cluster development india - diagnostic study

8/7/2019 Cluster development India - Diagnostic study

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CLUSTER DEVELOPMENT PROGRAMME, INDIA

DIAGNOSTIC STUDY

SME

PETHA (SWEET) CLUSTER

AGRA (UTTAR PRADESH)

BY

ADESH MOHAN

MINISTRY OF FOOD PROCESSING INDUSTRIES

NEW DELHI

DEVELOPED UNDER

THE TRAINING PROGRAMME FOR THE CLUSTER DEVELOPMENT

AGENTS, ORGANISED BY UNIDO CDP NEW DELHI

&

THE ENTREPRENEURSHIP DEVELOPMENT INSTITUTE OF INDIA

(EDII), AHMEDABAD

YEAR 2001


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The views expressed in the Diagnostic Studies are those of the

authors and should not be attributed to UNIDO or to the

institutions they may represent.


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CONTENTS

NO. TOPIC PAGE

1INTRODUCTION

1.1 Global Production of Fruits & Vegetables1.2 About 'Petha'

1.3 The Petha Cluster At Agra1.4 A Checkered Path of Growth

1.5 The Present Scenario

1

2THE PRODUCTION PROCESS

3

3SKETCH OF THE SMES, OTHER ENTERPRISES &

INSTITUTIONS IN THE CLUSTER

3.1 Industry Structure At Agra3.2 Local Institutions3.3 Central Government Institutions3.4 The Cluster Map

4

4ANALYSIS OF BUSINESS OPERATIONS

4.1 Raw Material4.2 Market

4.3 Networking In The Petha Industry

4.4 By-Products4.5 Industrial Space

4.6 Finance-Term Loans And Working Capital Needs4.7 Machinery, Production And Testing

8


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5ASSESSMENT OF ORGANISATION & LINKAGES

A Static Cluster Association Has Not Played A Proactive Role Modernization Of Plant And Modification Of Product Is Required

Testing And Quality Control Brand Building

11

6

SWOT ANALYSIS

Strengths

Weakness Opportunities

Threats

12

7VISION FOR THE CLUSTER & ACTION PLANS

7.1 The Vision Statement7.2 Action Plan (First Year)

7.3 Action Plan (Second & Third Year)

13


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1. INTRODUCTION

1.1 GLOBAL PRODUCTION OF FRUITS & VEGETABLES

Horticulture is one of the most important economy sectors of India. The country produces over 130million tons of fruits and vegetables and with that it stands second in world production. The fruits andvegetables processing industry has been termed as the 'Sun-rise industry' for India. The global processingbusiness is valued around Rs16000 billion and Indias contribution to that is Rs1400 billion. It is alsointeresting to note that at present only 2% of India production of fruits & vegetables is commerciallyprocessed, whereas in the developed countries this figure is more than 50%. The country's average annualgrowth rate of processed fruits and vegetables over the last five years has been around 22%.

1.2 ABOUT 'PETHA'

The fruit 'Ash Gourd', the botanical name of which is Benincasa hispida and is commonly known in Indiaas Petha or termed as Kushmand in ancient ayurveda, is believed to have remarkable curative properties.Wholesome and nutritive, it is known to act like a blood coagulant and is used in treatment of pepticulcers and obesity. The delicious sweet preparations made from it are used for the treatment oftuberculosis, weakness of the heart and anemia. The Petha has been an Indian favourite for centuries, notonly for its medicinal properties but also for its sublime flavour. This innocuous pumpkin like vegetablehas been transformed into a gourmets fantasy in the famous crystalline and translucent form of sweetPetha.

1.3 THE PETHA CLUSTER AT AGRAThe Petha cluster in Agra is more than a century old. Petha here refers to a form of sweet that is madefrom Ash-Pumpkins. The clustering of enterprises involved in production of Petha sweet occurred in Agradue to the availability of raw fruit here and the fondness of local people for sweets.

Most of Petha manufacturing units are located at Nurie Darwaza in Agra. Legend has it that the EmpressNur Jahans convoy halted at this spot, which housed the Petha industry at that time. She was offered thehumble Petha as a traditional Indian offering of sweets to the guest and the Empress liked its taste andlavished praise on it. The traders were so touched by the royal approval that they named the market NurieDarwaza.

