Responsible Corporate Engagement in Rural India-A Compendium of Good Practices.

Responsible Corporate Engagement in Rural India
A Compendium of Good Practices
Deutsche Gesellschaft fr 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 info@magnumbooks.org
Contents
Message Ministry of Corporate Affairs . .................................................................................. Foreword Indian Institute of Corporate Affairs. ........................................................................ Foreword Embassy of the Federal Republic of Germany. ....................................................... Preface.......................................................................................................................................... Acknowledgements. ..................................................................................................................... Abbreviations. ...............................................................................................................................
vii ix xi xiii xv xvii
Executive Summary. .....................................................................................................................
Replication and Scaling-up: Lessons from the Case Studies.................................................... Benets .............................................................................................................................. Success factors................................................................................................................... Challenges to replication......................................................................................................
5 6 8 10
Case Study 1: Partnering Progress BASFs SAMRUDDHI Project.......................................... Description of the intervention. ............................................................................................. Business case for BASF...................................................................................................... Value to rural communities................................................................................................... Lessons learnt .................................................................................................................... Challenges to replication......................................................................................................
11 11 14 15 16 17
Case Study 2: Empowering Women Retailers in Rural India Coca-Colas eKOCool Initiative Description of the intervention. ............................................................................................. Business case for Coca-Cola. .............................................................................................. Value to rural communities...................................................................................................
18 18 21 22
iii
Lessons learnt .................................................................................................................... Challenges to replication...................................................................................................... Annexure 1: Coca-Colas Global Women Empowerment Programme 5 by 20. ..................
23 24 26
Case Study 3: Securing Supply Chain and Improving Rural Livelihoods Bunge-SRIJAN Partnership ................................................................................. Description of the intervention. ............................................................................................. Business case for Bunge..................................................................................................... Value to rural communities................................................................................................... Lessons learnt..................................................................................................................... Challenges to replication...................................................................................................... Annexure 2: Key Activities Performed by SRIJAN. ................................................................ 27 27 35 36 38 40 42
Case Study 4: Securing Livelihoods for Rural Women and Securing Supply Chain Titan-MYRADA Partnership............................................................................... Description of the intervention. ............................................................................................. Business case for Titan. ....................................................................................................... Value to rural communities................................................................................................... Lessons learnt..................................................................................................................... Challenges to replication...................................................................................................... 46 47 54 55 56 57
Case Study 5: ITCs Social Investment Programme................................................................... Interventions ....................................................................................................................... Business case for ITC.......................................................................................................... Value to rural communities................................................................................................... Lessons learnt .................................................................................................................... Challenges to replication...................................................................................................... Annexure 3: Soya Procurement in Madhya Pradesh. ............................................................
59 59 65 67 68 71 74
iv
Case Study 6: Maintaining Social License to Operate Rio Tintos Bunder Project................ Intervention.......................................................................................................................... Business case for Rio Tinto. ................................................................................................. Value to rural communities................................................................................................... Lessons learnt..................................................................................................................... Challenges. .......................................................................................................................... Annexure 4: Drinking Water Initiative.................................................................................... Annexure 5: Women Drivers................................................................................................ Annexure 6: Vegetables Growers Group.............................................................................. Annexure 7: Interventions with Direct Impact on Livelihoods................................................ Annexure 8: Interventions with Focus on Health and Education........................................... Annexure 9: Other Initiatives................................................................................................
76 76 84 84 85 86 89 91 93 95 97 101
List of gures
Figure 1: Cross-cutting lessons from the case studies................................................................... Figure 2: Increase in yield of soybean in BASFs SAMRUDDHI programme.................................... Figure 3: Transfer of technical know-how to farmers...................................................................... Figure 4: Sources of credit available to the farmer. ......................................................................... Figure 5: Bunge-SRIJANs programme structure. ........................................................................... Figure 6: Structure of women led institutions in Bunges programme............................................. Figure 7: Organisation structure of MEADOW................................................................................ Figure 8: Programme development for Rio Tinto............................................................................ Figure 9: Circle of continuous interventions and business and community gains for Rio Tinto........ Figure 10: Working model for the drinking water programme: sourced from Rio Tintos presentation... 5 15 29 30 32 44 52 77 79 80
List of tables
Table 1: Brief description of the case studies................................................................................. Table 2: Bunges Samriddhi programme achievements.................................................................. Table 3: Key statistics of Bunges Samriddhi programme............................................................... Table 4: Roles and responsibilities of Bunge, SRIJAN and Service Provider................................... Table 5: Highlights of MEADOWs achievements............................................................................ Table 6: Year-wise activities of MEADOW....................................................................................... Table 7: Unit and location-wise number of employees of MEADOW............................................... Table 8: Roles and responsibilities of Titan, MYRADA and MEADOW. ............................................ Table 9: ITCs Social Development Programme highlights up to 2012............................................ Table 10: Rio Tintos programmes on enhancing livelihoods . ........................................................ Table 11: Rio Tintos interventions in health and education . .......................................................... 2 33 34 34 49 50 50 53 64 95 97
vi
Message from Ministry of Corporate Affairs
vii
Foreword Indian Institute of Corporate Affairs

