Journal of Economic and Social Development, Vol. VII, No. 1, 2011 SWOT Analysis of Coir Cooperative Marketing Society A Case Study from Salem Region S. Rajendran* and B Gandhimathy** India is the largest coir producer, accounting to nearly 80 per cent of the total world production, employing more than 6.4 lakh persons of whom a majority are from rural areas of economically backward society. Tamil Nadu occupies the first place in producing brown fibre and second in coir fibre contributing about 65 per cent of total production, providing direct employment opportunities to 52,648 and indirect employment opportunities to 20192. In order to rejuvenate the cooperative sector there is a need for an innovative strategy and transformation of technology from the private sector and application of it into the cooperative sector is need of the hour to explore a wide range of activities. This is in view of privatization cannot be considered as the panacea for all the ills of the economy. Key words : Coir Industry, Trend Analysis, Viability and SWOT Analysis. INTRODUCTION The coir sector provides employment opportunities to a large section of community including women and semiskilled labourers in which the development of the sector can create more employment opportunities in the rural areas with local resource use. Across the globe, India is the largest coir producer, accounting to nearly 80 per cent of the total world production, employing more than 6.4 lakh persons of whom a majority are from rural areas of economically backward society. Production and consumption of coir products depends on supply and demand of raw materials and final products respectively. The cooperative processing and marketing societies serve farmers, rural entrepreneurs and present diversity in their performance (Rajagopal, 1995). Marketing is the powerful multiplier of development and cooperative marketing further ensures benefits to the relatively weaker sections of the community. (Ravichandran and Nakkiran, 2009). The marketing society will reduce the price spread between the producers to consumers in which neither the former not the later are adversely affected. In India, Tamil Nadu occupies the first place in producing brown fibre and second in coir fibre contributing about 65 per cent of total production, providing direct employment opportunities to 52,648 and indirect employment opportunities to 20192. A total of 72840 workers involved in this enterprise. The data show that one third of women involve in this sector. The total number of coir units in Tamil Nadu stood at 5399 which consists of 5333 (98.77 per cent) from private sector and 66 (1.23 per cent) from cooperative sector. The fibre extraction units are 571, yarn spinning and rope making units are 4706, curled coir units are 103, rubberised coir units 8, pith processing units are 7 and 4 marketing societies located here. Annually, they produces 103105 MT of fibre, 78008 MT of yarn, 9198 MT of Mat and Matting, 2100 MT of rubberised coir products. In the cooperative sector there are eight fibre extraction societies, 51 yarn spinning societies, one each curled coir societies, rubberised coir societies and four marketing societies. These societies have a total membership and share capital of 9901 and Rs. 271.75 lakhs respectively. In and around Salem district, more than ten thousand families are benefited from coir industry via both cooperative and private as a home based industry and getting employment opportunities including women, skilled and semi skilled workers. In order to rejuvenate the cooperative sector there is a need for an innovative strategy and transformation of technology from the private sector and application of it * Professor and Head, Dept. of Economics, Periyar University, Salem (Tamilnadu) ** Research Scholar, Dept. of Economics, Periyar University, Salem (Tamilnadu)
