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LIVELIHOODS
ENERGY EFFICIENCY
MICRO ENTREPRENEURS
IN-DEPTH ANALYSIS:
Impact of Energy Expenditures
on Rural Livelihoods and Possible Interventions
Contents 1 Executive Summary ..................................................................................................................................... 1
2 Livelihoods Identified for Study ............................................................................................................. 2
3 Livelihoods ...................................................................................................................................................... 3
3.1 Power Loom Weavers ........................................................................................................................ 3
3.2 Silk Weavers .......................................................................................................................................... 6
3.3 Jaggery Makers ..................................................................................................................................... 9
3.4 Silk Reelers .......................................................................................................................................... 12
3.5 Tailors ................................................................................................................................................... 16
3.6 Sugarcane vendors ........................................................................................................................... 19
3.7 Channapatna Toy Making .............................................................................................................. 22
4 Conclusion .................................................................................................................................................... 26
July 2014
Authored by SELCO Foundation
Please address comments to Vikshut Mundkur: [email protected]
1
1 Executive Summary The availability of energy plays a critical role in rural livelihood generation. Many rural livelihoods are
energy intensive and quite often are unviable if the required energy is not available for the required
period of time each day. Thus, grid power scarcity forces entrepreneurs to use alternate sources of
energy like diesel generators and kerosene powered motors. Such measures, although necessary, result
in excessive expenditures on energy bills, thus reducing profitability. Alternatively, other entrepreneurs
are unable to afford these alternative energy supplies and end up working when power is available,
often at odd hours in the middle of the night or early morning.
The Bureau of Energy Efficiency (BEE) was set up to assist in developing policies and strategies to reduce
the energy intensity of the Indian economy. The Ministry of Micro, Small and Medium Enterprises
(MSME) has partnered with BEE to incorporate energy efficiency into the MSME sector. Many of the
high power consuming MSME clusters such as glass, foundry, coir and tiles (mainly the small and
medium enterprises) have been selected for interventions. However, the link between basic livelihood
generation in the micro enterprises sector in rural areas and energy efficiency has not been looked into
as an important aspect. Entrepreneurs like silk reelers, power loom workers, jaggery makers, small
tailors and sugarcane juice vendors have been left out of this exercise.
SELCO Foundation identified this gap and has made an effort to understand the issue and conceive
appropriate interventions. The approach developed in this effort includes:
Identification of energy intensive livelihoods
Documentation of energy consumption, expenditure, sources of capital, products/appliances
Exploration of possibilities for improving efficiency of these products or replacing with more
energy efficient products; Estimation of net income gain/loss from introducing efficient
appliances
Review of relevant policies (government and financing) in energy efficiency, and benefits that
can be capitalized on by these livelihoods in MSME sector.
Outline of next steps, in terms of –
o Technology manufacturers, efficient appliances that would be appropriate (existing or
required)
o Sources of financing/ESCOs for MSMEs for these interventions.
o Pilot interventions and documentation of all relevant findings
o Policy changes, if any, that must be suggested with regard to energy efficiency in MSME
sector and Policy recommendations for banks or government to meet credit needs,
improve tech standards and so on.
For most of the entrepreneurs surveyed, the expense on their energy bills was a major component of
overall business expenditure to the detriment of profitability and savings. For example, silk reelers
spend about 26% of their revenues on their energy bills and 18% in the case of sugarcane juice vendors,
while using fossil fuel back-up like diesel generators. In case they don’t use backup, this percentage
reduces, but their revenues come down as well, as they get to be productive for only half or two-thirds
the amount of time than they would wish to be. In contrast, an MNC or a large scale factory spends only
2
about 1-5% of its revenues on energy bills (varies from industry to industry) and even lesser when it
incorporates energy efficiency measures. This difference is primarily due to two reasons: Firstly, a small
entrepreneur’s profit margins are significantly lesser than that of a MNC/large factory. In fact, he/she
earns just enough to sustain him/herself and his/her family, whereas big businesses are able to focus on
cost minimization and economies of scale. Secondly, his/her dependence of back-up power such as
diesel, petrol or kerosene is a lot more due to larger power outages in the rural areas as compared to
cities.
