004___Sharma by HariRaghav

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Date : 08.08.2008
               Measuring Consistency in Productivity and
             Policy Implications of Closure and Revival of
                    NTC Mills in Madhya Pradesh – A Study
                                                                   R.C. Sharma* & R.C. Tiwari**

        The Indian textile industries comprises of organized and unorganized textile industries.
        The organized sector comprises of textile spinning, weaving and composite mills of India
        which includes textile N.T.C mills of Madhya Pradesh. The unorganized sector comprises
        of powerloom sectores and handlooms sectors, which manufacture cotton and synthetic
        cloths. The study deals with the analysis of the working results, specially the productivity
        analysis of those N.T.C mills of Madhya Pradesh.

        (a) Introduction                                 or eliminated? If one is to recommend
                                                         policies to deal with a slow down in
        T   he globalisation has been challenging
            productivity in manufacturing
        organisations located anywhere in the
                                                         the measured rate of productivity
                                                         growth, it is important to be sure that
                                                         the measures are reasonably accu-
        world including India. Dynamic eco-
                                                         rate. Third, what additional data
        nomic environment, changing cus-
                                                         should be collected to improve the
        tomer needs, highly informed custom-
                                                         measure?. That will also help manag-
        ers and technological advancements
                                                         ers and consultants to understand
        have aided in compounding their woes.
                                                         productivity concepts and existing
        ‘Survival of the fittest’ is being under-
                                                         productivity measurement models.
        stood in its true sense. The
        organisations, which are able to utilise         The Global Competitiveness Report
        there full potential at all times in all         (1997) (GCR), of the world economic
        the spheres of their activities will only        *
                                                             Dr. R.C. Sharma, Reader & Head, School of
        survive, which is only possible by pay-                 Future Studies and Planning, Devi Ahilya
        ing greater attention to measure and                    University, Indore – 452 017 e-mail –
                                                                r.c.sharma@indiatimes.com & r.c.sharma.
        improve productivity.                                   fsp@dauni.ac.in.
                                                         **
                                                              Dr. R.C.Tiwari, Chairman & Managing
        Whenever any measure of economic
                                                               Director, Jute Corporation of India,
        performance becomes a source of                        Kolkatta; MD NTC Mills Kolkatta & Ex. GM
        concern, several sets of questions                     NTC Mills, Madhya Pradesh.
        naturally arise. First, just what does           The author acknowledge Mr. Kenale Ray, the
        the measure really mean? What are                    then CMD of NTC Mills-Madhya Pradesh,
        the underlying concepts? How well are                Mr. Ramchendran Pillai; CMD-NTC-
                                                             Madhya Pradesh and NTC LTD, New Delhi;
        they understood and used by econo-                   Mr. R.K. Dubey, Deputy Manager MIS-
        mists, public officials, entrepreneurs               NTC, Madhya Pradesh. Prof. Narain Sinha
        and workers? Second, how accurate                    and Prof. I.C. Gupta for their motivation
        and timely are the measures? What                    and help. Dr. H.K. Gupta and Mr. P. Awale
                                                             of School of Future Studies and Planning
        are the sources of errors in them?                   are also thankful for helping in data
        How, if at all, can errors be reduced                processing.
2       The Journal of Institute of Public Enterprise
        Vol.30, 3&4 (2007)



forum has ranked India at 45th posi-                    Roy and Verma (1999) have stated
tion among 53 participating countries,                  that the first phase of transition began
while China takes the 29th position.                    with new economic policy (1991) at
The database and methodology of                         national level and later the impact of
GCR are underlining the image of the                    the WTO at global level, the textile
nation, which would be influenced by                    industries has undergone momentous
the report. It elaborates the various                   churning. The winds of globalization
factors that contribute to competitive-                 and liberalization are sweeping across
ness and examines India’s position                      the globe and the current turnoil is
and performances. The globalization                     the second phase of reforms in textile
process, which has led to increased                     Industry. This affected the productiv-
competition and lower profit margins                    ity and performance of N.T.C mills in
in many industries, including textiles,                 Madhya Pradesh and it became es-
has prompted great concern among                        sential to close uneconomic units and
the business community as well as the                   to modernize viable units to improve
national policy makers.                                 their productivity and performance, to
                                                        meet the global competition, specially
This study deals with the analysis of                   in 2005, when the new textile trade
working performance of seven com-                       system replace the old in 2005 the
posite textiles, National Textile Corpo-                textile trade was integrated with glo-
ration (N.T.C) mills, which were na-                    bal competition in all fields, quota free
tionalized in the year 1974 and man-                    exports and foreign investments in all
aged by N.T.C (Madhya Pradesh) Ltd,                     the sectors.
Indore, and public sector enterprises.
The employance of public sector en-
                                                        Growth of Textile Industries in India
terprises in post-independent India
was primarily with a definite purpose                   In the second chapter, the growth of
of ushering in an allround rapid socio-                 textile industries including organized
economic development and simulta-                       and unorganized sector indicates that
neously to consolidate the benefit of                   there is substantial growth in the pro-
economic development and reconcili-                     duction of cotton, blended and non-
ation with distributive justice and the                 cotton yarn and fabrics. There are
need to catch up with the industrial                    substantial advantages to Indian tex-
revolution that occured long ago in                     tile industry in comparison to other
western countries.                                      countries. The low cost of production
                                                        and domestic availability of raw mate-
Batra and Bhatia (1994) have sug-                       rial made this industry most competi-
gested important strategies for public                  tive. The growth in household con-
sector reforms such as restructuring                    sumption, non-household domestic
of public sector units, closure of                      consumption; export market further
unviable units, partial disinvestments                  increased in all segments after aboli-
of equity, strengthening managerial                     tion of quota in 2005, with a vast
autonomy and modernization of units                     potential in the growth of international
etc. Pal (1997) highlights about pro-                   market.
ductivity prospective and productivity
system of public sector enterprises.
                 Measuring Consistency in Productivity and Policy Implications of Closure   3
                                 and Revival of NTC Mills in Madhya Pradesh – A Study



Profile of Textile Mills in India                 (IDBI) was appointed the operating
                                                  agency to study the working perfor-
The textile mills of India come under
                                                  mance of these mills along with their
organized textile Industry. There are
                                                  assets and liabilities. The Ahmedabad
spinning, weaving and composite tex-
                                                  Textile Research Association (ATRA)
tile mills in India. The growth of these
                                                  which is the technical research agency
textile mills were substantially affected
                                                  for textile mills, have analyzed the
due to growth of unorganized sector
                                                  working results and productivity of all
i.e. power looms and handlooms,
                                                  the seven units of Madhya Pradesh
where the cost of production was com-
                                                  and submitted a report to IDBI on the
paratively much lower, due to subsi-
                                                  basis of which revival plan of the N.T.C
dized power, cheap labour and other
                                                  (MP) Ltd., Indore was approved by
factors. Therefore, the manufacturing
                                                  BIFR in Feb.’02.
of cloth gradually shifted from textile
mills to power looms and handlooms.
This has resulted in the closure of               (b) Review of Literature
composite textile mills in public as well
as private sector due to their low pro-           Productivity and Technological
ductivity and high cost of production             Advancement
as compared to powerlooms and                     The globalisation of economies are
handlooms. The new spinning mills are             now facing challenges not only from
private sector with new technology and            the organisations of the European
high productivity that have been es-              countries but also from organisations
tablished in all parts of country to face         located anywhere in the world includ-
global competition. There is good                 ing India. Dynamic economic environ-
growth in spinning mills in the private           ment, changing customer needs,
sector for the last 25 years.                     highly informed customers and tech-
                                                  nological advancements have aided in
The N.T.C mills in Madhya Pradesh                 compounding their woes. ‘Survival of
were also composite mills. On account             the fittest’ is being understood in its
of huge losses, outdated technology               true sense now. The organisations,
and excess labour/staff resulting in              which are able to utilise full potential
high wage bill, low value product-mix             at all times in all the spheres of their
and low level of man-machine produc-              activities will only survive, which is only
tivity and general recession in the               possible by paying greater attention
textile industry coupled with acute               to managing productive efficiency for
competition from the (unorganized)                improving productivity it has to be
powerloom sector, these units of N.T.C            measured first. And whenever any
(MP) Ltd., Indore were referred to                measure of economic performance
Board for Industrial and Financial                becomes a source of concern, sev-
Reconstruction (BIFR) during the year             eral set of questions naturally arise.
1992-93 under the Sick Industrial                 First, just what does the measure re-
Companies Act 1985 (SICA). The In-                ally mean? What are the underlying
dustrial Development Bank of India                concepts? How well are they under-
4       The Journal of Institute of Public Enterprise
        Vol.30, 3&4 (2007)



