Chapter 6

BEEDI COOPERATIVES: THE SAGA OF SUCCESS

Introduction

Cooperatives form a major segment of the beedi industry in

Kerala and they provide employment to more than 30000 workers. This

is in sharp contrast to the all-India situation where, beedi

cooperatives form only a marginal segment of both the beedi

industry and the industrial cooperative sector ln Indial.

Therefore, unlike coir and handloom cooperatives, the data on beedi

cooperatives are not available in the 17 industry classifications

of industrial cooperatives in the published data. A mac~o-analysis

of the cooperatives in the beedi industry is beyond ou~ reach.

Our study of beedi cooperatives in Kerala for:us or: the twenty

two primary cooperatives and one central cooperative operating in

the northern districts of Cannanore, Kasargod and Calj_cut

districts, commonly known as Kerala Dinesh Beedi (KDB)

Cooperatives. A few other beedi cooperatives function in the other

districts. But they hardly account for five percent of the

cooperative output and employment. Being rather recent entrants to

the industry, they also stand apart from KDB coopera~ives which

have completed twenty five years of working. Hence, our study of

beedi cooperatives is exclusively focused on the KDB cooperatives.

Further, it may also be mentioned here that the beedi industry

today is increasingly getting localised in Northern Kerala. The

share of beedi employment in the Travancore-Cochin region declined

from more than 50 percent in 1951 to around 27 percent in 19812.

The beedi employment increased by 312 percent in Kerala during the

period 1951-81. But growth was localised in the Malabar region

where beedi employment increased 603 percent as compared to only 88

percent in Travancore-Cochin area. The highest growth was

registered in Cannanore district where beedi employment increased

by a factor of 18.

As mentioned in chapter 3 unlike other traditional industries

in Kerala the beedi industry has continued to expand both its

workforce and production during the decades since the sixties. In

short, the industry cannot be considered to be in the throes of

crisis as the other traditional industries. The most important

distinguishing feature of the beedi industry is its relatively

buoyant market for its product. Further, though none of its raw

materials are being produced in Kerala, (the raw material crisis

has tended to aggravate sharply in the recent period), their

supplies have been adequate to meet the requirements of the

expanding industry. Finally, the industry also does not face

competition from mechanised production systems. Cigarette produced

with machinery in large scale factories caters to a very different

market segment of tobacco users.

At the same time, the beedi industry shares the generic

features of other traditional industries: handicraft technology,

low productivity and low wages. Attempts to improve the living

conditions through unionisa tion are rendered ineffective by the

employers, who take recourse to domestic unit based production,

sub contracting arrangements or more importantly shifting the

234

production to non uniOIJised regions3. The extremely low fixed

capital investment required for the beedi industry makes shifting

of industry a highly successful tool of the employers to confront

trade union challenges. Traditional forms of unionisation and

worker responses are largely rendered helpless in beedi industry.

Therefore, right from the inception of the trade union movement,

cooperative expansion was a demand from below to meet the

manipulations of the employers.

In section 1 of the chapter we discuss in detail the formation

of the Kerala Dinesh Beedi cooperatives in Northern Kerala. In this

connection we shall also be discussing the evolution of the

industrial structure, trends in standard of living of the workers

and the growth of the trade union movement in Northern Kerala.

Section 2 is devoted to a discussion of the growth and performance

of the beedi cooperatives. In section 3 we examine the factors

contributing to the efficiency of production of the primary

cooperatives. The overall functioning of the beedi cooperatives is

also crucially dependent on the efficient handling of the purchas~

and marketing functions and financial management handled by the

Central Cooperative. This is discussed in section 4. Here we

highlight the working of the central cooperative and the financial

structure of the cooperatives, which were crucial factors in

ensuring cooperative performance. The conclusions are also then

summed up.

235

Section 1

Formation of Kerala Dinesh Beedi Cooperative

It will not be an exaggeration . to state that the beedi

cooperatives are as old as the trade union movement in the industry

(the Sree Narayana Beedi Thozhilai Union) 4. Formation of the first

union in 1934 was partly a reflection of the social awakening of

the 'thiyya' caste from whom the majority of the beedi workers in

the region were drawn. It was also a response to the deterioration

of the working conditions in the beedi industry. Initially, the

export demand from Burma and Ceylon and then later the rapid

expansion of domestic demand had facilitated the growth of the

beedi industry in and around the towns of Cannanore and

Tellicherry5. The available evidence indicates that during the

first three decades of the century labour was scarce and wages

relatively high and advances had to be paid to ensure the supply of

workers 6. During the industrial expansion in the post first Har

period the scale of production in most of the units also increased

so that many of them came to employ more than a hundred workers in

work sheds 7. With the onset of depression and increase in

unemployment labour supply became plentiful. The advanced system

ceased and wages came to be arbitrarily reduced. Various forms of

arbitrary deductions from wages also became the norm causing much

resentment among the workers.

Soon after the formation of the first trade union of beedi

workers in Tellicherry there took place a spontaneous strike at

Charka beedi factory, a prominent firm of the period. Reduction in

236

wages was the provocation8 The strike soon fizzled out. The trade

union found itself helpless against the pressure tactics of the

employer. Suggestions carne up from various quarters that a worker

cooperative was the only lasting solution to the high handedness of

the employers. Thus, hardly within a month of its formation the

fledgling trade union was forced to sponsor a worker cooperative

named 'Thozhilali Beedi Works' to rehabilitate the retrenched

workers 9. Appeals were made in the press requesting support for the

new venture. This pioneering cooperative enterprise did not survive

very long.

The available information showed that the wages in the

Cannanore and Tellicherry regions deteriorated so much so that

during the latter half of the 'thirties the wage rates in these

towns were significantly lower than those paid by the beedi firms

at Mangalore, lying 80 kilometers north, in South Kanara

district 10 . Many beedi rollers migrated to Mangalore seeking

employment. Similarly, some Mangalore based beedi firms also began

to set up work sheds in and around the towns of Tellicherry and

Cannanore to take advantage of the lower wages. The first of the

firms was established in 1934 and this shift of the industry

accelerated from the early forties and continued to the sixties11 .

Largely under the pressure of the trade union movement the

Madras government extended the Factories Act to the beedi industry

in 1937. The beedi employers responded by bifurcating the large

beedi work sheds into smaller establishments or branches, each

employing less than twenty workers, so that they would remain

outside the purview of the Factories Act12 . The workers resisted

237

the move and presented a charter of demands to the beedi employers.

The result was a long drawn out industry wide strike, which lasted

more than a month. Although the strike was total in Cannanore and

Tellicherry regions, the production went on unhindered in other

areas like Mangalore. The beedi workers, despite their high

political conscience and .militancy, were forced to reach a

settlement largely on terms set by the beedi employers. The branch

system of production became the dominant organisational feature of

the beedi industry from that period.

Although the strike of 1937 fai.led it proved to be a very

important nodal point in the radicalisation of beP.di workers. Beedi

workers were deeply involved in the national movement and were

strongly influenced by the radical elements organised under the

Congress Socialist Party. The role played by the Congress Socialist

Party leaders in organising the strike drew the workers even closer

to the militant movements. One point that should be mentioned in

this context is the long standing tradition of political education

among the beedi workers as part of the work routine. It was normal

that at any work center workers would take turns to read aloud

political tracts while the others rolled the beedis. In fact one of

the demands of the 1931 strike was for the above right of learning

while working13 . The beedi workers became well known for their

political knowledge and social commitment. From among their ranks

came many a prominent radical leader of Northern Kerala14 .

The period of the Second World War was one of comparative

industrial peace although the real wages failed to keep up with war

time inflation. It was due to the conscious policy pursued by the

238

communists, who by and large controlled the trade unions, not to

hinder the war efforts. However, with the cessation of the War the

beedi trade unions launched a major offensive demanding wage

increase and payment of bonus. Unlike in 1937 the trade unions in

the Malabar and South Kanara districts decided to coordinate their

strike action and the entire indu~try came to a standsti11 15 . After

one and a half months the government was forced to refer the

dispute t6 compulsory adjudication and the strike was withdrawn.

The arbitration award was favourable to the workers 16 • But it

proved to be a mirage. For, by the time the award came, along with

the Communist Party the communist trade unions, including the beedi

trade union, were outlawed. The employers refused to implement the

adjudication award. Instead they set out to reorganise the

production on the basis of indirect production system. The former

branches of large firms were put under the charge of contractors

with no formal association with the firm. Thus, the workers ceased

to have any formal legal connection with the owners of beedi firms.

The lifting of the ban in 1951, enabled the rejuvenation of

trade union activities in the fifties. During this period the trade

unions successf11lly countered the attempts of the beedi employers

to further decentralise beedi production to the household of the

workers. But they were unable to enhance the low wages in the

Malabar beedi industry. The Tripartite Committee Report for Beedi

and Cigar Industry (1958) noted that beedi wages in Malabar were

around 25 percent lower than that of other regions in Kerala 17 •

These low wages enabled the continued shift of the industry from

South Kanara to North Malabar and by the sixties the Mangalore

239

based firms emerged as the largest beedi employers in Malabar. The

Mangalore Ganesh Beedi alone employed around 10000 workers in

Cannanore district in that period.

Apart from the efforts to improve the wages the trade union

efforts during the fifties· concentrated in two directions. The

first was the demand for comprehensive legislation especially for

the beedi industry that would provide protection even for the

workers employed indirectly under contractors. The union organised

a 'jatha' to Madras in support of this demand and succeeded in

forcing the then Madras government to enact the Minimum Wages Act

in 1948 18 • But the implementation of the new Act resulted in the

migration of the beedi industry from Madras and the government had

to beat a hasty retreat. Therefore, the unions began to raise

demands for a national legislation for the beedi industry that

would cover all the states and provide no scope for evasion.

