Jayaashree industries making meaning to the society


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Case Study for Operations & Supply Chain Management course on Jayaashree industries

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Jayaashree industries making meaning to the society

  1. 1. IMT Hyderabad Jayaashree Industries: Making meaning to the society Case Study for Operations & Supply Chain Management course Pankaj Gaurav, Arakedeep Meta, Harshal Ghandhi, Nilay Mehrotra, Digvijay Singh , Aditya Tarun Group: 4 , Section: B
  2. 2. Jayaashree Industries: Making meaning to the society When Arunachalam Muruganantham perceived the idea that he was going to do something about the fact that women in India can’t afford sanitary napkins, he went the extra mile: He wore his own for a week to figure out the best design. Chances are you've never heard of Jayaashree Industries or its owner Arunachalam Muruganantham yet. With his roots in rural Tamil Nadu, his main claim to fame is that he almost single-handedly created a model for making affordable sanitary napkins in the country. It's a subject few men know or dare to ask about. Muruganantham's curiosity about his wife's use of cloth during her periods led to shocking revelations and a long body of research. Driven by the revelation that his wife was torn between spending money on milk for the children and buying commercially manufactured sanitary napkins, Indian innovator and inventor Arunachalam Muruganantham embarked on a long and intensive journey to find a solution. His achievement – a simple machine – is bringing dignity to poor women and providing them with a much-needed income source. Early Life Muruganantham (47) hails from Pudur in Coimbatore, Tamil Nadu. When he was young, he lost his father, Mr. S. Arunachalam, in a road accident. His mother, Mrs. A. Vanitha, who was a housewife, had to work as a farm worker to support the family. Around this time, he discontinued his studies after SSLC to earn a living and help his family financially. During his formative years in school, he displayed a keen interest in science and astronomy. His science teacher encouraged him to experiment and give birth to new ideas. He had participated in a school science exhibition and won an award for a chicken incubator that he had developed. Most of his classmates came from neighboring farms. He spent a lot of time visiting the farms, learning about farm implements and also tried his hand at modifying and repairing them. For over three decades, he faced economic hardships while trying his hand at various trades to support his family. He worked in various capacities; as a part time technician at Lakshmi Machine Works, Coimbatore, machine operator, insurance agent, farm laborer and yarn selling agent. Currently, he runs his firm, Jayashree industries, which he has built from scratch centered on commercializing his innovation- the mini sanitary napkin machine. Inception Arunachalam Muruganantham was all set to find out more and more for his research on creating a sanitary napkin for poor women. He rummaged through garbage dumps in the middle of the night for discarded pieces of cloth, rags and napkins. "When people came to know they were suspicious." That was not all. After making some pads manually, he attempted without success to get college girls to try his product and fill in feedback forms. He finally decided to do what most men typically wouldn’t dream of. He wore one himself--for a whole week. Fashioning his own menstruating uterus by filling a bladder with goat’s blood, Muruganantham went about his life while wearing women’s underwear, occasionally squeezing the contraption to test out his latest iteration. It resulted in endless derision and almost destroyed his family. Needless to say, it didn't earn him any friends, and everyone thought he had gone mad. "My wife and mother left me. Then they chased me out
  3. 3. of the village," he says.But he knew he was onto something graver than a mere inconvenience. At the root was what he calls the "'triple A problem - Affordability, Availability and Awareness.' It's something only educated and rich people can access," he says. Right now, 88% of women in India resort to using dirty rags, newspapers, dried leaves, and even ashes during their periods, because they just can’t afford sanitary napkins, according to "Sanitation protection: Every Women’s Health Right," a study by AC Nielsen. Analyzing branded napkins at laboratories led to Muruganantham’s first breakthrough. "I found out that these napkins were made of cellulose derived from the bark of a tree," he said. A high school dropout, he taught himself English and pretended to be a millionaire to get U.S. manufacturers to send him samples of their raw material. Demystifying the napkin was only the first step. Once he knew how to make them, he discovered that the machine necessary to convert the pine wood fiber into cellulose cost more than half a million U.S. dollars. It’s one of the reasons why only multinational giants such as Johnson & Johnson and Procter & Gamble have dominated the sanitary napkin making industry in India. He realised that the wood fiber was good not only in securely draining the fluids but also in retaining the shape of the pad. He then procured the raw material from Mumbai that came in the form of sheets and boards. It took Muruganantham a little over four years to create a simpler version of the machine, but he eventually found a solution. He developed his own defibering unit to process the raw material in desired sizes and shapes. Having