Building a WinWin Model : Hindustan Levers Rural Initiative

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Building a Win-Win Model Hindustan Levers
Rural Initiative

• June 2001

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Corporate Rural Initiatives The Case for a new
Paradigm
HIGH

Mass Media

NEW PARADIGM
REACH
Folk Arts, CSR Activities, VOW etc.
Conventional Distribution Channels
LOW
LOW
HIGH
RICHNESS
Key is to make the corporate intervention
sustainable
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Building a Win-Win Paradigm

• The new model must have a Win for all key
  stakeholders
• Value-adding to consumers
• In line with the Corporates commercial
  priorities
• Beneficial to all other facilitators

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SHAKTI
HLLs RURAL VENTURE
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Rural Venture - Areas of Influence
Access Attitudes Awareness Affluence
Discontinuous Increase in direct rural reach
Education Attitudinal shifts towards Health,
Hygiene etc.
Create a channel for Brand Communication in deep
rural
Catalyze Rural Wealth Creation
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Rural Venture - The Entry Strategy
Channel Intervention
Re-intermediation
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Channel Intervention The Micro Credit Model
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Breaking the vicious cycle of povertyThe GRAMEEN
Model
Low Income
Low Investments
Low Savings
MICROCREDIT
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SHGs in India Insights Learning

• Some SHGs fail within 3-4 months
• Those SHGs who survive
• Develop fiscal discipline regular savings habit
• High repayment rates - gt 90
• Group peer pressure key reason for high repayment
  rates
• Shift from consumption to productive use over
  time
• However, lack of adequate income generation
  opportunities hindering progression towards
  micro-enterprise

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SHG - HLL Partnership

• Self-help Groups to operate like a Rural Direct
  to Home team of sales women (awareness,education,
  selling)
• Micro Credit from banks and a meaningful income
  generation activity offered by HLL can stimulate
  demand/consumption

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The traditional Micro Credit Model
Micro credit
SHG
Bank/NBFC
Repayment
NGO
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Using the channel to expand market - The
modified Micro Credit Model
Micro Credit
SHG
Bank/NBFC
Consumers
Repayment
Goods/Info
Cash
NGO/ SHG Fedn.
Goods/Info
Cash
HLL
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Win-Win Model .
Faster turnaround of money Better repayment
Social fulfillment
Bank
Income / Investment opportunity Education
/ Awareness Access to urban markets and
information
Income generating activities Efficiency
and Productivity Less dependence on grants
Micro Credit Model
SHG
NGO
Better product reach Category penetration
Social fulfillment
HLL
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Shakti - The Cascading Effect for SHGs
Will cascade into a next loan of Rs.8000
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Re-intermediation The Connectivity Model
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Profile of Indian Rural Economy
Need to stimulate agricultural income to drive
rural wealth
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The Agri-Business Domain
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The Key Drivers

• Key Strategic Drivers
• Knowledge Dissemination
• Re-intermediation of the entire Agri-Business
  Chain to enable maximization of profits
• Key Enabler
• Technology necessary to operationalise the model
  and maximize reach

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Maximizing Reach and Richness
The connectivity Approach
HIGH
XXXXX.com
WIDTH OF CONTACT
Traditional Media
LOW
DEPTH OF CONTACT
LOW
HIGH
. Mass Customization a reality
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Key Elements
Access Points
Portal
5000 Internet Kiosks 70 lakh farmers
Farmer
Finance Payment Gateway
Fulfillment
Tie-up with output buyers and transport
companies
Tie-ups with banks and insurance companies
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Re-intermediation - The next steps

• Set up access points in Nalgonda district
• HLL its partner to test out the information and
  transaction modules through these access points
• HLL to test out the SHG connectivity module
• Impact to be measured and quantified over the
  next 6 months

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The Integrated Growth Model
Micro credit
Consumers
SHG
Bank
Repayment

• SHG Federation
• A direct to home distributor
• A HLL-XXX access point

XXX
HLL
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Thank You..
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Hindustan Lever Limited

• Unilever subsidiary
• About Rs.12000 Crore turnover
• Manufacturers and marketers of daily use
  categories
• Personal wash Fabric Wash, Beverages
• Oral Care, Household Care, Oils and Edible Fats
• Hair Care, Culinary Products
• Skin Care Ice Creams Branded
  staples etc.
• Seeds and Fertilizers

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Hindustan Lever LimitedCorporate Purpose

• Meet every day needs of people every where
• Anticipate the aspirations of our consumers and
  customers and respond creatively and
  competitively with branded products and services
  which raise their quality of lives
• Bring our wealth of knowledge and international
  expertise to the service of local consumers - a
  truly multi-local multinational
• Total commitment to exceptional standards of
  performance and productivity
• Willingness to embrace new ideas and learn
  continuously

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Hindustan Lever LimitedCorporate Purpose

• Highest standards of corporate behavior towards
  employees, consumers and the societies and world
  in which we live in.
• This is Unilevers road to sustainable,
  profitable growth for our business and long term
  value creation for our shareholders and employees

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Hindustan Lever LimitedCorporate Growth Vision
To double our turnover every four years