Professional Documents
Culture Documents
of SSI
on
Agricultural Implements Industry
at
Karnal (Haryana)
(May 2005)
Prepared by:
Raj Kumar Arora, Asstt. Director (Mech.) &
Cluster Development Executive
Small Industries Service Institute
Ministry of SSI, Govt. of India
11-A, IDC, KUNJPURA ROAD
KARNAL-132001 (HARYANA)
PH: 0184-2231862, 2230882, 2230910
e-mail: sisiknl@sancharnet.in, rka_nathana@yahoo.com
Website:www.sisiharyana.org
INDEX
S. Description Page
No.
Executive Summary i to ii
1. STATUS & IMPORTANCE OF CLUSTERS IN SSI 1
SECTOR
2. AGRICULTURAL IMPLEMENTS 4
MANUFACTURING IN SSI SECTOR
3. DESCRIPTION OF THE CLUSTER 6
4. THE KARNAL AGRICULTURAL IMPLEMENTS 10
CLUSTER
5. CLUSTER ACTORS 24
6. LINKAGES AMONG CLUSTER ACTORS 35
7. CURRENT INSTITUTIONAL MATRIX 36
8. VALUE CHAIN ANALYSIS 37
9. ANALYSIS OF BUSINESS OPERATION 43
10. REALITY TREE DIAGRAMMES 54
11. INDUSTRY STRUCTURE ANALYSIS 58
12. SWOT ANALYSIS 61
13. PRESENT CLUSTER MAP 65
14. CLUSTER VISION 66
15. PROPOSED PROGRAMMES / ACTIVITIES 67
16. TECHNOLOGICAL INTERVENTIONS 69
17. FUTURE CLUSTER MAP 73
18. ACTION PLAN / Budget -- YEAR 200506 74
EXECUTIVE SUMMARY
The report in hand has tried to identify the areas for improvement in the working of
Agricultural Implements Manufacturing Industry at Karnal (Haryana) to enable it to
produce good quality, standardized and cost effective implements of latest design
to suit newer techniques of farming.
The report is based on information and data collected from SMEs in the cluster,
related industries associations, Govt. departments and institutions working in the
area of agriculture research, development & extension education.
These units produce implements like Cultivators, Disc Harrows, Shrub Masters,
Land Levellers, Bund Formers, Seed cum- Fertilizer Drills, Zero Tillage Machines,
Straw Reapers & Thrashers etc.
Present annual Turn over of Karnal Cluster is around Rs.198 crore. Cluster
provides direct employment to more than 1000 persons. This turn over of Karnal
cluster is 18% of the Gross output of Agricultural implement manufacturing segment
in SSI sector.
i
Despite the presence of many R & D institutes in local and nearby areas, cluster
member SSIs have not developed strong linkages with them resulting in no
significant improvement in design and standards of implements or introduction /
development of new implements.
Inter firm linkages and sub-contracting among SSIs in cluster are almost non
existent. There are no hard networks (consortias). However there is a
manufacturers association which takes up the matters of common concern with
appropriate authorities.
The major market for Karnal implements is Haryana, UP, Utteranchal, Rajasthan,
MP, Chhatisgarh, Bihar, Jharkhand some parts of Maharashtra & Gujarat, and
even north east.
Only 2-3 units are exporting their products . However major export share is from
Harrow disc. Domestic market share of Karnal cluster implements is shrinking due
to various reasons.
There is lot of room for improvement in the working of SSIs in the cluster. Major
areas for improvement are Machinery & Technology, Design, Quality Management
systems, Human resources and Business Development Services. There is also
scope for improving inter-firm linkages and inducing networks for common buying of
Raw Materials and Consortia based exports. This will help in bringing down the
rivalry level in the firms and enhancing there bargaining power in front of Raw
Material suppliers as well as customers too.
There is potential for growth in Karnal agricultural implement cluster provided the
core cluster members show positive interest in implementing the proposed action
plan to achieve the Vision i.e. Technology up gradation through process
improvement and Standardisation with an eye on Quality enhancement and
value addition of the product. The strategic interventions are required to be made
in the areas of Technology up-gradation, Standardisation and Design improvement,
Personal counseling & training, Networking and Trust building.
ii
Diagnostic Study Report
Agriculture Implements Industry Cluster at Karnal
As per the report of third All India Census of Small Scale Industries conducted in
the year 2001-02 there were more than 13,74,974 registered and more than
91,46,216 unregistered small scale enterprises in the country with Total Gross
Output of Rs. 2,03,25,462 Lakh. Out of these 65.55% were SSIs & Small Scale
Ancillaries among registered units and 38.75% in unregistered sector. The remaining
are Small scale Service & Business Enterprises (SSSBEs). Total SSI sector
(including service & Business enterprises) provides employment to about 2.5 crore
persons in total. With more than 6000 products / services produced /rendered in SSI
sector it contributes Rs. 14,19,956 lakh to national exports earnings. The value of
exports was only 5% of the gross output. The regd. SSI sector accounted for 87% of
the total exports with only 14.5 % of the exporting units.
As per 3rd All India census in the regd. SSI sector in the year 2001-02 a district
having 100 or more regd. SSI units engaged in the manufacture of same product
was considered as cluster for that product in that district. Similarly in unregistered
sector each district having an estimated no. of 500 or more un-regd. SSI units
engaged in manufacturing same product was considered to be a cluster.
According to above criteria 1223 clusters covering 321 products were identified in
the regd. SSI sector. These clusters had 32.68% share in total no. of regd. SSI
units, 18.95% in total market value of fixed assets, 16.99% in total gross output and
27.66% in total value of employment of manufacturing activity of the regd. SSI
sector.
In the unregistered SSI Segment there are 819 clusters covering 250 products had
been identified through out the country. These clusters had a share of 37.85% in
total estimated no. of un-registered units, 22.45% in total estimated market value of
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fixed assets, 21.04% in total estimated gross output and 34.63% in total estimated
value of employment in the manufacturing activity in the unregistered units.
