community enterprise full report 98

8/8/2019 Community Enterprise Full Report 98

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STUDY OF COMMUNITY ENTERPRISES IN SOUTH TAMIL NADU( MARCH 1998)

by S.Ananthanarayana Sarma95, Double Street, Sholavandan Village,Vadipatti Taluk, Madurai District.

(Funded by EZE, through DATA, 11, Kennet Cross Road, New EllisNagar, Madurai -10)


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EXECUTIVE SUMMARY

Data is a training and consultancy organization initiated to supportcommunity development initiatives towards sustainability. Data organized aone day workshop on 16th November 1996, for developmental activists in andaround Madurai on the "Relevance, scope and status of community enterprises" -in the context of the economic liberalization policies and their impact onthe rural poor. The genesis of the study lies in this workshop. A follow-up

workshop on "Enabling role of NGOs in promoting community enterprises"on June 13-14 1997, attempted to define what is a community enterprise -from the perspectives of economic/ business theory, sociology, and socialwork. Based on the experiences narrated by five NGOs, a CommunityEnterprise Development model was conceptualized.

The model states that a community enterprise has to be initiated from thecommunity. It's skills, and resources should be taken into account, whiledesigning the enterprise. The task of the NGO is to link the enterprisewith the market, with appropriate product design.

The workshop also conceptualized the distinctions between conventionalenterprise promotion and community enterprise promotion. Conventionalenterprises were focussed on markets, customer centric, with specific products

as focus. A package approach was preferred, with profit maximisation as theobjective

Community enterprises worked with market as one of the variables. It wascommunity centric, working on the skills/ resources of the community. It workedtowards sustainable livelihoods with a process orientation.

This study objectives was to "ground" these concepts throughinvestigating the characteristics of live enterprises promoted byNGOs, in South Tamil Nadu. The study used the casestudy methoddue to the need to understand process elements and context, andthe inability to conceptualize all the variables before thestudy. For reasons of access five enterprises promoted by theSarva Seva Gramudyog Samithi (SSGS) ( an organization affiliated

to Khadi and Village Industries Commission) , in Virudunagardistrict, three enterprises promoted by village organizations inAssefa Plan Kariapatti project (Virudunagar district) and oneenterprise promoted by an NGO in Theni district were studied ascases. Eight caselets/experiences drawn from presentations madeby NGOs in the June workshop were also used for makinginferences.

The analysis of the data validated the genesis of CommunityEnterprises to lie in either strong village women groups, orvillage based skills or village based resources. In terms of thesupport provided by NGOs, a distinction was made between SSGS andnon SSGS promoted enterprises. For the SSGS units, the supportranged in a continuum - from complete financial andadministrative autonomy with only the brandname as support - toone where every activity excepting the physical production anddisbursal of wages was controlled by the SSGS. In the non SSGSunits, the continuum ranged from the NGO being a passive supplierof working capital at market rates - to one where the NGO was an"employer" and the community "labour" as in conventional firms.

The NGO provided support in areas like financial capital,machinery, technology training, raw material procurement, qualitycontrol, stock and financial accounting, remuneration of managersand marketing.

The underlying differences in values between conventionaland community enterprises were also validated.

From the data, some definitions emerged for community


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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.

Community Enterprise Development Programmes (CEDP) wereinferred to be only a "process" - unsuitable for"modules/packages" . However some key elements like money and

stock accounting, marketing concepts, economic/business behaviortheory, and relevant public policies could be standardized fortraining NGO managers and community leaders for initiatingcommunity enterprises.

Recommendations for action emerged for NGOs, bankers, andvillage organizations (like women savings and credit groups). Thedevelopment of the concept of "CEDP" was found to be located inan overall paradigm shift, in all fields of development - awayfrom blueprints/things towards process/people. While conventionalindividual enterprise promotion could follow a blueprint model,community enterprise development had to take people and processinto account.

In terms of developmental action, certain reversals appearednecessary in conventional behaviour and action, for CommunityEnterpises to succeed. NGO staff had to play down their skills in"process" and become more disciplined in meeting the demands ofthe open market. Government functionaries and bankers in turn,had to become less task oriented in meeting targets and budgetsand learn to listen more to problems emanating from the field.Enterprise trainers had to shift from the "modular" mode ofindividual enterprise training - to playing a role ofaccompanyment or facilitation - for the community enterprise toevolve and grow.

Critiques of this report centred on its exclusive focus onthe "business" of community enterprise - to neglect of important

issues like gender, the politics of banking, etc.


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CHAPTER I: GENESIS OF THE STUDY

About Data - Data ( Development Association for Training and Technologyappropriation) is a development organization - set up to support communityintiatives towards sustainability. It coor-dinates a network of ten NonGovernmental Organizations (NGOs) in South Tamil Nadu for working with palmyrahworkers and with women groups - called NEERA. This network is based on thesuccessful experiences of the Palmyrah Workers Development Society, Kanya

Kumari.

16 Nov.96 workshop Data organized a one day workshop for developmentresearchers, bankers and NGO functionaries on 16 Nov. 1996 at the Data office inMadurai. The theme of the workshop was "Relevance, status, and scope ofcommunity enterprises". Some of the key points that emerged in this workshopwere -

(*) The economic liberalization policy, globalization, and the StructuralAdjustment Policies could further hinder the survival of the alreadymarginalized rural poor. Competition from multinationals and big industrialgroups could pose a serious threat to the tiny and cottage industry sectors,which depend on traditional skills, and local markets. The withdrawal of thestate from welfare programmes could further extenuate the problem. This also

provided an oppurtunity or a social space for NGOs for working on economicissues of the rural poor,especially rural artisans.

(*) Two banks, the Canara Bank, and Bank of Majura discussed theirexperiences with the small scale and the NGO sector. The bankers expressedwillingness to fund community initiatives provided an integrated supportsystem existed for training, marketing and technology.

(*) A further clarification of concepts resulted in coining the objective of"COMMUNITY ENTERPRISES FOR A SUSTAINABLE LIVELIHOOD". The wordenterprise meant that the activity was a profit making one, not a charity.Community enterprise meant that the profits went to the community as a whole,and not restricted to individual proprieters or shareholders. Sustainableimplied that the activity should survive across time. Livelihoods implied that

the benefits of the activity should accrue to the traditionally marginalized,especially the rural poor - who usually faced survival problems in terms ofaccess to food, clothing and shelter.Some of the other issues that arose were -

- Provision of marketing support - in terms of brand, certifying productquality, distribution systems etc.- Working on behavioural barriers that prevented the rural poor fromorganizing themselves.- Support sytems which needed to work on unfavourable public policies andenabling village groups to perform effectively.

An alliance of activists and organizations in Madurai was mooted to follow upthe workshop. The following people were made responsible for specifictasks, to further develop the theme.

Creating model units - Shri JayakumarConsumer Awareness programmes - Shri Regi ChandraAdvocacy - Shri PaneerselvamTraining - Data team, headed by Shri Bhaskar and Shri JohnStudies - Shri S. Ananthanarayana Sarma.

The present study is a result of the decisions taken at thisworkshop.


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CHAPTER II - CONCEPTUALIZING COMMUNITY ENTERPRISES

13-14TH June 1997 seminarData held a seminar on "Ennabling role of NGOs in promotingCommunity Enterprise Development Programmes (CEDP)," at itsoffice on 13 -14 June 1998. Five NGOs - Assefa, PWDS, Seva Ni-layam, Aroghyam, and CCD, all working in South Tamil Nadu, pre-

sented their experiences with Income Generating Programmes. TheEntrepreneurship Development Institute of India, the Bank ofMajura, and Data also presented training modules for incomegenerating programmes for NGOs. It was this workshop which"floated" the term Community Enterprise Development Programmes tothe NGO community - as a sort of counterpart to the traditionalIndividual oriented Entrepreneuship Development Programmes. Tounderstand the concept the following distinctions were madebetween conventional entrepreneurship development programmes andcommunity entrepreneurship development programmes. Thedistinctions were made in terms of the underlying "organizationalvalue" orientation for the various aspects of the programmes.

ORGANIZATIONAL VALUE ORIENTATION OF CONVENTIONAL AND COMMUNITY

ENTERPRISES

ORGANIZATIONAL VALUE ORIENTATION OF CONVENTIONAL AND COMMUNITYENTERPRISES

POINT OF REFERENCE CONVENTIONAL ENTERPRISEDEVELOPMENT

COMMUNITY ENTERPRISEDEVELOPMENT

Market focus COMPLETELY MARKETORIENTED

MARKET IS ONLY ONE OF THEVARIABLES

Social orientation CUSTOMER CENTERED COMMUNITY CENTERED

Basis of activity PRODUCT BASED SKILL/RESOURCE BASED

Management orientation CONVENTIONAL BUSINESS

MANAGEMENT

BUSINESS MANAGEMENT +

DEVELOPMENT ORIENTATIONApproach PACKAGE PROCESS

Objective of Enterprise PROFIT MAXIMIZATION(RETURN ON INVESTMENT)

SUSTAINABLE LIVELIHOODCREATION

DEFINING THE CONCEPTS

The workshop also attempted to define the concepts by workingthrough groups and a plenary on the following questions.The objective of the discussions were stated to be to produce aconcept paper for the bankers - for developing a policy forfunding community enterprises. All the discussions and presenta-tions were made by three groups, each well balanced, with academ-ics, bankers and NGO activists. The discussions were structured

around the following questions.

