Pradeep Kashyap ,CEO MART, Delhi based Rural Marketing Research & Consulting Firm explaining how he conceptualize Shakti business model for FMCG firm Hindustan Unilever with help of microfinanciers.

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Daily News & Analysis
FMCGs, telcos find a Godsent ally in microfinanciers
Amit Tripathi / DNA
Thursday, July 15, 2010 1:57
About four months back, Hyderabad-based SKS Microfinance, India’s largest, started associating with companies looking to tap
the purchasing power of rural women.
That idea is turning out to be a veritable killer app: fast-moving consumer goods companies and telecom operators are rushing to
get into a synergistic hug. In the process, the microfinancier is expanding its role from being pureplay lender to a marketing/sales
intermediary.
For example, SKS members today have access to most consumer goods, be it nutritious food or mobile handsets.
“SKS has financed Nokia mobile phones with Airtel SIM cards across Karnataka, Andhra Pradesh, Orissa, West Bengal, Bihar,
Madhya Pradesh and Rajasthan,” said an SKS spokesperson, who did not wish to benamed..
Metro Cash and Carry, the German giant, recently entered into an agreement with SKS in Karnataka and Andhra Pradesh. Under
the deal, SKS members can buy goods worth Rs 4,000 from Metro Cash and Carry in a fortnight with financing and logistics
support form SKS.
The Future Group, India’s biggest retailer, has also tied up with SKS, initially for the New Delhi area. SKS’s 70 lakh women-
members live in 100,000 villages, spread across 19 states.
According to industry estimates, microfinance institutions cover about 2 crore people in India at present. They generally provide
loans of Rs 5,000 on average for a maximum period of a year, with interest rates varying from 24% to 48%.
Ujjivan, a Bangalore-based entity that focuses on financing the underprivileged in urban and semi-urban areas, has also started
tying-up with companies looking to tap its 7 lakh subscriber base.
Samit Ghosh, chief executive, said, since the last eight months, his firm has partnered Nokia to finance handsets to Ujjivan
members.
“Hindustan Unilever is also in talks with us to finance its water purifiers for our members,” he said.
Ujjivan also provides a mandatory life insurance cover of Rs 30,000 from ICICI Prudential for its members for a premium of Rs
100.
According to a top executive in a large microfinance company, such alliances are a win-win.
“Consumer goods companies have been facing this problem of monitoring the products they supply for distribution. We could
solve that issue since our members work in small groups and have a strong bond among themselves,” he said.

2. As a result, pilferage and wastage, a bane for the companies, have drastically reduced.
The virtuous loop doesn’t end there. The consumers also give feedback on products, helping the companies get precious client
information.
But Pradeep Kashyap, founder and managing director of MART Rural, a Noida-based research firm that works in the rural
markets, said though the microfinancier-corporate association is becoming a trend, it’s unlikely to be pervasive.
In 2000, MART Rural did something similar as part of Project Shakti by what was then Hindustan Lever — where the company
looked at providing dealerships to women with the aim of increasing their income. Today, there are 46,000 women HUL
dealers in 5 states.
“I see that microfinanciers are beginning to do something similar. But it may remain just an additional mode of distribution, if not
the dominant mode. That’s because microfinanciers’ core work is financing and not selling,” he said, adding that rural areas
require independent distribution companies with expertise in selling to succeed.