Ordinary women, extraordinary work

Until a few days back, they were a mix of housewives from middle-class families and slum dwellers who worked as domestic help. Now they own a company -- Swamini Mahila Bachat Gat Akhil Sangh Ltd -- that will manufacture polythene bags.

At the heart of this turnaround are 160 women in Pimpri-Chinchwad, a city adjacent to Pune, who inaugurated their polythene bag unit in the industrial area of Talawade on May 28. 

SMBGAS has an initial order -- for 700 kg of bags per day for 250 days -- from Sumedh Polymers, a Pune-based manufacturer of plastic and polythene products which will market the bags in Dubai and the United States. The development has brought about immense confidence in the women, who now plan to manufacture 700 kg of polythene bags daily.

Some of the women are slum-dwellers who worked as domestic help; others are housewives who never thought of taking up jobs or generating employment for others.

With help from the Pimpri-Chinchwad Municipal Corporation, which has subsidised this project, as well as Sumedh Polymers (which helped the women draw up a business plan, and will also train them), the women have organised themselves into a self-help group named Swamini. Commercial production is expected to begin in the second week of July.

Sulabha Ubale, a political activist and member of the group, told Business Standard, "From being poor and socially deprived, the women are now empowered human beings. Many still find it difficult to believe that they own a small industrial unit which will change their future."

The investment in the project is Rs 1 crore (Rs 10 million), to start with. The women have jointly contributed Rs 20 lakh (Rs 2 million), while the PCMC has given SMBGAS a subsidy of Rs 30 lakh (Rs 3 million). The Bank of Baroda has advanced the unit a loan of Rs 50 lakh (Rs 5 million), which has to be repaid over a period of seven years. 

"The most interesting aspect of this project is that we have signed a seven year contract with Sumedh Polymers to supply polythene bags as per their requirements. This makes the business viable. We are recruiting 70 odd women at this unit and paying them a good salary," said Ubale. 

"The unit will supply plastic bags to Sumedh Polymers, which will export them to Dubai and the US. Hence, we need to manufacture bags to specific standards. Over the next one month, we will undergo extensive training and then begin commercial production," said Swati Mujumdar, an activist.

She added, "We are not focusing on profits, as this unit has been set up to bring about social change. Once the women are employed, they will deliver better results and the business will grow automatically."

Mujumdar said, "Some 11 self-help groups were formed in Pimpri-Chinchwad around 15 months back. These groups had their own savings, which were added to the financial assistance by PCMC."

SMBGAS has the capacity to manufacture 700 kg of polythene bags daily and it will sell them to Sumedh Polymers at Rs 18 per kg. This is expected to generate annual revenues of about Rs 36 crore (Rs 360 million) for the unit.

After paying various taxes, salaries, the loan installments and other expenses, SMBGAS expects to earn a profit of Rs 4 lakh (Rs 400,000) in the first year of operations. Six months after the start of operations, it will begin making polythene sheets, tarpaulin sheets and a few other products as well.

Chanda Bhande, a vegetable vendor and chief of a self-help group, said, "I only knew how to sell vegetables and run my house. Things have now changed for me. I am making money and also helping others to earn money."

Damayanti Gaekwad, another member, added, "This has worked as a confidence building exercise for us. We want to expand the business beyond this single unit."

RBI deputy governor hints at small savings rate cut

A reduction in government-administered small savings rate will signal a benign interest rate regime and facilitate reduction in banks' lending and deposit rates, according to K C Chakrabarty, who on Monday took over as the Reserve Bank of India's deputy governor.

In his first interaction with the media after taking charge, the former chairman and managing director of Punjab National Bank said, "When the government is giving a certain interest rate on small savings, it is not logically correct for banks to provide a lower rate of interest. When we are saying that interest rates are coming down, that means the small savings rate should also come down."

However, he said the small savings rate was not the only factor influencing lending and deposit rates. "A slight increase or decrease in the small savings rate will not greatly affect bank deposits, but this is a directional issue," said Chakrabarty.

Small savings schemes such as public provident fund and post office deposits earn around 8 per cent a year. Bankers cite this as an impediment to lowering deposit rates and, consequently, lending rates.

At the RBI, Chakrabarty will oversee eight departments, including customer service, administration and personnel management, information technology, payment and settlement systems, human resources development, the Rajbhasha department, rural planning and credit and urban banks. He will also serve as the alternate appellate authority under the Right to Information Act, 2005.

On consolidation in the banking sector, Chakrabarty said financial inclusion was more important than consolidation in a country where 60 per cent of the population did not have access to banking facilities.

He said consolidation was necessary and unavoidable and a road map for it should be drawn in the next three-five years.

Asked about the possibility of the government selling its stake in public sector banks, Chakrabarty said the issue was whether these banks were adequately capitalised to meet their lending targets.

"On this matter, the finance minister has categorically assured that public sector banks will not suffer due to inadequate capital."