The Ministry of Corporate Affairs 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 ling 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 reect 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 prot making corporates to actively engage on Corporate Social Responsibility (CSR), providing another opportunity for companies to reect 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 benecial 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 fr Internationale Zusammenarbeit (GIZ) GmbH by PwC seeks to demonstrate that companies already interact with rural communities in ways that benet 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 the country. Objective wish to target the rural communities around Principle 8 of the NVGs.
its kind in sses responsibility, including CSR The case studies serve as critical inputs in the process of developing a project aimed at improving the business needs of companies more clearly. and investment climate for companies engaging with the rural sector, while at the same time maximising their em of institutions that can catalyse and inclusive development in rural areas. The project will focus on encouraging contribution to sustainable ports and duly acknowledges the 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 Chatterjee Director General & CEO, IICA Dr. BhaskarChatterjee
DG & CEO, IICA
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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 fr 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 signicant role both as a driver and a beneter. In view of Indias 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 MCAs 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
xi
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 benecial 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 ndings 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 businesss success is measured by the triple bottom-line People, Planet, Prots 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-prot organisations such as producer companies, self-help groups and federations, etc.
xiii
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 benet 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, (ITCs e-Choupal and Unilevers Shakti Project being the two exceptions) which embody the idea iterated above. The IICA and GIZ, through this project, endeavour to uncover these opportunities the efcacy of the above idea to Corporate India, NGOs and state agencies through which can then be scaled up and replicated to increase impact. Acknowledging this towards synthesising business strategy and rural development goals is imperative equitable development. and demonstrate live case studies, gap and working for inclusive and
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 benets to both are monetary and quantiable while non-commercial relationships refer to those where the qualitative benets to both are clear but its quantication 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 benets 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 benets 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 benet to communities is increased, more predictable incomes and/or alternative livelihood opportunities while companies benet from a diversied 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 benets while companies can gain in a number of ways broadly classied as community license to operate.
xiv
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 benet basis, in order to support the German Government in achieving its development-policy objectives. We acknowledge GIZs contribution towards making this exercise both rigorous, forward-looking and a fullling 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 nal 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.
xv
Abbreviations
APMC BMGF CNA CEO CSR DSR FMCG GIZ ha HR IICA INR ITI KVKs MCA mt MYRADA NGO NVGs O&M PoP PRA Agricultural Produce Market Committee Bill and Melinda Gates Foundation Community Needs Assessment Chief Executive Ofcer Corporate Social Responsibility Directorate of Soybean Research Fast Moving Consumer Goods Deutsche Gesellschaft fr Internationale Zusammenarbeit Hectare Human Resources Indian Institute of Corporate Affairs Indian Rupees Industrial Training Institute Krishi Vigyan Kendras Ministry of Corporate Affairs Million tonnes Mysore Resettlement and Development Agency Non-Governmental Organisation National Voluntary Guidelines Operation and Maintenance Package of Practices Participatory Rural Appraisal
xvii
PwC Qtl R&D RTEIPL SAGs SHGs SIP SIPCOT SMCPCL SMS SRIJAN TIDCO UHDP UNICEF USD VDC VWSC
PricewaterhouseCoopers Pvt. Ltd. Quintal Research and Development Rio Tinto Exploration India Private Limited Self-Help Afnity Groups Self-Help Groups Social Investment Programme State Industries Promotion Corporation of Tamil Nadu Ltd Samridhhi Mahila Crop Producers Company Ltd Samridhhi Mahila Sangh Self-Reliant Initiatives through Joint Action Tamilnadu Industrial Development Corporation Limited Ultra High Density farming Practices United Nations Childrens Fund US Dollars Village Development Committee Village Water and Sanitation Committee
xviii
Executive Summary
This report presents a set of six case studies that seek to demonstrate that companies can play a signicant role in rural development beyond philanthropic interventions (important as they are) when there are business benets as well. The reason for this is simple philanthropic engagements tend to be closely linked with the nancial 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 benets. The case-studies have been based on discussions with company and NGO staff, and eld 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 denition, 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 difcult 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 reection of the importance of the philanthropic motivation of the respective company.
Responsible Corporate Engagement in Rural India: A Compendium of Good Practices
The six case studies are briey 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

Category
Case study
Brief description
Partnering Progress BASFs SAMRUDDHI project Sector: Chemical including agrochemicals Key actors: BASF and farmers
SAMRUDDHI is BASFs 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 benecial. BASF India initiated Soybean SAMRUDDHI in 2007 and started
Coverage:
Soybean
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 beneted by increased sales.
SAMRUDDHI covers all districts in Madhya Pradesh, Maharashtra (entire Vidarbha and parts of Marathwada), Andhra Pradesh (Adilabad), Chattisgarh and Rajasthan (Kota, Jhalawar, Bundi & Chittorgarh)
Distribution
Empowering
women
retailers
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 CocaCola 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 ve times as compared to previous years sales which beneted the company in terms of increased sales and the women retailers in terms of increased incomes.
in rural India Coca-Colas 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
Executive Summary
Category
Case study
Brief description
Securing
supply
chain
and
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 protability. The programme provides access to credit and market information, better seeds and
improving rural livelihoods Bunge-SRIJAN Partnership Sector: Agriculture Key Pvt. actors: Ltd Bunge India
enhanced agronomic practices related to planting, irrigation, pest control and harvesting. In 2011, 7,000 participating farmers saw average crop yields and net prot rise by 87 and 167 per cent, respectively, when compared to others in their districts. The business benet accruing to Bunge is increased availability of soybean in the region which has improved capacity utilisation of its oilseed processing plant.
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
Supply chain
of these farmers range from less than 1 hectare to 2 hectares with average being 0.34 hectare.
Securing livelihoods for rural women and securing supply chain Titan-MYRADA partnership Sector: Retail Key actors: Titan and Industries Mysore Manufacturing and
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.
Limited
(Titan)
Resettlement and Development Agency (MYRADA) Coverage: 511 rural poor women in Hosur Taluk, Krishnagiri District, Tamil Nadu.
Category
Case study
Brief description
ITCs
Social
Investment
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 benets seen as primary and this is a part of
Programme
Sector: FMCG Key actors: ITC and rural
its ethos across the company. This strategy is led by the Social Investment Programme (SIP) where a part of ITCs prots 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 ITCs soybean procurement
communities Coverage: Various states of India
Community engagement
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 Tintos 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 benets, 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 benets continue to enhance rural lives beyond mine life.
Replication and Scaling-up: Lessons from the Case Studies

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 benets, lessons and challenges observed in the case studies developed. Figure 1 below presents an overview of these lessons. Business case for companies
Securing supply chain Expanding rural distribution network Maintaining social license to operate
Value to rural communities

Direct economic benefits
Success factors
Building a relationship with rural communities Business partner approach
Challenges to replication
Choosing the right partner NGO Managing expectations of the communities
Capacity building
Women empowerment
Commitment from the top management
Sustained livelihoods
Partnership with NGOs
Focussing on women
Investment through grant
Figure 1: Cross-cutting lessons from the case studies
Benets
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 benets are highlighted as follows:
Business benet 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 companys 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. Specic 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. Specic 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 dont feel left behind whilst they prosper and grow. Specic 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.

