JAIPUR RUGS COMPANY

Presentation by: Group-1

THE CHALLENGE
Developing human capability and skill at grass root level. Providing steady income for rural men & women. Connecting these people with rich markets. Is the model sustainable?

BRIEF OVERVIEW OF COMPANY

Founder NK Chaudhary entered rug-making business in 1986 with his brother. Jaipur Rugs registered in 2006. By 2008, the company had an annual revenue of $21.1mn with a CAGR of 38% between 2005-08. Approximately 300 direct employees, 40000 contractors, operations split into 4 entities.

BUILDING BLOCKS

Deep Rooted Relationships: Driven By Social Values: Reducing Capital Intensity: Technical Architecture:

Chaudhary built Jaipur Rugs by emphasizing strong personal loyalties and family ties. This allows JR to efficiently operate a highly decentralized system.

Competitive wages, skills training, access to healthcare and education and opportunity for entrepreneurs.

Work and investment are decentralized, leverages management influence over key decisions.

ERP and human network.

WORKFORCE
Headquarters, 22 branch offices, field officers (branch managers, area commanders) and JR foundation motivators. Rugs produced by 28000 artisans further supported by 12000 workers. Main advantage: a steady income throughout the year, alternative sources supplement it, better wages by elimination of middlemen.

OVERVIEW OF PROCESS
Raw material (wool, silk, cotton) Processing
(Cleaning, Carding,Spinning, Dyeing, Opening) Weaving Finishing Ready for sale

WEAVER ENGAGEMENT
Mode of Employment Direct contact with JRC Indirect via Entrepreneur Indirect via Middlemen Number of Weavers 15,170 6,900 5,500 % of Weavers 55 25 20 Average Monthly Income 1870-2970* 1760-2800 1320-1980

*Variation in income is based on skill and output. Even in case of middlemen, the compensation that weavers get is much better than other market players. JR ensures that child labor is not practiced by any of its outsourcing partners also.

PROPER SYSTEM IN PLACE

Despite having a highly decentralized process, JR has a very efficient supply chain because of periodic and properly placed system checks that ensure quality and minimize rejection. Weavers are not required to bear transport cost thereby saving time and money and increasing output. Efforts are underway to further streamline the process to reduce the lead time.

SOCIAL ISSUES AND ENCOURAGEMENT

Promotion of leadership and entrepreneurship, upward mobility. Employee interaction- Sunday night discussions and Book share programs. Employee training. Labor Practices- no discrimination on any grounds.

FUTURE GOALS & CHALLENGES

Target more people- broader product line Capacity building- in terms of design, production and supply. Efficient supply chain. Finding right people and developing them- at top level, mid level and at the weaver and contractor level.

It seems JR is managing issues related to sustainability and inclusive growth (in line with its vision) pretty well!!

ISSUES FACED BY JODHPUR FURNITURES

Fierce competition (Margin cuts) High labor and raw material costs. Shortage of skilled labor. Strict timelines imposed by SEZ.

The way forward: Target more towards domestic market.

SIMILARITY BETWEEN THE TWO?

JR follows a very robust model. Its dependence on skilled labor is not that high. The company has set up offices where there was no history or rug making and trained people there. Competition: Boon or Bane?? Industry wide reputation of JR. High RM costs can be absorbed by a combination of decrease in margins and increase in prices.

DIFFERNTIATING FACTOR!
Focus on inclusive growth and sustainability. Encouragement to be an entrepreneur. Jodhpur Furniture is highly capital intensive whereas JR is not. Reason? High reliability on skilled labor in case of Jodhpur Furniture. JR provides incentives in form of hundreds of upward motivated successful employees.

Jaipur Rugs is here to stay !!