As per Census Report, In Haryana, in registered SSI segment there were 38 clusters
having 7468 no. of units having Rs. 1049.91 crore fixed assets & Rs. 7177.73 crore
output and providing employment to 52171 persons. Similarly, there were 02 nos. of
clusters in un-registered SSI manufacturing sector having 1130 units and having
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Fixed assets of Rs. 16.77 crore and gross output Rs. 27.02 crore providing
employment to 1637 persons.
In view of the importance attached to cluster in SSI sector, an attempt has been
made to further develop these clusters in a planned and effective manner. Govt. of
India has adopted a scheme named CLUSTER DEVELOPMENT PROGRAMME.
This programme aims at systematically identifying the under performing clusters,
gathering dispersed knowledge through participatory study about its constraints and
potential as well as local linkages and support mechanisms. Then establishing an
atmosphere of trust within a cluster for building a realistic action plan to strengthen
the cluster.
Earlier, during late ninties UNIDO had identified 358 clusters throughout the country
that could be cover under the Cluster Development Programme. Later the list was
updated to 388. In Haryana, 21 clusters were identified for CDP out of which work
on Rice Milling Industry at Karnal was commenced in the year 2004.
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Table: 2.1
Position of Agricultural Implements Manufacturing Activity in Regd SSI segment
S.No. Criteria Measure Position
1. No. of units 18354 13th
2. Gross output Rs. 66,324 lakh 43rd
3. Employment 44799 persons 17th
4. Export US$ 68.6476 million -
Source: 3rd All India Census of SSIs 2001-02 & www.tradeportalofindia.com
Table: 2.2
Agricultural Implements Manufacturing Activity in Un-regd SSI segment
S.No. Criteria Measure Position
1. No. of units 97049 Nos. (estimated) 15th
2. Gross output 43017 lakhs 26th
3. Employment 160195 persons 18th
4. Export Rs. 300 lakhs 16th
Source: 3rd All India Census of SSIs 2001-02
From the point of view of total no. of registered SSIs units in clusters, Agricultural
Implements Segment is having 28 clusters spread over 7 States i.e. Punjab,
Rajasthan, U.P., West Bengal, M.P. Gujarat and Karnataka with 5124 nos. of units
with fixed assets of Rs. 90.994 crores and gross output of Rs. 147.84 crores. It
provides employment to 12874 persons.
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Agriculture production depends not only upon land use, but also upon productivity
i.e. the relationship between agricultural output and input. Research and
development work in this field are being undertaken by various institutions all
over the world. Along with providing irrigation facilities, use of high yielding variety
of seeds, use of pesticides and insecticides, use of fertilizers and better
techniques of farming, use of modern agricultural machinery and implements
plays a vital role in increasing the productivity of agriculture output. Therefore
with the increasing awareness and trend in scientific cultivation and mechanised
farming, the use of modern agriculture implements has increased since the early
years of independence i.e. with the advent of green revolution.
.
Defining the Product:
As per Hand Book of Agricultural Machinery Terminology (SP-44:1989) by
Bureau of Indian Standards, the definition of Implement is Equipment generally
having no driven / moving parts, such as Harrow or having simple mechanism
such as Plough. But, practically agriculture operations invariably require the use
of various Implements for different purposes such as tillage, making seed beds,
land preparation, seeding, spraying and dusting pesticides / insecticides,
harvesting, thrashing and processing etc. Many of them are simple but some of
them have moving parts and are driven by power / tractor. Therefore for the
purpose of this diagnostic study all the farm machineries except tractors,
power tillers, diesel engines and water pumps have been considered as
agricultural implements.
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All these implements or farm machinery may be manual, animal or tractor drawn /
driven or motor driven.
I. Tillage Implements :
These are used for breaking up the ground, turning it up and cutting furrows in
the soil. They include -----
i. Different types of Cultivators
ii. Different types of Harrows
iii. Different types of Ploughs
iv. Different types of Rotary Tillers
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M/s Partap Iron Works, headed by Sh. Partap Singh Aneja were already producing
bullock drawn implements at this point of time at Karnal.
During these days cultivators were being imported mainly from Denmark by a Delhi
based firm named M/s New India Equipment owned by S. Tirlok Singh. They were
importing Harrow Disc too. Now their sons have unit of Harrow Disc at Bahadurgarh.
S. Tarlok Singh and S. Mohar Singh of Karnal had also started their firm by 1961
manufacturing implements who afterwards tried their hands in Harrow disc and were
quite successful. Another Delhi based Company, M/s Das Motors was also
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manufacturing Agricultural Discs during those days. Discs were mainly imported
from Australia, Yogoslavia and U.K.
Turning points: The first turning point came in the history of Karnal Agricultural
Implements Industry when around 1963-64 Govt. of India allowed direct import of
Agricultural Disc by registered SSI units. This proved to be very profitable and
encouraging to the implement manufacturers.
During that period M/s Eastern Engg. Co., at Bareilley tried manufacturing of horrow
disc but now they have discontinued. One firm from Lakhimpur Kheri (U.P.) also
tried but were not successful. Only Grow More brand disc from Meerut (U.P.) was
able to make regular supplier. Afterwards M/s Das Motors Mr. CR Dass started Disc
manufacturing at Sahibabad. By that time TATA had also started manufacturing &
supplying Harrow discs but being high priced were not purchased by Karnal
Implement Manufacturers. Afterwards around 1970, the item was reserved for
manufacture in SSI sector and TATA being large scale unit was banned from
making discs.
Around 1968-69 Sh. Harbans Lal Rajpal, M/s Pritam Singh Sons, Delhi, Sh. Ram
Gopal Latka of Kaithal & Sh. Mool Chand Matta jointly started manufacturing their
own disc at Karnal with manufacturing capacity of 100 discs per day. About a year
or two later around 1970, Sh. Prem Katyal, Sh. Ram Kishan Chandna & Sh. J.M.L.
Patni started another unit manufacturing agricultural discs in the name of M/s
Universal Steel Disc Co., with about 60 disc. per day capacity.
