CLUSTER DEVELOPMENT PROGRAMME, INDIA

DIAGNOSTIC STUDY

SME

PETHA (SWEET) CLUSTER

AGRA (UTTAR PRADESH)

BY
ADESH MOHAN
MINISTRY OF FOOD PROCESSING INDUSTRIES
NEW DELHI

DEVELOPED UNDER
THE TRAINING PROGRAMME FOR THE CLUSTER DEVELOPMENT
AGENTS, ORGANISED BY UNIDO CDP NEW DELHI

&

THE ENTREPRENEURSHIP DEVELOPMENT INSTITUTE OF INDIA

(EDII), AHMEDABAD
YEAR 2001
The views expressed in the Diagnostic Studies are those of the
authors and should not be attributed to UNIDO or to the
institutions they may represent.
 AGRA PETHA CLUSTER

CONTENTS
NO. TOPIC PAGE

1 1
INTRODUCTION
1.1 Global Production of Fruits & Vegetables
1.2 About 'Petha'
1.3 The Petha Cluster At Agra
1.4 A Checkered Path of Growth
1.5 The Present Scenario

2 3
THE PRODUCTION PROCESS

3 4
SKETCH OF THE SMES, OTHER ENTERPRISES &
INSTITUTIONS IN THE CLUSTER
3.1 Industry Structure At Agra
3.2 Local Institutions
3.3 Central Government Institutions
3.4 The Cluster Map

4 8
ANALYSIS OF BUSINESS OPERATIONS
4.1 Raw Material
4.2 Market
4.3 Networking In The Petha Industry
4.4 By-Products
4.5 Industrial Space
4.6 Finance-Term Loans And Working Capital Needs
4.7 Machinery, Production And Testing
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5 11
ASSESSMENT OF ORGANISATION & LINKAGES
• A Static Cluster
• Association Has Not Played A Proactive Role
• Modernization Of Plant And Modification Of Product Is Required
• Testing And Quality Control
• Brand Building

6 12
SWOT ANALYSIS
• Strengths
• Weakness
• Opportunities
• Threats

7 13
VISION FOR THE CLUSTER & ACTION PLANS
7.1 The Vision Statement
7.2 Action Plan (First Year)
7.3 Action Plan (Second & Third Year)
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1. INTRODUCTION
1.1 GLOBAL PRODUCTION OF FRUITS & VEGETABLES
Horticulture is one of the most important economy sectors of India. The country produces over 130
million tons of fruits and vegetables and with that it stands second in world production. The fruits and
vegetables processing industry has been termed as the 'Sun-rise industry' for India. The global processing
business is valued around Rs16000 billion and India’s contribution to that is Rs1400 billion. It is also
interesting to note that at present only 2% of India production of fruits & vegetables is commercially
processed, whereas in the developed countries this figure is more than 50%. The country's average annual
growth rate of processed fruits and vegetables over the last five years has been around 22%.

1.2 ABOUT 'PETHA'

The fruit 'Ash Gourd', the botanical name of which is Benincasa hispida and is commonly known in India
as Petha or termed as Kushmand in ancient ayurveda, is believed to have remarkable curative properties.
Wholesome and nutritive, it is known to act like a blood coagulant and is used in treatment of peptic
ulcers and obesity. The delicious sweet preparations made from it are used for the treatment of
tuberculosis, weakness of the heart and anemia. The Petha has been an Indian favourite for centuries, not
only for its medicinal properties but also for its sublime flavour. This innocuous pumpkin like vegetable
has been transformed into a gourmet’s fantasy in the famous crystalline and translucent form of sweet
Petha.

1.3 THE PETHA CLUSTER AT AGRA

The Petha cluster in Agra is more than a century old. Petha here refers to a form of sweet that is made
from Ash-Pumpkins. The clustering of enterprises involved in production of Petha sweet occurred in Agra
due to the availability of raw fruit here and the fondness of local people for sweets.

Most of Petha manufacturing units are located at Nurie Darwaza in Agra. Legend has it that the Empress
Nur Jahan’s convoy halted at this spot, which housed the Petha industry at that time. She was offered the
humble Petha as a traditional Indian offering of sweets to the guest and the Empress liked its taste and
lavished praise on it. The traders were so touched by the royal approval that they named the market Nurie
Darwaza.

