submitted on - sidbi

Diagnostic Study Report of Hyderabad Pharma Cluster, Telangana

UPDATION OF FINANCIAL & NON-FINANCIAL GAPS IN ALAPPUZHA FLOOR COVERING CLUSTER, KERALA

Submitted to:

Small Industries Development Bank of

India

Strictly Private and Confidential

Submitted on: December 2020

Mapping of Financial & Non-Financial Gaps in Alleppey Floor Covering Cluster, Kerala 1

Table of Contents

List of Tables ............................................................................................................................. 5

List of Figures ............................................................................................................................ 6

Abbreviations ............................................................................................................................. 7

1 Executive Summary ............................................................................................................ 9

Cluster Population And Structure ................................................................................. 9

Key Issues Faced by MSMEs in Cluster ...................................................................... 9

1.2.1 Raw Material ......................................................................................................... 9

1.2.2 Finance ................................................................................................................. 9

1.2.3 Market..................................................................................................................10

1.2.4 Skill Development ................................................................................................10

1.2.5 Infrastructure........................................................................................................10

1.2.6 Other Issues ........................................................................................................10

Credit Demand, Supply & Gap ....................................................................................10

Key Recommendations & Action Plan .........................................................................11

2 Brief Background and Methodology ...................................................................................13

Context of the Assignment ..........................................................................................13

Objective and Scope of the Assignment ......................................................................13

Approach ....................................................................................................................14

Overall Project Methodology .......................................................................................15

2.4.1 Secondary Research ...........................................................................................15

2.4.2 Primary Research ................................................................................................15

Methodology for Credit Gap Assessment ....................................................................15

2.5.1 Credit Demand Estimation ...................................................................................16

2.5.2 Credit Supply Estimation ......................................................................................17

2.5.3 Credit Gap Estimation ..........................................................................................18

3 Baseline Study of the Cluster .............................................................................................20

Products .....................................................................................................................20

Place...........................................................................................................................20

History And Evolution Of The Cluster ..........................................................................21

Cluster Profile – Basic Statistics ..................................................................................22

Ecosystem Of The Cluster ..........................................................................................23

3.5.1 Government Bodies .............................................................................................23


3.5.2 Industry Associations ..............................................................................................24

3.5.3 Technical Institutions ...............................................................................................25

3.5.4 Training Institutions ................................................................................................25

3.5.5 Financial Institutions ...............................................................................................25

3.5.6 Machinery Suppliers ..............................................................................................25

Raw Material Used ......................................................................................................25

Production/Manufacturing Process .............................................................................26

Value Chain Analysis Based on Financial Transactions ..............................................30

Market/Customer ........................................................................................................32

3.9.1 Agencies of Kerala Government ..........................................................................32

3.9.2 Coir Board ...........................................................................................................33

3.9.3 Private wholesalers and retailers .........................................................................33

3.9.4 Coir Exports .........................................................................................................33

Skill Development .......................................................................................................33

Finance .......................................................................................................................34

Usage of Schemes......................................................................................................37

General Infrastructure .................................................................................................38

Common Facility Centres In The Cluster .....................................................................39

3.14.1 Alappuzha Coir Cluster Development Society (ACCDS) ......................................39

3.14.2 Business Development Centre supported by IIUS and SIDBI ..............................39

3.14.3 Harippad Coir Cluster development Society .........................................................40

3.14.4 Ambalapuzha Coir Cluster Development Society .................................................40

Status Of Previous Interventions .................................................................................40

3.15.1 Technology Up-gradation Program during 2002 – 2005 by State Bank of India ...40

3.15.2 “Bee-SME program for energy efficiency improvement”. ......................................41

3.15.3 Developing “Business Development Service providers” ......................................41

4 Benchmark Cluster Analysis ..............................................................................................42

History ........................................................................................................................42

Place...........................................................................................................................43

Value Chain Analysis ..................................................................................................43

5 Analysis of Business Operations ........................................................................................44

Raw Material ...............................................................................................................44

Production Process Related ........................................................................................44

Access to Markets.......................................................................................................44

Skill Development .......................................................................................................45


Finance .......................................................................................................................45

5.5.1 Financial Gap Analysis ........................................................................................46

Sustainable Development ...........................................................................................49

Infrastructure ...............................................................................................................50

Any other issues emerging in the cluster .....................................................................50

Status of business development services in the cluster ..............................................50

5.9.1 Strategic BDSP ....................................................................................................51

5.9.2 Operational BDSP ...............................................................................................51

5.9.3 Who Does Who Pays (WDWP) Matrix .................................................................51

Major Learnings from Benchmark Cluster ...................................................................51

Major Learnings from Value Chain Analysis ................................................................51

6 Suggestions & Recommendations .....................................................................................52

SWOT Analysis ...........................................................................................................52

Vision and objectives of the cluster .............................................................................52

6.2.1 Cluster Vision.......................................................................................................52

6.2.2 Long Term Objectives ..........................................................................................52

6.2.3 Short Term Objectives .........................................................................................53

Recommendations & Action Plan for Non - FINANCIAL Areas ...................................53

6.3.1 Raw Material ........................................................................................................53

6.3.2 Improving the physical infrastructure and Technology (Machinery) ......................54

6.3.3 Concern Area: Skill Development ........................................................................54

6.3.4 Concern area: Domestic Market Development .....................................................54

6.3.5 Access to Product Diversification & Testing Facility .............................................54

6.3.6 Information dissemination ....................................................................................54

Recommendations for Financial Issues .......................................................................56

Interventions Suggested at Policy, Cluster and Unit Level ..........................................56

6.5.1 Initiatives where SIDBI may intervene ..................................................................57

Big Impact Initiatives ...................................................................................................58

7 Annexure ...........................................................................................................................59

Comparative Analysis Between Previous Study and Present Study ............................59

7.1.1 Basic Statistics .....................................................................................................59

7.1.2 Comparative on Key Issues .................................................................................59

Sample Target vs Achieved ........................................................................................62

List of Stakeholders / Interviewees ..............................................................................62

Validation Exercise .....................................................................................................64


Secondary Sources Referred ......................................................................................66

Questionnaire for Principal Firms ................................................................................67

Questionnaire for Public and Private Service Providers ..............................................73

Questionnaire for Support firms (Buyers like wholesalers, retailers, exporters etc.) ....75

Questionnaire for Support firms (Supplier of raw material/machinery) .........................78

Questionnaire for Banks/ NBFCs/ other FIs ................................................................81

Questionnaire for BMO ...............................................................................................83


LIST OF TABLES

Table 1.1 Cluster Statistics ........................................................................................................ 9

Table 1.2 - Credit Gap Analysis ................................................................................................10

Table 2.1 Credit Demand Estimation Process ...........................................................................16

Table 2.2 - Credit Supply Estimation Process ...........................................................................17

Table 3.1 - Product Categories .................................................................................................20

Table 3.2 – Alappuzha district profile ........................................................................................20

Table 3.3 - Cluster statistics ......................................................................................................22

Table 3.4 - Value chain for 1’ x 5’ Panama matting ...................................................................31

Table 3.5 - Value chain mapping for PVC Tufted mat – a batch of 108 sq. mtr..........................31

Table 3.6 - Product Usage Matrix ..............................................................................................32

Table 3.7 - Domestic sale of Coir products ................................................................................33

Table 3.8 - Exports from Alappuzha ..........................................................................................33

Table 3.9 Details of Skilled/unskilled persons in the Cluster ......................................................34

Table 3.10 Whether MSMEs have ever applied for a loan before ..............................................34

Table 3.11 Source of Borrowing ................................................................................................35

Table 3.12 - Government’s Scheme Awareness .......................................................................36

Table 3.13 - Government’s Scheme Availed .............................................................................36

Table 3.14 SIDBI’s Scheme Awareness ....................................................................................36

Table 3.15 SIDBI’s Scheme Availed ..........................................................................................37

Table 3.16 Usage of Schemes ..................................................................................................37

Table 3.17 Train Connectivity ....................................................................................................38

Table 3.18 Industrial Estates in Alappuzha ...............................................................................38

Table 4.1 Profile of Pollachi coir cluster ....................................................................................42

Table 4.2 Gist of comparison with Pollachi Cluster ....................................................................43

Table 5.1 Credit Supply Estimation ...........................................................................................46

Table 5.2 - Working Capital Demand Assessment ....................................................................48

Table 5.3 - Term Loan Demand Assessment ............................................................................48

Table 5.4 - Credit Gap Analysis ................................................................................................49

Table 5.5 Who Does Who Pays Matrix ......................................................................................51

Table 6.1 Gist of the action plan (Hard intervention) ............................................................54

Table 6.2 Gist of the action plan (Soft intervention) ...................................................................55

Table 6.3 - Recommendations for Financial Issues ...................................................................56

Table 6.4 – Initiatives where SIDBI may Intervene ....................................................................57

Table 7.1 Comparative Between the Previous Study and this study ..........................................59

Table 7.2 - Sample Mix .............................................................................................................62

Table 7.3 - List of Interviewees .................................................................................................62


LIST OF FIGURES

Figure 2.1 Project Approach......................................................................................................14

Figure 2.2 - Credit Gap Estimation Methodology .......................................................................15

Figure 3.1 - Geographical Spread of the Cluster .......................................................................21

Figure 3.2- Cluster Map ............................................................................................................23

Figure 3.3- Raw Materials .........................................................................................................25

Figure 3.4- Production / Manufacturing Process ........................................................................26

Figure 3.5- Manufacturing Process (Spinning) ..........................................................................27

Figure 3.6- Manufacturing Process (weaving) ...........................................................................28

Figure 3.7- Process Flow chart - Matt and Matting process flow chart .......................................30

Figure 3.8 Process Flowchart - PVC Tufted mat production process .........................................30

Figure 3.9 Loan Purpose ...........................................................................................................35

Figure 3.10 Business Development Center funded by SIDBI and FICEA Office ........................39

Figure 5.1 Issues Faced while Applying for Loans ....................................................................46

Figure 5.2 Hazardous condition ................................................................................................49

Figure 5.3 Infrastructure condition .............................................................................................50


ABBREVIATIONS

Abbreviation Full-Form

MSME Micro Small and Medium Enterprises

GDP Gross Domestic Production

RBI Reserve Bank of India

BDS Business Development Services

DIC District Industries Centre

MSME-DI Micro Small Medium Enterprises Development Institute

SIDBI Small Industries Development Bank of India

WCD Working Capital Demand

TLD Term Loan Demand

MOSPI Ministry of Statistics & Program Implementation

ASI Annual Survey of Industry

SLBC State Level Bankers Committee

CCRI Central Coir Research Institute

CICT Central Institute of Coir Technology

Coir Fed Kerala State Coir Co-op. Marketing Federation

FICEA Federation of Indian Coir Exporters Association

ICA Indian Coir Association

ICEC Indian Coir Exporters Chamber

CSC Coir Shippers Council

TCMMMA Travancore Coir Mat & Mattings Manufacturers Association

KSSCMF Kerala State Small Coir Manufacturers Federation

KSSIA Kerala State Small Industries Association

SPEM State Poverty Eradication Mission

NHG Neighborhood Groups

ADS Area Development Society

CDS Community Development Society

NCRMI National Coir Research & Management Institute

ACCDS Alappuzha Coir Cluster Development Society

WII Winrock International India

CBRC Centre for Business Research

SFURTI Scheme of Funds for Regeneration of Traditional Industries

PMEGP Prime Minister’s Employment Generation Program


BEE MoP Bureau of Energy Efficiency, Ministry of Power

DIPP Department of Industrial Policy and Promotion

IIUS Industrial Infrastructure Up-gradation Scheme

CA Chartered Accountant

CVY Coir Vikas Yojana

SMILE SIDBI Make in India Soft Loan Fund for Micro, Small & Medium Enterprises

TULIP Top-up Loan for Immediate Purposes

SAFE SIDBI Assistance to Facilitate Emergency Response against Corona Virus


1 EXECUTIVE SUMMARY

CLUSTER POPULATION AND STRUCTURE An age-old traditional cluster, having involved once nearly three lakhs artisans, Alappuzha Floor Covering

cluster has its uniqueness. Had an integrated system of de-husking, spinning, weaving, processing value-

added products and marketing. 90% of the coir value-added products in India are being marketed from this

cluster. Due to the environmental problem, de-fibering activity has been stand stilled. Almost 90% of the

units engaged in spinning and weaving are household/micro units. It was estimated that over 27000 such

units are existing now in the cluster. Almost 8000 weaving units are doing hand weaving. There are 75

small scale and 45 medium scale units.

Table 1.1 Cluster Statistics

Head 2019-20

Cluster Turnover (INR Cr)

Micro 2,766

Small 76

Medium 173

Total 3,015

No. of Units

Micro 27000

Small 75

Medium 45

Total 27120

Employment

Skilled 65000

Unskilled 80000

Total 145000

Exports (INR Cr) 15 % of the total turnover 864

Source: Industry associations/BMOs/Coir Project Office/Coir Board/Estimation

Government of Kerala has been considering Coir as priority sector as it provides a livelihood for coastal

people. In Alappuzha, 291 societies are working in the coir sector.

KEY ISSUES FACED BY MSMES IN CLUSTER

1.2.1 Raw Material

• Production of basic raw material, i.e. coir fibre is minimum in the cluster and mainly depending upon Tamil Nadu (almost 90%). It was also observed that there was deterioration in quality and fluctuation in price, at times 10%. Tamil Nadu is now concentrating export of fibre. Government of Kerala taking aggressive measures to establish defibering units by providing capital subsidy. The husk collection was the major issue.

1.2.2 Finance

• Almost all units are experiencing working capital problems. The payment from suppliers is not

uniform, thereby resulting in underemployment in household /micro-units.


1.2.3 Market

• Household and micro enterprises are mainly depending upon institutional support or other small

and medium enterprises for marketing. Both State and Central Governments are providing

marketing support by establishing their showrooms in various parts of the country. Coir Board

provides financial support to entrepreneurs for attending national and international exhibitions.

Kerala Coir Corporation is purchasing the material from household/micro units by protecting their

cost. Still, it is felt that the domestic market promotion, especially the households may be explored

further. The turnover of the cluster during 2019-20 is estimated to INR 3,015.00 CR and export

of INR 864ssssss CR.

1.2.4 Skill Development

• The cluster is an age-old cluster, possessing traditional skills in both spinning and weaving. In

spinning, artisans have skills in particular yarn only. The cluster needs multiple varieties, as per

the market requirement, in mechanized ratts. Skill up-gradation training may be provided to

artisans. In weaving also more than 25000 artisans are doing the manual operation. This is

cumbersome and health hazardous. Now there are different technology, wherein the mechanized

process can be used in weaving. These artisans may be provided skill up-gradation training.

1.2.5 Infrastructure

• The General infrastructure, transport, roads, electricity, etc. are moderate in the cluster. However,

specific infrastructure such as work shed, machinery, health standards, etc. needs to be improved.

The entrepreneurs may not be in a position to cope with the financial burden of changing

infrastructure and technology.

• Alappuzha Coir Cluster Development Society (ACCDS) under IIUS project has developed a few

common facility centres in various facets of this sector. Under SFURTI also CFCs have been

established in spinning and weaving. The cluster needs more CFCs under SFURTI.

1.2.6 Other Issues

• The entrepreneurs from the cluster have started their operation in Tamil Nadu, as the raw material

accessibility is better. They also use alternate fibres like Jute and sisal in manufacturing.

• The entrepreneurs and support system needs proper awareness of government as well as financial

institutions schemes.

• Apprehension amongst the artisans and unions about mechanization as it may reduce the

employment.

CREDIT DEMAND, SUPPLY & GAP There is no credit gap in the cluster as credit supply for both working capital and term loan is more than

demand.

Table 1.2 - Credit Gap Analysis

In Crores Working Capital Term Loan

Credit Demand

Micro 609 135

Small 17 3

Medium 38 14

Credit Supply

Micro 1163 2159

Small 32 59

Medium 73 135


Credit Gap for MSME -604 -2202

KEY RECOMMENDATIONS & ACTION PLAN • For improving raw material supply establish raw material banks in the cluster and more defibering

units, by following effective husk collection mechanism.

• Domestic market promotion may be accelerated through BDS support as well as establishing

marketing consortia. BDS providers may be developed and placed in the cluster with the support

of SIDBI.

• Infrastructure and technology may be improved by implementing more SFURTI programs.

• SFURTI cluster development programs will provide financial support for both soft and hard

interventions. 50 such programs may be envisaged for the next four years.

• Government of Kerala providing capital subsidy to the tune of 50% for establishing defibering units.

Efforts may be made for maximum utilization of this benefit.

• Skill up-gradation training may be provided by the identified agencies with the funding support of

the Coir Board/Government of Kerala. Coir Board and Stat Government may initiate appropriate

measures to protect the traditional skills.

• Efforts may be made for schemes awareness (both SIDBI as well as Governments) with funding

support from SIDBI.


BRIEF BACKGROUND AND CONTEXT


2 BRIEF BACKGROUND AND METHODOLOGY

CONTEXT OF THE ASSIGNMENT The micro, small and medium (MSME) sector is a major contributor and the proverbial backbone

of Indian economy. The MSME sector accounts for around 6.11% of the manufacturing GDP and

24.63% of the GDP from service activities as well as 33.4% of India's manufacturing output. It is

further estimated that the MSME sector provides employment to around 120 million persons and

contribute around 45% of the overall exports from India.

With its agility and dynamism, the MSME sector has shown admirable innovativeness and

adaptability to survive the previous economic downturn and recessions. However, different

studies have pointed out that despite their relative importance to the Indian economy, the MSME

units across the country face a lot of challenges, both financial as well as non-financial, ranging

from unavailability of timely and adequate credit, raw material, skilled personnel, access to

technology, access to market, proper infrastructure, etc.

OBJECTIVE AND SCOPE OF THE ASSIGNMENT The main objective of this study is to conduct an on-site analysis of the business dynamics and

need assessment of the cluster to do its gap analysis to work out an action plan to enhance the

cluster competitiveness, besides ascertaining the current level of hard and soft intervention.

More specific objectives of the assignment (scope of work) are as follows:

• Updation of Non-Financial gaps

o Business Services - Business Services which are strategic in nature and are

necessary to improve the competitiveness of the cluster. The agency will have to

update these kind of services which are required in the cluster, their present status,

the desired situation etc., in the cluster. The agency will update the entire

ecosystem of the cluster and also mark the cruciality of these service providers in

the entire ecosystem.

o Update need and scope for these services, as also find out the services which

these MSMEs require but don't have its availability at all in the cluster. The agency

may use various tools viz., "Who does who pays matrix", "Participatory Appraisal

of Competitive Advantage" (PACA), "Value Chain Analysis" (VCA) etc., for the

mapping.

o Update on infrastructure - issues which are continue to affect the growth of the

cluster viz. spatial issues - basic cluster infrastructure (roads, industrial

space/galas), common facility centre, SPVs, social capital, marketing

infrastructure, power, water, effluent treatment infrastructure, cloud / IT services

infrastructure, govt. linkages including PPP, environmental degradation related

issues, renewable energy sources, technical requirements (specific) etc.

Identification of gaps in the above, possible actionable points to address them

including the rough cost estimates.

o Update support services (transactional services)- support service areas which are

necessary for the improvement in the cluster. Present stage of these services


(status of services, no of service providers, % of MSMEs availing their services,

network of these service providers etc.). The agency will find out the need and

scope for these services.

o Update existing schemes of various State Govt., Central Govt, MSME-DI (MSME-

Development Institutions) and other MSME related schemes and will try to develop

the synergy between them.

