‘Khadi Focus’ plan was a hastily drafted document, & when i pointed the glaring lapses. Colleague got upset :-)

October 15, 2017

Khadi Focus Plan

Commission Cell – KVIC:

I have reviewed the document ‘Project Khadi Focus’, and i have the following observations , concerns & suggestions .

1. This is a supply-based document and does not discuss or factor “a consumption oriented” plan OR/ & efforts for “demand creation” or ‘New product lines’. All throughout the document, i searched for the consumption pattern and consumption trends over the past 2 -3 years and future projections, but I could not find the same . Such plans without any basis are bound to falter. A retail organization is based on the needs of the consumers and market dynamics, this document falls short on addressing the core issue of ‘consumption need gaps’ , ‘demand creation’ and ‘Competition analysis’. This should have been the starting point . So it is a manufacturing plan without a sales plan, which makes it incomplete
2. This document makes no references to the ‘total apparel or fabric market’ and the ‘trends in apparel industry’ or refer to any forecasts about the annual growth in the industry/ segment. I expected that a plan to boost sales should ideally have been based on a market research or study conducted by KVIC to arrive at the details. Whereas , some good reports are freely available in India and should have been referenced for this document , there is no such mention.
3. I did not find any mention, leave alone any convincing plan for addressing middle class family’s needs , youth and college going segment of the population; which will be a big contributor the boosting sales . Demographic segmentation is totally missing from this document , which is crucial for the consumption and growth of Khadi
4. SWOT ( Strengths, Weakness , Opportunity & Threats) analysis is missing for Khadi, and this makes this document totally relying on the support from the Hon’ble PM’s messages, and it is at best, a ‘wishful thinking’, lacking any planning rigour needed for massive organic growth
5. The serious lapses mentioned above makes this document questionable from the planning point of view. More so, since this document is based on the meeting on 23 August 2016 at the PMO, and this Khadi Focus was presented briefly to the commission in the form of a short power point presentation only on 26^th September 2017.  Prime facie, it looks like that more than a year has gone into preparation of a document,  which falls short on fundamentals of a business plan
6. Management summary (in common parlance is referred as Executive Summary) is way too long, and this makes it repetitive in the management summary & the main plan document. Ideally, this should have been 2 pages at max.
7. Page 2 para 3 & again on page 12 para 1 it has a typo. It must be ‘ Editions’ and not ‘Additions’ of ‘Mann Ki Baat’.
8. I did not find a plan to connect rural artisans to national / global markets / consumers which is the key in today’s connected ( online sales driven) world. Ideally, it should have mentioned our SWOT analysis of the tie up with Paytm etc. and our future course of action.
9. This document is weak on addressing profitability of artisans , logistics , visibility of Khadi , Quality of products and with no basis on the number of artisans needed to provide ‘gainful employment’ .
10. The numbers mentioned on page 4 don’t add up. With KIs turnover of 1065 crore handled by 3.2 lakh artisans , the revenue per artisan comes to Rs. 33,281.25 Moreover, this is the retail turnover , which means the profits are barely anything ( may be Rs.6000 per artisan annually @ 20 % margin at the producer level). Even the data on the same page , of 2313 institutions Which will make it like the crisis of existence for people involved in KVI unless we address the fundamental issue of sustainability of KIs
11. The paradigm shift mentioned on page 5 reads “Communities that works, the infrastructure that produces, and the markets that absorb the production’, but this is incomplete and ideally should have read “Artisan finds a gainful employment, robust infrastructure that produces quality products , and the markets that absorb the production, thereby leading to sustainable consumption and growth for Khadi’. Please remember , if the earnings of the artisans are not enough, we will have failed to address the sustainable growth model for KIs. Profit of rural artisans lies at the heart of this success story
12. Page 6 para 2: If you add 15 lakh people with additional looms to work whole time and considering the existing 3.2 lakh artisans , the Rs. 5000 crore turnover for KIs would mean that retail value of Rs. 27472.00 for each artisan ( this is the retail turnover and the earning per artisan will be in the range of Rs.5500 per year). This cannot be attractive to any worker in today’s time, and will kill the artisans and their families. Right now, farmers commit suicides , after some time, Khadi artisans will start committing suicides with such faulty planning .