By bringing in energy efficiency (and backing the systems with renewable energy sources if appropriate),
the goal is to reduce energy expenditures, benefiting the entrepreneurs.
These interventions will be crucial lessons, requiring involvement of Technology and Design entities (for
technical tests and implementation) and financial institutions (for loans, interest/capital subsidies to
reduce the investment burdens). Based on our learnings, we plan to develop a policy recommendation
paper suggesting the required changes in the present policies so that these micro entrepreneurs are
made aware, included and serviced for their energy efficiency needs. The manufacturing sector is
currently seeing a massive energy crisis and increased energy efficiency will go a long way in helping the
sector, and its micro entrepreneurs.
2 Livelihoods Identified for Study The livelihoods and regions identified for the study after extensive analysis were:
An Initial Data Survey (IDS) was conducted by visiting each of these livelihoods in two or three clusters
across Karnataka. The themes addressed included:
Nature of Business, hours of operations, history
Monthly Earnings, Expenditure and Savings from business and household
Energy expenditure, perceptions and impact of fuel prices
Technology, productivity, capacity and willingness to pay
# Livelihoods Regions Covered as part of Initial Data Study
1 Power loom weavers Golsangi and Vandala, Bijapur District, Karnataka
2 Silk Weavers Kollegal, Chamrajnagar District, Karnataka
3 Sugarcane juice vendors Belgaum District, Karnataka
4 Tailors Belgaum District and at Siddalhgatta, Chikballapur District, Karnataka
5 Silk reelers Siddalghatta, Chikballapur Disrict, Karnataka
6 Jaggery makers Sirsi, Uttar Kannada District, Karnataka
7 Toy Makers Channapatna, Bangalore Rural District, Karnataka
3
Access to finance
Business structure, ownership and associations
In the subsequent sections, each livelihood will be looked at in detail.
3 Livelihoods
3.1 Power Loom Weavers In Karnataka, Power loom weavers are majorly clustered around Bijapur, Bagalkot, Gadag and
Bangalore. The study was focused on two clusters in Bijapur, the villages of Golsangi and Vandala. Power
looms are slowly replacing the handlooms in the area; the latter are normally family businesses dating
back more than 30-40 years. In contrast, most power looms in the area a little over a year old.
Figure 1 – Power Loom Process Diagram
Figure 2 – Power Looms
•Silk threads
•Design pattern
Materials received
•Threads coupled with spindles for weaving
•The mechanic installs design pattern
Setting up powerlooms Sarees
Final product
4
Golsangi Village
All the weavers in the Golsangi village are part of an association called Prathamika Kaimagga Nekarara
Utpdadakara Sahakari Sangh, Golsangi. The association supports weavers including for, but not limited
to, getting loans for their power looms, training the power loom operators and lobbying with utilities to
get continuous power supply. This association also strives to persuade the current handloom weavers to
move to power looms. Thus, it is common in Golsangi for each weaver to have 2 power looms and 1
handloom. Golsangi village currently has 42 power looms.
Figure 3 – Prathamika Kaimagga Nekarara Utpdadakara Sahakari Sangh, Golsangi
Vandala
Vandala, a small village 15 kms from Golsangi also has weavers who utilize handlooms; there are 10-12
power looms in the village that remain inactive due to lack of power supply. Vandala also has a weavers
association which is not as effective as the one in Golsangi. Members expressed complaints against it for
not being able to provide electricity or helping them in getting work.
Business Model
The weavers get their orders to weave sarees/blouse
from retail businesses in Bijapur or other cities nearby.