• Updation of Financial Gaps

o Updated Assessment of credit gap: Document the demand and supply side issues

in current credit disbursements

▪ Services provided by various Banks / FIs / NBFCs etc. (e.g., Adequacy of

financial services with emphasis on credit, timely availability, rate of

interest/other costs, application and approval process, seasonality etc.)

▪ Key bottleneck (e.g., procedural, awareness, delay in decision making etc.)

for access to finance from various Banks / FIs / NBFCs

▪ Financial value chain analysis to recognize which activities need to be a

focus area for banks to support them through finance and specific financial

products

o Assess the institutional mechanism for the credit delivery in the cluster and also

suggest the measures to improve the same.

o Estimate the credit gap in the selected cluster by estimating the current demand &

supply in the cluster and the impact of the same on industrial growth and

competitiveness of the firms/cluster.

o Document the suggestions in terms of:

▪ Refinement required in existing products and procedures to meet the

genuine credit needs of the enterprises in the cluster

▪ Recommendations to enhance the flow of credit to the cluster

▪ Suggest on need of cluster specific financial products

▪ Chart out an action plan for implementation of the recommendation

APPROACH The project approach adopted by the study team is detailed below.

Figure 2.1 Project Approach

Source: Project Team

The elements which were covered in each of these modules are detailed below.

Baseline StudyCluster

Benchmarking Need Assessment

& Gap AnalysisDiagnostic Study

Recommendations


• Baseline Study – This was done based on secondary and primary research. Given the

complexity of the cluster in terms of the products manufactured, we first identified the key

products for focus and then did a complete value chain mapping of the identified products.

• Benchmark Cluster Analysis – In this module, we identified a renowned cluster having

similar product profile to key factors of success which can be applied/incorporated in this

cluster.

• Need Assessment and Gap Analysis – Key gaps and requirements for various factor

conditions like raw material, marketing, skill development, finance, infrastructure, testing

& certification and other such issues have been highlighted in this module.

• Diagnostic Study Recommendations – Here, hard and soft interventions along with an

action plan for implementing the same has been proposed.

OVERALL PROJECT METHODOLOGY To execute this assignment a three-pronged approach was adopted by the study team.

2.4.1 Secondary Research

Information from secondary sources such as RBI & government publications and documents from

local support institutions & research institutions have also been used for this study. A detailed list

of all the documents and websites searched are captured in Annexure.

2.4.2 Primary Research

A series of structured primary surveys were conducted to understand the main issues in the

clusters. Structured questionnaires (provided in Annexure) was developed to guide the

discussions with the MSME units and other stakeholders. Questionnaire-based interactions were

conducted with about 40 primary and 20 support stakeholders (list provided in Annexure) drawn

from:

• MSMEs in the clusters – covering micro, small and medium units

• Raw material and machinery suppliers

• Buyers

• BDS providers for various segments like infrastructure, marketing, skill development,

environment protection, finance, technology, energy efficiency and so on.

• Office bearers of cluster-level industry associations

• Government bodies such as District Industries Centre (DIC)

• Local government and private skill imparting institutions

• Lead Bank of the district

• Local Banks and financial institutions

METHODOLOGY FOR CREDIT GAP ASSESSMENT Credit gap for an MSME-Cluster can be defined as the difference between the ‘aggregate

demand of credit’ and the ‘aggregate supply of credit’ in the cluster at a particular point of time.

Estimation of Credit Gap requires identification of Credit Demand and Credit Supply to MSMEs.

Further, these can be broken down into Working Capital gap (demand, supply) and Term Loan

gap (demand, supply). Below is the schematic of credit gap estimation and discussion of

suitable credit gap estimation methodologies.

Figure 2.2 - Credit Gap Estimation Methodology


Source: Study Team Analysis

2.5.1 Credit Demand Estimation

We have used the following methods for the estimation of credit demand:

• Working Capital Demand – The working capital demand has been estimated by using

appropriate statistical tools with ‘total number’ of enterprises’, ‘their aggregate turnover’,

‘percentage of growth of the cluster’. According to the Nayak Committee

recommendations, the working capital requirement of MSME units is roughly 20 per cent

of unit turnover. The number of units and its breakup among micro, small & medium, along

with per unit turnover and the per cent growth rate that the cluster is expected to witness

in the current financial year has been found using the primary survey among MSME units

and other relevant stakeholders in the cluster including leading associations, bankers,

support stakeholders, etc.

• Term Loan Demand – The term loan demand has been arrived at by finding out the total

investments in plant and machinery in the cluster and the expected investment in plant

and machinery by the units in the cluster has been arrived at from the primary survey. The

difference in plant and machinery investments between two fiscals gives us the likely

investment in plant & machinery in this fiscal. Banks typically finance 80 per cent of any

investment in fixed assets like machinery. Using that we have arrived at the term loan

demand for the cluster.

The step-wise process for estimation of credit demand is as follows:

Table 2.1 Credit Demand Estimation Process Steps Details Source/ Calculation

Working

Capital

Demand

Step 1 Number of units in the cluster– Micro, Small & Medium (a) Primary Interactions1

Step 2 Per unit turnover of MSME in the cluster (b) Primary Interactions2

Step 3

Cluster turnover (last fiscal) for MSME (c) a*b

Average turnover growth for the Cluster (d) Primary Interactions2

Cluster turnover (present fiscal) for MSME (e) c*(1+d)

1 Interaction with Industry Associations & BDS agency for the cluster 2 Interaction with Units (survey) & Industry Associations in the cluster


Step 4 Nayak Committee Guidelines for WC Loan (f) 20%

Working Capital Funding Requirements (present fiscal) (g) e*f

Term Loan

Demand

Step 5 Cluster Total Investments in Plant & Machinery of all units in the

cluster (last fiscal) (h) Primary Survey3& Calculations

Step 6

Average growth rate of Plant & Machinery for present fiscal (i) ASI4

Cluster Total Investments in Plant & Machinery of all units in the

cluster (present fiscal) (j) h*(1+i)

Step 7

Growth in Investment in Plant & Machinery in present fiscal (k) j-h

Bank Finance (l) Primary Interactions5

Step 8 Term Credit Funding Requirement – March (present fiscal) k*l

2.5.2 Credit Supply Estimation

Enterprise turnover is one of the important criteria for loan appraisal process and it can be safely

assumed that credit supply to the cluster is correlated with the turnover generated. Thus, the study

team has used a method involving the “Proportion of Cluster Turnover to Industry State Turnover”

to arrive at cluster level credit supply.

In the first step, the study team has found out the advances given by the all scheduled commercial

banks to the same industry as this cluster from secondary sources (RBI statistical tables).

Following this, the study team found out the turnover of the industry (similar to the one for this

cluster; data from Annual survey of industries). This data is last available for 2017-18 fiscal. The

study team using IIP growth rates then calculated the state industry turnover for the required

fiscal. The cluster turnover is then calculated by multiplying the number of units with per unit

turnover (separately for micro, small and medium units) based on the primary survey that the

study team did. Cluster level advance outstanding is found by multiplying the ratio of cluster

turnover to state industry turnover with the state industry advances. Then based on the ratio of

term loan credit to total credit disbursed in the district (received from lead bank) the term loan

supply and working capital loan supply is calculated. The step-wise process for estimation of

credit demand is as follows:

Table 2.2 - Credit Supply Estimation Process # Details Source/ Calculation

Step

1

State industry advances outstanding (last fiscal) (a) Table 5.6, RBI6

Average growth rate of the state industry advances for present fiscal (b) Table 5.6, RBI6

State industry advances outstanding (present fiscal) (c) a*(1+b)

Step

2

State industry turnover (base year) (d) ASI 7

IIP Growth Rate for the sector- CAGR (e) IIP Growth Rate8

State industry turnover (present fiscal) (f) d*(1+e)

Step

3 Number of units in the cluster– Micro, Small & Medium (g)

Primary Interactions9

Step

4 Per unit turnover of MSME in the cluster (h)

Primary Interactions10

3 Primary Survey of Units in the cluster 4 ASI, MOSPI 5 Interactions with bankers in the cluster 6RBI – Basic Statistical Returns of SCBs in India – Table 5.6 7MOSPI - ASI 8MOSPI 9Interaction with Industry Associations & BDS agency for the cluster 10 Interaction with Units (survey) & Industry Associations in the cluster


Step

5

Cluster turnover of all units (last fiscal) (i) g*h

Average turnover growth rate for next year(j) Primary Interactions2

Cluster turnover of all units (present fiscal) (k) i*(1+j)

Step

6 Proportion of cluster turnover to state industry turnover (l) k/f

Step

7

Cluster level advance outstanding as of March present fiscal for MSME (m) l*c

Ratio of Advance Achievement for MSE to Credit outstanding for MSE (for the last

available year) (n)

SLBC11, Lead Bank12 and

RBI6

Cluster level credit supply (present fiscal) (o) m*n

Step

8

State Level Advances: Term Loan Advance (Small Enterprise) as % of

Total Advance (Small Enterprises) (p)

SLBC11, RBI13 and Primary

Interactions14

State Level Advances: Term Loan Advance (Medium Enterprises) as % of Total

Advances (Medium Enterprises) (q) Primary Interactions14

Step

9 Working Capital Supply (present fiscal) (WCS)

o*(1-p) or

o*(1-q)

Step

10 Term Loan Supply (present fiscal) (TLS) o-WCS

2.5.3 Credit Gap Estimation

Credit gap has estimated by calculating the difference between Working capital demand (WLD)

& Working capital supply (WLS) and Term loan demand (TLD) and Term loan supply (TLS).

11SLBC – Individual SLBC Websites 12 Primary Survey - Lead Bank in the District 13 Basic Statistical Tables Relating to Banks in India 14Interaction with Bankers in the cluster


MAJOR FINDINGS/CHALLENGES HAMPERING THE

GROWTH OF MSMES IN THE CLUSTER


3 BASELINE STUDY OF THE CLUSTER

PRODUCTS By extracting coconut husk and using that fibre, coir yarn has been produced from the time immemorial,

throughout the coastal belt of Kerala. Initially, this yarn was used for the agricultural purpose as well as

making coir rope and handmade coir mat the then value-added product. However due to the introduction

of looms, way back in 1859, the vistas for value-added products have been widely opened in this sector.

The products like mat, & mattings (different types), coir rugs, mourzouk, etc. which have huge potential for

exports been introduced in the market.

Coir geotextile was another product used to arrest soil erosion. It is now also being used for road

construction. Coir handicrafts, coir ply, non-woven products like coir mattress and needle-felt, etc. also

included in the product mix and have very good market potential.

Disposal of accumulated coir pith was the major problem for the coir defibering units as it was causing an

environmental problem. Due to the advent of technology for converting pith to fertilizer, it has become the

most precious products in the coir sector having both export and domestic market.

Traditionally a cottage industry, this sector has recently been undergoing substantial technological

changes, as more capital-intensive products are coming online. Non-coir inputs are increasingly being used

for these products. Products15 like rubberized coir mat, PVC tufted mat, Coir needlefelt, coir ply, coir particle

board etc. are the new capital-intensive products.

These products can broadly be classified into the following categories:

Table 3.1 - Product Categories

Categories Products

Defibering Fibre, pith organic manure

Spinning Coir Yarn, Rope, Curled Yarn

Weaving Mat, mattings, Tufted mat, rug, mourzouk, geotextiles

Other Coir needlefelt, coco log, coir ply, coir particleboard

Source: Primary Survey

PLACE Alappuzha or Alleppey is an entrancing region of natural beauty with the Arabian Sea on the west and vast

tangle of cerulean lakes, serene backwater and freshwater rivers. It is usually referred to as Venice of East.

Alappuzha is the most coveted tourist destination of Kerala. It is also called the “backwater paradise in

God’s Own Country”. It is located 62 Kms. From Cochin and 155 km from Trivandrum. The district is well

connected with Roads and Rail. Cochin international airport is 90 km. from Alappuzha whereas

Thiruvananthapuram airport is 150 km. It is the smallest district of Kerala. The total area is 1415 sq. km.

Table 3.2 – Alappuzha district profile Description 2011 2001

Population 21.28 lakhs 21.09 lakhs

Male 10,13,142 10,14,529

Female 11.14.647 10,94,631

Population growth 0.88% 5.39%

Density of population per sq. km 1504 1492

Portion of Kerala Population 6.37% 6.62%

Sex Ratio (1000) 1100 1079

15 The products details are given in Annexure (figure 3.1)


Average Literacy 95.72 93.43

Male literacy 97.36 96.27

Female Literacy 94.24 90.82

Source: Census of India

Figure 3.1 - Geographical Spread of the Cluster

Source: Maps of India

Alappuzha district has 6 talukas viz. Cherthala, Ambalapuzha, Kuttanad, Chengannur, Mavelikkara and

Karthikapilli. The coir cluster is mainly situated in Cherthala, Ambalapuzha and Karthikapilli taluks. Out of

the total 93 villages, the cluster had the presence in 53 villages. Migration of the Kerala population is a

normal one. But no specific data of migration is available, due to underemployment.

HISTORY AND EVOLUTION OF THE CLUSTER Coir sector was one of the major livelihood avenues for the coastal belt of Kerala. Abundant availability of

coconut and conducive environment for retting the husk (both saline and freshwater) was the major strength

of this sector. It was estimated that there were nearly seven lakhs people involved in this industry in Kerala.

There was a time when even the spinning was done by hand. Introduction of the rotating wheel, helped the

spinning artisans to augment their income. Different parts of Kerala were making different varieties of coir

yarn such as Anchuthengu, Mangadan, Ashtamudi, Muppiri, Aratory, Alappat, Vycom, Parur, Quilandi,

Beypore, etc.

Till 1859, the sector was confined to making only coir yarn and coir ropes. The first factory in weaving for

manufacturing value-added products like mat and mattings has been commenced in Alappuzha during

1859. Following this, several other units have been established especially in Cherthala and Ambalapuzha

taluks. All the value-added products have been exported to western countries. Majority of the companies


were owned by foreigners. After independence, the Europeans had left India, handing over the units to

their Indian counterparts.

The new owners have sensed difficulties in managing the units and started retrenching workers by paying

their legitimate benefits by way of looms and equipment. These retrenched workers have started units in

the suburbs of Alappuzha. These workers cum owners have the skill to produce different varieties of coir

products on heavy structured looms. They, themselves developed an integrated system for doing

bleaching, dyeing and printing by adopting the traditional technology and manufacture the products as per

the orders placed by the exporters. As the demand for yarn has been increased, the self-sustained

backward integration in spinning has been increased. The cluster is having a large pool of artisans

(especially women), who are involved in spinning. Karthikapilli taluk is the major Centre for spinning.

As this sector was providing livelihood avenues nearly seven lack people in the coastal area, the Rulers of

erstwhile Travancore Cochin Kingdoms were supporting the artisans. Government of Kerala has also been

protecting the decentralized coir workers, by forming co-operative societies. A separate department has

been formed by the State Government to provide perpetual support. Coir Fed an Apex Co-operative society

has been formed in 1979 to provide raw material support for both spinning and weaving. Coir Corporation

has been formed during the same year to provide marketing support.

Coir Board was established by the Government of India under the Coir Industry Act 1953 for the overall

development of coir industry in India. The major functions of the Coir Board are Research & Development,

and market promotion – both export and domestic, etc. Coir Board acts as a facilitator for providing

technical support and guidance to the industry.

The sector is highly unorganized and attrition of artisans is high. It is now estimated that nearly 1.5 lac

artisans are involved in this sector in Alappuzha. The cluster has players like households, micro, small &

medium entrepreneurs, coir co-operative societies, public sector undertakings, exporters, wholesalers,

retailers, trade unions, Non-Governmental Organizations, etc.

CLUSTER PROFILE – BASIC STATISTICS The post-independence era witnessed the decentralization process in the coir industry. The large organized

units have been shifted to many household/micro/small units. Since this is a highly unorganized sector, no

formal data is available on vital statistics. As per the available data provided by Coir Board, there are 9161

micro-units were registered in Kerala. Further 75 small and 45 medium units are registered with Coir Board.

There is no exact statistics for household and micro-units, as many of them have not registered with any

statutory body. It was estimated that over 27000 household/micro-units are involved in spinning and

weaving. Besides this, there are 291 active co-operative societies.

Table 3.3 - Cluster statistics Head 2017-18 2018-19 2019-20

Cluster Turnover

(INR Cr.)

Micro 2,509 2,634 2,766

Small 69 72 76

Medium 157 165 173

Total 2735 2,871 3,015

No. of units

Micro 27000 27000 27000

Small 75 75 75

Medium 45 45 45

Total 27120 27120 27120

Employment

Skilled 65000 65000 65000

Unskilled 90000 85000 80000

Total 155000 150000 145000

Exports (INR Cr.) 771.43 849.59 864.36


Source: Industry associations/BMOs/Coir Project Office/Coir Board/Estimation

ECOSYSTEM OF THE CLUSTER

Since this is an age-old traditional cluster, the eco-system is quite adequate. The details of the various players in the ecosystem are given below:

Figure 3.2- Cluster Map


3.5.1 Government Bodies

• Coir Board –

o Coir Board is a Statutory Body established by the Government of India under the Coir

Industry Act 1953 for the overall development of Coir Industry in India. The main objectives

include (i) Export and Domestic Market Development, (ii) Research & Development and

Training, (iii) Implement various Developmental Schemes for the promotion of coir sector

and (iv) Advocacy supports.

o Central Coir Research Institute (CCRI), Alappuzha and Central Institute of Coir Technology

(CICT), Bangalore are the two main research Institutes established by Coir Board. CCRI

established during 1959 for researching all aspects of coir including extraction, processing,


product development and diversification, waste management, etc. Central Institute of Coir

Technology (CICT), Bangalore established in 1978 for economic utilization of coir fibre

produced in non-traditional coir producing States. These Institutes have developed a state

of art technologies/machinery in defibering, spinning and weaving sectors. Further, various

products such as garden articles like nursery pots, germination trays, grow bags, etc. coir

wood, blended fine yarn, etc. have been developed by these institutes.

• Coir Directorate

o Kerala is the base land for coir industry in India. It was the livelihood option for more than

seven lakhs people. Government of Kerala has been giving due importance to this sector.

Various schemes and incentives have been introduced for the development of this industry.

The industry department has formed a separate section for Coir. Under Coir Directorate,

there are 10 project offices. Since Alappuzha is the major Centre for coir industry, there

are two Coir Project Offices; one at Alappuzha and other at Kayamkulam. Kerala State

Coir Co-operative Marketing Federation (Coirfed), Kerala State Coir Corporation Ltd., and

Foam Mattings India Ltd. are the three institutions established for supporting coir sector.

o Coirfed and Coir Corporation are the two agencies for supporting the procurement of raw

material and marketing the products.

• Kudumbashree

o Kudumbashree, the Kerala “State Poverty Eradication Mission” (SPEM) was established

during 1998 with a Mission of eradicating absolute poverty within 10 years under the

leadership of Local Self Government. Kudumbashree works in a 3-tier system - Grass root

level Neighborhood Groups (NHG), ward level Area Development Society (ADS) and LSG

level Community Development Society (CDS). There are 2.77 lacs NHGs (an NHG has 10

- 20 members). Kudumbashree provides micro credit to household units.

• Micro Small Medium Enterprises Development Institute (MSME-DI)

o MSME-DI is an apex organization under Ministry of MSME for promoting entrepreneurship

as well as cluster development initiatives. Ministry has established 30 such Institutes and

28 branches to spearhead entrepreneurship activities all over the country. The Kerala

Office is situated at Trichur (130 km. from Alappuzha). The Institute provides consultancy

on various facets of the industry.

• DIC

o District Industries Centre, the agency under the Industry Department for promoting

entrepreneurship activities in the district. It is the nodal agency for implementing PMEGP

in urban areas.