58 S Rejendran & B Gandhimathy into the cooperative sector is need of the hour to explore a wide range of activities. The best solution for removing vicious circle between capital scarcity and under development in the coir sector is need to design the efficient and effective optimum rate of capital accumulation in the coir sector. Privatization cannot be considered as the panacea for all the ills of the economy (Dongre, 2010). The Issue The same researchers (Rajendran and Gandhimathy, 20101) in another exercise attempted to analyse the trend values and associated issues of SCCMS. A few inferences from this study have been drawn here for comprehensive understanding. The cooperative society shows that though the economic viability is more, due to the exogenous and endogenous factors, the profit level is not in a significant level. The regression analysis shows that one percent increase in sales leading to 0.046 per cent increase in profit which reveals inefficient working condition of the society. The trend value of purchasing value reveals a moderately developed level where as the sales and gross profit shows only a meagre relationship. Comprehensive planned revitalization of the society is essential for get back the favourable results. Hence it is necessary to assess the overall performance of the society by applying Strength Weakness Opportunities and Threats (SWOT) analysis. The SWOT is a popular tool for explaining the crucial issue in a logical and lucid form. Many socio-economic and related studies used SWOT analysis and the present study too uses the same. The Salem central marketing cooperative society (SCCMS) was registered on 6.7.1963 and started its working on the same day. At present, this society has a membership2 of 165 with a paid up share capital of Rs. 10,17,710 which are contributed by the government, members and society as Rs. 10 lakhs, Rs. 14510 and Rs. 3100 respectively. SCCMS engaged its activities as service type providing employment opportunities to 46 members. It has a land area 20748 sq.ft, building plinth area of 5148 sq ft, work shed plinth area of 700 sq ft and vacant land of 15,600 sq ft. and attains greater significance because it provides raw materials to its primary industrial cooperative societies3 and procures raw materials from these societies. The primary object of the society is improving the coir production through its primary industrial cooperative society. It controls over four primary industrial cooperative societies and raises the economic conditions of weaker sections and provides employment opportunity via primary industrial cooperative societies. The economic viability4 of society is shown in the following table. Year Table 1, Economic Viability of SCCMS Gross profit or loss Working capital EV 1985-86 3870 512510 0.76 1990-91 151904 515935 29.44 1995-96 946943 1361215 69.57 2000-01 11307560 1244010 90.89 2005-06 1025298 23914177 4.29 2006-07 917225 1524764 60.15 Sources: Official reports from SCCMS (for quinquennial years). 1 Rajendran and Gandhimathy (2010), Financial Analysis of Central Coir MarketinIndustrial Cooperative Society in Salem District, Draft Paper, Department of Economics, Periyar University, Salem 636 011. 2 The total membership is dispersed as 18 society members, 146 individual members and one government staff. 3 Two coir service industrial cooperative societies and two coconut fiber extraction cum production societies (one society exclusively for SC) in Salem district.
Journal of Economic and Social Development The table 2 indicates that economic viability of the society goes on increasing and peaked during 1996-97 (103.12) and very poor in 2005-06. However, in the next year it was picked up. The table also Table 2, Trend Analysis on Purchase Value Year Y X XY X 2 Yc Trend Pre Liberalization Period 1985-86 15-2 -30 4-22.51-67 1986-87 2-1 -2 1 33.91 6 1987-88 35 0 0 0 90.33 39 1988-89 70 1 70 1 146.75 48 1989-90 166 2 332 4 203.17 82 1990-91 254 3 762 9 259.29 98 Total Y=542 XY=1072 =19 Post Liberalization Period (Ist Decade) 1991-92 332-4 -1328 16 302.24 110 1992-93 714-3 -2142 9 584.83 122 1993-94 1004-2 -2008 4 867.42 116 1994-95 1137-1 -1137 1 1150.01 99 1995-96 1322 0 0 0 1432.6 92 1996-97 1534 1 1534 1 1715.19 89 1997-98 1960 2 3920 4 1997.78 98 1998-99 2084 3 6252 9 2280.39 91 1999-00 2266 4 9064 16 2562.96 88 2000-01 1973 5 9865 25 2845.55 69 Total Y=14326 XY=24020 =85 Post Liberalization Period (IInd Decade) 2001-02 2065-4 -8260 16 2214.6 93 2002-03 2037-3 -6111 9 2142.84 95 2003-04 2419-2 -4838 4 2071.08 117 2004-05 2028-1 -2028 1 1999.32 101 2005-06 2000 0 0 0 1927.56 104 2006-07 1912 1 1912 1 1855.8 103 2007-08 1494 2 2988 4 1784.04 84 2008-09 1541 3 4623 9 1712.28 90 2009-10 1852 4 7408 16 1640.52 113 Y=17348 XY=-4306 =60 59
