07 chapter 1

CHAPTER I RESEARCH METHODOLOGY


1.1. INTRODUCTION

The cooperation and coordination is the basis of human society. First builds the

society while other manages it. The co-operative movement is well flourished in

Maharashtra by efforts and philosophy of Mahatma Phule and Rajarshi Shahu

Maharaj. ‘The way of cooperation is the only way to the prosperity’ was well

understood by Mahatma Gandhi. The co-operative sugar factories and dairies are

the examples of well-flourished co-operatives in Maharashtra. These co-

operatives have changed the lives of millions of peoples from villages. The

roads, education, irrigation and even the culture in the rural area have been

supported by these co-operatives. The first co-operative sugar factory was

established by late Padmashree Vithalrao Vikhe Patil inspired and supported by

late Vaikunth Mehta and Prof. Dhananjayrao Gadgil.

The beauty of the rural co-operative movement is these big establishments of

hundreds of crores of rupees are owned by semiliterate and poor farmers. They

elect Board of Directors and run the organisation. But now a day the co-

operative industries are suffering from many problems and these problems are

related to management. The ignorance of the farmers, lack of transparency in the

management and slow rate of information processing leads to losses, corruption

and misappropriation of funds.

The co-operative sugar factories are not only income generating or sugar

producing establishment but they are biggest employers. In 2005-06 there are

173 sugar factories are registered in Maharashtra state out of which more than

90% factories are co-operative sugar factories and situated in Western

Maharashtra, Marathwada and Vidharbha. Out of 173 sugar factories more than

50% factories are located in Western Maharashtra and these units are successful

units and have played vital role in development of Western Maharashtra.

These factories are directly related to livelihood of 30 million farmers, 1.7

million employees and 5 million labours in Maharashtra. The co-operative dairy

industry is related to sugar industry as the green fodder is mainly generated from

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sugarcane leaves and residues. Even the industries producing chemical fertilizers

are depending on sugarcane growers. Therefore the progress of rural

Maharashtra depends upon survival and progress of sugar co-operatives. In the

era of globalization and liberalization, all industries in private sector have

improvised their management systems through Information Technology and they

have improved their performance while the co-operative sector is lagging behind

in this regard. Hence it is national and social need that the management of these

co-operatives should be improved through Information Technology. There are

many suggestions and solutions coming forward for the computerization of the

sugar industry but due to lack of sufficient research and investigation a common,

appropriate and rugged solution has not been accepted by industries.

At present sugar factories are choosing modular approach for computerization,

which doesn’t fulfill competitive requirement of the industry. Information

Technology is revolutionizing the way in which we live and work. It is changing

all aspects of our life and lifestyle. The digital revolution has given mankind the

ability to treat information with mathematical precision to transmit it with very

high accuracy and to manipulate it at will. Computers and Communications are

becoming integral parts of our lives. To survive, thrive, and beat the competitive

world, one has to manage the future. Managing future means managing

information. In order to manage the information, deliver high quality

information to the decision makers at right time, automate the process of data

collection, collation and refinement; organizations have to make Information

Technology an ally, harnessing its full potential and using it in the best possible

way. Hence, the researcher hereby intends to study and investigate the present

status and problems and prospects of computerization in co-operative sugar

industry.

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1.2 MANAGEMENT PROBLEM

Agriculture has continued to be the backbone of Indian economy and it

contributes about 29% to GDP. Sugar industry is the second largest agro based

industry in India and India is the second largest sugar producer in the world. The

co-operative sugar sector has accounted a lion’s share in terms of the total

number of sugar factories as well as in the quantum of sugar production in India.

The co-operative sector generated ‘Surety and Security’ for its members. The

sector provides a definite market of the members’ sugarcane as well as

infrastructure development funds at a low rate of interest. The co-operative sugar

factories that are promoted by the members, of the members and for the

members, operating on the basis of an accepted co-operative principles and

values play a pivotal role in catering to the sugar requirement of people in India

in particular and to people across the world in general.