3.5.2 Industry Associations Two umbrella associations are functioning exclusively for Coir industry. Besides these two Federations,

Kerala State Small Industries Association, an apex association of small-scale industries, is also active in

Alappuzha.

• Federation of Indian Coir Exporters Association (FICEA) - FICEA is the Confederation of Coir and

allied products exporters of India. This is the apex association for coir and allied products exports

units. The other institutional members of this association are Indian Coir Association, Indian Coir

Exporters Chamber, Coir Shippers Council, Travancore Coir Mat and Matting Manufacturers

Association, and the Coir Pith & Allied Products Manufacturers & Exporters Association. FCIEA

was established in the year 2010 and has 82 members (micro 34, small 40 and medium 8). Two

full time and 2 part-time staff is working for the association. The membership fee is 0.025% of FOB

export turnover.


• Kerala State Small Scale Coir Manufacturers Federation - It is an apex federation of mat-mattings

manufacturing units and established during 1983. This Federation has village-wise sub-centres.

Having 8000 members covering household and micro-units, especially handlooms. The

association provides free advocacy services.

3.5.3 Technical Institutions Coir Board has established two technical Institutions, as mentioned earlier. National Coir Research &

Management Institute (NCRMI), a Kerala Government Institute established during 1994 to provide technical

and management training to coir workers and societies. They have also developed moveable defibering

machine.

3.5.4 Training Institutions Gandhi Smaraka Grama Seva Kendra is an NGO working in the grass-root level. Apart from CCRI, this

agency is also involved in imparting training. A Common Facility Center for the production of rubberized

coir products is also housed in this Centre. Besides this NGO, Coir Societies are also providing relevant

training to artisans.

3.5.5 Financial Institutions State Bank of India is the lead bank in Alappuzha. The major banks are State Bank of India, Indian Bank,

Allahabad Bank, Federal Bank, CSB, South Indian Bank, etc. Both nationalized and scheduled bank has

417 branches. Co-operative banks have a good presence in Alappuzha having 50 – 60 branches.

Kudumbashree and ESAF Small Bank are also providing microfinance. Kerala Finance Corporation, the

State Finance Corporation, and Small Industries Development Bank of India (SIDBI) are the other Financial

Institutions.

3.5.6 Machinery Suppliers

Coir Board has approved and empanelled machinery suppliers for various products. Kerala Government

has started, a fully owned public sector undertaking for coir machinery manufacturing. In addition to the

machinery manufacturers from Kerala, Coimbatore and Bangalore are the other major places.

RAW MATERIAL USED Coconut husk is the raw material for a defibering unit. The defibering process will give pith and fibre. Pith

is the raw material for Organic manure and fibre is for spinning. The spinning process will give yarn and

yarn is the raw material for mat and mattings. In short coconut husk is the only raw material for the major

coir processing. For PVC tufted mat, in addition to coir PVC resin is also used and rubberized coir mat,

rubber is used. Sisal and Jute are the two supplementary fibres used for making mat. The other materials

required are dyes and chemicals for colouring.

There are two types of fibre – brown and white. Brown fibre from fully ripened coconut husks, strong and

resistant to abrasion – mainly used in brushes, floor mats and upholstery padding. White fibre from husks

of coconuts harvested just before they ripen; softer and less strong – spun into yarn, used for ropes and

mats.

Figure 3.3- Raw Materials


Husk Pith Fibre Yarn


PRODUCTION/MANUFACTURING PROCESS The production/manufacturing process has witnessed rapid technological enhancement in the coir sector.

From the traditional labour intensive, it has now changed to fully mechanized process. The picture given

below depicts the production process of the coir sector:

Figure 3.4- Production / Manufacturing Process


The major process involved are:

• Retting – After the separation from the nut, the husks are processed by various retting techniques,

generally putting in ponds or lagoons. The conventional method of retting needs 8 to 10 months to

soften the fibre. This has been causing an environmental problem and forced to look for an alternate

method. The present technology needs no retting only spraying the water.

• Defibering - The conventional method is labour intensive. This is the alternate method where the

process has become purely mechanical. In this process, the product will be screened and one will

get pith, baby fibre and fibre separately.

• Bundling – As the fibre is voluminous, it is to be compressed and bundled. Normally the bundle

will be of 30 Kgs.

• Willowing - Willowing machine will separate the compressed fibre into single particles and also

clear the impurities.

• Spinning - The spinning process has various technologies. From traditional human-operated ratts,

the technology has upgraded to automatic auto-fed spinning machines. The different technologies

are; traditionally human-operated ratts, motorized ratt, electronic ratt, automatic spinning machine,

and automatic auto-fed spinning machine. The automatic auto-fed spinning machine is having a

capacity of 100 kgs. production per day; whereas the traditional, motorized or electronics rats can

produce less than 20 kg yarn per day. The cluster at present is using motorized ratt, electronic ratt

and automatic spinning methods of spinning.


Figure 3.5- Manufacturing Process (Spinning)

Hand Spin

Traditional ratt

Motorized ratt

Electronic ratt

Automatic Spinning

Source: A Handbook on the Schemes and Services of Coir Board, Coir Board publication


Hand spinning and traditional ratts are not being used in the cluster now.

• Bleaching & dyeing - The coir yarn is first bleached by socking into hot water adding bleaching

agents. The bleached yarn will be dyed as per the requirement. Then it is dried.

• Spool and cop-winding - Spool winding is basically for warp and cop winding for the weft.

• Weaving - Ever since 1859 Alappuzha was known for coir value-added products like a mat,

mattings, etc. The technology transformation is from traditional wooden handlooms to state of art

looms as Anugraha/Anupam looms. The following figure will give the technological change

occurred in weaving. Currently, all these different types of looms are being used for weaving.

Figure 3.6- Manufacturing Process (weaving) Wooden handloom

Pneumatic handloom

Semi automatic loom

Anugraha looms


Anupam loom

Power looms

Source: A handbook on the Schemes and Services of Coir Board, Coir Board Publication

Level of technology adoption

In the spinning sector, most of the household units are using electronic ratts to alleviate the drudgery.

Alappuzha Cluster Development Society (ACCDS) as a part of their Technology Upgradation Program has

provided electronic ratts to more 7000 beneficiaries. Kerala Government also through their various schemes

provided electronic ratts. However, moving to an automatic spinning machine, as it is capital intensive, the

entrepreneurs are not able to absorb the same. But the new units prefer automatic spinning machines, for

getting more production. In weaving, though semi-automatic and automatic looms are available, due to lack

of investment capability, the same has not been absorbed. Still, there are about 8000 micro units using

handlooms. The productivity of these looms is very less. In the weaving sector, all the above machines are

being used in the cluster.


Figure 3.7- Process Flow chart - Matt and Matting process flow chart

Source: Field Survey

Figure 3.8 Process Flowchart - PVC Tufted mat production process

VALUE CHAIN ANALYSIS BASED ON FINANCIAL TRANSACTIONS Value Chain calculations for two products, viz. mattings and PVC tufted mat have been depicted below:



Table 3.4 - Value chain for 1’ x 5’ Panama matting # Particulars Cost (INR)

A Cost of Warp

1 Yarn cost per Kg. 51.00

2. No. of reed (yarn) 208

3. Total wt. of yarn 6.00 Kg.

4 Cost of yarn 306.00

6 Total cost for warp 306.00

B Cost Weft

7 No. of yarn in weft 500

8 Total yarn requirement for weft 3 Kgs.

9 Total yarn cost for weft 153.00

10 Total Yarn cost 459.00

C Labour charge

11 Labour requirement 2.5 hours

12 Wage 800/-

13 Labour cost 250.00

14 Total electricity charges 25.00

15 Packing and transportation charge 10.00

16 Overheads 25.00

17 Sales Price 820.00

18 Profit margin 51.00

19 Market Price 1000 – 1200/-

This is unbleached and dyed yarn. Bleaching cost of Yarn is INR 41.00 for 100 Kg. and dyeing cost will be INR 50 – 60/-. A skilled person will manage 4 to 5 looms.

Source: Field survey

Table 3.5 - Value chain mapping for PVC Tufted mat – a batch of 108 sq. mtr. # Description Quantity Rate (INR) Amount (INR)

A Raw material chemicals

1 PVC Resin 121.3 Kg. 25 / kg 3032.50

2 PVC Resin t 124 Kg. 50 / kg 6200.00

3 Dioctyl Terephthalate (DOTP) 110.5 kg 46 / kg 5083.00

4 Dolomite Powder 3.4 Kg. 250 / Kg 850.00

5 Carbon Black 82.0 K. 1.50 / kg 123.00

6 Moisture Powder 24 Kg 3.00/ kg 72.00

7 Silicon oil 18.50

B Raw Material Coir 313.2 52.5 / Kg. 16443.00

C Utility

8 Firewood 155 Kg. 2.4 / kg 372.00

9 Electricity 432.00

D HR Cost

10 Wage 2000.00

11 Other benefits 233.00

12 Maintenance 258.00

12 Apportion to gratuity 108.00

E Overheads

13 Depreciation (apportioned) 634.00

14 Belt maintenance 216.00

Total for 108 sq. meters. 36075.00

Cost for 1 sq. Mtr. 334.00

15 Selling price 370.00

16 Stencilling (3 colours) 100.00

17 Total cost 470.00

18 Market price (avg) 750.00

In a single shift, 5 to 6 batches may be taken. Manpower requirement is 15 The product will be cut at different sizes as per the market requirement.



MARKET/CUSTOMER Yarn market - Major quantity of yarn (approximately 95%) produced by the spinners will be used for captive

consumption of weavers in the cluster. The other markets for domestic yarn are Calcutta, Kanpur, Delhi,

Bombay, Nagpur, Tamil Nadu and Saurashtra. Most of the markets have a preference for products. For

example, Kanpur has a preference for ‘aratory and ‘parur’ yarn. Certain districts of Tamil Nadu have a good

market for ‘muppiri’ coir. Karnataka, Delhi, Tamil Nadu are the major market for coir products. Coir Fed is

the facilitating agent in the yarn market. They purchase the yarn from spinners and provide to weaving

units.

Major output (about 70%) of the woven products from micro units are purchased by small and medium units

for further processing and value addition within the cluster. Coir value-added products are marketed

through showrooms of Coir Board & State Governments. There are wholesale and retail agents in place

for marketing the products. However, it was observed that the domestic market penetration is minimum.

The eco-friendly products will have wider demand in the domestic market. Efforts should be made to

improve both the export and domestic markets. Besides Kerala, the major market for the products in Tamil

Nadu, Bangalore, New Delhi, etc. The figure below will give the product/usage matric:

Table 3.6 - Product Usage Matrix # Product Usage

1 Yarn Agriculture & weaving

2 Mat Domestic & Office

3 Matting Domestic & office

4 Cricket mat Sports

5 Geotextile Soil erosion and road construction

6 Coir ply Furniture industry

7 Curled yarn Upholstery


The major players involved in marketing are:

3.9.1 Agencies of Kerala Government Government of Kerala has established three institutions for marketing coir products, such as Kerala State

Co-operative Marketing Federation (COIR FED), Kerala State Coir Corporation Limited, and Foam Mattings

India Ltd. All these agencies are situated in Alappuzha.

3.9.1.1 Kerala State Co-operative Marketing Federation (Coir Fed) For developing the coir industry on a co-operative basis, the erstwhile Travancore-Cochin Government,

during 1950, has launched a special scheme to solve the problems of small producers. Four central

marketing Societies were started at Kollam, Alappuzha, Kochi and Kozhikode. During 1979, these four

Societies have been amalgamated and formed a single agency viz. Kerala Coir Co-operative Marketing

Federation. The main objective is to support the purchase and sale of coir products. Coir Fed facilitates the

fibre supply to both societies and private entrepreneurs (if need be). They also purchase yarn from them

by using Fluctuating Price Stabilization Scheme (Krayavila sthiratha scheme). Government of Kerala has

introduced this scheme to protect spinning units from price fluctuations. Coir Fed has its warehouses,

sales depot, sub-offices and branch offices. Coir Fed is having more than 100 showrooms all over India.


3.9.1.2 Kerala State Coir Corporation Limited The Corporation is engaged in direct marketing of Coir products. It is also a nodal agency for implementation

of coir geotextiles. With a nationwide network of 21 showrooms, the corporation is one of the major

suppliers to defence establishments and other big Government sectors and also exports products to various

countries.

3.8.1.3 Foam Mattings (India) Ltd. Foam Mattings (India) Ltd., a state-owned manufacturing Company, produces various coir products and

extend market development support to small units, especially societies. This company purchases yarn from

primary producers and manufacture finished goods and directly market the same.

3.9.2 Coir Board Coir Board is assisting both export and domestic market promotion of coir products. Board has 30

showrooms at different parts of the country. Organizing national and international level exhibitions, and

sponsoring entrepreneurs for participating in various exhibitions are the major agenda of the Coir Board for

market promotion. Coir Board has good co-ordination and network with various State level agencies for

market promotion.

3.9.3 Private wholesalers and retailers Besides, the Central and State Government market initiative, there are private entrepreneurs and traders

involved in marketing coir products. It was echoed that the domestic market has not been exploited even

50% of the market requirement. The total domestic sale of coir products is given below:

Table 3.7 - Domestic sale of Coir products

Year Amount (INR Cr.)

2017-18 1963.57

2018-19 2021.41

2019-20 2150.64

Source: Primary data and calculation

3.9.4 Coir Exports Coir export from India has a long history. Initially, it was only yarn and further moved to different products.

India now exports to more than 100 countries. The major buyers are European countries, USA, etc.

Alappuzha Floor Covering Cluster is mainly exporting value products like a mat, mattings, and geotextiles.

This comes only 33% of the total export. As per the data available from Coir Board, the total export from

Kerala is Rs.1343.00 INR during 2019-20.

Table 3.8 - Exports from Alappuzha

Year 2017-18 2018-19 2019-20

Exports from Alappuzha

Cluster (INR Cr) 771.43 849.59 864.36


SKILL DEVELOPMENT The cluster is having age-old traditions. Artisans have traditional skills in both spinning and weaving. The

cluster now requires skill up-gradation, basically in the field of spinning. The traditional workers are

acquainted with particular yarn production. The cluster may be needing a different set of skills for spinning

different yarns like vikom, aratory, etc. However, it is also felt that a fully mechanized process will lose the

uniqueness of traditional handlooms (for example Carnatic mats). Such skill may be maintained by

providing training to the younger generation.


Table 3.9 Details of Skilled/unskilled persons in the Cluster Production State Available skilled person Available unskilled person

Spinning 40000 50000

Weaving 22000 25000

Others 3000 5000

Total 65000 80000

Source: Industry association and field interaction

Coir Board has been conducting skill training programs for technology up-gradation, through NGO networks

and Societies. NCRMI, the Research Institute promoted by Government of Kerala is also providing both

technology up-gradation and managerial training. Most of the training programs are free with a stipend.

Coir Board, in association District Industries Centre and Khadi and Village Industries Corporation, also

provides Entrepreneurship Development training for potential entrepreneurs to start a new business.

FINANCE The cluster needs finance for both term loan and working capital. The micro units are operating below the

capacity either due to lack of finance and deficiency of order. Coir Fed and Coir Corporation are the major

institutional buyers from micro/household units. The payment terms from these organizations depend on

various factors, thereby resulting in underutilization of capacity. For augmenting their production, the units

need more working capital.

The existing household/micro-units (especially weaving) are apprehensive in changing the technology, as

it is capital intensive and are not affordable by them. However, the cluster as a whole need term loan to

change the physical infrastructure and reduce the drudgery. A grant-cum loan approach will help these

entrepreneurs to change their infrastructure facility. However, in long run, the cluster needs to change the

technology and infrastructure to cope with the environment and market.

• Loan processing: It was observed that all the small and medium units have availed loan, whereas

19% of micro units have not taken any loan. All the units, who have applied for a loan have received

the same. The terms offered by the banks were acceptable to them.

Table 3.10 Whether MSMEs have ever applied for a loan before

• Loan Purposes: The major purpose of availing the loan is to meet the working capital need for

micro and small units. However, the medium-scale units have taken loan for capacity expansion

and new project-related activities.

All Micro Small Medium

(a) Yes, loan availed 95% 95% 94% 100%

(b) Yes, but did not succeed

(c)Yes, but the terms offered were not acceptable

(d) Did not have any loan requirement, hence not applied

(e)Not applied because of other reasons 5% 5% 6% 0%

Respondent Base 41 21 18 2



Figure 3.9 Loan Purpose

• Sources of borrowing: The major sources of borrowing for working capital are co-operatives,

especially micro-units. For small units, 70% of the borrowing is from public sector banks and co-

operatives. Only micro units have borrowed from NBFC and that too a marginal percentage.

Medium-scale units prefer State Finance Corporation and Public Sector banks for their borrowings.

95% of units have taken term loan from Public Sector Banks/Co-operative banks. The following

figure depicts the borrowing for working capital.

Table 3.11 Source of Borrowing

Entity

Working Capital Term Loans

All

units Micro Small Medium

All

units Micro Small Medium*

SIDBI 0% 0% 0% 0% 0% 0% 0% -

Public Sector Banks/

Regional Rural Banks 28% 20% 38% 0% 32% 18% 0% -

Cooperative Banks 45% 60% 32% 0% 63% 73% 50% -

Private Indian / Foreign

Banks 14% 13% 15% 50% 5% 9% 50% -

State Financial Corporation 10% 0% 15% 50% 0% 0% 0% -

NABARD 0% 0% 0% 0% 0% 0% 0% -

NBFCs/Micro Finance

Institutions 3% 7%

0% 0% 0% 0% 0% -

Other Formal Sources 0% 0% 0% 0% 0% 0% 0% -

Informal Sources (includes

Friends / Family, Customers)

0% 0% 0% 0% 0% 0% 0% -

Source: Primary Survey, Working Capital Respondent base: Total 29 Micro 15 Small 12 Medium 2

Term Loan Respondent Base: Total 19, Micro 11, Small 8; Medium 0

* No Data for Medium Units for term loans as they didn’t answer the questions

• Scheme awareness & whether availed: Though 70% of units were aware of Mudra Scheme,

only 19% have availed the same. Only 31% of micro-units have availed the CGTMSE. The

awareness of CGTMSE is very high. A substantial portion of small units has availed CGTMSE

scheme. The awareness of Credit Linked Capital Subsidy for Technology Up-gradation is moderate

amongst the micro and small units. Overall, only 31% of the units have availed the scheme.

Source: Primary Survey, Respondent base for this graph/ Table: All 39 Micro 20 Small 17 Medium 2

82%

13%5%

85%

10% 5%

88%

12%0%0%

100%

0%

Working Capital Related Capacity Expansion/ New ProjectRelated

Specific need for a special project/purpose



Table 3.12 - Government’s Scheme Awareness

Table 3.13 - Government’s Scheme Availed

• SIDBI’s Scheme awareness and whether availed: The awareness and availing of SIDBI

schemes are very limited, especially in micro and small units. Except for the working capital (cash

credit) and SMILE, no other schemes are availed by entrepreneurs. It is observed that micro-units

have not availed any schemes. Efforts may be made for popularizing SIDBI schemes to avail the

benefits by more units.

