – 1200 hrs. 0 30

1200 hrs. – 1800 hrs. 0 0

1800 hrs. – 2200 hrs. 0 60

HTP – III (PWW-BMR/PMR) 300 350

HTP – IV (PWW-Others) 220 320

HTP – V (Railway Traction) 0 420

HTP – VI

Residential Complex 180 200

Commercial Complex 180 300

HTP VII (Agricultural)

Flat Rate Tariff (Rs/HP/month)*** 117 0

Metered Tariff 20 120

HTP VIII Poultry Layers & Boilers 180 120

HTP IX (???) 600 330

SP – I Agri (HT/LT) High Tech, Cold Storage 180 200

Mula Pravara Electric Co-op. Soc. 0 120

Inter State Sale 0 260

Note : (*** : Flat rate tariff shall be applicable till the time ?????? are installed.

FCA shall be applicable to all categories of consumers. The methodology for charging FCA shall be

determined by the Commission on a quarterly basis.)

(Supplied by Shri Mujeeb Momin, member of all India Textile Board.)

PUBLIC REACTIONS :

Really speaking it was a cruel step taken towards powerloom owners in

Maharashtra. It was impossible for owners to pay of fixed rate of Rs. 180/-. The

powerloom industry was already in crisis due to costly yarn and improper supply

of electricity. Most of the powerlooms were locked in Bhiwandi. Few cases of

suicide of powerloom owners occurred in Bhiwandi and Ichalkaranji due to this

crisis.

At first, the powerloom owners from Ichalkaranji opposed the proposal of

new tariff. Then the owners from Bhiwandi came into arena. In the second week of

June, the powerloom owners of Malegaon and Dhule opposed it. The Powerloom

Protection Committee of Malegaon called a meeting in order to protest against the

tariff unitedly (11 -6-2000). Not only powerloom owners, but the people from all

walks of life also responded to the call. In the meeting it was analyzed by Shri

Nehal Ahmed that, the Government of Maharashtra had ceased the concession to

the powerloom owners since 1992. Due to this policy, the existence powerloom

industry was endangered. The National Region Company paid the power bill of Rs.

1.40 crore monthly and did not oppose the tariff because it earned profit. On the

contrary the powerloom industry was already in loss, hence it was not possible for

it to bear such heavy burden of monthly power tariff of Rs. 320 per powerloom.

The board was formed by the Government but the policy was not formed. That was

the reason, the Board imposed the tariff as per their will. At present not only the

powerloom owners but farmers and domestic users of electricity also are in trouble.

12

A decision has been taken by the Government of Maharashtra make the

electricity board private and divide it into three parts. As a result, fifty thousands of

employees would be jobless. It was shocking announcement by the Chief Minister

of Maharashtra. The powerloom owners of Dhule, Bhiwandi and Malegaon were to

start a movement against charge of Rs. 320. In Malegaon it was decided, instead of

paying bill, it would be returned with application.

In protest of increased tariff "Malegaon Bandh" was observed on 10th July

2000 by the people. The communal minded parties opposed it. Actually it was not

the problem of powerloom only but also of all the citizens of Malegaon. That's why

one day earlier in a public meeting at Quidwai Road, nearly 70 thousand people

were present. The protest was remarkable and historical as well.

On the other hand, the sitting MLA Shri Shaikh Rasheed of Malegaon

formed powerloom Udyoug Bachao Samiti. He opposed the movement of

powerloom action committee only because it was led by Nihal Ahmed former

MLA of Janata Dal (S). Thus, the matter became disputable. But the people did not

respond/to Udyog Samiti. It tried to get the political advantage for Congress MLA.

After several agitations, 12 MLAs from all powerloom centres staged protest

in the Assembly. The following decisions were taken in the meeting of Chief

Minister with the MLAs.

i) The decision of 55% concession on 13th January 2000 will be continued.

ii) The remaining amount of 45% will be paid in three installments.

iii) The powerloom which are not working Rs. 30/- should be charged.

iv) The charges of capacitor shall not be taken.

v) Over load penalty shall not be charged.

In respect of above decision it was a stay on the “regulatory commission”.

The Government planned to go to court against the commission too. It is because

almost 32 petitions were already admitted in the High Court against Regulatory

Commission, by various organizations of powerloom centres.