13. Please refer your point on ‘Focus Strategy to increase Production on page 7. The document mentions main strategy is to increase Khadi Production. I think , this is wrongly placed and this validates the challenge I mentioned in point 1 . This document has failed to do the SWOT analysis and hence such a misplaced priority !!! Please address the issue I have raised in point 11 above before thinking of adding 15 lakh more artisans ( page 6) or adding more units ( page 7). Whereas , it is important to add more artisans and provide employment , but It cannot be done without have adequate ‘consumption markets’ and ‘gainful employment’ for people involved.
14. You need a transition plan for transformation and which is completely missing in this document . The numbers don’t add up
15. Page 6 gives an note on strategic focus and mentions four points . But what it mentions as strategies are in fact goals . I didn’t find the pathways leading to attain the goals like; how will you increase production , ensure national participation, develop community skill or invigorate market ( refer organogram on page 6).
16. Khadi Plaza as a policy must be reviewed given the financial pressures and the cost of setting the Khadi Plaza as discussed in the commission stands at Rs.6-10 crore. We need to rationally allocate resources. I am given to understand that Jaipur Plaza is a massive waste of resources due to wrong decisions. We cannot squander the government funds meant to create employment and income for the poor and the rural artisans. Khadi Plaza must come out after proper market assessment ( refer my inputs on franchise document sent to myself early 2017) . Also, the commission must deliberate this issue of setting up Khadi Plaza’s after assessing the contributions of the existing Khadi Plaza’s. We must focus on asset light models, where the future growth should come through franchises and MBOs ( Multi-brand outlets ) and SIS ( shop-in-shops) retail models
17. Page 8 para on PPPs: I am not sure if partnering with private companies to co-produce Khadi products will help us in the long run. May be , we will remain just a supplier of fabric and these companies will takeover the market of readymade Khadi products. I recall in my meeting dated 8^th June of the SFC, wherein , I made a specific request to the S&T Director ; ‘please pick up the Khadi products made by Raymonds and find how we can reach that level of quality inhouse’. The strength lies in competing with them and not allowing them to kill our retail products. As a member of the Commission , I firmly believe, that by relying too much on such tie ups , we are going to kill our retail customers and lose them to private brands and also, one day, these companies will find a way to circumvent our procurement, product differentiation and deal directly with the artisans thereby making KVIC organization irrelevant over the next few years. Our goal should be innovations from end to end ( weaving to retailing) and managing the entire value chain within the exclusive realm of KVIC.
18. Page 9 , para 1 : I am not convinced that MDAs will be sufficient / right mode to pay for the Rs.2011 crores with interest in five years ( page 20 last para). Please present the data on MDAs for the past two years.
19. Page 11. Data on 35 % population living in remote corner of the country is without a basis . If this document is referring to the rural population , the data is wrong , it is around 67 percent and not 35 %. Also, there is no definition of remote corner in this document.
20. Data presented in the Khadi Focus is inconsistent and confusing. On page 4, last para it mentions 137.49 lakh ( one crore thirty seven lakh) rural artisans employed by KVIs, and on page 11 it mentions 3.20 lakh micro-enterprises. Data sets used should be consistent and not confusing . I would like to see the basis for the data of 137.49 lakh rural artisans . Please provide the source of this data . When we are talking of Khadi Focus , we must only refer data pertaining to KIs.
21. Page 18 under marketing strategy: I cannot understand the term ‘trendy’. If it’s a new design , has there been any study of apparel retail formats ?
22. Page 18 under marketing strategy : the statement is contradictory and without any understanding of the production process and supply chain. If you are opening Khadi production to institutions and companies, it conveys your lack of understanding of the basic fact , that the individual artisans will not be able to compete with mass production from institutions and companies and will move out of the Khadi production. I didn’t find a justifiable reason for this misstep !! Would need to learn more about the reasoning behind . Please share the details and enlighten me
23. Logistics & supply chain improvements finds no mention , whereas a three fold increase will need drastic improvements in procurement and supply chain.