Table 3.14 SIDBI’s Scheme Awareness All Micro Small Medium

SIDBI Make In India Soft Loan Fund For Micro Small And Medium

Enterprises (SMILE) 28% 26% 22% 50%

Loans under partnership with OEM 10% 5% 11% 50%

Working Capital (Cash Credit) 23% 11% 28% 100%

SIDBI-loan for Purchase of Equipment for Enterprise’s development plus

(SPEED PLUS) 18% 16% 22% 0%

Top up Loan for Immediate Purposes (TULIP) 15% 11% 22% 0%

Source: Primary Survey, Respondent base for this graph : All 38 Micro 20 Small 16 Medium 2

Source: Primary Survey, Respondent base for this graph: All 26 Micro 13 Small 11 Medium 2

79% 84%

45%

75%85%

40%

81% 81%

44%

100% 100% 100%

MUDRA Credit Guarantee Trust Fund for Micro& Small Enterprises

Credit Linked Capital Subsidy forTechnology Upgradation


19%

50%

31%23%

31%

46%

18%

64%

18%

0%

100%

50%

MUDRA Credit Guarantee Trust Fund for Micro& Small Enterprises

Credit Linked Capital Subsidy forTechnology Upgradation



SIDBI Tem Loan Assistance for Rooftop solar PV Plants 28% 21% 28% 100%

SIDBI assistance to facilitate emergency response against corona virus

(SAFE) 2% 0% 6% 0%

Source: Primary Survey, Respondent base for this graph/table: All 39 Micro 19 Small 18 Medium 2

Table 3.15 SIDBI’s Scheme Availed


SIDBI Make in India Soft Loan Fund For Micro Small And Medium

Enterprises (SMILE) 10% 0% 15% 50%

Loans under partnership with OEM 0% 0% 0% 0%

Working Capital (Cash Credit) 16% 0% 23% 100%

SIDBI-loan for Purchase of Equipment for Enterprise’s development plus

(SPEED PLUS) 0% 0% 0% 0%

Top up Loan for Immediate Purposes (TULIP) 0% 0% 0% 0%

SIDBI Term Loan Assistance for Rooftop solar PV Plants 0% 0% 0% 0%

SIDBI assistance to facilitate emergency response against corona virus

(SAFE) 0% 0% 0% 0%

Source: Primary Survey, Respondent base for this graph/table: All 30 Micro 15 Small 13 Medium 2

USAGE OF SCHEMES Both Central and State Governments have introduced various schemes for the development of this sector.

The Schemes introduced by Government of Kerala are exclusively for the coir sector except for the

Enterprise Support Scheme. Further Government of Kerala has also been providing Income Support for

spinning and handloom weavers. Also, the Small Industries Development Bank of India has introduced

various financial schemes for the benefit of the industry. The gist of the schemes is given the table below.

Table 3.16 Usage of Schemes

# Scheme Category

A Coir Board

1 Coir Vikas Yojana (CVY) Subsidy

1.1 Coir Industry Technology Up-gradation Scheme Subsidy

1.2 Science & Technology Subsidy

1.3 Skill Up-gradation and Mahila Coir Yojana Subsidy

1.4 Export Market Promotion Subsidy

1.5 Trade and Industry related functional support Services Subsidy

2 Prime Ministers Employment Generation Program (PMEGP) Subsidy/Credit

3 Scheme of Funds for Regeneration of Traditional Industries (SFURTI) Subsidy

B State Initiative Subsidy

1 Mechanization and infrastructure development of coir industry Subsidy

2 Marketing, Publicity and propaganda, trade exhibitions and assistance for setting up showrooms Subsidy

3 Production and market incentive to promote production, marketing and exports of PVC and rubberized coir

products, and geotextiles

Subsidy

4 Coir Geo Textiles Program Subsidy

5. Income Support Scheme for artisans Subsidy

6 Enterprise Support Scheme for manufacturing units Subsidy

C Small Industries Development Bank of India Schemes

1 SIDBI Make In India Soft Loan Fund For Micro Small And Medium Enterprises (SMILE) Credit


2 Loans under partnership with OEM Credit

3 Working Capital (Cash Credit) Credit

4 SIDBI-loan for Purchase of Equipment for Enterprise’s development plus (SPEED PLUS) Credit

5 Top-up Loan for Immediate Purposes (TULIP) Credit

6 SIDBI Tem Loan Assistance for Rooftop solar PV Plants Credit

7 SIDBI assistance to facilitate emergency response against coronavirus (SAFE) Credit

D Other

1 Mudra Credit

Source: Coir board, SIDBI, Coir Department, Government of Kerala

GENERAL INFRASTRUCTURE Alappuzha is well connected with both road and rail. It is situated in between Cochin and Trivandrum. The

district is located 62 km. from Cochin and 155 km from Trivandrum. Cochin International airport is 90 km

whereas Trivandrum airport is 150 km.

National Highway 66 (Panevel to Kanyakumari) is passing through Alappuzha. Main Central Road (MC

Road), the arterial State High in the Travancore region of Kerala State. It is designated to State Highway

No. 1 and it passes through Chengannur of Alappuzha district. Alappuzha town is connected with State

Highway 11. The other State Highways are SH 40 (Alappuzha to Madurai – Tamil Nadu), SH 66 (Alappuzha

to Ernakulam), SH 5 (Kayamkulam to Pallimuku, SH 6 (Kayamkulam to Thiruvalla), SH10 (Mavelikkara to

Kozencherry) and SH 12 (Ambalapuzha to Thiruvalla).

Kerala State Road Transport Corporation running adequate bus services to the main cities and within the

district. In addition to the state-owned bus services, frequency of private services is also high. The district

is not experiencing any transport problem. However, the frequency will be drastically reduced between night

10.00 pm and 6.00 am.

Table 3.17 Train Connectivity # Through Alappuzha Train No. Frequency

1 Thiruvanthapuram – New Delhi 12432 Tue. Thu. Fri

2 Thiruvanthapuram - Mangalore 16603 Daily

3 Chennai Central - Trivandrum 22207 Wed. Sat

4 Kochuveli – Bangalore 16315 Daily

5 Chennai Egmore - Guruvayoor 16341 Daily

6 Chennai Central - Alappuzha 22639 Daily

7 Kochuveli -Chandigarh 12218 Fri. Sun

8 Amritsar – Kochuveli 12484 Tuesday

9 Kochuveli - Porbandur 18262 Friday

10 Alappuzha - Kannur 16308 Daily

11 Thiruvanthapuram - Nizamudeen 12643 Daily

Source: Railway time table

Industrial Estates

Table 3.18 Industrial Estates in Alappuzha # Place Developed area (hectare)

1 Punnapra 9.46

2 Kollakadav 5.83

3 Chengannur 1.85

4 Coir Park - I 8.94

5 Coir Park - II 6.34

6 DA Aroor/CIE Aroor 21.91

7 SIDCO Maithara 2.96

8 Kadakkarapalli 0.47

9 Mararikulam 0.41


10 Industrial Growth Centre, Pallipuram 91.21

11 SIDCO Kollakadav 6.13

12 Mararikulam North 0.40

13 Pathiyoor 0.40

14 Nooranadu 0.40

15 Thamarakulam 0.40

16 Kavelikkara 0.40

17 Mannar 0.40

18 Mannancherry 0.40

Source: MSME-DI brief Industrial Profile of Alappuzha 2017-18

Power – The power requirement for micro spinning and spooling units are minimum. Further nearly 8000

handloom weaving units not required power for their operation. As such the units are not experiencing

power problem. However, intermittent power cut/failure is the normal incident. Since micro-units do not

have standbys, during the power failure, they have to stop the production.

Water: Alappuzha, a low lying area and surrounded by backwater is not facing any water problem.

Trade Infrastructure: Under IIUS project, a Trade Centre has been developed in association with FICEA,

during 2014-15 in Cherthala, Alappuzha Dist. The Centre has a training facility, meeting rooms, guest

house, etc. FICEA and Coir Shippers Council have started their offices here. SIDBI has provided funding

support to establish a Business Development Centre, as a part of the BDS program.

COMMON FACILITY CENTRES IN THE CLUSTER Three major interventions are made for developing infrastructure in the Cluster. They are:

3.14.1 Alappuzha Coir Cluster Development Society (ACCDS) State Bank of India had initiated a Project “Support to country efforts for SME Cluster Development’ of

UNIDO during 2002-05 (State Bank of India Project up Tech). Financial assistance has been provided to

various household and micro-units. To facilitate hard intervention, an SPV has been formed viz. Alappuzha

Coir Cluster Development Society (ACCDS), with the initiative of State Government and Coir Board in 2004.

A proposal was submitted to the Department of Industrial Policy and Promotion (DIPP), Ministry of

Commerce and Industry, Government of India under Industrial Infrastructure Up-gradation Scheme (IIUS).

The total project outlay was INR 56.80 CR.

With this intervention, different facets of the coir sector got Common Facility Centers, besides providing

electronic ratts to 7000 beneficiaries. All the CFCs are independently managed and ACCDS is getting the

user fee, for its sustainability. Following common facility centres have been established under this project:

• PVC tufted mat unit jointly by ACCDS and Coirfed

• Coir Composite Board making unit by ACCDS and FOMIL

• Business Development Centre, in association with SIDBI

• PVC Tufted mat unit - Alappuzha Fibre Tuft Pvt. Ltd.

• Rubber backing unit at Gandhi Smaraka Grama Seva Kendra

• Rubber backing unit at Santhigiri Koottukudumba Coir

3.14.2 Business Development Centre supported by IIUS and SIDBI Under IIUS project, with the support of SIDBI, a Business Development Centre has been established at

Coir Shippers Council office. FICEA’s office is also situated in this building.

Figure 3.10 Business Development Center funded by SIDBI and FICEA Office


Source: Diagnostic study on floor coverings cluster at Alappuzha, March 2013 Prepared by Cluster Pulse Ahmadabad

This Business Development Centre concentrates mainly the following:

• Export Promotion Consultancy

• Advocacy in Coir Fibre Policy, Marketing support, etc.

• Settling IGST/GST issues

3.14.3 Harippad Coir Cluster development Society Under SFURTI scheme, a cluster development program has been initiated at Harippad, Karthikapilli Taluk.

3 common facility centres have been established for Automatic spinning. 10 ASMs along with the

supplementary machinery have been installed in each CFC. The project outlay for one CFC was INR 82.15

lacs for building and plant & machinery and INR16.4 lakhs for working capital for each CFC.

3.14.4 Ambalapuzha Coir Cluster Development Society Another SFURTI cluster program is under implementation at Ambalapuzha. Common Facility for

manufacturing geotextiles will be installed in this centre, with a project outlay of INR 105.47 lakhs for building

and plant & machinery and INR 21.03 lakhs for working capital.

STATUS OF PREVIOUS INTERVENTIONS Government of Kerala has been considering the coir industry as a priority sector, as it gives good export

earnings and provides employment to rural poor. State Government have been making budgetary

provisions, every year for the sustainability of this sector. This provisions will be for working capital,

technology advancement, income support to coir workers, cluster development, subsidy for machinery

purchase, etc.

The other major interventions are:

3.15.1 Technology Up-gradation Program during 2002 – 2005 by State Bank of India16 As it is evident, most of the entrepreneurs, especially in spinning and weaving, are operating an informal

manner. Unlike the enterprise in other States, Alappuzha does not have large factories. The State Bank of

India sponsored program was, therefore, focused on finance, technology and market interventions. The

major achievements:

• Establishment of 223 consortia comprising around 4700 tiny and small ‘enterprises’ (spinners and

weavers) to pursue various common business plans.

16 End of Project Report under the Project “Support to Country Effort for SME Cluster Development of UNIDO (US/IND/01/193)

during 2002-05, State Bank of India


• For tiny women spinners, earnings have increased by about 25 per cent by utilizing upgraded ratts.

• State Bank of India provided credit linkages to 223 consortia amounting to INR 4.60 CR.

• 118 women consortia have been financed for husk collection in collaboration with District

Panchayat for INR 59.00 lakhs.

3.15.2 “Bee-SME program for energy efficiency improvement”.17 This program was sponsored by Bureau of Energy Efficiency, Ministry of Power, and Government of India

during 2010-11 and conducted by Winrock International India (WII). That study identified 11 areas where

energy can be saved.

3.15.3 Developing “Business Development Service providers” 18 SIDBI had initiated a project to carry out the diagnostic study to understand the pain points of Floor

cover/carpet industry – Alappuzha, with a major emphasis on developing Business Development Service

Providers, to support the cluster. The intervention was carried out during 2007 – 11.

As MSMEs cannot avail the services of highly paid professionals in the business thematic areas, therefore

the small BDS providers were developed to give expert solutions to MSMEs. These BDS services range

from production, Finance, Marketing, Human Resources, and Intellectual Property Rights. The major

outcome of the interventions are,

• 43 BDS providers are placed in the cluster to provide need-based support

• 96 empanelled BDS providers have been trained.

The study referred to two types of BDS such as Strategic and Operational. The strategic BDS are

Associations, Government Bodies such as Coir Board, CCRI, Coir Fed, Coir Corporation. Whereas

operational BDS are for-profit from the private sector. They provide support in functional areas like

production, finance, marketing, organizational management, skill development, etc.

Operational BDS providers are the result of SIDBI’s Alappuzha BDS project. Under this project, SIDBI has

established a consortium for Service Providers, viz. “Centre for Business Research & Council (CBRC).

CBRC has conducted an all India Study about Coir Market and provide guidance. Since the last three

years, the activities of BDS are minimum.

17 “Manual on Alleppey Cluster “, Winrock International India”, March 2011 18 “A Report on Diagnostic Study on Floor Covering Cluster at Alleppey” Cluster Plus, Ahmedabad 2014


4 BENCHMARK CLUSTER ANALYSIS

India is the major exporter of coir value-added products viz. mat, mattings, tufted coir mats, rubberized coir

mats, etc. More than 90% of these products are being manufactured from Alappuzha. This traditional

cluster was once employing more than three lakhs artisans in household/micro as well as small and medium

units. Due to environmental problem the defibering activity has become standstill. Pollachi and Nagercoil

districts of Tamil Nadu are the major raw material (fibre) source for Alappuzha. The cluster is also having a

strong back up of spinning units, basically households. Alappuzha is having a value chain integration, as

the product of one segment is the raw material for others. Hence benchmarking may not be possible for

this cluster as in Coir Floor Covering, Alappuzha is the novel cluster.

The cluster is now experiencing multiple problems like raw material dependency, availability of quality raw

material, lack of state of art technology, age-old infrastructure facility, a high degree of informal structure,

shortage of skilled labour for absorbing new technology, etc.

However, Pollachi is an emerging coir cluster, which is having modern facilities as well as various product

mix. We are thus attempting to understand the key learnings for the early success of Pollachi cluster which

can then be incorporated in Alappuzha coir cluster.

HISTORY The coconut cultivation in Coimbatore District is around 87413 hectares and annual production of coconut

8038 lakhs nut19 during 2017-18, particularly in Pollachi South and North Taluks. Most of the coir units are

situated in this area. Coir industry started flourishing in Pollachi due to the availability of abundant raw

material. The major problem in defibering units was the disposal of coir pith. The units need a lot of space

to dump the waste. Since Coir Board has developed the technology to convert the pith to fertilizer, pith has

become the most valuable product. Several defibering units, with enhanced capacity, has been started in

Pollachi and nearby areas. This cluster is now exporting fibre and pith, tufted mat, etc. to many countries.

The cluster is self-sufficient in all facets and good scope for growth.

Table 4.1 Profile of Pollachi coir cluster Product Details

Coir Fibre 450

Coir Yarn 150

Curled Coir rope 28

Coir Pith Block 100

Geo-textiles 1

PVC Tufted mat 3

Turn over 2018-19 INR Cr 278

Export 2018-19 INR Cr. 195

Employment 3720

Source: Interaction with Association

19 Coconut development board


Table 4.2 Gist of comparison with Pollachi Cluster

Parameters Alappuzha Cluster Pollachi Cluster

Fibre availability Shortage of almost 90%. Depending Tamil Nadu and other districts of Kerala Abundant

Technology Traditional Modern

Infrastructure Conventional Reasonably Good

Skilled labour Reasonable Reasonable


PLACE The cluster spread includes 26 villages’ panchayats in Coimbatore district particularly in Pollachi South and

North Talukas. The geographical spread of the cluster measures about 20 – 25 km radius.

VALUE CHAIN ANALYSIS The value chain for tufted mat will be similar to Alappuzha except for the yarn cost. The yarn required for

TVC tufted mat is 2.9 Kg. per sq. meter production. The yarn cost at Pollachi is INR 48.00, whereas in

Alappuzha it is INR 52.50, a difference of INR 4.50. As the raw material cost will be reduced to the tune

of INR 13.00 per sq. mtr.


5 ANALYSIS OF BUSINESS OPERATIONS

RAW MATERIAL Coir fibre is the main raw material for the coir industry. It is estimated that the total requirement of coir yarn

to the cluster is approx. 3.07 lakhs metric ton. Kerala needs nearly 3.4 lakh MT fibre. As per Coconut

Development Board statistics, Kerala produces 45% of the total coconut production of India. The South

Indian States contribute 92%. During 2019, the production of coconut in Kerala was 5834 million nuts.

Nevertheless, Kerala imports 90% of its fibre requirement, mainly from Tamil Nadu. Since the international

demand for fibre has been increased and the defibering units in Tamil Nadu prefer to export, the availability

of fibre to the cluster is irrational. The quality of the fibre is also poor resulting in more wastage. The price

is also fluctuating. Coirfed is the facilitating agency for raw material purchases. Immediate steps need to

be taken for adequate availability of fibre and to the cluster.

Government of Kerala is promoting setting up of defibering units in the State. Though husk is available,

collection of husk is the major hindrance. Government has to establishment ‘husk banks’ in association with

Kudumbashree, local self-government and Coconut Producers Society (a society initiated by Coconut

Development Board). If Kerala can utilize 60% of the available husk, the fibre problem may be alleviated.

PRODUCTION PROCESS RELATED The major workforce of coir industry is in spinning and weaving.

Spinning: The traditional way of spinning using ordinary ratt, will have very low productivity and is

cumbersome. Majority of the spinning workforce is women. Now the units increasingly are using

mechanized or electronic ratt. By using these ratts, productivity has been increased to 15 - 20 Kg. per day.

However, by using an automatic spinning machine, productivity may be increased to 60 – 80 Kg. per day.

The investment of the same is very high and cannot be affordable by the artisans.

Weaving: Almost 8000 weaving units are using manually operated traditional looms, which is cumbersome

and provides very low productivity. Pneumatic and automatic looms have been developed by CCRI, which

is easy to operate and give more output. Adoption of this technology may need huge funding and may not

be affordable by micro-units. Efforts may be made to develop more Common Facility Centers in weaving.

Production Infrastructure: Almost 80% of micro-units are working in a shed near to their dwelling. No formal

factory type environment is existing in most of the units. Even in societies, the physical environment is poor.

The Occupational Health Standards need to be improved. Production infrastructure also needs to be

improved.

More SFURTI cluster development programs may be initiated. There are two hindering factors for this

program – one is providing land for CFC and the second minimum number of artisans in a cluster. This may

be addressed and arrive at a suitable solution.

ACCESS TO MARKETS Coir Department, Government of Kerala has started two organizations, viz. Coir Fed and Coir Corporation

to support spinning and weaving units. Coir Fed purchases fibre and provides to the entrepreneurs, who

are doing the spinning activity. They also procure the yarn from the producers and provide to weaving

units. Most of the spinning units provide yarn to Coir Fed, as there is production incentive. Coir Corporation

purchases the value-added products from the producers under “Price Fluctuation and stabilization scheme”.

Under this scheme, the manufacturers will get the fair margin for their products. It is estimated that almost


70% produces of micro-units are utilized for captive use by small and medium enterprises within the cluster.

The remaining products will be sold through wholesalers and retailers as well as Coir Corporation. The

major markets for value-added products are Karnataka, Delhi and Tamil Nadu, in addition to Kerala. Coir

Corporation will sell the products, through their showrooms or other channels. It was also noted that

sometimes the Corporation will have overstocks. This may cause the deterioration of quality and become

obsolete. There are 46 exporters in the cluster. The exporters are also exporting the products from other

States. Only small and medium enterprises are doing export.

