CHAPTER - VII

MANAGEMENT OF OPERATIONAL PERFORMANCE OF VIGHNAHAR CO­ OPERATIVE SUGAR FACTORY LTD CHAPTER VII MANAGEMENT OF OPERATIONAL PERFORMANCE OF VIGHNAHAR CO­ OPERATIVE SUGAR FACTORY LTD

7.1 INTRODUCTION: This chapter studies the Management of operational performance of Vighnahar co-operative sugar factory Ltd. For the purpose of this research a case study method has been adopted. This chapter contains details of the historical background, aims and objectives, location and command area, initial period, turn around strategy, membership, administrative and management structure, financial structure, increase in membership and share capital etc. Then the operational performance of the factory, expansion of crushing capacity, area under sugarcane (in hectors), cane crushed (in tones), sugar production (in quintals), capacity utilization and time lost, sugar recovery (%), crushing season (days), average cane yield (tone per hector), cane price (Rs. per tone), have been explained.

7.2 HISTORICAL BACKGROUND : Junnar Taluka is well known from historical times. It is the birthplace of the great Maratha warrior Shivaji Maharaj. It’s a well- known religious place too, for the Samadhi of Chaitanya Maharaj who was the Guru of the well-known Sant Tukaram Maharaj. Geographically it is the far end of Pune District. The 2001 census shows that out of the total population of 3,69,806 of the Junnar Taluka, agriculture sector has provided the main source of livelihood to as many as 3,45,065 people or nearly 93.30% of the population. The main source of irrigation was wells

246 because very few villages were getting water from the Yedgaon left bank canal, emerging directly from the kukadi, Yedgaon dam. If the farmers were lucky in having well water, could irrigate vegetable gardens, fruit plantations and even small plots of sugarcane. That time, Junnar Taluka was famous for banana gardens. The sugarcane was cultivated in well and canal area and mostly in various villages namely Otur, Shiroli, Ozar, Naryangoan, Manchar, Bori, Umbraj, etc. The sugarcane was mainly used for ‘gur’ production. There were number of ‘gur’ manufacturing establishments, called gurhal, managed by individual sugarcane growers. But the farmers always faced the danger of widely fluctuating prices of gur and the resultant losses. The marketing of banana had a number of malpractices on the parts of traders. They were not paying the prices in time and the prices were also subjected to many deductions. There was uncertain trend in the movement of prices of bananas. It is said, “next to rain, price changes have been the greatest enemy of the farmers”. Geographically, Junnar Taluka is situated on the Banks of rivers- Bhima, Kukadi, and Mandvi & Meena. The western region is mostly a hilly region surrounded by the mountains Sahyadri mountains ranges & Deccan plateau. The western region of the Taluka gets abundant rains whereas the eastern part is mostly a draught prone area. Previously the Taluka was mostly dependent on well irrigation as the other irrigation sources were not available round the year. But whatever irrigation potential was available; it was fully utilized by the hard working farmers of the region. The cropping pattern of the region was as follows. Western region - Paddy,

947 Central region - Cash crops, vegetables etc Eastern region - bajra, jawar But the people in the area are very hard working & industrious. With improving nearness to Mumbai, due to a new & closer highway, increasing business spirit in the farmers ultimately influenced the total agriculture of the region. The farmers have specialized themselves in horticulture, floriculture and growing vegetables. But the irregularity of rains, the unpredictable climatic conditions shattered the dreams of the farmers. The experience of the last two- decade was striking, as though horticulture vegetables fetched them very good returns some times, it proved totally risky to rely upon farming. The universal law of economics played a vital role. High prices for their produce were followed by abundant supply in the season, which in turn were followed by lowest prices. The rainfall uncertain and the marketing uncertainty were the main causes of their increasing indebtedness. The problems of the farmers were intensified with increase of labour intensive farming of vegetables and horticulture. It was further intensified with shortage of farm labour, which again increased their expenses. This naturally resulted in the creative re-thinking of crop patterns among the farmers. They came to the conclusion that in the prevailing circumstances sugarcane cultivation was the most appropriate solution to their problem. There was a man with the vision to look into future. The honorable, devoted, selfless chairman Mr. Nivruttisheth Sherkar sensed the mood of the people at a very right time and took an initiative in the nick of time, motivated the farmers for cultivating sugarcane.

248 7.3 REGISTRATION: As it was against the socio-economic background, the local leaders and the farmers naturally thought that they could attain certain degree of prosperity by forming a co-operative sugar factory in Junnar Taluka. The farmers began to organize themselves because they wanted greater control over marketing than they could get as individual clients of gur brokers. The success of the co-operative experiment at Shrioli, Dhalewadi, in the Taluka was also a source of inspiration to them. Under such circumstances, various social leaders like Nivruttisheth Sherkar, Sopansheth Sherkar, S.M.Kale, late Ramkrushna More, Valhabh Benke, Dilip Valse Patil took lead in creating confidence among the farmers and inspired them to organize themselves for establishing a co-operative sugar factory. These leaders held number of public meetings in various villages to get support from the village farmers who were to be the shareholders and cane suppliers. Nivruttisheth Sherkar also encouraged the leaders and farmers. The idea of forming a co-operative sugar factory comprising of all villages in the Junnar and Ambegaon Taluka was first discussed in a meeting of the farmers presided over by Shri. Niruttisheth Sherkar at Shiroli on 11-11-1976. The result of the meeting was that the farmers jointly sent their application for co-operative sugar factory to the Government of Maharashtra. The application was submitted with reference to the first note dated 21-02-1977 issued by the Government of Maharashtra asking the public to apply for licenses to set up co-operative sugar factories in the state. His appeal was appreciated and supported by the people. The people entrusted with him the responsibility of chief promoter ship.

74Q Again his vision was prominent. The existing sugarcane from the Taluka alone was not sufficient to run a sugar factory. He then got the Shri Vighnahar co-operative sugar factory Ltd. registered in 1981 with Junnar and Ambegaon as the area of operation. The factory site was selected. It was a barren land on a small hill. A big reservoir dam of Kukadi irrigation project surrounded it. Though there was a natural abundance of water at a comparatively nearer place, it was hindered by a clearance to be sought from Pollution Control Board. The advantage was stabilized by clearance from environmentalists and Pollution Control Board. The total cost of the proposed project was estimated to Rs. 1 crore. It was decided to collect RslO lack from farmers as share capital. An amount of Rs 10 lack was proposed to be contributed to the share capital by the state Government and Rs 80 lacks was to be expected jointly from Industrial Finance Corporation (IFC) and state co­ operative bank by way of loan. The local farmers started to collect the share capital and actually they collected a sum of Rs 156,70 lack. The Government agreed to contribute Rs 286,50 lack towards the share capital. The Industrial Finance and State Co-operative Bank advanced loans worth Rs 43 lacks and Rs 28.24 lacks respectively. The willingness of the state Government, Industrial Finance Corporation and the state co­ operative Bank to bear the financial responsibility was the most important factor in raising finance for the co-operative sugar factory at Junnar. After procedural formalities, the Maharashtra Government sanctioned registration under the Maharashtra Co-operative Societies Act. 1960, to the Junner co-operative sugar factory Limited on 17* October 1981. Thereafter, the factory obtained an industrial licence on 31*‘ December 1984. The factory placed its order on 19**^ July 1982 for machinery having crushing capacity of 1250 tons of cane per day with M/S Richards and Crud’s Company Mumbai. The company had sent its experts to supervise the erection work. The erection work started on 12*'’ September 1983 and was completed in Decemberl984. The factory started the production from 16**’ February 1985. Thus, the ideas of a co-operative sugar factory in Junnar Taluka became a reality within a period of three years from the date of registration. It is one of the five co-operative sugar factories in Pune District, established during that period. But due to the unending efforts of Mr. Nivruttisheth Sherkar, all the hindrances were cleared by ‘Vighnahar’ and the machinery of factory was installed in 1984-85. At last the dream of the farmers, shareholders and visionary Chairman came into reality.

7.4 AIMS AND OBJECTIVES: The main aims and objectives incorporated in the by-laws of the factories are: To get more benefit of the agricultural product to members and farmers by using modem methods of farming, to use the co­ operative farming method and to begin the supplementary business based on farming. The institution will follow the following factors for success. 1) To increase the tendency of self-help & co-operate with supply of sugarcane. 2) Not to delay supply of sugarcane for crushing in the factory, to assist farmers in harvesting & transportation to avoid possible wastage of sugarcane.

251 3) The factory will buy machinery for getting more production of sugar, construct the building & acquire required land for expansion. 4) The factory will give information to the farmers & members about the modern methods of getting more production of sugarcane, will supply the members & farmers with seeds, chemical fertilizers & tools of farming, will encourage the members for agricultural business training for all round development and welfare of the farmers. 5) To give more benefit to the members by producing sugar & Gur & other by-product. 6) To increase the crushing capacity of factory for getting more production of sugar. 7) To give advanced amount to the members for the development of agricultural products on the basis of sugarcane by the permission of Sugar Commissioner & Registrar of Co-operative Institute of Maharashtra State. 8) To buy new machinery for getting byproducts from baggas, molasses, & presmud, the factory will provide raw material & sell the new product. 9) If the production of sugarcane is not possible, to take the production of other food crop & cash crop. 10) To establish supplementary business for the development and welfare of the factory. To establish supplementary business for the development and welfare of the people in the working area of the factory and to encourage the people. 11) To get money from the government of India as loan & subsidies on the basis of conditions set by Indian Government subsidies Industrial Housing Scheme. To make use of money for the workers for building the houses & give them loans and subsidies for those factories, which are under the factory Act of 1948 and Mines Act. 1952, and make suitable agreements with the workers about this. 12) To provide water supply schemes to the farmers land development scheme and joint business in the area of factory and to make plan for the Land development and participation in them and implement them. But before undertaking such a scheme or invest finance in such a scheme to take permission from M/S Sugar Commissioner Maharashtra State, Pune. 13) For the beneficiary members of the factory, to provide them water supply & benefit of other schemes. To give the finance on the basis of assets and crop mortgage, for purchasing machines for land development & for doing other constructions. For this, factory must take pre-permission from the Sugar Commissioner of Maharashtra State. 14) To undertake the programme of building new roads and to maintain them in the area of the factory for transporting sugarcane from the field in minimum expenditure and time. To give the work of roads on contract basis and to provide financial help. To provide money for the development of roads. To take help from local people, Zilha Parisad, Local Institutions and State Government. To accept the responsibility of the maintenance of roads. 15) To undertake educational, cultural and all round development scheme for the development of shareholders, workers and other people who live in the area of the factory. 16) To handle other suitable matters for achieving the aims of the factory. 17) To buy means of transport, hire them or purchase. 18) To carry on partnership with the co-operative factories and the Government for establishing business, purchase and sale. To undertake new experiment suitable to the sugar industry. To establish experiment centers. To help the experiment and research school, which are in working condition. On the basis of mortgage and non-mortgage of the society assets for increasing the capital of factory to take finance from Industrial Finance Corporation of India, Industrial Credit and Investment Corporation of India, Life Insurance corporation or other institutions. 19) To improve the socio-economic conditions of the agricultural producers, through co-operative processing and marketing their agricultural produce, especially of sugarcane and products obtained there from. 20) To undertake such other activities as are incidental and essential for the attainment of above objectives. 21) To undertake all such activities as are conductive to the all­ round development and welfare of people residing in the command area of the factory.

