Startups at the
Bottom of the Pyramid
With a little hand-holding from mentors like
Ronnie Screwvala, an alternative narrative of entrepreneurship is emerging from
rural and impoverished India
For Ronnie Screwvala this was an unusual success story. At a
community centre in Khamgaon, a village 166 km south of Mumbai, he engaged a
group of 25 rural women, all dressed in pink, aged between 30 and 40, in a
discussion on sanitary napkins with great enthusiasm. But then, success and
Screwvala are not strangers. He has had plenty of bigger ones, as a media
mogul, promoter of film and television production company UTV, which he finally
sold to Disney (residual 49% for `2,000 crore in 2012). His second innings, as
do gooder, is just about taking off. At the same time, life also seems to be
taking off for Rashmi Tambe, one of the pink saree clad ladies talking `female
hy giene products' with Screwvala on a hot April afternoon. Screwvala's Swades
Foundation (named after the Shah Rukh Khan-starrer) is helping rural women in
Maharashtra's Raigad district start a small factory to produce sanitary napkins
and sell them in the villages. Tambe, a housewife, is also one of the directors
of a new company being formed. For about a year she has been engaged as a
suraksha mitra (health worker) by the Swades Foundation.
For a monthly salary of `500, the health workers are supposed to
assist people in their villages with health issues. For instance, Tambe speaks
about an afternoon in the first week of March 2015 when she rushed with a woman
in labour from one government hospital to another; at both the doctors were on
leave for Holi. Finally she got the woman admitted to a private hospital for a
Caesarean section.
Swades' suraksha mitras (SMs), typically housewives, have gained
in stature in their villages through interventions like these. Swades now has
more than 1,000 such SMs working with it in and around Raigad (once the capital
of Shivaji's empire). For the affordable sanitary napkins project, Swades is
procuring a factory that will use cotton. Tambe and her band of women will form
a company to run the plant and also sell the product. They have already helped
coin a brand name `Sakhi' and the name `Swaraksha Sakhi' for their venture.
There's but one catch -to start off, the group needs to be 500-strong, each
woman contributing `500. So far, 256 women have signed up for this project.
Tambe suggests that the SMs earning `500 a month be forced to join up and one
month's salary be deducted towards the capital. Screwvala suggests a `100
monthly deduction over five months. For Screwvala, it is important to succeed
with this plant, so there can be one more later in the area. Screwvala today
devotes 35-40% of his time to Swades Foundation and his wife Zarina works
fulltime with it.
Step by Step
The foundation has been working on water and sanitation in Raigad
for a decade. But, today, with Screwvala quitting UTV and devoting a lot more
time to Swades, it is aiming higher. Swades has taken up an ambitious project
to work in six blocks of Raigad (Mahad, Mangaon, Poladpur, Shrivardhan, Mhasala
and Tala) and help around 10,000 entrepreneurs set up their own businesses. The
goal: to help these ventures clock total revenues of `50 crore by 2015-16, and
then go up to `165 crore three years later.
That is when Screwvala hopes to execute what is unique to his
model of philanthropy -an exit plan. The foundation is working on water,
sanitation, health and education. However, growing the earning capacity of the
people is key to make all the other efforts self-sustaining. Screwvala says:
“We will work here for six years in these 3,000 villages with 4.71 lakh people.
Then we will move to a new area.“ For the livelihood entrepreneurship
programmes, Swades has chosen activities like cashew-processing,
mushroom-farming, desi-chicken rearing, stitching and agarbatti-making. Also on
the drawing board are dairy and agriculture interventions. “The goal is to
increase the GDP of the region,“ Screwvala says. A part of the programme is an
outreach in Mumbai for people who have their homes back in this region. “We
want young men who go to Mumbai to find a job to come back and start something
here.“ His charm seems to be working.
In Turbe, another village in the area, 25year old Anirudh Tausdkar
has been bitten by the entrepreneurship bug. He has quit his job as a retail
assistant in R City Mall in the eastern suburb of Ghatkopar in Mumbai that used
to earn him `12,000 a month and has come back to his village to take up cashew processing.
The cashew crop grows wild in the region and is often consumed as a vegetable.
While the state government has, through a scheme, distributed equipment for
cashew-processing among villagers, not many units are active. That may be
because while the equipment costs just about `1 lakh, the annual working
capital required is eight to nine times that. Screwvala and Swades are stepping
in here to provide working capital assistance and guidance to the cashew processors.
“The idea is to make them scale up so they can bring in more profits. After a
year or two of support, the banks will be interested in financing them,“ says
Screwvala.
The Rules of the Game
Screwvala knows a thing or two about funding. Back in Mumbai,
Screwvala has his own private equity investments in 15-odd startups, on each of
which he has a board seat. In Raigad, the model is vastly different. While the
cashew processors need working capital support, the sanitary napkin venture
needs marketing guidance and technology. Screwvala stresses that he is
influenced by the late corporate strategist CK Prahalad and his theory of
finding profit at the bottom of the pyramid. Screwvala is trying to find
entrepreneurs at the base of that pyramid. “You cannot meet prospective
entrepreneurs here and ask what is their business plan. At this level, you have
to mentor, handhold and celebrate small successes every day,“ he says. And
while the entrepreneur in him constantly thinks scale, he admits that cash flow
is the key.
