7

FACTORS RESPONSIBLE FOR POOR

PERFORMANCE OF PAPER MILLS IN KUMAUN.

It is a bitter truth that industrialisation is not mere a result

of only mechanical means and availability of technical facilities.

It is a fact that industrialisation is a principal means of enabling

developing countries to produce for themselves the resources

for modernization and for the solution of the problems of mass

poverty, unemployment and general backwardness. But for its

success there is also need of social, cultural, administrative and

political favourableness alongwith economic aspirations. The

forces and circumstances which tend to hinder the

industrialization of any region may be present in varying

degrees and forms.

Industrialisation is not conceived as an alternative to

agricultural development in the region. Both are complementary

and tend to reinforce each other, in accelerating economic

development. A backward subsistence agriculture with low

productivity, lack of diversification and commercialization, is a

major constraint on industrialisation process, both from supply

and demand sides. A modernized highly commercialized

Estelar

agriculture with a proper technological base is a powerful factor

for providing supply and demand linkages with industries. It is

a high time that the agriculture industry matrix is properly

understood by the higher administration and policy makers of

the State. Rural industrialisation programmes having greater

linkages with agriculture and forests will tend to be hindered

both from the supply and demand sides unless agriculture

adequately responds.1

Before discussing factors responsible for poor performance

of paper mills in Kumaun, it is better to know about the

structure of an industrial unit. Subsequently, factors responsible

for poor performance will be discussed. To have better

understanding of poor performance, it is necessary to have a

graphic insight into the anatomy of an industrial unit first. A

clear understanding of the anatomy of an industrial unit will

help in the analysis of its different structures or systems and

their critical elements before analyzing poor performance. An

industrial unit may be divided into four quadrants which

represent the four functional areas viz.,

1. Patnaik, SC : Industrial Development in a Backward Region: Dynamics ofPolicy, Ashish Publishing House, New Delhi, 1988, p-60

Estelar

finance, production, marketing and personnel. The corporate

management is responsible for coordinating these four

functions. These quadrants are discussed as under :-

(I) FINANCE QUADRANT

All the financial decisions relevant to an industrial

unit depend upon this quadrant. It comprises critical

elements like financial structure, financial planning,

budgeting, assets utilisation, working capital

management, costing, pricing, accounting systems and

procedures etc. These critical elements are the various

sub-systems and their proper functioning is essential for

the overall performance of the financial system. Out of

these sub-systems, financial structure involves decisions

about the ratio in which debt and equity should be

structured to maximize shareholders’ net worth. Financial

planning and budgeting look at future financial

requirements, establishment of departmental budgets and

a regular comparison of the actual performance with

budgeted figures. Optimum utilisation of assets is another

Estelar

critical element for improving productivity. Efficient and

effective utilisation of investment in current assets is

ensured through working capital management. Costing

and pricing decisions help in minimizing costs and

maximizing anticipated profits tending to wealth

maximization. It is noteworthy that without an effective

accounting system and control procedures, it may be

quite difficult to arrive at the financial health of an

industrial unit at frequent intervals. It is evident that all

these critical and key elements of sub-systems of the

functional area are important for effective functioning of

the system on an overall basis.

(II) PRODUCTION QUADRANT

Various sub-systems of this system are site selection

or location of the industrial unit, plant and machinery,

product design, production planning and control,

purchase and control of inventory, maintenance, quality

control, research and development etc. All these

sub-systems represent the various critical elements of this

functional area.

Estelar

The decision as regards selection of the site of an

industrial unit depends upon a number of factors

including availability of advanced and developed

infrastructure and inputs, proximity to the sources of raw

material, nearness to the market and granting of various

subsidies and fiscal concessions by the Government etc.

Capital expenditure decisions regarding choice of

appropriate plant and machinery are also crucial.

