Milaap - Field Report on Swayam Shikshan Prayog, Maharashtra

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  • 1. Milaap Field Report – Sakhi Retail Private Limited (SRPL) and Swayam Shikshan Prayog (SSP) Pune, India – 8th April, 2010 She is hardly aware that she could be the part of a new wave in India’s retail network. Reaching to the rural consumers has been an enigma to firms across board; we see the numbers, we know there’s demand; yet the idiosyncrasies of the market and the cost of operations have kept many from realizing the dreams. There is hardly a doubt that innovation in the distribution channel is essential and among the many models being tried out Sakhi Retail Private limited, a subsidiary of Swayam Shikshan Prayog, is trying out one of the most promising of them. The idea is simple; get women from local villages as the foot-soldiers and rural entrepreneurs to deliver goods to the last mile. Easier said than done, the challenges in the field are immense and that’s where you need leaders. The leadership of Prema Gopalan and the vision of Dr. C K Prahalad was the genesis of this initiative. The Genesis “Sakhi retail works with the dual objective to augment the income source for the families especially the women and to develop a sustainable distribution channel for innovative products” remarks Upamanyu Patil, CEO of SRPL, a subsidiary of SSP. Operations manager Kaka Adusule has been with SSP for the past 15 years and manages the critical work of warehouse operations for the warehouses. “I started my career with SSP and would like to stay on till the end” says a motivated Kaka, who is also a member of the Maharashtra government committee for monitoring of sanitation funds to panchayaths. All the years and the experience with Government projects has made him aware of the region like the back of his hand. The Products: SRPL strategically decides the products to be distributed and social benefit ranks top on the agenda. It immediately helps to focus on innovative products and avoid conflicts with other distribution channel. It started with BP Energy’s smokeless cookstoves (called Oorja) and pellets, which were a real blessing for the women in the extreme heat. The encouraging success of cook stoves has helped SRPL venture into innovative products that touch other fundamental aspects like clean water and affordable lighting. The partnership with Godrej in promoting the mini- refrigerators has been an instant hit as it helps women to store vegetables. “Vegetables get spoilt in two days in summers and even our own kitchen garden produce can not be preserved. Chotukool is really popular among sakhis”, says Nanda Jagtap who started with SRPL two years back. Another popular product is the portable solar lights made by D.light, which comes in extremely handy for kids during long power cuts in summer time. “The choice of products is important to the overall positioning of the network. We have built the trust in introducing products that address fundamental concerns of the people and this is the greatest asset of the organization” mentions Upamanyu. 1
  • 2. The backbone of operations is rural women called Sakhis, who are essentially members of the Self Help Groups (SHGs) of SSP. Over the years, the operations of SSP have created the required trust among the people which is essential to build consumer confidence in new products. Each Sakhi, intending to be a member of the retail supply chain has to chip in an initial capital to buy the goods. The transportation costs are borne by SRPL from its warehouse to the villages of the Sakhis. A good performing sakhi could earn upto Rs. 4500 a month. The general income ranges from Rs 500 – 1,200 and about 200 of them above Rs 2,000; involvement in this enterprise has pushed up their incomes by nearly 30 per cent. “It helps a lot to support the family and provide for the additional requirements for educating the children” says Savita Makde, a proud mother of four, able to support the education of all her kids. SRPL is taking some new initiatives to step-up visibility in the area. A new showroom was inaugurated in April this year to increase market presence and awareness. Kanitkar, one of the Area Managers, involved in SRPL mentions “People in urban/semi-urban areas always want to see a shop”. Other initiatives like a van campaign has also started with a promo van – see photo – to promote the products. Innovative supply chain linkages One of the most important challenges in promoting new products in rural India is education – first the channel and then the consumers. It’s a huge challenge to first gather the manpower, train them and then retain. Each new product, a solar lantern, chotukool (mini-refrigerator) or PureIt ( entails a high touch concept selling. That immediately translates to escalation of cost of operations. SRPL’s strongest advantage is the pool of SHG members of SSP. First the involvement with SHG operations acquaints the Sakhis with processes etc and hence an imminent change in perspectives. This is extremely critical in breaking the social barrier and letting women venture out of the household work. Second, the closes connect helps to build confidence within the community, an essential feature of sales in rural India. Third, arranging training and briefing sessions is a lot easier for companies with SRPL. The success with consumer durable products has helped SRPL foray into larger installation based systems, However, the network does need active support from suppliers as well. Addressing servicing issues on time is essential to the brand name of SRPL. Also timely training and marketing initiatives are essential to sustain the channel. Upamanyu says, “I understand there are challenges in managing cost of operations; but we are confident. We have been able to cut down transportation costs by nearly 50% and expect it to go down further as the channel moves towards stability”. His beaming confidence comes as a refreshing change in the otherwise arid air. Transportation and overhead costs do play a decisive role in viability of the business and they are directly dependent on the order quantities of the sakhis. For example, a dedicated vehicle is viable only on order quantities above Rs. 5000. To circumvent the problem, sometimes smaller order quantities are sent in local buses. However, the order quantities are essential to achieve scale and hence capital availability for Sakhis is important. Milaap aims to provide low cost capital to the Sakhis to facilitate higher investments at their end. The Role of Milaap The Milaap team visited SSP office in Osmananbad which has been functional from the time of the Latur earthquake. Meeting the members of the SSP initiative was awe inspiring for the team. We met Godavari Shisagar who has recently been conferred with the Grass Roots Award for her contribution to the community. Starting as a Sakhi she has been passionate about the entire initiative and is now a member of the capacity building team of SSP. The financing arm of SSP was started in 2006 under the name of Sakhi Samuday Kosh, a section 25 company. It has been steadily increasing the presence in the region with a total disbursement of over Rs. 11 cr in the last financial 2
  • 3. year and with a healthy recovery rate of close to 97%. SSK has been trying to diversify to education, emergency and house repair loans as well. However, financing of Sakhis has been a challenge because of the high cost of capital which makes the loans difficult for Sakhis. “At the current rate of 24% diminishing, it becomes difficult for Sakhis to generate enough for repayments. It would be great if Milaap can source low cost capital which can eventually be lent at lower costs to the Sakhis. We certainly welcome your initiative” notes Rajesh Badakh, CEO SSK. The organisation currently is catering for clients in rural and urban areas through the SHG and the JLG model respectively. It takes vision and more importantly extreme rigour to develop a distribution channel in one of the most underdeveloped areas in Maharashtra. 3