Case Study Assignment Paper on SST Kelly

Case Study SST Kelly
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Introduction
The Srinivasan Service Trust (SST) has been helping residents of rural India advance the quality of their lives and eliminates poverty. The villagers showed an improvement in their healthcare, education, and living conditions as of 2009. They also established Self-Help Groups (SHGs) that gave them access to microloans that helped in creating economic viability in rural India. Other than funding, the SST engaged the villagers in training in order to gain skills on marketing, managerial and financial as this would help them increase their earnings.
Srinivasan Service Trust
Srinivasan Service Trust (SST) was started by Venu Srinivasan in 1996 to continue the corporate social responsibility of his family businesses. The family business involved companies like the TVS Group that recorded US$4 billion in sales in 2009. The family has 30 companies like TVS Motor Company and Sundaram-Clayton ltd, and they have employed over 40,000 people. The companies are committed to the services provided and they have provided their employees with education and medical benefits. Venu Srinivasan formalized the social services arm of their family company, and decided on a mission to foster sustainable development through self-reliance in India’s poor rural communities, and this is where the Srinivasan Service Trust came in (Li et al, 2011).
SST headquarters are in Chennai and it was directed by Ashoke Joshi and his 5 leadership team that overlooked over 130 staff, including engineers, social workers, doctors and veterinarians. SST aimed at creating a self-reliant society that benefited from public private partnership in health care development, economic development, infrastructure development and conservation of the environment. The SST merely wanted the local community to sustain their own economy, and so, the SST staff built trust with the locals and created formal programs that aimed at improving the local livelihood.
Banking: Microfinance
Microfinance is the allocations of loans to people that are earning less than US$1.25 a day, in order for them to entrepreneur small enterprises that would alleviate poverty and increase their income. This is done through Microfinance Institutions (MFI) that are both public and privately owned, and which provide financial assistance to the poor in developing countries. The MFI and SHG-bank link provided financial linkages programs in India. The MFI would get individuals to borrow and pay back weekly and monthly, whereas, the SHGs bank chose a dynamic approach that reached out to people`s culture and daily life. The Self-Help Groups would incorporate about 20 people that would save up for a certain period of time and then secure loans from microfinance institutions, with their savings as collateral and this loan would be distributed among them. Microfinance grew in India from 1995 to 2010, with records of 25% of the loans given coming from urban microfinance and the rest from rural microfinance, and 4 out of 5 of the clients of MFI were women (Li et al, 2011).
Agriculture
Rural India is known for farming and this is the industry that the SST targeted so that they could make farmers not only gain from farming, but also increase their income by diversifying in agriculture and starting other income generating projects that are related to agriculture. The SST saw this as a way to make the farmers sustain their economic development. The SST would use the banking industry together with the farming industry to improve the livelihood of the villagers. This would create jobs for other people too.
The SST encouraged the village farmers to form SHGs, and then the SST would educate, discipline and monitor the SHGs` savings, record keeping, and loan repayments. Thereafter, the SST would initiate Income Generating Projects (IGPs) through the loans the SHGs gets from the banks. The local villagers then engaged in baking, basketry, and soap making in order to supplement their daily incomes in farming. This grew popular among the locals and neighbouring villages. This lead to the SST being called in for assistance in other regions, therefore, it expanded to 216 villages by 2010. The number of SHG-bank linkages grew up to 1715, and the IGPs added more income to the farmers who were now earning US$2.2 per day. Other successful income earners got up to US$11.1 per day. This would make the farmers save, reinvest, start other businesses and invest on their children’s education (Li et al, 2011).
The villages
Looking at two villages: Padavedu and Thirukkurungudi, whose market structure showed a positive impact of SST, through the formation of Self-Help Groups that had diverse Income Generating Projects set up for the locals, one notes the model of success and benefits for the locals. Padavedu had income generating projects like production of milk, manufacturing of palm leaf, banana, soap, incense and disinfectant products, pottery, weaving of silk and cultivation of mushrooms. These SST operations were budgeted up to US$552,889. Thirukkurungudi engaged in agriculture production of rice and bananas, dairy milk production, baking, banana chips and paper products and manufacturing of banana fibres, plastic bags and Rexene covers. Their annual budget was US$366,667(Li et al, 2011).
The challenges
SST was expanding into more village clusters and it needed a new strategic plan towards sales and marketing of the products produced by the IGPs. This is because the IGPs depended on the buyers that the SST provided, and they used the local markets as their primary distribution channels. This made the daily additional income stagnate at 100 rupees.
The villagers became comfortable staying at the income level they were at. They were inclined to risk adverse income generating projects that would show their entrepreneurial potential and higher income and profit margins. The villagers knew this, but they were satisfied by the SST support that provided lower but steady income. The IGPs that the villagers pursued assured them of nominal profits even though it recorded lower margins (Li et al, 2011).
Lack of profitability
This was caused by the SHGs that had limited knowledge on value base pricing; pricing products on the customers` perceived value and purchase price, and low pricing power because of the nature of the commodity products. A nomi...