Warming up to wool

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J&K sells 70 percent of it wool in raw form for lack of processing units. Consultants engaged by the government suggested market intervention, capital infusion and private public partnership for reviving the sector, reports Tasavur Mushtaq

Long and cold winters in Kashmir makes woolens an essential commodity here. Being one of the significant producers of wool Jammu and Kashmir has failed to use its produce for want of infrastructure.

The state produces about 60 lakh kilogram of wool, mostly from the crossbred animals and suitable making apparel. Out of available wool, only 30 per cent is used by J&K in public and private sectors. The rest finds its way in raw form to neighboring states such as Punjab and Himachal Pradesh for value addition due to inadequate processing facility in the state.A large quantity of raw wool is also sold to Rajasthan for manufacturing and industrial application.

“Selling raw wool to the outside market results in poor price realization.,” says one of the businessman associated with the trade in the valley. “It also contains large amount of dust, dirt and vegetable matters adding transportation and handling costs.”

The government seems to be coming to the rescue of the declining traditional activity of Kashmir. “Subsidies are not a permanent solution,” Chief Minister Omar Abdullah reportedly said in a Cabinet meeting.  “A long term road map needs to be framed for revival of the woolen sector and advised engagement of reputed and national level consultants,” he said.

Government is engaging a national level consultant to suggest measures to revive the ailing sector.

The Central Sheep and Wool Research Institute (CSWRI) Avikanagar was appointed as consulting agency after an MoU (Memorandum of understanding) was signed between CSWRI and J&K Sheep and Sheep Products Development Board (JKSSPDB).

Before signing the MoU, Dr S.A.Karim, Director CSWRI along with Dr D B Shakyawar, principal scientist and head, Textile Manufacture and Textile Chemistry visited the units of JKI, JKSSPDB, JK Handloom Development Corporation (HDC) in February 2011.

Consultants analyzed the state and status of sector in state and submitted detailed project report “revival of J&K woolen industries” on Jul 26, 2011 to the state government. “It was an uphill task, since; the woolen sector of state is widely spread with different organizations. We have made our sincere effort to come out with viable solution for reviving woolen industry of state,” writes Dr Karim.

The report suggests that there is urgent need to set up a pre-processing unit for scouring and pressing in Srinagar. This will significantly reduce overhead cost on transportation and other handling operation, thus wool will be produced and marketed in the form of scoured wool.

In its survey the team was surprised to find that all government and defense personals of government of India are using low quality woolen products made of shoddy/recycled yarn which is not as per BIS standard. “As per BIS standard ‘virgin wool’ should be used for woolen products,” the report points out. Virgin or new wool is term used to describe wool which has not been previously used in finished products and has not been subjected to any spinning or felting processes other than required in the manufacturing of the product. The consumption of shoddy products on the other hand is helping the economy of other countries.

The blankets are generally made of shoddy yarn manufactured at Panipat and Ludhiana using rags and other woolen products imported from developed countries. Imported at cheap price, these rags are garneted and converted into recycled wool, adversely affecting utilization of domestically produced wool. The team found that there is neither proper policy on utilization nor plan for monitoring of production of shoddy blankets.

To avoid such situations, the report suggests that the state government should encourage marketing of woolen products made of virgin wool produced in J&K state only and control purchase for its own consumption in the department of police, health, forest and others. These departments purchase large quantity of blanket and other woolen products from open market. In an estimate provided by the state government, about two to three lakh blankets and one to two lakh meters woolen cloth are required by J&K government departments every year. Similar quantity is also consumed by central government departments for its paramilitary forces. To meet this requirement, about 10 lakh kg wool for blanket and one to two lakh kg of wool for woolen clothing are required.
The consultants have stressed the urgent need for state government intervention to develop a system to procure woolen cloth made of virgin wool of J&K in place of recycled wool of shoddy quality.

The proposed intervention will ensure utilization of 10-12 lakh kg of indigenous wool.  The procurement will favor price realization as well as economic benefit to poor sheep farmers.  The activity is believed to revitalize assets lying idle and help in generation of employment in the state. “In the said venture about six lakh man days will be generated for providing employment to about 5000-6000 persons in a year,” the report reads.

