TULASI QUESTION

8/7/2019 TULASI QUESTION

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M B A P R O G R A M M E

TRAINING & DEVELOPMENT

INTRODUCTION

Human Resource Management (HRM) is a management function that helps

managers recruit, select, training and develops members for an organization.

Obviously, HRM is concerned with the people s dimension in organization. Human

Resource Management is a broad concept. Personnel management and Human

Resource (Management) development are a part of HRM. Human Resource

Management is concerned with the people dimension in management since every

organization is made up of people acquiring this services, developing their skills,

motivating them to high levels of performance and ensuring that they continue to

maintain their commitment to the organization, are essential to achieving organization

objectives. This is true regardless of the type or organization government, business

education, health, generation or social action. Getting and keeping good people incritical to the success of every organization whether profit or nonprofit, public or

private.

Those organizations that are able to achieve their goals and efficient and

spending .the efficient spending the least amount of resources necessarily, that is in

efficient or inefficient risk the hazards of stagnating of business. Survival of the

organization requires competent managers and workers coordination their efforts

towards an ultimate goal. While succeful coordination cant guarantee success

organization there unsucceful in getting such coordinate from managers and workers

will ultimately full.

1MADDI LAKSHMAIAH&CO.LTD


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HRM is process consisting of four functions:

1) Acquisition

2.) Development

3) Motivation and

4) Maintenance of Human Resource

The most valuable asset of an organization is m- man power (or) Human

resources it may be thought as the total knowledge, skills, creative abilities, talents and

aptitudes of an organizations work force as well as the values and attitudes and benefits

of an individual involved.

Human resource planning is integrated approach performing the planning

aspects of the personal function in order to have a sufficient supply of adequately

developed and motivated people to perform the duties and tasks required to meet

organizational objectives and satisfy the individual needs and goals of the

organizational members.

-----Leon. C. Megginsson.

Meaning and importance:

Corporate manpower planning refers to the application of planning process

order to assess the requirement of manpower and also for procuring, utilizing and

developing the human resources at the level of the enterprise in order to attain the

corporate objectives.

Human resource planning is double-edged weapon. It leads to maximum

utilization of human resources excessive labor turnover and high absenteeism, improves

productivity and aid in achieving of an organization.

resource planning is the responsibility of the both line and staff managers.

The line manager is responsible for estimating the manpower requirements. The staff



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manager provides the supplementary information in the form of the records and

estimates.

TRAINING:

Training is the process of increasing the knowledge and skills for doing a

particular job. It is an organized procedure by which people learn knowledge and skill

for definite purpose. The purpose of training is basically to bridge the gap between job

requirements and present competence of an employee training is aimed at improving

the behavior and performance of a person. It is a never ending and continuous process.

DEFINITION

According to training is the act of increasing the knowledge and

skills of an employee for doing a particular job _ Flippo.

NEED FOR TRAINING

The need for training arises due to the following reasons:-

To match the employee specifications with the job requirements and

organizational needs.

To achieve the goal of organizational viability and the transformational process.

To meet the challenges of latest technology i.e., mechanization, computation and

automation.

To meet the organizational complexities such as manufacturing of multiple

products and bi- products are dealing in services of diversified lines, extension of

operation to various regions of the country or in overseas countries.



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success of our educational and industrial training progammes the success or has been

archived by a tendency in many quarters to regard to training person. Its almost

traditional in America to believe that if something is good, more of the teaching is even

better. Hence, we can take more vitamin pills to solve personals health problem and

more training to solve our manpower problem. Over and under emphasis on training

system largely from inadequate recognition and determination of training needs and

objectives. Stem also from back recognition of the professional techniques of modern

industrial training.

ADVANTAGES OF TRAINING

Improves the morale of the workforce.

Helps people identify with organization goals.

Helps create a better corporate image.

Improves the relationship between boss and subordinate..

Provides information for future needs in all areas of the organization.

Creates an appropriate climate for growth, communication.

Helps the individual in making better decision and defective problem solving.

Provides information for improving knowledge on leadership, communication

kills and attitudes.

DEVELOPMENT

Management development programs are future oriented and more concernededucation that is employee training or assisting a person to become a better performer.

It is a long-term educational process utilizing a systematic and organized

procedure by which managerial personnel learn conceptual and theoretical knowledgefor general purpose. Development is related with less skill oriented but stresses on



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knowledge about business environment, principles and techniques, human relations of

specific industry analysis .It also covers not only those, which improve job performance,

but also those which bring about growth of the personality. It helps individual

actualization of their potential capacities so that they become not only good employees

but also better men and women. In organizational terms, it is intended to equip persons

to earn promotion and greater responsibility.

TRAINING AND DEVELOPMENT

Every organization needs to have well-trained and experienced people to

perform the activities that have to be done. If current or potential job occupants can

meet this requirement training is not important when this is not the case, it is not

necessary to raise the skill levels and increase the versatility and adaptability of

employees.

As jobs have become more complex the importance of employee training has

increased when jobs were simple, easy to learn and influenced to only a small degree by

technological changes, there was little need for employees to upgrade or alter their

skills. But the rapid changes taking place during the last quarter-century in our highly

sophisticated and complex society have created increased pressure for organizations to

readapt the products and services produced. The manner in which products and

services are produced and offered, the types of jobs required and the types of skills

necessary to complete these jobs.

Training moulds the employees attitudes and helps them to achieve the

better co-operation with the company and greater loyalty to it. The management is

benefited in the sense that highest standards of quality are achieved further trained

employees make better and economical use of materials and the equipment, there fore

wastage for constant supervision is reduced. Successful candidates placed on the jobs

need training to perform their duties effectively. Workers must be trained to the

minimum and avoid accidents. It is not only the workers who need training but



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supervisors, and executives also need to be developed in order to enable them to grow

and acquire maturity of thought and actions. Training and development constitute and

ongoing process in any organization.

DISTINCTION BETWEEN TRAINING AND DEVELOPMENT

Training is a short-term process utilizing a systematic and organized

procedure by which non-managerial personnel learn technical knowledge and skill for

definite purpose.

Development is a long-term process utilizing a systematic and organized

procedure by which managerial personnel learn conceptual and theoretical knowledge

for general purpose.

IMPORTANCE OF TRAINING AND DEVELOPMENT

Training is the corner stone of sound management for which it makesemployees more effective and productive. It is actively and intimately connected with all

the personnel or managerial activities. It is an integral part of the whole management

program, with all its many activities functionally interrelated.

Training and development program helps to remove performance

deficiencies in employees. This is particularly true when

The deficiency is caused by lack of ability rather than lack of motivation to

perform.

The individuals involved have the aptitude and notation needed to learn to do the

job better.

Supervisors and peers are supportive of the desired behaviors



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There is greater stability, flexibility, and capacity for growth in

organization training contributes to employee stability in at least two ways.

Employees become efficient after under going training. Efficient employees

contribute to the growth of the organization. Growth renders stability to the

work force. Further, trained employees need to stay with the organization.

NEED FOR TRAINING AND DEVELOPMENT

We propose that management can determine the need for training by

answering four questions.

1. What are the organization goals?

2. What tasks must be completed to achieve these goals?

3. What behaviors are necessary for each incumbent to complete his or herassigned tasks?

4. What deficiencies, if any do incumbents have in the skills, knowledge or

attitude required performing the necessary behaviors?

These questions demonstrate the close link between human resource

planning and determination of training needs based on our determination of the

organizations needs, the type of work out training program should follow up

naturally. Once we can answer question 4 we have a grasp of the extent and

nature of our training needs.

What kind of signals can warn a manager that employee training may be

necessary? Clearly the more obvious ones relate directly to productivity.

Inadequate job performance or a drop in productivity. The former is likely to

occur in the early months on a new job. When individuals are making a

satisfactory effort attention should be given towards raising the skill level of the



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worker. When a manager is confronted with a drop in productivity, it may

suggest that skills need to be fine tuned.

