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By:
Anant Jayant Natu (25058)
PRM 25
Submitted to:
Dhriiti- The Courage Within
on
August 16, 2005
Faculty Guide:
Prof. Arvind Gupta
1
Acknowledgements
A picture says a thousand words similarly working on a live project is like reading
thousand books. Working with Dhriiti was an extremely enriching experience for
two reasons - academically, because it fulfilled the academic requirement of
completing an OAC and personally, because it gave the immense satisfaction of
having contributed, albeit in small measure to an organization which holds a very
promising future. During this endeavour, Arindam was my constant companion- as
a guide, friend and a professional. I express my profound gratitude to him for
having made this journey a memorable one. I thank other members of the Dhriiti
team in Barpeta- Manabendra, Gyanendra, Shantanu and Moni for their support.
Nidhi and Anirban gave some vital inputs during the presentation on the project in
Delhi-my heartfelt thanks to them too. And last but not the least I thank my faculty
Guide, Prof. Arvind Gupta for giving me the overall direction and reminding me of
the ‘larger picture’ and the four levels of ‘Why’.
2
Executive Summary
Title: Business model for Areca nut Leaf plate manufacturing cluster in Assam.
Organisation: Dhriiti-The Courage Within
Reporting Officer: Mr. Arindam Dasgupta
Objective of the project: (i) To explore the market for the product and develop the strategies to
market them in and around Assam. (ii) To prepare a business model for areca nut leaf-plate
manufacturing cluster of 20 units. (iii) Designing a feasible organisational set-up for long term
sustainability of the cluster.
Methodology: Primary sources of data were the direct interactions and interviews with villagers,
retailers, wholesalers, Dhriiti employees and information from various manufacturing unit in
Tamil Nadu and Karnataka. The secondary sources were the internet material on cluster
development and few books.
Report Outlines: Areca nut is the largest plantation crop in Assam. Huge raw material
availability and other favourable factor conditions make the Areca nut leaf plate manufacturing
an attractive option. The market survey also concluded that there is a huge potential demand for
the product and a big section of consumer segment using the thermo col and other institutional
buyers like railways; temples etc. can be the prospective customers. Having sensed the potential
of the business, Dhriiti started a Pilot Unit at Barpeta, which at present acts as a learning/training
ground for both the professionals and the entrepreneur who would wish to start the business. My
observations at the Pilot Unit, countryside of Barpeta district and four districts in South India
(Salem, Erode, Coimbatore and Tumkur) formed the basis for preparing a model for an areca nut
leaf plate cluster of twenty units in Barpeta districts. I have theoretically configured a supply
chain for the product and enumerated the role of the various actors in this chain. Further ahead a
viable institutional arrangement for the federation of these twenty units has been explored. Given
the current social, economic and political milieu and some unfavorable experiences with
Cooperatives, Producer Company set up was chosen. Producer Company apart from packaging
and marketing the product of member institutions would provide institutional support to the
Producer Institutions. Then some phase-wise marketing strategies to popularize and regularize
the product has been discussed. The role of Dhriiti as an enabling and empowering intermediary
NGO in the whole process has also been mentioned. Lastly, a SWOT analysis of the project, as it
stands now, has been done.
3
Table of Contents
4
11.4.1 SGSY:..........................................................................................................................39
11.4.2 PMRY:.........................................................................................................................40
Annexure 7: Linear Type Shrink Wrapping Machines..............................................................45
References...............................................................................................................46
List of Tables
Table 1: Package size in terms of number of pieces for each of the four final products
5
List of Figures
6
List of Abbreviations
7
1 OBJECTIVE OF THE PROJECT
• To explore the market for the product and develop the strategies to market them in and
around Assam
• To prepare a business model for areca nut leaf-plate manufacturing cluster of 20 units
• Designing a feasible organizational set-up for long term sustainability of the cluster
2 METHODOLOGY
The data was collected through a combination of following techniques: i) unstructured interviews
ii) semi-structured interviews iii) observations and measurements and iv) informal discussions.
The primary sources of data were the Dhriiti employees, measurements at the Pilot Unit at
Barpeta, villagers or the potential beneficiaries, manufacturers in the Salem, Coimbatore, Erode
and Tumkur districts in South India. The secondary sources of data were the books, internet and
the reports at the Dhriiti office.
Researches carried out by Central Food Technology Research Institute (CFTRI), Mysore have
demonstrated that arecanut sheaths (extension of the leaf) could be utilized for the manufacture
of plates / bowls. The raw material is not plucked from the trees but is collected once the leaves
fall from the trees, thus does not lead to any environmental problem. Other important features are
as follows:
• Present Use: Firewood, Fencing etc. but has no economic value
8
• Average of 4 leaves per tree per year.
• Seasonal product-available for four months from March to June
• Requires high volume for storage
• Non-perishable and can be stored for 12-14 months without any deterioration
• Colour, size, thickness and moisture content varies from region to region and is
dependent on the climate
• Prone to attack by Fungus if moist
The above qualities of the raw material makes these plates much better than the existing
disposable plates available in the market, made out of plastic, thermocol, paper and sal patta.
Thus it has a potential demand at places like marriage halls, hotels, high end food chains like
Haldirams, temples etc.