 

The structure of Khadi Focus document could have been as follows( in my view);

• Executive Summary – 1-2 page ( TORs, goals, recommendations. Please note that Executive Summary is normally 5-10 percent of the entire document)
• A paragraph on PMs vision / meeting with PMO – Goal
• Market estimates based on various forecasts/ reports for apparel / garment / fabrics for the next 3 years- data on the market , consumption trends , income of households and their expenditure on clothing
• In house market research conducted by KVIC on consumers expectations and market assessment and needs, along with competitor analysis
• Detailed sales, supply and profit analysis of tie-ups done till date like , ONGC / Railways / MOHFW/ Paytm etc.
• Off-take from Ritu Berri collection & Benefits from Raymonds tie up
• Target for sales
• How to make Khadi weaving an attractive profession, and Khadi an attractive apparel in keeping with the needs of the consumers
• How to convert non-khadi buyers into Khadi . No reference or mention about it
• Product differentiation strategy – this is critical to ward off ‘Me too’ products.
• Measures to strengthening and re-orienting the existing institutions and artisans
• State-wise / district wise plan for priority areas for Khadi development is missing . Neither there is any analysis of state specific SWOT analysis for planning .
• Measures to improve quality totally missing from the document , which is critical to sustaining customers and growth. I would have appreciated if there was a mention of initiatives for Quality Control / Quality Assurance
• Training needs has not been touched upon in this document
• Research and development and how to make Khadi ‘low maintenance’ . As of now , people have expressed concerns about Khadi being a ‘High maintenance’ office wear.
• Also, we need new product lines and this is not finding a mention in this document
• Outreach efforts
• Logistics & supply chain improvements
• Unconventional sales channels and plans – refer my detailed plan / note dated 02^nd April , 2017
• International sales
• Half- yearly / Quarterly plan on marketing & sales
• Break up of Rs.5000 crore retail sales into cost of manufacturing , cost of transportation , selling and break up of the associated cost and how we can add value in each step of the process would have given a robustness to this plan / document . Which is totally missing .
• You need a transition plan for transformation and which is completely missing in this document

The lack of relevant date sets in this document reminds me of my mail dated Dec 28, 2016 on data that I have asked for , and I can see its importance in planning

There is a need of ‘Khadi Connect’ program which includes outreach to schools and colleges , National Khadi Yatra etc.. Please refer my mail dated on Khadi Marketing Workshop early 2017

How about Khadi clusters setting up their own retail arm / channel in ‘Village Hats in every town or linking them to customers directly through the Khadi app which I have already initiated in June.

Mention of reducing drudgery is missing and occupational health is important and needs to be addressed, if we wish to engage more artisans in KIs and boost up sales

Such an important document should have been prepared in consultation with the members of KVIC and other stake holders, and after a proper study conducted by KVIC.  Every member of KVIC is handpicked by the Central Government based on specific skill-sets . But this brings me back to the two pager letter sent by our Member-South Zone in September on the way KVIC is being run without taking members views into decision making. Also, surprisingly, no market study was conducted ( it has not reference in this document) to arrive at a plan for attaining Rs.5000 crore in sales and it is shocking to see a document lacking any fundamental basis of reference to any data to arrive at the plan, to achieve the sales and that too, when it has taken a year to prepare this document .

But , I am sure that Hon’ble PMs call will itself be enough to boost the sales as long as we can cater to it !!!

My best wishes for success

Rajendra Pratap Gupta

Expert Member ( Marketing)

Khadi & Village Industries Commission &

Member, National Khadi & Village Industries Board