BUSINESS PLAN FOR DEVELOPMENT OF NARASAPUR LACE CLUSTER

DIAGNOSTIC SURVEY:
1.0 INTRODUCTION: Lace is a fabric woven in an intricate manner with a stainless steel crochet that gives a special craft look. Most of the cases the women weave the laces in different manner with cotton/ other fabric yarn and a needle. This is an art of stitching lace threads to form door mats, decorative articles, bags etc. This traditional craft and has been practised in India for the last three to four centuries. The oldest centre, Jamnagar in Gujarat, has involved the womenfolk in this craft since the time of the Mughal Emperor Aurangzeb. This craft is also prevalent in the delta of the Godavari River. This forms the primary livelihood for poor rural folk in Narsapur area of East Godavari district of Andhra Pradesh. Many lace businessmen with business deals with Australia, UK & US have origins in Narsapur. The lace industry at Narsapur in Andhra Pradesh is famous world wide for over 300 kinds of designs which are made by the women of this region who are mainly from the fishing community. Their familiarity with net-making helps them with the crochet work. It was the Dutch and Portugese missionaries who introduced lace and crochet embroidery in both Tamil Nadu and Kerala.

Final Report: Business Plan for Development of Narasapur Lace Cluster

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As of 2001 India census, Narsapur had a population of 58,508. Males constitute 49% of the population and females 51%. Narsapur has an average literacy rate of 75%, higher than the national average of 59.5%: male literacy is 78%, and female literacy is 71%. In Narsapur, 11% of the population is under 6 years of age. Narsapur is famous for the crochet lace products. The cluster is having around 50 exporters who are exporting to various countries. The cluster is having around 2 lakh women artisans doing the lace work. The cluster is located in and around Narsapur, Andhra Pradesh, India, in various villages like Sitarmpiuram, Palkol, Venkatrayapalem, Antarvedi, Royapeta, Mogaltur, etc. The cluster is specialised in doing the lace works like dollies, furnishings, garments, tablemats, etc. The Crochet Lace cluster at Narsapur is an emerging cluster with good export potential employing more than 2 lakh women artisans. Out of total production 80% of production value is being exported, there is good potential to expand its market both overseas and in domestic markets. With a mission to develop this cluster and help the women artisans, Development Commisionarate, Small Scale Industries (DC-SSI), Ministry of SSI, Govt. of India has assigned the cluster to National Resource center for Cluster Development (NRCD) to develop this cluster in a holistic manner. NRCD helped units in forming a marketing consortium called Narsapur Crochet Lace Consortium comprising of the lace exporters, SSI units, NGO, SHG and Lace Park (DRDA) with an objective of enhancing the exports and improve the domestic sales. Any order placed on the consortium will be shared among the members of the consortium and utmost care will be taken in executing the order to the best of quality and within the time schedule under the active guidance and support of NRCD. The orders placed on the consortium are going to help 2,00,000 lakh women artisans in supporting their family and in the process elevate them above poverty line.

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1.1 ANALYSIS OF MACRO ENVIRONMENT OF THE CLUSTER: The cluster is Located around 450 Kms. from Hyderabad Capital City of Andhra Pradesh. It is well connected by train and Bus Services. The City was located on the banks of Godavari. The city is on the banks of river Godavari and on Bay-of- Bengal Cost at Narsapur River Godavari merges into Bay-of-Bengal. The city has Distinction of being located on the banks of river Godavari and the cost of bay-of-Bengal Narsapur remote West is place a in

Godavari

District of Andhra Pradesh, India. It is famous crochet products. cluster is for the lace The having

around 50 exporters who are exporting to various The having lakh lace and Narsapur, work. countries. cluster around is 2

women The around Andhra

artisans doing the cluster is located in

Pradesh, India, in various villages like Sitarmpiuram, Palkol, Venkatrayapalem, Antarvedi, Royapeta, Mogaltur, etc. The cluster is specialised in doing the lace works like dollies, furnishings, garments, tablemats, etc. The cluster is 168-year-old.
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Most of the women do the lacing in there respective houses. (Approx 600 km away from Hyderabad) is located around it within a radius of about 35 km.P.P with substantial lace Artisan concentration & population include the following:                  Narasapur Elamanchilli Mogalturu Veeravasaram Palakol Achanta Penugonda Iragavaram Bhimavaram Peravali Kalla Poduru Undrajavaram Tanuku Attili Penumantra Nidamarru Final Report: Business Plan for Development of Narasapur Lace Cluster -4- .P. A. A. The major Mandals of West Godavari District. in about 22 Mandals of West Godavari District. Traditionally the families are doing it since generations. A.98 Lakh Lace artisans (100% women) mainly located in rural areas (Total 480 villages). In some places women gather at a common place in the village and do it together. District.It all started by a Scottish lady by name Macrea who came here on missionaries of Charity work in the year 1844 and taught the house wife’s the art of lace work by needles and since that time it spread in the district and women took up the activity as a source income. The Hand Crochet Lace cluster of Narasapur. West Godavari. It has about 0.

The craft is dominated and practiced mainly by the Kapu community as they are orthodox and do not let their women to go outside for work. Major Domestic Markets for Laced products include Metros like Mumbai. accessories are provided to the Artisans along with Design Pattern/Sample by Exporters/Lace Park and the Artisans are paid conversion charges. Majority of the Lace artisans have adopted the Lace work art/techniques from their mothers & grand mothers in a traditional manner and have experience of about 15-20 years. The age group of the artisans is 20-60 years. West Godavari District in the year 2007-08 is Rs. The Lace Artisans are 100 percent Women and mainly belong to the Other Cast Category – Kapu community (85 percent share) balance includes Backward class like Khamma. 3500 per month per family). 1. 500 from Lace craft and Rs. The girls of the family mostly adopt lace craft after finishing class 12th as they do not have money to go for higher education. 40 crores with Exports accounting about 90 percent. The lace Artisans execute work provided by the Exporters and Lace Park and rarely are engaged in direct marketing of Lace products. The raw materials i. Macrae started this cluster in 1844 and taught this craft to the local women. Majority of the Lace Artisans have not obtained any formal training and follow traditional designs and lace products. Christians etc. fabric. 3000 from Agriculture (Total Rs. It is believed that Scottish Couple Mr.Narasapur Hand Crochet Lace Cluster is a traditional cluster with a history of more than 160 years.2 MAPPING OF THE CLUSTER POTENTIAL Final Report: Business Plan for Development of Narasapur Lace Cluster -5- . yarn. Europe. typically the family consists of four members with an average monthly income of Rs. The estimated sales turnover of the Narasapur Lace cluster. The women work on a part time basis. Mostly the Common Production Centre is at the residence of the Artisan Society President.e. Middle East etc. Delhi etc. generally 4-5 hrs per day either from their residences or common village level Production Centre(where ever present) in a group. Ever since this craft has seen mushroom growth. The Lace Artisans are mostly educated to a level of VII th grade and understand & speak Telgu language only. In a Lace Artisan family. paid mostly based on ½ kg yarn conversion for lace item. Major International Markets include USA. and Mrs.

Elamanchilli. In Phase II.G. Mogalturu. Tanuku. Kalla and Undrajavaram consisting of 1630 Lace SHG and 11551 Artisans where Societies are under formation. Palakol. Achanta.e. W. Iragavaram. District) under its Federation. There are 40 Juki-Automatic stitching Final Report: Business Plan for Development of Narasapur Lace Cluster -6- . Godavari District (Phase I) i. Lace Park would have 3119 SHG and 24730 (about 25 percent of Lace Artisans in W.G District are being added i. Designs and so far it has a Design Bank consisting of about 600 New Designs in Home Furnishings. Narasapur.1 Crochet Lace Park. Veeravasaram comprising of 1489 Lace SHG and 13179 Lace Artisans.G.2. the other major stakeholders of the Narasapur Lace Cluster include the following: 1. The Training programs are completely residential and so far about 8000 Artisans of W. of AP (under IIDF.  Imparting skill upgradation (Training) to Artisans in Design along with NIFT at Lace Park and other techniques like stitching. all women.G. Peravali. 51 Lace Artisan Societies were formed in 6 Mandals of W. Narasapur. skill upgradation/training. The main functions of Lace Park are:  Organizing the Lace Artisans in the West Godavari District under the Federation in order to provide them higher conversion charges. District have been trained (Small Training of 15 days). Eight additional Mandals of W. Andhra Pradesh in the year 2004 with a financial outlay of approx Rs. SGSY Schemes) and o/o the DC (Handicrafts).e. In addition to the Lace Artisans. 3 crores received as Grant over 3 years period from DRDA-Govt. In the year 2004. Kids & Women Wear etc. more work. Embroidery .  R&D and Design Development Wing of Lace Park has been established with a NIFT graduate as its head and a core team of 20 members (skilled resident artisans) to develop new Lace based products. It is being considered as one of the mega clusters in the country where about one lakh artisans. New Delhi under AHVY. live and depends for their livelihoods. Penugonda.The lace cluster at Narsapur has tremendous business potential. Picoting etc. Poduru. Bhimavaram.District Crochet Lace Park (The West Godavari District Alankriti Lace Manufacturing Women Mutually Aided Cooperative Societies Federation) was established by Velegu-DRDA. Thus with the completion of Phase II.

Steam Boiler.  Procurement. appropriate price directly from the Manufacturers (Coats India. 2 over-lock machines & 2 Picoting machines that have been installed for training purposes. So far (Year 2007-08) production worth Rs. Mumbai etc) and distributing them to Primary Societies as per production plan. website etc. Pali. tied up with AP Govt Lepakshi for exhibiting products at Delhi. It has obtained Rs. Malaysia. Auxiliary equipments like Trolleys. Tumble Dryers of 50 kg & 10 kg batch capacities. Common Production Centres have been established at village level (About 150 operational at present) where Quality production takes place in an organized manner under the supervision of an MLT (Master Lace Trainer). Century Mills. stocking & distribution of Raw material (Yarn. fabric) of right quality. ITPO etc). 2.  The Common Facility set up at Lace Park which is being utilized by them for their own production and could be utilized as well by other stakeholders particularly by Exporters include the following: • • • Automatic Washing & bleaching Machines of 165 kg & 15 kg batch capacities.  Procuring & Distributing high quality needles (the prime tool for Hand Crochet) among the artisans free of Cost and till date about 15000 Needles have been distributed including Japanese needles good for fine weaving of Lace work and handling of fine yarn. Ambasamudram. 6A  Narasapur and undertaking efforts at present to develop product catalogues. tied up with Tirpur & Karur (TN) Agencies for International Marketing. Sri Umed Mills. established retail outlets at Eluru & Page No.  Marketing Efforts to enhance Sales Turn over both in the International and Domestic Markets by way of participation in Fairs (Dubai. Hyderabad.  With the intervention of Lace Park.0 crores has been achieved starting from the year 2004-05. Water Treatment plant etc. 97 Lacs under AHVY from o/o DC(H). New Delhi as non-recurring grant-in-aid as Margin Money for meeting the Working Capital requirement of its Lace Artisan members.machines. Final Report: Business Plan for Development of Narasapur Lace Cluster -7- . Water Softner.