9
5 FACTORS OF PRODUCTION
5.1 Demand:
• Material: No demand of the leaf and one can see the leaves strewn across all places
during the season
• Labour: High demand but Bihari or migrant labour preferred and are in demand (in tea
plantations, oil fields etc.) as they are willing to work for longer hours and lesser wages
than the local Assamese
• Capital: Low demand due to agrarian nature of economy and low level of
industrialization in the state
5.2 Supply:
• Material: Abundant supply with 6,000 hectares of plantations in Barpeta district alone
and leaves sufficient to feed as many as 250 units
• Labour: Very cheap, willing to work for extremely low wages (Rs.20-25 per day)
• Capital: Low capital base but Govt. willing to provide it
6 FINAL PRODUCT
6.1 Demand:
• High demand for Substitute products: disposable items-plastic, thermo col, salpatta
and their variants
• Low demand for leaf plates except south India due to: lack of exposure to the product,
huge storage space and spoilage during transportation. The initial response for the
product has been very positive in the North East and North.
• In areas where the product is known, prices have to be brought down to the level of
thermo col plates so as to poach on its territory
• Guwahati: huge market remains to be tapped
• Barpeta (Town and Road) Market: normal season demand was 25,000 and 50,000
during the marriage season.
10
6.2 Supply:
• Dhriiti is the first producer of these plates in the North-east
• One person from Guwahati has started the business and got his RM from one of our
suppliers for a price as high as 50p per piece
• In Guwahati market all the FP was sourced from Salem
7 SUPPLY CHAIN
The supply chain of the areca nut leaf plate starts from the supplier who has the plantations. He
collects the sheaths and sells it to the Raw Material Bank (RMB) for a fixed price. Alternatively,
it can also be sold in the weekly haat or market directly by the supplier. The raw material is
stored in the RMB so that it can be used for production during the off-season. During this time it
is bought by the Producers. Producers sell the finished product either directly to the
retailers/wholesalers or to the Producer Company depending on the profits he expects. From
wholesalers the product moves to the final consumers.
11
Suppliers RMB/Market Producers
Producer
Company
Wholesalers
Retailers
Consumers
Figure 1
8 THE MODEL
12
RMB & FP Storehouse
3
1
2
4
S S S S U U U U
Drying Packaging
Unit PRODUCER COMPNY Unit
Market
Figure 2
The main task of the RMBs is collection, storage and protection of the raw material.
8.1.1 Collection:
The RMBs will take the raw material from the neighbouring villages/area for a pre-determined
price. The location of RMB should be such that it should not be too far from the feeder villages
and the suppliers should be able to come to the RMB and sell their raw material. Otherwise the
RMB can buy the raw material from the weekly markets or haats at the prevailing maket prices.
13
The raw material brought by the suppliers to the RMB is unbundled, graded according to quality
and again bundled in a stack of fifty pieces.
The quality of the raw material is gauged from its colour, size, moisture content and hardness. A
good raw material is light in colour, dry to the point of breaking, three feet in size and the back s
surface is biscuit brown in colour.
8.1.2 Storage:
The main task performed by the RMB is to add time value to the raw material. The raw material
is abundantly available in Assam but it is seasonal and available for only four months. Therefore
to carry on production for five months from October to February, a steady supply from the RMB
is essential. Assuming that there are five RMBs (three in Anand bazar and two in Nityanando)
catering to twenty units:
Small, medium and large pieces are produced in the ratio of 2:1:1. The raw material usage per
piece of finished product is 0ne-fourth, two-fifth and half respectively. Therefore average pieces
of finished product per pieces of raw material are:
(2 * 4 + 1 * 2.5 + 1 * 2) / (2 + 1 + 1) = 3.13
Maximum storage capacity per RMB will be the total requirement of all the twenty units:
= 14,200 * 8 * 20 / 5 = 4,54,400
14
Therefore the total storage space for the twenty units must be between 3,00,000 to 4,50,000
pieces of raw material
Table 1
The FPs from the nearest four units will be stored at the RMB till it is taken to the Producer
Company for drying and secondary packaging. The RMB will have the space to store the FP
stock for a maximum of one month. Ordinarily the FPs will be taken to Producer Company on
fortnightly basis
Total FPs produced from four units per month = 40,000 * 4 = 1,60,000
Therefore the RMBs will have the storage space store a minimum of 80,000 and a maximum of
1,60,000 pieces of FPs.
15
fronts: firstly they will have to be told that storing the raw material in their houses will
expose it to moisture thereby, the FPs will be of inferior quality and it may be rejected by
the Producer Company. Secondly, the members of the group will have to understand that
the 25p they get on selling the raw material is the individual benefit whereas the 35p that
they have to shell out for buying the raw material is a group cost.
• For RMB the prices to be paid to the suppliers will be decided as:
Price paid to the suppliers = Selling price to units – Transportation cost, one way –
administrative expenses – Profit margin
• The raw material from the RMB should be visibly superior to the one available outside
by virtue of the protection facilities available there. Only a better quality of raw material
at the RMB can lure the producers to buy from the RMB, otherwise they may buy
directly from the suppliers. The role of the RMB as an intermediary is valid only if it
provides the raw material at the lowest possible price and at best possible quality.
• RMBs shall bear the cost of transportation from the far off villages.
• Maximum distance between the RMB and potential suppliers will be fixed by a
criterion/set of criteria. For e.g. RMB will collect raw material from all the feeder
villages lying within 5 km. radius.
16
Particulars Quantity Amount (in Rs.)
Cost per unit of raw material 0.25
Raw material required per unit per year 113,600
Raw material required by 20 units 2,272,000
% of wastage of raw material 5
Total Raw material collection 2,391,579
Total cost price of raw materials 597,894.74
Operational Cost of 4 Banks 181,600.00
Selling Price per unit of raw material 0.35
Total Revenue from sales 795,200.00
Profit from RMBs per year 15,705.26
Profit for an RMB 3,926
Table 2
Initial Investment
S. No Particulars Amount (in Rs.)
1 Machinery (5 machines) 100,000
2 Unit Construction (Bamboo Based) 50,000
3 Gas Connection & Fittings 5,000
4 Other Equipments & Furniture 5,000
5 Preliminary & Preoperative Expenses 10,000
6 Working Capital margin (2 months) 30,000
7 Total 200,000
Table 3
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per month
Rs.
