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SUBICSHA COCONUTS PRODUCER COMPANY LIMITED

SUBICSHA COCONUTS PRODUCER COMPANY LIMITED, DOOR NO NP9/708A, NOCHAD PO, NADUVANNUR VIZ KOZHIKODE DIS, KERALA STATE, 674614

9946209005

www.subicsha.in

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SUBICSHA COCONUTS PRODUCER COMPANY LIMITED
Food Processing Manufacturing (Small enterprise)

RURAL WOMEN IN BUSINESS: A CASE OF SUBICSHA COCUNUT PRODUCER COMPANY LIMITED ( A Part of the report prepared by IRMA) SGSYplayed an important role in collectivizing women through SHGs, providing micro-finance and trainings in various business activities, but lacked in creating a sustainable path for business ventures of most of these groups. The Producer Company Act in 2000 emerged as one of the way forward to larger collectivization, and sustainable business growth and income returns for these SHGs. The transformation of 522 of 700 women SHGs ofspecial DRDA project SUBICSHA in to a larger collective - SUBICSHA PC Ltd in 2005 in Perambra block of Kerala State is probably the first such initiative in India. As a part of larger research project this study looked into the growth, functioning and impact of SUBICSHA PC on its membersunder three sub-question – factors that led to its growth, challenges faced by the PC and its impact on producers.It explored seven areas of PCs functioning – socioeconomic ecosystem, institutional design, institutionalization process, access to financial services, legal and regulatory framework, marketing, value chain and impact on producers. The study was based on case study approach and was mainly ethnographic in nature in its data collection process. The mixed method instruments viz. interview schedule, in-depth interviews and semi-quantitative Fuzzy Cognitive Mapping (FCM) were used for data collection. The results show that SUBICSHA is well fitted within the local livelihood and market needs that are associated with coconut and coconut related products. About 95 percent of its business comes from coconut procurement and sale of coconut products. With healthy promotional and financial support from local and state level institutions it has been able to strengthen local leadership and run both the governance and operating system through itsshareholders. Over the 9 years of functioning the PC’s membership has reached to 6000 women (588 SHGs). With share capital to Rs. 4.03 lakhit is reaching closer to its authorized share capital of Rs 10 lakh. With primary and secondary value addition of 30 products in 7 common production centers and 200 home centered units and 200 marketing unitsits business with little fluctuations has grown from business 1.08 crore in 2006 to 3.25 crore in 2014, and Net profit from -15 thousand in 2006 to Rs. 4.73 lakh in 2014. As a result of this business expansion it has been able to provideemployment 1260 members in management, processing, packing, marketing and sales and is continuously striving to reach its target of 6000. This employment generation has resulted in net income increase of 70 to 100 percent as before joining PC majority of these women were job less or low paid workers.The greater level of impact has taken place in producers’ personal assets (self confidence and decision making), followed by social (social cohesion, freedom to work), financial (increase in income, quality of life, financial risk management, and asset investment) physical (jobs, and accommodative working conditions), human (knowledge and skill enhancement)and organizational (institutional membership, and democratic decision making) assets. Notwithstanding these achievements, the PC faces several challenges that come in the way of its growth and sustainability such as lack of trained professions to guide business plans, marketing, and production process; lack of financial capital to pay higher salaries for professional service, and advertising; and issue of patronage centrality and member centrality. With all these outcomes SUBICSHA stands out to be a great learning for policy makers and practitioners who are in the process of transforming SHGs or women SHGs in particular in to a producer company.It is in the backdrop of these problems that Perambra block panchayat initiated ‘Good Coconut Program’ in 2000 under the leadership of Mr Kunniahmad to involve SHGs in value addition process of coconut products in order to strengthen their business, bring better income thereby lead to women empowerment. The program was successful but inadequate to reach the large number of SHGs and convert all the coconut raw material into products. Therefore a feasibility study was conducted with the support of IIM Kozhikode entitled – SUBICSHA to extend the coverage of programand explore the possibilities of additional business ventures (Das, et al., 2002). The proposal was accepted by the Ministry of Rural Development under special SGSY project with 14.6 crore budget in 2002 (Ibid, 2002). The implemented took place in 2003 with its extension to 700 SHGs. Again the business development process was successful, but due to large number of Home Based Production Centres (HBPCs) the business was fragmented and suffered from lack of standardization in production, packing and marketing. Transferring the federation of 700 SHGs into a larger business collective was decided as a step forward by BP and DRDA. Out of the four collectivization models viz. private company, trust, cooperative and producer company, the latter was found to be more appropriate model to address the problems of lack of standardization and business sustainability of these SHGs. This resulted in transformation of SUBICSHA project into SUBICSHA PC in 2005 with initial membership of 5000 women from 522 groups. Since the PC has completed 10 years there is scarcity of evidence about its growth, functioning and empowerment impact on women. This paper is addressing this knowledge gap by using a case study approach with mixed methods instruments of data collection in order to capture all the relevant information and data from various stakeholders. The instruments used are interview schedule, in-depth interviews and Fuzzy Cognitive Mapping and the stakeholders interacted are chairman, BoD, Managers, CEO, accountant, other staff and members of the PC. In addition, a thorough review of organizational documents was also done. The rest of the paper explains the outcomes of the study through nine broader sections – overview, geo-economics and political ecosystem, institutional design, access to financial 6 services, legal and regulatory framework, value chain process, challenges, impact of PC on its members, and conclusion. 3. EVOLUTION OF SUBICSHA COCONUT PC: The genesis of SUBICSHA PCare in the micro-credit and SHG movement which started in Kerala in 1980s and took an institutional shape with the enactment of SGSY in 1999, a predecessor of all the earlier self-employment programs in India. The first phase of pre-promotion process was between 2000 to 2002, when PerambraBP under the presidency of Mr.Kunnahmad started coconut value addition process to give sustainable business to women SHGs in the Block. ‘Good Coconut Program’ was started with one coconut drier having capacity of 1000 coconuts per day, with the involvement of one SHG group having membership of 10 women.Before the initiation of this program SHGs existed in the block but they were involved only in primary credit activities (Das, et al., 2002).After one year BP found it very provoking model and distributed Rs. 5000 as working capital to 50 women SHGs in the same business. Groups were taking copra and selling it directly in the market. While the business was going well and was profitable the BP realized that there are many other related products that were getting wasted such as shell and coconut water. To make holistic use of coconut produced in the block, the BP thought of launching a large-scale intervention. The idea was discussed with a team of two faculty members of IIM Kozhikode Prof. Mukunda Das and Dr. SajiGopinath in 2002. The team suggested about conducting a baseline feasibility survey and presenting proposal before the government for funding. The study was conducted in 2002 and the proposal was prepared entitled ‘Special Project for Sustainable Business Development of Innovative Coconut Based Micro-enterprises for Holistic Growth and Poverty Alleviation’ (SUBICSHA). The aim of the project was to augment the livelihood of 7,000 families organized in 700 women SHGs in 68 wards of the seven gram panchayats of Perambra block within three years by developing 43 value added products from coconut (Das et al., 2002; Govin, 2015). The enterprises were also expected to help the coconut farmer of the areas with price increase in coconut by 60-70 percent (Das et al., 2002). The detailed project report was submitted to the Government of India in 2002. The project was approved in 2002 under the SGSY innovative projects with outlay of 14.26crore for 3 years (Ibid, 2015). For the establishment of 523 enterprises Rs 796 lakhs, creating a set of common production centers Rs. 301 lakhs, marketing and administrative infrastructure Rs. 170 lakhs, and training cost 159 lakhs. Rs. 605 lakhs were sought from SGSY special project, Rs. 201 matching grant from state government, Rs. 249 from local government support (block and gram panchayat) and the rest amount from Coconut Technology Mission, SGSY normal program, Coconut Board, Coir Board and NGOs (Das, et, al., 2002). Before the implementation of the project the DRDA and BP organized awareness and mobilization camps and meetings during early 2003 within SHG groups, communities, local politicians and various related administrative department regarding the project and its implementation process. In addition the project was discussed in length withlocal banksthat were sought to provide credit of Rs. 681 lakh to SHGs (Das et al., 2002). 