Samridhi proposal-Jan


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Samridhi proposal-Jan

  1. 1. About SamridhiSamridhi is a registered for-profit company and is an associate company of Sanchetna Financial Services(Sanchetna), a microfinance institution working in the rural areas across five districts surrounding thecity of Lucknow in Uttar Pradesh, India. Samridhi’s objective is to promote sustainable employmentopportunities for the rural and semi-urban poor, primarily by filling the gaps of local value chains in away that unlocks greater potential for community-based economic activities. Employment platformsinclude dairy farming and vegetable vending; Samridhi plans to pilot test and launch the dairy initiativein late summer 2011, with the vegetable vending platform to follow in early 2012. Samridhi is alsoseeking to set up Farmer Facilitation Centers for better availability of farm inputs for the marginalfarmers. This profile describes the dairy initiative in greater detail.Executive SummaryFor a long time, it was regarded that rural development is the primary pre condition for growth of adeveloping country. This understanding is going through a change, with rapid urbanization becoming thetrend of the day. However, this has had adverse implications for the agricultural sector. With the fastdiminishing land holdings, the predominantly agricultural dependant population is struggling to meettheir ends. Agriculture has been losing its capacity to engage a large workforce. In such a scenario, anylivelihood solution to the rural population should be one which is labor intensive and has a capacity toabsorb people who are otherwise unemployed or underemployed.While looking to make an intervention in the field of livelihood solutions, the promoters of Sanchetnaresearched about the Dairy sector. Dairy sector is the single largest contributor of agricultural sector toIndia’s Gross Domestic Product, with its annual value exceeding Rs. 11790 crores in the year 20041. Indiahas emerged as the largest milk producer in the world with about 108 Mn Ton milk production in theyears 20062.Despite this, Indian agriculture is essentially a ‘crop-livestock production system’, where crop residuesare fed to the milch animals. Besides this, dairy farmers utilise family labour available in their ownhousehold for milk production activities. This very passive nature of livestock-rearing helps Indiandairying industry retain its cost-competitiveness vis-à-vis many other leading countries like New Zealandor Australia. However, this also gives way to low milk productivity of milch cattle & low quality of milkwith regards to the internationally accepted standards. E.g. Productivity of cattle in India is 987Kg/lactation whereas global average is 2084 Kgs/lactation3. Other factors for lower productivity can be1 Smallholder dairy development - Lessons learned in Asia... From FAO Directory2 Animal Husbandry Department, Government of India3 Smallholder dairy development - Lessons learned in Asia...From FAO Directory
  2. 2. summarized as poorer quality of cattle and also lack of extension services in the field of animal healthand up-keep. At the same time, meaningful intervention in this field can take care of providing livelihoodsolutions to about 75% of rural households who own two or more cattle4.Genesis of SamridhiIn order to offer financial services to a vast section of society, predominantly rural, which is outside theambit of organized players, a group of like-minded young professionals having had exposure to differentsectors started a company in the name of Sanchetna Financial Services Pvt Ltd in mid-2008. Afterworking closely with rural populace for about a year, the promoters realized that financial services alonewill not make sufficient & long-lasting impact on the livelihoods of these people unless these areclubbed with other business support services.Thus, to support various elements of the eco-system around a host of livelihood activities beingpracticed in the rural areas, the promoters set up Samridhi Agri Products Pvt Ltd. Equipped with thevaluable insights gained from the close relationship of the former company with rural people, and giventhe past work experience of some of the promoters, Dairying was chosen as the activity where Samridhisought to make interventions. While considering dairying as an industry, several support services areassumed to go hand in hand, like availability of high-yielding varieties of milch cattle, provision ofnutritional cattle feed, institutionalization of milk procurement from villages, timely payment to milk-pourers, artificial insemination, veterinary services, cattle insurance, milk processing, packaging andmarketing.Promoting dairying not only touches the economic aspects of the lives of rural populace, but alsopromotes gender and social equity: 58% of the total workers engaged in the dairying sub-sector arewomen. The participation of women in other activities, including agriculture, is low compared to that inanimal husbandry, particularly dairying. Further, the majority of dairy workers belong to socially andeconomically disadvantaged communities: Scheduled Tribes (STs), Scheduled Castes (SCs) and OtherBackward Castes (OBCs) together constitute about 69% of the persons employed in dairy sector.Target GeographySamridhi had first piloted the dairy model in Deva block of Barabanki district of Uttar Pradesh. The teamis currently piloting the new model in the same block and would later expand to other blocks.Barabanki district is marked as ‘A’ category district that is the socio economic parameters are below theparameters set on national average grounds. Deva Block is a rural block, where agriculture, animalhusbandry, and bee keeping are the main economic practice. The main crops grown are wheat, paddyand maize. Menthol oil is a vastly grown cash crop in the region. The average income for a farmer or adairy producer is very low and there are many villages with a large number of people below poverty line.4 Smallholder dairy development - Lessons learned in Asia...From FAO Directory