Direct economic benets The case studies clearly indicate that communities gain economically from an increase in their incomes and/or through cost savings (direct or from efcient utilisation of resources) induced as part of the intervention. Specic examples from the case studies on direct economic benets:
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 signicant cost saving in electricity and ice, accompanied by increase in income due to higher sales, for the retailers. Titans 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 benets (economic as well social) as a result of aggregation. Specic 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 Tintos 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.
Womens 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 signicantly, 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 benets of each of these interventions. Interventions by Bunge, Coca-Cola, Titan and Rio Tinto all rely on women to achieve each of their objectives.
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 benets which they may not be able to make otherwise. All the case studies in supply chain and distribution categories extend this benet 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 longterm 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 y-by-night operator. Establishing trust takes time, investment and commitment to create mutual gains between the communities and companies. Specic 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.
Specic 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. Specic examples from the case studies on commitment from the top management:
ITCs 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 benet 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 nancing 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.
Examples from the case studies on focusing on women:

Both Cola-colas and Titans 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 womens enterprise in the Titans 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.
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 nd it difcult to nd 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 nd it challenging to work with NGOs and prefer to set up their own service network. Finding the right partner and nding the best way of working with the partner may be a difcult 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 nancial 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 nancial sense for the companies.
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Case Study 1: Partnering Progress BASFs SAMRUDDHI Project

About BASF in India
BASF has successfully partnered in Indias 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, BASFs community development activities focus on relief and rehabilitation, womens empowerment, education, and improving governance standards. BASF in India has 2,157 employees at nine production sites, eight sales ofces 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 worlds 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 fth 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 BASFs 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 tted 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.
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 signicant 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 specic 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 BASFs 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 Ofcers and SAMRUDDHI Field Ofcers under them. These SAMRUDDHI Ofcers and Field Ofcers 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 benet the farmer. The eld implementation of the programme in a village is kick-started by an initial presentation by the SAMRUDDHI Ofcer to the farmers. The presentation includes an introduction to BASF, a safety lm and good farming practices. Apart from presentations and verbal education to farmers, BASF also demonstrates these good practices on the eld. 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 identied 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 Ofcer 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 Ofcers then move to another set of farmers and assist them in adopting good practices. This ensures the gradual expansion of BASFs 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 Ofcers who are always available to assist the farmers. Continuous engagement with the farmer ensures that the Field Ofcers are aware of any complications that might arise in the eld, and enables them take appropriate action. This also serves as a comforting factor for the farmers who have access to knowledge gained through the eld ofcers. 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 Ofcer 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 eld ofcers 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 farmers 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.
31% 30% 25.70% 23.60%
25%
2008
2009
2010
2011
2012
Figure 2: Increase in yield of soybean in BASFs 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 beneted 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-Efciency2 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 signicantly more eco-efcient for both economy and the environment. The programme delivers higher yields with lower environmental impacts as compared to traditional farming practices.
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=Z sEcUZ7cHZSG8QSI-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 eld. 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 eld ofcer or the call centre. The Margdarshaks are separately trained on the good practices and any updates on scientic research are shared by BASFs Field Ofcers. Through the Margdarshaks as well as the eld ofcers, 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 benet 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 BASFs 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 beneted 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 Ofcers 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 BASFs knowledge over the phone. Trust is also built through BASFs eld 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 signicant contributor. The fact that BASF had a product that could address this challenge provided it a signicant opportunity to intervene in a manner that everyone beneted. 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 signicantly 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 BASFs network, there are synergies on the ground which may benet 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. BASFs 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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Case Study 2: Empowering Women Retailers in Rural India Coca-Colas eKOCool Initiative
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 worlds 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-Colas 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 CocaCola, 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 MarchJuly 2010. It initially installed
3 4
http://www.coca-colaindia.com/ourcompany/company.html Coca-Cola collaborated with Mumbai-based Western Refrigeration for developing the prototype and manufacturing of the eKOCool solar cooler.
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20 solar coolers in rural areas near Agra in Uttar Pradesh where sales showed an impressive jump as high as ve 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 ve hours, and are chilled enough for consumption. Retailers reported that once they start the cooler, they chill the rst 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-Colas global women empowerment programme 5 by 20 derived from the programme goal of empowering ve 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, nancial 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 nancial burden on the retailers on account of electricity bills.
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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 others 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 (sufcient 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 identied, 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 sufcient 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 benet 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 rst time retailers who were not selling Coca-Cola products before as well as rst 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 benetting both retailers as well as Coca-Cola. This effect is yet to be seen on the eld as the programme has been running for less than a year. As the rural market expands and slowly matures, it will open up the eld 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 nancially 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 3.54 years5 and this makes the programme a nancially viable venture for Coca-Cola. The retail outlet owners have also beneted 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
Based on back of the envelope calculations sourced from Coca-Colas sales team.
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allows the retail outlet to sell chilled beverages year-round, thereby making the business nancially 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 benets as the retail outlets with solar coolers are activated with brand signage like any other retail outlet selling Coca-Cola products. Although the benets cannot be quantied, 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 benet
The retail outlets that are part of the eKOCool solar cooler programme have witnessed an increase in prots. This has been possible because of an increase in sales as high as ve times as compared to previous years 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 prots. 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 xed 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 tted 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 nancial assets, lack of basic business
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training, and cultural barriers in rural areas related to working women. The eKOCool solar cooler programme is part of Coca-Colas 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 nancial 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 familys 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 nalising the design and conguration 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 efcient utilisation of resources key towards ensuring sustainability of such a venture. While developing the solar cooler, Coca-Cola also wanted to keep the conguration as simple as possible and decided to rst 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 benet 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 nal 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
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availability. Developing the cooler was a time consuming process and involved several trials before achieving the desired system conguration. 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-nancing 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 nd 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 conguration
Coca-Cola distributes its solar cooler free of cost to women retailers in rural India and bears the associated nancial cost itself. For such a programme, resource optimisation is important for ensuring transfer of maximum benets to all the stakeholders Coca-Cola, its distributors and the retailers. It leveraged its existing distribution network to deliver the programme. It modied 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 benet 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.
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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 efcacy of the programme and the potential benets it would entail for everyone involved. Internal buy-in was achieved through demonstration (show and tell) of the working system and its benets 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 benets of the programme to all the internal stakeholders and have everybody on the same side of the fence.
Improving nancial 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 nancial outlay for the programme will also rise. At the new scale, maintaining nancial viability may require government support, support by a partner company or even contributions from the retailer (fully, partly or through external nance). 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 nancial risk associated with the programme. Maintaining nancial 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 exibility 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 outlets 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.
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Annexure 1: Coca-Colas Global Women Empowerment Programme 5 by 206

