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Coir can yet succeed, via clusters

The coir industry in coastal Kerala, which is in the doldrums, is being rejuvenated through several schemes. Project Uptech is a State Bank of India and UNIDO- facilitated project, which is well on its way to success, finds CHANDY JOHN.

COIR WAS something that was a cottage industry for a long time and women usually made enough to keep the hearth burning. But of late suicides were common among the coir workers and coastal Kerala was reeling in uncertainty regarding this sector, what with demand not in keeping with the kind of products made by the poor workers. For a while, it seemed there was no hope.

But all it took was ten months and a project to turn the fortunes of 907 people from bankruptcy to profit making. The people in question are the tiny manufacturers of the coir industry and the project, the State Bank of India's Project Uptech, which was launched in August 2001.

Since its inception in that month, when 53 tiny manufacturers came together and formed three consortiums, it has gone from strength to strength. Project Uptech is a State Bank of India (SBI) and United Nations Industrial Development Organisation (UNIDO)-facilitated project to form clusters within the small and tiny sector coir industry.

According to an SBI official, "A cluster pertains to a geographical location where people are engaged in the same type of activity, facing the same opportunities and threats, surrounded by related institutions and the same private and public service providers. The aim of cluster development is to bring about linkages within the cluster. In this manner, the bank has involved itself in each and every point along the production chain, with the collaboration of the Coir Board. The ultimate objective is to bring about the holistic development of the coir industry and to reverse a general downward trend that had resulted in a spate of suicides."

When a consortium is formed, its members are able to pool in their resources by forming a common raw material bank, and incur huge cost savings through common transport facilities, raw material procurement, financing, marketing, management and facilty centres. SBI's Project Uptech coordinator, Mr. Abraham Joseph, says, "Cost reduction is the glue that binds them together. Each consortium saves an average of Rs. 70,000 on a monthly basis. With an average monthly turnover of Rs. 3-4 lakhs, the profit margins average 15 to 20 per cent."

Very importantly, of the 53 consortiums that have been formed, 26 are all-women groups and sources say that this number could very well increase. According to a member of the Valiya Kalavoor Cooperative Society, an all-women consortium, "This project has helped the downtrodden women labourers. Middlemen have been eliminated through the formation of raw material banks."

Mr. Thankachan Gopalan, a member of another consortium, explains that the situation was very grim, due to the high prices of raw materials and the low price of the product itself, but with the implementation of this project, there has been a drastic improvement in the standard of living of the families. "We have been able to pay off loans and make a profit. In a business where there were 22 units functioning, there are now 55. Hundred people can make a living out of a twenty-member consortium," he adds.

All the consortiums have effectively increased their business turnover and product range. There have been substantial gains in terms of their income, employment opportunities, quality conciousness, costing ability, product range and managerial and marketing skills, among other things.

Nine of the consortiums have also initiated forward and backward integration to bring down production costs. To ensure this they have set up their own yarn manufacturing units and four of them are also in the process of setting up defibring units.

Mr. Abraham Joseph says, "We can assure that a non- viable unit will turn viable within 2 to 3 months. The first step is to ensure that the consortium is a cohesive unit before funding them on a cash-credit basis. The project also envisages the linking up of several institutions like CUSAT, Coir Board, Khadi and Village Industries Commission (KVIC), IIM, Kozhikode, Rotary Clubs and local panchayats among others to facilitate cluster development."

He adds that the project aims at empowering people, ensuring sustainability and capacity building. The consortiums are encouraged to learn from and compete with each other. This competition will lead to product and market development. All the consortium members have been taken to fibre producing areas in Tamil Nadu and have attended a three-day workshop conducted by the Entrepreneurship Development Institute, Ahmedabad. One of the consortiums has been visited by an expert from the Netherlands who spent a month along with 22 CUSAT students, helping them develop a new product.

Three of the consortiums attended the India International Trade Fair in New Delhi apart from various buyer-seller meets to hone their marketing skills. Two of them have employed full-time professionals to manage their business, while three are marketing themselves via their own websites.

Mr. Abraham Joseph admits that they do have the occasional lazy member. "We have to push them forward. Members from other consortiums take care of that. When a consortium starts off, their products are at first inspected by members from another consortium to ensure quality."

SBI believes that the coir clusters at Alappuzha will become a globally preferred sub-contraction pocket for various coir fibre related value added products by 2005. Does this vision sound too lofty?

Well, consider this; some of these consortiums are already supplying products to big exporters, an indication that they have been able to implement the necessary quality processes. So things are surely going their way.

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