Coir Board is facilitating the export and domestic market sales, through their showrooms. Board is

encouraging the entrepreneurs to attend various exhibitions at national and international level for market

development.

The institutional market for coir geotextiles is having high potential and growing rapidly. Government of

Kerala is already supporting geotextile market promotion. The domestic market format, mattings and tufted

mats are not exploited properly. The domestic market penetration is very poor and needs to be improved.

SKILL DEVELOPMENT Alappuzha Floor Covering cluster is an age-old traditional cluster. The artisans are having skills for manual

operation. There was resistance from different parts, especially unions, for mechanization and productivity

augmentation, as there may be a reduction in employment. It was now realized that following the labour-

intensive production process will increase the production cost, which may affect marketing in a competitive

environment. In the spinning sector now the artisans are using either electric or electronic ratts or even

automatic spinning. They need the training to use the enhanced ratts for maintaining quality. Similarly, the

artisans are accustomed to spin a particular variety of yarn. Now depending upon the market requirement,

they need to produce multiple varieties of yarn. Both the Coir Board and State Government are providing

skill training. Coir Board is imparting skill training through societies and reputed NGOs. Kerala Government

is providing training through the National Coir Research and Management Institute, Thiruvanthapuram.

It was estimated that nearly 25000 people are involved in manual weaving from 8000 establishments. These

artisans need skill up-gradation training. These units can try to change the technology in a staggered

manner.

FINANCE • Working capital: The cluster has been experiencing working capital problems. Coir Fed and Coir

Corporation are the major institutional buyers for micro / household units, as the products are being

used for captive consumption in the cluster itself. The payment term of these organizations are not

uniform and as such units need to stop the production for lack of working capital. Almost all units

are experiencing working capital problems. Customized products may be introduced to solve the

working capital gap.

• Term Loan: Though CGTMSE scheme is in place, banks still insist on collateral security for a term

loan. Units are apprehensive in providing collateral due to various reasons. Long processing time,

unable to bear the financial cost, etc. are the other hindering factors for taking term loan. However,

to gain a competitive advantage, the units need technological up-gradation both in spinning,

weaving and processing. Government of Kerala is providing 50% subsidy for coir units for either

establishing new units or purchasing advanced machinery. A positive response should come from

the formal financial system to accomplish this task.

• Interest rate: It was the general opinion that the rate of interest is high. The rate of interest is now

11 – 12%, which is to be reduced to an affordable percentage to reduce the overall cost.


• Scheme Awareness: SIDBI has introduced various schemes to support MSM units. However, the

awareness of such schemes amongst micro and small units are less than 30%, whereas medium

scale units it is 50%. The major scheme availed by the small and medium enterprises is Working

capital (Cash credit). Few medium scale units also availed SMILE. The micro-unit has not taken

any schemes. Efforts may be made to popularize the scheme amongst entrepreneurs and

implement the same with more customer-friendly.

• Scheme awareness amongst exporters, wholesalers and retailers are also limited. Most of them

are aware of SMILE and Cash Credit, whereas amongst machinery suppliers also it is limited. 40%

of the respondents availed cash credit scheme of SIDBI. The units are aware of MUDRA loan and

CGTMSE. All have availed CGTMSE, however, none of them has taken MUDRA loan.

Figure 5.1 Issues Faced while Applying for Loans

5.5.1 Financial Gap Analysis

5.5.1.1 Supply of Credit to MSMEs Enterprise turnover is one of the important criteria for loan appraisal process and it can be safely assumed

that credit supply to the cluster is correlated to the turnover generated. We have thus used “Cluster Turnover

proportion to Industry State Turnover” method to arrive at cluster level credit supply.

Table 5.1 Credit Supply Estimation

# Details Unit Numbers

Step 1

State Industry Advances Outstanding (a)20 Mar, 2020 (INR, Cr) 2,434

Average Growth rate assumed for 2020-21 (b) -3%

State Industry Advances Outstanding (c=a*(1+b)) Mar, 2021 (INR, Cr) 2,360

Step 2 State Industry Turnover (Yr : 2017-18) (d)21 (INR, Cr) 2,207

IIP Growth Rate 2018-19 (e )22 1%

20 Table 5.6 : State & Bank Group Wise Classification of Outstanding 21 Annual Survey of Industries 2017-18 22 IIP

Source: Primary Survey, Respondent Base for this graph: All – 39, Micro – 20, Small – 17, Medium – 2

67%

94%

41%

100%

79%72%

94% 100%

0% 0% 0% 0%


Term Loan related issues like high collaterals, complex documentation, processing charges or others, pleasespecify

Process related ussues like long processing time, poor information dissimination related to documentation, others,please specify

Others like stringent eligibility norms, banker’s behaviour etc., please specify


State Industry Turnover (Yr : 2018-19) (f=d*(1+e)) (INR, Cr) 2,238

IIP Growth Rate 2019-20 (g) -2.5%

State Industry Turnover (Yr : 2019-20) (h=f*(1+g)) (INR, Cr) 2,182

IIP Growth Rate 2020-21 (i) -41.5%

State Industry Turnover (Yr : 2020-21) (j=h*(1+i)) (INR, Cr) 1,275

Step 3 Number of Units in the Cluster - Micro, Small and Medium (k)

Micro No. 27,000

Small No. 75

Medium No. 45

Total No. 27,120

Step 4 Average of Cluster Sample Turnover of units for each

classification (l)

Micro (INR, Cr) 0.1

Small (INR, Cr) 1.0

Medium (INR, Cr) 3.8

Total (INR, Cr) 5.0

Step 5 Cluster Turnover of all units in the cluster (2012-13) (m=k*l)

Micro No. 2,766

Small No. 76

Medium No. 173

Total No. 3,015

Average Turnover Growth of Cluster (n)23 10.0%

Step 5 ii Cluster Turnover of all units in the cluster (2013-14)

(o=m*(1+n))

Micro (INR, Cr) 3,043

Small (INR, Cr) 84

Medium (INR, Cr) 190

Total (INR, Cr) 3,317

Step 6 Proportion of Cluster Turnover to State Industry Turnover

using Results [(5)/(2)]

Micro No. 239%

Small No. 7%

Medium No. 15%

Total No. 260%

Step 7

Cluster Level Credit Supply, Mar 2021 (q=p*c)


Small (INR, Cr) 155



Ratio of ACP achievement for 2019-20 for MSE to Credit

Advances Outstanding to MSE till March'2020 (r )24

59.0%

Cluster Level Credit Supply, Mar 2021 (s=q*r)

Micro (INR, Cr) 3322

Small (INR, Cr) 91


Total (INR, Cr) 3621

Step 8 State Level Advances – Term Loan Advance to MSMEs 65%

Step 9 Working Capital Supply 2020-21 (s*(1-t) or s*(1-u) )


Small (INR, Cr) 32

Medium (INR, Cr) 73


Step 10 Term Loan Supply (s-WCS) Micro (INR, Cr) 2,159

23 While IIP growth for sector for 2020-21 (6 months) is -41.6%, the turnover growth expected by cluster unit owners (primary

survey) in next year is 10%. We are taking the figure we got from cluster for projecting turnover growth. 24 Source: Lead Bank Office


Small (INR, Cr) 59



5.5.1.2 Credit Demand

The working capital demand has been calculated based on the Nayak Committee Guidelines.

Table 5.2 - Working Capital Demand Assessment

Numbers

Step 1 Number of Units in the Cluster - Micro, Small and Medium (a)

Micro 27,000

Small 75

Medium 45

Total 27,120

Step 2 Per unit turnover of MSME in the cluster (b)

Micro (INR, Cr) 0.10

Small (INR, Cr) 1.01

Medium (INR, Cr) 3.84

Step 3

Cluster Turnover for 2019-20 (c=a*b)


Small (INR, Cr) 76



IIP Growth Rate (20-21) for the sector (d) 10.00%

Cluster Turnover for 2020-21 (e=c*(1+d))


Small (INR, Cr) 84



Step 4

Nayak Committee Guidelines for WC Loan (f) 20%

Working Capital Funding Requirements 2020-21 (g=e*f)

Micro (INR, Cr) 609

Small (INR, Cr) 17

Medium (INR, Cr) 38

Total (INR, Cr) 663

The term loan demand has been calculated based on the growth of fixed capital approach.

Table 5.3 - Term Loan Demand Assessment

Step 5 Cluster Total Investments in Plant & Machinery of all units in the cluster for 2012-2013 (h)


Small (INR, Cr) 78



Step 6

The average growth rate of fixed capital for FY 2020-21 (i)25 5%

Cluster Total Investments in Plant & Machinery of all units in the cluster - Mar 2021 (j=h*(1+i))


Small (INR, Cr) 82



Step 7 Growth in Fixed Capital (k=j-h) Micro (INR, Cr) 169

Small (INR, Cr) 4

25 Based on Cluster Feedback


Medium (INR, Cr) 17

Total (INR, Cr) 190

Step 8

Bank Finance (l) 80%

Term Credit Funding Requirement - Mar 2021 (k*l)

Micro (INR, Cr) 135

Small (INR, Cr) 3

Medium (INR, Cr) 14

Total (INR, Cr) 152

5.5.1.3 Credit Gap Analysis There is no credit gap in the cluster as credit supply for both working capital and term loan is more than

demand.

Table 5.4 - Credit Gap Analysis

In Crores Working Capital Term Loan

Credit Demand

Micro 609 3,375

Small 17 78

Medium 38 338

Credit Supply

Micro 1163 3,791

Small 32 5%

Medium 73 3,544

Credit Gap for MSME -604 -2202

SUSTAINABLE DEVELOPMENT Since the coir sector in Alappuzha has a minimum formal factory set up, the basic amenities of the workers

are not at the desired level. Inadequate facilities for restrooms, women rest areas, etc. are pertinent in most

of the units. Barring very few, the physical environment in most of the factories (both private and societies)

are very poor. The working environment probably may not be conducive to health. The prevalent situation

provides very poor ergonomics and Occupational Health System (OHS). The following figure depicts the

hazardous working environment of a handloom factory.

Figure 5.2 Hazardous condition

Source: Study Team


The entrepreneurs may not be in a position to address these issues due to poor financial backup.

Intervention from State/Central Governments is necessary. More SFURTI cluster development programs

may be initiated.

INFRASTRUCTURE Unlike clusters in other States, formal factory set up is limited here. Almost 80% of the micro units are

operating from the shed near their dwelling. The amenities are very poor and need to be improved. The

entrepreneurs are not in a position to invest in infrastructure development. Even in societies, physical

infrastructure needs to be improved. Support from Government is required to improve the physical

infrastructure. Here again, SFURTI cluster development program may be a better solution.

Figure 5.3 Infrastructure condition

Source: Study Team

ANY OTHER ISSUES EMERGING IN THE CLUSTER Availability of quality fibre has been affected the working of both spinning and weaving thereby affecting

the production of the entire system. The processing units are either small or medium enterprises. The

medium companies started using alternate fibre like jute/sisal as also started production centres in Tamil

Nadu. This will in long run result a speedy declining the operations in the cluster.

Household/micro units have not taken any registration, including Udyog Adhar. Coir Board has taken steps

to formalize sector. However, there was strong resistance from the cluster members. Through SFURTI

program efforts may be made to formalize this sector. Or otherwise special efforts may be made.

After the national lockdown due to Covid, the availability of raw material from Tamil Nadu has been drastically reduced. Coupled with this, the shortage of labour has also been affected by the operations.

STATUS OF BUSINESS DEVELOPMENT SERVICES IN THE CLUSTER The BDS providers can be classified into two, viz. Strategic and Operational. Strategic BDSP consists of

associations, government bodies etc., whereas operational BDSPs are for-profit and by the private sector.


5.9.1 Strategic BDSP

• Associations - Federation of Indian Coir Exporters Association (FICEA), (a Confederation of Coir

and Allied products exporters). Under this umbrella, other members are Indian Coir Association,

Indian Coir Exporters Chamber, Coir Shippers Council, Travancore Coir Mat & Matting

Manufacturers Association, and The Coir Pith & Allied Products Manufacturers & Exporters

Association. It voices the problems being faced by the Coir Industry in general and the exporters

in particular.

• Government body like Coir Board, CCRI, Coir Fed, and Coir Corporation

• Alappuzha Coir Cluster Development Society (ACCDS).

5.9.2 Operational BDSP Operational BDSP are those who are working for profit from the private sector. Their services are in finance,

production, organizational management, marketing, skill development, product development, etc. SIDBI,

Business Development Services Providers program trained 96 BDSP and placed 43 BDS in the cluster.

However, operational BDS support is minimum in the cluster since 2017.

5.9.3 Who Does Who Pays (WDWP) Matrix Table 5.5 Who Does Who Pays Matrix

# BDS Function Who Does Who Pays Payment

Mechanism Remarks

1 Finance: Business Plan CA SME Direct

2 Finance: Auditing CA SME Direct

3 Product Development & design CCRI CCRI ..

4 New technology research CCRI Coir Board Direct

6 Skill training State Coir Directorate

CCRI

Coir Directorate

CCRI

Subsidy

Subsidy

7 Marketing sector level branding Coir Board

Coir Directorate

BDS

Coir Board

Coir Directorate

SME

Subsidy

Subsidy

Direct

8 Marketing – trade fair logistics Marketing BDS

SME

Coir Board

SME

Subsidy

Direct


MAJOR LEARNINGS FROM BENCHMARK CLUSTER As mentioned in Chapter 4, proper benchmarking may not be possible for Alappuzha cluster, as it is the

best cluster with Geographical Indication. However, it is not a self-sustained cluster in terms of availability

of raw material, standard infrastructure, and adequate skilled manpower. The cluster needs to depend on

the government support schemes for its survival. Efforts may be made to improve the raw material supply

from the State by establishing more defibering units.

MAJOR LEARNINGS FROM VALUE CHAIN ANALYSIS Sample calculation of value chain has been done for two products, viz. Panama mattings and PVC tufted

mat. Panama mattings have been manufactured by both handlooms and power looms. The micro units are

getting a meagre portion of the profit, whereas medium units and traders are taking a major share of the

profit. Tufted mats are being manufactured by organized small and medium enterprises. Here also traders

and exporters are making more margin than the manufacturers.


6 SUGGESTIONS & RECOMMENDATIONS

SWOT ANALYSIS • Strengths

o Good Export Potential (25-30% of total sales)

o This product has a Geographical Indication (GI) and thus good reputation due to its

geographical origin.

o Strong Institutional support (Coir Board, CCRI, Coir Department, etc.)

o Good strategic BDS support

o A traditional industry which has wide scope for capital investment.

• Threats

o The dependency of quality raw material (fibre) from other state (Tamil Nadu) and given

the preference of defibering units in Tamil Nadu prefer to export, the availability of fibre to

the cluster is erratic.

o The product quality is declining due to raw material quality such as fibre length

o The units in the cluster are predominantly doing spinning through traditional methods

which leads to very poor productivity and high cost of production

o Large number of micro units in the cluster are informal which makes it difficult to access

formal finance

o There is resistance from labour to increasing production and productivity through

mechanization and modernisation

o There is over dependency on state-sponsored marketing agency

o The penetration of units in domestic market is weak

o The working conditions in most of the units is cluster is not at the desired level

o Lack of awareness about quality certifications and lack of testing infrastructure

• Opportunities

o Huge demand for geotextiles

o Unexploited domestic market

o Ample scope for product development

o The emergence of new technology in various facets (spinning, weaving and printing)

• Threats

o Good scope for digital marketing (20% increase in sales)

o High competition in export front from other countries (Countries like Sri Lanka, Indonesia,

Malaysia, Philippines, Thailand, Vietnam, etc.

o Substitute products are increasing (Products from Rubber, plastic, cotton, etc.

o Cost of production is increasing due to using traditional technologies

VISION AND OBJECTIVES OF THE CLUSTER

6.2.1 Cluster Vision “To become a technologically advanced production centre and a globally preferred cluster for various coir

fibre-related value-added products with 70% world market share in this segment (coir fibre-related value-

added products) by 2025.”

6.2.2 Long Term Objectives

• Facilitation of technology up-gradation and infrastructure development, by creating Common Facility

Centres in various facets of the coir industry, such as spinning, weaving, blended mats, printing, etc.

• Domestic market penetration may be accelerated. At present, the major market promotion is done by

Central and State Institutions with minimum private participation. Efforts may be made to boost market


development networks by forming consortia. Usage of coir products in households may be popularised.

“One Coir Product in House”, the slogan of Government of Kerala may be expanded to all India. Market

intelligence may also be used for product development to meet customer need.

• State Government may initiate efforts for better utilisation of husk by establishing more defibering units

as well as the availability of husk

• Cost-effective technology with increased productivity may be developed in spinning. Now the ASM is

costing INR 3.00 lakhs, which is not affordable for poor artisans.

• The industry may be transformed from the traditional informal sector to the formal technology-driven

one.

• The traditional artisans skill may be maintained.

6.2.3 Short Term Objectives

• Awareness creation on cluster level approach to the scattered artisans

• Formation of small activity groups (livelihood groups of Kudumbashree) for collective action like raw

material purchase.

• Up-scaling of safety audits and strengthening of OHS.

RECOMMENDATIONS & ACTION PLAN FOR NON - FINANCIAL AREAS

6.3.1 Raw Material

• Activities

o Establish Defibering units to increase fibre availability. To meet the fibre shortage in Kerala, it

is required to establish 25 defibering unit of 8000 husk capacity per day. Government of Kerala

is already providing subsidy even to private entrepreneurs to the tune of 50%. Government of

Kerala, through their Coir Project Offices, may put more efforts into establishing defibering

units. This may be either in co-operative and private sectors.

o Coconut Producers Society (CPS) was formed by the Coconut Development Board (CDB) to

help the farmers. Kudumbashree CDS and Local Self Government may co-ordinate with the

CPS for husk collection. Kudumbashree may form livelihood groups for husk collection. CPS

should decide the harvesting pattern of the farmer, to get more green husks. Further, develop

Panchayat level husk banks. This will help the availability of husks to the entrepreneurs.

o Raw material banks may be an integral part of SFURTI program – both fibre as well as a husk.

• Implementer: State Government/Central Government/Coir Board/Kudumbashree CDS/Local

Panchayat

• Outcome:

o Availability of quality raw material in a cost-effective manner and avoid erratic supply.

o Better utilisation of husk

• Tentative Budget - Proposal may be submitted to Coir Board under SFURTI Cluster Development

Programme. The budget for a mini-cluster under SFURTI is INR 2.5 Cr. The major hindering factor

may be the land. State Government may identify the appropriate land for the project, negotiating with

Societies. The beneficiary contribution in this project is 10% of the hard intervention. If the beneficiary

may not be in a position to finance the contribution, State Government need to help them. Minimum 10

defibering units may be established under SFURTI. The approximate investment may be INR 25.00

CR.

In addition to this, the State Government is providing 50% subsidy for establishing defibering units.

Efforts may be initiated to establish 25 defibering units in Kerala, with a capacity of 8000 husks per day.


The total project outlay may be INR 75 lakhs per unit. Private entrepreneurs may also be encouraged.

Since State Government is providing 50% subsidy, formal financial institutions may provide loans to

these entrepreneurs. The approximate investment may be INR 19.00 Cr.

• Timeline: 4 years

6.3.2 Improving the physical infrastructure and Technology (Machinery)

• Activities - Establish 50 advanced technology-oriented production facility for spinning and weaving

with acceptable OHS along with the raw material bank.

• Implementer: Central /State Governments / implementing agency for SFURTI coir cluster

• Outcome: State of art production facility at 50 centres

• Tentative Budget: SFURTI Mini cluster is having Rs. 2.5 Cr. Project outlay. The beneficiary

contribution is 10% of the hard intervention. If the beneficiary is not able to bear the same, this

contribution may be made available by the State Government. The approximate investment may be

INR 125.00 CR.