By this time Sh. Harbans Lal Rajpal started manufacture of tiller tynes with the help
of Sh. Arjun Dev Sehgal of M/s Prakash Engineering Works. Also there was ban on
import of 22, 24 & 26 Harrow Disc by this time to save foreign currency. This
gave boost to Karnal Agricultural Implement Industry and many more people took
interest in the line.
By the year 1977 Sh. Harbans Lal Rajpal & Sh. Mool Chand Matta separated the
business. Similarly at about this point of time Sh. J.M.L Patni got separated from
Bharat Engg. Co. and started his own units of implements, discs and also cultivator
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springs, which after the ban on import, were being manufactured by M/s Sethi Indl.
Corporation of Faridabad and were always in short supply. During this period after
partitions, splits and reorganization among the existing business partners and with
the entry of some new entrants the number of units manufacturing agricultural
implements started increasing. Some of them could sustain with the time and
flourished, but some due to various reasons like financial, managerial or family
problems were closed.
Clustering Phenomena : Beginning from around 1979 through the decades of 80s
& 90s there was a boom in agricultural implement industry at Karnal as there was
rising trend in the population of tractors due to liberalized credit (loan) policy of Govt /
Banks for purchase of tractors as is evident from Table-4.1 & 4.2 , which show the
cumulative nos. of 4-wheeled agriculture tractors & Power thrashers in India from
1972 t0 1999 and Production / Sale of Tractors in the country from 1999-2K to 2004-
05 respectively.
It can be seen from table -3.1 that there was addition of more than 5 Lakh new
tractors during the period between 1982 to 1987. This period witnessed growth of
implement industry at Karnal.
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Presently, about 60 entrepreneur houses (family groups) are working in this sector at
Karnal proper owning around 70 plus SSI units manufacturing various Agricultural
Implements (Farm equipments) and their components.
Besides these 70 working units at Karnal proper there are around 9 10 SSI units
and a Haryana Agro Industries Corpn. Unit at Nilokheri ; 4 to 5 good working units
each are situated in Assandh and Ghraunda blocks of the district.
Estimated marked value of Present fixed assets of these units is Rs. 125 crore. The
cluster provides direct employment to about 1025 persons Besides this more than 75
members of entrepreneur families are directly engaged / employed in supervisory /
managerial work. Further this cluster provides employment to about more than 1000
additional persons during the peak season,
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If compared the output of Karnal cluster for 2001-02 with that of combined out put of
28 cluster of agriculture implements in registered segment, It can be seen that
Karnal cluster (70 Units) alone produced equal to 81% of the total output of 28
cluster (excluding Karnal) in registered segment with total 5124 nos. of units that too
with around 2100 persons employed as compared to 12,874 by 28 clusters.
Similarly this output was more than 91% of Gross output of 25 clusters of agricultural
implements in un-registered segment with total nos. 25537 and employment of
52,252 persons.
Fig. 4.1 Graphical comparison of performance of Clusters
700.00
Karnal Cluster
600.00 (70 Units)
500.00
28 Clusters
400.00 (Regd.
Value
Segment)
300.00
25 Clusters
200.00 (Un-regd
Segment)
100.00
All 25+28
0.00 Clusters
Fixed Assets Rs. Emploment in Gross output Rs.
In Crores ,00s In Crores
Karnal Cluster (70 125.00 21.00 120.00
Units)
28 Clusters (Regd. 90.99 128.74 147.84
Segment)
25 Clusters (Un-regd 61.06 522.52 130.94
Segment)
All 25+28 Clusters 152.05 651.26 278.78
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The turn over of Karnal cluster as evident from the table above, seems to have
increased in terms of value. But, this has not happened in real terms, because the
increase is not due to increase in production. Rather, this is due to continuous rise in
the price of steel for the last 3- 4 years. The cumulative rise in prices of steel during
this period is reported to be around 40 %.
2 Disc Harrows- Trailed or Mounted 6x6, 7x7, 8x8, 9x9, or 10x10 Disc
type (Notched or plain disc)
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Pitch 20mm
As reported earlier also, the demand for 100 % of Hammer Forged Tynes, 70 % of
other types of Tynes, 80 % of Cultivator Spring, 100 % of Forged Disc Plough
Spindles, and 100 % of Forged Trolley Hooks is met by Karnal based SSI
manufacturers.
Some of the important operations involved for most of the agricultural implements
are: Shearing, Cutting, Pressing, Gas Cutting, Sheet Metal Fabrication, Welding,
Turning, Grinding and painting etc.
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whereas reapers and thrashers have high speed moving parts. Therefore there is
no generic manufacturing process sequence for each product. Still here are
some commonalities and also differences in the manufacturing process sequence.
Fixing Shovel
Painting
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Rolling
Bending Rolling Drilling Bending
Joining
Assembling Together
Painting
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Cutting (shearing)
Cutting (shearing)
Straightening
Drilling
Drilling
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Punching
Coiling
Round / Circle Cutting on Press
Hook Bending
Quenching
Shot Blasting(Optional)
Packing
Edge Machining
Painting
The production process of implements does not involve any highly technical
operations. Simple machineries such as welding sets, Power presses, Lathes, Power
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5. CLUSTER ACTORS
(A) Core Cluster Actors:
Agricultural Implement (Farm Equipment) Manufacturing is a second largest
industrial group of Karnal after Rice milling. It includes Tractor Drawn Tillage,
Sowing, Harvesting equipment, Trailers manufacturing as well as various parts like
Cultivator Tyne, Harrow Disc, Shovel, Cultivator & Plough Springs, Harrow Axle &
Trolley Hook etc manufacturing. There are a few foundry units too.
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Category 5 : This group is of the suppliers of structural Steel & spring Steel
wire. Structural steel mainly procured from Mandi Gobindgarh (Punjab). Very few
manufacturer making high quality Implements are using Tata / SAIL Steel Materials.
Spring Steel wire is being procured from M/s. TATA Steels (A Tata Group Company)
& M/s. Usha Martin Ltd. They are taking full benefit of their monopoly. Mandi
Gobindgarh Material generally purchased through commission agent because the
quantities are Smaller & Agents give some Credit facility also. On timely payment
agents pass on a part of discount also.
