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Sunday, May 04, 2014

Jayant Agro:Self Employed Women Association (SEWA) and castor supply chain

Interesting report done as part of M.Sc degree by student of DA-IICT (Dhirubhai Ambani Institute of Information and Communication Technology) Its a report of how SEWA is working as part of castor seed procurement supply chain with Jayant Agro Organics.

SEWA  is  a  trade  union  registered  in  1972.  It  is  an  organization  of  poor,  self-employed women workers. These are women who earn a living through their own labor or  small  businesses.  They  do not obtain  regular salaried  employment  with welfare  benefits  like  workers  in  the  organized  sector.  They  are  the  unprotected labor force of our country. Constituting 93% of the labor force, these are workers of the unorganized sector. Of the female labor force in India, more than 94% are in the  unorganized  sector.  However  their  work  is  not  counted  and  hence  remains invisible. In fact, women workers themselves remain uncounted, undercounted and invisible.  SEWA’s  main  goals  are  to  organize  women  workers  for  full employment. Full employment means employment whereby workers obtain work security,  income  security,  food  security  and  social  security  (at  least  health  care, child  care  and  shelter).  SEWA  organizes  women  to  ensure  that  every  family obtains  full  employment.  By self reliance  we  mean  that  women  should  be autonomous and self-reliant, individually and collectively, both economically and  in terms of their decision-making ability. 
In rural India, agriculture and allied industrial sectors employ as much as 89.5% of the total female labor. In overall farm production, women's average contribution is estimated at 55% to 66% of the total labor.  

Brief description of RUDI               
RUDI  was  initiated  by  Self  Employed  Women’s  Association  (SEWA)  in  2004.RUDI  Multi  Trading  Company  Limited  has  been  established  in  2007  with  an objective  to  internally  generate  funds  for  the  rural  producer  groups.  This  will enhance the quality, capacity and efficiency of production through the use of better technology. Eventually it will result in scaling up the profit margins by way of bulk procurement and a well organized sales and distribution network. The profits will be shared by the members of the rural Self-Help Groups and Farmer’s Association, which  will  bring  a  positive  change  in  the  economic  condition  of  the  marginal farmers and workers who are struggling to survive and are below the poverty line.  
The  company  would  enable  direct  promotion  and  marketing  of  the  agro commodities procured through Farmer’s Association in the rural retail network of farmers and agriculture  laborers across all the villages of 14 districts of Gujarat. RUDI Company also enables multiple employment opportunities, reduce incidental expenses, availability of good quality agricultural & non-agricultural products to the  rural  consumers  at  affordable  prices  and  required  quantity,  elimination  of middlemen,  better  earning  for  the  producers  and  thereby  socio  economic development of the underprivileged rural people.     
About castor crop: 
Castor is a plant that is commercially very important to the world. Castor seed oil cake  is  very  useful  manure  to  crops.  It  is  a  very  good  fertilizer  alternative containing  optimum  levels  of  Nitrogen,  Phosphorous  and  Potassium  which  is suitable for cultivation of Paddy, Wheat, Maize and Sugarcane. Castor Oil’s application range is very wide‐the uses range from cosmetics, paints, synthetic resins & varnishes, to the areas of national security involving engineering plastics,  jet  engine  lubricants  and  polymers  for  electronics  and telecommunications. 
Gujarat  is  the  leading  state  in  castor  seeds  production  in  India  followed  by Rajasthan and Andhra Pradesh. Gujarat contributed 71% of the total production of castor seed in India in 2007‐08, followed by Rajasthan at 16%, Andhra Pradesh at 9% and other states sharing 4% Mehsana and Banaskantha is the largest castor producing districts in Gujarat. In Gujarat castor cultivation comes from 6 districts of North Gujarat, viz., Mehsana, Banaskantha, Sabarkantha, surendranagar, Patan and Kutch.  
Role of SEWA:  
SEWA has its own district office in nine district of Gujarat. Surendranagar district association  has  232  groups  of  farmers.  Each  farmer  group  has  usually  10-20 members. Majority of the members are women. The main work of these groups is to provide small  farmers,  a  village level  platform  from  where  they  can  sell  their products. It helps small farmer to get appropriate money for their products because 
it save their transportation cost to the market and bargaining rates of market. In this way the rural women and small farmers works and get mutually benefitted as farmer association share profit with the company where SEWA has a tie-up and farmers get money at their home. 

Castor Production in Dhrangadhra block: 
There are 8000-9000 members of Sewa district association from different village of Dhargadhra.   They visit all villages of different blocks  and ask farmer to sell their castor to them. They buy castor or at the appropriate rates and then procure it. Once the  procurement process  gets  finished  then by  the help  of local  labor they make  it  clean,  package  it  and  make  the  castor  load  on  the  company  truck.  The procurement  is  determined  by  SEWA  headquarter  at  Ahmadabad.  They  keeps inform everyday to their district associations about daily castor rates. When  member  of  farmers  group  go  for  procurement  they  already  know  about today’s  rate  of  castor  as  they  have  been  already  informed  by  Company  main headquarter  at  Ahmadabad  ,  so  before  purchasing  they  keep  two  things  in  their mind,  first  that  today’s  rate  of  castor  and  second  quality  of  castor.  The  price  is usually fixed but can be negotiable at good quality of castor product. 
They purchase castor according to the quality because the company to whom they sell it have certain criteria for quality standard determination. If one bag of castor doesn’t have weight of 75.2 kg of weight they don’t give same rate that was fixed earlier. So it becomes members of farmer group responsibility to purchase castor of good quality and package it well.  

Jayant Agro-organic ltd. (The Company) 
Jayant Agro-Organics Limited is an emerging global oleo chemical company with leadership in the castor-based specialty chemicals industry. With proven research capabilities,  strict  adherence  to  stringent  quality  controls  conforming  to International Standards and flawless record of honoring delivery schedules it is no wonder  that  Jayant  Agro-Organics  Ltd.  is  the  preferred  partner  of  choice worldwide for sourcing of castor oil and castor oil derivatives. With the long-term approach  we  have  adopted  to the  industry  it  is  no  wonder that  we balance  your requirement equations not only chemically but also economically. 
This company has a tie-up with SEWA. They  purchase castor in a bulk amount from farmers group. They give 2% of total sell, means if farmer group sell castor of  cost  1lakhs  in  a  day  then  they  will  get  2000  Rs.    In  Surendranagr  district association, they sell 20 ton/day means, they sell castor of worth 650,000 Rs, and if price rate of castor is 650/20kg means they will get 13,000 Rs.  The 1.25% of this amount goes to SEWA’S district association and remaining 0.75% goes to SEWA main headquarter in Ahmadabad. 

PN: I have deleted a portion of the document to make it more readable.. but the document itself is worth reading .. It also provides us an idea about how well entrenched Jayant is with its non standard supply chain involving NGO and farmers directly.. and giving them a market determined price.

This information could be detrimental for Jayant agro as competitors could also enter into similar agreements ..but my personal view is a company is more than just one part .. its how the whole organization works together as a team that makes a difference..  Jayant at CMP: 105/= is a great stock to buy.. deep value and a multibagger on long term basis..

Quarter ending March 2014 according to my estimates, Jayant Agro Organics is scheduled to report anywhere between 450-550Cr of sales (consolidated)