responsible corporate engagement in rural india-a compendium of good practices

Responsible Corporate Engagement in Rural India

A Compendium of Good Practices

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

B5/1 Safdarjung Enclave, 3rd Floor

New Delhi 110 029

India

www.giz.de

responsiblebusinessindia.org

Indian Institute of Corporate Affairs

Ministry of Corporate Affairs

Plot No- P 6,7,8, Sector-5, IMT Manesar

Gurgaon

www.iica.in

Design and production:

Magnum Custom Publishing

New Delhi, India

[email protected]

iii

Contents

Message – Ministry of Corporate Affairs ................................................................................... vii

Foreword – Indian Institute of Corporate Affairs ........................................................................ ix

Foreword – Embassy of the Federal Republic of Germany ....................................................... xi

Preface ......................................................................................................................................... xiii

Acknowledgements ..................................................................................................................... xv

Abbreviations ............................................................................................................................... xvii

Executive Summary ..................................................................................................................... 1

Replication and Scaling-up: Lessons from the Case Studies ................................................... 5

Benefits ............................................................................................................................. 6

Success factors .................................................................................................................. 8

Challenges to replication ..................................................................................................... 10

Case Study 1: Partnering Progress – BASF’s SAMRUDDHI Project ......................................... 11

Description of the intervention ............................................................................................. 11

Business case for BASF...................................................................................................... 14

Value to rural communities .................................................................................................. 15

Lessons learnt ................................................................................................................... 16


Case Study 2: Empowering Women Retailers in Rural India – Coca-Cola’s eKOCool Initiative 18


Business case for Coca-Cola .............................................................................................. 21


iv

Lessons learnt ................................................................................................................... 23


Annexure 1: Coca-Cola’s Global Women Empowerment Programme – 5 by 20 .................. 26

Case Study 3: Securing Supply Chain and Improving Rural

Livelihoods – Bunge-SRIJAN Partnership ................................................................................. 27


Business case for Bunge .................................................................................................... 35


Lessons learnt .................................................................................................................... 38


Annexure 2: Key Activities Performed by SRIJAN ................................................................ 42

Case Study 4: Securing Livelihoods for Rural Women and Securing

Supply Chain – Titan-MYRADA Partnership .............................................................................. 46


Business case for Titan ....................................................................................................... 54


Lessons learnt .................................................................................................................... 56


Case Study 5: ITC’s Social Investment Programme .................................................................. 59

Interventions ...................................................................................................................... 59

Business case for ITC ......................................................................................................... 65


Lessons learnt ................................................................................................................... 68


Annexure 3: Soya Procurement in Madhya Pradesh ............................................................ 74

v

Case Study 6: Maintaining Social License to Operate – Rio Tinto’s Bunder Project ............... 76

Intervention ......................................................................................................................... 76

Business case for Rio Tinto ................................................................................................. 84


Lessons learnt .................................................................................................................... 85

Challenges .......................................................................................................................... 86

Annexure 4: Drinking Water Initiative ................................................................................... 89

Annexure 5: Women Drivers................................................................................................ 91

Annexure 6: Vegetables Growers Group ............................................................................. 93

Annexure 7: Interventions with Direct Impact on Livelihoods ............................................... 95

Annexure 8: Interventions with Focus on Health and Education .......................................... 97

Annexure 9: Other Initiatives................................................................................................ 101

List of figures

Figure 1: Cross-cutting lessons from the case studies .................................................................. 5

Figure 2: Increase in yield of soybean in BASF’s SAMRUDDHI programme ................................... 15

Figure 3: Transfer of technical know-how to farmers ..................................................................... 29

Figure 4: Sources of credit available to the farmer ......................................................................... 30

Figure 5: Bunge-SRIJAN’s programme structure ........................................................................... 32

Figure 6: Structure of women led institutions in Bunge’s programme ............................................ 44

Figure 7: Organisation structure of MEADOW ............................................................................... 52

Figure 8: Programme development for Rio Tinto ........................................................................... 77

Figure 9: Circle of continuous interventions and business and community gains for Rio Tinto ....... 79

Figure 10: Working model for the drinking water programme: sourced from Rio Tinto’s presentation... 80

vi

List of tables

Table 1: Brief description of the case studies ................................................................................ 2

Table 2: Bunge’s Samriddhi programme achievements ................................................................. 33

Table 3: Key statistics of Bunge’s Samriddhi programme .............................................................. 34

Table 4: Roles and responsibilities of Bunge, SRIJAN and Service Provider .................................. 34

Table 5: Highlights of MEADOW’s achievements ........................................................................... 49

Table 6: Year-wise activities of MEADOW ...................................................................................... 50

Table 7: Unit and location-wise number of employees of MEADOW .............................................. 50

Table 8: Roles and responsibilities of Titan, MYRADA and MEADOW ............................................ 53

Table 9: ITC’s Social Development Programme highlights up to 2012 ........................................... 64

Table 10: Rio Tinto’s programmes on enhancing livelihoods ......................................................... 95

Table 11: Rio Tinto’s interventions in health and education ........................................................... 97

vii

Message from Ministry of Corporate Affairs

ix

Responsibility India Survey 2013 - the first of its kind in the country. Objective assessment of prevalent practices on businesses responsibility, including CSR practices, will help us understand the gaps and needs of companies more clearly. IICA, whose mandate is to strengthen an ecosystem of institutions that can catalyse demand for responsible business practices, supports and duly acknowledges the potential benefits of such research initiatives.

With best wishes

Dr. BhaskarChatterjee DG & CEO, IICA

Foreword – Indian Institute of Corporate Affairs

The Ministry of Corporate Affair’s Corporate Social Responsibility Voluntary Guidelines laid the foundation for mainstreaming the concept of Business Responsibility in 2009. These guidelines were further revised through an extensive consultative process to evolve as the ‘The National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business’ (NVGs) which were released by the Ministry of Corporate Affairs in July 2011. In 2012 the Securities and Exchange Board of India mandated filing of Business Responsibility Reports (BRRs) as a part of Annual Report for the top 100 listed companies by market capitalisation. Initial indications suggest that the process of preparing BRRs have prompted companies to reflect on their own activities from a responsibility perspective.

These efforts to mainstream Business Responsibility indirectly through reporting have seen greater understanding of NVGs as a means to enhanced competitiveness in both domestic and international markets. The recently passed Companies Act 2013 expects profit making corporates to actively engage on Corporate Social Responsibility (CSR), providing another opportunity for companies to reflect on their role in society. As the Rules for the Companies Act get formulated, there is reason to believe that companies can move beyond the traditional philanthropy, to one where companies partner with rural communities in developing mutually beneficial relationships. The inclusion of such ‘shared value’ activities into Schedule VII could be a game changer for companies involved with rural communities by ensuring these interventions become a part of core business and hence outlive business cycles.

This compendium of case studies developed for the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH by PwC seeks to demonstrate that companies already interact with rural communities in ways that benefit both the company and communities. It provides a knowledge repository of best practices being adopted by companies in engaging with the rural communities and also highlights the key bottlenecks in developing successful rural business models. These case studies could inspire social enterprises and companies who wish to target the rural communities around Principle 8 of the NVGs.

The case studies serve as critical inputs in the process of developing a project aimed at improving the business and investment climate for companies engaging with the rural sector, while at the same time maximising their contribution to sustainable and inclusive development in rural areas. The project will focus on encouraging companies to share their own similar initiatives and facilitate the learning, adaptation, scaling-up and replication of these models in their own contexts

I am sure that these case studies will go a long way in changing the way business interacts with rural India and India Inc., will walk the extra mile in adopting them in their core business strategy and contribute towards equitable and inclusive development.

With best wishes

Dr. Bhaskar ChatterjeeDirector General & CEO, IICA

xi

Foreword – Embassy of the Federal Republic of Germany

For Mahatma Gandhi the soul of India rested in the village. Still today, the vast majority of Indians live in rural

areas. I am therefore pleased that Indo-German development cooperation has taken a very special view on rural

India. The Indian Institute of Corporate Affairs and the Deutsche Gesellschaft für Internationale Zusammenarbeit

(GIZ) have initiated a study, ‘Responsible Corporate Engagement in Rural India – A Compendium of

Good Practices’.

This study underlines one of the main objectives of Government of India, i.e. sustainable and inclusive growth,

in which the rural sector plays an enormously significant role both as a driver and a benefiter.

In view of India’s more than 700 million rural population and an estimated volume of rural economy reaching

$425 billion by 2017, creating suitable policies and business models thereby ensuring sustainable livelihoods,

employment and income generation in the farm and non-farm segments of rural India has gained tremendous

importance.

An integrated approach becomes increasingly crucial as businesses depend on the rural value chain for raw

materials as well as markets which cover wide range of sectors such as agribusiness, banking, insurance,

telecom and crop extension among others.

This study aims to explore creating a platform that can gather such experiences and render services for

businesses to replicate and scale up responsible business models in the rural sector. Its objective is to provide

the adequate landscape analysis in order to move this idea further and help the implementation of the MCA’s

National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) as

well as the CSR legislation in the new Companies Act, 2013.

I wish all partners success in this joint effort!

Cord Meier-Klodt

Deputy Chief of Mission

Embassy of the Federal Republic of Germany

New Delhi

xiii

Preface

Project background

The GIZ and IICA are undertaking a project on corporate engagement with the rural sector with the objective

of establishing effective platforms (national/regional and sectoral) for enhanced Public-Private Dialogue (PPD)

on improving the business and investment climate for corporate India in rural areas while maximising their

contribution towards sustainable development in these very areas.

The project is conceived in two phases.

Phase 1 is the preparatory phase which constitutes a feasibility study of cases where companies have engaged

with rural communities under the ambit of a mutually beneficial relationship and not philanthropy.

Phase 2 is the implementation phase wherein a Platform for Responsible Corporate Engagement in Rural

India, a bilateral, medium-sized (2 years; INR 18-25 million) Public-Private Partnership (PPP) will be developed

and rolled out. Under the PPP 51% of the funding will come from private sources, principally companies,

and 49% from public sources. The proposed platform, with select private and public partners, will showcase

and disseminate knowledge about successful corporate-rural engagements, provide execution support to

companies/Non-Governmental Organisations (NGOs)* on scaling up/replicating successful models and

facilitate public-private dialogues to sensitise the government on the challenges/opportunities/merits of such

engagements.

This report summarises the findings of phase 1 and presents the case studies of innovative projects undertaken

by companies in the rural sector which exemplify the symbiotic relationships between the companies and the

rural communities.

Business case for sustainability

A business’s success is measured by the triple bottom-line – People, Planet, Profits – which is widely accepted

today and many successful global companies have been incorporating this into their core business strategies.

The National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs)

announced by the Ministry of Corporate Affairs in July 2011 seeks to encourage precisely this behaviour by

providing an overarching framework of responsible business behaviour in the form of nine principles. The principle

on inclusive growth enshrined in the NVGs is understood by companies as Corporate Social Responsibility

(CSR). This principle encourages companies to ‘innovate and contribute to the overall development of the

country, especially to that of the disadvantaged, vulnerable and marginalised sections of society’.

* NGOs in this document also refers to not-for-profit organisations such as producer companies, self-help groups and federations, etc.

xiv

The triple bottom-line framework posits that business can work with rural communities on a sustained basis

only in ways where there is a mutual benefit to both. Anecdotal evidence suggests that this idea is being

pursued by many businesses. However, there are few documented scalable and replicable business models,

especially in the rural context, (ITC’s e-Choupal and Unilever’s Shakti Project being the two exceptions) which

embody the idea iterated above.

The IICA and GIZ, through this project, endeavour to uncover these opportunities and demonstrate

the efficacy of the above idea to Corporate India, NGOs and state agencies through live case studies,

which can then be scaled up and replicated to increase impact. Acknowledging this gap and working

towards synthesising business strategy and rural development goals is imperative for inclusive and

equitable development.

Corporate engagement with the rural sector

There are clear links between businesses and the rural sector which may be broadly termed as Commercial

and Non-commercial relationships. It may be noted that commercial relations refer to those where the benefits

to both are monetary and quantifiable while non-commercial relationships refer to those where the qualitative

benefits to both are clear but its quantification is complex.

The rural sector interacts with businesses on a commercial level as a supplier of goods (inputs), services,

labour and as a market for their goods and services. Businesses also impact rural communities through setting

up of industrial activity in rural areas, more recently, these interactions have become strained and complex,

leading businesses to look beyond traditional philanthropy and towards core strategy.

As stated above, the study focuses on interventions that balance business and community benefits so as

to demonstrate that this balance is possible, if not imperative. The interventions have been analysed in the

following categories:

1. Rural communities as distributors of company products. Community benefits include increased

incomes and access to products while companies gain from greater and perhaps cost-effective

distribution reach.

2. Rural communities as suppliers to companies. The principal benefit to communities is increased, more

predictable incomes and/or alternative livelihood opportunities while companies benefit from a diversified

supply chain which is potentially secure and cost-effective.

3. Rural communities impacted by the setting up of industrial activity in their vicinity. Communities can gain

through activities that mitigate the negative impacts of industrial activity and a share of socio-economic

benefits while companies can gain in a number of ways broadly classified as ‘community license

to operate’.

xv

Acknowledgements

The study – ‘Responsible Corporate Engagement in Rural India: A Compendium of Good Practices’ was

commissioned by the GIZ – a federally-owned international cooperation enterprise for sustainable development

which operates worldwide, on a public benefit basis, in order to support the German Government in achieving

its development-policy objectives. We acknowledge GIZ’s contribution towards making this exercise both

rigorous, forward-looking and a fulfilling experience for us. We extend our gratitude to Mr. Manfred Haebig,

Director, Private Sector Development, GIZ, Ms. Neha Kumar, Sr. Technical Expert, GIZ and Ms. Nandini Sharma,

Project Advisor, GIZ for working with us in developing this study in a shape and form that adds value to the

current knowledge on creating ‘shared value’ responsible business models in rural India.

This document forms the basis for developing a Public-Private Partnership (PPP) with the objective of

establishing an effective platform for improving the business and investment climate for companies in rural

India. This report is a culmination of efforts of multiple stakeholders all of whom deserve a special mention.

We deeply acknowledge support and guidance which has been forthcoming from the IICA, their endorsement

has been instrumental in the development of the study. Our sincere thanks to Dr. Bhaskar Chatterjee, DG

& CEO IICA, and his team headed by Mr. Atul Dev Sarmah at IICA for participating in the multi-stakeholder

workshops and providing inputs to the final compilation of cases in the study, and their presentation in a reader

friendly manner.

The support and cooperation extended by all participating companies – BASF, Bunge, Coca-Cola, ITC,

Rio Tinto and Titan and their respective NGO partners – SRIJAN and MYRADA for allowing us to document their

innovative practices for the purpose of sharing with their peers is deeply appreciated. Many companies, NGOs

and foundations also provided valuable inputs during the multi-stakeholder workshops. These include Ambuja

Cement Foundation, Bayer, Bharti Foundation, Cargill, Charities Aid Foundation, Dabur, DLF Foundation, GMR

Foundation, HCC Ltd., UNDP, Pepsico, PI Industries, Pradan and Tata Power.

We also acknowledge all the hard work put in by the PricewaterhouseCoopers Private Limited team led by Mr.

Shankar Venkateswaran in facilitating discussions, organising multi-stakeholder workshops and drafting the

six case studies.

xvii

Abbreviations

APMC Agricultural Produce Market Committee

BMGF Bill and Melinda Gates Foundation

CNA Community Needs Assessment

CEO Chief Executive Officer

CSR Corporate Social Responsibility

DSR Directorate of Soybean Research

FMCG Fast Moving Consumer Goods

GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit

ha Hectare

HR Human Resources

IICA Indian Institute of Corporate Affairs

INR Indian Rupees

ITI Industrial Training Institute

KVKs Krishi Vigyan Kendras

MCA Ministry of Corporate Affairs

mt Million tonnes

MYRADA Mysore Resettlement and Development Agency

NGO Non-Governmental Organisation

NVGs National Voluntary Guidelines

O&M Operation and Maintenance

PoP Package of Practices

PRA Participatory Rural Appraisal

xviii

PwC PricewaterhouseCoopers Pvt. Ltd.

Qtl Quintal

R&D Research and Development

RTEIPL Rio Tinto Exploration India Private Limited

SAGs Self-Help Affinity Groups

SHGs Self-Help Groups

SIP Social Investment Programme

SIPCOT State Industries Promotion Corporation of Tamil Nadu Ltd

SMCPCL Samridhhi Mahila Crop Producer’s Company Ltd

SMS Samridhhi Mahila Sangh

SRIJAN Self-Reliant Initiatives through Joint Action

TIDCO Tamilnadu Industrial Development Corporation Limited

UHDP Ultra High Density farming Practices

UNICEF United Nations Children’s Fund

USD US Dollars

VDC Village Development Committee

VWSC Village Water and Sanitation Committee

1

This report presents a set of six case studies that seek to demonstrate that companies can play a significant

role in rural development beyond philanthropic interventions (important as they are) when there are business

benefits as well. The reason for this is simple – philanthropic engagements tend to be closely linked with

the financial performance of companies while those engagements with a strong business link tend to be

more enduring as they directly contribute to business success. However, business-linked interventions do not

always result in positive outcomes for rural communities and so the focus of this report is on those initiatives

that sought to balance business and community benefits.

The case-studies have been based on discussions with company and NGO staff, and field visits (typically

one to two days) to understand the ground realities and observe the work on the ground, besides having

discussions with other key stakeholders, especially rural communities who are the focus of these interventions.

Emphasis on the business case

It is widely known and recognised that many company interventions with disadvantaged communities are

driven by core values of the company, often embedded in its DNA. While some are purely philanthropic – by

definition, those that do not expect a return – many are a mix of philanthropic and business reasons. In the

case of the latter, it is often hard to determine how much is which, both because this changes with time and

because it is difficult to assess and put a value to this. All the six interventions presented here are driven by

a mix of philanthropy and business reasons. However, only the business reasons have been emphasised as

that is the purpose of this study. This is not a reflection of the importance of the philanthropic motivation of the

respective company.

Executive Summary

Responsible Corporate Engagement in Rural India: A Compendium of Good Practices

2

The six case studies are briefly described in Table 1. The table also details the sectors to which the companies

belong, key actors and the coverage of the interventions.

Table 1: Brief description of the case studies

Cat

ego

ry

Case study Brief description

Dis

trib

utio

n

Partnering Progress – BASF’s

SAMRUDDHI project

Sector: Chemical including agro-

chemicals

Key actors: BASF and farmers

Coverage: Soybean

SAMRUDDHI covers all districts

in Madhya Pradesh, Maharashtra

(entire Vidarbha and parts of

Marathwada), Andhra Pradesh

(Adilabad), Chattisgarh and

Rajasthan (Kota, Jhalawar, Bundi

& Chittorgarh)

SAMRUDDHI is BASF’s programme of practices and ethos run

for the farmers with the objective of increasing the farm yield

productivity of farmers by disseminating knowledge about better

farming practices among them. Because of this approach the

soybean farmers are seeing BASF as their ‘partner in progress’

and recognise that using its products is beneficial.

BASF India initiated Soybean SAMRUDDHI in 2007 and started

working with 30,000 farmers which increased to 1,80,000 farmers

by 2012. Farmers under the SAMRUDDHI programme have

increased their production by 30%, which has brought prosperity

to the farmer, country and BASF. The success of this programme

in India has motivated BASF to start similar programmes in

other crops like onion and potato. BASF has benefited by

increased sales.

Empowering women retailers

in rural India – Coca-Cola’s

eKOCool initiative

Sector: Food & Beverage

Key actors: Coca-Cola India

(Coca-Cola), its bottling and

distribution network and women

retailers in rural India

Coverage: Over the last two

years, the eKOCool initiative

has been successfully piloted

and 400 solar coolers have

been distributed and installed

in villages across Uttar Pradesh,

Andhra Pradesh, Haryana,

Punjab and West Bengal

Coca-Cola under its eKOCool initiative distributes solar-powered

refrigeration units (solar coolers) free of cost to women retailers

in rural India. The solar cooler has been developed by Coca-

Cola especially for areas that are plagued by no or intermittent

power supply. Having a solar-powered cooler makes chilled

beverages available for sale at these power-scarce retail outlets.

The initiative was piloted in rural areas near Agra, Uttar Pradesh

where the retail outlets witnessed an increase in sales as high as

five times as compared to previous year’s sales which benefited

the company in terms of increased sales and the women retailers

in terms of increased incomes.

3

Cat

ego

ryCase study Brief description

Sup

ply

chai

n

Securing supply chain and

improving rural livelihoods –

Bunge-SRIJAN Partnership

Sector: Agriculture

Key actors: Bunge India

Pvt. Ltd and Self-Reliant

Initiatives through Joint Action

(SRIJAN)

Coverage: Bundi and Pratapgarh

districts in South-East Rajasthan,

India. In 2012, the programme

covered 12,000 small farmers

and 324 Self-help Groups with

2,430 women. The land holdings

of these farmers range from less

than 1 hectare to 2 hectares with

average being 0.34 hectare.

Bunge, in partnership with an NGO called SRIJAN, has been

working since 2008 with small farmers near the company's

oilseed-processing plant in Rajasthan to help them increase

soybean productivity (and hence the overall production in the

region) and improve their profitability. The programme provides

access to credit and market information, better seeds and

enhanced agronomic practices related to planting, irrigation,

pest control and harvesting. In 2011, 7,000 participating farmers

saw average crop yields and net profit rise by 87 and 167

per cent, respectively, when compared to others in their districts.

The business benefit accruing to Bunge is increased availability

of soybean in the region which has improved capacity utilisation

of its oilseed processing plant.

Securing livelihoods for rural

women and securing supply

chain – Titan-MYRADA

partnership

Sector: Manufacturing and

Retail

Key actors: Titan Industries

Limited (Titan) and Mysore

Resettlement and Development

Agency (MYRADA)

Coverage: 511 rural poor women

in Hosur Taluk, Krishnagiri

District, Tamil Nadu.

Titan Industries Limited, a premier company of the TATA group

manufacturing watches, jewellery, eyewear and precision parts for

the automotive and aerospace industries in India, has outsourced

several activities to a group of women from rural households in

Hosur (Tamil Nadu). A local NGO, Mysore Resettlement and

Development Agency (MYRADA), facilitated this outsourcing.

This outsourcing has resulted in the eventual formation of a

professionally managed company run by these poor rural women

which now generates INR 40 Million in revenue. In turn, Titan has

access to a reliable and high-quality supplier of precision items.

Executive Summary


4

Cat

ego

ryCase study Brief description

Co

mm

unit

y en

gag

emen

t

ITC’s Social Investment

Programme

Sector: FMCG

Key actors: ITC and rural

communities

Coverage: Various states of

India

Like many companies, ITC has a vibrant CSR programme. But

what makes ITC different is its approach. Its community initiatives

are completely integrated with its business and in many cases,

even led by it, but rural communities are kept at the centre at

all times and their benefits seen as primary and this is a part of

its ethos across the company. This strategy is led by the Social

Investment Programme (SIP) where a part of ITC’s profits are

re-invested in the development of rural communities.

In 2012, ITC spent INR 80 crores through its SIP on

various activities in different parts of the country, covering

agricultural extension services to water and soil conservation,

cattle development and animal husbandry, and social

forestry, etc.

The case study was based on a visit to ITC’s soybean procurement

areas in Madhya Pradesh where the company is also engaged in

the provision and distribution of a range of goods and services to

rural communities. The case study, however, focuses on how SIP

and the businesses worked together to create this.

Maintaining social license to

operate – Rio Tinto’s Bunder

project

Sector: Mining

Key actors: Rio Tinto and its

respective project partners

Coverage: Chhatarpur district

in the Bundelkhand region of

Madhya Pradesh. 15 villages

(core villages) surrounding the

proposed mine with a population

of around 6,000 people.

