Project SHAKTI - Changing Lives in Rural India

NAMES ROLLNO

HEENA SHAIKH 100

SNEHAL THORAT 119

RACHANA RANE 81

PRIYA SHARMA 102

NEETA WALODRA 127

NEHA SHETYE 106

SHRUTI SAWANT 93

VIRALI SHAH 99

Acknowledgement:

We the students of SYBMS (B), with Roll No: 119, 100, 81, 102, 127, 106, 99, 93 glad to present the hard copy of our project on HUL SHAKTI. We are thankful to you providing us with such an interesting Topic and we had a great time in collecting all relevant matter of this project.

You’re sincerely,

SYBMS (B)

INDEX1.Introduction of Hul 5-62.Where HUL's Shakti comes from 73.What is project shakti all about 84.What is self help groups & how does

it work9

5.Concept 10-156.Objective 167.Model of Project Shakti 178.Business goals 189.Shakti Vani 19-2010. Shakti Vani is a social

communication programme21

11. iShakti: Crossing the Border 22-2312. How project shakti works: 24-2513. Process 2614. How HUL's Rural Model Work 27-28

15. Distribution of Villages in India 29-30

16. Reaching the unreachable geographical areas 31-32

17. Conversation with two workers of project shakti

33-35

Introduction of Hul1.Hindustan Unilever Limited (HUL) is India's largest Fast

Moving Consumer Goods Company, touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. The company’s Turnover is Rs. 17,523 crores (for the financial year 2009 - 2010)

2.Unilever was the world's largest Fast Moving Consumer Goods (FMCG) Company with worldwide revenue of $55 billion in 2005. Its Indian subsidiary, the Hindustan Unilever Limited (HUL) was the country's largest FMCG Company with combined volumes of about 4 million tonnes and revenues near about $2.43 billion. HUL's major brands included Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall's etc. These were manufactured over 40 factories across the country.

3.HUL is a subsidiary of Unilever4.Hindustan Unilever was recently rated among the top

four companies globally in the list of “Global Top Companies for Leaders” by a study sponsored by Hewitt Associates, in partnership with Fortune magazine and the RBL Group. The company was ranked number one in the Asia-Pacific region and in India.

5.HUL has been proactively engaged in rural development since 1976 with the initiation of the Integrated Rural Development Programme in the Etah district of Uttar Pradesh, in tandem with the company’s dairy operations. This Programme now covers 500 villages in the district. Subsequently, the factories that HUL continued establishing in less-developed regions of the country have been engaged in similar programmes in adjacent villages. These factory-centered activities mainly focus on training farmers, animal husbandry, generating alternative income, health & hygiene and infrastructure development.

6.The mission that inspires HUL's more than 15,000 employees, including over 1,400 managers, is to help people feel good, look good and get more out of life with brands and services that are good for them and good for others. 

7.It is a mission HUL shares with its parent company, Unilever, which holds about 52 % of the equity.

8.Home & Personal Care Personal Wash Fabric Wash Home Care Oral Care Skin Care Hair Care Deodorants & Talc'sColor Cosmetics

Where HUL's Shakti comes from:

A HARSH summer sun beats down mercilessly on the drive to Nalgonda district in Andhra Pradesh. The rocky landscape is parched, scorched by successive years of drought. The destination is Peddakaparthy village, 65 kms from Hyderabad, and the seat of a brave new experiment by fast moving consumer goods major, Hindustan Lever Ltd (HLL), where, undaunted by the vagaries of nature, a group of village women are attempting to bring about a transformation in their lives. Through a combination of micro-credit and training in enterprise management, these women from self-help groups have turned direct-to-home distributors of a range of HUL products and helping the company plumb hitherto unexplored rural hinterlands.

From the time HUL's new distribution model, named Project Shakti, was piloted in Nalgonda district in 2001, it has been scaled up and extended to over 5,000 villages in

52 districts in AP, Karnataka, Gujarat and Madhya Pradesh with around 1,000 women entrepreneurs in its fold. The vision is ambitious: to create by 2010 about 11,000 Shakti entrepreneurs covering one lakh villages and touching the lives of 100 million rural consumers.

