Professional Documents
Culture Documents
( MARCH 1998)
by S.Ananthanarayana Sarma
95, Double Street, Sholavandan Village,
Vadipatti Taluk, Madurai District.
(Funded by EZE, through DATA, 11, Kennet Cross Road, New Ellis
Nagar, Madurai -10)
EXECUTIVE SUMMARY
The model states that a community enterprise has to be initiated from the
community. It's skills, and resources should be taken into account, while
designing the enterprise. The task of the NGO is to link the enterprise
with the market, with appropriate product design.
2
enterprises, such as -
(a) A minimum of five people directly drawing wages/salaries
(b) A minimum "physical control" over the production process
(c) Organizing collectively for economic benefits.
3
CHAPTER I: GENESIS OF THE STUDY
(*) Two banks, the Canara Bank, and Bank of Majura discussed their
experiences with the small scale and the NGO sector. The bankers expressed
willingness to fund community initiatives provided an integrated support
system existed for training, marketing and technology.
4
CHAPTER II - CONCEPTUALIZING COMMUNITY ENTERPRISES
(E) HOW DOES ONE BUILD UP S&C GROUPS INTO COMMUNITY ENTERPRISES?
5
GROUP# 1
A community enterprise is one which
- OWNS the pysical assets, the brand name and the personnel
- HAS DECISION MAKING POWERS ON Trade, Marketing strategy,
selection/termination of staff, and profit utilization.
- FOR THE SOCIO ECONOMIC EMPOWERMENT OF THE CONCERNED COMMUNITY.
GROUP# 2
A Community Enterprise can be defined as any organized endeavour
at grassroot level intiated :
- to induce collective benefit
- to gain bargaining power, and
- to carry on income generating activities for promotion of
socio economic status.
GROUP # 3
(A) An enterprising enterprise owned, managed, controlled, and
run by the community either by itself or an organization re-
prsenting them for the benefit of the community as a whole. This
shall also include such enterprises run by socially committed
charitable development organizations for the benefit of the
community. The ownership could be by the group or a managing
committee/ office bearers of the groups, and members from the
NGO. The capital could be from finacial organizations, with equal
contributions from the group. The election of the commitee should
be after two years. The office bearers should include a Presi-
dent, a Vice President, a Secretary, a Treasurer and a represen-
tative from the NGO. The Managing Commitee should meet once in a
month. The profit sharing should be among the group members. An
administrative charge could be paid to the NGO at the discretion
of the group. An external auditor should assess profits. The NGO
role is that of a facilitator.
It can been seen from the above definitions that the first one,
is from conventional enterprise theory from management/
economics. It is a " legalistic" one - defining the community
enterprise in terms of powers and responsibilities. The second
definition, gives a more "sociological " orientation to the
concept - explaining it in terms of what it means to the communi-
ty as a social system. The third definition is a "pragmatic"
working definition - which also attempts to describe some attrib-
utes of a community enterprise.
GROUP# 1
The sequence of selection of enterprise should be-
GROUP# 2
6
The enterprise should start with PEOPLE - with due consideration
on the available skills and with the focus on the market.
GROUP # 3
The enterprise should start from the community. - taking into
account the people and the environment. NGO role is to educate
the people regarding viable projects, and the group has to come
forward with project ideas.
All the three groups appear to have agreed that the community
enterprise had to start with the community and then move to the
market. An attempt was made to understand the role of the NGO in
facilitating this process - that of linking the enterprise with
the market.
GROUP# 1
The training process should be redefined as a "PROCESS FOR
ACCOMPANYING THE COMMUNITY TO INITIATE AND SUSTAIN A COMMUNITY
ENTERPRISE."
GROUP# 2
DATA's training module contents may be maintained. The duration
maybe extended to another two days. Business oppurtunities iden-
tification of enterprise, project preparation, should be includ-
ed. Accompanyment period should be long enough to allow for the
take off of the IGP initiated. This depends on nature of the IGP
identified.
INPUT TIME
7
GROUP# 2
Though profit is the prime concern, this should not be at the
expense of ethics and values.
GROUP # 3
-------------------
/PROFIT ORIENTATION
/
ENTERPRISE
-----------------------------/------------------------
SOCIAL RESPONSIBILITIES / OF NGOs
/
/
/
PROFIT ORIENTATION /
_______________________/
GROUP# 2
Savings ---> Credit ----> Enterprise. The same sequence of
activities can be adopted.
GROUP # 3
The SHG should be a homogenous one. The community should be
capable of handling the business. The project should be techni-
cally and economically viable, and environmentally friendly. If
alternate products are available, the more profitable ones should
be selected.
8
Based on the discussions and consensus arrived at, the following
conceptual frame was agreed upon for starting "community enter-
prise development programmes(CEDP)". It was emphasized, that the
conventional business management theory had to be reversed, in
the case of community enterprises. THE COMMUNITY OR PEOPLE had to
be put at the center, instead of the "market or the consumer".
Hence, the model started with the community - their skills and
resources, had to be inventoried and used as a basis for starting
a community enterprise. The NGO had to primarily facilitate a
process, whereby the community enterprise gets linked to the
external market, through appropriate product decisions. This
constrasts with much of received business management wisdom,
which put the market and the consumer first, and then links
backwards to the setting up of an enterprise. This model was
represented as under -
COMMUNITY
RESOURCES
SKILLS
COMMUNITY
ENTERPRISES
NGO
Product
development
MARKET
9
CHAPTER III - METHODOLOGY OF THE STUDY
RESEARCH OBJECTIVE
(a) The proposed CEDP programme was aimed at NGOs - who would
facilitate Savings and Credit Groups to evolve into Community
Enterprises. Hence a study of the existing income generating
enterprises of NGOs would provide insight into the "practise" of
running enterprises by the NGO sector.
Hence the RESEARCH OBJECTIVE for the study was framed as under -
RESEARCH DESIGN
10
research - and could be justifiably be expected to resent part-
ing with information, much of it of its shortcomings, with no
material reward in return.
Also Shri Bhaskar and Kum. Nancy J. Anabel, who enjoyed special
access to Arogyaham, (an NGO in Theni district, unconnected with
Assefa) wrote a casestudy on its coir making unit.
Some of the experiences narrated during the 13/14 June '97
workshop by NGOs in running income generating enterprises, were
also used for drawing inferences and conclusions. The following
NGO experiences have been included.
11
this list. Where the researcher observed or heard data, which did
not fit into this "wishlist", he/she was free to investigate
further. Also lack of data, or its access, was not a constraint.
The operating principle used in data collection, was to collect
what was available, and would be shared with comfort by the NGO.
A. RELATING TO OBJECTIVES:
Location of Enterprise
Inception(Who identified the enterprise? why was it started?)
Objectives (to be collected by asking project holder, staff,
benef)
B. RELATING TO FINANCES
Capital
Amount of capital invested
Use of capital
Who invested?
Grants and subsidies
Working capital
Has this been estimated?
Who funds?
Profits
How much ?
How is it distributed?
Sharing with the employees?
Cost break up of production, to find margins.
C.RELATING TO MARKETING
Products
What are the products marketed?
How was this decided? who decided?
Price
What is the price of different products?
Who decides?
What are the competition prices?
Promotion
Is there advertising? how is this done? who decides? costs?
Sales
12
Total sales for each year, broken up by product since inception
In units ( Physical quantity)
In rupees ( financial)
Competition
( If possible, sales, size, location of competition)
D. RELATING TO HUMANPOWER
Total number of staff
Their background Age, sex, education, marital status, previous
work experience, salaries,
Who decides salaries? Who pays?
Structure of reporting and communication?
Style of decision making ( use instrument)
No. of human days employment generated? Wages earned?
E. RELATING TO PRODUCTION
What is the product/ products? ( Output)
Raw material needed? how procured? costs?(Input)
Machines/ technology? how decided? capacity?
Skills for using technology?
Their processes for production?
Break up of material use and their cost?
Production cost break-up?
G. RELATING TO OWNERSHIP
Identify owners - through
Legal structure
Members of Governing committee/ board
Funders
Other important stake holders
How was this decided
Relationship between owners -> employees -> beneficiaries.
Review meetings for monitoring performance
( meetings, minute books, etc.)
13
CHAPTER IV -VERBATIM REPORTS BY NGOs
AROGYAHAM
This experience started the presentation. Arogyaham found that
middlemen bought milk at Rs.5.50 and sold at Rs.8.00. Twenty
villagers organized under the IFAD programme were organized to
directly sell the milk to Andipatti. The capital investment in
the form of cans were provided by the NGO. The NGO also provides
accounting support and monitoring. The experiment had started
with two women groups. One had withdrawn and another continued.
Arogyaham also was experimenting with coir making and herbal
collection. In poultry two of the six sheds had been a success.
The major problems faced were as under.
- With Dairying accounting and sales realization from vendors
were a problem.