Rio Tinto is developing a diamond mine project (Bunder project)

in the Chhatarpur district of Madhya Pradesh. The exploration

phase of the project started in 2002 and is expected to be

operational by 2017. Rio Tinto believes that its mining operations

must have a long-term positive impact on the communities that

surround its operations and hence even though Bunder project

will start its commercial operations 4-5 years down the line, Rio

Tinto has been working at forging long-term relationships with

the local communities from as early as 2004. Each initiative is

designed in close conjunction with the local communities and

targets to become a sustainable source of benefits, tangible

and intangible, intended to be driven primarily by these very

communities in the future on their own. This is done to ensure

that the benefits continue to enhance rural lives beyond mine life.

5

Business casefor companies

Securing supplychain

Expanding ruraldistribution

network

Maintaining sociallicense to operate

Value to ruralcommunities

Success factors Challenges to replication

Direct economicbenefits

Capacity building

Womenempowerment

Sustainedlivelihoods

Building arelationship with

rural communities

Business partnerapproach

Commitmentfrom the topmanagement

Partnership withNGOs

Focussing onwomen

Investmentthrough grant

Choosing the rightpartner NGO

Managingexpectations of the

communities

While each case study is unique in terms of its design and offers new insights into working with rural communities,

they also have common lessons and challenges that are important considerations for a company that wishes

to adapt, replicate or scale-up the interventions. This chapter highlights the cross cutting benefits, lessons and

challenges observed in the case studies developed.

Figure 1 below presents an overview of these lessons.

Figure 1: Cross-cutting lessons from the case studies

Replication and Scaling-up: Lessons from the Case Studies


6

Benefits As the interventions made by the companies in this study fall within the ambit of a business relationship and

not philanthropy, they are of value to companies as well as to the communities. These benefits are highlighted

as follows:

Business benefit to companies

Securing supply chain – Securing its supply chain i.e., ensuring that it supplies quality goods reliably and on

time, is critical to every company’s business strategy and as the documented case studies demonstrate,

there are innovative ways of engaging with rural communities which can serve this purpose. Companies can

not only secure the supply of agriculture commodities but can also create a reliable supply chain for their

manufacturing processes.

Specific examples from the case studies on securing the supply chain:

Bunge works with small farmers to help them increase soybean production in areas around its plant. This has helped

Bunge increase the capacity utilisation of its processing plant.

Titan Industries Limited outsources several simple to complex manufacturing tasks to a company owned by a group

of rural women and also supports its operation. This has allowed Titan to ensure a reliable and secure supply of

material for its main plant.

Expanding rural distribution network – Rural distribution in India is complex due to its sheer size and weak

infrastructure but strategic engagements with rural communities can address these complexities and create

lucrative opportunities for expanding business in rural markets.

Specific examples from the case studies on expanding rural distribution network:

Coca-Cola distributes solar-powered refrigerators free of cost to women retailers to increase its sale of beverages in

areas where non-availability of electricity was hampering sales.

BASF runs its SAMRUDDHI programme for increasing productivity of soya by training the farmers on good farming

practices and in the process recommends the use of its crop protection products. This has helped BASF increase

sales of its products.

Maintaining social license to operate – For any large upcoming project in rural areas, it has become increasingly

critical to engage with rural communities surrounding the project to ensure smooth operations throughout the

lifecycle (pre-feasibility, construction and operational phase) of the project. Companies need to understand

community perceptions, needs and priorities and ensure that rural communities don’t feel ‘left behind’ whilst

they prosper and grow.

Specific example from the case studies on maintaining social license to operate:

Rio Tinto is developing a diamond mine project and has been working at forging long-term relationships with the local

communities from nearly a decade before the start of commercial operations of its mine to maintain its social license

to operate.

7

Value to rural communities

Direct economic benefits – The case studies clearly indicate that communities gain economically from an

increase in their incomes and/or through cost savings (direct or from efficient utilisation of resources) induced

as part of the intervention.

Specific examples from the case studies on direct economic benefits:

Bunge and BASF engage directly with farmers to increase their farm productivity and thereby provide an opportunity

to the farmers to increase their income.

Coca-Cola distributes its solar refrigerator free of cost to retailers and this entails a significant cost saving in electricity

and ice, accompanied by increase in income due to higher sales, for the retailers.

Titan’s project leads to economic development of the local community by increasing average household income and

providing secure employment to one member of each rural household.

Capacity building – The interventions by companies also build the capacity of rural communities in several

ways – by promoting entrepreneurship and business skills, through livelihood-linked skill development and

through formation of local institutions led by communities. Building community based institutions [Self-Help

Groups (SHGs), producer companies, SHG federations] enables individuals to function as a unit and together

reap greater benefits (economic as well social) as a result of aggregation.

Specific examples from the case studies on capacity building:

Bunge, BASF, ITC and Titan encourage communities to take business decisions on their own and this promotes a

culture of entrepreneurship and helps these communities to engage with other companies as well.

Rio Tinto’s programme has an explicit focus on promoting livelihood-linked skill development programmes and

building local institutions.

Coca-Cola also provides business training to all its women retailers and its programme in essence promotes

entrepreneurship amongst rural women.

Women’s empowerment – The focus on women plays a unique role in each of the interventions and is a key

ingredient in the success of each intervention. Empowering women also leads to better social outcomes on the

ground. These interventions empower women in a number of ways such as providing them access to credit,

access to skills, access to income generating assets, understanding of their rights and entitlements in all areas,

including health and education, and perhaps most significantly, giving them a voice in decision-making on all

aspects that impact families. This goes a long way in effectively delivering the economic and social benefits of

each of these interventions.

Interventions by Bunge, Coca-Cola, Titan and Rio Tinto – all rely on women to achieve each of their objectives.



8

Sustained livelihoods – As all the commercial-related initiatives by companies have close linkages with their

business, none of the companies have plans to suddenly pull-out. The longer the engagement, the greater

the company gains from the engagement. So communities can feel secure and even make investments to

enhance benefits which they may not be able to make otherwise.

All the case studies in supply chain and distribution categories extend this benefit to communities.

Success factors

The case studies highlight a number of critical success factors that other companies can draw on. These are

outlined in this section.

Building relationships with rural communities – Building a relationship with the rural communities requires long-

term commitment from the companies to create trust. This trust building is important so as to establish connect

with the communities and ensure them that the company is not a fly-by-night operator. Establishing trust takes

time, investment and commitment to create mutual gains between the communities and companies.

Specific examples from the case studies on building relationships with rural communities:

BASF builds a strong element of trust and credibility by making its staff accessible and continuously associated with

farmers over a period of two to three years.

ITC establishes the trust by continuously engaging with the local communities through the Sanchalaks and Choupal

Sagar networks.

Titan and Bunge have made a long-term commitment to engage with the rural communities to secure their

supply chains.

Coke established the trust by distributing its products free of cost to women retailers and also bearing the operation

cost of the solar coolers.

Rio Tinto has begun engaging with the communities much before the start of its mining operations to initiate

community development in the region which is economically backward, underdeveloped, water-scarce, drought

prone, with limited access to health, education and communication services.

Business partner approach – A business-like relationship with the community where neither party expects

anything free is important for the sustainability of the initiative. This approach also creates a sense of responsibility

and motivates the communities to deliver quality.

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Specific examples from the case studies on business partner approach:

BASF does not distribute its product free of cost even to the group of selected farmers but only demonstrates the

advantage of using its product in increasing yield to keep the relationship strictly business-like.

ITC and Rio Tinto both encourage the communities to fund a part of the infrastructure and be responsible for its

maintenance.

Titan has made rural women the owners of the company MEADOW and the group is responsible for timely and quality

deliveries, thereby securing the long-term sustainability of the initiative.

Commitment from the top management – All the initiatives by companies are resource intensive and some

have long payback period. Thus, they require a strong commitment from the top management to overcome

the challenges of working with the rural communities.

Specific examples from the case studies on commitment from the top management:

ITC’s business heads work closely with their Social Investment Programme group in designing, funding and reviewing

the interventions.

Most interventions covered in the case studies are monitored by a committee of Board members.

Partnership with NGOs – Since trust building is crucial while working with rural communities, companies need

to build either their own rural connect or work with a local NGO that has this connect. The case studies show

that NGOs also have the necessary technical skills required and can undertake these tasks at much lower

costs than a company. Thus, partnering with an NGO has multiple advantages.

While, BASF and Coca-Cola have leveraged their existing internal set-up, all the other companies engaged

with NGO(s) to develop their initiative.

Focusing on women – Targeting initiatives through women has the dual benefit of empowerment and relying on

a responsible and committed partner. Women tend to be more committed when it comes to productivity and

show greater sense of responsibility. Micro financing institutions also realise these gender differences and lend

only to women. Being an income-generating member of the family also enhances the status of women in their

households as well as in society and thus ensures their loyalty to the company.



10

Examples from the case studies on focusing on women:

Both Cola-cola’s and Titan’s initiative show that women owned and managed enterprises can be successful and are

the single biggest reason for their successes.

Bunge has also used the local women self-help groups to increase the adoption rate of its package of practices.

Investment through grants – Initial grant is required to kick-start the initiative to overcome the high upfront cost

of the initiatives. Companies consider these grants as investments with long-term paybacks.

Examples from the case studies on investment through grants:

The rural women’s enterprise in the Titan’s initiative was initially supported by a grant from Plan International, a US

based development aid organisation, to purchase land and machinery.

ITC invites members of their Social Investment Programme to formulate a joint plan and strategy for the area with the

business unit. Investments in the social programmes are planned simultaneously when the business units make their

own investment plans.

Bunge has funded the activities of its partner NGO, SRIJAN, in enhancing the capacity of farmers to adopt best

practices in soya farming.

Challenges to replication

Replicating successful interventions comes with its own set of challenges; the common challenges are

outlined below:

Choosing the right NGO partner – Companies willing to replicate the case studies may find it difficult to find

professional, credible, and responsible NGOs in their local areas. Sometimes, partners may also have a way of

functioning which may or may not suit companies. Simple activities like joint budgeting and planning might be

complex for companies new to social programmes. There may also be multiple partners – some performing

and some non-performing ones which slow down the speed of delivery. Sometimes, partners working in an

area may even refuse to work with companies. Partnerships involve mutual respect, clarity of roles and a strong

agreement on objectives. The effort and time to establish strong working partnerships is critical for delivering

such projects. On account of risks involved or loss of control, some companies may find it challenging to work

with NGOs and prefer to set up their own service network. Finding the right partner and finding the best way

of working with the partner may be a difficult challenge for companies to take on.

Managing expectations of the communities – As the rural communities get comfortable in working with

companies, their expectations from the company/company-NGO partnerships also gradually change. In case

of community development activities, the extent to which a company can intervene for developing a community

is at the end of the day bound by the financial contribution, which understandably is not unlimited. It is therefore

important to manage the expectations of the rural communities in a manner which is not abrupt and also

makes financial sense for the companies.

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About BASF in India

BASF has successfully partnered in India’s progress for over a century, with all its global businesses

maintaining a local presence in India today, except for oil and gas. BASF has maintained an excellent

performance in India for environment, and health and safety, in line with BASF global and internationally

accepted standards. On the social front, BASF’s community development activities focus on relief and

rehabilitation, women’s empowerment, education, and improving governance standards. BASF in India has

2,157 employees at nine production sites, eight sales offices and two Research and Development (R&D)

centres. In 2012, BASF registered sales of €1.14 billion to customers in India.

About BASF

BASF is the world’s leading chemical company: The company is headquartered in Ludwigshafen, Germany.

Its portfolio ranges from chemicals, plastics, and crop protection products to oil and gas. BASF combines

economic success with environmental protection and social responsibility. Through science and innovation,

BASF enables customers in nearly every industry to meet current and future needs of society. Their products

and solutions contribute to conserving resources, ensuring nutrition and improving quality of life. BASF has

summed up this contribution in their corporate purpose: BASF creates chemistry for a sustainable future.

BASF posted sales of €78.7 billion in 2012 and had more than 113,000 employees as of the end of the year.

BASF shares are traded on the stock exchanges in Frankfurt (BAS), London (BFA) and Zurich (AN).

Description of the intervention

Context

India is the fifth largest producer of soybean in the world but requires nearly twice the area required to grow

the same quantity of soybean as compared to its peers because of low yield. The yield of soybean in India is

currently only half the global average of 2.4mt/ha. The situation in 2006 (when BASF’s intervention started) was

worse with the yield of soybean at only one-third of global average, while demand was increasing consistently

since soymeal remains the main source of protein for feed industry (mainly exported as de-oiled cake). This

growing demand resulted in more and more land being brought under soybean (also soybean fitted very

well in the cropping pattern of these rainfed geographies) but productivity remained low for a number of

reasons – inappropriate fertilisation, excess seeding, inappropriate use of crop protection products and lack of

knowledge about good farming practices.

Case Study 1: Partnering Progress – BASF’s SAMRUDDHI Project

1 Further information on BASF is available on the Internet at www.basf.com.


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BASF saw this need gap as an opportunity to develop a new business model, SAMRUDDHI, which addresses

the needs of the farmers in a holistic way to enhance soybean productivity. Through SAMRUDDHI, BASF

educated farmers not only on the timely usage of crop protection inputs, but also about correct fertilisation,

seed rate and spacing to enable higher yields.

SAMRUDDHI was also a significant change process for the BASF team – from focus on dealers to focus on

farmers, from selling crop protection products to selling a crop solution, from solving a specific pest problem

to the higher ideal of helping customers grow better crops and reap higher returns.

The objective of SAMRUDDHI is two-fold: improving yields thereby enhancing prosperity of the farmer and in the

process increasing revenue for BASF from crop protection products. The underlying principle of SAMRUDDHI

is ‘BASF will prosper when the farmers prosper’.

SAMRUDDHI is currently entirely managed and run by BASF and is thus a very resource intensive programme

because of its current reach of 180,000 farmers.

Programme organisation

SAMRUDDHI is not just seen as a CSR programme or activity in BASF but as an integral part of its business

process. It is a classic example of how BASF partners with their stakeholders to ensure sustainable business

operations. It is led by the Business Unit Leads (BULs) who are also responsible for the business of BASF’s

products in the region. These Business Unit Leads have regional sales managers and local sales managers in

their teams. The local sales managers have SAMRUDDHI Officers and SAMRUDDHI Field Officers under them.

These SAMRUDDHI Officers and Field Officers are agronomists, taken on contract, who work with the farmers

on the ground along with the local sales managers.

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Demonstrating good practices

The basic premise of the SAMRUDDHI approach is that farmers will buy BASF products if they trust the

company and this is built over time by BASF demonstrating that its advice, including buying its products,

will benefit the farmer. The field implementation of the programme in a village is kick-started by an initial

presentation by the SAMRUDDHI Officer to the farmers. The presentation includes an introduction to BASF, a

safety film and good farming practices. Apart from presentations and verbal education to farmers, BASF also

demonstrates these good practices on the field.

Field demonstrations are made for other farmers as well so they can view evident improvements in yield and

quality of crops on which the SAMRUDDHI approach has been applied.

A group of self-reliant farmers are identified and provided access to information on good practices in farming,

and exclusive training programmes. These farmers are called ‘Margdarshaks’ and are entrusted to promote

SAMRUDDHI in their village and BASF also helps these farmers adopt the best practices. A Margdarshak acts

as the disseminator of knowledge but he does not physically distribute products.

Continuing support to farmers

The group of chosen farmers is assisted by the SAMRUDDHI Officer for a period of two years. At the end

of the second year, these farmers, who by then have absorbed the good practices and trust BASF and

its products, are connected to a call centre from where they are offered telephonic support. This remote

telephone system covers the entire SAMRUDDHI communication ranging from knowledge on agronomical

practices to marketing of their produce. The call centres also regularly collect feedback from the farmers.

The SAMRUDDHI Officers then move to another set of farmers and assist them in adopting good practices.

This ensures the gradual expansion of BASF’s reach and also helps them sustain long-term relationship with

the farmers.



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Project monitoring

The Core Team (BULs/Marketing Managers/Crop Managers) monitors and reviews the progress of

the programme on a regular basis. This culminates with an annual review during October-November when

learnings from the previous season are incorporated and new interventions planned after due consent from the

management team.

Business case for BASF

Increase in sales for BASF

Farmers see BASF as a trusted partner who is there from the beginning of the crop season in March to the sale

of harvest in October. This approach is in sharp contrast to other companies whose only point of contact with

the farmer is the local distributor. This traditional distribution channel does not enable the companies to create

the trust which BASF has managed to create with its SAMRUDDHI Field Officers who are always available to

assist the farmers. Continuous engagement with the farmer ensures that the Field Officers are aware of any

complications that might arise in the field, and enables them take appropriate action. This also serves as a

comforting factor for the farmers who have access to knowledge gained through the field officers. This trust

has also translated into higher sales for BASF particularly from the time the SAMRUDDHI programme was

initiated i.e., since 2007.

Creating market for new products

The long-term relationship with the farmers, initially established through the SAMRUDDHI Officer and then

maintained by the call centre, enables BASF to gain quick acceptance of any new products they introduce.

Another reason for the adoption of a new product is its relevance for the farmers in increasing yields. As the

field officers have a constant association with the farmers, they are cognizant with any gaps in the farming

practices and are thus able to recommend new BASF products.

Replicating the model in other crops

The successful experience of running Soybean SAMRUDDHI has motivated BASF to replicate the model with

other crops. Soybean SAMRUDDHI has also enabled BASF to understand the farmer’s needs and issues

better and in the process establish trust and a long-term relationship that can help BASF expand in other

geographies and adapt the best practices to local growing conditions and agricultural economies. BASF plans

to broaden SAMRUDDHI with 27,500 potato and 25,000 onion growers in India. Further pilot trials are planned

for chillies, tomatoes, groundnuts, etc.

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Increase in yield

Farmers have seen tremendous growth in the yield of soybean as compared to 2006 levels. The graph below

shows the yearly improvements in yield of soybean.

Figure 2 represents the positive differential yield percentage of the SAMRUDDHI programme as compared to

farmer practice achieved each year starting 2008.

Figure 2: Increase in yield of soybean in BASF’s SAMRUDDHI programme

Increase in yield translates to increase in production and in turn, increase in revenue for the farmers. The

demand for soybean has been continuously increasing and so has the price. While a large part of the increase

in demand has been from the increase in domestic consumption, international markets also contributed to

this demand. The increase in the price of soybean has greatly benefited the farmers as their gains are further

augmented by increase in yield.

Access to new markets

Soybean produced under SAMRUDDHI is sustainable. BASF conducted a detailed Eco-Efficiency2 analysis

for soybean by looking at the economic and environmental performance. The results of the study indicate

that the cultivation of soybean under the programme is significantly more eco-efficient for both economy and

the environment. The programme delivers higher yields with lower environmental impacts as compared to

traditional farming practices.

31%

23.60%

30%

25.70% 25%

2008 2009 2010 2011 2012

2 A Sustainability Challenge: Food Security for All: Report of Two Workshops (http://books.google.co.in/books?id=3vqxniEh7SYC&pg=PA46&lpg=PA46&dq=basf+samruddhi&source=bl&ots=8Ah-YnRLeX&sig=Gp3JvNQu_0WYo33ptymvlHmFgYw&hl=en&sa=X&ei=ZsEcUZ7cHZSG8QSI-oDgDg&ved=0CD0Q6AEwAjgK#v=onepage&q=basf%20samruddhi&f=false)



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Access to good farming practices

SAMRUDDHI enables and supports the farmers to enhance their knowledge on good farming practices. It also

promotes and advocates judicious and safe use of seeds and chemicals in the field. This in turn translates to

cost saving for the farmers and prevention of any health hazard during the use of chemicals. The farmers also

have access to any additional information or solutions to their problems during any part of soybean cultivation

through either the field officer or the call centre.

The Margdarshaks are separately trained on the good practices and any updates on scientific research are

shared by BASF’s Field Officers. Through the Margdarshaks as well as the field officers, the information is

disseminated to the farmers and they are constantly improving their farming practices.

The good practices adopted by the farmers in SAMRUDDHI also enable them to replicate these in other crops

where BASF does not provide support. Thus, the farmers benefit by increased production in other crops as well.

Lessons learnt

Top management commitment

SAMRUDDHI is a resource intensive model and requires a long-term commitment from companies. The single

biggest driver behind this resource intensive programme was the commitment from BASF’s top management.

The top management saw merit in the initial investment and has continued to support the programme in spite

of a few initial hiccups.

Companies willing to deploy a similar programme might need long-term commitments from its top management

as working in the agriculture sector has its own set of complications.

Establishing trust

Establishing trust takes time, investment and commitment to create mutual gains between farmers and

companies. BASF benefited by establishing trust with the farmers as their advice is never restricted to their

product portfolio but includes other products which the BASF considers the best. The farmers see SAMRUDDHI

Officers as experts and guides who are committed to increasing the yield of soybean. BASF builds a strong

element of trust and credibility making its staff accessible and continuously associated with farmers over a

period of two-three years. Once the farmer has been with SAMRUDDHI for two years, he is transferred to the

call centre, where he has access to BASF’s knowledge over the phone.

Trust is also built through BASF’s field demonstrations where the farmers can see the difference in yield and

quality of produce. Thus, the multi-tiered trust building process has helped BASF establish a strong rural connect.

This trust has helped increase sales of its product as the farmers are offered an unparalleled after sales service.

Companies willing to deploy a similar programme may consider targeting smaller groups, empowering a lead

farmer to promote the programme, setting up demonstration projects and making a long-term commitment. These

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interventions will add to the trust from the farmers and farmers will see the company as a trusted partner in helping

them increase production and not a company whose only interest is to increase sales and push new products.

Companies could deploy a similar transaction cost reduction model where the level of support offered could

reduce over time as the learning of farmers increase. This will enable the company to replicate the success in

other areas and expand their geographic reach in a cost-effective manner.


Finding the right opportunity

Soybean SAMRUDDHI was successful with farmers as it provided an opportunity for them to increase

productivity. The inadequate extension services were also a significant contributor. The fact that BASF had a

product that could address this challenge provided it a significant opportunity to intervene in a manner that

everyone benefited.

Companies willing to deploy a similar model have to look for opportunities where the gap between the baseline

and expected improvement is substantial and it can be demonstrated that their products can significantly

improve this situation.

Increase adoption rate

Farmers often chose practices depending upon their convenience and thus the yield improvements were

not always as desired by BASF. Companies willing to adopt a similar model might want to explore other

innovative ways of increasing the adoption of good practices. This may include extending the support through

relationship managers and organising capacity building workshops to highlight the advantages of adopting all

the good farming practices.

Partnership with other companies and NGOs

In order to help support the soybean farmers better and to increase the number of farmers within BASF’s

network, there are synergies on the ground which may benefit the farmers, other companies or NGOs. In

practice, models could include working with the same lead farmer (Margdarshak) or utilising the ground staff of

NGOs/partner companies in providing support to farmers or even common programming and delivery.

BASF’s existing infrastructure of call centres may also be leveraged by NGOs/partner companies to provide

additional services to farmers in health, education, other crops, etc. The additional revenue generated by

sharing the infrastructure will also help BASF reduce transaction costs and also expand its reach.


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About Coca-Cola3

The Coca-Cola Company is the largest beverage company in the world. It reaches out to the consumers

with more than 500 sparkling and still brands. Its product portfolio features 15 billion-dollar brands including

Diet Coke, Fanta, Sprite, Coca-Cola Zero, Minute Maid, Georgia etc. Through the world’s largest beverage

distribution system spanning more than 200 countries, its beverages are consumed at a rate of 1.8 billion

servings a day. In India, Coca-Cola’s range of beverages include Coca-Cola, Diet Coke, Thums Up, Fanta,

Limca, Sprite, Maaza, Minute Maid, Georgia, Kinley, Schweppes, Burn etc., which are sold across the country

through a network of more than 1.5 million outlets.