succeeded in this, he developed the machines for subsequent stages to do the core forming and sealing of napkins. Muruganantham developed the final assembly of machines in 2004. He distributed the first set of samples among his neighbors to get their feedbacks. He got encouraging inputs on its efficacy. Subsequently, he improved on the machine by adding the UV sterilization unit, calibration for various pad sizes and increased the production rate to target 1000 pads per day. He indeed succeeded making 1000 napkins a day, which retail for about $.25 for a package of eight. After seeing the ATM in cities, dispensing cash to the customers as required, the innovator decided to build a sanitary napkin dispenser (vending machine) with a coin slot that could be set up in hospitals, colleges and public places to supply napkins on demand. The vending machine was developed in 2008 and has a capacity of 25 pads. The birth of Jayaashree Industries Mr. Muruganandam, the founder of Jayaashree industries started it in the year 2004 by installing its first assembly of machines. During initial years, Mr. Muruganandam conducted certain experiments to conclude the best possible raw material for sanitary napkin. The plants procurement of raw materials was done from Mumbai during initial years. Development of de-fibering unit of the plant was the next step in order to obtain desired size and shape. The core forming and sealing of napkins were thus carried out by machines. In order to run the trial test, he distributed the napkins to its neighbors from where he obtained a favorable response. After this initial phase of success he expanded his social venture. The machine designed by Mr. Muruganandam was priced at only Rs 65000 as against the machines costing Rs 3.5 crore by leading sanitary napkins manufacturers. Continuing his process of innovation and improvements of its product, in the year 2008 he installed vending machines of sanitary napkins in front of hospitals, colleges and public places. The initial sanitary napkin vending machine had a capacity of serving 25 sanitary napkin to its customer. The National Innovation Foundation in Ahmedabad helped him procure a patent, which he says he never intends to sell to a multinational company or a private investor. "The purpose was not to exploit the patent. I
  4. 4. am using the same IPR to empower women in India. I am making them owners of this project, not workers," he says. "My vision is to make India a 100% sanitary napkin country." The machines are sold on a 'turnkey' basis, whereby entrepreneurs are supported on the raw material supplies and with training. At a starting price of `80,000, each machine can produce 1,000 pads in an eight hour shift. With each pad costing Rs 1 to Rs 1.50 on average, overheads included, Muruganantham says they can be sold for Rs 1.50 to Rs 2 apiece for a sizeable profit. Moreover, he claims that while the pads may not match the glossy sophistication and packaging of large brands, they score far better in terms of functionality. "Our pads weigh 10 gm against the 6gm pads by multinationals that sell at `3 each. We give double the size at half the price," he says, adding that he plans to come up with organic napkins soon. "Instead of transporting the product to rural markets, we have created a decentralized manufacturing model," he says. The machines are bought by entrepreneurs, NGOs, self-help groups (SHGs) and state governments (under the National Rural Health Mission) who in turn deploy a unique approach to distribution, keeping in mind the sensitivity of the category in rural markets. Some have created their own local brands too. Typically, 'resident dealers' are appointed in every street/locality. These are women who inform and educate women in other households about the perils of using other rudimentary and unsafe methods. "It's done silently and even the male members of their families don't know," says Muruganantham. "They are ready to open the packet and sell single also." Sometimes they sell through barter as well. "It's something the big companies don't understand. To compete they need passionate staff." Staying focused on a B2B model is a sound strategy, agrees Abraham Koshy, professor of marketing at IIM Ahmedabad. "In the sanitary napkins market, taking on big brands at national level is very difficult. Even if you are a small regional player you need distribution muscle," he says. "That's where a local manufacturer can manage costs. Conversion and marketing costs too will not be as large. Jayaashree Industries have been able to expand its presence of machines to 14 states of India and its machines are in demand at foreign countries such as Nigeria, Uganda, Kenya, Nepal, Bangladesh etc. Benefits of the Product: Benefits to Women: 1) It allows women to lead a hygienic life 2) The product provided a healthy lifestyle for women 3) The low cost venture provides regular income to village women community Benefits to Society: 1) The venture proves to be an uplift of below poverty line people and rural women community lifestyle 2) Better health and better care for children 3) A quality product at an affordable price for all 4) A new area of social venture entrepreneur development Napkin Market Currently the size of the Indian Sanitary Napkins market is 2,000 crores it is growing 16% annually. There is a large Female Group even they aware of the napkins due to affordability (cost of MNC napkins) they are not using napkins, by reaching the particular Female group with suitable pricing, the napkins can be branded very quickly in local Market.