  3. 3. About the Region – Uttar PradeshUttar Pradesh, located in north India, is the most populous state in the country accounting for 16.4% ofthe country’s population, and is also the world’s most populous sub-national entity5. Lucknow is thecapital city of Uttar Pradesh. The per capita income of the state is among the lowest in India. UttarPradesh, along with Bihar and Orissa, lags behind in social indicators such as medical facilities, birth rate,death rate, infant mortality rate, literacy, unemployment, etc.6Majority of the population is dependent on farming as its main occupation. Poverty estimates providedby the Planning Commission reveal that Uttar Pradesh has 59 million people who are below poverty line.Government schemes and market reforms have failed to percolate down to the rural economy in UP. Asper the multi-dimensional poverty index (MPI)7, Uttar Pradesh has over 134 million people (21% of5 Website of the Govt. Of UP - The Multidimensional Poverty Index (MPI), an Oxford poverty and human development initiative, complementsincome poverty measures by reflecting the deprivations that a poor person faces all at once with respect toeducation, health and living standard
  4. 4. India’s poor) who are multi-dimensionally poor. Even microfinance, which has penetrated large parts ofIndia, has frustratingly low penetration in Uttar Pradesh. Total outreach of microfinance in the state isaround 1.2 million8 (compared to the total covered, 23 million, in India).Current OperationsHaving started its operations towards the end of 2009, Samridhi started with milk procurement fromApril’10. Samridhi currently procures about 1000 LPD from 13 villages. Milk procurement is faced withthe factor of seasonality, which is much more prominent in case of buffaloes. Therefore Samridhi hasmade special efforts to procure cow milk even by putting a differential pricing strategy that gives weightto SNF (as compared to fat) which makes it more equitable for cow milk.Samridhi has set-up one model unit which comprises 10 - 12 villages having a capacity to pour about2000 LPD. Each of these units is given one Bulk Milk Cooler (BMC) and is manned by one BMC In-Chargeand three-four employees who will look after milk collection from villages.As on date, Samridhi serves 150 farmers across 10 villages and buys milk from them at better thanmarket rates. Regular milk sales allow these people to move from subsistence to earning a market-basedincome. Typically, these women already own 1-3 cows and sell milk to a middleman every day. However,they are constantly subjected to delayed and below-the-market payments for their produce. Throughthe dairy initiative, Samridhi works with these women and gives them accurate and timely payments.Samridhi’s rates are higher than that given by the middlemen or even the state dairy cooperative.Samridhi serves the population that did not have any control over the pricing or payments of theircommodity and consequently was getting disillusioned from dairy as a business. However, the team feltthat this model was not impacting the lives of the ultra poor or the poorest of the poor.Samridhi thus developed a new model to effectively serve multiple layers of the poor.The New ModelSamridhi works with two different client segments in the dairy initiative:1. Ultra Poor (“UP”) Households (under $1.25 / day)8 Microfinance map of India – source: Sa-dhan
  5. 5. These are small, rural farmers who are among the poorest groups in India and have little to no assets. Atpresent, they cobble together odd jobs, such as manual labour or field work, to earn an income. Theyseek steady income to stabilize their lives and address their basic necessities. Samridhi will developrobust selection criteria to ensure that only ultra poor women are given access to stable employment asthey do not have any other sources of employment.The basic premise of the model is to make UP families part of the milk production cycle and to make useof the reproductive assets to reproduce as many similar nature assets as possible. This will allowSamridhi to reach out to as many such families as possible. This will in turn make sure that Samridhi hasa large number of milk producers having their own productive assets. While the cattle is owned by theorganization, the client gets a fixed payment and portion of milk as remuneration for the same. Thesubsequent offspring of the cattle is owned by the client.Under this model, Samridhi provides each of their clients with one or more cows with total productivityof 8 Litres per day or three to five goats with total productive capacity of 5-6 Litres for milk production.In case of cow, the client rears the cow on her own and meets all related expenses. As long as sheprovides milk worth Rs. 16,580 every year, she gets a fixed wage of Rs. 650 per month. Any milk abovethis minimum requirement belongs to the client and she can decide whom to sell this milk to and atwhat price. Taking a particular example of 8 Liters milk being available the client can end up making Rs.650 as fixed wage and Rs. 1700 by selling the milk to Samridhi collection center. Another benefit for theclients will be from the offspring of the cow which will be their asset; Samridhi will not have anyownership over them. This way the family could end up owning about four cows within a span of 10years.When the cattle is dry and does not provide any milk, Samridhi still pays them Rs. 650 every month.After the cow gives birth, the client gets to own the calf. Until the she-calf starts giving milk, the originalcattle will remain with the client, and thereafter be taken back by the company and allotted to anotherclient.The table below shows one year timeline of milk generation from a 2 year old cow.Assumptions 1. Total production starts from 8 Litres per day, and goes on decreasing with time. 2. The figures taken here are an average over a year. However, as cow productivity declines, Samridhi’s share also declines with it. 3. A cow is assumed to be in lactation for nine months in a year. For the three months over the dry period, Samidhi still pays an amount of Rs.650 per month to each client. 4. The table given here assumes the worst case scenario with respect to offsprings. In the first year, we assume a male calf, and in the second year a female calf that will hold a value only in the third year.