stood and used by economists, public                    help in providing better services so as
officials, entrepreneurs and workers?                   to improve the standard of living.
Second, how accurate and timely are                     Economists consider productivity mea-
the measures? What are the sources                      surement as a vital tool for economic
of error in them? How, if at all, can                   growth and for increasing the real in-
errors be reduced or eliminated? If one                 come of all the sections of the soci-
is to recommend policies to deal with                   ety, while business executives view
a slowdown in the measured rate of                      productivity as an answer to increased
productivity growth, it is important to                 competition and a means to cut down
be sure that the measures are rea-                      cost of production and improve profit-
sonably accurate. Third, what addi-                     ability. Supervisors and engineers in
tional data should be collected to im-                  industrial undertakings link productiv-
prove the measure? This will also help                  ity with meeting of schedules of pro-
managers and consultants to under-                      duction, reduced rejections, better
stand productivity concepts and exist-                  quality of goods manufactured, de-
ing productivity measurement models.                    creased expenses and improved yield
                                                        of material etc. Workers of an organi-
At the international level, concern for                 zation associate productivity with
productivity is mainly aimed at estab-                  higher wages, safer work environment
lishing competitiveness against the                     and increased quality of work life,
produce of different countries in terms                 while suppliers take it as continuous
of quality, cost of production, technol-                orders and prompt payment. For cus-
ogy and service provided to the cus-                    tomers productivity means lower cost,
tomer. At national level, productivity is               best quality, higher reliability, safety
considered as an index of economic                      and timeliness of delivery and for a
growth. The basic emphasis is to im-                    common man it could be more money
prove the living standard of the citi-                  and more leisure time.
zens.
                                                        To attend the minimum cost, the pro-
Another dimension of concern at the                     duction organization must utilize its
national level is to conserve the scarce                output in the most efficient manner
resources and to encourage deploy-                      (technical efficiency) and choose a
ment or use of available resources in                   combination of inputs which recog-
such a way that their yield is maxi-                    nizes input prices and marginal prod-
mized. Thus at the enterprise level,                    ucts (allocative efficiency). A firm is
main concern is towards maximum                         said to be more technically efficient
utilization of resources, lower unit cost,              than other if it consistently produces
high returns on investment, higher                      larger quantities of output from the
market share and improved corporate                     same quantities of measurable inputs.
image. For public administrators/ bu-                   Differences in technical efficiency
reaucrats an increase in productivity                   among (groups of) firms can, there-
will generate more funds, increase the                  fore, be captured by qualifying their
revenue of the state, which in turn can                 differences in technology.
                  Measuring Consistency in Productivity and Policy Implications of Closure   5
                                  and Revival of NTC Mills in Madhya Pradesh – A Study



Factors influencing Productivity                   cepts are highly varied and are still
                                                   not clear. Anything that happens to do
Factors influencing productivity can be
                                                   something with the process of man-
classified broadly into two categories
                                                   agement, organisational effectiveness,
as internal or controllable factors and
                                                   resource utilisation, performance and
external or uncontrollable factors.
                                                   efficiency can be linked to productiv-
External factors such as, government
                                                   ity.
policies and institutions, infrastructure,
socio-economic conditions, socio-cul-              European Economic Co-operation
tural factors, availability of natural re-         (EEC) proposed one of the oldest for-
sources etc. affect productivity. Inter-           mal definitions in 1950 as “productiv-
nal factors can be divided in hard and             ity is the quotient obtained by dividing
soft ones (Shaheed, 1994). Hard fac-               output by one of the factors of pro-
tors include product, equipment, raw               duction. In this way, it is possible to
material etc., while soft factors are              speak of the productivity of raw mate-
people, organizational system and                  rial, energy, human resource, in rela-
procedures, management style and                   tion to total output is being consid-
work methods.                                      ered. When the word productivity is
                                                   used without further qualification, the
Productivity                                       productivity of labour is understood.”
The concept of production and pro-                 Rostas (1955) also gave a similar
ductivity are totally different. Produc-           view. Ernst(1956) in his article raised
tion refers to absolute output whereas             questions as to how productivity
productivity is a relative term. Beri              changes could be accounted for from
(1962) defines production as volume                the input factors of men, machine and
or quantum of output free from any                 material. He opines that effect of indi-
price fluctuations of inputs. The con-             vidual factors like labour, material,
ventional concept visualises produc-               technology etc. on productivity can be
tivity as the ratio of the production of           studied and suggested a methodology
a commodity and its inputs. Output is              for     integrating    these    inputs.
commonly understood as the goods                   Tsujimura(1963) also expressed the
produced (or sold) or value added. The             similar views on productivity. He clas-
inputs traditionally considered are the            sified productivity as labour productiv-
labour, material and energy etc. And,              ity, physical productivity and value
therefore in this study, Material Factor           productivity. Instead of single ratio,
Productivity (MFP), Energy Factor Pro-             multi-ratio approach was suggested by
ductivity (EFP), Human Resource                    Siegal(1955). He considered produc-
Factor Productivity (HFP), and Total               tivity as “class of conceivable mea-
Factor Productivity (TFP), are calcu-              sures depicting output per unit of as-
lated as productivity measures. Pro-               sociated input in a sequence of com-
ductivity is probably the most widely              pared period”.
discussed, yet least understood con-               One of the earliest models on produc-
cept of present management era (Sink,              tivity measurement was given by
1985). It has several beliefs. The con-            Kendrick and Creamer (1965). He
6       The Journal of Institute of Public Enterprise
        Vol.30, 3&4 (2007)



states that the term ‘productivity’ has                 inputs’ and ‘determination of best com-
been used loosely to describe the                       bination of resources’. Smith(1973)
relationship, usually in ratio form, be-                suggested productivity as a ratio of
tween output and any or all of the                      output to input but has expanded the
associated inputs in real terms. The                    inputs to include technology besides
concept given by Kendrick and                           material, labour and utilization of ma-
Creamer left a profound impact and                      chine.
the scope of concepts of productivity
got widened to include reference to                     Stewart (1978) defined productivity as
any or all of the inputs. Crag and                      the ratio of performance towards or-
Harris(1973) and Greenberg(1973)                        ganizational objectives to the totality
also agreed to the basic idea given                     of input parameters. This was a major
by Kendrick and Creamer with limited                    departure from the conventional views
variations to the identification and                    and brought out the concept of ‘per-
quantification of inputs.                               formance’ as output. In a similar con-
                                                        text of productivity Mali(1978) defined
The concept of use of production func-                  it as “productivity is the measure of
tion for measurement of productivity                    how well resources are brought to-
was proposed by International Labour                    gether in organizations and utilized for
Organization(ILO) in the year 1967 by                   accomplishing a set of results. Pro-
giving a formal definition of productiv-                ductivity is reaching the higher level
ity as “the ratio between the output of                 of performance with the least expen-
wealth produced and the input re-                       diture of resources.” He further elabo-
sources used up in the process of                       rates that it is a ratio of effectiveness
production.” Working on the same                        and efficiency where effectiveness is
concept Fabricant(1973) tried to sim-                   related to performance and efficiency
plify the concept of productivity and                   is to resource utilization. Roll and
hypothesized that “productivity refers                  Sachish (1981) to include technologi-
to a comparison between the quantity                    cal progress as well in the output that
of goods or services produced and the                   broaden the scope. Gold(1982) pro-
quantity of resources employed in turn-                 posed that productivity analysis should
ing out these goods or services.”                       help in appraising the effects of
Ramsay (1973) further advanced the                      changes in various physical input-out-
concept of productivity. He defined                     put relationships on specified perfor-
productivity as “productivity is the                    mance objectives subject to manage-
optimization (or maximization of eco-                   rial control. He emphasized on three
nomic utilization) of all available re-                 specific dimensions as specified per-
sources, investigation into the best                    formance objectives, effect of changes
known resources and generation of                       in input-output relationships and pro-
new resources through creative think-                   ductivity improvement programmes.
ing, research and development and by                    Sardana and Prem Varat (1983) have
the use of all possible improvement                     also expressed the similar views and
techniques and methods.” He consid-                     recommended it to serve as a tool in
ered productivity as ‘optimization of                   the hands of management to take
                 Measuring Consistency in Productivity and Policy Implications of Closure   7
                                 and Revival of NTC Mills in Madhya Pradesh – A Study



corrective steps for productivity im-             principles of comparison. With a ba-
provement. Scharf (1984) recom-                   sic assumption that measurement
mends systems approach and defines                means comparison Allard et al.(1971)
productivity as output expressed in               refer to the following three ap-
terms of how well the systems func-               proaches.
tion is achieved divided by all the in-
put resources consumed by the sys-                •    Comparison of current perfor-
tem (or its sub-systems).                              mance with a historical base.

