Net Factories

Manufacturing & marketing of fishing net and accessories play an important role in helping the  fishermen to reduce their capital investment. It is a classic example how the Government, institutional and overseas assistances have been effectively utilized to build up an activity to support a co-operative organisation to give benefits to its members. It all started in the year 1985 when Japanese Government had sanctioned a grant of 12 net making machines to Government India through Ministry of Agriculture. Matsyafed with support of Ministry of Agriculture got 6 net machines of the above mentioned 12 machines. With this six net making machines, Matsyafed started its first fishnet factory at Willington Island, Cochin in 1985. In 1988 Matsyafed took over the ailing fish net factory of Kerala Fisheries Corporation at Cochin.

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Fishnet factory at Cochin

The first grant- in- aid was very effectively used by Matsyafed and the survey conducted by IMRB for Japanese Government, selected Matsyafed Net Complex at Willington Island as the best performing grant in aid programme in 1985. On the basis of this another grant-in-aid from Japan was sanctioned in 1991, which included 15 net making machines of different specifications, one length stretching machine, one depth stretching machine, one dyeing machine, one boiler and one centrifugal separator. These machines were installed in the factory taken over from Kerala Fisheries Corporation at Ernakulam. In 2000, the 6 net machines from Matsyafed Net Complex at Willington Island were shifted to Ernakulam and it was converted to a  single unit with 27 net making machines.

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Fishnet factory at Azheekkal in Kannur District

In 2011, Matsyafed established  another fishnet factory with 525 ton capacity per annum at Azheekkal in Kannur District with an investment of Rs.18.50 crores.  For this project, National Fishery Development Board (NFDB) provided a soft loan of Rs.10 crores at an interest rate of 5% per annum for a period of 4 years.

Fishnet factory at Muttathara in Trivandrum district

In 2014, Government of Kerala with financial assistance under RKVY (Rashtriya Krishi Vikas Yojana) funded another fishnet factory at Muttathara in Trivandrum district with a capacity of 500 tons per annum. This new factory with 30 net making machines have started production since December 2015.

Products, production and efficiency in fishnet production

In these fishnet factories Matsyafed have 50 net making machines and processing machines with capacity to produce 1025tons of different types of fish nets. The details of the machines are given below:

Sl No

Specification of machines

Net Factory, Eranakulam

Net Factory Kannur

1

Amita net machine 6-60

-

10

2

Amita net machine 7-50

3

-

3

Amita net machine  7-60

7

7

4

Toyo Kogyo net machine 7-60

-

3

5

Amita net machine 9-40

5

2

6

Toyo Kogyo net machine 9-40

2

-

7

Amita net machine  11-40

2

1

8

Amita net machine 14-30

2

1

9

Toyo Kogyo net machine 18-25

2

-

10

Amita net machine 18-25

1

1

11

Amita net machine GTA 30-17

1

-

12

Length stretching machine

2

2

13

Dying machine

1

1

14

Centrifugal separator

1

1

15

Boiler 600kg/hr

1

1

16

Amita Depth stretching machine

1

-

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With the above machines, Matsyafed net factories are capable of producing all kind of nets like nylon multifilament (from 110/2 ply to 210/180 ply), nylon mono filament nets (from 0.12 mm diameter to 2 mm diameter) and polyethylene nets of (diameter 0.25mm to 6 mm). The minimum mesh sizes in the machines are from 10mm stretched mesh size to unlimited mesh size in case of the polyethylene. The factory can process all kind of net with dyeing, depth stretching and length stretching facilities. Matsyafed is capable of producing all kinds of fish net like gillnets, Purse seine nets and trawl nets of all sizes. It gives more focus on the production of net used by the traditional sector in Kerala like thanguvala as developing the traditional fisheries sector is the prime objective of Matsyafed.Fish nets from these factories are provided to fishermen under the IFDP project on loan basis as well as through direct cash sale.

Matsyafed has given utmost care to quality in its products,which is ensured through the men, machine and material. All the net machine operators are technically qualified and the managerial staff are professionally qualified. All net machines are imported Japanese machines, technically superior and the raw materials used are of highest quality. Stringent quality standards are followed in raw material purchases with help of Central Institute of Technology (CIFT) Cochin. Thus the best men, machine and material is used to ensure that the quality of the products is superior.

Matsyafed also develops different kind of value added products in its factories. The most important product developed is the cages for aquaculture which is used widely by the fishermen as well as in institutions.