In addition to productivity measures a high reject rate or larger than usual

scrap page may indicate a need for employee training. A rise in the member of

accidents reported also suggests some type of retraining is necessary. There are

also the future element changes that are being impressed on the workers as a

result of a job redesign or a technological break through. These types of job

changes require a training effort

That is fewer crises oriented that is a preparation for planned change rather than

a reaction to immediately unsatisfactory conditions.

Training will be judged by its contribution to performance where

performance is a function of skills, motivation and the opportunity to perform.

Managers must compare the value received from the increase in performance

that can be attributed to training with the costs incurred in that training. The

desire for improved worker productivity cannot be approached in a vacuum. The

benefits that occur from training must exceed the costs incurred, when

inadequate performance results from a motivation problem rather than skill

problem.

Once it had been determined that training is necessary, training goalsmust be established. Management should explicitly state what changes or results

are sought for each employee. It is not adequate merely to say that change in

employee knowledge, skills, attitudes or how much we would argue that these

goals should be tangible, verifiable and measurable. They should be clear to both

management and the employee.



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PROCESS OF TRAINING


TRAINING

TRAINING

NEEDSANALYSIS

TRAINING

EVALUTION

TRAINING

IMPLEMEN

T

TRAININ

G


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TRAINING NEED ANALYSIS (TNA)/TRAINING NEED

IDENTIFICATION (TNI)

An analysis of training needs an essential requirement to the design of effective

training. Purpose of training need analysis is to determine whether there is a gap

between what is required for effective performance and present level of

performance.

Training Need arises at three levels

Organization level

Individual level

Operational level

Corporate need and training need are interdependent because the organization

performance ultimately depends on the performance of its individual employee

and its subgroup.

Organizational level Training need analysis at organizational level focuses in

strategic planning, business need, procedures, structures, policies, strengthen, and

weaknesses and external environment such as opportunities and threats. After

doing theSWOT analysis, weaknesses can be dealt with the training interventions,

while strengths can further be strengthened with continued training. Threats can

be reduced by identifying the areas where training is required. And, opportunities

can be exploited by balancing it against costs. For this approach to be successful,

the HR department of the company requires to be involved in strategic planning.

In this planning HR develops strategies to be sure that the employees in the

organization have the required knowledge, skills, and attributes (KSAs) based on

the future KSAs requirements at each level.



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to be done plus the tasks that will be required in the future. based on

the information collected; training need analysis (TNA) is done.

BENEFITS OF NEED ASSESSMENT

Training programs are designed to achieve specific goals that meetfelt need. There are many benefits of need assessment.

Trainers may be informed about the broader need of the trainees.

Trainers re able to pitch their course inputs closer to the specific

needs of the trainees.

Assessment makes training department more ccountable and more

clearly linked to other human resource activities, which make the

training programs easier to sell to line managers.

TRAINING DESIGN

The design of the training program can be undertaken only when a

clear training objectives has been produced. The training objectivesclear what goal has to be achieved by the end of training program i.e.

what the trainees are expected to b able to do at the end of their

training. Training objectives assist trainees to design the training

program.



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The trainer Before starting a training program, a trainer analyses

his technical, interpersonal, judgment skills in order to deliver quality

content to trainers.

The trainees A good training design requires close secretions the

trainees and their profiles. Age, experience, needs and expectations of

the trainees are some of the important factors that affect training

design.

Cost of training

It is one of the most important considerations in designing a

training programme. A training programme involves cost of

different types. These may be in the form of direct expenses

incurred in training, cost of training material to be provided,

arrangement of physical facilities and refreshment, etc.besides

these expenses the organization has to bear indirect cost in the

form of loss of production during training period. Ideally, a

training programme must be able to generate more revenues

than the cost involved.

Training climate

A good training climate comprises of ambience, tone, feelings, positive

perception for training program etc. therefore, when the climate is

favorable nothing goes wrong but the unfavorable, almost every thing goes

wrong.



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Organizational

resources

practices

priorites.etc

Trainer Training climates Trainees

Trainers skillsTrainees learning

style

Training

objectives

Training

strategies

Training

tactics

Support

facilities

Program

design

Terminal

objectives

Training

topics

On\off the

job

Break up program contentsEnablingobjective

s

Lesson objectives Categorize contents into information,

knowledge, skills, and attitudes

Sequence the contents

Determine learning outcomes for

each topic

Constraints


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TRAINING DESIGN

Trainees learning style the learning style, age, experience,

educational of trainees must be kept in mind in order to get the right

pitch it the design of the program.

Training strategies Once the training objective has been

identified, the trainer translates it into specific training area and

modules. The trainer prepares the priority list of about what must be

included, what could be included.

Training topics After formulating a strategy, trainer decides upon

the content to be delivered. Trainers break the content into headings,

topics, ad modules. These topics and modules are then classified into

information, knowledge, skills, and attitudes.

Sequence the contents- contents are then sequenced in a following

manner:

From simple to complex

Topics are arranged in terms of their relative importance

From known to unknown

From specific to general

Dependent relationship

Training tactics- Once the objectives and the strategy of the

training program becomes clear, trainer comes in the position



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to select most appropriate tactics or methods or techniques. The

method selection depends on the following factors:

Trainees background

Time allocated

Style preference of trainer

Level of competence of trainer

Availability of facilities and resources, etc

SUPPORT FACILITIES IT can be segregated into printed

and audio visual. The various requirements in a training program

are white boards, flip charts, markers, etc.

CONSTRAINTS The various constraints that lay in thetrainers mind are:

o Time

o Accommodation, facilities and their availability

o Furnishing and equipments

o Budget

o Design of the training, etc



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TRAINING IMPLEMENTATION

To put training program into effect according to definite plan or procedure is

called training implementation. Training implementation is the hardest part of

the system because one wrong step can lead to the failure of whole training

program. Even the best training program will fail due to one wrong action.

Training implementation can be segregated into:

Practical administrative arrangements

Carrying out o the training

In general programme implementation involves action to the

following lines:

Deciding the location and organizing training and other facilities.

Scheduling the training program.

Conducting the programme

Monitoring the progress of the trainees



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TRAINING EVALTION

The process of examining a training program is called training evolution.

Training evolution checks whether training had has the desired effect. training

evolution ensures that whether candidates are able to implement their learning In

their respective workplaces, or to the regular work routines.

PURPOSE OF TRAINING EVALUTION

The five main purpose of training evolution are:

Feedback: it helps in giving feedback t the candidates by defining the objectives

and linking it to learning outcomes.

Research: it helps in ascertaining the relationship between acquired knowledge,

transfer of knowledge at the workplace, and training

Control: it helps in controlling the training program because if the training is not

effective, then it can be dealt with accordingly

Power games: at times, the top management (higher authoritative employee)

uses the evaluative data to manipulate it for their own benefits.

Intervention: it helps in determining that whether the actual outcomes are aligned

with the expected outcomes.



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AREA OF TRAINING KNOWLEDGE

The aim is to the new employees learn rules and regulations about the job

and fully aware of what goes inside and outside of the company.

TECHNICAL SKILLS

The employee is taught specific skills like operating the machine,

operating computer etc.sothat he can acquire that skill and contribute

meaningfully.

SOCIAL SKIILS

If focus on teaching the employee how to be a team member and get a head.



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TECHNIQUES

This involves application of knowledge and skills.


Types of training

Orientation

Training

Job Training

Remedial

Training

Refresher

Training

Promotional

Training

Safety Training


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OBJECTIVES OF TRAINING AND DEVELOPMENT

To do the project on training & development following things you

should take into consideration.

Process followed by the company for the identification of training

needs

Training process\schedule.

Measures followed to identify the effectiveness of the training.

Measurement for the impact for the training

.

MISSION OF THE EMPLOYEE DEVELOPMENT

CENTER

Improve individual and organizational and organizationalperformance.

Reduced employee turnover.

Enhance workplace harmony and communication.