Coca-Colas 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 decit areas of rural India. 2 Pragati is a business skills/capability development programme led by Coca-Colas 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 rst 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 nancial management and utilise a multimedia training approach using videos, text and trainers. Training is offered in 14 languages and all trainers are trained and certied by Coca-Cola.
http://www.coca-colaindia.com/presscenter/Coke-Muhtar_AgraVisit.html
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Case Study 3: Securing Supply Chain and Improving Rural Livelihoods Bunge-SRIJAN Partnership
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, sunower seed, canola seed and rapeseed), rening 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, Bunges 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. SRIJANs 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 beneciaries. This principle emanates across SRIJANs 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 specic 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.
9
7 8
http://www.bunge.com 2011 Bunge Annual Report http://srijanindia.org
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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 womens role in farming
SRIJAN also focuses on ensuring a ready market for the produce of the farmers it works with through Bunges collection centres.
Programme structure and activities

In order to work towards these objectives, Bunge provides an annual nancial grant to SRIJAN for managing the programme on the eld. 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 years performance. Once the plan is agreed, SRIJAN details its programme activities for the next year and implements these activities on the ground. From a farmers 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 Producers 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
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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 benets of better prices from bulk procurement. Technical know-how As discussed before, there was a denite lack of knowledge of appropriate soya farming practices as reected in the low productivity in the region. The programme targeted this element by adopting Bunge Brazils 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 beneciaries. 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.
Farmer
Technical assistance from Directorate of Soybean Research (DSR, earlier National Research Centre for Soybean, NRCS)
Designing package of practices including local innovations Promote sustainable practices for increasing productivity of soya bean Programme enrollment and expansion activities Programme promotion activities Capacity building (internal & external)
Technical Knowhow
Service Provider (SP)
Objective
Activities
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
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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 sufcient 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 governments 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.
Farmer
Credit
SHGs internal saving scheme & loans to SHGs from banks Federations loan scheme
Commercial Banks
Local lenders
Kisan credit card
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 ofcials 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.
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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 scientically 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 rst to the mandi and then to Bunges plant. The collection centres located near the farms directly send the produce to Bunges 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.
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Farmer
Technical assistance from Directorate of Soybean Research (DSR, earlier National Research Centre for Soybean, NRCS)
Figure 5: Bunge-SRIJANs programme structure
Funds (grant)
Bunge
SRIJAN
Annual proposal
Joint planning
Objectives
Credit
Programme activities
Technical Knowhow
Agricultural inputs
Market
Designing package of practices including local innovations
Programme enrollment and expansion activities
Producer company Bunge collection centres Other collection centres Commercial Banks Mandi Local lenders
Promote sustainable practices for increasing productivity of soya bean
Programme promotion activities
Capacity building
SHGs internal saving scheme & loans to SHGs from banks Federations loan scheme
Promote women-led community-owned institutions
Establishing community-owned institutions (SHGs & Clusters, Federation, Producer company)
Strengthen the value chain of soya bean
Procurement through collection centres
Kisan credit card
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 SRIJANs 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 gures are presented in the Table 2 below for the period 2008-2011 with expected gures for 2012
Table 2: Bunges Samriddhi programme achievements

2008
Farmers Geographical Spread (Village/Block/District) Productivity (Soy) (Qtl/ha) % incremental yield Prot INR/ha Average Adoption Rate of selected practices: Spacing Fertilizer Seed Treatment Women in SHGs 6% 80% 10% 0 30% 35% 80% 250 45% 44% 77% 750 65% 49% 86% 2136 66% 33% 78% 2430 13.04 84 % 9,500 12.89 47% 7,050 18.30 65 % 12,350 18.74 34% 9,500 18-20 (Expected) 40% (Expected) 13,850 (Expected) 50 5/1/1
2009
678 40/1/1
2010
3000 87/3/1
2011
7000 140/4/2
2012
12,000 223/5/2
Table 3 shows that in 2011 Soya Sammridhi farmers realised an average prot of INR 27,247 (USD 545) per ha which is 167% more than the district average. Intensive farmers earned 14% and 183% more prot as compared to extensive farmers and average district farmers.
10
Source: SRIJAN, exchange rate used: 1 USD=INR 50
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Table 3: Key statistics of Bunges Samriddhi programme