Material 4970
Labour (4) 4000
Gas (17 cylinders) 4080
Miscellaneous 1200
Total 14,250
Table 4
The unit will be registered with the District Industries Center (DIC). The certificate issued by the
DIC will be used in getting electricity connection, PCB clearance and Fire service clearance. The
unit will have to avail of the bank loan under various schemes such as PMRY and SGSY which
can be availed by the groups. Agencies involved in the whole process are: BDO, DRDA, Lead
Bank managers.
Note: Details of these schemes are given in the Annexure 4
Units with turnover of less than Rs.5 lakhs are not taxed. There is neither excise tax nor the sales
tax. The “cottage certificate” that the unit gets from the DIC exempts it from taxation. There is
also no tax on the RM and the FP. Machines are taxed under the VAT (12.5%).
8.2.2 Input:
The raw material will be bought from the RMBs. The raw material needs to be of very good
quality with absolutely no moisture. Buying the raw material from RMB should itself ensure that
it is of best quality. The indicators for good quality of raw material are: light in colour, dry to the
point of breaking, three feet or more in size and the back s surface is biscuit brown in colour.
The transportation cost of the raw material will be borne by the unit
8.2.3 Process:
The process for the production will be standardized keeping in view the climatic conditions in
Assam. The steps in production will be as following:
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1. Raw material is dipped in water from 15 to 30 minutes depending on the thickness of the
sheath. The water may or may not contain any of these anti-fungal mixtures like 1%
copper sulphate solution, a cupful of chlorine, turmeric and neem leaves, soap oil, tea
leaves or sugar solution.
2. Pieces are scrubbed clean in the tank with a brush and then taken out and sun dried till all
the extra water on the surface has dried
3. Slightly moist sheaths are stacked outside the workplace and covered by wet cloth (This
is to retain the elasticity of the sheath and may be done from two to eight hours)
4. Cover is removed and pieces are sorted out according to size
5. Manufacturing begins in two shifts of eight hours each. (A worker operates two to three
machines and also does the finishing)
Production will be carried out in eight months from October to March at the rate of 40,000 pieces
of FP per month
8.2.4 Machinery:
A set up of five machines is found out to be optimum for small enterprises. There will be five
machines in each unit- two large, one medium and two small. The large machines will have dies
of twelve inches round shape, the medium will have eight inches round shape die and the small
machines will have one four inches round and one five inches square dies.
The heating will be done by two LPG cylinders. Two twelve inches machines run on one
cylinder for 3 ¾ days (30 hours) producing approximately 3000 twelve inches plates or 800
plates daily
Note: Refer Annexure 2: Learnings from the trip to South India
The second LPG cylinder will energise three machines-two small (one four inch and one five
inch) and one medium (one eight inches). The cylinder will last for 2 ½ days producing
approximately 6000 small and medium plates or 2400 plates daily i.e. approximately 1600 small
plates and 800 medium plates.
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Taking the conservative estimates (50% of the above figures), it can be assumed that the unit
produces 800 small plates, 400 medium plates and 400 large plates i.e. 1600 plates daily.
Assuming that an LPG gas cylinder costs Rs.240, the cost of gas per unit of finished product is as
follows:
8.3 Federation
20
The twenty units of the four blocks will be federated to form a Producer company. The main
functions of the Producer Company will be as follows:
• The PC will pick the FP (which would be primary packaged) from the five RMBs on a
fortnightly basis
• The FP will be taken to the Drying Unit
• Graded
• Taken to the Shrink packaging section for shrink packaging
• Price determination: Two ways have been proposed - assuming that the seasonality in
demand doesn’t affect the business in first few years of operation as FP volume will be
only eight lakh pieces and that too for a maximum of 8 months:
(i) Price paid to the producer institutions = Selling price in market – Transportation cost,
both ways – Administrative expenses of PC – Build up of Reserves
(ii) The units will be paid back the money equal to the costs incurred by the unit in
producing that many pieces of finished product. After this, administrative costs,
reserve build up and the transportation cost will be deduced. from the money realized
by the Producer Company after the sale of finished product, The surplus will be
distributed in proportion to the patronage of units/Producer Institution.
• Marketing of the FP
As the activity becomes popular in the region more and more groups would want to start the
business. They shall also become the member of the federation after qualifying on certain
minimum conditions.
21
For eight months, every fortnight four lakh pieces of finished product will be reaching the PC.
Out of these medium and large pieces will be one lakhs each and small pieces will be two lakhs
in number. Given that the packaging size for medium and large pieces is twenty five and for
small pieces it is fifty, the total number of packages reaching the PC is 4,000 packets each of
large, medium size and small size.
The PC will have to dry 12,000 packets every fortnight. That is, assuming an eight hour working
day, a package will have to be dried every 34 seconds to keep the machine at 100% capacity
utilization. The drying units are essentially improvised version of the shrink packaging units
which are discussed in the nest sub-head.
The choice of the “form” of the federation is dictated by the environment in which it has to work.
With liberalization, the protections, financial and other support enjoyed by cooperatives has been
largely or entirely withdrawn. Unless cooperatives become efficient, businesslike and
professional, multinational and other private sector competitors will wipe out most of these
cooperatives. And the most easiest way of doing it is to register the federation as a Producer
22
Company- it ensure that there are unique elements of cooperative business with a regulatory
framework similar to that of companies.
