Transforming KSCDC into a global business organisation

The Kerala State Cashew Development Corporation (KSCDC), taking a pragmatic approach in line with the changing times, seems to be departing from the traditional way of running the traditional industry and adopting a new strategic method to establish itself as a profit making enterprise.

The corporation, with a capacity to process 60,000 tonnes of raw cashewnuts, is the largest employer in the State with over 20,000 workers mostly rural women. It provides employment to them for over 280 days now.

Speaking to Business Line , the Corporation's Managing Director, Dr K.A. Retheesh, said “now there is a platform for KSCDC to compete in the International market.” The effort of developing “CDC Cashews” in the international market will help the Industry as a whole.

Trading activities

Entering into trading activities is a better option for the corporation after reaching bulk purchase agreements with major raw nut producing countries at competitive price. Since the KSCDC would require large quantity of cashew kernels for value addition and producing its branded products for exports, it can supply raw nuts to a number of small processing units on a buyback arrangement and that, in turn, will be beneficial to both.

He said that the Indian Institute of Foreign Trade (IIFT) has conducted a market survey and study in the non-traditional markets, China and Russia, and its report is expected early next month.

According to him, there is good potential for value-added CDC branded cashews in these countries and other markets in the world.

According to Dr Retheesh, there are more than 500 cashew factories in Kollam district alone. They require raw material, and for them, importing raw nuts is a difficult task. “So, there is a big opportunity for KSCDC to do raw cashew trade,” he said.

But, being a government corporation, the government might have to come out to support it with adequate and timely financial assistance. He expressed optimism that with support from the Government, the management, staff and workers, he will turn around the Corporation to a profitable one, as the “ultimate aim of any business organisation is to make profit.” “Unfortunately, most of the public sector undertakings in Kerala are working at huge losses and net worth is negative for most of the PSUs.”

Organisation history

KSCDC was started in 1969 mainly to protect the interest of cashew workers who were exploited by private processors. In the initial stage, it was a success, but later, problems began to cropup with accumulated losses mountingand consequently, the Corporation was closed for two years from 2002 to 2004.

In 2004-05, the Government took the initiative to re-open the factories by entering into a settlement with banks. The first attempt was to give continuous employment. It was a success and yielded 235 days in 2005.

As usual, the operation ended in loss. The reasons are fluctuation in prices, no parity in workers (shelling, peeling and grading), interest burden in the old dues, big overheads, etc. Bankers were reluctant to give further financing. At this juncture,the company should have been closed but professionalism helped the company to survive.

Using the negative working capital strategy, the corporation continued the work. It created an impression in the market that it was working continuously, which in turn helped it secure funds from market as advances for the purchases. Meanwhile, bankers stopped transactions. In 2006-07, the Government took another initiative to discuss the issue with the bankers.

However, time-bound settlement has not happened so far. In order to get good price for the end product, KSCDC introduced new products in the brand name “CDC Cashews”.

This was the first time in the history of the cashew industry that true value-added products such as Cashew Soup, Cashew vita, Cashew Powder and Bits, developed by the CFTRI were introduced.

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