Enhance over all well being of employees.



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OBJECTIVES OF THE EMPLOYEE DEVELOPMENT

CENTER

Build and refine employee knowledge and skills for the effectiveperformance of duties and responsibilities.

Provide leadership in initiating, developing, coordinating and

sponsoring employee training and development activities.

Prepare employees for evolving basic technologies job duties

and responsibilities.

Assist employees by providing a training and education forum

for self

Improvement, personal wellness and work\family needs.

Create as sense of community by offering comprehensiveorientation programs for employees.

Assist employees in furthering their educational goals and

career development.

Improve superiority and leadership skills to manage

employees for peak performance.



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Provide adult basic education classes for employees to

improve basic writing and math skill and\or prepare for

their GED certificate.

Provide consultation services and specialized training to

individual departments.

Provide a training and development resource library for

employee use.

Create and manage a training web site and data base for

training registration, tracking and transcript generation.



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METHOD OF TRAINING


Methods of training

On the job

training

Off the job

training

Job rotation

Coaching

Vestibule

training

Role play

Jobinstruction Lecture methods

Committee Conferences

Apprenticeshiptraining Programmedinstruction


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.

CLASSIFICATION OF TRAINING METHODS:

The training programs commonly used to train operativesand supervisory personnel are classified into two types

On the job

Off the job

ON THE-JOB TRAINING:

The most widely used methods of training take place on-the-

job. This can be attributed to the simplicity to such methods and the

impression that they are less costly to operate on-the-job training

places the employees in are actual work situation and makes then

appear to be immediately productive. It is learning by doing .For jobs



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that are difficult to simulate or be learned quickly by watching and

doing, on the-job training makes sense.

Special assignments or committees are other methods used

to provide tower-level with first experience in working on used to

provide lower executive from actual problem functional areas serve

on boards and are required to analyze problems and recommended

solutions to top management.

Apprenticeship programs:

Apprenticeship programs put the trainee under the

guidance of a master worker. The argument for apprenticeship

programs is that the required job knowledge and skills are so complex

as to rule out anything less than a long time period where the trainee

understudies a skilled master journeyman.

COACHING AND MONTORING:

Coaching is one-to-one relationship between trainee and supervisors

which offer workers continues guidance and feedback on who well

they are handling their tasks.

Mentoring is particular form of coaching used by experienced

executives to groom junior employees. Normally, mentoring involves



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one-to-one coaching for a period of several years until the individual

is eventually capable of replacing the mentor.

Job instruction training:

Job instruction training consists of four basic steps.

Prepare the trainees by telling them about the job and overcoming

their uncertainties.

Presenting the instruction, giving essential information in a clear

manner.

Having the trainees try out the job to demonstrate their

understanding.

Placing the workers into the job, on their own, with a designated

resource person to call upon should they need assistance.

JOB ROTATION

This kind of training involves the moment of trainee from

one job to another. This helps him to have a general understanding of

how th organization functions. Apart from realizing boredom, job

rotation allows workers to built rapport with a wide range of individuals

with in the organization, facilitating future co-operation among

departments. The cross trained personal offer a great amount of



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flexibility for organizations when transfers, promotions or replacements

become inevitable.

Job rotation may pose several problems, especially while

the trainees are rolled on various jobs at frequent intervals. In such a

case trainees do not usually spend long enough in any single phase of the

operation to develop a strong degree of expertise. For slow learners, it

does not give enough room to integrate resource properly. Trainees can

become confused when they are exposed to rotating managers, with

contrasting styles of operation. Todays managers commands may be

replaced by another manager.

COMMITTEE ASSIGNMENTS

In this method. Trainees are asked, to solve an actual

organization problem. The trainees have to work together and offer

solution to the problem. This method of training helps them develop

team spirit and work united common goals.

The above on the job methods are cost effective. Workers

actually produce whole they learn. Since immediate feedback is

valuable, they motivate trainees to observe and learn the right way of

doing things. Very few problems arise in the case of training because the

employee learns in the actual work environment where the skills that

are learnt actually used. Experienced workers cannot use the facilities

that are use in training. Poor learners may damage machinery and



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equipment. Finally, if the trainer does not possess teaching skills, there

is very little benefit to the trainee.

OFF-THE-JOB TRAINING:

Off-the-job training simply means that training is not a part

of everybody job activity. Under this method of training, trainee is

separated from the job situation ands his attention is focused upon

learning the material related requirements; he can place his entire

concentration of learning job rather than spending his time in

performing it. There is an opportunity forfreedom of expression for

the trainees.

Off-the-job training covers a number of techniques classroom

lecturers, films, demonstrations, case studies and other simulation

exercises and programmed instructions. The facilities needed for each

of these techniques vary from a small makeshift classroom to an

elaborated development center with large lecture halls, supplement by

small conference rooms with sophisticated audiovisual equipment,

two-way mirrors and all the frills.

Classroom lectures or conferences:

The lecture or conference approach is well adapted toconveying specific information rules, procedures or methods. The use

of audiovisuals or demonstrations can often make a formal classroom

presentation more interesting while increasing retention and offering



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a vehicle for clarifying more difficult points. The lectures liabilities

include possible lack of feedback and the lake of active involvement

by the trainees. However this can be partially offset by reducing the

structured lecture format and allowing trainee to provide feedback to

the lecturer or creating discussion groups under the direction of a

conference leader.

Vestibule training:

In vestibule training, employees learn their jobs on the

equipment they will be using, but the training is conducted away

from the actual work floor. Vestibule training allows employees to

get a full fill for doing tasks without real-world pressures.

Additionally it minimizes the problem of transferring learning to

the job, since vestibule training uses the same equipment the trainee

will use on the job.



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Programmed instruction:

The programmed instruction technique can be in the form of programmed texts

or manuals, while in some organizations teaching materials are utilized.

All programmed instructions approaches have a common characteristic.

They condense the material to be learned into highly organized, logical

sequences, which require the trainee to respond. The ideal format

provides for nearly instantaneous feedback that informs the trainee if his

on her response is correct.



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TOBACCO IN INDIA

INTRODUCTION

The study reviews the status of the tobacco sector in India, both raw tobacco

and its manufactured products. An attempt has been made to identify major economic

and social factors affecting tobacco production and consumption, and to explore the

economic implications of government policy measures for tobacco control.

AREA, PRODUCTION AND YIELD

The area under tobacco, some 0.25 percent of the total cropped

area, has fluctuated irregularly over the past three decades. The area under

tobacco appears to be strongly influenced by prices in the preceding year. As

a result of increasing yields, production of tobacco rose from 362 000 tones in

1970/71 to 646 000 tones in 1997/98 (Table 3.1).



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During the last three decades, production of Flue Cured Virginia (FCV)

tobacco increased at an annual rate of l.2 percent despite its area declining by 0.7

percent annually. Production of other varieties increased by over 2 percent, reflecting

mainly higher productivity as the area sown registered only a marginal increase. An

analysis of long-term performance indicates marked changes in trends between the

1980s and the 1990s. Total FCV production between 1981/82 and 1991/92 showed a

small annual rate of growth (0.9 percent). The decline in area offset part of the gains

from productivity. Of the increased output, almost 85 percent was due to increased

productivity and 15 percent to expansion of area. The increasing yield of VFC tobacco

during the 1990s reflected the boost from government policy, through the Tobacco

Board, for this variety. The improved technology and the cultural practices

recommended by the Central Tobacco Research Institute (CTRI) and other institutions

also helped to boost production.