These businesses provide the design for the sarees and
all the required raw materials which is usually threads of
different colors. The orders are usually to the order of
75-100 sarees of the same design. Weavers hire
technicians to help them configure their power looms for
Figure 4 - Beam of the powerloom
5
the required design, which is usually done by modifying
the design causing unit on top of all power looms.
Weavers usually work for 6 hours a day and can weave
around 1 ½ to 2 sarees per day with two power looms, so
completing a set of 75 to 100 sarees usually takes them
around 3 months. Weavers collect the payment from the
businesses for their work and give back the woven sarees.
The payment can vary from Rs. 70 – Rs. 150 per saree,
based on the complexity of the job.
Energy Usage
Power looms in this area are mostly bought from the same manufacturer. They are powered by ¾ HP
motors, running on 3 phase power. They rotate at 960 RPM. These motors are run continuously without
any stoppage. The same motors are also used to prepare the threads for weaving.
The power looms have been bought with the help of loans and subsidies. Loans have been given to
weavers by the local Syndicate bank, Golsangi with an upfront subsidy of 50%. Two power looms cost Rs.
2 lakhs (after reducing Rs. 2 lakh subsidy). The subsidy amount varies based on cast and OBCs can get
upto 90% subsidy. Other than the EMI, major expenses for weavers are electricity bills and labor for the
technician to reconfigure the power loom based on the saree pattern. Even the electricity is subsidized
at 1.25Rs/Unit for 3 phase electricity against the actual price of 3.5 Rs/Unit.
The average monthly business expenditure break-up and an example of monthly business expenditure
versus savings are shown in the graphs below.
6000
6500
7000
7500
8000
Amount (Rs.)
6,650
350
500
300
Monthly Business Expenditure Vs Savings
for Livelihood
Maintenance
Technician
Electricity Bill
Savings for livelihood
Figure 5 - Motor
31% 43%
26%
Average Monthly Business Expenditure
Break Up
Electricity bills
Technician
Maintanence
6
Scope of Intervention
The major pain point for the weavers is the unavailability of continuous electricity supply. Power is
available only for total of 6 hours/day, with 4 hours in morning and 2 hours at mid night. Ideally if they
have continuous electricity they could work for 12 hours in the day time and sleep at night without
disturbing neighbors because of the work. This will double their income level.
The size and efficiency of the motor should be evaluated and intervention should be proposed
accordingly. Bank loan and subsidy options for energy efficiency/solar interventions should be looked
into.
Also, if possible, the weavers can be trained to adjust their power looms for required designs. This will
further help them save money.
3.2 Silk Weavers Majority of Silk Handlooms are in Kollegal (mainly in Manjunath Nagar, Hanur and Kanchihalli villages),
Chamrajnagar District of Karnataka. There are totally about 175 looms that produce silk sarees and silk
to cotton sarees using fly shuttle and 25 looms produce plain silk dress-material. The survey was
conducted in Hanur village, Kollegal, Chamrajnagar District.
Silk Weavers weave silk sarees, blouses or dhotis and they are typically done in households; an age-old
profession under immense decline. Many weavers interviewed mentioned that this might be the last
generation to do weaving. This is majorly because these are hand operated handlooms which require
dedicated effort of two people to weave a saree, for a relatively small daily wage. The economics in
other professions seems lucrative than weaving.
Figure 6 – Silk Weaving Process Diagram
Silk theads Materials procured
Fixing up silk threads
to handlooms
Weaving process
• Sarees
• Dhothis Final
product
7
Figure 7 - Weaving Process
Each Silk Weaver in Kollegal gets orders independently but remains
affiliated to an association called Sri Chowdeshwari Nekarara
Sahakari Sangha. There are 18 silk weavers in Hanur and 8 in
neighboring RS Doddi. Although there is another society called Kollegal Weavers Society present to aid
weavers, it has not built the confidence from the weavers’ community. Their part in getting work for the
weaver seems minimal. Weavers instead rely on retail businesses in Tamil Nadu to give them work.