Narasapur Annual Sales Turnover Rs. College. Palakol M/s Ram Krishna Pramahansa & Co. bleaching & washing job to Final Report: Business Plan for Development of Narasapur Lace Cluster -8- . 1.0 Crores Rs.5 crores Rs. Ltd. 10. Seetharampuram M/s P.3. Venkanna & Co Pvt. Narasapur M/s Sri J. Co.4. 2. District. Narasapur. Palakol M/s Koteshwari Lace Industries.0 Crores  In addition there are about 3 Merchandisers who are manufacturing and supplying laced products to other Exporters.2 Exporters & Merchandisers  There are about 17 Major Direct Exporters of Laced products out of which 15 are located at Narasapur (Seetharampuram) and balance 2 in Palakol. Elure and subcontracting Lace Work to Artisans located in villages. 2.  The 20 Exporters and Merchandisers are registered as SSI Units with DIC. Narasapur.N.G.J Lakshmi & Co. Seetharampuram.Veeraiah. Fashion Crochet Lace. Palakol. Health Insurance of Artisans. both in W.0 crores Rs. Adult Education awareness camps with Sri Y.2. issuing Photo identity cards etc. Seetharampuram.0 Crores Rs. Retail outlets based at Delhi & Mumbai and prominent ones include M/s Sri Kanaka Durga Lace Industries. Carrying out Social Welfare activities for the Artisans like organizing Eye Camps in association with SCOJO Foundation. A few major Exporters and their Annual Turnovers are provided below: Exporter M/s P.

• Sree Adarsha Mutually Aided Thrift & Credit Society Ltd. World Vision (Godavari ADP) is one NGO that has spent around Rs. District: The Society has about 600 Members and is engaged in the manufacturing & export of Handmade Cotton Crochet Lace Goods & Cotton madeps with an annual turnover of Rs. 6B 1.  There is no specific NGO that is working in the Narasapur Lace Cluster exclusively for the benefit of Hand Crochet lace Artisans. NGO  Besides the 51 Lace Artisan Societies formed in 14 Mandals of W. Education. Mumbai. Narasapur out of which 3119 are under the Lace park. packing in polythene bags & Cardboard Cartons etc.G. 6 Lacs in Training of Lace Artisans at Lace park and towards free distribution of yarn to lace Artisans at Small level. Page No. W. Artisan Members and is engaged in skill Development/Training activities of Artisans & production and Domestic Sales of Lace Products with annual Turnover of Rs. District: The society has about 1500 Lace. Narasapur. Agriculture etc. labeling. 60 Lacs. • It is estimated that there are at present about 3500 Lace Artisan SHG in the lace cluster. Poduru.2. Health .job work units and are only carrying out finishing & packing jobs inhouse like stitching.G. Fishery.  All the above are members of All India Crochet Lace Exporters Association based at Narasapur. 25 Lacs to Markets in Delhi. SHG. Final Report: Business Plan for Development of Narasapur Lace Cluster -9- . although there are several NGO’s (estimated 800 Nos) working in rural areas addressing issues related to Housing.3 Lace Artisan Societies. 100 under Sree Adarsha Mutually Aided Thrift & Credit Society Ltd and about 70 under Godavari Delta Women Lace Artisans Co-op Cottage Industrial Society Ltd.G. District under the Lace Park there are about 5 more Lace Artisan Societies and prominent among them include: • Godavari Delta Women Lace Artisans Co-op Cottage Industrial Society Ltd. W.

1 Crore  M/s P. 1. Bagheswaram village. Narasapur. Vasa Ramalingeswara Page No. Narasapur. 20/kg of Product. Palakol: Cotton Fabric Annual Sales : Rs.Job Work Units  There are about 15 tiny scale units that are offering Coning facility (Conversion of yarn Hanks into ½ kg Cones) to Exporters out of which 10 are located in Palakol and 5 at Narsapur. Co. Palakol : Yarn. Annual Sales: Rs.. The average Coning Charges are Rs. Palakol. Fabric) in the Narasapur Lace cluster mainly located at Palakol and prominent ones are:  M/s K. Digamaru Village. Naidu & Co. 2 per ½ kg yarn cone. 50 Lacs In addition to these raw material suppliers the Exporters\ Lace Park are also directly buying Cotton yarn and Cotton Fabric from Mills located at Pali. Narasapur. A few prominent names include Nagamullika Dyeing Works. A few prominent names include Sega Venkata Ramayya. washing tiny units located at Narasapur & Palakol who are offering crude/primitive process & facilities to Exporters (for bleaching & washing only). Palakol. Samathavam Mullikarjunniah.6CRao. Coimbatore.10 - . Gopi & Co. The average bleaching charges are Rs. Annual Sales: Rs. 75 Lacs  M/s P. Veeraiah. bleaching. 50 Lacs  M/s Champalal & Co. Annul Sales: Rs. Tirpur etc. Prominent Banks include: Final Report: Business Plan for Development of Narasapur Lace Cluster . Rajasthan. Financial Institutions There are several Banks located in the Narasapur Lace Cluster that are extending Loans to the SHG & its members under Micro Credit plan/Scheme. Kasa Veerauna.S.2.4 Raw Material Suppliers There are about 5 major wholesale suppliers of raw material (Yarn.  There are about 5 Hand dyeing. Palakol: Yarn. Palakol: Yarn.

 Andhra Bank. Seetharampuram & Magulturu  Godavari Bank.  Rs. Final Report: Business Plan for Development of Narasapur Lace Cluster . Manly offwhite and white threads are used in lace making.1. Rajasthan Spinning Mills etc. 10 Count) of offwhite colour (acrobase) mostly procured from Mills in Pali.e.  Rs. Narasapur (supported 79 SHG) : Loan outstanding Rs. Coimbatore. off-white Cotton yarn) in Hank form. The price of yarn varies according to Grade.i. Narasapur (Supported 35 SHG) : Loan outstanding Rs. Vardhman etc. Madpadu & Kallipatnam 1. 250 for 400 g (4 balls of yarn each of 100g weight packed. 460 for ½ kg (3/5000m length.11 - . The Raw Material in the lace cluster is cotton fabrics converted into cones. Umed. off-white/coloured cotton yarn) from Madura Coats. At present of the total yarn used 95 percent is of off-white colour or white colour due to absence of sophisticated common dyeing facility in the cluster and high cost of dyed yarn obtained from Madura Coats.3 RAW MATERIAL The main raw material being used by the Narsapur Lace cluster is 100 percent Cotton yarn (2 ply.  Rs. Raw material (yarn in ½ kg Cone form) is provided to the Lace Artisans who under the guidance & supervision of MLT produce the Crochet Lace work as per desired Quality & Design. off-white or coloured Cotton yarn) in Cone form obtained from Madura Coats. Narasapur  SBI. Source & form and is:  Rs.54 Lacs  SBI. Rajasthan. 65 for 1 kg (2/10.75 Crores  State Bank of Hyderabad. 45 for ½ kg (2/10 offwhite Cotton yarn) in cone form obtained from Mills of Pali Rajasthan .

AP).12 - . 20 per ½ /kg yarn. The other major Raw material besides yarn/thread used is 100% Cotton Fabric which is priced at Rs. Tirpur (Tamil Nadu) and Cost is approx Rs. 8. 45-65/sqm in off-white colour or organic dyed (200gsm) from Mills located at Kalamkari (Krishna District. mostly obtained Nadu) or Mangalagiri  If yarn/fabric needs quality dyeing it is sent to Erode. Tirpur (Tamil near Vijawada.8 Final Report: Business Plan for Development of Narasapur Lace Cluster . Page No.

MANUFACTURING PROCESS Final Report: Business Plan for Development of Narasapur Lace Cluster .0 OBJECTIVES OF BUSINESS PLAN:  To enhance the Sales Turnover (Exports/Domestic Sales) of the cluster to a level of Aprox Rs. 40 Cr.  To organize additional 50. 160 Cr. convert them into producer group directly selling their products in the Market. Automatic Dyeing etc so that the cluster operations become economical & selfsustainable.13 - .000 Lace Artisans so that their economic development could take place. 2012-13) from a present level of Rs. product quality & range improves.  To set up additional critical facilities at cluster level like Automatic Bleaching.OBJECTIVES FOR CLUSTER BUSINESS PLAN 2.  To empower the Lace Artisans. (Yr.

The Buyer provides the Product Design pattern (Drawing on paper. or joined end-to-end and worked in rounds. The Raw Material (yarn in ½ kg Cone form) is provided to the Lace Artisans who under the guidance & supervision of MLT produce the Crochet Lace work as per desired Quality & Design. 10 Count) of off-white colour ( acrobase) mostly procured from Mills in Pali. At present of the total yarn used 95 percent is of off-white colour or white colour due to absence of sophisticated common dyeing facility in the Final Report: Business Plan for Development of Narasapur Lace Cluster . The Crocheted fabric is begun by placing a thread loop on the hook. The chain is either turned and worked in rows. Mostly Single hook Needles of Six inch long and made from cycle spoke are being used by Artisans with a thermocole piece (stopper) placed on the top of the Needle to provide better control while weaving. \ b. photograph) or actual product Sample to be manufactured. quality Tests to be carried if any etc. The main raw material being used by the Narasapur Lace cluster is 100 percent Cotton yarn (2 ply. d. 90-100. Rajasthan. e. The word Crochet is derived from Middle French word Croc or Croche meaning a hook. Stitches are made by pulling one or more loops through each loop of the chain. pulling another loop through the first loop and so on to create a chain. Usually it takes a week’s time for an individual Lace artisan working 5 hrs / day to weave ½ kg of yarn which fetches them roughly Rs.MANUFACTURING PROCESS: The Manufacturing Process widely being adopted in Narasapur Lace Cluster. The Supplier provides the Product Design pattern/Sample to the Master Lace Trainers/Liners who in-turn educate/train the group of artisans at Common Production Centre at village level.14 - . c. to the Lace Park/Exporter (Supplier). specifications of yarn & fabric to be used. Raw Materials & Tools utilized for production of Laced products include: a. It is a process of creating/weaving a fabric from a length of yarn/thread with a hooked Needle.

65 for 1 kg (2/10. g. Coimbatore. Final Report: Business Plan for Development of Narasapur Lace Cluster .i. AP). 20 per ½ /kg yarn.  Rs. 45 for ½ kg (2/10 offwhite Cotton yarn) in cone form obtained from Mills of Pali Rajasthan . offwhite or coloured Cotton yarn) in Cone form obtained from Madura Coats. The Exporter/Lace Park finishes the product by stitching Lace Panel & Fabric. Azo free dye test etc and for this the Samples (4-5 Nos) are sent by the Exporter/Lace Park to Testign Labs at Chennai (SGS). picoting. Tirpur (Tamil Nadu) and Cost is approx Rs. the finished product is tested for various tests like Optical Brighter test. Tirpur (Tamil Nadu) or Mangalagiri near Vijawada.cluster and high cost of dyed yarn obtained from Madura Coats. 460 for ½ kg (3/5000m length. f.20/kg of material. adding accessories. h. the charges being Rs. The other major Raw material besides yarn/thread used is 100% Cotton Fabric which is priced at Rs. 45-65/sqm in offwhite colour or organic dyed (200gsm) mostly obtained from Mills located at Kalamkari (Krishna District. 12000 per testing. The Terrecota Lables of the Buyer are prepared by Screen/offset Printing & Bar coding using Software by Printers located at cluster level that are also stiched by the Exporters to the finished products. offwhite/coloured cotton yarn) from Madura Coats. j. k. Rajasthan Spinning Mills etc. for which total typical charges are Rs. Vardhman etc. offwhite Cotton yarn) in Hank form  Rs. The Consignment is sent to Chennai by Exporters/Lace Park and the Shipping/Custom House Agents get it inspected & certified by Export Inspection Agency (Cotton Textile Export Promotion Council) and from there it is exported. 250 for 400 g (4 balls of yarn each of 100g weight packed. Since the product requires bleaching & washing it is sent to Job work unit in the cluster for the same. Source & form and is :  Rs. If yarn/fabric needs quality dyeing it is sent to Erode.e. i. Umed.15 - . The price of yarn varies according to Grade.  Rs. interlocking. Thane etc. packing etc. These are then packed in polyethylene bags (transparent) and finally packed in Cardbaord Cartons with total weight of approx 10 kg per Carton. on random sampling basis. If specified by the Foreign Buyer.

