Nararative aproach to study business model of flower sellers and rule of micro finace

NARRATIVE APPROACH TO STUDY BUSINESS MODEL OF FLOWER SELLERS AND ROLE OF MICRO FINANCE Dr.K.Prabhakar, Professor Velammal Engineering College,kprskr@gmail.com V.N.Aruna,BE PGPBA,Aruna.v.n@gmail.com Electronic Electroniccopy copyavailable availableat: at:https://ssrn.com/abstract=1854283 http://ssrn.com/abstract=1854283 Abstract Flower sellers are part of Tamil culture They are found in every town, predominantly women Use of flowers for different festivals, occasions or as an expression of auspicious nature of event is part flock lore of Tamil culture However, it is not restricted to Tamilnadu and may be generalized for other parts of India However, their business models are least studied and seldom cared for by management researchers One of the estimates indicates the flower market in Chennai is one hundred cores per annum providing employment to approximately one lakh thousand women As predominantly the business is carried out by women with less education, narrative approach has been used to obtain information and make some inferences The model given by www.businessmodelgeneration.com is used to discern different dimensions of business For this study 20 flower sellers were interviewed –mainly about their background and their business model with Focus on how they manage their finances and role of micro finance Also included in this report are insights from others who are a part of the world of micro finance – Mr Matt Duncan of the Grameen foundation, Ms Rebecca, centre leader of Equitas in Choolaimedu and Mr Viswanathan, a local money lender or in international terms money shark Some of the results are counter intuitive; they prefer the money shark The inferences are given in the form of points to ponder on what should be done by state, administration or civil society to help these millions who are just have no voice or just not worthy to reach except during elections Key Words: Business Models, Self Help Groups, Micro Finance Institutions, Money Sharks, Usury Interest rates, flower business The key words are defined here as they are not universal and contextual in the case of Tamilnadu and India Electronic Electroniccopy copyavailable availableat: at:https://ssrn.com/abstract=1854283 http://ssrn.com/abstract=1854283 Business Models A business model describes the rationale of how an organization creates, delivers, and captures value - economic, social, or other forms of value The process of business model design is part of business strategy In theory and practice the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies Hence, it gives a complete picture of an organization from high-level perspective Self Help Groups These definition of self-help group is specific to Tamilnadu and the information can be obtained from the website (http://www.tn.gov.in/dtp/shg.htm).SHG is group of rural poor (includes urban poor; included by researcher) who have volunteered to organise themselves into a group for eradication of poverty of the members They agree to save regularly and convert their savings into a Common Fund known as the Group corpus The members of the group agree to use this common fund and such other funds that they may receive as a group through a common management Though the norms appear out of reach for rural poor and women, it has been observed by researcher due to strong value systems some of the women groups follow the norms This aspect is needed to be researched further The group formation will keeping in view the following broad guidelines; Generally a self-help group may consist of 10 to 20 persons However, in difficult areas like deserts, hills and areas with scattered and sparse population and in case of minor irrigation and disabled persons, this number may be from 5-20 The difficult areas have to be identified by the State Level SGSY Committee and the above relaxation in membership will be permitted only in Electronic Electroniccopy copyavailable availableat: at:https://ssrn.com/abstract=1854283 http://ssrn.com/abstract=1854283 such areas Generally all members of the group should belong to families below the poverty line However, if necessary, a maximum of 20% and in exceptional cases, where essentially required, up to a maximum of 30% of the members in a group may be taken from families marginally above the poverty line living contiguously with BELOW POVERTY LINE definition: as per Government of India, earning at Rs 10 or less per day approximately, per person, considered as below poverty As per the Government of India, poverty line for the urban areas is Rs 296 per month and for rural areas Rs 276 per month, i.e people in India who earn less than Rs 10 per day This amount will buy food equivalent to 2200 calories per day, medically enough, to prevent death This actually translates to Rs 3650 per year or US $ 75 per year