SKEPL Beneficiaries & Impact-Makers

The beneficiary reach of SKEPL is so efficient and the scale so staggering we found ourselves double and triple-checking our assumptions this week as we calculated the social return on investment. The fact is, with 3 million farmers, 100,000 cooperatives and a 1:350 ratio of milk collection machine to farmer, the SROI can’t be anything but astronomical. For every system installed, SKEPL saves farmers an hour per day in wait time, sells 8000 liters in sample milk that can be sold rather than thrown away and increases the annual bonus per farmer by up to 5%. Though our calculation factored in the increased bonus and sample milk savings, it did not quantify the time saved or the indirect impact on the farmers’ families. If you consider that the system saves 400,000 farmer hours per day and touches the lives of over 1.6M people, the $28 SROI is probably conservative.

As we attempt to digest this mind-boggling impact and potential for scale, we tend to focus on SKEPL and dairy farmers, skipping over the crucial intermediary. I believe the unsung heroes in this story are those running the dairy collection societies day to day, managing the books, purchasing SKEPL products and maintaining the machines, sometimes traveling hundreds of kilometers to do so, opening their doors every day from 6-8 in the morning and again from 6-8 in the evenings, always staying open until the last farmer has poured his or her milk.

I’ve had the pleasure of interviewing a number of society secretaries and chairmen over the last month. Though the details of the stories always vary - some are farmers, some scholars, some straight up businessmen - the same core theme threads through them all: innovation, commitment and a deep-seated satisfaction in their contribution to their communities.

Take Govindbhai Charan, for example. When the dairy collection society in his village had gone bankrupt and was facing imminent closure, Govindbhai, a young corn and rice farmer and the most educated person in the village, felt obligated to intervene. With the support of a few friends, Govindbhai called a village meeting and promised to turn the cooperative around. Under Govindbhai’s management over the past fourteen years the Vavdi Khurd cooperative has grown from 30 members to 500; 40 liters per day to 2500 per day; a staff of seven full time employees from two, many of whom offered to work for free given the chance to learn from Govindbhai; one small ramshackle building to two new offices including a separate meeting hall, storage for feed and supplies, and solar panels that power the collection equipment. The society gives milk vessels to farmers on Diwali, pays for books for students at the local school and recently funded a village water tank. A cooperative on the brink of dissolution in 1996 is now the best cooperative in the district and an exemplary community partner. When asked about his favorite aspect of work, Govindbhai responded, “supporting the local school and ensuring that the students have books.” Evidently, the farmer cum entrepreneur and community leader remains a scholar at heart.

Govindbhai and several other impact-makers, as I’m calling them, are featured in this short slide show. Enjoy!

Week 5

“We’re equals,” the society secretary from a nearby dairy cooperative insisted with a kind smile. But, he added, “Indian culture is better.” After replaying the entire interaction in my head, scrutinizing it for any gesture or comment I made that may have prompted the observation and determining that the man was not responding to an unintended offense but rather making a general point, I began to think about the comment as it relates to the investor/investee relationship. The point touches on what I see as an inherent tension between investors and portfolio companies and the complicated task of providing lasting technical assistance. Though the impact investor’s goal is to provide guidance that helps the company develop and grow in a way that strengthens its social and environmental impact, the investor must be patient enough to resist doing too much too soon, be truly committed to co-creating a common vision and be cognizant of the power he/she has in the relationship. In order to establish and maintain an egalitarian and effective partnership, both sides should prioritize the relationship-building phase early on in the process and acknowledge that capacity building takes time. If the investor shows an understanding and appreciation of the cultural context while providing immediate non-monetary value to the company, and the investee is not only receptive to technical assistance and but actively involved in defining the scope of the assistance, I believe some of the pitfalls of TA and possible power imbalances may be circumvented.