  6. 6. Value of Total Cattle Total total Samirdhis Clients Samridhis Samridhi Fixed to client Month production share share Margin Benefit wages client benefit Year 1 32025 16585 15440 4575 21160 7800 1000 24240 Year 2 32025 16585 15440 4575 21160 7800 0 23240 Year 3 32025 16585 15440 4575 21160 7800 11000 34240Apart from cow, Samridhi also provides goats to some of the clients. As a livelihood option thereproduction cycle of goats is shorter at 5 months. Moreover, goats generally give birth to twins and theprice of male kid is the same as that of a female kid. However, due to the social stigma attached torearing goats, not many clients are willing to rear goats as livelihoods.As goats are rarely reared for milk, Samridhi has entered into an agreement with The Goat Trustfoundation to source goats. The Trust will also train para-vets in the project area who will take care ofthe preliminary ailments to the goats in the villages. As these people will not be on the pay-rolls ofSamridhi, they will provide their services to other cattle owners in the village as well.Under this programme, Samridhi provides three to five goats with a total productivity of 5 Litres to eachclient. In the first batch, Samridhi is procuring goats of Sirohi breed through The Goat Trust, but goingforward, local breeds will be procured as well. Given that a goat reproduces twice in a year, Samridhilets the original goat be with the client and takes two female goats that it produces over a span of threeyears. In case the goat produces a male goat, it is kept by the client, who may also sell the same toSamridhi under buy-back guarantee scheme @165/Kg body weight.For Goats, the timeline of productivity is given below.Assumptions 1. Average total production stands at 5 Litres per day. 2. A goat is assumed to be in lactation for eight months in a year. For the four months over the dry period, Samidhi still pays an amount of Rs.600 per month to each client. 3. The table given here assumes the worst case scenario with respect to offsprings. For each goat, in each year, we assume two male kids and one female kid. Out of these, Samridhi takes back one female kid in the first year, and one in the third year. Value of Cattle Total Total total Samirdhis Clients Samridhis Fixed to Cattle to Samridhi client Month production share share Margin wages client Samridhi Benefit benefit Year 1 25620 17934 7686 3660 12000 15000 7500 29094 34686 Year 2 25620 17934 7686 3660 12000 22500 0 21594 42186 Year 3 25620 17934 7686 3660 12000 15000 7500 29094 34686
  7. 7. Client Advantage-The main advantage to the client is that within 2 years time, the client actually gets to own milk givingcattle that will be completely out of Samridhi’s dominion. The average cost of rearing the cattle shouldaverage out to be around Rs.500 per month. For this, they get a fixed payment of Rs.650, and marketrate for the milk produced over and above the agreed upon limit.Below is a graphical representation of the value chain: 5. Samridhi 1. Samridhi collects milk selects the and makes clients based payment to on Poverty the client Indicators 4. Women 2. Client clients rear selects the the cattle cattle 3. Samridhi procures the cattle and hands it over to the clientOnce the cattle has been handed over to the client, she immediately becomes solely responsible for therearing of the cattle. Everything from feeding the cattle to attending to its illnesses is taken care of bythe client. The cattle is as good as the client’s own asset. The client has to ensure that the animalremains healthy and physically stable. At the time of returning the animal, Samridhi expects it to be inthe same condition as it were at the time of assigning to the client.Samridhi’s role, however, does not end once the cattle is assigned and handed over.The grid below explains the division of responsibilities between different players: Activity Samridhi Client Client receives cattle from Cattle Purchase Samridhi purchases and gives it to the client Samridhi Cattle Maintenance No involvement Maintains on her own
  8. 8. Milk Selling Collects milk from the clients and sells it ahead Gives milk to Samridhi Risk Mitigation Cattle insurance in Samridhis name No involvement Keeps the original animal after calf starts giving Calving milk Owns the calf Veterinary Services Makes services available to the client Pays for servicesSince rearing of the cow/goat is a low skilled job and requires only 1/2-1 hour of work in a day, theincome is more lucrative than other livelihood options. More importantly, it supplements the incomegenerated by the male member of the family and helps them move out of extreme poverty.To measure the income levels and change in quality of life brought by this programme, Samridhiconducts surveys to calculate certain indices: • For potential clients, the company first conducts a survey in the targeted villages, where we calculate the Progress Out of