silk route
TRANSCRIPT
Silk Routexx9 March 2016
Silk industry
$4.3 billion
China $2.25bn India $1.09bn Others
Silk industry
Silk Garments Manufacturing Import in North America
ProductionIndia is the second largest producer of silk.
Opportunity #1 (Market Opportunity)Silk Industry Expects High Growth:
India is the largest importer of raw silk, despite being the second largest producer
• Local demand greatly exceeds supply.
Opportunity to improve exports • Work with Indian Silk Export Promotion Council (ISEPC)• New Products: Casual styling
Opportunity #2 (Operations Opportunity)Raw Materials are Readily Available:
Silk production in India has shown remarkable progress: • 11.8% growth last year• Raw silk imports will stop by 2022
Central Silk Board (CSB), Bangalore: • Research & Development, Training & IT initiatives • Seed Organisation/ HRD and • Quality Certification Systems
Ministry of Textiles, Govt. of India• To promote planned and harmonious growth of textiles by
making available adequate fibres to all sectors. • To promote technological upgradation for all types of textiles
including technical textiles, jute, silk, cotton and wool. • To promote skills of all textile workers, handloom weavers and
handicrafts artisans, creation of new employment opportunities and development of new designs to make these sectors economically sustainable.
• To ensure proper working environment and easy access to health care facilities and insurance cover to weavers and artisans to achieve better quality of life.
• To promote exports of all types of textiles and clothing and handicrafts and increase India’s share of world exports in these sectors.
Opportunity #3 (Partner Opportunity)Partner with Government and E-commerce:
Utilize government benefits• to secure sales• to secure high quality raw silk at good rates• for betterment of weavers and artisans quality of life
FlipKart Marketing through e-commerce.
Handloom Sector• Largest economic activity behind agriculture• Employs more than 43 lakh (4.3 million)
weavers and allied workers• Accounts for 15% of cloth production in the
country• 95% of world’s hand woven fabric comes from
India Strengths:• Uniqueness• Flexibility of production• Openness to innovations• Adaptability to the supplier’s requirement• Wealth of tradition
Monetary BreakdownCost of silk (raw material): ₹400 ($6.50)
Cost of weaving: • ₹200 ($3.50) • Manual labor 10 hrs
Sale price to trader: ₹800 ($13.50)
Retail price: ₹1,100 ($18.50)
Where do handloom weavers fit in?
Opportunity #4 (Social Opportunity)Improve Lives of the Poor:
• Most people working in the handloom sector earn less than $4• Living conditions are terrible• Lots of manual labor for small output
Looms• Traditional Handloom
• Physically straining• Slow going
• 6 yds / day
• Semi-automatic Handloom• Increased mechanical advantage• Operated by foot treadle or by hand (no
electricity required)• Can attach a motor, though it may be
considered a powerloom at that point• Increased ease of motion → Increased
productivity• 20 - 24 yds / day
• Upgrades• Government subsidies under NERTPS program
Govt. InitiativesPositive Initiatives from Government of India:
• Cluster approach• Marketing• Social welfare
National Handloom Development Programme
• Revival, Reform & Restructuring (RRR) package for the handloom sector
• Cluster Development Programme • Marketing Incentive• Yarn Supply Scheme
Problems• Inefficiency of technology• No stable demand• Shortage of capital to purchase raw materials or to maintain their
handlooms and weaving accessories• Transportation issues• Competition from powerloom and mill sector, changing consumer
preferences and alternative employment opportunities• Government initiatives have not reached the poor (lack of
communication)
What we do
We address the problems of unstable supply and demand, inefficient technology, and lack of information transference in the handloom sector. Our venture takes over the time-intensive process of finding, applying for, and implementing government schemes. We provide supply assurance, technology upgrades, and sales contracts that enable artisans to increase their productivity, and enable both artisans and middlemen to earn a higher, more stable wage and gain access to government benefits.
Purchase Raw Materials
Screen & Sample
Purchase Pre-owned Looms
Provide Maintenance
Priv
ate
Inve
stor
Cap
ital
Upgrade & Lease Production
Mobile Orders
Quality Control
Wholesale/ Retail
FlipKart
Profits Reinvested for
Expansion
Wages & Benefits
Government
Government
Government
Government
FlipKart
Our Process
Details• Central Location
• Open in a central location• Potential to create other branches (distribution and maintenance centers) in future
• Loom Ownership• We buy individual’s looms (they’re our assets) & upgrade them with the help of
the gov’t• 5-year rent-to-own program, where “payments” are a percentage of the sale price
• coincides with investor pay-off• Can choose to keep upgraded loom & exit the program OR re-up contract • We continue providing upgrades (with gov’t assistance) & maintenance
• Shipping & Distribution• India has a prolific postal service• We’ll undertake shipping and provide workers with shipping vouchers as situation
dictates• Expansion
• Larger regions -- more contracts (mechanical support, too)• Other fibers -- cotton, jute, wool• Better technology -- more upgrades, integration of solar power
Employees & ContractorsAll workers receive stable work and higher wages due to secure supply and sales channels.
Handloom artisans will be contract employees
• Better technology and higher wages improve working conditions• Education on available government programs for handloom weavers• Financial and mechanical support
Full-time employees will include mechanical support, investor relations, sales/quality control, supply chain, IT services, admin/c-suite
• Training and development• FTE Benefits
Investors/Partners• Government
• Industry Subsidies (RRR)• Supply assurance• Upgrade assistance• Marketing assistance
• National Handloom Development Programme
• Philanthropic Impact Investment Capital• Debt-financing
Returns• Payback on debt-financing with low interest• Social impact
Financials
Assumptions• Increasing productivity (saree supply) will not result in a significant
market price decrease• Handweavers want to work from home and will agree to the leasing
scheme• Current middlemen will help build connections in exchange for
stability• We can secure philanthropic impact investment capital
Measurement
Metrics:• Worker productivity• Percent of handweavers with advanced technology• Wages• Quality of output
Data Collection:• Government-assisted surveying• Relationships with contracted handweavers
Success• 5-year investor pay-off• If we have additional weavers, salespeople, and technicians who want to
come on-board
Thank You!Questions?