Now that I’ve spent a month with SKEPL I’m especially attuned to this challenge. Though some of the projects I’m working on could result in a finalized powerpoint deck or excel model, I’m attempting to focus less on developing full fledged solutions and more on using those deliverables to impart whatever knowledge I can. In this vein I’ve been working on developing a decision-making process to help SKEPL better assess and prioritize new opportunities. With the survey pilot behind us we’re developing a plan to roll out the survey to the six service centers in India and collect input from at least 200 of the 2000 cooperatives. The last couple of days have been focused on developing a strategy for SKEPL to further explore the company’s interest in Kenya as a potential market.

No week of work here is exempt from the personal and this week was no exception. To honor the opening of the new office the company staff and their families spent Tuesday morning conducting a pooja in the office. It was a beautiful celebration and, for prashant lovers (among whom I count myself), a delicious one as well.

Included here are photos of the office staff (above), pooja treats and altar.

South Africa Shines

By: Sara Taylor (Lusaka, Zambia)

A few days after returning from Johannesburg, with Spain in the final and the sound of vuvuzelas still ringing in my ears, it is difficult to start with anything other than the World Cup fever that seems to have gripped this continent. No doubt this has been helped by the valiant efforts of the Ghanaian team who must have felt like they were playing on home ground, despite being many miles from Accra.

But although Ghana couldn’t make it all the way, South Africa has excelled in its mission, putting on an incredible show and taking good care of its visitors from the moment they set foot in the gleaming airport. Besides the first rate transport and organisation, including the brand new speedy airport train and efficient bus system to get to and from matches, the most striking thing is the enthusiasm and justifiable pride with which the South Africans have hosted this major event.

But Joburg is worlds away from Lusaka and this is evident when you fly out at night, leaving behind the sparkling lights stretching to the horizon in every direction, to arrive in a city surrounded by darkness. Tourism can play a major role in economic growth and poverty alleviation and no doubt the spotlight of a successful World Cup will attract visitors to South Africa, and hopefully other parts of the continent, helping to create employment and economic opportunities.

Back at the office after the public holiday, things are as busy as ever and I am learning as much about the world of a start-up as I am about Zambian regulation of mobile money. I share a round table with management and listen with interest as discussions turn from the detail of client projects to cash flow statements, agent training, a new IT based project management tool, web site design, potential investors and expansion into new markets. Despite the frustrations of the Zambian internet, there is constant communication between the Lusaka office and the Cape Town based IT and accounts team who run the core system on which Mobile Transactions’ business is based.

Next door, there doesn’t seem to be a moment when the customer care, agent training, marketing and corporate payments teams are not busy. But this does not detract from the general good humour as people seem to enjoy the open and dynamic office culture that Mobile Transactions has created. I notice my colleagues asking questions of employees, customers, agents, competitors and interns in an attempt to gain information and constantly improve the business. This is an inclusive environment in which feedback and participation are encouraged and responsibility and accountability are expected. A bit reminiscent of my short time at GBF!

It is difficult not to feel involved in this kind of effort. I find myself asking a taxi driver from Chipata (the capital of the Eastern Province, about an 8 hour drive from Lusaka) how he sends money back home. Through the Post Office, he tells me. “Have you heard of Mobile Transactions?” I ask. I seem to have caught the bug…

-Sara

Lead SKEPL installer, Vikram Parmar, understands the dairy business inside out. As the son of dairy farmers, Vikram grew up in the business and now has two buffalo of his own. His mother milks the buffalo during the day and he delivers the milk after work in the evening. Vikram knew the job at SKEPL was right for him because he is able to work with people in the field, utilize his training in accounting and apply his background in dairy farming. Over his six-year tenure at the company, Vikram has become the de facto automated milk collection system installer and resource for milk societies, plants and unions. Widely respected in the dairy sector, Vikram meets with clients throughout Gujarat and is often invited to attend important milk society events as an honorary guest.

When we rolled out the customer satisfaction and progress out of poverty survey pilot two weeks ago, Vikram was brought in to handle the translation work. As I watched him explain the survey process to the first two respondents and actively engage the society employees, it became obvious to me that he was the natural person to champion the survey in the future. I was also touched by the many invitations I received from the society employees to visit their villages and by their interest in my role in the process. One person very directly suggested that since I’m in India I should learn the local language. I agree wholeheartedly with him and am embarrassed by my linguistic shortcoming. Following his suggestion I’ve picked up a few phrases and, to the amusement of the team, have attempted to use them on occasion.