The widespread adoption of improved varieties released by CTRI and other

research stations, combined with the adoption of improved cultural practices, haveimproved unit yields. Substantial increases in the use of fertilizers and insecticides for

tobacco have also played an important role. Data on total quantities of these inputs used

on the tobacco crop are not available for the country as whole, but research indicates

that tobacco farmers in India use dosages of these inputs that are substantially higher

than those recommended by research stations (cf. NCAER, 1994). However, in Andhra

Pradesh, according to estimates (DES, 2000), fertilizer application per hectare on

tobacco increased almost 250 percent in the five years from 1990/9l to 1994/95, while the

use of insecticides doubled. Similarly, increased use of irrigation, which gives higher

yields compared with rainfed production, has also made an important contribution. All

of these inputs are supplied at subsidized prices. Finally, price increases also seem to

have stimulated higher output. Farm harvest prices for tobacco have increased three- to

ten-fold in the last three decades, depending on region. Moreover, the increase in

wholesale prices for tobacco has been higher than for cereals or other alternative crops,

such as cotton, pulses, chili or groundnut.



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A wide variety of tobaccos are grown in 16 states in India under diverse agro

climatic conditions. However, most of the varieties grown (other than Virginia, Burley

and Oriental) are of non-cigarette types. These include natu, bidi, chewing, hooka

(hookah), cigar and cheroot tobaccos and account for about 77 percent of the total

output (Table 3.2). Cultivation of FCV tobacco was initially confined to the traditional

black soil areas of Andhra Pradesh. However, to suit the quality requirements in

internal and export markets, cultivation of FCV was encouraged in light soils in

Karnataka and Andhra Pradesh. In the initial years, the varieties grown were limited to

Havana tobacco used in cigars, and Lanka tobacco used in the manufacture of snuff and

bidis. Subsequently, other forms, like FCV, were introduced.

TABLE 3.2 : Distribution (percentage) of production of different types of tobacco in

India.

Year Percentage distribution of production of

different tobacco types

Total

harvest

(000

tonne)

FCV Natu Bidi Cigar Hookah Cheroot Snuff

1975/76 27.7 10.9 31.4 4.3 7.1 17.2 1.4 349.8

1980/81 26.1 10.6 36.5 2.8 7.7 14.8 1.5 520.1

1985/86 18.0 13.8 39.3 4.0 6.8 17.0 1.8 441.2

1986/87 23.7 9.5 40.0 2.4 6.1 16.9 1.4 461.8

1987/88 15.4 9.8 37.6 2.7 8.7 24.1 1.7 367.4

1988/89 21.2 12.2 33.9 2.9 9.4 18.8 2.1 492.8

1989/90 18.8 12.9 33.4 2.8 6.2 23.5 2.4 551.6

1990/91 20.3 10.5 35.5 2.6 14.1 14.9 2.1 558.4

1991/92 28.2 12.3 28.6 2.4 12.4 13.5 2.6 584.4

1992/93 27.8 10.4 31.6 2.8 13.3 11.9 2.2 596.5

1993/94 22.0 10.7 33.4 2.8 17.3 11.7 2.1 562.9

1994/95 20.0 7.9 38.6 3.1 3.9 24.4 2.1 566.7

1995/96 22.0 9.0 38.3 3.2 3.2 22.2 2.1 535.2



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1996/97 23.4 8.1 34.2 2.1 5.8 25.8 1.6 617.9

1997/98 23.6 8.1 29.5 1.5 6.6 29.1 1.5 646.0

Source: Directorate of Tobacco Development, Ministry of Agriculture, Chennai.

IMPACT OF GOVERNMENT POLICIES ON PRODUCTION OF TOBACCO

Even though tobacco comes under state jurisdiction, the Government of India

plays an important role in the growth and development of the tobacco industry. In fact,

at least six ministries of the Union Government - Agriculture, Commerce, Finance,

Industry, Labor, and Rural Development - deal with one or another specified aspects of

the industry. Following the increasing health concern about tobacco consumption, the

central Ministry of Agriculture has not launched any development scheme for the crop

since the completion of the Seventh Five-Year Plan (1985-90). However, in general,

government policy has been to promote production, improve quality and ensure

remunerative prices for growers.

Government interventions in support of the industry can broadly be classified into:

i. Institutional and regulatory support;

ii. Price and market ;

iii. Export promotion;

iv. Research and development (R&D) and

v. Direct fertilizer and credit subsidies

All these interventions involve explicit or implicit subsidies for the tobacco industry.

The introduction of the auction system by the Tobacco Board brought an

element of competition to the tobacco leaf market and freed the market from pricing

and grading anomalies. Farmers intending to grow Virginia tobacco are required to



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register with the Board every year. Production quotas are fixed. Nevertheless, the

Tobacco Board, which has responsibility for regulating production, marketing and

exports of FCV tobacco grown in the states of Andhra Pradesh, Karnataka and

Maharashtra, has not been completely successful in controlling the area under tobacco

(Table 3.3). In fact, controlling the area to be planted is an ineffective instrument for

controlling production since price incentives, climatic conditions and the expertise of

individual growers can greatly change the yield per hectare on individual farms from

season to season. The Boards attempts to reduce fluctuations in auction prices have

met with mixed success. Moreover, cultivation and trade of non-FCV varieties,

constituting over 75 percent of tobacco production, is still outside the purview of the

Tobacco Board.

TABLE 3.3: Area registered and planted to FCV tobacco cultivars, and

production

Year Area (000 ha) Production (000 tonne) %

change

in price

Recorded Planted Difference

[(3) - (2)]

Expected Actual Difference

[(6) - (5)]

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

1986/87 111.20 104.871 -6.33 110.20 132.73 3.07 21.37

1987/88 83.20 68.31 -14.89 83.20 59.34 -23.77 -34.18

1988/89 92.08 105.52 13.44 100.00 116.21 16.21 98.66

1989/90 88.58 105.32 16.74 93.00 100.82 7.82 1.59

1990/91 103.52 122.40 18.88 105.00 109.48 4.48 -11.451991/92 122.26 153.55 31.29 144.83 159.19 14.36 -13.37

1992/93 113.56 140.71 27.15 124.06 158.86 34.80 -18.37

1993/94 86.11 122.84 36.73 92.64 125.50 32.86 1.68

1994/95 81.69 106.39 24.70 86.27 96.34 10.07 10.00

1995/96 94.28 124.14 29.86 99.67 114.40 14.73 26.32

1996/97 100.54 152.72 52.18 112.76 168.21 55.45 24.38

1997/98 105.38 154.03 48.65 141.81 177.09 35.28 37.61

1998/99 118.23 183.47 65.24 139.26 204.49 65.23 n.a.

1999/20 120.73 178.93 58.20 132.28 190.00 57.72 n.a.



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Source: Tobacco Board (various issues).Annual Administrative Report.

The Directorate of Tobacco Development handles marketing of non-FCV

tobacco. The Central Ministry of Agriculture continues its efforts to streamline the

marketing of non-FCV tobacco in consultation with the State Departments of

Agriculture. They provide limited facilities, such as market yards, and their impact on

prices, etc., is restricted. In this sector, traders and manufacturers are more active and

they take advantage of weak bargaining positions, especially in cases where they

provide loans and or inputs on credit to farmers for raising the tobacco crop.

The Tobacco Board, established in 1976, provides marketing services for FCV

tobacco, through its compulsory auction system. Virginia tobacco at the primary level is

sold through auctions conducted by the Board. Exporters of tobacco, manufacturers of

cigarettes and dealers in tobacco wishing to participate in the auctions have to register

as a buyer for each auction floor, wherever they intend to operate. However, the auction

system has not been successful in reducing fluctuations in the levels of auction and

export prices. Table 3.4 compares price levels for selected representative grades at both

the production and export levels. These grades include F2 at the farm level and its

equivalent export grade, namely L2.TABLE 3.4:Structure of tobacco prices

(Rs/kg)

Year MSP MGP Auction Price

(F2 Grade)

MEP

(L2 Grade)

Actual unit export value

1984/85 11.15 Nil 11.98 23.25 23.99

1985/86 11.15 Nil 13.01 23.25 24.92

1986/87 11.15 Nil 8.26 23.25 25.45

1987/88 11.25 Nil 19.9 24.55 25.35

1988/89 11.75 18.00 18.52 27.00 28.13

1989/90 12.50 15.10 34.49 27.00 31.47

1990/91 13.25 15.90 29.88 32.10 33.76

1991/92 14.75 21.50 29.88 48.50 58.45

1992/93 16.00 n.a. 24.39 n.a. 50.31



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1993/94 18.00 n.a. 24.80 * 58.57

1994/95 18.50 25.00 27.28 * 54.63

1995/96 19.00 28.00 34.46 * 68.56

1996/97 19.00 31.00 42.86 * 80.64

1997/98 20.50 36.00 58.98 * 62.45

1998/99 22.50 38.00 34.47 * 71.14

Notes: n.a. = not available. * = not applicable, as the Minimum Export Price was

abolished as of 1993/94.