Productivity Measurement
                                                  •    Comparison of performance be-
                                                       tween entities.
Productivity measurement is the pro-
cess of obtaining symbols to repre-               •    Comparison of performance with
                                                       a target.
sent the properties of objects, events
or states (Manson and Burton                      In this paper, comparison of perfor-
Swanson, 1981). Since productivity                mance of seven N.T.C mills was made
has different meaning for different               and coefficient of variation calculated
people in different context, the follow-          to find out the consistency in their
ing logical steps should be taken up              operation.
in sequential order to measure the
productivity.                                     Considering output as value of pro-
                                                  duction, a large number of models
•   The concept of productivity should            have been formulated with a little
    be clearly understood.                        modification or extension. Ruist (1961)
                                                  proposed measurement of productiv-
•   The choice or selection of mea-
                                                  ity based on production index, which
    sure should be dependent on
                                                  is a ratio of production of current pe-
    conceptualisation of productivity.
                                                  riod with production of base period.
                                                  Tsujimura (1963) has suggested two
•   The characteristics or attributes of
                                                  measures of productivity as physical
    productivity should be identified.
                                                  productivity, which is the ratio of quan-
The objectives of measuring produc-               tity of production with labour expended
tivity should be clearly laid down.               and value productivity, which is the
Selection of appropriate objectives is            ratio of cost of production with labour
sequel to the user’s disposition and              expended. Kendreack and Creamer
takes into cognisance requirements of             (1965) have proposed that productiv-
the purpose and the context of the                ity can be measured with the help of
measure and as to who would use the               productivity indices like labour, mate-
measure and for what purpose. Mea-                rial, energy etc.
surement, in brief, also means com-
parison. Since productivity is a rela-            Major input factors considered are the
tive concept, the most appropriate                labour, capital and material but some
scale for productivity measurement is             of the authors have regarded produc-
Ordinal Scale – which is based on the             tivity of labour or more commonly
8       The Journal of Institute of Public Enterprise
        Vol.30, 3&4 (2007)



labour productivity as main index of                    their performances for sometime but
productivity of an organization. Those                  after that no funds were invested for
who have strongly advocated the con-                    modernization of these mills, which
cept of labour productivity are, Ruist                  entailed their lower productivity and
(1955), Rostas (1955), Balakrishna                      increase in losses.
(1958), Greenberg (1961), Siegel
(1961), and Roll and Cohen.                             Gherzi Giuseppe (1999) has stressed
                                                        on increase in capacity, modernization
                                                        of spinning, weaving and processing
Recognizing   the   Impact                   of
                                                        sector to make the Indian textile in-
Technology on Productivity,
                                                        dustry more competitive. Shrivastva
Edosomwam (1987) proposed Tech-                         Vivek (2000) stated that the produc-
nology-oriented Total Productivity Mea-                 tivity results for textile sectors, points
surement Model (TOTPMM). Input                          towards a fall in productivity growth
variables of this model are labour, ma-                 rates. The productivity results along
terial, capital, energy, development ex-                with other technical and financial pa-
penses, computers, robotics, and other                  rameters of N.T.C Mills in Madhya
forms of technology, administrative                     Pradesh also confirm poor perfor-
expenses and re-training expenses.                      mance of these mills are mainly due
While outputs of this model are con-                    to their old technology. The 27th an-
sidered as value of technological and                   nual report N.T.C. (M.P.) did also
conceptual ideas, partial units pro-                    showed huge losses of these N.T.C
duced, finished unit produced.                          mills of Madhya Pradesh.

Productivity of Textile Mills                           Shanmuganandam, (2003) has men-
                                                        tioned that in the wake of liberaliza-
Sharma Hari Raghu Rama (1991) has                       tion policies and globalization, the di-
explained the process of manufactur-                    rections and management of textile
ing of cloth from its raw material cot-                 spinning mills should acquire a fresh
ton/ man made fiber and described                       dynamism. He compared the quarterly
each stage with its machine produc-                     performance of about 120 to 200 mills
tivity and quality of finished products                 in his study including high tech ex-
of textile mills of N.T.C working in                    port- oriented units spread all over
South India. He stated that the tech-                   India. The basic parameters for com-
nology and speed of the machines are                    parison was contribution, sale value,
mainly responsible for higher produc-                   raw material cost, incidental of waste
tivity and good quality of cloth.                       and incidental losses, salaries and
                                                        wages cost as percentage of sales
The corporate plan (1992-1997) of                       revenue, power cost, quality and pro-
N.T.C has suggested for investment                      ductivity. He concluded that “a capac-
in the mills of N.T.C. working in all                   ity utilization of 95 per cent and mini-
states of India including Madhya                        mum production per spindle of more
Pradesh. These investments for par-                     than 85 grams (40s conversion) must
tial modernization of these mills have                  be maintained.”
shown considerable improvement in
                  Measuring Consistency in Productivity and Policy Implications of Closure   9
                                  and Revival of NTC Mills in Madhya Pradesh – A Study



Chandran (2003) stated that the mar-               mills (2002-03), have compared the
ket economy globalisation and inter-               N.T.C mills of Madhya Pradesh (pub-
national competition warranted the                 lic sector mills) with private sector mills
mills to go for cost reduction in all the          and found them lower in ranking, loss-
areas. The cost of raw material, labour            making units with low productivity
and energy contribute to more than                 mainly due to very old technology.
90 per cent of the production value in
a spinning mill and hence the produc-              The review concludes that the textile
tion value in a spinning mill through              mills of the country are using out-dated
conserving energy by conducting en-                technology and in present day com-
ergy audit is most important area in a             petitive environment, speedy modern-
textile mill to improve energy efficiency.         ization and technological upgradation
                                                   are essential to improve their produc-
The review of literature with respect              tivity for their survival.
to future implications in textile indus-
try suggested for technological                    Productivity (management) is impera-
upgradation to improve the productiv-              tive in the present day business envi-
ity of textile mills of India including            ronment. In a globally competitive
N.T.C mills of Madhya Pradesh. The                 world of work, higher productivity is
various eminent researchers has sug-               the only basis of survival and growth.
gested productivity analysis based on              To manage productivity, unless cor-
few factors will not serve the purpose.            rectly measured and expressed in right
The concept of productivity with re-               form it cannot be managed. In this
spect to textile mills require to con-             study, the productivity indices calcu-
sider various socio-economic factors               lated reveals a new concept for analy-
such as work culture, energy conser-               sis of productivity data of a textile mill.
vation, wage structure, product mix,               The consistency in operation of a
market demand, future trends etc. to               manufacturing textile mills is very im-
arrive at a particular result.                     portant in this competitive situation,
                                                   and, therefore, coefficient of variation
Chandran Raju (2004) stated that the               is calculated in respect of each mills
textile industry of India is expected to           to have a comparative analysis of
grow significantly in the years to come            there performance. This analysis is im-
following the post-WTO era, with the               portant to form a criteria for closer/
dismantling of tariff barriers. India’s 35         revival of textile mills.
millions spindles are still obsolete and
requires urgent modernization. Prayag              Methodology
(2002) has also recommended for
modernization of N.T.C mills in                    Following the review of literature a
Madhya Pradesh in view of old and                  naïve set of indices for measuring
obsolete technology of these mills.                partial factor productivity and total fac-
Ahemedabad Textile Industry’s Re-                  tor productivity are the following:
search Association in their 22nd report            (a) Material Factor Productivity (MFP)
on financial performance of spinning
10      The Journal of Institute of Public Enterprise
        Vol.30, 3&4 (2007)