In absence of organized structure for the processing of raw wool, there is no choice but to sell the raw wool to outside traders. About 50 per cent of the wool produced annually is of combable length having a mean fiber length of more than 45mm. Rest of the 50 per cent is of carding type having a mean fiber length of less than 45 mm.

About 50 to 60 per cent of the wool produced in J&K is having fineness of 21-25 micron while rest of wool is in the range of 25-32 micron. The combing type of wool with relatively lower fiber diameter can be used for combing purpose and the wool tops so produced can be consumed for making worsted suiting after blending with imported wool having longer and finer micron for enhancing quality and look of the fabric. This activity is carried outside state as there are no combing facilities available in the state but the bulk of finished product finds their market in the valley.

The only portion of wool produced in the state is used for felting into Namdha making which is used locally and also exported to European countries.  “Local consumption of the wool produced in the state is limited to making of Namdhas and to some extent cheddars and local patto (tweed),” reads the report. The local consumption of the wool produced in the state is not more than 30 to 40 per cent.

Various organizations involved in processing of wool in both private and public sectors are making losses. The Sheep husbandry department, JKSSPDB, J&K Industries, HDC, Directorate of Handloom are the organizations which due to poor financial resource, non-availability of technical man power, poor linkage among these agencies contribute to the very low efficiency of laid down machinery.
The team monitored the state and status of these units and suggested measures to be implemented on ground.

JKSSPDB  
To avoid exploitation of sheep farmers by middleman, the state government had set up an autonomous organization ‘JKSSPDB (wool board) in 1980. This was done in order to procure wool strictly from the original breeders. The present mandate of the board is procurement of wool from primary producers at prevailing market rate and its grading, scouring and combing before it is sold within and outside state.

The board,  in order to carry out work established forty two seasonal procurement centers. Facilitating the breeder to sell their wool at doorstep, board organized collection of wool through wool collectors. The consultancy found this arrangement good enough to continue.  The report suggests to move from using dailywagers for grading to contractual productivity-linked arrangement to minimize the costs. The consultants found that on an average two lakh kgs of wool is being procured/graded/sold per annum.

This quantity is too less than expected keeping in view the infrastructure / manpower and other facilities.  “Taking into account 2.00 lakh kg wool procurement and sale by board, the board hardly gets earning of Rs15.00 lakhs per annum as compared to expenditure,” reads the report.

RECOMMENDATIONS
The consultants recommended expansion of the board’s procurement capacity to 10 lakh kgs per annum. “This will reduce overhead costs and earning will grow to Rs 75 lakhs per annum,” the report said.

The team reasoned that since the board is engaged in social activity/ social security, the establishment cost on account of salary of permanent employees should be paid by government under non-plan. The earnings made by board should be used for enhancement of revolving fund required for strengthening its activities. For setting up a scouring plant and other facilities about 100 lakh are required. To meet up financial requirement, the board suggested that 50 lakh may be provided by J&K government and matching grant of 50 lakh may be taken from Central Wool Development Board( CWDB).

The report estimates that for wool procurement/ grading and marketing the board requires about Rs. 250 lakhs additional fund under revolving fund scheme. The board suggested that Rs. 200 lakhs may be provided by J&K government and Rs. 50 lakhs may be provided by CWDB under wool marketing scheme. In addition Rs 50 lakhs will be required for installing additional bailing and pressing machine.

J&K WOOLEN INDUSTRY
Woolen industry in J&K has been established in early 1960. Having worsted mill, composite mill and shoddy plant under its banner, these mills were fulfilling the requirement of state in terms of woolen yarn and products. After 1990 with open marketing, shoddy was imported at large scale and converted into shoddy products. It adversely affected woolen activities in J&K.

