The Hindu : Tamil Nadu / Chennai News : Helping start-ups get off the ground

Online edition of India's National Newspaper
Friday, Feb 18, 2005

Tamil Nadu

Tamil Nadu - Chennai

Helping start-ups get off the ground

By M. Dinesh Varma

CHENNAI, FEB. 17. From the archetypal housewife to full-fledged entrepreneur, Amaravathi Latha has come a long way.

In 1992, she was wondering how to supplement the family's meagre income. Her husband's company was in the red and money was hard to come by for their daughter's schooling and mother-in-law's treatment.

A bank loan helped her set up a small tailoring unit at a rented location in Chetpet. By 1997, she had managed to repay the loan and was looking for funds and professional advice to diversify. Both came her way when she contacted the Bharatiya Yuva Shakti Trust, a non-profit arm of the Confederation of Indian Industry promoting small-scale entrepreneurship.

Today, Ms. Amaravathi is a confident entrepreneur employing five women and three men. Her success fetched her the Citigroup's award for "Best Entrepreneur" in the southern region this year; incidentally it is being celebrated as the United Nations International Year for Micro Credit.

She received the award from the Union Finance Minister, P. Chidambaram, at a function in New Delhi recently.

A success story

Ms. Amaravathi's is one of the many success stories scripted by the New Delhi-based BYST initiative, which was launched in Chennai in 1992. Its primary aim is to support youth aged 18-35 in setting up and managing an enterprise. BYST beneficiaries in the city today operate units ranging from desktop publishing (DTP) and food processing to garments and tinkering enterprises.

Focusing on lending for start-ups in manufacturing and services, BYST has so far helped 311 entrepreneurs, most of whom are doing well. The BYST gives seed capital up to a maximum of Rs.50,000 on a 12.24 per cent diminishing rate of interest. Project reports have to be passed by a scrutiny committee before the loan is released from New Delhi.

Unlike banks, the BYST does not insist on collateral but an applicant is required to furnish two references. The loan processing takes about 48 days.

"We have an excellent repayment rate perhaps because we play a motivational role from start-up to sale," said Y. Ajit Kumar of BYST.

"Unlike in the case of a regular bank loan, here the services extend beyond the transfer of money," said Ms. Amaravathi who continues to get expert inputs on improving and streamlining her business from the BYST's mentoring programme — where a panel of industry experts gives guidance to entrepreneurs.

She now plans to invest Rs. 10 lakhs in her unit, which already has two tailoring machines, a fashion maker, an overlock machine and a button kaja machine. Her clientele has grown to include the American International School and the Presidency Girls' HSS to whom she supplies uniforms.

"I did not know much about running a business in a professional manner or maintaining accounts," said M.R. Kamlesh, the winner of Citigroup's runner-up prize this year, who runs a tinkering and welding unit in the city.

BYST's first entrepreneur in the city set up his enterprise on a loan of Rs.14,000 and today supplies fabricated steel pieces ranging from cabinets for cooling systems to furniture.

Employing seven people with an annual turnover of around Rs. 8 lakhs on average, Mr. Kamlesh meets his mentor every month to evaluate the business and improve performance.

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