Decisions as regards size, capacity, cost and operating

characteristics have to be taken. Production and

planning control regulates the production process in

such a way that the actual behaviour corresponds to the

plans. Material management helps in controlling the

price, usage, quality and timely procurement of all

materials required. The sub-system of maintenance helps

in optimum utilisation of machinery. Quality of production

must be ensured through quality control measures.

Research and development efforts enable an industrial

unit to innovate and bring improvement in its products by

keeping pace with technological changes. All these

elements collectively will result in smooth functioning of

the production function.

Estelar

(III) MARKETING QUADRANT :

The key elements of functional area of marketing

are :- forecasting of demand, product-mix decisions,

market segmentation, distribution and promotion strategy,

etc. The success of an industrial undertaking depends upon

accurate estimate of demand and supply position of the

product to be manufactured. Demand forecasting is of

immense help in this regards. Selection of an appropriate

product mix enables a unit to maximise its earnings with

the available production capacity. A study of market

segmentation helps in knowing about the consumers and

brining appropriate modifications in its product/products to

suit their requirements. A suitable distribution and

promotion strategy like offering better sales service

marketability and demand of its product may also be

developed by the enterprise. All these critical elements

combined together if work well will help in efficient

functioning of overall marketing system.

(IV) PERSONNEL QUADRANT

This quadrant represents the personnel function of

an industrial enterprise. Its sub-systems are recruitment,

Estelar

selection, training, man-power planning, wage and salary

administration, labour relations, morale etc. The

recruitment and selection of right persons, their placement

as per job requirement, their training for better use in the

present job or grooming them to take up higher

responsibilities are extremely important. Manpower

planning helps in estimating prospective manpower

requirements, its deployment needs and development. A

judicious policy relating to wage and salary is another

critical element. Good labour relations and high morale of

the workers are also important to improve productivity,

upkeep & maintenance of plant & machinery and reduce

wastages of all types.

CORPORATE MANAGEMENT

Corporate management which is called the brain of an

industrial undertaking pervades through all the above

mentioned four functional areas. Its critical elements are

organisation, planning, leading, measuring, controlling and

development etc. Organizing involves assignment of various

tasks to different persons and departments. It aims at getting

work done as per schedule and building of a social structure

Estelar

that is helpful in meeting the needs of the masses. Planning

involves setting up of objectives and goals for the enterprise as

a whole. It lays down sub-goals for each functional area,

establishing policies and standard methods, developing

programmes, strategies and schedules and keeping the work

moving towards predetermined objectives.

Leading is concerned with the integration of welfare of the

people with the needs of the enterprise. Through leading, the

workers perform their tasks in efficient manner and also do

achieve their personal aspirations. Measuring involves

evaluation of the actual performance whereas controlling

relates to corrective action if variances are recorded.

Development involves a planned change in the unit to enable it

to face the challenges of tomorrow.

After having knowledge of the various systems and

sub-systems of an industrial undertaking, one may have a fair

idea about its functioning. A normal and a healthy unit is one in

which all the systems and sub-systems work efficiently. If any

functional area of an industrial unit viz., finance, production,

marketing, personnel and corporate management is sick, the

whole unit may become sick. Abnormality in functioning may

Estelar

be said if the workers are not getting their wages and

increments in time, return on investments and dividend

declared on share capital are inadequate. The banks and

financial institutions are more worried about the repayment of

their loans, the unit shows its inability in meeting its

contractual obligations.

NORMAL UNIT

An industrial unit is called normal when all of its functional

areas like production, marketing, finance and personnel

are functioning efficiently. In other words, if it is earning

significant amount of profits, the current ratio is more than

one, net worth is positive, solvency ratio is more than one

and debt equity ratio is less than one, the unit can be

declared healthy.

TENDING TOWARDS POOR PERFORMANCE

If there is certain initial aberration in any of the functional

areas or the unit is facing some environmental constraints,

the initial stage of the poor performance will set in. At this

stage, the unit is said to be tending towards sickness. The

indicators of this stage are decline in profits in the last year

as compared to the previous year and losses are doubted in

Estelar

the current year. This is the stage at which some

appropriate preventive measures can be considered after

going into the various causes of poor performance.