Source: Tobacco Board (various issues).Annual Administrative Report.

CTRI is an apex research body for tobacco in India, and has been successful

through its multidisciplinary programmes in evolving a number of high yielding

cultivars of tobacco and in improving quality. In addition to the CTRI programmes, six

research stations - located in Andhra Pradesh, Gujarat, Karnataka, Orissa and Uttar

Pradesh - under the All India Coordinated Research Project on Tobacco have evolved

high yielding varieties for different types of tobacco for various states. They have also

developed improved crop management and crop rotation systems.

CROP SUBSTITUTION POSSIBILITIES

Economics of tobacco versus alternative crops

Tobacco in India, as in many other countries, yields higher net returns per unit

of land than most other cash crops, and substantially more than food crops. Currently,

there are a few specialized crops in various areas that provide similar incomes, but it is

estimated that these crops would not remain remunerative if total production increased.

The economics of alternative crops is generally based on experiments carried out on a

limited area at research stations under optimal conditions. More detailed research work

is needed on a wider scale at farmers field level before firm recommendations can be

made about them. In general, under farmers field conditions, most other alternative

crops, as discussed below, are currently not as remunerative as tobacco. Should tobacco

farmers need to diversify into other crops, they are likely to suffer economic hardship.



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These alternative crops also require high levels of irrigation. Tobacco is

preferred due to its drought resistance and suitability for growing under rainfed

conditions. Other problems associated with substitution by other crops include the

capital invested in specialized facilities created for tobacco processing, which cannot be

used for other crops; the difficulties of finding substitute crops for rainfed areas; and

the dependency of millions of people on bidi rolling and tendu leaf collection. Moreover,

with an assured market and prompt payment of sale proceeds through the Tobacco

Board, it will be difficult to replace FCV tobacco as a crop.

It is worthwhile comparing rates of return from tobacco with competing crops

such as groundnut or cotton. For this, Karnataka is taken as a representative state for

FCV tobacco. The data show that while tobacco typically yields high profits, it can also

show severe losses at times (Table 3.5). Of the three crops, groundnut consistently

showed reasonable profits over cost of cultivation. In contrast, cotton and tobacco

showed fluctuations in profits. Though data are not available for comparable years, it

may be assumed that the trend observed for several years for these crops will not havechanged much in recent years.

In the light of oversupply of FCV tobacco in recent years, some comparisons

have been carried out on profits from growing tobacco versus other crops in FCV-

growing areas. The comparison indicates that some other crops can be grown in that

soil, and that some of the crops can be more remunerative than tobacco. For instance,

the Central Research Institute found that combinations of hybrid maize and black gram

yielded promising levels of net returns per hectare in black cotton soils of Andhra

Pradesh, as did hybrid maize and soybean.

TABLE 3.5: Net return from different crops in Karnataka (Rs/quintal)

Crop year Groundnut Cotton Tobacco

1982/83 71.11 46.77 313.71

1983/84 121.61 103.13 146.94

1985/86 77.27 -57.71 n.a.



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1986/87 119.15 -17.72 -1 069.31

1987/88 n.a. n.a. -432.25

1991/92 145.50 n.a. 1 110.00

.Notes: n.a = not available; 1 quintal = 100kg.

Source: Directorate of Economics and Statistics. Cost of Cultivation of Principal Crops in

India. (Various issues).

Bidi tobacco is generally less remunerative to farmers than is VFC tobacco.

Some studies have shown other crops, such as chili or cotton, or a combination of

soybean andRabisorghum, as well as groundnut and Rabi sorghum, could give higher

returns than a sole crop of tobacco. However, other studies (e.g. Kiremath, 2000; studies

conducted by the Department of Agricultural Economics, University of Agricultural

Sciences, Dharward, on Economics of Bidi Tobacco in Nippani Area in Belgaum

District; and a Centre for Multidisciplinary Development Research (CMDR) study in

three Talukas in Dharward Districts) have shown different results, with bidi tobaccoyielding higher net return per hectare than soybean, sorghum, cotton or groundnut,

with only sugar cane being more profitable than tobacco. Sugar cane could be the most

favored crop in the region wherever irrigation is available. Moreover, the extensive

research programme carried out by CTRI show that currently no alternative crop

tested under monocropping gives returns comparable to tobacco. Intercropping or

double-crop returns were equal to monocropped tobacco (CTRI, 1999). It is important

to stress that tobacco is generally raised as a sole crop, except in areas where ample and

assured irrigation facilities allow a second crop.

Micro-level information on shifting from tobacco to other crops

(NCAER, 1994) and by CMDR showed a number of major socio-economic factors

encouraging tobacco growing:

Richer farmers tend to Field studies carried out by the National Council of

Applied Economic Research prefer tobacco to other crops.



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Small-scale farmers take to tobacco cultivation as something inevitable in the

absence of a suitable alternative.

Tobacco as a crop gives superior net economic returns compared with

alternative crops.

Tobacco is preferred due to its drought resistance and suitability for growing

under rainfed conditions. Due to tobaccos soil preferences, cultivation is

concentrated in certain states, and even within major tobacco growing states, the

crop is grown in specific districts.

A widespread belief prevails among farmers, especially in bidi growing areas,

that no other crops should be grown in the same land where tobacco is

cultivated, as it will lower the quality of the subsequent crops. However, this is

contrary to scientific recommendation that tobacco should be grown alternate

years.

The prevalent practice of growing only tobacco every year is reinforced by bidi

manufacturers through their agents, who may refuse to purchase tobacco if any

other crop has been grown on the same plot. Marketing of non-FCV tobacco has

been a major problem and there have been allegations of agents exploiting

farmers.

A well organized marketing system for FCV tobacco through the Tobacco Board

assures prompt payment to farmers, which is not the case for many other crops.

Farmers are reluctant to give up tobacco cultivation because of heavy investment

in irrigation equipment and barns.

A change in cropping is practicable only when some assured irrigation isavailable. For example, the coming online of Nagarjuna Sagar dam led to a

radical change in cropping pattern - from tobacco to sugar cane.

Failure of other crops raised in the past.

The farmers favour tobacco cultivation as it generally yields higher returns

than other crops. However, the cost of cultivation of tobacco is also much higher. It

seems that farmers often do not consider the full economic implications - both costs and

returns - of tobacco cultivation.



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The Tobacco Board declared a complete crop holiday for FCV tobacco in

Andhra Pradesh and lowered production targets for Karnataka from 40,000 tones in

1999/2000 to 25,000 tones for the 2000/01 season. As a result, some of the progressive

farmers devoted a part of their tobacco areas to other crops, such as sugar cane, chili,

groundnut or cotton.

The CMDR team surveyed 74 non-tobacco growers in the tobacco region of

Karnataka, to learn about reasons for not cultivating tobacco (Table 3.6). It seems that

the majority of such farmers were convinced of the economic difficulties of tobacco

cultivation. It should be stressed that more detailed studies of these aspects are needed

to derive further insights useful for policy formulation.