These SHGs are planned to help the families of occupational groups like agricultural labourers, marginal farmers and artisans marginally above the poverty line, or who may have been excluded from the BPL list to become members of the Self Help Group However, the (ABOVE POVERTY LINE) APL members will not be eligible for the subsidy under the scheme The group shall not consist of more than one member from the same family A person should not be a member of more than one group The BPL families must actively participate in the management and decision making, which should not ordinarily be entirely in the hands of Above Poverty Line (hitherto referred as APL) families Further, APL members of the Self Help Group shall not become office bearers (Group Leader, Assistant Group Leader or Treasurer) of the Group Managerial Aspects relating to the group governance The group should devise a code of conduct (Group management norms) to bind itself This should be in the form of regular meetings (weekly or fortnightly), functioning in a democratic manner, allowing free exchange of views, participation by the members in the decision making process Electronic copy available at: https://ssrn.com/abstract=1854283 The group should be able to draw up an agenda for each meeting and take up discussions as per the agenda The members should build their corpus through regular savings The group should be able to collect the minimum voluntary saving amount from all the members regularly in the group meetings The savings so collected will be the group corpus fund The group corpus fund should be used to advance loans to the members The group should develop financial management norms covering the loan sanction procedure, repayment schedule and interest rates The members in the group meetings should take all the loaning decisions through a participatory decision making process The group should be able to prioritise the loan applications, fix repayment schedules, fix appropriate rate of interest for the loans advanced and closely monitor the repayment of the loan instalments from the loaned The group should operate a group account preferably in their service area bank branch, so as to deposit the balance amounts left with the groups after disbursing loans to its members The group should maintain simple basic records such as Minutes book, Attendance register, Loan ledger, General ledger, Cash book, Bank passbook and individual passbooks The sample preform for maintenance of above records by the group is in the Annexure II for guidance These could be used with necessary changes/ modifications wherever required Fifty per cent of the groups formed in each block should be exclusively for the women In the case of disabled persons, the groups formed should ideally be disability-specific wherever possible, however, in case sufficient number of people for formation of disability-specific groups are not available, a group may Electronic copy available at: https://ssrn.com/abstract=1854283 comprise of persons with diverse disabilities or a group may comprise of both disabled and non-disabled persons below the poverty line Definition of Microfinance and MFIs Microfinance services as “providing financial assistance to an individual or an eligible client, either directly or through a group mechanism for : i an amount, not exceeding rupees fifty thousand in aggregate per individual, for small and tiny enterprise, agriculture, allied activities (including for consumption purposes of such individual) or ii An amount not exceeding rupees one lakh fifty thousand in aggregate per individual for housing purposes, or physisuch other amounts, for any of the purposes mentioned at items (i) and (ii) above or other purposes, as may be prescribed.” MFIs could play a significant role in facilitating inclusion, as they are uniquely positioned in reaching out to the rural poor Many of them operate in a limited geographical area, have a greater understanding of the issues specific to the rural poor, enjoy greater acceptability amongst the rural poor and have flexibility in operations providing a level of comfort to their clientele There are several legal forms of MFIs However, firm data regarding the number of MFIs operating under different forms is not available It is roughly estimated that there are about 1,000 NGO-MFIs and more than 20 Company MFIs Further, in Andhra Pradesh, nearly 30,000 cooperative organizations are engaged in MF activities However, the company MFIs are major players accounting for over 80% of the microfinance loan portfolio (www.nabard.org) Usury Interest Rates Usury was interest above the rate allowed by law Today, usury is commonly used to refer to the charging of unreasonable and excessive rates of interest Electronic copy available at: https://ssrn.com/abstract=1854283 Loan Shark or a Kandu vaddi money lender A loan shark or kandu vaddi money lender in local