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Vol V: Taming the Tide: Stories from India

This article was originally published in the 2016 Spring Issue, and can be read here.
Authors: Claire Bentley, Vanessa Brombosz, Sofianne Gabrielli, Ga Eun Lee, Vaidehi Nafade, Lindsay Steele, Muhammed Wali

This paper examines an innovative sanitary pad manufacturing process in India that uses machines staffed by local women. In considering its financial viability, we assess whether the intervention – based on a social entrepreneurship model – adequately addresses the economic and social challenges of menstrual hygiene management in rural regions of the developing world.

Background

The impact of poor menstrual hygiene management (MHM) on women’s health, education, and economic participation has attracted attention only in recent years. The situation is particularly dire in India, where a national survey conducted in 2011 by the research agency AC Nielsen and Plan India found that 70 percent of women cannot afford sanitary napkins (SNs). Of the 355 million women of reproductive age, only 12 percent use SNs. In rural areas, home to 68 percent of the total population, (1) usage is even lower, at around 2 percent. (2) In comparison, 64 and 88 percent of women use SNs in China and Indonesia, respectively. (3)

The social and economic costs of inadequate menstrual protection are significant. A study of 1,033 women and 151 gynecologists found that, in addition to five missed days of school per month among adolescent girls (ages 12 to 18 years), around 23 percent drop out altogether after they begin menstruating. (4) It is estimated that providing women with more opportunities, including facilitating full participation in school and the workforce, could increase India’s economic growth rate by 4.2 percent. (5)

Many girls in India begin menstruating with insufficient guidance and information about this important physiological change. (6) Studies have indicated that between 56 and 66 percent of girls have no information about menstruation prior to reaching menarche. (4,5) One study in Rajasthan found that 70 percent of girls believe that menstruation is unnatural. (7) This lack of awareness is exacerbated by persistent cultural taboos that surround menstruation, which is often “associated with impurity, secrecy, and shame.” (6) Based on a study of Delhi slums, adolescent girls who are menstruating are frequently restricted from engaging in certain activities, such as worship (92 percent) and household chores (70 percent). (8)

Rather than purchasing SNs, over 77 percent of Indian women depend on cloths or rags that are often reused, while 88 percent have resorted to other materials such as ashes, newspapers, dried leaves, corn husks, and sand. (9) Furthermore, 48 and 38 percent of girls in urban and rural areas of West Bengal, respectively, reported unsatisfactory cleaning practices. (10) Although there is little data to suggest a causal link between the use of makeshift materials and reproductive disease, poor menstrual hygiene is associated with a higher risk of vaginal infections and pregnancy-related complications.

Problem Statement

In consideration of cultural factors, lack of education, and economic constraints, improving MHM requires a multi-faceted approach. Along with the behavioral challenges associated with low literacy levels and menstrual hygiene awareness, the problem is also market-based. There is little incentive for multinational companies to penetrate rural areas given the high transportation costs, difficulties of marketing to diverse and rural consumers, and relatively low profit margins. With scarce resources, commercial SNs are unaffordable and consumer access is limited. Finally, the cost of traditional machinery necessary to manufacture SNs is out of reach for entrepreneurs seeking market entry.

Intervention

Technology

Arunachalam Muruganantham, a craftsman from rural Tamil Nadu, India, was shocked when he realized that his wife would use dirty rags during menstruation so as not to sacrifice part of the family’s food budget to purchase SNs. He recognized that an innovative solution was needed to address the MHM needs of rural women. His goal was to design a cheaper alternative to commercial SNs, which cost 4 rupees (INR) at the local pharmacy, a price almost 40 times higher than the value of the raw materials. (12)

After identifying the composition of a typical SN (cellulose extracted from wood fibre), Muruganantham set out to design a simplified and cheaper version of the expensive machine used to convert the wood fibre into cellulose. (12) In four years, Muruganantham successfully designed a semi-automatic assembly line machine using skills he had learned while working in a welding shop. He obtained machine parts through his previous partnerships in exchange for a stake in his company. (13)

Each machine, powered by electricity and a foot pedal, can produce up to 1,000 SNs per day using four simple steps. (14) First, the tough wood fibre is crushed into soft cellulose. The cellulose is then compressed into the desired shape and sealed with non-woven polyethylene. The final step involves sterilization by UV light. Upon receiving a national innovation award by the Indian Institutes of Technology (IIT) and an Indian presidential award, Muruganantham’s technology was patented in 2006. (15) In spite of his success Muruganantham has not commercialized his product, determined instead to employ a decentralized manufacturing strategy.