INCIPIENT POOR PERFORMANCE

If the deterioration in the functional areas continues, it may

result in the actual setting in poor performance. Such a stage is

termed as incipient poor performance stage which is

determined by the following factors:-

1. The unit has experienced a cash loss in the last year

and the estimates for the current year also indicate

occurrence of the same.

2. Deterioration is anticipated in the current ratio position

in the current financial year although the same may be

more than one on the basis of last year’s financial

statement.

3. Contraction is anticipated in net worth during the

current financial year.

4. Deterioration is anticipated in the debt equity position

in the current year.

Estelar

It may be concluded that incipient poor performance is a

stage where the industrial unit incurs cash losses but imbalance

in the financial structure may not be apparent. At this stage

overall situation must be reviewed and suitable corrective

measures must be undertaken to prevent the unit from

becoming sick. When the corrective measures are either not

undertaken or are inadequate at the incipient stage and the

casual factors continue to adversely affect the functional areas,

the unit finally becomes sick. Sickness is characterized when

the unit has incurred cash loss during the last year, doubts loss

during the current year and is also likely to incur cash loss in

the next year, and there is functional imbalance, i.e. the current

ratio is less than 1 and the debt-equity ratio is showing

worsening trend.

Poor performance does not set in overnight. It is a gradual

process with distinct stages. There is need to identify proper

signals and symptoms of poor performance so that a banker

may check and maintain health of the units financed by it.

After analysing the data obtained from personal survey,

personal discussions and interviews, answers to questionnaires

and indirect oral discussions, the factors responsible for poor

Estelar

performance of the paper mills of Kumaun may be divided into

two categories i.e. internal or endogenous factors and external

or exogenous factors given as under:-

INTERNAL OR ENDOGENOUS FACTORS

These factors are also called avoidable factors.

Mismanagement, diversion of funds, excessive overheads, lack

of provision for depreciation, repairs and renewals as regards

plant & machinery and other equipments, overestimation of

demand, incompetence and inability of management, improper

project planning, formulation and implementation, obsolete,

out-dated and inappropriate technology, delay in the

implementation of projects, unbalanced capital structure,

over/under estimation of capital costs and defective working

capital management are internal factors causing poor

performance of paper mills of Kumaun.

EXTERNAL OR EXOGENOUS FACTORS

These factors are also termed as unavoidable factors and

include :- Government policies relating to production,

distribution and pricing, shortage of raw materials, power and

transport facilities, working at uneconomic levels, market

recession, non-cooperation by financial institutions and

Estelar

commercial as well as co-operative banks, low productivity and

under-utilisation of capacity.

It is very difficult to draw a clearcut line between internal

and external factors responsible for poor performance of the

paper mills of Kumaun Division of Uttaranchal. So we have

combined these factors together as under :-

SHORTAGE OF RAW MATERIALS

The raw materials to be used by paper mills may be

divided into five parts :-

(i) Agricultural residue like bagasse, rice straw & rice

husk and wheat straw;

(ii) Naturally grown weeds like elephanta grass, hemp

and sabia grass;

(iii) Vegetation like eucalyptus and poplar;

(iv) Imported raw material like bamboo pulp and wood

pulp;

(v) Waste paper and old gunny.

The Tarai area of Kumaun Division of Uttaranchal is

agriculturally a rich belt. There are six sugar mills in the region

which provide bagasse to these paper mills as raw material.

Estelar

These sugar mills are key feeder to the paper mills. Sugar mills

are established as under-

1. DSM Ltd., Kashipur

2. The Kishan Sahkari Chini Mills Ltd., Nadehi

3. Kichha Sugar Company Ltd., Kichha

4. The Kisan Sahkari Chini Mills Ltd. Sitarganj

5. The Bazpur Cooperative Sugar Factory, Bazpur

6. Kisan Sahkari Chini Mills Ltd., Gadarpur

Initially, the paper mills were established in the region to

avail benefits of a number of fiscal incentives and concessions

like Central Investment Subsidy, State Capital Subsidy, Power

Subsidy, Central Transport Subsidy, Generating Set Subsidy,

exemption from income tax, sales tax and excise duty for a

certain period, risk capital assistance etc. After the formation of

Uttaranchal as on 9th Nov. 2000, a large sugarcane producing

area remained under the possession of the parent State.