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Matsyafed cages for the sea bass farming with CMFRI, grouper farming in RGCA and different cages for various fishery departments around the country are the new developments of these factories.

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The factories also developed nets for square mesh code ends, agriculture purposes, sports nets, anti bird netting, safety nets etc which form part of product portfolios of Matsyafed.

Incentive scheme

The factories are working in three shifts and work throughout the year including holidays. All production systems in the factories are linked to a production linked wage system which ensures productivity. The incentive schemes working in factories have ensured a minimum production and the staff are paid a production incentive for production above this minimum. All incentives are paid on the basis of different production parameters including the knots produced, bobbins wound, duties attended, salary for different group of workers and staff. There are piece rate wages paid on many activities like bobbin winding, mending, bobbin changing and dyeing. The piece rates are designed in such a way that it will provide an opportunity to workers to get better wages than minimum wage by ensuring higher productivity. This ensures a team effort in factory and gives clear responsibilities among the workers. An amount of about 15% of the profit of the unit is paid as incentive to the employees of the unit.

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The very successful functioning of the unit is largely dependent on the system of productivity linked wages and incentive. It shifted the initiative and responsibility to employees. The incentive system is modified as per changes in the prices, increase in wages etc from time to time. Workers are getting an extra income of about 25-50% of their salary as incentive which ensures that the system will take care of its efficiency by itself.

Technological up gradation and creation of additional capacity

In 1985 when started with 6 machines, net making capacity of Matsyafed was only 60 tonnes with 3 machines of 7-50 specification and 3 machines of 9-40 specification. The margins of operation was about 20% on sales and over a period of time competition in the sector with additional capacities have made the return on turn over reduced to a level of about 6%. Matsyafed consistently increased the production capacities through additional machines and new factories could maintain a better margin through increased production and sales. Even when the return over turn over was declined the profitability of the business was maintained and increased by increasing sales volume. The sale of fishnet business was Rs.83.18 lakhs in 1986 and Rs.4143 lakhs in the year 2014-15 and the net profit of the business was Rs.16.42 lakhs and Rs.266.97 lakhs during the corresponding period.

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Another important feature of this venture of  Matsyafed was the continuous technological up gradation of the fishnet factories. In the initial years when the operation of the factory was started, the machines were with 250 shuttles, speed of operation was 10 rpm and bobbin size was 80mm dia. The technologies have consistently changed and machines have now become 600 shuttles, speed of operation has come to up to 28 rpm and size of the bobbin up to 200mm dia. The factories are even equipped with the very advanced machine like the GTA 30-17 which can produce nets of twine size up to 6 mm with unlimited mesh size. The whole production system of the GTA machine is server controlled and all operations are computerized.  Thus the increased cost of production has been distributed over the increased quantity of production and has resulted in a very competitive product. Thus the technological up gradation has helped Matsyafed factories to be competitive in the industry.

Marketing, branding and distribution network

All the products produced in these factories are sold either through the retail network set up along the coastal belt of Kerala called Vyasa stores or directly from the factory itself. For sale of fishnet out side states dealership have been given and it is confined to Karnataka, Goa, Maharashtra and Tamilnadu. Matsyafed in early 80's itself set up a chain of Vyasa stores to make available all fishing inputs to fishermen at reasonable price at their major landing centers. Fishing inputs like out board motors, fishing nets, ropes, floats,  sinkers, anchors, twines, hooks, 2t oil, out board motor spares etc are made available through the Vyasa stores. Matsyafed imports Suzuki and Yamaha engines, markets 2T oil in collaboration with HPCL and purchases all other materials from the suppliers centrally to get bulk purchase benefit and make it available through the stores. Thus a direct link with manufacturer and user fishermen has been created by Matsyafed and it used for the marketing of the fishnets produced in the fishnet factories.

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The National Cooperative Development Corporation funded integrated fisheries development project implementation through Matsyafed was a platform to create a direct linkage with consumer fishermen. Matsyafed issues production inputs as loan through primary cooperatives and fishnet is one of the major inputs distributed through these schemes. This provided an opportunity to give credit to customers as well as create a direct link with the customer fishermen.