Addressing the Need

Muruganantham established his company, Jayaashree Industries, with the following objectives: increase the usage of SNs, create a sustainable model by providing employment opportunities, and improve health by raising awareness about proper MHM. (16) Muruganantham sells the machines at an affordable price to women’s self-help groups (SHGs) in rural communities who receive financing through bank loans or non-governmental organizations (NGOs). Muruganantham transports the machines and raw materials himself, thereby reducing the number of players in the supply chain. Since he is present for the setup of the new machinery, Muruganantham also trains the women to use the semi-automatic machine in the span of three hours. All sites are staffed and managed by an average of ten women per unit. (14)

The women can customize the products they produce by selecting the name and designing the packaging. (12) With over 867 local brands, the products are marketable within many different communities despite regional variances in language and culture. (16) Generally, elderly women in the community, called resident dealers, take on the task of distributing SNs to women while also promoting good MHM practices. Another reason this model is well-adapted to rural settings is that it allows community members to obtain SNs as packages or single units, either by direct purchase or through a barter system. (13)

Infrastructure and Financing

Muruganantham sells the machine at a starting price of 75,000 INR (about 1,090 USD) with additional costs for materials and setup. (13) The entrepreneur is expected to pay 10 percent of the initial investment, with bank loans or NGOs covering the remaining 90 percent. Loans may be obtained by members of SHGs, comprised of 10 to 20 women from the same low-resource village. This is done through the pooling of resources, generated by monthly or bimonthly contributions to a common fund, or from formal micro-finance institutions and commercial banks that provide group loans. (17) The banks work closely with NGOs to help facilitate lending and educate women about income-based work. (17) Lending to SHGs is also profitable for banks, as the women are then more likely to open accounts and take out loans themselves, with a recovery rate of 99 percent. (17). This grassroots model allows women to participate not only as consumers, but also as investors, manufacturers, and marketers.

Evaluation of Impacts and Outcomes

Investment Details

The Jayaashree Industries grassroots social entrepreneurship model provides women with low incomes the means to start their business and recoup their initial investment in under four years. Becoming a napkin manufacturer requires an initial investment of 371,170 INR. (Figure 1).

Estimated monthly expenses are 84,775 INR, which include raw materials, labor, and administrative expenses. Estimated monthly revenues are 100,000 INR. This is based on the production of 5000 packets per month (the quantity that one machine can produce) at 20 INR per packet (the recommended retail price). This means that manufacturers can expect to make a monthly net profit of 15,225 INR, a profit margin of 15 percent (Figure 2).

Figure 1:
Total Initial Investment Detaild
*See Appendix A for additional cost details **SSI Registration was calculated using vakilsearch.com
Figure 2: Expected Monthly Expenses and Revenue Details *See Appendix B for additional cost details.
Figure 3: Annual Net Profit Details.
Low Cost Product

Jayaashree Industries SNs are demonstrated to be lower cost than other popular products on the market in India (Figure 4). The marketplace is currently dominated by Procter & Gamble (P&G) and Johnson & Johnson (J&J). [18] Popular J&J products, the Stay-free Security Cottony Soft and Carefree Regular, retail for 2.50 INR and 5.25 INR per SN, respectively, with an average per unit price of 3.88 INR. Popular P&G products, Whisper Choice and Whisper Ultra Soft XL Wings, retail for 4.00 INR and 11.14 INR per SN, respectively, with an average per unit price of 7.57 INR. On average, Jayashree Industries SNs retail for 1.00 – 1.50 INR per unit, less than a third of the cost of commercial products. This range depends on the pricing determined by the local women.

Figure 4: Sanitary Napkin Market in India, Price Comparison
Employment for Women

Another positive impact of the intervention is the creation of jobs for local women. By 2014, there were over 2,000 machines spread across 887 taluks in India and 14 countries (Nepal, Bangladesh, Myanmar, Sri Lanka, Philippines, Mauritius, South Africa, Zambia, Ghana, Nigeria, Kenya, Malawi, Somalia and the USA), with each machine employing between 10 and 14 women. (16) Accordingly, there are over 20,000 women directly benefitting via employment from this model today. In India, these women make a monthly salary of 5,000 INR, or 200 INR per day for 25 working days per month. (18) These wages are competitive with rural wages in other sectors of India’s economy. Based on Indian Labour Bureau data from 2014, average daily wages were 207 and 239 INR in the agricultural and non-agricultural sectors, respectively. (20) The model also offers indirect benefit to over one million “resident dealers” in communities across India. (16) From 2008 to 2012, the number of direct beneficiaries grew from 155 to 5,000, the number of indirect beneficiaries from 45,000 to 1,000,000, and the number of municipalities marketed from 7 to 35. (16) (Figure 5). These numbers represent growth rates of 323, 2,222, and 500 percent, respectively, over the four-year period.

