Why an RSS affiliate is building Kerala’s largest supermarket chain

Good Morning! A big hello to readers who signed up this week. This is The Signal’s weekend edition. Our story today shows how one of the most socially and politically influential organisations in the country is, well, selling groceries! It’s not a trifling matter, we guarantee. Also in today’s edition: the best of reads from the week. Happy weekend reading.

MS Vinod is trying to get the first floor of the Samrudhi supermarket ready by October. Once the work is done, the supermarket in central Kerala’s temple town of Ettumanoor plans to open a kitchenware, and later, a consumer durables section. It had opened in February with groceries and consumer goods.

“In the final phase, we will add a coffee shop and bakery,’’ Vinod, the secretary of Ettumanoor Social Service Society (ESSS), which runs the supermarket, told The Intersection.

The 9,000-square feet store is quite unremarkable and resembles any other large format retail outlet that sells groceries, vegetables, and other household stuff. It is, however, the ownership and strategic objective that sets it apart. Samrudhi is a chain of supermarkets started under the patronage of Sahakar Bharati, an influential affiliate of the Rashtriya Swayamsevak Sangh (RSS), the ideological mentor of the Bharatiya Janata Party (BJP).

In February, Sahakar Bharati had demanded a separate ministry for the co-operative sector. Less than five months later, the Union government obliged. The government said the ministry would “deepen co-operatives as a true people-based movement reaching up to the grassroots”. 

The Kerala retail chain, which currently has 38 stores, is part of a broader strategy — business and socio-political — to connect and consolidate producers, farmers, traders, and consumers who are Hindus. Originally established to market homemade products of self-help groups (SHGs), the strategic direction changed in the wake of the protest against the Citizenship Amendment Act. Under the Sahakar Bharati umbrella, three organisations — SHGs run by Akshayasree Mission, Hindu Economic Forum (HEF), and Bharat Agro Processing and Marketing Co-operative (Bamco) — are spearheading the push.

If all goes according to plan, Sahakar Bharati, the cooperative movement founded by Prime Minister Narendra Modi’s mentor, Laxmanrao Inamdar, will oversee 1,500 stores in five years in Kerala, more than four times the number of outlets of MarginFree, the largest retail supermarket chain in the state. To compare the scale of ambition, India’s largest grocery store chains Reliance Fresh had 797 stores, and Big Bazaar had 1,388 in 2020. 

Ownership

The ownership structure of Samrudhi stores varies according to location, says PR Muraleedharan, president of Akshayasree Mission state federation and vice president of Bamco, a farm products-processing, and marketing cooperative which also provides tourism and agriculture consultancy. 

At Ettumanoor, for instance, Vinod and 62 other local businessmen have pooled in capital to set up ESSS which owns the supermarket. At some other locations, such as Kothamangalam in the Ernakulam district, Akshayasree Mission SHG clusters have founded the store. A cluster of 10 SHGs with 20 members each can set up a store.

Depending on the size, each shop could cost between ₹1 crore and ₹2 crore. A contribution of ₹1 lakh from 200 members is enough to start a fairly large supermarket. The stores also function as the front-end for products made by the groups. A new one being set up in Thodupuzha in the Idukki district will be a limited liability company with hundreds of shareholders. Akshayasree Mission has 7,300 SHG units with a membership of 1,40,000.

“The idea is to build a well-knit community of Hindu businesspersons across the state,” says S Padmabhooshan, a member of HEF’s executive council and until recently general secretary of the organisation. HEF separately runs 16 supermarkets in the northern districts of Kannur, Kasaragod, and Kozhikode that are branded differently, such as Orange and Green Apple.

The forum has about 5,000 members, 80% of whom are businesspersons and the rest are professionals. Divided into local chapters, the organization holds weekly B2B networking meetings. “We try to solve various issues that our members have. It could be anything ranging from GST-related issues to financial assistance,” Padmabhooshan, who is moving into a national role, told The Intersection. Where large amounts of capital are required, HEF brings businesspersons together to set up joint ventures such as Samrudhi supermarkets. The forum is also grooming youngsters to become entrepreneurs instead of taking up jobs. “A young person may earn a few lakhs working for a company, but if he becomes an entrepreneur, he would earn much more and be able to provide jobs to many,” Padmabhooshan says.

