Porapara again

Thursday, March 20, 2008

On 3rd March, as was discussed earlier, we went to Porapara again but this time with an objective of studying the source of raw material required for our business. Ujjwal, Himanshu, Sharma ji, Kanika and myself reached the village around 3 PM. After a search of half an hour we could locate the particular households whose members were involved in sal-leaves plate business. We talked to them, mainly ladies, at length and came to know that that was a wrong time of the year to look for the raw materials. Every year during late February and early April the Sal trees shed their leaves and hence the quality of the leaves deteriorate consequently leading to a rise in the price of the sal-leave plates. The current rate of the plates were 12-13 paise per plate. That was within our estimated cost analysis but still the profit margin was getting reduced considerably. We also learnt that the cost reduces to a minimum of 8 paise per plate as opposed to 6 paise mentioned by Mr. Bhattacharya. Here we learnt a lesson again. We should not accept anything only on the basis of its face value. We should dive deep to get the real picture.

We then moved to meet the group of women who were already doing what we intended to establish with our set of Ravindra Palli ladies. This group was formed by another such student group of IIT Kharagpur. We met the ladies and discussed the reasons due to which they had to discontinue the activity. We came to know that the group comprised of wives of the farmers whose primary source of bread was cultivation. So the reasons which we could make out were:

1) The sal-leave plate business was secondary source of income. So they were not putting their heart and soul behind it.
2) Due to less volume of production the per head profit margin was not significant.
3) Frequent disputes among the ladies and poor attendance during the production.

On top of all these we learnt that the variation in the cost of the end product that is the molded sal-leave plate did not vary proportionally to the cost of raw material. The average selling price of a molded sal-leave plate varied from 32-35 paise per plate as opposed to 30-60 paise according to our cost analysis. But, this was only in the local market. On further research we came to know that the returns are much higher if the end-product is sold in south India. Though the market in south India was appearing quite lucrative but we could not target that market at the very beginning. So, the things were getting clear.

* The profit margin is not so high due to existing system of production.
* The profit maximization is dependent on volume of production.
* Discontinuity in production is disastrous.
* A mechanism is required to ensure coherence in the group.
* We will have to modify the current system of production to reduce the input cost.
* We will have to look for alternate raw materials apart from sal-leaves, other leaves or for that matter, paper!!!

Posted by TS at 10:09 AM  

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