7.5 LOCATIONS AND COMMAND AREA: The site of the karkhana is known “Nivruttinagar”, (Dhalewadi). It is about lOKms. to the west of Junnar, the Taluka head quarter. The Ahmednagar - Kalyan Highway No50 is 18 K.M. away in the North. The Yedgaon left Bank canal, which is to the East of the factory site, has solved the problem of water supply. The campus of the factory site is of 305 acres (122.30 hector). 254 Initially, there were 232 villages covered under the command area of the factory. Thus, at present there are 232 villages in the command area of the factory, of which 132 villages are from Junnar Taluka & 100 from Ambegaon Taluka.

JUNNAR TALUKA; 1) Amrapur 2) Agar 3) Ane 4) Aldhare 5) Ale 6) Aravi 7) Alame 8) Balhalwadi 9) Panghari via Otur 10) Basti 11) Belhe 12) Belsar 13) Bori BK. 14) Bori Kurd. 15) Chincholi 16)Dhamankhel 17) Dholwad 18) Dingore 19) Golegaon 20) Gunjalwadi 21) Hirvre BK. 22) Hirve Kurd 23) Hirve via Naryangaon 24) Kale 25) Kuran 26) Kumshet 27) Kandali 28) Kusur 29) Khodad 30) khamundi 31) Mangrul 32) Mandame 33) nalvane 34) Narayangaon 35) Nimgaonsava 36) Nirgudsar 37) Netvad 38) Otur 39) Ozar 40) Parunde 41) Pargaon Via Ale 42) Pimpri Kaval 43) Ourangpur 44) Pipalwandi 45) Vishkkhede 46) Pimpripendar 47) Pimpalgaon Via Naryangaon 48) Rajuri 49) Shiroli BK. 50) Shiroli Kurd 51) Shinde 52) Taleran 53) Savergaon 54) Shiroli Bori 55) Vadaj 56) Pimpalgaon Shidhnath 57) Sakuri Via Belhe 58) Tejewadi 59) Dhangarwadi 60) Dhalewadi Via Haveli 61) Udapur 62) Umbraj 63) Vadgaon Anand 64) Vadgaon Kandali 65) Vadgaon Shahni 66) Yedgaon 67) Yenere 68) Katede 69) Datkhilwadi 70) Rohokadi 71) Sultanpur 72) Khanapur 73) Dhalewadi Via Minher 74) Vanewadi 75) Jadhavwadi 76) Ambegavan 77) Chilhewadi 78) Nimdari 79) Ajnawle 80) Nimgaon Via Mhlunge 81) Devale 82) Bhivdi BK 83) Bhivdi Kurd 84) Chvand 85) Pur 86) Shiroli Via Kukadner 87) Keli 88) Mankeshwar 89) Ghatghar 90) Fangulgavan 91) hadsar 92)Ingalun 93) Kalwandi 94) Kewad\ 95") Khamgaon 96) Khubi 97) Khireshwar 98) Kangale 99) Mad 100) Shitewadi 101) Khire 102) Nimgiri 103) Khatkale 104) Pargaon Via Mad 105) Pangari Via Mad 106) Watkhale 107) Kolwadi 108) Padali 109) Somatwadi 110) Alu 111) Pimpalgaon Goga 112) Rajur 113) Tejur 114)Undekhadak 115) Sangnor 116) Kohlewadi 117) Surale 118) Aptale 119) Khangaon 120) Bhotarde 121) Tambe 122) Uchil 123) Amboli 124) Shivali 125) Manikdhov 126) Godhre 127) Sonawale 128) Manjarwadi 129) Baglohore 130) Sukalwedhe 131) Mandwe 132) Junnar.

AMBEGAON TALUKA : 1) Avsari BK 2) Avsari Khurd 3) Aklhre 4) Chikhali 5) Chas 6) Chincholi 7) Narodi 8) Pimpalgaon Via Mhlunghe 9) Manchar 10) Mhalughe padval 11) Vadgaon Kshibeg 12) Sultanpur 13) Ambegaon 14) Pargaon Via Khed 15) Thugaon 16) Amondi 17) Gangapur BK. 18) 19) Ghodegaon 20) Dhkale 21) Chandoli 22) Nirgudsar 23) Pimpalgaon 24) Shinoli 25) Shal 26) Supeghar 27) Kathapur BK. 28) Kurwandi 29) Dhegaon 30) Loni 31) Pargaon Via Avasari 32) Lakhangaon 33) Dhamani 34) Kalamb 35) Vadgaonpir 36) Chandoli BK. 38) Sakhore 39) louki 40) Apti 41) Fulwade 42) Borghar 43) Mhalunghe Via Ghode 44) Mapoli 45) Ranjani 46) Khadaki 47) Thorandale 48) Valti 49) Shivange 50) Bharadi 51) Bhagdi 52) Jake 53) Kaljai 54) Kotawe 55) Chikhali 56) Jambori 57) Dhigad 58) Pokhari 59) Panchale Kurd 60) Mudholi 61) Rajewadi 62) Vachpe 63) Adivare 64) Amade 65) Ahupe 66) Anyey 67) Asane 68) Kushire Kurdh 69) Kushire BK. 70) Panchale BK 71) Kondhare 72) Kondval 73) Dhon 74) Taleghar 75) Tirpad 76) Teruman 77) Nanvade 78) Kindale 79) Navade 80) Patan 81) Pimpri 82) Punvade 83) Malin 84) Mhalunghe Via Ambegaon 85) Pimprgane 86) Rajapur 87) Sakori 88) Savarli 89) Varsene 90) Chincholi 91) Karegaon 92) Landewadi 93) Peth 94) Bhavdi 95) Nagapur 96) Kanase 97) Ghohe BK. 98) Ghohe Kurd 99) Dimbhe BK. 100) Dimbhe Kurd. The command area is within a radius of about 45 Kilometers from the factory site. The command area is divided in to 15 Zones (Gats). The number of villages in each Zone is shown in the Table 7.1

256 Table 7.1 Gatwise Number of Villages in the Command Area

Gat No. Name of the Zone (Gat) Number of Villages 1 Junnar 27 2 Shiroli 11 3 Ozar 11 4 Otur 9 5 Banakar Phata 10 6 Umbraj 9 7 Pimpalvandi 10 8 Bori 9 9 Sakori 9 10 Nimgaonsava 10 11 Khodad 8 12 Narayangaon 9 13 Kalamb 35 Gat No. Name of the Zone (Gat) Number of Villages 14 Nirgodsar 38 15 Ghodegaon 27

■ Junnar ■ Shiroli □ Ozar □ Otur ■ Banakar Phata ■ Umbraj ■ Pimpalvandi □ Bori ■ Sakori ■ Nimgaonsava I □ Khodad ■ Narayangaon ■ Kalamb II ■ Nirgodsar Number of Villages ■ Ghodegaon Fig .7.1 Source: From the official records of “Share Department” of the factory

257 From the Table 7.1 above it is observed that the command area is within a radius of about 45 Kilometers from the factory site. The command area is divided into 15 Zones (Gats). The gat number eleven Khodad is of eight villages, the minimum number. Then gat number fourteen Nirgudsar has thirty-eight villages as maximum number in the sugar factory area.

7.6 INITIAL PERIOD: During 1984-85 seasons, the installed Machinery was trailed successfully. It was the testing time for the factory. The set up was ready. Though the society was registered in 1981, it received the letter of intent for setting up a factory and industrial license were received on 31-12-1984. After erection of plant and machinery by M/S. Richardson Cruddas Ltd. Mumbai, the first trial-crushing season of the factory started w. e. f. 15^*^ February 1985. But it lasted for 23 days only. Similarly the 1985-86 crushing season lasted for 160 days and 1986-87 seasons lasted only for 144 days. These two seasons were consequently the poorest seasons on all performance parameters in the history of the sugar factory. The loan and interest on those amounts was mounting very rapidly. The factory was in disastrous financial problems. When problems come, they don’t come one by one. The cluster of problems was surrounding the factory. The days were not far away from declaring it a sick unit. The climate and the nature played its role and worsened the situation. The insufficient rains reduced the area under sugarcane cultivation. The reducing area under sugar-cane cultivation was a big jolt for the factory. Unless the irrigation facilities get improved, there were no chances of running a sugar factory for a full season economically. The confidence of the farmers in the viability of 258 sugar factory started declining. Farmers only knew their factory should run for the full season, and that too, economically, so as to fetch proper yield for their produce. But they forgot the basic, that without raw material, i.e. availability of sugarcane; it was futile to run a sugar factory for a full season. Otherwise in the same state of affairs it was nothing other than adding to losses and increasing the loan and interest burdens. It was nothing other than away the prodigy in to the death throwing traps of surmounting loans & interests. Though the factory worked for 160 days and 144 days respectively in the 1985-86 and 1986-87 seasons, the overall performance was very poor on account of inadequate availability of sugarcane. Time lost on ‘No-Cane’ was 66.39 and 54.78 respectively.