parlance is a person or body that offers unsecured loans at high interest rates to individuals, often enforcing repayment by blackmail or threats of violence They are generally part of criminal-police-politician-judiciary network and most of their tactics are above law Sometimes, the interest rates are as high as 300% per year and never less than one hundred per cent per annum in most of the cases Electronic copy available at: https://ssrn.com/abstract=1854283 TABLE OF CONTENTS Objective: 10 The flower sellers of Choolaimedu: 10 Limitations of the study: 11 Narratives 12 5.1 Vasantha: 12 5.2 Kannama.S: 13 5.3 Sivabaghyam: 14 5.4 Lakshmi: 15 5.5 K.Rani: 16 5.6 Uma: 16 5.7 Sakkarai: 17 5.8 Veeramma.M 17 5.9 Indira: 18 5.10 Anjalai: 19 5.11 Gowri: 19 5.12 Aarumugam Ammal: 20 5.13 Vasantha: 21 5.14 Kuppamma: 21 5.15 Shanthi: 22 5.16 Lakshmi: 23 5.17 Leelavathy: 23 5.18 Tamizhchelvi: 24 5.19 Panjaksharam: 24 5.20 Kannatha: 25 Business model of flower sellers: 26 Other insights and inputs: 26 7.1 Vishwanathan: 26 7.2 Rebecca: 27 7.3 Matt Duncan: 27 Observations: 28 8.1 Demographic aspects: 28 Electronic copy available at: https://ssrn.com/abstract=1854283 8.2 Business aspect: 29 8.3 Financial aspect: 30 Appendix 1: 32 Appendix 2: 33 Electronic copy available at: https://ssrn.com/abstract=1854283 Introduction The two things that an average Indian buys on an everyday basis are vegetables and flowers Not bouquets or fancy bunches of flowers but long strings of fragrant flowers Flowers are an integral part of daily lives, especially to Hindus who consider them as a superior form of offering to God However, it is prevalent among other religions It was an anathema for the Tamilians, if the unmarried and married women did not wear flowers in their hair Now, even if they don’t adorn their hair with flowers, they at least make sure that they adorn the pictures of their Gods with flowers Flowers here not only symbolises love, but also worship and respect Majority of households interacts with a flower seller on a regular basis and this proximity is the key inspiration to conduct an exploratory study on their way of life In a city that boasts of dozens of flower sellers in every major street, their sheer number and their nature of their business is apt for an exploratory study on micro finance Some of the questions that need to be answered are; how these flower sellers run their shop? What made them get into this business? How they manage their finances? What kind of a role can MFIs play in the lives of these women? Objective: To conduct an exploratory narrative research on the flower sellers of Choolaimedu (a small representative place in Chennai city with populations of both upper, middle and lower strata of society; Google map is provided in the Appendix 1) to find, • demographic background • business Model • Financial aspects relating to their life and business cash flows The sampling method used for this study is snowball sampling The flower sellers of Choolaimedu: Twenty flower sellers that the researcher had interacted with and 19 of them are illiterate with only one woman who has studied till 8th standard The flower sellers buy flowers in bulk from either the Koyambedu flower market (whole sale market situated 12 kilometres from Choolaimedu or the Parrys market (smaller wholesale market 14 kilometres 10 Electronic copy available at: https://ssrn.com/abstract=1854283 to meet her household expenses and for supporting her son’s business She was a member of Mahasemam and opted out of it as she felt that there was a misappropriation of funds So now, she depends solely on the money lenders 5.12 Aarumugam Ammal: When asked for her name, her husband rushed forward and said “Aarumugam Ammal” with a heavy stress on “Ammal” The husband and wife duo hail from a family of flower sellers from Kariampatti –a small village near Dindukal She was also the only flower seller I had encountered to have had some education She has studied till 8th class 34 year old Aarumugam Ammal is striving to make ends meet and also support the education of her son, who is now in 11th standard and daughter who is in 9th “We started this business because we fell into bad times and badly needed additional income.” says Murugan Her husband Murugan sometimes helps her in running the shop He works in a flower shop in Parrys and they buy the flowers for the shop from Parrys Into this business for the past 10 years, Aarumugam Ammal sets shop for a capital of Rs 500 and makes a profit of Rs 100 to 15 per day Once, she was a member of SHG but unfortunately, the group has dissolved and now, she is looking forward to join another SHG, mainly for saving money rather than availing loan “We borrow money from the money lender only during festival times to infuse more capital to the shop Otherwise, with the money that we earn between us, we can manage our expenses” beams Aarumugam Ammal