(A) DEFINE A COMMUNITY ENTERPRISE.

(B) WHERE SHOULD COMMUNITY ENTERPRISES START FROM - PEOPLE,MARKET OR PRODUCT?

(C) WHAT SORT OF TRAINING INPUTS ARE NECESSARY FOR COMMUNITYENTERPRISES?

(D) DISCUSS THE ISSUES OF PROFIT VERSUS SOCIAL RESPONSIBILITY.

(E) HOW DOES ONE BUILD UP S&C GROUPS INTO COMMUNITY ENTERPRISES?

The results of the group exercises are presented below.

DEFINING A COMMUNITY ENTERPRISE


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GROUP# 1A 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.

The Companies Act specifies a maximum of twenty people (?) aspartners for an enterprise. In our case we could take this numberas the upper limit to start a community enterprise.

GROUP# 2A Community Enterprise can be defined as any organized endeavourat grassroot level intiated :- to induce collective benefit- to gain bargaining power, and- to carry on income generating activities for promotion ofsocio 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. Thisshall also include such enterprises run by socially committedcharitable development organizations for the benefit of thecommunity. The ownership could be by the group or a managingcommittee/ office bearers of the groups, and members from theNGO. The capital could be from finacial organizations, with equalcontributions from the group. The election of the commitee shouldbe 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 amonth. The profit sharing should be among the group members. Anadministrative charge could be paid to the NGO at the discretionof 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 communityenterprise in terms of powers and responsibilities. The seconddefinition, gives a more "sociological " orientation to theconcept - 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.

It would appear safe to surmise, that defining a communityenterprise, depends on the frame of reference of the definer. Inthe case of this workshop, three definitions - from the viewpointof economics/business management, sociology and social workemerged.

WHERE SHOULD THE COMMUNITY ENTERPRISE START FROM?

GROUP# 1The sequence of selection of enterprise should be-

PEOPLE ---> SKILL/ RAW MATERIAL^| PRODUCT|

vMARKET

GROUP# 2


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The enterprise should start with PEOPLE - with due considerationon the available skills and with the focus on the market.

GROUP # 3The enterprise should start from the community. - taking intoaccount the people and the environment. NGO role is to educatethe people regarding viable projects, and the group has to comeforward with project ideas.

All the three groups appear to have agreed that the communityenterprise had to start with the community and then move to themarket. An attempt was made to understand the role of the NGO infacilitating this process - that of linking the enterprise withthe market.

TRAINING INPUTS NECESSARY FOR COMMUNITY ENTERPRISES

GROUP# 1The training process should be redefined as a "PROCESS FORACCOMPANYING THE COMMUNITY TO INITIATE AND SUSTAIN A COMMUNITYENTERPRISE."

The duration of the enterprise cannot be predicted.The sequence could be as under -

- Assess the local resources (skills/ raw materials)- Assess the market- Design the product- Motivate the community- Equip the community to start production for skills,linkages and systems.

The goal of the accompanyment process should be TO ENSURESUSTAINABILTY - FOR MARKETS, LEADERSHIP AND FOR RESOURCES.

GROUP# 2

DATA's training module contents may be maintained. The durationmaybe 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 thetake off of the IGP initiated. This depends on nature of the IGPidentified.

GROUP # 3 The training input -

INPUT TIME

Information One dayBehavioural Three daysBusiness organization One dayExposure visit One dayProject report One dayAccounts and Finance Two daysMarketing One dayMIS and decision making Two days

This would be a continuing programme with a one year accompa-nyment.

Though not directly relevant to the study, it is important tonote that training for CEDP was seen as a "process" extendingover time (one year in the case of the third group). This couldbe contrasted with the "forty days individual enterpreneurial

development programme modules" which have been successfullygrounded by the EDI.PROFIT VERSUS SOCIAL RESPONSIBILITY IN COMMUNITY ENTERPRISES


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GROUP# 2Though profit is the prime concern, this should not be at theexpense of ethics and values.

GROUP # 3-------------------/PROFIT ORIENTATION/

ENTERPRISE-----------------------------/------------------------

SOCIAL RESPONSIBILITIES / OF NGOs///

PROFIT ORIENTATION /_______________________/

Both the groups which attempted to solve the question of ethicsverus social responsibility agreed that "profit" was a concern.Social responsibility appeared to be relegated to the secondposition, in the long run.( which position is however much akin

to conventional economic/ business management theory). The pointwhich seems to have been made, is that a Community Enterprise, isprimarily a profit making organization- no different in thisaspect from conventional business enterprises.

BUILDING UP VILLAGE SAVINGS AND CREDIT GROUPS INTO COMMUNITYENTERPRISES

GROUP# 2Savings ---> Credit ----> Enterprise. The same sequence ofactivities can be adopted.

GROUP # 3The 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. Ifalternate products are available, the more profitable ones shouldbe selected.

Both the groups which attempted this concept appear to agreethat a sound group (whether through savings or other activity)was essential - before a community enterprise could be started.

SUMMARY OF THE CONCEPTUALIZING PROCESS

Based on the above discussions, we could perhaps infer -

(A) A community enterprise can be defined in terms of economic/business theory, or sociology or in terms of pragmatic attributesof existing groups/ enterprises. Defining a community enterprisedepends on the frame of reference of the definer.(B) Community enterprises had to start with the community or thepeople. Their resources and skills had to be taken into account,for deciding on the nature of the community enterprise.

(C) Community Enterprise Development Programmes can only be a"process" - and not a " package" or a "module".

(D) Profit is the major objective for a community enterprise,with social responsibility occupying a lesser position.

(E) Sound groups have to exist in the community, before a commun-ity enterprise can be attempted.

CONCEPTUAL FRAME FOR UNDERSTANDING COMMUNITY ENTERPRISES


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Based on the discussions and consensus arrived at, the followingconceptual frame was agreed upon for starting "community enter-prise development programmes(CEDP)". It was emphasized, that theconventional business management theory had to be reversed, inthe case of community enterprises. THE COMMUNITY OR PEOPLE had tobe 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 startinga community enterprise. The NGO had to primarily facilitate aprocess, whereby the community enterprise gets linked to theexternal market, through appropriate product decisions. Thisconstrasts with much of received business management wisdom,which put the market and the consumer first, and then linksbackwards to the setting up of an enterprise. This model wasrepresented as under -

A FRAME WORK FOR UNDERSTANDING COMMUNITY ENTERPRISE

COMMUNITY

RESOURCESSKILLS

COMMUNITYENTERPRISES

NGOProductdevelopment

MARKET


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CHAPTER III - METHODOLOGY OF THE STUDY

RESEARCH OBJECTIVE

To ground the "concepts" on Community Enterprises produced inData workshops it was decided to study existing income generatingenterprises of Non Government Organizations in South Tamil Nadu.The reasons for this methodological choice were -

(a) The proposed CEDP programme was aimed at NGOs - who wouldfacilitate Savings and Credit Groups to evolve into CommunityEnterprises. Hence a study of the existing income generatingenterprises of NGOs would provide insight into the "practise" ofrunning enterprises by the NGO sector.

(b) The bankers had reiterated that funding to community enter-prises would be available only if adequate support structuresexist. In the present development context of South Tamil Nadu,such support could be created immediately only from the world ofNGOs. The capabilities of the NGOs in providing support servicescould be understood from this study.

(c) A study of existing income generating enterprises run byNGOs, even if not stricty "community enterprises" would be usefulin

- further clarifying the concept of what is a communityenterprise

- understanding the realistic field constraints, set byorganizational contexts - which would shape the development ofcommunity enterprises.(especially if directed through NGOs).

Hence the RESEARCH OBJECTIVE for the study was framed as under -

STUDY THE EXISTING INCOME GENERATING ENTERPRISE ACTIVITIES OFNGOs IN SOUTH TAMIL NADU.

By Income Generating Enterprise activities is meant "structuredtasks directed for monetary profit" - run directly by the NGOs,or with NGO sopport.

RESEARCH DESIGN

CHOICE OF TECHNIQUES - A social science researcher has twochoices broadly of techniques - the quantitative questionnairesurvey or the qualitative case study and associated methods. Itwas decided to use the qualitative case study method for thefollowing reasons -(a) The indepth nature of the data that would be required onincome generating enterprises could be better gathered with thecase study method.(b) All the variables thought pertinent to the study of NGO runincome generating enterprises could not be predicted before hand.The casestudy method allowed the flexibility of collecting data,which may earlier have not been thought relevant to the study.(c) The study of the organizational contexts, was thought to beof vital importance. The case study method allowed better studyof the contexts.(d) The case study method allowed a better appreciation of"process" elements.