Poverty Index, which takes into account the incomes, expenditure, the housing index, the education levels etc. This is our primary measure of the impact that our services will generate. • The clients reside in ‘kachha’ houses made of mud or thatches, and on an average have 4-6 children who are not going to school, and working as farm labour instead. Their average monthly income is Rs.1500 to 2000. • Ideally, the PPI score for our clients is less than 18. This indicates that the households are ultra poor with minimal assets, and large families to support. • The combined household and asset index comes to below 10. This implies that the clients reside in ‘kachha’ houses, seldom have access to private source of water, and have no toilet and sanitary facilities at all.2. Poor Households (earning between $2 - $3 / day)More than 40% of Indian farming households, roughly two thirds of which own less than 1 hectare ofland, are engaged in milk production as they can engage in this activity with relative ease to improvetheir livelihoods basket. Regular milk sales allow them to move from subsistence to earning a market-based income. Typically, these women already own 1-3 cows and sell milk to a middleman every day. Asdescribed above, however, they are constantly subject to delayed and below-the-market payments fortheir work.Through the dairy initiative, Samridhi works with these women and gives them accurate and timelypayments. Samridhi’s rates are higher than that given by the middlemen or state dairy cooperative.Another benefit of working with Samridhi is that the women are paid predictable amounts on a weeklybasis, which directly alleviates the current problem of erratic and/or substandard payments.Apart from cattle, Samridhi also provides extension services to these women. Keeping that in mind,Samridhi has also tied up with organizations which have expertise in providing veterinary services such
  9. 9. as artificial insemination, vaccination and de worming of cattle. Samridhi will also provide quality cattle de-wormingfeed with an objective of maintaining the yield of the cattle. With the objective of reaching as manyultra poor households as possible, the original asset will be transferred to another family as soon as itbears a subsequent productive asset.Samridhi benefits two distinct client groups, one as employees and one as su suppliers:While the financial returns are important to ensure scalability, Samridhi has a strong focus on the socialobjectives and tracks the social metrics 1. Economic Objective: To provide members/ clients with a source of income by facilitating better services at lower prices. Besides giving them a direct source of income, Samridhi also aims to rvices impart the necessary skills to increase their production, by using resources in the most efficient manner. 2. Social Objective- To empower the impoverished sector, not only economically, but by giving not them a sense of independence and knowledge, that will facilitate community participation and decision making. This holds especially true in the case of gender roles, since this additional income is directed towards the women of the household. The cattle are issued in the name of women the woman heading the household. Thus, in a way, we are creating employment opportunities for women in villages who otherwise do not have a fixed means of earning. This bears an important social role in villages. Creating income for them leads to a feeling of empowerment among women and gives them discretion in decision making.Support Services-
  10. 10. As mentioned above it is essential to provide supporting environment to the activity of cattle reari as rearinga livelihood option. Following is the bucket of facilities that Samridhi will be providing as a part ofimplementation of the project. 1. Cattle Insurance- The cattle will be insured before being handed out to the client. For this purpose, Samridhi has tied collaboration with TATA AIG, which will be providing cattle insurance to us. In case of animal death, the client does not bear any additional expenses. The client will not be held responsible, and the claim for the cattle will be given to the company. company. 2. Network of Para-vets- For regular check up on the animal, we will train a woman from each village to provide basic veterinary services in that particular village. Thus we create the concept of ‘Pashu Sakhi’. The Pashu Sakhi will be trained free of cost, and be provided with basic cost, medicines to heal basic ailments. She can charge a fixed percentage on these medicines while selling them to the clients when they approach her. Thus, it provides a channel of income for the Pashu Sakhi. 3. Cattle Feed- Samridhi also provides cattle feed to its clients at less than market price. The cattle feed is delivered at their doorstep. Thus they save money on the cost of the item, as well as travel and time costs. 4. De Worming Tablets and Vaccination As a subsidiary service to clients from whom we collect Vaccination- milk, we provide de worming tablets. The client does not need to pay for these. They are told about the importance of these tablets, and how they are supposed to be consumed by the cattle. 5. Artificial Insemination- Samridhi will assist the clients for practices like AI. Although the expenses will be borne by the client, the provision of the vet and other facilities will be provided, so that the client does not have to spend more time and cost on searching for these facilities. A safe and healthy practice of AI is assured by Samridhi, and the calves thus generated . will be an asset of the client.Key CompetitionCompetitive Advantage