(a) Material Factor Productivity (MFP)                  ing various productivity indices.
                  Product Value
        =                                               The data for five closed mills (closed
               Raw Material Cost                        during 2002-2003) from 1985-86 to
                                                        1998-99 and the data for two revival
(b) Energy Factor Productivity (EFP)
                                                        mills are from 1985-86 to 2002-2004
                Product Value                           for comparison.
        =
                 Energy Cost
                                                        The product value indicates total real
(c) Human Resource Productivity                         value of finished produced. The mate-
(HFP)                                                   rial cost is total cost of raw material
             Product Value                              consumed for production of finished
       =                                                goods. The energy cost is the total
          Payment to Employees
                                                        amount of power and fuel consumed
(d) Total Factor Productivity (TFP)                     for production. The total payment to
                  Product Value                         employees includes wages and sala-
         =                                              ries and other direct financial benefits.
                    Total Cost                          And the total cost includes all fixed
                                                        and variable cost.
Coefficient of Variation
                                                        The edited data sheets for calculating
In order to show the impact of global-                  various productivity indices and the
ization on productivity in public enter-                consistency, are mentioned below for
prises with reference to N.T.C mills in                 each individual mill separately:
Madhya Pradesh, the time-series of
above mentioned productivity indices                    Empirics
are prepared separately for all indi-
vidual mills.                                           (a) Productivity and Consistency in
                                                        Productivity
Apart from measures of productivity
indices, the time-series consistency                    The time series productivity and con-
related with each index for all mills                   sistency are reported as follows : -
are also calculated using a simple
methodology. The time-series consis-                    Consistency       and   Performance
tency of productivity reveals the rela-                 Ranking
tive performances measure of mills
and suggests suitable policy implica-                   On the basis of productivity measures
tion of closure / revival under financial               and consistency in productivity indi-
and other economic and non-economic                     ces reported in the section of empiric,
constraints.                                            the main empirical analysis is related
                                                        with the performance ranking of the
                                                        seven mills. The performance ranking
Data
                                                        can be analysed through various re-
Annual reports and M.I.S reports of                     sults of consistency in productivity,
N.T.C – (Madhya Pradesh) have been                      based on simple concept of time-se-
considered as database for measur-
                    Measuring Consistency in Productivity and Policy Implications of Closure        11
                                    and Revival of NTC Mills in Madhya Pradesh – A Study



     Table – 1 : Edited Data for Measuring Productivity of IMU Mills, Indore
                                                                                           (Rs. in Lacs)
   Year        PV        RM         ENR        W&S      STORES       ADMN         S&D        T COST
 1985-86    1811.38     653.52     217.86      676.05    227.25        41.55       33.76      1849.99
 1986-87    1354.87     428.08     213.22      756.92    208.40        39.52       28.89      1675.03
 1987-88    1238.23     615.14     194.59      628.22    160.09        46.09       27.70      1671.83
 1988-89    1577.43     735.87     256.48      649.98    189.45        59.72       27.84      1919.34
 1989-90    1688.06     699.18     286.73      682.65    224.29        55.39       27.13      1975.37
 1990-91    1726.77     674.96     257.38      770.71    221.89        53.06       28.52      2006.52
 1991-92    1766.54     777.64     266.79      779.33    211.97        81.95       38.13      2155.81
 1992-93     770.65     394.19     153.10      671.70        81.86    103.29       18.83      1422.97
 1993-94     372.10     208.63       81.85     516.97        19.34     64.91        5.71       897.41
 1994-95       96.51       7.32      63.31     534.38         8.99     73.28        0.44       687.72
 1995-96     173.19       70.53      69.39     566.04        18.26     90.54        0.78       815.54
 1996-97     254.23     178.96       75.52     541.52        11.26     41.12        2.62       851.00
 1997-98     391.77     284.31       78.57     550.56        14.98     53.37        2.32       984.11
 1998-99       40.26      28.75      11.22     584.20         2.34     53.62        0.61       680.74
 1999-00        8.16       0.00       0.00     601.36         0.00     55.50        0.02       656.88
 2000-01        5.32       0.00       0.00     606.16         0.00     46.24        0.00       652.40
 2001-02       10.38       0.00       0.00     625.52         0.00     45.26        0.00       670.78
 2002-03        7.97       0.00       0.00     488.71         0.00     72.10        0.00       560.81
 2003-04        6.68       0.00       0.00      79.51         0.00       5.80       0.00        85.31

Source : Annual Reports and MIS Reports, IMU Mills, Indore

                                         Abbreviations
 PV             Production Value
 RM             Raw Material
 ENR            Power and Fuel
 W&S            Wages and Salaries
 STORE          Store Cost
 ADMN           Administration Expenses
 S&D            Selling and Distribution Expenses
 T. COST        Total Cost

ries coefficient of variation. The fol-              measures of consistency is summa-
lowing table is a snapshot of consis-                rized as follows:
tency in productivity calculated in sec-
                                                     With reference to material factor pro-
tion (a) of productivity and consistency.
                                                     ductivity (MFP) and its time-series
With the help of these results the                   consistency the best mills is BNCM –
performance ranking is possible. The                 Rajnandgaon, the second is BTM
four types of ranking based on four                  Burhanpur, third is NBT- Bhopal, is
12          The Journal of Institute of Public Enterprise
            Vol.30, 3&4 (2007)



       Table – 2 : Edited Data for Measuring Productivity of KM Mills, Indore
                                                                                            (Rs. in Lacs)
     Year         PV          RM         ENR        W&S       STORES     ADMN      S&D        T COST
 1985-86        1217.41      469.60     140.00      464.89     105.97      28.46    23.55      1232.47
 1986-87         910.31      306.94     144.91      550.20     149.28      29.76    25.95      1207.04
 1987-88        1053.36      477.99     141.18      454.08     127.63      35.64    26.53      1263.05
 1988-89        1331.58      594.91     182.66      490.12     146.77      47.55    27.12      1489.13
 1989-90        1481.47      576.80     286.73      501.39     185.20      42.67    23.89      1616.68
 1990-91        1571.58      555.20     207.05      580.78     193.70      44.64    32.63      1614.00
 1991-92        1605.05      707.42     245.49      642.24     190.16      77.40    40.77      1903.48
 1992-93         668.39      319.27     139.76      530.51      66.15      80.98    16.29      1152.96
 1993-94         205.94      119.10       63.20     429.30      15.55      54.75     3.34       685.24
 1994-95          11.32        0.00       27.99     450.45       4.32      67.18     0.10       550.04
 1995-96         112.32       50.49       54.25     483.73      11.44      90.04     0.93       690.88
 1996-97         203.52      142.15       53.11     464.94       9.03      34.27     1.62       705.12
 1997-98          70.43       52.46       36.07     489.18       5.88      43.45     0.76       627.80
 1998-99          15.35       12.67        6.60     525.27       1.33      44.29     0.42       590.58
 1999-00           7.61        0.00        0.00     546.92       0.00      47.80     0.00       594.72
 2000-01           0.95        0.00        0.00     565.59       0.00      40.83     0.00       606.42
 2001-02           4.37        0.00        0.00     577.41       0.00      39.26     0.00       616.67
 2002-03           6.14        0.00        0.00     130.11       0.00      23.83     0.00       153.94
 2003-04          42.71        0.00        0.00      18.03       0.00       1.49     0.00        19.52

Source : Annual Reports and MIS Reports, KM Mills, Indore

KMM Indore, fifth is HM – Ujjain, sixth                     is academically justified. Due to lim-
is IMUM – Indore and Seventh, i.e.,                         ited resources and other economic and
poorest is STM – Indore ( as men-                           non-economic constraints this study
tioned in column 1 on EFP – Consis-                         confirms the revival of relatively best
tency, HFP- consistency and TFP –                           two mills, i.e., NBT – Bhopal and BTM
consistency are reported in column 2,3                      – Burhanpur.
and 4, respectively,
                                                            The productivity measures reported in
Aggregate (final) ranking based on                          section 5.3 also confirm that the per-
total marks of the four types of rank-                      formance of these mills was relatively
ing is also reported here. Best perfor-                     better up to the year 1991-92 as com-
mance mill is given 10 marks and                            pared to the period from 1992-93 to
poorest is given 4 marks ( simple rela-                     2003-04.
tive marks/ weights). Hence the final
                                                            The impact of globalisation on produc-
ranking is as follows:
                                                            tivity in public enterprises like N.T.C
Relative performance ranking in pro-                        mills of Madhya Pradesh reveals that
ductivity reveals that the decision to                      it is either urgent to close down the
close down the mills ranked at 3 to 7                       sick mills or it is essential to revive/
                    Measuring Consistency in Productivity and Policy Implications of Closure        13
                                    and Revival of NTC Mills in Madhya Pradesh – A Study



