CHAPTER I RESEARCH METHODOLOGY

CHAPTER I
RESEARCH METHODOLOGY
1.1. INTRODUCTION
The cooperation and coordination is the basis of human society. First builds the
society while other manages it. The co-operative movement is well flourished in
Maharashtra by efforts and philosophy of Mahatma Phule and Rajarshi Shahu
Maharaj. The way of cooperation is the only way to the prosperity was well
understood by Mahatma Gandhi. The co-operative sugar factories and dairies are
the examples of well-flourished co-operatives in Maharashtra. These co-
operatives have changed the lives of millions of peoples from villages. The
roads, education, irrigation and even the culture in the rural area have been
supported by these co-operatives. The first co-operative sugar factory was
established by late Padmashree Vithalrao Vikhe Patil inspired and supported by
late Vaikunth Mehta and Prof. Dhananjayrao Gadgil.

The beauty of the rural co-operative movement is these big establishments of
hundreds of crores of rupees are owned by semiliterate and poor farmers. They
elect Board of Directors and run the organisation. But now a day the co-
operative industries are suffering from many problems and these problems are
related to management. The ignorance of the farmers, lack of transparency in the
management and slow rate of information processing leads to losses, corruption
and misappropriation of funds.

The co-operative sugar factories are not only income generating or sugar
producing establishment but they are biggest employers. In 2005-06 there are
173 sugar factories are registered in Maharashtra state out of which more than
90% factories are co-operative sugar factories and situated in Western
Maharashtra, Marathwada and Vidharbha. Out of 173 sugar factories more than
50% factories are located in Western Maharashtra and these units are successful
units and have played vital role in development of Western Maharashtra.

These factories are directly related to livelihood of 30 million farmers, 1.7
million employees and 5 million labours in Maharashtra. The co-operative dairy
industry is related to sugar industry as the green fodder is mainly generated from
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CHAPTER I RESEARCH METHODOLOGY
sugarcane leaves and residues. Even the industries producing chemical fertilizers
are depending on sugarcane growers. Therefore the progress of rural
Maharashtra depends upon survival and progress of sugar co-operatives. In the
era of globalization and liberalization, all industries in private sector have
improvised their management systems through Information Technology and they
have improved their performance while the co-operative sector is lagging behind
in this regard. Hence it is national and social need that the management of these
co-operatives should be improved through Information Technology. There are
many suggestions and solutions coming forward for the computerization of the
sugar industry but due to lack of sufficient research and investigation a common,
appropriate and rugged solution has not been accepted by industries.

At present sugar factories are choosing modular approach for computerization,
which doesnt fulfill competitive requirement of the industry. Information
Technology is revolutionizing the way in which we live and work. It is changing
all aspects of our life and lifestyle. The digital revolution has given mankind the
ability to treat information with mathematical precision to transmit it with very
high accuracy and to manipulate it at will. Computers and Communications are
becoming integral parts of our lives. To survive, thrive, and beat the competitive
world, one has to manage the future. Managing future means managing
information. In order to manage the information, deliver high quality
information to the decision makers at right time, automate the process of data
collection, collation and refinement; organizations have to make Information
Technology an ally, harnessing its full potential and using it in the best possible
way. Hence, the researcher hereby intends to study and investigate the present
status and problems and prospects of computerization in co-operative sugar
industry.
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1.2 MANAGEMENT PROBLEM
Agriculture has continued to be the backbone of Indian economy and it
contributes about 29% to GDP. Sugar industry is the second largest agro based
industry in India and India is the second largest sugar producer in the world. The
co-operative sugar sector has accounted a lions share in terms of the total
number of sugar factories as well as in the quantum of sugar production in India.
The co-operative sector generated Surety and Security for its members. The
sector provides a definite market of the members sugarcane as well as
infrastructure development funds at a low rate of interest. The co-operative sugar
factories that are promoted by the members, of the members and for the
members, operating on the basis of an accepted co-operative principles and
values play a pivotal role in catering to the sugar requirement of people in India
in particular and to people across the world in general.