The second direction of trade union mobilisation was for

reorganisation of the industry on a cooperative basis. At the

height of the 1937 strike one of the mediators, exasperated at the

intrangience of the beedi employers, had publicly appealed to the

trade unions to organise workers' cooperatives to improve their

bargaining power19 . By 1946, promotion of worker cooperatives had

become the

cooperatives

official policy of the trade unions.

were an important element of the

Worker's

postwar

revitalisation programme for the industry drawn up by the workers

and placed for endorsement of the candidates contesting in the 1946

legislative elections20 •

240

It took more than a decade for the above demand for workers

cooperatives to materialise. The communist government that carne to

power in the newly formed state of Kerala in 1957 favourably

responded to the demand of the workers. A scheme to set up 14 beedi

cooperatives in the important beedi manufacturing centers of the

state was drawn up following the recommendations of the Tripartite

Cornrni t tee for the Beedi and Cigar Indus try ( 19 58) 21 • Of the 14

cooperatives at least three were based in Cannanore district in the

towns of Cannanorer Tellicherry and Neeleswararn. There is hardly

any information regarding the working and performance of these

cooperatives. But the available information indicates that the

experience was not very encouraging22 . The cooperatives had very

inadequate resources and they were too small to compete with the

large beedi producersr who dominated the market. The marketing of

beedis was done by the beedi workers themselves. Though they

attempted to improve the working condition of the workers and

provide some token payments as non wage benefits to their workers

they were unable to register any significant achievements;;). The

dismissal of the left government in 1959 also resulted in reduction

of government commitment to the beedi cooperatives, especially in

terms of financial support, and they gradually wound up one after

the other. Despite these inadequacies some cooperatives, like those

in Cannanore and Neeleswaramr continued to survive up to the

seventies.

The sixties saw the introduction of new regulatory measures

in the industry. The Kerala Beedi and Cigar Industrial Premises

(Regulations of Conditions of Work) Act was enacted in 196124 . The

new regulations further emboldened the workers and a series of

241

strikes broke out demanding increased wages and better working

conditions. The result was that by the mid sixties the wages in

Cannanore became marginally higher than those at South Kanara2 5.

This was an important turning point for the beedi industry of

the region. The low wage rationale behind the shift of the beedi

industry from Mangalore to North Malabnr was completely eroded. The

beedi employers saw the decentralisation of production to worker

households as the sole means to escape the government regulations

and to cornibat the increasing strength of the trade unions and

prevent further increases in labour costs. They intensified their

attempts to decentralise production to the worker's households.

This was fiercely resisted by the trade unions. Some beedi

employers reduced production of beedis in Cannanore and some large

local firms like Sadhoo Beedi even stnrted a reverse sh1ft of the

industry to Mangalore where they organised decentralised production

units in 196326 .

To make matters worse for the beedi employers other

progressive laws to protect the workers were legislated in the mid

sixties. In 1966 the state government enacted the Beedi and Cigar

Workers Minimum Wages Act while the central government enacted the

Beedi and Cigar Workers "" (Conditions of Employment) Act• 1• These

Acts sought to further regulate the working of the industry and

provide improved wages and better working conditions to the

workers. The beedi employers were thus threatened with a further

escalation in wage and other production costs.

242

The three large Mangalore based beedi firms, who employed

around 12000 workers in and around Cannanore and Tellicherry towns,

were the first to respond to the increasing wages and new

regulations. The immediate provocation was the Kerala Government

notification detailing its intention to implement the Beedi and

Cigar Workers (Condition of Employment) Act in August 1968 28 . The

large Mangalore based firms threatened stoppage of work and shift

of production to Mangalore. The trade unions responded by forming

joint action councils and initiating campaigns to mobilise public

opinion in their favour. Prominent public personalities were

inducted in the negotiations to prevent the bAedi firms from

implementing their threat. However, the beedi firms stopped

production in the middle of October 1968 and 12000 workers lost

employment.

Negotiations were started at various levels to resolve the

problems. During the prolonged talks the state government agreed to

stay the implementation of the Beedi and Cigar Workers (Conditions

of Employment) Act 29 . But the beedi firms demanded the right to

decentralise production to worker household as a precondition to

restart production. The trade unions split into two gronps over

this issue. The dominant communist un1ons and thA socialists were

unwilling to concede the demand30 . 'T'he beedi firms initiated

efforts to decentralise production to worker household through

intermediaries with the help of the other smaller trade unions.

This led to violent clashes and agi ta tions31 . Though the beedi

firms were marginally successful in their efforts the large section

of the workers resisted the move and continued their agitation. The

failure of the talks with the beedi employers directed the workers

243

to agitate tor government intervention. The state government

responded by deciding to start a cooperative of the unemployed

beedi workers, two months after the closure of the beedi firms. The

rules and regulations of the cooperative and the location, number

and size of the primary cooperatives were ~ecided at the meeting of

the trade unions and government representatives. Twenty primary

beedi cooperatives were registered in January 1969 with the

government as the chief promoter and the five major beedi trade

unions as the co-promoters32 • The central cooperative was

registered in the following month. The cooperatives started

production in March 1969 with around 3000 workers.

Section 2

The Growth and Performance of Kerala Dinesh Beedi Cooperatives

The spectacular growth and successful performance of the

Kerala Dinesh Beedi cooperatives are emphatically brought out by

the growth of its membership 1 work force and turnover and more

importantly by the increase in emoluments paid to its work force.

The cooperative successfully achieved the objective of

rehabilitating the 13000 workers forced out of employment following

the closure of the three private sector beedi firms within five

years/ i.e., by 1973-74. Between 1974 and 1984 it more than doubled

its employment from 12000 to 27000 workers. Though the peak

employment of 35000 workers was achieved in 1991 we find that

growth of employment has decelerated in the last decade. It is seen

in table 2 that in value terms the total sales of the cooperative

244

have increased from around 11 lakhs in 1969 to 5879 lakhs in 1992.

However, in real terms the turnover has also tended to stagnate in

recent years 33 • We shall examine the factors responsible for it

later. But it should not detract one from the remarkable success of

the cooperative in achieving on of ·its primary objective:

protection of employment.

Table 1

Growth of the Beedi Cooperatives (Amount in Rs Lakhs)

Year

( 1)

1969 1970 1971 1972 1973 1974 1975 1976 1977 1978

h979 h980 h981 11982 1983 1984

1

1985 1986

h987 11988 1989 1990 1991

[1992

I I I

I

l

Primary Cooperatives

Membership

( 2)

13000 N.a. N.a. N.a. N.a. N.a. N.a. N.a. N.a. N.a. N.a. N.a. N.a. N.a. N.a. N.a. N.a.

47768 46623 48510 49077 50727 50051 49120

I I I I I I

I

I I

I

I

Employment

( 3)

3000 5000 7000 8000

10000 12000 14000 1n5oo 18000 18000 19246 19036 2?.330 22065 28569 27148 30590 32633 30658 3.3518 .32670 33771 350.35 33372

I I

I

I

Workers income

( 4)

N.a. N.a. N.a. N.a. N.a. N .a. 234 252 362 400 420 480 652 762 948

1031 1384 1598 1799 20n4 1671 2499 2756 3270

I I I I I I

I

I

Central

Sales

(5)

11 52

108 141 169 245 388 492 649 761 80.1 9.1 l

1254 1415 1719 2015 2342 2873 3420 3617 2808 4.566 5318 5878

Cooperative

I I

I

Net Profit

( 6)

.50

.30

.98 .-11 .-18

.92 .-38

.34 .-27

.80

.66

.88

.93 1.14

.27 1. 01 3.15 7.08

33.88 31.51 26.11 38.92 32.17 36.42

I I

Source: Kerala Dinesh Beedi Workers Central Cooperative Society, Annual Reports, (Various Years)

It is also seen from table 1 that the total emoluments paid to

the production workers has increased from Rs.234 lakhs in 1975 to

Rs.3270 lakhs in 1992. The salaries and allowances paid to

management and administrative staff in the primary and central

245

cooperatives have .tended to increase only proportionately to the

wages of workers 34 • The trend in per capita wages and earnings are

presented in Table 2

Table 2

Growth of Workers Income ..

Year Per capita annual earnings (Rs.) Percapita Share of real non wage

Wage Other Bonus Total earnings benefits benefits (Rs) %

(1) (2) (3) (4) (5) (6) (7)

1975 1550 57 64 .1671 1006 7 1976 1363 90 72 1525 947 11 1977 1677 201 133 2011 1281 17 1978 1766 271 183 2220 1354 20 1979 1678 311 192 2181 1246 23 1980 1896 388 236 2520 1254 25 1981 2131 497 291 2919 1275 27 1982 2483 607 362 3452 1426 28 1983 2407 - 563 350 3320 1253 28 1984 2718 685 394 3797 1266 28 1985 3239 791 493 4523 1454 28 1986 3463 852 582 4897 1436 29 1987 4061 1008 799 5868 1573 31 1988 4245 1053 859 6158 1532 31 1989 3315 857 943 5115 1224 35 1990 5081 1267 1051 7400 1697 31 1991 5366 1399 1102 7866 1576 32 1992 6652 1747 1399 9799 1775 32

Source: Same as table 1

The per capita annual wages per worker increased from Rs.1550

to Rs.6652 between 1975 and 1992. At the same time, the per capita

annual non wage benefits tended to increAse at n fAster rnte so

that its share in the total earnings tended to rise over time from

7 percent in 1975 to 32 percent in 1992. The total emoluments to

the worker increased from Rs 1671 to Rs 9799 during the period.

Even when measured in real terms the total income earned by the

workers shows substantial improvement by 75 percent between 1975

and 1992.