Context

Small retailers in rural areas primarily rely on makeshift ice boxes to chill the bottled beverages they sell. These

ice boxes are fed with ice purchased daily from the local market and therefore require additional costs in terms

of the price of ice and travel/time cost associated with going to the local market. The capacity of the ice box is

also restricted to 12-15 bottles as ice takes up most of the space. Moreover, ice in the local market is available

only during the period from March to June/July as the ice makers stop producing ice during rest of the year and

as a result, many retailers stop stocking these products altogether during the winter months. The alternative of

using a refrigerator instead of an ice box is not viable because of the intermittent supply of power in these rural

markets. As a result, chilled beverages are not available throughout the year in rural markets, which impact sales.

This situation presents a challenge to both the retailer, who cannot realise the sale potential of its outlet and Coca-

Cola, which in turn cannot realise its own sales potential owing to low uptake of stocks by rural retailers.

The eKOCool solar cooler

As a response to this challenge, innovators at Coca-Cola came up with a new solar powered refrigerating unit

called the eKOCool solar cooler4 to address the issue cited above. The solar cooler runs completely on solar

energy channelled through a solar panel attached to the cooling unit and makes chilled beverages available

throughout the year. Coca-Cola conducted trials of the prototype between March–July 2010. It initially installed

Case Study 2: Empowering Women Retailers in Rural India – Coca-Cola’s eKOCool Initiative

3 http://www.coca-colaindia.com/ourcompany/company.html4 Coca-Cola collaborated with Mumbai-based Western Refrigeration for developing the prototype and manufacturing of the eKOCool

solar cooler.

19

20 solar coolers in rural areas near Agra in Uttar Pradesh where sales showed an impressive jump – as high as

five times its initial value. This presented an opportunity for both Coca-Cola and the rural retailers.

The eKOCool solar cooler consists of a refrigerating unit (a chest cooler) which can hold around two crates

amounting to 48 bottles of 300 ml each. The refrigerating unit is connected to a solar panel through a 10 metre

cord and is kept on the roof of the outlet free from any obstruction to allow for maximum solar exposure. The

solar cooler also comes with a mobile charging point and a solar lantern charging point. Bottled beverages

loaded in the cooler overnight start getting chilled with the dawn of the sun, in a duration of four to five hours,

and are chilled enough for consumption. Retailers reported that once they start the cooler, they chill the first

batch of two crates and start selling the beverages, subsequent bottles have to be reloaded into the cooler

sequentially to ensure chilled stock at all times. This presents a clear advantage over the ice box as it ensures

availability of chilled beverages throughout the day and that too without any recurring expenses (savings on ice

and no additional electricity costs). The cost of the cooler at current capacity is around INR 35,000. Around

40% of the total cost can be attributed to the solar panel used in the cooler.

Women empowerment

The solar cooler is currently being distributed free of cost only to women retailers in rural areas. The focus

on women comes from Coca-Cola’s global women empowerment programme – ‘5 by 20’ derived from

the programme goal of empowering five million women throughout the world by 2020. A summary of the

programme is presented in annexure 1. It aims at providing access to business skills, financial services, assets

and support networks of women and their peers, and ultimately helps women in succeeding as entrepreneurs.

The solar cooler acts as a tool for empowering rural women retailers by enhancing the income generating

capacity of their business. Also, utilising solar energy results in emissions free operations and no additional

financial burden on the retailers on account of electricity bills.



20

The women in the programme typically run a small convenience store either full time or part time in an upcountry

rural area. The outlets are located in villages where grid connectivity is limited or not available at all. Usually, the

front portion of the house is converted into a small store which allows the women to manage both the store and

the family needs simultaneously. Their husbands may be employed elsewhere – farming on own or other’s land,

construction etc. The households are economically weak and cannot afford their own refrigerators or electricity

generators to run these refrigerators.

Programme management

Coca-Cola utilises its network of bottling partners, distributors and sub-distributors for implementing the

programme on the ground. The overall framework and guidelines of the programme – type of outlet suitable

for installing the solar cooler, supplying the solar cooler to the distributor for onward installation, installation

guidelines, training modules and maintenance guidelines – are managed by Coca-Cola and the execution is

driven by the sales team of the respective distributor present in the territory.

The sales team of the distributor is responsible for:

• Short-listing suitable retail outlets: The sales team follows strict guidelines for identifying outlets for installing

the solar cooler. The outlet must be owned or managed by a woman retailer and the woman should

operate the outlet for at least 16-20 hours a week. A technical feasibility check is also conducted on the

outlet to ensure that the retail space in conducive to running a solar powered cooler (sufficient space for

placing the cooler and the solar panel, no obstruction of sunlight by a tree or any other structure).

• Installation: Once the right outlet is identified, the sales team installs the unit at the retail outlet. This

involves correctly placing the solar panel on the roof of the outlet and connecting the panel with the

cooling unit placed inside the outlet.

• Training: Along with installation, the sales team also provides sufficient training to the women running the

outlet regarding operation and maintenance requirements (cleaning the solar panel) of the solar cooler.

• Monitoring: The sales team visits the retail outlets periodically for distributing stock. This makes it easier

for it to monitor the functioning of the solar cooler continuously and provide any technical support

required by the women managing the retail outlet.

• Maintenance: The maintenance of the solar cooler including the solar panel is also taken care of by the

local sales team and entails no additional cost for the retailer.

The programme started with 20 eKOCool solar cooler outlets in 2010 during the pilot phase and has installed

around 400 units since then. Coca-Cola plans to distribute around 1,000 units across the country by 2013 and

this is expected to go upto 4,000-5,000 units in the next three to four years. Also, Coca-Cola is replicating this

programme in 22 countries around the world.

The programme is designed to benefit both the retailer as well Coca-Cola. It increases business for Coca-Cola,

improves sales for retailers, entails no negative impact on the environment, builds retailing capacity and new

markets at the same time.

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Business case for Coca-Cola

Ability to expand and strategise in rural markets

The importance of rural markets for retail across sectors has been stressed upon by many studies. The same

holds true for Coca-Cola, which was facing barriers in expanding its rural footprint because of lack of right retail

infrastructure for selling its beverages which are required to be chilled before consumption. The problem arose

from intermittent or no supply of electricity in rural areas, therefore a conventional refrigerator could not be of

any help. The eKOCool solar cooler programme targets expansion in rural markets through increasing sales

from existing outlets which is evident in the results so far achieved by the project. The capacity of the solar

cooler was restricted to two cases keeping in mind the cost, available space at retail outlets and the potential

for sales. The increase in sales has been such that retailers are demanding a cooler with higher capacity. The

solar cooler is bringing in first time retailers who were not selling Coca-Cola products before as well as first

time consumers who have never consumed Coca-Cola products due to unavailability of chilled beverages.

The programme has thus been able to tap new rural markets for Coca-Cola. As the programme expands,

the increase in sales from existing retailers and emergence of demand from rural markets will encourage new

retailers to crop up thus benefitting both – retailers as well as Coca-Cola. This effect is yet to be seen on the

field as the programme has been running for less than a year. As the rural market expands and slowly matures,

it will open up the field for Coca-Cola to strategise for its growth by introducing new products, targeting new

price points and package sizes. The programme therefore also entails long-term strategic implications.

A financially viable venture

The solar coolers have helped Coca-Cola increase sales of its beverages in the rural areas. Each solar cooler, at

their current capacity of two crates, roughly has a payback period of 3.5–4 years5 and this makes the programme

a financially viable venture for Coca-Cola. The retail outlet owners have also benefited from the increased sales of

beverages throughout the year. As discussed earlier, before the introduction of the solar cooler, many outlets would

stop stocking products in the winter months because of unavailability of ice for the ice boxes. The solar cooler

5 Based on back of the envelope calculations sourced from Coca-Cola’s sales team.



22

allows the retail outlet to sell chilled beverages year-round, thereby making the business financially viable. Also, being

entirely run by solar power, the cooler does not emit any greenhouse gases and thus does not contribute to global

warming. This would not have been true for any other conventional refrigerator that runs on electricity.

Enhancing brand visibility

Local communities can easily link the brand Coca-Cola with benefits as the retail outlets with solar coolers

are activated with brand signage like any other retail outlet selling Coca-Cola products. Although the benefits

cannot be quantified, being the only player running such a programme gives Coca-Cola a distinct competitive

advantage in acquiring new consumers as well as new retailers in an untapped market.


Direct economic benefit

The retail outlets that are part of the eKOCool solar cooler programme have witnessed an increase in profits.

This has been possible because of an increase in sales as high as five times as compared to previous year’s

sales as well as a reduction in costs.

Saving in costs

Earlier when the retailers used ice boxes, on an average each retailer would spend INR 50-100 per day on

ice. If the sales on a certain day did not surpass this amount spent on ice, the retailer would automatically

incur a loss. The travel and time cost associated with going to the local market for purchasing ice everyday

would also put a dent into the profits. The introduction of solar cooler completely does away with using ice and

results in savings from not having to purchase ice and travel to the local market for buying it. Since the cooler is

distributed free of cost, savings are in the form of both fixed and variable costs. There are also notional savings

in the form of savings in electricity costs as the cooler runs on solar energy.

Increase in sales

The cooler also makes available an assured supply of chilled beverages to the local consumers throughout the

day and year. The assured supply also provides a competitive advantage to outlets with solar cooler as locals

know which outlet they can rely on for their supply of chilled beverages for their regular consumption or for any

domestic event. The solar cooler is also equipped with a solar lantern charging point; when fitted with a solar

lantern, the retailer is able to run the shop for an additional two to three hours after sunset. The increase in

duration of open-hours for the outlet and extending the availability of chilled beverages year-round has a direct

impact on the sales. The mobile charging capability of the cooler also attracts customers and increases the

footfall at the outlet and impacts overall sales.

Empowering rural women entrepreneurs

Women are traditionally seen as helpers and not as managers – an outcome of the agrarian society. Women

entrepreneurs in rural India face several barriers – lack of physical and financial assets, lack of basic business

23

training, and cultural barriers in rural areas related to working women. The eKOCool solar cooler programme

is part of Coca-Cola’s global women empowerment programme – 5 by 20. The programme provides distinct

advantages to rural women retailers by providing (free of cost) an asset that enhances their income generating

capability and by providing requisite business training (shop management, stock management, customer

management and financial management). As the coolers are distributed only to women retailers, this also

encourages other women to take up entrepreneurship. The participating rural women have also gained

recognition by being part of the programme. Being an income-generating member of the family also impacts

the status of women in their households as well as in the society. The programme also takes forward the

agenda of inclusive growth by targeting women from weak economic backgrounds. Empowering women also

has an impact on human development aspects like health and education as women are more likely to redeploy

their earnings into their family’s health and education outcomes.

Lessons learnt

Innovations can enhance distribution

This intervention demonstrates that while rural distribution in India is complex due to its sheer size and weak

infrastructure, innovations can address these complexities. eKOCool is not just a product innovation that

simultaneously addresses infrastructure gaps and environment challenges, it also offered the possibility for the

company to create new retailers by leveraging the 5 by 20 programme which essentially is a CSR initiative.

Learning-feedback loop

After the initial trials, Coca-Cola learned that while finalising the design and configuration of the solar cooler it was

critical to utilise solar energy to the maximum extent possible. It was therefore decided to include two additional

features to the initial design – a mobile charging port and a solar lantern charging port. As discussed before, both

of these features contribute towards the goal of enhancing the income generating capability of the retail outlet.

The entire cost of the programme including the R&D costs associated with the solar cooler are borne entirely by

Coca-Cola which makes cost optimisation and efficient utilisation of resources key towards ensuring sustainability

of such a venture. While developing the solar cooler, Coca-Cola also wanted to keep the configuration as simple

as possible and decided to first develop a solar cooler with a capacity of cooling two crates at a time. After rolling

out the project, the retail outlets witnessed such a jump in sales that it created the demand for a cooler with higher

capacity. Coca-Cola has taken this into account and is currently developing a four-crate cooler. Higher sales

from a larger cooler will benefit both the retailer as well as Coca-Cola. From the above, it is clear that Coca-Cola

utilised lessons learned at each step of the programme and these lessons served as feedback for improving the

programme while always keeping business sustainability in mind.

Working with partners

Executing an ambitious programme requires working with partners at each stage. For developing the prototype

and manufacturing the final product, Coca-Cola worked with its technical partner – Western technologies.

Coca-Cola also had to work closely with the supplier of components for the solar cooler to ensure timely



24

availability. Developing the cooler was a time consuming process and involved several trials before achieving

the desired system configuration.

As the project expands, the costs will also rise thus creating a need for possibly sharing these costs with

strategic partners. Cost and risk sharing can also be achieved through government support (if available –

through subsidy on solar panels). As the scale of the programme expands, Coca-Cola may also engage

with ground level NGOs for selection, training and monitoring of the retail outlets. It may also be possible to

partner with micro-financing schemes for distributing the solar coolers to other retailers in rural India and not

just women retailers. Thus, not just working with current partners but recognising the need to work with future

partners is also critical for scaling up such a programme.

Planning for human resource needs

Although the overall framework and guidelines of the programme are managed by Coca-Cola, the implementation

on the ground is managed by its network of bottling partners, distributors and sub-distributors for implementing

the programme on the ground. By leveraging the sales force of its distribution network, Coca-Cola was able to

meet the extensive human resource requirement of this programme. Therefore, Coca-Cola utilised its existing

resources instead of deploying a new dedicated team for implementing the programme. This was possible as

the programme was directly linked to the business of the distributor as well and the incentives of all the parties

– Coca-Cola, distributors and retailers were aligned. Going forward, learning from its experience, Coca-Cola

wants to deploy dedicated women resources for interacting with rural women to ensure better delivery of the

programme. Coca-Cola worked with its pre-dominantly male sales force to deliver the programme on the

ground and did find some inertia on the part of rural women for opening up to and interacting with male team

members. To address this, Coca-Cola will need to deploy additional resources. A programme which aims to

expand needs to meet the human resource requirement through both internal as well as external resources.


Resource optimisation – Balancing cost and configuration

Coca-Cola distributes its solar cooler free of cost to women retailers in rural India and bears the associated

financial cost itself. For such a programme, resource optimisation is important for ensuring transfer of maximum

benefits to all the stakeholders – Coca-Cola, its distributors and the retailers. It leveraged its existing distribution

network to deliver the programme. It modified the design of the cooler to incorporate a mobile charger and a

solar lantern charging point to maximise the use of solar energy. For the programme to sustain and continue to

benefit women retailers, the programme may need to enter into strategic alliances with partners (possibly solar

lantern manufacturers, telecom service and equipment suppliers, government agencies) to share the costs and

risks associated with scaling up – both the capacity of the cooler and the reach of the programme.

25

Internal buy-in

The success of any programme is also determined by having all the stakeholders on the same side of the

fence. Coca-Cola also had to convince its internal stakeholders (distribution network and the respective sales

teams) about the efficacy of the programme and the potential benefits it would entail for everyone involved.

Internal buy-in was achieved through demonstration (show and tell) of the working system and its benefits

by running trials at sample locations. This was necessary as the programme relied on the support of many

internal stakeholders for delivering the programme on the ground. Companies looking at deploying such a

programme need to be able to demonstrate the benefits of the programme to all the internal stakeholders and

have everybody on the same side of the fence.

Improving financial viability

As discussed earlier, the solar cooler presents an attractive business proposition for the retail outlets. However, the

payback period for Coca-Cola currently runs into multiple years and as the handling capacity of the coolers further

increases, the associated financial outlay for the programme will also rise. At the new scale, maintaining financial

viability may require government support, support by a partner company or even contributions from the retailer

(fully, partly or through external finance). Partner companies, like telecom companies and lantern manufacturers,

could use the availability of electricity to power their devices and provide additional services to the rural households.

Companies can also consider partnering with manufacturers of non-competing products to form a combined

distribution platform in order to share and mitigate financial risk associated with the programme. Maintaining financial

viability, as the programme design evolves, is key for the programme to make business sense.

Security of the solar panels

The solar panels are located outside the outlets and do not offer the flexibility of frequent removal and installation.

This makes the panels vulnerable to theft during night when the outlets are not manned. The security of the

solar panels is of utmost importance as they are being distributed free of cost with no liability on the retail

outlet’s owners in case of a theft.

Coca-Cola addressed this issue by distributing of eKOCool solar coolers to only women retail outlet owners.

This addressed the issue to a certain degree as most of the retail outlets run by women are part of their houses.

This integration ensures that women can simultaneously take care of household chores along with the retail

outlet. This also ensures that the panel are less prone to theft as compared to a situation where the outlets

would have been located far from the houses. For a programme involving distribution of an asset free of cost,

addressing the question of security and liability is also important.



26

Annexure 1: Coca-Cola’s Global Women Empowerment Programme – 5 by 206

Coca-Cola’s global women empowerment programme – 5 by 20, aims to empower 5 million women

entrepreneurs throughout its global business system by 2020. In India, the programme is focused on driving

women empowerment through entrepreneurship, capacity building and by providing access to resources.

There are 4 key initiatives currently being implemented:

1 eKOCool solar cooler programme has been initiated with the aim of providing income generation

opportunities to low income women retailers through access to solar coolers in power deficit areas

of rural India.

2 Pragati is a business skills/capability development programme led by Coca-Cola’s bottling partners

and is focused on training and building capacity of women retailers in rural markets.

3 Parivartan is another business skills/ capability development programme led by Coca-Cola University

for bottling partners and is focused on building capability of women retailers under the 5 by 20

programme, by imparting business skills in areas of customer handling, book keeping, stock keeping

and merchandising.

4 Unnati is aimed at adoption of Ultra High Density farming Practices (UHDP) by leveraging drip

irrigation; Project Unnati targets to reach out to 50,000 farmers over the next 5 years; 10,000 being

women farmers. The programme is presently in the process of identifying the challenges that women

farmers face so that gender responsive training can be provided to build capability and enhance

income generation capacity of participating women farmers.

Parivartan training programme

Parivartan training takes place in classrooms and specially designed buses. The first classroom training began

on 18th December 2007 in Agra. After a few years, Coca-Cola decided to make a mobile classroom and

increase its reach to more retailers. A customised bus was designed to reach out to retailers in rural and

semi-urban areas and train them on the various methods and tools of retailing. Four customised buses were

deployed with basic training amenities such as seating area, presentation zone, audio-video capability and with

on board trainers. The mobile training workshop can train 25 people in one sitting. The training modules are

centred on shop management, stock management, customer management and financial management and

utilise a multimedia training approach using videos, text and trainers. Training is offered in 14 languages and all

trainers are trained and certified by Coca-Cola.

6 http://www.coca-colaindia.com/presscenter/Coke-Muhtar_AgraVisit.html

27

About Bunge7

Bunge is a leading US based Agribusiness and Food Company with globally integrated operations spread over

40 countries. Bunge manufactures products ranging from animal feed to consumer foods to renewable fuels.

It works in the following four industry verticals: Agribusiness, Sugar and Bioenergy, Food and Ingredients and

Fertilizers. In India, Bunge operates oilseed processing (Soybean, sunflower seed, canola seed and rapeseed),

refining and packaging plants and sells retail and commercial products under brands like Dalda, Masterline and

Chambal. In 2012, Bunge India acquired the edible oils and fats business of Amrit Banaspati, whose portfolio of

brands includes Amrit, Bansari, Ginni, Merrigold and Sunehri Teer, and the rights to the hydrogenated vegetable

oil (vanaspati) brand, Gagan. In 2011, Bunge’s global net sales were USD 61 billion8.

About SRIJAN9

Self-Reliant Initiatives through Joint Action (SRIJAN) is a registered public charitable trust and has been

working with rural poor since 2000. SRIJAN’s key working principle is that large scale development cannot

be promoted by grants or charity and that ways must be found to promote sustainable models of poverty

alleviation, the ones that promote self-reliance and enhance self-respect of those who are called ‘beneficiaries’.

This principle emanates across SRIJAN’s work including the case being presented here. SRIJAN currently

works 14 districts in Madhya Pradesh, Karnataka, Rajasthan, Chhattisgarh and Odisha with more than 30,000

rural poor – women, dalits and tribals.


Context

The average soya productivity in the Bundi district of Rajasthan has been historically quite low. Factors like

unsuitable soil quality, poor rainfall pattern, low quality agricultural inputs and lack of know-how of modern

agriculture practices specific to soya farming have contributed to the low productivity in the region. As a

result Bunge, which operates a soya crushing plant in the same region, suffered from low capacity utilisation

at their plant.

Case Study 3: Securing Supply Chain and Improving Rural Livelihoods – Bunge-SRIJAN Partnership

7 http://www.bunge.com8 2011 Bunge Annual Report9 http://srijanindia.org


28

Soya farming engages women extensively, however, owing to lack of knowledge and expertise most women

are resigned to labour. This lack of expertise has limited their role and contribution to soya farming and impeded

their empowerment.

To address the above issues, the SRIJAN-Bunge partnership runs the ‘Soya-Samriddhi’ programme in the

Bundi region to assist small and marginal farmers in increasing their soya productivity thereby improving their

livelihood and assuring a continuous supply of good quality soya for its crushing plant.

Objectives

Following are the main objectives of the programme:

• Promote sustainable agricultural practices for increasing productivity of soyabean

• Promote community-owned institutions for carrying the programme forward and encourage women’s

role in farming

SRIJAN also focuses on ensuring a ready market for the produce of the farmers it works with through Bunge’s

collection centres.

Programme structure and activities

In order to work towards these objectives, Bunge provides an annual financial grant to SRIJAN for managing

the programme on the field. In an annual joint planning exercise, SRIJAN submits its proposal for activities to

be carried out during the next year in light of the previous year’s performance. Once the plan is agreed, SRIJAN

details its programme activities for the next year and implements these activities on the ground.

From a farmer’s perspective, any farming ecosystem is governed by the following four elements:

• Agricultural inputs

• Technical know-how

• Credit

• Market

The programme is designed and implemented to impact all four elements in order to achieve its objectives.

Agricultural inputs

Availability of quality agricultural inputs like seeds, fertilizers, pesticides, etc., in a timely manner are integral

ingredients for raising productivity. In this project, Samridhhi Mahila Crop Producer’s Company Ltd. (SMCPCL),

a women-led producers company promoted by SRIJAN utilises its greater bargaining power by procuring

these items in bulk and sells to farmers at a price lower than what they got when individual farmers would

separately procure from regional dealers. By using cheaper and appropriate quantities of inputs like chemical

29

Activities

Farmer

Designing package of practices including local innovations

Programme enrollment and expansion activities

Programme promotion activities

Capacity building (internal & external)

Service Provider (SP)

Objective

Technical Know-how

Technical assistance from Directorate of Soybean Research (DSR, earlier National

Research Centre for Soybean, NRCS)

Promote sustainable practices for increasing productivity of soya bean

fertilizers, the cost of following the improved agricultural practices prescribed by SRIJAN is reduced. Earlier

farmers would separately procure their individual requirements from dealers and therefore could not leverage

the benefits of better prices from bulk procurement.

Technical know-how

As discussed before, there was a definite lack of knowledge of appropriate soya farming practices as reflected in

the low productivity in the region. The programme targeted this element by adopting Bunge Brazil’s experiences

with farmers and adapted it by designing a package of practices for the local farmers with technical assistance

from the Directorate of Soybean Research (DSR) and then disseminating it through multiple avenues. SRIJAN

carries out activities for expanding this programme, undertakes promotion drives, recruits a cadre of service

providers to facilitate daily interaction with the farmers and undertakes extensive capacity building exercises

targeted at its own team as well as the beneficiaries. To allow for maximum adoption of recommended practices,

it also builds women-led community owned institutions like self-help groups which are further networked into

clusters and a federation. The process is presented diagrammatically in Figure 3.

Figure 3: Transfer of technical know-how to farmers

Credit

Like most agricultural settings where formal credit is very burdensome in terms of procedure and the need for

collateral, farmers in Bundi are also tied closely to the traditional credit system. Farmers take loans not only for

productive agricultural usage but also for non-productive uses like organising a marriage, from the local trader

(Aaratiya). The farmer is hence bound to sell his produce through this Aaratiya who recovers the principal and



30

interest from the sale price of the produce. Since interest rates can be usurious (24%–36% annually depending

on the credit worthiness of the farmer), the farmer eventually is left with a small fraction of the value of his

produce which is usually not sufficient for making investments for the next cropping cycle. This creates a debt

trap for the farmers as they have to go back to the Aaratiya every cropping cycle.

