The feasibility report was almost as significant an investment by the promoter as the plant and machinery itself. He therefore got one of the  topnotch consulting firms of the country to do it.

Ever since the unit has been set up, they have got tremendous amount of support from institutions. Now, they do not hesitate to seek professional help in whatever areas they need support, not restricting themselves to areas where subsidies are available.

They now recognize the value of external professional input, apart from the comforting fact that "grant-type" funding is available for some activities. This great impetus and initial thrust that the unit has got from the institutional sources has helped it to grow at a phenomenal rate to achieve a Rs. 100 million turnover

In the process of the study we found a peculiar instance where a first generation entrepreneur had developed computer software that helps the students take competitive examinations to practice on the tests. The software has a question bank, can time the answers, and rank them in order of difficulty and in terms of different sorts of capability sought by the student. This needs a massive distribution channel. The question is can the entrepreneur trust a service provider to find a distribution and marketing channel without running the risk of the CD being duplicated overnight by somebody? How does he ensure that he gets fair returns for the two years of work that he has put in? A very delicate issue indeed - considering that the product took about two years to develop, it can be easily copied and he does not have an established brand or channel to leverage on - at the same time, he desperately needs to depend on the traditional channels.

As a result, I end up discussing my plans informally with several friends and keep getting off-the cuff ideas. Unfortunately that won't do.

Based on a study of around 80 businesses, it was found that the major areas where the community needed help were in the areas of costing, marketing and accounting. Now the agency has placed a consultant at each of the locations to work exclusively with the community. BDS services are charged on the basis of the client's ability to pay. The AKEPB pays a fixed fee for the consultant andthere is a significant element of subsidy involved only in beginning stage

In contrast we have the case of a Excel Peripherals - a computer support service company which has remained small while its client group is growing and moving away from the support service provider. Small enterprises typically tend to use this company for ordering their first computers and giving them the service contract for maintenance. But as the client grows, they would want to shift to branded computers, bought out software and longer warranty periods, thereby leaving the neighborhood assembler to look for other clients. This possibly happens because by the time a SME gets to a stage of ordering a computer it is most likely to have crossed the barrier of mindset and possibly is moving towards some growth.

Sathguru thinks that there is a very large mismatch between what SME’s seek and what they need. This is the classic problem of mindset. For instance in the Coir industry around Alappuzha, there is no sense of worry about the EU  REACH regime in relation to dyes being used for mats & mattings. All the small  units are still bogged down by how to get an export order.

"They are in a sense like the fishermen of Orissa before the Cyclone. They are blissfully unaware of what is going to hit them !"

The second area where there is market pull is due to the scheme of Modified Value Added Tax (MODVAT) introduced by the central excise. Though MODVAT was introduced over a decade and a half ago, it has gone through several rounds of refining. Due to MODVAT where the larger industrialist who in any case would fall in the excisable limits prefers to source raw materials from units which are also paying excise so that they could claim exemption to the extent of tax already paid. Because of this, several larger units prefer to source their material from the units that are registered with the Central Excise and are paying tax. This has helped in several smaller units going in for Central Excise registration, possible reduced spawning of firms to avoid excise and created a demand for the services of an excise consultant.

Both large exporting units and smaller co op societies, who often work as feeders of large units, never considered domestic market as an area of importance. In particular, lack of finance required for such a venture, deterred smaller units from doing so. Scope also existed for diversification to non-traditional export market too by the exporters. The larger units required introspection and a change in their mind set. The smaller units and societies however needed to explore the scope for generating capital for investing in the new market as well as equipping themselves organizationally to do marketing on their own. Another strategy for smaller units was to encourage them to diversify their product line to attract larger domestic clientele. Overall, continuous exposure to new knowledge areas were done to develop the vision.

Through the organizational renewal workshop conducted by IBS, Aspinwall and Co, a large 143 year old exporting unit realized the scope and opportunity in domestic market. The company did a few trial sales through participation in a few fairs and was enthused about the potential of the domestic market. They have created a separate brand “Sparsh” for the national market and has launched the same. They are further looking up to services of another BDS for developing detailed strategy for entry into this market.

Vishwanath, M D – Aspinwall & Co. : We thank Alappuzha BDS project to suggest and provide a BDS provider for workshop on Organisational renewal. We have never had such an experience before. SPARSH is one of the out come of that.

Workshop and seminars are organized on diverse issues like “How to generate new business through E-Market places”, “Business promotion through ISO Certification”, “Intellectual Property Rights (IPR), “Opportunities for Coir Products in PSUs and Corporates”, etc.