CHOICE OF ORGANIZATIONS - The study of NGO run Income GeneratingEnterprises, required frank disclosures by the NGO, of itsmanagement practises and operational cultures. Given the history

of failures in income generation activities of NGOs, this neednot be necessarily forthcoming - unless the researcher had spe-cial access to the chief executives. NGO cultures, definitely inSouth Nadu had not been exposed to world of organizational


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research - and could be justifiably be expected to resent part-ing with information, much of it of its shortcomings, with nomaterial reward in return.

Since the researcher, Shri S. Ananthanarayana Sarma, enjoyed thisspecial access with Shri P.Rajarathinam, the then ProjectDirector of Assefa activities for South Tamil Nadu, it was decid-ed to concentrate mainly only on Assefa units, under his super-

vision. Assefa also was the largest NGO in India, in terms ofbudget, number of employees, and scale and diversity of activi-ties. It origins lay in the Sarvodyan Bhoomidanam movement ofAcharya Vinoba Bhave. Being quintessentially South Asian inculture, Assefa would also strongly reflect " charecteristicstrenghts and weaknesses" of NGOs in the subcontinent. Thisfurther strenghtened the decision to concentrate on Assefa units.

Assefa had floated the Sarva Seva Gram Udyog Samithi(SSGS) as anumbrella organization for certification from the Central Govern-ment Khadi and Village Industries Commission (KVIC). Any unitfloated by any of the projects of Assefa could avail CentralGovernment subsidies from this registration. The following SSGSactivities in South Tamil Nadu were studied -

(a) Seva Agarbathi unit - Madurai(b) Seva Steel Furniture unit - Mudianoor (Virudunagar district)(c) Seva Cattlefeed plant - P.Pudupatti (Virudunagar District)(d) Polyvastra spinning unit - Chinnapuliyampatti village

(Virudunagar district)(e) Khadi Weaving unit - Valyankulam (Virudunagar district)All these case studies were done by Shri S.Ananthanarayana Sarma

Three units floated by "people's organizations" in Kariapattiblock were also studied by other members of the Data team.(a) Seva Vaniga Maiyam, studied by Shri John Chester(b) Seva Nursery, studied by Kum.P.Nancy and Smt. K.SrideviRajagopal.(c) Seva Canteen, studied by Kum.P.Nancy and Smt. K.Sridevi

Rajagopal.

Also Shri Bhaskar and Kum. Nancy J. Anabel, who enjoyed specialaccess to Arogyaham, (an NGO in Theni district, unconnected withAssefa) wrote a casestudy on its coir making unit.Some of the experiences narrated during the 13/14 June '97workshop by NGOs in running income generating enterprises, werealso used for drawing inferences and conclusions. The followingNGO experiences have been included.

(a) Assefa Plan T.Kallupatti project (Madurai district) ruralindustrialization programme (presented by Shri Khadir Esmail)(b) Arogyaham (Theni district) programmes for milk marketing,herb collection, and poultry, using women groups.(c) Palmyrah Workers Development Society (Kanyakumari/Trivandrumdistrict) programme for palm candy (presented by Shri GodwinJackson)(d) Seva Nilayam (Theni district) programmes for pillows andmattresses and tailoring.(presented by Shri K.Pandi)(e) Covenant Center for Development (Virudnagar district) pro-gramme for charcoal from Prosipis(karuvel) trees.(presented byShri Ravikumar)

RESEARCH MODEL- The "object" of study - NGO run Income GeneratingEnterprises - were in essence enterprises, established with eco-nomic motives. They could hence be studied with much of theframeworks of conventional "business enterprises". Some addi-

tional questions needed to asked to cover the "developmental"aspects. Keeping this perspective, the following "wishlist" ofdesirable data was generated. The data collection broadly fol-lowed this format - collecting whatever data was available within


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this list. Where the researcher observed or heard data, which didnot fit into this "wishlist", he/she was free to investigatefurther. Also lack of data, or its access, was not a constraint.The operating principle used in data collection, was to collectwhat was available, and would be shared with comfort by the NGO.

SOURCES OF DATA - To best preserve the "authenticity" of thecases, all the cases relied mainly on field visits to the actual

"site" of the community enterprise. Interviews and non particip-ant observation were the tools used for primary data collection.Financial data collection relied on secondary data, like auditedaccounting statements (where available) and trial balances, fromwhich profit and loss statements and balance sheets, were recon-structed. The other NGO cases, (listed seperately) are the verba-tim presentations made at the June 13-14 '97 seminar.

CASESTUDY DATA COLLECTION SCHEDULEThe following was the "wishlist" used -

CHECKLIST FOR STUDY OF COMMUNITY ENTERPRISES

A. RELATING TO OBJECTIVES:

Location of EnterpriseInception(Who identified the enterprise? why was it started?)Objectives (to be collected by asking project holder, staff,benef)B. RELATING TO FINANCES

CapitalAmount of capital investedUse of capitalWho invested?Grants and subsidies

Working capital

Has this been estimated?Who funds?

ProfitsHow much ?How is it distributed?Sharing with the employees?Cost break up of production, to find margins.

Audits and accountsWhat are the books of accounts?System of purchases and sales? ( Receipts/ vouchers, etc.)Is there audit? who audits? when?Copies of balance sheet and profit and loss since inceptionStock accounting systems?

C.RELATING TO MARKETING

ProductsWhat are the products marketed?How was this decided? who decided?

PriceWhat is the price of different products?Who decides?What are the competition prices?

PromotionIs there advertising? how is this done? who decides? costs?

Sales


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Total sales for each year, broken up by product since inceptionIn units ( Physical quantity)In rupees ( financial)

Competition( If possible, sales, size, location of competition)

D. RELATING TO HUMANPOWER

Total number of staffTheir background Age, sex, education, marital status, previouswork 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 PRODUCTIONWhat 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?

F. RELATING TO BENEFIARIES/ USERS/ CLIENTSWho are the beneficiaries?(customers,staff,employees,suppliers,etc)How was this decided?

G. RELATING TO OWNERSHIPIdentify owners - throughLegal structureMembers of Governing committee/ boardFundersOther important stake holders

How was this decidedRelationship between owners -> employees -> beneficiaries.Review meetings for monitoring performance( meetings, minute books, etc.)

H. RELATING TO SUPPORT SYSTEMS FROM NGONature of support( funds, technical expertise, supervision, sales, supply ofmaterial, others?)

I. WHAT ARE THE THREE MAIN PROBLEMS FACED?

J. HOW CAN TRAINING HELP YOU TO SOLVE THESE PRORBLEMS?ARE THERE OTHER PROBLEMS WHICH NEED TRAINING?


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CHAPTER IV -VERBATIM REPORTS BY NGOs

At the June 13/14 '97 seminar on community enterprises the firsthalf day was devoted to presentation of live field experiences byparticipating NGOs. Mr.Jayakumar of Bank of Majura moderated thesession. The following NGOs shared their experiences- PALMYRAH WORKERS DEVELOPMENT SOCIETY (Kanyakumari/Trivandrum)

- ASSEFA (T.Kallupatti, Madurai district)- SEVA NILAYAM (Theni district)- AROGYAHAM (Theni district)- CCD (Virudunagar district)

AROGYAHAMThis experience started the presentation. Arogyaham found thatmiddlemen bought milk at Rs.5.50 and sold at Rs.8.00. Twentyvillagers organized under the IFAD programme were organized todirectly sell the milk to Andipatti. The capital investment inthe form of cans were provided by the NGO. The NGO also providesaccounting support and monitoring. The experiment had startedwith 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 vendorswere a problem.- With herb collection, the sales were done by the group. Therewere twentythree members and sales for a season ranged from twoto ten tonnes. The turnover sometimes was one lac rupees peryear: and profits Rs.50,000. The profits were shared by the groupmembers on a per kilo basis. The working capital of Rs.70,000given by the NGO had been paid back with 12% annual interest ratein eighteen months.- With coir, Arogyaham initially helped at all stages from rawmaterial procurement to marketing. Now the producers had takenover most of the areas. Arogyaham now gave support for training,

problem solving and in motivation.- With poultry, one unit consisted of two hundred birds. (Herethe moderator interjected and said that scale economies neededten thousand birds and own feeding units). The success here wasnot up to the mark.

PALMYRAH WORKERS DEVELOPMENT SOCIETYThe PWDS presentation was made by Mr.Jackson. He stated that thepalmcandy unit was an Income Generation Programme. It was aproduct diversification from palm jaggery to palm candy. Theproduction was a group effort. Since there were beneficial ef-fects, social and economical, other palmyrah groups have startedasking for these projects. There was a high demand for palmcandywhich could not be met by the existing five units. While produc-tion was seasonal, production was throughout the year. The work-ing capital per unit was around Rs.120,000 per year. There hadbeen some initial problems as in jaggery there were immediatereturns. Profit sharing was by the amount of liters supplied.PWDS took responsibility for mobilizing the community, ensuringthe quality of the new neera, monitoring the production, andmarketing for ensuring profits. PWDS assured market and gavefinancial assistance for working capital (Rs.50,000 at 12% pa).Children of the plamyrah workers were not going to school stilldue to lack of organization and migration.