- With herb collection, the sales were done by the group. There
were twentythree members and sales for a season ranged from two
to ten tonnes. The turnover sometimes was one lac rupees per
year: and profits Rs.50,000. The profits were shared by the group
members on a per kilo basis. The working capital of Rs.70,000
given by the NGO had been paid back with 12% annual interest rate
in eighteen months.
- With coir, Arogyaham initially helped at all stages from raw
material procurement to marketing. Now the producers had taken
over most of the areas. Arogyaham now gave support for training,
problem solving and in motivation.
- With poultry, one unit consisted of two hundred birds. (Here
the moderator interjected and said that scale economies needed
ten thousand birds and own feeding units). The success here was
not up to the mark.
14
(Uttar Pradesh). There had been heavy funding by PLAN
INTERNATIONAL, the funding agency. The problem arose, "Which IGP
to promote?". The funding agency reccomended Mr.Keshub Sen. A
project directors workshop had been held for two days for
identifying the NGOs and the beneficiaries. A clash arose here
between the Sarvodayan and corporate values. Mr. Sen asked the
Project Directors to list all the IGP ideas they had. The list
extended to fifty seven. Using the following criteria, potential
IGP areas were selected:
- IGPS which did not need advertisement for marketing
- IGPs which did not cater to local consumption
- IGPs which used intermediate technology for permanant markets,
connecting local production to city markets.
For instance, lungi manufacturing fitted these criteria.
SEVA NILAYAM
The presentation by Seva Nilayam began with the assertion that
IGPs were started since funds were made available. Since silk
cotton trees existed locally, pillow and mattresses were made as
a community enterprise. Since the women in the villages knew
tailoring, they were linked with a market retail outlet in
Kodaikanal for stitching tea covers. In a span of four years a
profit of Rs.20,000 had been made in the group enterprises.
Seva Nilayam also gave individual loans to those undergoing
Tuberculosis (TB) therapy - mainly for heifer rearing. The fear
of attachment (japti) engendered recovery.
15
CHAPTER V - CASE STUDIES
INCEPTION:
OBJECTIVES
FINANCES
----------------------------------------------------------------
16
sales of around Rs.24 lacs he estimated the working capital to be
around ten lac rupees. He thus conceptualized the assistance of
Rs.8.43 lacs from Assefa as working capital: the remaining amount
of working capital being supplied from retained earnings.
The following table details the sales turnover of the unit since
inception and the payables and receivables.(In Rs.1000)
1988-89 150 (- 7) 19 35
1989-90 570 (+ 30) Nil 139
1990-91 755 (+ 99) Nil 207
1991-92 1111 (+ 62) 88 88
1992-93 1540 (+129) 9 361
1993-94 1608 (+172) 127 948
1994-95 2189 (+ 63) 101 866
1995-96 2694 (+177) 55 993
1996-97 2339 (+179) 139 1103
--------------------------------------------------------------
Raw material were indented for and purchased in the first week of
each month. The purchase vouchers were entered into the day book
for credit transactions and in the cash day book when cash
purchases were made. These entries were then posted in the
ledger.
17
this figure shows a loss."
This apart the unit also purchased some products from "Sarvodaya"
units for repacking and sale. Such products were:
(a) Ginger jam from Tutikodi Sarvodaya Sangh (in 200 gm jars)
(b) Saffron from Jammu (half and one gram)
(c) Rose gulkhand from Jammu(edible)- 300 gms pack)
(d) Rosewater from Jammu - in 150/250/500 ml. bottles.
18
stick in the masala. A quality checker accepted the sticks and
sorted according to size and thickness. These sticks were then
dipped inside the units in various perfumes, to create the vari-
ous varieties. The "perfume composition" was stated by Mr.Ponniah
to be the MOST important part of the production process. The
business apparently entirely depended on this aspect, and wrong
perfuming could finish the unit. Hence he termed the skill a
"Chidambara rahasya"(an almost unavailable piece of information).
The final products were then repacked as per need.
For the other products, the production process consisted of
buying the raw material, sorting by quality, mixing, and repack-
ing. Mr.Ponniah stated that the groud floor was used for the
mixing and packing, and for storage of the finished products- the
first floor was used for packing material, and the terrace as a
drying yard.
MARKETING
Price: The unit had a detailed price list, for the various pro-
ducts in varying packaged quantities. (this was only in Tamil).
The sales price unit had the following proforma:
19
- which also enjoyed special markets and funds due to its Euro-
pean contacts. Private agarbathi manufacturers in Banglore and
some major brands (advertised heavily on television like "Sugand-
hi" and "Chandan") were the other comeptitors. He also stated
that the "entry barriers" to the business was non existent.
Agarbathi rolling was a cottage industry. In Madurai there were
perfumery shops which sold bamboo sticks, the masala and the
perfumes. Ready made packs were available with these shops. An
initial capital of twenty rupees was sufficient to start produc-
tion. Almost all the major district capitals of Tamil Nadu like
Trichy, Tirunelveli, Erode, Salem and Thanjavur had such per-
fumery shops. He explained " In Madurai there are roadside idli
shops which give low cost products with low quality. There is
also Arya Bhavan which gives good food at a relatively high
price. My Bathi unit is like the Arya Bhavan restaurant."
MANPOWER:
The Bathi unit had ten full time salaried Staff- and
supported sixtyive part time artisans. Five to six artisans
usually came daily to the unit for dipping the agarbathi sticks
in perfume and for packing. These parttimers were paid daily
wages. The other artisans who daily rolled agarbathi sticks at
home, were paid on a "piece - rate" basis.
-----------------------------------------------------------------
All the fulltime staff, excepting the accountant were male. The
General Manager, Mr.Ponniah, the office manager, and one of the
accountants were married and had children.
Salary decisions were made by the Head office of the SSGS, (sited
at Madras) and communicated through the Executive Director of
Assefa(who was also the managing trustee of the SSGS). Mr.Ponniah
stated that he had powers to recommend salaries which were
approved at Madras. The unit paid all salaries through internal
earnings.
20
Executive Director
| If necessary meeting
| (Mostly given in writing)
|
General Manager
|
Ten fulltime employees
|
65 artisans
-----------------------------------------------------------------
Beneficiaries The sixty five artisans who rolled the agarbathis
were termed the beneficiaries of the bathi unit. Mr.Ponniah
stated most of the artisans were married and in the agegroup 30
to 40 years. There were some artisans in the 15 to 20 age group
and a few in the 40 to 60 agegroup. All the artisans were
already trained in this skil- for many of them this was a
traditional occupation. Around half of the artisans were Muslim.
Mr.Ponniah observed that this skill of agarbathi rolling was very
useful for Muslim women - since they observed the system of
"purdah", they could not easily go out to work. In this case,
they had to visit the unit, only to take out raw materials
(bamboo sticks and masala) and bring back the finished product.
Mr.Ponniah stated that he did not analyse whether destitute women
or abandoned women were being benefitted from the unit. He took
it as a moral binding not to ask about the personal details. He
said he was satisfied that the artisans benefitting from this
unit were economically weak.
The same number of sixty five artisans had been associated with
the unit since inception. The wages given to them since inception
is detailed below.
1988-89 53
1989-90 54
1990-91 68
1991-92 112
1992-93 134
1994-95 209
1996-97 140
Mr.Ponniah stated that " the piece rates has not been reduced,
only increased. The variations in wages could be due to
accounting. Also agarbathi gives lower wages than sambhrani. When
sambharani production increases, wages also increase. When bathi
production increases instead of sambhrani, the wages decrease".
21
Madras office sends an auditor annualy to check if their initial
investment is still protected." The SSGS had fifty odd retail
outlets of its own in small towns with Assefa projects and had
links with Assefa projects with other states. When asked whether
the unit received marketing support, Mr.Ponniah stated that only
ten pecent of the total sales were through the SSGS.
CONCLUSIONS
22
SSGS STEEL UNIT AT MUDIANOOR
OBJECTIVES:
Mrs. Chandra, the SSGS incharge for Kariapatti stated that of the
twelve lakh odd sales per year, seven lakhs were rotated within the
Kariapatti block - which which would haave otherwise gone outside the
local economy to the corporate sector like Godrej. This activity had
also created employment and additional income oppurtunities.
FINANCE:
Prodn wages ? 74 98
Freight 6 14 21
Admn.salaries - - 30
Other admn. 1 26 3
TOTAL EXPENSES:
23
INCOME
Other income 5
Purchase comm. 12
Closing stock
- Raw material 359 561 527
- Furniture 44 162 394
TOTAL:
LIABILITIES:
Stock Suspense - 62 -
ASSETS:
Furniture 13 21 41
Electricity fittings 3 8 -
Closing stock
- Raw material 359 561 527
- Steel furniture 44 162 394
Cash in hand 1 1 10
------ ------ -----
549 929 1147
Accounting systems All accounts are kept in the Tamil language. Howev-
er the final audited figures are printed in English. The following are
the account books kept -
Purchase bill file
Cash voucvher file
Invoice book ( 3 copies made, for ThonugalHO, office, and buyer).