• Timeline: 4 years

6.3.3 Concern Area: Skill Development

• Activities o The artisans in the cluster are possessing skill in the traditional way of production. Upgrading

their skills to operate modern machinery is necessary. Efforts may be made for skill up-gradation training. CFC will start skill training in apprenticeship mode. Either the State Government or Coir Board may provide a stipend for the trainees.

• Implementer: Cluster/NCMRI/Coir Board

• Outcome: Availability of skilled manpower

• Budget: 20 lakhs per year

• Timeline: Continuous

6.3.4 Concern area: Domestic Market Development

• Activities o Developing marketing consortia o Participation in trade fairs/exhibitions o Establish Market development BDS o Developing linkages with online marketplaces like Amazon, Flipkart and vertical marketplaces

like pepper fry, urban ladder and other similar online stores o Developing an online trading platform for the different products from the cluster

• Implementer: BDS Providers/cluster

• Budget: Rs. 25.00 lakhs per year


6.3.5 Access to Product Diversification & Testing Facility

• Activities o New product development o Research in the production process

• Implementer - CCRI/Entrepreneur/Cluster/ACCDS

• Budget: Rs. 10.00 lakhs


6.3.6 Information dissemination The information gaps on various schemes are pertinent in the cluster. As a part of SFURTI cluster program, the soft skill development an integral part. No separate budget has been provided. Table 6.1 Gist of the action plan (Hard intervention)


# Concern Area

Activities

Implementer/ BDS provider/ Participants

Outcome

Budgets

Timelines

1 Raw material

• Establish 35 defibering units in Kerala

• Establish Raw Material Banks

Private Entrepreneurs with the support of State/Central Govts., CDS

Better utilization of husk and availability of quality raw material at a moderate price

INR 45.00 Cr

4 years

2 Improving physical infrastructure & Machinery

• Establish 50 advanced technology-oriented production facility in both spinning and weaving (cluster approach)

• Improve the physical infrastructure as a part of cluster development

State /Central Government cluster development program

Common facility centre with state of art technology in 50 centres

INR125.00 Cr.

4 years

3 Improve OHS

• Develop appropriate OHS

• Good working environment

As a part of cluster development

Good working environment

No separate budget

4 years

4 Domestic Market Development

• Display Centre

• BDS development

As a part of cluster development

Increase sales by 20%

INR 25.00 lakhs

Continuous

5 Testing facility

• Form a testing facility As a part of the cluster

Quality may be maintained

No separate budget

1 year


Table 6.2 Gist of the action plan (Soft intervention)

# Concern

Area Activities

Implementer/ BDS provider/ Participants

Outcome

Budgets

Timelines

1 Skill Development

• Technology Up-gradation program

• Need-based training in advanced machinery operation

• Skill in making different verity yarns

Coir Board/State Govt./local training institution

Improve the skill to use modern machinery

INR.20.00 lacs

Continuous

2 Domestic Market Penetration

• Market Development

• Identifying BDS in marketing

• Organising and participating exhibitions

BDS

Expansion in market and sales

INR.25.00 lacs

Continuous

3 Access to product diversification

• Product development

Private entrepreneurs/Coir Board/NCRMI

Develop new products

INR.10.00 lacs

Continuous

4 Information dissemination

• Organising seminars/workshops to disseminate various screams

• Provide information about the facilities available within the cluster

SFURTI

Develop new products

INR 20.00 lacs

Continuous



RECOMMENDATIONS FOR FINANCIAL ISSUES Table 6.3 - Recommendations for Financial Issues

Recommendation Area Recommendations

Refinement in Product

Interest Rates

Lower interest rates for Working Capital & Term Loans.

Shishu Mudra loan through Industry Sakha/Sakhis or through MFI: Given that the cluster has a

he number of micro units, this is a good option to finance lower end of the MSME spectrum

Special Product for Purchase of Automatic Spinning Machine – Majority of the artisans in the

cluster are using either mechanized ratt or electric ratt for spinning. However, with the help of automatic

spinning machine they can increase their productivity upto 4 times. The cost of automatic spinning

machine is about INR 250,000, which is difficult to afford for individual artisan. A specialized loan

product for the same in partnership with BMOs and local financial institution/MFI can be made avaialbel

to such micro units.

Formation of Joint Liability Groups to tackle the problem of working capital finance – The micro

unis, small household units face a challenge in accessing working capital. SIDBI can work with BMO

and other cooperative or public sector banks. This would enable access to collateral and document

free credit for house hold spinners and very micro sized weavers. Repayment Schedule

Repayment schedules to be increased and flexibility in repayment and top-up loan requirements.

Refinement in Process

Improvement in Application Filing & Processing

Proactive and timely sharing of complete information regarding the charges (processing fees, interest

rates and other charges) needs to adopted by banks

The number of documents required for processing of bank loans to be brought down.

Lower Processing Time

Reduction in days for sanctioning of a loan after all the documents has been submitted – Maximum

10-18 days is expected by the units.

Scheme Awareness

Government Schemes

Partner with BDSPs to improve awareness of schemes like Credit Linked Capital Subsidy Scheme

(CLCSS), Technology and Quality Up-gradation Support to Micro, Small and Medium Enterprises

(TEQUP), Financing Schemes for Sustainable Development including Energy Efficiency and Cleaner

Production in MSMEs & Receivable Finance Scheme, ATI Scheme (Training Component), Marketing

Assistance Scheme, Credit Guarantee Scheme, Zero Effect Zero Defect (ZED), Procurement and

Marketing Support Scheme (PMS), IPR Building Awareness on Intellectual Property Rights for

MSMEs, Lean Manufacturing Competitiveness Scheme for MSMEs, Design Clinic Scheme for

Design Expertise to Micro, Small and Medium Enterprises, Incubation Centre Support for

Entrepreneurial and Managerial Development of SMEs through Incubators, International Cooperation

(IC) Scheme,

SIDBI Schemes

SIDBI’s Make in India Soft Loan Fund for Micro Small and Medium Enterprises (SMILE), Loans

under partnership with OEM, Working Capital (Cash Credit), SIDBI Loan for Purchase of Equipment

for enterprise’s development Plus (SPEED PLUS), Top-up Loan for Immediate Purposes (TULIP),

SIDBI Term Loan Assistance for Rooftop solar PV Plants, SIDBI assistance to facilitate emergency

response against coronavirus (SAFE), etc.

Knowledge Dissemination Workshops

Mini-workshops for focused dissemination of loan products & processes for MSMEs (e.g. Formats in

which documents need to be submitted, key requisites of collaterals like land etc.)

Making Units Loan Fit

A large number of household or micro units in the cluster are unregistered. A special programme can

be made along with BDSP for formalizing the units nominal charges for Udyog Aadhar Registration

SIDBI should work along with Fintech companies to make units loan fit

INTERVENTIONS SUGGESTED AT POLICY, CLUSTER AND UNIT LEVEL Policy Level

▪ Reduction in interest rate to below 10% from current 11-12% may be looked in to by the Banks

Cluster Level

▪ Establish Raw Material Depot, Common Production Centre having Automated Spinning Machine,

Design R&D Centre and a Marketing Outlet through SFURTI or MSE-CDP scheme.


▪ Government of Kerala is providing 50% capital subsidy to new and existing coir units. Banks may

provide term loan for the remaining amount for establishing new units or for new machineries

procurement.

▪ Credit Facilitation Centre for quick process of loan along with customised loan products in the tune

of Rs 1-5 lakhs. Banks may look into it.

▪ Introduce BDS in the area of Digital Marketing and Social Media Promotion as well as for increasing

outreach in the national market through BMOs with the possible support of SIDBI

▪ Promote marketing network/SPV for common marketing purposes & brand promotion through

BMOs with the possible support of SIDBI

▪ Product diversification and promote it at the national level as eco-friendly products/utility item

through NID with the possible support of SIDBI

Unit Level

▪ Technology upgradation through procurement of automated/semi-automated spinning machine.

Banks may think of providing customised industry specific term loan

▪ Design & Drawing training to the artisans to create their own designs and products through Thrissur

Art College with the possible support of SIDBI

6.5.1 Initiatives where SIDBI may intervene Table 6.4 – Initiatives where SIDBI may Intervene

Interventions Year 1 Year 2 Year 3

Coir Tourism

Undertake Market Feasibility Study and Preparation of Model

Business Plan

Hand-hold existing coir based HHEs to undertake tourism

initiate which will lead to employment as well as additional

income generation

Start Ups or women-based enterprises under “Stand Up”

India can be promoted for initiating Coir Tourism Business

Market

Promotion

Introduce BDS in the area of Digital Marketing and Social

Media Promotion as well as for increasing outreach in the

national market

Promote marketing network/SPV for common marketing

purposes & brand promotion

Product diversification and promote it at the national level as

eco-friendly products/utility item

Skill

Development

15 days Training in automated/semi-automated spinning

machine

3 months Drawing training to the artisans to create their own

designs and products

1 month training in sample product creation as per new

designs

Finance

Promotion of Credit Facilitation Centre and hand-hold in

finalisation of financial report/Bankable Report for seeking

new loan


Infrastructure Facilitate in submission of DPR under SFURTI/MSE-CDP

Scheme

BIG IMPACT INITIATIVES Promote COIR Tourism

Approximately 6 lakh tourists (approx. 15% being foreign tourists) visit Alappuzha annually and it is growing

at 20%. If, 20% of existing tourists can be converted as potential customers in next 3 years and average

spending on COIR products remain Rs 1,000/tourist an additional Rs 12 Cr. can be additional revenue for

the cluster firms. Apart from that it will have huge national outreach also and more tourists can be attracted.

An actionable policy document may be prepared and submitted to DoT, Government of Kerala as well as

to COIR Board for COIR Tourism promotion plan under which following initiatives may be promoted

i) Home-stay facility promotion among Coir based HHEs/artisanal units. It can be taken up by existing

enterprises or new enterprises under “Stand Up India” scheme. These home-stay initiatives can be

led by women member of the family to showcase COIR products as well as community lifestyle

also

ii) Customised learning/exposure courses for tourists for learning and even making coir products

iii) One day exposure visit to the cluster for tourists. It can become part of the overall tourist packages.

Established local Travel Agencies/BMOs may be roped in for that. Even new enterprises can also

be promoted in this regard as part of responsible tourism/COIR Tourism.

iv) Tie up can also be made between COIR Based SPV and Houseboat Associations for keeping some

of the COIR Products for selling purpose inside their Houseboat.

v) A floating COIR Outlet can also be promoted on the prominent backwater channels for tourist.

vi) A robust digital & social media promotional plan should be in place

Raw Material Depot

Cluster firms are majorly dependent on the fibre supplier of Tamil Nadu and since those suppliers mostly

supply to the export market either price increases or supply becomes erratic. Either way, it is a major

challenge for the cluster firms. A Raw Material Depot is utmost needed.

Term Loan for Technology Upgradation and Working Capital

HHEs/Micro units can upgrade their technology from motor fitted spinning machine to electronic spinning

machine which can enhance the productivity by 10 times and small/export units can upgrade from electronic

spinning machine to semi-automated spinning machine which will enhance the productivity by 4 times.

Term Loan may be provided to the willing units on a fast-track basis along with some working capital

requirement also due to long cycle of payment.


7 ANNEXURE

COMPARATIVE ANALYSIS BETWEEN PREVIOUS STUDY AND PRESENT STUDY

7.1.1 Basic Statistics The Coir sector was giving livelihood avenues for nearly seven lakhs people in the coastal area of Kerala,

especially in Alappuzha. However, the dependency of this traditional sector has been reduced gradually,

due to various factors. The number of household units, especially in spinning and spooling sector have

come down drastically, as per the information provided by Cluster officials, BDS providers, associations,

etc. According to the present DSR survey, there were nearly 27000 micro/household units, 75 small units

and 45 medium units. However, the survey conducted during 2014, it was mentioned about 45000

household units, especially in spinning sector, and 9700 MSME units of which 9650 micro and 250 small

units. There are no medium units.

As per the present study, the cluster is now engaging 145000 artisans of which 65000 skilled and 80000

unskilled. However, previous study has not mentioned the workers details. During 2014, the turnover of the

cluster was INR 2200 CR. The turnover has increased to INR 3015 CR, an increase of 37%.

Table 7.1 Comparative Between the Previous Study and this study

Head Previous Study (2013-14) Current Study (2020-21)

Cluster Turnover (INR Cr)

Micro Not mentioned 2766

Small Not mentioned 76

Medium Not mentioned 173

Total 2200 3015

No. of Units

H.H.. units 45000 Not given separately. Included in micro units

Micro 9450 27000 including HH

Small 250 75

Medium Not mentioned 45

Total 54450 27120

Employment

Skilled Not mentioned 65000

Unskilled Not mentioned 80000

Total 145000

7.1.2 Comparative on Key Issues

7.1.2.1 Raw Material

• Identified in the Present Study - The cluster imports 90% of its fibre requirement (the main raw

material), from Tamil Nadu. Since the international demand of fibre has been increased and the

defibering units in Tamil Nadu prefer to export, the availability of fibre to the cluster is irrational.

The quality of the fibre is also poor resulting into more wastage. The price is also fluctuating to the

tune of 5-10%. Coirfed is the facilitating agency for raw material purchases.

• Identified in Previous Study - The cluster is a “vertically deep” cluster with a high degree of sub-

contracted and in some cases job-worked activity. MSME and large exporters outsource much or

all of production (weaving) activity to mats, mattings and other product manufacturing MSE in the

cluster. Product manufacturers, in turn, outsource the entire primary processing (yarn spinning)

activity to MSE spinning cum spooling units. Thus, in turn, outsource much of spinning activity to

HH units in the region.

7.1.2.2 Technology

• Identified in the Present Study - In the spinning sector, most of the household units are using

electronic ratts to alleviate the drudgery. Alappuzha Cluster Development Society (ACCDS) as a


part of their Technology Upgradation Program has provided electronic ratts to more 7000

beneficiaries. Kerala Government also through their various schemes provided electronic ratts.

However, moving to automatic spinning machine, as it is capital intensive, the entrepreneurs are

not able to absorb the same. But the new units prefer automatic spinning machines, for getting

more production. In weaving, though semi-automatic automatic and power looms are available,

due to lack of investment capability, the same has not been absorbed. Still there are about 8000

micro units using handlooms. The productivity of these looms is very less. However, new units

are using power loom/semi-automatic & automatic looms.

• Identified in Previous Study - But for integrated exporters the product and yarn manufacturing

segment of the cluster is relatively under-developed in terms of usage of modern technology.

Therefore, there is sporadic requirement for term credit directed towards technology up-gradation,

also. Further, already many units have been going into value products and upgrading without

assistance under schemes like SFURTI and REMOTE.

7.1.2.3 Skill

• Identified in the Present Study - The cluster is having age old traditions. Artisans have traditional

skills in both spinning and weaving. The cluster now requires skill up-gradation, basically in the

field of spinning. The traditional workers are acquainted with particular yarn production. The

cluster may be needing different set of skills for spinning different yarns like vikom, aratory, etc.

However, it is also felt that fully mechanized process will lose the uniqueness of traditional

handlooms (for example Carnatic mats). Such skill may be maintained by providing training to

younger generation. Coir Board has been conducting skill training programs for technology up-

gradation, through NGO networks and Societies. NCRMI, the Research Institute promoted by

Government of Kerala is also providing both technology up-gradation and managerial training.

Most of the training programs are free with stipend. Coir Board, in association District Industries

Centre and Khadi and Village Industries Corporation, also provides Entrepreneurship Development

training for potential entrepreneurs to start new business.

• Identified in Previous study - Value-chain activities like product and yarn manufacturing (spinning

and spooling) are labour intensive. Notably, these segments are also barely financed adequately

at all by typical or private sector banks.

7.1.2.4 Marketing

• Identified in the Present Study - Coir value added products are marketed through show rooms of

Coir Board & State Government. Government of Kerala has established separate organizations to

provide marketing support. There are wholesale and retail agents in place for marketing the

products. However, it was observed that the domestic market penetration is minimum. The eco-

friendly products will have wider demand in the domestic market. Efforts should be made to improve

both export and domestic markets.

• Identified in Previous Study - Exporting units have a fixed credit cycle and are typically disciplined

in meeting payment deadlines. The overall credit cycle in the cluster on an aggregate basis is

around 60-90 days but can go up to 120 and 150 days. Therefore, the sales and credit linkages

are relatively well established in the cluster. The small units however, at times, face issues in

obtaining payments on time from the exporting enterprises. The typical credit cycle for exporters is

about 90 days for which they enjoy 90 days credit. However, their sub-contractors also in turn offer

30-60 days credit and many of such mats and mattings and other manufacturers do not have

access to adequate credit facilities.

7.1.2.5 Infrastructure

• Identified in the Present Study - Unlike clusters in other States, formal factory set up is limited

here. Almost 80% of the micro units are operating from the shed near their dwelling. The amenities


are very poor and need to be improved. The entrepreneurs are not in a position to invest on

infrastructure development. Even in societies, the physical infrastructure needs to be improved.

Support from Government is required to improve the physical infrastructure. Here again SFURTI

cluster development program may be a better solution.

• Identified in Previous Study - No comments

7.1.2.6 Finance

• Identified in the Present Study

o Working capital: The cluster has been experiencing working capital problems. The

payment terms from institutional buyers are not uniform and as such units need to stop the

production for lack of working capital. Almost all units are experiencing working capital

problems. Customized products may be introduced to solve the working capital gap.

o Term Loan: Though CGTMSE scheme is in place, banks still insist collateral security for

term loan. Units are apprehensive in providing collateral due to various reasons. Long

processing time, unable to bear the financial cost, etc. are the other hindering factors for

taking term loan. Government of Kerala is providing 50% subsidy for coir units for either

establishing new units or purchasing advanced machinery. A positive response should

come from the formal financial system to accomplish this task.

o Interest rate: It was the general opinion that the rate of interest is high. The rate of interest

is now 11 – 12%, which is to be reduced to an affordable percentage to reduce the overall

cost.

o Scheme Awareness: SIDBI has introduced various schemes to support MSM units.

However, the awareness of such schemes amongst micro and small units are less than

30%, whereas medium scale units it is 50%. The major scheme availed by the small and

medium enterprises is Working Capital (Cash credit). Few medium scale units also availed

SMILE. Micro unit have not taken any schemes. Efforts may be made to popularize the

scheme amongst entrepreneurs and implement the same with more customer friendly.

• Identified in Previous Study - Most units per force fund their own capital requirements, and

majority micro and small units are (as indicated) dependent either exclusively or significantly on

expensive informal sources of credit which eats in to their profit margins considerably. Some also

occasionally depend on informal sources like family and friends. This is also because of the detailed

documentation requirements of institutional financiers. Collateral and typical asset based lending

practice with high demand of 150%-200% of loan value is required. Also, by their very nature of

operations which is labour intensive and dependent on fluctuating demand from stakeholders up

the value-chain, the demand is more for working capital than term loan. There is therefore smaller

demand for term loans. As a matter of fact, the lesser number of documents and speedy loan

disbursements leave many MSE product and yarn manufacturer’s dependent on informal sources

such as usurious money lenders. Notably, however, many MSE spinning and spooling units as well

as medium sized units are going in for labour saving, higher degree of mechanization and

automation.