246

The cooperative pays the statutorily determined wages

periodically determined for the industry. In the privRte sector

even the minimum wages are not paid to the workers in the

unorganised sector. As for the non wage benefits, the cooperative

is ahead of the organised private sector beedi firms. It has taken

ini tia ti ves to implement the various we 1 fare ·schemes · envisaged

under the Beedi and Cigar Workers (Conditions of Employment) Act

and also devised various non statutory benefit schemes of its own

like the pension to beedi workers. As a result there exists a wide

gulf between the earnings of a beedi roller in the private

unorganised sector and the cooperative sector (see table 3).

As indicated above out of thR twelve non WRC]P. bRnefi ts

existing in the cooperative sector today, nlne are totally non

existent in the privat.e nnorg;:mised sector. The other three non

wage benefits viz. bonus, gratuity and provident fund are paid by

only a few of the beedi firms in the unorganised sector. A larc:Je

segment of the workers in the private unorganised sector employP.d

by Mangalore based beedi firms' refuse to pay even the prescribed

minimum wages in the state and only pay the minimum wages

applicable in Karnataka that H

are lower than that of Kerala"". It

has been calculated that the actual labour costs of producing 1000

beedis in the cooperative sector increases to more than Rs.60 when

all other non wage monetary bRnefi ts including 81 days of paid

holidays are accounted for 36 .

Besides the higher wagR and non wage benefits the cooperRtives

have also focussed on improving the working condition in the work-

centers. Over the years the cooperative has continuously improved

247

the facili"ties by constructing new ·· ventilated and well-lighted

work sheds with back rest for the beedi rollers and with toilets

and other facilities. It is seen that over the years 139 new work

sheds have been constructed in the different primary cooperatives

for the 326 work centers functioning in 199337 • The modern work

sheds of the cooperative is indeed a sharp contrast to the over

crowded ill ventilated attics or rooms in which beedi rolling is

usually carried on.

Table 3

Wage and Non Wage Benefits 1992-93 in the Cooperative and Private Sectors

Wage categories Cooperative Private sector unorganised

sector

( 1) - I ( 2) ( 3)

1 . Rolling for thousand beedis (a) Basic wage Rs.14 Rs.14 (b) Dearness allowances Rs.17 Rs.17

2 . Sunday wage All Sundays Nil 3 . Holiday wage I 1'1 day's Nil 4 . Casual leave wage One day for Nil

every 18 days worked

5 . Medical allowance Rs.50 Nil 6 . Maternity benefit Rs.400 and Nil

I 3 months leave I

7. Bonus I 16.5% 14%* 8. Gratuity As per Act As per Act$ 9. Provident Fund 6.25% 6.25%$

10. Retirement benefit Rs.3000 Nil 11. Death benefit Rs.5000 Nil 12. Pension Rs.150 per Nil

month 13. Thrift loan Rs.600 Nil

Note: * Bonus rates in private unorganised sector range from lumpsum of a few hundred rupees to 8 or 12 percent of annual earnings; $ = Gratuity and provident fund are not paid to all the workers. Usually only a small percentage of the workers are given these benefits. Source:Survey conducted in 1992-93

248

The emoluments paid to the Kerala Dinesh Beedi workers have

become the bench mark by which the wages in the beedi industry are

negotiated. The trade unions paint to the higher wages of the

cooperative worker as the indicator of the industry's ability to

pay higher wages. The wages in the private sector though lower than

in the cooperative tend to be revised in proportion to the wage

. . h t. t 38 1ncreases 1n t e coopera 1ve sec or . Some welfare schemes like

the pension scheme had its influence on the other segments of the

cooperative sector.

The higher wages paid to the workers have not been at the cost

of the financial viability of the cooperative. Throughout its

history, expect for four years the Central cooperative had

registered profits (see table 1). In the initial years the profits

were kept at the minimal level due to the high incidence of taxes.

The cooperative was more keen to return as much surplus generated

to the workers and build up assets, especially in the form of new

work sheds, to provide better amenities and conditions of work.

• Hence, the maximum amount of the trade profit of the Central

cooperative was paid back to the primary cnopera ti ves as price

enhancement for beedis prod11ced so that net income and profits of

the Central cooperative and taxes pni.d by it were t.he least.. A

change in the tax Jaws, which allowed for tax exemption to interest

income earned by cooperative institutions from cooperative credit

sector, enabled the Central cooperative to declare higher profits

and increase the funds accruing to the reserve and building funds.

This accounts for the sudden spurt in profits of the Central

cooperative in the later years.

249

Now we shall turn to explain the factors that have contributed

to the success of the Kerala Dinesh Beedi Cooperative. Other things

remaining the same, the profits of the cooperative depend upon the

efficiency at which the raw materials are converted to finished

beedis. We shall first examine the factors that influence the

productivity of the cooperative.

Section 3

Efficiency in Production at the Primary Cooperatives

It is the primary cooperative that undertakes the prnduction

of beedis. Two more primary cooperatives were for~ed after 1969 so

that there are 22 primary cooperatives in the fold of Kerala Dinesh

Beedi Central Cooperative. Each of the primary cooperatives

confines its activities and membership to beedi rollers' resident

within a definite non overlapping geographical area. Each primary

cooperative 1s managed by an elected board of directors and

administrative staff employed by the cooperative. The actual beedi

rolling is carried out in work-centers distributed at various

vantage points within the operational area of the cooperative. The

headquarters serves as an administrative and distribution and

packaging center. The main features of the primary beedi

cooperatives are summarised in Table 4.

The primary beedi cooperatives significantly vary from one

other in terms of membership as well as scale of operation. The

Chala primary was the largest with 3885 members and Cannanore City

primary with 605 member~ the smallest i~ 1992. The output of the

250

primary cooperatives also varied significantly. The Pinarayi

primary cooperative that produced 71 crore beedis was almost eight

times as large as the smallest Cannanore City primary cooperative

that produced around 9 crore beedis. The composition of output

between different beedi brands also tended to vary from primary to

primary. For example, the share of Medium beedis, one of the most

popular brands, in the primary cooperatives varied from zero to 100

percent of the production.

Table 4

Profile of Priaary Cooperatives (1991-92)

I Naae I of

Total number of I Percentage share of Work

I· priaary sheds

I ( 11 (21

Tellichery 16 Kadirur 22 Dhanadaa 16

IPinarayi 29 Chala 29

IThottada 10 Valianur I 23

lcannanoreTown 4

ICanna'noreCi ly 5 KaHad I 9

lchalad I 6

IChirakkal 11 Azhikode 11

IPayvanur 15

IChe;uvtur 1

1

21 Nelesaram 16

1

1

Hosdurg I 17 Kotachery 15

I Kasargod 20 INaniesaram 13

I Bad;gara I 9 Bediadeka I 10

Heabersliorkers

( 3)

2204 2474 17 3 8 3472 3885 1355

I 3441 I 787

I 605

1464 1203 1278 2117 1981 3574 2998 2926 2198 5017 1665

I 1304 1434

\

i ( 4) ·.-

148o I 18 8 9 I 1s o 5 I Jo 4 5 I 28 4 9 I 905 I

2287 ! 367 3431

I 810 I 4oo I 788 I 942 I

1452 I 2263 I 1656 I 2o18 I 1657 I 2246 I 1456 I 776 I 9 61 I

Lab. worker

(51

3 2 3 3 4 4 4 5

I Kale

f

I I I I I I I

worker

( 6)

47 I 40 56 53 40 73 75 92 87 I 84 1

91 68 I 16 I ul 36 I

Rote: Lab. = Labelling; Ada. = Ad11inistrative

Ad;. staff

(7) j 2l 2l

21

ll zl 31

Total beedi Share of Per worker outEut I output medium Per annua Per davl llakhsl beedis(%) . (

I 8) ( 9) ( ( 10) I I 111 f .I

2555 52 I 240 8 46 I 4224 56 223 , 87 1

7126 57 221 780 I

824 I 3335 42 234 7924

I 44 243 m I

2351 0 I 259 915 I 5565 I 45 24 3 857 I m I 22 252 888 I 909 24 265 933

2010 31 248 876 1037 15 259 913 1997 32 253 890 2604 18 276 973 3263 67 224 792 5104 49 225 794 3541 47 213 753 3770 62 215 760 4355 59 227 801 4475 100 199 702 3222 100 221 779 1629 0 210 739 1842 100 191 67 5

Source: From annual reports and other unpublished data provided by the Central and Primary cooperatives

251

Table 5 Profits as Percent of Primary Cooperative Sales(1982-83 to 1991-92)

Primary 1982-83 1983-84 1984-85 1985-86 1986-87

Tellichery -1 4 -1 5 8 Kadirur -1 4 0 4 7 Dharmadam 1 5 1 4 8 Pinarayi 0 5 1 4 8 Chala 2 6 -0 5 9 Thottada -0 4. -0 4 7 Valianur 0 3 -0 3 7 Cann.Town -3 1 3 3 8 Cann.City -2 -3 -8 0 4 Kakkad 0 4 1 2 9 Chalad -1 -1 -8 2 6 Chirrakal 1 3 3 1 6 Azhikode -2 5 4 4 6 Payyanur 2 7 2 3 7 Cheruvtur -2 7 -0 4 6 Nelesaram 0 3 -1 2 4 Hosdurg 3 5 3 4 6 Kotachery 1 5 -1 2 1 Kasargod 4 9 1 2 5 Manjesaram 2 6 -0 2 7 Badagara .:;2 7 1 -1 6 Bediadeka 2 4 -4 -1 5 Total 0 5 0 3 7