Source : Shamnama Daily, Malegaon dt. 20-7-2000

STRIKE OF ELECTRIC EMPLOYEES :

The problem of increased rate by Regulatory Commission was a burning

matter. In course of time the fourteen employees unions of MSEB from all over

Maharashtra gave a notice of unlimited strike on the subject of division of the

electricity board and privatization of electricity in the State. Almost one lakh

eleven thousand employees took part in the strike from 25th

July 2000. Due to this

strike the electricity problem has turned so serious that what would happen the next

moment in the State, could not be predicted. The Government of Maharashtra was

helpless. 15

TRANSPORTATION :

INTRODUCTION:

For flourishing of any industry transportation is one of the important factors.

For easy and quick transportation, there must be good roads connected to the

market centres, for the transportation of prepared goods as well as to carry the raw

materials at the industrial place.

LOCATION OF MALEGAON :

Malegaon is located 108.63 km away from Nasik city to the north-east.

Dhule is another powerloom centre situated to the north-east of Malegaon.

Manmad, a railway junction of central railway is located toward the south-east at

38 kms away from Malegaon. Another railway station called Chalisgaon is located

45 kms towards south-west of Malegaon. Bombay an international place and well

known for textile industries is 300 kms away from Malegaon. The only benefit for

Malegaon is that, it is located on the Bombay-Agra Road, The new NH3 passes

from western side of Malegaon. As far as the means of transportation are

concerned, Malegaon is unlucky. The only facility is that of road, which is time

consuming for transportation.

IN THE PAST:

Since the establishment of powerloom industry in Malegaon, the facility of

transportation is not proper. In the early stage, the yarn and other raw materials

were transported only from Bombay. The coloured sarees were sold in the local

market, so there was no need of quick transportation. With the growth and

expansion of powerloom industry the requirement of yarn, colours, chemicals,

textile accessories, sizing materials and spare parts etc. required in a large quantity.

The coloured sarees were sent to Marathwada, Jalgaon, Amrawati, Kolhapur, Pune,

Bombay, Ahemednagar, Nasik and to some other parts of Karnataka, Gujrat,

Madhya Pradesh and Andhra Pradesh by railway, S.T., lorry and private carriers.

These means of transport were very expensive and time consuming. As a result the

actual users of the saree have to buy it at doubled rate than in Malegaon. It is only

because of road transport.

MODERN AGE:

After 1970 and 1990, the coloured sarees banned by the Government,

diminished slowly and, the grey cloth production increased. After 1990 the

polyester P.C. and roto took its place on the powerloom. For the grey cloth the

cotton yarn was brought from south Indian mills in the form of bags of cones on a

large scale by lorries daily. The average expenditure of transportation for one lorry

is Rs. 7 lakhs, the cloth of Malegaon becomes dearer than the cloth at other

powerloom centres. Except for road transportation there is no way to bring the yarn

from South India.

At present the polyester, roto and P.C. yarn are brought mostly from

Ahmedabad and Bombay by roadways. The expenditure of road way is dearer than

any other means.

Likewise, the finished grey cotton i.e. cambric and poplin are sent to Pali,

Balotra, Jetpur and Ahmedabad by traders through lorries. It takes two days for the

delivery of cloth. One thing is notable that, after the delivery of cloth, it is sent for

processing and bleaching in order to find out the defects. It takes two to three days.

If the goods are okay then the payments are made to the powerloom owners,

otherwise they have to wait till the decision.

As far as the lungees are concerned, they have a good local market. Still

2/3rd

of production is sent out of Malegaon by lorries. In the remote parts of the

country like Bangalore, Hyderabad, Chennai (Madras), Calcutta and Nagpur, it

takes 2 to 3 days for the delivery of lungees.

The payment is made after the delivery of goods.

MARKETING :

For a successful marketing of powerloom cloth, adequate working capital,

yarn and other raw materials in sufficient quantities at the required time, the

capacity of powerloom owners to hold on stocks in time of depression, and their

ability to study the markets and adjust the pattern of production are some of the

important factors.

Keeping this in mind marketing of Malegaon powerloom industry, the whole

industrial area is divided into four zones to cover up all types of units big and

small. Nearly 30 powerloom owners having 1000 powerlooms were consulted.

During the survey, it was noticed that the powerloom industry of Malegaon

is completely unaware of marketing organization. All the loom owners, either big

or small, sell their products on their own and face risk. There are several

co-operative societies of powerlooms. Their role is passive as far as the marketing

organizations are concerned.

METHOD OF TRANSACTION:

(a) Gujree: Since the beginning of this industry in Malegaon, when only the

coloured sarees were manufactured, the powerloom owners used to bring their

sarees on their shoulders in "Sapati Bazar" (at present it is known as Tilak Road).