The Petha fruit is easily available in Agra and nearby areas. The Bania and the Muslim community werethe main ones to be involved in this trade and their community's bias has been the major cause for thegrowth of this industry. However, the growth of the industry has been extremely slow because oftraditional processing. The processing of the sweet is still completely manual. Only two-three units haverecently started using certain amount of technology for the preservation of the sweet.


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1.4 CHECKERED PATH OF GROWTH

The checkered history of Petha sweet cluster is characterized by the change of environment both externalas well as internal compulsions:

Period upto 1980: The growth was extremely slow but steady. Agra was emerging as a major tradingcenter and more and more businessmen were starting to set up their manufacturing units here.

During the 1990s:

The numbers of Petha processing units increased remarkably but most of them were unauthorised

Some improvements in process like introduction of canning technology

Number of commission agents was doubled. Some exports started to U.S.A. & Middle East Countries

Pollution control board had directed to shift all the units to another place because of pollution ofriver Yamuna. The State Government arranged for land in Kalindi Vihar to set up all the unitsthere.

1.5 THE PRESENT SCENARIO

Although the production of Petha sweet has been started in many parts of U.P. and Delhi yet the Petha ofAgra ranks at the top because of its good taste and variety. At present there are about 500 units that areproducing Petha sweet in Agra. However, only three or four of them are working efficiently and haveadopted canning technology to export their products in the international markets. The demand for Petha

sweet in the domestic market is also increasing day by day as the sweet is a quite an affordable one and isknown to give energy and keeps the body cool in summers.

This is a labour oriented work as not much mechanisation has been done as yet. Easy & cheaperprocessing and easy loan system through commission agents has lead to sub contracting of production.Many workers after receiving experience of 2-3 years have started running their own units with a smallworking capital investment, which too is easily available from commission agents.

Environmental degradation caused by effluents let out by the manufacturing unties has been worrying theState Government. The waste water from Petha manufacturing units has higher content of BOD(Biological Oxygen Demand) and COD (Chemical Oxygen Demand) and also contains some suspended

solids, dissolved solids etc. This waste-water is usually let out in the river Yamuna that makes the waterunusable and unsafe. The State Government is planning to shift all the Petha manufacturing units atKalindi Vihar where a common waste water treatment plant has been establishes, but most of themanufacturers are not keen on shifting their units because of lack of other infrastructure facilities there.Besides, the small manufacturers lack the purchasing power to buy their own piece of land.


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2. THE PRODUCTION PROCESS

PROCESS FLOW CHART PETHA SWEET

Petha Fruit

Washing

Pieces are pierced with nail like spikes

Sorting

Cutting into pieces

Cutting into small pieces

Removal of seeds

Pieces are finally immersed in

boiling sugar syrup for an hour

Canning

Drying in trays

Packing

Boiling in water having Phitkiri

Washing with fresh water

Pieces are immersed in Lime Water for 2 hrs


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3. SKETCH OF THE SMES, OTHER ENTERPRISES & INSTITUTIONS

3.1 THE INDUSTRY STRUCTURE AT AGRA

The city of Agra enjoys a world-fame because of the Taj Mahal, which is why one can find tourist inflowhere throughout the year. In the industrial map of India, Agra is famous for its leather shoemanufacturing, Petha manufacturing and even generator production. Due to pollution related problems,most of the industries are being shifted to the outskirts of the city.

STRUCTURE OF THE INDUSTRYIt is estimated that there are as many as 500 units in this industry, each one employing on an average 6persons thus leading to a direct employment of almost 3000 persons. Besides, another 1000 persons are

dependent on the related enterprises and trading activities of the industry. A classification of these unitsaccording to a geographical area in Agra district is given as under:

Geographical Distribution of the Petha Sweet Industry

Place Number of UnitsNoorie Darwaja 380

Sheetla Gali 50Bagh Muzzafar Khan 40

Chippitola 10Moti Katra 20

Total 500

The Petha industry and businesses can be broadly classified as:

Big Groups having their own production units or shops. They supply their products to differentcities and have even started exporting sweets.