  5. 5. Raw Materials The main raw materials used for making sanitary napkin in this machine include wood fiber, thermo bonded non-woven, polyethylene – barrier film, release paper, super bond paste & LLDPE 50 GSM – packing cover. Wood fiber is imported from USA, Thermo bonded no-woven fabric is imported from Malaysia. Other raw materials like barrier film, release paper, super bond paste & LLDPE 50 GSM packing cover are procured from local vendors. (Exhibit 1) Plant Details  Installed Capacity The installed capacity of unit is 1,440 Napkins per day on single shifts basis. The annual capacity works out to 4,32,000 Napkins.  Machinery The following items of plant and machinery are required for the Plant 1. Defibering Machine 2. Core forming Machine 3. Napkin Finishing Machine 4. Ultra Violet Treatment Unit (Exhibit 1) Production Process In the first stage, the raw material in the form of wood fiber is taken into a de-fiberation unit (36’’ x 24"x 30"). The raw material is cut up by 4 blades, fitted on a disc at the bottom of a conical vessel, to deliver de-fiberated wood pulp with a filament length of 1 to 1.5 mm. The unit is powered by a 1 HP single-phase motor rotating at 10,000 RPM to deliver the cutting action and deliver soft pulp at the rate of 150 gm per minute. The second stage involves compressing the de-fibered pulp to the required shape of the napkin. This is done using a core-forming unit (24" x 24" x 30"), operated by a foot pedal. The mould or core block is made of food grade aluminum and facilitates making two kinds of sanitary napkin pads; one with a variable density and the other with constant or equal density. The variable density pads have more density of material at the bottom for better absorption. The third stage involves sealing the pads in the napkin-finishing machine (36" x 30"x 30"), where they are wrapped with non-woven fabrics such as polypropylene and sealed. The operator uses the foot pedal to power the unit and seal the pads in three sides. The unit is rated at 40 Watts and seals about 4-10 napkins per minute using a cam operated limit switch, which facilitates fast heating and cooling within two seconds per stroke. The fourth stage involves passing the sealed pads through a dedicated Sterilization unit. The sterilization can be achieved either by manually exposing the pads to the UV lamp or by batch-type sterilization unit. The sterilization units consist of a closed container with UV lamps. In the UV chamber, sealed pads are sterilized by exposing them for 10 seconds. The UV sterilization is achieved by using short wave Germicidal Erasing Lamps
  6. 6. with specific wavelengths between 240 - 280 nanometers with a peak wavelength of 265 nanometers. Once the sterilization is complete, the pads are ready for the finishing operations consisting of trimming, position strip fixing, packing and dispatch. The machine can produce over 900 sanitary napkin pads per day @ 4 napkins per minute. It needs a maximum of three people to operate the three main production stages. The rate of production can be enhanced using two core-forming dies. In India expensive imported machines costing over twenty five lakh rupees are used in manufacturing. This makes the price of the product beyond the reach of women in middle class and lower income group. Production process requires some precautions as mentioned in Exhibit 2. Product Distribution Product is distributed with help of Local entrepreneurs and Self Help Groups (SHPs). Who have launched the low cost pads in various trade names (EASY FEEL, FREE STYLE, STYLE FREE, FEEL FREE and BE FREE). These products are available in the local market at an affordable cost range of Rs 13 for a set of 8 pads and Rs 15 for a set of 10 pads. With the support from the Micro Venture Innovation Fund (MVIF) at NIF, the innovator has been able to install over eighty units in thirteen states across the country. He has received support from other sources as well. Future Challenges Muruganantham sees it is a business model that “can deliver livelihood, hygiene and dignity to poor women, and help them strengthen society,” according to his website. Like many innovators and inventors, his work at first was little understood by others and meant he had to plough a lonely furrow. But his persistence paid off and is now receiving attention from countries across the global South. Apart from its technological simplicity, the idea is to make it easy for women to form cooperatives and businesses to boost their incomes. At first, he had a difficult time convincing people of the utility of the machine. He enlisted his wife to help with the marketing of the new napkins to nearby women. He says the advantage of his business model is that it turns the making of the napkins into a sustainable, grassroots activity. It provides an essential commodity for poor women at an affordable price, removing middlemen and using a simple, non-chemical technology. It also cuts down on expensive transport costs by keeping manufacturing local. Though he’s won numerous awards (and won his wife back) he doesn’t sell his product commercially. "It’s a service," he says. His company, Jayaashree Industries, helps rural women buy one of the $2,500 machines through NGOs, government loans, and rural self-help groups. "My vision is to make India a 100% napkin-using country," said Muruganantham at the INK conference in Jaipur. "We can create 1 million employment opportunities for rural women and expand the model to other developing nations." Today, there are about 600 machines deployed in 23 states across India and in a few countries abroad. This machine heralds a new revolution in personal hygiene, for women across all sections of society, while creating potential perennial revenue stream for small scale entrepreneurs, and self help groups by deploying a self sustaining micro-enterprise model. With this machine slowly gaining national recognition, many self help groups, corporates and organizations such as M S Swaminathan Research Foundation, All India Woman’s Conference, DATA, Malabar Hospital, Community Center-AAI Delhi, Mandal Mahila Samkiya and Sammilana have placed orders for this machine. And while Muruganantham is focused on making the machine a success, he is already looking forward to working on its further growth and new innovations. The only question is: Is this model going to be sustainable?