Chakrabarty is the RBI's 51st deputy governor. Commenting on his move from a commercial bank to the central bank, Chakrabarty said, "It is the dream of every commercial banker to become a central banker and after spending 30 years in commercial banks, I am now part of the central bank."

Can this government deliver what India needs?

The exercise that I am asking you to attempt is simple.

Let us take government as a black box whose internal workings we shall try not to apply our mind to. You are feeding your tax money into this black box and standing at the out gate to receive something in return -- some basic services that all respectable governments want to ensure for their people like potable water, food, shelter, roads, healthcare, education, power, security and the like.

The result at this out gate is startling every time you look at it afresh.

There are over 300 million Indians living in abject poverty, while those above them face deprivation in different spheres, whether it is in education or shelter or energy. Drastic improvement is required in the basic human development indicators. My belief is that there is a better chance of that happening if money is directly taken from the taxpayers and given to the needy in some form of cash transfer than if money is routed though the black box of the government, with all its inefficiencies and susceptibility to vested interests.

The government has already dabbled with some cash transfer schemes focusing on the girl child (Ladli, Dhanalakshmi, Janani Suraksha Yojana and so on) and more are being talked about. It is obvious that one hop in this transfer of cash can be reduced -- instead of the money going from the taxpayer to the government to the poor, it can be directly channelised to the poor, supported by a smart system of fiscal incentives.

There are many people, and companies, who would happily set aside money to sponsor a child, or a child's education, or pay for healthcare or food of the poor, as long as they can see the results.

Seeing the 100 students that have gained an education from your (tax) money definitely beats seeing where your tax money is going in the annual budget statement under the 'rupee goes to' head which reads something like this in the current year: 20 per towards interest payments (which is the largest head), 13 per cent on defence, 9 per cent on subsidies, 18 per cent on the central plan, 15 per cent to states as their share of taxes and duties, and so on.

The economists would have their own view on such a direct transfer mechanism and there would be questions on the practicality of the proposal, but such a scheme is likely to be more effective in denting the poverty numbers and taking us closer to our development goals than elaborate and inefficient government programmes, of which more are in the making by ministers in the new government.

Walk through even the most somnolent ministries and you are likely to see a flurry of activity as these new ministers get down to the task of formulating a 100-day agenda as if the agenda is an end in itself.

There has been an agenda on road development for the last few years. That did not yield roads. The power capacity addition programme did not bring in additional power capacity of any significant scale. If an agenda could substitute for action, we would be well on our way towards developed country status.

The new power minister -- who has been in the same ministry before -- reiterates his commitment to rural electrification and to power for all by 2012. The minister for small industries promises to address the credit needs of the sector. The heavy industries minister promises higher transparency in all transactions. The minister for housing and urban poverty alleviation talks about affordable housing for all and the plans for a slum-free city campaign. They could have been talking two or four or six years ago and would not have needed to change a single comma in their speeches.

We know that urban development is required. We know that people in a civilised society should not be forced to live in slums. We know that power is required. We know that the credit needs of the small scale sector need to be met. We know that the country needs adequate security. We know that there should be zero-tolerance for corruption.

What we need to know is what is being done to deliver results. What are the milestones that we should look out for standing at the out gate. That would be the real measure of any government's success. Nothing else!

ESPN STAR, advertisers on a sticky wicket

At least a dozen advertisers, including Reliance Communications, Nokia, Pepsi, Hero Honda, Maruti and Visa among others, and host broadcaster ESPN STAR Sports may find themselves on a sticky wicket with India's exit from the current world Twenty20 cricket tournament.

Advertisers are in a fix because they have invested around Rs 185 crore in ad spots for the tournament that is being broadcast on the STAR Cricket channel in India, and India's exit means they'll get less bang for the buck.

Ratings of non-India matches have consistently fallen below 1.5 per cent, which media planners consider extremely low for a popular cricket tournament, and this raises concerns over viewership for the remaining matches.

Since India has lost two of its fixtures in the Super Eight stage, it has no chance of making it to the semi-finals (it has one more match to play against South Africa). "With India out of the World Cup, the ratings for the semi-finals and finals may also fall extremely low, so the cost-per-ratings-point, the factor on which advertisers get their returns, will now work out very high," said a media planner requesting anonymity.

"With dismal ratings for the non-India matches, most of the regular advertisers are evaluating their options of continuing to use the T20 World Cup platform for their brands," added a senior executive of a leading media agency.

As a result, sources in the advertising industry added that ESPN STAR Sports may not be able to offload the 10 to 15 per cent inventory of ad spots it was reserving to sell at a premium for the semi-final and final matches. This could translate into a Rs 20 crore to Rs 25 crore loss. ESPN STAR Sports executives declined to comment on the issue.

Meanwhile, film exhibitor PVR Cinemas is also in trouble, having acquired the in-theatre telecast rights for the tournament for which it has to pay ESPN STAR Sports Rs 50,000 per match, per screen, irrespective of whether it sells tickets or not.

