IIM-L adopts a village
I am happy to find some of my suggestions rather dreams getting realized. Perhaps, there are many enthusiasts thinking alike about the ways of developing the rural India that requires effective means to improve its earnings. When I once asked prospective MBAs in a class of a Noida’s reputed business school if they would be interested in working on rural development, I got very hesitant affirmation. As a surprise change, <a href="IIM-L adopts a village“>IIM-L students decided to adopt ‘the village, Chakarpurva in UP’ and have already interacted with the village folks to assess Chakarpurva’s problems. Once in a month, they have meeting with the village panchayat along with the block development officer to set goals, as well as to assess the progress of the work initiated,

It has happened under the leadership of Professor D.S. Sengar, a Fulbright scholar and chairman, student affairs. And certainly it is easy for someone from IIM-L ‘to put a call to an officer and get things implemented, because of the weight of the brand. Chakarpurva is a typical UP village with 300 inhabitants with a dirt track for a road, no primary healthcare center, no power, and a primary school, still to be recognized by the state education board and literacy level below 50 per cent.

 IIM-L students under the banner of Bhavishya, have drawn up a plan for Chakarpurva, and identified five areas which required immediate focus: ‘infrastructural development to tackle the lack of transport network and power; environment overhauling necessitated by the lack of underground drainage system posing a health hazard; cultural rejuvenation needed to counter social evils like child marriage and dowry prevalent in the village; social development in the field of education; and economic self-sufficiency to ensure that unemployment levels stayed low and credit got available on time.’

 Microcredit assistance, self-help women group initiatives are starting in January 2007. IIM-L students have set themselves strict deadlines and phase-wise implementation. They wish to channelise some corporate social responsibility to the village by implementing a novel conceptualise-initiate-transfer model wherein project ownership is transferred to corporates after a phase-wise completion.

The students are also trying to convince the villagers to show a little initiative instead of seeking help. Education is another lacuna they find, and three days of the week, the students teach children who cannot afford a formal education.

Let us hope the students of IIM-L will achieve what they are doing successfully in corporate world.

Involute Technologies develops Rural Entrepreneurs

In another story, Involute Technologies, a gear manufacturing company has taken an initiative to turn more than 30 farmers of Dhanore, a small village 40 km from Pune into entrepreneurs in the auto component business. Involute’s plant at Alandi (a small town 10 km off Dhanore) manufactures over 12 lakh gear components a year for clients such as Tata Motors, John Deere and Bharat Forge with turnover above Rs 60 crore.

About 30 farmer-entrepreneurs supply parts to Involute Technologies worth Rs 3.71 crore every year. The farmers in all employ 346 employees in their small workshops. Many owning their own land have given up farming as they found it less lucrative, and turned to manufacturing.

In 1992, a strike at Involute Technologies (IT) forced it to switch over to this business model. While training farmers and unemployed youth to fill in the labour requirements, it found many of the farmers getting into entrepreneurship. Again, when the order book of IT increased substantially, outsourcing of parts it manufactured to farmers was an effective alternative. Involute trains the farmers on the machine shop for two years. It then assists a worker in setting up his own manufacturing unit, either by giving him free space on the company premises, or by setting him up in a shed near the plant.

The best part of the deal is that these entrepreneurs are not bound to IT only and are free to sell to other companies as well. IT arranges to buy steel and get forged parts from suppliers. Then the farmer-entrepreneur on his second-hand machines completes the rest of machining operations such as cutting, grinding, and shaping as per the original equipment manufacturer’s requirements. All parts from the farmer- entrepreneurs produced are sent to IT premises daily for inspection for quality. IT also manages the logistics to maintain the stock according to the client’s requirement.

Involute Technologies supplies second-hand grinding, shaping and cutting machines (Rs 25 lakh-30 lakh) and recovers the cost in the pricing of the supplies from the entrepreneurs. The investment on the farmers’ workshops is one-time, and the farmers maintain the machines themselves. ? The model has drastically changed the face of Dhanore’s economy. Is it not the model that many bigger manufacturers such as Tata Motors, Hindustan Motors, and for that matter many others would have followed?

Direct sourcing from farmers

Reliance Retail has already started with Reliance Fresh with vegetables and fruits in Hyderabad. Reliance Fresh is trying to hit at the right points to make the supply chain efficient, unlike the traditional Indian food supply chain that is grossly inefficient. There are several intermediaries. Each adds his profit margin to the cost. Besides, there is huge wastage in transit. Farmers are the worst hit by these intermediaries. Farmers get the minimum negotiated. Reliance Retail plans to buy always from the farmer, and not from the mandi. For example, the leafy vegetables, brinjals, tomatoes and green chillies in the Banjara Hills outlet were sourced directly from farmers in Vantimamdi, Chevella and nearby mandals in Ranga Reddy district of Andhra Pradesh. Already, a few hundred farmers have been hooked on to the Reliance Retail supply chain. In the next five years, that number will grow to millions. Even contract farming – by assisting farmers to procure high-quality seeds, fertilisers and other essential raw materials – is on the cards. By going to the farmer directly, Reliance Retail hopes to dis-intermediate the supply chain and eliminate waste. This means fresher products at lower cost. This is the model that can give the maximum price to the farmers, if Reliance doesn’t become unscrupulous to corner the maximum benefits at the cost of farmers. Other big business houses such as Birlas, Bharatis must keep this in mind.
Read
Leveling the Indian Playing Field?
PS: Read this column of Gurucharan Das ‘The price of potatoes’,who agrees with my views