60 S Rejendran & B Gandhimathy shows the gross profit and working capital position. There is a perceptional change in gross profit earning of the society during 1990-91 and it continues still 2005-06. The weaken EV of 2005-06 had reflected in gross profit of the next year. Working capital position of society shows there is a low level of gradual improvement except for a few years. Purchasing power of society in respect to the demand condition is an important economic aspect and hence a trend analysis 5 is used to analyze the purchasing power of society in three phases pre liberalization, post liberalization (first decade) and Post liberalization (II nd decade). The purchase values are given in thousands for easy computation. The purchase value of the society is analyzed in three phases pre-liberalization, post-liberalization in first decade and post-liberalization in second decade which is exhibited in the above table. All these three phases show that there is no substantial growth of the coir society in the economy. During the pre liberalization period, it can be seen that only an upward movement of the series where as in the post liberalization period of first phase, the series shows some improvement in the initial period and slowly declines. In the second decade of post liberalization period also similar to first decade and in over all during the nineties there is some improvement of the society. SWOT analysis The overall performance of society can be expressed by using SWOT analysis. The SWOT analysis is done based on the extensive literature surveys, field visits, interaction with officials and members. The following issues emerged with respect to SWOT analysis. In this analysis of the strengths, weaknesses, opportunities and threats, organisational effectiveness is the central issue. The analysis reveals the following points. Strengths There is a scope for expansion of coir industrial cooperative society by regular supply of raw materials. It provides employment opportunities to weaker sections including women. Labour absorption is more in this sector. It needs a low capital investment and semi skilled labourers. Due to huge demand from North Indians and foreign countries, internal trade and international trade are possible which earns more resources. Flow of money ensures further investment. Weakness The society shows considerable numbers in membership, but in reality it is not so. It has inefficient to capture large market share due to the lack of administrative skills among the departmental staff. Under utilization is manpower is more in this sector. Lack of innovative technology and poor entrepreneurship weaken the society. Most of the coir societies are functioning in rural side - erratic power cut inhibit the production. 4 Economic viability can be calculated by gross profit divided by working capital x 100. 5 The trend shows the long term movement of the series. A mathematical function describes a trend as well as development of time series. The straight line trend is represented by the equation yc = a+bx. Where yc is used to designate the calculated values of y, a is the y intercept or the value of y variable when x = 0, b represents the amount of change in y variable that is associated with a change of one unit in x variable. The x variable in time series analysis represents time.
Journal of Economic and Social Development In fiber extraction and yarn spinning activities the workers are not much trained to earn enough daily wages. Neither the piece rate system nor daily wages suit to the society because the former gives lower wage rate to labourers and later raises the cost of production of the society. Lack of quality of the product also creates the problem of demand. Under utilization of the industry will lead the industry in less profit and creates shortages in capital formation. The irregular and inadequate supply of raw material problems creates erratic production. Since agro climatic conditions influence the raw materials and coconut cultivations, arrangement of water supply and plantation is another task for coir industry. During the glut, there is a need for a good storage and warehousing facilities. During the shortage of supply, the society should have a capacity to pull according to the demand. Opportunities The imposition of sales tax from the past few years will reduce the production and raises the cost of production. Hence to avoid the transportation of raw materials to neighbouring stage, it is necessary to remove the tax. If proper impetus given to the primary coir cooperatives, then production increases simultaneously the marketing of the coir items will increase. Production will increase by running the society with out any