Primary 1987-88 1988-89 1989-90 1990-91 1991-92 Avg

Tellichery 5 -2 1 -5 -1 1 Kadirur 4 -2 1 -2 -2 1 Dharmadam 6 -1 1 -3 -1 2 Pinarayi 4 -1 -3 -2 -1 2 Chala 6 -0 1 -2 1 3 Thottada 5 -1 2 -2 -0 2 Valianur 4 -1 -1 -5 0 1 Cann.Town 5 -3 -0 -5 -2 1 Cann.City 5 -2 1 1 -1 -1 Kakkad 5 -1 -1 -2 1 2 Chalad 2

I -2

I 0 -5 -4 I -1

Chirrakal 4 -5 2 -6 1 1 IAzhikode 7

I -2 4 -2 2 3

IPayyanur 5 -2 4 0 1 3 Cheruvtur 2 -1 -1 -1 -2 1 Nelesaram 2 -4 -2 -5 -1 -0 Hosdurg 3 -16 2 -1 -2 1 Kotachery 5 -6 -3 -1 0 0 Kasargod 2 -19 2 -3 -1 0 Manjesaram 2 -4 1 -5 -5 0 Badagara 2 -3 -6 -7 -5 -1 Bediadeka 1 -6 -1 -5 -4 -1 Total 4 -2 0 -3 -1 1

Note: Avg. = Average; Source: Same as table 4

252

Table 6

Profit Per Worker (1982-83 to 1991-92)

Primary 82-83 1983-84 1984-85 1985-86 1986-87

Tellichery -45 337 -41 534 898 Kadirur -40 324 1 305 764 Dharmadam 73 385 49 405 844 Pinarayi 8 385 76 326 878 Chala 105 464 -14 467 1082 Thottada -8 323 -23 386 838 Valianur 18 269 -6 331 895 Cann.Town -254 98 244 332 989 Cann.City -136 -227 -660 5 545 Kakkad 12 313 91 240 1034 Chalad -48 -117 -649 420 785 Chirrakal 42 257 255 92 722 Azhikode -106 434 317 496 757 Payyanur --119 482 131 255 749 Cheruvtur -104 470 -19 276 633 Nelesaram 11 210 -61 167 417 Hosdurg 188 383 202 331 634 Kotachery 54 283 -68 175 77 Kasargod I 179 533 51 171 496 Manjesaram 78 350 -5 138 653 Badagara I -84 489 59 -54 541 Bediadeka I 65 182 -228 -54 396 Total I 27 350 13 283 720

Primary 11987-88 1988-89 1989-90 1990-91 1991-92 JAvg.

Tellicher I 596 -140 117 -894 -209 I

115 Kadirur I 423 -178 95 -292 -326 108 Dharma dam I 604 -61 91 -517 -146 173 Pinarayi I 498 -104 -293 -283 -161 133 Chala I 714 -11 152 -374 103 269 Thottada

I 583 -127 271 -342 -80 182

Valianur 439 -117 -112 -740 108 108 Cann.Town I 531 -276 -45 -820 -343 46 Cann.City I 648 -228 88 100 -318 -18 Kakkad

I 548 -100 -127 -437 102 167

Chalad 223 -197 132 -908 -743 -110 Chirrakal I 456 -459 246 -958 135 79 Azhikode

I 828 -216 581 -346 370 312

Payyanur 516 -174 424 52 172 273 Cheruvtur I 186 -68 -54 -79 -370 87 Nelesaram I 189 -304 -224 -771 -166 -53 Hosdurg I 293 -312 178 -99 -266 153 Kotachery I 539 -12 -321 -207 4 53 Kasargod I 152 -319 132 -354 -134 90 Manjesaram I 199 -305 94 -682 -913 -39 Badagara I 195 -235 -573 -980 -856 -150 Bediadeka I 78 -408 -200 -570 -616 -136 Total I 429 -123 34 -429 -170 113

Note: Avg. = Average; Source:Same as table 4 In terms of profitability also the primary cooperatives

253

revealed very substantial differences. Table 5 gives the trend in

profit rate for the various primary cooperatives. We find that some

cooperatives have done relatively better in terms profit

generation. Primary cooperative like Chala, Azhikode, and Payyanur

have tended to consistently perform better than the others during

the 1980's. On the other .hand, the cooperatives at Bedideka,

Cannanore City and Chalad have been consistent laggards. The

general picture does not radically change even if one considers the

profits per worker (see table 6). In the absence of relevant data

it is not possible to undertake a time series analysis of the trend

in profits. However, we intend to undertake an analysis of the

factors that determine the profi tabi li ty of the primary

cooperatives using cross sectional data for the year 1991-92.

The raw materials are supplied by the central cooperative on

a cost plus basis to the primary cooperatives. Similarly 1 the

beedis are purchased back at a uniform price determined by the

central cooperative. Therefore, the profitability of each primary

would depend upon the efficiency with which the given raw material

is converted into beedis. There are three elements that contribute

to the efficiency of conversion viz. 1 (a) leaf out turn (b) tobacco

out turn and (c) labour out turn. We shall briefly explain these

factors.

(a) The leaf out turn refers to the number of wrappers cut from a

given quantity of raw tendu leaves. The data shows that there is a

wide disparity in the leaf out turn across the different primary

cooperatives. In 1992 it ranged from 2022 beedis from one kilogram

of leaf in Cannanore town primary to a maximum of 2396 in Payyanur

primary; a difference of around 20 percent. Assuming that uniform

254

quality of leaves is distributed to the primary cooperatives the

leaf out turn would depend on the skill and care of the worker in

cutting the maximum number of wrappers from each leaf. The

importance of leaf out turn in the efficiency of conversion has

grown in importance due to the sharp increase in the leaf prices in

the last decade.

(b) The tobacco out turn, which also is dependent on worker skill,

is also of crucial importance in determining the efficiency of

conversion. But the variation in the tobacco out turn is lower than

that of the leaves. In the case of medium beedis it ranges from a

minimum of 5466 beedis from one kilogram of tobacco in Azhikode to

a maximum of 5596 beedis in Pinarayi. The tobacco out turn also

differs between the beedi brands. 'l'he optimum use of tobacco is

essential in maintaining the product quality. Too much tobacco

clogs the smoke channel of the beedi and adversely effects product

quality while too little tobacco adversely effects the flavour of

the beedi.

(c) Labour out turn refers to the number of beedis that a worker

produces in a working day. Higher the output per worker per day,

the lower would be the average labour cost of producing a beedi.

This peculiar situation is due to the system of wagR payment

prevalent in the industry. 'l'he wage of the worker has tr,w

components. The first is the basic wage which 1s a piece rate fixed

by the minimum wage's committee. The second, 1s the vnriable

dearness allowance periodically revised according to changes in the

cost of living index. The dearness allowance is a lump sum amount

for every working day. Any worker, who produces a minimum of 800

beedis per working day, is eligible for the lump sum amount.

Therefore, there is a built-in disincentive within the wage

255

structure to roll only the minimu~ number of bee~is on the part of

the workers. On the other hand, since the marginal labour costs of

beedis above the first 800 are significantly lower, a cooperative

that has relatively higher out turn, can reduce the average labour

costs and earn higher profits.

As can be seen from the table 4 the per capita beedi output

shows considerable variation over primary cooperatives. It ranges

from 276 thousand beedis in Azhikode primary to 191 thousand beedis

in Bediadeka primary. It is not possible to accurately arrive at

average output per worker per day in each cooperative since we do

not have data regarding average number of days that the rollers may

have worked in each cooperative. There could be substantial

differences 1.n the average number of working days per worker

between the various cooperatives. Assuming that in 1991-92 on an

average there were 284 number of working days we have worked out

average beedi rolled by a worker during a working day (seP. column

11 of table 4). It appears, on an average the labour productivity

is above the minimum threshold for eligibility for dearness

allowance in many primary cooperatives. But it l.S evident that

there is substantial scope for improvement. An average worker can

roll with ease around 1000 beedis per day.

The number of beedis rolled per day would depend upon many

factors the most important being, (a) the number of hours the

worker chooses to roll beedis, and (b) the skill and speed of the

worker in rolling beedis. It is a well-known fact that the speed of

beedi rolling peaks at around 40 years of age of the worker and

begins to rapidly decline as one crosses tifties. The reason is

256

that over time, due to constant aberration, the skin on the fingers

becomes smooth and the beedis tend to slip from the fingers while

rolling. Therefore, the age composition of the workforce is an

important factor in determining the speed and skill of rolling.

Similarly, the sex composition of the workers also affects output.

It has been often been remarked that the women wdrkers tend to come

late and leave early at the work centers due to the domestic

hurdles including household chores. As against this, opinions are

also expressed that women tend to handle the leaves and tobacco

more carefully and that their leaf out turn is relatively higher

than that of males.

Apart from the above three skill-related elements there are

certain macro factors related to the organisational environment of

the cooperatives that may effect relative profitability. The first

would be the overhead charges of the cooperative and the scale of

production. Primary cooperatives with large scale production will

be better able to spread their overhead charges. But larger scale

may bring in certain disRconomies of scale also. If the work

centers are too distant transportation costs may increase. The

proportion of beedis damaged in transport and storage is another

factor. The rent costs vary significantly between the primary

cooperatives. Another cost element that substantially varies

between the cooperatives is the maternity benefit allowances which

would vary depending on the age component of the female workforce.

Finally, and perhaps most importantly, is the efficiency of the

cooperative management and its ability to motivate the workers in

improving the productivity and quality.