Item
No of farmers Area in ha Total production, Qtl Average yield, Qtl/ha Average cost of cultivation, INR/ha Gross Prot (INR) per ha Net prot (INR) per ha Increase in income, % Increase in production, % Farmer got loss after considering land opportunity cost
Intensive
3,101 3,023 59,671 19.74 11,588 40,467 28,879 183% 97% 22
Extensive
3,984 3,653 65,443 17.91 11,131 36,721 25,590 151% 79% 418
Total
7,085 6,676 125,114 18.74 11,359 38,606 27,247 167% 87% 440
District Average
NA 80,000 800,000 10 10,825 21,000 10,175
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
Bunge
Responsibility Financial grant to SRIJAN for programme management Market information (pricing) to SRIJAN/collection centres for procurement purpose Assured procurement of produce from SRIJAN farmers 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 Daily point of contact for the farmer Implementation of recommended practices at the farm (services to the farmer) Farmer enrolment
SRIJAN
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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 Bunges 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 benets. This section highlights these business reasons, both those stated by Bunge as well as those that have emerged during discussions and the eld 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 Bunges 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 xed costs and hence better returns on investment for Bunge. Over time, the capacity utilisation of Bunges processing plant has improved. While it is difcult 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 benecial to business. Apart from ensuring a community license to operate, a very critical business benet, several collateral benets are likely to accrue. As more and more farmers recognise Bunges 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 signicantly 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 Bunges 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:
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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 Bunges plants. By increasing procurement through collection centres, Bunge can benet 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.
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Savings in transportation costs, lower wastages and the convenience offered by the collection centres established by the intervention.
Womens 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 signicantly, 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 Bunges requirements at present, the plans are that they would grow signicantly 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 benet 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.
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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-prot company and a non-prot 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 condently without creating dependencies by farmers. SRIJAN does not advertise Bunges role but acknowledges that its operations rely on Bunges contributions. Bunge acknowledges the work of SRIJAN and its role is delivering Bunges CSR in the most effective, sustainable and mutually benecial 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. SRIJANs 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 sufcient 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 SRIJANs experience.
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Interventions that build such local community institutions which can play the role of aggregators are therefore an efcient 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 Bunges 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 rst 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
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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 avour to an extent and avoid forming long-term dependencies.
Understanding the local context
Any initiative like this that calls for signicant 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 nd 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 fullled 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, nding 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 nding 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 benets 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-prot 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.
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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 benets 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.
Benets spill over

Another possible challenge to replicating such a programme is that companies need to recognise the fact that all the benets 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 farmers 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 nancial 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.
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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 identies 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: Beneciary identication 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 eld) stay in the identied 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 benets and results of SRIJANs 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.
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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 nancial transactions. Inter-village exposures and eld trainings for farmers to demonstrate the results and benets 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 benets of practices recommended by SRIJAN to other small farmers through exposure visits.
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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 1020 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.
Federation
Cluster
Cluster
Cluster
SHG Women farmers
SHG Women farmers
SHG Women farmers
SHG Women farmers
SHG Women farmers
SHG Women farmers
Figure 6: Structure of women led institutions in Bunges 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 members 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 federations loan scheme for larger loans (24% interest
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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 Producers Company Ltd. (SMCPLC) In November 2011, Samridhi Mahila Crop Producer Company became the rst 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 benet 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 prot margin.
Procurement through collection centres

As explained before, Bunge runs two collection centres to procure from farmers. The mechanism has already been described.
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Case Study 4: Securing Livelihoods for Rural Women and Securing Supply Chain Titan-MYRADA Partnership
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 ofce in Hosur and its corporate ofce 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 afnity 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 elds and has a social order skewed in favour of men given the prevailing patriarchal systems.
12 13
http://www.titan.co.in/corporate/company-prole http://MYRADA.org/MYRADAProle%202010.pdf
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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 benets 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 inuence 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 Titans 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 qualications beyond the high school level. Given that nger dexterity was a key requirement of such type of jobs, MYRADA felt that the daughters of the Self-Help Afnity 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 nger dexterity was a concern. MYRADA, Titan and the SAG members developed the following criteria for the selection of the rst batch of women for this purpose. The person selected should either be a SAG member or a members 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 t. This includes good nger 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 15
http://MYRADA.org/MYRADAProle%202010.pdf SAGs are women self-help groups formed by MYRADA
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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 womens 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. Signicant 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 nancial 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 ownermanagers 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.)
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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 signicant 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 conict resolution, improving awareness and self-condence, gender issues, health, behavioural aspects, Human Resources (HR), and nancial and legal management. Titan on its part organised training by its supervisors on polishing watch bracelets, braiding wires for Titans 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 signicantly 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 MEADOWs achievements

Contribution to corpus (after TDS)
Nil 2.08 -0.92 1.21 -2.78 0.61 0.02 2.41 5.14 8.45 11.62 5.57 13.00 10.20
No of units
No of employees
Prot (INR lacs)
Turnover (INR lacs)
1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
80 87 90 99 111 119 128 157 318 409 419 436 464 511
1 1 1 1 2 3 6 6 10 16 16 16 16 16
4 5 4 4 5 8 12 14 18 21 21 24 24 26
15.58 35.31 46.41 59.15 47.19 54.78 57.91 61.91 106.48 150.07 213.12 264.54 388.72 392
Nil 4.20 Nil 3.70 Nil 3.40 3.60 7.40 27.20 30.00 46.55 56.70 77.30 58.20
16
Plan International is a US based development aid organisation working in more than 40 countries to alleviate child poverty.
Dividend (INR lacs)