The ASSEFA presentation of the T.Kallupatti experience was madeby Mr.N.Khadir Esmail. There had been an initial problem of

corporate sector pragmatism versus Gandhian idealism. Mr.KeshubSen formerly a BITS (Pilani) professor, and a Toyota ManagingDirector, had set up a small industries consultancy in Delhi. Hehad sucessfully launched tomato ketchup processing in north India


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(Uttar Pradesh). There had been heavy funding by PLANINTERNATIONAL, the funding agency. The problem arose, "Which IGPto promote?". The funding agency reccomended Mr.Keshub Sen. Aproject directors workshop had been held for two days foridentifying the NGOs and the beneficiaries. A clash arose herebetween the Sarvodayan and corporate values. Mr. Sen asked theProject Directors to list all the IGP ideas they had. The listextended 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.

The objective was mainly to reverse migration. Mr.Esmail statedthat problems arose mainly with the NGOs, (staff selection,taking over control of the enterprise). The community had to beprepared before funding. The profits were divided into fiveparts: one part as savings, one part as dividend for the workers,one part to the village, one part to the cluster committee, andone part ploughed back into the unit. Out of the sixteen units

started, seven units were making profits. These were lungiweaving, brick kiln, readymade garments (which specialized inpetticoats), PVC electric appliance, body toners (with an exporttieup), motor rewinding and notebook production. Four units,honey processing, footwear production, silk weaving, and brassvessels, were breaking even. Five units, spinning, dehusking, oilextraction, silk reeling and iron works were making a loss. Themajor problem was competing with the "underground" economy of theother competitors. The moderator agreed with this assessment. Hestated that seriousness could be created if bank loans were givenfor capital costs.

SEVA NILAYAMThe presentation by Seva Nilayam began with the assertion that

IGPs were started since funds were made available. Since silkcotton trees existed locally, pillow and mattresses were made asa community enterprise. Since the women in the villages knewtailoring, they were linked with a market retail outlet inKodaikanal for stitching tea covers. In a span of four years aprofit of Rs.20,000 had been made in the group enterprises.Seva Nilayam also gave individual loans to those undergoingTuberculosis (TB) therapy - mainly for heifer rearing. The fearof attachment (japti) engendered recovery.

COVENANT CENTER FOR DEVELOPMENTCCD stated that IGP programmes could not be taken up in a largescale, as they were working in a dry tract. SIDBI had sanctioneda Rs.350,000 loan for charcoal production at 9 % annualinterest.(using the locally available karuvel (prosipis trees).The funds were given to Kalasham the people's bank, which trans-ferred the funds to individual women groups at 18% annual inter-est. The final borrowers, usually women members, received theloan at 24% annual interest. CCD was planning herbal units, andpalmyrah units.


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CHAPTER V - CASE STUDIES

CASESTUDY ON SEVA BATHI UNIT (MADURAI) - JUNE 1997

INCEPTION:

The Sarva Seva Bathi unit, is a part of the larger industrialwing of Assefa _ the Sarva Seva Gramudyog Samiithi. Assefa is a

large multisectoral NGO working in some 3000 villages in sixstates in the Indian subcontinent. Assefa set up the SSGS toensure qualification for Central Government subsidies under theKVIC (Khadi and Village Industry Commission). The SSGS "brandname" was "franchised" to various units/ projects in Assefa.

The inception of the agarbathi unit (incense sticks) is dated toI June 1988. Mr.T.Gourishankar is credited with the initiation ofthe unit. Mr. Gouri was earlier with the Akhil Bharitya SarvaSeva Sangh (Tamil Nadu branch) since 1956. He set up theTirunelveli vibhag of the Sangh, and was the founder - Secretary.He later shifted to the Trichengode Gandhi Ashram in Salemdistrict.

Mr. Gourishankar started an incense stick (bathi) unit inAmbasundaram, which won statewide reknown. He started anotherbathi unit in Trichengode, which was also successful. Assefainvited hin in 1988, to start a bathi unit in Madurai, under theSSGS banner which probably is one of the first such products ofthe SSGS.

OBJECTIVES

Mr.Ponniah the present manager of the Bathi unit stated theobjective of the unit to be:"To provide employment oppurtunities to rural people (who may bemen or women). The only criterion for selection as a beneficiaryis that they should be poor. Specifically, we did not target

destitute or abondoned women for this unit." He also stated thatthe choice of the product, in this case, bathi had been made byMr. Gaurisahankar himself."

FINANCES

Assefa through the SSGS granted Rs.7,93,000 to start the unit, in1988-89 financial year. (April to March). Rs.16,000 had beeninitally spent on furniture. The rest of the money had been spentas working capital, for advancing trade credit and buying rawmaterial. Assefa granted another Rs.50,000 in 1995-96. Theaccumulated profit of the unit from 1988- 89 to 1996-97 came toRs.7,88,000. The manager Mr. Ponniah specifically stated that nota single paisa had been taken from the KVIC.

The Balance sheet as on 31 March 1997 was as under(Rupees in1000s):LIABILITIES ASSETS

Working capital 843 Furniture 80Accumulated profit 788 Sheds 10Payables 139 Receivables 1200Reserves 99 Cash 120

Closing stock 459

TOTAL: 1869 TOTAL 1869

----------------------------------------------------------------

Mr.Ponniah stated that in the Bathi trade working capital neededcould be estimated to be 40% of sales. Given the the 1996-97


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sales of around Rs.24 lacs he estimated the working capital to bearound ten lac rupees. He thus conceptualized the assistance ofRs.8.43 lacs from Assefa as working capital: the remaining amountof working capital being supplied from retained earnings.

The following table details the sales turnover of the unit sinceinception and the payables and receivables.(In Rs.1000)

YEAR SALES PROFIT/ PAYABLES RECEIVABLESLOSS

--------------------------------------------------------------

1988-89 150 (- 7) 19 351989-90 570 (+ 30) Nil 1391990-91 755 (+ 99) Nil 2071991-92 1111 (+ 62) 88 881992-93 1540 (+129) 9 3611993-94 1608 (+172) 127 9481994-95 2189 (+ 63) 101 8661995-96 2694 (+177) 55 9931996-97 2339 (+179) 139 1103

--------------------------------------------------------------

Profit: Mr.Ponniah stated that profit calculation occured in twostages. In the first stage,GROSS PROFIT = SALES - (PURCHASES+ CONSUMPTION+WAGES PAID)This figure could be calculated through what he termed the "firstaccount" consisting of purchases and sales transactions.In the second stage,NET PROFIT = GROSS PROFIT - ESTABLISHMENT - TRADING COSTS.These figures were termed "trading account". The "Establishment"expenses consisted of transactions related to house rent,electricity, cartage, periodicals, stationery and postage,travelling costs, salaries (of core staff), audit fees andsundries. The "Trading costs" consisted of transactions related

to railway freight, packing, trading commission and cartage.Accounting system: The accounting system, prescribed by the SSGSconsisted of two "day books" and a ledger. All cash transactionswere entered into a cash day book. All credit transactions wereentered into a Journal day book. The entries in the day bookswere then posted in the General ledger. For instance, salesinvoices were raised either for cash payment or on credit. Cashpayments were recorded in the cash day book, and credit sales inthe Journal day book. These entries were then posted in theledger. The accountant made a trial balance every month, asMr.Ponniah put it to "find the position of debtors".

Raw material were indented for and purchased in the first week ofeach month. The purchase vouchers were entered into the day bookfor credit transactions and in the cash day book when cashpurchases were made. These entries were then posted in theledger.

An itemwise production statement was made daily. This statementincluded the raw material consumed and the quantity of finishedproducts (including the packing size). Every month an approximateprofit was worked out as under:

Total finished products * sales value) = Total IncomeTotal raw material consumed + Wages = Total Expenses.

The difference between the Income and Expenses would be the

profit. To illustrate this Mr. Ponniah stated: " Suppose we havea finished product value of Rs.7000 for a month. That month, wespent Rs.4000 on raw material and Rs.2000 on wages. Thus thatmonth profit would be Rs.1000. I would start getting concerned if


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this figure shows a loss."

An auditor appointed by the SSGS conducted an annual audit.Mr.Ponniah also stated that he had no powers to raise loans fromthe market. SSGS had to give him permission for this. He statedthat this was not the case with the "Sarvodaya" Sanghams startedin each district (in which he and Mr.Gourishakar had workedearlier). Mr.Ponniah stated that his monthly "establishment" or

administrative cost to be around Rs. 25,000. He gave thefollowing breakup of expenses.