7.7 TURN AROUND STRATEGY: The approach to turn around lies as under; 1) A policy turn around. 2) A Managerial turn around. 3) A financial turn around. 4) Cost Reduction and Saving. 5) A technological turn around.

1) A policy Turn Around; Due to inadequate supply of sugarcane, even though successful trials of machinery were taken, due to under capacity utilization, factory could not pay fair and proper price to sugarcane producers as equivalent to other factories. This further resulted into financial over burden. So in order to avoid further operational losses, a major policy turn around was taken by Management. They decided to close the crushing operation during 1987-88 seasons. The losses in closing the factory for a season were less than in running the factory underutilized. This proved to be a major turn around in policy in the history of the factory. Thus by skipping one crushing season and diverting the available sugarcane to the near by factories, not only proved economical to the factory but it ensured higher returns to the well-deserving farmer members. Again this decision not only ensured higher yield to the farmers, it gained the psychological confidence of the farmers in the factory, which was of vital importance in the long run. Thus the repercussions of this visionary turn around were envisaged in the successive years to come. That was the base of a grand success story. 2) Managerial Turn Around: In order to increase managerial efficiency the need for an efficient manager was felt by the Management. A need for a man who knows the in and outs of sugar industry, was badly felt by the factory, which was passing through very a critical stage. A knowledgeable person was most urgently being required. A man who can motivate the devoted employees was searched. The basic principles of strategic management decided to be strictly followed by Board of Directors. The Board of Management will take the strategic policy decisions. The operational implementation was totally left with lower level of Management. It was decided by Chairman and board of Directors not to interfere in the operational implementation at any stage. A continuous watch by Managing Director and middle level

260 Management was on proper implementation. Tiie main cause of failure of organization is the interference in operations, at every stage by the directors. The real concept that the directors are the real trustees was given top priority. A search for proper man ended as Mr. R. K. Borkar, Present Managing Director joined the factory on 1*‘ May 1988. His expertise sensed the problems of the factory. He, with the help of Board of directors, and full confidence in him on part of board of Directors, prioritized the problems. Planned efforts towards the targets were followed by the success story in coming years. It is worth seeing here the famous principle of human resource development. “TAKE CARE OF MEN, THEY WILL AUTOMATICALLY TAKE CARE OF THE ORGANISATION”. The vested confidence by board of Directors bore magnificent fruits. Thus this managerial turn around is one of the most important causes behind the saga of success of Vighnahar. 3) Financial Turn Around; The previous two crushing seasons were an utter failure on all parameters. The effect of which resulted in a financial crisis for the sugar factory. But a loan of Rs. 40.50 lacks from Sugar Development Fund helped the factory in overcoming the financial troubles of the organization. This helped the factory by increasing the irrigation potential. But with assistance from sugar development fund, the factory was able to increase the area under sugarcane cultivation. But in order to start the season, a large amount was required to be given to the laborers who cut the crop. The friendly relations of the factory with Bank of India helped a lot to the factory. Bank of India, under D.I.R. scheme financed on factory guarantee a huge sum of Rs. 30 lacks at meagre rate of interest i.e. at 4% P.A. This timely help on part of Bank of India helped the factory to see through the 1988-89 crushing season. Similarly a finance to landless laborers to purchase bullock-carts with tires on 50% grant and 50% loan at 10% P.A. by I.R.D.P. Scheme by Panchayat Samiti not only helped the factory but helped the unemployed land-less laborers to increase their income and reduce unemployment. Thus this financial turn around to implement the proper schemes of finance at a very low rate of interest helped the factory in reducing interest burden on the factory. 4) Cost Reduction and Savings: i) Interest of 4% P.A. under D.I.R. scheme from Bank of India has saved Rs 4 to 5 lacks P.A. Vighnahar, is the only sugar factory in Maharashtra who has implemented this scheme so intensively. ii) Assistance to landless laborers to purchase bullock carts with tires on 50% loan and 50% grant basis at Rs 10 P.A. has made savings in interest to the tune of Rs. 3 & 4Lacks p. A. iii) Vighnahar employed only 625 workers to run a sugar factory of 1250 T.C.D. This is the only sugar factory in Maharashtra run by lowest number of workers. This has saved lacks of Rs of the factory on the wage bill itself But this alone is not sufficient to say. The workers at Vighnahar are best-paid workers in the industry. This has resulted to increase worker efficiency and less labour turnover.

0A9 From the above labour turnover it is clearly visible that a lesser labour turnover is the result of best wage structure, high morale that has increased the labour efficiency. This is one of the reasons behind the efficient installed capacity utilization. iv) Along with I.F.C.I., I.D.B.I., I.C.I.C.I, Vighnahar is also financed by the Maharashtra State Co-op. Bank Ltd., in order to pay lesser amount of interest to the M.S.C. Bank Ltd. The chairman has instructed a scheme to the accounts office. It has become possible for the factory not to take drawl on pledge account three months prior to the start of the crushing season and two months after the start of the crushing season. Thus it was possible for the factory not to take drawl on pledge account for five months. It has saved Rs.40 Lacks P.A. on interest account. 5) A Technological turn around: Even without expansion the factory of 1250 T.C.D. capacity was able to make 158% of the capacity utilization. A still higher capacity 194.80 % was utilized in the year 1997-98. But as the expansion proposal of 2500 TCD was sanctioned, the conventional expansion programme would have cost Rs. 15 to 16 cores. But with the technical advice from Mr. J. T. Jadhav, a modernization and expansion programme for the existing machinery was successfully implemented. With implementation of the latest technology in the factory it was possible to complete the moderations with only Rs. 550 lacks. Thus, this mechanical / Technological turnaround has saved Rs 10 cores.

7^^ By adopting all these saving schemes, it has become possible for the factory for timely repayment of loans of various financial institutions. It is clearly evident from the following chart. Table 7.2 Repayments made by factory-ending 31.12.1992

Loan Repayment Sr.No. Financial Institute Outstanding (Rs.ln Lacks) (Rs.ln Lacks)

1 I.F.C.I. 1.19 1.19 Nil

2 I.D.B.I. 2.18 1.86 0.32

3 I.C.I.C.I. 0.99 0.93 0.06

4 M.S.C .Bank. 1.00 1.00 Nil

TOTAL 5.36 4.98 0.38

■ I.F.C.I. ■ I.D.B.I. □ I.C.I.C.I. □ M.S.C.Bank. ■ TOTAL

Loan (Rs.ln Lacks) Repayments made by factory-ending 31.12.1992

■ I.F.C.I. ■ I.D.B.I. □ I.C.I.C.I. □ M.S.C.Bank. ■ TOTAL

Repayment (Rs.ln Lacks)

Fig . 1 2

From the above Table 1 2 it is observed that so far we have analyzed the various turn around by the factory. We analyzed these turn around & their effective season wise implementation, which bore magnificent fruits.

7.8 M EM BERSHIP: The provisions regarding the membership are contained in the by­ laws of the factory. The membership of the factory is open to farmers, co-operative societies. District Central Co-operative Bank and State Governments etc. The members are classified into the following four types. 1) Producer Members ‘A’ Class 2) Ordinary Members ‘B’ Class 3) Nominal Members ‘C’ Class 4) Beneficiary Members ‘D’ Class

Note : Dividend will not be allowed to Nominal and Beneficiary member. They will not participate in work of the factory and have no right of voting. 265 1) Producer Members ‘A’ Class: This type of membership is restricted to sugarcane cultivators who grow sugarcane in minimum one-half acre in the command area of the factory. The producer members are bound to give all the sugarcane, grown by them, to the factory. It is binding on each producer member to grow sugarcane as per the instructions of the factory. The by-laws empower the board to issue directives to the members on the general agricultural activity. The producer member must hold at lest one share of Rs5000. These members are not allowed to buy more than 25 shares The producer members will have to fulfils the following conditions: 1. He is liable for agreement and has completed 18 Years. 2. He must be owner and protective tenant and simple tenant and the owner of the land area of the factory. He must be cultivating half-acre for sugarcane. He must make agreement with factory to provide standard quality sugarcane. The responsibility of harvesting and transportation of sugarcane will be on the factory. The member will make the agreement of cutting and transporting of sugarcane as per the decision of director. The factory wills pear the expenditure about transporting. The member must be ready to do the agreement as above. 3. The producer member must record in detail sugarcane area, liable land of producing sugarcane; land gatnumber, water supply arrangement etc. If the notified record has changed he must report the factory in writing within three months. He must give written information and make agreement with the factory.

266 4. As per the Sub-Rule of 57 the factory will be responsible for harvesting sugarcane of the member. The producer must supply the sugarcane for harvesting to the factory. Accepting the sugarcane from out of the factory area will depend on the factory, if the member of the recorded area of the sugarcane of the factory did not register, before 1S*’’ September, it will not be possible for the factory to crush sugarcane. It is the responsibility of the factory to inform the member before 15“^ September. 5. He should apply for membership. 6. He should pay Rs. 11 as entry fee. 7. As per sub-rule 8 he must take minimum one share at Rs. 5000/- 2) General and Non-Producer Members ‘B’ Class: This type of membership is open to the co-operative societies working in the command area of the factory. The ordinary member must hold at least one share of Rs5000. a) For being member a person must fulfill the following conditions: - 1. He must have completed 18 years of age and be liable for making agreement and must be a citizen of the factory area. 2. He should apply for minimum one share. 3. He must pay Rs. 11 as fee. He must pay the amount of the share. b) The society as a member must fulfill the following conditions: - 1. The society must take minimum one share of Rs. 5000/- 2. Society must apply in writing for membership.