The annual sugar cane price paid to the cultivators by the Sugar factories
amounts to more than Rs.15,000 crore per year.. The annual turnover of the sugar
industry amounts to Rs. 25, 000 Crore. The Central Excise Department earns of
Rs. 2000 crore and the State Governments earns Rs. 800 Crore in the form of
various cesses. Looking at the importance of the Sugar sector the Government of
India has established 56 Sugar Cane Research Stations all over the country.
Despite the economic significance of sugar industry, especially in cooperative
sector, the sector still continues to encounter several problems as follows:
(I) Low Sugar Cane Productivity across the country, which varies widely in the range
of 40 to 134.2 MT per hector. Tamil Nadu and Karnataka stand first and second
by producing 134.2 and 91.2 MT per hector respectively. Leading states like
Madhya Pradesh and Bihar have the lowest yield in the range of 39.3 to 48.5 MT
per hector. Maharashtra have moderate yield in the range of 80 to 90 MT per
hector.
(II) Most of the machineries in sugar mills are out dated. For the last 40-50 years
none of the major repairs or replacements and automation has been made in most
of the sugar factories. These old technologies increase the cost of production.
Low profits often do not allow a substantial depreciation without which the
rehabilitation cannot be done.
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CHAPTER I RESEARCH METHODOLOGY
III) The average per capita consumption of sugar in India is only about 17.75 kg per
annum and gur and khandsari 8.62 kg per annum (total 26.37 kg); one of the
lowest per capita consumption of sugar in the world. It is 55 kg in Australia, 52
kg in U.K and 50 kg in USA. The high sugar price and substitutes availability in
the form of gur in our country is often responsible for low consumption. Jagarry
tea is common in Indian villages. Competition with an unorganized sector (gur
and khandsari producers)is another face of this problem.
IV) Imposition of high excise duty and control on sugar stock, sugar price and cane
price have resulted, a decrease in the profit margin of the sugar mills and
therefore, they are neither in a position to offer high price of cane to the farmers
nor in a position to make payment in time.
V) Low rate of import duty leads to the dumping of sugar from other countries and it
creates cutthroat competition in sugar rates
VI) Lack of professionals on the Management: The sugar industry being rural
oriented enterprise brings hindrances in the management of the industry to
achieve 100% effectiveness. The management chairs in cooperative sugar
industries are occupied by semiliterate farmers and lead by politicians. These
politicians have their vested interest that leads to mismanagement and
misappropriations. Huge resources like material, manpower and money are
employed in sugar industry. It is the responsibility of management to make
optimum utilization of these resources. But due to lack of professional
management the resources are underutilized or misutilized, resulting in huge loss
as a result of which most of the mills have miserably failed to attain the financial
viability. It is, therefore, a challenge for the management to attain economic
viability by increasing its profits. In order to survive in global competition and
the growth of the organization, it is essential for every cooperative sugar factory
to earn profit. If it fails to earn profit, the entire capital investment will get eroded
and the very existence of the mill will be in jeopardy. It is, therefore, very
essential that the mills should maximize their profit by making optimum use of
resources, by introducing professional management strategies at all levels.
VII) High cost of production and low profitability: Production cost in sugar industry
includes cost of chemicals, cost of manpower, cost of fuel, maintenance cost,
harvesting and transportation cost and cost of sugarcane. Due to unprofessional
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CHAPTER I RESEARCH METHODOLOGY
management practices followed by sugar cooperatives, management of them has
failed to control cost of production and day by day profitability is declined.

