Mainstreaming an unorganized industry: the case of Suguna poultry

Abstract

The Corporate Social Responsibility (CSR) framework is quite rich with its concepts like sustainability, mainstreaming, stakeholders and their inclusiveness, citizenship, etc. The debate in CSR is increasingly about making it a part of core business process rather than treating it as a compliance function. In this context, the business model of Suguna Poultry was studied and it was observed that it can help in understanding the deeper meanings of these concepts in a concrete way.

Suguna Poultry was started by two brothers, Soundararajan and Sundararajan with 200 birds 25 years back in Udumalpet, a small town in Tamil Nadu. After a lot of struggle and persistence, it scaled to reach a turnover of Rs.30,180 million in 2009, with presence in 11 states. The case is about how it managed to mesh its Business Model and Revenue Model with a Sustainable Development Model. The CSR theme is closely linked to their growth strategies and the entrepreneurs? basic philosophy towards business and stakeholders. The contribution of Suguna in the context of mainstreaming poultry industry, which belonged to unorganized sector in India are:

It converted a commodity market into a product market

It converted a neighbourhood market into a national market

It pioneered several process innovations which changed the character of the industry itself.

The business model is based on contract farming. It contributed mainly through (i) risk mitigation for the farmers which is their major bane and (ii) by providing integrated service which reduced the stages of intermediation and cost of transaction. Their process model emerges as a combination of (a) choice of appropriate technology, (b) extended organizational processes, and (c) value creating processes.

The CSR aspects that emerge from the Suguna case are:

Its Sustainable business model, which works for the benefit of the immediate as well as stakeholders at large. They achieved this through their entire value chain over a vast area.

Achieving CSR within a ‘for profit’ objective and a ‘commercial orientation’ rather than through ?charitable orientation. It offered a market relationship to farmers and not a benign or charitable relationship. This made the debt-ridden farmers self-confident entrepreneurs.

Embedding CSR concerns in their core business processes and in the value system of management. The promoters as well as managers closely identify themselves with the contract farmers.

Ensuring inclusive value chain model wherein all its stakeholders like growers, retailers, and customers are benefitted, and so one segment gains at the cost of another.