23
8.4 Marketing
24
demand would exceed the supply in the market (since initially the number of producers would be
less). The product would be pitched as a premium segment product (environment friendly, bio
degradable and attractive product) and would be branded in order to have high recall amongst its
customers.
Phase 2: Popularization
The popularization/regularization of the product in the domestic market would be the main
objective. Here assuming an increase in number of producers and hence increased supply of
finished products would lead to reduction in price and bulk selling. In this phase established food
chains, big temples/gurudwaras (which have huge demand for disposable plates for prasadam/
langar) and the catering industry in general would be targeted. This phase is moving on from the
concept-selling phase to the product-selling phase. The product will be pitched as a commercial
segment product.
• Support will be “enabling” so that the twenty units can work up an institutional
arrangements even after the Dhriiti’s exit
• Facilitating certification of SHGs at the DIC
• Bank loan arrangements for SHGs
• Teaching the procedures for availing of different schemes
• Working as a Marketing intermediary for the groups until the Producer company comes
into being
25
10 SWOT ANAYSIS OF THE PROJECT
SWOT analysis has been done for the present situation.
• Strengths:
– Easy availability of the raw material and its low cost
– Research &Development initiatives with IIT-Guwahati
– Good market for the product
– A team of motivated professionals
• Weaknesses:
– Lack of manpower
– SHG movement is still in its nascent stage in Assam
– Excessive rains in Assam
– Proper financials details of the Pilot unit have not been worked out, thereby
the profit figures may turn out to be below expected level
– Fungus
• Opportunities:
– Potential of scaling the business to an industry level
– Willingness of people to be a part of such a venture
– Easy availability of knowledge and technology
– Product is gaining acceptability amongst masses
– Zero cost of water/irrigation
• Threats:
– Electricity
– Volatile socio-political scenario in Assam
11 ANNEXURES
11.1 Annexure 1: Financials for the Production Unit
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No. of machines 2 1 2 5 Information Qty/Amt
Production per day per machine 400 400 200 No. of workers 4
Total Production per day 800 400 400 1600 Wages per month per person 1000
No. of Machine Hours 8 8 8 Per Unit cost of Electricity 2
Raw material usage (per piece of FP) 1/4 2/5 1/2 Cost per unit of raw material 0.50
Selling Price 0.40 1.30 1.90 Loan 200000.00
Interest (%) 11
Variable Costs Cost of machines 100000
LPG heating 0.10 0.10 0.20 0.125 Rent per Month 500
Manpower 0.08 0.08 0.16 Admin expenses per month 1000
Raw Material 0.13 0.20 0.25 Maintenance per month 500
No. of Working days per
Packaging Cost 0.02 0.04 0.06 month 25
Total Variable Cost 0.33 0.42 0.67
Average Variable Cost 0.44 Fixed Expenses per annum
Average Selling Price 1.00 Rent 6000
Depriciation 20000
Break Even Point 132769.9 Interest 31015
Break Even Percentage 27.6604 Miscellaneous 18000
Total 75015
Profit per annum 196185
27
coil is imported and the thermostat is also of a better quality. The cutter is also
imported thus results are better. Two dies are operated in the same machine and the
dies are also interchangeable. Each die can produce upto 400 12” plate in an 8 hour
shift and the cost of the machine is 1 Lakh. The die finishing is also very good thus
the finished products are more standardized.
• Hand type gas based fly press machine: The heating is done by LPG cylinders. Three
machines run on one cylinder for 2 ½ days (20 hours) producing approximately 1000
12” plates or 2500 4” bowls per machine. In the hand type fly press the die (male)
falls from top on the plate (female). A wheel fitted at the top of the machine controls
the movement of the die. The gas apparatus consists of cylinder, gas burner, machine
stand, pipes and regulators. Total set up cost for 6 machines is approx. Rs.3,000. The
gas pipe is attached to a burner placed below the plate, which is being continuously
heated. According to them the temperature is around 1000 degree centigrade. The
body of the press is made of cast iron and the die is made of mild steel. The blades are
made of OHNS (Market price Rs.110/kg). As the whole weight of the die is falling
from above with a lot of force the cutting is perfect and no scissor operation is
required. During the downward movement of the die the wheel has to be moved until
it gets locked but one has to only give a little push to the wheel to release the die and
move it upwards. The dies can be interchanged easily but in a range. The frame has
various sizes from 5 to 8. In 5 size frame small 3” to 5” dies are fitted and similarly in
the large frame larger dies are attached. The lower surface of the product burns (more
in 12”plates) in these machines. The cutter has to be changed after one year and they
also have repair the threading in some machines every year.
• Hand type gas based inverted die machine: These machines have been innovated by
the local producers of Tumkur to solve the burning problem. The frame of the
machine is made of angles similar to the leg type machines but it is straight rather
than slanting. In this machine an inverted die (male) is placed below and the plate
(female) is on top. The plate falls from above on the die. The movement of the plate is
done with the help of a wheel placed on top of the frame similar to the fly press. The
gas burner is placed below the inverted die. The die is made from aluminum and
cutter from OHNS. The rate of production is similar to that of the fly press but there
28
is no burning. Consumption of gas is also less. 3 machines run on one cylinder for 7
days (56 hours). The dies are interchangeable and all sizes die can be fitted in the
same frame with the help of moveable screws and bolts. The machine operation is
also similar to the fly press.
• Hand type pillar press: The technology is similar to that of fly press but the frame is
made of small pillars. Some people are using electricity and some gas for heating on
these machines. The die falls on the plate from above with the help of a wheel. These
machines are very small in height thus are placed on raised cemented platforms. The
dies can be interchanged very easily.
