Micro Finance Case Study

Association for Sustainable Community Development

Tamil Nadu, India. Written by B.M.Ware

Before Mrs. Veronika started her own micro-business, she was a house wife. Her husband earned 75 rupees a day working in a nearby bakery.  She has two young daughters, one is of school age and the other is too young for school. In India, there is a very wide range of quality in the government education system. If you are lucky enough to live near a good school, then you can expect a reasonable education in comparison to western state standards. However, if you live close to a poor school, or live in a very rural area, then the education received by the children can be very patchy. The schools are often very small, poorly equipped and the teachers frequently don’t attend due to logistical problems.

Despite her husband’s meagre wage, Mrs Veronika was able to take one of her daughters out of state school and send her to a nearby private English medium school. Unfortunately this did not last long, as it became apparent that they simply did not have the means to sustain their daughter’s education. She was determined to increase their income, so she purchased an old sewing machine and began to stitch women’s garments. This earned her an extra 25 – 30 rupees a day.

She heard about ASSCOD and the concept of Women’s Self-Help Groups (SHG) from a friend. She visited ASSCOD at their office in Vandavasi to find out more about forming her own SHG in her own street. With the guidance of ASSCOD, she was able to form her own SHG with seventeen other women. Their SHG name is ‘Muthamizh’, which in Tamil is the name given to the three languages or dialects spoken in Tamil Nadu and is often used as a word for co-operation. The SHG was formed in February 2005 and Mrs. Veronika is known as an ‘Animator’. She holds a special position in the group and frequently attends workshops run by ASSCOD. She is responsible for motivating and guiding the other members.

She attended an Entrepreneurial Development Programme run by ASSCOD, which lasted a week. It was after this that she decided to try and make more money from her tailoring skills. She decided to focus on making bags, such as school bags, leather purses and bags for business use.  She approached several local people involved in the leather bag business and was able to secure an initial order for some bags.

She borrowed 5000 rupees to buy the raw materials. She then set about fulfilling the order. At the same time, she made a batch of school bags and was able to sell them to local parents and to a local shop. Each school bag costs approximately 95 rupees to make, and they are sold for between 150 and 180 rupees each. That means a typical profit of 55 rupees on each item and she can produce on average, five bags a day. Most of the work is to order and recently, she received an order from one shop to produce 100 bags. Either way, she estimated her average monthly profit is about 2000 rupees.

Now with the extra money she is able to send her daughter back to school. She was also able to buy the family a colour television! When we met her in October 2007, she informed us that her husband had recently had an accident while riding to work. Because of her extra income, she was able to pay for his treatment at a private hospital. He is now back at work.