TABLE 3.6 Reasons why selected farmers in Karnataka did not cultivate tobacco

Reason given Percentage of farmers1. Labor problems 10.8

2. High cost of cultivation 25.7

3. Risk involved 2.7

4. Low price of tobacco 1.3

5. Irrigation is available (facilitating other crop cultivation) 36.9

6. Disease of tobacco plant 2.7

7. Maintenance of tobacco crop is time consuming and costly 2.7

8. Other 17.6

Economics of inter-cropping systems as an approach to agricultural diversification

Field experiments on inter-cropping conducted by CTRIs station in Pusa, Bihar,

from 1990 to 1997, showed that mixed cropping was more profitable than tobacco

monocropping. Tobacco plus garlic; tobacco plus red kidney bean; and tobacco plus

potato all showed potential to provide better returns than tobacco alone. Such inter-

cropping systems may be the first step to moving away from tobacco. A package of

mixed cropping, shifting to other crops with suitable crop insurance facilities, adequate



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farm inputs for the alternative crops, adequate marketing facilities, etc., would be

needed to ensure the success of a policy of gradually shifting from tobacco.

Economic implications of diversification on tobacco land

An attempt is made below to assess the direct implications for farmers and

agricultural laborers of shifting land from tobacco to alternative crops. CTRI identified

certain next-best crops for different areas in a number of tobaccos producing States.

Net returns per hectare from all of these crops were generally lower than from tobacco

alone. Thus, even if the farmers can grow these alternative crops, they are likely to lose

rather than gain. Moreover, given the wide variations in quality and other specifications

of tobacco and other alternative crops, the determining factors will not only be prices

but also the capacity to expand production of alternative crops with requisite quality

and to put in place support infrastructure. The results of the CTRIs studies are used

here to assess the impact on farmer income of substitution of tobacco by the next best

alternative crops, while the official data on Cost of Cultivation of Principal Crops in

India has been used to analyze implications for employment. The assessment has been

worked out on a per hectare basis where such data are available.

The reduction in net income that might result from a shift to the next most

profitable crop is estimated to average about 23 percent. This would amount to a

considerable loss, especially for the marginal and small-scale farmers that constitute the

bulk of the farmers in most States.

Bigger-scale farmers tended to adopt tobacco cultivation more than others. In

rural areas, a large number of households depend largely on tobacco for their cash

income, especially in the three major tobacco growing states. Most of the marginal and

small-scale farmers practice tobacco monoculture and rely mainly on this crop for their

livelihood. They have to buy staple grains and other essential items for family

consumption.



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A study on the Tobacco Industry in Andhra Pradesh, commissioned by the

Tobacco Institute of India, assessed the expenditure of tobacco farmers on baskets of

household goods and services. The marginal and small-scale farmers depended on

tobacco as the main source of their family income and livelihood. The overall average

annual income of the tobacco farmer in the State came to about Rs l5 000. The largest

share of household consumption expenditure was devoted to food items, some 67

percent. In the absence of detailed information in the study on consumption patterns,

results of the survey conducted by the National Sample Survey of Household Consumer

Expenditure for 1993/94 for Rural Andhra Pradesh (NSSO, 1996) can serve as a proxy.

Among food items, cereals and pulses accounted for 24 percent and 4 percent

respectively, with annual cereal consumption per household about 800 kg. Other major

food items included milk and milk products (9.7 percent); fruit and vegetables (7.7

percent); and meat, eggs and fish (3.3 percent). Of non-food items, fuel and light

accounted for 7.3 percent, followed by clothing (5.3 percent), while cigarettes and bidi

were 2 percent of total household expenditure. Tobacco farmers household annual

income and expenditure in Andhra Pradesh are summarized in Table 3.7.

To assess the impact on the food security of the tobacco-growing farmers if they

were to shift their tobacco land to other crops, the overall reduction in income per

hectare of 23 percent from the alternative crops has been used. With the loss of income

from the tobacco crop, the farmer would need to readjust the family consumption

expenditure pattern, either by devoting a higher share of family expenditure to food or

by reducing food consumption, especially among the marginal and small-scale farming

households. In the event of a total switch from tobacco production, with a consequent

estimated average drop of 23 percent in annual household income, cereal consumption

would contract by around 10 percent. Average family cereal consumption could decline

from 800 to 720 kg. This would have an adverse affect on the health and well-being of

marginal and small-farmers families, who are already undernourished.

A shift away from the tobacco crop would be likely to reduce the demand for

hired labor in most states, as the hired labor required for alternative crops is



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substantially lower. Total labor requirements for alternative crops, including family

labor, would be some 35 percent lower.

Table 3.7: Tobacco farming household annual income and expenditure in

Andhra Pradesh

Item Annual consumption

Rs Proportion (%)1. Food 10 000 66.6

2. Clothing and travel 2 000 13.3

3. Housing 1 000 6.7

4. Entertainment 1 000 6.7

5. Other 1 000 6.7

Average income of tobacco farmers per year 15 000 100.0

Source: COSMODE, January 2000. Tobacco Industry in Andhra Pradesh: A

Compendium.

Any reduction in employment of hired labor in rural areas would seriously affect

the landless laborers, who depend for their livelihood by working mainly in the

agricultural sector, as well as for the marginal and small-scale farmers who supplement

their earnings by working on other large farms as hired laborers. Therefore, the

reduction in employment for hired labor in areas where the tobacco crop is replaced

with other crops would result in increased economic and food insecurity, not only



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among a large section of the landless in rural areas but also among the marginal and

small-scale farming families.

MARKETING CHANNELS AND PRICE DETERMINATION OF CIGARETTES

In 1984, a compulsory auction system was introduced for the Virginia varieties

normally used in cigarette manufacture and sold in overseas markets. Generally, the

farmer delivers bales of leaf to the auction platform.

The market for bidi tobacco, in contrast, is largely unregulated. As marketing of

bidi tobacco is not under the control of any government agency, bidi farmers do not get

prices as remunerative as in the case of FCV tobacco. Bidi tobacco is sold to traders at

negotiated prices. In most cases the agent buys the bidi tobacco crop based on the

smoke of leaf, leaf spangle and nicotine content. In most cases, the trading community

finances the farmers, and so price setting power lies with the trader, and in most cases

the farmer is not paid until almost a year after the sale occurs.

Processing of bidi tobacco is not a technology-intensive process. After the

processing of the tobacco into flakes, the agent stores the tobacco until it is dispatched

to the manufacturer. The processor also blends the tobacco according to the

manufacturers requirements. The purchase of bidi tobacco from the farmer begins in

February and March. After processing, the tobacco is stored for a period of 6-12

months for ageing.

The marketing and distribution of bidi tobacco continues to be the domain of the

private sector and the industry is totally free. Currently, no effective institutional

arrangements for the regulation or marketing of bidi tobacco exist, due to strong

opposition of bidi tobacco traders.

Marketing channels for leaf tobacco, bidi and cigarettes are shown in Figure 4.l.

All the marketing agencies are in the private sector, except for the Tobacco Board and

the State Trading Corporation.



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The cigarette market is oligopolistic, with four large manufacturing companies.

The Indian market for cigarettes and other tobacco products is highly price sensitive.

Following the reduction in excise duty and consequently prices in 1994, there was an

explosion in demand for micros (cigarettes shorter than 60 mm). Trade sources

estimated that consumption of micros rose from 300 million pieces in 1993 to around 4

000 million pieces in 1994, 18 000 million pieces in 1995 and over 19 000 million in 1996.

However, with the increased excise duty on these cigarettes since the 1996/97 budget,

demand has declined, and led to a drift back towards small filter products by some

smokers and towards bidis by others.

Prices of different types and size of cigarettes depend inter alia on the level of

and changes in excise duty imposed by the central government in its annual fiscal

budget. Any more than moderate increase in excise duty (say over 3 percent) effectively

raises prices of cigarettes. At times, a modest increase in taxation has helped to

maintain retail prices. Owing to the variations in prices as a result of differential

changes of taxation on different types and size of cigarettes, their share in total sales haschanged considerably.

