Index

Sr.No. 1 2 3 4 5 6 7 8

Contents Executive Summary Historical Evolution of the cluster Sketch of MSMEs & other Actors Analysis of Business Operations Inter-Firm Industrial Organisation SWOT Analysis, Vision Action Plan Annexure
Institutional Matrix (Pr, Post Intervention) Value Chain Analysis (Pre, Intervention) Cluster Map (Pre, Post- Intervention) Products of Cluster Post

Page No.

Executive Summary
The Rs. 150 crores handloom cluster of Barabanki has displayed impressive performance over the years particularly in the front of export. The enterprises in the cluster have develop globel recognation in over a three decades operations. Co-operative societies, who constitute an important segment of product manufacturers in the cluster and are witnessing the decreasing of demand. Due to lack of market and brand name most of the core actors are selling their products to the local traders or outside traders at very low margin.

The Core cluster actors are micro weavers who are job workers or tiny weavers, Co-operative societies and traders.Most of the cooperative societies are farmed by the senior weavers. A weaver who get Rs. 50-60 per day per loom even the working days has been reduced to less then 250 days. The linkages of the core actors with most of the Public service providers are very weak. There is some help from WSC, Varanasi and DOH, Lucknow, linkages with other service providers have to be strengthened.

Post Weaving operations

The linkages with BDS & commercial service providers is virtually nil in the cluster The value chain analysis shaws unequal distribution of margin ,major margin has been taken by the outside traders. . The cluster which estimated 50,000 weavers and 20,000 looms, will be supported by the way of Integrated Handloom Cluster Development Programme on a cluster mode. With Proper interventions in the areas of raw material procurement,design,dyeing , skill up gradation, direct marketing & exports , Buyer seller meets with the help of Public & commercial service providers. Barabanki cluster can achieve market growth. DC, HL in

( II ) Geographical Location

The district of Barabanki is 35 kms far from Lucknow the state capital of Uttar Pradesh, also known as the 'Entrance to Poorvanchal',

Historical Evolution As the saying goes, in ancient times this district was part of the kingdom ruled by Suryavanshi kings, whose capital was Ayodhya. King Dashrath and his famous son, Lord Ram was of this dynasty. Guru Vashisht was their Kulguru, and he preached and taught the young royal princes of the dynasty at Satrikh, initially known as Saptrishi. This district was under the rule of the Chandravanshi kings for a very long period. During the Mahabharat era, it was part of the 'Gaurav Rajya' and this part of land was known by the name Kurukshetra. Pandav along with their mother Kunti had spent some time on the banks of river Ghaghra during their exile. District Barabanki was known as Dariyabad with its headquarters at Dariyabad town established by an officer in the army of Mohammed Shah Shariqi by the name Dariab Khan. It remained the district headquarter till 1858 AD. The district headquarter was shifted to Nawabganj known as Barabanki. The Barabanki Handloom cluster is famous for weaving during the nawabs period of Lucknow. The total turnover from the handloom cluster of Barabanki is around 150 crores. About 95% of total cluster turnover has been oriented towards export. Cluster actors also outsource production to some other cluster due to heavy demand and time bound order of export market. The societies are cluster are dependent on the local traders. Phase I: In year 1940 the weavers of Barabanki used fly shuttle throw looms, the yarn suppliers the Japani yarn .The product initially manufactured in the cluster was the Lungi. Soon traditional pit loom were replace by fly shuttle throw loom. By the year 1947 when the country was become freedom the weavers of Barabanki established a Co-Operative Society named Alapur Co-Operative Society Ltd. Phase II : By the 1960s they produce check lungi called Gabroon which was made by Japani stapled yarn, the product was very low colour fastness supplied to Lucknow market, Late 60s they produce another product called Gamcha which was made by cotton yarn. in 1859 AD now