Category 6 : This Category includes a few trading units who are either trading in
components of Agricultural implements or getting order of some implements &
supply after getting the same manufactured as per their / Customers requirements.
There are hardly three to four units in each category. Other wise quite few of the
implement or Components manufacturing units are also trading in parts like Shovel,
Thrasher wheels, Harrow spools, Thresher parts or Trolley Axles etc. which are
being manufactured at other places .
Category 7 : These are a few Tools & Die makers who have very un-organised set-
up. They have good practical experience of Press & Forging die making but limited
knowledge about latest Tool & Alloy Steel or methods of their Heat Treatment. Heat
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Treatment is done in a very crude manner by heating the job in furnaces being used
by Disc, Shovel or Tyne manufacturers & quenching in the oil without any care about
its suitability, quality or grade and without taking care of heat treatment parameters
etc.
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The Association actively participates in the regular meetings convened by the state
and central Govt. departments. / offices.
For smooth running of Association working , the work has been entrusted to
following sub-committees:-
1. High Power committee- to deal with official matters like taxation, VAT, and
Cluster Development Programme.
The association is now concentrating on the CDP, got it approved from AS &
DC(SSI), Govt of India, with the support of Director, SISI, Karnal
The Association intends to have a Testing Centre for Raw Materials & Components
as well as a Prototype Development Centre within the cluster itself.
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The chamber is represented in State level high power Committee as well in district
level departmental advisory and coordination Committees of various central and
State Govt. departments such as Excise, Income Tax, Sales Tax, Pollution control,
Electricity Commission / Corporations,. Town Planning etc.
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registration, which is very much helpful while dealing with banks and other govt.
departments. Some of its objectives are as follows
Keeping updated record of SMEs.
Providing information to Govt. as per requirement.
Keeping complete statistical information/ data on small scale industries.
Implementing industrial policies of the Govt.
Providing subsidies / incentives as per Govt. rule
3. REGIONAL TESTING CENTRE (NR) New Delhi: RTC New Delhi is one of the
four RTCs set up by Govt. of India to provide
Testing & quality Control facilities for SSIS in the northern region
To help in improving the quality of Products to Small Scale
To provide facility of calibration of Instruments & Ganges for SSIs.
RTC also imparts two types of trainings to meet the demand of testing personals
from SSIs.
6 Months Training to fresh Diploma Engineers or Science graduates in the
fields of Chemical, Electrical, Mechanical & Metallurgical Testing
2 or 3 weeks specialized training in specific range of products for technicians
sponsored by the industry.
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Foundries etc. The Institute provides HRD, Technical support to the industry in
various fields of Engineering In Steel sector.
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The institute is equipped with Workshops, Farm for imparting on the job trainings and
demos, Audio-visual section, a well organized Library and Rest House facility.
Achievements: The Department has done pioneer Research & Extension work for
giving a boost to farm mechanization in Haryana State.
The salient achievements being:
Acid Delinting Technology / Hand Operated Acid Delinters of different capacities.
Manual Seeders, Wheel Hand Hoe, Crust Breaker, Cotton Stalk Puller, Papad and
Wadi making Machines.
Developments / promotion of bullock drawn machines like land preparation,
land leveling, Stubble Collector cum Planker, Mustard Drill, Seed cum fertilizer
drills, Weeding machines.
Developments / promotion of Tractor operated machines i.e.
Rotavators, Puddlers, High Clearance Weeders, High capacity Crop Threshers,
Paddy Transplanters, Automatic Sugarcane Planters, Ridge Seeders/Bed Planters,
Potato Planter & Digger etc.
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11. RICE and WHEAT CONSORTIUM: RWC for the Indo-Gengatic Plains (IGP) is a
collaborative Programme about sustainability of Rice-Wheat System of IGP. The
collaborators are CIMMYT (an international organization for the improvement in
Wheat and Maize based at Mexico.)
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13. HARYANA FINANCIAL CORPORATION: HFC meets the credit needs of small
/medium scale industrial units in Haryana for the purpose of acquiring fixed assets
such as land, building and plant & machinery.
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As for as commercial links is concerned SMEs have established linkages with the
suppliers of raw materials, inputs & also with traders (Sellers), marketing & export
agent local as well as in nearby towns/ clusters.
R&D Linkages between SMEs & institutions are also not strong enough to
contribute to any technological up-gradation or innovation.
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The matrix below reveals the degree of linkage among various Cluster Actors as per information gathered by interaction with them
measured on scale of 5. The figure 0 (Zero) depicts no linkage whereas figure 5 tells Strongest linkage. NA means not sufficient
information is available on the linkages of particular institutions.
NRFMTTI
KAIMA
HSIDC
NISST
DFPM
PPDC
EEPC
SIDBI
HCCI
NM L
HAIC
CIAE
NSIC
DWR
RWC
DIET
RTC
HFC
SISI
KAIMA - 4 3 DIC
2 0 0 0 0 1 0 1 1 0 3 3 3 0 0 1 0
HCCI 4 - 2 2 0 0 0 0 0 0 0 0 0 4 4 3 2 1 2 0
SISI 3 2 - 3 1 0 1 0 0 0 0 0 0 1 2 0 3 4 1 2
DIC 2 2 3 - 0 0 0 0 0 0 0 0 0 4 4 3 2 1 2 0
RTC 0 0 1 0 - NA NA NA NA NA 0 0 0 0 0 0 NA 0 NA 0
NISST 0 0 0 0 NA - NA NA NA NA 0 0 0 0 0 0 NA 0 NA 0
PPDC 0 0 1 0 NA NA - NA NA 0 0 0 0 0 0 NA 0 0 0 0
NML 0 0 0 0 NA NA NA - 0 0 NA 0 0 0 0 NA 0 0 NA 0
NRFMTTI 1 0 0 0 NA NA NA 0 - 2 2 0 0 0 0 0 0 0 0 0
DFPM 0 0 0 0 NA NA 0 0 2 - 2 0 0 0 0 1 0 0 0 0
CIAE 1 0 0 0 0 0 0 NA 2 2 - 1 3 0 0 0 0 0 0 0
DWR 1 0 0 0 0 0 0 0 0 0 1 - 5 0 0 0 0 0 0 0
RWC 0 0 0 0 0 0 0 0 0 0 3 5 - 0 0 0 0 0 0 0
HSIDC 0 4 1 4 0 0 0 0 0 0 0 0 0 - 5 0 0 NA 0 0
HFC 3 4 2 4 0 0 0 0 0 0 0 0 0 5 - 0 0 NA 0
HAIC 3 3 0 3 0 0 NA NA 0 1 0 0 0 0 0 - 0 0 0 0
NSIC 0 2 3 2 NA NA 0 0 0 0 0 0 0 0 0 0 - 5 NA 0
SIDBI 0 1 4 1 0 0 0 0 0 0 0 0 0 NA NA 0 5 - NA 0
EEPC 1 2 1 2 NA NA 0 NA 0 0 0 0 0 0 0 0 NA NA - 0
DIET 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -
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The major raw material for Agricultural Implements is structural steel which is the
base for costing the product. With the price fluctuation at Mandi Gobindgarh, the
price of implements at Karnal also fluctuate in the same manner. The Booking of
orders is done on the basis of steel price at Mandi Gobindgarh. The present price of
structural steels at Mandi Gobindgarh varies between Rs. 26000 to 27000 for M.T.