A BDS who was successfully conducting Organizational Renewal Workshops in other sectors was introduced to the cluster. They conducted three workshops one each for a large, medium and small unit. Also leadership programs were conducted for the top management which enabled them to think beyond the export market. These efforts resulted in some of the units taking positive decisions in stepping into the local market. A “practical presentation on coir mats & Mattings exports to Turkey” was done by a marketing consultant from Turkey. A workshop was organized to develop better skill in forex management.

Photograph of thematic mats & IT mats
In the samller units, financial audits found that issues like incorrect cost structuring, high interest rates etc. were making the firms non-competitive. This led to the creation of a new BDS product for the coir cluster called the “Business Audit”. Also some units were encouraged to market new products which resulted in new creations like Thematic mats and Comfort mats. The units have begun production of these mats and will be marketing them with the help of BDS providers. 4 marketing BDS providers have been introduced by the project. The marketing initiative also made the cluster more aware of BDS for website and catalogue development which provides the right platform for the units to promote their products. Such BDS providers were introduced through a number of awareness programs and monthly BDS-SME clinics.

Serious Marketing Initiatives
Swasreya Coir Development Society, has 40 SHGs of 10 members each. The Society was linked to M/s R.G. Consultancy, A BDSP for marketing in October 2008. As a part of their marketing strategy to increase visibility the project also introduced a BDS for website and catalogue development. Through his efforts the unit got its first domestic order in March 2009. Alappuzha BDS Project makes Coir industry vibrant – K K Gopi, M.D Swasreya Coir Development Society

The society had also developed a new product called the Comfort mat but were not making much headway in marketing it. The BDS provider is looking to market it at niche markets like IT sectors where the product will have most relevance and easy acceptance. The BDS provider is also building a marketing department within the unit and training the personnel so the unit develops its own marketing capabilities.

80 small units and 10 large units have tied up with BDS providers. In a cluster where net linkage was at a minimum, introduction of appropriate BDS has led to creation of 17 websites. It is estimated that; a total of Rs. 1.5 million worth of domestic market orders has been received by – SMEs through various pilot initiatives. The BDS Van travelled to 12 nearby cities and small towns - and generated business of Rs. 0.25 million. Besides enquiry worth over Rs.5 million (including Rs 1 million for geotextiles) has been generated for 6 SMEs also for domestic market. MSMEs received export orders worth Rs. 15 million and generated enquiries for over Rs. 90 million.

Promotion of BDS – IT gyaanam yagnam & managament gyaanam mantra

Usage of Business Development Services was not a well established practice in the cluster. There was very limited availability and hence usage of BDS providers and only very large enterprises enlisted such services, that too rarely. The smaller unit’s willingness to pay for the services of the BDS providers was also very low. This in turn resulted in very few BDS being interested in considering Alappuzha’s coir industry as prospective clients and so very few BDS were available within the cluster. The strategy was to create demand for BDS by demonstrating their worth.

Mr.Hashier of Novasoft, a BDS provider involved in web related services was introduced to the cluster through the first BDS training program. Since then he has been associated closely with the project and has signed 4 MOUs with various units. His team has become so confident about the potential of the market for IT related services that he has come forward to create and maintain the first coir B2B website, totalcoir.com.

The project arranged various awareness programs followed by one to one meetings with the BDS providers. This created a meeting platform where the SMEs could discuss the potential of the services offered by the BDS. Also two 15 day long training programs on IT called IT Gyaanam Yagnam were conducted in January 2009 and January 2010 enabling the cluster to appreciate the need for IT related BDS. Also a week long training program called Management Gyaanam Mantra was conducted in June 2009 by a BDS for small cooperative societies which once created awareness in the cluster for the need of such services.

Management Gyaanam Mantra, a 7-day long training program was conducted by Mr.Sasikant of Marg Atreya, a BDS  provider who conducts business renewal workshops for 38 societies participated. The program was the first ever of its kind conducted for cooperative societies. While the participants were appreciative of project, the BDS provider was even more enthused. “... the project had conditioned the cluster to accept my services. This is great, given the past history access to the coir industry has been made easier by the presence of a neutral agency”.

The project also organized two ‘BDS training programs’, the first one in December 2007 with 39 BDS providers from both public and private sector and the second in August 2009 with 33 BDS providers. The objective of the two day program was making the BDS providers aware of the various areas in which their services will be required and welcomed within the cluster. The program which consisted of a day long field visit followed by another day in a class room session made the BDS realize the interesting prospect the coir industry offered.