     Table – 3 : Edited Data for Measuring Productivity of ST Mills, Indore
                                                                                           (Rs. In Lacs)
   Year       PV         RM         ENR        W&S      STORES       ADMN         S&D        T COST
 1985-86     759.26     300.83     100.68      350.05        83.01     18.19       11.54       864.30
 1986-87     645.33     227.33     102.91      394.38        79.16     19.90       12.46       836.14
 1987-88     710.27     356.07       99.73     341.41        74.40     27.46       14.21       913.28
 1988-89     836.78     414.09     106.84      354.92        88.23     32.47       15.45      1012.00
 1989-90     842.52     357.80     220.48      364.68        84.97     29.75       16.45      1074.13
 1990-91     791.64     319.33     115.05      412.43        88.46     31.84       16.86       983.97
 1991-92     945.68     473.35     123.49      459.62       114.32     48.85       20.21      1239.84
 1992-93     349.29     208.95       71.42     357.84        33.92     60.78       11.00       743.91
 1993-94      80.64        1.07      46.85     242.81        12.13     36.65        1.84       341.35
 1994-95      13.15        1.66      20.39     254.86         2.91     42.77        0.13       322.72
 1995-96     106.63      51.88       41.18     270.90        12.36     53.81        0.24       430.37
 1996-97     203.05     163.04       54.51     271.81        11.10     25.36        1.74       527.56
 1997-98      82.50      60.63       32.92     272.05         3.07     28.91        0.66       398.24
 1998-99        2.06       0.56       1.92     299.50         0.53     31.73        0.03       334.27
 1999-00        0.05       0.00       0.00     295.27         0.00     28.01        0.00       323.28
 2000-01        0.37       0.00       0.00     292.75         0.00     26.59        0.00       319.34
 2001-02        5.32       0.00       0.00     309.94         0.00     20.65        0.00       330.59
 2002-03        2.49       0.00       0.00      74.68         0.00     11.98        0.00        86.66
 2003-04        0.40       0.00       0.00      17.59         0.00       1.31       0.00        18.90

Source : Annual Reports and MIS Reports, ST Mills, Indore

modernize them to compete with effi-                 cember 2004. A new regime of fron-
ciency. For closure/modernization,                   tier-free global trade in textiles is in
value of surplus assest and land, cost               progress.The textile industries
of revival, consistency in productivity,             throughout the world will be required
work culture, location, role of respec-              to go in for state-of-the-trade technol-
tive labour union and the role of gov-               ogy for textile fabrication to withstand
ernment are important factors.                       and sustain the blasts of fierce
                                                     completion. This would call for heavy
Conclusion and Future Policy                         investment on modernization, expan-
Implications                                         sion and re-equipment.

The textile and allied industries are                The Tenth-Five-Year Plan of India
on the threshold of a major transfor-                (2002-2007) projects a GDP growth
mation. The Agreement on Textiles                    rate of 8 per cent for which an indus-
and Clothing, which imposed trading                  trial growth of 10 per cent is envis-
restrictions on textile producing and                aged. The Indian textile industry with
importing countries for over four de-                its high capabilities and potential is
cades, is already terminated in De-                  an obvious choice for special atten-
14          The Journal of Institute of Public Enterprise
            Vol.30, 3&4 (2007)



      Table – 4 : Edited Data for Measuring Productivity of Hira Mills, Ujjain
                                                                                            (Rs. in Lacs)
     Year         PV          RM         ENR        W&S       STORES     ADMN      S&D        T COST
 1985-86         846.97      326.60     118.98      371.03     120.09      26.42    13.10       976.22
 1986-87         579.32      195.83     105.91      410.00      82.13      28.66     9.06       831.59
 1987-88         722.37      336.68     113.18      417.86      96.74      37.04    15.84      1017.34
 1988-89         914.99      443.78     177.50      444.45     108.50      42.22    15.57      1232.02
 1989-90         936.66      386.28     124.28      432.72     122.58      33.99    10.95      1110.80
 1990-91         900.47      354.04     142.84      453.74     119.72      34.58    12.38      1117.30
 1991-92         873.91      424.80     137.07      457.94      95.93      49.93    15.38      1181.05
 1992-93         333.99      192.54       83.60     403.59      22.22      58.26     4.97       765.18
 1993-94         123.41       61.80       56.73     370.51       8.73      48.49     1.44       547.70
 1994-95          63.05        0.00       51.70     333.11       7.69      54.62     0.00       447.12
 1995-96         144.10       26.19       60.85     332.73      21.50      80.22     0.17       521.66
 1996-97         129.41       29.48       67.16     321.98      16.73      26.77     0.15       462.27
 1997-98         379.64      272.17       70.81     295.44      19.44      33.34     2.05       693.25
 1998-99          52.24       20.63       27.50     270.61       4.65      34.32     0.33       358.04
 1999-00           5.30        0.00        0.00     286.86       0.00      32.27     0.00       319.13
 2000-01           9.25        0.00        0.00     288.66       0.00      23.20     0.00       311.86
 2001-02          81.17       62.54       17.79     299.89       3.81      25.85     0.17       410.05
 2002-03          16.50        0.00       10.50     144.57       0.01      21.70     0.22       177.00
 2003-04           8.62        0.00        0.00      24.85       0.00       8.75     0.00        33.60

Source: Annual Reports and MIS Reports, Hira Mills, Ujjain

tion. In order to achieve these objec-                      powerloom sector, which accounts for
tives, large investments are required                       68 per cent of the total production of
in technology and modernization in                          cloth in the country, is in urgent need
critical areas particularly in spinning,                    of modernization. The textile package
weaving, knitting, and finishing and ap-                    announced in the central government
parel sectors. The technology                               included modernization of the weav-
upgradation scheme has been intro-                          ing sector with 2.50 lakhs semi-auto-
duced to encourage modernization                            matic/automatic shuttle looms and
and technology upgradation in the                           50,000 shuttleless looms. There are
critical segments of textile and jute                       about 2,324 processing units in the
industries.                                                 country of which 83 belong to com-
                                                            posite units, 165 to processing houses.
From the total of about 38 million                          Of these, 227 units are modern, 1,775
spindles currently available, 10 million                    are of medium technology and 322 are
spindles are to be modernized. In                           obsolete units. Modernization of fin-
addition, about 3 million new spindles                      ishing units will call for a substantial
have to be installed during the tenth                       financial outlay.
plan period. The decentralized
                     Measuring Consistency in Productivity and Policy Implications of Closure        15
                                     and Revival of NTC Mills in Madhya Pradesh – A Study



Table – 5 : Edited Data for Measuring Productivity of BNC Mills, Rajnandgaon
                                                                                            (Rs. in Lacs)
     Year       PV        RM         ENR        W&S      STORES       ADMN         S&D        T COST
    1985-86    832.51    302.08       90.78     325.42      94.41       27.67       15.13       855.49
    1986-87    527.63    203.85       68.54     322.64      60.71       25.87       10.87       692.48
    1987-88    898.49    376.62     100.25      381.64    130.99        39.33       17.41      1046.24
    1988-89   1316.67    546.93     148.62      463.18    179.64        54.61       24.10      1417.08
    1989-90   1364.62    499.88       77.34     468.06    193.85        68.36       24.97      1332.46
    1990-91   1396.86    461.75     150.88      523.81    182.76        58.83       28.99      1407.02
    1991-92   1657.98    640.12     186.07      598.13    258.78        87.74       37.24      1808.08
    1992-93   1305.12    585.63     197.54      556.85    190.30       104.01       33.05      1667.38
    1993-94   1403.14    533.04     253.54      545.52    193.44        70.71       30.99      1627.24
    1994-95    542.99    200.80     138.02      552.89      60.22       72.64       20.14      1044.71
    1995-96    490.70    176.35     148.09      596.40      46.14       86.54        9.71      1063.23
    1996-97    457.88    117.50     179.92      552.91      56.11       53.99       13.17       973.60
    1997-98    526.16    214.19     195.84      582.37      49.21       66.52       15.63      1123.76
    1998-99    428.59    217.48     158.22      626.86      35.86       60.25       13.10      1111.77
    1999-00     27.76       2.47      30.70     621.83       3.75       62.11        0.97       721.83
    2000-01      2.47       0.33       0.00     602.08       0.00       45.87        0.00       648.28
    2001-02      6.95       3.42       0.00     602.44       0.00       47.51        0.00       653.37
    2002-03      5.54       0.72       0.00     331.92       0.00       49.20        0.00       381.84
    2003-04      2.38       0.00       0.00      28.69       0.00         4.62       0.00        33.31