The Programme promoted Self-Help Groups (SHGs), which are women-led community institutions, have made

possible an additional source of formal credit for agricultural purposes and for needs related to health and

education. The women farmers can utilise the internal saving scheme run by the SHGs or take a loan from the

federation. Commercial banks also lend directly to the SHGs. The government’s Kisan Credit Card scheme is

also a source of borrowing for agricultural purposes. The federation gets interest-free loans from SRIJAN which

maintains a fund from philanthropists (INR 10 million has been lent so far to the Bundi federation) over and

above the grant from Bunge. Figure 4 represents the sources of credit available to farmers.

Figure 4: Sources of credit available to the farmer

Market

There are two types of procurement methods for agricultural produce in Rajasthan:

• The mandi or the local agricultural marketplace where companies buy produce via agents (Aaratiya, also

the local lender) and the local traders (vyapaaree). The markets are run under the Rajasthan Agricultural

Produce Market Committee (APMC) Act with mandi officials monitoring the activities and ensuring timely

same-day payments to the farmers.

• Collection centres licensed under the Rajasthan APMC Act where companies can buy directly from the

farmers.

Farmer

Credit

Local lenders

SHG’s internal saving scheme & loans to SHGs from banks

Commercial Banks

Federation’s loan scheme

Kisan credit card

31

Till 2011, the programme also focused on strengthening the soya value chain for its farmers and so it was

decided to open up collection centres near the farms for providing a ready market for farmers. With support from

Bunge, two collection centres were started. A licensed agent runs the centre for Bunge and is compensated

directly by Bunge. Bunge also commits to buy the entire produce which meets the required quality standards

at the centre. The objectives of setting up these centres are:

• Providing fair prices based on objective and scientifically determined quality tests as different from the

traditional practice wherein the Aaritiya uses his judgement to determine quality and the farmer cannot

question this.

• Procure good quality and quantity of soya bean for Bunge.

• Reducing transportation costs, time and leakages associated with transferring the produce first to the

mandi and then to Bunge’s plant. The collection centres located near the farms directly send the produce

to Bunge’s plant.

In the Bundi district, the demand for soybean is high. The local markets (mandis) are not dominated by one

buyer but by several large ones (ITC, Bunge, Ruchi Soya, ADM, Adani) who procure mostly through the

mandi. In recent years, speculative as well as aggressive buying has increased crop prices leading farmers into

changing their selection of crops in the subsequent years.

The programme structure is summarised in Figure 5.



32

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33

A list of key activities performed by SRIJAN to achieve the programme objectives is presented in Annexure 2.

Other programmes

Besides the Soya Samriddhi programme, to have a round the year interaction with the farmers, SRIJAN has

started getting involved with mustard and wheat farmers and is also experimenting with zero-budget natural

farming for wheat. This ensures continuity in terms of SRIJAN’s relationship with the farmers.

Bundi district can be divided into two types of land: irrigated or command area (irrigated by the canal) and

non-irrigated or non-command area. Farmers mainly produce corn on the non-irrigated land. To address the

issue of irrigation, SRIJAN assists farmers in applying for the government funded subsidy scheme for building

farm ponds.

Programme achievements10

Some of the key figures are presented in the Table 2 below for the period 2008-2011 with expected figures

for 2012

Table 2: Bunge’s Samriddhi programme achievements

2008 2009 2010 2011 2012

Farmers 50 678 3000 7000 12,000

Geographical Spread

(Village/Block/District)

5/1/1 40/1/1 87/3/1 140/4/2 223/5/2

Productivity (Soy) (Qtl/ha) 13.04 12.89 18.30 18.74 18-20 (Expected)

% incremental yield 84 % 47% 65 % 34% 40% (Expected)

Profit INR/ha 9,500 7,050 12,350 9,500 13,850 (Expected)

Average Adoption Rate of

selected practices:

Spacing 6% 30% 45% 65% 66%

Fertilizer 80% 35% 44% 49% 33%

Seed Treatment 10% 80% 77% 86% 78%

Women in SHGs 0 250 750 2136 2430

Table 3 shows that in 2011 Soya Sammridhi farmers realised an average profit of INR 27,247 (USD 545) per

ha which is 167% more than the district average. Intensive farmers earned 14% and 183% more profit as

compared to extensive farmers and average district farmers.

10 Source: SRIJAN, exchange rate used: 1 USD=INR 50



34

Table 3: Key statistics of Bunge’s Samriddhi programme

Item Intensive Extensive Total District Average

No of farmers 3,101 3,984 7,085 NA

Area in ha 3,023 3,653 6,676 80,000

Total production, Qtl 59,671 65,443 125,114 800,000

Average yield, Qtl/ha 19.74 17.91 18.74 10

Average cost of cultivation, INR/ha 11,588 11,131 11,359 10,825

Gross Profit (INR) per ha 40,467 36,721 38,606 21,000

Net profit (INR) per ha 28,879 25,590 27,247 10,175

Increase in income, % 183% 151% 167% –

Increase in production, % 97% 79% 87% –

Farmer got loss after considering

land opportunity cost

22 418 440 –

According to SRIJAN, if the land opportunity cost is considered in the cost of cultivation then about

440 farmers will not be able to recover their cost of cultivation.

Roles and responsibilities

The roles and responsibilities of all the key entities involved in the programme are summarised in Table 4.

Table 4: Roles and responsibilities of Bunge, SRIJAN and the Service Provider

Entity Responsibility

Bunge • Financial grant to SRIJAN for programme management

• Market information (pricing) to SRIJAN/collection centres for procurement purpose

• Assured procurement of produce from SRIJAN farmers

SRIJAN • Programme management

• Village selection

• Village entry/promotion activities like farmer fairs, movie shows, pamphlet distribution

etc.

• Selection of village resource person – Service Provider (SP)

• Farmer enrolment/registration process with a focus on small/marginal farmers

• Farm level innovation including technology adaption for small/marginal farmers

• Capacity building activities for SPs, master farmers, SRIJAN professionals, SHGs,

• Facilitating institution building – producer company and SHGs

Service

Provider

(SP)

• Daily point of contact for the farmer

• Implementation of recommended practices at the farm (services to the farmer)

• Farmer enrolment

35

Project monitoring

The Vice President (Commercial) monitors the programme on a regular basis, the CEO monitors on a monthly

basis and the Board of Directors once in a quarter.

Business case for Bunge

While Bunge’s decision to work with farmers continues to be supported out of its community engagement

budget and is an integral part of its CSR commitment, there are clear business benefits. This section highlights

these business reasons, both those stated by Bunge as well as those that have emerged during discussions

and the field visit. It may be noted that the non-business reasons have deliberately not been included as they

were not the focus of this study.

Increase production and plant capacity utilisation

The region did not have a high production of soya and as a result, capacity utilisation of most plants, including

Bunge’s has been quite low. Increasing availability of soya in the region both through increasing productivity

and area under soya would immediately improve this situation, resulting in higher sales and higher absorption

of fixed costs and hence better returns on investment for Bunge.

Over time, the capacity utilisation of Bunge’s processing plant has improved. While it is difficult to

pinpoint the extent to which this can be attributed to the intervention, there is reason to believe that it has

contributed.

Improved relations with local communities

Bunge believes that improved relations with farmers and the local community can be beneficial to business.

Apart from ensuring a ‘community license to operate’, a very critical business benefit, several collateral

benefits are likely to accrue. As more and more farmers recognise Bunge’s contribution to the intervention,

it can result in building loyalty between the company and the farmers which can secure the supply chain.

Security of supply

While not explicitly stated by Bunge, it is clear that the intervention can contribute significantly to securing the

supply of soya to the plant. Increasing availability of the crop in the region – a stated business driver discussed

above – does go a long way but given that there are several processors located in the vicinity of Bunge’s plant,

is there a way of ensuring that farmers supply to Bunge?

Given that getting into contracts with farmers is not an option for Bunge for a number of reasons, the

answer lies in farmers voluntarily preferring to supply to Bunge. While price is clearly a factor, there are

a number of other practices that the intervention already practices which can build this loyalty. Some of

these are:



36

• Helping farmers improve their incomes, which is an essential ingredient of the intervention.

• Practices that increase transparency in business dealings e.g., price related to objective (rather than

subjective) quality parameters which the farmer can understand and relate to.

• Other practices like conveniently located collection centres, prompt payments, advance commitments

of quantities it will purchase, etc.

Reducing transportation costs

The current system of procuring from the mandi means increased transportation costs and hence higher

landed costs of soya at Bunge’s plants. By increasing procurement through collection centres, Bunge can

benefit from reduced costs. Currently, Bunge procures only 5% of its requirements through the collection

centres but plans to rapidly increase this to 20%.


Increasing incomes for farmers

The principal value to the farmers has been the increased incomes through a combination of:

• Improved productivity through better agricultural practices. This is achieved by the programme accessing

know-how from various sources including Directorate of Soybean Research.

• Timely availability of quality inputs – seeds, fertilizers, pesticides – at prices lower than what individual

farmers can get.

37

• Savings in transportation costs, lower wastages and the convenience offered by the collection centres

established by the intervention.

Women’s empowerment

The programmes stated that women have to be central to the development process. This led to the creation of

self-help groups, which then have been federated. These community institutions have empowered women in

a number of ways such as providing them access to credit, understanding of their rights and entitlements in all

areas, including health and education, and perhaps most significantly, giving them a voice in decision-making

on all aspects that impact families.

The role of credit has been particularly of value as this has meant that farmers have access to formal

credit from savings at the SHG level as well bank funds through the SHG clusters and federations. This

has provided them an alternative to borrowing from the Aaratiyas in terms that are usually not favourable

to them.

Access to markets

The setting up of licensed collection centres have provided farmers an alternative to selling through the Aaratiyas

in the local mandi. The location of these centres and the terms of engagement are added advantages that

have accrued to the farmers. Though these centres account for only 5% of Bunge’s requirements at present,

the plans are that they would grow significantly in future as the number of farmers adopting the programme

increases over time.

Access to entitlements

The programme has also assisted in better delivery of government schemes available to farmers. The local

Krishi Vigyan Kendras (KVKs) leverage the programme resources working on the ground for their own

programmes. KVKs utilise the trained service providers for their activities like preparing demonstration

farms. This helps in increasing the adoption rate of better farm practices by the farmers as well as in

further enhancing the available research and extension system to the farmer. The farmers benefit from

better access of services provided by KVKs. The programme also utilises the available resources of KVKs

(e.g., scientists) for delivering its programme. It also works on creating awareness about the opportunities

available under the National Rural Employment Guarantee Act. This has a direct impact on improving

access to the scheme.

Building institutions like SHGs also enables members of such institutions to not just become aware of

entitlements available to them but also demand these entitlements. Women who are members of SHGs

have reported how being part of such institutions has helped them in demanding entitlements from local

administrators like anganwadi workers and thereby increasing access to such entitlements.



38

Lessons learnt

The need for and role of a local partner

The nature of activities – engaging extension service providers, providing credit through producer groups,

collection centres etc., required local knowledge and skills that would not have been readily available in a

corporate like Bunge. Building such capacities in-house would not only have been expensive but also taken

Bunge away from its core business of processing and marketing.

Thus there was a need for a local partner and Bunge was quick to realise this. In SRIJAN it not only found a

partner whose competencies were complementary but one whose extensive grass-roots experience enabled

it to quickly build trust with the farmers which was a necessary condition to introduce new practices. SRIJAN

also brought perspectives that were critical for success, like involving women in the project and building social

capital and local institutions which are critical building blocks.

Building blocks for successful partnerships

The intervention also brought out some interesting lessons for a successful partnership between a for-profit

company and a non-profit organisation:

• Role and goal clarity: Bunge and SRIJAN share a common understanding of purpose. Moreover, the

availability of funds allows SRIJAN to expand rapidly and confidently without creating dependencies by

farmers. SRIJAN does not advertise Bunge’s role but acknowledges that its operations rely on Bunge’s

contributions. Bunge acknowledges the work of SRIJAN and its role is delivering Bunge’s CSR in the

most effective, sustainable and mutually beneficial way.

• Accountable, transparent and trusting relationship: Bunge and SRIJAN carry out joint annual planning

and budgeting to discuss annual targets and priorities. This exercise helps create accountability and

transparency between the partners. This is an invaluable exercise which keeps both stakeholders aligned

to a common objective through practical actions.

Building local community institutions

Large companies like Bunge are simply not structured to procure small quantities of produce from a large

number of producers in a cost-effective manner. It requires aggregators who can aggregate information and

outputs from small farmers and disseminate information to them about their quality and quantity requirements.

SRIJAN’s approach has always been to build local institutions of communities – SHGs, farmers’ groups etc.,

who can eventually take over the role that it plays to start with. For this to be sustainable, social capital needs

to be built so that these institutions are self-governed and generate sufficient income from activities to cover its

cost. Thus, facilitating the establishment of groups/cooperatives/collectives/other aggregation platforms is at

the heart of the long-term sustainable success of such initiatives. Formation of SHGs also has a direct bearing

on improving the outcomes of the programme as SHGs help in increasing the adoption rate of the package of

practices provided by the programme. This is evident through SRIJAN’s experience.

39

Interventions that build such local community institutions which can play the role of aggregators are therefore

an efficient and cost-effective strategy for companies wishing to procure from local, small producers.

Need for grant funds

From the outset, the Bunge-SRIJAN partnership has taken a long-term approach. Both partners realised that

activities like introducing new practices that can improve productivity, building local community institutions

and securing the ‘license to operate’ take time and both organisations were prepared to stay invested in

the project.

Funds for the intervention have come in the form of grants from Bunge’s community engagement budget and

while this has not decreased in absolute terms, the investment per farmer has been continuously reducing.

Thus, an emerging lesson is that when interventions are inherently long-term in nature, the initial funds must be

in the form of grants, though it is not clear for how long.

Moving towards a business relationship

Since Bunge-SRIJAN partnership is geared towards development objectives along with business needs, it is

therefore important to bring in business characteristics to the stakeholder relationships driving the programme.

Delivering increased productivity gains and generating sustainable livelihoods is not an overnight process

and investments in developmental activities and building social capital are the first and critical steps for future

interventions to succeed and become sustainable. The programme is designed in a way so as to leave the

decision making in the hands of the community and to avoid creating any long-term dependencies, this is

essential to avoid any NGO from becoming the provider of services that the government should normally



40

provide. SRIJAN in its activities while recognising that their work is driven by grant funding, continuously tries

to make a business case for obtaining buy-ins from its stakeholders i.e., stakeholders take business decisions

to continue to stay associated with SRIJAN e.g., compare market interest rates, prices etc. As the objective

is also to make the programme self-sustaining in the future, it is important to retain the business flavour to an

extent and avoid forming long-term dependencies.


Understanding the local context

Any initiative like this that calls for significant changes in practices – of farming methods and sale of produce

to just name two – which will be met with resistance, both due to benign factors like habit to less benign

ones, perceived threat to status quo and established power relations. Thus, for an intervention that has such

ambitious objectives to be successful, it is critical to understand the local context, the power dynamics and the

barriers and find ways to deal with them appropriately. For a company, whose activities and competencies are

far removed from this, understanding the local context is its biggest challenge.

Finding a partner

As was mentioned earlier, Bunge found an experienced partner in SRIJAN who fulfilled most of the requirements

for successful implementation, including working on soya and experience in Rajasthan. Moreover, SRIJAN

brought in several useful insights on local institutional building and the role of women, all of which have become

central to the intervention.

However, finding such a partner is a challenge and any company wishing to work in partnership – which of

course is very valuable as discussed earlier – needs to invest in finding a partner and nurturing this relationship.

There are several government and non-government institutions that can facilitate this process and companies

need to identify and work with them. Partnership-building is often a slow process and given its criticality, it is

important to get it right.

Company-NGO partnerships

While the benefits of working with a local partner are several, a point to be considered is whether that local

partner should be an NGO (as in the case of SRIJAN) or commercial entity – say a trader – that has strong

local connects with farmers. This question needs careful attention as companies are more familiar working with

for-profit entities than NGOs who are often seen as adversaries. Also, many NGOs are ideologically opposed

to working with companies, which only adds to the challenge.

The Bunge-SRIJAN partnership demonstrated that it is possible for companies and NGOs to work successfully

in partnership but that this can be challenging must be kept in mind. Finding the right NGO partner who has

what it takes to make this work will remain a challenge.

41

Grant funds – how much, for how long and from where?

One of the emerging lessons is that when a company wants to invest in building alternative supply channels

and/or wants to obtain the ‘community license to operate’, both of which are long-term commitments, grant

funds are critical. In the case of the Bunge-SRIJAN partnership, initial grant funds were provided by the Bill and

Melinda Gates Foundation (BMGF) even after BMGF withdrew as they shifted their focus in India to a different

region, Bunge continues to provide grant funding because it is convinced about the utility of the programme.

However, the challenge is determining how much grant funds are required and for how long. This case study

does not provide ready answers other than the fact that Bunge is prepared to fund this activity till its objectives

are met and SRIJAN is clear that sooner than later, the community that benefits from this programme will

and must be willing to bear the costs, but the trajectory is hard to generalise. Thus, the local context, clarity

of objectives between partners and joint planning between the company and the partner are necessary to

determine this.

A related question is the source of grant funds. This case study shows that there is potential to raise funds from

foundations like BMGF but the company must also be prepared to provide from its own resources. Whether

this should come out of the business or from its philanthropic budget is something to think about.

Benefits spill over

Another possible challenge to replicating such a programme is that companies need to recognise the fact that

all the benefits of their investments will not translate into gains just for them. In this case study, the farmers

associated with the programme are not bound to sell their produce to Bunge. They take a business decision by

comparing all the options (prices) available to them. The process of building loyalty through interventions that

directly impact livelihoods and those that build social capital and enhance rural lives is a clear tool for managing

this challenge.

Policy bottlenecks

As the programme evolves over time, its growth and reach will also be determined by policies that can enable

this growth and expansion. At present, the provisions under the APMC Act in Rajasthan require a company to

have a net worth of at least INR 10 million for obtaining a license to procure farmer’s output outside the mandi.

The net worth of SMCPLC is INR 0.1 million. A relaxation of this provision for farmer-led producer companies

like SMCPLC can have a positive impact on the financial sustainability of such producer companies. Another

area where policy can play a growth enabling role for the programme is making credit available to farmers

against their stock. The provision of a warehousing facility where the farmer can store the produce and obtain

credit in return will allow the farmer to exercise market timing and provide the opportunity to wait for the best

price for his produce.



42

Annexure 2: Key Activities Performed by SRIJAN

Following is the list of key activities performed by SRIJAN to achieve the programme objectives:

Designing package of practices for increasing soya productivity

The lack of technical knowledge about soya farming is one of the primary reasons for low productivity in Bundi

district. SRIJAN along with the existing Package of Practices (PoP) obtained from Brazilian farmers associated

with Bunge, over the years has developed a locally relevant package of practices for soya bean farming.

These practices pertain to seed treatment, seed replacement, fertilizer application, proper spacing, weeding,

integrated pest management, land preparation and irrigation. Scientists from the Directorate of Soybean

Research, earlier known as National Research Centre for Soybean) also provided the technical support for

developing these practices.

Programme enrolment and expansion activities

In order to expand its coverage to more farmers in more villages, SRIJAN identifies intensive and extensive

farmers, based on their capacity to adopt practices. This was done in 2011 based on the results from the

previous two years. A different package of practices was designed for both type of farmers wherein 7 practices

were designed for intensive farmers and only 3 for the extensive farmer. This strategy is primarily a tool to

increase programme coverage. The enrolment and expansion activities involve the following steps:

• Village selection process: Beneficiary identification methodologies like wealth ranking, social mapping

etc., are carried out before expanding the programme to new villages. Villages are selected based on

certain criterions like number of soy farmers, number of poor households, potential for starting an SHG

programme, etc.

• Village entry activities: After selecting a village, the next step is to engage in relationship building exercises

with the farmers. SRIJAN professionals (SRIJAN staff working in the field) stay in the identified villages,

conduct meetings with farmers, understand their concerns and challenges and disseminate information

on farming practices. This is supplemented with movies and presentations related to soya farming and

showcasing success stories from other villages in order to highlight the benefits and results of SRIJAN’s

recommendations.

• Selection of the village resource person – Service Provider (SP): SPs are recruited based on their skills,

capacity and knowledge to carry out the farm-level tasks (farmer capacity building, implementing

package of practices etc.) they are expected to perform for 200-300 farmers allocated to them. SPs are

recruited from the same village where they are supposed to work in. All SPs undergo requisite orientation

and training sessions. SPs interact with their farmers on a daily basis and are an integral part of building

a sustained relationship with the farmer. Earlier, the SRIJAN team (SRIJAN professionals) used to carry

out this task on its own but as the number of farmers grew the need for recruiting SPs was felt.

43


• Farmer selection and enrolment: After a village level meeting, interested farmers are enrolled in the

programme. These farmers pay a token registration fee of INR 5.00 and are given a card on registration.

They also sign a pledge to follow the package of practices and that they take full responsibility of all the

gains or losses arising out of their farming practices.

Programme promotion activities

In order to increase the adoption rates of its recommended practices, SRIJAN uses the following methods to

popularise its programme amongst farmers:

• Farmer fair: The fair provides a platform to disseminate the recommended farming practices to a large

number of farmers from several villages and share the experiences and achievements of those who have

successfully adopted the practices. The attendance at these fairs can be as high as 4,800 farmers.

Both SPs and villagers are part of the organising team and their role has increased over the years.

Villagers have also been encouraged to make contributions in cash or kind (premises, tent, water, travel

cost, etc.) to induce ownership and increase their capacity in organising these events on their own.

Other methods include: Organising informative movie shows, informative wall paintings, pamphlet distribution,

information dissemination at SHG level, visits by SRIJAN professionals and SPs, mobile van for promotion

purposes and mobile soil testing van.

Capacity building

In order to make the programme self-sustainable, it is imperative to build both internal and external capacity.

The same is achieved through:

• Training programmes on improved farming techniques for SPs, master farmers11 and SRIJAN

professionals. These are facilitated by scientists from the Directorate of Soybean Research, Indore and

local agriculture university and are organised at KVK, Bundi.

• Monthly training sessions for SRIJAN farmers on package of practices recommended to them.

• SPs are also trained to ensure timely follow-ups with farmers, data collection and monitoring. SPs are

also taken through specialised training sessions on pro-poor development, gender issues, planning and

communication skills for their overall development and better understanding of the programme.

• Training sessions for SHGs on proper record keeping of financial transactions.

• Inter-village exposures and field trainings for farmers to demonstrate the results and benefits of

recommended practices.

11 Master farmers are farmers who have the capacity to implement most of the package of practices recommended by SRIJAN. These farmers help in demonstrating the benefits of practices recommended by SRIJAN to other small farmers through exposure visits.


44

Federation

Cluster

SHG

Womenfarmers

Womenfarmers

Womenfarmers

Womenfarmers

Womenfarmers

Womenfarmers

SHG SHG SHG SHG SHG

Cluster Cluster

Establishing community-owned institutions

Establishing community-owned institutions is a key ingredient of the programme for ensuring that it eventually

becomes self-sustainable. SRIJAN focuses on creating women-led institutions as a strategy for ensuring

greater adoption of recommended package of practices, timely availability of farm inputs and for creating a

source of credit. These are discussed below:

• SHG-Federation – Samridhhi Mahila Sangh

The building blocks of the institutional framework are the women SHGs. Each such group consists of

10-12 women and the number of self-help groups in a village vary based on the size of the village. The

members of the SHG meet on a weekly basis to discuss both agricultural as well as non-agricultural

issues. SHGs are therefore used as a medium of disseminating the recommended package of practices

as well as a point of raising locally relevant social issues. Every SHG also runs an internal savings scheme

and gives out loans to its members for either agricultural purposes or for health and education needs.

