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  • Cashew corporation closes down 30 factories

    May 3rd, 2015

    Lack of working capital, coupled with high processing cost, has forced the government undertaking Kerala State Cashew Development Corporation (KSCDC) to close down its factories. With the closure of 30 factories run by the corporation about two months ago, 18,000 workers, mostly rural women, have been rendered jobless, R Chandrasekharan, Chairman, KSCDC, told Business Line.

    Social obligation

    Chandrasekharan said the Corporation had been running the factories to provide employment to poor women in rural areas. They were operated on social, cultural and humanitarian considerations rather than profit motives, he said.

    The Corporation has been suffering losses ever since its inception in 1969. It has been providing employment for only 88 days a year from 1969-70 to 2004-05. The total turnover during the period was `1,394.73 crore while the loss incurred was `416.63 crore.

    In a bid to raise the number of working days, the government permitted the corporation to operate under the principle of ‘Freedom with Responsibility’.

    Hike in working days

    Because of the delay in getting working capital from the government due to bureaucratic hurdles, the corporation resorted to a method of “suppliers’ credit and buyers’ advance” and operated factories for 222 days a year, he said. Following the introduction of this method, the turnover increased substantially to `1,394.73 crore between 2005-06 and 2014-15 with a total loss of `263.40 crore.

    “When you purchase the raw cashew nut on credit, naturally you have to pay a higher price. Similarly, when advance is taken from the prospective buyer you have to sell the kernel at a lower price. The corporation had to follow this practice to keep the factories running to provide employment to its workers,” a highly placed official said.

    In the domestic market, indigenously produced raw nut price was ruling at around `100 a kg while the cost of imported raw nuts was around `70 a kg.

    Factory ownership

    According to Chandrasekharan, out of 30 factories under the possession of the corporation, 10 belonged to the government while 20 were taken over from the private sector. The Supreme Court has ordered the transfer of 10 factories held by the Capex to the private parties from whom they were taken over.

    Non-provision of working capital to the corporation for long and the consequent closure of the factories could pave the way for the return of the other 20 factories also to private parties, Chandrasekharan said. No- implementation of the revised wages in the corporation-run factories would also help private processors, whose 700-odd factories remain closed since April 1, not to implement the government’s decision to hike the wages of an estimated three lakh workers, mostly women, he added.

    He has urged the State government to look into the matter and initiate steps to save the interests of thousands of workers.