7 The project was formally inaugurated by the then Honorable Minister of Rural Development of Kerala Mr. C.F. Thomas on October 31st 2003. This was also the beginning of the second phase of pre-promotionprocess, which ended up in 2005. During this period various activities started talking place in parallel to each other. First, after the awareness generation 700 SHGs of the block joined the programwho were federated under one federation. While most of these SGHs were old,established by Kudumbashree, somewere newly formed under SUBICSHA. The number of business activities suggested in feasibility study were presented before groups. All the groups selected one business activity as per their choice.Second, the government transferred three existing Copra Dryer units in Perambra block panchayat (Cheruvannur, Nochad, and Kayanna) to SUBICSHA as a part of women development program. In addition, with the financial assistance from SUBICSHAconstruction of Virgin Coconut Oil Production Unitsstarted taking place in 5 of the 7 panchayats in Perambra Block.Third, the process oftechnical, soft skill, marketing, management and skill development trainings to SHG members also started. For the leadership development of SHGs,training of trainers (TOT) was done. A group of women from SHGs called ‘Preraks’ were trained to organize and mobilize SHGs. Another group of 10 womennamely ‘Resource Counsellors’ were trained to impart leadership, livelihood skill, management and technology trainings to members in various business ventures. The soft skill trainings were given for about 3 days to one week and the business and technology trainings were give for about 25 days. The institutions that were involved in giving soft skill and technology trainings to TOTs are CFTRI Mysore, NIT Calicut, CDB Cochin, NIRD Hyderabad, SIRD Kerala and CPCRIKasaragod. Fifth, all SHGs were graded and creditdisbursement started taking place to mature SHGs by the end of 2003. Out of the total project cost Rs. 200 lakh were allocated for grant to working capital of SHGs to start their micro-enterprises. Even though up to 50 percent assistance is available under the scheme guidelines, the project gave only 25 percent of the total cost of starting the enterprise (Das, et al., 2002).All SHGs also had their own nominal savings that in total amounted for Rs. 70 lakh when project was started (Ibid, 2002). Sixth, SHGs who received credit started their business units through HBPC model in which a group of 10-15 women were working together at one place.This was followed by SUBICSHA’s first entry into the market. The marketing strategy was selling through same SHG members to local communities and local shops. The products that were prepared and sold by SHGs are coconut oil, virgin coconut oil, pickle and soap. In mid 2004 when project was coming to an end, the DRDA, BP, and IIM Kozhikode team realized that the production is going well but there are problems of fragmentation, lack of standardization in raw material, production, quality, packaging and marketing and issues of lack of sustainability in groups business.In addition, the production capacity is limited especially at special occasions and it is difficult and very expensive to provide machinery atHBPC level. While the federation of SHGs was already in place from 2003, it was not able to overcome these challenges. Therefore theneed was felt to unify these production activities by establish a centralized platform forprocurement, processing, packing and marketing. While the feasibility study had suggested registration of a society to look after the post- 8 project implementation process, it was found to be an inadequate institutional framework. Three other institutional designs were discussed in length - Trust, Cooperative and Company.According to the chairman the trust was found having technical problems with doing business, cooperative was found to be too political, and the company was constrained by share limit of 80 and shares could be sold to anyone outside the company. Considering the socio-economic condition and livelihoods needs of these SHGs forth institutional design - Producer Company was found to be more appropriate. Therefore the federation was registered asSUBICSHA Coconut Producer Company Ltd in April 2005 and was appointed by the government as an implementation arm of SUBICSHA with an agreement between the BP and SUBICSHA PC.This became the first PC of poor women in India, with initial authorized share capital of ten lakh from 10 SHGs, at equity share of Rs. 10. The main objective as per MoA of the PC is to carry on the business of producing, procuring, pooling, handing, packaging, manufacturing, marketing, purchasing, importing, exporting, developing and dealing in coconut, coconut based, coconut tree based goods, products and articles from members. With the registration as a PC in 2005, the role of SUBICSHA also changed from pre-promotion to promotion and it started helping PC in its start-up. The BOD was nominated and a series of trainings and awareness camps were organized for SHGs about the PC, its functioning, benefits to members and the role of members in PC. After these workshops out of 700 SHGs, 522 joined PC as shareholders. The total strength of these SHGs was 6000 members.In order to give an institutional shape to procurement, processing, packing, branding and marketing, the PC realized that HBPC modelis unsystematic and unsustainability. Therefore a shift was made towardsCommon