Vikram is pictured here on the right, discussing the survey with the first two farmers to complete the survey.

It’s been an otherwise busy week at SKEPL headquarters. Following the meeting with Harold Rosen we’ve started developing a plan for the reconnaissance trip to Africa and launched a thorough review of all marketing materials in order to identify what additional collateral will be needed for new markets. In an effort to identify new revenue streams for milk cooperatives we started discussions with Sarvajal, a company based in Gujarat that aims to increase the accessibility of clean drinking water to low-income people. The office construction is completed and we’re all eager to move into the beautiful new space on Tuesday, an auspicious day, after the ceremonial pooja.

- Lauren

“The milk is white but the business is black”, remarks Sulax Shah, founder and CEO of Akashganga. When I sat down with Sulax to better understand the company’s founder and leader, he recounted a rainy morning years ago when he and his three co-founders rode their motorcycles to a village 40 kilometers outside of Anand to install a milk collection system. After a successful installation they headed back to their motorcycles and saw the bikes were four inches lower than they should be; upon closer inspection they realized that the tires had been slashed. With the help of the society secretary, they removed one at a time and carried them to the closest shop. Five hours later, Sulax and his team couldn’t help but feel a big deflated themselves.

Now, Sulax laughs at the story and the twinkle in his eye tells you it was, if anything, only a minor setback and an important lesson early on. Akashganga’s commitment to increasing transparency in the dairy sector is not always regarded favorably. Just ask the disgruntled farmer whose fraud was brought to light after an Akashganga system was installed at his local society. Sulax was called out to inspect the system because the society’s most prolific farmer insisted that the measurement was incorrect. Somewhat concerned that one of his earliest systems was failing shortly after installation, Sulax headed straight to the society to test the system. Admonishing himself for doubting the system in the first place, Sulax was unsurprised yet pleased to determine that its measurement was accurate. When the farmer persisted, Sulax inspected his milk can and determined that the farmer had fixed a large cylinder inside the can that displaced about ½ liter of milk. Since the society measured milk by sight, the farmer was likely getting paid for an extra liter of milk every day for several years. Never again did Sulax doubt the reliability and accuracy of an Akashganga system.

Like any industry, the dairy sector has its share of corruption and manipulation but that won’t keep Akashganga from their mission to build world class systems that improve accountability and efficiency. Just this week they held their annual board meeting in Mumbai and met with Harold Rosen, Executive Director of Grassroots Business Fund, to lay out their plans for expansion to Africa. In an effort to differentiate their offering from the competition, they’re launching a customer feedback survey pilot with local societies this weekend. Electrical wiring, furniture selection and carpentry are all that stand between us and a beautiful new office, the first upgrade for SKEPL in 14 years. In the spirit of the World Cup, Ole!

- Lauren

Mulishani? Bwino sana!

By: Sara Taylor (Lusaka, Zambia)

That’s Bemba, one of over 70 languages spoken in Zambia, for “How’s it going? Very well”. And so far, it is…apart from England crashing out of the World Cup on Sunday of course. I will now be focusing my attention on Spain and hoping they get through to the quarter finals, particularly as I will be at that match in Johannesburg this weekend.

My first two weeks here seem to have flown by. It feels pretty normal, and quite liberating, to be back in a full time job after a year of writing papers and taking exams. Lusaka is a sprawling city, with a population of about 3 million people (out of a total of about 13 million, making Zambia one of the world’s least densely populated countries). It is not a very pedestrian friendly place and many people get around by car. I live about a 20 minute drive from work although this often takes longer during peak hours when the three main roads leading to the town centre get clogged up with traffic. I have been feeling slightly less housebound since discovering how to get to work on a minibus and befriending a few cab drivers. I get the impression that the local blue and white minibuses are not the usual form of transport for a "muzungu" (foreigner) but at a cost of 30 cents, it’s a useful option to have in the morning.

