Case Studies of Micro-Businesses

 created with funding from Helping to Help

Written by B.M.Ware

This is a case study focusing on rural Micro-businesses that were created by borrowing money from a Micro-Credit scheme. The money used to create the Micro-Credit scheme was donated by Helping to Help, Spain. All the Micro-businesses are based in rural villages of Tamil Nadu, South India. The Micro-Credit scheme was operated by the Women’s Self Help Groups (SHGs). The SHGs were organised and directed by the Association for Sustainable Community Development (ASSCOD), who are a NGO working in Tamil Nadu, South India.

Model Making, Irumanthangal Village, Tamil Nadu. India.

The purpose of this business was to manufacture models out of plaster and then to sell them in the local markets, mainly in nearby Kancheepuram. There is a great demand for these types of models, mainly depicting Indian gods such as Ganesha, or sacred animals such as the Cow or the Elephant. These are mainly bought by Indians themselves to display in their homes, or by tourists as a souvenir to take home as a momentum of their visit.

Before K.Sasikala started his model making business, he was a daily labourer or “coolie”, this involved finding unskilled work wherever he could. It would often be a day of hard agriculture work toiling in the fields under the burning sun. Other days he might be working on a construction site moving rocks or digging trenches as part of a gang. No matter what he did, his typical wage would be 30 to 40 rupees (just under $1) a day. And work was not always guaranteed, like many millions of rural Indians, he would only work half the time. On average his wage was just 600 rupees ($18) a month.

While visiting Kancheepuram with his wife, he had the idea to start manufacturing plaster models, but they did not have the financial means to start the business. His wife was already a member of the SHG, and when the micro-credit funds became available from Helping to Help, she was able to apply to the SHG and borrow money from the central fund.

Initially, they borrowed 12,000 rupees with a loan period of 12 months. Most of this paid for the moulds, and for the gas oven that was required to fire the moulds. The remaining money was used to buy the plaster powder, the glaze and the paints.

Now that the business is fully operational, they are selling about 15 models a month. The models sell for approximately 150 rupees each ($4). Due to the fact that this is a labour intensive micro-business, they are able to keep their over-heads to a minimum. As a result, once their costs are deducted, their profit is approximately 1000 rupees a month. This is a significant improvement in their income, and with the loan period about to come to an end, they are looking forward to their disposable income doubling. The work is also considerable less-back breaking. Their future plans are to continue with the business for now, and if they can find new customers, they will think about buying another oven. He is also hoping to send his son to private school in the near future.

Milk Animals, Kunnavakkam Village, Tamil Nadu, India.

Milk Animals, specifically cows and buffalos, are a popular way of earning additional income. This is because they can be left to graze by themselves while their owners are away working in the fields. The only thing that stops most people from owning one of these animals is the initial high cost of purchase. A typical cow costs 8000 rupees ($200), which is the annual income of most people.

M.Aiswarya was determined to own her own animal, and she had already attended Animal Husbandry classes provided by her local SHG. Thanks to the donation made by Helping to Help, she was able to borrow the money to pay for her cow.

The typical daily yield of a cow is just three litres. The market price for a litre is just 6 rupees. This means that the cow provides an additional income of about 500 rupees ($12.5) per month. Although this may not sound like much, she and her husband are still able to continue their ‘coolie’ work. This means that their monthly income has almost doubled. The cow will continue to give milk for about five years, so after the loan is settled, they can continue to reap the benefits for years to come. Also, when they get older, they will be able to rely less on the back-breaking coolie work, and more on the income from these animals.

There are milk animals being kept in many of the surrounding villages. The SHGs from these villages are hoping that one day they will be able to create their milk co-operative. This will involve daily collections from all the villages of the milk, central storage and refrigeration, and subsequent distribution to the retailers. In order for them to achieve this, they need a sizable loan to start the business.

Peanut Growing, Irumanthangal Village, Tamil Nadu. India.

Peanuts, or Groundnuts as they are known in India, are a popular cash-crop. They are easy to grow and they are also hardy, and because they grow underground, they are resistant to pests. The nuts are sold in local shops and markets and are used as a snack or in cooking. M.Buvaneshwari, or ‘Baby’ as she is known to everyone, borrowed 6000 rupees ($150) from the central micro-credit scheme to buy one acre of poor agricultural land. She uses the land for growing peanuts.

There are only two harvests per year. The growing cycle is approximately 3 months per harvest. Each harvest yields approximately 100 kilos of nuts; these are then sold to a local agri-cooperative. The income is approximately 3000 ($75) per harvest. The work is easy, and once the seeds are sown, nature is left to do its job. The harvesting is also easy; the nuts require little preparation before they are sold.

She is able to do the work by herself. Like many small micro-enterprises, Baby uses the proceeds to supplement her income. She is able to use the additional income to improve her living standards, and that of her family. She would like to be able buy more land to grow more cash-crops such as maize and potatoes.