257

Now we shall examine the relative importance of the above

factors, to the extent the data permits, in explaining the relative

profit level of the primary cooperatives for the year 1991-92. We

have taken profit and losses per worker as the indicator of the

financial performance of the primary cooperatives. Since the

annual reports of the prima-ry cooperatives did not have a uniform

format for presenting the data it was not useful to take the

nominal balance sheet profits of the primary cooperatives that

included different expenditure components for individual needs (for

example investment on buildings) of the individual primary

cooperatives. For finding a uniform comparable profit figure of the

different primary cooperatives we deducted from the beedi sales of

each primary the expenditures incurred on wage and non wage

benefits (Sunday wages, holiday wages, casual leave wages, bonus,

maternity and medical allowance and provident fund and gratuity

payments) to workers, raw material costs (raw material purchased

plus opening stock minus closing stock) , salaries to other staff

(i.e., all employees excluding beedi rollers and beedi rollers) and

rent to calculate our total estimated profits that are seen in

table 7. We then found out the per worker profit by dividing the

estimated total profit with the number of production workers (beedi

roller and labelling workers) in each cooperative. It is seen that

profit per worker varied from a maximum of Rs 1786 1n the

Tellichery primary to a loss of Rs 11596 in Badagara primary.

Taking profit per worker as the dependent variable, we

identified nine independent variables that were likely to influence

the profitability. The independent variables included ( 1) per

worker output of beedis (PWO), (2) out turn from tobacco (TO), (3)

258

out turn from leaves (LO) I (4) maternity allowance (M) I (5)

salaries of employees (S) I (6) rent (R) I (7) female participation

( FP) 1 ( 8) total workers (TW) and ( 9) average distance of work

centers. The direct wages costs and material costs were left out as

their influence would be captured by per worker output and out turn

from raw materials. The costs were represented in per worker terms.

Table 7

Profit and Losses of Pimary Cooperatives (1991-92)

Primary Total Profit per Rank profit worker(Rs)

( 1) ( 2) ( 3) ( 4)

Tellicherry 2726845 I 1786 1 Kathirur 3240649 1678 7 Dharmadham 1813660 I 1167 13 Pinarayi 4450289 1424 10 Chala 5155600 1747 2 I Thottada 1558080 1652 8 Valliyanur 4068110 1717 4 Cannan ore town 432041 1116 16 Cannanore city 355391

I 998 16

I Kakkad 1416893 1703 5 Chalad 211667 504

I 20

I Chirrakal 919401 1125 14 Azhikode 1691958 1719 3 Payyanur 2499985 1685 6 Cheruvathur 2807887 1200 12 Neeleswar 1628697 950 17 Hosdurg 1946374 937 18 Kottacherry 2463750 1452 9 Kasargod 3109505 1360 11 Manjeswaram 1182758 799 19 Badagara 9462438 -11596 22 Bediadeka 9195541 -9383 21

Source: Same as table 4

Table 8 shows' the correlation coefficient among all these

variables. The profitability of the primary cooperative (i.e. 1 the

dependent variable) is seen to have a medium positive correlation

with per worker output (.60) and medium negative correlation with

female participation in the labour force (.52).

259

Out turn of tobacco (.66) is strongly negatively correlated to

per worker output. But per worker output and leaf out turn have

only a medium negative correlation ( .61). This indicates that

higher output level per worker leads more to the inefficient use of

tobacco rather than of leaves. The per worker output is also

strongly negatively related to womens participation in labour force

(.87). But it has only a medium negative correlation with

maternity allowance (.54). This indicates that the decrease in per

worker output with increase in female participation is enhanced by

other factors rather than by just the maternity leave alone. The

increases in female participation which leads to both decrease in

per worker output and increased maternity costs is the possible

cause of the negative corrRlation between female participation and

profitability (.52). On the other hand, the positive relationship

between female participation and leaf and tobacco out turns (. 65

and . 55) shows that female participation increases the Rfficient

conversion of raw materials and hence reduces costs in this way. As

expected maternity costs is strongly associated with extent of

female participation ( . 7 2) The medium association between

maternity allowances and work center distances is spurious.

Regarding other organisational costs like salaries and rents

we find salary costs are strongly negatively associated with size

of work force (. 70). This indicates that economies of scale do

operate in larger primary cooperatives. But it is seen that the

rent costs are not associated in any way with size of work force

(.04). The strong positive correlation between female participation

and distance of work centers distances (.69) is rather interesting.

260

This indicates that widely scattered work centers make it possible

for more women to join the cooperatives.

Table 8

Correlations Among Profitability variables

p P\1'0 TO LO M s R FP T\1' \lCD p 1.00 P\1'0 .60* 1.00 TO -.42 -.66 1.00 LO -.07 -.61 .44 1.00 M -.16 -.54 .39 .53* 1.00 s -.19 .32 .10 -.36 -.52* 1.00 R .01 .17 -.27 .02 .08 -.25 1.00 FP -.52* -.87 .65** .55* .72** -.41 .11 1.00 TW .04 -.38 .19 .38 .47 -.70 .04 .46 1.00 wen .15 -.56 .36 .46 .53* -. 31) .20 .69** .42 1.00

Having thus identified the independent variable that is most

strongly correlated with the dependent variable we did a multiple

regression analysis. Table 9 shows the results of an ordinary least

square multiple regression of the above variables. The signifi~ance

tests indicate that of the eight independent variables only per

worker output and salaries are highly ~orn~ l i'l t_ed in a lin ear

fashion with the dependent variable at five per~ en t levels of

significance. The positive effect of leaf out turn is F!lso evident.

But the influence of the variable lS s 1 igh tly above 10 percent

levels of significance.

The regression results show that only per worker output has a

positive impact on profitability. The other variable, salaries,

have in contrast a negative effect. Roth the varjables are

s ta tis tically significant at 5 percent. The R 2 shows that 76

percent of the variations in profit are determined by the above

nine independent variables. Moreover, the calculated 'f' value is

significant at five percent levels.

261

Table 9

Estimated Equation of Profitability of Primary Cooperatives

Independent Coefficient 'T' Value variables

(1) ( 2) ( 3)

1.PWO .0221 2.608* 2.TO .3862 1. 077 3.LO 1.5267 1.655** 4. M -1.7755 -.325 5.S -3.4625 -2.479* 6.R -11.9413 -1.477 7.FP -4.2920 -.501 8.TW .0944 -.753 9.WCD 46.1388 1.583** Constant -7566.7332 -2.202*

R2 =.76 F = 4.18 N = 22 * 5 percent levels of significance

** 15 percent levels of significance

The influence of per worker output and managerial costs on

efficiency of functioning of the primary coopP.rativP.s has prompted

the central cooperative to keep a close watch on the differentials

in these parameters across various primary cooperatives. 'I'hongh the

appointment of the managerial and other salaried employees and the

emoluments paid to them were initially done by the primary

cooperatives at their discretion, over time the central cooperative

has ensured that a uniform norm is followed by all the primary

cooperatives in all such appointments. For instance, it has fixed

the ratio between production workers and clerical staff should be

in the ratio 250:1. It is also ensured that differences in uniform

emoluments paid to the employees of the primary cooperatives in the

early years of its working has been evened out. Table 10 show that

the share of salaries in production cost has remained stable during

the period 1982-83 to 1991-92. It is also seen that the disparities

in such costs across primary cooperatives have narrowed down during

the period.

262

Table 10

Improvement in Productivity (1982-83 to 1991-92)

Primary Per worker Output Salary share % Leaf out turn

1982-83 1991-92 1982-83 1991-92 1982-83 1991-92

{ 1) ( 2) ( 3) ( 4) ( 5) ( 6) {7)

Tellichery 221443 240256 1.48 1. 40 1717 .2063 Kadirur 218874 223611 1. 23 1. 46 1784 2211 Dharmadam 232261 221621 1.15 1. 59 1793 2100 Pinarayi 217470 234043 1. 47 1.26 1753 2192 Chala 232929 243055 1. 31 1. 39 1785 2144 Thottada 249728 259830 1. 54 1. 43 1694 2089 Valianur 223370 243350 0.98 0.62 1741 2129 Cann.Town 263119 252065 2.43 2.70 1727 2022 Cann.City 241637 265055 3.04 2.01 1734 2148 Kakkad 216042 248770 2.14 2.23 1737 2153 Chalad 255968 259333 2.55 2.70 1670 2056 Chirrakal 244982 252723 1. 98 2.13 1677 2057 Azhikode 255074 276435 1.19 1. 35 1726 2087 Payyanur 180824 224790 1. 77 1. 81 1865 2396 Cheruvthur 172219 225565 1. 54 1. 61 1736 2302 Nelesaram 171520 213824 1. 72 1. 90 1785 2304 Hosdurg 227526 215853 1. 57 1. 56 1916 2160 Kotachery 177908 227568 1. 35 1. 39 1749 2254 Kasargod 163965 199262 1. 39 2.03 1810 2262 Manjesaram 182492 221328 2.16 2.37 1576 2078 Badagara 133373 210008 2.20 1. 66 1682 2188 Bediadeka 127083 191770 2.21 2.14 1612 2263 Total 207577 229855 1. 57 1. 54 1740 2166

Continued

263

Primary Tobacco out turn Changes {1982-83/91-92)

1982-83 1991-92 PWO % ss LO % TO %

( 8) { 9) {11) {12) {13) {14)

Tellichery 5763 5481 8 -0.08 20 -5 Kadirur 5443 5596 2 0.23 24 3 Dharmadam 5477 5594 -5 0.44 17 2 Pinarayi 5439 5488 8 -0.21 25 1 Chala 5500 5502 4 0.08 20 0 Thottada 5162 4 -0.11 23 Valianur 5833 5496 9 -0.35 22 -6 Cann.Town 5577 5502 -4 0.27 17 -1 Cann.City 5686 5530 10 -1.02 24 -3 Kakkad 5735 5505 15 0.09 24 -4 Chalad 5211 5519 1 0.15 23 6 Chirrakal 5429 5466 3 0.15 23 1 Azhikode 5535 5517 8 0.16 21 -0 Payyanur 5525 5504 24 0.04 28 -0 Cheruvtur 5475 5490 31 0.07 33 0 Nelesaram 5460 25 0.18 29 Hosdurg 5525 5500 -5 -0.01 13 -0 Kotachery 5561 5504 28 0.05 29 -1 Kasargod 556'3 5519 22 0.64 25 -1 Manjesaram 5427 5495 21 0.22 32 1 Badagara 5357 57 -0.54 30 Bediadeka 4983 5517 51 -0.08 40 11 Total 5485 5512 11 -0.04 25 0

Note: PWO = Per worker output; SS = share of salary; LO= Leaf out turn; TO = Tobacco out turn

Source:Same as table 4

However, the authority of the central cooperative in improving

the production parameters is much more restricted as it is

difficult to use directives to control such parameters. Since

workers in individual cooperatives do not receive any special

material incentive for their better performance, the central

cooperative has to motivate the primary cooperative functionaries

and incorporate trade union activists in all such efforts to

improve productivity and quality. Right from the beginning of the

formation of the cooperatives the trade unions have been insistent

throughout on ensuring uniform labour standards within the entire

cooperative sector. Individual primary cooperatives do not have the

264

right to award any special benefit to its workers whatever ~e their

financial situation. They are formulated at the Central cooperative

level through a process of a collective bargaining between the

Central cooperative management and the trade unions.