Consequently, the sugar mills of the region are facing shortage

of sugarcane, which resulted in shortage of bagasse. The

bagasse is used in paper board/card board/straw board/M.G.

kraft paper manufacturing units as raw material.

Estelar

There are also 265 rice mills in the region which provide

rice husk to the paper mills. The rice-straw is made available

by the farmers and other suppliers. Rice-straw is got from

paddy which is one of the main crops of Tarai area of Kumaun.

In this area, the farmers grow paddy two times in a year.

Wheat-straw is also available in the region as wheat is also

grown as the main crop. The other raw materials like

elephanta grass, sabia grass, hemp, bamboo pulp, wood pulp,

waste paper and old gunny are supplied by the traders residing

outside Uttaranchal. Eucalyptus and poplar are supplied by the

farmers of the area.

The whole production process depends upon the timely

availability of raw material. Some units are facing acute

shortage of raw material in the area. There are many factors

responsible for this shortage of raw material such as growth in

demand, establishment of additional units based on same raw

material, shortage of raw material in the region from where it is

imported, consumption of raw materials like bagasse,

wheat-straw in primary activities etc. Besides, paper mills now

depend upon import of raw materials from Uttar Pradesh i.e.

these units may not run on their own. The following table

Estelar

shows raw materials shortage in tonnes in Kumaun Division of

Uttaranchal.

Table 7.1

Raw Materials Position in Paper Mills of Kumaun

(in 000 tonnes)

Raw Material Requirement Availability Shortage

Bagasse 450 150 300

Wheat-Straw 420 180 240

Rice Straw 530 230 300

Wood Pulp 30 20 10

Bamboo Pulp 24 18 6

Waste Paper 36 20 16

Others 50 36 14

Total 1540 654 886

Source : Based on Survey

Nearly 58 percent the available raw materials as stated in

the above table are imported from U.P. The waste paper is

Estelar

supplied by the suppliers of Delhi. Some units are facing acute

shortage of wheat-straw and bagasse. As a result of heavy

transportation cost of such bulky materials, it does not seem

viable these to purchase from far-off places.

HIGHER TRANSPORTATION COST :-

The raw materials to be used in paper mills are very heavy

in weight and bulky in size. This is why the paper mills have

to bear heavy transportation cost which puts pressure on the

profitability of the mills. Higher is the transportation cost lower

is the profitability of the units tending to sickness. Transporters'

union has increased fares significantly as a result of rise in the

prices of diesel . Besides, monopoly of the transporters' union is

also responsible for higher transportation cost.

LABOUR PROBLEMS

The paper mills of Kumaun Division of Uttaranchal lack in

efficient, qualified and trained workers. All the paper mills of

the region are in private sector which pays low wages to its

workers resulting in discontentment among the workers. Low

wages are the result of poor bargaining power of the workers.

No trade union exists in these paper mills excepts Century Pulp

& Paper Mills, Lalkuan. No efforts are made by the owners to

Estelar

the mills to motivate the workers. Low wage rates result in

miserable life and fall in efficiency which results in poor

performance. There is not even a single institution in the region

to impart education regarding paper manufacturing. The reason

behind the inefficiency of workers is lack of adequate number

of ITIs and polytechnics. The units have to hire skilled workers

at higher wages from far off stations which inflates wage-bill

resulting in decline in profitability.