Entire separate bazar is residential ‘vyapari’ place. The commission agents or

"Saree Arhat" used sit in their "Verandas" from 3.30 p.m. to 6-7 in the evening

except on Saturday which observed as holiday, and on Friday from 8 am to 10 am.

It was gathering of buyers and sellers of coloured sarees. It was called “Gujre” in

local language. 16

Generally, buyers (Vyaparees) were non-Muslim Marvadees and sellers

were Muslims. The owners showed their sarees to every vyapari. If the matter of

rate is settled down, the owner would sell and collect the "Daam" (Payment)

otherwise; the owner would proceed next vyapari and so on.

Some times the vyapari would contact the saree owners at their home and

settled the rate matter. Most of the transactions were performed in cash. Sometimes

promissory note (Hundee) was used by vyaparees.

(b) Tamba Kanta: Such a practice continued till 1980 but with the

diminishing of coloured sarees, the tradition of Gujree vanished.

With the growth of grey cotton cloth, a new tradition came into practice. The

buyers and sellers used to gather at “Tamba Kanta” the northern end of Tilak road

in the morning from 11 to 2 and in the evening from 5 to 8. Today the market itself

is called Tamba Kanta. The gathering of Tamba Kanta always creates the traffic

problems. It is a headache for the residents of the place as well as for the police

department and to common people, particularly for women, however both the

ruling and opposition parties are distressed at this gathering, but nothing can be

done in this regard.

(c) Bunkar Bazar: Taking into consideration the distress of weavers and

yarn merchants and cloth traders Seth Shabbir Ahmed, president of Malegaon

Municipal Council built a huge building at Quidwai road called Bunkar Bazar in

1980 at the cost of 40 lakh rupees.

Unfortunately the building is incomplete due to some political conflict. It

was tried to shift the market in Bunkar Bazar but the yarn merchants and cloth

traders are not ready to come here by giving some excuses.

(d) Marketing Department: During the study, it is observed that there is no

separate marketing department for purchasing the yarn and selling the prepared

cloth. However, the marketing department is compulsory for that purpose.

The general practice in Malegaon is that the senior most member of the

family who is considered an experienced person and aware of all the ups and

downs of the market, handle the marketing affairs. He buys the yarn according to

the need of his unit. He also sells the cloth in the market at some profitable rate. He

is considered supreme authority of unit,

Generally, all the transactions are made in cash. In case of coloured sarees, it

is credited for one to six months, whereas in regard to grey cloth, it is one to eight

days. Sometimes current cheques are accepted by the weavers and given back to

the yarn merchants for the payment of yarn.

METHOD OF SELLING AND PURCHASING:

The policy and method for purchasing raw material and selling the cloth is

hotchpotch. No particular rules and principles of marketing are followed. It is

because of insufficient working capital and stock of market, however, the selling

and purchasing are done together.

The demand of coloured saree increased during marriage season. (Lagan

Sarai) i.e. February to May and even in Diwali. Moreover, it is also demanded

regularly from January to May. The remaining period is observed as slack in

market. The main brands of coloured sarees are, Irkal, Jar Jamin (golden thread

used in the border), silver (white silk used in the border), Mangla, pinpin, Bootee,

(Bootee are woven in the body of Saree) etc. Sarees are generally known by their

borders. These are sent to Pune, Kolhapur, Ahemednagar, Nizamabad, to some

parts of Karnataka, the entire Jalgaon district and neighbouring villages through

the commission agents of Malegaon.

Popline, Combrick, Polyesters and rotto cloth are some of the popular grey

cloth. These are sent to Bombay, Ahmedabad, Pali, Jaipur and Mathura through the

agents.

Really speaking, the weavers of Malegaon do not plan for the production,

purchasing and selling of goods. The whole industry runs on their own risk and

conditions or situation of the market. The weavers are not fully aware of the ups

and downs of the market. Apart from this, they do not stock raw materials for a

month or two. They are not able to stock the prepared cloth due to insufficient

capacity or scarcity of capital. As a result, they are repeatedly exploited by the yarn

traders, commission agents and cloth merchants.

It is observed that, during the slack period the cloth traders buy the cloth

from the weavers at lower rate which could not cover even the cost of production.

The weavers are not able to stock their produce. The capitalists stock such

products and sells them during the boom period and earn a handsome profit on it.

From above study, it is evident that the weavers of Malegaon do not pay

attention towards the marketing department. They do not think of forming union or

any organizations or cooperative society or consumers’ society of their own.

The powerloom owners were not in position to appoint a person to look after

marketing due to the fear of rising cost of production.

