A truly “fab”ulous story..........

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