  11. 11. The procurement volume in the region has a seasonal pattern with many small dairies operating onlyduring the flush season. Since none of these dairies have so far focussed on either giving good rates tothe farmers or provided any extension services to improve the cattle productivity, this trend is likely tocontinue in the years to come.The long marriage season during the lean season also ensures that the most of the milk is purchased bythe dudhias at very attractive prices. The state dairy cooperative (Parag) is the only player in the marketwith a reasonable presence in areas surrounding Lucknow. The drawback with the state cooperative isthat it mostly covers villages which are situated on the main roads, which leaves out a large chunk of thevillages where organized players such as Samridhi plan to reach.Having a symbiotic relationship with Sanchetna, which is already providing the farmers with capital andinsurance services, Samridhi provides the services of veterinary doctors to the farmers. The company isin the process of setting up a system wherein the farmers will be provided with cattle feeds ataffordable rates.The promoters put a lot of emphasis on direct & regular touch with the milk producers, economicempowerment of milk producers, transparency, customer service & professionalism. These all will helpus gain an edge over the competition.The following is a snapshot of the Samridhi’s positioning vis-a-vis other market players: State Milk Co- Private Players Milk Men Samridhi Operative (Dudhias)Outreach Villages on the Towns Interior Villages Interior Villages connecting roadsMilk Rate Basis FAT and CLR FAT Only (Favours No Scientific Basis FAT and CLR Buffalo Milk) (about Rs. 1/Ltr more than that of Co-op)Payment Monthly Basis Monthly Basis Erratic WeeklyPoint of Contact Co-ordinator Milk Middleman Farmer FarmerFinancial Not Available Not Available Available AvailableAssistanceCattle Insurance Not Available Not Available Not Available AvailableVeterinary Available but Not Available Not Available AvailableServices erraticFinancial Analysis
  12. 12. The business model of Samridhi is based on the margin between procurement price of milk from therural areas and selling price to the milk company.While coming to procuring milk from the villagers there will be two different set of producers 1. Population already having one or more milch animal 2. Population living below poverty line not having cattle who will be provided with cattle to be reared for a period of three years over that period the milk will be shared between Samridhi and years the member whereas the offspring of the cattle will be owned by the member whereas the original asset will belong to Samridhi. During this period the member will be paid Rs. 500/month (hiked by inflation YOY) as fixed wages.Other assumptions are as follows 1. Price of milk will be determined on the basis of FAT and SNF 2. Margin between procurement and selling price is Rs. 3/Liter 3. Fixed cost of maintaining Bulk Milk Cooler for one month including salaries, transportation and utilities is INR 70,000 4. In case of Samridhi’s cattle being reared by members 2.82 LPD/Member will be poured to Samridhi for which there will be no other payment other than fixed wages to the clients Milk collection Milk is Milk stored Milk collection van transports Field Staff collected, and chilled in van transports all the milk to reaches Village sample is the BMC the collected our partner Collection tested for Fat before being milk to BMC at Dairy where it Center and CNR transported to Saddipur is processed content Dairy and packaged Income Year 1 Year 2 Year 3 Year 4 Year 5 Milk Sold - Samridhi Portion 5956800 5956800 5956800 5956800 5956800 Milk Sold - Client Portion 2803200 8935200 27331200 50983200 78139200 Grant Income 500000 0 0 0 0 Total Income 9260000 14892000 33288000 56940000 84096000