PREPARATION FOR MARKET :

(a) Trade Mark and Brand:

(i) Coloured Sarees: A large number of varieties of cloth are manufactured

in Malegaon. For identification and packaging, cover etc. are necessary. For the

attraction of the customers, the appearance of the product is more important. The

majority of small units, having one to four or six powerlooms, manufacture

coloured sarees. During the survey it was noted that, they do not use any

trademark, label and brand for their sarees, because they have not enough money

and urge.

In contrast to the small unit weavers, there are some big powerloom owners

having ten to twenty or forty looms, who are careful about their identify. They use

their own trademark and brand. To avoid the duplication, they use rubber stamp

with non-washable (Dhobi ink) ink on the face of the sarees. Colorful and

attractive labels are pasted. For the safe-guard and attraction multi coloured covers

are used. These sarees are named as Shakuntala Patal, Apna Desh, Naagchhap

Patal, Naurang sariyan, Raj Hans Patal, Blue Bird etc.

Some used figures like 62 number, A-1 Patal, 786 Patal etc. Some of the

owners are popular and their names are associated with their brands like Abdul

Hameed Navrang, Ayyub Shakuntala, Abdul Rahman 62 Number, Mustafa

Nagwala etc.

This is not only name but there is also guarantee of quality, fast colour,

durability and superiority of reed, picks and yarn, width and length of nine yards.

Hence, there is permanent demand from the customers. So, ultimately it helps to

develop good will and reputation in the market.

On the basis of goodwill and standard, they issue price list of their products,

in the market every week. There is no haggling about the price. The commission

agents have to buy according to the price list. The prices are changed with the

fluctuation of raw material and sundry expenses. During the slack market a minor

reduction is made in the price list by the owners. Of course there is monopoly of

powerloom owners in the market. All this is because of their capacity to stock raw

material as well as finished goods for more than six months. Their honesty, ability,

standard and manner of business and behaviour play a vital role in building their

market.

(ii) Grey Cloth: As for the grey cotton cloth, rotto, polyester and P.C. etc.

there are exception for Trade mark or brand like the coloured sarees. Label

coverings or warper etc. are not used due to unfinished and unprocessed cloth,

which is sent to the wholesaler in Bombay, Ahmedabad, Firozpur, Jetpur, Pali and

Balotra through the commission agents of Malegaon. After bleaching, calendaring

and processing, printed sarees are made. From the cambric cotton cloth printed bed

sheet, Pillow cover, Razai covers and curtains are made.

For developing individuality and standard, rubber stamp or screen is used for

Trademark, on the outer edge of the “Takha” (lump).

(In local language, lump is called ‘Takha’ which is in length of 100 meters).

Leader, Rupali, Metro, Sagar, Laxmi, Taj and Blue star are some popular names in

the market which have developed their good will. These products are sold on their

names because of their standard of yarn, pick, reed, width and length. Generally,

cloth is sold at per meter rate. At a time, contracts are made for more than five

‘Ganth’. (In local language Bale is called Ganth.). One bale is consisted of 15 to 18

lumps. i.e. 1500 meters to 1800 meters. For costing per meter rate, the formula is

used;

warpofweightYarnofCount

LumpofLenghthYarn

Formula =

÷

×

=

1850

weftofWeightCount1850

PickWidthLumpLength====

××××

××××××××

Generally, the rate of per meter cloth depends upon the fluctuated price of

yarn, so does the price of cloth. It is just like barometer or stock exchange. The

political changes at State or The Central levels affect the price of yarn and cloth.

The market becomes very dull and cast down before and after the budget of the

country and during the rainy season. In other words we can say that the yarn price

rules the cloth rate. Reverse the case of coloured sarees. The price of saree is in the

hands of powerloom owners. In the case of grey cloth the powerloom owner

dependent on the yarn merchants and cloth traders.

Big powerloom owners have 20 to 100 or 200 looms in different sheds while

small powerloom owners have only 10 or 20 looms. In the grey cloth market the

small units are insignificant. The big unit holder gets cloth from the small units.

Most of the transactions are made on credit for 8 to 10 days and during

depression period of credit extends to 15 to 30 days.

(iii) Lungi: Another variety of cloth is lungi which is manufactured at

present on 400 to 600 powerlooms. Generally, polyester, cotton and mercerized

lungies are prepared.

In cotton, Guide, Gulshan, Kranti, Navjeevan, Hafeez and Diamond etc are

well known Trade marks. By using mercerized yarn; lungees are produced only by

Guide and Chaar Minar Trademarks. The lungee weavers use their own brand trade

mark, label, rubber stamp and printed plastic bags to avoid the duplication. These

are produced in fine, medium and superfine qualities.