Salaries (ten corestaff)- Rs.14,000/-Rent - Rs. 2,000/-Newspaper - Rs. 75/-Daily wages - Rs. 1,500/-Travelling Allowance - Rs. 1,500/-Stationery - Rs. 250/-Postage - Rs. 150/-Publicity samples - Rs. 1,000/-Electricity - Rs. 800/-

- Rs. 2,000/---------------

Rs.25,000/---------------

Fixed Costs - Rs.14,000/-(Salaries and rent) - Rs. 2,000/-

--------------Rs.16,000/-

--------------PRODUCTION:

The Bathi unit had been sited since inception in a residentialhouse in a middle class locality of Madurai. The two storiedbuilding and the boundary wall stood on around 4500 square feetof land. The building itself accoupied around half of the land.Thatched sheds had been put up in the remaining land. The Bathi

unit directly manufactured twelve products. These were-

(a) Agarbathis (incense sticks) - in seven varieties, with pack-ing as per requirement(10 sticks to 100 sticks)(b) Javadhu powder(perfume powder) - in 2gm and 8 gm packs(c) Pooja powder and pills (for smearing on body)- in 20 gms pack(d) Camphor - in 25 and 50 gm packs(e) Instant sambrani ( incense) - in 25 gm pack(f) Dhoop (incense) - in packs of twenty numbers(g) Kumkum (powder used by women) - in 20 gram pack(h) Vibhooti (powdered for smearing on body) - 50 gms. pack(i) Dasangam (incense powder) - 100 gms. pack(j) Snanam powder (herbal bathing powder)-(h) Poosamanjal thool (turmeric powder)

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.

Agarbathis accounted for two thirds of the production by value.Instant sambhrani accounted for another fifth of total productionby value, and camphor for a sixth. The remaining productsaccounted for the rest. Excepting in the case of the agarbathis,all the other products involved sorting and repacking within the

premises. In the case of agarbathis, the bamboo sticks and theagarbathi masala (or mix) were handed over to the workers(beneficiaries?) in the morning. This was taken home, and re-turned the nenext day morning- the process being rolling the


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stick in the masala. A quality checker accepted the sticks andsorted according to size and thickness. These sticks were thendipped inside the units in various perfumes, to create the vari-ous varieties. The "perfume composition" was stated by Mr.Ponniahto be the MOST important part of the production process. Thebusiness apparently entirely depended on this aspect, and wrongperfuming 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 ofbuying the raw material, sorting by quality, mixing, and repack-ing. Mr.Ponniah stated that the groud floor was used for themixing and packing, and for storage of the finished products- thefirst floor was used for packing material, and the terrace as adrying yard.

Mr.Ponniah took all decisions relating to the products to beproduced. If a new product was introduced or an old one reintro-duced, "average" production was undertaken and the orders re-ceived studied. He gave as an example" In agarbathis there aresix to eight varieties, but only some move fast. I consolidateall orders, see the trends and then decide what should be

produced". The unit produced a monthly stock statement for eachtype of raw material to monitor purchases, consumption, sales andclosing stock.

MARKETING

Product: As mentioned, the bathi unit directly produced twelveproducts: of which the most important, agarbathis had eightvarieties and flexible packing. All the other products werestandardized in terms of varieties, and had one or two packingsizes. Thus in terms of product range, the bathi unit appeared tohave covered a large range of the "incense" market. Other nonincense products, were related either to prayer,(Pooja powder,kumkum, vibhooti, camphor ) or to taking traditional baths

(usually before prayers (dasangam, sananam powder).

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:

ITEM Sales Price Maximum Retail Dealer Commission(A) Price(B) (B) - (A)

Mr. Ponniah decided on the price of each product. He used a "Costplus 15%" formula for the sales price (or the invoice price). Themaximum retail price, printed on the labels was Sales price + 25%for all products. This 25% margin was the dealer commission.

Advertising: Mr.Ponniah did not believe in spending foradvertising - apart from an annual gift of a shoulder bag to alldealers, as a gift. Free Samples were also sent for creating newsales. Any promotion,if occured in Mr.Ponniah's words,was mainly"word of mouth, due to the reputation of Mr.Gourishankar and thebathiunit."Distribution: Each district in Tamil Nadu had Sarvodaya Sanghs -production and marketing organizations usually making village andcottage products, and sometimes funded by the KVIC. The retailoutlets of the district Sarvodya sanghs accounted for ninetypercent of all sales according to Mr. Ponniah. The SSGS retailoutlets (some fifty odd in small towns in Tamil Nadu) accountedfor the remaining ten percent of sales.

Competition: Mr.Ponniah termed all the Sarvodaya Sanghs as com-petitors - as each of them had agarbathi units. The Aurobindoashram (Pondicherry) in his opinion was another major competitor


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- which also enjoyed special markets and funds due to its Euro-pean contacts. Private agarbathi manufacturers in Banglore andsome major brands (advertised heavily on television like "Sugand-hi" and "Chandan") were the other comeptitors. He also statedthat the "entry barriers" to the business was non existent.Agarbathi rolling was a cottage industry. In Madurai there wereperfumery shops which sold bamboo sticks, the masala and theperfumes. 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 likeTrichy, Tirunelveli, Erode, Salem and Thanjavur had such per-fumery shops. He explained " In Madurai there are roadside idlishops which give low cost products with low quality. There isalso Arya Bhavan which gives good food at a relatively highprice. My Bathi unit is like the Arya Bhavan restaurant."

MANPOWER:

The Bathi unit had ten full time salaried Staff- andsupported sixtyive part time artisans. Five to six artisansusually came daily to the unit for dipping the agarbathi sticksin perfume and for packing. These parttimers were paid daily

wages. The other artisans who daily rolled agarbathi sticks athome, were paid on a "piece - rate" basis.

The details of the ten fulltime staff are as under :-----------------------------------------------------------------Designation Age Education Work Salary

Experience (Rs./month)-----------------------------------------------------------------General Manager 63 S.S.L.C. 40 years in

Sarvodhaya Sanghs Rs.1,700/-

Office Manager 47 S.S.L.C. 15 years in Rs.1,400/-Sarvodya Sanghs

Accountant (Female) 22 + 2 3 years in Rs.800/-private firm

Technician 28 + 2 8 years in Rs.1,400/-(Perfume compounder) ASSEFA

6 assistants 25 & 10th & 2 years (two) 400 - (2)below 8th etc. 3 years (three) 850 - (3)

8 years (one) 1125 - (1)

-----------------------------------------------------------------All the fulltime staff, excepting the accountant were male. TheGeneral Manager, Mr.Ponniah, the office manager, and one of theaccountants were married and had children.

Salary decisions were made by the Head office of the SSGS, (sitedat Madras) and communicated through the Executive Director ofAssefa(who was also the managing trustee of the SSGS). Mr.Ponniahstated that he had powers to recommend salaries which wereapproved at Madras. The unit paid all salaries through internalearnings.

Mr.Ponniah stated that he reported only to the SSGS head officeat Madras. He usually gave indents, and reccomendations inwriting to the Madras office. He stated that all the tenfulltime staff reported directly to him. These staff in turncoordinated with the sixty five odd artisans who benefitted from

the unit.

Mr.Ponniah drew the following chart to illustrate theorganization structure.


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Executive Director

| If necessary meeting| (Mostly given in writing)|

General Manager|

Ten fulltime employees

|65 artisans

-----------------------------------------------------------------Beneficiaries The sixty five artisans who rolled the agarbathiswere termed the beneficiaries of the bathi unit. Mr.Ponniahstated most of the artisans were married and in the agegroup 30to 40 years. There were some artisans in the 15 to 20 age groupand a few in the 40 to 60 agegroup. All the artisans werealready trained in this skil- for many of them this was atraditional occupation. Around half of the artisans were Muslim.Mr.Ponniah observed that this skill of agarbathi rolling was veryuseful 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 womenor abandoned women were being benefitted from the unit. He tookit as a moral binding not to ask about the personal details. Hesaid he was satisfied that the artisans benefitting from thisunit were economically weak.

The same number of sixty five artisans had been associated withthe unit since inception. The wages given to them since inceptionis detailed below.

YEAR WAGES PAID(In 1000 rupees)

1988-89 53

1989-90 54

1990-91 68

1991-92 112

1992-93 134

1993-94 121 + 7 (Bonus)

1994-95 209

1995-96 187 + 8 (Bonus)

1996-97 140

Mr.Ponniah stated that " the piece rates has not been reduced,only increased. The variations in wages could be due toaccounting. Also agarbathi gives lower wages than sambhrani. Whensambharani production increases, wages also increase. When bathiproduction increases instead of sambhrani, the wages decrease".

RELATIONSHIP WITH THE SARVA SEVA GRAMUDYOG SAMITHI

Mr.Ponniah stated that the unit had no seperate registeration -being a part of the umbrella of the SSGS. Hence there were no

seperate Governing Board for the unit. He stated the unit'sidentity as a production branch of the SSGS.Asked about the nature of support he received from the SSGSMr.Ponniah said," We received only initial working capital. The


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Madras office sends an auditor annualy to check if their initialinvestment is still protected." The SSGS had fifty odd retailoutlets of its own in small towns with Assefa projects and hadlinks with Assefa projects with other states. When asked whetherthe unit received marketing support, Mr.Ponniah stated that onlyten pecent of the total sales were through the SSGS.