  13. 13. ExpensesMilk Bought 2394400 7632150 23345400 43548150 66743900Salaries 834000 834000 834000 834000 834000Admin Expenses 252000 252000 252000 252000 252000Training Expenses 300000 80000 0 120000 0Interest Expenses 900000 72000 54000 36000 180000Depreciation 30000 30000 30000 30000 30000Total Expenses 4710400 8900150 24515400 44820150 68039900PBT 4549600 5991850 8772600 12119850 16056100Income Tax 1501368 1977311 2894958 3999551 5298513PAT 3048232 4014540 5877642 8120300 10757587Assets Year 1 Year 2 Year 3 Year 4 Year 5Cash and Equivalents 2078232 5972772 11730413 19730710 30368294Livestock 7200000 7200000 7200000 7200000 7200000BMC 270000 240000 210000 180000 150000Total Assets 9548232 13412772 19140413 27110710 37718294LiabilitiesEquity 9548232 13412772 19140413 27110710 37718294Total Liabilities 9548232 13412772 19140413 27110710 37718294Cash FlowInflow Year 1 Year 2 Year 3 Year 4 Year 5Opening Balance 0 2078232 5972772 11730413 19730710Capital Infusion 80,00,000 0 0 0 0Milk Sold 9260000 14892000 33288000 56940000 84096000Total Inflow 17260000 16970232 39260772 68670413 103826710Cash OutflowMilk Bought 2394400 7632150 23345400 43548150 66743900Salaries 834000 834000 834000 834000 834000Training Expenses 300000 80000 0 120000 0Rent and other utilities 252000 252000 252000 252000 252000Livestock 7200000 0 0 0 0BMC 300000 0 0 0 0Interest Expenses 900000 72000 54000 36000 180000Loan Repayment 1500000 150000 150001 150002 150003Income Tax 1501368 1977311 2894958 3999551 5298513Total Outflow 15181768 10997461 27530359 48939703 73458416Closing Balance 2078232 5972772 11730413 19730710 30368294
  14. 14. Capital RequirementAs captured in the financial statements above total capital requirement is INR 80,00,000 in order toreach about 400 clients in 20 villages. We shall be able to scale up it even further subject to access tofurther capital.Risk Mitigation:Currently, Insurance Companies do not have an extensive network in the rural hinterlands. These oftenrely on NGOs, insurance agents etc. to meet their regulatory requirement of rural portfolio. Lack ofawareness among the rural people makes it difficult for them to benefit from insurance products. Whileit is our endeavour to enable milk producers to maximise profits from cattle rearing, it might backfireand push them back to below-poverty levels, if their cattle are not properly insured. Thus, like any otherbusiness, risk mitigation has to be provided. Currently, Samridhi is providing cattle insurance by offeringthrough TATA-AIG, a general insurance company. The non-members of Samridhi are also offered thisservice, albeit at a slightly higher price. Moreover, veterinary services at affordable prices & otherbusiness-support services would also reduce business risk for the producers. Risk/ Source and Impact Way to Mitigate Challenge Factor Procurement • It is difficult to procure cattle in Samridhi will tie up with the necessary Risk large numbers, more so when it is service providers to provide Artificial important to take care of the Insemination for the goats, thus also breed. catering for breed enhancement. • The result could be slow scalability of the project. Quality Risk • Since we are procuring the goats Goats are purchased on agreement with from Rajasthan, it is possible that the supplier, which will clearly state that the supplier does not provide the payment to the supplier will be genuine breed. made only after the goat delivers the • The result could be low pre-stated amount of milk. productivity of goats. Risk on part of • Since the cost of the original cattle The formation of Village Committees will the Member’s is not borne by the members, they ensure continuous monitoring. Upkeep might not take proper care of the Moreover, the Village Supervisor will be animal. making daily visits to each household • The result could be deteriorating and recording the health status of the
  15. 15. health of the cattle, as well as low animal with a camera. The body weight productivity. of the animal will be measured at regular intervals and if fallen below a particular level, the cattle will be taken back by the company. All of this will be communicated to the client beforehand in the agreement. Also, since a major part of the milk will be owned by the client, he has a positive incentive to maintain the cattle well.Risk from • The client might report lesser The initial agreement will stipulate theCompetition milk, and sell it elsewhere to other amount of milk expected by the parties in milk business. company. In case the shortfall reaches a • The result could be a substantial particular amount, the company will decrease in the company’s take the cattle back from the client. revenues. Also, there is day to day monitoring done by the Village Supervisor.Reproductive • There could be time distortions in Samridhi will arrange for ArtificialRisk delivery of goat kids, since it Insemination for the goats, thus making depends on a number of external the whole procedure scientific. Also the factors that may not be in control para vets will record regularly and keep of the goat rearer. a check on the time of goat’s heat • This could result in slower period, so that the AI can be done at scalability. appropriate time.Risk from • It