Ironing Packing Product Testing. Buyer Product Design Pattern & other details Exporter/Lace Park (Supplier) a) Design b) Raw Material (Yarn) c) Needles Group of Lace Artisans MLT (Supervision. Certification & Shipment from Chennai Final Report: Business Plan for Development of Narasapur Lace Cluster .Manufacturing Process-Flowchart for production of Lace products adopted at Lace cluster. Bar-coding. Finishing With Fabric Bleaching & Washing at Job Work Unit Bleached & Washed Products Labeling.16 - . QC) Lace Panel Exporter/ Lace Park Inspection. Narasapur .

packing material)  Cost of stitching. Cushion Cover (20 inch x 20 inch size) A) Cost of production per piece  Cost of Yarn (70g@Rs.P) : Rs.17 - . 950 : Rs. Packing. 30. 10.VALUE CHAIN ANALYSIS FOR LACE PRODUCTS: 4. 42 : Rs.775 : Rs. 90 per kg)  Cost of Lace Panel (Conversion)  Cost of Fabric (20s. Total B) Selling price/piece C) Profit : Rs. bleached in white colour are provided below: i).00 : Rs 36. 90/kg) • Lacing charges • Othere overheads including Bleaching.70 : Rs. Adm & Sales overheads etc. 225 : Rs.00 : Rs.450 : Rs. Sewing Thread. 1. Sliders.P) Final Report: Business Plan for Development of Narasapur Lace Cluster . 2.5 % of S. 160 gsm@0.5 kg@ Rs.50 per sqm  Accessories (Zipper. 175 (18% of S.35 : Rs. 5.100 : Rs. Washing. others Adm & Sales overheads Total Cost B) Selling price per piece C) Profit per piece ii) Bedsheet (Laced) of Size 6’ x 6’ A) Cost of production/piece • Yarn Cost (2/10 Count.00 : Rs.0 The Value Chain: The value chain Analysis for 100% Cotton Yarn (2/10 Count Pali) based Laced products. 6. 2.35 sqm @ Rs.30 : Rs 13. cloth cutting  Cost of Bleaching.35 : Rs. 3.65 (13.

There will be no back log of stock. If we assume that the artisans get only 5 percent of the total profit that makes Rs 20. Again it is observed that major profit can be made in larger products like bed sheet. the smaller products can be profitable too.00 annually for about 35000 women artisans.18 - . while the sale of the smaller products can be higher. as these products take less time for making and sales are almost immediate. Final Report: Business Plan for Development of Narasapur Lace Cluster .000. If raw material costs can be cut down. in both the cases the profit is 13.00.As sited above the two products – the bed sheet and the cushion cover. which may on the other hand does not block seed money and can be used for further procuring of new stock of raw materials. dress materials etc.5 % to 18 %.

Final Report: Business Plan for Development of Narasapur Lace Cluster .  100 percent Cotton (Natural Fiber) based products generally preferred by users. District being extended to another 8 Mandals (Total 14 Mandals)  There is good demand for the Handmade products both nationally and internationally.  Low capital investment and high ratio of value addition  Wide variety of products which are unique. Bleaching.G.1 STRENGTHS  The women artisan skill level in the cluster is natural and traditional (Mostly without any formal training) and they are highly adaptive to the latest Product & Design trends. Stitching etc that can be gainfully utilized by cluster members for manufacture of high quality products. Artisans) established by Lace Park in 6 Mandals of W. Drying. Narasapuram has excellent facilities for Automatic washing.  The cluster is having sufficient capacity to execute any amount of orders.  Abundant. Society. skilled & cheap Labour hence can compete on price.19 - .SWOT ANALYSIS 5.  CFC at Lace Park.  Strong Institutional Framework( Federation.

emerging trends & Quality Standards. the quality is not up to the international standards.2 WEAKNESS  The women Artisans consider Lace Work as part time work hence professionalism is lacking  As the job is done mostly at the residential places of Artisan.e. they don’t have much of the exposure to the Intentional markets. done by hand & using inferior quality chemicals) that lead to inferior quality product. (As 85% Women Artisans belong to Kapu Community in which women do not go out to work).  Good support from Government and various other agencies.  Very little cooperation & coordination between major cluster stakeholders i. Exporters & Lace Park which leads to under utilization of Common Facilities set up at Lace Park. 5.  Low level of migration to other professions.20 - .  The bleaching practices adopted by the Job work units in the cluster are primitive (manual.  As the cluster is dominated by semi-educated and un-educated. Final Report: Business Plan for Development of Narasapur Lace Cluster . There is a close network among the skill work force of the cluster.

Design trends.  The Lace Park is unable to provide continuous work to their Artisan members (they utilize only 50 percent of their available time) due to inadequate direct export orders and there is no Marketing Set up at Lace Park to procure orders. Final Report: Business Plan for Development of Narasapur Lace Cluster .r. new products.  The Lace Park (Artisan Federation) although has been able to organize about 25000 Lace Artisans in W. This inturn also discourages them to take up coloured jobs. District.  The cluster Artisans follow/are trained in the traditional age-old design patterns and need to be up graded according to the latest trends in the fashion world. Tirpur. This also leads to lower income levels of Artisans.21 - .t International & Domestic Markets for Lace products.\  The artisans lace the traditional products (mostly in coarse thread of 2/10 count Cotton) and there is need for development of newer product range/product diversification and training to weave in fine count thread (Complex Work).  Inadequate Market Study/Intelligence w. majority of the Artisans (75%) in the District are still unorganized. The Absence of quality yarn/fabric dyeing facilities in the cluster leads to lot of inconvenience & expenses for Exporters/Lace Park as the products have to be sent to Erode.G.

Mumbai.  The Lace Artisans are based deep inside the villages which have Kuchha roads.22 - . This creates a lot of problem for the movement of the material & artisan as well.  Products made of coloured yarn & fabric. Acrylic etc specially for Ladies & children wear provide vast market potential (International & Domestic Markets). Hyderabad. Final Report: Business Plan for Development of Narasapur Lace Cluster .g. 5. The Artisans do not have the capability & capacity of direct marketing.3 OPPORTUNITIES  The Domestic Demand for Laced products is growing at a fast pace in Delhi. The cluster Artisans are heavily dependent on Job Work from Exporters who have direct orders hence they are paid lower Conversion Charges (almost 30% lower) as compared to Lace Park. other type of materials e.  The Exporters/Lace Park are unable to participate extensively in International Trade Fair/Exhibitions for Handicrafts/Textiles due to their limited resources and inadequate MDA assistance offered by Ministry of Commerce & Industry. fine count yarn. etc which is untapped presently. Nylon.  Scope for developing new product range & Designs.

 Highly adaptive nature of the artisans can easily be trained. Hand/Machine Embroidery. 5. Picoting etc which will provide them more work and higher revenue.23 - .e.4 THREATS  Competition from Chinese market(Lower price. leads to higher product cost  Change in the Government Policies (i. better product quality)  Machine lacing (Lower product cost)  Rise in Price of textile yarn. Interlocking.  The women Lace Artisans could be trained to adopt other value added skills besides Lace work e.  Easy availability of highly skilled work force. reduction of Customs Duty Draw back etc) Final Report: Business Plan for Development of Narasapur Lace Cluster . Machine stitching.g.

0 ISSUES The Issues to be tackled for developing the business plan for Narsapur lace cluster are as follows –  Inadequate coordination among the stakeholders particularly Lace park and exporters which leads to disharmony and under utilization of facilities of Lace Park  Lack of quality dyeing of yarn and fabric and exporters and Lace Park have to send the material in Tamil nadu which is not cost effective and also time consuming.  Marketing set up of Lace Park is deficient. Final Report: Business Plan for Development of Narasapur Lace Cluster .ISSUES FOR DEVELOPMENT OF BUSINESS PLAN IN TERMS OF DEVELOPMENTAL SCHEME OF O/O DC (H) 6.24 - . leads to low sales turnover and noncontinuous work for the artisans  Lack of working capital  Product diversification is not available  Export market for lace is stagnant and domestic market remains un-tapped  The production facilities at Lace park is inadequate  Majority of the Lace workers are still out of any kind of federation or group The issues given above are further explained below and the proposed intervention to address the issue together with the time frame is also given.

The Lace Park does not coordinate with the leading exporters for the sale of their products.1. In some cases.1 (CDCC) Formation of a Cluster Development Coordination Committee The CDCC will be an apex body in nature and will be chaired by DC (H) and officiated by (Ex-officio Secretary) the DM of West Godavari district (as the head of the DRDA). Representatives from the local Community Based Organisations. SHG Federation. it is necessary to resolve this issue of co-ordination.6. The above situation leads to inadequate co-ordination and disharmony between the various stakeholders. centres for further embellishment etc.2 PROPOSED INTERVENTION 6. there are failed promises about the quantity to be supplied and the time of delivery of the product. 6. Similarly. the facilities available in the Lace park are under utilized.25 - . The Lace Park members also are not aware of the quality output the exporters need. While we propose various steps to develop the cluster.1 INADEQUATE COORDINATION AMONG THE STAKEHOLDERS PARTICULARLY LACE PARK AND EXPORTERS WHICH LEADS TO DISHARMONY AND UNDER UTILIZATION OF FACILITIES OF LACE PARK 6.1 Issue: It was observed that there is very little coordination amongst the stakeholders – mainly the exporters and the lace park. Secretary for State Finance and Industry and Commerce Departments. potential buyers. For these reasons. the exporters do not know the actual volume produced in the Park.2. representatives will be officials from Export Promotion Council for Handicraft. Director of State Handicrafts. quality of the product also differs. Final Report: Business Plan for Development of Narasapur Lace Cluster . District).G. Velugu-DRDA. The state government agencies which will be representing the body are DC (W. The Lace Park officials do not have a database which can furnish the data on raw material supply and the value chain. Other Central Govt. Non Government Organisations. In most of the cases. Lace Artisans Federation (Lace Park) and local designers and Exporters Association.

 Assisting the SPVs in identification and engagement of service providers/consultants for various services related to specific handicrafts technology.2. for implementation/execution of the interventions outlined in the DPR.26 - . marketing engineering. of India for Narasapur Lace Cluster. Assisting the Ministry of Textiles/SPVs in releasing/mobilizing proposed project. will proactively work with the cluster stakeholders and the SPVs in implementation of the interventions. managerial financial infrastructure and capacity building expertise that are required to design and execute cluster oriented interpenetrations.   funds for the project.  CMTA apart from assisting the Ministry of Textile in designing and monitoring of the project. at Cluster level & Steer the process of implementation of Business Plan with the assistance of the Cluster Management and Technical Agency (CMTA) duly appointed by Ministry of Textiles. Govt.6. Final Report: Business Plan for Development of Narasapur Lace Cluster . skill development. processing designing. financing etc.2 Main Function of CDCC: CDCC would have regular Meetings.  The CMTA Shall have proven capability in terms of technical. Such mobilization would involve preparation of proposals under relevant schemes of the Government apart from tying up loans from the banks. The responsibilities CMTA are given below:    Conducting diagnostic study at cluster level Preparing DPR for the Project Sensitizing and mobilizing the stakeholders to be part of the Establishment and structuring of the SPVs.  Assisting the SPVs in obtaining requisite statutory approvals/clearance.