The Petha fruit is easily available in Agra and nearby areas. The Bania and the Muslim community were
the main ones to be involved in this trade and their community's bias has been the major cause for the
growth of this industry. However, the growth of the industry has been extremely slow because of
traditional processing. The processing of the sweet is still completely manual. Only two-three units have
recently started using certain amount of technology for the preservation of the sweet.

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1.4 CHECKERED PATH OF GROWTH

The checkered history of Petha sweet cluster is characterized by the change of environment both external
as well as internal compulsions:

Period upto 1980: The growth was extremely slow but steady. Agra was emerging as a major trading
center and more and more businessmen were starting to set up their manufacturing units here.

During the 1990s:

• The numbers of Petha processing units increased remarkably but most of them were unauthorised
• Some improvements in process like introduction of canning technology
• Number of commission agents was doubled.
• Some exports started to U.S.A. & Middle East Countries
• Pollution control board had directed to shift all the units to another place because of pollution of
river Yamuna. The State Government arranged for land in Kalindi Vihar to set up all the units
there.

1.5 THE PRESENT SCENARIO

Although the production of Petha sweet has been started in many parts of U.P. and Delhi yet the Petha of
Agra ranks at the top because of its good taste and variety. At present there are about 500 units that are
producing Petha sweet in Agra. However, only three or four of them are working efficiently and have
adopted canning technology to export their products in the international markets. The demand for Petha
sweet in the domestic market is also increasing day by day as the sweet is a quite an affordable one and is
known to give energy and keeps the body cool in summers.

This is a labour oriented work as not much mechanisation has been done as yet. Easy & cheaper
processing and easy loan system through commission agents has lead to sub contracting of production.
Many workers after receiving experience of 2-3 years have started running their own units with a small
working capital investment, which too is easily available from commission agents.

Environmental degradation caused by effluents let out by the manufacturing unties has been worrying the
State Government. The waste water from Petha manufacturing units has higher content of BOD
(Biological Oxygen Demand) and COD (Chemical Oxygen Demand) and also contains some suspended
solids, dissolved solids etc. This waste-water is usually let out in the river Yamuna that makes the water
unusable and unsafe. The State Government is planning to shift all the Petha manufacturing units at
Kalindi Vihar where a common waste water treatment plant has been establishes, but most of the
manufacturers are not keen on shifting their units because of lack of other infrastructure facilities there.
Besides, the small manufacturers lack the purchasing power to buy their own pie ce of land.

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2. THE PRODUCTION PROCESS

PROCESS FLOW CHART – PETHA SWEET

Petha Fruit

Washing

Sorting

Cutting into pieces

Removal of seeds

Cutting into small pieces

Pieces are pierced with nail like spikes

Pieces are immersed in Lime Water for 2 hrs

Washing with fresh water

Boiling in water having Phitkiri

Pieces are finally immersed in Canning

boiling sugar syrup for an hour

Drying in trays

Packing

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3. SKETCH OF THE SMES, OTHER ENTERPRISES & INSTITUTIONS

3.1 THE INDUSTRY STRUCTURE AT AGRA
The city of Agra enjoys a world-fame because of the Taj Mahal, which is why one can find tourist inflow
here throughout the year. In the industrial map of India, Agra is famous for its leather shoe
manufacturing, Petha manufacturing and even generator production. Due to pollution related problems,
most of the industries are being shifted to the outskirts of the city.

STRUCTURE OF THE INDUSTRY

It is estimated that there are as many as 500 units in this industry, each one employing on an average 6
persons thus leading to a direct employment of almost 3000 persons. Besides, another 1000 persons are
dependent on the related enterprises and trading activities of the industry. A classification of these units
according to a geographical area in Agra district is given as under:

Geographical Distribution of the Petha Sweet Industry

Place Number of Units

Noorie Darwaja 380
Sheetla Gali 50
Bagh Muzzafar Khan 40
Chippitola 10
Moti Katra 20
Total 500

The Petha industry and businesses can be broadly classified as:

• Big Groups having their own production units or shops. They supply their products to different
cities and have even started exporting sweets.
• Medium groups having their own production units, shop etc but they supply their product to
commission agents and not directly to markets in different cities.
• Very small groups having their own production unit but they are dependent upon the commission
agents even for the raw material and marketing of the product.
• Commission Agents who have no production units of their own but are involved in trading
activity.