Source : Annual Reports and MIS Reports, BNC Mills, Ragnandgaon
                                                      iers to the world. With our rich heri-
•     Scheme for strengthening and
                                                      tage of fabric production, the skills
      expanding the knitting sector, tech-
      nical textiles, and woolen and jute             inherent in our country, the vast pool
      industries are to be taken up.                  of talent and labour, there is no doubt
                                                      that India will shine as a beacon.
•     The textile engineering Industry is             Consolidation, progress, investments,
      to be encouraged to modernize                   retail, and infrastructure, technology.
      and offer state-of-the-art technol-             all of these are the drivers towards
      ogy to the textile industry.                    the Indian success story. Five years
                                                      from now, the industry is likely to be
•     Domestic research and develop-                  very different from what it is today.
      ment are to be initiated through                The Indian textile industry will have to
      focused textile machinery R&D                   think and work long and hard to
      efforts.                                        achieve pre-eminence in world trade.
Explosive growth is foreseen for the                  With global competition in all fields, a
country in the textile field and India                quota free export, foreign investment
will emerge as one of the major cloth-                in all sectors, it is necessary to look
                                                      at the big picture.
16           The Journal of Institute of Public Enterprise
             Vol.30, 3&4 (2007)



       Table – 6 : Edited Data for Measuring Productivity of NBT Mills, Bhopal
                                                                                           (Rs. in Lacs)
      Year         PV          RM         ENR        W&S         STORES   ADMN     S&D       T COST
     1985-86      772.05      297.86       80.22     262.93       80.25    16.20   11.84       749.30
     1986-87      626.60      202.41       81.95     294.93       70.03    16.33   10.22       675.87
     1987-88      745.40      324.02       92.20     293.62       77.32    26.98   11.21       825.35
     1988-89      890.33      408.85       95.95     312.09       88.69    35.45   12.12       953.15
     1989-90      939.63      385.11     141.83      319.97       93.33    33.31   12.98       986.53
     1990-91      898.52      317.82     102.46      346.19       98.27    30.80   16.50       912.04
     1991-92     1021.47      477.29     123.82      390.27      122.77    46.44   18.15      1178.74
     1992-93      635.36      347.17       86.53     343.68       51.68    57.62   12.43       899.11
     1993-94      493.15      270.40       75.23     280.93       28.66    38.57    4.74       698.53
     1994-95      105.23       40.30       37.50     300.20        6.73    43.85    1.13       429.71
     1995-96      200.30       74.15       69.84     316.08       19.79    56.87    0.48       537.21
     1996-97      429.40      278.04       90.67     337.85       25.44    33.74    2.76       768.50
     1997-98      554.61      331.71     109.09      404.14       33.74    44.06    4.33       927.07
     1998-99      440.37      233.93     111.81      445.83       35.22    45.98    3.76       876.53
     1999-00      234.30       48.40     107.22      442.70       24.57    42.57    1.55       667.01
     2000-01      320.04      127.50     101.54      442.61       28.08    38.55    1.63       739.91
     2001-02      233.56       69.89     101.49      444.71       30.85    36.91    1.02       684.87
     2002-03      372.38      161.71     114.04      482.34       31.10    63.80    1.56       854.55
     2003-04      763.95      518.15     156.51      490.70       29.18    63.11    6.07      1263.72

Source : Annual Reports and MIS Reports, NBT Mills, Bhopal
The public sector enterprises have                           •   Promotion of private sector com-
been suffering from high cost of pro-                            petition,
duction, low level of technology, ex-
cess manpower, stringent labour laws,                        •   Reduction of budgetary support,
                                                                 safety,
low capacity utilization, lower produc-
tivity and low consistency in opera-                         •   Creation of safety net to protect
tion. Therefore, a comprehensive re-                             labour,
forms of public enterprises has been                         •   Partial disinvestments of equity,
considered necessary to operationa-                          •   Restructuring and closure of
lise in consonance with the overall                              unviable enterprises, and
structural changes. The key elements
of the strategy to the reform of public
                                                             •   Improvement in productivity, cost
                                                                 reduction,         technological
sector enterprises has put forward                               upgradation, optimizing product
following measures to make them prof-                            mix as per market demand and
itable and globally competitive.                                 maximum capacity utilization to
                                                                 make them competitive in interna-
•      Strengthening managerial au-
                                                                 tional market.
       tonomy,
                   Measuring Consistency in Productivity and Policy Implications of Closure        17
                                   and Revival of NTC Mills in Madhya Pradesh – A Study



   Table – 7 : Edited Data for Measuring Productivity of BT Mills, Burhanpur
                                                                                          (Rs. In Lacs)
   Year       PV         RM        ENR        W&S      STORES       ADMN         S&D        T COST
 1985-86    1384.59     482.97     136.26     382.59    166.66        25.49       22.93      1216.90
 1986-87    1205.83     359.44     142.47     405.02    162.72        27.83       21.84      1119.32
 1987-88     968.20     374.71     103.10     331.89    115.22        36.78       23.44       985.14
 1988-89     622.46     305.49      67.24     260.64      69.74       22.09       11.72       736.92
 1989-90     644.17     323.46     194.40     168.85      81.05       22.15        9.54       799.45
 1990-91     955.15     443.68      95.22     217.17    102.41        28.96       15.05       902.49
 1991-92    1501.59     774.36     157.26     270.91    146.03        42.86       32.54      1423.96
 1992-93    1213.81     542.34     178.95     295.15    160.46        53.32       23.03      1253.25
 1993-94    1262.28     575.92     209.06     319.99    164.57        43.44       33.52      1346.50
 1994-95     494.17     167.88     144.53     312.95      74.75       51.62       17.15       768.88
 1995-96     480.93     168.24     136.11     344.59      75.80       54.94       21.34       801.02
 1996-97     587.43     278.68     163.99     375.12      59.58       40.15       27.82       945.34
 1997-98     628.66     320.70     186.42     413.00      59.07       52.78       33.69      1065.66
 1998-99     462.59     227.50     159.63     427.76      44.87       46.55       22.91       929.22
 1999-00     313.70     120.86     122.34     438.83      24.26       49.40       12.01       767.70
 2000-01     298.78     120.22      93.02     426.54      27.31       43.16        7.32       717.57
 2001-02     218.90      74.79      91.17     457.45      21.96       41.21        6.92       693.50
 2002-03     261.60      93.46      95.11     490.91      23.10       72.72        7.52       782.82
 2003-04     382.26     219.18      98.60     496.25      25.30       69.15        9.28       917.76

Source : Annual Reports and MIS Reports, BT Mills, Burhanpur
The N.T.C mills in Madhya Pradesh,                  ing it extremely difficult to operate in
are units of National Textile Corpora-              an economically viable manner.
tion (MP) Ltd. Indore, a Government
of India enterprise. The productivity of            It goes without saying that the textile
these mills were gradually reduced                  mills including N.T.C mills in Madhya
due to lack of modernization. By in-                Pradesh using outdated technology
troduction of new industrial policy in              with low productivity and in the present
July 1991, the government has turned                competitive environment speedy mod-
the system of economic regulation                   ernization      and      technological
inside out. The overall economic situ-              upgradation are essential for their
ation in the country was showing signs              survival. In view of above, it was de-
of recovery. This has resulted in stiff             cided to refer these mills to BIFR in
competition in the market and perfor-               the year 1992-93 under the provision
mance of these mills has seriously                  of Sick Industrial (special provisions)
affected due to globalisation of Indian             Act 1985.
economy. The sickness in the textile                The revival plan of these mills was
industry was spreading fast with the
                                                    prepared based on their assets and
result that many textile mills were find-           liabilities. The productivity, past per-
18      The Journal of Institute of Public Enterprise
        Vol.30, 3&4 (2007)