Business Model
Weavers get their silk threads from retailers, who provide them with silk threads and the required
design of the saree. Weavers work for a fee to make the sarees and deliver the completed sarees back.
The orders for each weaver are usually between 10-15 sarees of same design and it requires a weaver
anywhere between 4 days to a week to weave them. They package them and send the product through
the local government bus to the retailers. The money is usually paid in advance at the rate of anywhere
between Rs. 800-1500/saree depending on the complexity of the design.
Energy Usage
Weavers’ working hours are usually from 6AM to 10PM. Their major requirement for power is focus
lighting. They use CFL lights and they have UPS to back up in the event of power loss which is common.
They have motors of ¼ HP motor to help them sort the threads for weaving. Once an order is placed,
they have to hire 5-6 people for a day’s work to prepare the “beam”. Another person is needed for a day
to prepare the handloom design for the saree. While one person prepares the saree, there is a need for
one more person throughout the process to help them reel the threads so that it fits into shuttles.
8
The major expenses are labor and power. Another expense incurred is the charge for the bus driver to
transport the saree to the entrepreneur in Tamil Nadu (about Rs. 50-Rs. 70). The average monthly
business expenditure break up and an example of monthly business expenditure versus savings are
shown in the graphs below.
Figure 8 (from left to right) Design Pattern and Thread feeder
0
1000
2000
3000
4000
5000
6000
7000
8000
Amount
7130
600 200
70
Other Expenses
Electricity bills
Beam & Labour
Saving
69%
23%
8%
Average Monthly Business Expenditure
Break Up
Beam & Labour
Electricity bills
Other Expenses
9
Scope of Intervention
The weavers would like to see a reduced power bill, which will help them increase their savings. There is
scope to automate some of their processes to increase productivity.
3.3 Jaggery Makers Jaggery making in Karnataka is mostly centered in Sirsi, Belgaum and Mandya districts. Jaggery is a
traditional un-centrifuged sugar consumed in dishes mainly in India and other Asian countries. It is made
of sugarcane juice or from date palm tree. Jaggery manufacturers where visited in Sirsi, Uttar Kannada
district and Kalenahalli, Mandya district.
Jaggery manufacturing is a family business, which means a family will have multiple sugarcane growers
who help each other in all processes right from sowing the seed to making jaggery. They pay for each
other’s work and it assures them of reliable labor. Farmers in Sirsi were part of Kadamba Marketing
Souharda Sahakari LTD.
Business Model
Jaggery Manufacturers are either:
a) Farmers who grow the sugarcane juice and prepare Jaggery in their field after the yield.
b) People who buy sugarcane from farmers and prepare Jaggery
with their equipments.
This document focuses on farmers as the possibility of intervention is
same irrespective of the 2 business models.
Farmers grow their crop for the whole year with labor assistance from
family members. The crop is ready for harvest in the months of
December/January. During harvesting they set up a furnace and rent a
motor for Rs. 500/day (inclusive of fuel expenses) to crush the sugarcane
into sugarcane juice. The sugarcane juice is boiled for some time with
some lemon added to it, and froth is removed actively from the boiling
kadai. This is stored in 25kg capacity containers. Typically with one kadai
the farmers fill 8-10 of these 25Kg containers a day. This is the yield from
a ¼ acre land, and takes a month to make the jaggery. They sell their
25kg containers at Rs. 1400-1500/container to either Kadamba society or to
other buyers.
Extraction of sugarcane juice
Juice conducted to heating process
Boiled extract then poured into containers
Figure 10 – Jaggery Making Process Diagram
10
Figure 11 - Kadai, Power Tiller with Diesel Engine, Jaggery Cans
Energy Usage
The energy source for the motors is usually diesel, which is part of the Rs. 500 per day rent package.