Fluctuation of even Rs. 100 per MT affects the costing of an implements. The prices
of implements fluctuate on daily basis, almost like commodity.
3. Spring Steel Wire Rod Rs. 35250 / MT Rs. 37500 / MT Rs. 36000 / MT
6. Disc for Harrow 24 X4mm Rs. 340 / Pc Rs. 355 / Pc Rs. 370 / Pc
7. Disc for Harrow 26 X4mm Rs. 480 / Pc Rs. 500 / Pc Rs. 525 / Pc
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Costing Method
Tiller (cultivator), 9 Tyne, Rigid Type, Wt.190 Kg.
(Medium Quality)
8 Labour -- 150
9 Scrap/wastage -- 50
10 Interests -- 150
Total 6909
Note:- In practice the product is sold at much lower price due to cost
based competition thereby compromising the technological up gradation
& modernisation of the unit in long run.
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Costing Method
Tiller (cultivator), 9 Tyne, Spring Loaded, Wt.200 Kg.
(Medium Quality)
8 Labour -- 200
9 Scrap/wastage -- 50
10 Interests -- 150
Total 7134
Note:- In practice the product is sold at much lower price due to cost
based competition thereby compromising the technological up gradation
& modernisation of the unit in long run.
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Costing Method
Tiller (cultivator) 9 Tyne, Spring Loaded, Wt. 235Kg.
(High Quality)
8 Labour -- 200
9 Scrap/wastage -- 50
10 Interests -- 150
Total 9862
Note:- In practice the product is sold at much lower price due to cost
based competition thereby compromising the technological up gradation
& modernisation of the unit in long run.
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Costing Method
HARROW (TRAILING TYPE, 7 x 7 ; weight 500 kg) Medium Quality
9 Scrap/wastage -- 100
10 Interests -- 200
Note:- In practice the product is sold at much lower price due to cost
based competition thereby compromising the technological up gradation
& modernisation of the unit in long run.
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Costing Method
HARROW (TRAILING TYPE, 7 x 7 ; weight 600 kg) High Quality
10 Interests -- 300
Note:- In practice the product is sold at much lower price due to cost
based competition thereby compromising the technological up gradation
& modernisation of the unit in long run.
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The following section presents an analysis of Business Operations for the Karnal
Agricultural Implements Manufacturing Cluster. The analysis is based on following
factors:
Raw Materials & Components
Technology (Machinery & Products)
Products & Marketing
Background of Entrepreneurs and their Enterprises
Finance and working capital
Man Power Requirement
Infrastructure facilities
Business Development Services (BDS)
Quality, Standards and Management Systems
Main source of supply of this raw material is Mandi Gobindgarh, the steel town of
Punjab at a distance of 130 kms. from Karnal. A very few progressive units who
have built up their brand image are using SAIL or TATA material also.
Sheet for thresher and seed drill is commercial quality CR / BP Sheets without
much consideration of any quality parameters
Raw Material for Harrow Disc is EN-42. Earlier the sheet was supplied by a
Gobindgarh Supplier. But as some of local disc manufacturers started rolling their
own sheet, Gobindgarh supplier has closed the operation. Local Manufacturers now
prefer 2nd grade Rail from SAIL being an economical proposition and fulfilling the
quality (hardness) parameters also as compared to billets. Up to some time back the
largest exporting unit of this cluster M/s Karnal Agricultural Industry Ltd. was
importing SAE 1070 billets against Advance Licence. But due to price of steel gone
up in the international market , they also prefer now to procure local (SAIL)material.
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Raw Material for Cultivator Tyne is also produced from Gobindgarh in the form of
Flats and is easily available. Two units having own Rolling mill are rolling the
material for their own requirements.
Spring Steel Wire for Cultivator Springs: Only two suppliers are monopolizing the
market 1st being M/s TISCO and 2nd being M/s Usha Martin Ltd. supplying wire rod.
Both of these suppliers are exploiting the market to their best advantage and the
spring manufactures, who are unable to store the wire/wire rod in time are not able to
make good season.
For Shovel: Though there are two units at Karnal. But very little quantity is picked
up by 2 or 3 local manufacturer owing to their price being higher as compared to
shovel being produced at Khatauli (U.P.) which are economical as compared to
being manufactured at Yamunanagar (Haryana) and Karnal. Raw Material for Shovel
being manufactured at Karnal and Khatauli is scrap (broken) Leaf Spring from
Automobiles which is available in plenty in UP itself , also the labour in UP is
economical. That is why Khatauli made shovels are comparatively cheaper.
Cast Spool for Harrow are besides three local foundries, mainly procured from
Kaithal and function of the item being for structural purpose, have no quality
problems. However Harrow hub and Thresher Plumber Block and other parts of
Seed drills are produced from Goraya, Ludhiana, Moga and Mansa etc. towns of
Punjab.