In Malegaon, Muslims being in majority 2/3rd

production is sold in

Malegaon directly or through the retail shop owners. Remaining production is sent

out of Malegaon to such places as Bombay, Bhiwandi, Hyderabad, Bangalore,

Madras, Nagpur, Kolkata and to neighbouring cities like Satana, Nasik, Dhule,

Aurangabad etc. The lungi production is not so much affected by price

fluctuations, price, so lungee weavers enjoy good profit.

NO REGISTRATION:

During the survey it was found that the powerloom owners do not register

their trademark or brand with the Government. It would add to cost and also the

duplicator would escape by makeing a minor difference in the yarn, border and

body of the cloth.

The next reason for non-registration is that the powerloom owners do not

want to involve themselves into anxiety of government's sales tax, income tax and

registration fees. Without taking care of the rules and regulation of the market, they

run their business successfully .Of course it seems surprising.

(ii) Advertisement: In the marketing aspects, advertisement has taken an

important place to attract the consumers. Due to the local market and buyers being

inter-mediator and commission agents, the weavers of Malegaon do not pay heed

to this factor. One or two weavers took initiative in advertisement by showing their

products in the cinema halls, through slides. As it was costly, so that they could not

bear the financial burden. The matter of advertisement is completely neglected in

Malegaon textile industry. One thing is notable that the weavers of Malegaon run

the business by using simple method. It is concluded that their products are

cheaper than mill sector and handloom sector and superior in quality and

durability. Hence wholesalers and traders prefer the product of Malegaon.

SALES PROMOTION METHOD:

This is the age of modern techniques like computer and network system. By

using them sales are increased and a handsome profit can be gained. There are so

many ways and means to attract the consumers. In this aspect too, weavers of

Malegaon are unaware. For the long period, reducing pick, reed, length and width

and during depression, selling at reasonably cheaper rates are some factors which

can keep the market alive. During the depression the weavers helplessly sell the

product in loss. This repeated loss leads them to bankruptcy and they vanish from

the market.

Apart from this, the powerloom owners are not sincere in the sales

promotion method. There is nobody to guide them.

The grey cloth manufacturers sell their unfinished goods, so they do not take

any step in the matter of advertisement. Very little amount of money is spent for

their trademark, names, and labels. The lump, which is called “Takha” in the local

language of Malegaon, is folded and brand name, reed, pick, weight and length are

printed or screened in attractive colours. Of course, these are not the part and

parcel of advertisement. In other words it can be said that the aspect of

advertisement is almost nil.

Though the weavers know the importance of advertisement, they do not take

any initiative in this aspect. During the discussion, it is noticed that, selling of

unfinished product, selling to the inter-mediators, lack of funds, and interest, the

money spent is not covered in the cost. Hence weavers don’t turn to advertisement.

For the attraction, popularization and more selling with handsome margin,

the weavers should sell their finished goods, directly to the wholesaler and

retailers. The weavers should form organization in this regard, in order to

overcome the market risks. By this step automatically the inter-mediators will be

kept away from the market. In this way the weavers should escape from the

exploitation by the brokers and they would gain handsome profit which is snatched

away the brokers.

Table Shows the Product of “Coloured Sarees” In Various Areas

(Market) Demanded. 17

Table No. 6.15

Quality of

the product

regar-ding

the border

Count

of

Yarn

Used

Rate of

per

Saree of

8.23 mts.

Nature

of the

Custome

r

Area in which the

coloured sarees or the

market of the product.

Silver and 60

s x

60s

Rs. 190/- Poor Ahemadnagar,

Pune, Sharda

Golden

(Silk

80 s x

80s

Rs. 220/-

Rs. 250/-

Middle

Middle

Aurangabad, Paithan,

Kolhapur, Sangli,

Border) 100 s x

100s

Satara,

Zari

60 s x

60s

80 s x

80s

100 s x

100s

Rs. 175/-

Rs. 195/-

Rs. 230/-

Poor

Middle

Middle

Aurangabad, Jalna,

Nizamabad (Karnataka)

Parbhani, Navapur,

Surat etc.

Kasab

Twisted

Of Zar &

Silk

60 s x

60s

80 s x

80s

100 s x

100s

Rs. 210/-

Rs. 235/-

Rs. 260/-

Middle

Middle

Middle

Nasik, Bombay, Jalna,

Marathwada, Navapur

Aurangabad,Nizamabad,

Karnataka etc.