CONCLUSIONS

Mr. Ponniah stated in conclusion, "We have been growing slowlyand stabilizing. Automatically systems have been created".On asked to name the three major problems faced by the unit hesaid:(a) Collection of dues from Sarvodaya Institutions(b) Lack of space ( A long hall would have been ideal. The housewas divided into small rooms)(c) There could be some improvement perhaps in stock systems.

Asked what sort of training would be useful to him, he said: " Iwould welcome training in perfume compounding. This is aChidambara rahasyam (a deep secret) which no one is willing toshare".


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SSGS STEEL UNIT AT MUDIANOOR

LOCATION: At Mudianoor village, on the Kalakurchi to Virudunagar road, 12 kms.east of Virudunagar, falling under the Kariapatti block, Aruppukottai Talukaof Virudunagar district.

INCEPTION: Started by Mudianoor cluster committee, a federation of villageGrama Sabhas in 1994, with Plan funds. Handed over to the SSGS in 1994, after

running it for eight months - to avail of concessions for excise and salestax, which accrues from working under the SSGS banner ( which is registeredwith the Khadi and VIllage Industries Commission (KVIC) banner). The unit wasoriginally started as there were some blacksmiths and carpenters in theadjoining villages. Since these skills also formed a part of the KVIC mandate,and since SSGS wanted to increase the "variety" of industries under it'sbanner, it also accepted the offer to take over the enterprise. Initialcapital expenses were provided by the cluster committee.

OBJECTIVES:

The manager of the unit, Shri Sivamurugan, stated the objectives ofthe unit to be -(a) providing employment to local people

(b) providing additional income to the Sarva Seva Khadi retail shops.(c) providing quality steel furniture to the Grama Sabah members ofKariapatti,( who are also given credit facilities by the shops).(d) generating profits for the umbrella organization the SSGS.

The accountant. Shri Govindasamy, a retired Sarvodya worker, addedthat the objectives also included -(a) fostering economic development in the area(b) creating a name for the SSGS,by manufacturing and retailing quali-ty products.

Mrs. Chandra, the SSGS incharge for Kariapatti stated that of thetwelve lakh odd sales per year, seven lakhs were rotated within theKariapatti block - which which would haave otherwise gone outside the

local economy to the corporate sector like Godrej. This activity hadalso created employment and additional income oppurtunities.

FINANCE:

INCOME AND EXPENDITURE STATEMENTS:(Rs. in 1000)

EXPENDITURE: 1994-95 1995-96 1996-97(two months) (unaudited)

Opening Stock-Raw material ? 44 561- Furniture 359 162

Purchases ? 785 867

Prodn wages ? 74 98

Other prodn exp. ? 40 40

Freight 6 14 21

Admn.salaries - - 30

Other admn. 1 26 3

Sales commission 29 82 110

Profits 142 53 118

TOTAL EXPENSES:


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INCOME

Furniture sales 811 1102

Other income 5

Purchase comm. 12

Closing stock- Raw material 359 561 527- Furniture 44 162 394TOTAL:

BALANCE SHEET FOR STEEL FURNITURE UNIT

94-95 95-96 96-97(two months) (unaudited)

LIABILITIES:

SSGS H.O. (Kariapatti) 403 778 916

Price margin 4 16 113

Furniture Depreciation 0 20 (deducted?)

Income from P & L 142 53 118

Stock Suspense - 62 -

------ ------ ------549 929 1147

ASSETS:

Furniture 13 21 41

Machinery 129 175 175

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

Working Capital Not estimated

Profits - All ploughed back into the unit.

Administrative salaries met from internal profits from 1996-97.

Accounting systems All accounts are kept in the Tamil language. Howev-er the final audited figures are printed in English. The following arethe account books kept -Purchase bill fileCash voucvher fileInvoice book ( 3 copies made, for ThonugalHO, office, and buyer).Cash receipt bookJournal + cash day book

Ledger

A monthly audit is carried out by the SSGS office auditor, and theKVIC auditor audits once a year.


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PRODUCTION AND SALES STATEMENT (Rs. in 1000s)

Production Sales

1994 - 95 ? 921995 - 96 913 8111996 - 97 1164 1102

1997 - 98 959 757

Finance : All accounts kept in Thonugal head office:No knowledge in unit.

MARKETING

PRODUCTS MANUFACTURED AND THEIR PRICE (IN RUPEES)

FURNITURE

(A) Wardrobe ( 4'6" height) 3100Wardrobe ( 5'6" height) 3650 (Optionals - Hanger 150Wardrobe (6'6" height) 4200 - Mirror 120 )

(B) Double cot ( 6'x 4') 2150Single cot (6'x 3') 1835

(C) Steel stool ( 1'x 1') ?Steel stool ( 1 x 1'6") Steel top = 160

Mica top = 180

(D) S type chair ( 1'8" x 1'8") 250

(E)Television stand (2' x 2'4" x 1'6") 475

(F) Table (3' x 2') Steel top = 1700Mica top = 1900

Table ( 4' x 2') Steel top = 1900Mica top = 2100

(G) SSGS shop racks made to order

HOUSING MATERIAL ( as per orders)

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.

All product decisions, by Mrs. Chandra and PE (Assefa)All material made of 20"CR steel sheets.PRICE:

Pricing decisions based on production costs. 10% margin for the steelunit, and 10% margin for the retail shop is added to the productioncost, to arrive at the final retail price. This decision is taken bythe SSGS (Kariapatti) and the PE (Assefa). The prices are decidedyearly, by the PE and SSGS. In the market, 24" gauge and fifty kilosweight wardrobes are available for Rs. 2500/ against the 20" gauge andhundred kilo weight wardrobes of Assefa which cost around Rs. 4500.Nippon and Godrej (from the corporate sector) manufacture 20" gaugewardrobes with machine moulds and mettalic paints which cost Rs.10000to 12000.

PROMOTION

Advertisements are placed in the Assefe village Tamil monthly " Seva


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madal". Two cinema theaters in Kariapatti display slides advertisingthe brand name ( Seva Furniture). Boards are displayed in every SSGSshop ( fifty in Tamil nadu) advertising the availability of SevaFurniture. The key chains for the wardrobes have the SSGS logo. Onepage 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 SSGSbanner ( around fifty such units exist in Tamil Nadu). For housingmaterial, the sales are routed through the Kariapatti housing commit-tee.

SALES BREAKUP BY PRODUCTS

For the year 1996 - 97, the following were the product wise approx-imate breakup by quantity and sales value.

ITEM QUANTITY SALES VALUE( in rupees)

Wardrobes 100 400,000

Cots 60 200,000Tables 20 50,000Stool + chair 100 50,000Housing ? 400,000

COMPETITION

Wardrobes -The competition comes from two sources. Local productionunits in Aruppukottai, Virudunagar, Madurai, produce wardrobes usinglower quality iron/ steel sheets, which retail at the half the price.The market is primarily low income households, for whom a wardrobe isan essential item of a bride's dowry. At the upper end of the market,Godrej, Nippon and Allwyn use machine moulds and metallic finish,using large scale capital intensive production techniques to retail

wardrobes at around Rs.12000. This brought mainly by the upper incomegroups. The SSGS steel unit sold around half of all products withinthe Kariapatti block area - and the other half through SSGS retailoutlets. The buyers were office staff, belonging to the middle class,staying in small towns and villages, who were offered credit facili-ties by the SSGS outlets.

Cots - There is no high income market for steel cots. Cots of valueRs.10,000 and above are usually made of plywood, use stainless steelpipes, beading, have decorative mirrors, etc. Only very high incomefamilies buy this product. At the lower end, as in the case of war-drobes, small units s\using lower quality sheets, produced cots whichretailed at half the price of the SSGS cots. These cots too catered tothe "seeru" market - with low income families purchasing these cots asa part of the girl's dowry. The buyers of the SSGS cots, were usuallymiddle class and availed of credit facilities from the SSGS retailunits.

Stools A wooden stool costed around Rs. 200- 300. The steel stoolswere 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 usuallyoffices and shops. Households used folding chairs, for which the unitdid not have machines. (the cost of dies for this chair amounting totwo hundred thousand rupees).

Tables Offices and shops usually purchased the tables. However demandwas not very high.

Housing material The beneficiaries who took loans from the Assefa


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housing committee, had a choice to buy their construction materialfrom the open market. Around half of the beneficiaries opted to buyfrom the housing commitee itself. These orders translated into demandfor the steel unit, for steel doors, windows, grills, ventilators,etc.

STAFF The steel unit employed three full time staff - one manager, onewatchman 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 finalproduct by a particular time. All the staff were men, in the age group20 to 55 years, excepting the accountant - who was 68 years, andretired from the Aruppukottai Sarvodaya Sangh. The following tabledetails the background of the three full time staff.

Designation Age Education Marital Experience Salarystatus ( Rs./month)

Manager 29 Civil Eng. Married with 4 years in Rs.1600diploma two children own workshop. + TA.

Accountant 68 SSLC " 35 years in Rs.1350Sarvodya Sangh

Watchman 60 Illiterate Married with Private Rs.900four children mill watchman

All salary decisions were taken by the Programme Executive and Smt.Chandra. Salaries were paid by cheques and from internally generatedprofits. The wages were paid piecerate, and worked to around 6.5% to7.5% of the production value. Only men were involved in this work, asit involved manual tasks like cutting, painting and welding. On anaverage the unit provided twenty to twentyfive days employment permonth. Staff salaries were paid from retained earnings.