Similarly, Machined shafts, gears, pulleys, sprockets, sub Assemblies and thresher
head and gear box assemblies as well as thresher blades and fasteners etc. are also
procured from Ludhiana and other towns of Punjab.
Materials for Press tools and forging dies etc. are purchased from Delhi or Ludhiana
as there is not much developed engineering industry at Karnal to fascinate any
trader to open a shop.
Paint used for the agricultural Implements is generally local made. There are around
5 to 6 units manufacturing satisfactory quality for domestic market product. However,
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for export quality implements, paint of reputed manufacturers is available from local
market.
As far as is concerned for Structural Steel from Mandi Gobindgarh or 2nd grade rail
from SAIL, owing to limited suppliers and absence of any testing laboratory at
approachable distance, and alternate source of supply, they are compelled to accept
and use whatever is supplied by Gobindgarh suppliers. Therefore, due to non-
consistency in material quality, there are sometimes problems in machining
operations; but as there is no system of fits and tolerances being followed, the
problem is taken very lightly because the product is for rough use in the fields.
However, there is a little bit check on consistency of the hardness of material for
Harrow Disc, Cultivator tynes. The Spring wire is procured form main producers
along with Test Certificate.
Mandi Gobindgarh Raw Material (structural steel as well as HCS for tyne) market is
totally in the grip of Arhtiyas (Commission agents) who are cutting into the profit
margin of implements / component manufacturers of this cluster. Common buying, if
possible, may contribute to cut down the raw material cost to a significant extent.
Even another nearby Raw Material Market of Muzaffarnagar can also be tapped by
forming some hard networks (Consortias) in order to get advantage of economy of
scale through common buying. Alternately the leading mills at Ghaziabad can be
explored or some mill owner in Haryana itself can be persuaded to meet demand of
this cluster of industry.
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Painting
Normally the machines employed are general purpose like - Welding Sets, Power
Presses, Drilling Machines, Lathes, Power Hacksaws, Hydraulic Presses, only
locally developed special purpose tension type spring coiling adda is used for
cultivator springs. Most of the machines used are manufactured at Ludhiana, Batala
and Delhi or near by areas.
Some of the units have changed over to MIG welding from conventional Electric Arc
welding process. As there are long off seasons in the trade, there is no
botheration for proper upkeep, maintenance and productivity of the machines.
Since the end product has got very rough use and the end user is also not much
aware & educated; therefore, no consideration is imparted to tolerances. No concept
of limit gauges exists in the cluster.
Furnaces are used in the trade for hot forging. Only a very few units are using
temperature controllers on the furnaces that are locally made under the supervision
of some private manufacturers. Therefore some times there is non-uniformity in the
quality of product.
(iii) PRODUCT:
Main products are Tillage implements like various types of Cultivators, Disc Harrows,
Ploughs, Rotavators. Land preparation implements, like Puddlers, Bund Former,
Soil Scoops, Tramplers etc., Sowing implements like Seed-Cum-Fertilizer Drill, Zero
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Till Machine, Bed Planters etc., Harvesting and Thrashing implements like various
types of straw Reapers and Thrashers.
The designs, as reported, are either copied from those introduced by various tractor
manufacturers like Escorts, Massey Fergusan, International (Mohindra) etc. other
reputed implements manufactures in various states like Punjab, Gujarat,
Maharashtra etc. as per the requirements of the customers and are many a times
named after those original manufacturers.
(iv) MARKET:
Domestic Market: The Karnal cluster is situated in Agriculturally Rich belt of Punjab,
Haryana and Western UP. The demand from near by areas imparted strength to the
cluster and other developing states like Rajasthan, Gujarat, MP, Maharashtra,
Eastern UP and Bihar also looked to Karnal for established implement industry
owing the economical cost of implements.
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Export Market: Two or three units are exporting their products. At least one is
exporting implements & other components like Harrow Discs directly. It is reported
that 2 to 3 units are exporting indirectly i.e. through units located at Karnal or through
Ludhiana / Delhi based exporters / agents. Exports are being made to even USA,
GERMANY, AUSTRALIA etc. besides developing and under developed countries
like Sri Lanka, Bangla Desh & Nepal etc., but this is a very small fraction of the over
all turn over of the cluster.
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no fresh idea came up and the process of manufacturing remained traditional. Hiring
experienced and specialized persons in different functional areas necessitates
higher pay, which entrepreneurs are generally not willing to pay due to cut throat
competition on cost. Some times entrepreneurs are not even aware of source.
The export oriented units are effectively utilizing the export credit facilities.
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No efforts have been made to train and upgrade the skills of workers in an
organized/formal manner.
It is observed that during the season periods there is shortage of space in the units.
In case the SSIs are receptive to the idea of enhancing their productivity and quality
, they need more space for assembly & storage of materials & finished goods.
Short term BDS providers like Commission Agents from Mandi Gobindgarh or Sales
Agents though not in plenty but are operating. But concept of engaging Long Term
Strategic BDS providers is not popular among SSIs. Only two or three SMEs
understand their importance and are utilizing services of a few of this kind.
Govt. Agencies, NGOs and Institutions like IARI, DWR, Sugarcane Breeding and
Research Centre, Haryana Agriculture University Regional Research Station, are
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locally situated but rarely approached by the industry barring a few organized SMEs.
Similarly National Institute of Technology Kurukshetra is there. An Engineering and
Management Institute has come up at Karnal a few years back. There are no
industry institute linkages. NPC, ECGC, DGFT, SIDBI are also approachable but no
significant services from them have been obtained. SISI is some times approached
but no concrete project has been worked out except present CDP.
Agricultural Implements being a rough and tough product, people never cared to
search for BDS providers in the area of technology, Marketing, Export, etc. Due to
this and limited exposure of entrepreneurs in these fields, the process of
manufacture and quality of product did not change over the years, neither any
innovation evolved. Rather market has started shrinking. Agricultural Implements
being not a very high profit item and fees of BDS being very high, consortia
approach should be adopted for areas like Karnal made brand building. If the
demand for strategic BDS providers is created, there is possibility that some BDS
providers may open contact point at Karnal.