267 3) Nominal members ‘C’ Class: The nominal membership is open to persons, Business firm, factories, Societies & institution. Such members have no right of voting & have no right for taking part in the worlcing process of the factory. The following conditions apply for being nominal members: 1. A Person must be 18 years old & must be liable for making agreement. 2. He must pay Rs. 11 as entry fee. 3. Directors at meeting will grant his membership. 4) Beneficiary Members ‘D’ Class: a) There are several development schemes, undertaken by the factory. The persons who have benefit from such schemes become beneficiary member: The rights and responsibility of these members will be as per nominal members. b) The following conditions apply for the beneficiary members: 1) He person must be 18 years of age and be liable for making agreement. 2) Under command Act Approved development scheme, the member must be owner or tenant of land. 3) He must pay Rsll as entry fee. He must pay 25% of his share amount as the initial expenditure of such schemes. He must pay RslOO per share out of which he has to pay Rs25 along with the application form. He will have to pay the remaining amount within the demand date fixed by the board of directors. 4) The directors may grant his application form for the membership. c) For every beneficiary member; -

268 1. For the employment development scheme, he must accept the methods of cultivating sugarcane, given by the order of committee and development scheme councilor. 2. He must supply the production of sugarcane from the development scheme. 3. As per the Maharashtra Institute Act. 1960 Rule 47, the society will take the first installment of the total amount of loan from the time of the production of sugarcane. 4. As per the development scheme, it is compulsory for the member to pay the amount fixed for water supply. 5. The member must take permission for making water supply arrangement, such as building tanks, making canals etc. 6. All the beneficiary members must make agreement for taking loan on land mortgage. d) The beneficiary member will be responsible for the loan, which has been taken by the factory. e) This type of membership is open to individuals, benefited by the development schemes undertaken by the factory. These members have no right and they cannot participate in the management of the factory. Of these, the producer members are the most important because they supply sugarcane, the raw material to the factory. They also enjoy the maximum benefit of the factory, as the main object of the factory is to improve the socio-economic conditions of the producer members.

269 7.9 ADMINISTRATIVE AND MANAGEMENT STRUCTURE: Each shareholder holding share worth RsSOOO agrees to supply the cane annually and the factory commits to buy the cane. One member can own a maximum of twenty-five shares. The working of the factory reveals all the salient features of a co­ operative democracy. A Board of directors elected from the members manages the factory, each member having only one vote, regardless of how many shares he owns. All the members from all the zones have voting right for the election. The Board of Directors makes all policy decisions in accordance with the guidelines laid down in the by-laws. The present composition of the Board of Directors is as follows. 1) 15 - Directors elected by the producer members (3 from each Zone into 5 Zones). 1) 01 - Director elected by the society (ordinary) members. 2) 01 - Director elected as a nominee of the backward class. 3) 02 - Women directors elected by the members. 4) 02 - Nominee of the employees. 5) 01 - Director co-opted as an expert. 6) 01 - District Deputy Registrar as a Government nominee. 7) 01 - Nominee of the M.S.C. Bank, Pune. 8) 01 - The Managing Director as the ex-officio member of the Board. At present, there is no nominee from financial corporation on the Board of Directors of the factory. Elected members of the Board in turn elect their Chairman and Vice Chairman. The Chairman is the leader of the Board and is constantly in touch with the Board members. In the absence of Chairman, the Vice-Chairman presides over the meetings. The

270 representatives of the district central co-operative banlc, state Government, and employees nominee and the co-opted directors, are not allowed to hold the chairmanship or not even vote for the election of the chairman. Next to the Board of Directors, there is an Executive Committee. It consists of seven directors. The chairman of the board is the ex- officio chairman of the executive committee. The executive committee takes executive decisions from time to time during the period, when the Board of Directors does not meet. However, the limits of the authority of the executive committee are prescribed. The board functions with the help of following five committees constituted for the special purposes. 1) Purchase committee. 2) Cane supply committee. 3) Civil works committee. 4) Sugar sales committee. 5) Any other committee. The purpose of constituting various committees is to train leadership in the democratic functioning of the factory. This arrangement also helps the board to be in close touch with day-to- day activities. The board and its committees meet regularly, usually once in a month, sometimes more often. The administrator who oversees daily operations is the Managing Director, a salaried employee and ex-officio member of the board. He is full time officer and provides necessary link between the elected board members and the officers. After the Managing Director comes the Secretary & Labour welfare officer. Chief Agricultural officer. Chief Engineer, Chief

271 Chemist (Quality Control), Chief Chemist (Production), Dy. Chief Engineer, Chief Accountant, Dy. Chief Accountant, Office Superintendent, Cane Development officer. Civil Engineer, Purchase officer. Store & Excise in charge. Sugar Godown keeper. Medical Officer, Labour Officer, Timekeeper, Public Relation Officer, Garage Foreman, and Security Officer, skilled workers and unskilled workers, and clerks. For integration and close co-ordination of various departments and to have teamwork in the entire organization, the Vighnahar co­ operative sugar factory has constructed Central office building in November 2002 with an investment of about Rs55 lacks. The departments, which have contact with the public and large numbers of farmers, have been centralized less than one roof These departments are agricultural, accountants, and general administration, labour, welfare and public relations. Board meeting hall. Chairman’s and Vice-Chairman cabins are located in the central offices near each other with adequate reception rooms for meeting people. The facilities like toilet, drinking water, canteen, etc. are within easy reach of the staff The computer system has been installed in the Central Office to carry out wide range of office activities. The calculation of wage bills, cane bills and other office work is done with the help of the computers. The central office provides all office services to large number of farmers under one roof, which saves time and energy and also reduces delay in office work.

272 7.10 FINANCIAL STRUCTURE: The financial requirements of the factory are met from the following sources. 1. The capital will be collected by the following sources: a) By selling shares. b) By accepting deposits & guarantee. c) Loan & overdrafts. d) To take finance from the state Government & Government of India, Industrial Housing Scheme for workers as per factory Act of 1948 and 1952 mining Act. i) To collect the debentures. ii) By accepting donation, grant and other financial assistance. iii) By charging entry fee, share transfer fee & nomination fee etc. 2. Capital would be not more than ten times than subscribed capital; reserved fund & development rebate or reserved ftind & its loss. 3. Shares and Share Capital: - The total authorized share capital of the factory is Rs. 3500 lack and it is divided into 70,000 shares. i) For producer members, face value of per share is Rs 5000, per share, the factory 1500 Rs. in Lack at divided in to 30,000 shares. ii) For non-producer members / co-operative institute face value of per share is Rs. 5000, and divided in to 250 Lack into 5000 shares. iii) Per share 5000 face value divided in to 1750 Lack 35000- preference share, bought by Maharashtra Government.

273 4. i) Preferential share will be distributed only for Maharashtra Government. The share amount will be refunded towards the capital redemption fund or convertible deposit. The refund will be according to Government policy. In case the factory is dissolved the Government has the right to refund the share capital, to distribute the dividend. The factory can refund capital before the date given by State Government. But the amount of share capital must be equal to convertible deposit. ii) The factory must not take finance until the refund of loan taken from Industrial Finance Corporation of India, Maharashtra State Co-operative Banks or Nationalized Bank or other Finance Institutes 5. a) The deposit as per the by-law No 64: Converted Deposit & Fixed Deposit b) By collecting finance (Loan). c) To accept the responsibility in form of guarantee. 6. Authorized capital for selling Rs. 3500 lack is as follows. i) For producer member’s face value of Rs. 5000 per share: 1500 Lack, divided into 30,000 shares. ii) For Non-producer members or Co-operative institution the face value is Rs 5000 per share, divided Rs 1750 Lacks in to 35000 shares.

1) Share capital: The share capital contributed by the producer member is related to his acreage under sugarcane supplied to the factory. Accordingly, per acre Rs2000 is collected with a maximum of Rs50000. The amount of share capital is also contributed by the ordinary members i. e. co-operative 274 societies working in the command area. Initially the face value of the share was of Rs 1000, but since 1992-93, it has been increased to Rs.2000 per share as per the directives of the state Government. The state Government had also contributed large amount of share capital since the inception of the factory. The shares held by the government are redeemable preference shares. 2) Long Term Loans: To meet the need of capital expenditure, the factory since its inception has borrowed long terms loans from various financial institutions such as Industrial Finance Corporation (IFC), Industrial Credit and Investment Corporation of India (ICICI), Industrial Development Bank of India (IDBI), and State Co-operative Bank. 3) Medium Term Loan: To meet medium term capital requirements, the factory borrows Loans for a period of five years from the district central co-operative Bank as and when required. 4) Deposits from Members: The provisions regarding the compulsory non-refundable and refundable deposits are contained in the by-laws. Accordingly, the compulsory non-refundable deposits are collected until the external loans are repaid and share subscribed by the government are redeemed. These deposits are deducted every year from the cane price to be paid to the producer members. The rate of collection of non-refundable deposits from the individual member is not less than Re.l. At present Rs.3 per ton are deducted. These deposits carry a rate of interest at 12 percent per annum. After the repayment

275 of external loans and redemption of Government capital, these deposits are converted into share capital. Each member is entitled to receive shares in exchange of deposit amount standing to his credit. Besides, the non-refundable deposits, the factory can also collect refundable deposits through the payment of cane price from the members. The period of deposits is of five years. These deposits carry 12 percent interest per annum. a) As per the order of the Government, the factory will collect transfer deposit from the members on provide sugarcane per ton. Each year 8% interest will be provided on such deposits. b) The factory will deduct Rs. 10/- from the benefit of the production of sugarcane; per tone not less than Rs. 10/-. till the refund of loan from Industrial Finance Corporation of India, Industrial Credit and Investment Corporation of India and Life Insurance Corporation. On such a way amount of collected deposit first priority capital expenditure and when the factory will be in profit then such amount will be used for the installment of loan taken from Industrial Finance corporation of India, Industrial Bank Investment Corporation of India then, for refunding share capital taken from State Government or will be used for other reasons. c) The share amount will be transferred in transfer deposit within 5 to 10 years. d) If the membership of any member is canceled, the amount of transfer deposit, collected on his account will deduct transfer deposit, and the remaining amount will be paid to the shareholder within 150 days.