Induction into an SHG is based on criterions based land holdings and asset ownership developed by

SRIJAN. These SHGs are further networked through clusters. Each cluster may be composed of 10-

20 SHGs from nearby villages and each cluster consists of elected leaders from member SHGs. Each

cluster acts as a point of social advocacy for issues relevant to its members. Presently there are 243

SHGs and 13 clusters under the federation. The cluster members meet monthly. All member SHGs

and clusters are further networked into a federation, Samridhhi Mahila Sangh (SMS). The structure is

represented in Figure 6.

Figure 6: Structure of women led institutions in Bunge’s programme

The federation is basically a platform for leadership development of its women members. It consists

of 20 women leaders (representatives from clusters) who are responsible for looking after the loan

scheme it runs, resolve social issues of SHGs and clusters, deal with the issues related to member’s

rights and entitlements. The federation holds monthly meetings. Therefore, SHG members can make

use of their internal lending scheme (six months to one year repayment period at an interest rate of

24%) usually for smaller loans and utilise the federation’s loan scheme for larger loans (24% interest

45

rate). The clusters which also meet monthly are responsible for loan approval and rejections and timely

repayment from SHG members.

• Producer company – Samridhhi Mahila Crop Producer’s Company Ltd. (SMCPLC)

In November 2011, Samridhi Mahila Crop Producer Company became the first registered women

led producer company in Bundi. The company consists of farmers who are members of the SHGs

or are potential members. The board of directors consists of 20 members. Although the company

is in its nascent stages it will eventually take care of providing services related to agricultural inputs

and output procurement for farmers, organising farmers to benefit from collective action (better

bargaining power and for providing extension services. As of now, the company has been able to

deliver quality inputs at a fair price in a timely manner by procuring them at better prices. In 2011,

during the harvest season it sold agricultural inputs worth INR 15,00,000 and earned an eight per

cent gross profit margin.

Procurement through collection centres

As explained before, Bunge runs two collection centres to procure from farmers. The mechanism has already

been described.


46

About Titan12

Titan Industries Limited was incorporated in 1984 as a joint venture between the Tata Group and the Tamilnadu

Industrial Development Corporation Limited (TIDCO). The company has its registered office in Hosur and its

corporate office in Bangalore. It also has manufacturing and assembly operations in Dehradun, Roorkee and

Pantnagar. The company is organised into four major divisions. The watch division manufactures and retails

quartz watches, sunglasses, and licensed watch brands. The precision engineering division manufactures

precision components, components for aerospace special purpose machines, and automation systems.

The jewellery division manufactures and markets 18 kt studded jewellery, 22 kt plain jewellery and platinum

jewellery under the brand name Tanishq. The eyewear division designs, manufactures and retails prescription

eyewear. In keeping with the Tata ethos of engaging and empowering the communities around its work sites,

Titan also has a well-crafted community development programme of giving back to the community.

About MYRADA13

The Mysore Resettlement and Development Agency (MYRADA) was founded in 1968 to assist the Government

in resettling 15,000 Tibetan Refugees in Karnataka. The Tibetan programme ended in the early 80s. By 1982,

MYRADA moved out of resettlement and began to focus entirely on integrated rural development of the poor

and marginalised communities. It is a non-governmental, non-political, non-religious charitable institution that

is registered under the Societies Registration Act and enables socio-economic development of women in rural

areas through formation and development of self-help groups called self-help affinity groups. Its project areas

are the states of Karnataka, Andhra Pradesh and Tamil Nadu. It offers consultancy and support services to

government and NGOs in other states like Haryana, Madhya Pradesh, UP, Gujarat and the North-eastern Indian

states; and in countries like Myanmar, Cambodia, Indonesia, Sri Lanka, Bangladesh, Kenya, and Vietnam, etc.

About the local region

The intervention covers the Krishnagiri district. Being a border district, it has for long remained quite backward

in terms of infrastructure and human development indicators. It is a drought prone area with low literacy levels,

gender inequality, rampant female infanticide, early marriage, girl child labour, gender inequality, employment

to women being restricted to labour work in agricultural fields and has a social order skewed in favour of men

given the prevailing patriarchal systems.

Case Study 4: Securing Livelihoods for Rural Women and Securing Supply Chain – Titan-MYRADA Partnership

12 http://www.titan.co.in/corporate/company-profile13 http://MYRADA.org/MYRADAProfile%202010.pdf

47

Despite the establishment of an industrial zone in Hosur, a major town in Krishnagiri, by State Industries

Promotion Corporation of Tamil Nadu Ltd (SIPCOT)14, development benefits did not percolate to the

communities of this region. With poor skill levels and low literacy, the local communities lost out to the more

educated and skilled workforce who came from outside the district to seek employment in the multitude of

companies (around 400) dotting Hosur. Even local companies prefer to get people from outside to work here

to avoid local political influence and union issues.


Formation of MEADOW

In 1993-94, MYRADA explored possible collaborations between industries in Hosur and the rural population.

Titan Industries Ltd responded positively to the idea of working with rural women and deliberated on engaging

young women from poor rural households in assembly line jobs. This consisted of work on watch straps and

bracelets.

Titan being in the business of manufacture and retail of high-end watches, jewellery and precision engineering, was

uniquely placed to employ women for such outsourced operations. The nature of the industry is not constricted

by pollution or safety issues and lends itself to employing women to perform tasks that Titan’s own operators

were keen to outsource. These tasks largely required coordination between hand and eye and did not involve

the need to operate heavy equipment and did not require academic qualifications beyond the high school level.

Given that finger dexterity was a key requirement of such type of jobs, MYRADA felt that the daughters of the

Self-Help Affinity Groups (SAGs)15 members would be better suited to take up this activity as the members of

SAG who were middle aged or elderly women had issues of failing eyesight and finger dexterity was a concern.

MYRADA, Titan and the SAG members developed the following criteria for the selection of the first batch of

women for this purpose.

• The person selected should either be a SAG member or a member’s daughter.

• The age of the person selected should be between 17 and 25 years.

• The person selected should belong to a poor family i.e., one with an annual income below INR 12,000.

• The person must be physically fit. This includes good finger dexterity.

• The person selected should have completed at least six years of schooling.

• The person selected should give an assurance and an acceptance to work for a minimum of three years

so that the future of the enterprise can be guaranteed.

Twenty four girls (members and daughters) were initially selected from the existing SAGs and organised

into three task groups of eight women each. These task groups were trained by Titan (within the Titan

14 http://MYRADA.org/MYRADAProfile%202010.pdf15 SAGs are women self-help groups formed by MYRADA



48

facility) in the process of bracelet assembly. Titan was impressed with the quality and timely delivery of the

output. The success of this initial activity enthused Titan to sign a memorandum of understanding directly

with the women’s group. Titan agreed to pay a rate of INR 3.70 per set to the task groups, out of which the

women received INR 1.70 as wages and the remaining amount was held as a corpus in order to secure a

resource base for the future.

Significant improvements in the quality and production were observed with time. This prompted Titan to

outsource other activities like the ‘end link assembly’ and ‘rope making’. The initial financial success of

the venture helped the task groups increase their human resource base to 80. Titan was subsequently

interested in outsourcing a larger part of their work to these task groups. However, when internally

questions were raised about the legality of making payments to such informal groups, Titan proposed

that MYRADA create a legal entity on behalf of the women to receive payments. MYRADA, choose not

to become a ‘conduit’ for fund transfers. It saw this as an opportunity for women to become owner-

managers of their own enterprise and encouraged TITAN to deal directly with women, including entering

into contracts and making payments.

Initially the women hesitated to take the responsibility of running an enterprise as they did not have any prior

experience and were afraid of running it. MYRADA convinced them by highlighting the importance of being

owners cum managers and how it will help secure future sustainability of the enterprise if the women got

involved directly. The women were convinced to take up the challenge and MEADOW was registered as a

private limited company with less than 50 shareholders (selected from the women who worked for MEADOW.

Each women task group had one representative in the Board and currently each unit has one representative

on the Board.)

49

Resources

MYRADA mobilised INR 1.5 Million (in the form of grant from Plan International16) in 1998 for the purchase

of 1.7 acres of land for setting up the factory building of 3,000 sq. ft and for the purchase of furniture and

machinery. This was the only significant infusion of funds from external sources as the enterprise was able to

meet its requirements from internal accruals.

It also deputed one of its staff as a full time CEO in MEADOW and paid his salary for three years. Additionally

MYRADA provided training on conflict resolution, improving awareness and self-confidence, gender issues,

health, behavioural aspects, Human Resources (HR), and financial and legal management.

Titan on its part organised training by its supervisors on polishing watch bracelets, braiding wires for Titan’s

jewellery operations, assembling watch movements and assembling clocks. In addition to technical training,

knowledge and skills on how to run a business were also given by Titan to MEADOW employees.

Success of MEADOW

MEADOW has grown significantly in terms of the number of women it employs and the nature of its activities

to reach an annual turnover of almost INR 40 Million (Refer to Table 5).

Table 5: Highlights of MEADOW’s achievements

Year

No

of

emp

loye

es

No

of

unit

s

No

of

acti

viti

es

Turn

ove

r

(INR

lacs

)

Pro

fit

(INR

lacs

)

Div

iden

d

(INR

lacs

)

Co

ntri

but

ion

to c

orp

us

(aft

er T

DS

)

1998-1999 80 1 4 15.58 Nil Nil Nil

1999-2000 87 1 5 35.31 4.20 Nil 2.08

2000-2001 90 1 4 46.41 Nil Nil -0.92

2001-2002 99 1 4 59.15 3.70 0.93 1.21

2002-2003 111 2 5 47.19 Nil 1.39 -2.78

2003-2004 119 3 8 54.78 3.40 1.68 0.61

2004-2005 128 6 12 57.91 3.60 1.97 0.02

2005-2006 157 6 14 61.91 7.40 2.78 2.41

2006-2007 318 10 18 106.48 27.20 15.06 5.14

2007-2008 409 16 21 150.07 30.00 21.55 8.45

2008-2009 419 16 21 213.12 46.55 34.93 11.62

2009-2010 436 16 24 264.54 56.70 51.13 5.57

2010-2011 464 16 24 388.72 77.30 64.30 13.00

2011-2012 511 16 26 392 58.20 48.00 10.20

16 Plan International is a US based development aid organisation working in more than 40 countries to alleviate child poverty.



50

The engagement that began with the watches division, soon led to partnerships with the jewellery division

and precision engineering division. Currently MEADOW undertakes 26 different sets of activities for Titan and

employs 511 people. Table 6 below shows how the activities have evolved over the years.

Table 6: Year-wise activities of MEADOW

Year Activities initiated

Upto 1996 Link assembly, hand press, final assembly, end link fixing

1997 - 1999 Flap satin, jewellery – silver work, table clock assembly, watch quality control, rope assembly

2000-2004 Calendar Mechanism Main Plate (CMMP), strapping, gold plating

2005-2006 Movement assembly, train wheel bridge, jewellery – stone setting, deburring, mould setting,

waxing, case polishing

2007-2008 Aerospace, S.S. straps, case polishing II, band recovery, strap masking, full watch packing

2008-2009 L.F.S., C.F.A., back cover

2009-2010 Enamelling, 22 kt jewellery, wax setting

2010-2011 Case rework, filigree jewellery, case masking, stone sorting

2011-2012 Case assembly, HD waxing, filigree, plastic module assembly

Unit and location-wise number of employees are given in Table 7.

Table 7: Unit and location-wise number of employees of MEADOW

Division No Unit Locality Number of

employees

Watch

Division

1 Case polishing Kalugopasandram village 40

2 Strapping Koot road 21

3 Stone setting and enamelling Koot road 20

4 Strap masking Midigarupalli 30

5 Gold plating Midigarupalli 15

6 Case rework Midigarupalli 19

7 Case polishing 2 and plating

recovery and back cover

Midigarupalli 48

8 Movement assembly Dinnur 33

Precision

Engineering

9 Deburring Dinnur 29

10 Aerospace Dinnur 47

51

Division No Unit Locality Number of

employees

Jewellery

Division

11 Jewellery metal setting and

stone sorting

Dinnur 45

12 22 carat gold plain gold Dinnur 13

13 Waxing and filigree Dinnur 16

14 Mould setting Dinnur 30

15 Waxing Dinnur 54

16 Wax setting Dinnur 35

Office Staff

Accounts 5

Housekeeping (sweepers) 5

Night watchman 2

Security (day) 4

MEADOW continues to enhance employment opportunities for young rural women by following a strict policy

of providing employment to only one woman per family so that it can reach out to a larger number of poor

families. This project has also significantly improved the earning of women in the region, from INR 1,200 before

the project to INR 6,000–8,000 now.



52

Structure of MEADOW

Currently the board is represented by one member from each unit. Once the company was registered, the task

groups ceased to exist. Board members were and continue to be drawn from the various operational units.

The Board approves the appointment of the CEO, clears new proposals for expansions, decides on issues of

staff, salary, profit distribution, negotiations with Titan, statutory functions relating to labour, audit, etc. Three

members (not from the board) look after accounts, fund flows and other office work. They track the daily

production status. All replacements for the Board are chosen in the Annual General Body Meetings.

The organisational structure is presented in Figure 7.

Figure 7: Organisation structure of MEADOW

Other details

Titan has provided limited equipment (under an asset agreement17) to MEADOW and also contributes to

major maintenance expenses for equipment supplied by it. The majority of equipment has been purchased

by MEADOW. All maintenance expenses of the equipment are borne by MEADOW. Scheduling agreement is

signed with MEADOW that specifies the terms of engagement in line with Titan’s agreement with other sub-

contractors. MEADOW has to also comply with all statutory requirements as is the case with other vendors of

Titan. MEADOW is, however, given preference in sub-contracting by Titan.

17 The agreement between Titan and MEADOW which covers the equipment and associated operation and maintenance (O&M) costs. Titan bears the cost of the limited equipments that it has supplied to MEADOW and the O&M costs but can take back the equipment if the need so arises.

Board of Directors

CEO

Unit Managers and Members

Consists of women selected by the 16 task groups and holds office for a tenure of one year

Oversees the administration of MEADOW

Preferably male because of travel constraint faced by women

Oversee operation of each unit

Responsible for daily operations, managing HR and finance

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With increasing awareness, confidence and improved capabilities, the women directly negotiate with Titan

over annual revision of piece rates, handle purchase, draw up work schedules, calculate payments, follow

up on receivables and handle reporting on statutory requirements. Titan and MEADOW have a commercial

agreement that determines the terms of engagement. Representatives from Titan meet MEADOW for weekly

and monthly-production discussions, quality issues, price negotiation, exploring new opportunities and evolving

major process modifications.

Roles and responsibilities

Table 8: Roles and responsibilities of Titan, MYRADA and MEADOW

Entity Responsibility

Titan • Training of women

• Sharing machines and equipment with units

• Subcontracting work

• Identifying new activities for subcontracting

• Provides raw material for the activities

• Technical support to MEADOW

MYRADA18 • Facilitating setting up of MEADOW as project promoter

• Initial capital investment for land and building construction

• Identifying and training women

• Hand holding the women in management of the enterprise and being a part of the

decision making process till 2007

MEADOW19 • Management of day-to-day operations

• Negotiating with Titan on prices and tasks

• Ensuring timely delivery of contract agreement terms

• A percentage of their earning is set aside as corpus for infrastructure investment –

new buildings, recruitment, machines, facilities

• Expenditure on power, office space for units, new equipment, manpower cost,

etc., is taken care of by MEADOW

Present scenario

MEADOW was advised by Titan to register itself as a non-profit company under the Companies Act so that

it can have the characteristics of a company while allowing it to access grant funds if need be and also act

18 MYRADA is no longer involved on a day to day basis but keeps in touch and brings visiting dignitaries occasionally19 Post separation of MEADOW from MYRADA, all responsibilities of MYRADA are with MEADOW



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as an entity to service rural poor women. Titan also supported MEADOW to come out with the guideline for

maintaining internal systems and procedures.

Business case for Titan

Titan’s initiative to outsource activities to MEADOW initially started as an experiment to train rural women and

employ them in-house. This initiative was taken in collaboration with MYRADA to address local issues like

low literacy rates, gender inequality, female child labour, female infanticide, and early marriage. The first joint

initiative was when the SHG women were asked to make chappatis for the Titan canteen. Issues of hygiene

and quality led to this initiative coming to an end. Next the SHG women were given the contract to wash

workers coats and trays. The performance of SHG women in this activity led Titan and MYRADA to explore

the possibility of outsourcing simple manufacturing tasks. That partnership went on to form MEADOW and

the rest as they say is history. This transition from a purely philanthropic initiative to a business partner has the

following advantages for Titan:

Cost benefits of outsourcing

Titan was very keen to outsource its smaller processes involved in watch-making to concentrate on its core

business by utilising its in-house workforce for more complex activities, thereby also reducing its costs.

MEADOW offered the company an excellent opportunity to meet this objective as these tasks largely required

finger dexterity, good eyesight and involved no use of heavy equipment. Thus, the business benefit to Titan

is immense as they have secured their supply chain by procuring quality services at competitive rates with

minimal involvement in the entire process.

Securing the supply chain

An increasingly important success factor for a company is that its supply chain remains reliable and secure and

maintains quality and delivery schedules to feed its production system and keep its inventories low. MEADOW

has consistently been supplying quality products at competitive rates, which has contributed to it receiving the

best supplier award on multiple occasions by Titan.

A number of factors have contributed to MEADOW’s ability to remain a secure and reliable supplier to

Titan including:

• Excellent labour relations: As MEADOW is entirely owned by the workers in the company, there are no

labour issues. The workers in the company are also motivated to maintain quality and deliver on time as

they are the direct beneficiaries of the profits of the company.

• Low employee turnover: Since MEADOW is a worker-owned enterprise, the women have a greater

sense of belonging and are committed to staying on, which may not have been the case had they

been mere employees in some other business entity. Further, women find it harder to shift jobs as

compared to men because of logistics issues, which ensure that workers stay longer in the company.

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As a result of the company being able retain its trained workforce, it can be counted to supply quality

products consistently.

• Producing solely for Titan: Since MEADOW products are to specifications (as is the case with an ancillary

unit); the risk to Titan of the production being sold to other companies is extremely low.

Ready supplier for other outsourced parts

A reliable supplier opens up opportunities for a company to outsource other similar products to the same

supplier. MEADOW has clearly proved itself to this challenge as what started with watch straps, now includes

jewellery and precision engineering. The skills acquired by the workers have grown with time and this has

prompted Titan to expand the scope and number of activities outsourced to MEADOW.

Building community relationship

The objective with which the programme was initiated by Titan – empowerment of rural women – was

adequately met by MEADOW. This helped Titan strengthen their relationship with the community and address

the challenges women faced in the region; low literacy rates, gender inequality, female child labour and high

female infanticide rates. A better community relationship can potentially protect Titan from disruptions like

labour unrest which is a definite risk in an industrial estate like Hosur.


Economic and social benefits

This project has also led to the economic development of the local community by increasing the average

household income and providing secure employment to one member of each household. The increase in

income has helped the households to repay debts and purchase assets like property, jewellery etc. Also,

because of the increased income, many employees of MEADOW have continued their studies and completed

their high school education.

Additionally, as women turned into bread earners, their social status improved because of:

• Greater respect and acknowledgement of women as valuable members of family and society as most of

them are the highest earners in their families.

• Decrease in early marriage of girls because of their enhanced social status.

• There have been other social benefits to the community as well:

y Increased awareness about the wrongful practice of female infanticide and the need to wipe it out

from their communities.

y Increased awareness about hygiene and environmental issues around the villages.



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Gender empowerment

The project has inculcated leadership and decision making abilities in women by providing them a platform

to be owners of a professionally run company. This has also enhanced the management skills of women.

For example, by being a part of the company, the women have learned to deal with government officials and

banks, undertaking negotiations that were previously confined to men. The project has also educated the

women to handle complex tasks like production planning, material management, HR, price negotiations,

and complying with statutory requirements. This has led to rural families increasingly consulting women on

important decisions.

It has also led to an enhancement in the skill sets of the women. From the most basic operations for the watch

factory, today they are engaged in complex operations for the jewellery as well as precision engineering division.

The project has also increased the mobility of women. They are confident of travelling by themselves and many

have purchased two wheelers and are not afraid to take two to three buses to get to their workplace. It has

also provided them with better access to health services and education facilities both for themselves and their

families. Women have a say in decisions regarding their marriage and are also able to save and pay for the

entire marriage expenses in some cases.

Lessons learnt

Manufacturing can be outsourced to community groups

The Titan initiative demonstrates that community groups are as adept at industrial production as they are in

services and agriculture. And these are reasonably high-precision processes and as the products are directly

visible to Titan’s customers, they are critical.

To that extent, Titan made a leap of faith through this initiative and by all accounts it has worked out very well.

Thus, there is every reason for companies to seriously consider outsourcing of manufacturing activities to rural

communities.

Women can succeed in non-traditional areas

Two myths were dominant when it came to women. One was that given their multiple responsibilities of home

and childcare, rural women cannot work in an industrial environment which requires close adherence to

quality and delivery. Second, many of the processes related to jewellery have been the sole preserve of men

and done only by certain caste-occupation groups and conventional wisdom had it that women could not

undertake these.

This initiative has succeeded in shattering both these myths and in that sense has the potential to be a game-

changer when it comes to outsourcing manufacturing activities. Women proved to be willing and able learners

and practitioners of production enterprise management skills.

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Worker-owned and managed enterprises can be successful

Most manufacturing industries in India, including other Titan suppliers, tend to be male entrepreneur setups.

This intervention demonstrated that collective women-owned and managed enterprises can succeed.

Need for a local partner

Another lesson from this case-study is that while the company’s commitment of time and resources is critical,

equally critical is the role of the local support agency like MYRADA in being the bridge between the company

and the community. All indications are that without MYRADA’s involvement, and its own commitment to enable

women to own and manage the enterprise, the initiative would not only have taken longer to set up but all

the significant non-financial benefits that accrued to the women and, in turn, the larger community may have

been different.

Need for patient support

It must be recognised that building such enterprises requires considerable time, hand-holding, technical,

managerial and financial support. This is because women engaged in this intervention had to overcome many

significant barriers – of the nature of the enterprise; learning new, non-traditional skills; and learning to manage

it. Thus, the lesson to companies wanting to replicate this intervention is that if they are committed to working

with rural women and willing to make the investments required, the rewards are there.


Finding an NGO partner

Given the nature of the intervention and Titan’s own conviction that the benefits of outsourcing must accrue to

local communities, it was clear that its partner must be an NGO who can bridge the company-community gap

and play a range of roles from identifying workers to training and helping build the enterprise. However, finding

such a partner can be a challenge and any company wishing to work in partnership needs to invest significantly

in finding a partner and nurturing this relationship.

Companies wishing to go down this route would do well to build their capacities to identify and select

appropriate partners for their interventions. There are several government and non-government institutions that

can facilitate this process and companies need to identify and work with them. This case-study demonstrates

that it is possible for companies and NGOs to work successfully in partnership but that this can be challenging

must be kept in mind.

Access to funds

A manufacturing unit requires investments in plant, machinery, land, buildings and so on. Typically, neither

communities nor NGOs have the experience or the funds to do this and banks are usually unwilling or unable



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to fund this, given their risk perception. Thus, access to funds is one of the biggest challenges for setting up

such a unit.

This case-study demonstrates two ways of doing this. One, through the partner NGO’s (in this case MYRADA)

ability to access funds and second through contribution in kind from Titan by way of providing equipment.

Market constraints

A significant challenge for MEADOW is that it is solely dependent upon Titan for selling its produce. While this

is fine as long as Titan’s market is buoyant, difficult market conditions can adversely impact the profitability

of MEADOW. As a ‘co-promoter’ of this venture, Titan tries to ensure that MEADOW remains profitable by

outsourcing work to it at all times and treating it as a preferred supplier but these are not formal commitments.