Typically, tractor engines are coupled with sugarcane crushers. They consume close to 6 liters of
diesel/day. This varies depending on the scale of production and appropriate motor used. These motors
sometimes have to be carried to the location and it would cost them around Rs. 1500 to get the motor
to the Jaggery making location. Their expenditure is distributed between labor, rent for equipment and
cost of wood to burn the furnace.
Figure 12 – Sugarcane Crusher
11
Given below are the typical breakup charts:
a) Farmers who grow the sugarcane and prepare Jaggery in their field after the yield
b) Vendors lending Equipment to the farmers for Jaggery preparation.
0
50000
100000
150000
200000
250000
300000
Amount
180000
87500
12500 19500
Yearly expenses
For Wood
Rent for Equipment
Labour
Savings
74%
10%
1%
15%
Average In Season Expenditure Break Up
Labor
Rent for Equipment
Wood to burn
Yearly Expenses
47% 53%
Average In Season Expenditure Break Up
Diesel cost
Transportation &Labour
0
5000
10000
15000
20000
25000
30000
Amount
5900
10800
12100
Transportation & Labour
Diesel cost
Savings
12
Scope of Intervention
The major scope of intervention, even though not evident in the numbers shown above, is in the
expenses for wood to burn. They burn a few quintals of wood every day to heat up the kadai to cook
sugarcane juice into Jaggery. There is a fair amount of illegal tree-cutting being done to get the wood
supply. There is an unknown amount of money being paid to government officials as kick-back but the
farmers weren’t ready to divulge any details and we got the numbers only for the wood that was legally
obtained. All of the farmers agreed they need innovation in that space, where they could heat up or at
least pre-heat the sugarcane juice before boiling.
3.4 Silk Reelers
Silk reeling is the process by which a number of cocoon braves are reeled together to produce a single
thread. This is achieved by unwinding filaments collectively from a group of cooked cocoons at one end
in a warm water bath and winding the resultant thread onto a fast moving reel. Raw silk reeling may be
classified by direct reeling method on a standard sized reel, indirect method of reeling on small reels,
and the transfer of reeled silk from small reels onto standard sized reels on a re-reeling machine. The
last technique is primarily applied in modern silk reeling processes.
Figure 13 – Cocoon Basin Connected Reelers
Siddalghatta is a major sericulture centre of Karnataka. Sericulture, reeling, twisting and related
activities help a large number of families earn their livelihood in this “silk town”. The town supplies silk
threads to industrial centers such as Surat, Kanchipuram and Mumbai. While there are 3,500 reeling
centers in the town and surrounding areas, there more than 1,000 twisting units. Most of these units
work as “home industry”, in which about 10,000 people are engaged directly.
13
Figure 14 – Silk Reeling Machines
There are a large numbers of families who have been practicing silk reeling over the past 30 to 40 years.
There are many processes involved in silk reeling. These processes need continuous monitoring and
hence labor plays a major role. They face issues here because this needs skilled labor, of which there is a
shortage. The power cuts in this region are for around 3-4 hrs per day on an average. Some units are run
on generators while many reelers are not equipped with generators for back up.
Central Silk Board has established Raw Silk Testing Centre at Siddalghatta in Chikballapur district,
Karnataka during the year 2004 – 2005. The office is located at Govt. Model Grain age Complex and is
functioning under the control of Director, Central Silk Technological Institute, Central Silk Board,
Bangalore.
Business Model
Reeling is the process of unwinding silk filaments from the cocoon and combining them together to
make a thread of raw silk. The reeling industry is predominantly a cottage-based one. The reelers buy
cocoons from government-regulated cocoon markets and produce raw silk yarn. As the filament of the
cocoon is too fine for commercial use, three to ten strands are usually reeled at a time to produce the
desired diameter of raw silk which is known as "reeled silk". The different processes involved are
winding, doubling and wheeling. After these processes the fine silk thread is sold to silk weavers. But
some reelers just borrow the cocoons from traders and after the reeling process the silk thread is given
Extraction of silk strand
from cocoons
Reeling of silk thread to
large spindles
Twisting of Silk strands
Doubling / winding
Re-reeling
14
back to them. These reelers only charge for the labor. On an average, each small scale reeler winds
around 80 to 100 kgs per month. They charge around Rs. 160 for reeling 1 kg of silk.