Absenteeism is other major labour problem of the paper

mills. Workers from nearby areas come to the mills by their

bicycles which break down frequently and the workers fail to

join duty in time. The rate of absenteeism is very high in rainy

season in the nights which is due to non-availability of

residential quarters in the nearby areas of the units. Residential

facility is much more costly which all the paper mills cannot

afford. The workers lack in industrial culture. According to

personal survey results workers of nearly 40 percent paper

mills are quite negligent to work and their duty as well. They

also lack in sense of responsibility which disturbs the whole

production process.

Estelar

The following table shows the nature of labour problems

and percentage of paper mills under study being affected or

unaffected by these problems.

Table 7.2

Existence of Labour Problems in Paper Mills of Kumaun

Labour Problem Diagnosed Yes No

Lack of Technical/Skilled Workers 80.0 20.0

Labour Unrest 20.0 80.0

Non-cooperative Behaviour of the workers 13.3 86.7

Negligence of Duty among the workers 26.7 73.3

Position of Absenteeism 40.0 60.0

Position of Strike 6.7 93.3

Unhygienic working environment within the

unit26.7 73.3

Source : Based on Survey

By the analysis of the above table it is clear that 80

percent of the units lack in skilled /technical workers. This ratio

Estelar

is very high which leads to poor performance i.e. fall in

productivity and volume of production. The quality of the

finished products may also be poor on account of lack of

knowledge. Undoubtedly, technical and skilled workers are

asset to an industry and the prosperity of the industry vests in

them. Due to low wages, lack of job security and residential

facilities, the workers are not much satisfied with their jobs. On

account of illiteracy, lack of industrial culture and owing to

social bottlenecks, the ratio of absenteeism is very high i.e. 40

percent. As there are no trade unions (except Century Pulp &

Paper Mill, Lalkuan) in the paper mills the percentage of

occurring strike is meagre i.e. 6.67 percent. But unhygienic

working conditions lie in about one-fourth of the total paper

mills which is a poor state of the picture. Due to health hazards

the performance of the workers is not upto the mark.

Estelar

ENTREPRENEURIAL INEFFICIENCY :

The Kumaun Division of Uttaranchal lacks in able and

efficient entrepreneur. There is general lack of industrial

entrepreneurship in the region which is a barrier to industrial

expansion. Generally big farmers are the owners to the paper

mills who are not acquainted with commercial principles and

financial constraints. Only 40 percent of the paper mills are

managed by entrepreneurs having some knowledge of paper

manufacturing and technology. About 60 percent of the paper

mills are enjoying the services of managers having Diploma in

Paper Technology from Institute of Paper Technology,

Saharanpur (U.P.). But the Board of Directors have no

knowledge or qualification of paper manufacturing. The

Directors are generally of agriculture background. The

inefficiency of the entrepreneurs is visible from low equity base

who made no efforts to build internal financial resources during

good years. Even they maintained high volume of inventories to

total production and invested short term borrowings in

Estelar

medium-term investments resulting in the development of poor

internal resilience to fight difficult times.

It is the entrepreneur who conceives a project and puts it

into operation by arranging the location, finance, machinery

and equipment and recruitment of workers. The survey showed

that in 40 percent cases there was no planned approach to the

activities in the key functional areas, such as finance, marketing

and production. There was no financial discipline, particularly

in the management of working capital. Factors relating to

entrepreneurs leading to poor performance can be sub divided

as under:-

i) Poor talent of the entrepreneurs,

ii) Weak set –up in the organisation,

iii) Lack of farsightedness and control,

iv) Deliberate diversion of funds for personal gains.

v) Unplanned diversification.

Estelar

FAULTY PRODUCT SELECTION

The survey conducted observed a general tendency among

the entrepreneurs that they enter the business in which others

are already in large number or often select a product which is

being manufactured or produced by others in the same industry

in that area. In this way, there is a "wave of an industry". In

Kumaun Division of Uttaranchal this tendency of entrepreneurs

resulted in sickness to some of the straw board, card board &

paper board manufacturing units. The enmassing of

indiscriminate entry brings in its wake, raw material shortage,

labour availability problems and cut-throat competition.

Consequently, only a few units do well while others turn sick.