Reporting relationships All reporting relationships were with theThonugal head office of the SSGS. The following details the variouspurposes for which reporting relationships existed.(a) All purchases of raw material were made on the basis of quota-tions gathered from three suppliers, by a committee formed by theThonugal office. Paint and Cold Rolled steel sheets, were purchased inbulk, with postal quotations to avoid individual contact. Where quota-tions were solicited in person, the Thonugal office, crosschecked withthe supplier on phone, to check veracity of the prices quoted. Allpayments were made only by Demand Drafts and cheques, by the Thonugaloffice.(b) Monthly production expense reports in money terms, were sent bythe steel unit to the Thonugal office. The items reported productionrelated expenses, broken up by heads -Sheets and wiresLocks and screwsPaintElectricty chargesPacking chargesProduction wagesProduction margin ( around 10% of total cost).A monthly stock balance report included -Number of days production unit workedOpening stock, production, sales and closing stock for finished pro-ductTarget versus actual production in money terms cumulated for the year.Stock reports for eight major items in money terms

A column was kept opeonended for special problems ( usually reportedproblems included low sales, and material availability).(c) A monthy trial balance was also sent to the Thonugal office.(d) A copy of each sales invoice was also sent to the Thonugal office.


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(No direct sales was undertaken. Only credit bills were issued on theparticular SSGS retail outlet).(e) Cash receipts were sent to the Thonugal office for the amountsent.(f) Petty cash of Rs.2500/ wa sanctioned, which was reimbursed by theThonugal office, after particulars were sent.(g) A one day monthly meeting, with all retail unit heads, productionmanagers, Mrs. Chandra and the PE (Kariapatti) was held for coordinat-

ing production activities with buyers requirements as reported bysalesmen.The manager stated that he had to meet Mrs. Chandra atleast threetimes a week, for cheques, follwing up material etc. The salariescheques were issued by the Thonugal office, only when the productionreport, the stock report and the trial balance were submitted.The SSGS Thonugal unit submitted to the Madras SSGS office, aquarterly progress report, based on the monthly reports of the unit.

PRODUCTION

The steel unit was housed in a campus a little off the KalakurichiVirudunagar road. The campus of 100 feet by 60 feet dimension wascompetely 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 ---+-----------+

Note : L = latrine, W = Watchman's shed, R.M. = Raw material

The semi finished stock room had a welding connection. The weldingwas however done in the open in the working shed. Painting was doneboth in the open working shed, and in the main machine room. ( It wasobserved that painting and welding was being undertaken simultaneouslyin the open working shed). Cutting and bending machines were installedin the main machine room. Finished stock were kept both in the mainmachine room and in the finished stock room.

Machinery The installed machines were as under

Bending machines- One corner bending- One angle bending- One bending machine for wardrobes.

One Sheet Cutting machineOne painting air compressorOne welding machineOne drilling machineOne hand grinding machineOne pipe bending table with vice.

The total value of these machines was estimated at Rs.175,000 in thebalance sheet.Raw material The raw material shed kept the following -Angles, sheets and bars ( for housing material) valued at Rs.18/kg.


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20 gauge CR sheets valued at Rs.25/kgOne inch thick pipes valued at Rs.33/ metre.Mica sheets valued at Rs.45/ square sheet.Paint in cans, valued at Rs.120/ literChair sets (handles, + frames) valued at Rs.250/ setLocks, screws and hingesThe value of the raw material at any point in time appeared to rangearound Rs.500,000 as per the balance sheet figures.

ProcessAll material processing, irrespective of product followed the follow-ing process flow.

Indent rawmaterial from ---->Cutting------> Bending ----> Painting --> Finishedstores goods

stores

Stock accounting

Two raw material stock book are kept- one for sheets, angles and barsand 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 perorders). 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. Thefinal retail price as fixed by the SSGS also finds an entry. In thisregister the various costs for electricity, wages, raw material ( as

per fixed heads like sheets, paint,etc) are calculated. The finalmargin is arrived at be deducting the various costs from the retailprice fixed by the SSGS. A casual perusal of the register revealedthat while producing one wardrobe earned a 20% margin, producing threewardrobes in one batch, earned a 26% margin.

After production, the finished product details are entered into theFinished Stock register. Each item has a seperate page. The details ofthe purchase order/ invoice number, the quantity of production, thevalue, the sales quantity and the rate are entered.Production cost breakupAn example of the details from the Production register, for a six andhalf feet wardrobe with jewelbox and mirror frame.

Raw materials = Rs. 2316.25Other material = Rs. 303.75Paint = Rs. 255.70Electricity = Rs. 50.00Packing costs = Rs. 60.00Wages = Rs. 346.50Margin = Rs. 1137.00

-----------TOTAL = Rs. 4470.00

The manager explained that the margin figure varied as per the cost ofraw material, with steel price ranging from Rs.25 to Rs.28/kg. ( Thequantam 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


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CONSUMPTIONRaw material = Rs. 512,000 ( mainly steel CR sheets)Iron angle = Rs. 5,000Iron pipe = Rs. 20,000Locks = Rs. 1,000Other expenses = Rs. 47,000Paint = Rs. 37,000

Plywood = Rs. 5,000Production wages = Rs. 74,000

------------TOTAL: = Rs. 703,000

OTHERSElectricity = Rs. 9,000Packing = Rs. 3,000Production = Rs. 6,000Interest = Rs. 14,000Insurance = Rs. 9,000Margin on Production = Rs. 170,000

TOTAL = Rs. 913,000

Production and sales

The following figures were furnished in monetary value for productionand sales. ( No individual product quantity wise figures are kept).

YEAR PRODUCTION SALES( In rupees)

94-95 ? 93,00095-96 913,000 812,00096-97 1164,000 1102,00097 -98(9 month) 959,000 757,000OWNERSHIP BENEFICIARY AND NGO SUPPORT

The manager stated that the following were the beneficiaries of thesteel 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 skillsand earn an income

He stated that the SSGS sales branches found it very useful, as thesales margins provided income- to pay salaries for salesstaff. Alsothe profits of the steel unit cross subsidized the losses of thespinning units.

The ownership of the land and buildings were vested with the Mudianoorcluster committee ( a federation of village Grama Sabhas). InitiallyPlan international funded the project, when it was run by the clustercommittee. After handing over of the unit to the SSGS, the concept ofof funding by retained earnings had replaced that of foreign funds.The machinery belonged to the SSGS (which was a registered Trust, inthe Madras HO of Assefa, and had Khadi and Village Industries Commis-sion (KVIC) certification).

NGO support

In terms of NGO support, from SSGS, the manager reported that- Sales were taken care of through the retail units- Cash was provided for purchases ( working capital?)- A meeting was held once a year, with all SSGS staff in Tamil Nadu

- Accounting mistakes were pointed out during audit

From the ASSEFA Kariapatti project, the manager stated the support tobe


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- Orders for housing material, for schools, community buildings,housing committee beneficiaries, etc.- Support from the Project Executive ( Mr. Rajarathinam) in terms ofadministrative systems, product design, production and sales

Shri Perumalsamy, SSGS advisor at Thonugal, stated that there was nosupport from Assefa. The SSGS support was the sales distributionnetwork and accounts auditing.

ProblemsThe problems listed by the manager were(a) Sales - while the target fixed had been Rs,2,000,000 only halfcould be acheived due to ow offtake.(b) Labour - the private sector provided bonus and advances whichmade labour sometimes unavailable.(c) Raw material supply was sometimes delayed

The SSGS head, Mrs. Chandra stated that raw material could not betermed a problem, as the production manager did not compute interestcarrying costs. Hence the SSGS deliberately delayed purchases toreduce 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 ofservice in the Sarvodaya Sanghs) stated that labour was a problem - asthe skills of painting welding and cutting were mcuh in demand. Hestated that the manager needed to learn methods of manufacturing newproducts. The labour had to be trained on painting, tinkering, fit-ting.The manager stated his major training need to be exposure to qualityproducers to improve "finishing". Aslo quality control systems had tobe improved.

Mrs. Chandra concluding her assessment of the steel unit stated "Evenif 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, salariesand depreciation. Even allowing for a "market rent" of Rs.12,000, aprofit of Rs.28,000 is being made annually by the steel unit."


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SSGS CATTLE FEED UNIT - P. Pudupatti

LOCATION: The Sarva Seva Gramudyog Samithi cattlefeed unit, lies some12 kms. to the south east of Kariapatti town (which is the blockheadquarter and is on the Madurai to Tuticorin State Highway. The unitis located in P.Pudupatti village, which is on the Kallikudi toTrichuli road, passing via Kariapatti. The campus containing around

ten cents of land, is located alongwith the Assefa cluster office. Thearea is visibly a drought prone one, with straggly weeds and dry mud.Around ten trees have been planted around the campus some six monthsago.

