|
Advantages of a corporate model
In Economies of scale, which remains the biggest and most obvious advantage of switching over to a corporatised structure. Salt will remain labour-oriented. But mechanisation, even in small degrees, could be effective if there are large salt units instead of small-scattered holdings. This has been, to an extent, addressed by the co-operatives. But, the fact remains that for them there is no incentive to mechanise operations. Moreover, given the fact that labour is cheaply available and that too by the plentiful, manufacturers are happier with the existing status quo rather than investing in modern technologies. Introduction of new technologies. This is especially relevant in the case of refineries.
Change of thought process. A professional corporate manufacturing body would not be likely to oppose the refining of salt as the small people have generally been doing.
Process and quality standardisation. These are crucial areas for an industry that is trying to increase its presence in the export market. Action in these areas will also help bankers feel comfortable in dealing with projects trying for finance.
Price discipline. Companies traditionally have more of this. A look at the table alongside shows that, post-delicencing, unregistered units have mushroomed. Operating on fewer overheads and having limited stocking capacity, theirs is the output likely to pressurise prices.
Ease for government. Corporatisation means ease and regularity for government in collection areas like excise, income tax, etc. The government would then be more likely to consider incentives for modernisation.
Forward integration. Corporatisation will help the industry integrate forward. As a whole, the salt manufacturers' integration into caustic soda and soda ash manufacturing companies (or those people getting into salt pans) will help immensely. That is because these products will become more cost competitive and there will be a strong reason to invest in machinery and processes, which will improve the salt quality and thereby the quality of the end product.
|