exogenous disturbances. Attractive wages and incentives can prevent the workers to go on private sector. After the extraction of fiber from coconut, the residuals will be used for poultry farming. It also earns some money value. There is a great opportunity to the Matt and matting products from other states. Hence improvement over the product can raise the production. Depending upon the demand from North Indian market, Southern Indian coir production is boosted. Production adjustments are needed to avoid wastages and storage problems. Threats Growth of private units at a large size seriously threat to the cooperative sector. Unless the government programmes increase to purchase coir items via cooperative marketing society, it couldn t stand in their own legs. The profit of the society does not show healthy sign to the cooperative coir sector. Hence, it needs some policy attention from government side. Higher cost of production leading to couldn t withstand in the money oriented market economy of today. By keeping SWOT in view, the authorities may initiate a variety of policies to streamline the SCCMS. Apparently from the SWOT analysis, the weakness component is found to be fairly serve and hence appreciate measures need to be initiated. 61
62 Conclusion The coir society can do well in the world if the weaknesses are converted into strength and threats are termed as opportunities. This society captures large market at inter and intra regional level if the inhibiting factors are overcome and the coir sector engage in the value added items like mat and matting s. The extension of government programmes by procuring the coir products in various departments will give boost to this sector. Also the removal of taxation will add to this. References S Rejendran & B Gandhimathy Ramana Acharyulu A V (2009), Rural Marketing, National Publishing House, Jaipur. Rajagopal (1995), Rural Marketing Administration in India, Kaveri books, Delhi. Dongre Yashavanth (2010), Cooperativization As An Alternative to Privatization: Exploring policy options, Indian Cooperative Review, 47 (3):207. Rajendran S and B Gandhimathy (2010), Market Structure and Performance of Agro Based Industrial Cooperative Society in Salem Region, Indian Cooperative Review, 47(4):258-64. Rajendran S (2009), Cooperative Innovative Strategy and Rural Transformation: Empirical Evidence from the Indian Villages, International Journal of Cooperative Management, IV (21): 45-54. Ravichandran and Nakkiran (2009), Cooperation Theory and Practice, Abhijeet Publications, Delhi.
Journal of Economic and Social Development 63 Appendix: 1 Year Purchase Sales Gross profit Net Profit Membeship (N0) No of Shares Paid up capital Working capital 1984-85 98,589.50 99414.30 2555.80 13133.47 97 N.A 575248 595248 1985-86 1,49,582.50 153188.90 3869.70 4157.41 100 N.A 596848 512510 1986-87 17,469.50 17844.50 868.70-17497.68 98 N.A 596748 1146548 1987-88 347256.15 350460.60 19603.42 13557.19 104 5071 504900 512510 1988-89 697082.00 745316.25 39947.34 21680.52 110 5071 504900 641485 1989-90 1655231.44 1741946.82 78934.23 14237.14 116 5071 505400 642445 1990-91 2541964.37 2685415.5 151903.98-93997.97 116 5077 514360 515935 1991-92 3321519.56 3635555.70 195743.50-35925.95 130 6642 664260 665835 1992-93 7144690.35 7531229.40 424385.24 218494.40 117 6640 664110 1159946 1993-94 10039860.50 10971065.05 539097.20 302490.13 117 6637 663710 1101685 1994-95 11370249.10 12594483.65 626624.30 261362.25 116 6636 663610 1360881 1995-96 13224181.30 14795109.75 946943.00 436707.68 116 6636 665710 1361215 1996-97 15340911.90 17629359.80 1401415.25 738587.21 137 6657 1566210 1359041 1997-98 19602312.95 20657265.65 1048737.40 489781.30 142 6662 667010 1243410 1998-99 20844620.88 22785521.25 1282348.10 336428.07 150 6670 667310 1243410 1999-00 22663976.40 25664797.45 1244145.25 329789.80 153 6673 667610 1244010 2000-01 19729933.55 21178867.30 1130756.20 123386.53 156 6676 667610 1244010 2001-02 20652094.25 21106000.65 909717.80 29475.30 156 6676 666710 1161510 2002-03 20377488.55 21797423.95 1031037.45 63757.02 156 6676 666710 1138210 2003-04 24190932.65 25823699.65 1114567.75 66144.05 160 6680 667110 1119094 2004-05 20282360.20 20731068.45 1044262.35 23541.99 165 6675 667510 2430289.87 2005-06 20005650.05 20731068.45 1025298.04 26119.05 167 6677 667710 2391416.87 2006-07 19128110.20 19920288.75 917225.45-108851.44 167 6677 667710 1524763.86 Sources: Official reports from SCCMS, Salem.