276 e) Such deposit amount will be used to complete all the capital responsibility. f) If mentioned by the members such deposit can be transferred on the name of other shareholder, but both members must submit written agreement. g) If necessary, the directors’ transfer the per-ton-sugarcane- deposit amount collected every year. In accordance with the quantity of sugarcane provided, the members fix the per-ton rate, with permission from Sugar Commissioner. The factory will deduct the refundable amount of 5 to 10 years. Such amount will be used to expand the factory for the production of by-products. On such refundable deposit maximum 10% interest will be charged. Such type of refund deposit will be transferred into refund share capital after the sanction of director in the general meeting. 5) Short term Capital: The shot-term capital requirements are normally referred to as the working capital requirement. The district central co­ operative bank provides the working capital by sanctioning cash-credit, hypothecation and pledge credit. Cash-credit amount is available during the crushing season and is sanctioned to the factory to enable it to release its funds locked up in the stores. The most important and great volume is the finance of pledge credit on sugar bags stored in Godown. In 1984-85 the factory had initial authorized share capital of Rs. 50 lacks consisting of 5000 shares of Rs.1000 each, out of which 3150 shares were issued to members and raised capital worth Rs.31.57 lacks. The Government had

277 contributed Rs.lO lacks through 1000 redeemable preference shares of Rs. 1000 each. The Industrial Finance Corporation and State Co-operative Bank advanced Loans of Rs.43 lacks and 28.24 Lacks respectively. During the period 1985-86 to 1995-96, the loan advanced by IFC was fully repaid without any default in twelve installments. Table No 7.3 Loan Repaid

Sr.No Year Rs. In Lacks

1987-88 3.50

1988-89 3.50

1989-90 3.50

1990-91 4.00

1991-92 2.50

Loan Repaid

■ 1987-88 ■ 1988-89 □ 1989-90 □ 1990-91 ■ 1991-92

Rs. In Lacks

Fig .7.3 The loan advanced by the state co-operative Bank of Rs28.24 lacks was repaid in three equal installments of Rs 3.50 lacks each during 1987-88 to 1989-90and rest of the loan of Rs 4.00 lacks in 1990-91. The government holds the preference shares of Rs 3.00 lacks. Then the 1991-92 loans are Rs 2.50 lacks.

278 By amending the by-laws, the figure of authorized capital has increased to Rs 5.9 corers in 1984-85. It is divided into 28,750 shares of Rs 2000 each and 1500 redeemable preference shares of Rs 1000 each to be held by the state Government. Out of 28,750 shares, 26,069 shares were issued to producer members and raised 393.02 lacks. The shares issued to co­ operative societies were 383, contributing Rs64.18 lacks. The initial preference share held by the Government were redeemed at the end of 1986-87, however in 1988-89, the Government again participated in share capital under the National Co-operative Development Corporation’s (NCDC) Sugar Godown scheme and contributed Rsl4.371acks. The factory started redemption of Government’s share capital from 1989-90 onwards. Hence the amount of preference share capital outstanding at the end of 1994-95 stood Rs 502.62 lacks. Table 7.4 Details of capital and fixed assets

Particulars 1994-95 2003-04

(A) Owned Capital: Rs. In lacks Rs. In lacks 1. Members share capital 502.62 693.97

2. Reserve Funds 1523.85 4626.47

Total 2026.47 5320.44

(B) Deposits 623.87 1748.40

(c) Borrowings (Secured Loans) 1864.38 8541.12 (D) Total Capital (A+B+C) 4514.72 15609.96 (E) Working Capital: 1. Current Assets 3326.08 13280.42

2. Current Liabilities 2117.09 5990.85

3. Net working Capital

(F) Fixed Assets: 2207.57 6675.63

279 Table 7.4 shows the details regarding the owned capital, deposit mobilization, borrowings, working capital and fixed assets of the factory for the year 1994-95 and 2003-04. From the table, it is clear that the owned capital was of Rs. 2026.47 lacks & 5320.44 lacks in the years 1994-95& 2003-04 respectively of which the amount of share capital stood at Rs. 502.62 lacks & Rs.693.971acks, accounted for about 25 % and 13%. Reserved funds of 1523.85 lacks and 4626.47 lacks were accounted for about 75 % and 87 % of the owned capital. Thus it is clear that the factory built up huge reserves and funds through a process of ploughing back profits into business. So far as investment in fixed assets is concerned, it is clear that the fixed assets that include land and building, machinery, vehicles, tools and equipment, furniture, etc., were Rs.3326.88. (Table 7.4) The owned funds of 2026.47 lacks and 5320.44 lacks are less than the fixed assets of Rs. 2207.57 lacks and 6675.63 lacks in the year of 1994-95 and 2003-04. In other words the fixed assets are 109 % & 125 % of the owned funds. It means that deposits and long-term loans finance a part of fixed assets. Table 7.5 Details of reserves and funds

Rs. In Lacks Rs. In Lacks Sr. No. Particulars 1994.95 2003.04

1. Reserve Fund 16.36 404.56

2. Deprecation Fund 106.31 4142.57

3. Investment Fund 160.61

4. Reserve for contingencies 68.73 9.50

5. Workmen’s compensation 2.00 Fund

6. Bad debts 9.82 19.82

7. Development Fund 50.00 50.00

8. Building Fund 100.00

280 Details of reserves and funds

Reserve Fund

■ Deprecation Fund

□ Investment Fund

□ Reserve for contingencies

■ Workmen’s compensation Rs. In Lacks Rs. In Lacks Fund 1994.95 2003.04 ■ Bad debts Fig .7.4 The various reserves and funds set up for different purposes are Reserve fund, Depreciation fund, Reserve for Contingencies, Woricmen’s Compensation fund, Investment allowance Fund, Molasses storage Fund. Depreciation fund is the most important accounted for 21.00 % for the year of 1994-95 and 89.53 % for the year of 2003-04, which is built up according to the accepted Income Tax standards for the replacement of plant and machinery in future. Table 7.5 shows the position as to its investment in various funds. As per the provisions regarding by-laws, the factory has collected deposits of RS. 623.87 lacks accounted for more than 13.81 % in the year of 1994-95 & 11.20 % in the year of 2003-04 of the total capital. The total borrowings were Rs. 1864.38 and 8541.12 lacks; in the year of 1994-95& 2003-04 respectively of short loans of Rs. 31.92 and 1018.13 lacks raised by way of pledge, hypothecation, are about Rs. 986 lacks.

281 Table 7.6 Details of secured loans

1994-95 2003-04 Sr. No. Particulars Rs. in Lacks Rs. in Lacks

1. Short Term Loans;

1. Pledge on sugar Bags 1805.05 5253.73

2. Pledge on Paper stock 3.06 5.25

3. Hypothecation on stores 31.92 1018.13

2. Medium Term Loan from District 1151.92 Central Co-operative Bank.

3. Sugar Development Fund 18.15 960.00 Loan from Central Govt.

4. Loan from LC.I.C.L / IDBI 6.20 24.00

5. Go down Construction Loan 4.95

6 C.COM. Incentive Loan 49.64

7 Sugar Technology Mission, 73.48 New Delhi

■ 3-D Column 1 ■ 1805.05 □ 3.06 □ 31.92

118.15 16.2

2003-04 Rs. in Lacks

Fig. 7.5

Source: Annual Report - 1994-95 & 2003-04. Table 7.6 the medium term loan taken from district co-operative bank for modernization of machinery stood at Rs 1151.92 lacks. The long-term loans were of Rs 960 lacks. Thus, it is observed that the proportion of

282 long term outstanding so far is quite small accounted for 41.29 % and 54.71 % of the total borrowings in the year 1994-95 to 2003-04 respectively. Relating to the size of reserves and share capital of the factory, its borrowings are not heavy.

7.11 INCREASE IN MEMBERSHIP AND SHARE CAPITAL: The initial share capital 1985-86 of the factory was of Rs. 443.20 lacks of which 15,670 producer members contributed Rs. 156.70 lacks and Rs.2; the Government of Maharashtra disbursed 86.50 lacks. The membership and share capital increased up to 11,466 and Rs. 159.44 lacks respectively by the end of 1991-92. The progress of the factory in terms of membership and share capital during the last two decades i.e. from 2002-03 to 2003-04 is shown in Table 7.7

Table 7.7 Statements showing increases in membership and share capital of the factory Rs .In Lacks Share Membership Capital Sr. No Producer Co-op Total Annual Total Year Govt. (Rs .In Members Soc. Members Growth Shares Lacks) 443.20 1 85-86 11,197 1 1 11,199 44,320

2 86-87 11250 1 _ 11,251 52 15,723 157.23

3 87-89 11,300 1 11,301 50 15,773 157.73

4 89-90 11,345 1 _ 11,346 45 15,804 158.04

5 90-91 11,374 48 _ 11,422 76 15,920 159.20

159.44 6 91-92 11,410 56 _ 11,466 44 15,889

7 92-93 11,431 56 _ 11,487 21 15,879 159.44

8 93-94 11,464 56 11,520 33 15,898 159.66

283 Share M em bership Sr. Capital No Producer Co-op Total Annual Total Year Govt. Members Soc. Members Growth Shares (Rs.In Lacks) 9 94-95 11,494 56 11,550 30 15,882 159.64

10 95-96 13,299 56 ___ 13,355 1805 17,653 195.16

11 96-97 13,331 56 13,387 32 17,634 194.98

284.35 12 97-98 13,339 56 _ 13,395 08 17,628

13 98-99 13,369 56 _ 13,425 30 17,622 284.29 ----- 14 99-00 17,186 56 17,186 3761 21,344 396.10

15 00-01 17,247 56 ... 17,303 117 21,421 475.41

16 01-02 17,259 56 ___ 17,315 12 21,417 586.97

17 02-03 17341 56 17,397 82 21,431 592.81 617.74 18 03-04 17,378 56 - 17,434 37 21,445

■ 85-86 ■ 86-87 □ 87-89 □ 89-90 ■ 90-91 ■ 91-92 ■ 92-93 □ 93-94 ■ 94-95 ■ 95-96 □ 96-97 ■ 97-98 ■ 98-99 ■ 99-00 ■ 00-01 ■ 2-Jan Producer Members ■ 3-Feb □ 4-Mar Fig .7.6 Source: Complied from the Annual Reports of the Factory,

284 The Table 7.7 shows that the membership of the factory increased from 11,199 in 1985-86 to 17,434 in 2003-04.Hence there is an increase of almost four times in a period of eighteen years. The number of producer members increased from 8,058 to 14,452 and the membership of co-operative societies increased from 01 to 56, showing an increase of more than three times and five times respectively. Although, the annual growth during the period 1985-86 to 2003-04 is fairly steady, a sharp rise is evident in the year 1986-87 to 1994-95. The rise in membership during 1995-96 is only due to change in the accounting year, as the figures for 6 months from 1*‘ October 1995 to 31^^ March 1996 were taken into account. The highest rise is recorded in 1999-2000. The rise in membership in 2001-02 is the result of the recent election for Board of Directors held in 2003, as the ruling party finalized all the pending applications for membership before the election. By the end of 2003-04 the total paid up share capital of the factory was of Rs. 617.74 lacks, which means a rise of almost 18 times from the initial share capital of Rs.157.23 lacks in 1986.87. Table 7.6 also shows that during the period 1985-86 to 2003-04, the contribution of the producer members towards the share capital has registered an increase from Rs. 156.70 lacks to 617.74 lacks, and the share capital contributed by the co-operative societies increased from Rs. 1000 to 1,63 lacks. The factory redeemed the initial contribution of the Government in preference shares of Rs. 286.50 lacks in 1985-86.