Bootic

embroidery

in the body

with silk

border

60 s x

60s

80 s x

80s

100 s x

100s

Rs. 210/-

Rs. 240/-

Rs. 270/-

Middle

Middle

Middle

In all areas mentioned

above.

Table Shows the Product of Grey “Cotton Cloth”

in the areas demanded (Market) 18

Table No. 6.16

Name &

Type of

Grey

Cloth

Count of

Yarn used

Warp &

Weft

Reed and

Pick Rate of

Cloth

Per Metre

Area or market in

which the product

are

demanded or used.

R

E

E

D

P

I

C

K

W

I

D

TH

Cambrick

42 – 36

42 – 36

42 – 36

42 – 36

38 – 36

38 – 36

44

38

38

38

52

52

42

34

34

34

48

48

43

43

44

45

47

47

6.90 –

6.95

5.90 – 5.-

95

6.10 –

6.15

6.25

9.50

9.30

Mumbai

Ahemadnagar

Pali

Balotra

Calcutta etc.

Popline

38 – 34

38 – 34

38 – 34

38 – 34

38 – 34

27 – 24

60

60

70

70

78

78

48

48

48

48

48

48

38

38

38

39

38

39

8.50 –

8.55

8.60 –

8.70

9.15 –

9.20

9.60 –

9.70

9.80

10.6 - 10.6

Mumbai

Ahemadabad

Pali

Balotra

Calcutta etc.

P.C.

64.56

60.52

66.66

70.70

43

43

46

46

9.30

8.30

10.70

11.70

----- do -----

OCTROI :

Importance: Octroi is the main source of income for Malegaon Municipal

Council. On one hand, it is a benefit for the MMC, on the other hand it is for the

progress and development of powerloom industry in Malegaon. No doubt, the

entire development projects like health and sanitation, education, streets-lights,

water supply, road and salaries of their employees are covered in the Municipal

budget. Of course the municipal council is fully responsible for the development of

the city as well as to take care of public. In this business of MMC, the income from

octroi, plays an important role. At present the octroi has got so much importance

that all the political activities of Malegaon revolve around it. This activity has put

back the powerloom industry. In fact, the existence and life of Malegaon entirely

depends on powerloom industry. Seventy percent population of Malegaon is

dependant on the powerloom directly or indirectly. In other words, the industry

provides the whole population their livelihood. Despite the industry itself does not get

any benefit from Octroi.

It is observed that the Malegaon Municipal Council gets 40% to 50% of its

total income from octroi. Out of total octroi 75% are collected from powerloom

industry directly, or indirectly.

Table shows the octroi of Malegaon Municipal Council from powerloom

industry.

Table No. 6.17

Income of MMC from Octroi on powerloom items 20

Sr.

No. Year

Yarn=Cotton

Polyster Rs.

Powerloom

Spare Parts

Rs.

Sizing consum-

ables Rs.

1

2

3

4

5

6

7

1991 – 92

1992 – 93

1993 – 94

1994 – 95

1995 – 96

1996 – 97

1997 – 98

4,91,32,016/-

5,61,79,965/-

6,69,59,124/-

7,84,10,282/-

7,79,74,971/-

6,61,74,452/-

7,01,48,451/-

2,01,115/-

2,31,992/-

2,61,620/-

3,79,226/-

3,98,119/-

4,65,715/-

3,63,305/-

2,03,921/-

2,25,905/-

2,20,634/-

3,16,125/-

3,27,108/-

3,60,417/-

4,41,523/-

The following table shows the octroi from powerloom industry out of Total

Octroi with comparing the total budget of the MMC. 20

Table No. 6.18

Year Total

Octroi

Octroi from

Powerloom

Industry

Percen-

tage Total Budget

1991 – 92

1992 – 93

1993 – 94

1994 – 95

1995 – 96

1996 – 97

1997 – 98

1998 – 99

1999 – 2000

6,55,09,355/-

8,02,59,094/-

8,92,78,330/-

10,89,03,175/-

10,69,15,038/-

8,82,36,603/-

9,55,10,395/-

12,85,90,123/-

4,95,37,142/-

5,66,37,862/-

6,74,41,378/-

7,91,05,633/-

7,87,00,198/-

6,70,00,584/-

7,09,53,279/-

75.62

70.57

75.54

72.64

73.61

75.93

75.84

15,95,24,336/-

18,41,63,674/-

18,22,59,784/-

16,82,49,774/-

20,50,67,774/-

20,86,62,923/-

23,08,24,282/-

23,59,43,473/-

COMPARATIVE STUDY OF OCTROI OF DIFFERENT

MUNICIPALITIES:

At present there are 228 municipalities in Maharashtra State including

Malegaon Municipal Council. The Malegaon municipal council is ranked 2nd

comparing its budget to Bhiwandi which has the first position. No doubt, these two

places are the powerloom centres. 40 to 60 percent income is received thorough

octroi on yarn and items related to the powerloom industry. In Malegaon at present

Rs. 1.80% is levied on yarn by the municipal council. An average daily collection

is Rs. 3 to 4 lakhs in which 40 to 60% is through powerloom related items. In

1998-99, the octroi collection was allotted to Anas Enterprises of Mehsana

(Gujarat) on contract basis from 10th

June 1998 to 10th March 1999.

According to contract, the Anas Enterprises was bound to pay rupees one

crore eight lakhs monthly to MMC. It was the 60% of the total budget. Before the

contract, the octroi collection by MMC, was very low due to “Alter” i.e. (octroi

stealing). Compared to other municipal councils, the Malegaon Municipal Council

gets much more octroi.

Table shows the octroi of 9 municipalities in Nasik District. 21

Table No. 6.19

No. Municipalities in Dist. Nasik Collection of Octroi

1

2

3

4

5

6

7

8

9

Malegaon

Manmad

Satana

Yeola

Sinner

Igatpuri

Bhagur

Trimbkeshwar

Nandgaon

Rs. 14 – 0 Crores

Rs. 1 - 50 Lakhs

Rs. 1 - 60 Lakhs

Rs. 0.96 Lakhs

Rs. 0.86 Lakhs

Rs. 0.44 Lakhs

Rs. 0 - 2 Lakhs

Rs. 0 - 15 Lakhs

Rs. 0.42 Lakhs

Before the contract of Anas Enterprises, the octroi collection had hardly

reached to one crore.

It was only 60 to 80 lakh rupees per month. The following reasons affected

the low collection of octroi.

a) Alter

b) Insignificant number of employees

c) Political interference of Municipal Councilor

d) Bribes

(a) Alter (Stealing of Octroi) :

To know, how octroi affected the powerloom industry it is necessary to

understand the term "Alter".

In the local language octroi stealing is called “Alter” the doer of alter is

called “Alterbaaz”. The definition of alter is that a yarn merchant carries a loaded

lorry with yarn bags worth of Rs. one lakh. That lorry is always kept outside of

Malegaon municipal area. The yarn merchant has to pay legally Rs. 1.80% octroi

on yarn. For one lakh, he has to pay Rs. 1800=00. There are such groups in

Malegaon which take the responsibility for delivering the yarn bags to the

powerloom owners at half the payment. Such parties are involved in antisocial

activities or “Gundagiri”. They always carry weapons like sword, choppers,

hockey sticks, iron bars. Nobody dares to stop them from this illegal business.

With the help of Municipal Councilor’s employees and even police, the goods are

delivered at the right places. After the delivery the payment of Rs. 900/- is

collected from the yarn merchant. In this way municipal council is deprived of

octroi, while yarn merchant gets benefit of Rs. 900.

Before the contract of Anas Enterprises there were three or four groups in

the city who were busy in such illegal business. It is estimated that sum of almost

one lakh rupees was earned by each group daily. Thus, Municipal council loses 25

to 30 lakh rupees per month. Sometimes there were gang wars among these groups

of Gundas. With this illegal money these Gundas lead a a luxurious life.

So, it is clear that yarn merchant saves a handsome amount on the yarns and

so also the powerloom owners. Ultimately, a powerloom cloth is cheaper than the

cloth manufactured by octroi paid yarn.

This is the reason, why octroi collection was allotted to Anas Enterprises on

contract basis for 10 months for one crore eight lakh rupees per month.

(b) Insignificant Number of Employees :

On 10th

June 1998, the octroi collection was allotted to Anas Enterprises for

10 months on contract basis. 350 employees were appointed for collection of octroi

by the company. Whereas only 150 employees were working in octroi department

of municipal council. Due to this insignificant number of employees by municipal

council, the octroi collection decreased. With the growth, development and

expansion of the city the employees were not increased so as to cover-up the whole

city in order to keep watch on stealing the amount of octroi. Apart from this the

employees were afraid of their lives from Gundas. Servants were corrupt and took

bribes from the people. Compared to municipal council, the Anas Enterprises

appointed 350 employees and four patrolling jeeps with several inspectors. Due to

sufficient employees, the company succeeded in its efforts to reach the target of

more than one crore eight lakhs monthly. It proves the inability of municipal

council in collection of octroi.