INDIAN BIDI AND CIGARETTE INDUSTRY

The bidi industry

Bidi is tobacco rolled in a tendu leaf and tied by a string. Tendu leaf accounts for

74 percent by weight of bidi. Dark and sun-dried tobacco varieties are used in bidi

production. Almost 80 percent of bidi tobacco comes from Gujarat, and the rest comes

from Karnataka. Bidis account for over 50 percent of total tobacco use, compared with

less than 20 percent by the cigarette segment. There are an estimated 290 000 growers

of bidi tobacco.



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1993/94 78 800 25 3 456

1994/95 84 000 86 3 463

1995/96 95 600 134 1 461

1996/97 102 300 157 1 206

1997/98 104 600 252 1 446

1998/99 101 000 35 2 543

Source: Union Budget, and foreign trade data from Directorate General of Commercial

Intelligence

Currently, there four major cigarette manufacturers in India: ITC Limited

(formerly Imperial Tobacco Co.); VST Industries Limited (formerly Vazir Sultan

Tobacco Co.); Godfrey Philips India Ltd; and GTC Industries Limited (formerly

Golden Tobacco Co., Ltd.). There are a couple of smaller-sized cigarette companies

with manufacturing facilities. As they lack the necessary marketing infrastructure, they

produce cigarettes for the large cigarette companies on a sub-contractual basis.

Production of cigarettes reached a peak of 96.1 billion pieces in 1984/85 and then

declined. It recovered again in the 1990s (Table 3.8). The Indian cigarette market was

reportedly worth Rs 66 billion in 1997 (ERC Statistics International, 1998).

The average price for a pack of ten cigarettes increased from Rs 4 in 1990/91 to

Rs 6 in 1998/99. Currently, the retail price of a pack of 10 cheap cigarettes is Rs 6,

against Rs 3 for a bundle of 25 bidis. Bidis largely escape tax as most are produced in

cottage industries across the country. Attempts to raise the taxes on bidis are often

interpreted as an attack on the poor, and therefore regarded as politically inexpedient.

Prices of cigarettes and other tobacco products in 1998/99 are compared in Table 3.9.



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TABLE 3.9 Retail prices of cigarettes and other tobacco products.

Item Average urban retail price

Bidi Rs 3.50 per bundle of 25

Cigarette Rs 6 per packet of 10

Cheroot Rs 0.45 each

Snuff Rs 17.10 per packet of 100 g

Tobacco - Huka (Huble-babal) Rs 15.85 per 1 kg.

Pan Leaf Small Rs 12 per 100

Pan Finished Ordinary Rs 2 each

Raw Leaf Rs 38.50 per 1 kg.

Source: National statistics. As at September 2000

ECONOMIC ANALYSIS OF TOBACCO MANUFACTURING ENTERPRISES

It is estimated that over 2.3 million persons depended on this sector for their

livelihood. The annual wage bill in these enterprises averaged Rs 4,300 million, and

annual wages per worker varied from Rs 8,400 in bidi factories to Rs 55,730 in

cigarette, cigar and cheroot factories. The total net value added by all enterprises

averaged Rs 15,000 million per annum, of which bidi factories contributed 41.2 percent,

and cigarette and allied industries 34.3 percent. The total annual wage bill in the

cigarette and allied industries, despite wages per worker being substantially higher, was

only 4 percent of its gross value of output, compared to 16 percent in the bidi factories,

because bidi manufacturing is more labour intensive. Bidi manufacturing is estimated

to provide employment to more than 4.4 million workers, a large number of whom are

women and children. If the forward and backward economic linkages are taken into

account, bidis generated 1,310 million workdays, whereas cigarettes generated 340

million workdays (Table 3.10).

TABLE 3.10 Employment (formal + informal) in the bidi and cigarette industry,

1994/95



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Cultivator Processor Manufacturer Wholesaler Retailer Total

Full-time

equivalent

Bidis 140 000 29 300 2 964 000 110 000 1 130 000 4 373 300

Cigarettes 124 000 2 200 10 620 110 666 886 066 1 134 128

Persons employed

Bidis 290 000 44 000 4 461 000 83 000 757 000 5 635 000

Cigarettes 267 000 3 278 10 620 81 616 543 000 906 090

Workdays (million)

Bidis 41.5 8.8 889.2 371.1 n.a. 1310.6

Cigarettes 37.1 0.7 3.2 299.0 n.a. 340.2

Note: n.a = not available

Source: Bidi and Cigarette Industry - A Comparative Status. Indian Market Research

Bureau Report, 1996.

The bidi industry provides employment to a large number of workers - some 4.4

million workers employed in bidi rolling alone. Around 22 percent of these workers

depend upon bidi rolling as their sole source of income. Table 3.11 shows comparative

gross value addition per unit in the bidi and cigarette industries. The employment

figures do not include the employment created in tendu leaf picking (in the case of bidis)

or in the supplier industries for the cigarettes industry, such as the manufacture of

paper, packaging and machinery used in cigarette manufacture.

Impact of introduction of new processing technologies and equipment

The cigarette manufacturing companies have been modernizing their processing

and manufacturingfacilities, with new or upgraded machines introduced for cigarette

making. The impact of the advanced technology has been to improve processing, reduce

component prices and improve quality and efficiency. It has also reduced cigarette

damage and waste; reduced tar and nicotine levels through filterization; reduced usage



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of tobacco per cigarette; and improved cigarette paper and filter design. The share of

filter-tipped cigarettes increased from less than 30 percent in 1970 to 66 percent in 1998.

The reduction in tobacco used per cigarette has been significant. According to industry

sources, currently about 750 g of processed tobacco is used to manufacture l 000

cigarettes, against the 1 000 g used three decades ago.

However, the cigarette industry in India has generally not kept pace

technologically with the developed countries. For instance, the speed of cigarette makers

and packers in India is 2,000 to 3,000 cigarettes per minute (cpm), compared to 7,000-

10,000 cpm abroad. The plants abroad have very high levels of automation in primary

processing, material handling systems and secondary technology.

TABLE 3.11 Gross value addition by the bidi and cigarette industry

Bidi Cigarette

Gross value generated per workday (Rs) 47 192

Gross value generated per million pieces (Rs 000s) 87.3 724.4

Gross value added per workday (Rs.) 31 135

Gross value added per million pieces (Rs 000s) 58.9 508.3

Equivalent full employment (million) 4.37 1.13

Total employment created (million workdays) 1 310.6 340.1

Gross value generated (Rs million) 61 110 65 200

Source: Bidi and Cigarette Industry - A Comparative Status. Indian Market ResearchBureau Report, 1996.



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The introduction of modern technology has had little impact on prices. In fact,

retail prices of cigarettes have continued to increase, due largely to increase excise duty,

which now accounts for some 61 percent of the retail price of cigarettes in India.

DEVELOPMENTS IN TOBACCO CONSUMPTION

Total consumption of tobacco products has been increasing in India, as in many

other developing countries, notwithstanding the increased awareness of negative health

effects. Total tobacco consumption increased from around 300 000 tones in 1971/72 to

450 000 tones in 1998/99 - an increase of 1.6 percent annually. Only about 20 percent of

the total tobacco consumed in India (by weight) is in the form of cigarettes. Bidis

account for about 40 percent of tobacco consumption (about 950 billion bidis), with the

rest divided among chewing tobacco, pan masala, snuff, hookah, zarada and other

mixtures. Cigarette smoking is essentially an urban phenomenon: 80 percent of

cigarette smokers are in urban areas, while 80 percent of bidi smokers are in rural

areas.

Non-price measures to reduce demand for tobacco

Advertising restrictions

The central government regulates advertising and promotion of cigarettes. The

state governments regulate, at most, advertising of other tobacco products. Advertisingof cigarettes is currently banned on television and commercial radio stations, and in

government owned premises. Cinema, press and outdoor advertising is permitted, as is

sponsorship of sports and other events and cultural activities. The use of hoardings and

billboards is, however, restricted in certain areas and some sports grounds. Some state

governments have started to follow the policy of the central government. For instance,

in 1997, the Government of Delhi State imposed a ban on tobacco advertising. During

1997/98, some other states followed in imposing such a ban, notably Himachal Pradesh

and Goa.



