The fabric of participative venture
Posted on January 21, 2011 | Author: Radhika P Nair | View 414
Rangsutra designs a unique model where artisans are entrepreneurs
Difficulty in accessing funding led Sumita Ghose to explore the idea of converting the co-operative unit that she operated,into a company.Set up in Rajasthan,the unit supplied apparel for women,men and children and also produced home furnishings and accessories for large retail chains.But converting this co-operative unit into a forprofit company was a challenge,more so as Ghose was clear that the artisans must also have a stake in the company.In 2006,Ghose set up Rangsutra Crafts India,a company that started out with a paid up capital of 50 lakh.1000 artisans put in 1,000 each for a quarter of the shares in the company.Ghose,social venture capital fund Aavishkaar,and Fabindias Artisans Microfinance hold the rest.
The companys products are sourced almost entirely by ethnic retail major FabIndia,a business that now has a turnover of 8 crore.
Though Rangsutra works with producer units,they function independently.We have strong design and market linkages through Fabindia.The designs are given by us and the units create the fabrics, says Ghose.One unit creates the fabric,while another does the embroidery and yet another comes out with the final output.
Ghose realised early on that the model would work only if there was economies of scale.With production scaling up and their main buyer Fabindia growing at a fast clip,Rangsutra broke even in 2009.
However,there have been many difficulties on the way,she recalls.The main challenge was to balance profitability with fair wages in a competitive environment.Also,a change in the mindset of the artisans was crucial,to create such an enterprise out of their work.
Megha Jindal,Aavishkaars senior investment manager,says they decided to support the venture because we were looking at nurturing a model that was inclusive and scaleable.She adds that Rangsutra has delivered on its promise.The company is clocking up around 8-9 crore in turnover.While the numbers are impressive,the real story is how Rangsutra has grown as an organisation,made strides in product development and has helped and engaged with artisans, says Jindal.
Smita Mankad,managing director of Artisans Microfinance,is confident about the companys growth prospects.The potential is great.They will continue product development and supplying products to Fabindia. But this dependence on Fabindia as the single biggest buyer is something the company wants to change.Aavishkaars Jindal says: One of the major opportunities for Rangsutra to explore in near future is diversifying its market base,especially on export side.Currently,more than 90% of its sales are made to FabIndia.
Mankad says that Fabindia does not expect producers to supply exclusively to them.As long as the designs are not Fabindias and they are not supplying to a direct competitor,a producer can sell to other buyers as well.
The answer for future growth is in expanding exports,which constitute 10% of the companys sales at present.Apart from exports,the company is also planning to get into organic clothing and food.They also want to expand their producer base and venture east,where they already have a presence in Assam.Ghose says that apparel remains their core product category and there is further scope for growth.The middle class in the country is more aware and the younger generation in particular is interested in the story behind the product they are buying.
With a plan to expand both its supply and buyer base,Rangsutra is aiming at a higher growth,which will translate into improved standards of living for its firstname.lastname@example.org