Phase III : By the 1970s time was changed and the weavers of Barabanki diversified their product, now they were producing Stoles, Scarves & Shawls. Teen Tara Scarf, which was 36X36 in Size and weaved by 26 n.f. Stapled yarn got very high demand in the market. In the year 1977 they were producing Stoles, Scarves & Stoles weaved by rayon yarn. The traders of metro cities saw a big market of Barabanki products, they contacted the local traders and gave their orders, The traders of Barabanki supplies the raw material to Co-operative societies and individual weavers. The weavers of Barbanki gets wages against the products they produced. Traders of Barabanki supplies the final product to the traders of metro cities and they were exported that product to European and Gulf countries. But the demand of Barabanki handloom products is fallen down due to competition of other handloom cluster and powerloom. Now they have to diversified there products to sustain in the export market. Present Scenario Barabanki Handloom product is a dream house of apparel accessories for women. As per the estimation there are about 50,000 weavers and 20,000 Looms at Barabanki and adjoining area*. In addition there are number of traders and ancillary support providers. The annual turnover of Barabanki cluster is estimated at Rs. 150 Crore. (*Note: The exact weavers force and Looms in the cluster have to be mapped.) The main products are Scarfs, Shawls and Stoles, which have a good export market. These products are broadly categorized in to two segments: I] Rayon fiber II] Cotton yarn Mostly they are using 2 x 40,17 nf single rayon yarn and 2 X 40, 20 single, 2 X 17, 2 X60 denier cotton yarn. Most of the weavers are Job Workers who receives Yarn and design from the traders and handed over a woven product to them and receiving wages. Some of the senior weavers have started Co-operative Societies with wage Payment weavers as members, most of the weavers in the Barabanki are depending On Societies and traders for work, the financial condition of a weaver is not good to Purchase the raw material from the market and sale out. There are some tiny weavers or unskilled weavers who doesnt have designer skills will take raw material from the local traders and produce a ordinary gamcha for the local buyers. The weavers can be categorized into 2 types, based on their skill: (i) Weavers who produce higher end product like Stoles, Scarves & Shawls for export market

(ii)

Weavers who produce low quality product like Gamcha for local market.

The weaver earning vary from 12000 to 15,000 per anum, and average wages per day is Rs 50-60 per loom. The demand of the product is in declining since last five years . The average working days have reduced from 300 to 250 days due to competition from the other clusters and power loom sector Socio- Economic Status: Majority of the population among the weavers have not gone up to the school level .It is found that most of the families among the weavers have more then 6 members in the family. estimated household income is up to 12 to 15 thousand per anum and the average wages per day per loom. Sketch of MSMEs and Other Cluster Actors The Weaver: There are around 50,000 weavers at Barabanki and adjoining area ,most of them are job workers receiving yarn and design handing over a woven product and receiving wages. All the pre weaving process did by the family members of the weaver & the labor cost of this comes under the wages of weaver. Other role players: There are also many other players such as designer, yarn supplier, loom supplier as the backward linkages of the supply chain, some role players at the forward linkages of supply chain. They are traders and exporters. Traders: The local traders are just intermediaries in between the outside traders and the weavers took the orders from them and supply the raw material to the weavers. the weavers weave the product and hand over to get the wage. Dyeing: The raw material rayon yarn & cotton yarn procured is both gray as well as dyed types. The dyeing process is not taken up on a large scale in the cluster, dyers operate from their household traditional dyeing is in practice for dyeing the yarn. A typical dyeing unit possesses 400 to 500 sq.ft. built up space. Usually it has two chullhas .One chullha handles maximum 2.5 kgs of yarn in a batch it can produce up to 25 kgs in 10 hours. Designing: Rs. 50-60

The designer gets input from trader, he generates design anticipation of demand. Relative to design generation graph making is a routine work. Designer may perform both functions often receiving a package price. His exposures to design books/journals/exhibitions are negligible. He earns around Rs.2000/per month. He is the creative backbone of this sector. Looms: The handloom industry of Barabanki utilizes the simple pit-loom. On an average the cost of these looms ranges from Rs. 2500 to Rs. 4000. The Handloom specific govt. agencies: The handloom specific government agencies at Barabanki cluster are Directorate of Handloom (DOH),Lucknow WSC, Varanasi The director of handloom registers and assists co-operative society and monitors their work, it manages rebate scheme s if any on handloom sale and organizes exhibition. DOH manages schemes of assistance for handloom weavers these include loom up gradation, work shed cum housing, design development, skill upgradation, group insurance and health package. Co-Operative Society: These societies by and large act as private enterprises in spirit. There is generally a single individual driving force who may have worked as a weaver earlier. He is engaged with the trade channel in an identical way. The weaver members are focused on wage payment. Local District Administration & Financial Institutions: The District Industry Center (DIC) and District Rural Development Authority (DRDA), they do not engage in handloom promotion work. Banks: Most of the government banks having there branches in the cluster they are Bank of India, Punjab National Bank, State Bank of India, the lead bank of Barabanki is Bank of India but the credit linkages of the cluster actors are very poor, talking with the Development Manager of the bank, who says that they want to develop this sector but the actors of cluster do not take any initiative. National Handloom Development Corporation (NHDC): NHDC is supplying yarn to very few co-operative societies , but due to lack of knowledge of supply rules the services are not percolating to ordinary weaver.