Cash receipt book
Journal + cash day book
Ledger
A monthly audit is carried out by the SSGS office auditor, and the
KVIC auditor audits once a year.
24
PRODUCTION AND SALES STATEMENT (Rs. in 1000s)
Production Sales
1994 - 95 ? 92
1995 - 96 913 811
1996 - 97 1164 1102
1997 - 98 959 757
MARKETING
FURNITURE
Usually,
(a) Steel door ( 6' x 3') and ( 7' x 3') @ Rs. 135/ sq. feet
(b) Steel windows ( 4' x 3') @ Rs. 135/ square feet
(c) Gate, grills, ventilators, shutters, girders.
Pricing decisions based on production costs. 10% margin for the steel
unit, and 10% margin for the retail shop is added to the production
cost, to arrive at the final retail price. This decision is taken by
the SSGS (Kariapatti) and the PE (Assefa). The prices are decided
yearly, by the PE and SSGS. In the market, 24" gauge and fifty kilos
weight wardrobes are available for Rs. 2500/ against the 20" gauge and
hundred kilo weight wardrobes of Assefa which cost around Rs. 4500.
Nippon and Godrej (from the corporate sector) manufacture 20" gauge
wardrobes with machine moulds and mettalic paints which cost Rs.10000
to 12000.
PROMOTION
Advertisements are placed in the Assefe village Tamil monthly " Seva
25
madal". Two cinema theaters in Kariapatti display slides advertising
the brand name ( Seva Furniture). Boards are displayed in every SSGS
shop ( fifty in Tamil nadu) advertising the availability of Seva
Furniture. The key chains for the wardrobes have the SSGS logo. One
page printed "bit notices" are also circulated in the villages adver-
tising the products.
DISTRIBUTION
All the furniture is sold only through retial units under the SSGS
banner ( around fifty such units exist in Tamil Nadu). For housing
material, the sales are routed through the Kariapatti housing commit-
tee.
For the year 1996 - 97, the following were the product wise approx-
imate breakup by quantity and sales value.
COMPETITION
Cots - There is no high income market for steel cots. Cots of value
Rs.10,000 and above are usually made of plywood, use stainless steel
pipes, beading, have decorative mirrors, etc. Only very high income
families buy this product. At the lower end, as in the case of war-
drobes, small units s\using lower quality sheets, produced cots which
retailed at half the price of the SSGS cots. These cots too catered to
the "seeru" market - with low income families purchasing these cots as
a part of the girl's dowry. The buyers of the SSGS cots, were usually
middle class and availed of credit facilities from the SSGS retail
units.
Stools A wooden stool costed around Rs. 200- 300. The steel stools
were less in weight and price. There was hence not much competition.
But demand was also less, with the main buyers being shops.
S Type Chairs The chairs did not move, as the buyers were usually
offices and shops. Households used folding chairs, for which the unit
did not have machines. (the cost of dies for this chair amounting to
two hundred thousand rupees).
Tables Offices and shops usually purchased the tables. However demand
was not very high.
Housing material The beneficiaries who took loans from the Assefa
26
housing committee, had a choice to buy their construction material
from the open market. Around half of the beneficiaries opted to buy
from the housing commitee itself. These orders translated into demand
for the steel unit, for steel doors, windows, grills, ventilators,
etc.
STAFF The steel unit employed three full time staff - one manager, one
watchman and one accountant. There were around ten workers, who were
fitters and painters by trade and living in the neighbouring villages.
They were hired on piece rate basis. They were supplied the raw mate-
rial, the work space, the machines, and asked to deliver the final
product by a particular time. All the staff were men, in the age group
20 to 55 years, excepting the accountant - who was 68 years, and
retired from the Aruppukottai Sarvodaya Sangh. The following table
details the background of the three full time staff.
All salary decisions were taken by the Programme Executive and Smt.
Chandra. Salaries were paid by cheques and from internally generated
profits. The wages were paid piecerate, and worked to around 6.5% to
7.5% of the production value. Only men were involved in this work, as
it involved manual tasks like cutting, painting and welding. On an
average the unit provided twenty to twentyfive days employment per
month. Staff salaries were paid from retained earnings.
27
(No direct sales was undertaken. Only credit bills were issued on the
particular SSGS retail outlet).
(e) Cash receipts were sent to the Thonugal office for the amount
sent.
(f) Petty cash of Rs.2500/ wa sanctioned, which was reimbursed by the
Thonugal office, after particulars were sent.
(g) A one day monthly meeting, with all retail unit heads, production
managers, Mrs. Chandra and the PE (Kariapatti) was held for coordinat-
ing production activities with buyers requirements as reported by
salesmen.
The manager stated that he had to meet Mrs. Chandra atleast three
times a week, for cheques, follwing up material etc. The salaries
cheques were issued by the Thonugal office, only when the production
report, the stock report and the trial balance were submitted.
The SSGS Thonugal unit submitted to the Madras SSGS office, a
quarterly progress report, based on the monthly reports of the unit.
PRODUCTION
The steel unit was housed in a campus a little off the Kalakurichi
Virudunagar road. The campus of 100 feet by 60 feet dimension was
competely fenced. Some trees had been planted as a border plantation.
The layout of the campus was as under -
| East
|
| +-------------------------------------------------------+
| | +----------------------+--------+ |L |
| | | Main machine room | Semi | +--|
| | | + stock room |finished| |
| | | | | +-------|
| | |------+------------------------+ | Finish|
| | |Stores| Working shed . | ed |
| | |r.m. | (only roof) . | Stock |
Road | +------+......................... |-------|
to | |Office |
Virud| | |
nagar| +W+ +-------|
+-----------------------------------Gate ---+-----------+
The semi finished stock room had a welding connection. The welding
was however done in the open in the working shed. Painting was done
both in the open working shed, and in the main machine room. ( It was
observed that painting and welding was being undertaken simultaneously
in the open working shed). Cutting and bending machines were installed
in the main machine room. Finished stock were kept both in the main
machine room and in the finished stock room.
28
20 gauge CR sheets valued at Rs.25/kg
One inch thick pipes valued at Rs.33/ metre.
Mica sheets valued at Rs.45/ square sheet.
Paint in cans, valued at Rs.120/ liter
Chair sets (handles, + frames) valued at Rs.250/ set
Locks, screws and hinges
The value of the raw material at any point in time appeared to range
around Rs.500,000 as per the balance sheet figures.
Process
All material processing, irrespective of product followed the follow-
ing process flow.
Indent raw
material from ---->Cutting------> Bending ----> Painting --> Finished
stores goods
stores
Stock accounting
Two raw material stock book are kept- one for sheets, angles and bars
and another for "other items"( paint, hinges, etc.)
Raw material is released as per JOB CARDS.( Production is on a "
batch" basis as per instructions from the Thonugal office, and as per
orders). The raw material required for each unit of production ( cot/
wardrobe/etc) is prefixed. The job card also contains
- the name of the contractor
- The tasks to be performed
- The starting and the closing date for the batch
- The wages paid
- The raw material returened to stores unused.
- The item of production, the quantity and the value.
The job card details are reentered into the Production register. The
final retail price as fixed by the SSGS also finds an entry. In this
register the various costs for electricity, wages, raw material ( as
per fixed heads like sheets, paint,etc) are calculated. The final
margin is arrived at be deducting the various costs from the retail
price fixed by the SSGS. A casual perusal of the register revealed
that while producing one wardrobe earned a 20% margin, producing three
wardrobes in one batch, earned a 26% margin.
After production, the finished product details are entered into the
Finished Stock register. Each item has a seperate page. The details of
the purchase order/ invoice number, the quantity of production, the
value, the sales quantity and the rate are entered.
Production cost breakup
An example of the details from the Production register, for a six and
half feet wardrobe with jewelbox and mirror frame.
The manager explained that the margin figure varied as per the cost of
raw material, with steel price ranging from Rs.25 to Rs.28/kg. ( The
quantam of raw material and the final price was prefixed by the Thonu-
gal HO).
The overall production cost breakup for the year 95-96 was as under -
Total Production value = Rs.913,000
29
CONSUMPTION
Raw material = Rs. 512,000 ( mainly steel CR sheets)
Iron angle = Rs. 5,000
Iron pipe = Rs. 20,000
Locks = Rs. 1,000
Other expenses = Rs. 47,000
Paint = Rs. 37,000
Plywood = Rs. 5,000
Production wages = Rs. 74,000
------------
TOTAL: = Rs. 703,000
OTHERS
Electricity = Rs. 9,000
Packing = Rs. 3,000
Production = Rs. 6,000
Interest = Rs. 14,000
Insurance = Rs. 9,000
Margin on Production = Rs. 170,000
The manager stated that the following were the beneficiaries of the
steel unit -
- SSGS employees, who earned a salary because of the unit
- villagers who received quality products at a reasonable price.