4 Approximate Budget : Rs.6 Proposed Agencies for Implementation . carrying out Diagnostic Survey at Lace Cluster level.  the CDCC. Selection & appointment of CMTA. 90 Crore) 6.2.5 Expected Outcome /Benefits  Better harmony among the major stakeholders of the cluster 6. Providing periodical progress reports to the Ministry of Textiles with respect to achievements of the stated outcomes is another deliverable of 6. particularly the Government Organizations. Project Performance Assessment(@5% of total estimated project cost of Rs. 450 Lacs Approximate budget for formation of CAG.27 - Final Report: Business Plan for Development of Narasapur Lace Cluster .2.2.2. preparation of Project DPR . buyers and financial institutions. Providing interfacing support and linkage between the SPVs and various other stakeholders.3 months Time Frame : Within 2 6.

But in most of the cases the artisans do not have basic facilities like lack of Common facility centre.2. Due to lack of quality dyeing units.3. only bulk orders are entertained. The annual turnover is Rs 40 crore. 6. bleaching centre. 6. the local products are very coarse and sometimes they are incapable to compete in the export market. The Tirpur Dyeing unit in Tamil nadu does not entertain small quantities for development of samples. dyeing hank yarns etc. These units only undertake some first level job works.3 LACK OF QUALITY DYEING OF YARN AND FABRIC AND EXPORTERS AND LACE PARK HAVE TO SEND THE MATERIAL IN TAMIL NADU WHICH IS NOT COST EFFECTIVE AND ALSO TIME CONSUMING.2 6.1 Proposed Intervention Setting up Common Facility Centres Final Report: Business Plan for Development of Narasapur Lace Cluster . Presently there are about 20 units which are catering to the need of the local artisans. DC ( WG District)  DRDA-AP  DC (H) Office 6. About 15 units offering coning facility located in Palakkol and Narsapur. It is to be noted that about 90 % sale of Lace products is through exports.3.1 Issues: Narsapur is a big cluster and about one lakh women artisans are attached to this craft.3. The Bleaching facilities for finished products at the cluster are primitive and inadequate (Hand Bleaching).28 - .

 Hydro Extractors of 100 kg capacity (2Nos)  Tumble Dryers of 100 kg capacity (2Nos)  Steam Boiler of 1000 kg/hr capacity with Water Softener  Wet Linen Trolleys (10 Nos)  Six Spindle Yarn Hank to Cone conversion m/c (10 Nos)  Goods Career Vehicle  Building 3000 sqft 6. Final Report: Business Plan for Development of Narasapur Lace Cluster .4 Expected outcome/Benefit  Ease of Operation for the Stakeholders  Availability of Quality dyed yarn in half kg Cones/fabric in the cluster at economical prices. to run for 3 batches/day or total capacity of 600 kg/day.29 - .3.3.2.2 Time Frame 5 CFC'S to be installed over a 4 yrs period at the following locations:  Narasapur  Elamanchili  Tanuku  Poduru  Bheemavaram 6.3.2. to run for 3 batches/day or total capacity of 600 kg/day  Automatic Bleaching Plant with a capacity of 200 kg per batch. each following facilities: having the  Automatic Yarn Hank & Fabric dyeing plant with Jiggers with a capacity of 200 kg per batch.3 Approximate Budget : Rs 6 Crore 6. Setting up of total 5 CFC'S at various locations within the cluster.a.2.

these operations would be extended right up to the consumers' doorsteps. Ebony.4 MARKETING SET UP OF LACE PARK IS DEFICIENT.4. To this end.  For Display & Sales of Laced products.3 Time frame . Globus.30 - Final Report: Business Plan for Development of Narasapur Lace Cluster .1 Issue: Lace Park was established as a Co-operative/Corporate set up with Public/Private Participation by roping in entrepreneurs interested to participate in this activity. The cluster Turnover would increase due to inclusion of coloured products in product range. Stores.4. But the marketing set up of the Lace Park is deficient of catering the marketing aspects for the cluster. 6. 6. LEADS TO LOW SALES TURNOVER AND NON-CONTINUOUS WORK FOR THE ARTISANS 6.4. tying up with major Retail outlets( Furnishings. Mumbai etc. But slowly this concept has lost one basic thing. Mumbai etc like Jagidsh BigJos.2 Proposed Interventions:  Recruitment & Training of 1 Marketing Manager & 1 Field officer to tap International & Domestic Markets  Appointing Distributors in major cities i. Shoppers Stop. (Presently restricted mostly to off-white/white only)  The quality of Coloured products would be able to match the International Quality standards  Easy viability of off-white yarn in half kg cones at economical prices 6. Ladies & Kids Garments) in Delhi.e. the possibility of marketing the products. HomeSaz. Delhi. Koutons Retail. Today's pressing need is to reach as close to the customer as possible. Spencers Retail etc. Low turnover inflicts loss of job for the artisans. This defunct marketing system affects into low sales and which further regulate the volume of job for the artisans. Reliance Trends.

accessories are provided to the Artisans along with Design Pattern/Sample by Exporters/Lace Park and the Artisans are paid conversion charges. Again.4. mainly the yarns. paying wages etc (@ Rs. Bleaching units at Palakkal charges Rs 20 per kg.31 - Final Report: Business Plan for Development of Narasapur Lace Cluster . dyeing coning and bleaching of the yarns needs money.e. paid mostly based on ½ kg yarn conversion for lace item.2 Proposed Intervention/s: Working Capital needs to be provided for purchasing raw material. Local units charge Rs 4 per kg for conversion of yarn into cone. 6. But it is reported that the women from poor households can not afford the seed money for procuring raw materials. while for activities b) and c) the time frame is gradually over 3 years period. These artisans do not have any working capital for purchasing the raw materials.1 LACK OF WORKING CAPITAL Issue: The artisans are mostly poor and they are attached to a unit.4 Expected Outcome/ Benefits There will be enhanced marketing exposure for the lace products and a global brand building initiative will be undertaken through this activity.5 6. This hampers the production possibilities of the artisans.3 Time frame Over 4 Years .Recruitment of Marketing Manager and The Field Officer will be immediate. fabric.5. The raw materials i. yarn. 6. the drying. They spend 4-5 hours per day apart from their household chores.5. There a fair amount of cash is involved.5. 6. 2000 per Artisan and 1 lac Artisans) 6.

32 - .5.5 160 Cr. 30/piece Rs.1 PRODUCT DIVERSIFICATION IS NOT AVAILABLE Issue: The major Lace based products being manufactured in the Narsapur Lace Cluster and their approximate selling prices are given below: Product Approx Selling / Export Price a) Furnishings  Cushion cover ( 20 inch x 20 inch)  Pillow Cover ( 20 inch x 12 inch)  Double Bed Sheet/Cover (6ft x 6 ft) b) Dollies (12 inch in diameter) c) Table Mat (14 inch x 36 inch ) d) Ladies & Children Garments  Front Top Final Report: Business Plan for Development of Narasapur Lace Cluster Rs.5.4 Approximate budget Rs 20 Crore 6. 35/piece Rs. 750/piece .6 6. 950/piece Rs.6. 42/ piece Rs. 40/Piece Rs. year could be achieved in 6.5.O of Rs. Association will be implementing agencies for the abovementioned activities. 6.6. Per 4 years Expected Outcome/ Benefits a) A cluster level T.6 Proposed Agencies for Implementation SPV and Lace Artisans.

quality Tests to be carried if any etc. Expenditure @ Rs. 1.t:  New products/diversification  Latest Fashion Designs  High value art like M/c or hand stitching. most of the cases traditional works are undertaken by the workers.t.t other High Value Arts (Each of 4 months duration. Old & is lacking w. photograph) or actual product Sample to be manufactured. therefore. 2. specifications of yarn & fabric to be used. to the Lace Park/Exporter (Supplier). major production is undertaken in these few products only. New Laced Products.r. 750/piece Rs. Product variation is not available. interlocking. 800/piece But it is seen mostly table mats.80 Lac per workshop)  Organizing Mandal level Skill upgradation programs for Lace Artisans at Mini CFC'S w.2 Proposed Intervention/s:  Organizing Mandal level Design & Technical Development Workshops for Lace Artisans at Mini CFC'S w. dollies. 50 Artisans per batch. The Knowledge & skill of Lace cluster Artisans is traditional.7 Lacs per program) Final Report: Business Plan for Development of Narasapur Lace Cluster . pillow covers and cushion covers are sold. But. expenditure @ Rs. Embroidery.6. 6.r. Skirt  Middies Rs. picoting.r. Sometimes the buyer provides the Product Design pattern (Drawing on paper.33 - . beadwork  Fine Thread intricate Lace Work etc. Latest Fashion Design (Each of 15 days duration. 30 Artisans per batch.

 Undertaking

Integrated

Design

&

Technical

Development

Projects

for

Development of New Prototypes/Products based on Lace & Different varieties of fabrics, Test marketing etc. at Lace Park (Each project will be a residential program, of 6 months duration, 50 Artisans per batch, 40 prototypes to be developed, expenditure @ Rs. 10 Lacs per project) 6.6.3 Time frame

 Every month 2 such workshops would be organised or a total of 120 workshops in 4 years covering about 13 Major Lace Artisan Mandals of W.G. District.  Every year 12 such programs would be organised (one in each major Mandal) or a total of 60 programs in 4 years  Every year 2 such projects would be undertaken at Lace Park or a Total of 10 projects in 4 years

6.6.4 6.6.5

Approximate budget Expected Outcome/ Benefits

Rs. 4.78 crore

 About 6000 MLT will be trained in new Laced based products & latest Designs & they inturn would train other Artisans at village level in the proposed Mini CFC'S (Trainer-trainee program)  Due to skill upgradation the trained Artisans would be able to perform High value added work/job which would provide them more work and higher conversion charges.  About 1800 Master Stitching & Embroidery (MSE) Trainers would be trained in High value Arts like M/c or Hand stitching , interlocking, Picoting, Embroidery etc & they inturn would train other Artisans at village level in proposed Mini CFC'S. (Trainer -Trainee Program)
Final Report: Business Plan for Development of Narasapur Lace Cluster - 34 -

 Due to skill upgradation the trained Artisans would be able to perform High value added work/job which would provide them more work and higher conversion charges.  About 500 MLT will be trained in new Lace & garment based products & latest Designs & they inturn would train other Artisans at village level in the proposed Mini CFC'S (Trainer-trainee program)  Due to skill upgradation the trained Artisans would be able to perform High value added work/job which would provide them more work and higher conversion charges.

6.6.6

Proposed Agencies for Implementation

SPVs, Lace Park & other Societies, NIFT/NID and Mini CFCs will implement the activities

6.7

EXPORT MARKET FOR LACE IS STAGNANT AND DOMESTIC

MARKET REMAINS UN-TAPPED

6.7.1

Issue:

It is observed that the export market for the lace cluster is 90 percent and the domestic market is only 10 percent. Still, the export market is not fully tapped. Only Rs 36 crores is the export market and exported only in UK, Middle East and USA. The possibilities of tapping the other countries like major European countries, Japan, Indonesia, Malaysia etc and the business can be explored to many folds.

Again, domestic market is not at all tapped. For reference, it is understood by the sales figure of the lace products that only 10 percent of the total sales, ie. Rs 4 crores is the domestic sales, which is very small an amount for such a quality product. Presently,
Final Report: Business Plan for Development of Narasapur Lace Cluster - 35 -

places like Delhi, Mumbai, Hyderabad and Bangalore are only buyers. This needs to be improved.