The couple feel that it is best to avoid borrowing as it becomes an unnecessary strain on their pockets “It is best to limit our expenses in accordance with the income” says Murugan Incidentally, it was Murugan who changed her wife’s name to “Aarumugam Ammal” from “Aarumugam” “It’s a man’s name I wonder how her father gave her such a name” he grumbles well naturedly, while Aarumugam Ammal smiles shyly 20 Electronic copy available at: https://ssrn.com/abstract=1854283 5.13 Vasantha 45 year old Vasantha has her shop right next to the Choolaimedu bus stop and has been doing business in the same area for almost 30 years A native of Bunroti, Vasantha inherited this shop from her neighbour from Bunroti, who was moving to another area Ever since, she has been running this shop and currently invests Rs 300 to Rs 400 per day as a capital, making a profit of Rs 100 per day Vasantha had to repay a loan that was taken by an acquaintance in her name from a finance company nearby –Amma Finance in the Choolaimedu high road “They absconded with the money I had to pay back for the Rs 10,000 loan” she laments Vasantha’s livelihood and business revolves around the money she continually borrows from the local money lenders “It is no strain I have to make a daily payment of Rs 10 to Rs 50, depending upon the amount I borrowed And once I finish of the loan in months, I avail another” she grins When asked about SHG and MFI, she was able to say that she was a part of both but was not able to explain the details of it When pressed further, she took me to the centre leader of Equitas, from whom she has borrowed Rs 10,000 “I don’t believe in these SHG and MFI I end up paying more Never again am going to borrow money from these people Money lenders are the best choice” she says with conviction and nothing could shake her conviction, even the calculations that I made for her With only one son, who is uneducated like his mother, Vasantha avails his help and her mother’s for the business “I am planning to build a home at my native Once that is done, I will retire Have had enough of this business” says Vasantha 5.14 Kuppamma A huge red bindhi, lips that are stained maroon with constant chewing of betel leaves and an attitude that is aimed at milking sympathy –this is Kuppamma in a nutshell This 65 year old lady supplements her income by working as a night watch woman in one of the flats nearby, though which she earns Rs 2000 per month 21 Electronic copy available at: https://ssrn.com/abstract=1854283 Fifteen years ago, she got into the business of flower selling, before which she worked as a maid Old age made her quit the previous profession and turn to the less labour intensive job of selling flowers Skirting around the topic of her family, this Chennai native talks about the days when she started the business with a 50 rupee capital Now she invests anywhere between Rs 1000 to Rs 2000 per day for her shop From this, she makes a profit of Rs 250 to Rs 300 Kuppamma has availed a loan of Rs 10,000 from Amma Finance in Choolaimedu and is looking forward to finish off the loan in the next months not a big fan of money lenders or SHG, she says that borrowing money from neighbours and other known persons is the smart way to supplement the income as she can repay the borrowed amount without interest within a couple of days 5.15 Shanthi Fiercely independent and self-sufficient, Shanthi literally snarled out when I asked who helps her in running the shop “I don’t need anybody’s help for this Neither will I ever go and ask somebody to lend me a hand” says Shanthi 48 year old Shanthi has been running this business for 28 years Mother of sons and a daughter, this uneducated woman has given her children the basic schooling The capital for her shop comes mainly through the money that she borrows from the money lenders Shanthi is also a part of a SHG, where she has successfully completed the repayment of a loan of Rs 10,000 and has now taken a loan of Rs 15,000 from them She repays this loan through monthly instalments while for the money lenders, it is through daily instalments She, however, is not aware of MFIs She sets up the shop with a capital of Rs 500 to Rs 1000 and outsources a part of the flower tying at a payment of Rs 20 per day for labour The shop gives her a profit of Rs 100 and she is quite content with what she has now, with no further plans of expansion 22 Electronic copy available at: https://ssrn.com/abstract=1854283 5.16 Lakshmi 75 year old Lakshmi is a very intriguing character Estranged from her sons and her husband, she has been living alone for the past 35 years Coming from a family of flower sellers, she buys flowers from her husband’s shop at Koyambedu “It is purely business I pay him promptly I don’t expect or want his help” says Lakshmi She has been into this business for the past 40 years She invests Rs 700 per day for the shop and makes a