2. Cutter
• Apart from the normal blade cutter some producers also use suspension strips of
cars/trucks fro cutter material. These strips are attached along the die and sharpened
at the edge. When they become blunt the edge is again sharpened (like a pencil).
• In the hydraulic machine and some other leg type machines the fitting of the cutter is
little different. Rather than the cutter being fitted along the outer surface of the die it
is fitted in a very small/thin cavity at the edge of the die with the die metal being on
both sides of the cutter. A difference of 10mm is kept on the inner side of the cutter
with the die metal and a difference 5mm is kept on the outer side. The cutter is also
not fixed. It is just slipped into that cavity and can be easily pulled out and replaced.
• One reaction on making a separate cutting machine was that it would require high
degree of precision at the foundry and one also needs to take care of the elongation
(when soaked) and contraction (when heated) of sheaths very accurately.
3. Die
• In most of the products that has good finish the die plate (female) is fully covered by
a thin plate rather than being just a rim like structure. Small holes are kept in the
corners (at the joint between the plate and the rim) for extra water to drain out.
• Standardised dies with proper slanting of the sides/edges and proper depth produce
finished products, which take very less space in packaging. A bundle of 50 pieces
takes less space than a bundle of 25 pieces of products in our unit, as the products set
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one into the other very well even after the raw material being thicker. Very less
bending of the products also helps in this.
4. Raw Material
• The quality of the raw material in most parts of South India is much better than that
of Assam. In Tamil Nadu the quality of the raw material is best (absolutely white and
shining leaves) due to the hot and sunny climate. In other parts also the raw material
is mostly white or creamish. In Karnataka the material is little thick and spongy. But
in places where the climate is similar to Assam (moist and cold) the raw material
quality is similar.
• Both the producers and experts at various institutions attribute the better quality of
the raw material to the climate rather than the variety of plants. According to them
due to the hot and sunny weather the sheath opens up faster gets more sunlight in the
plant itself. Thus the sheaths are whiter. While in moist conditions and high rainfall
areas the sheaths do not open up before falling. Secondly water seeps into the sheaths
creating black water marks.
• According to the producers the sheaths have to be sun dried at least for 3 days after
falling from the plants. One test for checking the suitability of storage of RM can be-
1) the piece must be dry to the point of breaking and 2) the back surface must
become biscuit brown in colour (in no case should there be a greenish tinge to the
RM).
5. Production Process
• The most basic difference in the production process among all producers is in the
wetting/soaking of the sheaths before production. Each producer has his or her own
method of soaking. Minimum time of soaking is 10 minutes ranging up to 1 hour.
Some of them keep the sheaths in bundles after soaking for at least 2-8 hours under
wet jute bags. But the common element is that when the sheaths are put into the
machines they are just moist and much lesser wet than in our unit. Some have advised
30
that in a climate like Assam we don’t need to wet in water at all. We can only wash it
and keep them under wet jute bags for at least 2 hours.
• While soaking of the leaves care is taken that the water does not percolate into the
sheaths. The water should only wet the surfaces. If the water goes inside then drying
takes a lot of time. Thus even if it goes into some sheaths those parts are avoided for
production.
• In one unit pressure wash is used to wash the leaves.
• Most of the finished products are dried in the machine itself and only requires 10-15
minutes of sun drying.
• There is no bending or very minute bending in the products even when they are sun
dried in single pieces.
• In gas machines the time spent inside the machines is almost half that of electric
machines.
• Areca nut sheaths are also used to make ply boards. The description of the plyboard
production process on the website of Directorate of Arecanut & Spices Development,
Calicut can give us some leads. It is as follows: “Arecanut leaf sheath was found
suitable for making ply boards. Two plies of processed arecanut leaf sheaths in
combination with an ordinary wood veneer as core glued with urea formaldehyde
resin are used for making the plyboards. Leaf sheaths obtained from the farm are
highly heterogenous having variations in structure, shape and thickness. The rear end
is thicker and the two edges are thinner. The thickness at the center ranges from 3.0 –
8.5 mm (average 5.0 mm). A comparatively homogenous piece of fairly uniform
thickness and size 50-65 x 20-25 cm can be obtained if a piece of about 10 cm length
from either sides along the grain direction, 5 cm from the distal and 10-15 cm from
the end across the grain direction are trimmed out from the sheath. Further, to get a
flat sheath of uniform thickness and to remove the buck lings of folds, the sheath is
flattened under pressure and heat. For this, the sheaths are soaked in water to about 75
per cent moisture and then pressed for 30 min in a hot Plate press at 4 kg/cm2
pressure and 110ºC temperature. This process gives flat sheaths of 1.0-1.5 mm
thickness with about 12 per cent moisture. To prevent fungal growth on the sheath
surface, it can be soaked in 1 per cent copper sulphate solution for 24 hr before
31
pressing. The pressed sheaths are then air dried for one hour or longer. The arecanut
leaf sheath plyboards made with two veneers of areca sheaths as the faces and one
veneer of even an ordinary wood species like Mango as core ply and bonded with
Urea formaldehyde resin make commercially acceptable boards with average dry and
wet glue shear strengths of 50 kg and 12 kg respectively.”
6. Fungus Problem
• In Tamil Nadu and most parts of Karnataka the producers do not face fungus
problem. Only in coastal Karnataka and Kerala the producers face fungus problem
during the rainy season. There the climate is very similar to Assam. In these regions
the most of the producers stop production for 3-6 months depending on the duration
of the rainy season. Some of them produce only when they have orders and dispatch
the product immediately. Though many producers face this problem in this region,
none of them nor any institution has tried to address this problem scientifically.