     Table – 8 : Productivity indices and Consistency of IMU Mills, Indore
                                              IMU Mills
   Year               RMF                    ENF                  HRF                 TFP
 1985-86            2.771728               8.314422             2.679358             0.97913
 1986-87            3.164993               6.354329             1.789978            0.808863
 1987-88            2.012924               6.363277             1.971013            0.740643
 1988-89            2.143626               6.150304              2.42689            0.821861
 1989-90            2.414343               5.887281             2.472805            0.854554
 1990-91            2.558329               6.709029             2.240493             0.86058
 1991-92            2.271668               6.621463             2.266742            0.819432
 1992-93            1.955022               5.033638             1.147313            0.541579
 1993-94             1.78354               4.546121             0.719771            0.414638
 1994-95            13.18443               1.524404             0.180602            0.140333
 1995-96            2.455551               2.495893             0.305968            0.212362
 1996-97            1.420597               3.366393             0.469475            0.298743
 1997-98            1.377968               4.986254             0.711585            0.398096
 1998-99            1.400348               3.588235             0.068915            0.059142
 ST.DEV             3.000597               1.866482             0.964699            0.309606
 MEAN               2.922504               5.138646              1.38935            0.567854
 CV                 102.6721               36.32244             69.43525            54.52212
formance and other socio-economic                       textile mills generally the following
factors were considered to select two                   parameters are being used for their
mills (out of seven) for revival. ATIRA                 performance evaluation.
has vetted the proposal for revival of
two mills namely, new Bhopal textile                    •   Capacity utilization.
mills, Bhopal and Burhanpur Tapti
mills, Burhanpur with other five mills                  •   Productivity in gms/ spindle (40s
                                                            conversion)
to be closed. The future market de-
mands of textiles are encouraging                       •   Contribution (sale value – variable
revival of these two mills with a view                      cost)
to facing global challenges.
                                                        The mills with high contribution can
In this study, we have concentrated                     be called as best mills. But the contri-
on the performance results of these                     bution mainly depends on prevailing
seven units. The data for the years                     market rates of raw material, energy
1985-86 to 2003-04 for all the seven                    cost, wages and salary, and finished
mills was collected from MIS report                     product cost. Therefore, this cannot
and annual reports of these mills. The                  be considered as real parameters for
data was discussed with senior offic-                   evaluation of performance of these
ers of these mills to find out the                      mills because other factors like con-
method for inter-mills evaluation. In the               versation of energy, best utilization of
                 Measuring Consistency in Productivity and Policy Implications of Closure     19
                                 and Revival of NTC Mills in Madhya Pradesh – A Study



Table – 9 : Productivity indices and Consistency of Kalyanmal Mills, Indore
                                 Kalyanmal Mills, Indore
      Year              RMF               ENF               HRF                      TFP
 1985-86              2.59244          8.695786          2.618706                 0.987781
 1986-87             2.965759          6.281899          1.654507                 0.754167
 1987-88             2.203728          7.461113          2.319767                 0.833981
 1988-89             2.238288          7.289938          2.716845                    0.8942
 1989-90             2.568429          5.166777          2.954726                 0.916366
 1990-91             2.830656           7.59034          2.705982                 0.973717
 1991-92             2.268878          6.538148          2.499144                 0.843219
 1992-93             2.093495          4.782413          1.259901                 0.579717
 1993-94             1.729135          3.258544          0.479711                 0.300537
 1994-95                    0           0.40443           0.02513                  0.02058
 1995-96             2.224599          2.070415          0.232196                 0.162575
 1996-97             1.431727          3.832047          0.437734                 0.288632
 1997-98             1.342547          1.952592          0.143976                 0.112185
 1998-99             1.211523          2.325758          0.029223                 0.025991
 ST.DEV              0.783012          2.570488           1.17499                 0.378282
 MEAN                1.978657          4.832157          1.434111                 0.549546
 CV                  39.57291          53.19545          81.93165                 68.83538

raw material with better productivity,            created a challenging task before the
the performance of employees etc.                 textile industry, it is necessary to re-
also plays an important role.                     view the present performances of
                                                  these mills and adequate policy deci-
We have, therefore, calculated human
                                                  sions to be taken in this regard.
factor productivity, energy factor pro-
ductivity, and total factor productivity.         This study has revealed that produc-
The co-efficient of variation is calcu-           tivity analysis (productivity indices and
lated and it is concluded that consis-            consistency) is an important method
tency in operation is important and               to assess the performance of textile
based on that the decision to revived             mills and appropriate action can be
BT mills, Burhanpur and New Bhopal                decided based on this approach to
textile mills, Bhopal is in consonance            improve further performance.
with the analysis.
                                                  With the abolition of quota in 2005
The productivity analysis of N.T.C mills          there is a vast potential for the growth
in Madhya Pradesh has suggested                   of textile industry. This study shall be
that “productivity” is the main criterian         very useful for textile mills to forecast
to improve the performance of textile             and implement their plans with con-
mills considering the fact that                   tinuous improved performance to face
globalisation of Indian economy has               global competition.
20      The Journal of Institute of Public Enterprise
        Vol.30, 3&4 (2007)



                                  Table – 10
     Productivity indices and Consistency of Swadeshi Textile Mills, Indore
                                 Swadeshi Textile Mills, Indore
 Year                 RMF                 ENF                 HRF                    TFP
 1985-86            2.523884           7.541319             2.169004               0.878468
 1986-87            2.838737           6.270819             1.636315               0.771797
 1987-88            1.994748           7.121929             2.080402               0.777713
 1988-89            2.020768           7.832085             2.357658               0.826858
 1989-90            2.354723           3.821299             2.310299               0.784374
 1990-91            2.479066           6.880834             1.919453               0.804537
 1991-92            1.997845           7.657948             2.057526               0.762744
 1992-93            1.671644           4.890647             0.976107               0.469533
 1993-94            75.36449           1.721238             0.332112               0.236238
 1994-95            7.921687           0.644924             0.051597               0.040747
 1995-96             2.05532           2.589364             0.393614               0.247764
 1996-97              1.2454           3.725005             0.747029               0.384885
 1997-98            1.360713           2.506075             0.303253               0.207162
 1998-99            3.678571           1.072917             0.006878               0.006163
 ST.DEV              19.5096           2.617332             0.916295               0.319712
 MEAN               7.821971           4.591172             1.238661               0.514213
 CV                 249.4205           57.00792             73.97464               62.17502

This study of public sector enterprises                 national market. Finally, it can safely
suggests that restructuring of public                   be concluded that the impact of glo-
sector enterprises is necessary to face                 balization on productivity has given a
future challenges. Public sector has                    new dimension to these N.T.C mills of
to discharge a number of other socio-                   MP to restructure and modernize to
economic obligations, the performance                   make them profitable and competitive.
appraisal also covers items like inter-
nal resources generation for financing                  The empirical analysis of this study
the plan, contribution to public exche-                 confirms the planning to close down
quer, foreign exchange earning and                      the five N.T.C mills in Madhya Pradesh
to generate surplus with improve tech-                  and to revive only two N.T.C mills, for
nology in present global competitive                    the time -series analysis based on co-
scenario.                                               efficient of variation of various produc-
                                                        tivity measures reveals that there is
This study forecasts that the modern-                   relatively more consistency in produc-
ization of the two N.T.C Mills in                       tivity in the revival of mills as com-
Madhya Pradesh would substantially                      pared to that of the closed mills. Five
improve their productivity and perfor-                  mills viz Bengal Nagpur cotton mills,
mances, which will make them profit-                    Rajanandgaon (now in Chatisgarh),
able and capable to compete in inter-                   Hira mills - Ujjain, Indore Malwa United
                   Measuring Consistency in Productivity and Policy Implications of Closure     21
                                   and Revival of NTC Mills in Madhya Pradesh – A Study