Uptake

In India, with sales of $236 million in 2012 and projected sales of $442 million by 2017, the market for feminine hygiene products is rapidly expanding at an annual rate of 3 to 5 percent (11,13). In comparison to their competitor Kimberly-Clark, P&G has pursued a more aggressive marketing strategy in emerging markets (22), and their Whisper brand accounts for nearly half of the Indian SN market. (23) While there is no data available on the SN market share of Jayaashree Industries, the rural SN consumer market is largely untapped and vast, and it is expected that their market presence will continue to expand. (13)

Limited data on the usage and acceptance of Jayaashree Industries products has made it difficult to evaluate the impact of the venture. One trial found that women who had previously used commercial SNs were “extremely satisfied” with Jayaashree Industries products. However, it is unclear whether this experience is widespread. (18) Additionally, there is no data about the lifespan of the machines. Given these statistical gaps, it is challenging to assess the uptake of the venture, and an impact evaluation is highly recommended.

Sustainability

Muruganantham has helped SHGs arrange for bank loans and leveraged government schemes to cover the initial capital required. (13) However, the 99 percent loan repayment rate by SHGs is a positive indicator of its long-term viability. (17) It is unclear whether Muruganantham is gaining or losing money as there is no data available on Jayaashree Industries’ net profits. While most of Jayaashree Industries’ revenue is from machine sales, it is unclear whether the company also receives a portion of the profits generated by SN sales. Without more data, it is difficult to evaluate the sustainability of Jayaashree Industries with confidence.

Reflections

Strengths and Limitations

The greatest strength of Jayaashree Industries is its ability to respond to the unique needs of the rural market and spread throughout regions previously untouched by multinational corporations. Through a multi-pronged approach, Jayaashree Industries created a low-cost product as well as a business model. First, their innovation has enabled rural women to practice proper MHM and offers them the opportunity to run their own SN manufacturing businesses with high returns on investment. Second, Jayaashree Industries recognizes the importance of cultural sensitivity by allowing women to market and distribute SNs themselves in a manner that suits their communities. Third, as an intervention based on grassroots entrepreneurship, the model is more self-sustaining than an external intervention from other actors, such as the government or NGOs. Fourth, an emphasis on transparency has allowed social entrepreneurs in other countries to access the project details of Jayaashree Industries on public domain (individuals in 110 countries have already done so), permitting replication and expansion on a global scale.

Figure 5: Growth of Direct and Indirect Beneficiaries of Jayaashree Industries from 2008 – 2012. *Notes: 10 Lakhs = 1,000,000

Although the grassroots model offers numerous strengths, it also presents certain limitations. First, Muruganantham’s resistance to commercialization in favor of protecting local SN manufacturing limits the ability to scale-up the project, while production and marketing costs continue to rise. It may also become increasingly challenging for Jayaashree Industries to compete with multinational corporations who have started to realize the untapped potential of the rural market. For example, there is already evidence that P&G and Kimberly-Clark are designing programs to educate school-age girls about MHM. (11) Second, the sustainability of the intervention may be adversely affected by variations in the ability of SHGs to secure and properly manage loans. Third, while the machines are designed to be simple to assemble and maintain, the operators may lack the skills necessary to do so. Finally, while Jayaashree Industries recognizes the importance of coupling knowledge-sharing with marketing, there does not appear to be a concrete and effective education strategy that could overcome MHM-related stigma.

Future Directions

Within India, Muruganantham’s ultimate goal is to achieve 100 percent uptake of SNs and provide employment for one million women with the installation of 100,000 units. (24) He also plans to expand outside of India to 106 countries, including Kenya, the Philippines, and Bangladesh through a network of partnerships. (12) Given the logistical limitations of supplying the machines himself, Muruganantham may need to outsource machine assembly and training to continue expansion on a national scale. He is also seeking to cultivate partnerships with NGOs, corporations, organizations, banks, and governments to facilitate financing schemes for rural women interested in participating as entrepreneurs. Finally, he hopes to expand the line of products offered to include customizable SNs that vary by size and level of absorbency, as well as other types of products, such as diapers for children and adults. Although Muruganantham is currently adamant in his opposition to commercialization, (25) whether his stance will endure remains to be seen.

Lessons Learned

The Jayaashree Industries model presents a useful case study to understand how social enterprises can help to address previously neglected health needs in rural settings. Muruganantham was able to fill a gap left by multinational corporations by harnessing his experience and understanding of the social and cultural context of his target population. Whether this grassroots microenterprise model proves to be sustainable will provide important lessons about the value of engaging local stakeholders, the obstacles to raising awareness about heavily stigmatized health topics, and the challenges of scale-up inherent in a country as large and culturally diverse as India.

References

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Appendix

Appendix A
Machineries and other accessories
Appendix B
Expected Monthly Expenses and Revenues – Additional Details
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