Medium groups having their own production units, shop etc but they supply their product tocommission agents and not directly to markets in different cities.

Very small groups having their own production unit but they are dependent upon the commissionagents even for the raw material and marketing of the product.

Commission Agents who have no production units of their own but are involved in trading

activity.

The structure of the industry has an upside down pattern of different categories of units according to theirturnover:


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3.2 LOCAL INSTITUTIONS

Shahid Bhagat Singh Kutir Petha Udhyog Association, Agra

There are about 500 manufacturing units of Petha sweet in Agra but only 100 units hold the membershipof this association. The association was formed in 1980 to safeguard the interest of the industry bypresenting to the Government departments, the problems and the difficulties caused by the Policies etc.This is the main organisation that provides a link between the industry and trade on one side, and theCentral and the State Governments on the other. The members of this association do not have regularinteractions and meet only when there is any issue regarding Government policies. They do not conductseminar, workshops etc for the developmental of the cluster. The association is financially weak as thereis no annual membership fees charged and thereby absence of any means of revenue.

Public Health Department

The Public health department is a State Government department that monitors the quality of water supplyand draws the samples from manufacturing units to get them analysed in their laboratories. The samplesthat are drawn compulsorily by the department inspectors on random selection of units and it involves alarge quantum of work. Besides it also provides testing facilities to the entrepreneurs for a nominal feecharge.

3.3 CENTRAL GOVERNMENT INSTITUTIONS

Ministry of Food Processing Industries

A separate ministry was formed by the Central Government in 1989 to promote the food-processingsector. The ministry implements the fruit product order 1955 that regulates sanitary and hygieniccondition, quality of production, machinery and work area standards. It also provides technicalconsultancy to firms and gives them financial assistance through soft loans and grants.

The Department of Small Scale Industries

450 Units Rs45 crores




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AGRA PETHA CLUSTER

This department also gives consultancy for the development of food processing industries.

The Food Processing Training Centres (FPTC)

FPTC are Government funded training centres that impart training to persons who are working in foodprocessing factories or want to set up a new unit.


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3.4 THE CLUSTER MAP

Commission

Agents

Petha Fruit

Producing areas1) U.P Agra Etah Etawa Meerut Muzzafarnagar Bulandshahar2) Karnataka Bangalore Mangalore3) Maharashtra

Machinery Suppliers

1) Furnaces2) Pans

3) Sealing Machines

Local consumer

Or

Hawkers

Institutionalbuyers including

canteens

Commission

Agents

Exporters

Domestic Market

Delhi, Mumbai, U.P,Maharashtra,

Gujarat, Rajasthan

Export MarketU.S.A. Middle East

Countries

Sugar1) U.P Daurala Rampur

2) Maharashtra

Petha Sweet Manufacturing Units500 units

10 Units Rs30 crores L

40 Units Rs25 Crores M450 Units Rs45 Crores S

Support Institutions

1) Shahid Bhagat Singh Dwar

Laghu Kutir Petha Udyog

Association2) Public Health Department

3) Banks


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4. ANALYSIS OF BUSINESS OPERATION

4.1 RAW MATERIAL

Mainly two types of raw materials are used in the processing of the Petha fruit i.e. Raw Fruit (AshPumpkin) and Sugar.

The fruit is brought by the farmers from the districts of Etha, Etawah, Aligarh, Meerut, Mujaffarnagar andBulandshahar, to sell them at the Petha Mandis (wholesale markets). It is also brought from some part ofMaharashtra and Madhya Pradesh. During the peak of summer season due to a shortage of Petha Fruit,the latter is even brought from south India i.e. Bangalore, Mangalore and Pune.

Sugar is supplied from Daurala and Rampur in UP, and from Maharashtra. As 90% of the total units arevery small and lack finance so they are totally dependent upon the commission agents for raw materialssupply. Therefore the commission agents dominate the market trends.