- Production labour, who got an oppurtunity to exercise their skills
and earn an income
He stated that the SSGS sales branches found it very useful, as the
sales margins provided income- to pay salaries for salesstaff. Also
the profits of the steel unit cross subsidized the losses of the
spinning units.
The ownership of the land and buildings were vested with the Mudianoor
cluster committee ( a federation of village Grama Sabhas). Initially
Plan international funded the project, when it was run by the cluster
committee. After handing over of the unit to the SSGS, the concept of
of funding by retained earnings had replaced that of foreign funds.
The machinery belonged to the SSGS (which was a registered Trust, in
the Madras HO of Assefa, and had Khadi and Village Industries Commis-
sion (KVIC) certification).
NGO support
From the ASSEFA Kariapatti project, the manager stated the support to
be
30
- Orders for housing material, for schools, community buildings,
housing committee beneficiaries, etc.
- Support from the Project Executive ( Mr. Rajarathinam) in terms of
administrative systems, product design, production and sales
Problems
The problems listed by the manager were
(a) Sales - while the target fixed had been Rs,2,000,000 only half
could be acheived due to ow offtake.
(b) Labour - the private sector provided bonus and advances which
made labour sometimes unavailable.
(c) Raw material supply was sometimes delayed
The SSGS head, Mrs. Chandra stated that raw material could not be
termed a problem, as the production manager did not compute interest
carrying costs. Hence the SSGS deliberately delayed purchases to
reduce interest burden. In her opinion the major problems were
(a) An inability to supply material in the stipulated time
(b) improving the "finishing" of the products.
The SSGS advisor Shri Perumalsamy (who had retired after many years of
service in the Sarvodaya Sanghs) stated that labour was a problem - as
the skills of painting welding and cutting were mcuh in demand. He
stated that the manager needed to learn methods of manufacturing new
products. The labour had to be trained on painting, tinkering, fit-
ting.
The manager stated his major training need to be exposure to quality
producers to improve "finishing". Aslo quality control systems had to
be improved.
Mrs. Chandra concluding her assessment of the steel unit stated "Even
if we allocated an interest cost of 10% on the capital of Rs.1000,000,
a margin of Rs.40,000 remained, after deducting staff wages, salaries
and depreciation. Even allowing for a "market rent" of Rs.12,000, a
profit of Rs.28,000 is being made annually by the steel unit."
31
SSGS CATTLE FEED UNIT - P. Pudupatti
LOCATION: The Sarva Seva Gramudyog Samithi cattlefeed unit, lies some
12 kms. to the south east of Kariapatti town (which is the block
headquarter and is on the Madurai to Tuticorin State Highway. The unit
is located in P.Pudupatti village, which is on the Kallikudi to
Trichuli road, passing via Kariapatti. The campus containing around
ten cents of land, is located alongwith the Assefa cluster office. The
area is visibly a drought prone one, with straggly weeds and dry mud.
Around ten trees have been planted around the campus some six months
ago.
OPENING STOCK - 80
PURCHASES
Raw material 10 293
Cattlefeed 40 -
Packing material 3 2
PRODUCTION
Wages 5 20
Production cost 1 -
OTHERS
Margin on closing stock 8 3
Freightage 3 10
Sales commission 2 23
ADMINISTRATION
Salary - 21
Travelling 1 1
Stationery/others 1 1
Profits to b/s - 50
INCOME
SALES
- Cattlefeed 80 468
- Packing material 1 -
Purchase commission 1 -
Closing stock 80 30
32
Price margins received - 8
Loss to b/s 9 -
BALANCE SHEET
(Rs.in 1000s)
LIABILITIES 1995-96 1996-97
(2 months) (unaudited)
SSGS H.O 84 -
Margin on closing stock 8 3
Profit - 50
TOTAL 92 53
ASSETS 1995-96 1996-97
TOTAL 92 92
ACCOUNTS SYSTEMS
33
order in godown entries recorded
There were nineteen stock heads in the stock register. The heads
relating to raw material was as under -
Kambu (maize)
Groundnut oilcake
Rice bran
Jaggery
Mineral Salt(two varieties)
Salt
Gingelly oilcake
Black gram dust
COST MARGINS - The cost breakup for one batch of cattlefeed of 2500
kilos is given to get an understanding of the costs.
MARKETING
50 kgs Rs.325/
45 kgs Rs.270/
40 kgs Rs.260/
20 kgs Rs.130/
10 kgs Rs. 65/
5 kgs Rs. 32.50
34
PROMOTION The cattlefeed packs were sold under the brand name "SEVA
CATTLEFEED". This was advertised in the Tamil monthly newsletter of
Assefa Kariapatti "Seva madal" - which was circulated to all the 120
villages in the block. Both the cinema theaters in Kariapatti town
carried slides advertising the product. At the point of purchase,
usually SSGS retail outlets- a slate board was displayed indicating
availability of the product.
COMPETITION
The competition for the packed cattlefeed ranged from loose cattlefeed
ingredients sold in grocery shops, for mixing by the individual farmer
( deoiled cake, husk, etc) - to " packaged products " by large corpo-
rate organizations, backed by media advertising. The manager stated
that he did not see competition to be a problem since most of the
sales were to a captive market - the Assefa dairy farms in Kariapatti
and milch animal owners belonging to Assefa village organizations.
Around a fifth of the total sales was done directly through the retail
outlets.
Among the "packaged" products, the manager stated that SKM (from
Erode), Gem (from Andhra Pradesh), SKF (from Dindigul) and unbranded
packs from Virudunagar were the major players. He stated that "Godrej"
was a premium brand, which did not however sell in Kariapatti.
PEOPLE
Shri Bhaskar, the unit manager also had the additional responsibility
of being a SSGS retail unit salesman, when the unit was not in produc-
tion. The unit directly employed two couples on daily wages. The men
were aged around thirty years, and women around twenty years. The men
had earlier experience of working in a flour mill. The men were paid
Rs.35/ day and the women Rs.20/day.
The unit manager had studied upto the 12th standard. He was in his
late twenties and was unmarried. He had been earlier a stores incharge
in the Kariapatti Plan Assefa office for seven years, earning a montly
salary of Rs.1750/.
REPORTING
Shri Bhaskar stated that he reported directly to Smt. Chandra at the
Thonugal HO of SSGS. He met her daily for feed related problems, like
purchase procedures, payment of wages and grinding charges, etc. A
monthly review meeting with the Programme Executive of Assefa Karia-
patti, Dr.Ramasamy, Smt. Chandra and Shri Bhaskar took place at the
feed unit itself. Once in two months a review meeting was held at the
Thonugal office to review production versus target figures. The SSGS
35
Chennai office, also coordinated an annual meeting for all retail
managers and production unit heads. Shri Bhaskar had attended a five
day camp on accounting last year, organized by the SSGS.
Officially the following reports were sent from the cattlefeed units
to the Thonugal office of the SSGS
a) Monthly Trial balance
b) Monthly stock balance
c) Monthly wages list
Only if these reports were sent were the salaries released.
d) Monthly grinding charges paid was also sent.
PURCHASES
The cattlefeed unit being a mixing and grinding one, the crucial
function appeared to be purchases of raw material. As stated, the
cattlefeed was produced in four packagings, 40 kg, (80% of sales), 20
kgs,10kgs and 5 kgs. 50 kgs packs were also produced sometimes. The
raw materials used and the source was as under
Kambu (Bajra/Millet ) Kovilpatti/ Arupukottai
Deoiled cake (groundnut/ gingelly ) Madurai
Rice dust Arupukottai
Black gram dust Madurai
Mineral salt Virudhunagar
Jaggery Madurai
Salt Madurai
Polyster packing material Tirumangalam
PRODUCTION
PRODUCTION PROCESS
36
The production process could be depicted as under -
A tinplate was used for painting the following details on the polyster
sacks.
---> Date of manufacturing
--> Price
---> Net weight
The polyster sacks were printed on one side with the SSGS emblem, and
production unit address. The other side had the date, price and
weight.
Equipment:
The following equipment was used in the mixing process.
The manager stated that since the major process of grinding was done
outside, no major skill was needed for the mixing process.
Production costs
Production costing was done for each batch,2500 kilos. A batch costing
report of 26 January 1998, is reproduced below -
The cost of packing came to Rs.11.80 per sack for 40 kilo packing.
The unit manager stated that no ratio changes could be made without
the prior approval of the veterinary consultant. He stated that in the
last year alone, three changes had been made. For instance, in June,
millet was substituted for ricegram dust, as the millet price rose.
This had resulted in lowering the milk output of cows. In August the
old ratios were again used - which however resulted in margins declin-
ing from 17% to 7%.