6.7.2

Proposed Interventions:

 A Detailed Market Survey & Laced Products Assessment Survey needs to be carried out at International & National level  Marketing Support/Assistance for Larger Participation in International & National Handicrafts & Gifts Fairs, Textiles Fairs, Exhibitions held at Delhi Hat, New Delhi & showcasing of Lace based products at Leepakshi Showrooms of AP Handicrafts Development Corporation at New Delhi, Hyderabad, Vijaywara etc. by Exporters, Lace Park, other Societies

6.7.3 years

Time frame

Every

year

for

4

6.7.4 years

Approximate budget

Rs 11 crore for 4

6.7.5

Expected Outcome/ Benefits

The Sales Turnover of the Cluster would reach a level of approx Rs. 160 Cr. By 2012-13

Final Report: Business Plan for Development of Narasapur Lace Cluster

- 36 -

6.7.37 - .6 Proposed Agencies for Implementation  EPCH (Space booking)  Proposed cluster level SPV Final Report: Business Plan for Development of Narasapur Lace Cluster .

With the intervention of Lace Park. All these village cooperative society would be pooled together into a Federal and an apex Society at the District Level with head quarters at Narasapur housed in the lace park.6. So far Final Report: Business Plan for Development of Narasapur Lace Cluster . SGSY Schemes) and office of the DC (Handicrafts). Lace Park was established as a Co-operative/Corporate set up with Public/Private Participation by roping in entrepreneurs interested to participate in this activity. New Delhi under AHVY. Water Treatment plant etc. of AP (under IIDF.38 - . Water Softner.  Tumble Dryers of 50 kg & 10 kg batch capacities. The Common Facility set up at Lace Park which is being utilized by them for their own production and could be utilized as well by other stakeholders particularly by Exporters include the following:  Automatic Washing & bleaching Machines of 165 kg & 15 kg batch capacities.1 THE PRODUCTION FACILITIES AT LACE PARK IS INADEQUATE Issue: Crochet Lace Park (The West Godavari District Alankriti Lace Manufacturing Women Mutually Aided Cooperative Societies Federation) was established by Velegu-DRDA. Steam Boiler.8. 3 crores received as Grant over 3 years period from DRDA-Govt.  Auxiliary equipments like Trolleys. Andhra Pradesh in the year 2004 with a financial outlay of approx Rs. The Lace Self Help Groups at Village level shall be converted to village level Co-operative Societies. The activity would be organized such that the profits of the apex body would be passed down to the grass root level Lace workers in addition to the wages to their work. Common Production Centres have been established at village level (About 150 operational at present) where Quality production takes place in an organized manner under the supervision of an MLT (Master Lace Trainer).8 6.

artisans will not pocket a good earnings. Most of the cases.8. Century Mills. 6. the Lace Park has inadequate infrastructure to handle a large volume of job work. Unless there will be huge production and profit as well. the artisans have to depend on Tirupur and Karur. Marketing Efforts to enhance Sales Turn over both in the International and Domestic Markets by way of participation in Fairs (Dubai. appropriate price directly from the Manufacturers (Coats India.0 crores has been achieved starting from the year 2004-05. ITPO etc). Malaysia. It has obtained Rs. But.(Year 2007-08) production worth Rs. tied up with Tirpur & Karur (TN) Agencies for International Marketing. Ambasamudram. stocking & distribution of Raw material (Yarn. They are only satisfied with the present status. Mumbai etc) and distributing them to Primary Societies as per production plan. but the wing do not explore too much.39 - Final Report: Business Plan for Development of Narasapur Lace Cluster . Procuring & Distributing high quality needles (the prime tool for Hand Crochet) among the artisans free of Cost and till date about 15000 Needles have been distributed including Japanese needles good for fine weaving of Lace work and handling of fine yarn. Procurement. tied up with AP Govt Lepakshi for exhibiting products at Delhi. 97 Lacs under AHVY from o/o DC(H). 2. when the volume is high and for procuring a bulk work. established retail outlets at Eluru & Narasapur and undertaking efforts at present to develop product catalogues.2 Proposed Interventions: . New Delhi as non-recurring grant-in-aid as Margin Money for meeting the Working Capital requirement of its Lace Artisan members. Sri Umed Mills. Pali. fabric) of right quality. Again. website etc. Hyderabad. marketing wing is established in the Lace Park.

G.8. 6.4 6.5 Time frame Approximate budget Expected Outcome/ Benefits 6 months Rs 0.8.)  Construction of warehouse for Raw Material & Finished goods storage (1000 sqft) 6.40 - .6  SPV Proposed Agencies for Implementation  Lace Park (DRDA)  Machine Manufacturers & Suppliers  Civil Construction Agencies Final Report: Business Plan for Development of Narasapur Lace Cluster . Up-gradation of the following facilities at Lace Park  Steam Ironing m/c ( 4 Nos)  Straight Knife Fabric Cutting m/c (1 Nos)  Goods Carrier Vehicle (1 Nos)  Mini Van for Artisan Movement ( 1Nos)  D.25 Crore The productivity. operations.8.3 6. product finish at Lace Park would improve. Set for power back up (1 Nos.8.

2 Picoting m/c. Goods Carrier Vehicle Mini Van for Artisan Movement Total Cost @ Rs.G.41 - .9. out of which 3119 are under the Lace Park. SHG or cluster groups made by any agency. 1 no Straight Knife Fabric Cutting m/c. 6. overlocking m/c. Automatic Embroidery m/c with 6 heads. Narasapur.6.2 Proposed Intervention/s Mini Common Facility Centres suitable to accommodate about 100 Artisans need to be set up at various locations throughout the Lace Cluster consisting of the following:           2000 sqft working shed & R. 10 Automatic stitching m/c. Besides the 51 Lace Artisan Societies formed in 14 Mandals of W. Storage. District under the Lace Park there are about 5 more Lace Artisan Societies. 25 Lacs per centre Final Report: Business Plan for Development of Narasapur Lace Cluster . D.G.1 Issue: It is understood during the diagnostic study of the cluster at Narsapur. 100 under Sree Adarsha Mutually Aided Thrift & Credit Society Ltd and about 70 under Godavari Delta Women Lace Artisans Co-op Cottage Industrial Society Ltd. Set for Power Back up.M. It is estimated that there are at present about 3500 Lace Artisan SHG in the lace cluster.9 MAJORITY OF THE LACE WORKERS ARE STILL OUT OF ANY KIND OF FEDERATION OR GROUP 6. that majority of the artisans are still non members of any federation.9.

6.5 Expected Outcome/ Benefits Mini CFC'S will provide excellent working condition and result in enhanced quality & quantity of village level laced products manufacture under supervision of MLT/MS & ET a) b) The Cluster turnover would increase substantially 6. 21 Crore 6.3 Time frame Every year 12 Mini CFC'S would be set up or 60 in 4 years time covering selected major Artisan Mandals.9.9.4 Approximate budget Rs.9. 6.6     SPV Proposed Agencies for Implementation M/c Suppliers Civil Suppliers Civil Construction Agencies Final Report: Business Plan for Development of Narasapur Lace Cluster .9.42 - .

Final Report: Business Plan for Development of Narasapur Lace Cluster . and emphasis needs to be placed on production of fine lace which has a higher value  Bleaching and dyeing facilities need to be provided to increase the range of products  Artisans need equipment and facilities for producing better quality products and for improving productivity The following sections outline our approach to tackle the abovementioned issues: 7. Equity in the SPVs is to be held among the stakeholders of the SPVs. This approach ensures that all of the required interventions get equal priority. development of new designs based on market feedback and based on an analysis of market trends needs to given a priority  The quality of products needs to be improved. it is clear that the business plan for development of the Narasapur lace cluster has to deal with the following major issues:  Both export and domestic marketing needs to be given a thrust  In order to diversify the production base.1 SUMMARY OF ISSUES From the foregoing.2 APPROACH The overall approach to development of the cluster is through the formation of three separate SPVs each having a well defined focus and a well defined business plan.DEVELOPMENT PLAN FOR NARASAPUR LACE CLUSTER 7.43 - .

7. This CDCC will also mange inter-allia conflicts and improve coordination among the stakeholders. Hence.However. which will be again a Public Ltd Company and responsible for management and operations of 5 CFCs to be set up for dyeing.44 - . headed by DC (H) which will coordinate and monitor closely the activities of the business model to be implemented at Narsapur. bleaching and drying facilities in the block/ mandal level Final Report: Business Plan for Development of Narasapur Lace Cluster . Details of the functions and objectives of the CDCC hav already been outlined in chapter 6. A Project Management Cell is also proposed to be established. which will be a Public Ltd company for Marketing explorations. since the success of the development plan will depend largely on the manner in which all the three SPVs interact and support each other. a degree of trust and coordination is a must for the success of the plan. They will also conduct the third party monitoring of the activities and help in mid-term correction of the project activities.1 above.3 PROPOSED INTERVENTIONS: Agencies/ SPVs Proposed: Five different agencies are proposed for the comprehensive development of the lace cluster at Narasapur. These are as follows –  Formation of Cluster Development Coordination Committee (CDCC)  Formation of a Project Management Cell (PMC)  Formation of SPV – I. design development and technical support in marketing  Formation of SPV – II. the business model approach for Narsapur cluster is to form a Cluster Development Coordination Committee (CDCC). who will be a consultancy firm to give project management support to the SPVs under the guidance of the CDCC.

 Formation of SPV – III. who are the primary producers of the cluster. Final Report: Business Plan for Development of Narasapur Lace Cluster . which will be a producer company (581 B company) under Part IX A of Companies Act and owned by the artisans.45 - .

Lace Park. leads to low Sales Turnover and non-continuous work to Artisans.3.INTERVENTION – I FORMATION OF A MARKETING SPV 7.3. 7. f) Development of Marketing Channels/ avenues like Web Portal. Artisan SPV-3. tying up with major Retail outlets located in India & Abroad etc.3.3 Time Frame Final Report: Business Plan for Development of Narasapur Lace Cluster : 4 months for formation of the SPV . 7. Handicrafts & Gifts Fairs Development of New Designs & Product diversification (Design Bank) Execute orders under its ‘Brand’ with the assistance of Member Exporters.  The exports are falling & Domestic Market Demand remains untapped.1 Major Issues/Needs to be Addressed  The Marketing Set-Up/Infrastructure at Lace Cluster is deficient. Product & Design Catalogues.2 Proposed Interventions  Formation of SPV-1 (Public Ltd Co) for Market & Product Development at cluster level Main Functions of the Marketing SPV a) b) c) d) e) Explore & Procure Export-orders Procure Domestic orders Participate in Major International & National Textiles. appointing Dealers & Distributors.46 - .

and fixed assets like communication system and computers etc. Particulars No. c & d) Total 20.3. Lacs Final Report: Business Plan for Development of Narasapur Lace Cluster . b .Conference room etc c) Fixed Assets like office Communication system. S. Set. a) b) Land & Site Development (1 acre @ Rs.0 10.0 15. Computers & Printers (CAD) etc d) e) Preliminary & Pre-operative Expenses Contingencies (10% of a. display room.5 Means of Finance of Project Cost a) SPV-1 Stakeholders Equity (25% of total Project Cost) Rs. Lacs) 15.0 175.0 100.G. Conference room equipment. furniture & fixture. Amount (Rs.Showroom . D.7.0 7.47 - .Product Design Development office .0 25. conference room.3.Administrative office .4 Project Cost (For Establishment of Marketing & Product Design Development Centre) The Marketing SPV will establish a marketing and product design and development centre with a design office.Marketing office . 15 Lacs per acre) Building & Civil Works(Approx 1000 sqm @ Rs.000 per Sqm) comprising of: .