Managing multiple entities

Post the separation of MYRADA and MEADOW, the involvement of Titan has increased in resolving the

problems amicably to ensure continuation of operations and employability of poor rural women. The frequency

of visits by Titan executives to MEADOW units has also increased to ensure smooth functioning of units. Timely

intervention by Titan helped MEADOW to prosper in their journey towards building a profitable venture.

Companies willing to replicate the business model need to consider the complexities involved in managing

multiple entities and should be willing to invest extra in managing risks. This can be ensured by providing

support in developing internal processes and increasing interaction with the community.

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About ITC

The ITC Group is one of India’s largest private sector companies with a market capitalisation of approximately

US $ 42 billion. ITC has a diversified presence in Cigarettes, Hotels, Paperboards and Specialty Papers,

Packaging, Agri-Business, Branded Apparel, Packaged Foods and Confectionery, and other Fast Moving

Consumer Goods (FMCG) products. The International Business Division (IBD) of ITC, started in 1990, exports

agricultural commodities such as soybean meal, rice, wheat and wheat products, lentils, shrimp, fruit pulps,

and coffee.

Interventions

ITC plays out its business as well as CSR strategy through its field structures. What is interesting is how

the structures intertwine to bring business benefits in social transactions and social benefits in business

transactions.

ITC’s overarching strategy or approach of engaging with the rural communities is implemented by different

arms of its organisation working closely together. Its corporate division works along with the CSR division

through the Social Investment Programme (SIP) to help deliver its goal of working with rural communities. The

e-Choupal network provides ITC its breadth of relationship fronts to help execute the programmes (explained

below).

ITC’s Field Infrastructure

ITC has set up an elaborate rural field infrastructure that interfaces with its communities. This is described below:

1 e-Choupal – These are ICT kiosks consisting of a personal computer with Internet access that are

setup at the villages. Farmers access this kiosk for information on prices, and also have the option to

sell their produce either at the local market (called a Mandi) or directly to ITC through the e-Choupal.

The e-Choupal is run by a local entrepreneur called a Sanchalak who is at the heart of activities and

serves as a farmer coordinator for ITC. He is typically a lead farmer who has to meet some specific

criteria laid down by ITC. Typically, his network of influence covers farmers within a catchment

area of 10 km radius. The villages are selected upon the recommendation of ITC’s implementing

partner NGOs near the location of the procurement hubs. The ICT e-Choupal Kiosk is set up at the

Sanchalak’s house. The Sanchalak gets a commission from ITC if any farmer from within his network

decides to sell their produce at the hubs. Whilst he performs many other roles on behalf of ITC, he

does not receive any commission for any other services.

Case Study 5: ITC’s Social Investment Programme


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2 Procurement Hubs – ITC procures crops at its procurement hubs dotted across the producer belts. A

hub location would service a cluster of e-Choupals in a region and operate under a licence to procure

specific crops from the farmers. They provide an alternative procurement channel to the farmers who

otherwise have no option but to sell at the local mandis.

3 Choupal Sagar – This is a large rural retail outlet where ITC sells its own brand and other brands of

products ranging from soaps to flour to refrigerators and computers. Some of the Choupal Sagars

also have soil testing laboratories, training facilities, food courts, petrol stations, and storage facilities.

Every Choupal Sagar has a procurement hub within the large premises.

4 Choupal Haat – These are temporary promotional events organised by the Sanchalak through the

various tie-ups ITC has established. ITC charges a small fee for organising these village promotion

activities. There are no sales at the events.

Inter-linkages between ITC’s business units and community engagement

As a conglomerate working in trading, processing, retail etc., ITC’s business units are scattered across the

country. The company works with the rural communities when they fall into its factory catchment area or

when they procure produce for agricultural trading. The different business units work with the community

engagement side of ITC when working with rural communities.

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The SIP is the community engagement division of ITC which is responsible for their social development

programmes. These programmes include keys actors such as local NGOs and village institutions and also

bring in ITC’s field structures listed above wherever possible. These types of interventions are relatively common

even though NGO partners, states and crops change.

ITC’s social development programmes are guided by their CSR policy which focuses on aligning and

integrating with business value chains of the company and making them outcome oriented.

– ITC’s Sustainability report 2012

The idea underpinning the development of both the business as well as the community engagement strategy

is that if something adds value to the lives of the farmers, it will benefit ITC too. ITC creates value for the

farmer partly through its Social Investment Programme fund but very importantly, there is equal or more value

created through its business activities in rural India. Business and social activities combine together to meet

the farmers’ needs as follows:

1 Information on the prevailing market and weather conditions through e-Choupal – ITC feeds

information into the network, which is accessible at the Sanchalak’s house through a computer.

The information about weather, the day’s crop prices, and agricultural practices are available for the

farmers to access whenever they need, and help their planning and decision making process.


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2 Selection of the crop and inputs – The extension services supported by ITC provide technical

information to the farmers and demonstration plots are used to practically show the farmers the

evidence of new agricultural practices and benefits of quality inputs. These help farmers with their

decision making process along with guidance on quantities of fertilizers to use for different crops

depending upon the nutrient content of their soil.

3 Training and access to know-how on improvements in yield – ITC trains the farmers by setting up

training centres, some of which are located at the Choupal Sagar hubs. ITC also illustrates practices

at the demonstration farms and has tie-ups with various agricultural universities and employs its

own agronomists to translate laboratory research into implementable actions in the fields (extension

services). The Sanchalaks/e-Choupal network also supports the extension services which are

implemented by ITC’s partner NGOs like Srijan/Basix.

4 Improvements to local infrastructure and land – ITC supports local NGOs in helping establish village

institutions, or village development committees. The NGOs help organise exposure visits of these

institutions to other well-functioning village institutions. The Village Development Committee then

learns to find their own water and soil management solutions through participatory techniques

facilitated by NGOs.

5 Provision of fair prices and alternative markets – The independent procurement hubs provide the

farmers an alternative market. These hubs are different from the mandi in a number of ways. For

one, ITC announces guide prices on the previous day as opposed to the mandi where prices are

determined on the day that farmer brings produce to the mandi. For another, farmers bring the

produce in trolleys which get weighed as is, so the farmer does not lose produce while bagging which

may happen in the mandi. Thirdly, ITC has systematic and transparent weighing procedures and uses

machines to determine moisture content to finalise prices. And finally, the farmers get paid the same

day and save money on overnight stays at the mandi.

6 Provision of quality inputs at economical prices – ITC makes available quality agricultural inputs

to farmers in a number of ways. It provides inputs including high grade special potato tubers at

subsidised rates to potato farmers who are part of their foods supply chain. It sells agricultural inputs

such as seeds, pesticides and fertilizers at the Choupal Sagar outlets both on special demand for

large orders and in smaller quantities around the year. For large orders, the Sanchalaks compile

and place bulk orders at Choupal Sagar outlets. ITC procures these inputs from the producers and

supplies to the farmers at reasonable prices.

7 Facilitate access to credit through the Sanchalak network and tie-ups at Choupal Haat or the Choupal

Sagars – ITC organises credit camps but does not make any margins on the credit facilities. So far,

ITC’s role has been as a provider of venues and organiser of the credit camps.

8 Access to technology – ITC helps provide access to technology to the farmers in a number of ways.

The procurement hubs and the Choupal Sagars also provide soil testing facilities and training facilities

for the farmers. The farmers pay a small fee for the testing of their soil. They also get access to

knowledge of soil balancing nutrients for their own soil.

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9 Support with improvements in household incomes – Under the e-Choupal umbrella, ITC supports

and helps fund livelihood programmes such as Cattle Development Centres, aggarbatti production

by women’s producer groups, and production of organic chillies, etc. Specialist NGOs partner with

ITC to help deliver these programmes. ITC also has programmes of solid waste management, skill

development and natural resource management in the catchment areas surrounding their factories.

Internally, for ITC, it all starts when its different business units select a broad geographical area for their business

– for example any district in MP for the procurement of wheat of soya. The business unit then invites the SIP

to set up its support programmes for the rural communities. Once both the units (for example the Agricultural

division and Social Investment Programme) finalise the geographical area, they make joint plans and budgets

for a social development programme and the search for an NGO partner begins.

ITC’s SIP typically delivers social development programmes by partnering with specialist NGOs with whom it sets

up joint plans and budgets. The SIP monitors all expenditures and activities once every 3 months. The NGOs

usually deploy dedicated teams on the projects funded by ITC and usually work on common themes of community

empowerment, improvement of yields, overall production, and augmentation of rural household income.

The building blocks of ITC’s engagement with rural communities

Empowering the communities is a crucial building block of ITC’s approach. With the help of NGOs, farmers

become a part of the Village Development Committee (VDC) or village level institutions. The NGO partners

facilitate their visits to other well-functioning committees where they learn the ropes of setting up and managing

self-governing groups. These groups usually start with projects to help build physical infrastructures in order to

enhance production for the whole community. ITC funds the project in part but the community is expected to

contribute also. Often, the institutions go on to form user groups and charging a fee for the use of infrastructure

such as a water conservation project from the users. This helps build a corpus fund which they use to pay

part of their committed costs of building the infrastructure and use the rest over time for village development

activities. More recently, some of these village institutions have moved on to undertake business activities like

aggregating demand for agricultural inputs. But more importantly ITC recognises that these institutions are vital

for bringing about leaps in yield improvements and production.

Another building block is empowering the farmers. The foundation of ITC’s engagement process is the

empowerment of the farmers by providing them market information through the e-Choupal network, followed

by know-how through the extension services, then providing them a platform to voice ideas and concerns at the

village level committees which they can also use to access government schemes. Informed and empowered

farmers make their business decisions from a different vantage point. Empowered farmers build business

relationships with companies on a more equitable basis. However, the farmers are not obligated to sell their

produce to ITC but may make an independent choice of where to sell produce on a given day based upon ITC

prices and market conditions. Even if 10% of the total number of farmers it engages with actually sells at the

Choupal Sagar, ITC shows willingness to continue working with all the farmers nonetheless. On its part, ITC

then continues to find ways to service the needs of the farmers based upon practices, prices and choices to

become the preferred procurer of produce from the farmers.



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Working with farmers in a business like way is yet another building block of the ITC way. ITC continuously

strives to ensure a business like relationship with the farmers – even when working on social development

projects. For larger projects, it may fund activities through grants but the communities must also contribute a

share. For example ITC helps set up and pays part of the set up costs for a cattle development project via an

NGO but the farmers need to pay the NGO a small fee per insemination of their cattle. The engagement is not

based upon reliance or dependence of one party upon another.

ITC recognises that earning trust and credibility of the farmers is critical for success. The business units do this

by exhibiting openness and transparency by following consistent and fair business practices. On the social

side, the Social Investment Programmes create trust via the NGOs they work with. So the foot soldiers of the

e-Choupal network continuously work on building and retaining the farmers trust for the e-Choupal umbrella

under which the business and the CSR arms of ITC thrive.

Table 9: ITC’s Social Development Programme highlights up to 2012

Social Programmes Programme achievements

e-Choupal Reached 40,000 villages or 4 million farmers

Wasteland development Developed 90,000 hectares of wasteland

Soil and moisture conservation Built 442 water harvesting structures

Integrated animal husbandry programmes Started 293 cattle development centres

Women’s empowerment Supporting 2.6 lakh children in primary education

Sanitation Built 3,495 toilets

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Project monitoring

ITC’s Social Investments/CSR programmes are supervised by: (a) Board Committee on Sustainability;

(b) Corporate Management Committee (CMC); (c) Management Committee – Social Investments;

(d) Programme’s Divisional Management Committees (DMCs)/Strategic Business Units (SBUs); and

(e) Corporate Social Investments Team.

Business case for ITC

Building security of supply for quality produce in competitive markets

By increasing the overall production or yield in an area, the ITC funded programmes help build a stronger

supply chain especially for quality produce. Procurement of substantial near homogenous quality of produce

in quantities needed for trading, especially for volumes based on international trade, is not an easy task.

Increasing the yield of quality produce in the local areas provides sufficient volumes to enable procurement

to be economically viable and secures supply, even if only 10% of the farmers ITC works with through its

programmes sell to ITC.

The yield enhancement programmes also create a certain amount of trust in fairness and transparency of the

practices. Even though the farmers are not bound or obligated to sell to ITC, this trust is an influencing factor

on where the farmers sell their produce.



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Lower direct costs of procurement

Farmers access the ITC hubs through the Sanchalak network. The Sanchalak gives a unique number on a slip

to the farmer which he takes to the procurement hub. This number is paired with the amount and rate at which

ITC procures produce and determines the Sanchalak’s commission. By setting up its own hubs, ITC does not

have to pay higher transportation and brokerage costs of going to the mandi. Also, by consistently demanding

quality produce and paying prices to the farmers based upon transparent procurement practices, ITC gains

better graded stock and farmers strive towards delivering this quality product. Having loose, graded stock at

the procurement level, ITC saves on the cost of grading, re-grading, bagging and re-bagging produce brought

directly to its doorstep.

ITC’s diversification into processed foods like potato chips, atta etc., has meant that its requirement of

homogenous quality of inputs for processing has increased. By promoting quality and homogeneity through

yield and quality enhancements practices, ITC has potentially built a more cost-effective supply chain.

Dual benefits of getting the social license to operate and building a respected brand

Arthiyas or agents often act like money lenders to the farmers especially in emergencies. So, for the farmers,

selling produce to a new channel despite advantages like lower handling losses, transparent prices, transparent

grading, weighing etc., can be risky as it could adversely impact their business relationships with the traditional

channel. The social development programmes under the e-Choupal umbrella helps give a social license to

ITC’s operations. The trust built by ITC’s programmes and approach helps break barriers of tradition and the

farmers are less reluctant of selling to ITC.

Brand ITC is now beginning to be associated with the commonly known e-Choupal and Choupal Sagar.

Whether the strategy intended for it to or not, the e-Choupal network is also helping lay the foundation for a

smoother introduction of a range of ITC’s FMCG and other products. For example, the farmers familiar with

e-Choupal might be more open to shop at the Choupal Sagars or buy ITC’s soaps and shampoos.

Lower overall costs of operations

ITC is uniquely positioned to procure and to sell through the Choupal Sagar outlets. The location of hubs within

Choupal Sagar boundaries help efficiently utilise the facilities and also assist with the recovery of fixed costs

until retailing becomes more established in the rural landscape. The centralisation of its own procurement

saves ITC from having to go from mandi to mandi to buy produce.

Since the costs of these hubs is high, addressing various farmer needs from procurement, to retail, to distribution

of farming inputs from the same venues also helps keep each of these facilities viable. For example, the storage

facilities at the procurement hubs may get used for storing fertilizers, pesticides or seeds in the sowing season,

and the same storage can be used to store procured produce in the harvest season. As ITC finds more ways

of meeting the untapped needs of rural communities, its overall costs of operations could be lower or give it a

competitive advantage.

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Building supply pipelines for procurement of other products in the future

Since community engagement is initiated by the business, the interventions are designed to help secure the

supply chain and markets for new and emerging products. For example, ITC has partnered with BAIF for

its cattle development and animal husbandry programme which has helped increase the milk production

substantially in the area, paving the way for ITC’s new dairy business. Having well-established supply lines puts

ITC at a huge competitive advantage when it enters a new product or geography.

Blending of different varieties of crops to create new product varieties

Procurement through the channel of e-Choupal enables ITC to trace the source and quality of the crop. This

is possible as all procurement is centralised through the Sanchalak which enables ITC to maintain a database

of farmers, villages, varieties, and qualities of the food grain. This enables ITC’s Foods Division to create

blends using different varieties of crops to suit specific consumer tastes; thus enabling a commodity such as

Aashirvaad Atta to be differentiated based on consumer taste preferences in different geographies and gain a

competitive edge.


Improvements in farmer incomes and crop yields

ITC supported interventions and programmes target improvement in yields as well as quality. Through the

interventions in water and soil management, farmers are able to put larger sections of their land under cultivation

and meet their irrigation needs. Extension services and soil testing facilities also help the farmers improve their

yield and therefore incomes. ITC expects and demands high quality of graded produce. Farmers who follow

better agricultural practices and produce quality produce get a better price for their crop at the hubs which

they might not at the mandis.

Empowerment of the farmers through choices

The hubs now provide farmers with an additional avenue to sell produce and a new way of selling it. Mechanised

weighing facilities, grading and moisture testing machines, reduction in handling losses also help farmers get

a higher overall price. ITC announces its floor price the day before so the farmers know the base price in

order to decide whether to sell at the hub or the mandi. ITC pays the farmer the same day as opposed to

the mandi payments which often get delayed. Having a choice of a point of sale and a new system of sale is

an empowering process for the farmers. The mandi’s functioning may also start improving in the presence of

competition.

Changing farmer expectations of quality, fair pricing, transparent business practices

The aspect of quality is beginning to play a role in both selling and purchase decisions of the farmers.

On the sales side, the farmers get better price for selling quality produce to ITC and simultaneously, on



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their purchase side, they also have access to quality products through the Choupal Sagars. The farmers

are beginning to value the access to quality and recognise the price differential for quality in the equation

during their buying or selling decisions. In a rural setting, for ITC to advocate, demand, and pay for

quality and homogeneity could have alienated the farmers had it not invested in extension services and

demonstration farms.

Farmers that were interviewed also noted the changed landscape of business and changes in the balance

of power between farmers and companies. Farmers spoke of having choices and forcing more companies

to act responsibly. The e-Choupal network (market information in the hands of the producer), transparency

(consistently followed fair business practices), extension services to improve yields and incomes (know-how)

and finally, choices left at the hands of the farmers are gradually changing the business landscape.

Benefits of organisation – establishment of village level institutions

For ITC, the establishment of village level organisations has been an important method of delivering programmes

while working with specialist NGOs such as Srijan or BASIX. The Village Development Committees have access

to government facilities as a collective unit and are able to take independent actions if the government fails

to deliver. These institutions work on various levels and can include producer or user groups and sometimes

operate on cluster levels. Self-monitoring, self-governing institutions are beginning to thrive. Many of them hold

substantial cash balances which the village committees can use for the benefit of the entire community. These

institutions have gradually grown in power and stature in their villages.

Lower costs of transactions and inputs

Farmers reduce their transaction costs during the sale of produce through mechanised weighing, reduced costs

of bagging, transparent grading process, lower handling losses, absence of commissions, etc. Aggregating

the demand for agricultural inputs by the Sanchalak enables ITC to procure them in bulk and some of these

benefits are passed on to the farmers.

Lessons learnt

Partnership between business and CSR activities of a company enables win-win

The mainstream business units of ITC work closely with SIP, its community engagement unit, in delivering

benefits to both the rural communities and business. However, what makes this partnership unique is that the

business unit is responsible for initiating a new business idea where it subsequently ensures and enables SIP

to become a part of the planning and delivery of the social programme effort thereon. Both units work together

to build a business or business like relationship with the communities, which ensures that benefits accrue to

both the business and communities.

In order to work successfully on a similar model, companies must be prepared to create an internal

environment, structure and culture where both the business as well as the social sides work well together

under a common strategy. Leadership needs to demonstrate the parity of business as well as social units

69

within the organisation. Further, the CSR function in such a company must be hands on in working closely

with the NGOs, have knowledge of new methodologies and apply them judiciously, establish links with other

professional organisations, and try to maximise the impact of their effort. The business side, in turn, must also

recognise the value that the CSR team brings to this partnership and keep pace with changing demands,

community needs, and opportunities, and analyse how they can change their business to keep creating value.

Building trust with communities brings business benefits

Another lesson that emerges very clearly is that building trust brings long-term business benefits. ITC has done

this in several ways – one such strategy is to be there for the communities throughout. ITC has permanent

members of staff coordinating projects and running business in the area. Even though procurement may be

seasonal, farmers know that they have access to ITC whenever they need through the Sanchalak or Choupal

Sagar network. Many companies selling seasonal products send representatives prior to the season but are

not present there throughout the year. The other is by empowering them by providing information, know-

how, access to credit, markets and technology, establishment of self-governing groups, etc. Ethical business

practices like leaving decision making for point of sale in the hands of the farmers, transparent pricing, and

prompt payments cement this trust.

The establishment of ITC’s rural distribution business is a lesson on how to win the trust of village institutions.

Empowered rural communities respect and like to work with organisations that helped build them. Maintaining

their credibility with these institutions is crucial for companies to have a license to operate in rural areas over a

long term. The platform of their acceptance in turn is great competitive advantage for businesses intending to

introduce new business ventures in the area.

As another example, ITC procures good quality produce and pays matching prices for quality. Ungraded

produce or mixed quality produce fetches the farmers lower prices even at ITC. However, even at the cost of

having to lose procurement from a farmer, ITC remains steadfast to its procurement policies. Over a period of

time, farmers have come to acknowledge the price differential for quality and now try to incorporate practices

which will give homogeneous produce and also try to grade their produce before selling it at the ITC hubs.

Accessibility, openness and transparency help build the community’s trust towards companies, but it takes

time. Companies planning a foray in rural engagement need to be there for the long haul to be able to reap

real benefits and to be able to create real value. There are many companies that have assisted farmers initially

but when the farmers sold their produce to other companies or at the mandi for any reason, they had changed

attitudes towards the farmers.

Build business like relationships with rural communities

From the start, ITC maintains a business-like relationship with the community where neither party expects

anything free. For example, if a village committee requests ITC to fund a project like a water dam, the company

expects the community to put in their contribution. ITC may partly fund the project but the farmers are

responsible for its upkeep. ITC also tries to ensure that a user group is established which charges a fee per use

and the fee is used to keep the project sustainable.



70

When transactions between the two entities are business like, there is no culture of dependence or exploitation

from either side. For the farmers, there are no costs of association with ITC or the NGO partners without some

benefits associated. They are provided information and make independent informed choices.

Companies can look to build long-term relationships with the communities where the communities recognise

the interdependence and see the value in having a relationship of equals.

Strong community relationships can provide new business opportunities

When business is based on trying to create value for both sides, hidden or new business opportunities may

emerge for business as well as for farmers. For example, the benefits of branding spill over from one part of

the business to the other as is the case with the e-Choupal brand umbrella which strengthen the Choupal

Haat and Choupal Sagar businesses. This is a big advantage for the introduction of other products. So for

a farmer, to make the transition of ITC being a preferred buyer of produce to a preferred supplier may be a

little easier.

Another example is the animal husbandry programme that was initiated with the support of a specialist NGO

BAIF to improve the breed of cattle in the area to improve milk production and help improve income of the

farmers. The programme became successful so quickly that the market is now ready for a dairy and ITC is well

positioned to expand its business.

Partnerships with NGOs and the government

While working with rural communities, companies need to build their own service network or find an NGO

who specialises in the field of development. A key to ITC’s success is the partnerships it has forged with

so many government and non-government organisations. Partners are professional, economical and easily

acceptable implementers of social development programmes. In Madhya Pradesh alone, ITC has partnered

with government and non-government agencies in 13 projects running in 1,351 villages from 11 districts which

are implemented through 11 partner NGOs. Out of these projects, five are under public-private partnerships

with GoMP and NABARD. Specialist NGOs are chosen for their skills and experience in specific fields i.e., BAIF

for ITC’s cattle development programmes.

Business as well as CSR units of companies can leverage the indispensable skills and unique capabilities these

NGOs bring. These specialist organisations can increase and maintain networks with rural communities for

companies. They also provide a continuous focal point of access for businesses to reach communities. And

this access, as was mentioned above, is essential to build trust and credibility on which the success of both

– social programmes and rural business rely. Therefore, good working relationships can be valuable assets for

any company working in the rural landscape.

Working with governments not only enables access to policy makers, it also provides tremendous opportunities

to leverage the multitude of central and state government schemes that are meant for communities. This

unlocks funds both for the company and the community, making it yet another win-win for all.