Take chicken-rearing for instance. At Fauji Ambawade, a village
where almost every able-bodied man has joined the Army, Screwvala is betting on
chicken bred in backyards, or desi chicken (the local birds are more used to
the temperature and humidity that prevail in these villages than those used to
produce industrial chicken meat, or broilers).
Santosh Jadhav is just back from his Army posting in Bihar; he has
brought teddy bears for his three daughters and is somewhat amused by his
wife's attempt to start up a desi chicken poultry. Sharmila, his wife, has
devoted two new rooms for the birds that have to be allowed to roam around
(unlike broilers that live in coops) and Santosh promises to support her
venture. After all, the land owned by the family is a few kilometres away and
in his absence it cannot be tilled. The initial investment is `10,000 of which
Swades provides `3,000 and even offers an interest-free loan for the rest. One
lot of 100 chicks grows up in three months and potentially brings in
`20,000.Sharmila has invested in two lots in two months. She is expecting cash
to start flowing in from the third month. The
Shrivardhan-Harihareshwar-Diveagar stretch nearby are beach destinations with
tourism picking up and desi chicken sells well -often at `350 for a fullsized
bird.
To make this happen and tie up opportunities with markets, Swades
did a baseline study for the region. One of the opportunities that the study
showed up was oyster mushrooms that grow naturally in the region in the monsoons.
Swades is working with families to create humid rooms where these mushrooms can
be grown right through the year. The demand exists within the region itself as
people think it has therapeutic value. However, Screwvala is keen that the
mushroom growers load fresh mushrooms in an ice box and bring them to Mumbai
where a bigger market awaits. As he munches on mushroom pakoras, Screwvala
points out that oyster mushrooms are his biggest bet. He expects the business
to clock `90 crore a year by 2019. Around 13 mush room entrepreneurs at Dasgaon
village have already joined hands and formed a company. While the original plan
was to work from spare rooms and empty houses in the area, the company formed
by the entrepreneurs now plans to build a covered shed, akin to a greenhouse.
Rajendra Abgenkar, one of the mushroom farmers, says: “This way we will be able
to produce more in one place.“ The Flavour of the Season Clearly the Swades
approach to entrepreneurship can be replicated across product categories,
creating supplementary demand for things like mushroom seeds to even steel and
building material. And a clutch of rural entrepreneurs are being born. One
evangelist of rural entrepreneurship is CS Verma, chairman of Steel Authority
of India Ltd (SAIL). “There is a lot of demand potential for steel from rural
India. Income generation is growing and demand is growing. We are supporting
rural entrepreneurs to become our dealers. While urban consumption of steel is
58 kg per person, in rural India it is only 15 kg per person.“
To fuel the rural demand and support initiatives, Verma started a
scheme for rural dealerships two years back that he says has created more than
900 entrepreneurs who became rural dealers of SAIL. He says: “For the rural
dealers we are doing additional publicity, waiving off the security deposit and
even extending credit to them. We even take the steel to their doorstep. We
identified 1,000 talukas in the first go and are now going for more across the
country.“
There are even others who are literally taking a leaf out of
Ronnie Screwvala's book on entrepreneurship and philanthropy. (Yes, he has also
just published a book, see Screwvala's Nuts and Bolts). Take, for instance, the
foundation started by Mumbai-based hotel industry veteran Monica Lakhmana under
her own name. Lakhmana is using her contacts to set up self-help groups in and
around Mumbai to help women turn entrepreneurs. Currently, she is working with
a 64-women strong group in Badlapur, a city in Thane district on Mumbai's
outskirts, and is in the process of setting up two more in the city's western
suburb of Malad and in the giant slum of Dharavi, home to thousands of small
entrepreneurs. The Monica Lakhmana Foundation is focussed on bags and provides
fabric and design to the Badlapur group and helps sell them. Lakhmana says:
“Ultimately the goal is to wean them off from the foundation support in the
next two to three years, and ideally help them become entrepreneurs on their
own or in a group.“
In Belavali near Badlapur, Lata Gadve, wife of a retired
policeman, has taken up bag-making at the age of 50, and hopes to convince her
daughter-in-law to take it up along with her as soon as her grandson is a
little older. “There are 5-6 women in our society. Some day, we may be able to
start our own bag-making unit.“
Screwvala and Swades Foundation too know a few things about
bag-making. In Fauji Ambawade, a stitching unit has transformed itself into a
limited liability partnership with the help of Swades and has been named Kal
Bhairav Stitching LLP. The LLP has just landed its first order for bags after
training for almost six months and the members are confident that they will
start earning money soon. Screwvala feels it is important that each and every
model is tested for he is keen to get big companies to use Swades for their CSR
activities. For his sanitation projects, he has got commitments from the Tata
trusts and is in talks with the Ajay Piramal group, too. Given his track record
for setting trends, Screwvala holds out a promise of guiding philanthropy in
India towards an entrepreneurship-led model.
Suman
Layak
ETM12APR15
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