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The units have gained financial strength during good old days and now they invest
the funds in storing raw materials and components in off season. Prices of steel are
rising continuously for the last few years. This storage of material contributes to the
profitability of the units. Other wise counting on the basis of financial analysis tools,
most of the units would not be found performing well.
Keeping up to date inventory, records and even proper House-keeping are also not
so important areas for the SSIs in this cluster.
Technically the use of well designed jigs and fixtures, Gauges are not important for
the majority of units. Fits and tolerances are unheard terms for them. Need of
making component drawings or assembly drawing is never felt. Due to these
reasons the SSIs in this clusters are working as just dignified, bigger size version of
traditional fabrication / engineering workshops of old style. The engineering industry
base to catch new engineering product has not developed.
The overall management function of the cluster members is not efficient in general in
terms of systems, due to non engagement of qualified personals professionals and
non delegation of authority for routine work. Entrepreneurs are engrossed in day to
day affairs of co-ordinating the business and remain pre-occupied with immediate,
short term issues or problems with little emphasis on long term planning. There
seems to be no intention to increase activity level due to fear of loss of control. Two
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or three houses have, therefore, adapted the horizontal route to growth. Informal
business, evading statutory norms and dues, non declaration of statutory information
and avoiding coming under Factory Act is another reason for non-growth of this
sector. Reason being that most of the entrepreneurs are not from professionally
educated sector.
Some times back some Harrow Disc manufacturing units tried to use ISI Mark but
could not continue due to some inbuilt practical problems of the system decided to
discontinue with the use of ISI Mark. One or two seed drill and thrasher
manufacturers also tried with ISI Mark, but due to additional activity of maintaining
documentation and non availability of materials/components conforming to ISI
specifications in small quantity compelled them to discontinue with use of ISI Mark.
Still, as told earlier, some of the units are having the potential of implementing
inventory control/record, proper house-keeping and Quality Management Systems.
Only awareness needs to be created.
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Raw Material:
No alternate source
No Testing Facility to Gobindgarh
in the Cluster
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Products:
Marketing:
Shrinking local
Lack of Lack of market
awareness networks
No marketing
BDS provider
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No good returns
High cost of
on investment Inability to face
capital
competition
Increased
High cost of Inability to face
cost of
capital competition
product
Manpower:
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Infrastructure:
Non existence of
Less unison local R.M. /product Lack of awareness
among cluster testing facility
actors
Govt. Non -
Intervention
No other strong
industry segment
present
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The figure indicates the business environment in which this industry operates and its
vulnerability to the various market forces in respect of four major factors as
discussed here under-
1. ENTERY BARRIERS: The entry barrier from the point of view of investment in plant
& machinery in the implement segment is medium level. Only an investment of Rs.
5 to 6 lakh (including tooling) is needed to make an entry. However, to reap the
benefit of economy of scale, high investment in working capital is required as the
quantity & value of raw material is on high side. The value addition is not very
encouraging. Moreover the bargaining power of the major raw material (Structural
Steel) supply segment the rolling mills as well as commission agents at Gobindgarh
is also high.
There is no proprietary skill or high technology of any kind involved. Neither there is
any brand identity culture. Only 2 to 3 unit shave been able to create their brand
identity, But still there is not much product differentiation. Most of the products are
common and are produced by number of enterprises within and outside the cluster
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Entry barrier in components (Disc, Tyne, spring & shovel ) manufacturing side
are high due to the cost of Plant and machinery, tooling investments and kind of
technology (process) involved.
Entry barrier on implement side is hightened by another factor that exit barrier is high
because of payment recovery being in favour of dealers/ traders (Customers).
2. Rivalry is existing among the firms rather on high side as almost all are mainly
dependent on domestic market, particularly on retail sale and through traders. Still
some manufacturers are supplying to fixed customers for the last so many years. In
fact there has been a considerable increase in the number of units during 1985 to
1995. as the competition went up and on the other side market got saturated. Also
number of new tractors sold in the country and particularly in adjoining regions gone
down. A continuous drought for 2-3 years further cut the demand. This situation
compelled some houses to close down or scale down the production.
3. Bargaining power of the raw material suppliers of Mandi is high, as rolling mills are
not interested in rolling / supplying smaller quantity. Numbers of sections / sizes
required for consumption are so many that stocking requires lot of capital
involvement . Situation is exploited by commission agents to their advantage.
But bargaining power of other items / components like tyne, spring, & shovel is low .
The prices of these items have not increased proportionately to the raw material
prices.
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4. As far as is concerned for the bargaining power of customer, that too has tilted in the
favour of customer due to demand gone down and with coming up of new
manufacturers at various place in the country; who procure components directly from
manufacturers and fabricate the structure and produce the implements locally.
Another factor working in favour of customers bargaining power is that due to lack of
demand, manufacturers are not getting payments regularly. This becomes more
difficult due to seasonal nature of business. So changing customers (dealer/trader)
means loosing some payment. So manufacturers are trapped in a vicious circle. This
can be reduced by forming consortium and brand Building.
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International marketing,
5. Good Transport linkage- 4. Payment are not prompt change their sourcing
National Highway No, 1, Brand Building and
from dealers/traders due to country.
State Highway and stiff competition participation in Trade
Railways. 5. . Lack of knowledge of Fairs.
4. ISO-9000 QMS are
export marketing /
6. Purchase by State Govt. 4. Globalisation can usher necessary to adopt.
documentation.
Agriculture Deptts. And 6. Lack of brand image. tremendous market
Corporations for further 7. No effective agencies to potential for the 5. Survival of the fittest.
supply to farmers. help in export market. competitive firms.
7. Almost no import of the 8. Lack of Internet exposure.
product for farmers use. 9. Cut throat competition on 5. Quality and productivity
price at the expense of are the rule of the
quality. game.
10. Inadequate information of
changing techniques of
farming.
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prompt. assemblies.