285 Table 7.8 Statement showing changes in the contribution to the share capital of the factory

Sr. No. Members contribution to the share capital in percentage 1985-86 1991-92 1997-98 2003-04

Producer Members 27.37 78.30 81.84 89.20

Ordinary Members 07.99 21.70 18.16 10.80 (Co-operative societies)

Government 64.64

Total 100.00 100.00 100.00 100

I Producer Members

I Ordinary Members (Co­ operative societies) □ Government

□ Total

1985-86

Fig.7.7 Source: Compiled from the Annual Reports of the Factory. Table 7.8 shows the changes in the contribution to the share capital of the factory by the various types of members over the period from 1985-1986 to 2003-2004. As is evident from the table, initially the Government contribution accounted for 64.64 % of the total share capital while the producer members had a contribution of 27.37 % & Ordinary Members (co-operative society) had a contribution of 07.99%. But over the years the percentage share of the Government contribution declined from 64.64% in 1985-86, while the producer member’s contribution registered a rise from 27.37 % to 89.20 %. This shows that the cane

286 growers essentially owned the factory. The share of the ordinary members to the share capital is more or less constant.

7.12 OPERATIONAL PERFORMANCE OF THE FACTORY: The long-term performance of the factory during the last four decades from 1984-85 to 2003to 2004 is presented in Table No 7.8 to 7.16. However, here for detailed analysis, the last twenty years from 1984-85 to 2003-2004 are taken into consideration. The performance of the factory during this period is compared with the whole co-operative sugar industry in Pune District and also with other co-operative sugar factories in the Taluka for the last six crushing seasons i.e. 1998-99 to 2003-2004. Some of the important criteria used to judge the financial as well as technical efficiency are Expansion of crushing capacity, Area under sugarcane (in hectors). Cane crushed (in tons), Sugar production (in quintals). Capacity utilization. Sugar recovery. Crushing season (days). Average cane Yield (Tons per hector). Cane price paid (Rs. per tons). 7.12.1. Expansion of crushing capacity: The capacity of a sugar factory is expressed in terms of tons of sugarcane crushed by the factory in a day (T.C.D.). Initially (19984-85) the factory had a crushing capacity of 1250 tones of cane per day. The factory had started the production from the crushing season 1984-85 when the area under sugarcane was about 39.84 hectares. The crushing capacity of 1250 tons was very soon felt short because of expectations and needs of the farmers. The factory realized that the crushing capacity should be expanded to 2500 tons per day. Consequently, the crushing capacity of the factory was expanded to 2500 tones in 1998-99 with the capital investment of Rs. 284.29 lacks. 287 In subsequent years, due to extension in sugarcane area, the factory expanded to crusiiing capacity of 5000 tons in 2002-2003. The total amount invested in these expansion programmes was Rs.5, 92,81,000. Thus at present, the factory has a crushing capacity of 5000 tons of cane per day. These expansion programmes were mostly financed from the additional capital raised from the members by issuing new shares and through their non-refundable deposits. The necessary finance was also obtained from the financial corporations Table 7.9 Factory-wise expansion in crushing capacity

Existing Increase Initial Y ear of Installed Over Initial Sr. C rushing Name of the factory Establish- C rushing C rushing No. Capacity Capacity Capacity (T.C.D.) (T.C.D.) (In percent)

1 The Malegaon Co- 1955 1016 4000 293.70% Op. Sugar Factory. Baramati.

2 Shri. Chhatrapati 1955 1016 3500 244.48% Co-op Sugar Factory Indapur.

3 Shri. Someshwar 1960 1250 2500 100% Co-op. Sugar Factory Baramati.

4 Yeshwant Co-op. 1966 1250 3500 180% Sugar Factory. Theur.

5 Bhima Co-op. Sugar 1976 1250 5000 300% Factory. Patas. Daund.

6 Shri. Vighnahar co- 1981 1250 5000 300% Op. Sugar Factory. Nivrittinagar.Junnar

288 Existing Increase Initial Year of Installed Over Initial Sr. C rushing Name of the factory Establish- C rushing Crushing No. Capacity Capacity Capacity (T.C.D.) (T.C.D.) (In percent) 7 Indapur co-op. 1984 1750 5000 185% Sugar Factory. Indapur. 8 Rajgad Co-op. Sugar 1988 1016 1016 00% Factory. Bhor. 9 Shri. Sant Tukaram 1990 2500 2500 00% Co-op. Sugar Factory. Kasarsai, Mulshi. 10 Ghodganga Co-op. 1990 2500 2500 00% Sugar Factory. Nahavara, Shirur. 11 Bhima Shankar Co- 1994 2500 2500 00% Op. Sugar Factory. Pargaon, Ambegaon. 12 Nira Bhima Co-op. 1999 1250 1250 00% Sugar Factory. Indapur.

Initial Crushing Capacity (T.C.D.)

5000/ 4000 pr 3000

2000

1000 I 0 Existing Installed Crushing Capacity (T.C.D.) Fig.7.8 Source: Compiled from the annual reports of the sugar factories.

289 Table 7.9 shows the comparison between the performance of the Vighnahar co-operative sugar factory and that of other sugar factories in the district in respect of expansion in crushing capacity. This table includes only the old co-operative sugar factories established before 1988. The new factories are facing severe problems of cane shortage and hence could not expand their capacities. Their inclusion would lead to comparison in favour of Vighnahar co-operative sugar factory. The Table 7.9 shows that out of the 12 factories, 07 factories have expanded their small plants into bigger ones. The Someshwar co­ operative sugar factory, Yashwant co-operative sugar factory, Rajgad co­ operative sugar factory, Shri. Sant Tukaram co-operative sugar factories and Ghodganga co-operative sugar factory have not expanded its crushing capacity due to shortage of sugarcane since their inception. 7.12.2 Area under sugarcane (in hectares) The area of operation of the factory lies between big three villages: Junnar, Otur and Naryangoan on the Naryangoan to Otur& Junnar road. It comprises of 232 villages. In the area 8276.40 hectares of sugarcane is cultivated. Besides this area of operation, factory gets more sugarcane for its crushing from other villages. 80 % sugarcane is available in the area. It reduces the cost of transportation of sugarcane to the factory. The sugarcane grown by members is irrigated by the following means: 1) Canal Irrigation 2) Well Irrigation 3) Lift Irrigation in river. The area of Vighnahar co-operative sugar factory is well known for sugarcane cultivation. Producers adopt modem and scientific methods. Some producers have also won all India sugarcane competition prizes.

290 Table 7.10 Vighnahar co-operative sugar factory area under sugarcane (in hectares) from 1984-85 to 2003-04

Sr. Years Area under Sugarcane (In hectares) No.

1 1984-85 39.84

2 1985-86 1109.16

3 1986-87 807.54

4 1987-88 Season Close

5 1988-89 2500.60

6 1989-90 2654.63

7 1990-91 4870.52

8 1991-92 4386.60

9 1992-93 4158.93

10 1993-94 3770.60

11 1994-95 5244.24

12 1995-96 6892.00

13 1996-97 6181.20

14 1997-98 5614.40

15 1998-99 7090.00

16 1999-00 11061.00

17 2000-01 9662.30

18 2001-02 7647.00

19 2002-03 8023.10

20 2003-04 8276.40

291 Vighnahar co-operative sugar factory area under sugarcane (in hectares) in 1984-85 to 2003-04

■ 1984-85 12000-r ■ 1985-86 □ 1986-87 □ 1987-88 10000 ■ 1988-89 ■ 1989-90 8000 ■ 1990-91 □ 1991-92 ■ 1992-93 6000 ■ 1993-94 □ 1994-95 ■ 1995-96 4000 ■ 1996-97 ■ 1997-98 ■ 1998-99 2000 ■ 1999-00 ■ 2000-01 □ 2001-02

Area under Sugarcane (In hectares) □ 2002-03 □ 2003-04 Fig .7.9

Source: Annual reports from 1984-85 to 2003-04 The Table 7.10 shows the area under sugarcane cultivation in hectares 39.84 and 8276.40, between 1984-85 and 2003-04. The increase in sugarcane area is comparatively more, as it showed a continuous increasing trend: in 1999 the highest area being 11,061 hectares. But thereafter it has shown decreasing trend in the year of 2001-02. The factory has to make more efforts.