"Attendance was extremely low in the six theatres in which we broadcast the T20 match on Sunday. However, we will continue to telecast the remaining matches, since there is no compelling Bollywood movie lined up till June 21," said Gautam Dutta, CEO, PVR Cinemedia.

According to overnight ratings agency aMap, the India-England match on June 14 recorded a rating of 4.8 per cent on STAR Cricket, lower than the India-West Indies tie on June 12 that fetched a rating of 5.2 per cent, the highest so far in the current edition of the T20 World Cup.

It's business as usual for GM India

"Just media hype," said a relieved Sachin Kumar, executive of the Auto Vikas showroom of General Motors India in West Delhi's Moti Nagar. "There were some showroom queries on the first two days, but it died down."

If prospective consumers of GM's cars are visibly disturbed by the news that its United States parent has declared bankruptcy and filed for restructuring, it isn't apparent over here. All showroom staff have been directed to wear big badges with a 'There for you, there for India' logo. And zonal executives have been told to visit individual dealerships to directly tell customers that all's well and will continue to be so for GM India and its products. But the need doesn't seem pressing, given the scene at dealerships through the big cities.

"There has been a dip, about 15 per cent," said the manager of a Mumbai showroom, of the fortnight since the news of the giant's fall. But no cancellations. Enquiries are still flowing in."

The Detroit automaker filed for Chapter 11 bankruptcy protection on June 1 -- the largest auto industry bankruptcy in history.

The automotive industry in India has been going through a rough patch. The worst sales slump in eight years saw top automakers like Tata Motors and Mahindra & Mahindra cut production. Subsequently, government stimulus measures sparked a recovery, with car sales climbing for a fourth month in May and foreign car firms launching new models for India.

GM, which is dropping high profile brands, including its Hummer, Saturn and Saab brands, is now betting heavily on small cars and expanding in countries like India via new brands and local sourcing. It has 192 showrooms in the country and sold 61,526 cars last financial year.

"A few of our customers did cancel earlier bookings, but many others don't seem much aware of it," said the sales manager at Sundaram Motors, a long-time dealer in Bangalore for GM, one of two in the city. "Sales have been normal for the past 10 days."

"There was some apprehension in customers initially," admitted J K Singh, at Kolkata's India Automobiles' showroom. "But things improved after the company held press conferences and confirmed its India investment plans and launches were on track."

Added Rajesh Sanei, director of Dulichand Motors, another leading GM dealership in that city, "Customers are mostly concerned about spare parts availability, and we tell them we are maintaining ample stock and can refill as and when required from the plants."

"We are booking six-seven cars on an average every day and there has been no significant drop in bookings since December. Though, footfall is down by 5-10 per cent," said Sanei.

It helped that GM prepared the dealerships before the formal announcement. They were told of what was in the offing and what it meant and how to address the queries. Notably, for instance, they were told that no service warranty was being withdrawn, that the earlier planned launches of the LPG variant of the Spark, the Chevrolet Cruze and the Beat mini-car would all be held as planned, that the company was here to stay. And, that the Chapter 11 bankruptcy filing was meant to restructure and shed flab, to resume business, not to shut down.

"They assured us that there will be no supply problems for any spare parts or any other maintenance issue relating to the vehicles. And that GM India will continue to work, just as earlier," said the Mumbai dealership. "That they've invested more than $1 billion in India and are here to stay."

But what about the customers?

"When there were queries, we explained the difference between bankruptcy filing in India and the US, that this is meant to prevent closure. And on all the plans and launches for the Indian market," said Shashank Immanuel, sales executive at Delhi's Vardajyoti Automobiles. The giant displays in showrooms, on the three-year warranty or free maintenance for 100,000 km, unmatched by either Maruti or Hyundai, do help. And the tubeless tyres' offer.

"That three-year, no maintenance cost service on the Spark gets a good response," said a manager at Bangalore's Sundaram Motors. Each Indian dealership, said Kolkata's Sanei, keeps 150-200 cars in stock and that helps, too. More so, the 30-day stock of spare parts, something the company re-emphasised in the run-up.

At the moment, the Chevrolet Spark, the Aveo and the U-VA are the most sought after, says Kolkata's Sanei. His dealership booked 108 cars last month and the daily average pace has continued.

"It is the service back-up and spare parts that prospective buyers have on top of their minds, not the US news," says the Mumbai dealership, which sells around 100 cars a month. That gives their sales people a chance to pour out all the reassuring data.

"The average customer who comes to buy a Spark or to ask about a Tavera seems to be either ignorant about the Chapter 11 filing or has forgotten about it," said Auto Vikas in Delhi. "Only a few of our customers have cancelled their bookings and others don't seem much aware (of the US news)," echoes Sundaram Motors in Bangalore. "Overall, it's normal sales for the past 10 days."

"We tell everyone that the company sees India as a major market for growth," say executives at the Mumbai dealership. "The idea is that people, sooner or later, come to see GM India as part of the 'Good GM' unit."