37
The unit manager opined that the beneficiaries of the unit were -
- Four labourers who got employment
- SSGS who got profits
- Milch animal owners who got quality cattlefeed.
The building and the land was owned by the people's organization
cluster committee. The machines belonged to the SSGS.
The unit manager listed the following support received from the SSGS.
- Purchases
- Sales
- Audit and accounts, once a year
- Training,once a year.
Assefa Kariapatti project had taken the unit manager for an exposure
visit to the Dindigul SKF cattlefeed unit. He had also been taken to
Kerala to investigate raw material prices.
PROBLEMS
38
CHINNAPULIYAMPATTI SPINNING UNIT( Feb. 1998)
FINANCIAL ACCOUNTS
EXPENSES INCOME
LIABILITIES
LIABILITIES
39
SSGS HO Kariapatti 108 Furniture 1
Depreciation 10 Charkas 106
Loss 11
Capital The village had donated the land for the unit. The shed had
been constructed using Assefa Plan funds. The SSGS had contributed
the machines (31 machines at around Rs.100,000 cost).
Accounting systems
The entire cash and stock accounting was done only at the Thonugal
head office. A day book, a ledger and a voucher file were kept by
the Thonugal accountant for this unit. The central godown maintained
stock books for slivers (patai) and hanks (chittams). The Mahilir
officially bought Pattais (slivers) at the rate of Rs.110/ kg. After
spinning into Chittams (hanks) the yarn was sold to the SSGS at the
rate of Rs.175/kg. The margin of Rs.65/ kg was used for paying wages
(at the rate of Rs.1.13 for each chittam, with 54 chittams being spun
from a kg.) and for the office expenses ( around Rs.4/kg). The final
cost of a chittam for the SSGS was Rs.3.56, of which Rs.2.00 was
material cost, and Rs.1.56 labour cost. Approximately 10,000 chittams
were spun each month, with the Madhar Sangam making an approximate
profit of Rs. 1000 to Rs.1500 monthly, according to Shri Perumalsamy.
The supervisor monthly salary came to around Rs.450/ and other fixed
costs were minimal.( for instance the electricity bill came to Rs.72
for two months).
Smt. Vijaya physically lifted the sliver stock from the Thonugal
godown, with a village cyclist being hired by her for delivery. She
also physically transported the spun hanks to the godown, with a
cyclist being used for the physical transfer. She also disbursed the
cash wages to the spinners, after due entries in the "coolie" book.
PEOPLE The unit supervisor, Mrs. Vijaya was a widow, 35 years of age,
with one son. She had finished her matriculation, and had previously
three years experience as a spinner in the unit. ShShe had undergone a
one month training on charka repair and maintenance from the SSGS,
before assuming this charge. SHe had been a unit supervisor for two
years.
There were thirty women directly working in the spinning unit. All the
women were in the age group 20 to 35 years. Only 4 were married. The
unit six days a week, and was kept open from 7am to 4pm. The women
physically did the spinning in the center only.
PRODUCTION
Cotton ----> carding tape ----> primary tape----> sliver --> yarn
40
Initially cotton was carded and sent by the SSGS. Two drawing machines
and two roving machines installed in the unit,were used for futher
processing before spinning on "AMBAR CHARKAS" ( a modified improved
technology). Since August 97, SSGS had being processing at the
Padiyoor Sarvodya Sangam, Coimbatore, to get "simplex slivers". Shri
Perumalsamy gave the following reasons for the changes.
(a) Quality of the yarn was less in the older method. Weavers
preferred the simplex slivered yarn. Also all other Sarvodaya weaving
units started using the "simplex" slivers. So the SSGS was also forced
to change accordingly.
(b) Processing was possible only with electric power. Disruption in
electricity in the village caused disruption in production.
(c) Wastages were high in the older method.
(d) It was easier to weave using "simplex" yarn.
The production unit had thirty spinning machines kept in three rows.
The machines were "Ambar charkas", hand operated using four gears.
Presently only "polyvastra" was spun (which consisted two parts
polyster and one part cotton). Six bobbins could be spun at the same
time, but presently only two were used. The wage rate wa 44paise for
ordinary yarn, and Rs.1.30 for twisted yarn. For the eleven months of
1997-98, 107 chittams of single yarn and 10,000 chittams of twisted
yarn had been spun.
Production accounting The basic unit of accounting was one "ghani"
which was a single thread extending to two hundred metres. Five ghanis
made a chittam or a hank. The cost of a chittam was Rs.3.56 of which
Rs.2.00 was the material cost and Rs.1.56 the wage rate. From one kilo
of pattai or sliver, 54 chittams could be produced. The purchase cost
of one kilo of pattai was Rs.110/ and the sales price of one kilo of
chitam was Rs.175/. The spinner actually received Rs.1.13 as the wage
rate per chittam. A perusal of the "coolie book" revealed that some
spinners had earned Rs.335 in fifteen days.
41
Keela 2819 41,572 4,157 3,868 49,599 17.59
alaginallur
M.Illupa
kulam 2818 35,165 3,516 3,267 41,948 16.60
Khadi yarn was also being spun at centers with 30 and 70 count cotton
yarn. The yarn production was 195,202 hanks from 105 charkas (from 195
charkas issued). The weight of the chitams was 5,717 kgs. valued at
Rs.761,692. 14,341 humandays employment were generated and the total
wages paid was Rs.224,808. ( of which Rs.17908 was for welfare fund,
and Rs.17968 was for as incentives).
Kumari Jaya, a spinner was interviewed to elicit her opinions. She was
nineteen years old, unmarried and had finished junior college (+2).
She stated that she had trained for two months before starting
production. She had earned around six hundred rupees monthly, apart
from the Diwali bonus of six hundred rupees cash and six hundred and
fifty rupees worth of cloth. She stated the major problem to be of
quality, which was sorted out in the meetings.
OWNERSHIP The land and buildings belonged to the Mahilir Manram. The
machines belonged to the SSGS.
SUPPORT SYSTEMS FROM SSGS The SSGS provided all the raw material,
training and ensured marketing of th produced yarn. It also kept both
the stock and cash accounts - which was expected in course to be
transferred to the unit.
TRAINING Smt. Vijaya the unit superviso stated that she did not feel
the need for any training, except perhaps in accounts (if the unit
accounts were transferred). The spinner interviewed Kum. Jaya also did
not feel the need for any training.
42
VALAYANKULAM WEAVING UNIT
INCEPTION The unit was initially started by Assefa, with fund from
Plan International as an Income Generating Programme for weaving
turkey towels. In 1991 training was given to beneficiaries for weaving
turkey towels. Production commenced in 1992, and the unit ran for two
years. Due to a variety of reasons, Assefa decided to shut down the
unit - the major reasons being the doubling of the yarn rate, and
marketing problems due to competition from small scale industrial
units. Assefa decided to change the unit to a KVIC recognized one. The
Project Executive of Kariapatti decided to start a khadi weaving unit
for the following reasons -
(a) Traditional weavers living in the nearby Kalkurichi village
(b) Easy availability of the raw material ( khadi yarn), which was
spun in Assefa villages, under KVIC programmes.
(c) Existence of a market distribution network in the form of Sarva
Seva Gramudyg Samithi shops in Tamil Nadu ( which was a sister
organization of Assefa).
43
Building - 8 8
Furniture - 7 7
Electric Fittings - 7 7
Weaving advance - - 1
CLOSING STOCK
-Khadi yarn 44 41 }
-Poly yarn 17 25 } 92
- Packing material - - }
Cash on hand - 1
Net loss - 14 9
Opening Stock - 60 65
PURCHASES 80 162 80
PRODUCTION
Weaving wages 2 26 20
Incentives+welfare 1 4 4
Prodn expenses - 11 13
Interest+Insurance - 3 -
Yarn Dyeing - 6 -
Freight - 1 -
Sales/purchase commission 1 20 17
Price margin on stock - - 8
Other expenses - - 1
Depreciation - 2 1
ADMINISTRATION 1
Rent + Tax - 1 1
Stat,post,travel,etc - 1 2
Electricity - 13 7
Watchman wages - 5 9
Consolidated pay - - 2
TOTAL 87
SALES
- Poly yarn 14 7 -
- poly vastra 13 102 62
-Khadi yarn - 41 9
- Khadi vastra - 73 55
- Weaving accessories - 7 1
- Others - 8 -
CLOSING STOCK 60 65 92
Explaining the reason for the losses,for the last two years. Shri
Perumalsamy, stated the following -
(a) Around 200 teak trees, 50 neem and 30 savuku had been planted,
44
which required a watchman's salary be paid.
(b) Capital expenses had been undertaken on repair of main
gate(Rs.10,000), Electricity connection deposit(Rs.5000), Purchase of
new electric motor for water and its repairs(Rs.15000).
These expenses were not strictly under the purview of the weaving
unit.