is possible that another Since we have already tapped theImitation organization could imitate the targeted area, it is difficult to another model, and thus join the same party to enter the same geographical area as a competitor. area. Also Samridhi has established an • The potential clients may shift expertise in its management personnel towards the competitor, thus as well as partnerships. causing a decline in our revenues.Cattle • Since the first batch of goats are We have our Community ManagerMortality being procured from another trained in basic veterinary services, and state, there is a risk attached to goat management. He makes weekly their adaptability to the visits to the cattle rearers’ houses, and environment in U.P ensures that they are being fed properly,
  16. 16. • Furthermore, extreme weather and gives them the required treatment conditions can cause a fatal and medical services. We are also environment for goats training a member from each village to conduct these services.Key Values of Samridhi • Transparency: Information related to acceptable quality parameters and the pricing based on these are made available to milk producers. Not only the producers can witness the tests being done on the milk they bring in daily right in their villages, they have also been given a sheet to arrive at the price by themselves by knowing the test results. This gives them an assurance about the fair treatment accorded to them. • Direct & Regular Touch with the Producers: Due to the insufficient procurement levels, many dairy plants have no option but to run their plants below their installed capacities. This is because of their negligible presence in the place of production i.e. at the villages. Many promoters of Samridhi not only have a degree in rural management from a premier institute, but also have worked in the rural areas at the field level. The orientation of the promoters has influenced Samridhi to find a direction, where it wants to position itself as a company very close to milk producers, which benefits the shareholders by ensuring long-term welfare of the milk producers. Our systems are being developed keeping in mind the regular touch with the milk producers. Barring a few cooperatives in some states, private companies normally tend to ignore this crucial part of dairy business and ultimately have to depend upon middlemen for procurement. • Professionalism: Milk being a highly perishable commodity, its handling, processing & marketing requires a great deal of domain knowledge. Samridhi acknowledges this fact and places a lot of emphasis on bringing in professionalism into the business. Farmer-wise, village-wise data regarding procurement is recorded & archived. This data follows a flow to the management team on a daily basis and thus the management stays in touch with procurement levels. In making strategies and framing guidelines / instructions, the management weighs all merits & demerits of the proposed changes based on the incentives and dis-incentives for the parties involved. • Expected Outcomes
  17. 17. Each dairy unit of Samridhi is expected to create 120 jobs at scale. Most of these jobs are taken by people who don’t have any other predictable stream of income. Upaya expects that these jobs will eventually lead to more stable life circumstances and higher quality of life and access to other services. Samridhi is diligent about monitoring and reporting on multiple social indicators. It is important for the team to ensure a tangible improvement in the lives of the ultra poor women. Close monitoring of the below indicators also provides valuable input to the business itself, and allows for course correction if outcomes are not aligned with expectations.Based on initial lessons from pilot activity in the field, below are the outcomes and probable changesover a period of one year:Metric Pre-intervention Post-intervention Measured viaResidence • Stay in a kaccha 9 • Women live in Household Index house pucca10 housingHousehold assets • Household asset • Increased income Household Asset value <$100 lead to Index household’s buying needed assets such as fridge, electric fan, etc. • Household asset value of over $300Grameen PPI • Average score of • Average score Grameen PPI™11score customers around increases to 35 25Children’s • Women not • 75% of the women Household Cash Floweducation sending their kids sending their kids to school for the to either lack of money government or private schools9 Short-lived structure made of natural materials such as mud, grass, bamboo, thatch or sticks10 A more stable house that has fixed walls made up of material like stones, cement concrete, timber, etc. but roofis made up of the material like un-burnt bricks, bamboo, grass, thatch, etc.11 The Grameen Foundation Progress out of Poverty Index™ (PPI) is designed to measure the poverty levels ofhouseholds and to track changes in poverty levels over time.