Energy source For heating of cocoons, mainly biomass is used. Apart from that electricity acts as a major source since
all the machines need continuous power supply for their functioning. There are different machines used
for different process. Few reelers use generators as back up. These generators run on diesel. The motor
specifications are as follows:
For winding process- ¼ HP motor are used.
For doubling and twisting process- 1 HP & 1.5 HP motors are used.
They run around 60 to 120 spindles using these motors. The generators used are of 6 to 10 HP
with 7.5KV TO 10 KV output.
Figure 16 – Motor, Diesel Generator
15
0
10000
20000
30000
40000
50000
60000
70000
Amount
14157
33568
14400
375
1500
Electricity bills
Maintenance
Diesel
Labor
Savings
Figure 17 - Twisting and doubling machines
The average monthly business expenditure break-up and an example of monthly business expenditure
versus savings are shown in the graphs below.
9%
59%
30%
2%
Average Monthly Business Expenditure
Break Up
Electricity bills
Labor
Diesel
Maintenance
16
Scope for intervention
Since the reelers use biomass for heating, it causes lot of pollution and some reelers also face health
issues. In order to fuel the heaters they do need large amounts of timber. Solar water heaters can be
used to bring the temperature of water to certain level, so that the amount of timber that is needed
gets reduced. Some reelers have already adopted this method. Another major concern is that they don’t
use standard sized motors for operations. Each reeler uses a different set of motors for the same
operation. A study can be initiated here to understand the mechanical work needed and the
appropriately sized energy efficient motors that can be chosen to perform these tasks.
Due to power cuts they run the machines using diesel generators which add to their expenses. Since the
silk board provides subsidy for almost everything from building to equipment, they are interested in
adopting solar technology. Their ideal working hours is 12 hours but they are short of 3 to 4 hours due
to power cuts, which can be provided if they adopt solar as a backup.
3.5 Tailors Our survey on tailoring livelihood was mainly carried out in Belgaum. There are many retail tailors who
take orders from educational institutions, factories and they also have their own retail shop for sales.
Some tailors also take orders from individual customers. These tailors have been undertaking tailoring
over the past 40 to 50 years.
These tailors charge for the labor work they perform. Some of the tailors hire laborers for their work.
Each person gets a specified amount, based on the number of garments they stitch on a daily basis.
Some of the retail tailors have registered themselves with Karnataka State Tailors Association. Since
their shops are located well inside the city, they hardly face any power shortage issues. But the power
bills do act as a burden which they want to reduce.
Cloth received Stitched as
per specification
Stitched cloth Returned to the customer
17
Figure 19 - Sewing machine, Button Pressing Machine
Business model
There are two business models:
The tailors take cloth material from dealers, stitch the garments and charge labor charges for
the work.
Some tailors who practice tailoring on a large scale, employ tailors for work and the stitched
garments are sold in their own retail stores.
Energy source
The main energy source to run these tailoring machines is grid electricity. They use motors of different
specifications for different types of tailoring requirements.
Figure 20 - Different Sewing Machine Motors
18
The average monthly business expenditure break up and an example of monthly business expenditure
versus savings are shown in the graphs below.
Names of the tailoring machine
Motors ( All single phase )
Specification
Keerthi, Sunil, Emel, Durby, Juki, Nagpal, Merit
Novel motor 1/12 HP
SNAXO 1/6 HP
Charu 1/12 HP
Juki 1/3 HP
Not Known TK 1/2 HP
72%
12% 6% 10%
Average Monthly Business Expenditure
Break Up
Labor
Rent
Electricity bills
Other Expenses
0
2000
4000
6000
8000
10000
12000
14000
16000
Amount (Rs.)
