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Vision & Execution: The Making of a Homegrown Retail Giant

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India Brand Equity Foundation

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THE MAKING OF A HOMEGROWN RETAIL GIANT Tiny manufacturing units, supported by KVIC, form part of a large army of home grown enterprises which are giving Unilever India, a run for its money.
On the banks of Patalganga river, 70 kms away from Mumbai in Maharashtra, are a group of tiny village units producing soaps, detergents and edible oils. They are part of Adarsh Gram Vikas Udyog, a cooperative institution supported by Khadi and Village Industries Commission (www.kvic.org.in). About 1,500 kms away from Patalganga is Aali, a village on the Delhi-Faridabad border, where Dev Blenders, a unit that makes handmade soaps, shampoo and cosmetics, is located. These tiny manufacturing units, supported by KVIC, form part of a large army of home grown enterprises which are giving India's leading consumer products marketer, Hindustan Lever Ltd, a run for its money. Last year, KVIC became India's largest consumer goods marketer by recording a turnover of over US$ 2.2 billion. In the process it overtook India's largest multinational and consumer goods marketer Hindustan Lever. While Lever's topline has stayed static, KVIC's revenues have been growing 14 per cent. KVIC recently got into the more serious business of branding to extract more value and mileage for its supply chain. It introduced organic food brand desi ahaar (Hindi term for ethnic food) which has 20 odd items like basmati rice, natural sugar and tea. At another level, top Indian fashion designers like Rohit Bal, Malini Ramani and Jattin Kochhar have been roped in to produce chic khadi garments. Khadi Bhandar (a KVIC-owned outlet) in Delhi's swank Connaught Place now wears a new look thanks to design inputs provided by National Institute of Design (www.nid.edu), India's leading design school. The Delhi outlet is a superstore with separate sections for garments, furnishing, handicrafts, cosmetics, and food items, which clocks about US$ 1 million a year in sales Up, up and away: In five years, sales have doubled.
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KVIC is India's largest consumer goods marketer with turnover of over US$ 2.2 billion.

Khadi Bhandar in Delhi's swank Connaught Place now wears a new look thanks to design inputs provided by National Institute of Design.

1998-1999 1999-2000 2000-2001 2001-2000 2002-2003

Source: KVIC Annual Report

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India Brand Equity Foundation

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THE MAKING OF A HOMEGROWN RETAIL GIANT KVIC provides a subsidy of up to 30% of the project cost.
What makes KVIC tick? KVIC was set up in 1957 to act as a custodian of cooperative institutions and as an incubator of village industrial units. Today KVIC is a quasi-commercial organisation whose business practices hold many important lessons for other developing countries looking to promote enterprise and create jobs. The beauty of the KVIC business model is its simplicity. KVIC provides a subsidy of up to 30 per cent of the project cost, while the entrepreneur contributes the rest. The entrepreneur's share can come in as a low-interest loan from a nationalised bank, which provides funds on the condition that the unit is located in a KVIC-designated village. The commission also provides technical support, help source raw materials, and finally help market them to the end-consumer through its 7000 outlets. The model has worked astonishingly well over the years. While Hindustan Lever already has an existing contract manufacturing tie-up with the KVIC's Jharkhand unit for the production of soaps and detergents, several others like Marico Industries (www.maricoindia. com) and Godrej Consumer Products (www.godrejcp.com) are expected to forge tie-ups. Shopper's Stop (www.shoppersstop.com) a leading retail chain, has already begun sourcing handicraft and handloom products from KVIC's Gujarat unit. Another reason for KVIC's success is the built in flexibility. KVIC supports individuals to set up their own enterprises in rural areas, and gives them the freedom to sell not just to KVIC outlets but to others as well. For instance, Dev Blenders supplies soaps and cosmetics to the Khadi Bhandars in Connaught Place and Khan Market, while it also exports to UK and Spain. Khadi has so far helped 165,000 individual entrepreneurs like Dev Blenders to set up units across the country. KVIC is not just a successful commercial story. It is an important social phenomenon, and has created jobs in large numbers, which is the cornerstone of any successful co-operative movement. With a footprint spread in about 300000 villages, KVIC has some 6,000 co-operative institutions employing local men and women. Since its inception the commission has created jobs for 6.6 million people. In fact, even in an era when government and private sector jobs are

The commission also provides technical support, help source raw materials, and finally help market them to the endconsumer through its 7000 outlets.

Another reason for KVIC's success is the built- in flexibility. KVIC supports individuals to set up their own enterprises in rural areas, and gives them the freedom to sell not just to KVIC outlets but to others as well.

Khadi has so far helped 165,000 individual entrepreneurs set up units across the country.

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India Brand Equity Foundation

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THE MAKING OF A HOMEGROWN RETAIL GIANT With a footprint spread in about 300000 villages, KVIC has some 6,000 co-operative institutions employing local men and women.
both drying up, creating jobs has never been a problem for KVIC: last year, KVIC created 400,000 jobs and by 2006, it is planning to create an additional 2.5 million jobs. KVIC's transition from a village-based co-operative organisation to a savvy marketer is a fascinating experience. The commission has shown that it doesn't take private or foreign initiative to create success stories in India. All it needs is vision and execution.

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India Brand Equity Foundation

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The India Brand Equity Foundation is a public - private partnership between the Ministry of Commerce, Government of India and the Confederation of Indian Industry. The Foundation's primary objective is to build positive economic perceptions of India globally.

India Brand Equity Foundation

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