The cooperative sugar factories in Maharashtra, are no exception to these
problems. The sugarcane growers in Maharashtra are complaining about low
price for their sugarcane and delay in cane bill payment. But the mills
managements are not happy with price and fiscal policies of the Government..
Against this background, it is clear that the real problem that has emerged before
the policy makers and the co-operative is, how to improve the working and
performance of co-operative sugar factories in India. In order to overcome some
aforesaid problems and inject the professionalism and IT based systems in the
cooperative sugar industry; the government has initiated certain measures like
business reengineering, computerization and automation of various processes
involved. To implement these measures the NCDC provides financial assistance
and consultancy services. As a result, cooperative sugar industries especially in
Maharashtra initiated computerization and computer based automation processes
since 1986 onwards. However, all is not well besides, no systematic study has so
far been undertaken focusing upon the various aspects of computerization and
automation of cooperative sugar industries, focusing benefits of computerization
and automation, impact on the cost, productivity, the quality, performance
resulting from and also the problems, difficulties and the bottlenecks especially
management and technical in computerization and IT implementation. Keeping
this in mind the researcher has chosen the specific field for his study.

Co-operative sugar factory faces multifaceted computerization problems viz.,
bottlenecks in IT implementation, integration of various business modules,
technology selection, necessitating trained manpower requirement, accessories
maintenance and innovation. These problems impede smooth functioning and
create an obstacle to achieve the predefined organizational goals.
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1.3 STATEMENT OF RESEARCH PROBLEM
Researcher would like to find out micro perspective of these problems to suggest
solution(s) on the magnitude of such problems for better management of sugar
factories. Keeping this in view, the study was undertaken, titled as- A Study of
Present Status, Problems and Prospects Of Computerization in Selected Co-
Operative Sugar Factories in Western Maharashatra. The title signifies
study of the computerization on the magnitude of the present status and various
problems faced by sugar industry, identify prospects of further computerization
in belief to encountered majority of the problems faced by cooperative sugar
industry.

1.4. OBJECTIVES OF THE STUDY
The research work is concerned with prime objective of identifying the various
problems in computerization of selected co-operative sugar factories in western
Maharashtra therefore, the study undertaken confines to the following objectives.
1. To study present status of computerization in sugar factories.
2. To identify the problems in computerization and their causes.
3. To identify the uncovered areas of computerization vis--vis their
implication.
4. To make the comparative analysis of computerization with respect to
performance, problems and prospects.
5. To suggest Enterprise Resource Planning modules for cooperative sugar
factories

1.5. HYPOTHESES OF THE STUDY
The study is also undertaken to test following hypotheses.
1. Majority Cooperative sugar units are not using ERP systems.
2. The co-operative sugar factories are more computerized at operational level
with compared to managerial level and executive level activities
3. Hardware and software problems have been faced by sugar factories that
are of similar in nature
4. The sugar factories facing problems in computerization such as lack of
trained staff, inadequate infrastructure facilities are not dependent on
capacity of plant.
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7
5. The efficient and effective plant capacity utilization and decrease in total
losses are directly related to extent of computerization.

1.6 SCOPE OF STUDY
The present study confined to selected co-operative sugar factories in Western
Maharashatra i.e. A unit(s) which collect sugarcane from farmers, process it and
producing sugar as a finished product which runs on co-operative philosophy.
This study relates to selected sugar factories in western Maharashtra state of
India, which includes seven districts viz.Kolhapur, Sangli, Satara, Solapur, Pune,
Ahmednagr and Nashik as specified by the district under western Maharashtra
belt by commissionrate of sugar from the administrative perspective. The sugar
factories studied on the magnitude of its problems and prospects relate to
computerization in selected units.

Present research encompass concept like different performance parameters such
as capacity utilization, recovery, reduced mill extraction, pol percentage in
baggasse etc. The data collected and analyzed with the help of simple statistical
tools viz. percentage, averages, co-relations and the hypothesis have been tested
by using statistical tools viz. Mean, Standard Deviation, Spearmans rank
correlation, chi-squares test, z test etc. Data from sample units have been colleted
of last two years i.e. 2006-2007 and 2007-2008.












TER I RESEARCH METHODOLOGY
8
Map No.1.1
GEOGRAPHICAL SCOPE OF STUDY


















CHAP

CHAPTER I RESEARCH METHODOLOGY
1.7 SIGNIFICANCE OF THE STUDY
In todays era of cut throat competition everyone trying to survive by updating
their systems through adoption of information technology and cooperative sugar
units are not exceptional, they have to change according to time so as to keep
abreast with surrounding, The computerization in different functional and sub
functional areas would ensure storage and accurate database for enriching
productivity of sugar unit and foster management decision at all levels.