Handloom Export Promotion Council (HEPC): Very few co-operative societies have approached HEPC to know the Export Procedures and guidelines. The cluster is an export oriented product so linkage with HEPC is very important. Weavers Service Center (WSC): WSC, Varanasi is helping in preparation of new designs. It is acting as link between State Directorate of Handlooms and Development Commissioner Handlooms. Even the Cluster Scheme has to be monitored by them Analysis Of Business Operations Production Process

Yarn Sourcing & Twisting

Warp & of Weaving weft Fabric preperation

Ancillary operation Tani Work

Design generation

Dyeing : The raw material rayon yarn & cotton yarn procured is both gray as well as dyed types. The dyeing process is not taken up on a large scale in the cluster, dyers operate from their household traditional dyeing is in practice for dyeing the yarn. A typical dyeing unit possesses 400 to 500 sq.ft. built up space. Usually it has two chullhas .One chullha handels maximum 2.5 kgs of yarn in a batch it can produce up to 25 kgs in 10 hours .The order are in small sizes 1 to 2 kgs is the normal dyeing orders quantity. A dyeing house accept an order of dyeing even 100 gms Designing: The designer gets input from trader, he generate design anticipation of demand. Relative to design generation graph making is a routine work. Designer may perform both functions often receiving a package price. His exposures to design books/journals/exhibitions are negligible. He earns around Rs.2000/per month. He is the creative backbone of this sector. Waeving: This process which is very much significant in the chain. The weavers are using pit looms. A weaver is a job worker receiving yarn and design, handing over a woven product and receiving wages. Raw Material: There are two types of Yarn using as input material for scarf, shawls & and stoles are Rayon & cotton. In rayon product they are using 2- 40 denier as warp and in weft 17n.f. Single. In cotton product they used 32 denier single and 24 denier single. Yarn traders are locally available Raw material comes from Varanasi, Bareilly and southern states. Raw Material Cotton Rayon Price Rs.145/kg. Rs.150/kg.

Looms : The handloom industry of Barabanki utilizes the simple pit-loom. On an average the cost of these looms ranges from Rs. 2500 to Rs. 4000. Market: The maximum product of Barabanki are exported, the exporting products are Scarfs

 Stoles Shawls The exporters in most cases give big orders . The industry does not have any networking systems, the orders are time bound in many cases,exporters converts into a power loom order. Finance: Some Co-operative societies got the assistance from the bank, but the weavers are not entertaining the bankers due to non repayment of credit from the weavers in the past. Quality: Quality of raw material good but the quality of dyeing is very poor, the colours are very low fastness due to using traditionally household method of dyeing, no knowledge of scientific method. Power problem: There is an acute shortage of power and power roistering on an average 10-12 hrs daily is a regular feature. Inter Firm Industrial Organization: As per estimation There are about 50,000 weavers and 20,000 Looms at Barabanki and adjoining area. In addition there are number of traders and ancillary support providers. The annual turnover of Barabanki cluster is estimated at Rs. 150 Crore. The main products are Scarfs, Shawls and stoles. Which have a good export market. These products are broadly categorized in to two segments: I] Rayon fiber II] Cotton yarn Mostly they are using 2 x 40,17 NF single rayon yarn and 2 X 40, 20 single, 2 X 17, 2 X60 denier cotton yarn. Most of the weavers are Job Workers who receives Yarn and design from the traders and handed over a product to them and receiving wages. Some of the senior weavers have started Co-operative Societies with wage Payment weavers as members, most of the weavers in the Barabanki are depending on Societies and traders for work ,the financial condition of a weaver is not good to purchase the raw material from the market and sale out. There are some tiny weavers or unskilled weavers those dont have designer skill they took raw material from the local traders and produce a ordinary gamcha for the local buyers. By the skill differentiation across the weavers we can categorize the weavers in two Categories based on their skill (i) Weavers who produce higher end product like Stoles, Scarves &