The observers found conflict in region as other major stumbling block in the growth of woolen sector as “industrial activity slowed down”. This resulted in most of the units turning sick for want of raw material. The team found that the woolen industry was run by permanent employees which adversely worked into poor productivity and made the units unviable. The consultants recommended running these units under ‘public-private-partnership mode’.

a) BEMINA WOOLEN MILL
Under J&K Industries, Bemina Mills was established during 1970-74 as a composite woolen mill comprising spinning, weaving and finishing machineries with a capacity of 1.58 lakh meter per year on single shift of eight hours per day. The mill was not functional when the consultants visited it. The mill as per experts could be run by JKI having 110 skilled/technical manpower on its roll. Additional technical manpower like weaving master for sulzer, finishing master, spinning master may be hired on contractual basis .

b) SPINNING MILL  NOWSHERA

The government spinning mills at Nowshera Srinagar was set up in 1959-60 to cater to demand of raffal yarns of 48s required by private/ government handloom/power loom owners of the state. Till 1980 the mill enjoyed a sort of monopoly. The unit was having capacity of 1.5 lakh kgs yarn per annum. However, under Open General License (OGL) import of wool in the year 1980, the spinning mills lost this leverage. This paved way for traders/ spinners to import wool tops on their own. The mill faced tough competition with private operators in the trade resulting in losses.

The mills are almost non-functional for the last 15 years. The experts suggest, “Looking into the present position and age of machineries installed in mill, the revival of mill in present shape is not feasible.” The team recommends that machines in good condition may be shifted to Bemina Mill as per requirement. Worsted yarn manufacturing activities may be consolidated at Bemina and rest of machines should be written off and sold through auctioning. To use the land the team opines, the valuable land may be utilized for installing ultra modern state of art unit of worsted yarn from Australia merino wool under public- private partnership mode inviting direct investment from private entrepreneur providing land on lease.”

SHODDY SPINNING PLANT RAMBAGH
The plant has facility for woolen spinning only. Reportedly the plant can produce 20000 kg yarn per month if it functions in three shifts. The shoddy spinning project was set up by J&K Industries limited at Srinagar in 1985-86 and commissioned in 1987-88. Production activities in the unit were stopped since there are no technical/ skilled workers available. JKI as per experts has never been in a position to operate the factory at its projected capacity, thus incurring heavy loss. The team found that the machinery installed at mill is in quite good condition and can be operated with minor maintenance. The experts recommended to run this unit for manufacturing of yarn for blanket utilizing wool produced in the state.

JKHDC

Set up in 1981, the objective of HDC was to promote handloom sector of the state. The corporation has been one of the largest consumers of the wool produced domestically for manufacturing of various products like tweeds, blankets, chadders and lohies. JKHDC comprises full sledge design centre, well equipped testing laboratory, common facility centre for warping and ample preparation on handloom. It has four common facility centres facilitating about 150 weavers of state.

The experts identified lack of working capital and marketing of its products as major issues faced by HDC. “Looking into present situation of corporation, the need is to have assured market and working capital to utilize its assets effectively,” reads the report. The team observed that for assured market of the woolen products government intervention is essential.

By Production 100 thousand blankets per year and with a Rs 20 profit per blanket, the corporation can generate profit of Rs. 20 lakh per annum, the report says.

To sustain its activity a matching grant equivalent to profit earned should be provided by government suggests the team of experts. HDC, the team recommends should participate in wool/ expo fairs. This activity can enhance the sale to the tune of Rs 50 lakh and profit made will be about 5-10 lakhs.  Similarly HDC should start its franchise in different cities of northern states under public private partnership mode. This is believed to enhance the sale of products by tune of 100-50 lakhs annually and earning will be about 10-15 lakhs. All these measures will help HDC to earn about 40-50 lakhs per annum and sustain its activity.

CONCLUSION
With the change in economic and social scenario, it has become essential to restructure the woolen sector to make it more viable, competitive and accountable. The immediate action prescribed by experts is to have target procurement of 10 lakh kg wool by board in next three years and have wool scouring unit with capacity of 1000 kg per day at Srinagar.

The locals believe that main hindrance is the selfishness of people who are in trade. “We always go for short cuts forgetting that what comes easily goes easily, says Ghulam Qadir Mir a septugarian living in vicinity of Nowshera. “Let us hope this time it clicks,” he added.

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