' Thus, the absence of material incentives to ·improve

productivity in individual cooperatives ensured that the central

cooperative had to play a pivotal role in maintaining quality and

improving productivity. The maistries at the work centers, central

cooperative foremen stationed at the primary cooperative and the

foremen at the central cooperative are important functionaries who

enforce quality control. Additionally, various measures to improve

quality of output have been implemented in recent years following

increase in complaints from consumers. The first initiative in this

direction· has been taken in 198n when the central cooperative

called four zonal conferences of rna is tries and foremen of all

primary cooperatives to discuss the quality probl e;;,s. A speci a 1

squad of directors and foremen of central cooperative ~as set up in

1986 to conduct surprise checks to improve quality. The special

quality control squad was made a permanent set up in 1991-92.

Ensuring uniform out turn per worker in different primary

cooperatives is rendered difficult given the differences in age

composition of workers, their skills and gender composition in the

different primary cooperatives all of which have a significant

influence on per worker output. The inbuil t-bias in the wage

structure against increasing per-worker output has also made such

interventions very futile. Despite this per worker output has

increased by 11 percent between 1982-83 and 1991-92.

265

Besides, given the increasing costs of ra.w materials the

Central cooperative has been paying greater attention to increase

the productivity. The major focus has been in enhancing the number

of wrappers cut from a given quantity of tendu leaves. The prize

incentive scheme, under which cash awards are made to workers and

supervisors with the best out turn from leaves, was innovated by

the central cooperative in pursuit of this objective. The efforts

seem to have borne fruit as evident from the 25 percent increase in

leaf out turn during the period 1981-82 to 1991-92 (see table 10).

The increase in leaf out turn has been registered 1n all the

primary cooperatives and the differential in leaf out turn across

the primary cooperatives has also been narrowed down with all of

them increasing out turn from one kilogram of leaves to above 2000

beedis. However, no such improvement has been registered in out

turn from tobacco (see table 10); Though the out turn has tended to

stabilise there have been sharply contrasting trends with some

primary cooperative showing improvement as compared to a decline in

the others.

Section 4

Efficiency of Purchase and Marketing Operations and Financial

Management

So far we have been discussing the factors determining the

efficiency of conversion of raw materials, tendu leafs and tobacco,

into the final product viz. beedis. Consequently, our focus of

attention has been largely the primary cooperative. Needless to

say, the overall profitability of the cooperative system would also

266

be crucially dependent upon the efficiency of purchase and sale

operations and financial management. These are the primary tasks of

the Central cooperative. As already noted the Central cooperative

in the Kerala Dinesh Beedi is not a mere purchase and marketing

agency. It plays an active role in coordinating and monitoring the

production and setting the labour standards. Besides, it also plays

an important role in the financial management of the entire

cooperative system. It must be admitted that according to bye-laws

the primary cooperatives are autonomous units. But in actual

practice the autonomy of the primary cooperatives has been severely

restricted. In almost every aspect of their activity they have to

abide by the decisions made and guidelines drawn by the Central

cooperative. These traditions have been developed over time and

occasionally backed up by decisions of the general body of the

Central cooperative and rarely by government orders too 39 . However,

the most important factor that has facilitated the unchallenged

hegemony of the Central cooperative has been the extreme efficiency

with which the purchase and marketing operations and financial

management have been undertaken. We now briefly discuss the

purchase and marketing operations and the financial management of

the Central cooperative.

(i) Raw material purchases: In the early years the limited

financial resources of the cooperative forced it to buy raw

materials from the close-by markets of Calicut and Mangalore. The

prices were high and quality poor. As soon as the cooperative could

generate enough resources, it began scourging raw materials from

producing areas at harvest time enabling a substantial reduction in

raw material costs of production40 . The beedi leaves are largely

267

purchased from Madhya Pradesh and Orissa while tobacco is purchased

from Gujarat and Karnataka.

The cooperative takes great pains to avoid purchases fr~m the

private trade as the beedi leaf trade is a very corrupt business.

Hence, it relies solely on-the Orissa Forest Corporation for its

leaf requirements. This prevents any corruption in the large leaf

purchases. The tobacco purchases are done by calling quotatic~s and

samples and then negotiating favourable prices and other ter~s and

conditions. The other materials which are scoured by the central

cooperative include labels and yarn. The labels are purchasei from

Sivakasi in Tamil Nadu the cheapest possible market for l~bels,

while the yarn is procured from the local market.

Three remarkable features that characterise the pu~chase

operations of the Central cooperative may be noted. F:..~stly,

through bulk purchases it is able to gain substantial advant~ge in

prices and ensure uniform quality of raw materials. Seconc:y, it

has evolved a fairly foolproof system to avoid corrupti:::1 and

nepotism despite annual raw material purchase operations cur~ently

involving around Rs 25 crore, there has not been a single ir,stance

of corruption charge against the cooperative management 41 . T~:rdly,

adequate and timely supply of raw materials has been assured. By

staggering the delivery of purchases made in bulk the coope~ative

has managed to reduce the warehousing costs and overcome tra~sport

bottleneck's.

(ii) Marketing of beedis: The entire production of beedis pr::duced

by the primary cooperatives is marketed under a single bran= name

268

'Dinesh 1• The trade mark is owned by the Central cooperative. Given

the brand loyalty of the consumers this perhaps

source of control of the primary cooperatives

is the greatest

by the Central

cooperative. Today, the cooperative has gained wide spread brand

loyalty among the beedi smokers to command a substantial share of

the market within the state. This achievement was possible partly

due to the political good will that the workers 1 cooperative

enjoyed in the state and the innovative means of promotion employed

by the cooperative management.

The challenge initially faced by the central cooperative was

to market the entire output of 3000 workers, totalling around

twenty five lakh beedis a day, from the first day of its

operation 42 . The challenge was met by devising innovative marketing

techniques. The political sympathy generated by the struggles of

the beedi workers was used to popularise the cooperative 1 s product.

The beedi cooperatives were identified as a rehabilitation package

of the left government and its survi va 1 taken up as a po 1 it ica 1

task by the left political forces. The beedi trade unions formed

squads to exhort retailers and consumers to buy the beedis produced

by the cooperative 43 . In many cases the centr<'ll cooper8tive even

sponsored motorised campaigns by trade union activists to publicise

the cooperative product. The cooper<'ltive was thus able to

incorporate the trade union and political activists in its campaign

to popularise the cooperative product. These coordinated efforts of

the political parties, trade unions and the cooperative management

provided the initial impetus to generate sufficient publicity for

marketing a major portion of the output. The quality of the beedis

also helped in sustaining consumer interests in the product.

269

Apart from utilising the voluntary enthusiasm of its

sympathisers the cooperative also developed an efficient

distribution network of marketing agents throughout the state. All

the agents, whose area of operations was demarcated, were directly

connected with the CentraL cooperative. Thus, a long hierar~hy of

intermediaries was carefully avoided. Beedi being a fast-moving

trade i tern very seldom was the product given on credit. The

cooperative was hesitant to amass a fleet of vehicles for transport

of raw materials and products which usually leads to misuse of such

facilities. Therefore, it devised a scheme under which wholesale

distributors were given a commission, depPnding on quantity of

beedi sold, to maintain their own sales vehicles.

The boldest promotional campaign of the cooperative which in

fact played a major role in facilitating a market breakthrough was

the matchbox gift scheme devised to sell of the beedi stock of Rs

20 lakhs that got accumulated within the first six months of

operation. A matchbox was gifted freely with each bundle of beedi

purchased44 .

The cooperative has also made skillful use of the media in

projecting its image. News reports regarding the cooperative have

tended to receive wide publicity partly due to the conscious effort

of the management.

The efficient marketing of the beedis by the Central

cooperative requires that the production of cooperative beedis by

the primary cooperatives be according to the off take of beedis in

270

the market. This requires that level of output in the primary

cooperatives be tuned to market demand. The most important

instrument to regulate the output of the primary cooperatives is

the control exercised by the central cooperative over the

recruitment of workers by the primary cooperatives. The primary

cooperatives may recruit workers only according to the quotas

sanctioned by the Central cooperative. The Central cooperative also

decides the composition of output, i.e., the different beedi

brands, of each primary cooperative depending on the market demand

for the particular brand. These are the normal methods used to

control output levels. But occasionally the central cooperative

would be faced ·,.;i th the problem of fine tuning production to

fluctuations in demand. In case of large excess stocks of unsold

beedis the Central cooperative directs the primary cooperatives to

restrict output of individual workers or to stop production for a

few days by persuading workers to take leave with wages 45 .