10

Shawls for export market (ii) Weavers who produce low quality product like Gamcha for local market. Backward Linkages : Raw Material supply to weavers is supplied by either traders or co-operative societies. Direct linkages raw material supplier is nigligable. Yarn, Colures & Dyes from local suppliers at very high price. Looms are mainly local Barabanki made. All the spares are available with in the cluster. Dyers & Designers are available locally. The linkage of the weavers with them is very strong. . Linkage with Public & Private Service Providers: Handloom Related Government Institutions: Weavers Service Center, Varanasi is helping in preparation of new designs. It is acting as link between State Directorate of Handlooms and Development Commissioner Handlooms. Even the Cluster Scheme has to be monitored by them Department of Handloom, whose regional office is at Lucknow having a field Office at Barabanki. They are the main link between cluster actors and outside agencies. Indian Institute of Handloom Technology (IIHT),Varanasi is mainly looking training of the weavers. Financial Institutions: The Nationalized Banks have stopped sanctioning new loans because of high rate of defaulters. HEPC: Very few co-operative societies have approached HEPC to know the Export Procedures and guidelines. The cluster is an exports oriented product so linkage with HEPC is very important. District Administration: Development office is passed the project of RSVY. The linkage with DIC will help the weavers for training, procurement of land for CFCs and other infrastructure facilities Commercial Service Providers: National Institute of Design (NID): The ergonomics like size of the pit, optimum floor area, which may affect the productivity, has to be analyzed in the cluster for which the help of NID will be taken. National Institute of Fashion Technology (NIFT): Traders and weavers are following old designs developed by local designers, which decrease the demand of the product in international market. The services of the NIFT can be utilized in the form of training local designers or making of new designs.

11

National Handloom Development Corporation (NHDC) for Yarn Supply, but due to lack of knowledge of supply rules the services are not materialized .For reducing the cost of production services of NHDC has to be materialized. Value chain analysis of the cluster: The manufacturing of a product by the weaver price will be increasing going to another level of chain in this cluster there are few core actors in the value chain like weaver, dyer, local trader, outside trader. The average wages per pieces getting by the cluster actors are as followsDyer gets on an average@ Rs.4.0/pcs. Weaver gets @Rs.8.0/pcs. Local traders @Rs.3.15/pcs. Outside traders gets @Rs.6.3/pcs. The out sider trader is getting higher margin then the others actor, to just doing the outsourcing of the products.To make the cluster self-sustainable interventions are in areas of purchase,marketing,development, skill up-gradtion of weavers, technology development . In marketing,direct linkages are must for exporting . SWOT Analysis Strength: Production: Availability of skilled weavers Availability of raw material and other inputs Most weavers are continuing the profession traditionally Existence of active weavers association Market: Located barely 35 kms away from the Lucknow, State capital of U.P. Maximum product exported to gulf countries and European countries Finance: Existence of bankers Proximity to district Head Quarters for necessary support. Having strong Cooperative Society Base

12

Weakness: Production: Low Level of Modernization and up gradation of technology. Narrow product range Virtually no attempt made to add value to product. Poor quality of products. Linkage with service providers is very low. Exposure to IT especially at designing stage is nil No regular work for weavers Market: Highly unorganized cluster Inadequate attempt to add value to products Insufficient market promotion effort for the end products at the domestic an export market. Non-adoption of innovative designs in keeping with changing market expectation. Lack of market information and knowledge. No domestic market of Barabanki handloom cluster Finance : Low profitability and margins of SMEs which result in bankers being worry of supporting small units Linkages with other financial institutions like NABARD & SIDBI is nil SMEs do not come together for bulk purchase of raw material to get cost benefits for quantity discounts. Poor financial condition. Opportunities: Production: Diversification of product Exploration of new market Improvement in product design Patenting the design Scope for training and interventions among SMEs