6,700
500 1,000
6,000
800
Example: Monthly Business Expenditure vs Savings
Other expenses
Labor
Rent
Electricity Bill
Savings for livelihood
19
Scope for intervention
Solar powered LED lighting and efficient motors could be looked at as the immediate points of
intervention.
3.6 Sugarcane vendors Sugarcane juice is the raw ingredient that sugar manufacturers’ process into the familiar granulated
white sugar sold as a sweetener. Through evaporation and distillation, most of the moisture is removed
from the raw liquid and the result is a crystalline powder we recognize assucrose or sugar. Because the
juice is naturally sweet, it can be sold directly as a fresh beverage without additional processing. Some
vendors add flavorful ingredients such as ginger, lime juice or mint leaves to make the drink even more
palatable.
The Initial data survey was carried in Belgaum and Kittur. There are many retail juice vendors across the
city.
Figure 21 - Sugarcane Juice Crushers
The retail juice vendors basically have two types’ crushers. The crusher which runs on kerosene is a
portable type wherein the vendor moves around the city and provides juice to the customers. The other
type of crusher runs on electricity which is placed in shops. These crushers can be handled by a single
person only. These vendors have been into this business from past 30 to 40 yrs. They do face power
issues to certain extent. Some of the vendors do have generators with them which they use it as a
backup.
20
Business model
Sugarcane is brought from the market. They are crushed
using sugarcane crushers and the extracted juice is sold to
the individual customers. Some vendors have chains of
stores across Karnataka; they have appointed employees in
each shop, who look after the business for them.
Energy source
Here based on the type of crushers used, the energy source
is defined. Primarily large numbers of vendors have
crushers which run on electricity. The motor specifications
are as follows
1. 3 HP motor, 3000 rpm, 2.2 kW, 3 phase current.
2. 1 HP motor, 3600 rpm, 2.8 kW, run on diesel.
Figure 23 - Motors of Sugarcane Crushers
Figure 22 – DG/Grid Switch
21
The average monthly business expenditure break up and an example of monthly business expenditure
vs. savings are shown in the graphs below.
a) Retail vendors who work out of shops
b) Street vendors who work with portable units.
3%
18%
21%
37%
21%
Average Monthly Business Expenditure
Break Up
Electricity bills
Fuel
Labor
Raw materials
Rent
0
10000
20000
30000
40000
50000
60000
Amount (Rs.)
11,500
1,500
18,000
10,000
10,000
9,000
Example: Monthly Business Expenditure vs
Savings
Fuel
Labor
Rent
Raw materials
Electricity Bill
Savings for livelihood
52% 33%
15%
Average Monthly Business Expenditure
Break Up
Raw Materials
Kerosene
Other Expenses
0
1000
2000
3000
4000
5000
6000
7000
8000
Amount
4500
1000
1560
440 Other expenses
Raw material
Kerosene
Savings
22
Scope for Intervention
Major portion of their income is spent on fuel. This can be reduced by looking into energy efficient
motor alternatives powered on decentralized renewable energy.
3.7 Channapatna Toy Making Channapatna is known as the “Toy Town” of Karnataka. It is a small city located 80 km south-west of
Bangalore, on Bangalore-Mysore state highway and has a legacy of toys which goes back to more than
200 years. Centuries ago Tipu Sultan invited artisans from Persia to train the locals of Channapatna. They
started by carving toys out of ivory initially then switched to rubber, cedar, and teak. The art has gone
global in the recent years and there has been a great demand of toys from the UK and The US.
s
Figure 23 – Toy Makers and their Products
This is a small scale industry. Some artisans work right outside their houses. But, the majority of them
work in shops where four to six people can work together.
23
Some manufacturing facilities develop entire products while others make product parts which get
assembled in other facilities.