• On large manufacturer near Mangalore who has a plant of 150 machines is supposed
to produce even in the rainy season. He is supposed to have heat chambers for drying
the finished products. We were unable to see his unit as it was closed due to some
marriage.
• A shrink wrapping machine was seen in an industrial exhibition in Coimbatore which
apart from packaging can be also used for drying the products by passing it through
the heat chamber.
• According to the producers in Tamil Nadu sunlight is very essential for production.
Atleast 4-5 hours of good sunlight is required everyday to continue production,
otherwise the activity is not feasible.
• Some of the producers even suggested that the yellowish fungus formation on our
plates might not be fungus at all. They say that some insects are biting into the
material and secreting thus creating yellow spots of dust.
• Some producers use chlorine while washing the sheaths in moist weather. Raw
material is dipped in a tank of water containing a cupful of chlorine for fungal
32
treatment. Washing in luke warm water or usage of soap oil were some other
suggestions.
• 1% copper sulphate solution is another treatment learnt from the website. We also
enquired about this treatment from some micro biologists in Jadavpur University,
Kolkata. According to them it can be effective but one needs to test till what limit
copper sulphate is not harmful.
• In Jadavpur university the advise given was that it is better to fight the moisture than
the fungus. Thus the heat chamber treatment with immediate packaging, or
dye/plastic coating might be more feasible. They also suggested a solution that might
be effective in preventing fungus growth. It is solution prepared in a wooden drum
with the help of a culture and tea leaves (even used tea leaves can be used) and sugar.
We have asked him to prepare the culture and send it to us along with the exact
proportion tea leaves, sugar and water.
• Gas based machines would be better for us in Assam as electricity connection is very
poor in rural and semi urban areas resulting in a lot of production loss. The
productivity of the gas machines are higher and even the fixed and variable costs are
lower.
• Hand type machines seems to better in performance and more easier to use. In most
of the places women were operating these machines without any trouble.
• Standardisation of dies can result to better packaging.
• Dies should be interchangeable.
• We need to work on natural dyes or any other coating as our raw material will never
be as good as South India our competitors. It will also help us to control the fungus
problem.
• Apart from working on methods to deal with fungus we need to also develop
processes to avoid moisture. The intervention has to be both at the washing stage and
post processing drying stage.
33
• We also need to work on the soaking process and innovate it according to the
conditions prevailing in Assam.
• Quality of raw material can be another reason for fungus. We need to increase quality
control at the raw material collection stage.
8. Useful Contacts
• Mr. T.R.Prabhu
Head – Technology Transfer and Business Development
Mysore – 570020
Ph: 0821-2514534
Email: ttm@scftri.ren.nic.in
CFTRI has developed a Continuous bio-plate casting machine. It can also enter into
collaboration with IIT-G on design of better and efficient machines.
• PSG College of Technology
Post Box No. 1611
Pellamedu, Coimbatore – 641004
Ph: 0422 – 2572177, 2572477
Email: psgct@vsnl.com
They provide training on arecanut leaf plate manufacturing.
• Central Plantation Crop Research Institute
Kasaragod – 671124, Kerala
Ph: 04994-232894-6
Email: cpcri@hub.nic.in
They have regional station in Vittal, Karnataka which, has worked more on arecanut. At
Vittal Dr. Balasimha can be contacted by phone on 08255-239222, 352238 or via email
on dbsimha@sancharnet.in. CPCRI also has a regional station at Kahikuchi, Guwahati,
Assam. Ph:0361-2840251
34
• Directorate of Arecanut & Spices Development,
Ministry of Agriculture (Dept. of Agriculture & Co-operation)
Calicut-673 005, Kerala
Ph: 0495 236987, Director - 2765501, 2382053(R)
Fax: 0495 – 2765777
Email: spicedte@hub.nic.in
• National Environmental Engineering Research Institute, Nagpur
• Mr. P. Murugesan (Innovator/Manufacturer of Hydraulic machines)
Proprietor
Shwarna Leaf Plates
Erode – 638001
Ph: 0424-2277515, 9842758696
• Mr. Puutaraju (Innovator of inverted die hand type machines)
Proprietor
Sri Ganapathi Enterprises
Behind Ganesh Temple,
Gular, Tumkur – 572118
Ph:0816-2246671, 9845573271
• Mr. Sibu Sharma
Vijay Gas Agencies
216, Thadagam Road, Opp. Avilla Convent
Shop No. 34, Rajkamal Estate, Coimbatore-641025
Ph: 0422-2438544, 2439544, 9842243854, 9843025411
Email: vijaygas@yahoo.com
Develops various types of industrial gas machines.
• Mr. V. Rajan Paul
Chief- R&D
Sevana Electrical Appliances Private ltd.
P.B. No 2, Kizhakkambalam –683562
Kerala
35
Ph: 0484-2680780
Email: seal@sevana.com
Website: www.sevana.com
Manufacturers of Shrink packaging machines.
• Dr. Ratan
Professor, Jadavpur University
Introduction:
Some 4 kms from the Salem city is Tilur Panchayat. We were accompanied there by the CST’s
liaison officer Mrs. Fatima. It was Sumati’s house and she managed a unit there. She started the
unit on the insistence of her brother who had seen ALP units in and around Salem district. So
some two years back xyz invested her own money and bought five machines for Rs. 75,000. She
was already a member of an SHG which had formed one year back. And had an accumulated
savings of Rs.40,000. The group was involved in activities such as tailoring etc. She thought the
transfer of ALPs operation to the group as a good idea. The group was eligible to draw Rs.40,000
from the bank at 12% interest per annum on 1:1 basis. The loan was readily taken on the pretext
of leaf plate unit. But the money was distributed amongst the embers and only Rs.10,000 could
be invested in the unit.