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The central government has considered imposing a total ban on advertising of

cigarettes under a new Tobacco Products (Regulation of Production, Supply and

Distribution) Bill. The code would have prohibited the use of personal testimonials by

those well known or those specifically working with children. Advertisements were also

to be banned in any media aimed primarily at those under 18. However, the code had to

be withdrawn in December, 1998, because of lack of cooperation from Indias domestic

manufacturers. In particular, the code came into conflict with the promotion of tobacco

products at sport venues and the use of prominent celebrities for tobacco promotion.

The Tobacco Institute of India is preparing a new code for possible adoption by the

tobacco manufacturers, modelled on similar agreements between government and the

tobacco industry in European countries, such as the United Kingdom and the

Netherlands. The new code includes standardized health warnings, the publication of

tar and nicotinelevels, and the introduction of age restrictions for tobacco purchase.

Health warnings

A single health warning (Cigarette smoking is injurious to health) is

mandatory on packets and any advertisements.

Other restrictions

Smoking is currently banned in government offices, public transport (apart fromair-conditioned railway coaches) and internal flights, cinema halls, theatres and

government-run stadiums.

The Central Ministry of Health and Family Welfare set up an expert committee

consisting of 21 professionals from various disciplines to examine various facets of the

tobacco industry including economics of tobacco use. Following the submission of the

report of this committee, if it is accepted by the government, additional tobacco control



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measures could be introduced, inter alia better enforcement of the control measures

already in force and some new measures.

CONCLUSIONS

Tobacco production is an important source of income for Indias farmers. While

alternative crops are available in terms of agronomic suitability, in general a move

away from tobacco production would result in reduced income and food security for a

considerable number of farmers. Manufacturing, particularly of bidis, is also a sourceof employment and hence of income for a large number of people. Thus any attempts to

control the use of tobacco would need to take into account the economic impact on these

sec

RESEARCH DESIGN

NEED FOR STUDY

Training is an age old practice in every organization. Earlier training was

Improved an enhance to skill of the workers or the executives now the training is

Imparted not only to enhance skill but also introduce new skill. In brief todays training

Programme is a demand o suits the organization activities. These activities are changing

day by day so training has become as part of their curriculum.

Training to executives so that they allot the work to the various work forces, i.e.

Deal with rapid changes in allocation.

Training to superiors, so that inter personal i.e. how to make workers efficiently.

Training to workers to enhance their skill i.e. to perform their work with less



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Wastage and productivity.

OBJECTIVES OF THE STUDY

To identify the training activities and procedure of the organization.

To measure the effectiveness of training and development programmers.

To determined the contribution of training and development programmes to

improve the behavior of employees.

To find out the perception of employees on training and development.

To seek employees suggestions regarding the improvement in training

programmes.

To offer suitable findings, suggestions and conclusions for this study.



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LIMITATIONS

The time constraint there to study all the policies, it is very fast topic.

Sample size collected is not very large.

It is difficult to gather the information due to the reluctance of some

employees to give information.

The result of the study depends upon the information provided by the

employees, which may be be to personal bias.

The study is limited to the sample taken for observation which is not

exhaustive.

Methodology of the study

Research methodology is a way to systematically solve the research problem. It

may be under stood as a science of studying how research is done scientifically in it we

study the various steps that are generally adopted by a researcher in studying his

research problem along with the logic behind them.

Source of data collection

Sample plan

Source of data

Data can be broadly classified as:



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1. Primary data

2. Secondary data

Primary data

Primary data are those that are original in character and are collected afresh. As

the primary data is information collected for the first time, there are several methods in

which the data is completed the methods are:

Questionnaire

Schedule

Interviews

Observation

Of these 4 methods, personnel interview and questionnaire are used for collecting the

data.

Questionnaire:

Directly we interacting with existing employees

We provide Questionnaire to employees

We got feedback through that questionnaires and we understand the

satisfaction levels of employee towards the organization.

According my personal analysis 75% of employees are satisfied with theML Group of companies.



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It is formalized set of questioners, which are logically and systematically and arranged

to collect the information useful for the proposed study. The questionnaire in this study

is structured containing a limited number of questions, which are easy and clear to

understand.

Schedule:

The schedule is also used as tool for the collection of data classification of

schedules. Interview Schedule, Rating schedule, Observation schedule, Document

schedule.

Personal interview:

Directly I interact HR coordinator of ML Group of companies

Provided information by HR Coordinator, the employees are preferring long

relationship with ML Group of companies

Depends on the benefits provided by, ML Group of companies the employee

turn-over is very low.

It is the face-to-face systematic conversation between the interviewer and the

respondents to elicit information. This method is chosen because through this moreinformation can be gathered easily.

Observation:

Observation is the basic method of obtaining information about the world

around us. All observations are not scientific observations.

Secondary data



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Secondary data refers to the use of information already collected and published

or unpublished the source is basis journal, reports etc.

Sources of secondary data:

Annual report

Textual information available in the library

The secondary data means data that are already available. Secondary data may be

either published data (or) unpublished data.

Sampling method of the study:

The sample plan is the procedure or way in which the sampling has been done.

As no project or research can be done taken into consideration the whole of the

population or universe, the concept of sampling is used. As per the concept of sampling

only some sample is taken from the universe in order to find out the result.

The sample plan details:

Sample method

Sample size

Sample unit

Sample method:

Random sampling method was using in this study.

Sample size: Sample size of 50 was taken in the study.

Sample unit: The study is directed towards all employees of all the departments .



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COMPANY PROFILE

ABOUT MADDI LAKSHMAIAH GROUP:

Maddi Lakshmaiah group of companies was founded by Mr. Maddi Lakshmaiah

in 1970. He joined in his family business in 1952. After completing of his Engineering

degree. The joint family business started payback in 1943, dealing with tobacco exports,well before India.

Maddi Lakshmaiah Group of companies (Maddi Lakshmaiah Group) a pioneer

in Indian un-manufactured Tobacco Industry has been exporting tobacco to all over the

world for the past 3 decades. It has solidified its relationship with overseas tobacco

merchants and manufacturers.

The Group is performing excellently well from the date of its incorporation and

has been exporting large volumes of tobacco to Russia, CIS countries, UK, Europe,

African countries, China, Latin American countries, Middle east countries, Bangladesh

and Nepal etc.

The Group established its branches in Russia and European countries and has

strong ties up with African and Latin American countries and especially with the

neighbor giant china.



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Establishment of the group:

The Group is founded by Sri Maddi Lakshmaiah, a mechanical engineer after

15 years of versatile experience in tobacco industry in 1970 at chilakaluripet, Guntur

Dist., AP

The Group has 5 major concerns namely

1. Maddi Lakshmaiah and Co Ltd (MLCo)

2. Maddi Lakshmaiah Agro products Ltd (MLAP)

3. K S Subbiah Pillai and Co (India) Ltd (KSSP)

4. Maddi Lakshmaiah Exports (MLE)

5. Coromandel Agro Products and Oils Hd (CAPOL)

Excepting CAPOL which is engaged in edible oils, all are engaged in tobacco

industry. MLCO and MLAP have concentrated on processing activities where as KSSP

and MLE are leading exporters and are recognized by Govt of India as Export House.

Share holding pattern and management of the group:

Shri Maddi Lakshmaiahakshmiah and his family members are holding 100% of shares

of all the Group companies expect CAPOL where the Group is holding 66% shares. All

the partners of Maddi Lakshmaiah Exports are the family members of Sri Maddi

Lakshmaiahakshmiah.

The Group is totally managed and controlled by Shri Maddi

Lakshmaiahakshmiah and his family members only.



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Maddi Lakshmaiah Groups Infrastructure:

The Group has been successfully improving its business

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