LOW EQUITY BASE

Low equity base is often the root cause of establishment of

plants of unviable size, exclusion of important equipment and

facilities, late or partial implementation of projects. The survey

observed that 40 percent of the entrepreneurs failed to meet

Estelar

initial working capital requirements and the commercial banks

delayed in extending financial assistance to them. A slightly

delayed payment or a negligible accumulation of inventories

throws the working capital cycle out of gear. The paper mills of

Kumaun covered under SSI units have recorded poor

performance on account of uneconomic small size of their plants

as s result of low equity base.

INADEQUATE WORKING CAPITAL

The entrepreneurs blame of working capital problems as

the root cause of poor performance of the unit. Inadequate or

late sanction of working capital assistance or denial of such

assistance by commercial banks at the initial stage of a unit

clearly constitutes a real cause of poor performance i.e.

sickness. In some cases, however, lack of support from

commercial banks is a sickness-aggravating factor rather than

the basic cause of sickness. It is usual for the banks to insist

upon ‘proven performance’ either to resort working capital

limits, or to enhance existing limits. During the survey it has

Estelar

been noticed that 5 out of total 17 paper mills found it very

difficult to persuade the bank to restore assistance while they

were poised to resume work and collected large orders. The

absence of risk taking attitude and difficulties in formulating a

judgment are the major problems so far as banks are

concerned.

Inept working capital management is substantially

responsible for poor performance. Over-investment at the

execution stage and failure to evaluate the technical

complexities and build provisions to overcome these inevitably

create working capital problems. Small entrepreneurs face

problems in collecting dues from large/medium private

companies. It has been noticed that despite clear cut evidence

of satisfactory delivery of goods to some buyers the payment is

not received upto six months. On stoppage of further supplies,

the original payment was further delayed. All these problems

lead to working capital crisis.

Estelar

The liquidity crunch is also a wide spread cause of poor

performance. Poor accounting, costing and record keeping has

also been responsible for working capital problems. It has also

been observed to be a very common poor performance

prolonging cause that the accounts are either incomplete or

incorrect or simply not maintained. It takes several months to

prepare accounts when the task becomes unavoidable because

the entrepreneur is required to submit a working capital

proposal to the bank. It is noteworthy that unorganized and

no-systematic accounts, besides contributing to poor financial

planning loose confidence of the organization and cause critical

delays. The survey reveals that records pertaining to

production, inventory, material and energy consumption, sale,

workers and statutory matters are ill-maintained by 6 out of

total 17 paper mills. A drastic consequence of such laxity is that

units often have to face adverse and strict legal action not

because they did not comply with the statutory requirements

but because they have not maintained necessary records.

Estelar

SUBSTITUTION EFFECT

Spectacular progress in the field of science and

technology has resulted in the evolution of standardized new

and improved products. The units previously producing straw

and card boards started the production of mix boards which

created havoc among the straw and card board producing units

of the region. The newly emerged products are endangering the

survival of existing paper mills of the region.

UNECONOMIC SIZE

As we are aware of the fact that the per unit cost of

production of a product depends upon the size of the unit. Here

size of the plant refers to capacity in units. While making choice

of a plant it is necessary that the size of the plant be optimum

to result in lowest average cost. The entrepreneur must be

acquainted with the cost structure i.e. the volume of fixed and

variable costs at varied sizes of the plants, so that selection of

optimal size may be made easily. M/s Gauraya Straw & Card

Board Mills, Kashipur, M/s Prakash Straw Board Mills, Bazpur

Estelar

and M/s Cheema Paper Mill Ltd. Bazpur, fell a prey to

uneconomic size of their plants. It resulted in poor performance

and financial crisis.