Also the project has been conducting annual programs where ‘BEST BDS’ and ‘Innovative BDS’ awards have been given in order to encourage these service providers. So far 40 BDS providers has been linked to the cluster by the Project. The project has also motivated the core BDS providers to come forward and form a BDS consortia, CBRC- Coir Business Research and Counseling, which will slowly carry forward the activities of the project. The project will provide hand-holding support for a year and helap the consortia establish itself in the cluster. As the first step towards this a website called cbrcindia.com has been created. This will ensure that the interest and demand created for the BDS continues even after the end of the project. BDS van is used by cbrcindia for going to markets.

New BDS and BDSPs Promoted in the Alapuzzha Cluster

Coir industry reinventing itself to fight recession and expand
Sandip Das
Posted online: Feb 19, 2010 at 2252 hrs

Rajendra Paniker, a small-time coir mats producer in Alappuzha district of Kerala, is new to IT environment. Yet, these days, he is putting computers and Internet to good use to expand the market for coir products in and outside the country. Paniker is also business manager of Sarvodayapuram small-scale coirmats producers’ cooperative society, the 400-member body of producers of such items as area rugs, doormats, matting and carpets. Using IT tools, he has managed to double the co-op’s business from Rs 65 lakh in 2006-07 to Rs 1.3 crore during the last fiscal. Thanks to training imparted by a local IT service provider Novasoft, Paniker and most of his co-op members have learnt the basics of computer use for business expansion and data storage.

Coir Floor Furnishing, a private unit, was planning to increase its production capacity and required a working capital loan from banks. The company needed specialised financial services support to approach banks for the purpose. Thanks to the support by Gopalan Nair, an Alappuzha-based coir industry expert, the company could get a loan of Rs 35 lakh.

In this recessionary time, when the coir product exports from Kerala had been hit, timely intervention by Small Industries Development Bank of India’s (SIDBI) business development services (BDS) division has supported thousands of SMEs in this coir cluster in advisory services. This, in turn, has helped coir units to expand business.

P Mahadevan of Travancore Cocotuft, an exporter of coir products from Kerala, had been using IT for carrying out most back-office operations and handling customer orders. However, his business could not grow because Cocotuft did not have a presence in the Web. He had been helped by BDS to re-engineer his business processes, touching everything from how orders are managed to his staff incentive scheme. He also has an IT-related BDS provider on retainer, updating and adding to his custom-developed back-office enterprise system.

“This was despite the fact that he had been making a strong push during the last two years to develop new mat designs and get them to the market through major global trade fairs,” says Pankaj Ahir, senior manager of Cluster Pulse, the company implementing BDS project on behalf of SIDBI. With the support of Cluster Pulse, Mahadevan has uploaded in the company’s website all of its 4,000 odd designs so that customers from all over the world can browse the catalogue.

More than a century-old in Kerala, the coir industry employs more than 1.5 lakh weavers and 4 lakh spinners. The industry has been going through a bit of rough patch because of the lack of modernisation and marketing effort. “As most units are small in their operation and there are no big players in coir product manufacturing, we do not have the financial capacity to invest in market expansion and branding,” says MV Viswanathan, assistant general manager, Aspinwall & Co Ltd, one of the oldest industrial units now owned by the Travancore royal family.

Coir is a natural fibre extracted from the coconut husk abundantly available in the coconut-growing state of Kerala. Coir fibre is processed through a traditional retting process and from the unretted husk through a mechanical process. Kerala’s coir industry dates back to the 18th century when an industrial unit for manufacturing coir products was started by an Irish-American named Jame Darragh in 1859 in Alappuzha.

The sector mainly comprises micro enterprises that are largely promoter-driven and have limited access to specialised BDS. “This tends to affect their competitiveness and also limits the growth opportunities. So, this sector needs handholding and support over an extended period by way of affordable BDS and also access to credit,” KG Alai, head of project management division, SIDBI, told FE.

Alai said under the SME Financing & Development Project, a World Bank-led multi-agency effort being implemented by SIDBI, the technical assistance component of the Department for International Development envisages intervention in identified clusters through BDS. Following support from SIDBI and its associate Cluster Pulse, the coir industry, successful mainly in tapping the export market, is now looking at the domestic market in a big way. Aspinwall has recently launched the Sparsh brand of doormats exclusively targeted to the domestic market.