Accounting systems -
The Valayankulam weaving unit maintained only stock accounts - with
the Thonugal head office maintaining cash books and ledgers. The stock
accounting took place through two books -
(a) The stock book, which detailed receipt of hanks (chittams) of
yarn, along with bill number, and value.
(b) The coolie book, which detailed issue of yarn to weavers. Details
pertaining to the variety, number and length of the cloth woven, the
wage rate, the weaving wages due, the deductions and the net wages
paid were recorded for individual weavers.
MARKETING
Product The major products marketed were khadi cotton and polyvastra
cloth. Khadi and polyvastra yarn and weaving accessories were also
recorded as sold, by the unit. The cloth woven from the unit, was
directly transferred to the Central godown of the SSGS at Thonugal.
Orders for grey cloth were directly sent by the SSGS. Sometimes, the
SSGS took the responsibility to print and dye the cloth for sale,
either through the SSGS retail outlets or through outside
distributors.
The products produced at Valyankulam included the following--
10kal x 45" (towels)
10kal x 127" (dhotis)
6kal x 28" (towels)
7kal x 36" (shirt pieces)
(Note - one kal = 240 pieces or ends of yarn)
HUMANPOWER
The Valyankulam unit had three fulltime staff, with fixed salaries,
and presently nine weavers paid on an piece rate basis. The manager of
the unit, Kum.Muthulaxmi earned Rs.800/ month. She had finished her
matriculation and an one year course on Khadi. She was unmarried and
22 years old.
The watchman, Shri Velimuthu was 45 years of age, married and with
children. He was physically handicapped and earned Rs.25 per day as
daily wages. He was literate.
The Maistry, Shri Mohan was fifty years of age, married and with
children. He belonged to a traditional weaving community, and earned
Rs.35/ day as daily wages. He was literate.
The nine weavers along belonged to a traditional weaving community,
and were residing in a nearby village. They were in the age group 40-
60 years. 4 were men, and 5 were women. They could earn a minimum of
twenty rupees a day, from weaving. The manager stated that for
example, a 10kal x 45" cloth would be paid at the rate of
96paise/chittam. One piece would require 53 chittams, and would earn a
wage of Rs.50.88. A weaver could finish two pieces in three days.
45
Reporting The manager came to the Thonugal atleast once a week, which
facilitated reporting. Shri Perumalsamy was directly responsible for
all spinning and weaving activities under the Thonugal SSGS. He
stated that he expected a monthly trial balance, which was worked out
from the funds requested, expense vouchers, and indents of cash and
yarn, by the Thonugal accountant. This trial balance was consolidated
quarterly for submission to the Madras office of the SSGS. He also
stated that the Madras office expected a monthly stock and production
report. For this purpose, he directly took the data from the stock and
coolie book at the unit.
PRODUCTION
Production unit details - The production unit was located on a two
acre fenced campus off the Kalakurichi to Virudunagar road, very near
to Kalakurichi town (on the Madurai Tuticorin state highway). The unit
was located at the back of the campus - the front being planted with
200 teak, 50 neem and 30 savuku trees. The unit proper was housed in a
shed,with a sloping asbestos roof, with 30 feet width and 30 feet
height. The shed was divided into three rooms, each room having a
breadth of 60 feet. One of the rooms housed the weaving unit, and the
other was used as a godown. The third room was presently empty.
The production room was lighted with four tubelights - with enough
ventilation to allow working with natural sunlight. The only piece of
furniture in the room was a table and chair for the unit supervisor.
Each loom had a built in bench to facilitate sitting and weaving. The
unit had 11 frame looms, of which 4 were not in use. Apart from the
seven working looms in the campus, two looms had been installed in the
houses of the weavers.( making a total of nine working looms).The
looms were manually operated , mounted on a wooden frame, with all
parts made of wood. A manually operated sectional warping machine,
with gears, was used for wrapping the the thread around beams, before
weaving. Two hand operated bobbin machines (using cycle wheels) were
used for wrapping the yarn around spools ( instead of bobbins)
colloqially termed "dabbas".
Production over the years The following table details the production
and wages paid since inception, for both spinning units of Thonugal
SSGS.
BENEFICIARIES/NGO LINKAGES
Beneficiaries Both the SSGS head Smt.Chandra and the weaving advisor
Shri Perumalsamyopined that the beneficiaries of this activity were
46
the weavers. Shri perumalsamy also stated that potential existed to
increase employment oppurtunities for weavers - however the younger
generation did not appear to be too keen to take up this activity.
Ownership The Building and the land was registered in the name of the
Assefa Head Office in Chennai. The looms belonged to the SSGS. The
ownership of the trees had yet to be settled.
NGO support The SSGS provided the looms, the yarn, for many weavers
the physical space and the market for the spun cloth. The weavers
tasks presently related to only weaving the cloth according to
specifications set by the SSGS and collecting weaving wages in return.
PROBLEMS FACED Shri Perumalsamy stated that the weaving unit did not
face major problems. The only problem in his opinion was the
unwillingness of traditional weavers to continue this trade. He stated
that training other communities was not a solution.
47
A CASE STUDY ON COIR PRODUCTION UNIT
(Community enterprise supported by Arogyaham - Aundipatti).
INCEPTION
BACKGROUND
The SHG started two years ago (1995) with twelve members subscribing
ten rupees each. The people below the poverty line were identified to
start community enterprises. Among twelve SHG members, five were
selected for community enterprises and Arogya Aham identified
coirmaking unit for these people.
PERSONAL DATA
TRAINING
After the selection process, these five members had undergone a three
months training on coir making which was arranged by Arogya Aham.
Exposure visits werw arranged for these beneficiaries to gain more
knowledge/input, to provide psychological support, trough motivation
and building self confidence.
COIR PRODUCTION
The production of coir started one year ago in the village itself.The
land used for production of coir belongs to one of the beneficiaries.
Rent is not paid to use this place. The cost of the shed has been met
by Arogya Aham.
RAW MATERIAL
Raw material is being purchased from Devadanapatty for which tey are
spending Rs.150/ for a bale consisting of thirty kilos. Purchases of
fifteen bales is made at a time. Purchases are made either once or
twice a month. The transportation cost for purchasing the raw material
and marketing the product is Rs.500/. The raw material which is being
purchased now is poor in quality because of its less cost. Due to this
the wastage is high.
PEOPLE
Two women are employed by each beneficiary and they are given Rs.15/
as wages per day. The hours utilized for production is eight hours,
including an one hour lunch break, which is not properly monitored.
The employees belong to the same village, and they were given
training in the initial stage.
PRODUCTION
For each bale of thirty five kilos, nine kilos becomes waste. The
remaining twentysix kilos are used for production. This is used for
manufacturing two hundred bundles.
MARKETING
48
committee consisting of the President, the Secretary, and the
Treasurer. The rule for marketing is that any two beneficiaries should
for physically marketing the product. Initially there were marketing
problems. But now marketing has become simple, and there is adequate
market for what they are producing.
COMPETITION
ACCOUNTS
CAPITAL
Arogya Aham invested Rs.10,000 for buying five machines. The cluster
has provided a loan of Rs.3,700 as working capital for five people.
Repayment of the loans is Rs.190/ per month. Payment for machinery has
yet to start.
ADMINISTRATION
The group meets twice a month for taking decisions on purchase of raw
material, assinging people to go to the market, and keeping accounts.
The minutes of the meeting is also maintained by the group.
PROFITS
ADVERTISING
IMPRESSIONS
4) Though all the units are under one roof, there is no cooperation
between the women in production.
49
b) Human(woman?) hours
c) Monitoring
d) Quality of the products
e) Working capital
PREPARED BY -
S.BHASKARAN
NANCY J. ANABEL
50
SEVA VANIGA MAIYAM
A.BACKGROUND
PRODUCTS/SERVICES MARKETED
Price:
Promotion:
Competition:
Humanpower:
51
Two women staff have been employed of which one has completed
standard XII, and has half an year's experience in a Government
Office (temporary capacity). The other, has completed Standard X
and had been working as typist in a Government Ofice (temporary
capacity). The former who has joined a couple of years ago is
paid Rs.600/-. The salary for the latter who joined a month ago is
yet to be fixed.
KCEC decides the salary for the staff and pays it. The staff
reports to the office every week and the discussion regarding the
operation of the Vaniga Maiyam is taken by KCEC. The staff are
also invited to attend the KCEC meeting.
Ownership:
52
CASE STUDY ON SEVA CANTEEN
53
Customers:
The Seva canteen gets huge orders when there is a health day
meeting, children's function, village level meetings, school
functions, government functions etc. It's strategic position on
the highway also attracts truck drivers and bus passengers.
Ownership:
The canteen does not belong to any individual or group.
The cluster commitee of Chinnapuliampatti has an over all control
over the matters concerning the canteen. Whenever there is a
crisis ASSEFA comes to their rescue.