Nil Nil Nil 0.93 1.39 1.68 1.97 2.78 15.06 21.55 34.93 51.13 64.30 48.00
No of activities
Year
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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
Upto 1996 1997 - 1999 2000-2004 2005-2006
Activities initiated
Link assembly, hand press, nal assembly, end link xing Flap satin, jewellery silver work, table clock assembly, watch quality control, rope assembly Calendar Mechanism Main Plate (CMMP), strapping, gold plating Movement assembly, train wheel bridge, jewellery stone setting, deburring, mould setting, waxing, case polishing
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Aerospace, S.S. straps, case polishing II, band recovery, strap masking, full watch packing L.F.S., C.F.A., back cover Enamelling, 22 kt jewellery, wax setting Case rework, ligree jewellery, case masking, stone sorting Case assembly, HD waxing, ligree, 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
1 2 3 Watch Division 4 5 6 7
Unit
Case polishing Strapping Stone setting and enamelling Strap masking Gold plating Case rework Case polishing 2 and plating recovery and back cover
Locality
Kalugopasandram village Koot road Koot road Midigarupalli Midigarupalli Midigarupalli Midigarupalli
Number of employees
40 21 20 30 15 19 48
8 Precision Engineering 9 10
Movement assembly Deburring Aerospace
Dinnur Dinnur Dinnur
33 29 47
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Division
No
11
Unit
Jewellery metal setting and stone sorting Dinnur
Locality
Number of employees
45
12 Jewellery Division 13 14 15 16
22 carat gold plain gold Waxing and ligree Mould setting Waxing Wax setting Accounts
Dinnur Dinnur Dinnur Dinnur Dinnur
13 16 30 54 35 5 5 2 4
Ofce Staff
Housekeeping (sweepers) Night watchman Security (day)
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 signicantly improved the earning of women in the region, from INR 1,200 before the project to INR 6,0008,000 now.
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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, prot distribution, negotiations with Titan, statutory functions relating to labour, audit, etc. Three members (not from the board) look after accounts, fund ows and other ofce 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.
Board of Directors
Consists of women selected by the 16 task groups and holds ofce for a tenure of one year
Oversees the administration of MEADOW
CEO
Preferably male because of travel constraint faced by women
Oversee operation of each unit
Unit Managers and Members
Responsible for daily operations, managing HR and nance
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 species the terms of engagement in line with Titans agreement with other subcontractors. 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.
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With increasing awareness, condence 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 modications.
Roles and responsibilities

Table 8: Roles and responsibilities of Titan, MYRADA and MEADOW
Entity
Titan
Responsibility 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 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 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, ofce space for units, new equipment, manpower cost, etc., is taken care of by MEADOW
MYRADA18
MEADOW19
Present scenario
MEADOW was advised by Titan to register itself as a non-prot 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 19
MYRADA is no longer involved on a day to day basis but keeps in touch and brings visiting dignitaries occasionally 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

Titans 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 rst 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 benets 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 nger dexterity, good eyesight and involved no use of heavy equipment. Thus, the business benet 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 MEADOWs 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 beneciaries of the prots 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 nd 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 specications (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 denite risk in an industrial estate like Hosur.

Economic and social benets
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 benets to the community as well: yy Increased awareness about the wrongful practice of female infanticide and the need to wipe it out from their communities. Increased awareness about hygiene and environmental issues around the villages.
yy
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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 ofcials and banks, undertaking negotiations that were previously conned 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 condent 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 Titans 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 gamechanger 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 companys 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 MYRADAs 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 signicant non-nancial benets 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 nancial support. This is because women engaged in this intervention had to overcome many signicant 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 Titans own conviction that the benets 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, nding such a partner can be a challenge and any company wishing to work in partnership needs to invest signicantly in nding 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 NGOs (in this case MYRADA) ability to access funds and second through contribution in kind from Titan by way of providing equipment.
Market constraints
A signicant challenge for MEADOW is that it is solely dependent upon Titan for selling its produce. While this is ne as long as Titans market is buoyant, difcult market conditions can adversely impact the protability of MEADOW. As a co-promoter of this venture, Titan tries to ensure that MEADOW remains protable 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 protable 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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Case Study 5: ITCs Social Investment Programme
About ITC
The ITC Group is one of Indias largest private sector companies with a market capitalisation of approximately US $ 42 billion. ITC has a diversied 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 eld structures. What is interesting is how the structures intertwine to bring business benets in social transactions and social benets in business transactions. ITCs 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).
ITCs Field Infrastructure

ITC has set up an elaborate rural eld 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 specic criteria laid down by ITC. Typically, his network of inuence covers farmers within a catchment area of 10 km radius. The villages are selected upon the recommendation of ITCs implementing partner NGOs near the location of the procurement hubs. The ICT e-Choupal Kiosk is set up at the Sanchalaks 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.
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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 specic 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 our 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 ITCs business units and community engagement

As a conglomerate working in trading, processing, retail etc., ITCs 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 ITCs eld structures listed above wherever possible. These types of interventions are relatively common even though NGO partners, states and crops change. ITCs 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. ITCs 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 benet 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 Sanchalaks house through a computer. The information about weather, the days 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 benets 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 elds (extension services). The Sanchalaks/e-Choupal network also supports the extension services which are implemented by ITCs 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 nd 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 nalise prices. And nally, 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, ITCs 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 womens 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) nalise the geographical area, they make joint plans and budgets for a social development programme and the search for an NGO partner begins. ITCs 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 ITCs engagement with rural communities

Empowering the communities is a crucial building block of ITCs 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 ITCs 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 nd 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: ITCs Social Development Programme highlights up to 2012