WHAT IS PROJECT SHAKTI ALL ABOUT:

Launched in 2001, the initiative, Project Shakti, helped HUL reach the so-called media-dark regions by turning rural women into direct-to home distributors of its mass-market products

Shakti is HUL's rural initiative, which targets small villages with population of less than 2000 people or less. It seeks to empower underprivileged rural women by providing income-generating opportunities, health and hygiene education through the Shakti Vani programme, and creating access to relevant information through the iShakti community portal. Shakti is a pioneering effort in creating livelihoods for rural women, organised in Self-Help Groups (SHGs), and improving living standards in rural India. Shakti provides critically needed additional income to these women and their families, by equipping and training them to become an extended arm of the company's operation.

What is self help groups & how does it work: The SHGs are also popularly called DWCRA groups and this name became popular after the DWCRA programme (Development of Women and Children in rural areas)10-15 women come together to form a self help group to inculcate small savingsGroups promoted by the Government or NGOs to tackle poverty. Micro loans from rural bank to setup enterprisesIndividual women take small loans from the group to start income generating activity (petty vegetable vending, fish trading, tailoring, dairy)

Concept

Unilever wanted to penetrate deeper to 1,000 to 2,000 pop villages –existing distribution model unviable Self Help Group women members were looking for more sustainable business opportunities in small village markets

These provide rural women a platform to save money---they keep pooling money, save in a bank, and by the end of the year, they get a matching loan from the same bank.

This way, the group's corpus doubles, and individual members can borrow internally from the group and start a business.

These groups are increasingly being used by the government for social development. In Andhra Pradesh, for instance, all government schemes, the pulse polio programme or the LPG (cooking gas) connections are routed through these groups. There are around 6 lakh SHGs in the country.

Typically, each of these group save Re 1 per day or Rs 30 per month (some groups save more). A group with 15 members and a saving of Rs 30 per head would save Rs 450 per month or Rs 5,400 in a year. The members can borrow from the group's kitty (typically, the interest rates are 2-2.5 per cent month or 24-30 per cent per annum).

At the end of the year, the group---if the repayments within the group is 95 per cent and the attendance by members is 75 per cent---can take a matching loan from regional rural banks, who are refinanced by NABARD. This way their corpus doubles.

Initially, it starts off with individuals taking loans for self-consumption: a marriage or illness in the family. Soon the government agencies---the district collectors or the District Rural Development Authority (DRDA) which facilitates these groups----the banks and NABARD realised that to sustain these groups, it was important to have income-generating activities. As bank loans are strictly for productive activities, the groups began different activities: bought cattle for dairy activities, weaving, toy-manufacturing, leasing a farm or opening a small shop in the village. It's here that HUL saw an opportunity.

Started in 2001, Shakti has already been extended to about 80,000 villages in 15 states

Shakti already has about 25,000 women entrepreneurs in its fold. A typical Shakti entrepreneur earns a sustainable income of about Rs.700 -Rs.1, 000 per month, which is double their average household income. Shakti is thus creating opportunities for rural women to live in improved conditions and with dignity, while improving the overall standard of living in their families.

HUL soon realized that although it was enjoying a greater penetration in the rural market when compared with its competitor such as Nirma and ITC, its direct reach was restricted to only 16%. The FMCG giant was desperate to increase this share. HUL saw its dream fulfillment in the vast Indian rural market. The company was already engaged in rural development with the launch of the Integrated Rural Development Programme in 1976 in the Etah district of Uttar Pradesh. This program was in tandem with HUL's dairy operations and covered 500 villages in Etah. Subsequently, the company introduced similar programs in adjacent villages. These activities mainly aimed at training farmers, animal husbandry, generating alternative income, health & hygiene and infrastructure development.

The main issue in rural development was to create income-generating prospects for the poor villagers. Such initiatives, linked with the company's core business, became successful and sustainable and proved to be mutually beneficial to both the company and its rural customers. However, much remained to be done. Project Shakti was conceived.