It has not taken long to find things to keep me busy at Mobile Transactions. Looking into the regulatory environment for the mobile money sector is proving interesting. Ever since the success of M-Pesa in Kenya, the mobile payments business has experienced massive growth across Africa and the developing world in general. Regulators in many countries face a steep learning curve as they try to ensure that risks are managed and consumers are properly protected, while at the same time promoting the development of a more dynamic and inclusive financial sector.

I have opened a ‘1 Account’! The 1 Account is part of Mobile Transactions’ vision of a Cashless Africa and allows people without bank accounts to store value on their mobile phones (depositing or withdrawing funds through any of the company’s agents), make transfers directly to other accounts or buy airtime. My colleague Claudius takes a few details and uploads a photo of me and of my ID onto the system. About 3 minutes later I’m registered and ready to use the account from my mobile phone with my secret PIN.

It can get pretty chilly here in the evenings and I have been warned that it will be much colder in South Africa. As I look through my wardrobe to pack for the weekend, I find many clothes appropriate for an Italian summer and a variety of anti-mosquito measures (I have not seen a single one since I arrived). It may be time to borrow a hat and scarf as I seem to have come a bit unprepared for the African winter!

-Sara

Week 1 with SKEPL

Shops selling handmade leather sandals and paan, a digestive treat made of sugar and fennel seeds wrapped in bright green betel leaf, flank the three-story office building which is situated on a relatively quiet and tree-lined street in Anand. As I walked up the stairs to the SKEPL office the first day, I was surprised to hear the sound of hammering and to see a pile of debris sitting on the landing. Ujval Parghi, Head of Marketing and my main contact, informed me that the office was in the midst of a renovation and that for the next several weeks at least, the team would be working in the workshop where the products are assembled. Despite the whirling fans overhead, the temperature in the workshop hovered around 110 degrees. Stepping gingerly around product components and live wires, I made the rounds and was introduced to the company managers, engineers, accountants and product assemblers. Everyone was warm and welcoming, if not a little curious about what a tall, white, western woman was doing in the workshop. One step of the assembly process is captured in the photo below.

Fortunately, a single office was spared from the renovation so the four managers and I have been able to work in a comfortable air-conditioned room. The close quarters have facilitated easy collaboration and rapport building. By the end of the week, we were listening to Bruce Springsteen to block out the sound of electric saws, and the team lent me a thermos to use for what they view as my inordinate consumption of tea. I’m grateful to be working with such a passionate and receptive group of people.

With the initial transition behind us, we focused on the project at hand. Over the next two months I’ll be working with SKEPL on business development and marketing for the automated milk collection system (AMCS) product line. During the first week I ramped up on the dairy sector in India, touring several milk collection societies to observe the products in action, interviewing society employees and taste-testing several varieties of Indian ice cream, including my new favorite, saffron fennel. I learned that the Indian dairy sector is organized as a producer-owned cooperative system, characterized by millions of small farmers who carry containers of milk to the local co-op twice a day, seven days a week. Daily procurement by the co-operatives is an estimated 13 million liters, an astounding number that makes India the biggest milk-producing nation in the world. Anand is considered the dairy capital of Gujarat which is home to over 3.25 million dairy farmers, 13,000 milk societies and Amul, arguably the most successful milk producer in the country.

SKEPL has been designing and manufacturing technology-based systems to streamline milk collection operations at the co-op level since 1996. Summer months are slow in the dairy industry as a result of the sweltering temperatures and dry fields and the corresponding 50% decrease in milk production. The team is taking advantage of the downtime by renovating their office, exploring new revenue streams and ramping up marketing efforts in preparation for the release of their newest product. As Ujval Parghi explains, “SKEPL will stop only when the cows stop producing milk.” With an estimated 4% growth in dairy consumption over the next fifteen years in India and the World Bank’s $3.6 billion investment in the industry, the cows are far from calling it quits.

- Lauren

Lauren just completed her first year as an MBA student at the Ross School of Business at the University of Michigan, where she is specializing in business development in emerging markets. She is currently in Anand, India for the summer, working with Shree Kamdhenu Electronics Private Limited (SKEPL).