  18. 18. Financial inclusion • Don’t have bank • Active bank Samridhi metrics accounts and accounts with don’t save regular savingsNumber of meals • Average 1.5 • Eat 2.5 meals/day Samridhi metrics meals/day on average • Customers note increase in variety of foodPartnerships:Partner Services Offered ArrangementSanchetna 1. Providing customized loan products to Identical set of promotersFinancial meet the requirements of the clientele inServices Private the area of operationLimited 2. Information sharing about the possible areas of interventionUPAYA Social 1. Bridge capital investment Capital InvestmentVentures 2. Technical support on the business planningThe Goat Trust 1. Sourcing of milch cattle Memorandum of Understanding 2. Training of Para-vets 3. Breed enhancement of goat population in the area of interventionDewashish Milk 1. Purchasing milk from Samridhi Memorandum of UnderstandingFoods Pvt. Ltd. 2. Providing support in chilling milkCore TeamThe core team at Samridhi has a solid track record in the dairy industry, as well as in microfinance andother poverty-alleviating interventions that work directly with very poor and marginalized populations.Two of Samridhi’s promoters have earlier worked for Amul – India’s largest milk cooperative. Theyunderstand the entire value chain of milk production from the source to consumption and have addedsignificant insights in the construction of the business model. Samridhi will leverage their experience
  19. 19. while expanding the company’s operations. All team members are passionate about this space and have ilecompleted their graduate degrees from one of India’s premier institutes for economic development.Samridhi’s close association with Sanchetna is beneficial to both the organizations. In its next phase ofdevelopment, Sanchetna is diversifying to livelihood financing. One of its major focus areas is dairyfarming and the organization has already started a cattle loan. Making these loans available toemployees who wish to expand beyond existing cattle assets will help Samridhi get scale in milk hoproduction. In fact, Samridhi expects each ultra poor household to qualify for Sanchetna loans once theyfeel ready to manage additional cattle assets. Given Sanchetna’s strong and positive brand awareness in strongthese communities, Samridhi also benefits from this association in villages around Lucknow. Likewise,Sanchetna benefits from heightened risk mitigation on its loans, knowing that Samridhi is providingvalue chain linkages to its borrowers to increase their chances of earning a steady income. ages CEO - Lokesh Kr. Singh Sr. Manageer - Procurement Manager - New Initiatives Niraj Pareek Garima Siwach Executive - Procurement Executive - Business Development Sunil Ray Dharmendra Kumar Ray Village BMC In-charge charge Para-vets Committee Field Associate - Procurement Cattle Owners Lift-UP ClientsManagement Profile:Lokesh Kumar SinghLokesh is a Chemical Engineer from HBTI, Kanpur and holds a diploma in rural management from IRMA.He has got over seven years of experience in different fields. He worked in SKS Microfinance Pvt. Ltd.(India’s largest NBFC-MFI) for over 3 years where he headed the expansion between 2004 and 2007 in MFI)12 states including UP, MP, Rajasthan & Bihar. During this time, he built and managed a loan portfolio ofover Rs. 200 Crores with 100% repayment rate. During this period he recruited and managed over 1200employees.Having been associated with Samridhi since inception gives him insights into managing the overalloperations of Samridhi. He looks after the functions of procurement as well as new initiatives which has
  20. 20. mandate to enhance the procurement as well as other interventions to meet the requirements ofcustomers of Samridhi.Niraj PareekNiraj is an alumnus of the Accenture-XLRI HR Academy (first batch) and has over five years ofexperience. He worked in the Accenture India Delivery Centre at Bangalore for over two years in the HRTeam. As part of their recruitment team, he was involved in recruiting over 24,000 employees in twoyears. Prior to Sanchetna, he had a stint with a UP based MFI, where he managed their Varanasi andDehra Dun regions.Niraj Pareek was instrumental in spreading the operations of Samridhi to different geographies.Currently he looks after the function of procurement which includes starting new centers, maintainingchilling facilities, looking for prospective buyers of the chilled milk as well as co-ordination with BusinessDevelopment team so as to enhance the procurement.Garima SiwachGarima is in-charge of new initiatives for Samridhi. Currently she is looking after the initiative forlivelihood creation through providing cattle to below poverty line population in target area ofSamridhi. Garima is a Post Graduate in Economics from The University of Mumbai. She has worked onseveral research projects such as ‘Self Serving Biases Created by the Reservation Policy in India’,‘Banking Sector Reforms in India’, ‘Health and Education infrastructure in developing countries’ and‘Land Rights and Land Reforms, from the gender perspective’.Board MembersMember Qualification Current Occupation Prior ExperienceLokesh Kumar Singh B.Tech. Founder – Samridhi Over 7 years in social sector including PGDRM (IRMA) Agri Products 3 years with SKS handling operations in 11 statesNiraj Pareek PG Certificate from Director – Samridhi Over 5 years including 2 years with XLRI Agri Products Accenture in HR Team
  21. 21. Sachita Shenoy MBA - University of Executive Director Management Consultant – PWC Chicago UPAYA Social Ventures Director – SPM at UNITUSChris Turillo MBA – University of Co Founder – Medha Director – SKS Foundation USA Chicago Intern – Sequioa IndiaPrabhat Singh Bisht B. Tech. – Pantnagar Management Sr. Manager - NDDB Consultant