Kalanagara
In this village, the government has constructed houses and workshops for the craftsmen. All the artisans
of Kalanagara are registered under Cauvery Emporium, a state government enterprise that sells regional
handicrafts.
Figure 24 –Artisan working on turning lathes in the Kalanagara Complex
The average monthly business expenditure break up and an example of monthly business expenditure
vs. savings are shown in the graphs below.
84%
7% 9%
Average Monthly Business Expenditure Break Up
Wood
Rent
Maintainence
0
1000
2000
3000
4000
5000
6000
Amount
4010
100 90
1000 Wood
Rent
Maintainence
Savings
24
Neelasandra
This is a village which has been assisting in the export of artifacts for many decades now. Out of 150
houses around 120 houses practice toy making. Here all the houses use hand driven type turning
machines. The main reason behind this is the acute shortage of power. They have only 4 hours of power
supply. The shifts toggle randomly between 6 am to 10 am in the morning or 2 pm to 6 pm in the
evening.
Figure 29 – Artisans working on Hand driven type turning tool
Business model
The toy makers get orders from local retail shops for specific artifacts and based on the order received
they go ahead with their work. They earn around Rs. 250 per day. They work around 8 to 10 hrs per day.
The average monthly business expenditure break up and an example of monthly business expenditure
vs. savings are shown in the graphs below.
25
80%
9% 11%
Average Monthly Business Expenditure
Break Up
Wood
Electricity for lighting
Maintainence
0
1000
2000
3000
4000
5000
6000
7000
Amount
5260
1000
150 90
Electricity
Maintainence
Wood
Savings
26
4 Conclusion
For most of the entrepreneurs interviewed, the expense on their energy bills was a major component of
overall business expenses, and a limiting factor for savings. For example, silk reelers spend about 26% of
their revenues on their energy bills and 18% in the case of sugarcane juice vendors, if they use fossil fuel
back up like diesel generators. In case they don’t use backup power sources, this percentage reduces,
but their revenues come down as well, as they get to be productive for only half or two-thirds the
amount of time than they’d wish to be. In contrast, an MNC or a large scale factory spends only about 1
to 5 percent of its revenues on energy bills (varies from industry to industry) and even lesser when it
incorporates energy efficiency measures! This difference is primarily due to two reasons. Firstly, a small
entrepreneur’s profit margins are obviously significantly lesser than that of a MNC/large factory. In fact,
he/she earns just enough to sustain him/herself and his/her family, whereas big businesses are able to
focus on profit maximization. Secondly, his/her dependence of back-up power such as diesel, petrol or
kerosene is a lot more due to larger power outages in the rural areas as compared to cities.
By bringing in energy efficiency (and backing the systems with renewable energy sources if it makes
sense to), the goal is to reduce these energy expenditures, which will benefit them immensely.
Following this study, the SELCO Foundation Technology and Design efforts have been oriented towards
conducting detailed energy audits for all of these livelihoods to understand the energy usage in more
detail. Tests for high energy efficient alternatives are under way in the Lab and a few field pilots have
begun. The idea is to execute these pilots to understand end-user behavior and their willingness to
switch to new unfamiliar technologies. Simultaneously, mechanisms for credit financing and relevant
Government schemes that can be made use of to ease the burden of these technology transitions are
being explored. There will also be a performance monitoring of the energy efficient systems once
installed to get end-user feedback and ultimately work out their financial and economic returns.
Based on these learnings, the larger plan is to come out with a Policy recommendations paper
suggesting the required changes in the present policies so that these micro entrepreneurs have more
conducive access to energy efficient technologies in the market, which will enable them to be more
productive and earn higher levels of income.
SELCO Foundation- POLICY GROUP #12, 15th Cross,6th Phase, J P Nagar Bangalore- 560078, India; +91(80)26630739 [email protected] www.selcofoundation.org