However, the marketing strategy seP.ms to be losing its drive.

In recent years there has been a marginal decrease in sales. In

1990-91 the sale of Special beedis decreased by 14 crores and in

1991-92 the total sales decreased by 25 crore beedis and this was

wholly due to the decrease in sale of Special beedis by 28

crores 46 . The significant decline in sales between 1990-92 was

forewarned by the large stock of unsold beedis, which necessitated

stoppage of production in the primaries in 1987-88 and 1991-92.

Despite these market signals, the cooperative limited its response

to the launching of a marketing campaign by which gift coupons of

different values were distributed randomly in beedi packets for

retailers to reclaim by encashing its value47 . The scheme was tried

271

first in Madras city and then for special beedis throughout the

state in 1991-92.

Table 11

Marketing Costs of Central Cooperative

Year Total Marketing costs (Rs.lakh) Total Marketing costs.as % of sales sales marketi-(Rs.La- Van.all Sales Advt. ng costs Van.all. Sales Advt. Total I khs) ccm:n. costs ccmn. costs costs

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

1969 n.a. 0 0.54 0.2 0.74 n.a n.a. n.a. n.a. 1970 11 0 3.17 2.33 5.5 0.0 29.7 21.8 51.4 1971 52 0.75 6.09 2.03 8.87 1.5 11.8 3.9 17.2 1972 108 0.69 7.35 2.17 10.21 0.6 6.8 2.0 9.5 1973 141 0.49 8.39 2.33 11.21 0.3 6.0 1.7 8.0 1974 169 1.17 10.83 2.58 14.58 0.7 6.4 1.5 8.6 1975 245 1.88 14.86 1.% 18.7 0.8 6.1 0.8 7.6 I 1976 388 2.33 18.47 3.03 23.83 0.6 4.8 0.8 6.1 1977 492 3.08 23.95 2.72 29.75 0.6 4.9 0.6 6.0 1978 649 2.9Z 23.94 3.13 29.99 0.5 3.7 0.5 4.6 1979 761 2.98 23.62 3.02 29.62 0.4 3.1 0.4 3.9 1980 803 3.05 24.13 0 27.18 0.4 3.0 0.0 3.4 1981 931 3.43 30.44 3.94 37.81 0.4 3.3 0.4 4.1 1982 1254 3.88 33.42 3.33 40.63 0.3 2.7 0.3 3.2 1983 1415 4.53 39.04 4.47 48.04 0.3 2.8 0.3 3.4 1984 1719 4.51 43.29 4.92 52.72 0.3 2.5 0.3 3.1 1985 2015 0 48.57 I 0 48.57 0.0 2.4 0.0 2.4 1986 2342 5.18 60.38 5.37 70.93 0.2 2.6 0.2 3.0 1987 2873 n.a. n.a. n.a n.a n.a. n.a. n.a. n.a 1988 3420 5.57 75.93 5.5 87 0.2 2.2 0.2 2.5 1989 3617 4.46 60.36 8.21 73.03 0.1 1.7 0.2 2.0 I 1990 2808 5.59 96.06 I 9.18 110.83 0.2 3.4 0.3 3.9 I 1991 4566 6.02 109.97 8.12 124.11 0.1 2.4 0.2 2.1 I 1992 5318 5.64 118.38

I 9.25 133.27 0.1 2.2 0.2 l 2.5 1

Source: Annual Reports of KDBWCCS

The developments in the last decade indicate the need for more

aggressive sales strategy. This is a lacuna that needs to be

immediately tackled. An assessment of the cost of marketing

indicates that the percentage share of advertising costs, an

effective sales tool, in total sales has decelerated significantly

from twenty one percent in 1970 to a meagre 0.2 percent in 1992

(see table 11). In fact, even the total share of expenditure on

272

sales including that of advertisement, sales commission and van

allowances to agents, has declined from fifty one percent of sales

in 1970 to 2.5 percent of sales in 1992.

The other vital factor affecting the marketing effort is the

growth of duplicate or counterfeit beedis posing as the real Kerala

Dinesh beedis. There are three versions of this duplication. One is

those beedis which have a similar name as Dinesh Beedi. The second

category of duplication includes those brands which have similar

packaging and label as the cooperative beedis. The third ~nd most

dangerous and rampant duplication is actually counterfeit Dinesh

beedis made in the priv~te sector which are sold in every hook and

corner and in far flung regions like Palghat, Idukki, Kasargod and

Trivandrum. The large profits from the lower wage and non wage

costs paid by the counterfeiters and their evasion of the excise

duties make manufacturing of counterfeit beedis an attractive

proposition. The estimates of counterfeit beedis range as high as

30 to 50 percent48 .

Thus, the efficient operation of the procurement and marketing

network by the central cooperative has also contributed immensely

to the general performance of the beedi cooperatives. In fact, it

is this success of the central cooperative which enables it to

exert it influence on every aspect of cooperative functioning

including in the sphere of production which is under the purview of

the primary cooperatives. Thus, primary cooperatives are morally

coerced to accept the directives of the central cooperative despite

their autonomous legal standing. Another factor, which enables the

central cooperative to assert its supremacy over the primary

273

cooperative, is its financial structure. We-will now discuss this

aspect of KDB and then sum up the discussions.

(iii) Financial Self Reliance of the Beedi Cooperatives

The unfavourable circumstances of the origin of KDB

necessitated that the cooperative be wholly dependent on external

finances to fund its operations. The penury of the workers that led

to the origin of the Kerala Dinesh Beedi Cooperative is highlighted

by the fact that the workers were unable to finance a bare sum of

Rs 20 for purchase of one share capital to register as a member of

the primary cooperative. The state government provided a loan of

and the workers Rs 19 to each workers to purchase one share

contribution was restricted to a single rupee 49 • In the initial

years the finances required by the central and primary cooperative

were almost wholly provided by the state government and the

District Cooperative Bank. The state government provided funds to

the tune of around Rs.22 lakhs to the cooperatives of which Rs.13.5

lakhs were its contribution to the share capital of the central

cooperative, Rs.7 lakhs were for working capital loan and Rs.1.9

lakhs was loan given to individual workers through the primary

cooperatives, to purchase one share of the primary cooperatives. In

addition the government also stood guarantee to a loan of Rs.20

lakhs from the Cannanore District Central Cooperative Bank.

Over the years the Dinesh Beedi cooperatives have totally

discontinued its dependency on outside finances. Even the

proportion of government investment in share capital of the Central

cooperative has decreased from 93 percent to 63 percent over the

274

years. The last loan taken from a bank was in 197 9. Outside

finances have been fully replaced by internally generated funds.

The accumulated thrift deposits of workers, collected by primary

cooperatives by deducting five percent from the workers wages, are

the main source of internal finance. Originally, the thrift deposit

scheme was initiated to recoup the loan of Rs 19 given to the

primary cooperative members for of one share. But the scheme

continued even after the loan was repaid. The central cooperative

being the custodian of funds the finances raised under the thrift

deposit scheme are transferred to the central cooperative as also

all the other surplus funds accumulated by the primary

cooperatives. These form the main sources of working capital to the

cooperatives. To control finances and monitor expenditure and costs

incurred by the primary cooperatives the central cooperative

rations out the finances needed for working capital of the primary

cooperatives and also to meet any investment needs of fixed

capital. This strategy of the central cooperative ensures strict

financial discipline in r.1ll the beedi cooperatives and it has

prevented wasteful expenditures and the misuse of funds.

This strategy of financial management has proved to be very

effective in managing the resources and accumulating capital. Over

the years the workers not only repaid the entire loan amount but

also raised value of the share capital of the primary cooperatives

toRs 72 lakhs. The share of the member cooperatives in the paid up

capital of the central cooperative has increased from 63 percent in

1969 to 93 percent in 199250 • Besides, the thrift fund collected

by the primary cooperatives nearly amounted toRs 650 lakhs. Thus,

the ·primary cooperatives generate sufficient surplus funds enabling

275

the cooperative to be self sufficient even for its working capital

needs. At the time of its formation even the Central cooperative

did not have its own land or building. But today apart from own

central cooperative headquarters and warehouses all the primary

cooperatives have there own land and buildings. The majority of

the work sheds are also owned by the cooperatives. The book value

of the land and buildings owned by the cooperative exceeds Rs 500

lakhs51. The accumulation of physical assets has been entirely

financed by the surpluses generated by the cooperative.

Conclusion

The Kerala Dinesh Beedi cooperatives have been a success

story. It has ensured steady expansion of employment and earnings

for its members without compromising on its financial viability. A

major part of the surplus has been successfully accumulated so that

the cooperatives have an impressive network of fixed assets in work

sheds and other buildings and is fully self reliant for its working

funds. It has grown to be one of the largest beedi manufactllring

firms in -India. The most outstanding aspect of the beedi

cooperatives was the nature of its origin. Unlike in the handloom

and coir industries, the beedi cooperatives were not set up as a

part of the cooperative expansion schemes in the Five Year Plans.

The beedi cooperatives were self defence cooperatives that

originated at the initiative of the workers. The governroent

intervention was restricted to that of a facilitator which came

forward to provide the needed assistance to the cooperative

venture. The initiatives from below ensured that the cooperative

organisation came identified with the struggle to protect workers

276

interests. This resulted in active mass participation both in its

formation and functioning. The high level of worker participation

contributed to the enhancement of efficiency and productivity. Our

discussions in section 3 showed how the primary cooperatives were

motivated to constantly improve efficiency. The workers in the

cooperative were enthused to increase productivity by recourse to

peer group pressure and persuasion rather than through fines and

deductions as is done in private sector units. The efficiency in

production was a major factor in the financial success of the KDB

cooperative.