Books of Accounts:
Once a month an auditor verifies the accounts and the stock is verified once in
three months.
54
SEVA NURSERY
The Seva nursery was started in 1993 by ASSEFA at Kariapatti following the
Goverment Social Forestry Scheme in which trees were planted to enhance
rainfall. The resources for this scheme (i.e.)saplings were to be acquired
from a nursery and hence Seva Nursery was started to supply the saplings for
this scheme. The nursery was started with a capital of Rs 1 lakh from the
Kariapatti ASEFA plan.The rest of the financial contribution came from
the community.The capital was channelised into constructing a bore well for
water facilty, purchasing land to institute the nursery and in purchasing
saplings.
RELATING TO MARKET:
All kinds of saplings -fruit trees, native varieties ,crotons, flowering
plants and indoor plants are sold here. The varieties are decieded upon by the
popular demand.
Price: The price of the saplings are based on the variety
of the plant. The common trees like neem and tamarind are sold for
just Rs.3 and Rs. 5 respectively and coconut saplings are sold at
a cost of Rs.20.The saplings sre sold sold at costs less than the
government rates.
Promotion: The services of the nursery are advertised in the
newspaper and through partipation in exhibitions.Quality test for
the saplings and the services of an agricultural consultant
ensures quality products.
Sales: An average of 1 1/2 lakhs of saplings are sold every
year. The nursery has recorded an annual sales upto Rs4 1/2 lakhs.
Competition: There is no other nursery in the vicinity which
rules out any competition.The saplings are marketed as far as
Tutucorin.
RELATING TO PRODUCTION:
For the production of the saplings the raw materials required are:
1. The saplings are propagated at the nursery itself with seeds or cuttings.
Howwever if the requirement is high then saplings are purchased from other
nurseries.
2. 300 kgs. of plastic sapling bags per annum at the cost of Rs. 88 per
kg..The bags are bought from societies which produce them in small scale
industries.
5. Electricity.
The benefeciaries are the villagers and the nursery is owned by the cluster
village.
55
CHAPTER VI - INFERENCES
From the above we can perhaps infer, that in most cases reviewed
the inception has either been
* a strong village based women's savings and credit group
* availability of raw material within the community(usually
treebased?)
* skill availability within the community.
56
Notable successes,using survival as a financially self reliant
unit as a criterion, were the Seva agarbathi unit and Arogyaham
herbal unit. Both appeared linked to skills available
traditionally within the community.
We can hence perhaps infer that for most of the case studies, the
CEDP model has been validated as far as initiation of the unit is
concerned.
Within the SSGS units, one could see a continium- from complete
self reliance in capital, administration and marketing, to one
where everything except physical production was dependent on the
SSGS. The agarbathi unit was completely self sufficient, and
could perhaps survive even without SSGS support. The only contri-
bution of the SSGS had been an initial working capital grant, and
the "Sarva Seva" brand name. The bathi unit had accumulated
sufficient financial resources now to pay off this grant if the
need arose.
In the case of the steel unit, the SSGS apart from the initial
capital and machinery, assisted in purchases, production plans,
and marketing. While the steel unit could perhaps be financially
and administratively self reliant, its survival appeared to be
presently linked to the marketing distribution network of the
SSGS.
In the case of the cattlefeed unit, SSGS ensured purchases, set
57
the raw material ratios, provided working capital, and ensured
marketing. However there was a potential for financial and admin-
istrative self reliance, with reliable market support.
In the case of spinning and weaving units, the status was almost
that of "captive production units". The SSGS provided the raw
material, gave the specifications, and bought back the output.
While the weaving unit was atleast self reliant in accounting,
the spinning unit presently had only the administrative capabili-
ty, of supervising the physical production process.
58
TECHNOLOGY TRAINING - for updating old skills (palm candy) and
for new low technology enterprises like coir and spinning.
RAW MATERIAL PROVISION - which sometimes appeared to be also
linked to "buy back arrangements" for marketing.
QUALITY CONTROL - Of the final products, to ensure market accept-
ance.
ADMINISTRATION - Usually in the form of wages for the manager.
(which cost could be taken over by the unit itself in course of
time)
ACCOUNTING - Either accounts training, or physical keeping of
stock and financial accounts.
MARKETING - Either buying the entire produce, or providing access
and/or linkages to markets, or providing partial marketing sup-
port.
From the above we could perhaps infer that at the minimum, con-
trol/ supervision over the physical production process, was
necessary, for a unit to be described as a 'community enter-
prise'. In many cases the NGO had initiated the activity and had
provided technology training, the space, necessary machinery,
purchased the raw material, bought back the output, and kept the
accounts. The community enterprise's evolution to complete self
reliance, appeared to start with start with control over the
physical production. The community enterprise's financial ability
to "pay back" the inital contributions and then meet the adminis-
trative expenses appeared to be second phase in evolution. The
progress continued to being able to handle all the raw material
and marketing linkages. Usually at this stage, the NGO support
was restricted to keeping accounts and providing working capital.
Accounting capability, first physical and then stock accounting -
appeared to mark the next phase. Being to able to "pay" for the
space (in terms of rent), and for working capital at market
rates, marked another important evolution.
(B) NGO and community as partners - with the NGO providing either
all or some of the following inputs - capital, machinery, train-
ing, space, accounts keeping, raw material and marketing ( as
was the case of most of enterprises studied)
59
(D) Complete financial, and administrative autonomy from the sup-
port NGO - as was the case with the Bathi unit.
There could be some room for confusion between the terms bene-
ficiaries ( from the social work perspective), users ( technolog-
ical perspective) and clients/ consumers (economics/business
theory perspective).
To dispel this confusion the "unit of analysis" has to be de-
fined. For this study the analytical unit has been the "enter-
prise" run or atleast initiated by an support organization/NGO.
If the word "CONSUMER" implies the purchase of a commodity or a
service for a price, then the term is the same as defined for
conventional enterprises - the person in the market who pays a
price in purchasing the output of the enterprise. This also
implies that atleast for those transactions relating to the
market, "conventional marketing theories" appear to hold true.
If the word "BENEFICIARY" means all those who stand to gain from
the enterprise, the list appears to be wide. Apart from those
directly employed by the unit, the NGO staff who get paid for the
support services, the salespeople salaries paid by sales commis-
sions, and even suppliers of raw material need to be included in
the list of beneficiaries. This implies that beneficiaries should
not be narrowly defined to be only those whose salaries are
directly paid by the enterprise. For instance in the case of
smaller NGOs it is perhaps feasible for the entire administrative
and infrastructural costs to be met by profits made by community
enterprises it has supported. Perhaps there is merit in discard-
ing this term for a better word.
OWNERSHIP
60
In none of the enterprises studied was there a clear legal struc-
ture to define "ownership". In the case of the SSGS supported
enterprises, one could generally say that these were owned by the
SSGS - as they depended on the SSGS brand name, if not machinery,
marketing distribution systems and administrative expertise.
Important variations appeared to exist in terms of ownership of
the physical infrastructure (land and buildings) and of people (
the power to hire and fire the administrative staff).
In the case of the other NGOs, Seva Nilayam, Arogyagam, PWDS, and
CCD, "ownership" did not even figure as an "issue". The NGOs
appeared to have confined their major tasks to be providing
initial capital, some lowtech technology training, and in some
cases market access. Ownership by default could perhaps be rest-
ing with the village group. ( which inference is a matter of
conjecture, subject to verification with field data).
PROBLEMS STATED
61
Social issues appeared to have been neglected as potential
"problem areas" - the exception being the PWDS palm candy units,
which mentioned lack of schooling to the children of the palmyrah
workers.
62
CHAPTER - VII - CONCLUSIONS
Sociology
The community enterprises had definitely engendered a degree of
economic empowerment, through providing alternate wage employ-
ment. Whether this translated into social empowerment, could not
be stated with certainty. Health, education and culture appeared
to be neglected as too was gender issues. Only in the case of
agricultural bonded labourers would there have been a social
empowerment, from bondage to being a free labourer. Bargaining
power would have increased in economic terms. This had been done
collectively- not as indiviuals.
63
Redefining community enterprises from a "practical social work
perspective", we can conclude that -
(a) The degree of control exercised by the comunity in terms of
ownership, capital, and profit sharing appeared to be determined
by the complexity of the technology and the market.
(b) In cases of relatively low technology enterprises based in
village contexts, community leadership form and structures could
be predicted.
(c) Use of external auditors appeared to depend on formalization
and control by the support organization.
For NGOs
(a) Ideally select village groups which show some organizing
capability ( in terms of say, savings, frequency of meetings,
issues tackled, etc)
(b) If some local raw material exists and is accessible, build a
community enterprise on "value adding and marketing" this re-
source.
(c) Build a community enterprise on existing traditional skills
within your community. If this is also linked with local avail-
ability of the raw material, the chances of success are very
high.