Process:
The raw material is procured through an agent at 75p per piece, which includes the transportation
cost. During the normal operations 3000 pieces of raw material are procured after every 20 days.
This can vary according to the demand put forth by the trader who buys the FP. Maximum
storage is required prior to the rainy season when stock for approximately 80 days is required.
Hence there is an adequate space constructed to store 12,000 pieces near the unit (in the
Sumathi’s house itself). The process is similar to the ones found elsewhere only that the drum
was used for soaking the bundle (50) of raw material. The RM quality was satisfactory and
according to xyz some 15-20 pieces were capable of yielding12’’ plates.
36
Operations:
Sumathi charges a rent of Rs.1500 per month for the usage of the machine and space. The other
costs are as follows:
The two laborers are the members of the group. They work for the monthly wage of Rs.1250 per
head. Initially they were given wages on the piece rate basis but this had to be scrapped because
not only did it prove expensive but also required liquidity. The most unique part of the group’s
activity is that the sale of the FP is not the joint responsibility of the members rather the
responsibility of the sale can be taken up by any member or members jointly. They then share the
costs between them in share of the sales realized. In any case xyz does receive her monthly rent
of Rs.1500.Work shift is from 9 to 5 with an hours break in between. The total WCV requirement
is Rs.7000 to 8000 plus a liquidity of approx. Rs.25,000.
Marketing arrangements:
Traders come at the unit and place orders before hand and take the pieces. The prices offered as
follows:
Plate Price
12” Rs.1.40
10” Rs1.10
8” 80p to 75p 37
6” 30p to 40p
The traders take FP on 7 days credit. This creates a problem of liquidity. If the need for cash is
immediate the group seeks the services of shopkeeper in the city who offers a less price but
makes on the spot payments. The prices offered are a little less for e.g. The shopkeeper offers
90p for a plate that the trader buys at Rs1.10. Grading is done and the inferior FP is taken at 25%
lesser price (for e.g. 12” plate is sold at Rs.1.10).
Machinery/technology:
The machines used by the SHGs are simple hand operated ones which work on electricity. The
heat coil needs to be replaced every six months or so. Blade sharpening is also required after
every five-six months. Local electricians do such maintenance work.
The production is in doldrums for the past six months due to Sumathi’s health problems. She
didn’t look too satisfied with the business and even offered to sell the machines for Rs.7000.
Sumathi is willing to collaborate with other groups involved I plate making and start some “joint
venture “. She had an export house on her mind. But the main deterrent right now is the poor
quality of raw material and water problems. Unlike Assam there is no electricity problem.
There are fifteen members in the group. She is the Representative of the group. There is also an
Animator. The Animator and the Representative have a joint account in their name and all the
financial transactions are done through this account and their signature are required before
formalizing any document. Both of them are trained for keeping records and bookkeeping. The
SHG is involved in other activities like tailoring etc. Each member has to save Rs.100 per month.
38
The total savings till date are approx. Rs.30,000. Group loans are taken on the basis of direct
linkage with the bank. A cursory glance at the families of the members suggested that they were
all economically sound as evident from the mobile phones that most of the members used. Loan
applications can be tendered after six months of formation of group for starting of a business
activity.
11.4.1 SGSY:
Objective
Under the SGSY, assistance is given to the poor families living below the poverty line in rural
areas for taking up self employment. The persons taking up Self-Employment are called
swarozgaris. They may take up the activity either individually or in Groups, called the Self-
Help Groups. For successful Self-Employment, it is necessary to take up the right activity.
For this purpose, 4 to 5 activities are selected in each Block with the help of officials, non-
officials and the Bankers. These are called ‘Key Activities’, and should be such that they give
the Swarozgaris an income of Rs. 2000 per month, net of Bank loan repayment.
Quite often, in villages, people have skills. If any BPL person feel that he/she can gainfully
take up any activity he/she should immediately approach the Sarpanch or the BDO or the
Branch Manager of the nearest Bank.
Generally all members of the Group should belong to families below the poverty. However, if
necessary, a maximum of 20%, and in exceptional cases, where essentially required, up to a
maximum of 30% of the members in a Group may be from families marginally above the
poverty line, living continuously with BPL families and if they are acceptable to BPL
members of the Group. The APL members of Group will not be eligible for subsidy under the
scheme and shall not become office bearers( Group leader, assistant group leader or
treasurer ) of the group. The BPL families must actively participate in the management and
decision making which should not be entirely in the hands of APL families.
39
In case of disabled persons a group may comprise of persons with diverse disabilities or
group may comprise of both disabled and non-disabled persons below the poverty line.
Subsidy under the SGSY will be uniform at 30% of the project cost, subject to a maximum of
Rs. 7500/-. In respect of SC/STs and disabled persons however, these will be 50% and Rs.
10,000/- respectively. For group of Swarozgaris (SHGs ), the subsidy would be 50% of the
project cost subject to per capital subsidy of Rs. 10,000/- or monetary limit on subsidy for
irrigation projects.
11.4.2 PMRY:
I. Parameters of PMRY
1. Age: For all educated unemployed between the age group of 18-40 years, in general with
a 10 years relaxation for SC/STs, ex-servicemen, physically handicapped and women.
2. Educational Qualification: 8th passed. Preference will be given to those who have been
trained for any trade in Government recognised/approved institutions for a duration of at
least six months
3. Family income: Neither the income of the beneficiary along with the spouse nor the
income of parents of the beneficiaries shall exceed Rs.40000 pa
4. Residence: Permanent resident of the area for at least 3 years.
5. Defaulter: Should not be a defaulter to any nationalized bank / financial
institution/cooperative bank. Further, a person already assisted under other subsidy linked
government schemes would not be eligible under this scheme.