Social Programmes
e-Choupal Wasteland development Soil and moisture conservation Integrated animal husbandry programmes Womens empowerment Sanitation
Programme achievements
Reached 40,000 villages or 4 million farmers Developed 90,000 hectares of wasteland Built 442 water harvesting structures Started 293 cattle development centres Supporting 2.6 lakh children in primary education Built 3,495 toilets
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Project monitoring
ITCs Social Investments/CSR programmes are supervised by: (a) Board Committee on Sustainability; (b) Corporate Management Committee (CMC); (c) Management Committee Social Investments; (d) Programmes 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 sufcient 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 inuencing 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 Sanchalaks 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. ITCs diversication 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 benets 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 ITCs operations. The trust built by ITCs 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 ITCs FMCG and other products. For example, the farmers familiar with e-Choupal might be more open to shop at the Choupal Sagars or buy ITCs 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 efciently utilise the facilities and also assist with the recovery of xed 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 nds 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 ITCs 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 ITCs Foods Division to create blends using different varieties of crops to suit specic 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 oor 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 mandis 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 nally, choices left at the hands of the farmers are gradually changing the business landscape.
Benets 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 benet 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 benets 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 benets 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 benets 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
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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 benets

Another lesson that emerges very clearly is that building trust brings long-term business benets. 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, knowhow, 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 ITCs 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 communitys 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 benets 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.
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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 benets 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 benets 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 nd an NGO who specialises in the eld of development. A key to ITCs 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, ve are under public-private partnerships with GoMP and NABARD. Specialist NGOs are chosen for their skills and experience in specic elds i.e., BAIF for ITCs 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, ofcers 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 rst 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, ITCs approach is to provide yield improvement assistance but to leave the nal decision on the point of sale in the hands of the farmers. Thus, ITCs approach is to look at community engagement as a long-term business investment. Some companies may nd it difcult 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 nd it difcult to nd 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.
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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 nd it challenging to work with NGOs and prefer to set up their own service network. Finding the right partner and nding the best way of working with the partner may be a difcult 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 benet both the rural communities as well as the companies need signicant 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 prots and it is not always easy to apportion returns on capital from grant investments. Some companies may therefore nd it challenging or testing to work in environments where prots 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, signicant investments go into social programmes before Choupal Sagar units are set up and become protable. A new Choupal Sagar does benet 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 nd it difcult to ascertain if investments, especially business investments in social programmes are in fact beginning to inuence 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 difcult 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 benets
As mentioned above, social programmes often require heavy investments on behalf of the companies. However, companies operating the same areas with similar programmes can nd 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 benets merit the possibilities of such tie-ups in the future. However, on the ip side, many companies will nd 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 cant nd 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, ITCs 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. ITCs 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 nd 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 nd 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 benets 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 efcient 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 ow situations agricultural businesses face.
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As for the farmers, they were happy and condent 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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Case Study 6: Maintaining Social License to Operate Rio Tintos Bunder Project
About Rio Tinto20

Rio Tinto is a 130 years old global metals and mining company. It is involved in exploration, mining and processing of Earths 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 Tintos rst 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 rst diamond-bearing deposit (lamproite) was found in May 2004. The nal 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 eld. 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 identied issues, appropriate programmes are developed. Depending on the nature of individual programme requirements and availability of in-house capability and internal capacity, partnerships are
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http://www.riotintoindia.com
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Figure 8: Programme development for Rio Tinto
Use participatory methods, community needs assessment techniques and ongoing local knowledge building studies and surveys
Understand local needs and priorities
Select partners Develop programmes Assess possibility of leveraging government schemes
Based on identified needs, develop required programmes to achieve desired impact
Depending on the nature of the programme and availability of internal capacity, identify relevant partners for delivering the programme on the ground Assess the possibility of dovetailing with existing government schemes for funding projects or components of projects
Monitor programmes
Work together with partners, deploy funds and human resources, assist in formation of community owned institutions (if required)
Implement programmes on the ground
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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 efciently 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
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Interventions with impact on water availability Interventions with impact on livelihoods
Making water available today to communities, to manage future responses
Maintaining social license to operate
Interventions aimed at building community based institutions Interventions in areas of Health and Education
Making communities part of growth and prosperity of the company
Building a strong bond with communities
Enhance quality of life, indirectly impact livelihoods and build social capital
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 scientic and methodical water nding 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 Tintos 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.
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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 Tintos nancial 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 signicant 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.
Community
Target group
VWSC
Programme implementation
Rio Tinto
Programme funding
Haritika
Technical support and capacity building
Community and VWSC
Programme design and delivery phase
Post-delivery (O&M) phase
Figure 10: Working model for the drinking water programme. Sourced from Rio Tintos 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 owers 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 communitys 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 nding eligible candidates from local communities to participate in the programme. It also assists (ling 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 rst 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 difcult 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 benets of aggregation. It also feeds into the goal of making programmes self-sustaining whenever possible. Rio Tinto wants to ensure that the benets 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 Tintos 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 ndings of the participatory methods, needs assessment and other studies carried out to study the health and education prole 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 briey 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 ve-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 benets 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 dont feel left behind whilst they prosper and grow. They need to acknowledge the communitys 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 benets which drive the needs of the communities, but such benets 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 communitys 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--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 communitys neighbourhood.

