• Social Entrepreneur

More than halfway through her course in product design at National Institute of Design, in 1986, Neelam Chhiber suddenly discovered that her work was being increasingly influenced by western sensibilities. The thought disturbed her, because Chhiber was keen on retaining her Indian aesthetics in her work.

She took up a craft project to understand the inherent differences between Indian and western designs. “I found that in the west form follows function, while Indian aesthetics tend to be ostentatious as we have an eye for complexity,” explains Chhiber. But this was just one tiny detail in the realm of things she unearthed while working with craftsmen.

She also found that manufacturing hubs had shifted to urban centers, leaving rural folk poor and isolated. Chhiber decided to address this discrepancy. In the current scenario, estimates showed her that India has a population of about 40 million artisans and craftsmen which made it a good reason for Chhiber to set up Industree Crafts as a hybrid social enterprise, with distinct for-profit and non-profit wings, seeking to help rural artisans take their produce to urban markets.

Along with social investor Gita Ram and co-founder Poonam Bir Kasturi, Chhiber set up the company as a private limited firm in 1994, selling contemporary products, mainly home accessories, designed by them but made in villages. They worked through established NGOs and self-help groups, sold through Industree-branded stores, shop-in shops as well as exports to over 26 countries in Europe and the U.S. The company ventured to Latin American shores much later, in 2000. The initial years, as with any startup, were tough and the venture did not make any profits for the first five-six years.

Kasturi left the firm in 1999, and 2000 was a turning point for Industree as this period was crucial to Chhiber’s understanding of building a social enterprise. She realized that while a for-profit model helped them survive, it was not enough to provide artisans adequate training and manufacturing support to produce superior quality products.

The Industree Foundation was thus set up as Industree’s non-profit wing in August 2000 to access public funds. It worked with the office of Development Commissioner Handicrafts as a design consultancy firm, through NGOs, which would pitch to government for projects. It aimed to offer craft training, small enterprise skills development, and technical assistance to rural artisan producer groups.

During this phase Chhiber found that once the training program was completed, artisans were not able to produce any orders placed, because they did not have the infrastructure to produce on such scales. Moreover, each organization had its own aim which was not necessarily aligned to Industree’s goal of impacting livelihoods.

Cracking the system of rural sourcing, therefore, was not an easy task and Chhiber took the next 13 years to understand it. She attended a course by American NGO Social Impact, which helped clear her thought process. “I had never considered scale, but with this course I realized that in order to create social impact you need scale,” she says.

Chhiber saw a simple connection to achieve this. Industree needed to scale its retail markets, which in turn was possible only through increased production-ownership. “Three years ago we realized that the production model was not going to be factories in villages but production-ownership,” she says. In 2007, Chhiber adopted a clear-cut strategy to scale the model—scale up in domestic markets, incubate the producer-owned entities, open retail stores, and also work on a backward integrated value chain.

The social enterprise has been clear about its strategy to promote producer-owned groups and not single artisans. This has seen the income of producer-incubated units increase by 30 percent. While the lowermost artisan (trainee) in a group can earn Rs.3,000 a month, a leader can earn up to Rs.20,000 at Industree. The firm gives loans of Rs.15,000 per person to each group sourced from social microfinance organization in Chennai Rangde.org.

From a consumer perspective Chhiber saw most of India’s largest retail home brands were importing container loads of furniture and home accessories which could easily be produced here. Alongside, at export fairs she saw Indian exporters working with Indian artisans exporting products worth Rs.17,000 crore to several countries.

According to estimates by economists, organized retail in India touched Rs.1,16,700 crore in 2007-’08, and was estimated to quadruple by 2010. “For demand we are importing while suppliers want to export. Why the mismatch?” she asks. Chhiber felt connecting supply and demand in a linear way was a good answer to this, possible through a brand that would create a new market which would work towards increasing production.

But proficiency in large scale retail expansion required an experienced professional and who better than Indian retailing giant, Future Group? Industree thus sold 43 percent to Future Group for Rs.7 crore. Raminder Rekhi was brought in as CEO to aid retail expansion. Last year it diluted another 10 percent, totaling Future Group’s stake in the company to 53 percent now.

Twelve percent of shares have also been set aside in a mutual trust for producers to buy at par, once the methodology of doing so is formalized. The investment enabled the launch of a multi-brand store, Mother Earth, in 2009 in Bengaluru, stocking products under three verticals: food, fashion and lifestyle. Mother Earth has a sales target of Rs.130 crore by 2014 propelled by the launch of 40 stores across metros and tier I and tier II cities during the same time frame.

Chhiber is now raising investment for Industree Transform, a new supply chain company, which would export too. The new firm will have investment from Industree (retail), two social investors and 24 percent of shares will be set aside for producers to buy at par. “We are in advanced talks with a social investment company in Washington affiliated to the World Bank, and are looking for the second,” mentions Chhiber.

Industree Transform, expected to be operational by September-October 2010, has a sales estimate of Rs.120 crore over the next five years. Chhiber’s conviction to scale and succeed in this field has come with many valuable lessons. Her biggest learning as a social entrepreneur? “You have to be flexible and engage with mainstream businesses to affect any social change,” she says.

Artisan Speak
P. Steen, a 32-year-old from Bengaluru, was working in a leather factory along with friend Rajendra, earning Rs.3,000-Rs.4,000 a month. When Rajendra heard of Industree’s one year training program, he encouraged Steen to attend it as well.

In 2009, Rajendra developed a self-help group comprising 40 people, Ashraya & Samanvaya, in the city as two craft units supplying goods to Mother Earth. Today, he is the group leader while Steen is secretary, earning about Rs.7,000 a month.

“My earlier job gave me no satisfaction, and payments would get delayed too,” says Steen. “Today I am happier, the job is more interesting and Mother Earth gives us a good turnover of orders,” he mentions. These SHGs operate as independent entities today and produce gift boxes, laundry bins, bags, cushion covers for the store and caters to its own set of corporate clients too.

©Entrepreneur August 2010

Tags:
Artisans, Gita Ram, Industree, Neelam Chhiber, Poonam Bir Kasturi, social investor