The annual sugar cane price paid to the cultivators by the Sugar factories

amounts to more than Rs.15,000 crore per year.. The annual turnover of the sugar

industry amounts to Rs. 25, 000 Crore. The Central Excise Department earns of

Rs. 2000 crore and the State Governments earns Rs. 800 Crore in the form of

various cesses. Looking at the importance of the Sugar sector the Government of

India has established 56 Sugar Cane Research Stations all over the country.

Despite the economic significance of sugar industry, especially in cooperative

sector, the sector still continues to encounter several problems as follows:

(I) Low Sugar Cane Productivity across the country, which varies widely in the range

of 40 to 134.2 MT per hector. Tamil Nadu and Karnataka stand first and second

by producing 134.2 and 91.2 MT per hector respectively. Leading states like

Madhya Pradesh and Bihar have the lowest yield in the range of 39.3 to 48.5 MT

per hector. Maharashtra have moderate yield in the range of 80 to 90 MT per

hector.

(II) Most of the machineries in sugar mills are out dated. For the last 40-50 years

none of the major repairs or replacements and automation has been made in most

of the sugar factories. These old technologies increase the cost of production.

Low profits often do not allow a substantial depreciation without which the

rehabilitation cannot be done.

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III) The average per capita consumption of sugar in India is only about 17.75 kg per

annum and gur and khandsari 8.62 kg per annum (total 26.37 kg); one of the

lowest per capita consumption of sugar in the world. It is 55 kg in Australia, 52

kg in U.K and 50 kg in USA. The high sugar price and substitutes availability in

the form of gur in our country is often responsible for low consumption. Jagarry

tea is common in Indian villages. Competition with an unorganized sector (gur

and khandsari producers)is another face of this problem.

IV) Imposition of high excise duty and control on sugar stock, sugar price and cane

price have resulted, a decrease in the profit margin of the sugar mills and

therefore, they are neither in a position to offer high price of cane to the farmers

nor in a position to make payment in time.

V) Low rate of import duty leads to the dumping of sugar from other countries and it

creates cutthroat competition in sugar rates

VI) Lack of professionals on the Management: The sugar industry being rural

oriented enterprise brings hindrances in the management of the industry to

achieve 100% effectiveness. The management chairs in cooperative sugar

industries are occupied by semiliterate farmers and lead by politicians. These

politicians have their vested interest that leads to mismanagement and

misappropriations. Huge resources like material, manpower and money are

employed in sugar industry. It is the responsibility of management to make

optimum utilization of these resources. But due to lack of professional

management the resources are underutilized or misutilized, resulting in huge loss

as a result of which most of the mills have miserably failed to attain the financial

viability. It is, therefore, a challenge for the management to attain economic

viability by increasing its profits. In order to survive in global competition and

the growth of the organization, it is essential for every cooperative sugar factory

to earn profit. If it fails to earn profit, the entire capital investment will get eroded

and the very existence of the mill will be in jeopardy. It is, therefore, very

essential that the mills should maximize their profit by making optimum use of

resources, by introducing professional management strategies at all levels.

VII) High cost of production and low profitability: Production cost in sugar industry

includes cost of chemicals, cost of manpower, cost of fuel, maintenance cost,

harvesting and transportation cost and cost of sugarcane. Due to unprofessional

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management practices followed by sugar cooperatives, management of them has

failed to control cost of production and day by day profitability is declined.

The cooperative sugar factories in Maharashtra, are no exception to these

problems. The sugarcane growers in Maharashtra are complaining about low

price for their sugarcane and delay in cane bill payment. But the mills’

managements are not happy with price and fiscal policies of the Government..