Matsyafed has established 12 Vyasa stores along the coastal belt of Kerala  and also few outlets of mini Vyasa stores in association with primary cooperatives. In addition to this, net factories have dealership in neighbouring states for marketing fishnets. One of the biggest advantages Matsyafed has created by establishing  the chain of retail outlets inside the state is that it could directly sell the net to consumer fishermen, helping in developing a brand consciousness. As earlier mentioned, Matsyafed uses best men, machine and material to ensure that the quality of fishnet produced is very good, but it has to be accepted by the customer to create brand equity for the same. Other fish net manufacturers have depended on the dealer network for creation of brand, which is practically not possible in the case of fishnet. Dealers always prefer a better margin for their product rather than developing a particular brand. Thus the direct accesses to fishermen helped Matsyafed to create brand equity for Matsyafed fishnets.

Management of man power and value systems

The fishnet factories were managed by highly motivated professional managers and they could develop a good work culture in the factories. The Commercial operation division at the apex level look after the over all management of the factories and provide the direction to the working of these units. The Chairman, Managing Director and Director Board provide policy directions to the units.

The two fishnet factories at Kannur and Ernakulam have a total workforce of about 280 people. Of these, the operator who operates the machines are all technically qualified with ITI and apprenticeship under NCVT scheme. The supervisory staff are qualified and the managerial level staff are professionally qualified people. The unskilled jobs are always done on piece rate basis. The incentive system for production and piece rate system for unskilled labours has ensured productivity and efficiency.

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For the new fishnet factory at Kannur, Matsyafed did a work study and rearranged the operation  to reduce the number of skilled workers. The unskilled labours were recruited from the members of primary fishermen cooperatives. These people were given training in jobs like mending, bobbin winding and bobbin changing and there by reduced the labour cost. Also local fishermen community got involved in the project and found out solution for the cheaper man power requirements in the unskilled area.

The value system which Matsyafed created with the different levels of management is a key factor for the success of the fishnet factories. In today's world the business environment is very dynamic and quick decisions are very important. To continuously operate with such a big operation on a dynamic level require personal involvement and high degree of integrity. The integrity of people involved have played a very important role in the success of the fishnet business units in Matsyafed.

The financials of the operations in the last decade

The operation of the two fishnet factories has contributed to the profitability of the Matsyafed considerably. Matsyafed has continuously improved its performance in the fishnet business ever since it started its operation. The performances of the two units during the last 10 years are given below is a clear indication of the performance of the business.

Amount in Lakhs: Production in tons

Sl No

Year

Production MNF Cochin

Production MNF Kannur

Sales (Rs. in Lakhs)

Gross Profit (Rs. in Lakhs)

Net Profit (Rs. in Lakhs)

1

2005-06

254.770

--

1439.47

160.53

130.624

2

2006-07

291.316

--

1142.27

248.89

96.22

3

2007-08

350.160

--

1509.86

298.79

125.37

4

2008-09

388.120

--

1689.68

336.10

123.08

5

2009-10

430.670

--

2102.98

418.59

167.24

6

2010-11

462.360

--

2516.29

509.67

188.92

7

2011-12

460.510

96.180

3130.35

579.20

155.28

8

2012-13

435.920

159.550

3816.12

731.43

222.84

9

2013-14

466.330

195.880

4292.25

608.00

292.30

10

2014-15

491.867

237.120

4142.89

605.88

266.97

The financial capability of the federation has helped Matsyafed net factories to work with enough financial freedom. The capability of bulk production helped Matsyafed to get a better price for the raw materials nylon and polyethylene from the suppliers. It has large impact on profitability as the cost of twine  contributes about 75% of the total cost. The payment capability ensures all purchasers are paid with in 3-7 days time which ensures additional benefit in the price of raw material purchased. Over a period of time margin of net business on turn over came down but could improve profitability through these effective financial and managerial decisions. The profitability of the fishnet factory business helped Matsyafed to repay the soft loan with National Fishery Development Board (NFDB) in time.

The way forward

The fishnet business has created a link between fishermen and Matsyafed and vice versa. In the last 30 years it could work as an effective intervention in controlling the price of fishnet and providing a platform for improving the quality. The market share of Matsyafed in the state fishnet demand is 25% and this is expected to rise to 35% once the third factory at Trivandrum becomes fully operational . The diversification of fishnets for other application is also providing great opportunity to increase the business. With 3 fishnet factories in different part of the state with efficient management, high value system, greater reach to customer and brand equity, fishnet business will be a real asset to fishermen and Matsyafed. It will be model for other cooperative federations, fisheries corporations and even for public sector operations.