|KVIC BY THE NUMBERS
Rs 10,193 crore
Rs 3,398 crore
Number of products
Figures for 2002-03
Sharma, chairman of the Khadi and Village Industries Commission
(KVIC), has a pet peeve and it has to do with-you guessed it-his
pay packet. Last year, the 54-year-old pulled in a mere Rs 1.44
lakh in pay compared to Rs 215 lakh of Hindustan Lever Ltd's Chairman
M.S. Banga. Revealingly, Sharma's choice of benchmark is not incidental.
Although KVIC is a little-known government-owned enterprise, it
clocked Rs 10,193 crore in sales last year-Rs 293 crore more than
HLL-making it the biggest marketer of consumer products in the country.
So, will his employer reward Sharma with a 200-time increase in
pay? Will you grow wings tomorrow?
The fact remains that KVIC, set up in 1957
under an Act of Parliament to promote khadi and village industries,
is one of the fastest growing consumer marketers. It grew its revenues
14 per cent last year compared to, say, HLL's flat topline. It sells
goods ranging from soaps to shampoos to processed foods to leather
products to handmade paper, besides handloom and khadi, through
7,000-odd stores across the country. It has generated employment
for more than 66 lakh people so far and could do so for another
25 lakh by 2006. It has helped set up 6,000 cooperative institutions
and has funded 165,000 village entrepreneurs. And over the last
five years alone, it has invested Rs 5,000 crore in venture promotion.
Says Sharma, who has a doctorate in rural technology systems from
IIT Delhi and ran an NGO in Jharkhand before joining KVIC in 1998:
"In the next five years, we hope to double our sales to Rs
What drives this quiet cottage giant? The answer
lies in KVIC's unique organisational structure. Since it was set
up with the express purpose of promoting village industries, KVIC
operates like a huge incubator. First of all, it helps village entrepreneurs
by funding up to 30 per cent of their project cost (upto a maximum
of Rs 25 lakh). Then, it weighs in with technical support, helping
them source raw materials, set up their small factories or units,
and finally get their products across to the consumer. In the current
five-year plan (2002-07), KVIC will invest Rs 7,500 crore in promoting
village industries, add 1,000 outlets every year, even invest Rs
2,000 crore in-surprise-biotechnology.
Network of Entrepreneurs
In other words, what KVIC really does is to
create entrepreneurs. Like Sanjay Dutta and his wife Ruma. In 2001,
the duo approached KVIC for assistance to set up a village industry
unit for making herbal cosmetics. The Indian Overseas Bank gave
them a loan of Rs 1.2 lakh (30 per cent of it came from KVIC via
IOB) and the couple chipped in with Rs 1.5 lakh. Located down the
narrow lanes of Aali, a nondescript village in Badarpur near Delhi,
their Dev Blenders is a modest affair. In a 400 sq ft hall on the
ground floor of a dilapidated building, a dozen men and women-apparently
in their early 20s-busily work on personal herbal care products
ranging from soaps to lotions to face cream. In the first year,
the Duttas totted up Rs 7 lakh in sales, but last year they more
than tripled it to Rs 23 lakh.
|Yusuf Meherally Centre:
It offers employment to more than 100 artisans and boasts a
turnover of Rs 42 lakh
Initially the Duttas got marketing support from
KVIC, whose outlets in Delhi bought about 60 per cent of their production.
The remaining was sold to ethnic stores like Eicher's Good Earth.
But early this year, the husband-and-wife team attended an export
fair at Delhi's Pragati Maidan and received some enquiries from
buyers in the UK and Spain. Buoyed by Rs 4 lakh of orders, the Duttas
are now betting big on exports. "Our products have passed stringent
tests for toxicity in the labs of the importing countries,"
says the husband.
There's more. London-based retailer Selfridges
has initiated talks with Dev Blenders for sourcing herbal products,
while a few other buyers have also approached it for contract manufacture
of herbal products, which would be branded and sold. "Frankly
speaking, we are not able to meet the demand. It takes about 10-15
days to execute the orders," says Deepak Bali, Dutta's partner
in the venture. Which is why the unit is planning to increase its
capacity of 1,000 soaps (125 grams a piece) a day to 2,500 pieces.
All this will boost the topline to an expected Rs 40 lakh this year
and Rs 1 crore by 2006.
Dutta is not wary of competition in herbal
cosmetics from big players like Marico Industries and Shahnaz Husain.
"Our USP is genuine and hand-made herbal products, and there
is a market for it." In fact, Dev Blenders has all of just
one machine-an emulsifier to make creams, and it cost only Rs 20,000.
The rest of the work, including manufacturing and packaging, is
done manually. "The government wants to promote units such
as ours since it generates local employment and keeps villagers
from migrating to cities," says Dutta.