Researcher has investigated status of computerization, problems in
computerization and impact of computerization on performance of sugar units.
In order to discover obstacles that create trouble for cooperatives and is a
stumbling block in the way of prosperity. Prescription proposed by researcher
would assist cooperative sugar sector to improve its productivity and efficiency.
By taking the reference of these prescriptions software and hardware
professionals would equip themselves with requisite skills not only to maintain
their systems but also they can deal with any kind of eventuality and would be
able to convert threat into an opportunity. Majority of the sugar factories have
not implemented ERP hence this study is useful to these sugar units for ERP
implementation and for apex organization like MRSSK, State Government,
educational and research institute like VSI, NSI for designing various
educational programs in IT area. ERP consultants will use this study for
suggesting ERP implementations strategy and business reengineering. A study
is also helpful to identify a way to rescue them from complications in IT
governance so that it would assist them to keep a pace and maintain its
competitive strength that could lead to desired destination [8].

1.8. RESEARCH METHODOLOGY
Present research is of inferential descriptive in nature; to suffice aforesaid
objectives data had been collected from primary and secondary sources.

1.8.1 Data Required: The study requires profile of sugar industry, various
management areas in cooperative sugar industry, computer applications in sugar
industry, performance aspects and problems in cooperative sugar industry.
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CHAPTER I RESEARCH METHODOLOGY
Besides this present status of computerization in sample units, problems related
to computerization and performance results of sample units.

1.8.2 Data Source: The above mentioned data was secured with the help of
following sources. Survey Method was used to elicit relevant information
pertaining to fulfilling the objectives of study. Researcher has also resorted to
observation method for microscopic view of computerization in co-operative
sugar industry, to cross-examine the various responses received from the
respondents regarding problems. Furthermore data required to know
implications of non computerization had been collected from concerned
functional heads.
a) Primary Data: Data viz. areas of computerization covered and uncovered,
implications of manual systems, software development approach, problems in
computerization, IT manpower status obtained with the help of schedule by
taking interview of the Sugar factory employees such as Managing Director,
Secretary, EDP Manager, Finance Manager, Labour Welfare Officer, Chief
Engineer, Chief Chemist, and Agriculture Officer, Managers in By-products
division and Operating Staff .
b) Secondary Data: Data regarding to the status of co-operative sugar industry,
organizational profile collected from annual reports of Vasantdada Sugar
Institute, sugar factory official records and various publications of Maharashtra
Rajya Sahakari Sakhar Karkhana Sangh Ltd., and National Federation of Co-
operative Sugar Factories Ltd., New Delhi.

1.8.3 Instrument: Data had been collected by using structured schedule and
schedule was executed by conducting interviews of EDP managers and different
officials of sample unit. Schedule is divided in to two parts, first part covers
general information of sample unit which includes Name, address, capacity,
establishment year, number of members, and different by-product units etc. and
second part covers status of the computerization i.e. covered and uncovered
areas of computerization, availability of technical staff, IT infrastructure and
different problems in computerization, implications of noncomputerisation.
[Annexure I]
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1.8.4 Sampling: A scrutiny of statistics maintained by Vasantdada Sugar
Institute brought out there were 97 sugar factories in Western Maharashtra and it
covers Kolhapur, Solapur, Sangli, Satara, Pune, Nasik, Ahmednagar districts.
Out of 97, seven sugar factories (8%) are operated privately and remaining 90
units (92%) are co-operatives.
It was found that these cooperative sugar factories are using computers since
1986 for various applications. The method used for selection of sample is
stratified proportionate random sampling method in which sample units are
divided into seven stratums. Each district is considered as stratum. More details
are as under,
1 Sampling Technique Proportionate Stratified Random Sampling
2 Population Cooperative Sugar factories from Western Maharashtra
3 Type of Population Finite Population
4 Size of Population 90 Sugar Factories
5 Analysis Unit A Plant of Sugar Factory
6 Sampling Frame Sugar Factories from 7 Districts of Western
Maharashtra
7 Sample Size 18 Sugar Factories
8 Parameter of Interest Status and Problems in Computerization


