Crafting value for artisans

Crafting value for artisans

“For centuries, crafts have been an individual/family practice and not a community enterprise. Hence, there is limited growth in their productivity and better scope for the middleman or trader,” says Chhiber. Where Industree comes in is to bring these skilled individuals together under the framework of a group enterprise and thus, reap higher productivity on a group level. “Such groups will also have better access to working capital and raw material and this will help streamline their work,” she adds. According to a social audit done in 2007 by UK-based The Social Audit Network, for every Rs. 100 increase in Industree’s sales, artisans’ income went up by Rs. 58. “We were able to triple their income and move them up the value chain,” states Chhiber. Industree works with 3,000 artisans through its self-incubated groups, individual artisans, and through non-governmental organisations (NGO) and co-operative (co-op) societies.

According to a social audit done in 2007 by UK-based The Social Audit Network, for every Rs. 100 increase in Industree’s sales, artisans’ income went up by Rs. 58.

Turning to Mother Earth
Industree converted its retail brand name to Mother Earth from its eponymous name in 2008 when Future Ventures, the investment arm of the retail heavyweight Future Group, invested Rs. 10 crore. Mother Earth retails products such as clothes, accessories, home products and food. “We wanted to position the brand as a socially and environmentally sustainable one. Mother Earth seemed the apt name for it,” shares Chhiber. The investment helped scale up the social enterprise model. Future Group currently has more than 50 per cent stake in the brand. The company also received funding from US-based Grassroots Business Fund for US $1 million in 2011, which was used to strengthen its manufacturing arm and scale up its supply chain. Mother Earth now has seven self-owned stores across Tier I cities in India and hopes to open eight franchisees in the coming year. For fiscal 2011, the company reported a total income of Rs. 10.14 crore. It is now looking to register a turnover of Rs. 15 crore for fiscal 2012 and is targeting a turnover of Rs. 30 crore next fiscal. With that target, it also hopes to break even.

Snap Shot

Industree Crafts
Founders: Neelam Chhiber, Gita Ram
Year: 1994
Funding: Rs. 10 crore from Future Ventures in 2008 and US $1 million from Grassroots Business Fund in 2011
Target: Rs. 30 crore turnover in fiscal 2013

Taking root
A graduate of National Institute of Design, Chhiber worked as a consultant for various handicraft corporations such as Handicrafts and Handlooms Exports Corporation of India Ltd., UP Export Corporation, and Tamil Nadu State Handicraft Corporation among others, in designing products with artisan groups and helping market them. The idea of Industree came about when Chhiber was doing a study, funded by the Development Commissioner for Handicrafts, on stone crafts of India. During the course of the project, Chhiber met Gita Ram of Crafts Council of India and got discussing about the crafts sector. The idea was to set up a private company to design contemporary products with rural artisans and create a demand for them. The idea turned to reality with three initial shareholders including Chhiber and Ram, who each put in Rs. 20,000 and Ram loaned the company a further Rs. 12 lakh. The first Industree store was set up in 1996 in Bengaluru generating Rs. 3 lakh per month with the annual turnover for the first year being Rs. 36 lakh. The store continued until 2000, when it partnered with a design store to sell its merchandise. “We started exports in 2000 because retail was not booming back then,” say Chhiber. But by 2005, it returned to retail and the brand was re-launched and had three stores. With the artisans group being self-run, it requires loans to sustain the work. And to help the group repay those loans, Industree has to ensure regular orders which the erratic exports market alone could not guarantee. “Stores help create demand which goes back to these groups,” says Chhiber. In 2007, its turnover was Rs. 4 crore with equal measures of revenue coming in from exports, shop-in-shop sales and its own stores.

Facing challenges
Chhiber also joined the Social Impact International programme and US-based Global Social Benefit Incubator course, which taught her to build the company’s strategy and scale up. One of the major challenges Industree had to encounter was the fractured supply chain in the traditional crafts sector. “We first approached artisans through NGOs and co-op societies, but it took us 10 years to realise that working with other entities does not work. So, now we build our own production groups but they are owned by the producers. We simply handhold them,” says Chhiber. To strengthen the supply chain, artisans were teamed into self-help groups of 15 – 20 that would be recognised by financial institutions to avail loans. Industree had to steadily build the community group by group, give regular orders and link them to banks. “The biggest missing piece in the supply chain is working capital. We have tied up with Corporation Bank and are in the process of tying up with Yes Bank to facilitate working capital to these groups,” she adds.

Helping lives
In addition to its company’s ambitions to sustain the value created for artisans, in 2000, Industree set up ‘The Industree Foundation’ which is a non-profit organisation that has trained 10,000 artisans in 10 years. It serves as an implementation agency for government schemes in this sector and trains artisans through those schemes. It is currently in the process of training 7500 people through such a scheme. It also hopes to tie-up with the National Rural Livelihood Mission and is in discussions with the National Skill Development Corporation.

Industree has about 25 self-incubated groups consisting of 300 artisans (contributing to 30 per cent of its turnover) through its foundation. Besides, it also works with individual artisans and through NGOs and co-op societies that contribute another 30 per cent to its turnover. Many of them are concentrated in the south but there are programs running in Rajasthan, Bihar, Odisha, West Bengal and Uttar Pradesh through the foundation. Though Industree already buys from these regions through traders, it is also building its own supply chain. The producers also have shares in the company and hence, an ownership in the brand. About 10 per cent of the shares are placed in a mutually beneficial trust that artisans can access.

Weaving a path
Chhiber was recently bestowed as the winner of the 2011 Social Entrepreneur of the Year award by The Schwab Foundation for Social Entrepreneurship, a sister organisation of the World Economic Forum, for her contribution in helping artisans’ lives. “The award helps bring the sector into the limelight and the importance of traditional livelihoods, especially with increasing rural unemployment,” she says. And Chhiber wants to see Industree continuing to positively impact more lives of such artisans. By promoting it as a sustainable and modern lifestyle brand, she hopes to introduce personal care products soon. She is also working on building an e-commerce portal.

“We are looking at other avenues like wholesale business and distribution. Right now, exports contribute very marginally so we want to rebuild it. These new avenues should take us to a target of Rs. 100 crore in the next three years,” she concludes.


What next?

  • Looking at introducing a line of personal care products
  • Will soon set up an e-commerce portal
  • Rebuild its exports arm 
  • Diversify with wholesale and distribution businesses