(d) If you have to choose a new activity, keep it "low tech" and
ensure that marketing is your responsibility, atleast initially.
(e) Define your tasks in terms of your capabilities.
"Administrative capability" is a scarse resource in the
development sector. If you do not have the expertise, restrict
yourself to only being a passive provider of capital. Consider
"scaling up ", if you can ensure market access. This would imply
64
in administrative terms, building a brand name, formalizing
accounting systems, and optimizing production systems.
For bankers
(a) The systems of assessing "economic/financial viability" of a
community enterprise is no different than that of conventional
enterprises. Being hard headed here can save a lot of money!
(b) The chances of sucess depends critically on the capabilities
of the village groups and the support organizations. Consider
lending to the groups, if the technology is known and low, the
group is well organized and markets are known and assured. Con-
sider only lending to the support organization/NGO if the tech-
nology is relatively high tech and/or the markets are geographi-
cally dispersed and unknown.
(c) If you lend to the support organization/NGO, you need to
assess the administrative capabilities especially in accounting
and marketing. Spending on such expertise is an "investment" for
success, not a financial burden. This perspective may not be
always be appreciated by the support organization/NGO - who may
feel "uncomfortable" with the discipline demanded for competing
in the market.
(d) Lend to a community enterprise ideally if it uses local
material and available skills. If it uses either local material
or local skills, question closely the technology and the market-
ing strategies. Lending for a new technology with raw material
from outside is the most risky. (We have the example of gem
cutting for women groups in South Tamil Nadu before us).
65
POINT OF REFERENCE THINGS PEOPLE
Professionals Enabling/
and local people Motivating Empowering
Planning and
Action Top Down Bottom up
66
In a sense, they have to downplay the "process" elements of
discussions and participation" to become more "task oriented".
67
APPENDIX - A CRITIQUE OF THE STUDY
OTHER PARTICIPANTS
- Shri Muthu Velayudham (CCD - NGO working with rural women)
- Ms. Bimla and Ms. Kalamani (EKTA- activist feminism NGO)
- Ms. Amali, Shri Raja Samvel + three staff from Arogyaham (NGO)
- Fr. Xavier (Karmathur college - specialist in NGO management)
- Dr.(Ms.) Mary Alphonse (Nirmala Niketan College of Social Work,
gender aspects of rural development)
- Shri Jeyaraj (PWDS) (Income generation programmes)
- Shri Jeyakumar (AIRD)(Income generation programmes for women)
MORNING SESSION
Shri Reji Chandra introduced the theme of Community Enterprises
and facilitated the self introduction of participants. Shri John
Chester then spoke on concept of Community Enterprises and the
various activities connected with it. Shri S.Ananthanarayana
Sarma gave a gist of the various seminars which went into the
making of the CEDP study, the conceptual framework underlying the
study, the methodology and some important inferences.
The three resource people then stated their analysis and critique
of the study report. The other participants commented on the
presentations and raised various questions. It was generally
agreed that the theme for any community enterprise development
programme in the present socio economic context had to be sus-
tainable income security for rural women. (For sake of clarity,-
questions raised in the morning sessions and the responses formu-
lated in the afternoon is summarized in the following pages.)
AFTERNOON SESSION
After lunch, Shri Sarma listed the various questions raised under
the following heads -
- GENDER
- MODEL DEFINITIONS
- COMMUNITY ENTERPRISE FUNDING, MANAGEMENT AND NGO RELATIONSHIP
- ECOLOGY
- PSYCHOLOGY/ MOTIVATIONAL FACTORS
- POLITICS OF BANKING
68
tion.
GENDER
The units studied were very much dominated by men, at the manage-
ment level. NGOs studied cannot be stated to be "gender con-
scious". How to change this is a difficult question. If CEDPs are
programmed to work with rural marginalized women, perhaps there
is a possibility of a change. Hence the importance of the "devel-
opmental vision" before embarking on an community enterprise
promotion programme.
GENDER AND LABOUR ECONOMICS/WAGES
69
become more gender sensitive.
MODEL DEFINITION
a) Five as a number for the lowest viable unit is too low. Shoud
not the number be raised?
The Sewa model and the Grameen bank model work on "MICRO FINANCE"
issues. The Community Enterprise concept works on "MICRO ENTER-
PRISE" issues.
70
question of whether the assets are owned seperately or commonly
is not very relevant, as long as the group together takes some
responsibility for some part of the enterprise activities. (
either procurement, or processing or marketing). However where
"groups" were created specifically to take advantage of Govern-
mental subsidies, and assets created to fulfil financial targets,
the "group enterprise" cannot technically be treated as a commun-
ity enterprise.
The response after much deliberation stated that being law abid-
ing members of a civil society no rural women group can ignore
laws regarding ecology. However when the issue becomes "ideologi-
cal" - should plastic be used for packaging, etc - the safe norm
to use would be that ecology is not that important a concern, if
it threaten survival of the community enterprises' products in
the market. When conventional enterprises can get away with
marketing blantantly anti ecological products and services (which
pollute the air, water, land and cause health problems in socie-
ty), it would be suicidal for rural women initiated community
enterprises to get into "ideological" positions regarding ecolo-
gy. Hence it could be inferred that if no environmental related
laws are broken, ecology is not stricty a concern for community
enterprises, initiated for and by rural marginalized women.
The question raised was what are the "politics of credit" which
affect the funding of community enterprises?
71
alized poor be asked questions, related to ecology and gender.
However it may be noted that the participants agreed that the
thrust of any community development programme had to be on rural
poor marginalized women - thereby ensuring a gender prespective.
It was felt however that bankers should not ask these questions -
the same norms for funding conventional business enterprises
alone should apply to community enterprises also.
The participants also noted that the "politics of banking" ap-
peared to be veering towards poor rural women. The 1998 budget
presented by the Finance Minister in the Lok Sabha spoke of an
appropriation of five hundred crore rupees for the National Bank
for Agriculture and Rural Development (NABARD)- towards helping
the formation of two hundred thousand savings and credit groups
over the next five years. It hence appears that the political
context appears to be right for funding of community enterprises
for rural women, by formal banking insitutions.
--------------------------------
HIGH
P \ /
O / \ NGO
W E / \
E C / \
R / \
/ \
LOW
------------------------------
INCEPTION MATURITY
72
initially to take off a community enterprise. The NGO could over
time, slowly move the community enterprise towards self reliance.
Such tasks presupposes, that the community enteprise need NGO
support, atleast in the initial stages. A 100% community enter-
prise can only emerge after some patient, participative work of
an NGO in most cases.( This should not discount the possibility
of a fully empowered group with very good leadership being able
to start an enterprise on its won and handle all financial,
marketing and technological linkages. Such instances, would still
remain an aberration rather than a norm atleast in the context of
South Asia).
73
ing a doctoral thesis on management of NGOs. The group agreed
that the development vision underlying CEDPs would vary, accord-
ing to the values of the relevant community and that of the NGO.
This vision would in the final instance, determine the relation-
ship between the NGO and the CE. However it must be noted that
there is no such thing as a "good" vision or a "bad" vision. In
many cases, the vision may not have been articulated - or
sometimes even fully comprehended. However from a strictly social
science perspective, the underlying vision crucially shapes the
direction the community enterprise would take.
The example cited was that of a multinational telecommunications
firm Ericcson- which directly subcontracted assembly of mobile
telephones for manufacture to Thai women groups. The underlying
vision, belongs to that of "supply side economics" - of highly
monetized economies, accompained by free global flows of capital
and labour. Similar industry to rural women linkages are also
being aggresively marketed in South Asia, by the British funding
agency Action Aid, and nearer home by the TVS group and its
allied institutions like the Gandhigram Rural Institute. The
question remains - of how much control these women groups would
have with a product, for which they have neither traditional
skills nor raw material. There always remains the danger of these
women groups being dumped with hazardous tasks, which unionized
labour may refuse to perform (as often happens in multinational
production units in Third World countries). Or the industrial
enterprise may try to solve its market problems of controlling
costs, by turning to the cheaper labour of the rural women groups
- who need not be insured, or given provident funds, gratuity,
medical benefits, as is the norm for unionized labour. These
issues, should not however detract from the fact, that any em-
ployment, howsoever exploitative, is perferable to starvation for
rural women in drought prone subsistence economies.
Shri Shyam Sundar presented the following graph for understanding
community enterprises - which can be used to understand the
underlying vision -
COMMUNITY ENTERPRISES
|
|
FOURTH QUADRANT | FIRST QUADRANT
WELFARE-------------------------------------------DEVELOPMENT
|
THIRD QUADRANT | SECOND QUADRANT
|
|
CONVENTIONAL ENTERPRISES
74
NGO would fall in the third quadrant. The underlying development
vision, would while being paternalistic in principle, have a
welfare perspective of providing charity.
75