Formula for calculating the sample size of each stratum according to
Proportionate Distribution is as below.

n
h
= n (N
h
/ N)

where;
nh = Sample size of each stratum
n = Total sample size
Nh = Size of the stratum
N = Size of total population
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Table No 1.1
District-wise Selection of Sample of Sugar Factories
Sr.
No.
District
No. of
Co-
operative
Factories
No of
Private
Factories
Total

Sample
Size as
per
Formula
No. of
Sample
Units
1 Ahmednagar 16 1 17 3.19 3
2 Kolhapur 19 1 20 3.79 4
3 Nasik 6 1 7 1.19 1
4 Pune 11 1 12 2.19 2
5 Sangli 15 - 15 2.99 3
6 Satara 9 1 10 1.8 2
7 Solapur 14 2 16 2.79 3
Total 90 7 97 18
Source :(VSI Statistical Bulliten-2005-06)
Above table gives information about district wise sugar factories in seven
districts of geographical scope considered for study. Researcher undertaken
study of cooperative sugar factories, hence only cooperative units are
considered for deciding sample and total 18 cooperative sugar factories out of
90 from western Maharashtra are selected as samples. Graph No.1.1 depicts
stratum wise size of universe and sample. Requisite information has elicited
from head of the computer department in these units and heads of the other
functional areas and Managing Directors.

Graph No.1.1
District-wise Cooperative Sugar Units and Select Sample Units
0
2
4
6
8
10
12
14
16
18
20
Total Units 19 15 9 11 14 16 6
No. of Sample Units 4 3 1 2 3 3 1
Kolhapur Sangli Satara Pune Solapur
Ahmednag
ar
Nashik

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The data is collected from 18 sample units and taken on electronic spread
sheet. Classification is done on the basis of capacity of unit; viz. small and
large units. Small units are those whose plant crushing capacity is less than
4000 MT per day and large units are those whose plant crushing capacity is
more than 4000 MT per day.(Table No.5.1) Besides the broad classification on
the basis of size of sample units the classification of data, department wise has
also been done. Sugar factory has major six departments viz. general
department, finance department, agriculture department, labour and welfare
department, Engineering and manufacturing department and byproduct
department. Every department has its own sub functional areas of management
as follows (Table No.1.2).
Table No. 1.2
Functional and Sub-functional Areas of Management in
Co-operative Sugar Unit.
Sr.No. Functional Areas Sub Functional Areas
1) General Administration
2) Vehicles
3) Guest House
4) Legal
5) Civil & Irrigation
1 General
6) Watch & Ward
1) Share Accounts
2)Cane Accounting
3) Harvesting Billing
4) Transport Billing
5) Deposit Accounting
6) Store A/C & Costing
7) Financial A/C
2 Finance
8) Sugar & Byproducts Sales
1) Cane Development & Planning
2) Harvesting
3) Weighbridge
3 Agricultural
4) Transport Scheduling
1) Recruitment & Selection
2) Attendance system
3) Payroll
4) Personal information System
4
Labour &Welfare
(HRM)
5) Medical & Sanitation
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Sr.No. Functional Areas Sub Functional Areas
1) Inventory Management
2) Plant Maintenance
3) Production Planning
4) Lab analysis
5) Sugar Godown
5
Engineering &
Manufacturing
6) Process Atomization's
i) Cane Feeding
ii) Juice Weighing
iii) Boiler Atomization
iv) Boiling House
v) PH Control systems
vi) Pan Atomization
vii) Centrifugal
Atomization
viii) Sugar Weighing
System

1)Distillery
2)Ethanol
3)Liquor
4)Particle Board
5)Cogeneration
6 Byproduct
6)Other than above
(Source: Records of Labour & Welfare Department)

This classification is felt necessary to have micro analysis and facilitates
comparison to reach acute problems of computerization in sample units
capacity wise and department wise. Details of district wise sample units are
shown in Annexure II.