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Ensuring organisational readiness to take on a fresh approach to rural engagement

ITC encourages both the social as well the business units to share information and work closely with each

other. When a business unit is expanding in an area, it invites SIP to come in and supports it. The hub in-charge

and senior management of the SIP strategise, plan and execute the intervention jointly. Both units constantly

exchange information. When the production of a crop is better or marginal in an area, officers of the SIP let

the hubs and Choupal Sagar managers know. SIPs invites the business units for their events and the Choupal

Sagar and hubs invite the SIP teams for the Choupal Haats. Both units ensure that ITC gets corporate brand

recognition through their work.

This culture of information sharing, parity of structure and responsibility is a break from a mind-set where the

CSR divisions of companies work in near isolation from the business units. Often, the CSR divisions face

an internal challenge of demonstrating their role as a business necessity. Likewise, the business units also

need to learn to work closely and share information with the CSR side of companies. Clear messages from

the leadership and their commitment are the first step towards making changes in traditional mindsets for

information sharing to begin in earnest.

Continuously demonstrate commitment and willingness to work with communities

In contrast to contract farming where farmers are obligated by contract to sell to the companies, ITC’s approach

is to provide yield improvement assistance but to leave the final decision on the point of sale in the hands of

the farmers. Thus, ITC’s approach is to look at community engagement as a long-term business investment.

Some companies may find it difficult or economically unviable to continue to work with communities who do

not end up doing any business with them. Investments in rural engagement may take time to bear fruit. Whilst

there may be a strong business case for the investments, companies need to be prepared to continuously

demonstrate their willingness and openness to work in the rural set up.

Finding the right partner

ITC has partnered with different NGOs in different areas of expertise from extension services to social forestry to

establishing producer groups or assisting with cattle development. In Madhya Pradesh alone, 13 projects are

running in 1,351 villages in partnership with 11 NGOs. Partners bring in more than just professional expertise.

They also bring in transparency and acceptance by the rural community which are vital for programmes

to function.

However, companies willing to replicate this approach may find it difficult to find professional, credible and

responsible NGOs in their local areas. Sometimes, partners may also have a way of functioning which may

not suit companies. Simple activities like joint budgeting and planning might be complex for companies new

to social programming. There could also be multiple partners – some performing and some non-performing

which slow down the speed of delivery. Sometimes, partners working in an area may even refuse to work

with companies.



72

Partnerships involve mutual respect, clarity of roles and a strong agreement on objectives. The effort and time

to establish strong working partnerships is critical for delivering such projects. On account of risks involved

or loss of control, some companies may find it challenging to work with NGOs and prefer to set up their own

service network. Finding the right partner and finding the best way of working with the partner may be a difficult

challenge for companies.

Need for grants and initial investments

As mentioned before, at ITC, when a new business unit sets up operations in an area, especially an

agribusiness, they invite members of the Social Investment Programme to formulate a joint plan and strategy

for the area. Investments in the social programme are planned simultaneously as the business units make their

own investment plans.

Social programmes which benefit both the rural communities as well as the companies need significant

investments. Some of these investments may be channelled via grants to NGOs and some may be internal

costs of running such operations. The impact of social investments may not be directly attributable to business

profits and it is not always easy to apportion returns on capital from grant investments. Some companies may

therefore find it challenging or testing to work in environments where profits start to come in only in the long

term and investments in social programmes or seed capital investments are substantial.

In another example, Choupal Sagars are independently viable business units now. However, significant

investments go into social programmes before Choupal Sagar units are set up and become profitable. A

new Choupal Sagar does benefit greatly from the brand recognition it receives via the Social Investment

Programmes. These investments may be grants to NGOs but perceived as business investments in social

licenses. Nonetheless, companies investing in social programmes for business reasons may find it difficult

to ascertain if investments, especially business investments in social programmes are in fact beginning to

influence community perceptions towards the company.

Therefore, companies wanting to engage meaningfully with rural communities may need strong leadership

commitment and belief to be able to withstand shareholder and margin pressures. Changing shareholder

perceptions may be a difficult challenge but worthwhile to overcome.

Managing growing expectations of the rural communities

As rural communities get comfortable working with companies such as ITC, their expectations from the

company-NGO partnerships also gradually change. For example, as farmers understand yield enhancement

practices and establish themselves as members of village institutions, companies start to feel the need to

use existing resources to target more farmers as the existing farmers need less intensive support. ITC for

example may have the covered 50% farmers in an area for yield enhancement and the choice before it is:

should the next set of investments focus on helping the existing 50% farmers with value-addition e.g., grading

facilities or should it be yield enhancement interventions with the remaining 50% uncovered farmers? Farmers

may also start to expect other services from the company such as interventions in cattle, retail, helping to

establish producer groups or user groups for procurement or retail, etc.

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At this point of maturity in the lifecycle of the relationship of companies with rural communities, companies

face challenging business investment decisions on how far they are willing to go in working with the same

communities and how to meet their growing expectations. Do they, for example, increase the depth of

relationship with the same farmers or simply increase the number of farmers in the network?

Tie-ups with companies which bring synergies and share investments and benefits

As mentioned above, social programmes often require heavy investments on behalf of the companies. However,

companies operating the same areas with similar programmes can find synergies and implement programmes

jointly. For example ITC and BASF tied up under a pilot project to help improve soya yields. ITC pitched in with

water and soil conservation, BASF pitched in with their Samruddhi programme. Both companies are not in

competition for either procurement from or for sales to the farmers.

Companies which have synergies can come together and help intensify efforts working with rural communities

whilst at the same time reducing the management costs for both companies. Such examples are few and far

between but perhaps the benefits merit the possibilities of such tie-ups in the future. However, on the flip side,

many companies will find such information and resource sharing platforms challenging to work with.



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Annexure 3: Soya Procurement in Madhya Pradesh

Soya procurement in MP – How ITC engaged with the rural communities from yield improvement to procurement to retailing and now in distribution of agricultural inputs

India produces non-GM soya which is in increasing demand from around the world. In India, soya is grown in

Madhya Pradesh, Maharashtra and Rajasthan. The procurement companies can’t find enough soya supply

to meet demands for trading or even processing. But the yield of soya and therefore total production in India

remains much lower than the other soya producing regions like USA, China and Brazil. In MP, ITC also procures

wheat and maize besides soya. While we have reviewed here activities based around soya in detail, a similar

approach and infrastructure is in place for other crops as well.

In MP, ITC’s intervention with the rural community began in 2003-2004 under the Mission Sunehra Kal. The

objective of the mission was to enhance the productivity of land and the income of farmers, as well as to

augment non-farm income through other livelihood interventions. The programme has various NGO partners

and now touches more than 24,000 households in 1,513 villages across 12 districts. ITC’s Social Investment

Programme invested in extension services to help improve the yield. They facilitated farmer training sessions

and set up their own demonstration plots to evidence the improvements in yield and quality.

After the initial introduction of the e-Choupal kiosks, ITC has now opened procurement hubs and the most

recent addition to their foray in rural business are the Choupal Sagar retail outlets which sell a range of products

from soaps to computers to the rural and semi-rural communities.

To find everything from atta to high end TVs under one roof is a relatively new concept for the farmers which they

are gradually accepting. During purchases, the price is still the most critical decision factor but convenience

and quality are not far behind especially when companies are serving farmers with larger landholdings. Over the

year, almost 50% of the clientele is farmers and the remaining 50% is the semi-urban population. The farmers

may not yet be buying their monthly rations there but are beginning to find a reliable source to purchase high

value products such as televisions and computer screens.

Distribution at Choupal Sagar: As the idea of a one-stop-shop caught on, Choupal Sagar managers started

receiving requests from farmers to help procure agricultural inputs such as seeds, pesticides and fertilizers.

Farmers used their village development committees and the Sanchalaks to collect demands for inputs and

placed bulk orders at the Choupal Sagar outlets.

The Choupal Sagar started getting an indicative demand for inputs from various village institutions, it aggregated

the total demand and started procuring large volumes at lower prices from the producers. It then distributed the

inputs – mostly in bags to the farmers via the Sanchalaks. Farmers gained the cost benefits of bulk purchase

economies and reduced transportation costs. These inputs are now available for sale throughout the year.

When the distribution business started taking shape, ITC started to get a more efficient return for its investment

in the Choupal Sagar facilities. Even though the Choupal Sagar outlets are independently viable, the demand

for inputs also helps even out the seasonal cash flow situations agricultural businesses face.

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As for the farmers, they were happy and confident to place such orders as most of these inputs are the ones

that ITC uses on its own demonstration plots. They have come to trust ITC as a supplier of quality, knowing

that these inputs also help towards a higher quality of produce for which ITC is a ready buyer is also somewhat

reassuring for the farmers.

The evolution of the distribution side of the business is an evidence of loyalty and trust farmers place in

companies which demonstrate transparent and fair business practices. Not only do the farmers have access to

an alternative reliable procurer, they now also have access to alternative reliable distributors. There is a unique

two way buyer-seller relationship between ITC and the farmers.

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About Rio Tinto20

Rio Tinto is a 130 years old global metals and mining company. It is involved in exploration, mining and

processing of Earth’s metal and mineral resources in more than 40 countries around the world. At present, Rio

Tinto does not have any operating assets in India but will become a domestic minerals and metals producer

in the near future through its diamond and iron ore development projects in Madhya Pradesh and Orissa

respectively.

Intervention

Context

The Bunder project is Rio Tinto’s first diamond mining project in India and is operated by Rio Tinto Exploration

India Private Limited (RTEIPL), a wholly owned subsidiary of the Rio Tinto Group. The exploration phase began

in late 2001 and the first diamond-bearing deposit (lamproite) was found in May 2004.

The final approval to develop the project was granted by the Indian Government in 2011, and in early 2012 the

State Government of Madhya Pradesh issued the ‘Letter of Intent’ to begin development. The construction

phase is scheduled for 2014 and 2015 and the mine is expected to be operational by 2016 to early 2017.

Since 2004, the company has been engaging with local communities to determine how the local communities

can develop as the project grows, understanding local needs and priorities and establishing relationships

with local and international partners for delivering programmes at the grassroots. The region surrounding the

proposed mine is economically backward, underdeveloped, water-scarce, drought prone, with limited access

to health, education, and communication services, and is burdened by traditional caste systems.

Programme structure

Rio Tinto has placed a Community Relations Team on the field. The community relations team working on the

ground continuously consults with the local communities on their needs and priorities and then develops and

delivers locally relevant programmes. Participatory Rural Appraisal (PRA) and Community Needs Assessment

(CNA) methods are utilised to arrive at a list of priority issues. Subsequently, based on the desired impacts

needed to address the identified issues, appropriate programmes are developed. Depending on the nature of

individual programme requirements and availability of in-house capability and internal capacity, partnerships are

Case Study 6: Maintaining Social License to Operate – Rio Tinto’s Bunder Project

20 http://www.riotintoindia.com

77

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78

developed with local organisations (NGOs) or international organisations to assist in effectively delivering these

programmes in the target villages. At the same time, the possibility of dovetailing with existing government

(central and state) schemes wherever possible is also explored. This is done to avoid unnecessary duplication

of efforts and to efficiently utilise resources available with Rio Tinto. Funds and human resources are then

deployed for implementing the programme.

Figure 8 above shows the entire programme development cycle.

Rio Tinto (itself or through consultants) systematically carries out studies and surveys and maintains a

comprehensive issue based repository of information on its core villages to design its programmes. These

include child growth survey, education survey, community health perception survey, agri-livestock study, forest

livelihood impact assessment, housing option analysis study, regional skill mapping study, household energy

needs assessment, housing strength assessment study, documenting indigenous health specialists in villages

and digitising of village resource maps.

Rio Tinto also runs a ‘Community Information Centre’ (since December 2007) that functions as an easily accessible

point for disseminating information to the local community. The centre is open seven days a week and is located

at Buxwaha town, a local trading centre. The information requests from visitors ranges from enquiries on job

postings, diamond mine operations to information on community programmes run by Rio Tinto.

Programme activities

For communities to grow and prosper as the project develops and for Rio Tinto to forge a lasting relationship

with the community, its community projects focus on:

• Improving water availability

• Generating livelihoods

• Building community-based institutions

• Health and education

79

Maintaining social license to operate

Interventions with impact on water availability

Interventions with impact on livelihoods

Interventions aimed at building community based institutions

Making water available today to communities, to manage future

responses

Making communities part

of growth and prosperity of the

company

Enhance quality of life, indirectly

impact livelihoods and build

social capital

Building a strong bond

with communities

Interventions in areas ofHealth and Education


Figure 9: Circle of continuous interventions and business and community gains for Rio Tinto

Improving water availability

Lack of safe drinking water and unavailability of water for agricultural purposes are two major problems

impacting the villages surrounding the Bunder project. For domestic consumption, each village usually has

2-4 government installed water hand pumps. Women and children carry containers of water from these hand

pumps to their respective houses. Most of these hand pumps are not a reliable source of water and dry up in

a short span of time. Women sometimes have to wait for hours for water to come.

The local needs assessment studies carried out by Rio Tinto also pointed out the criticality of water availability

and water till date remains the highest priority issue for the community programmes developed by Rio Tinto.

Rio Tinto employs scientific and methodical water finding methods and focuses on quality, quantity and

sustainability of water resources. By managing water resources and making it available to the communities

today, Rio Tinto is trying to manage any potential impact on the local communities in the future when it will

start using the water resources for its mining operations. Therefore, a focus on water resource management

is imperative.

Rio Tinto’s programme involved installing a bore well at a location selected using results from a study of

water sources available near each village. A solar energy powered pump was installed right next to the bore

well. The water is pumped using the solar powered pump to a collection tank located inside the target village

miles away from the well. Pipelines are installed from the collection tank linking it to individual households.

At the end, each household has a functioning tap located inside its house doing away with the need to carry

water containers up to two to three km several times a day, hence completely eradicating drudgery related to

carrying water for domestic usage. Rio Tinto partnered with a local NGO – Haritika for delivering this solution.


80

CommunityTarget group

Rio TintoProgramme funding

VWSCProgramme

implementation

HaritikaTechnical support

and capacity building

Community and

VWSC

Programme design and delivery phase Post-delivery (O&M) phase

The programme also involved forming Village Water and Sanitation Committees (VWSCs). This village level

institution plays a critical role in making the intervention sustainable. The idea is that Rio Tinto’s financial

contribution is restricted to the capital expenditure incurred for setting up the system and the recurring expenses

during the operation and maintenance (O&M) phase will be managed by the local communities through their

respective VWSCs. Haritika and Rio Tinto work jointly with the VWSC at each stage to ensure a smooth

handing over of the project to the VWSC during the O&M phase. More details are provided in annexure 4.

The system has been installed in all the 14 targeted core villages (around 860 households with 4,682 people) and complete handing over to the VWSC has taken place in one village.

The working model of the drinking water scheme is diagrammatically represented in Figure 10.

After addressing the drinking water issue, Rio Tinto is working on a multi-year strategy for tackling the issue

of water for agricultural usage in the region as it entails significant bearing on agricultural and livelihood

programmes that it intends to develop going forward. The wells that have been dug at carefully selected sites

will eventually dry up if nothing is done to recharge the water table. This would require having a comprehensive

water resource and watershed management programme in place which is precisely what Rio Tinto is looking at

in the next phase of its programme. Rio Tinto is carrying out comprehensive studies to look at all water sources

available in each village, possibility of maintaining and refurbishing existing sources (pond renovation etc.) and

eventually putting together a watershed management programme in place. Water availability would allow Rio

Tinto to pursue a structured approach towards impacting agricultural livelihoods.

Figure 10: Working model for the drinking water programme. Sourced from Rio Tinto’s presentation

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Rio Tinto also works on repair and maintenance of traditional water structures, deepening of water augmentation

ponds, conducting hand pump repair drives with technical assistance from the Public Health Engineering

department, and conducts demonstrations of roof water harvesting methods.

Generating livelihoods

Rural livelihoods in the neighbouring communities are primarily associated with subsistence agriculture, animal

farming and forestry products (locals collect mahua flowers for supplying to the liquor industry and tendu leaves to make beedis). Therefore, there is tremendous scope for impacting livelihoods. Rio Tinto has started

several programmes for addressing this but also takes into account that the issue of water availability in turn

impacts the scope of agricultural livelihoods and therefore the programme on water management receives the

highest priority.

The local community’s acceptance of a company operating a diamond mine is also a key consideration while

designing community programmes. This is especially true for a commodity like diamonds. It is important for

Rio Tinto to be able to share a piece of its wealth from mining with the communities and ensure that they

also grow and prosper with the growth of the mine. Making communities a shareholder of prosperity enables

relationship building. The expectations of the communities are likely to become more oriented towards this

view as the mine starts its operations and Rio Tinto starts selling the mined diamonds. The community

programmes thus need to focus on creating sustainable livelihoods and enhancing the quality of life in the

nearby communities.

Local employment and skill development

Rio Tinto has been committed towards employing local people as providing employment is the most direct way

of improving livelihoods. In 2011, The Bunder project employed approximately 420 people including contractors,

of which approximately 80% were from Madhya Pradesh (70% from Chhatarpur district and 60% from the 15

core villages). According to estimates from Rio Tinto, the number is likely to double during the construction

phase. Over a period, direct employment from the mine in the operation phase is expected to be around

400 employees. This excludes indirect employment. Rio Tinto is committed to employ as many local people

as possible and has also submitted a proposal to the state government for developing an Industrial Training

Institute (ITI) to supply some of its trained graduates to the mine. The region will see substantial investment in the

next three years and will create employment opportunities for the graduates of the proposed institute.

Rio Tinto also worked with the Industrial Training Department to set up a skills development centre in Buxwaha

in 2011. The centre runs a 120 hour long ‘Electrician’ programme. Rio Tinto assists in finding eligible candidates

from local communities to participate in the programme. It also assists (filing applications) local students in

applying to ITIs.

Rio Tinto has organised a training programme for teaching interested women candidates to drive. Eleven

women aged between 18 and 35 years embraced this opportunity and started their training from October of

the same year. Four successful candidates have been recruited by Rio Tinto as one of the first professionally

employed women drivers in that region. The details are presented in Annexure 5.


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Local sourcing

Rio Tinto procures 100% of its supplies of vegetables for its camp kitchen from a group of local farmers. The

value of the monthly sale to Rio Tinto can vary from INR 50,000 to INR 100,000 depending on the requirement

at the camp kitchen. Till 2009, Rio Tinto used to procure the supply of vegetables and fruits for its camp

kitchen from a vendor located 100 km away from its camp in Chhatarpur village. Rio Tinto wanted to procure

these supplies locally from villages in the vicinity of its camp to drive local income generation activities but could

not do so as the farmers functioned as small fragmented units and it was operationally difficult for Rio Tinto

to engage with so many small farmers to meet its entire demand. To address this problem, the community

relations team started engaging with local farmers and helped them aggregate into a group. This led to 11

farmers coming together and forming a vegetable growers group (locally known as Matth Sabji Samooh). A

short case study on the vegetables growers group is presented in annexure 6.

Rio Tinto also meets its requirements of construction material like cement from local vendors. Some of the

other interventions with direct impact on local livelihoods are presented in Annexure 7.

Building community based institutions

Rio Tinto also focuses on building community based institutions and strengthening the existing ones. Building

institutions allows individuals to enjoy benefits of aggregation. It also feeds into the goal of making programmes

self-sustaining whenever possible. Rio Tinto wants to ensure that the benefits of the programmes it has initiated

continue to accrue to the communities even if they are not part of their communities in the future. Community

participation through institutions also brings a sense of ownership amongst the participants and provides

necessary capacity building to take these programmes forward without Rio Tinto’s support in the future.

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Rio Tinto looks at Institutionalisation of informal village level community groups in the form of youth groups,

cultural committees and women groups. It also assists in capacity building of Parent Teacher Associations

and Panchayat functionaries through regular village level meetings and consultations. It assists in formation of

women self-help groups and strengthening of existing ones.

Rio Tinto also focuses on institution building while designing its programmes to assist in programme

management and implementation. The Village Water and Sanitation Committee for the drinking water initiative

and the vegetables grower group for procuring local supplies of vegetables are two examples that have already

been discussed.

Health and education

The focus on health and education is guided by the findings of the participatory methods, needs assessment and

other studies carried out to study the health and education profile of local communities. The studies suggested

the lack of resources and knowledge to support better health and education outcomes. Rio Tinto carries out

several initiatives in the areas of health and education. These programmes help in further strengthening the

bond Rio Tinto shares with its surrounding communities as these help in enhancing the quality of rural life and

build social capital. The initiatives are briefly presented below and details are presented in annexure 8.

• In 2008, Rio Tinto entered into a long-term association with UNICEF that will see it provide USD 250,000

over a five-year period to support health and education initiatives for women and children.

• Rio Tinto assists in better delivery of services under the anganwadi programme to its 15 core villages.

• Rio Tinto runs coaching centres in 5 villages to help prepare students for their 10th standard board

exams. It has also started providing coaching for the pre poly-technic exam.

• Rio Tinto has started an initiative to teach basic reading, writing and arithmetic to women in its 15 core

villages.

• Rio Tinto works with the Gramodyog and block level Government Hospital to help patients suffering from

tuberculosis.

• Since 2007, Rio Tinto has been running a free bi-weekly health clinic in Bajna village in a sub-centre of

the government health department.

• Rio Tinto helps in organising health camps in collaboration with the local health departments. Rio Tinto

procures medicines on its own and distributes them for free. In cases where there is a provision for

distribution of free medicines by the health department, Rio Tinto assists in creating awareness and

organising the camp.

• Rio Tinto focuses on sanitation through organising exposure visits for VWSC members to show them

the benefits of community managed drinking water and sanitation projects, organising street plays, and

building sanitation blocks (3 villages).

• Rio Tinto has also undertaken other initiatives in areas of environment and resource management. These

are presented in annexure 9.


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Business case for Rio Tinto

Strong community relations are a prerequisite to starting operations of this kind and scale: Community development and need for a social license to operate

For an infrastructure project to operate smoothly during pre-feasibility, construction and operational phase, it

has become increasingly critical to engage with rural communities surrounding the project. It is important to

understand how communities perceive setting up of any project in their vicinity and how they view potential

wealth that will accrue to the company from using resources from its neighbourhood. Companies need to

ensure that the communities don’t feel ‘left behind’ whilst they prosper and grow. They need to acknowledge

the community’s perception, needs and priorities, design a dedicated community engagement programme and

implement strategic initiatives to address not only the ‘growth and prosper’ side of the story but a whole roster

of locally relevant issues which would encompass social and environmental spheres along with economic.

Although it is true that income and employment are the two major tangible benefits which drive the needs

of the communities, but such benefits are inherently capped by the capacity of the project to employ and

disburse funds. Companies therefore need to manage resource (funds, human resources etc.) allocation and

the community’s expectations and try to create an ecosystem of community initiatives that target and balance

both tangible and intangible impacts.

Securing resources critical to production without negative local impact

Rio Tinto understands how critical the issue of water availability is for this region and for its future mining

operations. By managing water resources proactively today and by making efforts to secure supply for the

communities as well as for itself, it is ensuring continuous access to water in the coming years.

Managing community relations and expectations

For a project which will see its commercial operations start in 2017, by engaging with communities more than a

decade in advance clearly puts Rio Tinto in a unique position vis-à-vis the local communities. The list of initiatives

undertaken by Rio Tinto in its 15 core villages spanning several locally relevant issues has allowed Rio Tinto to place

itself in a position of trust enjoyed by very few companies. This certainly reduces, if not completely eliminates, the

risk of facing operational disruptions arising from local community issues. Such a relationship demonstrates the

willingness of the company to share the value it will get from mining in that very community’s neighbourhood.


The activities undertaken by Rio Tinto have transferred economic benefits directly in the form of income and

employment and through skill development (vocational as well as basic business skills).

Locally relevant solutions

The programme development approach adopted by Rio Tinto closely takes into account the needs of the local

communities. As such, each project delivers customised solutions to the villages to address each locally relevant

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issue. Through its multi-year strategy for water, Rio Tinto has been able to deliver water to the community’s

doorsteps and will continue to work towards managing local water resources more efficiently. The long-term

plan is to eventually make water available for agriculture and livestock farming needs and thereby have a direct

impact on livelihoods.