  7. 7. Exhibit 1: Cost Structure Plant and Machinery The following items of plant and machinery are required for the project. Details Qty Rs. Defibering M/c 1 No 20,500 Core forming M/c 1 No 5,800 Napkin Finishing M/c 1 No 28,500 Ultra Violet Treatment Unit 1 No 10,400 Other accessories - 4,500 Total 69,700 Other Accessories S.No Items Nos Value (Rs) 1. Weighing Scale (To Weigh Wood Pulp) 1 3000 2. Work Table 2 2000 3. Plastic Buckets and Trays 5 500 Total 5500 Required Workers Workers S.No 1. Semi Skilled Labors (Daily Wages Rs.70 Per Day) S.No Nos Salary(Rs.) 4 Workers 7000 Monthly Administrative Expense Expenses Value (Rs) 1. Rent 750 2. Electricity Bill 500 3. General Administrative Expenses 1000 Total 2250 S.No Required Raw Material per Day Raw Material Unit Value (Rs) 1. Wood Pulp 14.5 Kgs 798 2. Top Layer 220 Mts 340 3. Back Layer 350 Grams; 65 4. Release Paper 15 Sheets 30 5. Gum 1 Kg 110 6. Packing Covers 180 Nos 135 Total 1478
  8. 8. Exhibit 1: Cost Structure(continued) Total Napkins Production Details Per Day (Minimum) Per Day Production 1440 Napkins 8 Napkins per Packet 180 Packets Price Fixing Per Napkin Packet(Rs.) Details in Rs. a. Raw Material per Napkin Packet 8.20 b. Wastage 0.10 c. Cost Per Napkin Packet 8.30 d. Add Our Profit 60 % 5.00 e. Whole sale Price 13.50 f. Add Whole seller's Profit Margin : 20% 2.50 g. Maximum Retail Price per Packet ( MRP) 15.80 Sales Per Month(Rs.) Details in Rs. Value Of per Day required Raw Material 1478 x 25 One Month (25 Working Days) 36,950 Per Day Napkin Production 1440÷8 = 180 Pkts One Month (24 Working Days) 24 x 180 = 4320 Pkts Per Packet Whole Sale Price 13.30 Value of One Month Production 4320 x 13.30 One Month Sales 57,456 One Month Raw Material Expense 36,950 Total Profit 20,506 Labor Charge - Less from profit 7000 Administrative Expenses - Less from profit 2250 Net Profit per Month 11,256 Profit Margin On one Month Total Raw Material Value 31% S.No Total Investment(Rs) Investment Details Value (Rs) 1. Advance for working Place 5000 2. Machineries, Installation and training fees 83,450 3. Other Accessories 3500 4. Running Capital for Two Months 86,660 5. SSI Registration and Other Admin Expense 7,000 Total 1,85,610
  9. 9. Exhibit 1: Cost Structure (continued) Net Profit per Year (Rs) Profit per Month = 11,256 Per Year profit 11,256 x 12 = 1,35,072 Interest for total investment @ 14 % = 25,985(A) Depreciation of Machineries 10% = 8000 (B) A+B = 33,985 Net Profit Per year; = 135072 - 33,985 = 1,01,087 Profit margin on Total Investment = 55% Exhibit 2: Precaution required for production of Sanitary napkin from hygiene point of view Cleanliness of production and storage place is mandatory. However if you wish to maintain a clean atmosphere please follow the points mentioned below. 1. The napkin manufacturing place should be clean ( like our Kitchen). All work should be done on work table only (like QC, packing, Etc.) 2. While making napkins worker should wear work coat, hand gloves, head cap and mouth closer. 3. No foot wear allowed while making napkins. 4. Don’t allow visitors (they sneeze or touch the napkins) if necessary visitors can be allowed on workers uniform. 5. Everyday production should be packed and stored; no napkins should be kept open after production.
  10. 10. Exhibit 3: Plant and Machinery snapshots
  11. 11. Exhibit 3: Plant and Machinery snapshots (continued)
  12. 12. References 1. http://www.newinventions.in/ 2. https://docs.google.com/viewer?url=http%3A%2F%2Fwww.vigyanprasar.gov.in%2FRadioserials%2FRa dio_Serial_Grass_Root_Innovations%2FEpisode_1_1.pdf 3. http://newinventions.in/aboutus.aspx 4. Reshma Kamath, Seoul National University ,“Jayaashree Industries: The Low Cost Sanitary Napkin Maker” 5. 6. 7. 8. http://www.minnpost.com/global-post/2010/05/meet-muruganantham-indias-tampon-king http://www.globalpost.com/dispatch/india/100519/tampons-india-health http://www.telegraphindia.com/1091125/jsp/nation/story_11783178.jsp http://www.changemakers.com/node/70734/images