profit of Rs 50 to Rs 100 per day which though which she sustains her life A member of a SHG at Aminjikarai, Lakshmi is not eligible for taking loans, but she uses the SHG to save Rs 110 per month “I stay alone and there is no one to look after me So the only option available for meet my financial needs are the local money lenders I regularly borrow Rs 10,000 from them and repay it at the rate of Rs 100 per day and finish of the loan in months, after which I again go for a loan It is through this money that I sustain my business and my livelihood” says this lonely grandmother 5.17 Leelavathy With her hair tightly bound into a bun and stern specs perching on her nose, Leelavathy looks like your regular government school teacher with a respectable look But this forty five year old 3rd generation flower seller proudly announces that she will be the last in her family to sell flowers Leelavathy has been running the shop for the past 30 years and is proud of the fact that her only son has studied B.Com “He got a merit seat at the Pachaiyappa’s College and we didn't have to get even single paise as loan for his studies” she beams with pride The son now works with TTK Pharma Leelavathy who is a member of a SHG is waiting to get out of it as she feels that the group leader misinformed her about the terms of the loan She saves Rs 110 per month in the SHG and is waiting for the year period to get over so that she can come out of it Once, she got a loan worth Rs 3500 from the SHG and she says “enough is enough I have repaid the loan and once my year locking period for 23 Electronic copy available at: https://ssrn.com/abstract=1854283 my savings gets over, I will get out of SHG.” She sets her shop with a daily investment of Rs 400 and earns a profit of Rs 100 per day To meet her day to day expenses and to supplement the capital for her shop, she prefers the local money lender from whom she regularly borrows Rs 5000 and repays it in months through a 50 rupee daily instalment 5.18 Tamizhchelvi 32 year old Tamizhchelvi started selling flowers years ago when her husband deserted her With a son and a daughter, uneducated Tamizhchelvi says that all that she wants now is to see to the fact that her children get good education She started the business with a capital of Rs 200, which she invested out of her savings And now, the shop has expanded and she invests Rs 500 to Rs 900 per day, making a tidy profit of Rs 150 to Rs 200 Incidentally, the business that provides her with livelihood is the family business of her in laws “I never borrow money What I earn from the shop is sufficient to meet my needs” she says When I looked at her in astonishments, she smiles and says that her mother and her brothers support her by giving provisions and some money for urgent needs “It was them (her mother and brothers) who married me to the man who deserted me So it is their responsibility to take care of me” says this Madurai native With this support, she says that there is no need for her to borrow money Tamizhchelvi si a member in a SHG in which she saves Rs 110 per month “I got a loan from the SHG and transferred it to someone else” she grins With her son and daughter supporting her in the business by delivering flowers to the houses of customers, Tamizhchelvi is happy with the way her business is flourishing “I am planning to expand my business soon by getting more varieties of flowers” she signs of confidently 5.19 Panjaksharam: You ask her about her age, it comes with a disclaimer “Am only 56 years old, but my hair has gone white prematurely” says Panjaksharam, who has been selling flowers since she was 10 years old She fondly recollects the days when she sold flowers with 24 Electronic copy available at: https://ssrn.com/abstract=1854283 her father at the bus stop in Parrys “Selling flowers is the only thing I know It is in my blood” she says This woman of grit has been through the death of sons and her husband “After my husband died years ago, I stopped taking loans from the money lender It is better to get money from the neighbours and repay within a few days free of interest” says Panjaksharam With this flower business, she contributes to the running of the family of her two remaining sons and is helped in her business by her sons and sharp 10 year old grandson who ended up asking me more questions than I asked to his boisterous grandmother Her shop is one of the oldest in Choolaimedu, which she set up way back in 1968 Her regular customers include the Amma Hospital, Aruna Diabetic centre and a couple of other clinics nearby She invests Rs 500 to Rs 900 per day and earns a profit ranging between Rs 100 to 150 Panjaksharam, who is not a big fan of SHG or MFI, says that she is content with what she has and is keenly exploring various avenues of savings 5.20 Kannatha: Kannatha was the last flower seller I interacted with and her shop was also the smallest