SAMPLE TARGET VS ACHIEVED

Table 7.2 - Sample Mix # Stakeholder Type Target Achieved

1 Primary

Stakeholder

Micro 25 21

Small 10 18

Medium 5 2

Total 40 41

2 Support Firms – Raw material Suppliers, Machinery Suppliers 3-4 4

3 Buyers 2-3 5

4 Industry Associations Minimum 2 4

5 Strategic Business Development Service Providers (BDSPs) 1-2 2

6 Government Bodies such as DIC, PCB 2-3 3

7 Skill Imparting Institutions – ITIs & Private institutions, NGOs 2 2

8 Financial Institutions – Lead Bank – District, Leading banks in the

cluster, including Commercial Branches of Banks, NFBCs Minimum 5

6

LIST OF STAKEHOLDERS / INTERVIEWEES Table 7.3 - List of Interviewees

# Stakeholder Type Stakeholders Met

1 MSME Units Promoters of

• Anand Coir Works

• Coir Zone

• Maniyappan Coir Works

• Meenakshi Coir Works

• Vishnu Coir Works

• Venice Mat Printing

• Sankaran Coir Factory

• Harippad Coir Cluster CFC

• Coir World Printing

• Naduvelil Coir Works

• Bharat Coir Mat & Mattings

• The Kerala Coir Mat Mattings Co-op. Society

• Taj Coir Mills

• Arunima Coir Carpet Unit (Aji)

• Laxmi Vanitha Society (Anitha)

• Panchami Coir Carpet (Gayathri)

• Opson Coir Mattings

• Siva Coir Unit (Sivadas)

• South Indian Coir Mat & Mattings

• Pooniyl Coir Mat& Mattings

• Sudarshan Coir Works

• Brothers Coir Fed

• National Coir Mills

• Byju Trading Company

• Joy Coir Products

• Alappuzha Coir Company Ltd.

• Paragan Vellakinar

• Surendran Coir Works

• Kommadi Coir

• Classic Coir Factory

• Santhi Rappalli

• Padma Coir Works

• Babu Coir Works

• Goodwill Coir Manufacturing

• Vimala Coir Works

• Eswari Coir Mills

• Matha Coir Works

• Kamalapuram Coir Mattings

• Koramkatt Coir Mill


• Ram Coir Mills

• Kanechira Coir Works

2 Support firms – Raw material

suppliers, machinery suppliers • Monark Engineers, Kochi

• Kerala State Coir Machinery Manufacturing Co. Ltd.

• Kerala State Co-op. Coir Marketing Federation

• SPV Design, Alapuzha

3 Buyers/exporters • Liso Coir Tex Pvt. Ltd.

• MV Joseph & Sons

• Alappuzha Small Scale Matting Society

• Babu Coir Mills

• Sanv Exports

4 Industry Associations • Federation of Indian Coir Exporters” Association

• Coir Shippers Council

• The Indian Coir Association

• Kerala State Small Scale Coir Manufacturers’. Federation

5 Strategic Business Development

Service Providers

• Alappuzha Coir Cluster Development Society

• Central Coir Research Institute

6 Government bodies such as

DIC, PCB

• Coir Board

• Micro Small Medium Enterprise Development Institute

• District Industries Centre

7 Skill imparting institutions NGO,

Govt. bodies • National Coir Research & Management Institute.

• Gandhi Smaraka Grama Seva Kendram, Alappuzha

8 Financial Institutions • Lead Bank (State Bank Of India)

• Federal Bank Ltd.

• Central Bank

• CSB Bank Ltd.

• ESAF Small Finance Bank

• NABARD


VALIDATION EXERCISE Cluster Name: Alappuzha Floor Covering Cluster

Date of Validation Meeting: 27 January 2021

Number of Participants: 13

Online/Offline: Online

A. Suggestions

# Point on which Suggestion is provided

(Capture in brief)

Suggestion Provided

(Capture in Detail)

Suggestion Provided by

Name Type of

Stakeholder

1

More or less same reflection Shri Sajan Nair BMO

2

Almost a true Picture Mr.

Ranganathan

ACCDS

3

Anupam loom photo is very old The findings are ok

Mr. V Babu.

Retd. Dy.

Director, Coir

Board

BDS

B. Meeting Participants

# Name Type of Stakeholder

(along with Designation)

Contact Details (Mobile & Email

Address)

Date of Participation

(If multiple meetings

were organised)

1 Mr. Sajan Nair

Secretary, Federaion of

Indian Coir Exporters

Association (FICEA)

9847043515, [email protected] 27 January 2021

2 Mrs Anita Jacob Director, Coir Board

9446026152

[email protected]

3

Ms. V Babu

Director, Global

Management and

Technical Consultancy

(Retired Dy. Director, Coir

Board)

9447364608 [email protected]

4 Mr. Ranganathan

Director, Alappuzha Coir

Cluster Development

Society


5 Mrs. Louly GM, DIC, Alappuzha 0477 2251403 [email protected]

6 Mr. Anil Kumar

ChairmanOnattukara Coir

Cluster, MSME Firm

9847126103

[email protected]


7 Mr. Krishnakumar

P

Managing

DirectorThycattussery Coir

Cluster, MIME firm

8289892331 [email protected],

8 Mr. Sibi John

Chairman, Aroor Coir

Development Society,

MSME firm

9961043294

[email protected]

9 Mr. Satyan

Gangadharan

Chairman, Coir Fibre

consortium

MSME firm

9901054828

[email protected]

10 Mr.

Pramodkumar C

Chairman, Valavanad Coir,

MSME firm

9496273061

[email protected]

11 Mr. Bobby

Proprietorm Thayyil Coir

Matting, MSME firm


12 Mr. Binoy Joseph

Proprietor, Coir World

Printing, MSME firm


13 Mr.Jayan

Susheelan

Director, Taj Coir Mills

MSME Firm



SECONDARY SOURCES REFERRED • “Economic Review of Kerala State” (2019), Vol. I and II, State Planning Board

• “A Handbook on the Schemes and Services of Coir Board”

• Minutes of SLBC meeting – Statistics (March 2019 and June 2020)

• “Annual Survey of Industries” (2010-11), Government of India, Ministry of Statistics and Program

Implementation.

• “Annual Survey of Industries” (2016-17) Government of India, Ministry of Statistics and Program

Implementation

• “Annual Report – Contribution of Different Sectors to Gross Value Added in 2017-18”, Government of

India, Ministry o Statistics and Program Implementation.

• “Brief Industrial Profile of Alappuzha District 2017-18”, MSME Development Institute, Trissur

• End of Project Report under the Project ‘Support to Country Effort for SME Cluster Development of

UNIDO (US/IND/01/193) during 2002-05

• “Manual on Alappuzha Coir Cluster”, Winrock International Indiam March 2011

• “A Report on Diagnostic study on Floor Covering Cluster at Alappuzha”, Cluster Plus, Ahmedabad 2014

• “Mapping Financial Gaps in the Floor Covering Cluster of Alappuzha” Study Report, Grant Thorton,

2014

• “Production Process of Coir and Coir Products”, M. Kavitha, Assistant Professor in Commerce,

Maharaja Arts & Science College, Coimbatore, Impact Journal, Vol.3, Issue 3, March 2015


QUESTIONNAIRE FOR PRINCIPAL FIRMS

1. Basic Information

a) Year of establishment of the Unit

b) Nature of unit: Proprietory/ Partnership/ Private Limited/ Others (Specify)

c) Does the unit have Udyog Aadhar?

d) Is it first or second or third generation business? How interested are the current generation in this business?

e) Existing products/ product line/ services offered

f) Reasons for establishment of unit:

2. Vital Statistics

a) Turnover during the last 3 years

2019-20 2018-19 2017-18

Total Sales (INR, lakhs)

- Domestic Sales (%)

- Export Sales (%)

Total 100% 100% 100%

Profit After Tax (%)

b) Gross investment in plant and machinery

a) upto Rs. 25 lakhs

b) Rs. 25 lakhs to Rs. 1 Cr

c) Rs. 1 Cr to Rs. 3 Cr

d) Rs. 3 Cr to Rs. 5 Cr

e) Rs. 5 Cr to Rs. 10 Cr

f) Above Rs. 10 Cr

c) Number of Employees in the Unit : Full Time: Part Time: Women:

d) Profile of customers (with approximate number )

a) Suppliers for National Brands

b) Supplier for Regional Brands

c) Suppliers for International Brands

d) Supplier for local companies

e) Own brand retail

f) Own brand wholesale

g) Other, please specify

e) Employment growth rate during the last 3 years: <0 per cent, 1-10 per cent, 11-25 per cent, 25-50 per cent, > 50 per cent

f) Who are your major technical & strategic service providers? Please mention names of such service providers

g) Are you member of any association/ SPV? Name

Nature of assistance provided by association/ SPV: Advocacy/ Training & Consulting/ Financial Facilitation/ Others (Specify)

3. Business Analysis

a) Raw Material

Whare the major raw materials required? Their major sources

Does association or any other promtional agency (like NSIC) helped you in sourcing of raw material in the past?

Is there formal/ informal raw material consortium or any meassures for collective procurement created in the past? If so are you

a member of it?

What are the Raw Material related problems? (Please √ the appropriate place and explain)

Explain the problem Explain the problem

Non-availability Sudden change in

supply (uneven supply)

High cost Import Problem (import

duties etc.)

Poor quality of the

raw materials Others (please specify)


b) Marketing

• Where and through which channel are the enterprise's/cluster’s main products sold? (%), any preferable channel, why?

Own

brand

Other

brand

Trader Agent Fair/

Exhibition

Other units Total

Within cluster

Outside cluster

Export (direct/ indirect)

Total 100

• Enterprise’s/ skill related problems in marketing: Lack of exposure/knowledge/skilled employee/skilled service providers/high cost

of skilled employees/ any other (please specify)

• Enterprise’s/ investment related problem in marketing: Too costly to: diversify or create new product range/open a show room/

afford a marketing team/afford to go for export marketing/create the desired volume/any other (please specify)

• Are you aware of any market promotional activities undertaken in the past by promotional/ implementing agencies at cluster

level? If so are you a part of it?

• Name two to three important strategic marketing services you require: Research/ niche driven strategy/ search engine

optimisation/ advertising/ referral marketing/ any others (specify)

c) Machinery/Technology

• What are the 2/3 most important (value wise and/or critical) machinery/ equipment need for your firm/the cluster firms and their

purpose (Like maintaining MIS/ Accounting/ others)? (Question specifically for service based clusters)

• Give details of the major machinery used? (For manufacturing based clusters)

SN Machine Purpose Price Average

age

Source of buying

(Supplier/

Location)

How is the

productivity

(Below average,

average)

Capacity

Utilisation (in

%)

• What are the principal sources of parts, servicing and repairs (including self-servicing by the enterprise itself)?

• Can you mention at least one/two/three/more than three innovative products/process that the enterprise/cluster have made during

the last 5 years (through any previous interventions)?

• Who do you think has played a major support in this process? Local Institute/Institute from outside the

cluster/buyer/supplier/service provider?

• What are the main problems (if any) with the machines or with the processes of production?

d) Skill

Employment details:

Type Full time Part time (Contractual) Salary/ wage Level

Man Woman Man Woman Min Max

a) Professional/managerial

b) Technical

c) Non-technical

d) Others

• Labour productivity of skilled labour of your firm/cluster: very low/low/satisfied/huge scope for improvement?

• What is the average price of skilled and unskilled labour?

• How do you get their supply? Local or Migrant?

• What problems you face in retaining them?


• Which functional area: PR/production/marketing/after sales/quality initiatives/any other (please specify)

• Main providers of technical training of your firm/cluster: Association/Technical Institution/Value Chain Partner/No source, need to

organize specially/none

• Major issues for skilled labour of your firm/cluster: shortage/high cost/quality consciousness skilled/personality issues/lack of

quality technical institutes/orientation of technical institutes for industry training

• Are you a part of any Skill Development/ Management Development programs organised by any promotional agencies

previously? If yes, have you are your workers benefitted through attending such programs?

e) Infrastructure

• What are the challenges for general infrastructure: quality of road/telecommunications/health

services/education/power/water/cargo handling/CETP/ any other (please specify)

• What are the needs for shareable cluster specific infrastructure – testing laboratory/raw material depot/common facility

centre/industrial park/design centre/training centre/display centre/ any other (please specify)?

• What are the challenges with respect to connectivity, power, water, logistics?

• Are there any common infarstructure projects undertaken in the past? If so are you a member of it?

f) Energy and Waste Management

f.1) Energy

• What is your monthly consumption of electricity/other main energy used?

• Do you think that your energy bill can be reduced?

• Have you ever undertaken energy audit? If not the reasons: lack of awareness/ high cost of the audit/ others (specify)

• Water Consumption per month? Can it be optimized? Any idea?

• Are you aware of any relevant energy efficiency interventions undertaken in the past? If so are you a part of it?

f.2) Waste Management

• Waste Disposal

Type Quantity Disposal method Remark

Solid :

Liquid:

Gases:

• Is disposition of waste is a problem?

• Can this waste be minimised or reutilised?

• Are you aware about technology/innovation for reduction or reutilisation waste?

• Is there any common facility for waste management within the cluster region?

• If not, then what are you planning to manage waste?

g) Policy Issues

• What are the major macro-economic factors that are promoting / holding back the growth of the cluster?

• What are the major regulatory factors that are promoting / holding back the growth of the cluster?

• What are the business responsibility factors that are promoting / holding back the growth of the cluster?

h. Finance

1. Have you ever applied for a loan before?

a) Yes, loan availed

b) Yes, but did not succeed

c) Yes, but the terms offered were not acceptable

d) Did not have any loan requirement, hence not applied

e) Not applied because of other reasons (Please specify)

2. What are the payment terms with your suppliers?

% share of total purchase value Additional Cost for Credit Period (%)

a) On Advance

b) On Delivery/Against LC

c) On Credit (mention no. of days)


3. What are the average payment terms for your customers?

% share of total sales value Cash Discount (%)

a) On Advance

b) On Delivery/Against LC

c) On Credit (mention no. of days)

4. For what all purposes do you need a loan?

a) Working Capital Related

b) Capacity Expansion /

New Project Related

c) Specific need for a

special project/ purpose

5. Please provide the overall estimate of funding availed for financing needs, the last time you took a loan. Please indicate the

various sources form which funding was availed, the amount of funding availed from the source and the relevant interest rate.

Working

Capital Loan

Term Loan

Total investment and working capital requirement during your last project expansion/new

project set up/new contract, etc. (INR, Lakhs)

Amount applied for bank funding (INR, Lakhs)

Amount actually sanctioned by the bank (INR, Lakhs)

Source of borrowing Working Capital Loan Term Loan

Amount Interest rate Amount Interest rate

- SIDBI

- Public Sector Banks/ Regional Rural Banks

- Cooperative Banks

- Private Indian / Foreign Banks

- State Financial Corporation

- NABARD

- Micro Finance Institutions/ NBFCs

- Other Formal Sources

Please Specify: __________

- Informal Sources (includes Friends / Family, Customers)

Total 100% 100%

6. Were you able to service your loans timely? (Yes/No)

7. What is the interest rate if borrowed from informal channels of finance? (__________)

C) LOAN PROCESS

8. Did you furnish collateral the last time you took a loan? (Yes/No)

9. If the answer to last question is NO, then did you avail loan under the CGTMSE scheme? (Yes/No)

a. In case NO, are you aware of CGTMSE scheme? (Yes/No)

10. If the answer to Q8 was YES, please indicate the type of collateral that you furnished.

a) Charge created on fixed assets

b) Charge created on current assets

c) Corporate Guarantee

d) Personal Guarantee

e) Third party guarantee

f) Others, please specify

___________

11. Please indicate your response with respect to the different schemes/subsidies of central/state government and other multilateral

agencies.


Schemes Awareness

(Yes/No)

Did you avail it in past

(Yes/No) If availed then for what purpose

1. MUDRA Loan

2. Credit Guarantee Trust Fund for

Micro & Small Enterprises

Credit Linked Capital Subsidy for

4. Technology Upgradation

4. Others (Please specify)

12. Please indicate your response with respect to the different schemes of SIDBI

Schemes Awareness

(Yes/No)


(Yes/No)

If availed then for what purpose

1. SIDBI Make In India Soft Loan

Fund For Micro Small And

Medium Enterprises (SMILE)

2. Loans under partnership with

OEM

3. Working Capital (Cash Credit)

4. SiIDBI-loan for Purchase of

Equipment for Eenterprise’s

development plus (SPEED PLUS)

5. Topup Loan for Immediate

Purposes (TULIP)

6. SIDBI Tem Loan Assistance for

Rooftop solar PV Plants

7. SIDBI assistance to facilitate

emergency response against

corona virus (SAFE)

13. Please indicate the problems faced while applying for loans.

Term Loan related issues like high collaterals, complex documentation, processing charges or others, please specify

Process related ussues like long processing time, poor information dissimination related to documentation, others, please specify


14. Please share the time taken for sanctioning the loan, the last time you took a loan from a bank.

Type of Loan Time Period (days)

a) Working Capital Loan

b) Term Loan

15. With respect to cluster specific financial products please comment on the following.

Working Capital Term

Loan

a) Preferred interest rate for new loan (%)

b) Ideal period for sanctioning of the loan after you have submitted all

documents. (in days)

c) What kinds of collateral which your frim/ most of the cluster firms can

offer

d) Repayment Period (state the duration)

e) Moratorium (state the period in months)

f) Minimum promoters’ contribution for loans (how much)

I. Business Services:


• What are the areas you need help of Business Service Providers: Marketing/ Finance/ Quality/ Technology/ Infra/ Other

(please specify)

• Are you availing services of any such BSPs? If so who is funding them? Own sources/ SPV/ Association/ others (specify)

• Does any BSPs linked to your firm through previous intreventions undertaken? If so who is the sponsorer? What id the

impact?

• What are the issues related to BDS: Non availability/ high cost/ lack of awareness/ lmited knowledge of BSPs/ others

(specify)

j. Impact of COVID - 19

• Please indicate major thematic areas adversely affected due to COVID – 19:

Finance/ Marketing/ raw material sourcing/ labour availability/ production process (incl. repairs & maintenance, any others

(please specify).

• Please inform the kind of support you are expecting from Central/ State Governments, banks, other promotional agencies

To do’s for interviewer

• Please take business card after the interview or get orally name, communication, etc.

• If possible, start with a tour of the production/storage facilities of the enterprise, before proceeding with the discussions.

• Not everybody will be willing to answer all factors. Hence ask them what is the two most critical issues among raw material,

market, skill, technology, infrastructure, energy & waste, etc. and go for those factors only and go for the other if there is

time and the firms is willing to give time.

• You may also do home work and identify the major raw materials, machinery, equipment, business development services

requirement in advance, for ease of interviewing considering time constraints during interview.

• Names/addresses of significant support firms/ institutes should be noted for possible subsequent interview

• Names/addresses of major buyers should be noted for possible subsequent interview.

• If other enterprises or institutions, including consortia of same, and enterprise associations, have played a significant role,

their names and (if necessary) addresses should be noted, so that they may be interviewed for their side of the story.

Recapitulation/Summary of Main Problems and Strategy of the Enterprise

• Recapitulate - very briefly, in a single short phrase per problem - the three main problems of the enterprise (if it has any

main problems), as seen by the interviewer.

• These problems may be among those noted by the enterprise itself, or by the interviewer but not by the enterprise (e.g.

poor management, disputes between the owners, no skilled floor supervisors, etc.)

• Summarize, in two to three lines, the enterprise's core competitive strategy and strengths, and its most valuable interactions

with other parties in the cluster (e.g. technical excellence and upgrading, market diversification, specialisation, low

costs/prices, using other enterprises for specialised job-work, producing for distant markets via large buyers, etc.).


