Evaluation Study MSE Cluster Development - Ministry of Micro ...

Chapter No: 6 – Hard Interventions in Sampled Clustersexpenditure items account for as much as 75 percent of the total expenditure. Labourcosts account for the third largest component of expenditure (18.94%). The entireprocess is energy intensive and with no immediate supplementary energy sources insight this will continue to remain a major challenge. This facility is also reported to beworking at a fairly low level of capacity utilization at present. The facility was reported tobe working on a single shift and at a capacity utilization of 33 percent. It is also reportedby SPV functionaries that a majority of the individual cluster units are making low endrubber products which do not require high quality rubber, and thus the utilization of thisfacility is low. However this scenario is likely to change once the cluster starts movingup the value chain. The increasing competitiveness, and quality consciousness is alsolikely to force this movement up the value chain.Moreover the strong demonstration effects that the CFC has already induced, is expectedto improve its capacity utilization quite significantly in the near future. Some large firmsfrom outside the cluster are reported to be using this facility and if the spare capacitycontinues to persist the SPV is likely to continue allowing the use of this facility to nonclustermembers. However in such a situation a higher differential tariff for non-clustermember needs to be introduced in order to attract cluster members, who are not yetattracted sufficiently to use this common facility.The Second case is that of the CFC built to serve the Foundry Cluster in Ahmedabad,Gujarat. The common facility that has been created here is a testing laboratory and afairly large conference hall. It is important to recollect that this cluster is highlydispersed with units located far apart. One is hard pressed to find an adequate numberof users from within the cluster. The cluster is also reported to have only a limitednumber of individual units raising doubts regarding the full utilization of this facility onthe basis of its use by cluster members alone. It is most likely that in an attempt togenerate additional revenue to meet the operating costs this facility will have to bethrown open to non cluster users. The size of the auditorium is also disproportionate tothe actual needs of the cluster members and is likely to be hired out for users unrelatedto the common needs of cluster actors. Turing to the working results complied in Table6.4 for period of seven months, one finds that the figures on revenues as compared toexpenditures incurred are not very encouraging with fairly large operating deficits in 6out of the seven months during which this facility has functioned.Table No.-6.4: REVENUES, EXPENDITURE AND OPERATING SURPLUS/DEFICIT OF CFC(FOUNDRY CLUSTER AHMADABAD)(All figures in this table are in Rs. unless specified otherwise)MonthUserChargesLabourexpensesElectricityRawMaterialsOtherExpTotalExpensesProfit/LossOct-07 17150 32002 4416 34730 71148 -53998Nov-07 27675 41295 3984 14100 59379 -31704Dec-07 29850 41770 3325 34536 79631 -49781Jan-08 43800 41623 4232 28310 74165 -30365Feb-08 81825 41723 3770 30812 76305 5520Mar-08 134688 52261 7282 137178 196721 -62033Apr-08 31600 48360 2151 5669 56180 -24580Total 366588 299034 29160 285335 613529 246941113