that I encountered 60 year old Kannatha is a resigned woman who has no one to support or look after Into this business for 35 years, Kannatha had a flourishing business in Parrys She shifted to Choolaimedu years back, after her husband died They never had any children “In those days, I used to invest Rs 500 to Rs 1000 per day in the shop which both I and my husband tended But now, I just put in enough capital (Rs 100 to Rs 150 per day) to meet my daily needs.” She says With the profit of Rs 30 to Rs 50 she makes, she meets her expenses and pulls though the day When asked how she can support herself on such a meagre income, she smiles and says that she has money left from the jewels that she sold off, which she has saved for a rainy day Kannatha doesn’t borrow any money from the lenders and is not the least bit interested in SHG of MFI “I am just counting the days for God to call me from this world” says Kannatha with a sorrowful smile 25 Electronic copy available at: https://ssrn.com/abstract=1854283 Business model of flower sellers: Fig 1: Business model generation canvas Other insights and inputs: 7.1 Vishwanathan: Every day, Vishwanathan, the money collector makes rounds on his scooty to collect money from those who have borrowed from the money lender His customers have a wide flexibility on the loan amount, which ranges anywhere between Rs 100 to Rs 10,000 and also on repayment terms Borrowers can repay the money on a weekly or daily basis However, the repayment period never exceeds months Vishwanathan has 15 colleagues who go around distributing and collecting money every day He says that over the years the business has been steadily increasing and laughs out when questioned whether MFIs are their competitors “They can never be our competitors Can they lend a sum as small as Rs 100?” he asks 26 Electronic copy available at: https://ssrn.com/abstract=1854283 Vishwanathan has been in this business for the past 20 years and he says that his customers always promptly repay the money When questioned further on turnover and other details, Vishwanathan refused to divulge any information and sped away in his scooty 7.2 Rebecca: Rebecca is a dynamic entrepreneur who is into detergent sales She is the centre leader of a group of 25 women of Equitas Microfinance and the group leader of the self help group, Swarnammal Arakattalai promoted by Dy.Chief Minister Her group has opted for the joint liability model for the MFI loan They are in the last leg of repayment of the Rs 10,000 per person loan from Equitas and will soon be eligible for a loan of Rs 15,000 When asked about the enthusiasm shown by the members for the MFI, Rebecca was sceptical “After this, maybe just 10 to 12 of the group members will be willing to take up the next loan” she said When asked for the reason, she said “they find it difficult to repay the money on a fortnightly basis as the sum gets accumulated as against what they pay to the money lenders on a daily basis Being a joint liability model, even if one defaults, the others have to share the burden, which is quite difficult for us However, she was much more enthusiastic about the SHG and said that it has been a huge success and the members are looking forward to avail the next loan When asked about how the group members utilize the money obtained as loan, Rebecca was non committal and said that it may be used for both business as well as personal expenses 7.3 Matt Duncan Matt Duncan is associated with the Grameen Foundation and is based in Seattle, USA The researcher chanced upon meeting Mr Duncan at the Coffee Day Square in Bangalore while he was discussing technical aspects of micro finance with an associate Duncan has come to India to conduct a seminar on technology for microfinance which is to be held in Delhi The researcher discussed about some aspects of micro finance with Duncan and he patiently shared his expertise Given below are his insights and observations “There are only 10 major micro finance companies catering to the entire world!” he started “MFIs need to focus on moving out and reaching out to more people rather than moving up and making more money The need of the hour is that MFIs must go back to the basics and remember that they were started with a social objective in mind and must adhere to it, instead of letting the focus drift more towards profit making “When asked about the impact of micro finance in the lives of people, Duncan had many success stories to share However, when 27 Electronic copy available at: https://ssrn.com/abstract=1854283 asked specifically about the role of MFI in the lives of urban population, he stressed again on the stand adopted by some MFIs who restrict themselves to urban areas and how it may not really make a difference Duncan, along with his associates, has developed a new cloud technology which can be used by MFIs at lower costs to enhance their performance