(c) Political Interference of Municipal Councillors:

As in proceeding lines it is clear that there was a lot of money in the octroi

department, so the employees became corrupt by helping the businessmen in

general and yarn merchants in particular. The municipal councillors also were

involved in this illegal business. With the help of municipal employees, the

municipal members started "Alteration" This illegal wealth created selfishness and

welfare of the people was forgotten. There was only purpose to collect more and

more money for the municipal members. That is the reason why every candidate

spends more than one lakh rupees during the municipal election. The situation

becomes worst during the election of president. The candidate for the president

spends more than Rs./ 40 to 50 lakhs. Each and every member collects almost one

lakh rupees. After the election, president of municipal council collects the

commission from every contract and particularly from the octroi department and

the businessmen.

Therefore, whenever a person or material with unpaid octroi was captured

by the employees, the political pressure from these members and the president

forced them to let him leave and the material unseized. Later on the illegal octroi

was collected by the member.

(d) Bribes :

In this business, the police was also involved. The police department did not

pay need to the octroi evaders. When the members of alter group attacked some

municipal employees, the police department neglected the matter because it was

bribed.

ABOLITION OF OCTROI:

It was a long standing demand of the Truck Owners Association of

Maharashtra and Maharashtra Transport Association to abolish the octroi, due to

harassments by the municipal employees at the toll centres on the outskirts of the

city.

At these centres, the truck owners had to wait for a longtime. It was only the

wastage of time and money. For their demand All India strikes were observed

several times. Sometimes octroi was received double and triple times on the same

goods. No argument against this practice was accepted otherwise the goods were

seized. In this way both the parties suffered a lot.

Almost the entire business community and the Vyapari Association of

Maharashtra protested against the octroi by sending deputation, strikes and

observation of "Bandh" etc.

The Indian Taxation Committee reported that, "the octroi is the bag of sin

and corruption." After 1925 almost 25 committees favoured octroi.

After a hard pressure of Maharashtra Transport Association and Vyapari

Association and a long discussion in the cabinet, the Government of Maharashtra

(Shivsena + BJP) decided to abolish the octroi from 1st May 1999. By this decision

228 Municipal councils were to suffer. By the abolition of octroi the Government

agreed to give an alternate amount to all the 228 municipalities. The Malegaon

municipality will get one crore fourteen lakhs every month.

(e) Effect of Decision :

It was a very good decision for the businessmen, lorry owners and

powerloom owners in Malegaon as well as for other powerloom centres like

Bhiwandi, Sholapur, Ichalkaranji and Dhule. Powerloom owners thanked the

Government for abolition of octroi.

But on the other hand particularly in Malegaon some of the municipal

members, municipal employees, and alter groups were very much worried.

The Union of Municipal employees severely opposed the decision and

threatened the government to launch an agitation. In Malegaon on 30th

April 1999,

all the total collection centres were shut down. 150 municipal employees who were

working in the octroi department, were transferred to some other departments. In

the month of April only Rs. 90 lakhs were collected as octroi.

Of course, it was a favourable step by the Government for powerloom

owners. The delivery of yarn began without any delay. Moreover 1.80% octroi was

saved and the cloth of Malegaon became more cheaper than earlier. The

powerloom owners got rid of many problems related with octroi.

REFERENCE

1. Powerloom Enquiry Committee Report, 1964

Ministry of Textile and Commerce,

Government of India Publication, New Delhi

Page No. 31

2. Ibid. Page No. 89

3. Awami Awaz, Weekly, Malegaon dt. 16-03-1964

4. Government of India publication, New Delhi

Ministry of Commerce and Textile

Notification No. 29, New Delhi.

5. Powerloom Enquiry Committee Report, 1964

Ministry of Textile and Commerce,

Government of India Publication, New Delhi

Page No. 123

6. Summary of HT Tariff for the year. 2000-2001, Bombay,

Page No. 8, 10

7. Shamnama Daily 1990

8. According to the report of MSEB Malegaon

9. Ibid

10. According to the report of Mahavitaran Committee of

MSEB 2000

11. Ibid.

12. Ibid.

13. Report of Commission MSEB 2000

14. Ibid.

15. Ibid.

16. Dr. P. C. Pardeshi,

Marketing Management,

Nirali Publication, Pune

June 1998

Page No. 216

17. According the survey report from weavers of Malegaon

18. Ibid.

19. Ibid.

20. According to the report of Malegaon Municipal council.

21. Ibid.

xxx