4.2 MARKET

The major market for Petha sweet is the state of UP and then comes Delhi, Rajasthan, Haryana andMadhya Pradesh. There are some part of Gujarat and Maharashtra also where the sweet is marketed.Some units have also started exporting canned Petha to Middle East countries. The sales are carried outthrough the following channels:

MARKETING CHANNEL PERCENTAGE OF UNITS

Through commission agents 70%

Through own shops & commission agents 20%

Directly through own shops and other markets 10%

As Petha sweet is a perishable item so its export is very difficult but two -three manufacturers with theuse of canning technology have started exporting the product to U.S.A and Gulf Countries, but their shareis still negligible.

4.3 NETWORKING IN THE PETHA INDUSTRY

The commission agents take away a lions share of the value added in the Petha industry, first during thesupply of raw fruit and then in the marketing of the finished product. Thus it would be of tremendousbenefit to the manufacturers if the role of these agents could be reduced in the whole game. This ispossible if: -

1. Linkages are developed with farmers and marketing federations.2. Sufficient capital is made available to the manufacturing units so that they do not have to depend

on the commission agents for their financing needs.


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4.4.BY-PRODUCTS

In Petha Industries there are three kinds of by products:- Peels- Pulpy material- Seeds

It is however sad to note that all these by products are being thrown without any utilisation. If some R&Dwork is done on these products, then they can be further used to make some other products.

4.5 INDUSTRIAL SPACE

The large-scale Petha sweet manufacturers who are involved in the canning of product and have FPO

license are well planned and have spacious land and buildings. But these are very few in number and mostof the rest of the industry lacks in adequate space and hygienic and sanitary working conditions.

4.6 ENTREPRENEURIAL BACKGROUND LABOUR AND TRAINING

The manufacturing and trading of Petha sweet has traditionally been a family business. Almost all theenterprises are managed either on proprietary basis or as partnership concerns. Most of the new units thatare emerging now are actually out of family partitions or partnership separations. The induction of familydescendents in business at a very young age has been a normal practice. The youngsters usually learn on-the-job and rarely go for a professional or technical education.

There are two types of labour involved in the industry i.e. semi-skilled and un-skilled. The semi-skilled

labourers do not have any professional qualification but they have sufficient experience to manufacturethe product. But the unskilled labourers neither have professional qualifications nor the experience tomake the product. They are employed only to help the semiskilled labour with ancillary tasks. There is noconcept of technical training for anyone in the cluster.

4.6 FINANCE-TERM LOANS AND WORKING CAPITAL NEEDS

LARGE UNITSThe large Petha making units are well organised in financial planning and control. Their accountingsystems are up-to-date and hence they are able to timely provide the information and financial statementsto the banks to get the required term loan whether for acquiring new machinery, expanding operations or

for day to day working capital requirements.

SMALL UNITSThe small units are financially less organised and most of them have not availed any term loan frombanks etc. However, they are making use of the banks for their working capitals needs. As many of theunits do not have municipal licenses so they are not easily granted loans and as a result these types ofunits are solely dependent on the private financing.


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4.7 MACHINERY, PRODUCTION AND TESTING

MACHINERIES ARE FAIRLY OLD:The use of machinery is very limited in the industry. And whatever machinery some units are using isgenerally 25-30 years old. The SMEs are mostly unaware of new technologies as the entrepreneurs areprofessionally not qualified. Only 2-3 units have started using modern canning technology for thepreservation of Petha sweet for exports.

PROCESSING METHODSThe process of manufacturing Petha sweet is completely manual. Although the process is simple but oneneeds a lot of experience to actually manufacture the product. Hygienic and sanitary conditions are not up

to the mark in most of the units. Old and traditional heating systems i.e. Coal fired bhattis (furnace) areused for processing. There are reports of some units being interested in looking for alternate fuels.

TESTINGThere is almost an absence of testing facilities in Agra. Small units do not go for testing of their materialwhile the three-four bigger ones have some in-house equipment for testing their products.

LABOURMost of the workers in these units are unskilled. Some of them have acquired the necessary skills throughexperience and learning fellow skilled workers. The entrepreneurs believe that the workers have sufficientexperience and require no further training etc for the improvement of the product.