292 7.12.3 Cane crushed (in tons) : The Table 7.11 shows year wise cane crushed sugarcane increase per year. Table 7.11 Year wise cane crushed in tons (in lacks) seasons from 1984-85 to 2003-04

Sr. Cane Crushed In tons Years No. (In Lacks)

1 1984-85 0.2

2 1985-86 0.84

3 1 1986-87 0.66

4 1987-88 Season Close

5 1988-89 1.59

6 1989-90 3.20

7 1990-91 3.25

8 1991-92 3.36

9 1992-93 3.67

10 1993-94 2.96

11 1994-95 4.23

12 1995-96 6.16

13 1996-97 3.54

14 1997-98 4.51

15 1998-99 5.84

16 1999-00 8.31

17 2000-01 7.92

18 2001-02 5.91

19 2002-03 6.41

20 2003-04 5.80

293 Year wise cane crushed in tons (in lacks) seasons from 1984-85 to 2003-04

9 ■ 1984-85 ■ 1985-86 8^ □ 1986-87 □ 1987-88 7- ■ 1988-89 ■ 1989-90 6 ■ 1990-91 □ 1991-92 5^ ■ 1992-93 ■ 1993-94 □ 1994-95 ■ 1995-96 ■ 1996-97 ■ 1997-98 ■ 1998-99 ■ 1999-00 ■ 2000-01 □ 2001-02 □ 2002-03 Cane Crushed In tons (In Lacks) □ 2003-04

Fig .7.10 Source: Annual Report of the factory from 1984-85 to 2003-04. The entire produce of sugarcane in the operational area is crushed in the factory. It has given a good fillip to sugarcane cultivators in the area and more and more land is being brought under sugarcane cultivation. During all these seasons non-members sugarcane has also been crushed. From the above Table 7.11 cane crushed in tons (in lacks) per year from 1984-85 to 2003-04 is observed. In the trial season 1984-85 only 2833 tons of cane was crushed. But the very next year (1985), 84687 tons of sugarcane was crushed. And from the year 1988-89 to 2003-04 continuous increase and decreased cane crushed. The cane crush had

294 reached its peak in 1999. The factory has to make more efforts, for steady continuous growth in cultivation. This factory is recognized as one of the well-developed co-operative sugar factories in Maharashtra. It is most prominent in sugar recovery. The original crushing capacity of the machinery was 1250 M.T. per day, which rose to 2500 M.T. per day from the season 1998-99. Then in 2002- 03 crushing capacity was expanded up to 5000 M.T. So far, it has completed twenty crushing seasons successfully, competing with the other well-developed sugar factories in the same region and has made tremendous progress in the last twenty years.

7.12.4 Sugar production (in quintals) The factory had started production since the crushing year 1984-85. In the first crushing season the factory produced 2,818 quintals of sugar. (See Table 7.11) In the season of 1985-86 there was increase in sugar production up to 86,746 quintals. The sugar production in 1986-87 was slightly lower as compared to that of the 1985-86. In the fourth crushing season (1987-88) the factory remained closed because of non-availability of sugarcane. During the period 1988-89 to 1992-93, there was continuous increase in sugar production when reached up to 4,34,377 quintals. The sugar production in 1993-94 was lower as compared to that of the 1992-93 because of shortage of sugarcane. From 1994-95 to 1997-98, there was improvement in the production which increased up to 5,33,460 quintals. In 1998-99, the factory had expanded crushing capacity from 1250 tons to 2500 tons per day. Due to the increase in crushing capacity and availability of adequate sugarcane, the production reached to 6,78,185 quintals in 1998-99, to 9,75,400 quintals in 1999-2000, and to 9,79,610 quintals in 2000-2001. In 2000-2001, the factory achieved a record 295 production of 9,79,610 quintals. This was the highest production in the life of the factory since its inception. The drought conditions of 2001- 2002 caused acute shortage of sugarcane and consequently sugar production declined to 7,34,060 quintals the very next year. In 2002-2003, the factory had expanded crushing capacity from 2500 tones to 5000 tons per day. Due to the increase in crushing capacity and availability of adequate sugarcane, the production reached to 8,19,410 quintals. The sugar production in 2003-2004 was slightly lower as compared to that of the previous year. Table 7.12 Sugar production in quintals

Sr. Sugar production in quintals Years No. (In Lacks) 1 1984-85 .2 2 1985-86 .86 3 1986-87 .66 4 1987-88 Season close 5 1988-89 1.90 6 1989-90 3.62 7 1990-91 3.76 8 1991-92 3.88 9 1992-93 4.34 10 1993-94 3.44 11 1994-95 5.13 12 1995-96 7.53 13 1996-97 4.16 14 1997-98 5.33 15 1998-99 6.78 16 1999-00 9.75 17 2000-01 9.79 18 2001-02 7.34 19 2002-03 8.19 20 2003-04 6.29

296 Sugar production in quintals

■ 1984-85 ■ 1985-86 □ 1986-87 □ 1987-88 ■ 1988-89 ■ 1989-90 ■ 1990-91 □ 1991-92 ■ 1992-93 ■ 1993-94 □ 1994-95 □ 1995-96 ■ 1996-97 ■ 1997-98 ■ 1998-99 ■ 1999-00 ■ 2000-01 □ 2001-02 Sugar production in quintals (In □ 2002-03 Lacks) □ 2003-04 Fig .7.11 Source: Annual Report of the factory from 1984-85 to 2003-04. It is observed from Table 7.12 that the sugar production in Vighnahar co­ operative sugar factory Ltd. Junnar, has been fluctuating between I lacks tons and 9 lacks tons. The production was maximum in the year 2000- 2001 with 9.79 lacks tons. The lowest production was in 1988-89 with 1.90 lacks tones. There are no sugar factories and sugar production in public sector in Maharashtra in the period, taken for research 1994-95 to 2003-04.

297 7.12.5 Capacity utilization and time lost; (Crushing capacity*average day % production) The efficiency and viability of sugar factory depends on its full utilization of crushing capacity. The losses of sugar may occur when season - day crushing is less than the rated capacity. Capacity utilization of a sugar factory mostly depends upon the availability of sugarcane and also upon the ability of factory personnel in avoiding mechanical stoppage, breakdowns and production bottlenecks. Table 7.13 Capacity utilization and time lost

Sr. Years Capacity Utilization % No. 1 1984-85 64.72 2 1985-86 101.00 3 1986-87 123.68 4 1987-88 Season Close 5 1988-89 99.44 6 1989-90 117.28 7 1990-91 136.56 8 1991-92 146.24 9 1992-93 168.64 10 1993-94 167.00 11 1994-95 187.52 12 1995-96 197.36 13 1996-97 183.60 14 1997-98 194.80 15 1998-99 123.32 16 1999-00 157.00 17 2000-01 180.64 18 2001-02 170.32 19 2002-03 90.80 20 2003-04 97.00

298 Capacity utilization and time lost

■ 1984-85 ■ 1985-86 □ 1986-87 □ 1987-88 ■ 1988-89 ■ 1989-90 ■ 1990-91 □ 1991-92 ■ 1992-93 ■ 1993-94 □ 1994-95 ■ 1995-96 ■ 1996-97 ■ 1997-98 ■ 1998-99 ■ 1999-00 ■ 2000-01 □ 2001-02 □ 2002-03 Capacity Utilization % □ 2003-04 Fig .7.12 Source: Annual Report of the factory from 1984-85 to 2003-04. It is observed from the above Table 7.13 that capacity utilization in 1984- 85 was 64.72 and in the year 2003-04 was 97. The capacity utilization had reached its peak in 1995-96, but there after it has shown decreasing trends. Even without expansion, the factory of 1250 T.C.D. capacity was able to make 194.80 of the capacity utilization in the year of 1997-98. But as the expansion proposal of 2500 TCD was sanctioned, the conventional expansion programme would have cost of 15 to 16 corers. But with the technical advise from Mr. J.T. Jadhav, modernization and expansion programme for the existing machinery was successfully implemented.

299 7.12.6 Sugar recovery (%) Sugar recovery refers to a percentage of sugar produced of the total sugarcane crushed in a particular season. The recovery rate is a measure of technical efficiency indicating what proportion of the raw material is converted into the finished product. It is one of the best indicators measuring the performance of sugar factories. The percentage of sugar recovery depends upon many factors such as quality of sugarcane, climatic, diseases and pests infections, duration of crushing season, plant efficiency etc. A sugar recovery of 10 to 12 percent is obtained in Maharashtra State. A few factories have also recorded a recovery of more than 12 percent. In the first year of production, the factory achieved a recovery rate of 6.34 % percent and in the subsequent years the rate of recovery ranged from 9.83 to 12.75 %. Table 7.14 Sugar Recovery

Sr. No. Years Sugar Recovery % 1 1984-85 6.34 2 1985-86 10.16 3 1986-87 9.83 4 1987-88 Season Close 5 1988-89 11.24 6 1989-90 11.31 7 1990-91 11.55 8 1991-92 11.50 9 1992-93 11.77 10 1993-94 11.60 11 1994-95 12.10 12 1995-96 12.06 13 1996-97 11.72 14 1997-98 11.70 15 1998-99 11.60 16 1999-00 11.70 17 2000-01 12.34 18 2001-02 12.37 19 2002-03 12.75 20 2003-04 10.82

300 Sugar Recovery

■ 1984-85 ■ 1985-86 □ 1986-87 □ 1987-88 ■ 1988-89 ■ 1989-90 ■ 1990-91 □ 1991-92 ■ 1992-93 ■ 1993-94 □ 1994-95 ■ 1995-96 ■ 1996-97 ■ 1997-98 ■ 1998-99 ■ 1999-00 ■ 2000-01 □ 2001-02 □ 2002-03 Sugar Recovery % □ 2003-04

Fig .7.13 Source: Annual Report of the factory from 1984-85 to 2003-04. The recovery percentage of sugar was studied in the period from 1984-85 to 2003-04. It was observed that during 1985-86, 1986-87,and 2003-04 recovery was 10.16 %, 9.83 %, & 10.82 % respectively. This was a low recovery as compared to the average for Maharashtra during these seasons, which stood at 11%. For the remaining years, the recovery was observed to be form 12.6 % to 12.75 %, which compared fairly well with many high recoveries, sugar co-operatives in Maharashtra.

301 The reasons for this high recovery have been the efforts made to procure the matured cane of required, quantity consistently at the right time for crushing and the scientific harvesting and transportation arranged by the factory. 7.12.7 Crushing season (days) The crushing season of the sugar factories usually starts every year from the month of October/November and lasts till the end of April. From April onwards, sugar recovery shows a downward trend, and in June percentage of sugar recovery comes down to the lowest level. The length of the crushing season largely depends upon the availability of sugarcane. For economic and viable working of any factory, it is desirable that the duration of crushing season should be around 160 days. If the crushing season of a factory is very short, it leads to an increase in overhead cost because the factory remains idle during the remaining period of the year.