Padmabhooshan is also the chairman of Spiceland Farmers, the farmer producer organisation (FPO) formed in Thodupuzha.

Watering the grassroots

Bamco, which is operating in Tamil Nadu, Karnataka, and Puducherry as well, is helping set up FPOs under a well-funded central scheme aimed at helping small and marginal farmers with capital and market linkages. Begun last year with a budgetary allocation of ₹6,865 crore, the centre hopes to set up 10,000 FPOs in the next five years. Bamco is a CBBO or Cluster-Based Business Organisation under the scheme.

The government would pay each FPO ₹18 lakh in the first three years to scope out feasibility and prepare a plan. Each FPO can also get up to ₹15 lakh capital support as a grant. Bamco has received approval to start 20 FPOs so far, including one in Puducherry, three in Tamil Nadu, four in Karnataka, and a dozen in Kerala.

Economic strength = political clout

Since mobilization is at the core of the cooperative movement, it has been a hotbed of politics across India, including the sugar co-operatives of Maharashtra, milk co-operatives of Gujarat, and co-operative banks of Kerala.

Tamil Nadu and Kerala are the frontier states for the Bharatiya Janata Party (BJP). Despite its strong presence in the state, it has managed to win only one seat in the Kerala legislative assembly in its history. In the Sangh Parivar’s assessment, one reason why it has had a limited impact on the state’s politics is a lack of influential businesspersons in its camp.

A shareholder of one of the Samrudhi stores, who did not want to be named, told The Intersection that she tries to shop from the store as much as possible. Although, she is not happy that it charges for home delivery and often takes time to stock up empty shelves. The Parivar hopes that each of these cooperative organisations will create network effects that will ultimately help draw customers like her and strengthen its political base. 

Business is not politics

Co-operation can be a powerful business instrument, but only if it follows the tenets of business. That seems to have escaped the planners at Sahakar Bharati in Kerala. There are murmurs that the supermarkets have not been getting the support they were promised. For instance, one of the key elements of the business plan was to have a hub-and-spoke model with centralised procurement. That has not happened, and each store has been left to fend for itself, a person involved with the running of one of the stores said.

Bamco’s Muraleedharan says his organization has delinked from the supermarket initiative and is solely focusing on farmer producer companies, and selling insurance and pensions.  

Many people who bought shares in these stores ideologically lean towards the RSS and the BJP, but they are businesspersons driven by the principles and logic of commerce. According to one businessman-shareholder, there is interference from people in the organization who do not understand business. So those planning new supermarkets are opting for a company structure for better local control.

ICYMI

Trump’s Capitol clasp: On January 6, the world watched in horror as Donald Trump supporters attacked the US Capitol. This cost his social media presence in addition to the US Presidency. In the book Peril, journalists Bob Woodward and Robert Costa detail Trump’s last attempts to hold on to power and the Capitol riots.

The (Ever)grande illusion: For years, real estate major Evergrande created an illusion of being financially sound. Now as the threat of default looms large, the skeletons are out of the closet. This report brings out the reality behind the firm’s debt-hiding tricks and how it managed to fool the markets.

Sober drinks: If you aren’t a drinker, sitting around bars sipping juice is an awkward experience. But that’s changing. A slew of non-alcoholic craft beers is now out in the market to cater to non-drinkers, and Connecticut’s Athletic Brewing Company is leading the way.

Couch’s silent expiry: Hippie travellers swore by it, so did budget travellers. Couchsurfing’s services were free and stay options were plenty. But a poor work culture, lack of vision, and user-reported crime pulled down its reputation. The 2020 plan to get paywalled sounded the death knell for its business.

Code-cracker Infy: In the heyday of the 1991 liberalisation, Indian IT was relatively unknown. That’s when NR Narayana Murthy made a risky bet to become an entrepreneur. This story gives a glimpse into the workings of Infosys and how it changed the image of the country’s technology sector.

FB scammer-traders: Small businesses relied on Facebook’s Marketplace to sell their products. But now it is a hub of criminal activity. A ProPublica investigation found that the platform is being used by fraudsters to sell fake items and spurious products. Facebook seems to be turning a blind eye.