Key Initiatives and Innovations

To help members establish themselves on a firm footing, and conduct operations profitably and smoothly, VAPCOL has undertaken a number of measures and innovative mechanisms:

Access to working capital

VAPCOL has accessed a working-capital credit limit of Rs 50 million from NABARD under its Umbrella Programme for Natural Resource Management (UPNRM). The amount availed (Rs 1.95-Rs 3.50 million annually so far) is loaned further to members, for procurement of cashew nuts from farmers in their area. While VAPCOL gets the loan at an interest rate of 10% per annum, members get it at the rate of 12%.

Equitable profit distribution across a multiple commodity base

To ensure that members get an equitable share in profit, according to the variable profits obtained from sale of different commodities, VAPCOL maintains commodity-wise partitioned records of procurement and sale. This enables fair and transparent calculation of commodity-wise profitability, and distribution of commodity-wise patronage bonus to members.

Equitable profit sharing among members at different stage in the value chain

Procurement of semi-processed produce by VAPCOL from its members at different stages in the value chain generates profits at VAPCOL in inverse proportion to the value of procurement. Hence, VAPCOL introduced a more equitable system of calculating patronage bonus on the basis of a "rectified value" of procurement linked to profit accrual at VAPCOL.

Mechanism for managing assets given to unregistered members

An innovative mechanism has been created for proper use of assets, such as machinery and implements, acquired for the benefit of unregistered members, through grants received by BAIF or its associate organizations. The assets and grants were transferred to VAPCOL's account, with the grant (value of assets) treated as the unregistered members' equity contribution. As this contribution could not be treated on par with paid-up equity, a category of Class B shares was created. Holders of these shares are entitled to dividend at a fixed percentage (1%). Beneficiary members were trained to manage and generate income by hiring out the machinery or implements. The members pay VAPCOL a service fee for use of the assets. The fee compensates for the depreciation loss VAPCOL suffers on account of the assets being on its books. Thus, a win-win situation has been legitimately created for all the entities concerned.

Marketing Initiatives

A number of initiatives are explored to expand market reach
  • Use of kiosks at VAPCOL branch offices to sell products directly to customers.
  • Sales promotion through announcements on FM radio channels, and temporary (seasonal) call centers.
  • Appointment of exclusive distributors for the Vrindavan brand.
  • Sale of corporate gift hampers in partnership with fair trade organizations; to use the fair trade tag, members underwent a rigorous certification process.
  • Market linkages with online retail and large-format retail stores.

Future Directions

Measures and initiatives planned to strengthen the financial base of VAPCOL and its members include:
  • Expanding the business portfolio of members (members in South Gujarat are already engaged in a range of business activities such as sale of cattle feed and construction materials; renting of godowns; aggregation and sale of grains and vegetables; sale of vermicompost, etc.).
  • Using technology to reduce the complexity of operations, improve efficiencies and manage more output.
  • Exploring new markets.
  • Fine-tuning business strategies and plans.
  • Obtaining expert inputs on financial systems and marketing.
  • Exploring new avenues to access finance, to support above plans.

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