The structure of the industry has an upside down pattern of different categories of units according to their
turnover:

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10 Units – Rs30 crores

40 Units – Rs25 crores

450 Units– Rs45 crores

3.2 LOCAL INSTITUTIONS

• Shahid Bhagat Singh Kutir Petha Udhyog Association, Agra

There are about 500 manufacturing units of Petha sweet in Agra but only 100 units hold the membership
of this association. The association was formed in 1980 to safeguard the interest of the industry by
presenting to the Government departments, the problems and the difficulties caused by the Policies etc.
This is the main organisation that provides a link between the industry and trade on one side, and the
Central and the State Governments on the other. The members of this association do not have regular
interactions and meet only when there is any issue regarding Government policies. They do not conduct
seminar, workshops etc for the developmental of the cluster. The association is financially weak as there
is no annual membership fees charged and thereby absence of any means of revenue.

• Public Health Department

The Public health department is a State Government department that monitors the quality of water supply
and draws the samples from manufacturing units to get them analysed in their laboratories. The samples
that are drawn compulsorily by the department inspectors on random selection of units and it involves a
large quantum of work. Besides it also provides testing facilities to the entrepreneurs for a nominal fee
charge.

3.3 CENTRAL GOVERNMENT INSTITUTIONS

• Ministry of Food Processing Industries

A separate ministry was formed by the Central Government in 1989 to promote the food-processing
sector. The ministry implements the fruit product order 1955 that regulates sanitary and hygienic
condition, quality of production, machinery and work area standards. It also provides technical
consultancy to firms and gives them financial assistance through soft loans and grants.

• The Department of Small Scale Industries

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This department also gives consultancy for the development of food processing industries.

• The Food Processing Training Centres (FPTC)

FPTC are Government funded training centres that impart training to persons who are working in food
processing factories or want to set up a new unit.

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3.4 THE CLUSTER MAP

Petha Fruit
Producing areas
1) U.P Machinery Suppliers Local consumer
§ Agra 1) Furnaces Or
§ Etah 2) Pans Hawkers
§ Etawa 3) Sealing Machines
§ Meerut
§ Muzzafarnagar
§ Bulandshahar
Institutional
2) Karnataka
buyers including
§ Bangalore
Petha Sweet Manufacturing Units canteens
§ Mangalore
500 units Domestic Market
3) Maharashtra
10 Units – Rs30 crores – L Delhi, Mumbai, U.P,
a) Pune
Commission 40 Units – Rs25 Crores – M Maharashtra,
Agents 450 Units – Rs45 Crores – S Commission Gujarat, Rajasthan
Agents

Support Institutions
Sugar 1) Shahid Bhagat Singh Dwar Export Market
1) U.P Exporters U.S.A. Middle East
Laghu Kutir Petha Udyog
§ Daurala Countries
Association
§ Rampur
2) Public Health Department
2) Maharashtra 3) Banks

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4. ANALYSIS OF BUSINESS OPERATION

4.1 RAW MATERIAL
Mainly two types of raw materials are used in the processing of the Petha fruit i.e. Raw Fruit (Ash
Pumpkin) and Sugar.

The fruit is brought by the farmers from the districts of Etha, Etawah, Aligarh, Meerut, Mujaffarnagar and
Bulandshahar, to sell them at the Petha Mandis (wholesale markets). It is also brought from some part of
Maharashtra and Madhya Pradesh. During the peak of summer season due to a shortage of Petha Fruit,
the latter is even brought from south India i.e. Bangalore, Mangalore and Pune.

Sugar is supplied from Daurala and Rampur in UP, and from Maharashtra. As 90% of the total units are
very small and lack finance so they are totally dependent upon the commission agents for raw materials
supply. Therefore the commission agents dominate the market trends.