The experience of the KDB also indicates the importance of

shelter organisations in promoting better cooperative functioning.

The efficient central cooperative plAyed an important rolP. in

ensuring cooperative success. The constant monitoring of production

parameters by the centra 1 cooper at i. ve allowed it to quickly pin

point deficiencies in working and pull up the laggard primary

cooperatives. The innovn~ive financial structure resulted jn the

centralisation of available funds with the central cooperative and

ensured a strict control over expenditure in the primary

cooperatives. The centralisation of the purchase and marketing

operations by the central cooperative enables it to reap economies

of scale. The general performance of the cooperative was also aided

by the buoyancy of the beedi industry.

The surprising aspect is that though the legal structure of

the KDB cooperatives is similar to the other industrial

cooperatives in the state, the KDB has been able to innovate a

distinct style of functioning of its own. The incorporation of the

277

trade unions in the management structure and in the wo~~-floor

functioning has been the prime factor, which enab::d the

cooperatives to coordinate the functioning of the various ?rimary

cooperatives and overcome the usual time horizon limitatic~s that

adversely effect the _accum11lation process in the suc=:ssfull

cooperatives. The role of trade union solidarity with the ~orkers

in the cooperative was an important factor that contributa~ to the

success of the initial marketing effort.

Despite the successful performance so far thE beedi

cooperatives are facing severe competition from low-prices beedis

both from inside and outside the state. Further, there ~~s also

been a deceleration in the demand for beedis both ~ue to

substitution of cigarettes and also due to increasing ave"3ion to

tobacco products due to heightened health awareness. Tr~ beedi

market seems to be stagnating if not declining in recenr years.

Diversification of the beedi cooperatives into other pr~~uction

sectors is necessary to meet the emerging situation. It ren3ins to

be seen how effectively will KDB cooperatives face ~~e new

challenges!

278

Notes and References

1. Though total employment in the Indian beedi industry is estimated t6 be between 16 to 50 lakhs, there are only a few beedi cooperatives, scattered across the other major beedi producing states, employing at most a couple of thousand workers. For further details see Panikkar G K (1986).

2. In 1951 there were 28834 beedi workers in the state of which 16268 were in Travancore Cochin and 12566 were in Malabar with Cannanore accounting for 12566 workers. By 1961 the total number of beedi workers in the state had increased to 64311 and that of the different regions mentioned above to 22369, 59033 and 40378 respect1vely. For details see Pyaralal Raghavan (1986), p.47.

Table 1 Growth of Beedi Employment; 1961-81

I Area 1961 1981

I I Persons j Male jremale \Persons IMnle jremale

Kerala I 64311 I 62959 I 13h1 1119000 I 77760 412401 Cannanore I 18501 I 17780 I 721 I 71309 I 39890 31419 Calicut I 8502 837.1 I 17.9 I 27on I 2560 1461 Mallapuram I 5815 I 5224 I 5911 Palghat 8171 7930 I 241 8555 7830 725 Trichur 4781 4567 214 11060 3264 7796 I Ernakulam 6339 I 6318 I 21 .1162 2813 349 Idduki I 672 658 14 Kottayam 3778 3774 I 4 2223 2219 4 Alleppey 5125 5121 I 4 4259 4185 74 Quilon 5593 5586

I 7 I 6509 6443 I 66

Trivandrum 3521 I 3510 11 I 3597 3547 I 50

Source: Government of India, Census of India, 1961, Vol VII Kerala Part II-B (i) General Econor.ic Tnbles, Table BI to B IV, Superintendent of Census, Kerala, 1965 and Government of India, Census of India, 1981 Series 10 Kerala Part-III "A & B li) 1 General Economic Tables, Table B-17, Director of Census Operation, Kerala

3. Pyara lal RaghavA.n ( 19 8 6) .. Chapters 2 & 3.

4. See the Hathrubhumi dated 30.5.1934 1 28.6.1934, 19.12.1937 and 19.11.1946.

5. Kannan C (1984) I p.44.

6. Pyaralal Raghavan (op.cit.) 1 p.?.3.

7. ibid., p.22.

8. See the Mathrubhumi dated 30.5.1934 and 28.6.1934.

9. The Tellicherry Beedi Workers Union (1984), p.18.

279

10. Government of Madras (1947).

11. See Mathrubhumi dated 4.11.1934.

12. See Mathrubhumi dated 30.11.1937.

13. Right from the very inception of the beedi trade union a night school and library functioned at the union office premises. For this and details of the strike demand see the Mathrubhumi dated 7.9.1934, 3.9.1934, 23.5.1937, 25.8.1937 a~d 30.11.1937.

14. The most prominent among them include the Late Azhikkoddan Raghavan who was one of the front ranking communist party leaders in the sixties, C Kannan the State President of the CITU the largest trade union in Kerala.

15. For further details see Mathrubhumi dated 18.6.1946, 9.10.1946, 22.10.1946, 7.11.1946, 19.11.1946 and 24.11.1946.

16. See Mathrubhumi dated 5.5.1952.

17. Government of Kerala 11958), p.31.

23.4.1946, 12.11.1946,

18. Tobacco Workers Union, CITU ~annanore (1984) I p.28.

19. See Mathrubhumi dated 19.12.1937.

20. Andalat (1978), p.439.

21. Government of Kerala (1958), p.16.

22. Subramaniam M (1965) 1 p.33.

23. Interview with Sri Kunhiraman, worker director of the Cannanore Beedi Workers Cooperative on 9.6.1993.

24. Subramani~m M (op.cit.), p.32.

25. Pyaralal Raghavan (op.cit.), p.58.

26. Government of Mysore (1973), p.222.

27. Pyaralal Raghavan lop.cit.), p.59.

28. See Mathrubhumi dated 30.9.1968 and 30.10.1968.

29. See Mathrubhumi dated 3.11.1968.

30. See Mathrubhumi dated 21.10.1968, 17.11.1968 and 13.11.1968.

31. See Mathrubhumi dated 11.12.1968, 17.12.1968/ 23.1/..1968/ 24.12.1968/ 28.12.1968 and 11.1.1969.

32. Kerala Dinesh Beedi Workers Central Cooperative Society (undated) r p.1.

280

33. See Kerala Dinesh Beedi Workers Central Cooperative Society, Annual Report, 1991-92 and 1992-93

34. In the period 1985-86 to 1991-92 the emoluments paid to administrative staff increased from Rs.45.67 lakhs to Rs .111. 64 lakhs. This is proportionate to the increase in emoluments paid to the production workers whose total emoluments increased from Rs .1596 lakhs to Rs. 3270 lakhs during the same period. For further details see Kerala Dinesh Beedi Workers Central Cooperative Society, Annual Reoort, 1985-86 and 1991-92

35. The information available for 1985 shows that while minimum wage rate in Kerala was Rs 15 per 1000 beedis the Karnataka minimum wage was only between Rs 8 to Rs 10. The differences continue to persist even today. For details see Halayala Manorama, dated 13.6.1985.

36. Table 2 Production Cost of Thousand Beedi's 1n Chala Primary in 1993

Component Amount

Wage Cost Rs 29.51 Holiday wages Rs 8.43 Bonus Rs 6.10 Provident fund, Gratuity, Medical, Maternity etc Rs 6.08 Managerial salaries etc Rs 1.11 Excise duty Rs 4.90 Raw material costs I Rs 19.12 Other costs

I Rs .65

Total Production cost Rs 75.93

Source: Calculated from data furnished by Chala Primary Cooperative

37. Data furnished by the Secretary, Kerala Dinesh Beedi WorkArs Central Cooperative Society.

38. Pyaralal Raghavan (op.cit.), pp.92-93.

39. See Kerala Dinesh Beedi Workers Central Cooperative Society, Annual Reoort, 1987-88.

40. Pyaralal Raghavan (op.cit.), p.104.

41. Unlike the usual experiences in most cooperatives even opposing unions does not accuse the management of cooperative of any corrupt practices.

the the

42. The central cooperative had faced a unique challenge in the history of the beedi industry right on the first day of the inception of cooperative production. Though there are large beedi firm~ which claims production of crores of beedis on a

281

single day, ~ither directly or indirectly through middLemen, a historical investigation of the origin of all these beedi firms, either big or small, will show that all of them started marketing particular beedi brands in minuscule amounts by starting off with one to five workers. All these firms were enabled to grow only in the long run by recruiting new workers as they improved their marketing network and created a ~arket for their particular brand name.

43. Interviews conducted-with Radhakrishnan, first secretary of the Central cooperative on 10.6.1993, K P Sahadevan, present secretary of the Cannanore Tobacco Workers Union on 9.5.1993 and Panniyan Bhara than and Pookodan Chandran, both :ormer directors of the Central Cooperative on 9.6.1993 and 8.6.1993

44. Panikkar G K (undated), p.10.

45. See Kerala Dinesh Beedi Workers Central Cooperative Society, Annual Report, 1990-91 and 1991-92.

46. See Kerala Dinesh Beedi Workers Central Cooperative Sccjety, Annual Reports, 1991-92 and 1992-93.

47. See Kerala Dinesh Beedi Workers Central Cooperative Scciety, Annual Report, 1991-92.

48. Interview with Pavithran a worker director of Kerala :inPsh Beedi Workers Central Cooperative Society, on 12.6.19?2.

49. Panikkar G K (op.cit.l, p.S.

50. See Kerala Dinesh Beedi Workers Central Cooperative Sc=iety, Annual Report, 1968-69 and 1991-92.

51. Details furnished by the Secretary, Kerala Dinesh 3eedi Workers Central Cooperative Society.

282