Following the pioneering work carried out by Grameen Bank of Bangladesh, Self Help Groups (SHGs) of rural

women were formed by several institutions, NGOs and government bodies in villages across India. This group of usually 15 members contributed a small amount of money to a common pool and then offered a micro-credit to a member of the group to invest in a commonly approved economic activity. Partnering with these SHGs, HUL started its Project Shakti in Nalgonda district of Andhra Pradesh in 50 villages in the year 2000. The social side of the Project Shakti was that it was aimed to create income-generating capabilities for underprivileged rural women, by providing a sustainable micro enterprise opportunity, and to improve rural living standards through health and hygiene awareness. Most SHG women viewed Project Shakti as a powerful business proposition and are keen participants in it. There after it was extended in other states with the total strength of over 40,000 Shakti Entrepreneurs.

HUL offered a wide range of products to the SHGs, which were relevant to rural customers. HUL invested significantly in resources who work with the women on the field and provide them with on-the-job training and support. HUL provided the necessary training to these groups on the basics of enterprise management, which the women need to manage their enterprises.

For the SHG women, this translated into a much-needed, sustainable income contributing towards better living and prosperity. Armed with micro-credit, women from SHGs become direct-to-home distributors in rural markets

Having successful in Nalgonda, in 2003 HUL planned to broaden Shakti to a 100 districts in Madhya Pradesh, Gujarat and UP. There were other plans such as to allow

other companies (except HUL's competitors) such As Nippo, TVS Motor for mopeds, insurance companies for LIC policies to get onto the Shakti network to sell their stocks. Sehgal was looking proud when he announced, "We wanted to first stabilise the project before we can look at other companies. It requires somebody with scale and size to build a platform and then invite other companies onto this platform." He further emphasized that Shakti was creating a win-win partnership between HUL and its consumers.

There were about 4.36 lakh women SHGs in AP with almost 58.29 lakh poor women. AP alone had about half of the SHGs of the country. By 2005 the SHGs had mobilized Rs 1500 crore had mobilised as corpus. The rural women organized themselves into `thrift and credit' groups with a saving of Re.1 a day which created a fund of more than Rs 800 crore. While the savings was there among the SHGs, there was no channel of investment. HUL tapped this huge overlooked network to launch Project Shakti. HUL has able to provide a window of prospect to invest and earn.

The impact of HUL was not all of a sudden. HUL witnessed 15% incremental sales from the villages of AP, which accounted 50% of the total sales of HUL products in AP. Market analysts were perceiving a huge potential in the rural foray of HUL. Nikhil Vora, Sr. Vice President of research group ASK Raymond James believed that if there was one company that could take on the onus of developing the rural markets, it was HUL. He further continued, "HUL contributes 20 per Cent of the total FMCG business in the country. So, clearly, the onus is on HUL to grow the market. Returns may not happen in the next five years, but a lot of consumer understanding and insights

comes from an exercise like Project Shakti, which in turn can lead to product innovation."

HUL acknowledged that for Project Shakti to be successful for the company's rural penetration, dealers and communicators must be well trained. It was unclear how dealers would perform in an expanded infrastructure. Although HUL's rural initiatives incurred huge costs to the company, it was expected that with the monsoon revival and greater rural incomes could decline the payback period for projects like Shakti. Moreover, the decreasing brand loyalty among urban consumers rural market had become an imperative. According to the Concurs K.N. Siva Subramanian, Sr. Vice President, Franklin Templeton India Ltd, "The (HUL) management had recognized the impending saturation of the urban markets some time back and launched aggressive plans to capture the rural markets. However, a slowdown in the agricultural sector resulted in rural incomes remaining flat and affecting sales. We believe that by targeting lower price points and further expanding the distribution network, companies can tap the potential of rural markets. Initiatives like Project Shakti will help them in establishing and consolidating their base in rural markets."

HUL would have to determine whether Project Shakti could be repeatable in other countries. The Indian family structure and village interaction provide a unique diffusion mechanism that is an effective vehicle for Shakti. Whether this model could be successfully implemented in other countries must be further explored. Moreover, it needs to find out whether the Project Shakti or e-choupal like initiatives could be increased. There was no doubt that the regional brands, or even larger FMCG companies, did not

have the kind of distribution reach that HUL had established and in the long run, that could prove a winner for HUL.