4.2 MARKET
The major market for Petha sweet is the state of UP and then comes Delhi, Rajasthan, Haryana and
Madhya Pradesh. There are some part of Gujarat and Maharashtra also where the sweet is marketed.
Some units have also started exporting canned Petha to Middle East countries. The sales are carried out
through the following channels:

MARKETING CHANNEL PERCENTAGE OF UNITS

Through commission agents 70%
Through own shops & commission agents 20%
Directly through own shops and other markets 10%

As Petha sweet is a perishable item so its export is very difficult but two -three manufacturers with the
use of canning technology have started exporting the product to U.S.A and Gulf Countries, but their share
is still negligible.

4.3 NETWORKING IN THE PETHA INDUSTRY

The commission agents take away a lion’s share of the value added in the Petha industry, first during the
supply of raw fruit and then in the marketing of the finished product. Thus it would be of tremendous
benefit to the manufacturers if the role of these agents could be reduced in the whole game. This is
possible if: -
1. Linkages are developed with farmers and marketing federations.
2. Sufficient capital is made available to the manufacturing units so that they do not have to depend
on the commission agents for their financing needs.
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4.4.BY-PRODUCTS
In Petha Industries there are three kinds of by products:
- Peels
- Pulpy material
- Seeds

It is however sad to note that all these by products are being thrown without any utilisation. If some R&D
work is done on these products, then they can be further used to make some other products.

4.5 INDUSTRIAL SPACE

The large-scale Petha sweet manufacturers who are involved in the canning of product and have FPO
license are well planned and have spacious land and buildings. But these are very few in number and most
of the rest of the industry lacks in adequate space and hygienic and sanitary working conditions.

4.6 ENTREPRENEURIAL BACKGROUND LABOUR AND TRAINING

The manufacturing and trading of Petha sweet has traditionally been a family business. Almost all the
enterprises are managed either on proprietary basis or as partnership concerns. Most of the new units that
are emerging now are actually out of family partitions or partnership separations. The induction of family
descendents in business at a very young age has been a normal practice. The youngsters usually learn on-
the-job and rarely go for a professional or technical education.

There are two types of labour involved in the industry i.e. semi-skilled and un-skilled. The semi-skilled
labourers do not have any professional qualification but they have sufficient experience to manufacture
the product. But the unskilled labourers neither have professional qualifications nor the experience to
make the product. They are employed only to help the semiskilled labour with ancillary tasks. There is no
concept of technical training for anyone in the cluster.

4.6 FINANCE-TERM LOANS AND WORKING CAPITAL NEEDS

• LARGE UNITS
The large Petha making units are well organised in financial planning and control. Their accounting
systems are up-to-date and hence they are able to timely provide the information and financial statements
to the banks to get the required term loan whether for acquiring new machinery, expanding operations or
for day to day working capital requirements.

• SMALL UNITS
The small units are financially less organised and most of them have not availed any term loan from
banks etc. However, they are making use of the banks for their working capitals needs. As many of the
units do not have municipal licenses so they are not easily granted loans and as a result these types of
units are solely dependent on the private financing.
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4.7 MACHINERY, PRODUCTION AND TESTING

• MACHINERIES ARE FAIRLY OLD:

The use of machinery is very limited in the industry. And whatever machinery some units are using is
generally 25-30 years old. The SMEs are mostly unaware of new technologies as the entrepreneurs are
professionally not qualified. Only 2-3 units have started using modern canning technology for the
preservation of Petha sweet for exports.

• PROCESSING METHODS
The process of manufacturing Petha sweet is completely manual. Although the process is simple but one
needs a lot of experience to actually manufacture the product. Hygienic and sanitary conditions are not up
to the mark in most of the units. Old and traditional heating systems i.e. Coal fired bhattis (furnace) are
used for processing. There are reports of some units being interested in looking for alternate fuels.

• TESTING
There is almost an absence of testing facilities in Agra. Small units do not go for testing of their material
while the three-four bigger ones have some in-house equipment for testing their products.

• LABOUR
Most of the workers in these units are unskilled. Some of them have acquired the necessary skills through
experience and learning fellow skilled workers. The entrepreneurs believe that the workers have sufficient
experience and require no further training etc for the improvement of the product.