1 Project Cost for Marketing & Promotional Measures S. Particulars Amount (Rs. Lacs) 30. Details have been given in chapter 6 above. No. Steps like appointment of distributors and wholesalers in the major markets. taking part in exhibitions and advertising are some of the steps to be taken. It will also advertise its products to the major buyers. For this purpose the SPV will undertake intensive participation in overseas fairs and exhibitions. In addition the SPV will undertake development of domestic market which has not been tapped to any substantial extent. a.000 Nos @ Rs. this SPV will undertake promotion of exports and also increase domestic market.(i) Lace Park (25%) 11 22 11 44 25% 131 Total 175 (ii) Exporters (About 15 Nos) (50%) (iii) Artisan SPV-3 Total Equity % of equity contribution b) GoI Grant (75% of total project cost) under CCDS (25%) 7.4 PROJECT COST (MARKETING/PROMOTIONAL MEASURES) Besides the abovementioned investment in a Marketing and design centre.4. and undertake one-to-one buyer seller meets. Printing of Product/Design Catalogues (20.48 - . but which holds great potential. 7.00 Final Report: Business Plan for Development of Narasapur Lace Cluster .

25 269.00 8.000 Nos @ Rs.50 807.00 1000.00 5. f. d.00 Total 1076.5 VIABILITY OF THE MARKETING SPV In accordance with the current practices.00 b.50 67. Marketing Tie-ups etc. GoI Grant under CCDS (75%) 7. Design Development/Uploading of Web Portal Brand Design & Promotion Advertising through Media Participation in International & Domestic Exhibitions/Fairs. SPV-1 Stakeholders contribution (25%) (i) Lace Park (25%) (ii) Exporters (50%) (iii) Artisans SPV-3 (25%) Total equity by stakeholders 67. e. 2 a. 4 .25 134.150/Catalogue) b. the marketing SPV not only obtains orders for execution. It then arranges for the yarn to be bleached or dyed as the case may be and then give it to Final Report: Business Plan for Development of Narasapur Lace Cluster .49 - . but also provides the designs and also obtains the raw materials. Printing of Product Brochures (10.00 7 Means of Finance .00 25. Total 1076.00 80/Brochure) c. 8.

Lacs Estimated Cost of Yarn & Fabric (35% of T. Yarn & Fabric based product) in Rs.1 Raw Material Requirement The table below gives the yarn and fabric requirement and the cost thereof. which is used for all subsequent calculations of profitability of all the SPVs. 160 gsm.50 - . price @ Rs. Assuming that the Marketing SPV is able to cater to 50% of the cluster’s turnover.8 2011-12 16000 5600 2240 2240 3360 1792 4032 1008 25 1008 7. the conversion cost etc. 7. Thus the cost of raw material.O in Rs Lacs) Estimated Cost of Yarn ( @40% of (2) in Rs. 100/kg offwhite) in Tonnes Estimated Cost of Fabric (@ 60% of (2) in Rs. Lacs Estimated Quantity of Fabric (20 s. Estimated Consumption/requirement of Yarn & Fabric in Lace Cluster. price @ Rs. the SPV would have a turnover of Rs 25 cr p.6 Year 2010-11 11000 3850 1540 1540 2310 1232 2772 693 15 415.a. Final Report: Business Plan for Development of Narasapur Lace Cluster . NO Particulars 2008-09 1 2 3 4 5 6 7 8 9 10 Anticipated total Sales T. has to be accounted for while calculating the profitability of the SPV. rising fourfold in four years to Rs 80 cr.5. Lacs Estimated Quantity of Yarn ( 2/10 Count.2 Profitability of the Marketing SPV The table below shows the viability of the SPV.Narasapur SL.O of Cluster (50:50.artisans to convert the raw material into the finished product on a conversion charge basis. 30/sqm) in Tonnes Total estimated quantity of Yarn & Fabric to be consumed in cluster (Tonnes) Estimated Yarn & Fabric neading Bleaching (25 % of 7) in Tonnes Estimated Yarn & Fabric neading colouring (% of 7) Estimated Yarn & Fabric needing coloring (Tonnes) 5000 1750 700 700 1050 560 1260 315 5 63 2009-10 8000 2800 1120 1120 1680 896 2016 504 10 201.5.

160 Cr. SPV 3 etc @40% of (2) Salaries.40 cr at present. rising to Rs 12 cr over a four year period. have them bleached and dyed using the facilities of the CFC SPV and give them for conversion to artisans.0 9. No.8 2127.9 300.5 2800 3200 200 2008-09 5000 2500 2009-10 8000 4000 2010-11 11000 5500 2011-12 16000 8000 187.5 1400 1600 100 1925 2200 137.8 3403.9 (v) 7.0 3.7 cr p. Admin Expense @2.3 a) Expected Outcome /Benefits The Sales Turnover of the Lace Cluster would reach a level of approximately Rs. This will be four folds of the total present sales figure of the Lace cluster.51 - .7 14.5% of (2) Depreciation Total of (3) 4 5 Profit Before Tax (2-3) PBT as % on Sales T.9 412. Lacs) Year S. The calculations show that the SPV will be viable from the first year itself with a Profit before Tax of Rs 3.2 14. O&M.5. Bleaching Dyeing.5 2. fabric.5 5.8 596. Ironing charges. Final Report: Business Plan for Development of Narasapur Lace Cluster .9 600.3 14./yr in 4 yrs from Rs. packing.7 4680. SPV-1 Profitability Statement (Rs. shipment etc (@7. accessories @35% of 2) Conversion charges paid to Artisans Federations.The SPV would purchase the raw materials.3 6809.8 372.O (4/2*100) 875 1000 62.5% of (2) Other Expenses like utilities.7 819.a.3 1190.2 14. 1 2 3 (i) (ii) (iii) (iv) Particulars Anticipated Total Sales Turnover of the Lace Cluster Anticipated Sales Turnover of SPV-1 (50% of 1) Cost of Operations Raw Materials & Consumables (Yarn.

Presently about 50.000 Lace Artisans in the cluster in 4 Yrs period. 7.000 artisans are involved in the Lace Park and having almost regular job. their higher income & economic development.5.6. This project will provide additional employment for the rest 50.1 Proposed Interventions Formation of SPV-2 (Public Ltd Co) for setting up and managing common conversion facilities (CFCs) to provide the abovementioned facilities at the door steps of the users. Lace Park. and many times not practical. Since the Narasapur cluster is spread over a radius of nearly 40 Kms.52 - other Societies have to send the material to Tirupur.6 MAJOR ISSUES / NEEDS TO BE ADDRESSED a) For Quality dyeing of yarn & fabric the Exporters. b) The Tirupur Dyeing units do not entertain small quantities for development of samples.b) Full employment to about 100. Hence it is proposed that five CFCs Final Report: Business Plan for Development of Narasapur Lace Cluster .4 a) b) c) Proposed Agencies for Implementation Cluster Advisory Group (CAG) Cluster Management & Technical Agency (CMTA) Proposed SPV-1 (Project Execution) INTERVENTION – II – FORMATION OF CFC SPV 7.000 artisans are not associated with any of the societies or organisations and their livelihood is at stake.000 lace artisans and include them within the organisation. Erode in TN which is expensive & time consuming . 7. 50. only Bulk orders. c) The Bleaching facilities for finished products at the cluster are Primitive and inadequate (Hand Bleaching). it is not practical to have all the facilities located at only one centre.

(3) Tanuku. (4) Poduru and (5) Bheemavaram. These facilities would be available not only to the stakeholders but also to any other businessmen as well i.3 Time Frame yr) : 4 years (1 CFC every year for first 3 years & 2 CFC’s in 4 th 7.53 - . b) Automatic Bleaching facilities.e. at (1) Narasapur. some exporters who may be operating independently or even some small factories who may like to take advantage of high quality facilities being set up.6. 7.6.be set up over the period of four years to meet the requirements of concentrated artisans in five mandals viz.6. c) High Speed Yarn hank to cone conversion facilities. 7. (2) Ellamanchilli.2 Main functions of the SPV The proposed SPV will provide the following services to the stakeholders on a service charge basis: a) Automatic Yarn hank and fabric dyeing facilities.4 Project Cost a) Project Cost for each CFC’s (in Rs Lakhs) Final Report: Business Plan for Development of Narasapur Lace Cluster .

S.000 per Sqm) comprising of: . c.Production Hall . 590 Lacs 7. Lacs . furniture & fixture.50 40.00 d) e) f) 15. Small Goods Career Vehicle etc Preliminary & Pre-operative Expenses Contingencies (10% of a.Raw Material and Product Storage .0 10. Set.54 - Rs. iii) Hydro Extractors of 100 kg capacity (2Nos) iv) Tumble Dryers of 100 kg capacity (2Nos) v) Steam Boiler of 1000 kg/hr capacity with Water Softener vi) Wet Linen Trolleys (10 Nos) vii) Six Spindle Yarn Hank to Cone conversion m/c (10 Nos) Misc. D. d & e) Total Amount 7. b .No. Fixed Assets like office equipment.6. to run for 3 batches/day or total capacity of 600 kg/day ii) Automatic Bleaching Plant with a capacity of 200 kg per batch.Office . Plant and Machinery comprising of the following : i) Automatic Yarn Hank & Fabric dyeing plant with Jiggers with a capacity of 200 kg per batch.00 c) 30.0 15.5 Means of Finance – Project Cost for 5 CFC’s a) SPV-2 Stakeholder Equity (25% of Total Project Cost) Final Report: Business Plan for Development of Narasapur Lace Cluster . 4. Particulars a) b) Land & Site Development (1/2 acre @ Rs.0 b) Thus the total project cost for 5 CFC’s would be Rs 118 lakhsx5=Rs. 15 Lacs per acre) Building & Civil Works(Approx 1000 sqm @ Rs.G. to run for 3 batches/day or total capacity of 600 kg/day.Electrical & DG Set room etc.5 118.

the CFC SPV will be carrying out job works on conversion charges basis. the CFC SPV will make a profit of Rs 14s in the first year rising to Rs 112 lakhs by the fourth year.(i) Lace Park (25%) (ii) Exporters (50%) (iii) Artisan SPV & Other Societies (25%) Total Equity b) 37. After accounting for the cost of materials and cost of operations. The total installed capacity per CFC will be 770 MT p.00 37. The PBT as a % of sales at 16-17% is reasonable.00 7.00 Project Cost) Total 590.6. Final Report: Business Plan for Development of Narasapur Lace Cluster .00 74. The income of the SPV is estimated at Rs 87 lakhs in the first year. of India Grant under CCDS (75% of Total 442. The viability calculations assumes that the CFCs will get about 60% of the dyeing and bleaching business of the cluster in the first year itself and as its credibility gets established and costs become more competitive.6 Viability of the CFC (Common Facility Center) SPV As explained earlier.a.00 148 Govt.55 - . rising to Rs 649 lakhs by the fourth year. the capacity utilization will rise to 90%.