Against this background, it is clear that the real problem that has emerged before

the policy makers and the co-operative is, how to improve the working and

performance of co-operative sugar factories in India. In order to overcome some

aforesaid problems and inject the professionalism and IT based systems in the

cooperative sugar industry; the government has initiated certain measures like

business reengineering, computerization and automation of various processes

involved. To implement these measures the NCDC provides financial assistance

and consultancy services. As a result, cooperative sugar industries especially in

Maharashtra initiated computerization and computer based automation processes

since 1986 onwards. However, all is not well besides, no systematic study has so

far been undertaken focusing upon the various aspects of computerization and

automation of cooperative sugar industries, focusing benefits of computerization

and automation, impact on the cost, productivity, the quality, performance

resulting from and also the problems, difficulties and the bottlenecks especially

management and technical in computerization and IT implementation. Keeping

this in mind the researcher has chosen the specific field for his study.

Co-operative sugar factory faces multifaceted computerization problems viz.,

bottlenecks in IT implementation, integration of various business modules,

technology selection, necessitating trained manpower requirement, accessories

maintenance and innovation. These problems impede smooth functioning and

create an obstacle to achieve the predefined organizational goals.

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1.3 STATEMENT OF RESEARCH PROBLEM

Researcher would like to find out micro perspective of these problems to suggest

solution(s) on the magnitude of such problems for better management of sugar

factories. Keeping this in view, the study was undertaken, titled as- ‘A Study of

Present Status, Problems and Prospects Of Computerization in Selected Co-

Operative Sugar Factories in Western Maharashatra’. The title signifies

study of the computerization on the magnitude of the present status and various

problems faced by sugar industry, identify prospects of further computerization

in belief to encountered majority of the problems faced by cooperative sugar

industry.

1.4. OBJECTIVES OF THE STUDY

The research work is concerned with prime objective of identifying the various

problems in computerization of selected co-operative sugar factories in western

Maharashtra therefore, the study undertaken confines to the following objectives.

1. To study present status of computerization in sugar factories.

2. To identify the problems in computerization and their causes.

3. To identify the uncovered areas of computerization vis-à-vis their

implication.

4. To make the comparative analysis of computerization with respect to

performance, problems and prospects.

5. To suggest Enterprise Resource Planning modules for cooperative sugar

factories

1.5. HYPOTHESES OF THE STUDY

The study is also undertaken to test following hypotheses.

1. Majority Cooperative sugar units are not using ERP systems.

2. The co-operative sugar factories are more computerized at operational level

with compared to managerial level and executive level activities

3. Hardware and software problems have been faced by sugar factories that

are of similar in nature

4. The sugar factories facing problems in computerization such as lack of

trained staff, inadequate infrastructure facilities are not dependent on

capacity of plant.

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5. The efficient and effective plant capacity utilization and decrease in total

losses are directly related to extent of computerization.

1.6 SCOPE OF STUDY

The present study confined to selected co-operative sugar factories in Western

Maharashatra i.e. A unit(s) which collect sugarcane from farmers, process it and

producing sugar as a finished product which runs on co-operative philosophy.

This study relates to selected sugar factories in western Maharashtra state of

India, which includes seven districts viz.Kolhapur, Sangli, Satara, Solapur, Pune,

Ahmednagr and Nashik as specified by the district under western Maharashtra

belt by commissionrate of sugar from the administrative perspective. The sugar

factories studied on the magnitude of its problems and prospects relate to

computerization in selected units.

Present research encompass concept like different performance parameters such

as capacity utilization, recovery, reduced mill extraction, pol percentage in

baggasse etc. The data collected and analyzed with the help of simple statistical

tools viz. percentage, averages, co-relations and the hypothesis have been tested

by using statistical tools viz. Mean, Standard Deviation, Spearman’s rank

correlation, chi-squares test, z test etc. Data from sample units have been colleted

of last two years i.e. 2006-2007 and 2007-2008.

TER I RESEARCH METHODOLOGY

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Map No.1.1 GEOGRAPHICAL SCOPE OF STUDY

CHAP


1.7 SIGNIFICANCE OF THE STUDY

In today’s era of cut throat competition everyone trying to survive by updating

their systems through adoption of information technology and cooperative sugar

units are not exceptional, they have to change according to time so as to keep

abreast with surrounding, The computerization in different functional and sub

functional areas would ensure storage and accurate database for enriching

productivity of sugar unit and foster management decision at all levels.