6. Activities covered: All economically viable activities including agriculture and allied
activities but excluding direct agricultural operations like raising crop, purchase of
manure etc.
7. Project cost: Rs.1.00 lakh for business sector. Rs. 2.00 lakhs for other activities. Loan to
be of composite nature. If two or more eligible persons join together in a partnership,
project upto Rs.10.00 lakhs are covered. Assistance shall be limited to individual
admissibility.
8. Subsidy and Margin money: Subsidy will be limited to 15% of the project cost subject
to ceiling of Rs.7,500/- per entrepreneur. Banks will be allowed to take margin money
40
from the entrepreneur varying from 5% to 16.25% of the project costs as to make the
total of the subsidy and the margin money equal to 20% of the project cost.
9. Collateral: No collateral for project upto Rs.1 lakh. Exemption from collateral in case of
partnership project will also be limited to an amount of Rs.1 lakh per person participating
in the project.
10. Rate of interest and repayment schedule: Normal bank rate of interest shall be charged.
Repayment schedule may range between 3 to 7 years after an initial moratorium as may
be prescribed.
11. Training and other assistance: the training expenses and operational expenditure to be
covered within the ceiling of Rs.2,000 per case. The existing system of revising the scale
of expenditure in consultation with the Finance for various activities and flexibility would
be available to the implementing agencies of the state and central levels subjects to
condition that over all training and operating expenses remain within the ceiling of
Rs.2,000/- per case sanctioned.
12. Implementing agency: the District Industries Centres and the Directorate of Industries
shall mainly be responsible for scheme implementation along with banks
13. Linkages of targets with recovery: Basic minimum targets based on the population and
the number of educated unemployed, Additional targets would be linked to the recovery
of loans sanctioned, past performance of sanctions or special circumstances prevailing in
the state/UT.
14. Reservation: Preference should be given to weaker sections including women. The
scheme envisages 22.5% reservation for SC/ST and 27% for other Backward class
(OBCs). In case SC/ST/OBC candidates are not available, States/UTs Government will
be competent to consider other categories of candidates under PMRY.
41
rent, wages/salaries, other expenditure etc., total cost of production, sales, profit, break-even
analysis, profitability ratios, repayments schedules etc. This project report would reflect at a
glance the details of capital required, cost of production, profit and various parameters of
viability of the proposed project. SISIs and DICs have prepared project profiles for PMRY
beneficiaries on various viable schemes, which can be adopted. Assistance, guidance can also be
provided for new / updating of the project profiles.
As the PMRY facilitates to provide loans under manufacturing, service and business ventures, a
Prospective Entrepreneur has to first prepare a project proposal. While deciding the ventures the
following factors should be carefully considered.
a. The marketability of the product by market survey
b. The demand and supply position of raw materials required if any
c. The availability of infrastructure facilities like power, water and other Government clearances.
d. Technology and know how of manufacturing / business/ service procedures to be adopted and
where to set up the unit.
42
One can apply any time during the year. But the best time would be between April to June of the
year. The normal practice is to hold PMRY interviews in three phases in a year in all the districts.
The Task Force Committee conducts the interview and select the candidates for the bank loan.
4. Training:
Selected Applicants are called for training. After the successful completion of the training the
candidates are awarded certificates which they have to produce to the bank to get the sanctioned
loan. The DIC and Bankers helps in the grounding of the project and supports for success of the
project
5. Grounding of the unit: Now the applicant is financially prepared for grounding the proposed
project. Before grounding the unit certain statutory and mandatory formalities are to be complied
with which are as follows:
• Arranging for the margin money as per the PMRY guidelines which could be 5% to
16.25% of the project cost.
• Arranging for collateral security if required by the bankers and for projects costing more
then Rs one lakh per person.
• Taking permission from the local body like Panchayat or Municipality as the case may be
for starting the unit
• Getting the Pollution Control Board clearance, if required.
• Getting the sales tax registration
• Registering with DIC as a tiny sector unit to avail the State Government incentives.
• Getting other statutory clearances like Factories Act, Labour Act, Boilers Act and Central
excise if the unit is covered under these legislation
43
In order to facilitate the Small entrepreneurs to get all the required clearances the District
Industries Centre (DIC) has started the single window system where DIC would get all these
clearances on behalf of the entrepreneur. The entrepreneur can avail these facilities
6. Repayment of loan:
After the unit is grounded and the unit starts its commercial production the repayment of the loan
along with the interest is to be paid. The repayment schedule is worked out by the banker and
intimated to the applicant which depends on the PMRY guidelines for repayment which are
between 3 to 7 years with initial moratorium worked out as the case may be.
Monthly Installments to be paid under the PMRY and the SGSY schemes
SGSY
-2,585
-124059 -24059
PMRY
44
Annexure 7: Linear Type Shrink Wrapping Machines
45
Features Specifications
Specifications
46
REFERENCES
1) Fischer, Thomas and Mahajan Vijay The Forgotten Sector: Non Farm Employment and
Enterprises in Rural India. New Delhi: Oxford & IBH Publishing Co. Pvt. Ltd.(19970
2) Schumacher, E.F Small is Beautiful: A study of economics as if people mattered. London:
Vintage Publishing House. (1973)
3) The Companies (Amendment) Act, 2002
4) Horne, C and Wachowicz John The Fundamentals of Financial Management. New Delhi:
Pearson Education Inc. (2001)
47