LOW INDUSTRIAL PRODUCTIVITY

Profitability of an industrial unit depends upon its

productivity. This productivity must be measured as to labour,

investment or any other limiting factor. Increase in industrial

productivity is possible only if the size of the plant is optimal,

work-force and capital invested and other means of production

are being utilized optimally. The productivity in paper mills

covered by SSI sector has been found lower than that of

medium & large scale units. Besides, the productivity of the

paper mills of the region has been found lower than that of big

units of industrially advanced states of the country like

Maharashtra, Gujarat and Haryana etc. This low productivity in

these paper mills is attributed to the obsolete plant &

machinery, inadequacy of power supply and raw materials

which resulted in under-utilization of capacity, low grade of

technology and inadequacy of skilled and trained workers.

Estelar

FAULTY PUBLIC ADMINISTRATION

Although, Uttaranchal Government has made

arrangements like 'Udyog Bandhu’, appointment of nodal

authority, screening committee, monitoring committee etc., yet

the entrepreneurs to the paper mills of the region are facing

many difficulties in dealing with public administration. Once

the licence for the industry is granted by the appropriate

authority, the entrepreneur has to apply for other licences to

other departments. The financial institutions like UPFC, PICUP

etc. do charge the interest since the day the loan is released.

But as a result of non-sanctioning of industrial power

connection, production may not be started with immediate

effect. Further 'No Objection Certificate' or consent letter (as the

case may be) is delayed by the Pollution Control Board. Lacking

of coordination among various Government

departments/agencies results in huge expenditure and

production delays. If the power connection and 'No Objection

Certificate' are granted with the licence, these huge financial

losses in the form of interest and loss of production may be

avoided. The responsibility to remove all these hurdles has

Estelar

been entrusted by Government of Uttaranchal to SIDCUL. But

SIDCUL (State Industrial Development Corporation of Uttaranchal

Ltd.) is just a newly set-up organization which will take some

time to manage all these affairs.

POOR MARKETING SYSTEM

Kumaun Division of Uttaranchal is handicapped as far as

marketing of paper mill products is concerned. The mills have

to sell their products through commission agents who reside in

Delhi. Their trading terms are against the interests of these

mills. The paper mills of the region find it quite difficult to

undertake exports of their goods. The export procedure is

complicated and full of various formalities. These paper mills

mostly in SSI sector find themselves incapable in complying the

same. There is no such infra-structure in the region as may

facilitate exports or make it possible or easy to undertake or

promote exports. The communication net-work too is still in

poor stage, on account of which it is very difficult to make

contacts with the buyers and commission agents of other parts

of the country.

Estelar

POOR TRANSPORTATION SYSTEM

Efficient transportation system plays a crucial role in the

industrial development of a region. Industrialization heavily

depends upon sound and cheap transportation system. Timely

supply of raw materials to the industries and of finished

products to the marketing centres is inevitable for smooth

running of the industrial unit. The Kumaun Division of

Uttaranchal is handicapped as far as transportation facilities are

concerned. The paper mills lack in their own trucks. The private

truck owners are in a monopolistic position to exploit these

paper mills. Due to poor communication system, contact is

hardly established with transporters of far-off places which

results in delay in the supply of raw materials to these units

First, it hampers production process and secondly, it incurs

financial burden.

The survey results as regards transportation system are as

under :-

Estelar

TABLE 7.3

PERFORMANCE OF TRANSPORTATION SYSTEM

(Figures are in % age)

Information Asked Yes No

Does the unit own its own transportation system? Nil 100.00

Is there delay in the supply of raw materials? 29.41 70.59

Are the transportation charges high? 76.47 23.53

Adequacy of transportation service 23.53 76.47

Is the unit satisfied with the hired transport services? 23.53 76.47

Source : Based on Survey

By the analysis of the above table it may be put that none

of the paper mills owns its own transportation system. All the

units depend upon private transporters for the transportation of

raw materials and finished goods as well. This is why these

paper mills have to pay high price for the monopolistic position

of the transporters. The delay in supply has been recorded by

29.41 percent of the total paper mills of the Division, while

76.47 percent of the units complained of higher transportation

charges. Only 23.53 percent of the total paper mills are

satisfied with the hired transportation services.

afFA

Estelar