Objective: •The Shakti entrepreneur program creates livelihood opportunities for underprivileged rural women.

•The Shakti Vani program works to improve the quality of life in rural India, by spreading awareness of best practices in health and hygiene.

•They are also studying the consumption habits of the rural people.

Participated States:

o Andhra Pradesh o Karnataka o Madhya Gujarat o Chhattisgarh o Orissa o Punjab o Rajasthan o Tamilnadu o Uttar Pradesh o West Bengal o Bihar o Haryana o Jharkhand

Model of Project Shakti:

BUSINESS GOALS:

The company breeds approximately half of its business in India from the towns and cities and half from rural areas, where its products are sold in some 100,000 villagesWith population of 2,000 or more. At the end of the 1990s, however, the company became conscious to augment its market share it can happen only when the market isExpanded. At this juncture, the challenge was to reach the 500,000 villages with less population located in secluded parts of the country, where there are millions of potentialConsumers, but no retail distribution network, no advertising coverage and media coverage and broken roads and transport. To achieve the aim the company needs a different business model. In this struggle there evolved the brain child of HUL “Project Shakti”.The main business goal of Project Shakti is to improve the rural Distribution channels, Cater profitably to consumers located at the bottom of the pyramid, tap the uncovered rural market. The study aims at scrutinizing whether the business goals of the project are achieved and to what extent it is achieved with reference to the opted research area.

SOCIAL GOALS Improve rural living standards through health

and hygiene awareness. Empowerment of women.

Shakti Vani:Shakti Vani is a social communication programme. Women, trained in health and suhygiene ises, address village communities through meetings at schools, village baithaks , SHG meetings and other social fora. In 2004, Shakti Vani has covered 10,000 villages in Madhya Pradesh, Chattisgarh and Karnataka.

It initiative which helps support Project Shakti isthe Shakti Vani programme. Under this programme, trained communicators visit schools and villagecongregations to drive messages on sanitation, goodhygiene practices and women empowerment. Thisserves as a rural communication vehicle and helpsthe Shakti Amma’s in their sales.

In 2001, the company embarked on an ambitious programme, Shakti. Through Shakti, HUL is creating micro-enterprise opportunities for rural women, thereby

improving their livelihood and the standard of living in rural communities. Shakti also includes health and hygiene education through the Shakti Vani Programme, and creating access to relevant information through the iShakti community portal. The program now covers 15 states in India and has over 31,000 women entrepreneurs in its fold, reaching out to 100,000 villages and directly reaching to 150 million rural consumers.

Shakti Vani is a social communication programme.

Free Dental /health Camps in Shakti Villages

iShakti: Crossing the Border

Encouraged by the goodwill and success of Project Shakti, in August 2003, HUL launched an Internet-based rural information service, called I-Shakti, in Andhra Pradesh, in association with the Andhra Pradesh Government's Rajiv Internet Village Programme. I-Shakti was an IT-based rural information service to provide vital information to the rural people in fields like agriculture, education, vocational training, health, hygiene and the like . The objective behind the i-Shakti model was to give need based demand driven information and services in the villages. iShakti, the Internet-based rural information service, has been launched  in Andhra Pradesh, in association with the Andhra Pradesh Government's Rajiv Internet Village Programme. The service is now available in Nalgonda, Vishakapatnam, West Godavari and East Godavari districts. iShakti has been developed to provide information and services to meet rural needs in medical health and hygiene, agriculture, animal husbandry,

Education, vocational training and employment and women's empowerment.

The vision is to have 3,500 kiosks across the state by 2005. I-Shakti was based on an interactive discussion technology developed & patented by the Unilever Corporate Research Team, U.K. The system enabled an in-depth understanding of each user needs and thereby improved the quality of services offered to them. The APonline , had tied up with i-Shakti to launch various services. Moreover, through i-shakti, the ICICI Bank and HUL jointly provided various financial products and services such as life and general insurance, investment products (Equity, Mutual Funds, Bonds), ICICI Bank Pure Gold (gold coins), Personal Credit, Rural Savings Accounts and Remittances to the rural customer.

