1. Milaap Field Report – Sakhi Retail Private Limited (SRPL) and Swayam Shikshan
Prayog (SSP)
Pune, India – 8th April, 2010
She is hardly aware that she could be the part of a new wave in India’s retail
network. Reaching to the rural consumers has been an enigma to firms
across board; we see the numbers, we know there’s demand; yet the
idiosyncrasies of the market and the cost of operations have kept many
from realizing the dreams. There is hardly a doubt that innovation in the
distribution channel is essential and among the many models being tried out
Sakhi Retail Private limited, a subsidiary of Swayam Shikshan Prayog, is
trying out one of the most promising of them.
The idea is simple; get women from local villages as the foot-soldiers and
rural entrepreneurs to deliver goods to the last mile. Easier said than done,
the challenges in the field are immense and that’s where you need leaders.
The leadership of Prema Gopalan and the vision of Dr. C K Prahalad was the
genesis of this initiative.
The Genesis
“Sakhi retail works with the dual objective to augment the income source for the families especially the women and
to develop a sustainable distribution channel for innovative products” remarks Upamanyu Patil, CEO of SRPL, a
subsidiary of SSP.
Operations manager Kaka Adusule has been with SSP for the past 15 years and manages the critical work of
warehouse operations for the warehouses. “I started my career with SSP and would like to stay on till the end” says
a motivated Kaka, who is also a member of the Maharashtra government committee for monitoring of sanitation
funds to panchayaths. All the years and the experience with Government projects has made him aware of the
region like the back of his hand.
The Products:
SRPL strategically decides the products to be distributed and social benefit ranks top on the agenda. It immediately
helps to focus on innovative products and avoid conflicts with other distribution channel.
It started with BP Energy’s smokeless cookstoves (called Oorja)
and pellets, which were a real blessing for the women in the
extreme heat. The encouraging success of cook stoves has
helped SRPL venture into innovative products that touch other
fundamental aspects like clean water and affordable lighting.
The partnership with Godrej in promoting the mini-
refrigerators has been an instant hit as it helps women to store
vegetables. “Vegetables get spoilt in two days in summers and
even our own kitchen garden produce can not be preserved.
Chotukool is really popular among sakhis”, says Nanda Jagtap
who started with SRPL two years back.
Another popular product is the portable solar lights made by D.light, which comes in extremely handy for kids
during long power cuts in summer time. “The choice of products is important to the overall positioning of the
network. We have built the trust in introducing products that address fundamental concerns of the people and this
is the greatest asset of the organization” mentions Upamanyu.
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2. The backbone of operations is rural women called Sakhis, who are essentially members of the Self Help Groups
(SHGs) of SSP. Over the years, the operations of SSP have created the required trust among the people which is
essential to build consumer confidence in new products. Each Sakhi, intending to be a member of the retail supply
chain has to chip in an initial capital to buy the goods.
The transportation costs are borne by SRPL from its
warehouse to the villages of the Sakhis. A good
performing sakhi could earn upto Rs. 4500 a month. The
general income ranges from Rs 500 – 1,200 and about
200 of them above Rs 2,000; involvement in this
enterprise has pushed up their incomes by nearly 30 per
cent. “It helps a lot to support the family and provide for
the additional requirements for educating the children”
says Savita Makde, a proud mother of four, able to
support the education of all her kids.
SRPL is taking some new initiatives to step-up visibility in the area. A new showroom was inaugurated in April this
year to increase market presence and awareness. Kanitkar, one of the Area Managers, involved in SRPL mentions
“People in urban/semi-urban areas always want to see a shop”. Other initiatives like a van campaign has also
started with a promo van – see photo – to promote the products.
Innovative supply chain linkages
One of the most important challenges in promoting new products in rural India is education – first the channel and
then the consumers. It’s a huge challenge to first gather the manpower, train them and then retain. Each new
product, a solar lantern, chotukool (mini-refrigerator) or PureIt ( entails a high touch concept selling. That
immediately translates to escalation of cost of operations. SRPL’s strongest advantage is the pool of SHG members
of SSP. First the involvement with SHG operations acquaints the Sakhis with processes etc and hence an imminent
change in perspectives. This is extremely critical in breaking the social barrier and letting women venture out of the
household work. Second, the closes connect helps to build confidence within the community, an essential feature of
sales in rural India. Third, arranging training and briefing sessions is a lot easier for companies with SRPL. The
success with consumer durable products has helped SRPL foray into larger installation based systems,
However, the network does need active support from suppliers as well. Addressing servicing issues on time is
essential to the brand name of SRPL. Also timely training and marketing initiatives are essential to sustain the
channel.
Upamanyu says, “I understand there are challenges in managing cost of operations; but we are confident. We have
been able to cut down transportation costs by nearly 50% and expect it to go down further as the channel moves
towards stability”. His beaming confidence comes as a refreshing change in the otherwise arid air.
Transportation and overhead costs do play a decisive role in viability of the business and they are directly
dependent on the order quantities of the sakhis. For example, a dedicated vehicle is viable only on order quantities
above Rs. 5000. To circumvent the problem, sometimes smaller order quantities are sent in local buses. However,
the order quantities are essential to achieve scale and hence capital availability for Sakhis is important. Milaap aims
to provide low cost capital to the Sakhis to facilitate higher investments at their end.
The Role of Milaap
The Milaap team visited SSP office in Osmananbad which has been functional from the time of the Latur earthquake.
Meeting the members of the SSP initiative was awe inspiring for the team. We met Godavari Shisagar who has
recently been conferred with the Grass Roots Award for her contribution to the community. Starting as a Sakhi she
has been passionate about the entire initiative and is now a member of the capacity building team of SSP.
The financing arm of SSP was started in 2006 under the name of Sakhi Samuday Kosh, a section 25 company. It has
been steadily increasing the presence in the region with a total disbursement of over Rs. 11 cr in the last financial
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3. year and with a healthy recovery rate of close to 97%. SSK has been trying to diversify to education, emergency and
house repair loans as well. However, financing of Sakhis has been a challenge because of the high cost of capital
which makes the loans difficult for Sakhis. “At the current rate of 24% diminishing, it becomes difficult for Sakhis to
generate enough for repayments. It would be great if Milaap can source low cost capital which can eventually be
lent at lower costs to the Sakhis. We certainly welcome your initiative” notes Rajesh Badakh, CEO SSK. The
organisation currently is catering for clients in rural and urban areas through the SHG and the JLG model
respectively.
It takes vision and more importantly extreme rigour to develop a distribution channel in one of the most
underdeveloped areas in Maharashtra.
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