QUESTIONNAIRE FOR PUBLIC AND PRIVATE SERVICE PROVIDERS


a) Name of the Organisation:

b) Location:

c) Nature of the entity: Branch/ Regional Office/ Zonal Office/ Head Office

d) Name of the main contact person:

e) Communication details: Phone No Mobile No:

Email Id

2. Business Analysis (mainly related to cluster)

a) What are the services offered by the organisation

Advisory/ Financial Support or facilitation (including grants)/ Licensing & Clearances/ Capacity Building/ market facilitation/

others (please specify)

b) Does Cluster firms have any linkage with your organisation? if Yes

c) What services provided to the firms?

d) How many firms (Nos): Micro (Nos), Small (Nos), Medium (Nos)

e) Nature of services provided:

Advisory: Micro (Nos), Small (Nos), Medium (Nos)

Financial Facilitation: Micro (Nos), Small (Nos), Medium (Nos)

Licensing & Clearances: Micro (Nos), Small (Nos), Medium (Nos)

Capacity building: Micro (Nos), Small (Nos), Medium (Nos)

Market facilitation: Micro (Nos), Small (Nos), Medium (Nos)

Others: Micro (Nos), Small (Nos), Medium (Nos)

f) What are the challenges faced in serving the cluster MSMEs?

Lack of awareness about the services offered among MSMEs/ budget constraints/ Reluctance of MSMEs to cooperate/

Distance from cluster location/ lack of proper association/ others (please specify)

g) What are the measures undertaken to promote the services offered among cluster MSMEs?

Interface with MSMEs/ periodical advertisements in papers/ delegating a promotional officer/ Dissemination through

associations & federations/ Distribution of pamphlets/ others (specify)

h) Has the organisation conducted any study/ survey with reference to the cluster/ relevant sector in the past? If so, mention

the thematic area:

Industrial Potential Survey/ Skill Mapping/ Credit Mapping / Census for industrial data/ others (please specify)

i) Does your organisation measure the impact of services/ programs provided/ conducted? If so instruments used:

Monitoring & evaluation through monthly or quarterly progress reports/ impact assessment survey/ formal or informal feed

back from beneficiaries/ others (please specify)


j) According to you, what are the major challenges faced by the cluster firms?

Obsolete technology/ limited skill sets/ lack of access to finance/ poor marketing strategies/ shortage of raw material/ poor

quality/ others (specify)

k) Do you feel that cluster MSMEs need customised services based on its product or services offered/ its diversified nature/

product specific statutory requirements/ others (specify)

l) Has your office involved in any cluster-based interventions organised in the past by a third party? If yes, what kind of

support extended?

Advisory/ part funding of activity/ / capacity building/ information dissemination/ others (please specify)

m) Does your office aware of SDIBI Schemes like:

• SIDBI Make In India Soft Loan Fund For Micro Small And Medium Enterprises (SMILE)

• Loans under partnership with OEM

• Working Capital (Cash Credit)

• SiIDBI-loan for Purchase of Equipment for Enterprise’s development plus (SPEED PLUS)

• Top-up Loan for Immediate Purposes (TULIP)

• SIDBI Tem Loan Assistance for Rooftop solar PV Plants

• SIDBI assistance to facilitate emergency response against corona virus (SAFE)


• Please take business card after the interview.

• Try to collect any cluster specific data (hard copy/ soft copy) available with the organisation

• Names/addresses of major cluster MSME customers should be noted for possible subsequent interview


QUESTIONNAIRE FOR SUPPORT FIRMS (BUYERS LIKE WHOLESALERS,

RETAILERS, EXPORTERS ETC.)


a) Name of the Unit:

b) Year of establishment of the Unit:

c) Nature of unit: Proprietory/ Partnership/ Private Limited/ Others (Specify)

d) Does the unit have Udyog Aadhar?

e) Are you wholesaler/ Retailer/ Exporter/ Mecrhant Manufacturer/ Agent/ Others (please sepcify)

f) Value of goods sourced

g) Gross investment in equipments and other fixed office establishment expenses

g) upto Rs. 25 lakhs

h) Rs. 25 lakhs to Rs. 1 Cr

i) Rs. 1 Cr to Rs. 3 Cr

j) Rs. 3 Cr to Rs. 5 Cr

k) Rs. 5 Cr to Rs. 10 Cr

l) Above Rs. 10 Cr

h) Is growth rate of your business with the cluster during the last 5 years (point to point): <0 per cent, 1-10 per cent, 11-25 per cent,

25-50 per cent, > 50 per cent /diversifying?

i) How many persons work with you?

j) Do you have branches in other places too?


2.1 Non Financial

h) How many major buyers are present in the cluster?

i) What are the main items and/or services sourced from the MSMEs and of what type?

j) What is the main motivation for such sourcing: low costs/local supply convenience/save on enterprise's own investment/high

quality/ any other (please specify)

k) What are the types of firms (household, micro, small, medium) from whom you source and in what percentage?

l) Do you do retailing or do you in to bulk selling to retailers/brands/other intermediaries like wholesalers and in what percentage?

m) What are the main problems experienced with sourcing from the SMEs: product consistency/high percentage of

defects/timeliness/packaging/willingness for rectification/ any other (please specify)

n) What according to you are the major issues of cluster firms? Lack of finance/ Limited Market/ Limited awareness on new

technologies/ poor skill sets/ lack of management skills/ limited awareness about support firms/ exploitation by middlemen/ others.

What is your opinion?

o) Are you aware of any previous interventions undertaken by any promotional/ implementing agencies? If yes, are you a part of it?

If so, can you explain your nature of involvement (Part of any B2B or B2S meets, participating in any Management Development

programs, launch or sensitisation workshops, any others)

p) Are you member of any association/ SPV? If yes, Name of the BMO:

q) Nature of assistance provided by association/ SPV: Advocacy/ Training & Consulting/ Financial Facilitation/ Others (Specify)

a. Financial



f) Yes, loan availed

g) Yes, but did not succeed

h) Yes, but the terms offered were not acceptable

i) Did not have any loan requirement, hence not applied

j) Not applied because of other reasons (Please specify)


d) Working Capital Related

e) Letter of Credit/ Bank

Guarrantee/ any other

non fund related

f) Specific need for a




- SIDBI


- Cooperative Banks



- NABARD





Total 100% 100%



LOAN PROCESS





g) Charge created on fixed assets

h) Charge created on current assets

i) Corporate Guarantee

j) Personal Guarantee

k) Third party guarantee

l) Others, please specify

___________


agencies.

Schemes Awareness

(Yes/No)



1. MUDRA Loan




4.



Schemes Awareness

(Yes/No)


(Yes/No)







Purposes (TULIP)



corona virus (SAFE)






• Please take business card after the interview, if possible.

• Not everybody will be willing to answer all factors. Hence ask them what is the two most critical issues faced by them and

also by cluster firms among raw material, market, technology, finance etc. and go for those factors only and go for the other

if there is time and the firms is willing to give time.

• If institutions like enterprise associations have played a significant role, their names and (if necessary) addresses should

be noted, so that they may be interviewed for their side of the story.

• Refrain probing in depth about their competitors, if they feel uncomfortable.


• Recapitulate - very briefly, in a single short phrase per problem - the three main problems of the support firms, as seen by

the interviewer.


QUESTIONNAIRE FOR SUPPORT FIRMS (SUPPLIER OF RAW

MATERIAL/MACHINERY) 1. Basic Information

a) Name of the Unit:

b) Year of establishment of the Unit:

c) Nature of unit: Proprietory/ Partnership/ Private Limited/ Others (Specify)

d) Does the unit have Udyog Aadhar?

e) Existing products/ product line/ services offered?

r) Gross investment in plant and machinery (If applicable)

m) upto Rs. 25 lakhs

n) Rs. 25 lakhs to Rs. 1 Cr

o) Rs. 1 Cr to Rs. 3 Cr

p) Rs. 3 Cr to Rs. 5 Cr

q) Rs. 5 Cr to Rs. 10 Cr

r) Above Rs. 10 Cr

f) Annual turnover (for FY 2019-20):

g) How many persons work with you? Full Time: Part Time

h) Do you have branches in other places too?

i) Who are your major technical & strategic service providers? Please mention names of such service providers

j) Is growth rate of your business with the cluster during the last 5 years (point to point): <0 per cent, 1-10 per cent, 11-25 per cent,

25-50 per cent, > 50 per cent /diversifying?


2.1 Non Financial

a) How many raw material/machinery suppliers/service providers are present in the cluster?

b) What are the main items/services supplied to the SMEs?

c) Are you a Original Equipment Manufacturer/ authorised dealer/ dealer (in case of machinery/ raw material suppliers)

d) What is the usage rate and for which service/ products?

e) Along with the core items supplied, what else is supplied: service/parts/usage advice/training/technical assistance/credit/ any

other (please specify)

f) Are these "supplements" paid separately by the MSMEs? Yes/no

g) What are the types of firms (household, micro, small, medium) from whom you source and in what percentage?

h) What skill related problems your firm face in marketing: Lack of exposure/knowledge/skilled employees/skilled service

providers/high cost of skilled employees/ any other (please specify)

i) Firms investment related problem in marketing: Too costly to: diversify or create new product/ service range/ afford a marketing

team/afford to go for export marketing/ /any others

j) Major issues for skilled labour of your firm/r: shortage/high cost/ lack of quality technical institutes/ others (please specify)

k) What are the major issues faced in supplying or offering materials/ equipment’s/ services to the cluster firms: Longer repayment

period/ limited awareness of firms on products/ services offered/ high competition/ Limited penetration among cluster firms/ others

(please specify)

l) What according to you are the major issues of cluster firms? Lack of finance/ Limited Market/ Limited awareness on new


technologies/ poor skill sets/ lack of management skills/ limited awareness about support firms/ exploitation by middlemen/ others

(please specify).

m) Are you aware of any previous interventions undertaken by any promotional/ implementing agencies? If yes, are you a part of it?

If so, can you explain your nature of involvement (providing services/ items, training/ sensitisation of your services to cluster

firms, any others)

n) Are you member of any association/ SPV? If yes, Name of the BMO:

o) Nature of assistance provided by association/ SPV: Advocacy/ Training & Consulting/ Financial Facilitation/ Others (Specify)

2.2 Financial


a) Yes, loan availed

b) Yes, but did not succeed

c) Yes, but the terms offered were not acceptable

d) Did not have any loan requirement, hence not applied

e) Not applied because of other reasons (Please specify)


a) Working Capital Related

b) Capacity Expansion /

New Project Related

c) Specific need for a




- SIDBI


- Cooperative Banks



- NABARD





Total 100% 100%



LOAN PROCESS





m) Charge created on fixed assets

n) Charge created on current assets

o) Corporate Guarantee

p) Personal Guarantee

q) Third party guarantee

r) Others, please specify

___________


agencies.


Schemes Awareness

(Yes/No)



1. MUDRA Loan



Credit Linked Capital Subsidy for

3. Technology Upgradation



Schemes Awareness

(Yes/No)


(Yes/No)






OEM






Purposes (TULIP)





corona virus (SAFE)






• Please take business card after the interview, if possible.

• Not everybody will be willing to answer all factors (some factors may not be even relevant). Hence ask them what is the two

most critical issues faced by them and also by cluster firms among raw material, market, technology, finance etc. and go

for those factors only and go for the other if there is time and the firms is willing to give time.

• If institutions like enterprise associations have played a significant role, their names and (if necessary) addresses should

be noted, so that they may be interviewed for their side of the story.

• Refrain probing in depth about their competitors, if they feel uncomfortable.


• Recapitulate - very briefly, in a single short phrase per problem - the three main problems of the support firms (both financial

and non financial), as seen by the interviewer.


QUESTIONNAIRE FOR BANKS/ NBFCS/ OTHER FIS


a) Name of the Bank/ NBFC/ FI:

b) Location:

c) Nature of the entity: Branch/ Regional Office/ Zonal Office/ Head Office

d) Name of the main contact person:

e) Communication details: Phone No Mobile No:

Email Id

2. Business Analysis (mainly related to cluster)

a) How many of the cluster firms are having account in the branch?

b) What sort of accounts opened in the branch? SB (nos) / Current (nos) / Others (specify)

c) Has the Bank/ NBFC/ FI, financed any cluster firms:

d) If yes, How many firms (Nos): Micro (Nos), Small (Nos), Medium (Nos)

e) Nature of loans provided:

Term Loan: Micro (Nos), Small (Nos), Medium (Nos)

Working Capital: Micro (Nos), Small (Nos), Medium (Nos)

Both TL &WC : Micro (Nos), Small (Nos), Medium (Nos)

Non fund based: Micro (Nos), Small (Nos), Medium (Nos)

f) Average loan amount:

Term Loan: Micro (In Rs ), Small (In Rs. ), Medium (In Rs. )

Working Capital: Micro (In Rs ), Small (In Rs. ), Medium (In Rs. )

g) Number/ Percentage of proposals covered under public supports schemes like:

PMEGP/ CGTMSE/ TUFs/MUDRA/ others (please specify)

h) What are the average interest rates on: Term Loan/ Working Capital Loan/ others (specify),

i) What are the challenges faced post disbursal of loans for cluster MSMEs?

Delays in loan repayments/ increasing NPAs/ poor maintenance of proper documents or ledgers/ non-compliance of

statutory norms like audited expenditure statements; filing of GST returns etc./ others

j) If answer to the question a) is no, then, reasons for not considering cluster MSMEs for credit facilitation

Lack of awareness on bank norms & documentation among MSMEs/ delay (or absence) in submission of required

documents/ lack of proper audited financial statements/ Lack of collaterals/ others (please specify).

k) Do you feel that cluster MSMEs need customised loan products? If so, was it anytime bringing to the notice of SLBC or

relevant forums?

l) Does your branch involved in any cluster-based interventions in the past? If yes, what kind of support extended:

Advisory/ part funding of activity/ appraisal (of any proposals/ counselling/ others (please specify)

m) Does the branch aware of SDIBI Schemes like:

• SIDBI Make In India Soft Loan Fund For Micro Small And Medium Enterprises (SMILE)

• Loans under partnership with OEM

• Working Capital (Cash Credit)

• SiIDBI-loan for Purchase of Equipment for Enterprise’s development plus (SPEED PLUS)

• Top-up Loan for Immediate Purposes (TULIP)

• SIDBI Tem Loan Assistance for Rooftop solar PV Plants

• SIDBI assistance to facilitate emergency response against corona virus (SAFE)



• Please take business card after the interview.

• Try to collect data (hard copy) of loans given to cluster based MSMEs

• Not everybody will be willing to answer all factors. Hence ask them what is the two most critical issues in financing to cluster

MSMEs.

• Names/addresses of major cluster MSME customers should be noted for possible subsequent interview


QUESTIONNAIRE FOR BMO


Date of visit:

Name of Association:

Year of Establishment

Name & Position of Respondent: (President/ Secretary/ Gen. Manager/ Exec. Director, etc.)

Location: Address:

Communication:

Phone No: Email ID

Website (if any):

Nature of organisation: Society/ Trust/ Cooperative/ Company/Section 8 Company/ Producers

Company/Others specify

Geographical Coverage: National/ State/ District/ Cluster Level

Estimated No of MSME Members: Micro: Small: Medium: Women:

Total

Whether Association has secretariat Yes: No:

If Yes: Number of Paid Staff: Full time: , part time:

Approximate Annual Income:

Approximate Total Assets: Land, buildings, equipment, vehicles, working funds

Membership fee per annum

Do members pay membership fee regularly Mostly/>50%mostly/Rarely/Never

Do you think that Association should charge for

special services to be given to members? Why?

2. Business Relations with and Services to MSMEs in the Cluster

What are the main services the association provides to the MSMEs in the cluster?

Production, Technology, and Training

• Common service facilities (specialist production; testing, designing etc.)

• Information and/or training on new technologies/processes

• Providing consultancy or R&D facilities

• Technical skills upgrading

• Business and management training

Markets and Marketing

• Arranging contacts with large manufacturers/buyers

• Securing and allocating orders from these

• Providing new designs or information on design sources

• Providing market information, e.g. export requirements, subcontracting exchanges

Infrastructure

• Negotiating for land access, industrial estate sites, etc.

• Providing or arranging for premises or serviced land

• Providing or arranging other common services (waste disposal, telecommunications, electricity, etc.)

• Facilitating establishment of common facilities centres through leveraging government schemes

Finance

• Promoting and/or managing savings and loans programmes


• Helping with credit applications to banks, etc. (credit facilitation)

• Providing credit guarantees

Awareness on various schemes

Schemes

Awareness

(Yes/No)

How many members

availed in the past with

the help of association

If availed then for what

purpose

1. MUDRA Loan



3. Credit Linked Capital Subsidy for

Technology Up gradation

4. MSECDP

5. SFURTI

6. NMCP Schemes (design and lean)

7. ZED

8. MDA


10. Others (please specify)

Others

• Bulk purchasing

• Business consultancy, help with business plans, etc.

• Meetings with national and local governments on policy issues (taxation, protection under contracts, zoning, electricity

supply, tariffs, etc.)

3. Issues and Business Services

• What are the problems in hiring Service Providers (be specific for technical, e.g. designing, ec./energy/environmental):

High cost/ non-availability/ not matching with member requirements/ others (please specify)

• In providing services, does the association work with other actors (e.g. large enterprises, Government training or technical

institutes)? And if so, how (technically, financially, etc.)?

• Does the association have literature (brochures, periodic or special reports, videos, etc.) providing further information on any of

these main services, or on their extent and impact?

• Does the association participated/ implemented any of the interventions previously undertaken by SIDBI or other promotional

agencies? If yes,

o What type of interventions (infra development/ financial linkages/ market development/ Energy Efficiency/ Quality

Control/ any others)

o What is the status of such interventions?

o What is the impact of such interventions on MSMEs (like increase in turnover/ quality improvement/ product

innovation/ product diversification/ process improvement/ increase credit facilitation/ others)

▪ Does the association have reasonably firm and fundable plans for further expansion/upgrading/diversification of its services to

the MSMEs in the cluster or network within the next two or three years? What is their essence?

Policy Issues


• What are the major macro-economic factors that are promoting / holding back the growth of the cluster?

• What are the major regulatory factors that are promoting / holding back the growth of the cluster?

• What are the business responsibility factors that are promoting / holding back the growth of the cluster?

4. Linkage with SIDBI and scheme awareness

Does the association have any formal links (MoUs) with SIDBI for financial facilitation? Yes: No:

If yes, how many members were provided credit linkages?

Awareness of SIDBI schemes for association executive and secretariat

Schemes Awareness

(Yes/No)

How many members

were facilitated to

avail the scheme

Major purpose for members to avail

the scheme





OEM






Purposes (TULIP)





corona virus (SAFE)

8. Any others, please specify

5. Impact of COVID – 19

How the COVID – 19 impacted the association members related to marketing/ finance/ raw material sourcing/ labour procurement/

others (specify)

How the association helped the members (and their workers) during lockdown period

What support envisaged from State/ Central Governments besides banks/ financial institutions and other promotional agencies post

lock down?


• It may be appropriate to initiate discussion with reference to comments by SMEs on their relations with the association, services

provided by it, etc.; enquire how the Association itself sees these relations and services; and let the discussion flow from that

point. This will be a useful tactic, and will also provide the advantage of specifically crosschecking the SMEs' remarks. However,

the primary purpose of the interview is to discuss only the topics relevant to this association.

• Emphasis should also be on involvement of association in previous interventions undertaken by different promotional/

implementing agencies and their impact. Also major interventions, which can be up scaled or introduced which can sustain

association as well as cluster.


• Any association brochures take or borrow copies to provide further input to the cluster diagnosis

Recapitulation/Summary of the Main SSI Services and Strategy of the Association

Recapitulate very briefly the 3 main types of services provided to MSMEs in the cluster, together with the association’s basic

strategy for those activities and any main problem in providing them, as seen by the interviewer.

submitted on - sidbi

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