Fabindia is a brand that needs no advertisement. For over 47 years, the Delhi-based retail chain has been providing world-class handloom textiles. It has the unique distinction of maintaining its relationship with its rural suppliers. With a retail presence of 86 stores in 39 cities, the chain has about 22,000 artisans as its supplier base. This is all set to expand to 100,000 by 2010.
The way the entire system operates is the most interesting part. The mastermind behind the entire plan is the Managing Director of the company William Bissell. Small-scale weavers and artisans are brought under the ambit of a corporate entity, which is called Supplier Region Companies (SRCs), in which they hold shares. There are currently 17 SRCs that are operational throughout India. Matters such as quality control and timely production, together with the basics balance sheet, profit and loss account, dividend, and change of auditor are impressed into the minds of the artisans by the directors.
The artisans and the weavers who know of no other source of income, other than the wages paid to them daily now have a giant leap in their income by becoming the shareholders of a company. The operations of the SRCs are currently managed by The Artisans Microfinance Limited (AFML), which is allowed to have 49 percent of the equity. While the artisans hold 26 percent shares, 10 percent are held by the employees. There is a huge potential of pooling of funds since the rest 10 percent can be held by venture capitalists and outside investors. The authorised capital of an SRC, whose board has one or two artisan-directors, ranges from Rs 40 lakh to Rs 1 crore.
This successful story could ideally be replicated in the agricultural sector. Our farmers are facing problems similar to the artisans in terms of poverty, low standard of living and lack of capital for investment in their fields. But, before any serious attempt is made, all the uncertainties regarding the replication has to be taken into account.
References: Business Today and Business Line, April 15 2007.
Avinash,
PGPABM-I
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7 comments:
Well, indeed a good article, that u have posted. Some companies are giving thought to this concept in agri sector too, prmarily the agri-produce/output processing companies. But none till date has given a modus-operandi for replicating this in agri. Certain questions related to operationalising this concept remain unanswered - mainly those related to resource allocation, utilization, consensus on issues like marketing & monetary realization apart from the other major uncontrollable factor - weather. In my opinion, this is going to be a sure success in agri sector provided it is operationalized in better way and on a large scale.
The model as such is very difficult to replicate in Agri sector itself as the sector itself is very diverse and the supply chain integration can be done for a particular enterprise but taking into consideration the different kind of intricacies in each crop from production to processing , the model will be very complex. secondly, the generation of funds from outside is very cumbersome due to high risk factor.Formation of cooperatives seems easy as on papers but till date in India very few of them have been noticed which are dealing in agricultural crops. A few of them existing play safe by selling to the govt regulated markets as private players also are not willing to take the risk associated with the backward integration and seasonal variations. May be this model can be successful for B2B ventures as the quantity involved is very high like that of WALMART BHARTI UPCOMING VENTURE and it can also be extended to other allied agri business.
Avinash your “fab”ulous story reminds me of the Butterly AMUL story. . It is one of the best examples of co-operative achievement. The operation flood which bought this unique Amul pattern has made India the largest producer of milk and milk products in the world.This wonderful model for rural development has spurred the White revolution of india.
Now we need to replicate this ideally for Rainbow revolution. BUT “Can we really achieve this?”
Great job Avinash, Fabindia’s work is truly appreciable, in the tiny village of Chanderi , Ashoknagar district of Madhya Pradesh, there is little relief from the scorching summer heat as the temperature shoots to 45 deg. Celsius. Rains are scanty. There is shortage of water, with daily tankers meeting the local people's meagre needs. The local population, which includes 1,000-odd weavers, could still have coped, but the mortal blow is looming in the form of disappearing demand for their cherished fabric, chanderi. Yet, in the face of impending doom, there is an air of hope, anticipation and excitement in this sleepy little village, as 455 weaver families are poised to become owners of shares in a community-owned company, a concept totally alien to all except the few educated youths here. That way has been paved by Fabindia, a retail outfit that has grown from one store in the mid 1990s to 85! Dabbling in fabric, apparel, handicraft and other products, it began an experiment with community-owned companies nine years ago in an attempt to include artisans in the wealth creation process.
True Shikha Rainbow Revolution or the GYOR is the name of another revolution that aims at making the availability and consumption of vegetables and fruits. Green, yellow, orange and red vegetables and fruits need to made part of the daily diet. But the paradox is shown a study conducted by National Nutrition Monitoring Bureau has implied that 90 per cent of children are anaemic thus making them vulnerable to infections. Tough times are coming ahead!!!
Thanks for all the comments. I agree that the success of the Fabindia model cannot ensure an outright success in agriculture, if applied as such. There has to be some customization, since agriculture works under the premise of weather (as "anonymous" mentioned). I think the challenge is before techno managers like us to devise a solution. The advantage of bringing a corporate framework into the entire scheme of things is that the weavers in Fabindia's case need not depend on subsidies, which would have killed their "savviness".
Gr8 work .
Seems to be a very very good an initiative.
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