13

Market: Building brand image Developing new domestic as well as international market. Common Product display center Finance: The Barabanki District is covered by Rashtriya Sam Vikas Yojana Scheme Under backward district initiative. Under the scheme Infrastructure facilities like roads can be developed. Besides the scheme also provides training and Other facilities. Common financing to facilitate cheaper institutional finances like Mutual Credit Guarantee Scheme. Common finance to facilitate common facility centers and common raw Material purchase Threats: Production : Non-up gradation of process technology may affect sustainability Absence of private, public, partnership to promote R&D value added Production and new market. Market : Domestic market is becoming increasingly quality conscious Increase in demand for low cost power loom products. Increased competition in the export market Finance : Decline in the profit margin for SMEs due to high cost of production may effect the sustainability. Bankers are not proactive for development plan of SMEs Credit policies not liberalized VISION: Barabanki handloom cluster will become a self-sustainable and producing a wide range of products, which highly demanded in international &domestic turnover will be increase by 20% by the year of 2010. market. The

14

Institutions Inter Linkages Matrix (Pre-Intervention) SME S SMES WSC IIHT CO.O P .SOC. NHDC HEPC NIFT NID ATIRA DCH DOH DRDA DIC FIN. INST WSC IIHT CO.OP . SOC. M M L FIN. INS T L L L L NHDC HEP C L L L M NIF T N L L N NID ATI -RA N L L N DC H L M M L DO H L M M M DRDA L L L L DIC

L L L M M M

L M L

L L L L

N L L N

L L L L

N N N N N L M L L N

M M L L L M M L L L

L M L L L M M L L L

L L L N N L M L L L

L L L N N L L L L

M M L L L M M L L L L M L M M L L L

L L L L M L L L N

L L L L M L L L N

L L L M L L L L L

M M M M L M L L L

M M L M L M L L L

L L L L L L L L L

L L L L L L L L

15

Institutions Inter Linkages Matrix (Post-Intervention) SME S SMES WSC IIHT CO.O P .SOC. NHDC HEPC NIFT NID ATIRA DCH DOH DRDA DIC FIN.. INST. WSC IIHT CO.OP . SOC. H H H FIN. INST . H H H H NHDC HEP C M M M H NIF T H M M H NID ATI -RA M H H H DC H H H H H DO H H H H H DRDA M M M M DIC

H H H H H H

H H H

M M M H

H M M H

M M M M

M M H H M H H M M H

M H M H H H H M M H

M H M H H H H M M H

H H H H H H H M M H

H H M M M H H M M

H H M M M H H M M H M H M H H M M H

M H M H H H M M M

M M M H H H M M M

M M H H H H M M M

H H H H H H H H H

H H H H H H H H H

M M M M M H H M M

H H M M M H H M

16

Value Chain Analysis of Barabanki Scarf

Weavers: Weaving & other related activities on job work basis Knotting &Packing Rs.3/pcs Local Traders : RM purchase Design brief Market initiatives Local Trader margin Rs.2.1 @ 7%

Rs.27.75

Rs.30.75

Weaving Rs. 7 / pcs

Rs.20.75 Out side traders Stock keeping Expense in Export

Rs.32.85 Outside trader margin Rs.7.15@ 22 %

Dyeing Rs.3.50

Rs. 17.25 Raw Material : Rayon 115 gm @Rs.150 kg = Rs.17.25

Rs. 40.00

Export

17

Value Chain analysis of Barabanki Stoles

Weavers: Weaving &other related activities on Job work basis Weaving @ Rs.8/ pcs Rs.26.5 Dyeing Rs. 4 /pcs
:

Knotting & Packing @ Rs.3 / pcs

Rs.34.5

Rs.37.5

Local Traders RM purchase Design brief Mktg. initiative Local trader margin Rs.2.6 @ 7%

Rs.40.10 Out side traders Stock keeping Expense in Export Out side trader Margin Rs. 4.9 @12.25 %