The activities undertaken by Rio Tinto have transferred economic benets 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 communitys doorsteps and will continue to work towards managing local water resources more efciently. 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 benets 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.
Efcient use of resources

Programmes on water resource management, alternative cooking fuel, sustainable agricultural practices etc., emphasise on utilising local natural resources more efciently. Small interventions over a period of time will turn into habits and communities will benet 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 sufcient 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
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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 nding 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 identied as important to them. This allows for companies and communities to become joint-stakeholders of the growth process and joint-shareholders of the associated benets. 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 Tintos drinking water project created the Village Water and Sanitation Committee to eventually manage the project on its own post-operationalisation. This reects Rio Tintos commitment on delivering self-sustaining solutions which will continue to benet 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 sufcient time to tackle issues that can potentially cause operative disruptions in the future. Proactive, constructive and mutually benecial 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 nding these partners. The partner-nding 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-prot and not-for-prot) 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 (nancial 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 nancial commitment. This is true for Rio Tinto as well. A good way to start would be to focus on high-impact areas identied 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 nancial contribution, which understandably is not unlimited. Rios 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.
Benets of the programme both for Rio Tinto and the communities are discussed below:
Benets 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.
Benets to local communities

Each participating household can enjoy the benets 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.
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Putting together institutions like VWSCs builds the capacity of village households and demonstrates the benets 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 Districts 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 exibility 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 learners driving licenses. Besides driving, the training covered trafc 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 modied 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 prociency test was conducted by the safety advisor working at the camp. Four women qualied 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 qualied for commercial driving licenses.
Benets to Rio Tinto

The unique programme furthered Rio Tintos commitment to empowering local women and strengthened their relationship with their neighbouring communities.
Benets to women drivers

Being the rst 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 Tintos 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 Tintos local staff leading to further prociency 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 Ofce 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.
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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 difcult 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 benets 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 Tintos 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 farmers 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 groups account. As a result of this, the group has purchased a pickup using a nancing 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 Tintos 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 kitchens requirements. The group sells half of its produce at the local market (haat/bazaar/mandi) and the remaining 25% to local establishments like dhabas.
Benets to Rio Tinto

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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Benets to local farmers

The farmers have reported a denite 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 intensied 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 nancial institutions (banks, non-banking nancial institutions) has imparted signicant 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 benets by being part it. The ability to function as a group has also brought other intangible benets 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 Tintos programmes on enhancing livelihoods
Programme
Sustainable agriculture programmes
Description
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 signicant 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 benet is that the surroundings are kept dungfree. This initiative is now being adopted in other villages too. Farmers benet 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 Kendras agriculture scientists for providing training on appropriate crop management practices.
Partners
Krishi Vigyan Kendra
Scale/ target
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 le 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 les these applications with the departments and facilitates the distribution process.
District Horticulture department
Across 15 core villages
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Programme
Farmer training programmes
Description
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.
Partners
Agriculture Extension Centre Nogaon, and Agriculture and Horticulture Department at Chhatarpur.
Scale/ target
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
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Annexure 8: Interventions with Focus on Health and Education

Table 11: Rio Tintos interventions in health and education
Programme
Programmes on education and nutrition Partnership with UNICEF
Description
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 ve-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 mines 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.
Partners
UNICEF
Scale/target
132 villages including the 17 villages within the mines vicinity
Anganwadi programme
Rio Tinto provided Government designed preeducation 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 Tintos paid contract employees.
Governments
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Programme
Coaching initiatives
Description
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 ve villages. About 130 children (56 girls) regularly attend tuitions in these ve 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.
Partners
Local schools for the use of their infrastructure
Scale/target
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
Programme for freeing 15 villages from tuberculosis
Description
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 Tintos 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.
Partners
Gramodyog (NGO), Block level government hospital
Scale/target
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
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Programme
Health camps and other community health programmes
Description
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 beneciaries which they are asked to pay in case of free medicine. Special health camps like health camps for children on childrens day, eye camp, leprosy camp. A child growth survey from the age group one to ve 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 identied children who did not have their polio shots and vaccinations on time.
Partners
Health departments
Scale/target
Sanitation programme
Rio Tinto focuses on sanitation by organising exposure visits for Village Water and Sanitation Committee (VWSC) members to show them the benets 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 opendefecation 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, lm shows, and fortnightly gatherings with themes like water resource management, health, hygiene and cleanliness awareness drives, AIDS awareness, cultural heritage conservation, and village cleanup 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
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Annexure 9: Other Initiatives

Programme
Alternative cooking fuel programme
Description
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 certied 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 beneciary.
Partners
Gramodyog
Scale/target
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 identied 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.
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A Compendium of Good Practices

vii ix xi xiii xv xvii

Executive Summary. .....................................................................................................................

Message from Ministry of Corporate Affairs

Foreword Indian Institute of Corporate Affairs

DG & CEO, IICA

Foreword Embassy of the Federal Republic of Germany

Business case for sustainability

Corporate engagement with the rural sector

Emphasis on the business case

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

Table 1: Brief description of the case studies

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

Sector: FMCG Key actors: ITC and rural

communities Coverage: Various states of India

Replication and Scaling-up: Lessons from the Case Studies

Value to rural communities

Commitment from the top management

Partnership with NGOs

Investment through grant

Figure 1: Cross-cutting lessons from the case studies

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

Business benet to companies

Replication and Scaling-up: Lessons from the Case Studies

Value to rural communities

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

Replication and Scaling-up: Lessons from the Case Studies

Specic examples from the case studies on business partner approach:

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

Examples from the case studies on focusing on women:

Case Study 1: Partnering Progress BASFs SAMRUDDHI Project

Description of the intervention

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

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

Case Study 1: Partnering Progress BASFs SAMRUDDHI Project

Demonstrating good practices

Continuing support to farmers

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

Business case for BASF

Creating market for new products

Replicating the model in other crops

Case Study 1: Partnering Progress BASFs SAMRUDDHI Project

Value to rural communities

Figure 2: Increase in yield of soybean in BASFs SAMRUDDHI programme

Access to new markets

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

Access to good farming practices

Case Study 1: Partnering Progress BASFs SAMRUDDHI Project

Increase adoption rate

Partnership with other companies and NGOs

Description of the intervention

The eKOCool solar cooler

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

Business case for Coca-Cola

A nancially viable venture

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

Enhancing brand visibility

Value to rural communities

Empowering rural women entrepreneurs

Working with partners

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

Planning for human resource needs

Improving nancial viability