7 4.6 17.8 103.7 32.3 34.O (5/3*100) 210 210 350 60 420 420 700 70 630 630 1050 80 1050 1050 1750 90 2008-09 Yearn 2009-10 2010-11 2011-12 50 28 8 87 118 65 20 202 202 111 34 346 378 208 63 649 4 a) b) c) d) e) f) 5 6 26.7 194.3 3. Lacs) Raw Materials & Consumables (Dyes. Lacs) PBT as % on Sales T.9 32. 1 a) b) c) 2 3 a) b) c) Particulars Installed Plant Capacities Automatic Yarn & Fabric Dyeing (TPA) Automatic Bleaching & Washing(TPA) Yarn Hank to Cone Conversion (TPA) Plant Capacity Utilization (%) Income from Operations/Services Yarn & Fabric dyed (@Rs.1 6. 4 per kg) in Rs. Plastic cones etc) @ 30% of (3) Wages & Salaries @30% of (3) Adm & Marketing Expenses (5% of 3) Utilities (Power.0 4. Hydrogen Peroxide bleach.6 60. Lacs 1/2 kg Cone Conversion (@ Rs. Fuel & Water)@10% of (3) Repair & Maintenance and other overheads (@5% of (3) Depreciation Total (4) Profit Before Tax (Rs.56 - . Lacs Product Bleaching & washing (@Rs.SPV-2 Profitability Statement S.1 20. 40 per kg charges) in Rs.6.4 17.4 536 112 17 7.0 26. No.7 Expected Outcome / Benefits Final Report: Business Plan for Development of Narasapur Lace Cluster . Lacs Total (3) Cost of Operations (Rs.6 10.3 11.8 17.2 288 58 17 194.3 8.2 10. 22 per kg) in Rs.3 73 14 16 60.4 64.5 168 34 17 103.

57 - .a) b) c) d) e) Ease of Operation for the Stakeholders Availability of Quality dyed yarn in half kg Cones/fabric in the cluster at economical prices.8 a) b) c) Proposed Agencies For Implementation Cluster Advisory Group (CAG) Cluster Management & Technical Agency (CMTA) Proposed SPV-II (Project Execution) Final Report: Business Plan for Development of Narasapur Lace Cluster . The cluster Turnover would increase due to inclusion of coloured products in product range.6. (Presently restricted mostly to offwhite/white only) The quality of Coloured products would be able to match the International Quality standards Easy availability of off white yarn in half kg cones at economical prices 7.

Artisans present are are c) Despite the efforts of Lace Park & Few other Societies. b) Common Production /Facility Centres at village level for Lace non existent in majority of the villages of the temporary at the residence of the cluster & those Society President. picoting.r. Embroidery.58 - .  Fine Thread intricate Lace Work etc.7 MAJOR ISSUES/ NEEDS TO BE ADDRESSED a) The Knowledge & skill of Lace cluster Artisans is traditional. A total of 50 worksheds are proposed to be set up during the 4 yr period. majority of the Lace Artisans (Approx 100000) are unorganized and working in isolation in W. outdated & is lacking w. Final Report: Business Plan for Development of Narasapur Lace Cluster .G.1 Proposed Interventions  Formation of SPV-3 (Producer Company) for the Lace Artisans at Cluster level with Mini CFCs/Work sheds to be set up near a cluster of villages. beadwork. d) The health of the women lace artisans is not good and they suffer from poor eye sight due to fine weaving work and are also highly anemic (Hemoglobin @ 6).INTERVENTION – III – FORMATION OF ARTISAN SPV 7. 7.t:  New products/diversification  Latest Fashion Designs  High value art like M/c or hand stitching.7. District. interlocking.

r. Projects for Undertaking Integrated Design & Technical Development fabrics. Test marketing etc.7. Development of New Prototypes/Products based on Lace & Different varieties of Organizing approximately 75. procuring orders from Capacity Building/Skill Up gradation of Artisans Organizing Mandal Level Design & Technical Development Workshops for Lace Artisans at proposed mini CFC’s w. New Designs etc.59 - .t Eye.7. Fine Thread intricate Lace Work etc.r.2 Main Functions of the SPV: Domestic Marketing Direct Domestic Marketing of Lace Artisan products & SPV 1 and other exporters.r. in the lace Godavari Orthopaedic ailments.t other High value art like M/c or picoting. Final Report: Business Plan for Development of Narasapur Lace Cluster . beadwork. Social Welfare Activities for Artisans Organizing Health Camps in about 12 Major Mandals of West District for Lace Artisans w.000 Artisans presently unorganized cluster. eye glasses etc. check Providing Health Insurance Cover to Lace Artisans will provide social security to the lace artisans which on the other hand give full-day employment for the artisans. Health. Artisans at Lace Products. interlocking. Gynae & up and distribution of necessary medicines. Organizing Mandal level Skill upgradation programs for Lace Mini CFC'S w. Embroidery.t. Managing Artisan Mini CFC’s Managing the operations of 50 Artisan Mini CFC’s (to be set up in 4 years in 12 major Artisan Mandals) which would offer facilities to the Lace Artisans sophisticated common production and getting quality work executed from Artisans. Latest Fashion hand stitching.

Electrical & DG Set room etc.50 10. Set.Raw Material and Product Storage . furniture & fixture.7. 7.0 Amount 3. .0 Final Report: Business Plan for Development of Narasapur Lace Cluster . D.4 Project Cost (Artisan Mini CFC’s) a) Project Cost for each Artisan Mini CFC’s (in Rs Lakhs) Particulars Land & Site Development (1/4 acre @ Rs.75 a) 4.75 42.7. every year 10 Mini CFC’s would be setup and in the 4th yr 20 Mini CFC’s would be set up.7.10 Automatic stitching m/c. .1 No. 10.000 per Sqm) comprising of: .Office .2 overlocking m/c.0 10.Production Hall . .0 3. d & e) Total 5. 15 Lacs per acre) b) Building & Civil Works(Approx 250 sqm @ Rs. b . c) Plant and Machinery comprising of the following : .3 Time Frame  In the first 3 yrs.60 - .2 Picoting m/c. Goods Career Vehicle etc e) f) Preliminary & Pre-operative Expenses Contingencies (10% of a.2 Automatic Embroidery m/c with 6 heads.G. Straight Knife Fabric Cutting m/c d) Misc. Fixed Assets like office equipment. . c.

CFC’s over 4 7. Societies) (25%) 531.7.5 Means of Finance for Project Cost for 50 Artisan Mini CFC’s (Work-sheds) Rs.00 Total 2125.00 b) GoI CCDS (75%) 1594. 2125 Lacs. Lacs a) Artisan SPV-3 Equity (Federation.00 Final Report: Business Plan for Development of Narasapur Lace Cluster .b) Thus the total project cost for setting up 50 Artisan Mini year period would be Rs.61 - .

Mumbai.e. 1.70 Lacs per program) (iii) Undertaking Integrated Design & Technical Development Amount (Rs. Artisan Skill-Upgradation & Social Welfare Activities) Capacity Building.7. 50 Artisans per batch (Total 120 Workshops in 4 Yrs in 12 Major Mandals @ Rs. Delhi. No. Handicrafts & Gifts Fairs organized by ITPO. Hyderabad. S.6 Project Cost (Domestic Market Development. EPCH etc Total (b) S. 13. Lacs) 216 162 100 Projects for new prototypes at Lacepark (Total 10 projects in 4 Yrs @ Rs. 2.50 Lacs / Bazar) (iii) Participation in major Domestic Textiles. Bangalore.62 - 478 16 338 100 454 Amount (Rs. Chennai etc (Total 25 Nos in 4 Yrs.000 Nos @ Rs. Lacs) Final Report: Business Plan for Development of Narasapur Lace Cluster .80 Lacs/Workshop) (ii) Organizing Mandal level Skill Upgradation Program for Artisans at Mini CFC’s. No. each of 4 Months duration. each with 150 Artisans stalls 10 days duration @ Rs. c) Particulars Social Welfare Activities . 30 Artisans per batch (Total 60 programs in 4 Yrs in 12 Major Mandals @ Rs.7. 10 Lacs per project) Total (a) b) Domestic Market Development (i) Development & Printing of Lace Product Brochures 20. 80/Brochure (ii) Organizing Craft Bazars in Major cities of India i. a) Particulars Capacity Building (i) Organizing Mandal Level Design & Technical Development Workshops for Artisans at Mini CFC’s each of 15 days duration.

Societies etc ( in the first year about 15. 900 per family  4th Year : 50.7. 2 Lacs/Camp (ii) Providing Health Insurance cover to about 100.63 - . issuing ID Cards. in major 120 Mandals in 4 Yrs @ Rs.000 Artisans over 4 Yrs period or about 50000 Artisans families based on the following plan:  1st Year : 20.7.000 Artisans would be organized then 20. 900 per family  3rd Year : 40.000 every subsequent year thereby forming a total of 300 additional Societies) @ Rs.8 Viability of the Artisan SPV (Producer Company) Final Report: Business Plan for Development of Narasapur Lace Cluster .000 Artisan Families @Rs. formation of SHG. 400 per Artisan Grand Total (a+b+c+d) 2612 300 1380 1260 7. 900 per family Total (c) d) Organizing of 75.7 (i) (ii) Means of Finance 653 1959 2612 Artisan SPV-3 Contribution (about 300 Societies) (25%) GoI Grant –CCDS (75%) TOTAL 7.000 Artisan Families @Rs.000 Lace Artisans Identification of unorganized Artisans village wise. 900 per family  2nd Year : 30.000 Artisan Families @Rs.(i) Organizing 60 Health Camps at Mandal level.000 Artisan Families @Rs.

10 cr by the end of fourth year.O.50 cr in the first year rising to Rs Rs 54. No Particulars 2008-09 b) Job Work from Exporters.00 2430.O of SPV-3 from Operations: a) Direct domestic marketing S.00 1450. the profits will be divided between the members partly as bonus and partly in the ratio of use of its facilities by the members of the artisan company.64 - . SPV-1 (65% of (2) Total (3) 4 Cost of Operations: 1300. No Particulars (Rs. As a producer company. that the domestic sales will form only a small % of the overall activities of the SPV.96 cr in the 1st yr rising to about Rs 7.00 3460.5 cr by the end of fourth year. in which case it will also directly execute such domestic orders.00 150.00 1250. The viability calculations assume on a conservative basis.00 5410. SPV-3 Profitability Statement S.00 Final Report: Business Plan for Development of Narasapur Lace Cluster . The turnover of the Producer Company is expected to be Rs 14.00 Year 2009-10 2080. After accounting for the cost of conversion etc. SPV-3 etc(40% of (1) Estimated T. it is found that the Profit Before Tax is Rs 1.00 5000 2000 2009-10 8000 3200 2010-11 11000 4400 2011-12 16000 6400 3 350.00 2010-11 2860.00 600. of Lace Cluster Estimated Conversion Charges Paid to Lace Park. Lacs ) Year 2008-09 1 2 Estimated Total Sales T.The artisan SPV will undertake job work from the Export SPV and will also develop some domestic sales of its own.00 2011-12 4160.

24 2099.50 162. R& M expenses (@3% of 3) d) Utilities (Power.50 1040.50 7.90 72.00 2498. Packing Cost @5% of 3(a) f) Depreciation (SLM) Total (4) 5 6 Profit Before Tax (3-4) PBT as % of T.70 746.00 1786.90 17.55 122.00 3765.46 13.71 466.60 4663. Fabric & Accessories @ 35% of 3 (a) b) Conversion Charges paid to Member Artisans for : i) Own product manufactured (@35% of 3(a) 52.50 122.80 30. Adm.29 13.50 43.60 210.50 210.50 1664.00 437.48 196.54 330.O (5/3 *100) Final Report: Business Plan for Development of Narasapur Lace Cluster .30 162. Dyeing.98 1253. Fuel @ 3% of 3) e) Bleaching.00 103.00 2288.50 3328.80 103.79 ii) Job Work (@80% of 3(b) Total (b) c) Salaries. Ironing.11 2993.00 1092.30 13.65 - .50 72.48 437.50 52.00 48.52 13.50 73.a) Raw Materials & Consumables (Yarn.50 13.30 62.50 27.50 43.