and efficiency and at the same time, cut down their cost “If an MFI can reach the rural population at the same cost that it can reach the urban population, then what is there to stop them from extending their hands to the needy?” says Duncan Observations: By studying this sample of 20 flower sellers in Choolaimedu, some of the inferences and points to ponder are discussed below; 8.1 Demographic aspects: The average age of the women who are into this business is 50 years, with the youngest being 30 years of age and the oldest 75 years 50% of the women come from a family of flower sellers and hence, taking up this trade has been a natural step for them Of the remaining 50%, the business of flower selling was an option that they took because it was less labour intensive and hence, could easily be managed in spite of their advanced age 60% of the flower sellers are Chennai natives and the rest have settled in this city for more than 10 years 19 of the 20 flower sellers are uneducated Their children are also not highly educated Most of them are school dropouts with exception of cases where the children have finished under graduation 45% of the flower sellers are widowed and for the remaining, the husbands are into either flower business or work as labourers Sociological Aspects Many of the flower sellers, despite their age, continue to support their family by generating income through this business These women exhibit extraordinary grit when it comes to seeing the welfare of their children and grandchildren More than a means of livelihood, this business is also a means through which they support the livelihood of their grown up sons and their sons 28 Electronic copy available at: https://ssrn.com/abstract=1854283 8.2 Business aspects The average capital employed by the flower sellers is around Rs 500 per day and on an average, they make a profit of Rs 100 per day The most important aspect is the capital requirements are daily and profit or loss is made daily It is similar to partha system of North Indian businessmen, where profit or loss is made every day The capital requirements are to be planned every day; the demand pattern depends on the festivals; important auspicious days; weather pattern (rainy days may have less demand); types of flowers available Keeping all these factors in mind the product is purchased from the wholesale market with high fluctuating prices The pricing of the final product works at price points of ten rupees for one arm length (one moorai) or if the prices are less it will be two arm lengths for ten rupees The prices are not negotiable and all the sellers form a small cartel (if we can use the word) and fix prices The flower sellers not have a fixed supplier from whom they buy flowers every day They change and buy from different wholesalers There is no credit at the wholesale level to the flower sellers The common flowers that they sell are jasmine, jaadhi or mullai depending upon the season, saamandhi, kadhambam (which is a mix of jasmine, kanakambaram, marikozhundu) Hybrid rose is also sold Neither they have a predetermined product mix They vary the quantity of flowers depending upon the price of each variety The flower sellers not seem to have a large number of regular customers They sell flowers primarily from the same location Once they set up a shop, they not move that particular place Home delivery of flowers is done to select customers from whom they collect money from a monthly basis Considering the nature of this business which requires infusion of capital on a day to day basis, how can MFIs or SHG help these flower sellers with the lump sum that they give out as loans? Can there be any way through which women such as these can be reached out and helped by the MFI? The local money lenders seem to be the perfect alley for these women as they lend amount as small as Rs 100 which will help the women to set up the shop They find frequent borrowing more suited for their style of business and these money lenders cater exactly to this need 29 Electronic copy available at: https://ssrn.com/abstract=1854283 8.3 Financial aspect: 17 of the 20 women go to the money lender or money shark for their requirements and find it convenient to repay to the lender on a daily or a weekly basis The money lender generally lives within the vicinity and has an eye on the operations of the business Short and flexible repayment periods, flexibility of instalment amount, minimum loan amount, individual liability and frequency of repayment period make the option of borrowing money from the money lender attractive Another added advantage with the money lender is that the money is lent and collected at their doorstep As the repayment period is short, the flower sellers are able to avail new loans once every months, which is not the case with SHG or MFI, where the repayment period is as long as year Trustworthiness of