Researcher has investigated status of computerization, problems in

computerization and impact of computerization on performance of sugar units.

In order to discover obstacles that create trouble for cooperatives and is a

stumbling block in the way of prosperity. Prescription proposed by researcher

would assist cooperative sugar sector to improve its productivity and efficiency.

By taking the reference of these prescriptions software and hardware

professionals would equip themselves with requisite skills not only to maintain

their systems but also they can deal with any kind of eventuality and would be

able to convert threat into an opportunity. Majority of the sugar factories have

not implemented ERP hence this study is useful to these sugar units for ERP

implementation and for apex organization like MRSSK, State Government,

educational and research institute like VSI, NSI for designing various

educational programs in IT area. ERP consultants will use this study for

suggesting ERP implementations strategy and business reengineering. A study

is also helpful to identify a way to rescue them from complications in IT

governance so that it would assist them to keep a pace and maintain its

competitive strength that could lead to desired destination [8].

1.8. RESEARCH METHODOLOGY

Present research is of inferential descriptive in nature; to suffice aforesaid

objectives data had been collected from primary and secondary sources.

1.8.1 Data Required: The study requires profile of sugar industry, various

management areas in cooperative sugar industry, computer applications in sugar

industry, performance aspects and problems in cooperative sugar industry.

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Besides this present status of computerization in sample units, problems related

to computerization and performance results of sample units.

1.8.2 Data Source: The above mentioned data was secured with the help of

following sources. Survey Method was used to elicit relevant information

pertaining to fulfilling the objectives of study. Researcher has also resorted to

observation method for microscopic view of computerization in co-operative

sugar industry, to cross-examine the various responses received from the

respondents regarding problems. Furthermore data required to know

implications of non computerization had been collected from concerned

functional heads.

a) Primary Data: Data viz. areas of computerization covered and uncovered,

implications of manual systems, software development approach, problems in

computerization, IT manpower status obtained with the help of schedule by

taking interview of the Sugar factory employees such as Managing Director,

Secretary, EDP Manager, Finance Manager, Labour Welfare Officer, Chief

Engineer, Chief Chemist, and Agriculture Officer, Managers in By-products

division and Operating Staff .

b) Secondary Data: Data regarding to the status of co-operative sugar industry,

organizational profile collected from annual reports of Vasantdada Sugar

Institute, sugar factory official records and various publications of Maharashtra

Rajya Sahakari Sakhar Karkhana Sangh Ltd., and National Federation of Co-

operative Sugar Factories Ltd., New Delhi.

1.8.3 Instrument: Data had been collected by using structured schedule and

schedule was executed by conducting interviews of EDP managers and different

officials of sample unit. Schedule is divided in to two parts, first part covers

general information of sample unit which includes Name, address, capacity,

establishment year, number of members, and different by-product units etc. and

second part covers status of the computerization i.e. covered and uncovered

areas of computerization, availability of technical staff, IT infrastructure and

different problems in computerization, implications of noncomputerisation.

[Annexure I]

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1.8.4 Sampling: A scrutiny of statistics maintained by Vasantdada Sugar

Institute brought out there were 97 sugar factories in Western Maharashtra and it

covers Kolhapur, Solapur, Sangli, Satara, Pune, Nasik, Ahmednagar districts.

Out of 97, seven sugar factories (8%) are operated privately and remaining 90

units (92%) are co-operatives.