Production Center (CPC) model.This plan was little different from the plan suggested in the feasibility study. The initial plan in the feasibility study was to establish 500 odd HBPCs (micro-enterprises) and 7 CPCs for the use of these micro-enterprises for drying, packing and expelling oil. In addition establishing an administrative building, and a testing center (Das, et al., 2002). The transition to this model was smooth because by this time two oil extraction units were completed one in Cheruvannur and the other in Nochad, and Virgin Coconut Oil units in other panchayats were also ready with the technical guidance from Coconut Pacific (an Australian company) and Rubber Co-operative Ltd (RUBCO). To supplement its working capital the PC mobilized Rs. 24 lakh as unsecured loan from those SHGs who has paid back their group loan to banks and had savings from group business activities. The rule for unsecured loan from member was that any group can take it back anytime in future with a fixed interest rate of 14 percent.TABLE-1 Evolution of SUBICSHA PC Year Activities/Initiatives Conceptualization 1980s Initiation of SHG movement in Kerala. 1998 Establishment of Kudumbashree community network (Present strength:2.58 lakhs NHGs (SHGs), over 19,700 ADSs and 1072 CDSs.). 2000 Enactment of Swarnajayanti Gram Swarozgar Yojana(SGSY). Pre-promotion (Phase-I) 2000 Perambra Block Panchayat (BP) under the Presidency of Mr. M Muhammad Master started ‘Good Coconut Program’. 2001 Realization of need to use all the coconut related raw material and transform it into marketable products through value addition. 2002 Constitution of need assessment and feasibility study team under the aegis of Indian Institute of Management (IIM) Kozhikode. 2002 Study conducted by IIM Kozhikode. 2002 Submission of detailed project report to Ministry of Rural Development Govt. of India. 2002 Project approved with outlay of 14.6 crore as a special status under SGSY. Pre-promotion (Phase-II) 2003 Awareness programs to SHGs, political and administrative institutions regarding project. 2003 Mobilization of 700 SHGs mostly from Kudumbshree and some newly established. 11 2003 Each SHG selected one business activity from the list recommended in feasibility report. 2003 Oct 2003, inauguration of the project by the then Honorable Minister of Rural Development Mr. C.F. Thomas. 2003 Initiation of soft skill and technology trainings. 2003 First phase of grading of SHG groups. 2003 Disbursement of grant from SUBICSHA project for infrastructural development. 2003 Credit from banks to the mature SHGs to start and expand business ventures. 2003 SHGs started home-based production centers (HBPS). 2003 Entry of SUBICSHA SGSY units into the local market. 2003 Started process of setting up of Virgin Coconut Oil Production Units in 5 of the 7 Panchayats under Perambra Block. 2003 Transformation of three earlier established Copra Dryer units in Perambra Block Panchayat (Cheruvannur, Nochad, and Kayanna) to SUBICSHA as a part of women development program. 2003 Registration of SHG group members under group insurance scheme of the govt. of India. 2004 Completion of 2 oil production units atCheruvannur and Nochad. 2005 Completion of Virgin Coconut Oil units with technical guidance from Coconut Pacific, an Australian company and collaborative support from RUBCO. 2005 BP and DRDA decided to register SHGs federation as a PC. Promotion and start-up of PC 2005 Registration of SUBICSHA PC. 2005 Nomination of first BOD and Chairman. 2005 Training programs to SHGs regarding PC, its functioning, risks and benefits. 2005 522 SHGs joined SUHICSHA PC with membership of 5000 women. 2005 6 Production centers were complete. 2005 Move from HBPC to CPCs. 2005 SHGs started paying their loan back to the banks. 2005 SUBICSHA PC started taking unsecured loan from SHG members. 2006 Establishment of a full-fledged laboratory with the support of CDB. 2006 Adoption of Sophisticated methods in production modernization of packaging systems with the help of Rs. 10 lakh financial assistance and training from NABARD. 2006 SUBICSHA PC entered into market with brand name of SUBICSHA. 2006 Establishment of marketing outlet in Kozhikode city and 3 small outlets in other parts. 2008 Winding of DRDA project. 2008 All SHGs paid their loan back to the banks. Independent Functioning (Growth and Expansion) 2010 Election of Second BoD and chairman with no changes. 2010 Brought the installation machinery for its largest coconut production center in Perambra from its own money. 2011 Completion of commissioning of machines and equipment, and starting of mass production of coconut oil. 2011 SUBICSHA made its first profit of Rs. 2.12 lakh. 12 2014 Incorporation of 66 new SHGs, with total new membership being 7000 members under 470 groups. 2006 & 11 Received best Co-operative society awarded from the Ministry of Agriculture, Govt. of India, under the aegis of CDB for its excellent performance. 2003, 12, & 13 Perambra Block Panchayat received Swaraj Trophy award from the govt. of Keralawith main reason being SUBICSHA PC.

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