10 Proposed Agencies for Implementation  Cluster Advisory Group (CAG)  Cluster Management & Technical Agency (CMTA)  Proposed SPV-III (Project Execution)  Design Institutes like NIFT/NID to provide Designers Final Report: Business Plan for Development of Narasapur Lace Cluster .  Mini CFC'S will provide excellent working condition and result in enhanced quality & quantity of village level laced products manufacture under supervision of MLT/MS & ET 7. (Trainer -Trainee Program)  About 500 MLT will be trained in new Lace & garment based products & latest Designs & they inturn would train other Artisans at village level in the proposed Mini CFC'S (Trainer-trainee program)  Due to skill upgradation the trained Artisans would be able to perform High value added work/job which would provide them more work and higher conversion charges.7. Embroidery etc & they in turn would train other Artisans at village level in proposed Mini CFC'S. interlocking.7.9 Expected Outcome / Benefits (4Yrs Period)  About 6000 MLT will be trained in new Laced based products & latest Designs & they inturn would train other Artisans at village level in the proposed Mini CFC'S (Trainer-trainee program)  About 1800 Master Stitching & Embroidery (MSE) Trainers would be trained in High value Arts like M/c or Hand stitching .7. Picoting.66 - .

2 Proposed Agencies for Implementation  SPV-I Export SPV  SPV-III Artisan SPV  Lace Park etc. starting with 25. 7.8.8 MAJOR ISSUES/ NEEDS TO BE ADDRESSED To provide margin money Working Capital Support to about 100. 7. going up to Rs 2000 lakhs in the fourth year based on a budget of about Rs 2000 per artisan.000 lace artisans in 4 yrs.INTERVENTION – IV – PROVIDING MARGIN MONEY SUPPORT 7.1 Budget / Requirement Budget requirement would be Rs 500 lakhs in the 1st year. Final Report: Business Plan for Development of Narasapur Lace Cluster .000 artisans in 1st year.8.67 - .

the project cost for development of Narasapur cluster is estimated at Rs 90.83 cr will be by way of grant from GoI. The stake holder’s participation will be by way of equity in the SPVs to be formed to the extent of 25% . from the equity contribution by the stakeholders and by way of grant from the Mega Cluster Scheme of GoI.e.9 PROJECT COST AND SOURCE OF FUNDS: The table below gives the summary of the fund requirement for various interventions and their source of funds. 7. the funding for the development plan of Narasapur cluster is proposed from two sources i. Provision has been made for grant by way of working capital margin money of Rs 20 cr as part of this scheme.28 crores to be spent over a period of four years. In overall terms. The equity contribution expected from the stakeholders is reasonable and realistic as can be seen from the subsequent table in section 8.2 below: Final Report: Business Plan for Development of Narasapur Lace Cluster . and the balance Rs 73.ESTIMATED COST AND SOURCE OF FUNDS As can be seen from the list of interventions outlined in chapter 7 above.68 - .

000 Artisans families by SPV 3 Organizing about 75. CMTA. issuing ID Cards. Societies etc by SPV 3 Margin Money Support for Working Capital to meet the requirements of Artisans at Cluster level Total Total Funds Required 450 Source of Fund GoI CCDS 450 Stakeholder Equity 0 % of Equity 0 2 3 4 175 1076 590 131 807 442 44 269 148 25 25 25 5 6 2125 478 1594 359 531 119 25 25 7 8 9 454 120 1260 341 90 945 113 30 315 25 25 25 10 300 225 75 25 11 2000 9028 2000 7383 0 1645 0 18 Final Report: Business Plan for Development of Narasapur Lace Cluster . identification of unorganized Artisans. Activity No.3 & Setting up of 50 Artisan Mini CFC's Capacity Building of Artisans by SPV 3 (Organisation of 120 Workshops. Lakhs) S.Summary of Project Cost & Source of Funds (In Rs. DPR preparation. Project Performance Assessment Formation of SPV 1 & Setting up of Market & Product Development Centre Market Development Activities by SPV 1 Formation of SPV-2 & Setting up of 5 CFCs for offering Bleaching. Dyeing. carrying out Diagnostic Survey of Lace Cluster . Cone Conversion facilities Formation of Artisan SPV . formation of SHG.e. 1 Formation of CAG.69 - .000 Lace Artisans i. 60 Skill Upgradation Programs & Undertaking 10 Nos Integrated Design & Technical Development Projects ) Domestic Market Development by SPV-3 Organizing 60 Health Camps by SPV-3 at Mandal level in the Cluster Providing Health Insurance cover to about 1 Lac Lace Artisans over 4 Yrs period or about 50.

) who are to be federated into the Producer Company sought to be formed as SPV-III.e.84 lakhs per exporters which is also reasonable.10 EQUITY CONTRIBUTION BY STAKEHOLDERS: As explained above the total equity contribution is to come from three major stake holders viz. The table below indicates that the expected contribution by the lace park federation is at the rate of Rs 115 per annum.70 - . The equity of the stakeholders is to be spread over four years as the project is implemented and funds are required. it should be possible for them to contribute this amount. whereas the artisans forming the producer companies are being asked to contribute about Rs 433 p.a.m. i. If the federations / SHGs so desire and decide. about Rs 35 p.The phasing of the requirement of funds and their source is given in the enclosed chart marked Annexure-I 7. they may also use part of the margin money to contribute towards equity.: (i) the federations formed by the artisans of the lace park (ii) Exporters and (iii) artisans (around 75000 in nos. Final Report: Business Plan for Development of Narasapur Lace Cluster . The contribution of exporters is Rs 3. considering that the artisans are likely to gain the most format eh interventions.

e. Dyeing. Societies etc by SPV 3 Margin Money Support for Working Capital to meet the requirements of Artisans at Cluster level Total No.S. Cone Conversion facilities Formation of Artisan SPV .000 Artisans families by SPV 3 Organizing about 75. carrying out Diagnostic Survey of Lace Cluster . In Lakhs) Total Equity Contribution of Different Equity Stakeholders (Rs. of Stakeholders Contribution / Stakeholder/Year in Rs. In Lakhs) Lace Pak Fund 0 Exporters 0 Artisans 0 1 2 3 4 Formation of CAG. issuing ID Cards. 60 Skill Up gradation Programs & Undertaking 10 Nos Integrated Design & Technical Development Projects ) Domestic Market Development by SPV-3 Organizing 60 Health Camps by SPV-3 at Mandal level in the Cluster Providing Health Insurance cover to about 1 Lac Lace Artisans over 4 Yrs period or about 50. identification of unorganized Artisans. CMTA. 0 44 269 148 11 67 37 22 134 74 11 67 37 5 6 531 119 0 0 0 0 531 120 7 8 9 113 30 315 0 0 0 0 0 0 114 30 315 10 75 0 0 75 11 0 1645 0 115 25000 115 0 230 15 384000 0 1299 75000 433 Final Report: Business Plan for Development of Narasapur Lace Cluster . Project Performance Assessment Formation of SPV 1 & Setting up of Market & Product Development Centre Maket Development Activities by SPV 1 Formation of SPV-2 & Setting up of 5 CFCs for offering Bleaching.71 - .3 & Setting up of 50 Artisan Mini CFC's Capacity Building of Artisans by SPV 3 (Organization of 120 Workshops. DPR preparation. formation of SHG. Activity Equity Contribution by Stakeholders (RS.000 Lace Artisans i. No.

40 Crore to Rs. 500/Month to about Rs.  The average Lace Artisan Income would increase from the current level of about Rs. to rise from current level of approx Rs.  The operations of Lace Cluster would become economic & self reliable with the improvement of infrastructure i.  Higher Foreign exchange earning by exports.72 - .000 Lace Artisans would be organized in the Lace cluster leading to their empowerment & Socioeconomic development. This project not only coordinates and collaborate all activities and stakeholders but will also converge all funds and efforts made by different organisations.e. 36 Cr/yr to about Rs. product bleaching & washing. Final Report: Business Plan for Development of Narasapur Lace Cluster . 160 Crore in the IVth year (2011-12). The major deliverables are given below:  There will be a substantial growth in the Lace Cluster in an organized manner and the cluster sales turnover (Exports.  During the next 4 Yrs (2008-09 to 2011-12) additional 75. Domestic Market) is expected to increase from the current level of approx Rs. The stakeholders in this programme will be trained in different capacities to deliver accordingly. setting up 5 CFC’s for providing Automatic Yarn hank & fabric dyeing. 80 Cr/yr in the 4th year (2011-12). Yarn Hank to cone conversion for Artisans (1/2 Kg small cones) facilities and 50 Mini CFC’s for Lace Artisans at village level.EXPECTED OUTCOMES / DELIVERABLES One of the major out come of the cluster development programme by developing the business plan is to ameliorate the socio-economic condition of the one lakh lace artisans whose present income is around Rs 500 per month. 1500/Month (Increase 3 folds) leading to better living standards.

3 percent of the project cost and the government stake will be 82 percent.11 SUSTAINABILITY OF THE PROGRAMME: This project is viable because all the stakeholders have their own stake in the project. Artisans SPVs (Three different SPVs) will share 14.27 percent of the project cost.54 percent of the project cost.e. The Lace Artisans families would be provided the much needed Health  Insurance Cover and the Health & Productivity of the Lace Artisans would improve through periodic Health Check-up camps. Lace Park society. at present to about Rs.  With the up gradation of Lace Artisans skills. including the exporters. they would be able to fetch higher wages for their art i. artisans and the Government.73 - . Rs. 90/1/2 Kg cone conversion for coarse Lace Work blended products like Lace & fabric products. The Lace products range would broaden with the addition of Coloured products & blended products like fabric & lace and products quality would improve which in turn would provide the Lace Cluster ample opportunities to compete in the Export Market with China and to tap the vast Domestic Market. Exporters are sharing 2. The operations of the Lace Cluster as a whole would become highly  economical and viable thereby leading to economic benefit for all stakeholders. intricate Lace work & 7. Final Report: Business Plan for Development of Narasapur Lace Cluster . Lace Park is sharing 1. 200/1/2 Kg cone conversion for fine.

This project is highly sustainable as par artisans will have to share Rs 400 for the project which is too small an amount. who are investing Rs 15 lakh par head.74 - . The exporters.Gradually the project cost will be shifted to the SPVs and exporters for the maintenance and running of the cluster. The artisans will be given capacity building training for design development and skill development. we very much wish that the State Government takes a minority shareholding in the equity of the SPVS. we have not assumed any equity contribution by the State Government. will reap the benefit of about ten times of what they invested. Although in the present proposal. The exporters and societies will be provided with marketing assistance and the margin money will be provided for further business. And after four years time the benefit they will reap will be a monthly earning of Rs 5000 on a regular basis. the stakeholders for their own benefit will run the SPVs and the project in long run. Final Report: Business Plan for Development of Narasapur Lace Cluster . so that they can be represented on the boards of the SPV and provide the much needed elder hand and patronage that the SPVs are bound to need in the initial phase. especially the exporters and the artisans. The role of the Cluster Advisory Group to be formed and headed by the District Collector will therefore be most crucial. Therefore. The success of the project will depend upon the ability of the various stakeholders to work together in a united manner and not be suspicious of each other.