2. Availability of castings
2. Cluster is solely
from nearby Kaithal and
other working parts for dependent on Mandi
thresher and Seed Drills Gobindgarh for supply of
etc. from not so far away structural steel that to
places of Punjab. through commission
3. Major raw material agents.
structural steel supply 3. No incoming inspection of
from nearby Mandi raw materials and
Gobindgarh. components.
4. TATA & SAIL sales 4. No structured system of
offices in Delhi/Fbd an quality control exist.
advantage.
1. Semi skilled workers 1. No skill development 1. Increased awareness 1. Skill base needs up-
needed . training programme / likely to increased skill gradation to adapt new
2. Most of the work is easily
Skill & HR
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plant & machinery increasing from the local innovative enterprises environment is always a
fabricators / have the ability to grow problem for less
2. Stable business till Manufacturing at other and meet requirement enterprising firms.
1995, therefore a good places. of export market as the
2. New generation dont find
scope for improvement developed countries
the line fascinating due to
for future too. 2. New generation not may not like to enter in labour intensive and
interested in labour the low tech segment. toiling working conditions.
3. Weak presence of other intensive and toiling
industries, , working conditions 3. There are more
entrepreneurs interested attractions / alternatives
in manufacturing activity 3. Unprofessional way of assuring easy / better
finds no easy alternate Management . return on investments like
for investment. real estate, properties ,
trading etc.
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Keeping in view the present status of Technology, Quality, Quality & Management
Systems in the cluster, following vision has been found suitable for this cluster.
Technology Up-gradation
Standardisation & Design improvement
Personal Counseling / Training
Networking
Trust Building
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The Agricultural Implements Industries at Karnal has got good potential for
growth in domestic and export market provided strategic and technological
interventions are made in the important areas identified through analysis in the
chapters Analysis of Business Operation, Reality Trees, Industry Structure
Analysis and SWOT Analysis. An indicative list of Programmes / activities needed
to undertaken in the implementation phase, to achieve the vision evolved, is
given below:-
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1. Testing of raw material: The incoming material for the production system
need testing in terms of chemical composition. Hardness, Finish, geometrical
dimension and micro structure. The entrepreneurs are not aware of the
methods and procedures adopted for inspection of their raw material and
therefore an in depth intervention is required through training, workshops/
This will ultimately create awareness among entrepreneurs.
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generation, (iii) scale formation due to higher temperature and (v) high
degree of formation of iron oxide.
Before taking the component to the forging press, some of the units heat the
blanks in a tunnel type furnace. These furnaces are usually not designed properly
for uniform temperature throughout the tunnel. Many a times these furnaces do
not have any temperature regulation and control instrument in order to establish
uniform temperature in the zone where the blanks are passing through the
temperature prior to forging. The technology of design and manufacturing of the
kind of furnaces need up-gradation in order to improve quality of forging and
minimising the power cost.
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18. CDP (Agri. Imp. At Karnal) ACTION PLAN / Budget for the YEAR 200506
Sl. Particulars Total Amount Reqd. Funds Required From Remarks
No (Rs. In Lacs) DC (SSI) (Rs. In Lacs)
1
Market Development 0.21 0.17 Detail as per Annex-1
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Annex-1
S. Net- Total Source of Funds Expected
Objective
period
& Time
Category
Duration
No. working / Fund (Rs. In Lacs) Benefici
Activity Collaborati Reqd. ary Outcome
DC(SSI) SSIs SI / Fin
on (Rs. In Inst
Lacs)
1 Training Programme on Strategic Q-4; Asson/ 0.15 0.12 0.03 SMEs Better
Marketing challenges Activity 3 days BDS / EDI Market
Marketing
2 Awareness Prog. on -do- Q-4; Asson / 0.06 0.05 0.01 SMEs Export
Marketing through Internet I day BDS / Inquiries
I.
each
2 Awareness Programme on Awareness Q-3; Asson/ 0.10 0.10 SMEs Awareness
Energy Conservation about I day NPC /
Enegry PCRA
3 Study of present Process Q-2; EDII / BDS 0.50 0.50 SMEs Technology
II.
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Annex-2
ACTION PLAN / Budget for the YEAR 200506 (continuous from the previous page)
S. Net- Total Source of Funds Benefici Expected
Time period
Duration &
Category
Objective
No. working / Fund (Rs. In Lacs) ary
Activity Collaborati Reqd. DC(SSI) SSIs SI / Out come
on (Rs. In Fin.
Lacs) Inst
1 Feasibility Study for CFC To find Q-4 BDS 0.25 0.25 CDP Feasibility
III. Common
feasibility RTC)
of
2 Feasibility Study for CFC CFC Q-4 BDS 0.25 0.25 CDP Feasibility
(Proto Shop) ( HAU or
NRFMTTC)
1 Exposure Visit to Trust Q-3; Asson. / 1.10 0.80 0.30 Cluster Trust Bldg.
Developed Cluster Bldg. 6-7 Sucsessful
days Cluster
2 Workshop with supporting Exposure Q-4; PDTC / 0.20 0.15 0.05 Cluster Awareness
Capacity Building
4 Workshop with supporting Info. on Q-4 HAU/ 0.20 0.15 0.05 Cluster
Institutes (Product Design) New 1 day DWR/ EDII
Designs
5 Seminar on Benefits of Trust Q-3; BDS/ EDII 0.30 0.25 0.05 Cluster Networking
Consortia Approach & Bldg 2 day
Meeting with RM Suppliers
6 Computer, Fax, Printer, Capacity Q-2 Asson 0.80 0.80 Asson Function
UPS for Asson. Bldg Better
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Annex-3
ACTION PLAN / Budget for the YEAR 200506 (continuous from the previous page)
S. Net- Total Source of Funds Benefici Expected
Time period
Duration &
Category
Objective
No. working / Fund (Rs. In Lacs) ary
Activity Collaborati Reqd. DC(SSI) SSIs SI / Fin Out come
on (Rs. In Inst.
Lacs)
1 NDA services for Asson. / Better Q2 to Asson 1.00 0.75 0.25 Asson Asson
liaison & implement. Work Imple- Q-4 Function
mentatio better
n of CDP
Other Activities
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