SHG is a major concern among the flower sellers as those who have been a member have had bad experience and feel cheated by the group leader They also find attending to the meetings and liaising with peers of SHG as inconvenience as their business hours are not suitable for such meetings Only out of the 20 women are aware of MFI The flower sellers feel that the procedures involved in availing loan from SHG or MFI complicated This is another factor which makes them go for the money lender The flower sellers feel that repaying money on a daily or weekly basis is easy on their pocket and does not put much strain on their resources However, when an accumulated amount is paid fortnightly or on a monthly basis, they feel the pinch 10 The purpose of borrowing in majority of the cases is for meeting personal expenses rather than for business needs; this is one of the important dimension The business needs and personal needs are not different The local money lenders have a tab on the needs and cash flow of the flower sellers This will help them to collect the money in time 8.4 Most important Questions to be addressed by State, Administrators or Civil Society The question that arises is that, if these women, who borrow primarily to meet their personal expenses, business needs, subsistence and survival needs, continue to the same without a thought of generating more revenue as expressed by many of them; given such 30 Electronic copy available at: https://ssrn.com/abstract=1854283 scenario than how can MFI or SHG help in improving their standard of living? Even if they have ambitious entrepreneurial skills, where are the opportunities to increase their turnover? Will they really make a difference in the lives of these urban flower sellers who already run an established business? Is there a way to help these women out of the vicious cycle of borrowing and repaying multiple loans? Also, it is glaringly visible that these money lenders make the lives of the flower sellers easier and miserable an oxymoron; easy lending and high on their lively hood due to information asymmetry They give them capital for setting up the shop everyday and what they collect at the end of the day is percentage of the profit that these women earn by selling flowers Looking at the money lenders in this perspective, we see that they are street venture capitalists Are they villains or ruffians in a broad sweep who use violating law for collections or they can be looked up as “street venture capitalists” who feed the politicianbureaucrat-police-criminal axis? Loan repayments cannot be enforced without this axis What is the solution? Are they destined to be like that with no surplus to be better in society? Does the society have any answers? 31 Electronic copy available at: https://ssrn.com/abstract=1854283 Appendix 1: Fig 2: Map showing the area covered –Shanmuganar Salai and Choolaimedu high road 32 Electronic copy available at: https://ssrn.com/abstract=1854283 Appendix 2: Questions: The questions are asked in Tamil and responses are recorded for further analysis The questions that were asked are Demographic a Name b Age c Educational qualification d Native place e Number of members in the family and their educational qualification f Family business Business a Number of years for which they are into this business b Support received for the business from family and through outsourcing c Various aspects of the business d Time for which they sell the flowers e Sourcing of raw materials f The inspiration behind starting the business g Future plans of the business Financials a Capital employed per day for the business b Profit earned per day c Source from which they borrow the money d Interest rates of the money borrowed e Frequency of money borrowed and the purpose of borrowing f Repayment details Awareness level a Awareness about self help groups (SHG) and micro finance institutions (MFI) b Details regarding their own participation in SHG and MFI c Their views about SHG and MFI d Preferences regarding sources of borrowing and the reason for the chosen source References www.businessmodelgeneration.com www.nabard.com www.socialresearchmethods.net/kb/ 33 Electronic copy available at: https://ssrn.com/abstract=1854283 34 Electronic copy available at: https://ssrn.com/abstract=1854283 ... increased to Rs 200 per day She makes a profit of Rs 50 to Rs 100 and gives this money to support her son’s business and her grandson’s education She delivers flowers to the home of her customers... business of tying flower since the age of ten Her husband being in the flower business made her to choose the business of flower selling to boost her income She started out as a house maid and with... 1000 and makes a profit of Rs 100 to Rs 150 per day Kannama is lucky to have the support of her daughter in tying flowers and distributing it to customer’s houses Also, her sons and her husband