The wages, work load, bonus etc are governed by bilateral verbal agreements between the employer andthe employee. The labourers are mostly working at the mercy of the owner and hence the wage levels arecomparatively low making the former socially and economically weak.


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5. ASSESSMENT OF ORGANISATION AND LINKAGES IN THE

CLUSTER

A STATIC CLUSTERThe SME segment of cluster has remained static for decades. The growth and development achieves inthe eighties did not sustain for a long time. This is mainly due to the failure of SMEs to adopt themselvesto the changing trends in technologies, market and products. It is observed that a few units have takeninitiatives to develop processes, products and markets since last two three years, but the most of them areworking in the same fashion as they were 20 years ago.

ASSOCIATION HAS NOT PLAYED A PROACTIVE ROLEThe association is active only in case of policy related issues and has been ignoring the overalldevelopment of the cluster. A proactive role from the association can lead to a healthy growth anddevelopment of healthy linkages for the industry.

MODERNISATION OF PLANT AND MODIFICATION OF PRODUCT IS REQUIREDThe processing of Petha is still completely done manually, because of which productivity is low, and thehygienic and sanitary conditions are not maintained. As India has a monopoly in this product, a slightmodification in production methods and packaging can open new markets at the international level.

TESTING AND QUALITY CONTROL

The testing and quality control systems have so far not been implemented as an integral function of theindustrial management due to a lack of awareness.

BRAND BUILDINGSome of the units are already popular by their brand names in the domestic market. The importance ofbrand building is slowly being understood by the enterprises.


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6. SWOT ANALYSIS

STRENGTHS

Almost all the entrepreneurs have businessbackground

Easy availability of cheap labour Comfortable availability of raw materials and

other inputs Installed/production capacity is more than

sufficient. Connected with main rail line and road for easy

transportation Easy availability of credit.

WEAKNESSES

Low levels of modernization and up-gradationof technology.

Low Labour productivity. Lack of awareness about quality/pollution

control/energy saving measures etc. Product diversification is limited. High dependence on commission agents for

marketing.

OPPORTUNITIES

Untapped potential in Rajasthan, Haryana,Maharashtra, Gujarat

Scope of export to USA and Middle East

countries. Favourable Government policies

THREATS

Improvement in quality to national andinternational standards

Government policies


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7. VISION FOR THE CLUSTER & ACTION PLAN

7.1 THE VISION STATEMENT

"A shift from Quantity production to hygienically processed Quality product with an increase in profitability by the year 2004."

7.2 ACTION PLAN (FIRST YEAR)

Sl. No. Activity Number Approx cost(Rs)

Total Cost (Rs) Action By Man days ForCDA

1 Strengthening of theAssociation

4 10,000/- permeeting

40,000/- (30,000/- Proposedto be borne by MFPI & Rs

10,000 by Assn)

ShahidBhagat

Singh KutirPetha

UdhyogAssociation

(Assn)

30 days

2 Creating a databaseof the cluster

MiscellaneousExpenses

Rs. 1000/- Assn.

3 Seminar on Quality,Hygiene, PollutionControl, legalmatters etc.

4 10,000/- perseminar

40,000/- (30,000/- Proposedto be borne by MFPI& 10,000/- Assn.)

Assn 20 days


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4 Workshop on

Packagingconsultancy

2 25,000/-

1,50,000/-

50,000/- Proposed to be borne

by MFPI & 1,50,000/- Assn.

Assn. 20 days

5 Training programmeon quality, hygiene,legal matters

4 10,000/- pertraining

40,000/- (30,000/- Proposedto be borne by MFPI& 10,000/- Assn.)

SGS 20 days

Total Proposed to be borne by

MFPI 1,40,000/-ASSN. 1,81,000/-


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7.3 ACTION PLAN (SECOND & THIRD YEAR)

Sl No. Activity Period

1 Common website 2nd Year

2 Setting up network chains

3 R&D on Technology for process, product and wastematerial

4 Quality Certification ISO-9000, ISO-14000 HACCP

5 Market development

6 Formation of Common testing facility Centre 3rd Year

7 Technology up gradation in manufacturing units

8 Common Brand Name

cluster development india - diagnostic study

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