It was found that these cooperative sugar factories are using computers since

1986 for various applications. The method used for selection of sample is

stratified proportionate random sampling method in which sample units are

divided into seven stratums. Each district is considered as stratum. More details

are as under,

1 Sampling Technique Proportionate Stratified Random Sampling

2 Population Cooperative Sugar factories from Western Maharashtra

3 Type of Population Finite Population

4 Size of Population 90 Sugar Factories

5 Analysis Unit A Plant of Sugar Factory

6 Sampling Frame Sugar Factories from 7 Districts of Western Maharashtra

7 Sample Size 18 Sugar Factories

8 Parameter of Interest Status and Problems in Computerization

Formula for calculating the sample size of each stratum according to

Proportionate Distribution is as below.

nh = n × (Nh / N)

where; nh = Sample size of each stratum n = Total sample size Nh = Size of the stratum N = Size of total population

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Table No 1.1 District-wise Selection of Sample of Sugar Factories

Sr. No. District

No. of Co-

operative Factories

No of Private

Factories

Total

Sample Size as

per Formula

No. of Sample Units

1 Ahmednagar 16 1 17 3.19 3 2 Kolhapur 19 1 20 3.79 4 3 Nasik 6 1 7 1.19 1 4 Pune 11 1 12 2.19 2 5 Sangli 15 - 15 2.99 3 6 Satara 9 1 10 1.8 2 7 Solapur 14 2 16 2.79 3 Total 90 7 97 18

Source :(VSI Statistical Bulliten-2005-06)

Above table gives information about district wise sugar factories in seven

districts of geographical scope considered for study. Researcher undertaken

study of cooperative sugar factories, hence only cooperative units are

considered for deciding sample and total 18 cooperative sugar factories out of

90 from western Maharashtra are selected as samples. Graph No.1.1 depicts

stratum wise size of universe and sample. Requisite information has elicited

from head of the computer department in these units and heads of the other

functional areas and Managing Directors.

Graph No.1.1

District-wise Cooperative Sugar Units and Select Sample Units

02468

101214161820

Total Units 19 15 9 11 14 16 6

No. of Sample Units 4 3 1 2 3 3 1

Kolhapur Sangli Satara Pune Solapur Ahmednagar

Nashik

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The data is collected from 18 sample units and taken on electronic spread

sheet. Classification is done on the basis of capacity of unit; viz. small and

large units. Small units are those whose plant crushing capacity is less than

4000 MT per day and large units are those whose plant crushing capacity is

more than 4000 MT per day.(Table No.5.1) Besides the broad classification on

the basis of size of sample units the classification of data, department wise has

also been done. Sugar factory has major six department’s viz. general

department, finance department, agriculture department, labour and welfare

department, Engineering and manufacturing department and byproduct

department. Every department has its own sub functional areas of management

as follows (Table No.1.2).

Table No. 1.2 Functional and Sub-functional Areas of Management in

Co-operative Sugar Unit. Sr.No. Functional Areas Sub Functional Areas

1) General Administration 2) Vehicles 3) Guest House 4) Legal 5) Civil & Irrigation

1 General

6) Watch & Ward 1) Share Accounts 2)Cane Accounting 3) Harvesting Billing 4) Transport Billing 5) Deposit Accounting 6) Store A/C & Costing 7) Financial A/C

2 Finance

8) Sugar & Byproducts Sales 1) Cane Development & Planning

2) Harvesting

3) Weighbridge 3 Agricultural

4) Transport Scheduling

1) Recruitment & Selection 2) Attendance system

3) Payroll 4) Personal information System

4 Labour &Welfare (HRM)

5) Medical & Sanitation

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Sr.No. Functional Areas Sub Functional Areas

1) Inventory Management 2) Plant Maintenance 3) Production Planning 4) Lab analysis 5) Sugar Godown

5 Engineering & Manufacturing

6) Process Atomization's i) Cane Feeding ii) Juice Weighing iii) Boiler Atomization iv) Boiling House v) PH Control systems vi) Pan Atomization vii) Centrifugal Atomization viii) Sugar Weighing System 1)Distillery 2)Ethanol 3)Liquor 4)Particle Board 5)Cogeneration

6 Byproduct

6)Other than above (Source: Records of Labour & Welfare Department)

This classification is felt necessary to have micro analysis and facilitates

comparison to reach acute problems of computerization in sample unit’s

capacity wise and department wise. Details of district wise sample units are

shown in Annexure II.