Geotextiles, a byproduct from coir, has, for the first time, found a new client in the sponge-iron industry in Orissa. The demand for geotextiles, currently being used for blanketing the industry’s waste mounds, is growing. According to a Coir Board official, despite the problems faced by the industry, exports of coir products would be in the range of Rs 700 crore this fiscal against Rs 580 crore achieved last year. “But there is no denying that much greater government support is needed for the industry that provides livelihood to lakhs of people,” he added.

Swasraya Coir Development Centre (SCDC) is an organization formed in 2004-05 working under, the NGO, Gandhi Smarak Grama Seva Kendram in Kanjikuzhy, near Alleppey town,
Mr. K.K.Gopi as its Managing Director.

This is a consortium of 69 Self Help Groups of 300 men and 400 women exclusively for coir activities. SCDC runs their usual business of manufacturing of coir mats & mattings. SCDC do jobwork for the coir export fraternity and arranges for the timely delivery through their SHGs at less than 1% rate of profit which is hardly adequate enough to run the consortia.  The craftsmanship and skill of the SHGs engaged in the manufacture of coir products excelled beyond par with the most attractive prevailing designs. Leading export houses are sourcing their export needs from these consortia which never compromised in quality and size specifications.

Role of Project:

Mr.K.K Gopi (M.D) is one of the regular participant of all MSME awareness programs. After one of the awareness program during One-2-One meeting, Mr. Gopi discussed with project team about their concern to increase turnover and profitability so that they can employ more people.  The project had called him for the next SME-BDS clinic to discuss & solve his issue with the help of BDS provider Mr. Rajan George (Marketing expert).

Mr. Gopi had participated in the SME-BDS clinic and understood in detail, what project is doing and how SCDC can avail BDS services to increase their business.

Below mentioned steps were taken by project to support SCDC:

• Signed MoU between BDS provider Mr. Rajan Goerge and SCDC to develop domestic market for SCDC products
• Developed Website and brochure under project support as marketing tool
• Started handholding of SCDC staff in improving their productivity
• Hand holding and continuous support by BDS provider in getting more and more domestic market orders 

Impact Study:

• Marketing skill improved among SCDC staff
• Developed direct Domestic market for the very first time for MSME 
• Created awareness about potential of domestic market amongst SCDC members
• Increased profitability and income of members
• Started overseas enquiries for coir product through project developed website
• Introduced new product of “IT MATS”
• Opened in-house show room of coir products for tourists

Quantitative:

• Domestic market direct sales increased by Rs. 14 lacs from ‘Nil’
• Profit ratio increased by 10% from <1%
• Inclusive growth happened among 700 members and their families.

Conclusion:

• This pilot has proved that BDS services can be useful to micro enterprises also.
• Micro enterprise started believing in importance of BDS for growth and innovations
• Market demand gave an idea to invent new product called IT MAT

Mr.Ranjith, the proprietor of K.N.Karthikeya Coir Works in Kommady a member of the Alleppey Smalll Scale coir Matting Society is a traditional weaver and managing the activities of his firm which was inherited from his forefathers. With hardworking and industrious mindset catering to the matting needs of the exporters and for domestic suppliers through the 6 looms under the shed close to his residence. The looms were seen to be almost obsolete and in a much depreciated condition but were working in spite of all the drawbacks like loss of productivity, quality, effort, etc.

Project Intervention

Project bring one of the BDS provider of Lean Mfg. Mr.Durai Rajan to visit the ancient looms he studied the loom to find out solutions, there were some challenges before giving any solutions as mention below. Had challenges like :

• Shortage of funds with beneficiary
• No reliable source of electricity
• Weavers are not ready to accept new designed loom due to conventional mindset and as they are habituated with old style working methodology               .
• No technically trained loom manufacturers.

With all above challenges project was able to find out solutions with support of BDS providers as below.

• Project decided to fund 50% of voucher support to pilots for BDS provider fee.
• Decided to go for easy and non-electrical improvement only
• Also not going for basic design changes which also can help to reduce cost of loom.
• BDS provider has trained 5 local loom manufacturers to improve loom productivity.

Implementation

During March 2010 started support for the loom modification with suggested changes by BDS provider for productivity improvement. The workmanship of the BDS provider and loom mfg. not only stood up to the standard which was warranted for an effortless weaving but also met with the parameters project has suggested for productivity and quality improvement.

Changes made for loom to improve productivity.