The wages, work load, bonus etc are governed by bilateral verbal agreements between the employer and
the employee. The labourers are mostly working at the mercy of the owner and hence the wage levels are
comparatively low making the former socially and economically weak.

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5. ASSESSMENT OF ORGANISATION AND LINKAGES IN THE

CLUSTER

• A STATIC CLUSTER
The SME segment of cluster has remained static for decades. The growth and development achieves in
the eighties did not sustain for a long time. This is mainly due to the failure of SMEs to adopt themselves
to the changing trends in technologies, market and products. It is observed that a few units have taken
initiatives to develop processes, products and markets since last two three years, but the most of them are
working in the same fashion as they were 20 years ago.

• ASSOCIATION HAS NOT PLAYED A PROACTIVE ROLE

The association is active only in case of policy related issues and has been ignoring the overall
development of the cluster. A proactive role from the association can lead to a healthy growth and
development of healthy linkages for the industry.

• MODERNISATION OF PLANT AND MODIFICATION OF PRODUCT IS REQUIRED

The processing of Petha is still completely done manually, because of which productivity is low, and the
hygienic and sanitary conditions are not maintained. As India has a monopoly in this product, a slight
modification in production methods and packaging can open new markets at the international level.

• TESTING AND QUALITY CONTROL

The testing and quality control systems have so far not been implemented as an integral function of the
industrial management due to a lack of awareness.

• BRAND BUILDING
Some of the units are already popular by their brand names in the domestic market. The importance of
brand building is slowly being understood by the enterprises.

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6. SWOT ANALYSIS

STRENGTHS WEAKNESSES

• Almost all the entrepreneurs have business
background
• Easy availability of cheap labour
• Comfortable availability of raw materials and
other inputs
• Installed/production capacity is more than
sufficient.
• Connected with main rail line and road for easy
transportation
• Easy availability of credit.
• Low levels of modernization and up-gradation
of technology.
• Low Labour productivity.
• Lack of awareness about quality/pollution
control/energy saving measures etc.
• Product diversification is limited.
• High dependence on commission agents for
marketing.

OPPORTUNITIES THREATS

• Untapped potential in Rajasthan, Haryana, • Improvement in quality to national and

Maharashtra, Gujarat international standards
• Scope of export to USA and Middle East • Government policies
countries.
• Favourable Government policies

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7. VISION FOR THE CLUSTER & ACTION PLAN

7.1 THE VISION STATEMENT
"A shift from Quantity production to hygienically processed Quality product with an increase in profitability by the year 2004."

7.2 ACTION PLAN (FIRST YEAR)

Sl. No. Activity Number Approx cost Total Cost (Rs) Action By Man days For
(Rs) CDA

1 Strengthening of the 4 10,000/- per 40,000/- (30,000/- Proposed Shahid 30 days

Association meeting to be borne by MFPI & Rs Bhagat
10,000 by Assn) Singh Kutir
Petha
Udhyog
Association
(Assn)
2 Creating a database Miscellaneous Rs. 1000/- Assn.
of the cluster Expenses

3 Seminar on Quality, 4 10,000/- per 40,000/- (30,000/- Proposed Assn 20 days

Hygiene, Pollution seminar to be borne by MFPI
Control, legal & 10,000/- Assn.)
matters etc.
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4 Workshop on 2 25,000/- 50,000/- Proposed to be borne Assn. 20 days

Packaging 1,50,000/- by MFPI & 1,50,000/- Assn.
consultancy
5 Training programme 4 10,000/- per 40,000/- (30,000/- Proposed SGS 20 days
on quality, hygiene, training to be borne by MFPI
legal matters & 10,000/- Assn.)
Total Proposed to be borne by
MFPI – 1,40,000/-
ASSN. – 1,81,000/-

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7.3 ACTION PLAN (SECOND & THIRD YEAR)

Sl No. Activity Period

1 Common website 2nd Year

2 Setting up network chains

3 R&D on Technology for process, product and waste

material

4 Quality Certification ISO-9000, ISO-14000 HACCP

5 Market development

6 Formation of Common testing facility Centre 3rd Year

7 Technology up gradation in manufacturing units

8 Common Brand Name

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