One such man who stayed on in his village and
hit the big times is Salim Kagzi. Now 72 years old, Kagzi set up
a handmade paper unit in 1965, but the big breakthrough came about
only in 1992, when he was invited by UNIDO to attend a fair for
ethnic products in New York. The exposure was huge and Kagzi-named
so because he belongs to a community that for centuries has hand
made paper-started getting big orders from abroad. That year, he
approached KVIC for a loan to ramp up his operations and hasn't
looked back since. His Salim Papers' turnover has soared from Rs
32 lakh to Rs 12 crore.
Kagzi's story doesn't come as a surprise to
Bharat Deep Vadhera. Till five years ago, the 44-year-old was a
company secretary at a handicrafts company. But on the advice from
some friends in Spain, Vadhera set up Ethnic Overseas in Noida,
near Delhi, to export ethnic furniture and handicrafts. As recent
as last year, all that Vadhera did was to buy and export. But in
February 2002, he approached KVIC to help set up a manufacturing
unit. Today, it makes wooden and iron furniture and also refurbishes
colonial furniture for export to the UK and Spain. Vadhera also
sources all of his handicraft requirements (mainly made of glass,
brass and beads) from a village near Dadri in Uttar Pradesh. Says
Vadhera: "KVIC offers me direct access to villages and to the
right artisans." Vadhera's unit has almost doubled sales to
Rs 1.50 crore since 2000-01.
|Sanjay and Ruma Dutta/Founders/Dev
Two years ago, the Duttas approached KVIC to set up a village
unit. Today, it rakes in Rs 23 lakh in
Goodness For Goodness' Sake
However, it's not just individual entrepreneurs
that KVIC has promoted. Charitable institutions and societies figure
on its list, too. In 1989, when Deepak Tyagi passed out of IMT Ghaziabad
after his MBA, he was 23 and an idealistic. Instead of joining his
family's engineering business, Tyagi decided to set up a charitable
trust Sushila Gramodhyog (Sushila is his mother's name) and got
it registered as an institution under KVIC. The initial capital
of Rs 1 lakh came from KVIC, while the family contributed 900-square
yards of land. The society is now one of the largest manufacturers
of khadi textiles in North India, with expected revenues of Rs 11
crore this year. More than half its sales are accounted for by supplies
to government agencies like the Border Security Force and the Indian
army, and the rest is sold through outlets owned by the society.
It provides employment to some 3,000 spinners and 200 weavers, who
earn about Rs 1,500-Rs 3,000 a month. "I wanted to do some
good work," says Tyagi.
And so did contemporaries of freedom fighter
Yusuf Meherally like Dr G.G. Parekh, S.T. Parekh, and Madhu Dandavate,
among others, who set up the Yusuf Meherally Centre near the Karnala
Bird Sanctuary in Maharashtra's Raigad district. Founded in 1961
as a charitable institution, the centre makes products ranging from
edible oils to soaps to pottery to baked products. And some of the
locally popular brands of soaps like Kutir, Sandal, and Sarvodaya
are sold through KVIC outlets. Last year, the centre clocked Rs
42.17 lakh in revenue, which is growing at 12 per cent annually.
But setting up a unit under KVIC doesn't mean
it's all smooth sailing thereafter. For instance, Adarsh Gram Vikas
Udyog, set up in 1999 in Raigad district of Maharashtra, touched
a turnover of Rs 3 crore in a matter of two years on the back of
government purchases, but when that dried up, its turnover plunged
to Rs 82 lakh in 2002. The saving grace was a carbolic soap brand
Parivar, which fetched Rs 44 lakh of the turnover.
That depending on government sales alone could
spell disaster is a lesson Chingleput Sarvodaya Sangh, a leading
silk sari manufacturer in Kancheepuram, learnt the hard way. The
Sangh has two silk producing centres and its saris are sold through
KVIC outlets. But it is now facing stiff competition and declining
customers. Says its Secretary, R. Ravikumar: "We have to be
aggressive in marketing. If we do not meet targets we will perish."
A big reason why the Sangh is facing a cash crunch is state government
dues: Rs 40 crore at last count.
In part to prevent such problems, KVIC recently
set up a marketing unit, Confederation for Promotion of Khadi &
Village Industries (CPKVI), which will do its bit to find buyers.
"The CPKVI has already procured orders worth Rs 18 crore from
the government this year for shoes, honey, pickles, soaps, leather
items and khadi textiles. This will be passed on to various societies
and village industry units," informs Tyagi, who is also the
Secretary of CPKVI. Going by his own experience, Tyagi reckons that
for aggressive entrepreneurs, KVIC offers tremendous potential.
And if Sharma manages to rope in more and more entrepreneurs under
the KVIC banner, he may well continue to lead giant private sector
marketers like HLL. As for his pay cheque...well, that's another