• All the wooden frames which needs replacement should have to be done duly cured.
• The Kannichattan (the frame on which the yarn strands is fixed for weaving) hitherto made with wood has to be replaced with G.I.
• The bottom shaft (pedal) used for weaving has to be made with metal with proper paddle and it has to be connected with a Bearing on the top for effortless pushing by legs leading to increased productivity.
• The beam for rolling the woven matting has to be replaced with iron instead of wood.
• The upper side wooden pulleys have been replaced with bearing and wire rope instead of cloth or coir rope with scientific alignment.

Before	After

After two weeks of the successful transaction was completed and now Mr.Ranjith is very much happy with the project for such an initiative and advises his colleagues also for going for such modifications which not only reduces their weaving exertion  but also for the sizeable increase in per day productivity.

Impact Study

• Effortless weaving
• Increased life of present loom with minimal spending
• Increase in per day income
• Product quality improvement
• Health improvement as less body strain

Quantitative Improvement :

• Increase in quality of product as mentioned by buyers & exporters
• Productivity increased by 20%
• Per day earning increased by Rs.100 -125

• After seeing success of this pilot, the project has indentified 20 more looms with hardworking and needy micro units to implement the same.

From the beginning of the Alappuzha BDS project, we were always conscious about competitiveness development of service providers which project had done through innovative efforts like BDSP training with field visits, BDS Bazaar, BDS on wheels Van, One-2-One meet, on field handholding support, BDSP consortia.

Project team feels while on-field handholding and trainings that show case the best practices and interaction with other (outside Kerala) BDS providers is required to understand MSMEs pain points and create more competitiveness among BDS providers.

With the above mission in mind Alappuzha BDS project planned & executed an exposure visit on 28th & 29th Sep 2010 to Hyderabad with 4 members of BDSP consortia -CBRC (Centre for Business Research and Counselling). The idea behind selecting Hyderabad was another available BDSP consortium – CAPSULE and a very different kind of industry experience - PHARMA.

On 28th Sep 2010 was the day when two BDSP consortium of India shared their experiences, difficulties and even solutions while providing services to MSMEs. Most interesting part was that they came up with support exchange idea in which they agreed to help each other to develop business, provide services, and also joint activity if required. Maybe it was first kind of BDSP consortia to consortia meet in India !

On 29th Sep 2010 the project conducted a work shop on “Business Health Check up” for 42 MSME's in Hyderabad in which one of the CBRC member - Mr.Sasikanth Prabhu guided MSME participants that where their business is lagging behind & how they can develop more from the present situation. This workshop helped to open door for Alappuzha BDS providers in Pharma industry. Then all members of CBRC presented about their areas of services to the 42 MSME CEO's who participated. 

Next day some meetings were fixed by CAPSULE between CBRC BDSP & MSME's. Some of the meetings are on the verge of MOU closure & will be reported soon. 

It was first of its kind of experience and learning for all delegates of this visit “How to develop an intra-regional service market”.

As an outcome of diagnostic study at Alleppey coir cluster, Marketing and branding are those areas where Alappuzha BDS project is doing focussed and sincere efforts by handholding coir MSMEs especially small scale coir co-operatives of the cluster, as a model of inclusiveness. On these lines, the Alappuzha BDS project had led a trade delegation consisting of 6 such delegates for participation in the IITF-2010, Delhi during 14th-27th Nov 2010 in association with Alappuzha Coir Cluster Development Society (ACCDS) a SPV under Coir Board. As a result of representation by Alappuzha BDS project and ACCDS to Coir Board, they allotted required stalls in their pavilion, project is thankful for their support.

Main objective of taking this delegation was primarily a learning exposure for the small scale entrepreneurs and not focused so much on sales because it was their first ever experience at such kind of a trade fair which developed their skills in preparing them for participation in an International Fair. Such handholding training was given before and during the trade fair to participants.

Coir pavilion was formally inaugurated by the Minister of MSME- Hon. Mr. Dinsha Patel, he visited our stalls with Secretary Min. of MSME- Mr. U K Verma, IAS, Chairman of Coir Board - Mr.V S Vijayaraghavan, vice chairman of Coir Board – Mr.Rameshwar Goel, Mr. Kumaraswamy Pillai (Director Marketing- coir board).

Outcome:

• Had a session with participants to do necessary preparation to take part in such a trade fair.
• Sample & promotion material preparation
• Display and promotion of the products
• How to interact with the visitors’ community including foreign buyers, local customers and dealers.
• Instant price quote and closing a deal
• Interaction with other vendors/exhibitors, closely observe other product exhibits & learn