                                  Table – 11
       Productivity indices and Consistency of BNC Mills, Rajanandgaon
                                  BNC Mills, Rajnandgaon
      Year                RMF              ENF              HRF                        TFP
 1985-86               2.755926         9.170632         2.558263                   0.973138
 1986-87               2.588325         7.698132         1.635352                   0.761943
 1987-88               2.385667         8.962494         2.354287                    0.85878
 1988-89               2.407383         8.859306         2.842675                   0.929143
 1989-90               2.729895         17.64443         2.915481                   1.024136
 1990-91               3.025143         9.258086          2.66673                   0.992779
 1991-92               2.590108         8.910518         2.771939                   0.916984
 1992-93               2.228574         6.606864         2.343755                   0.782737
 1993-94               2.632335         5.534196         2.572115                   0.862282
 1994-95               2.704133           3.93414        0.982094                   0.519752
 1995-96               2.782535         3.313526          0.82277                   0.461518
 1996-97               3.896851         2.544909         0.828128                   0.470296
 1997-98               2.456511         2.686683         0.903481                   0.468214
 1998-99                1.97071         2.708823         0.683709                   0.385502
 ST.DEV                 0.44256         4.082964         0.887739                   0.231322
 MEAN                  2.653864         6.988053         1.920056                   0.743372
 CV                    16.67606         58.42778         46.23506                      31.118
mills-Indore, Kalyanmal mills, Indore,                   (1971) Productivity Measurement – A
and Swadeshi textile mills, Indore.                      Symposium for the Seventies, Institute
                                                         of Personnel Management, London.
Against the traditional method of
                                                    ATIRA (2004) Ahemedabad Textile
evaluation based on capacity utiliza-                  Industry’s Research Association,
tion, productivity in gms/ spindle (40s                (2004) “Twenty-Second Report on
conversion) and the contribution (sales                Financial Performance”, Ahmedabad.
value – variable cost), various types
                                                    Batra G.S. & Bhatia (B.S) (1994)
of productivity indices viz. material                   Liberalisation of Indian Economy: An
factor productivity energy factor pro-                  Evaluation of recent Public Sector
ductivity, human resources factor pro-                  Reforms and Privatisation Strategies,
ductivity and total factor productivity,                The Journal of Institute of Public
have been estimated and consistency                     Enterprise,17,1994, 52-62.
in these productivity has also been                 Beri C.G (1962) Measurement of
considered for performance evaluation                   Production and Productivity in Indian
and relative performance ranking.                       Industry, Asia Publishing House,
                                                        Bombay.
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                                                       Productivity Measurement, Gower for
22      The Journal of Institute of Public Enterprise
        Vol.30, 3&4 (2007)



       Table-12 Productivity indices and Consistency of Hira Mills, Ujjain
                                         Hira Mills, Ujjain
      Year                 RMF                 ENF                   HRF              TFP
 1985-86                2.593295            7.118591              2.282753         0.867602
 1986-87                 2.95828            5.469927              1.412976         0.696641
 1987-88                2.145568            6.382488              1.728737         0.710058
 1988-89                 2.06181            5.154873              2.058702         0.742675
 1989-90                2.424821            7.536691              2.164587          0.84323
 1990-91                2.543413            6.304046              1.984551         0.805934
 1991-92                2.057227            6.375647               1.90835         0.739943
 1992-93                1.734653            3.995096              0.827548         0.436486
 1993-94                1.996926            2.175392              0.333081         0.225324
 1994-95                        0           1.219536              0.189277         0.141014
 1995-96                   5.5021           2.368118              0.433084         0.276234
 1996-97                4.389756            1.926891              0.401919         0.279945
 1997-98                1.394864              5.36139             1.284999         0.547624
 1998-99                2.532235            1.899636              0.193045         0.145905
 ST.DEV                 1.289106            2.198749              0.805215         0.272491
 MEAN                   2.452496            4.520595              1.228829         0.532758
 CV                     52.56303            48.63849              65.52699         51.14716
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                 Measuring Consistency in Productivity and Policy Implications of Closure    23
                                 and Revival of NTC Mills in Madhya Pradesh – A Study



    Table – 13 : Productivity Indices and consistency of NBT Mills, Bhopal
                                 BNC Mills, Rajnandgaon
      Year              RMF               ENF              HRF                       TFP
 1985-86              2.59199          9.624159         2.936333                  1.030362
 1986-87             3.095697          7.646126         2.124572                  0.927101
 1987-88             2.300475          8.084599         2.538655                  0.903132
 1988-89             2.177645          9.279104         2.852799                  0.934092
 1989-90                2.4399         6.625044         2.936619                   0.95246
 1990-91             2.827135          8.769471         2.595453                  0.985176
 1991-92             2.140145          8.249637         2.617342                  0.866578
 1992-93             1.830112          7.342656         1.848696                  0.706654
 1993-94              1.82378          6.555231         1.755419                  0.705983
 1994-95             2.611166          2.806133         0.350533                  0.244886
 1995-96             2.701281          2.867984           0.6337                  0.372852
 1996-97             1.544382          4.735855         1.270978                  0.558751
 1997-98             1.671973          5.083967         1.372321                   0.59824
 1998-99             1.882486          3.938556         0.987753                  0.502402
 ST.DEV              0.470592          2.299447          0.87897                  0.247466
 MEAN                2.259869          6.543466         1.915798                  0.734905
 CV                  20.82386          35.14111          45.8801                  33.67324

    Business, Government and not-for-                  Sanctioned by BIFR.
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24        The Journal of Institute of Public Enterprise
          Vol.30, 3&4 (2007)



                                    Table – 14
     Productivity indices and Consistency of Burhanpur Tapti Mills, Burhanpur
                               Burhanpur Tapti Mills, Burhanpur
      Year                   RMF             ENF              HRF                        TFP
 1985-86                  2.866824        10.16138         3.618992                   1.137801
 1986-8 7                 3.354746        8.463747         2.977211                   1.077288
 1987-88                  2.583865        9.390883         2.917232                   0.982804
 1988-89                  2.037579        9.257287         2.388198                   0.844678
 1989-90                  1.991498        3.313632         3.815043                   0.805766
 1990-91                   2.15279        10.03098         4.398167                    1.05835
 1991-92                  1.939137        9.548455         5.542763                   1.054517
 1992-93                  2.238098        6.782956         4.112519                    0.96853
 1993-94                  2.191763        6.037884         3.944748                   0.937453
 1994-95                  2.943591        3.419152          1.57907                   0.642714
 1995-96                  2.858595        3.533392         1.395659                   0.600397
 1996-97                  2.107902        3.582109         1.565979                   0.621395
 1997-98                  1.960274        3.372278         1.522179                   0.589925
 1998-99                  2.033363        2.897889         1.081424                   0.497826
 ST.DEV                   0.457016        2.972818         1.370041                   0.216578
 MEAN                     2.375716        6.413716         2.918513                   0.844246
 CV                       19.23697        46.35095         46.94313                   25.65337

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                  Measuring Consistency in Productivity and Policy Implications of Closure       25
                                  and Revival of NTC Mills in Madhya Pradesh – A Study



             Table – 15 : Comparison of Consistency in Productivity
            Year                     RMF                ENF              HRF             TFP
 IMUM, Indore                        102.6              36.3             69.4            54.5
 KMM, Indore                         39.5               53.1             81.9            68.8
 STM, Indore                         249.4              57.0             73.9            62.1
 HM, Ujjain                           52.5              48.6             65.5            51.1
 BNCM, Rajnandgaon                   16.67              58.4             46.2            31.1
 NBTM, Bhopal                        20.8               35.1             45.8            33.6
 BTM, Burhanpur                      19.2               46.3             46.9            25.6

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                    Table – 16 : Ranking through Consistency
                                     (2)                    (3)
                (1)                                                                (4)
                                  Ranking                Ranking
  S.No.     Ranking MFP                                                          Ranking
                                    EFP                    MFP-
            Consistency                                                      TFP Consistency
                                 Consistency            Consistency
                BCM
                                     NBT                    NBT                     BTM
    1       Rajnandgaon
                                  Bhopal (10)            Bhopal (10)            Burhanpur (10)
                 (10)
                BTM                 IMUM                    BNCM                   BHCM
    2
            Burhanpur (9)         Indore (9)           Rajnandgaon (9)        Rajnandgaon (9)
                NBT                  BTM                     BTM                    NBT
    3
             Bhopal (8)         Burhanpur (8)           Burhanpur (8)            Bhopal (8)
                KMM                   HM                      HM                     HM
    4
             Indore (7)            Ujjain (7)              Ujjain (7)             Ujjain (7)
                 HM                  KMM                    IMUM                   IMUM
    5
              Ujjain (6)          Indore (6)              Indore (6)             Indore (6)
               IMUM                  STM                     STM                    STM
    6
             Indore (5)           Indore (5)              Indore (5)             Indore (5)
                STM                 BNCM                     KMM                    KMM
    7
             Indore (4)        Rajnandgaon (4)            Indore (4)             Indore (4)
26    The Journal of Institute of Public Enterprise
      Vol.30, 3&4 (2007)



             Final Ranking                                  Aggregate Relative Marks
 1.     NBT – Bhopal                                  8+10+10+8      = 36
 2.     BTM- Burhanpur                                9+8+8+10       = 35
 3.     BCM – Rajnandgaon                             10+4+9+9       = 32
 4.     HM Ujjain                                     6+7+7+7= 27
 5.     IMUM – Indore                                 5+9+6+6= 26
 6.     KMM – Indore                                  7+6+4+4= 21
 7.     STM – Indore                                  4+5+5+5= 19




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