Rs.22.5

Rs.45.00

Raw Material : Rayon 150 Gm @ 150 kg= 22.5

Export

18

Value Chain analysis of Barabanki Shawl

weavera

Weavers: Weaving &other wea related activitiesWea on Job work basis

Knotting & Packing Rs. 3/pcs

Local Traders RM purchase Design brief Mktg. initiative

Rs.40.25 Weaving Rs. 9/pcs

Rs.43.25

Local trader margin Rs. 3.0 @ 7 %

Rs.31.25 Out side traders Stock keeping Expense in Export

Rs.46.25 Outside trader margin Rs 3.75 @ 8%

Dyeing Rs. 5 / pcs

Rs.26.25

Rs.50.0

Raw Material: Rayon 175 gm @150 kg =Rs.26.25

Export

19

Value Chain Analysis of Barabanki Cluster(Pre- intervention) Channel 1 Channel 4 dist. cChannel 4 Product Channel 2 Channel 3

Channe Trade groups

Outside traders

Yarn trader, Local traders

Co-Operative Socities

Weavers producing for local traders

Exporters :

Exports to European & Gulf countries

Traders

Retail outlet in Barabanki

Traders at Barabanki

Traders from out side cluster

Trading Scarves, Stoles, Shawls

Co-operative society producing for local traders/outside traders

Co-Operative Society / Traders

Micro Weavers/job worker Wages Rs.50-60/per day

Yarn Supplier

Tiny weaver producing low quality product for domestic market Rs.30-40/ per day

Traders DC(HL) WSC DIC DO DOH

NHDC

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Value Chain Analysis of Barabanki Cluster(Post-interventions) Channel 1 Channel 4 Channel 2 Channel 3

Product dist. channel Trade group

Outside traders/ Exporter

Yarn trader, Local traders

Co-Operative Socities

Weavers producing for local traders

Exporters :

Exports to European & Gulf countries

Traders

Consortia of cooperative societies & local traders for export

Traders from out side cluster

Trading Scarves, Stoles, Shawls

Co-operative society producing for local traders/outside traders

Association of CoOperative Societies for Raw material purchase

Micro Weavers/ job worker Wages Rs.80-90/per day

Yarn Supplier

Traders WSC DIC DO ADH NIFT

Direct yarn from mills NID

NHDC

DC(HL)

SIDBI

21

Value Chain Analysis of Barabanki Scarf Knotting &Packing Rs.3/pcs

Rs.27.75

Rs.31.5 Local Trader margin Rs 8.5/pcs

Weaving Rs. 9.1 / pcs

Increased by 30 %

Rs.19.4

Rs.40.0

Dyeing Rs.2.8

Reduced by 16.5 %

Rs. 16.6 Raw Material : Rayon 115 gm @Rs.145 kg = Rs.16.6 Reduced by 3 %

Export

22

Value Chain Analysis of Stoles

Value Chain Analysis of Shawl
Knotting & Packing Rs. 3/pcs
Knotting & Packing @ Rs.3 / pcs
Rs.45.3

Rs.42.3

Weaving Rs. 12.7/pcs

Rs.35.7

Increased by 30%

Rs.38.7

Consortia margin Rs. 6.7

Rs.29.6 Rs.10.2/ pcs

Raw Material : Rayon 150 Gm @ 145 kg= 21.75 Rs 25.5

Weaving @

Increased by 30%

Consortia margin Rs.6.3/-

Rs.50.0

Export
Rs.45.0

Dyeing Rs. 4.3 / pcs

Reduced by 16.5%

Rs.25.3

Dyeing Rs. 3.75 /pcs

Reduced by 16.5%

RawRs.21.75 Rayon Material: 175 gm @145 kg =Rs.25.3

Reduced by 3%

Export

Reduced by 3%

23

Cluster Map (Pre- Intervention)

NHDC

Yarn Supplier

Co-Operative Society (56)

Local Designer Tiny Weavers Dyers

W E A V E R S

Local Traders

Outside Traders Loom Suppliers

E X P O R T E R

Banks

WSC

Department of Handloom (State office)

HEPC

DIC & DRDA

24

Cluster Map (Post- Intervention)

ATIRA

NIFT NHDC

NID

Consortia of CoOperative Socities For Raw Material Purchase Consortia of Local Traders/ Co-OpSocities

Yarn Supplier C F C Association of Co-Operative Society W E A V E R S

Local Designer

Loom Suppliers

Job Workers

Outside Traders

E X P O R T E R

DIC & DRDA W S C, Department of Banks IIHT Handloom Products of Barabanki Handloom Cluster : (state office) HEPC

SIDBI

NABARD

25