1.8.5 Data Analysis: In order to accomplish the objectives of the study , the

data collected from primary and secondary sources have been analyzed using

statistical tools viz. percentage, Mean, Standard Deviation, t test. Hypotheses

have been tested using Chi-square test, Z test, ANOVA and spearman’s rank

correlation.

1.9 LIMITATIONS OF THE STUDY

1. Respondent were unenthusiastic to give real information because they thought

that it is part of enquiry conducted by apex organization.

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2. The performance appraisal is based on comparisons of fully computerized unit

and a meager computerized unit. That is the study assumes that other factors

(viz geographical conditions in area of operation, soil, availability of water,

resources, trained manpower, professional management, and active

involvement of share holders in management of sugar unit) affecting on

performance are considered as constant.

1.10 ORGANIZATION OF THESIS

A brief outline of the chapters in which present study is articulated as below

Chapter 1: Research Methodology

This chapter provides scope and relevance of study; objectives, hypotheses,

methodology employed and analytical tools used for analysis and hypotheses

testing methods. It also includes limitations of study, scope for further

research and chapter scheme.

Chapter 2: Literature Review

This chapter covers brief summaries of referred books, thesis and research

articles pertaining to IT implementation, sugar industry in India and aborad,

cooperative sector in India, cost and operational analysis of sugar factories,

human resource and management of sugar factories, problems of sugar

factories, IT implementation in various functional areas of sugar factories etc.

Chapter 3 : Profile of Cooperative Sugar Industry

This chapter provides an introduction to cooperative movement and its

significance, history of sugar, sugar scenario, of world and India. Growth of

cooperative sugar industry in India and Maharashtra, significance of sugar

cooperatives in economy, computerization areas for sugar industry and profile

of sample units selected for study.

Chapter 4 : Conceptual Frame Work

This chapter covers evolution of computers, need and various applications of

computers for sugar industry, different technical aspects considered in

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computerization process. This chapter also covers areas of computerization and

automation in sugar industry and recent trend in Information Technology.

Chapter 5 : Data Analysis and Interpretation

In this chapter, an attempt has been made to analyze status of computerization,

uncovered areas of computerization, various problems viz. hardware, software

and behavioral etc observed in computerization of sample units. The primary

and secondary data is tabulated and different statistical tools viz Percentage,

Mean, SD, Weighted averages by using Likert scale are used for drawing

inferences.

Chapter 6 : Observations, Conclusion and Suggestions

This Chapter summaries the findings; conclusion drawn and suitable

suggestions made for effective IT implementation and to improve the

efficiencies of various functional areas like general administration, agriculture,

finance, engineering and manufacturing, labour and welfare and byproduct

units of cooperative sugar factories

Bibliography

Annexure

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REFERENCES

1) Ram Vichar Sinha (1998), ‘Sugar Industry in India’, Deep and Deep

Publication New Delhi.

2) D K Grover and S S Grewal(1991),’The Problems of Sugar Industry in India’,

Vihar Publications, Allhabad.

3) D K Pant, S.M.Saraswat and Ajay Mishra (2005), Sugar Industry

Diversification For value Addition, Cooperative Sugar, Vol 37,No5 Jan 2006.

4) R J Shah(1997),’Statistical Techniques’, Sheth Publications Mumbai

5) Suranjan Shah(2006),’Matahmatics and Statistics’, Central Education

Enterprises (P) Ltd, Kolkata, IXth Edition.

6) Kothari S C(2006), ‘Research Methodology Methods and Techniques’, New

Age International Publishers, IInd Edition.

7) Gupta S C and Indira Gupta(2008), ‘Statistical Techniques’, Himalaya

Publication House, New Delhi, Vth Edition.

8) T.K. Balwe (2004), Proceedings of State level conference on ‘Cooperative

Sugar Industry in Maharashtra: Past, Present and Future’ Pune.

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07 chapter 1

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