-jno Table 7.15 Crushing Season (Days)

Sr. Crushing Years No. Season (days)

1 1984-85 23

2 1985-86 160

3 1986-87 144

4 1987-88 Season close

5 1988-89 162

6 1989-90 160

7 1990-91 208

8 1991-92 191

9 1992-93 180

10 1993-94 149

11 1994-95 189

12 1995-96 263

13 1996-97 162

14 1997-98 193

15 1998-99 204

16 1999-00 222

17 2000-01 180

18 2001-02 142

19 2002-03 150

20 2003-04 126

^01 Crushing Season (Days)

300 ■ 1984-85 ■ 1985-86 □ 1986-87 250 □ 1987-88 ■ 1988-89 ■ 1989-90 200 ■ 1990-91 □ 1991-92 ■ 1992-93 150 ■ 1993-94 □ 1994-95 ■ 1995-96 100 — ■ 1996-97 ■ 1997-98 ■ 1998-99 ■ 1999-00 ■ 2000-01 □ 2001-02 □ 2002-03 □ 2003-04 Crushing Season (days)

Fig .7.14 Source: Annual Report of the factory from 1984-85 to 2003-04. From the above Table 7.15 the duration of crushing season per year from 1984-85 to 2003-04 is observed. The factory is seasonal in character and it worked from 1984-85 to 2003-04 between 126 days to 263 days. Though there is increasing trend, the crushing season is mostly dependent upon availability of sugarcane in the operational area of the factory and availability of sugarcane from non-members’ cane produce.

304 7.12. 8 Average cane yield (Tons per hectare): The average yield per hectare during each year from 1984-85 to 2003-04 is given below: - Table 7.16 Average Cane Yield (Tons Per Hectare)

Average cane Sr. Years Yield (tons per No. Hectare)

1 1984-85 76.37

2 1985-86 75.47

3 1986-87 85.12

4 1987-88 Season close

5 1988-89 68.00

6 1989-90 69.86

7 1990-91 66.86

8 1991-92 100.44

9 1992-93 99.87

10 1993-94 78.55

11 1994-95 80.68

12 1995-96 89.49

13 1996-97 57.32

14 1997-98 80.08

15 1998-99 82.38

16 1999-00 75.20

17 2000-01 82.02

18 2001-02 77.35

19 2002-03 79.90

20 2003-04 70.08

305 Average Cane Yield (Tons Per Hectare)

120 ■ 1984-85 ■ 1985-86 □ 1986-87 100 □ 1987-88 ■ 1988-89 ■ 1989-90 ■ 1990-91 □ 1991-92 ■ 1992-93 ■ 1993-94 □ 1994-95 ■ 1995-96 ■ 1996-97 ■ 1997-98 ■ 1998-99 ■ 1999-00 ■ 2000-01 □ 2001-02 Average cane Yield (tons per □ 2002-03 Hectare) □ 2003-04 Fig .7.15 Source: Annual reports, from 1984-1985 to 2003-2004, It is observed from the Table 7.16 that average yield per hectare in 1984- 1985 was 76.37 and in the year 2003-2004 at 70.08. The average yield has reached its peak in 1991-1992 that was 100.44, But thereafter it showed decreasing trend, (See Graph No 7, 15) So the factory had to make more and more efforts to increase the per hectare yield. But in my opinion the average yield is not yet satisfactory, 7.12.9 Cane price (Rs. per tone) : The co-operative sugar factories are co-operative organization of sugarcane farmers having the primary objectives of maximizing the returns to the farmers. All the income except that which is held in reserves for investments is distributed in the form of higher cane prices. Co-operative sugar factories do not pay dividends to their members; instead, net income is distributed in the form of higher cane prices. The Government plays a vital role in the fixation of the cane price. The government has to strike a balance between holding the price line of sugar for customers on one-hand and ensuring adequate returns to the cane growers on the other, The Central Government fixes up a Statutory Minimum Price (SMP) for sugarcane in each crushing season, after taking into consideration the recommendations of Agricultural Price Commission and views of the state Government. SMP is linked to a recovery of 8.5 percent and suitable adjustments are made for recoveries above 8.5 percent. However, the state Government fixes up the State Advisory Price (SAP) at the end of each financial year on the basis of working results of each sugar factory. SAP acts as a floor price for farmers, which means that in case of shortage of cane, the sugar factories have to pay more than this price. The Government of Maharashtra has appointed ‘Cane Price Committee,’ which consists of the cabinet minister, assisted by the Director of sugar, and the chairman of the Maharashtra Rajya Sahkari Sakhar Karkhana Sangh. This committee inspects the annual accounts of each factory after the close of the crushing season and renders a decision on the highest cane price, which it may pay. At present, the factories are under obligation to pay fixed price, including advances from time to time determined by the Board of Directors, supplemented by additional price for the sugarcane supply, based on actual price realized on sale of sugar and resultant surplus. This process ensures advance payment of

307 statutory minimum price and subsequent additional payments on finalizing of the yearly surplus. The cane prices paid by the Vighnahar Co-operative sugar factory from 1984-85 to 2003-04 are shown in Table 7.17 Table 7.17 Cane Price (Rs. Per Tons)

Sr. Cane price Years No. (Rs. per tone)

1 1984-85 226

2 1985-86 230

3 1986-87 236

4 1987-88 Season close

5 1988-89 310

6 1989-90 350

7 1990-91 442.50

8 1991-92 500

9 1992-93 600

10 1993-94 1011

11 1994-95 811

12 1995-96 781

13 1996-97 911

14 1997-98 911

15 1998-99 811

16 1999-00 811

17 2000-01 931

18 2001-02 828

19 2002-03 877.70

20 2003-04 1100

308 Cane Price (Rs. Per Tons) 1200 ■ 1984-85 ■ 1985-86 □ 1986-87 1000 □ 1987-88 ■ 1988-89 ■ 1989-90 800 ■ 1990-91 □ 1991-92 ■ 1992-93 600 ■ 1993-94 □ 1994-95 ■ 1995-96 400 ■ 1996-97 ■ 1997-98 ■ 1998-99 200 ■ 1999-00 ■ 2000-01 □ 2001-02 □ 2002-03 Cane price (Rs. per tone) □ 2003-04 Fig .7.16 Source: Annual reports, from 1984-1985 to 2003-2004. It shows that the cane prices paid by the factory fluctuated from year to year with both upward and downward tendency. However, over the years of it’s working, the factory paid to members the cane prices which were always higher than the minimum prices announced by the Government. Since its inception the factory has been paying highest price per tons to the cane growers by minimizing the expenses and by maximizing output and efficiency.

309 The above Table 7.17 illustrates at a glance the price per tons of sugarcane that was received by congeries-members from the years 1984-85 to 2003-04. The minimum price payable by the factory is worked out on the basis of the recovery of the factory in the previous season during a specific period. The factory pays to its members ex-field total cane price, and expenditure incurred on harvesting and transporting of sugarcane. The average price paid during the years 1984-85 to 2003-04 was between Rs. 226/- per M.T. toRs. 1011/- M.T. Though there is increasing trend, yet the price paid by the factory is not fair as compared to the significant rise in the prices of inputs viz. fertilizers. Sugarcane growers were not satisfied and demanded more cane price than what was paid to them. The factory pays cane price within 14 days from the date of receipt of cane.

7.13 CONCLUSION: It is observed that success of Shri Vighnahar co-operative sugar factory Ltd as experiment at Shiroli, Dhalewadi; in Junnar Taluka is a source of inspiration. Under such circumstances, various social leaders had taken lead in creating confidence among the farmers and inspired them to organize themselves for establishing a co-operative sugar factory. The main aims and objectives incorporated were to get more benefit of the agricultural product and to begin the supplementary business based on farming. Initially, there were 232 villages covered under the command area of the factory. A search for proper man ended as Mr. R. K. Borkar, Present Managing Director joined the factory on 1*‘ May 1988. His expertise sensed the problems of the factory. He, with the help of Board of directors, who had full confidence in him, prioritized the problems. Planned efforts towards the targets were followed by the success story in coming years. It is worth seeing here the famous principle of human resource development. “Take care of Men, they will automatically take care of the Organization”. Thus this managerial turn around is one of the most important causes behind the saga of success of Vighnahar. Vighnahar employees are only 625 workers to run a sugar factory of 1250 T.C.D. This is the only sugar factory in Maharashtra run by the lowest number of workers. This has saved lacks of Rs. of the factory on 310 the wage bill itself. But only this is not sufficient to say. The workers at Vighnahar are best-paid workers in the industry. This has resulted into increased worker efficiency and less labour turnover. Operational performance of the factory ; Some of the important criteria used to judge the financial as well as technical efficiency are expansion of crushing capacity, area under sugarcane (in hectors), cane crushed (in tons), sugar production (in quintals), capacity utilization, sugar recovery, crushing season (days), average cane yield (tons per hectare), cane price paid (Rs. per tons). In 2002-2003, the factory had expanded crushing capacity from 2500 tons to 5000 tons per day. Due to the increase in crushing capacity and availability of adequate sugarcane, the production reached to 8,19,410 quintals. The sugar production in 2003-2004 was slightly lower as compared to that of the previous year. The recovery percentage of sugar was studied for the period from 1984- 85 to 2003-04. It was observed that during 1985-86, 1986-87,and 2003- 04 recovery was 10.16 %, 9.83 %, & 10.82 % respectively. This was a low recovery as compared to the average for Maharashtra during these seasons, which stood at 11%, For the remaining years the recovery was observed to be form 12.6 % to 12.75 %, which compared fairly well with many high recovery, sugar co-operatives in Maharashtra. The reasons for this high recovery have been the efforts made to procure the matured cane of required, quantity consistently at the right time for crushing and the scientific harvesting and transportation arranged by the factory. Since its inception the factory has been paying highest price per tons to the cane growers by minimizing the expenses and by maximizing output and efficiency. The factory pays to its members ex-field total cane price, and expenditure incurred on harvesting and transporting of sugarcane. The average price paid during the years from 1984-85 to 2003-04 was between Rs. 226/- per M.T. to Rs. 1011/- M.T. Though there is increasing trend, yet the price paid by the factory is not fair as compared to the significant rise in the prices of inputs viz. fertilizers. Sugarcane growers were not satisfied and demanded more cane price than what was paid to them. The factory pays cane price within 14 days from the date of receipt of cane.

311