INCEPTION: The cattlefeed unit was started by the Dharmavaram clustercommittee, a federation of ten village Grama Sabahs, initiated withAssefa's assistance. The unit was started to provide cattlefeed to thefive cattle farms kept by Assefa in the block. The unit was handedover to the SSGS in February '96, within a month of in its inception,as the cluster committee could not manage, the production - as also toavail the excise and sales tax concessions available with KVIC regis-tered units.

OBJECTIVES: Shri Bhaskaran, the manager of the unit, stated that ithad been initiated to mainly serve Assefa cattle farms. If cattlefeedwas purchased from the market, profits would be made by private trad-ers. In this case the profits remained within.Shri Perumalsamy, SSGS advisor stated the objective to be providingemployment to four people. He stated that the unit presented no man-agement problem, as the raw material was available locally and themarket was a captive one. He specifically said that the cattlefeedunit was not an SSGS idea - they had taken over the unit at the re-quest of the cluster committee.FINANCES:

PROFIT AND LOSS ACCOUNT (Rs. in 1000s)

EXPENDITURE 1995-96 1996-97(2 months) (unaudited)

OPENING STOCK - 80

PURCHASESRaw material 10 293Cattlefeed 40 -Packing material 3 2PRODUCTIONWages 5 20Production cost 1 -OTHERSMargin on closing stock 8 3Freightage 3 10Sales commission 2 23ADMINISTRATIONSalary - 21Travelling 1 1Stationery/others 1 1Profits to b/s - 50

TOTAL 171 504

INCOME

SALES

- Cattlefeed 80 468- Packing material 1 -Purchase commission 1 -Closing stock 80 30


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Price margins received - 8Loss to b/s 9 -

TOTAL 171 504

BALANCE SHEET(Rs.in 1000s)

LIABILITIES 1995-96 1996-97

(2 months) (unaudited)

SSGS H.O 84 -Margin on closing stock 8 3Profit - 50

TOTAL 92 53ASSETS 1995-96 1996-97

Loss as per P&L 9 -Cash on hand 3 -Furniture and fixtures - 10Outstanding with SSGS - 13CLOSING STOCK

Cattlefeed 78 2Packing 2 -

TOTAL 92 92

ACCOUNTS SYSTEMS

The money accounting system could be depicted as under -

Money received from ------> Cash receipt-----> Money enteredSSGS(HO) as per indent given in cash book

||

Ledger Unload material----> Stock book----> Usage figure


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order in godown entries recorded

There were nineteen stock heads in the stock register. The headsrelating to raw material was as under -

Kambu (maize)Groundnut oilcakeRice bran

JaggeryMineral Salt(two varieties)SaltGingelly oilcakeBlack gram dust

The stock heads relating to packing was under -Polythene bags - 40 kg pack

- 20 kg pack- 10 kg pack- 45 kg pack

The remaining heads related to packed cattlefeed.

AUDIT - Audit was undertaken annually by a certified chartered ac-countant sent by the Chennai office every March end. An inspection wascarried out quarterly by the SSGS Thonugal office.

COST MARGINS - The cost breakup for one batch of cattlefeed of 2500kilos is given to get an understanding of the costs.

Raw material Rs.12,158Wages paid Rs. 1,080Freight Rs. 600Packing Rs. 732Delivery Rs. 310Margins Rs. 1,239

TOTAL Rs.16,120 (Rs.6.44/kilo)

MARKETING

PRODUCT The cattlefeed unit produced powdered cattlefeed, as per thenutrient formula suggested by Dr.V.Ramasami (Animal Husbandary advi-sor) - a retired Government veterinary doctor. The product was avail-able in five polyster sack packings - 5 kgs, 10 kgs, 20 kgs, 40 kgs,and 50 kgs. Four fifth of all sales was with 50 kg packing. The markettrend in packing was however 40 kgs. The smaller packs had been creat-ed apparently to meet the need of owners of one or two milch animals.The nutrient mix was as per the standards set by the Tamil Nadu StateGovernment Center for Animal Husbandary Sciences (Chennai), which alsotested the product for certifying quality.PRICING The following were the retail prices charged for the variouspacks. The final retailer was allowed a 7% margin on the price.

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

Pricing decisions were made by a committee consisting of Dr.Ramasamy,the Programme Executive of Assefa Plan Kariapatti (Shri Rajarathinam),the SSGS Thonugal HO head (Smt. Chandra) and the cattlefeed unit

manager. The committee met once a year to review pricing policy. Themanager stated an instance where the price had been hiked to Rs.7/ perkilo which was later brought down to Rs.6.50/kilo due to market re-sistance.


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PROMOTION The cattlefeed packs were sold under the brand name "SEVACATTLEFEED". This was advertised in the Tamil monthly newsletter ofAssefa Kariapatti "Seva madal" - which was circulated to all the 120villages in the block. Both the cinema theaters in Kariapatti towncarried slides advertising the product. At the point of purchase,usually SSGS retail outlets- a slate board was displayed indicatingavailability of the product.

DISTRIBUTION All sales decisions were taken by the SSGS Thonugaloffice. No direct sales were allowed from the cattlefeed unit. Thesales were mainly done through the SSGS retail outlets ( six in Karia-patti block and around fifty in small towns in Tamil Nadu).

COMPETITION

The competition for the packed cattlefeed ranged from loose cattlefeedingredients 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 statedthat he did not see competition to be a problem since most of thesales 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 retailoutlets.

Among the "packaged" products, the manager stated that SKM (fromErode), Gem (from Andhra Pradesh), SKF (from Dindigul) and unbrandedpacks from Virudunagar were the major players. He stated that "Godrej"was a premium brand, which did not however sell in Kariapatti.

The competitor prices for powdered cattlefeed in gunnybag sacks, werestated as under -SKM (50 kgs) - Rs.300 (Rs.6/kg)GEM (50 kgs) - Rs.300 (rs.6/kg)Unbranded (50kgs) - Rs.275 (Rs.5.50/kg)

Only SKM sold "pelletized cattlefeed" which retailed at Rs.270 for a50 kgs in gunny bag packing.

PEOPLE

Shri Bhaskar, the unit manager also had the additional responsibilityof being a SSGS retail unit salesman, when the unit was not in produc-tion. The unit directly employed two couples on daily wages. The menwere aged around thirty years, and women around twenty years. The menhad earlier experience of working in a flour mill. The men were paidRs.35/ day and the women Rs.20/day.

Processing 2500 kgs or raw material resulted in eight days employmentfor both the men, and twelve days employment for both the women. Inthe first ten months of the latest year, 212 male and 318 female daysof employment had been generated. This worked out to an average ofeleven days for each man, and sixteen days for each woman.

The unit manager had studied upto the 12th standard. He was in hislate twenties and was unmarried. He had been earlier a stores inchargein the Kariapatti Plan Assefa office for seven years, earning a montlysalary of Rs.1750/.

REPORTINGShri Bhaskar stated that he reported directly to Smt. Chandra at theThonugal HO of SSGS. He met her daily for feed related problems, likepurchase 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 thefeed unit itself. Once in two months a review meeting was held at theThonugal office to review production versus target figures. The SSGS


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Chennai office, also coordinated an annual meeting for all retailmanagers and production unit heads. Shri Bhaskar had attended a fiveday camp on accounting last year, organized by the SSGS.

Officially the following reports were sent from the cattlefeed unitsto the Thonugal office of the SSGSa) Monthly Trial balanceb) Monthly stock balance

c) Monthly wages listOnly 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 crucialfunction appeared to be purchases of raw material. As stated, thecattlefeed was produced in four packagings, 40 kg, (80% of sales), 20kgs,10kgs and 5 kgs. 50 kgs packs were also produced sometimes. Theraw materials used and the source was as underKambu (Bajra/Millet ) Kovilpatti/ ArupukottaiDeoiled cake (groundnut/ gingelly ) MaduraiRice dust Arupukottai

Black gram dust MaduraiMineral salt VirudhunagarJaggery MaduraiSalt MaduraiPolyster packing material Tirumangalam

The purchase procedure was stated as under ---a) Indent to be sent to Thonugal SSGs officeb) SSGs office recommends asking for quotationsc) Purchase commitee formed (Manager, Smt.Chandra, one SSGs rep)d) Three quotations directly asked from supplierse) Comparitive statement madef) Smt.Chandra approves the supplierg) SSGs Thonugal places the order

h) Unit manager takes stock from supplier directlyi) Unit manager unloads stock in godownj) Unit manager reports compliance to Smt.Chandra.

PRODUCTION

The production unit was located in a 24 feet x36 feetx 12 feetshed,which had a single phase current. The shed had been orignallybuilt for gem cutting unit. When gem cutting did not take off, theshed has been converted as a cattlefeed unit. Excepting forgrinding,which was undertaken in a rice mill,opposite the campus allother production activities took place within this shed. The unitmanager stated that production took place only after firm orders had beenreceived.

PRODUCTION PROCESS

The production process was as under -

a) Grinding all the material in a nearby rice mill.b) Mixing of ingredients

community enterprise full report 98

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