Building Local institutions

Rio Tinto also focuses on building community based institutions and strengthening the existing ones. The

formation of institutions both formal and informal enables fragmented individuals to function as a unit and

together reap greater benefits as a result of aggregation. This is evident in institutions like the vegetable growers

group and the village water and sanitation committee discussed earlier.

Education and livelihood

Rio Tinto intends to impact each and every household of its 15 core villages with at least one of its

programmes and wants each household to become part of at least one community based institution.

Programmes for education focus on education at primary and secondary levels and higher education as

well. Programmes on skill development and trainings on sustainable agricultural practices create additional

livelihood opportunities.

Efficient use of resources

Programmes on water resource management, alternative cooking fuel, sustainable agricultural practices etc.,

emphasise on utilising local natural resources more efficiently. Small interventions over a period of time will turn

into habits and communities will benefit from sustained savings and better availability of resources by following

these resource management practices.

The social impact of each programme is evident in its design. Programmes on themes like education, women

empowerment, community health etc., delivered through different channels and mediums leave an overall

impact on the social fabric of the local communities.

Lessons learnt

Lesson learnt are that the communities need to allow companies to operate in their areas and compete for

natural resources. Companies need to recognise the value of a social license to operate which a community

grants to them. This does not begin once the operations start. The process starts way before that and continues

during the life of the operations of a company in an area.

Working with partners

A company may not have sufficient internal capacity to deliver specialised (household based biogas plants or

solar lighting provisions) programmes on the ground simply because it is not part of its core business. Finding

right partners with common interests and understanding is not an easy job but it is critical for the success of


86

such community programmes. This is evident in the case of Rio Tinto. As discussed before, a company could

utilise its internal resources to engage with potential partners or may devise an engagement mechanism for

connection with potential partners.

Making communities both a stakeholder and a shareholder

Companies need to ensure that the communities with which they will work in the future are part of the process

of not just delivering the programme but also part of the initial discussions while formulating the programme.

Using participatory and community needs assessment methods should not just be used as tools for finding out

the key local issues but should also be used as a way of inducing ownership amongst the communities for the

programmes which the company will run to address issues that the communities themselves have identified

as important to them. This allows for companies and communities to become joint-stakeholders of the growth

process and joint-shareholders of the associated benefits.

Building new community owned institutions and strengthening existing ones (existing self-help groups) is also

important for taking forward the shareholder approach. As per its plan, Rio Tinto’s drinking water project created

the Village Water and Sanitation Committee to eventually manage the project on its own post-operationalisation.

This reflects Rio Tinto’s commitment on delivering self-sustaining solutions which will continue to benefit the

communities even if they are unable to take their project forward.

Early start and long-term approach

Having a 10+ year head start (even before starting construction) for managing community relations provided

Rio Tinto sufficient time to tackle issues that can potentially cause operative disruptions in the future. Proactive,

constructive and mutually beneficial work can help build strong foundations of community relations to help resolve

any potential risk of community-based disruptions. Developing a lasting relationship with the communities is

anyway a long-term process. Having a long-term perspective is the only way to enable drivers for maintaining

the social license to operate to really start feeding into building a strong bond with the communities. How early

a company has to intervene will depend on its assessment of how much time it would take to bring in the

desired socio-economic changes before commencing operations.

Challenges

Finding the right partners

As discussed before, depending on internal capacity, Rio Tinto would either deploy its own resources or scout

for the right partners for delivering its community programmes. For its drinking water project it collaborated with

Haritika and for its alternative cooking fuel project (household based biogas plants) it worked with Gramodyog.

Both these NGOs had prior experience of delivering similar programmes. Rio Tinto utilised its existing network

with NGOs and its internal resources (some of the members of the community team had prior experience of

working with NGOs) for finding these partners. The partner-finding process was not particularly challenging for

Rio Tinto but this may not be true for every other company. Bringing together partners from different worlds

(for-profit and not-for-profit) and building on that relationship is imperative for the success of these community

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programmes. Companies can utilise their internal resources or develop these resources over time or develop

an external stakeholder engagement process for connecting with potential NGO partners. There is no formula

but a mix of these options can surely assist in making this process easier.

When to start and how much to allocate?

Another challenge for companies is to determine when to start engaging with communities and the right

amount of resources (financial resources, human resources etc.) to allocate for the process. Rio Tinto started

engaging with communities more than 10 years before its commercial operations were expected to start and

deployed a dedicated 4-member community relations team. Rio Tinto realised that for the local issues it had to

deal with (the district is one of the most backward ones in Madhya Pradesh), the impact it wanted to make and

for the magnitude of change in status-quo it had to bring in before its commercial operations, starting a decade

in advance made sense. Companies have to decide how much time they would need before commencing

operations to make the desired socio-economic transformation happen and the associated resources required

to bring in that very change. Connecting with communities and understanding contextual issues at the very

beginning is necessary to make these decisions. Working for communities while the company is not generating

revenues from their project requires substantial financial commitment. This is true for Rio Tinto as well. A

good way to start would be to focus on high-impact areas identified through participatory methods, develop

long-term strategies for these areas and leverage available government-run schemes as much as possible to

optimise the available resources.

Managing expectations

Rio Tinto pointed out that managing the expectations of the communities is a key challenge while running

it programme. The extent to which a company can intervene for developing a community is at the end of


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the day bound by the financial contribution, which understandably is not unlimited. Rio’s approach looks at

strategising on high impact issues (water, livelihood) and at the same time working on other locally relevant

issues as well (health, education etc). It also makes a conscious attempt at dovetailing as many government

subsidy schemes as possible. In many cases, it has simply intervened by facilitating better delivery of these

subsidised services. According to Rio Tinto, being transparent about its programmes and operations also

helps in managing expectations.

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Annexure 4: Drinking Water Initiative

Other details

• A solar energy powered water pump was procured from Auroville Renewable Energy (AuroRE). Although

installing a solar energy powered water pump as opposed to a conventional electricity powered pump

meant higher capital expenditure for Rio Tinto, the operating cost (no electricity bills) associated with a

solar powered pump is almost negligible. Once the entire system (borewell, solar pump, collection tank

and pipe connections) is in place, a single individual from the village is hired to guard the premises of

the pump and borewell and is trained by Haritika to perform simple operations for running the pump

through the day. The salary paid to this individual and some maintenance expenditure form part of the

recurring expenses of running the system. The guarantee offered by the equipment supplier also covers

any repair expenses.

• Each VWSC has 7 to 12 members with representation from all castes and both genders. A bank account

is opened in the name of the committee with three signatories: two from VWSC and one from Haritika.

• Although Rio Tinto was funding the initial expenses of the project, interested households were asked

how much they were willing to contribute as a one-time contribution. Depending upon the economic

status of households in each village, a one-time contribution (INR 1000 in some of the villages) was

collected by VWSC and deposited in its account. Households also make a monthly contribution, totaling

to INR 200, towards a saving fund. The initial contribution instils a sense of ownership and accountability

in the participating households and the monthly savings provide opportunities for investing in income

generating activities in the future.

Benefits of the programme both for Rio Tinto and the communities are discussed below:

Benefits to Rio Tinto

• Delivering a solution to one of the most critical problems plaguing the local communities helps build

community trust.

• In order to secure water for its mining operations, Rio Tinto plans to build a dam to capture the surface

water runoffs in this water-scarce region. By providing water to the local communities today, Rio Tinto is

in a better position to manage potential future operational risks.

Benefits to local communities

• Each participating household can enjoy the benefits of clean water supply at their doorstep.

• Drudgery faced by women and children by carrying water over long distances is eliminated and time can

be allocated to other economically or socially productive activities.



90

• Putting together institutions like VWSCs builds the capacity of village households and demonstrates the

benefits of aggregation and institutionalisation.

• The saving scheme embedded in the VWSC provides new opportunities and enables the community to

work together for its future by investing savings towards income generating activities.

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Annexure 5: Women Drivers

In July 2010, the Bunder project team along with Chhatarpur District’s Department of Women and Child

Development organised a workshop to assess and discuss the role that the Bunder project could play in the

area of women empowerment. The event saw participation of more than 270 women from 15 villages within a

5 km radius of the Bunder project camp. As an outcome of this workshop, Rio Tinto noted the enthusiasm of

local women to work for the project and their need for flexibility around their domestic responsibilities.

Rio Tinto then decided to organise a training programme for teaching interested women candidates to drive.

Eleven women aged between 18 and 35 years took this opportunity and started their training from October

of the same year. Rio Tinto assisted these women in procuring learner’s driving licenses. Besides driving, the

training covered traffic rules and basic mechanics. An in-house driver of the Bunder project team trained these

women from 7.00 am in the morning till 5.30 pm in the evening with each trainee getting 30-45 minutes of

driving time. Rio Tinto also arranged for a modified car from a driving institute to serve as the training vehicle.

The training programme was conducted free-of-cost for all the trainees.

After three months of training, a driving proficiency test was conducted by the safety advisor working at the

camp. Four women qualified the test, got their driving license made and were subsequently recruited by Rio

Tinto as drivers. The women are compensated the same amount as their male counterparts. Since then, two

women employees have qualified for commercial driving licenses.


The unique programme furthered Rio Tinto’s commitment to empowering local women and strengthened their

relationship with their neighbouring communities.

Benefits to women drivers

• Being the first women drivers in the area to be employed professionally, these women have received not

just local recognition but are also known as the faces of Rio Tinto’s unique programme. They serve as

role models to the other girls in the local community.

• Women drivers have also requested training sessions related to mechanical motor repair and have

subsequently participated in these training sessions organised by Rio Tinto’s local staff leading to further

proficiency in their driving skills.

• Becoming employed at Rio Tinto has exposed these women to a formal professional environment and

has opened up many other opportunities for the future. These women are also eligible for certain jobs at

the local Regional Transport Office which require a driving license.

• Two women drivers have also shown interest in learning how to operate a computer and have been able

to do so by the help and support provided by the staff working at the camp.

• Financial independence has improved the status of these women in their households.



92

• Such examples encourage broadening of traditional male mindsets leading them to encourage their

wives and daughter to become productive citizens.

Apart from this programme, Rio Tinto has also employed women as security guards. Though they are not from

the local population, they serve as role models for women empowerment to the local communities.

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Annexure 6: Vegetables Growers Group

Until 2009, Rio Tinto used to procure fruits and vegetables for its camp kitchen in Chhatarpur village from

a vendor located 100 km away. Rio Tinto wished to provision supplies from nearby villages to drive local

income generation activities but could not do so as the farmers functioned as small fragmented units and it

was operationally difficult for Rio Tinto to engage with so many small farmers. To address this problem, the

community relations team started engaging with local farmers and encouraged them to form a group.

It took almost a year to convince the farmers. The farmers were reluctant to form a group as they were

already generating some income through their existing operations. The community relations team conducted

numerous meetings with the farmers to demonstrate the benefits they would gain by coming together and

supplying produce to Rio Tinto and possibly other new customers.

In 2009, 11 farmers formed the Vegetable Growers Group (locally known as Math Sabji Samooh) and started

supplying to Rio Tinto’s camp kitchen. A bank account was opened and two signatories from the group were

selected. In 2011, Rio Tinto handed over the management of its kitchen to Sodexo (an on-site service solutions

provider) and the farmer group started dealing directly with Sodexo.

On a daily basis, the kitchen head gives an order sheet for the day to the representative of the farmer’s group.

The representative aggregates the required supply from the member farmers and delivers the order. The group

raises its bill on the 15th of every month and the payment is made by cheque by the end of the month

which is then distributed amongst the group. At present, all the members have personal bank accounts also.

Rio Tinto also encouraged the farmers to start a saving scheme as a result of which a nominal amount of INR

100 per farmer per Sodexo order is saved in the group’s account. As a result of this, the group has purchased

a pickup using a financing scheme available with the dealer.

The group also conducts monthly meetings to discuss their plans and any issue at hand. They have complete

access to Rio Tinto’s community relations team to take their guidance and help on any matter. Rio Tinto also

facilitates visits to teach modern nursery management and vegetable cultivation techniques to these farmers.

Rio Tinto procures all its supplies from the group and accounts for around 25% of the groups total sales.

The value of the monthly sale to Rio Tinto can vary from INR 50,000 to INR 100,000 depending on the camp

kitchen’s requirements. The group sells half of its produce at the local market (haat/bazaar/mandi) and the

remaining 25% to local establishments like dhabas.


• The formation of the group enabled Rio Tinto (and Sodexo) to deal with an organised institution instead of

individual farmers. At the same time, Rio Tinto in its role of advisor was able to strengthen its relationship

with the farmers at practically zero cost.


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Benefits to local farmers

• The farmers have reported a definite increase in their incomes. Earlier, on a given tract of land, each

farmer would produce all the vegetables to sell in the local market. This intensified the competition for

each item and drove the price down. As a result of being part of the group, each farmer specialises in

growing one or two vegetables. This allows him to become a price maker rather than a price taker.

• The experience of dealing with an institutional client (Sodexo/Rio Tinto) and local financial institutions

(banks, non-banking financial institutions) has imparted significant business training to the members of

the group. In the future, as other companies like SAIL and NTPC make investments in nearby areas, the

farmer group can become a supplier to these companies as well. Small things like developing an order

sheet for clients have resulted from the ‘learning by doing’ process.

• The saving scheme allows the group to manage its risks and plan better for the future.

• The entrepreneurial skills developed over a period of time have resulted in the formation of a sustainable

income generating group and the members have reaped both economic and social benefits by being

part it.

• The ability to function as a group has also brought other intangible benefits to the group. The members

reported that they now function as a family and can reach out to each other for their individual matters.

The group has also attained social standing in the village and actively takes part (as a group) in organising

social gatherings or functions.

• Although it is yet to materialise, the success of one group could inspire the formation of similar groups in

farming or even in other spheres of the rural economy.

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Annexure 7: Interventions with Direct Impact on Livelihoods

Table 10: Rio Tinto’s programmes on enhancing livelihoods

Programme Description Partners Scale/

target

Sustainable

agriculture

programmes

In the area surrounding the Bunder project, agriculture is

marred by issues of water scarcity and soil infertility, and

is primarily a subsistence activity. On a small piece of

land, farmers usually grow crops like wheat, soyabean,

sesame, lentil, chickpea and mustard. The input-output

cost ratio provides no economic rationale for this mode

of cultivation. To tackle this issue, Rio Tinto has been

engaging with farmers in the following manner:

Rio Tinto has started a drive to replace chemical fertilizers

with vermi compost in two tribal villages. Exposure visits

were organised to convince the farmers to shift to organic

farming. The process also involves using waste water

owing to general water scarcity. Government sponsored

schemes were also utilised. Farmers have recorded

significant savings (INR 1,000 on DAP and INR 400 on

urea for cultivating wheat in only one acre of land) from

not using chemical fertilizers. Households involved in

vermi composting also pick up animal dung lying around

to increase the output. Therefore, a side benefit is that

the surroundings are kept ‘dungfree’.

This initiative is now being adopted in other villages too.

Farmers benefit from getting high quality organic manure

and by earning cash income by selling earthworms (INR

300/per kg).

Rio Tinto also organises visits from Krishi Vigyan Kendra’s

agriculture scientists for providing training on appropriate

crop management practices.

Krishi

Vigyan

Kendra

Programme

started in

two tribal

villages.

The target

is to include

all 1,000

farmers

living in the

15 villages

by 2013.

Seed

distribution

programme

Rio Tinto has been working with the district horticulture

department since 2007. Under the scheme, the farmer

has to file an application with the department to obtain

free seeds. Rio Tinto has created awareness about

these programmes and assists farmers in the application

process and collectively files these applications with the

departments and facilitates the distribution process.

District

Horticulture

department

Across 15

core villages


96

Programme Description Partners Scale/

target

Farmer

training

programmes

Training is organised in association with government

departments on themes like nursery preparation and

management; crop nutrients management; and pest,

insect and plant disease management. Rio Tinto assists

in creating awareness about these programmes and

facilitates the delivery of these sessions to the farmers.

Agriculture

Extension

Centre

Nogaon,

and

Agriculture

and

Horticulture

Department

at

Chhatarpur.

Across 15

core villages

Animal

husbandry

programmes

Rio Tinto annually organises cattle breed improvement,

vaccination and animal health camps in collaboration

with the local animal health department.

Local

animal

health

department

Across 15

core villages

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Annexure 8: Interventions with Focus on Health and Education

Table 11: Rio Tinto’s interventions in health and education

Programme Description Partners Scale/target

Programmes

on education

and nutrition

– Partnership

with UNICEF

In 2008, Rio Tinto entered into a long-term association

with UNICEF. A Memorandum of Understanding

was signed that will see Rio Tinto provide USD

250,000 over a five-year period to support health

and education initiatives for women and children

in the Chattarpur District of Madhya Pradesh. The

programme has been rolled-out in 132 villages

including the 17 villages within the mine’s vicinity and

has involved supplying furniture and other equipment.

The programme also focuses on building capacity of

the teaching staff. The teachers are trained on using

activity based learning methodology in their class

rooms.

Health care projects include improving access to

primary health care facilities, nutrition education

programmes for women to address high rates of child

malnutrition, and increasing rates of immunisation,

especially among children. Rio Tinto carries out a

monitoring visit with UNICEF each year to review the

impact of the funding initiatives.

UNICEF 132 villages

including the

17 villages

within the

mine’s vicinity

Anganwadi

programme

Rio Tinto provided Government designed pre-

education kits in 12 Anganwadis across the 15 core

villages. Three mini Angawadis in three villages were

set up based on the demand from these communities.

Prior to this, these villages did not have any formal

Anganwadis. Rio Tinto engaged with the Government

and arranged for supply of supplementary nutrition

allocated under their Anganwadi scheme. Rio Tinto

collects the nutrition packets from the collection

centre and ensures delivery to the anganwadi centres.

Rio Tinto also made arrangements to set up tents to

provide a designated place to meet. The Anganwadi

workers were trained by Rio Tinto and have become

Rio Tinto’s paid contract employees.

Governments Across 15 core

villages


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Coaching

initiatives

The 15 core villages suffered from abysmal passing

rates for students appearing for the 10th Board

exams. Teacher absenteeism at the government

schools is also a common problem reported by

students. To address this concern, Rio Tinto runs

coaching centres in five villages. About 130 children

(56 girls) regularly attend tuitions in these five centres

free of cost. These are run during off-school hours

(early morning and evening) in the existing school

buildings of the respective villages with concurrence

from the government authorities. Rio Tinto has also

started providing coaching for the pre-polytechnic

exam.

Local

schools

for the use

of their

infrastructure

Coaching

centres are run

in 5 villages

but the classes

are attended

by students

from all 15

core villages.

Women

empowerment

through

education

Rio Tinto conducted a study on women in the 15 core

villages of the project which showed that over 80% of

them are illiterate. Rio Tinto felt that before inducting

women into a skill development programme, it is

imperative to instil basic reading and writing skills to

ensure that the skill learned in future can be taken

forward as an income generating activity. Under its

empowerment programme, Rio Tinto has started

with an initiative to teach basic reading, writing and

arithmetic to women in its 15 core villages.

At present, classes are conducted daily for one hour

in eight villages and 60 women participate as of now.

The basic skills also assist these women in helping

their husbands in carrying out trading activity. Simple

things like counting and multiplication help these

women to correctly calculate wages owed to them

or total money owed to them through sale of their

produce.

At present,

classes are

conducted

in eight

villages

and 60

women

participate

as of now.

The target

is to cover

all 15 core

villages.

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Programme

for freeing 15

villages from

tuberculosis

Tuberculosis has been responsible for many deaths

in the Buxwaha region. Lack of familiarity with

symptoms makes the disease go undiagnosed often.

What makes it worse is that patients are often kept in

isolation. Rio Tinto with the help of Gramodyog and

the block level government hospital have helped 13

patients suffering from tuberculosis.

Rio Tinto has launched an awareness campaign

on the local radio explaining the symptoms through

a song, prevention and available treatments and

facilities. A written message would have been

ineffective because of low literacy levels in the areas.

It is also assisting in identifying possible cases and

helping those infected to receive medical treatment

and recover.

The tuberculosis eradication programme also extends

Rio Tinto’s commitment towards nurturing a healthy

workforce where minimum man days are lost due to ill

health. This is true as 70% of the work force is local.

Gramodyog

(NGO),

Block level

government

hospital

Across 15 core

villages

Community

health clinics

Since 2007, Rio Tinto has been running a free

bi-weekly health clinic in Bajna village at a sub-centre

of the government health department. The doctors

working at the Bunder camp visit these clinics twice a

week. Since inception, a total of 16,200 consultations

have been conducted and in 2011 alone, 2,677

consultations/free medical assistance were provided.

Government

health

department

The clinic

operates in

one village and

is accessible

to all nearby

villages


100


Health camps

and other

community

health

programmes

Rio Tinto helps in organising health camps in

collaboration with the local health departments. Rio

Tinto procures medicines on its own and distributes

them for free. In cases where there is a provision

for distribution of free medicines by the health

department, Rio Tinto assists in creating awareness

and organising a camp. It also pays the levy on behalf

of the beneficiaries which they are asked to pay in

case of free medicine.

Special health camps like health camps for children

on children’s day, eye camp, leprosy camp.

A child growth survey from the age group one to five

was conducted in 15 villages to take stock of their

nutrition levels and to update polio and vaccination

records. All the malnourished children are admitted

into the nutrition rehabilitation centre in Buxwaha

for an intensive 14 day treatment and medication

programme. Rio Tinto is also working with the

Buxwaha hospital to create vaccination cards for

identified children who did not have their polio shots

and vaccinations on time.

Health

departments

Across 15 core

villages

Sanitation

programme

Rio Tinto focuses on sanitation by organising

exposure visits for Village Water and Sanitation

Committee (VWSC) members to show them the

benefits of community managed drinking water

and sanitation projects, organising street plays, and

building sanitation blocks (three villages). Rio Tinto

has also committed to make its core villages open-

defecation free.

Campaigns

cover all the 15

core villages.

Sanitation

blocks have

been built in

three villages.

Other

awareness

campaigns

Rio Tinto organises street plays, cultural events,

film shows, and fortnightly gatherings with themes

like water resource management, health, hygiene

and cleanliness awareness drives, AIDS awareness,

cultural heritage conservation, and village clean-

up drives. The Community Information Centre also

serves as an easily accessible source of information

for all the villages and not just the 15 core villages

Local

NGOs

Across 15

villages

101


Annexure 9: Other Initiatives


Alternative

cooking fuel

programme

To promote alternate cooking fuel options and

advanced way of making organic manure, Rio

Tinto along with its NGO partner, Gramodyog is

promoting Bio Gas technology and has targeted

50 bio gas plants at household level in a village.

Gramodyod is the certified Rural Energy

Technician in the region and is responsible for

running the government sponsored subsidy

scheme. The typical cost of installing such a

system is around INR 18,500-20,000. The

subsidy is worth INR 8,000. Rio Tinto contributes

INR 5,000 and the rest (INR 4,000-5,000) is

given by the beneficiary.

Gramodyog Currently, the

programme is

targeted to cover

50 households

and 10 systems

have been

successfully

installed

Forest

management

programmes

Lantana eradication drive: In 2011, Rio Rinto

organised a large scale Lantana eradication drive

covering more than 100 hectares in partnership

with the forest department and four village forest

committees.

Forest regeneration programme: 100 hectares

of degraded forest area have been identified

and a multi-year plantation programme will

be implemented in partnership with forest

committees.

Forest

department

and Village

forest

committees.

More than 100

hectares of forest

land around the

core villages

Plantation

drives

Rio Tinto annually organises plantation drives in all

its core villages. It had distributed 22,522 plants

till 2011. To create awareness on environmental

issues, Rio Tinto organises cultural events on

World Environment day every year.

Across 15 core

villages

responsible corporate engagement in rural india-a compendium of good practices

Documents

case study

business case

rural communities

case studies

floor new delhi

empowering women retailers

imt manesargurgaonwww

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