How project shakti works:

The recruitment of a Shakti Entrepreneur or Shakti Amma (SA) begins with the executives of HUL identifying the uncovered village.

The representative of the company meets the panchayat and the village head and identify the woman who they believe will be suitable as a SA. After training she is asked to put up Rs 20,000 as investment which is used to buy products for selling. The products are then sold door-to-door or through petty shops at home. On an average a Shakti Amma makes a 10% margin on the products she sells.

In general, a member from a SHG was selected as a Shakti entrepreneur, commonly referred as 'Shakti Amma' received stocks from the HLL rural distributor. After trained by the company, the Shakti entrepreneur then sold those goods directly to consumers and retailers in the village. Each Shakti entrepreneur usually serviced 6-10 villages in the population strata of 1,000-2,000 people with 4-5 major brands of HUL - Lifebuoy, Wheel, Pepsodent, Annapurna salt and Clinic Plus. Apart from these, other brands included Lux, Ponds, Nihar and 3 Roses tea. The Shakti entrepreneurs were given HUL products on a `cash and carry basis.' However, the local self-help groups or banks provided them micro credit wherever required. According to Dalip Sehgal, Executive Director, New Ventures & Marketing Services, HUL Project Shakti was adding up to 15% of HLL sales in rural Andhra Pradesh. He further asserted that given the largeness of the country and backwardness of its women, Project Shakti-like endeavor would place everybody in a win-win situation.

Process

How HUL's Rural Model Works:

HUL's approach: can you get these groups as your brand ambassadors, who can buy the products and sell them in their villages? HUL would supply them the stocks, but the groups would decide who would do the enterprising. The group could nominate one or two people to sell the products. They could sell the products to other members in the group, consume within the family or sell to others in the village. Every time a woman sells, she makes a margin (10 per cent; retailers make 8 per cent).

If a group nominates a person to do the selling, the profits are ploughed back into the group's kitty. But if the individual borrows from the group to start the enterprise, the individual can retain the profits. Both models exist, but HLL is increasingly realising that it's the individual model, and not the group model, that works in reality. Banks lend the groups at an interest rate of 12 per cent per annum or 1 per cent per month; the groups in turn, lend it internally to their members at 24 per cent per annum or 2 per cent per month.

The potential: consider a village with a population of 1,000 people, and an average spend of Rs 4 per head per month on personal products; now, if everybody buys from this group, HUL's share of the rural consumer's spend would be Rs 4,000 (Rs 4 X 1000). If half the people buy, HUL's share of the consumer's spend would be Rs 2,000.

Now, consider the income potential for the women brand ambassadors or the group. If she has a turnover of Rs 2,000 per month---at 10 per cent gross margin---she makes a profit of Rs 200 per month. Assuming that she would have borrowed this money (Rs 2,000) from the group, she would have to pay an interest (at 2 per cent

per month) of Rs 480 per annum or Rs 40 per month. After providing for interest costs, she will be still making a profit of Rs 160 per month or Rs 1,920 per annum. Thus, by taking a loan of Rs 2,000 and retained earnings of around Rs 2,000, she can double her capital by the end of the year.

But the situation on the ground is not really as rosy as these back-of-the-envelope calculation may suggest. These women have to cope with competition from retailers in the village. HUL is aware of the problems, and the need to scale up the model. But since most of these women are first-time entrepreneurs, HUL has launched the pilot with 12 SKUs to keep things as simple as possible.

Distribution of Villages in India:

When HLL shifted to the rural India, it faced many problems. In contrast with a low per capita income comparative to the urban citizens, there were some areas with enough money but their awareness level and consumerism was very low. Secondly, rural FMCG demand was depended upon agricultural situation which was again depended upon monsoon. Transportation was also a major hindrance. Many of the rural areas were not connected by rail transport. The Kacha roads were unserviceable during the monsoon and interior villages get isolated. Besides transportation, there was a problem of distribution and communication facilities such as telephone, fax and internet. Moreover, the lives in rural areas were still governed by ethnicity and traditions and people did not simply get used to new practices. For example, even rich and educated class of farmers does not wear jeans or branded shoes. The

buying decisions in villages were slow and delayed. They wanted to give a trial and buy only after being satisfied. And, finally the poor illiterate villagers viewed experience more important than formal education and they valued sales people who could provide practical solutions to their problems.

