Challenges of Growth and Continuity in a Co-operative Organization
An initiative was taken in 1980s by the State Government to develop textile industry base in Assam. A number of textile mills for production of yarn and fabric were set up. But due to various problems including poor-management, non-competitiveness of the mills, all the units had been closed except one. Assam Polyester Co-operative Society Limited (APOL) is the only unit now functioning in this region, thanks to the government’s drive to boost textile industry. It started as a textile composite mill for production of grey & dyed yarn and fabric in its spinning, weaving and processing units. The spinning mill was commissioned on 24th June, 1988. But this pioneering unit in the textile industry of Assam too had seen difficult days and has been still struggling to survive. In fact, the mill stopped production in December 2003 and was completely shut down for not being able to withstand the internal problems and external challenges. However, it started again in June 2006 to focus exclusively on yarn production......................
The Golden Years
A few zealous engineering students who earned Post Graduate degrees in Fiber Science came together to create APOL which was incorporated under the Assam Co-operative Societies Act 1969 as a manufacturing concern in September, 1981. Pioneering yarn manufacturing in the North Eastern region of India, this public sector state enterprise had gone through a roller-coaster ride during its 30 odd years of existence. Primary motto of APOL was to generate rural entrepreneurship and was registered as a co-operative society. One of its objectives was to promote the economic interest of its members by undertaking spinning, dyeing, sizing, weaving and manufacturing of textile materials and supply of yarn to the weaver members............
Crisis
By the early 2000s, the organization was in a crisis situation. In fact, challenges crept in soon after 1995. The liberalization policy adopted by the Central Government saw the entry of cheap fabrics from Taiwan and Singapore into the local market. Market demand for its fabrics fell and the organization lost its stronghold in the market................
Post-Revival Period
After the closure of the unit for three years, a revival strategy was worked out. Aided by one of the developmental institutions of the region, the mill started its spinning unit in 2006 at 50% capacity utilization. The other two units viz., the dyeing and weaving unit covering an approximate area of 7800 square feet remained unutilized. Around 300 workers were engaged in the dyeing and weaving units.............
Organization Structure
The organization structure is given in Exhibit I.
The Board has 13 members including the Chairman and the Managing Director (MD). The Board constituted by the state government is responsible for all the policy level decisions. The organization is headed by the MD, who is the Chief Executive Officer (CEO) of the Corporation. He is assisted by Chief of Operations who in turn is assisted by two Managers viz., Manager (Technical) and Manager (General).............
About the Product
The mill produced yarn from Polyester Staple Fiber (PSF) and Acrylic Staple Fiber (ASF). The main supplier of these fibers was Reliance Industries Ltd............
Current Performance
The utilization of its resources in terms of physical assets, financial resources and the human resources are discussed and details are given in the Exhibit II...........
Physical Performance
The overhead cost was high comprising mainly of manpower cost. Capacity utilization hovered around 50% of installed capacity. Since most of the machinery were very old (Exhibit III), breakdown was high leading to low efficiency level. Post revival, production saw a steep jump in 2007-08, but it had declined in the next year and thereafter there was no improvement in the production quantity.............
Financial Performance
Revenue had grown mainly due to the increase in selling price. It had grown from INR1253 lakh in 2007-08 to INR1885 lakh in FY 2013-14. The Net Profit had been low in the past few years. In fact, the organization had reported losses for the past two years (FY 2012-14). As reported by a senior official of the organization, the earnings from the mill operations were used for payment of salary and statutory obligations................
Human Resource Management
On the people front, the organization was facing problems. Employees are highly underpaid, much lesser than other State Corporations/State Enterprises where average annual salary comes around INR2.7 lakh. There was excessive staff due to closure of the dyeing and weaving units. Currently, there are around 322 workers. Altogether, 380 people are regular employees. There is high absenteeism and low morale amongst the work force. Absenteeism is very high (27% to 30%)...........
Technological Scenario
New technologies have been developed in spinning industry with an objective to eliminate a few steps/ processes involved in the traditional technology. There are three main spinning systems used commercially to produce cotton and other short staple yarns: i) Ring Spinning adopted by APOL (old technology) ii) Rotor Spinning (open-end spinning) iii) Air-jet Spinning including Vortex Spinning (latest technology)............
Problem Identification
Lack of working capital was the main hindrance in implementation of plans for revival as well as expansion. Lack of infrastructure facilities such as erratic power supply, old machineries were the major problems faced by the unit. Due to poor financial condition/ dearth of working capital, the raw yarn from Reliance Industries Ltd. and other producers were being procured and financed through a third party..............
Prospects and Challenges
North East India is inhabited by a number of tribes. They adorn traditional attire. The dresses are woven by the local people. Most of the women folk of the region know weaving and are self-sufficient in meeting their household needs for clothes. The vibrant colourful motifs of these woven materials had been in great demand since past and continues to be so from people across the country. As a result, handloom units have come up in the region to cater to this demand.................
Assignment Questions
I. What factors are responsible for suspension of operations of the organization in 2003?
II. Assess the post-revival performance of APOL.
III. Conduct a SWOT analysis for the organization.
IV. ......................
Exhibits
Exhibit I: Organisation Structure of APOL
Exhibit II: Performance Indicators
Exhibit III: Production Capacity of Processes
Exhibit IV: Machine Disposal
Exhibit V: Manpower Cost