1.8.5 Data Analysis: In order to accomplish the objectives of the study , the
data collected from primary and secondary sources have been analyzed using
statistical tools viz. percentage, Mean, Standard Deviation, t test. Hypotheses
have been tested using Chi-square test, Z test, ANOVA and spearmans rank
correlation.

1.9 LIMITATIONS OF THE STUDY
1. Respondent were unenthusiastic to give real information because they thought
that it is part of enquiry conducted by apex organization.
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CHAPTER I RESEARCH METHODOLOGY
2. The performance appraisal is based on comparisons of fully computerized unit
and a meager computerized unit. That is the study assumes that other factors
(viz geographical conditions in area of operation, soil, availability of water,
resources, trained manpower, professional management, and active
involvement of share holders in management of sugar unit) affecting on
performance are considered as constant.


1.10 ORGANIZATION OF THESIS
A brief outline of the chapters in which present study is articulated as below
Chapter 1: Research Methodology
This chapter provides scope and relevance of study; objectives, hypotheses,
methodology employed and analytical tools used for analysis and hypotheses
testing methods. It also includes limitations of study, scope for further
research and chapter scheme.

Chapter 2: Literature Review
This chapter covers brief summaries of referred books, thesis and research
articles pertaining to IT implementation, sugar industry in India and aborad,
cooperative sector in India, cost and operational analysis of sugar factories,
human resource and management of sugar factories, problems of sugar
factories, IT implementation in various functional areas of sugar factories etc.

Chapter 3 : Profile of Cooperative Sugar Industry
This chapter provides an introduction to cooperative movement and its
significance, history of sugar, sugar scenario, of world and India. Growth of
cooperative sugar industry in India and Maharashtra, significance of sugar
cooperatives in economy, computerization areas for sugar industry and profile
of sample units selected for study.

Chapter 4 : Conceptual Frame Work
This chapter covers evolution of computers, need and various applications of
computers for sugar industry, different technical aspects considered in
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CHAPTER I RESEARCH METHODOLOGY
computerization process. This chapter also covers areas of computerization and
automation in sugar industry and recent trend in Information Technology.

Chapter 5 : Data Analysis and Interpretation
In this chapter, an attempt has been made to analyze status of computerization,
uncovered areas of computerization, various problems viz. hardware, software
and behavioral etc observed in computerization of sample units. The primary
and secondary data is tabulated and different statistical tools viz Percentage,
Mean, SD, Weighted averages by using Likert scale are used for drawing
inferences.

Chapter 6 : Observations, Conclusion and Suggestions
This Chapter summaries the findings; conclusion drawn and suitable
suggestions made for effective IT implementation and to improve the
efficiencies of various functional areas like general administration, agriculture,
finance, engineering and manufacturing, labour and welfare and byproduct
units of cooperative sugar factories

Bibliography
Annexure














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CHAPTER I RESEARCH METHODOLOGY
REFERENCES
1) Ram Vichar Sinha (1998), Sugar Industry in India, Deep and Deep
Publication New Delhi.

2) D K Grover and S S Grewal(1991),The Problems of Sugar Industry in India,
Vihar Publications, Allhabad.

3) D K Pant, S.M.Saraswat and Ajay Mishra (2005), Sugar Industry
Diversification For value Addition, Cooperative Sugar, Vol 37,No5 Jan 2006.

4) R J Shah(1997),Statistical Techniques, Sheth Publications Mumbai

5) Suranjan Shah(2006),Matahmatics and Statistics, Central Education
Enterprises (P) Ltd, Kolkata, IX
th
Edition.

6) Kothari S C(2006), Research Methodology Methods and Techniques, New
Age International Publishers, II
nd
Edition.

7) Gupta S C and Indira Gupta(2008), Statistical Techniques, Himalaya
Publication House, New Delhi, V
th
Edition.

8) T.K. Balwe (2004), Proceedings of State level conference on Cooperative
Sugar Industry in Maharashtra: Past, Present and Future Pune.
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