The Hindu Business Line : Small scale, big profits

T.C. Venkat Subramanian (right), Chairman and Managing Director, Exim Bank, and K. Muthukumaran, General Manager, displaying some products made by Exim Bank-supported ventures. - Bijoy Ghosh

If all goes well in the negotiations that the Madurai-headquartered Dhan Foundation, which has transformed the lives of lakhs of rural women through micro finance, is currently having with the Export-Import Bank of India, very soon the delicious tamarind toffees you savour on domestic flights will be supplied by women's self-help groups.

The Exim Bank is making a special push to ensure that rural India, particularly village women, too gets a small slice of the export market. "We are looking for export opportunities from rural areas; instead of measuring urban development as an indicator of modernisation or economic growth, we want to generate exportable products from micro and grassroots enterprises," says Exim Bank Chairman and Managing Director, T.C. Venkat Subramanian. "Finance is not such a big problem; many commercial banks want to support smaller enterprises and a linkage with them makes credit delivery and paper work easier."

But the problem, when dealing with micro organisations is the design input where a lot of handholding is required, followed by marketing support, particularly for export, and the Exim Bank's mandate is that the entrepreneur should have an export orientation, even if a bulk of the produce serves the domestic market.

Success stories include Salim Papers, a Jaipur-based company that employs 700 semi-literate or illiterate women and manufactures well-designed products from hand-made paper. The range includes greeting cards, paper bags, card and pen-holders, decorative pots, etc. "They source their raw material — textile waste — all the way from Tirupur and their range of items is mind-boggling," he says. The company's turnover that was Rs 5 crore in 2002-03 is set to double this fiscal.

The company now wants to set up a marketing-cum-warehouse-cum final assembly unit in the West Indies with help from the Exim Bank.

Ramesh Flowers in Tuticorin is another success story. To get over the refrigeration and other logistic problems associated with export of fresh flowers, this company decided to tap the huge potpourri market overseas. Though the entrepreneur was from West Bengal, Tuticorin was chosen to set up the factory as the temperature and the humidity levels are just right for drying the flowers, seeds, roots etc, and the real estate affordable. After being dried naturally these are painted and perfumed; "the flowers, seeds, etc come from Himachal, Jammu and Kashmir and other areas."

Exim Bank has been working for 15 years with the company, which is now set to acquire a design company in the US. From Rs 3 crore in 1989-90, Ramesh Flowers' turnover has gone up to Rs 45 crore and is expected to cross Rs 60 crore this fiscal. It employs 1,200 people, of which "99.5 per cent are women."

Adds K. Muthukumaran, Exim Bank's General Manager, "This year the company has had a major breakthrough with a direct entry into Wal-Mart and Ikea."

Chennai-based Inca Hammocks is another company that has grown with Exim support. A cent-per-cent export company, it makes different kinds of hammocks, and its turnover has increased from Rs 1 crore in 1991 to Rs 25 crore this year. Ikea is one of its clients.

The challenge before the bank now is to replicate these success stories in the rest of the country; "we want their experience to benefit other smaller outfits" as also reach a wider body of creative talent. "We have limitations in reaching artisans, and want to work with NGOs controlling smaller production units. We've signed an agreement with Uravu (in Wayanad, Kerala) which makes bamboo products such as pen holders, magazine racks, etc," says Subramanian, adding they were also working with IIT, Mumbai, on developing simple, mechanised tools that can take away the drudgery, add value and scale up the production. "When it comes to handicrafts, when a big order comes, people are unable to deliver, so part mechanisation is required, with the finishing touch by the hand," he adds.

But quality is absolutely crucial in the export market, and "in this area, great patience is required. For instance, Uravu is now making bamboo pens, but we had to work very hard with them to take the product to a high standard. The finish and the packaging are very important," adds Muthukumaran.

Similarly, the bank has signed an MoU with the Dhan Foundation for palm leaf products, but the finish has to improve. "They have a unit producing and selling organic tamarind, but we want the SHGs to add value by making tamarind toffee."

To help artisans improve quality, know what will sell in the European markets, and how to enter those markets, Exim Bank recently brought in two Dutch handicraft experts to conduct workshops for artisans in Shillong, Jaipur and Delhi.

Subramanian adds the bank is working with International Trade Centre (ITC), Geneva, part of the UN agency UNCTAD, to train a representative in the development of "certain IT tools to appraise small projects, identify gaps and help them prepare viable business plans. We've allocated Rs 50 crore to be lent to 50-100 small units, each with an investment of Rs 50 lakh-1 crore. Once this project is launched successfully, the ITC wants to replicate it in other developing countries."

On the anvil is also a plan to expand the scope for certain niche products with limited markets because the technology is only with a select few. "Take for example special kinds of dyeing; in Tamil Nadu we have the Athangudi tiles, which are not vitrified and use a different technique to make the tiles glossier and longer lasting. These are manufactured by the cottage industry and the technology remains only with a small group. Similarly the Morbi tiles of Gujarat have ancient Italian design and fetch a high price but the manufacturing is limited," says Subramanian, adding that such manufacture bases have to expand to benefit more people.

Recently their Budapest office helped a Rajasthani entrepreneur export a large quantity of sandstone. "Happy with the execution of the order, the Hungarian company is sending a team to assess the company's capability of executing much larger orders."

Whether it is the silk-weaver co-operatives of West Bengal or villages in Uttaranchal generating 1 or 2 KV of power by using water mills, "we want to scale up and replicate these operations. The Uttaranchal water mills use a simple technology to generate power sufficient for lighting and operating small workshops and we're going to contact the Himalayan Environmental group to fine-tune this technology, and export it to Congo and other African regions with good water supply," says Subramanian, adding that better marketing models for rural women's produce have to be developed.

Adds Muthukumaran, "We want to help tribal and other women working in the agricultural sector. In Wayanad, the tribal women get farm work for barely 150 to 180 days a year and are unemployed for the rest of the days. Working with Uravu in making products out of bamboo or coconut shells brings them additional income."

Some of the tsunami-affected fishermen too have been given intensive training for making handicrafts. He thinks that bigger organisations can sub-contract some of their work to women's SHGs through NGOs. "What the SHGs lack is corporate and marketing linkage; if exporters outsource a part of the job to women's groups and give the finishing touch at their outlets, it'll be a win-win for both," he adds.

Subramanian says the Exim Bank is now talking to star hotels to explore the marketing of handicrafts made by rural women and the smaller companies. "Half of the tourists coming to India are business travellers with no time to shop for souvenirs. Many countries keep products inside the hotel room with a price tag giving a brief history of the craftsperson or what cause it will serve. These can be priced around $30-50 and tourists who want to help a cause will certainly buy them. I've myself picked up a $50 shawl made by a tribal woman from a hotel room in Columbia. The Taj group has evinced interest and we're thinking of beginning with products from Salim Papers."

He adds that there are opportunities even in the education sector with education consultancy having a market overseas. "Even though a couple of Indian institutions are there in Dubai, they only attract Indian students. We're now working with a Mumbai management institute that is looking at opportunities in South Africa. A feasibility study for this self-financing institute is now being done."

So how easy is it to get finance? Is there a red tape?

"There is no tape, red or black," says the Exim Bank CMD. "If you have the idea and the product, we have the money."

Any takers?

Response can be sent to rasheeda@thehindu.co.in

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