REACHING THE UNREACHABLE GEOGRAPHICAL AREAS:

Before the introduction of PS many unreachable remote villages were not covered Due to lack of transportation facilities. The river Godavari flows across E.G.Dt which makes many villages unreachable through roadways. Contacting those villages is a difficult task. But PS made it possible.The SE receives the stock at her door step from the stockiest. This provision madeThe products reach the villages which are close to the town. During the selling process,SEs reach the satellite villages (nearby villages) and satellite retailers on foot or bybullock carts or bicycles or mopeds or auto rickshaws. Some of the SEs replied that they are crossing small water streams by boat to carry on with their business.

Project Shakti is definitely a success story. Nevertheless to reach this success it has to cross many stumbling blocks. PS could succeed with the blend of efforts of large firms in collaboration with civil society organizations and local governments. During the research it is observed that some of the SHG are not cooperative with the local women.Strong purchasing power of consumers is necessary to increase the customer base Of the SEs. This is an uncertain factor which fluctuates with the agricultural output. In some instances, the Shakti entrepreneurs are turning out as competitors to the retailers in those villages. To withstand in the competition, the retailers sell private labels for a lower price. The entrepreneurs need intensive training in improving their selling skills. The SEs are facing lot of problems in acquiring the investment.

Many SEs have opined that they will be comfortable if company provides stock on credit basis. To our surprise there are respondents who are not that economically deprived, but they joined with the interest of earning and business leadership. Some of the SEs opined that they would be comfortable working with female rural executives rather than male rural executives.On the whole the result of the research can be concluded that Project Shakti is a massive success in the area of E.G Dt, India.

Conversation with two workers of project shakti:

1.Sankaramma:

Sankaramma, the leader of the local Kanaka Durga self-help Group (SHG) belongs to K. Thimmapuram village's Muddaner Mandal in the Kadapa district of Andhra Pradesh. The village has 350 households with a total population of 1200. Sankaramma's 5 hectares of agricultural land was not sufficient for six member family due to severe drought in the region. She started a business in April 2003 with the Hindustan Unilever Ltd. By 2005, she had a regular monthly turnover of Rs.10,000 per month. Initially she sold door to door, but thereafter the customers started visiting her home for products. She sees Project Shakti as a mean for the bright futures of her children. Project Shakti also enabled her to provide mid-day meals at the primary school in her village. Today, Sankaramma has become a key development figure in her village

2.Usha Sarvatai

Usha Sarvatai, a mother of 2, traveled 32 km everyday to work. Her husband's income was not sufficient for the two children and their old parents. But the long distance and the odd timings of the job forced Usha to quit the job.

Then she got a call from the Government dept. to attend a meeting, convened by Project Shakti. Usha became a Shakti Amma and started a new venture. In a short span the good relationships she developed with the villagers helped her do good business. She says, "I am happy fulfilling my family's requirements and people give me a lot of respect today." And she is now very eager to grow her business in the years to come.

The list does not end here. Hindustan Lever Ltd., a subsidiary of Unilever is counting on thousands of women like Sankaramma and Usha Sarvatai to sell its products to the rural consumers it couldn't reach before. By 2005, around 13,000 poor women were selling the company's products in 50,000 villages in India's 12 states and contributed for 15% of the company's rural sales in those states . The women typically earned between $16 and $22 per month , often doubling their household income which was used to educate their children. Overall, around 30% of

Hindustan Lever's revenue came from the rural markets in India Started in the late 2000, Project Shakti had enabled Hindustan Lever to access 80,000 of India's 638,000 villages . Hindustan Lever's director of new ventures proudly expressed, "At the end of the day, we're in business. But if by doing business we can do something positive, it's a great win-win model." Hindustan Lever was not the only company recognizing the vast marketing potential in rural India. With the saturation of urban market, the companies started reengineering their businesses and products to target rural consumers who are poor but are rich in aspirations fueled by the media and other forces