ECO TASAR

Moving beyond Business

Abhinav Marda 0440/56

Sanjay Natra 0447/56

Term V | Economics of Sustainability

 01
Value Chain
Eco Tasar

• Discuss the complete forward and backward value chain for Eco
Tasar.
• Identify where in the value chain, there are greater possibilities of
extracting value, and how this could be done?
• Home Producers Stitching is required for the products like
• Weavers’ wives often engage in cushions, duvets and bedcovers
the yarn making and other process
Weav
er Final
Stitchi Produ
ng ct

Eco
Tasa
r Delhi Final
Dyein Finish Offic Produ
g er e ct

• Mostly Employees of the

Home Producers
• Often uses natural dyes company
Forward Value
Chain
 • Mostly Employees of the
Backward Value •
company
Outsources sometimes
Design
Chain • Women from the tribal and rural areas er
• Home Producers
• Paid on contract basis

Coco
Egg Yarn Eco
on Weaver
Suppli Maker Tasar
Reare
er
r

• Home Producers
• People from the tribal areas • Weavers’ wives
• In the absence of open markets, traders often engage in the
exploit them Dyeing yarn making and
other process
• Rearing technology is still at novice
stage
• Home Producers
• Often uses natural dyes
Value Chain
Analysis • Most of the players involved in the value chain are contract workers and work from their
Firm Infrastructure homes
• Improving Infrastructure is not a prominent pain point

• Eco Tasar contributes to the livelihoods of the women at the bottom of the economic
Human Resource pyramid
Management • This needs to be maintained, even while planning to increase the scale

• Eco Tasar can use technology based prediction models to help rearers about the pest attacks,
Technology Development diseases and climate fluctuations

• Eco Tasar prides on the networks it had with the community. So we advise maintaining
Procurement better relationships with the Egg Suppliers too.

• Eco Tasar can recycle the used products to extract the yarn
Primary Activities • Through Marketing they can position themselves as eco-friendly premium products
 02
MPCL
(Masuta Producers Company Ltd)

• Why did it become bankrupt?

• What lessons could Pandya draw from this unfortunate event in
the context of running Eco Tasar?
 MPCL’s Bankruptcy
2005
Story
In an attempt to enhance self reliance at the bottom of the pyramid, Pradan transferred the entire project of
to a co-operative of female yarn makers – Masuta Producers Company Ltd.

Role of MPCL

MPCL was responsible for procuring cocoons from the market and supplying it to the women making
yarns, to finally aggregate and sell yarn in the market.

2007

Eco Tasar Silk Pvt Ltd : Fabric division as a separate joint venture is formed, it purchased yarn from
MPCL at market price.

Heavy Investment by MPCL

INR 1.52 million, with equity share of 76%.

MPCL also loaned 10 million to Eco Tasar

2011: Bankrupt

MPCL was declared bankrupt and Pandya repaid the entire loan and purchased 25% equity stake
 MPCL’s Yarn Market

MILL YARN: for

HAND WEAVERS
export
Handloom weavers who produced fabric in-house Large volume fabric exporters which used mill
had yarn produced by their wives and hence did yarns, hand made yarns of MPCL were
not wish to add up conversion cost by procuring it incompatible with the complex machines of the
from outside (MPCL) mills.

“ MPCL failed to create demand for its yarn in Bihar “

Source: https://youtu.be/KXtKuhjPPTk
 Lessons for Eco Tasar

01 02 03

Preliminary market
Diverted Capital Experiment
research MPCL at its inception itself Initial experiment to gain
MPCL was created to generate demand
for hand made yarns without conducting diverted huge capital funds to feedback on hand made
any preliminary assessment of the market Eco Tasar, focus was shifted yarn was not conducted,
to understand the market dynamics and away from core activities of the this could have helped in
players involved. co-operative assessing the gaps in
demand fulfillment
 03
Climate Change
Funds
• Could an organisation like Eco Tasar apply for climate change
related funds? If yes, under what heads could it apply?
• If not, what other (los cost) funds could it apply for?
 Potential Solutions:
• Develop technology based prediction models to
predict the weather fluctuations and patterns in
pesticide attacks and diseases.
• Develop Stress and disease tolerant breeds of silk
worms.
Can Climate Change affect the sericulture? • Create artificial conditions for the cultivation of the
Yes. silkworms.
The life cycle of the silkworm and other pesticides • Sericulture shares similarities with agriculture in
depend on the temperature and humid conditions they this matter
grow in. So, they are vulnerable to the climate • We can apply for the Government's and NGO’s aid
fluctuations and the climate change. for the supply of the high quality hybrid silkworm
eggs
• We can also apply for the monetary aid in the case
of cocoon failures as a result of climate change
• Apart from these, we can apply for the subsidies for
the handloom equipment
 04
• Given the attention and interest in sustainable fashion in the last few
years, how can Eco Tasar use this awareness to create and/or
differentiate its products or services?
• What would be the enabling and disabling factors in making such a
product differentiation strategy successful?
Considering Brown market v/s Green market
Vertical differentiation Differing product quality

2 types of product differentiation

Horizontal differentiation Difference on the basis of price. Not
fruitful as it is not sustainable.

Service Recycling of garments Reusing trash during fabric preparation

Addition
Recycling
Apparel recycling Difference on the basis of price. Not
fruitful as it is not sustainable.
Product
Addition

Branding
 05
• Given the case details, if you were to put yourself in Mr Pandyas
shoes, what would you do differently?
Stakeholder relationship • Eco Tasar prides on the networks it had with the community. So we advise
maintaining better relationships with the Egg Suppliers too.
• Eco Tasar can recycle the used apparels and by-products to extract the yarn
Circular economy
• Through Marketing they can position themselves as eco-friendly premium
products
• Try to produce quality silkworm egg
• In 2017, profitability diminished because of the increase in operational expenses.
The labor costs contribute to 25% of the price of the product.
Marking up selling price • And also, Eco Tasar faces intense competition from both the organized and
unorganized sectors. So, it is reasonable to increase the selling price by means of
positioning as a premium brand to account for the increase in the operational
expenses
• Eco Tasar faces issues with low the volume of production
Scaling up, Expansion • So, we would advise increasing the size of the weavers, yarn makers and rearers
• And also acquiring local competitors with good brand loyalty and customer base
 06
• Given the challenges anticipated by Pandya in May 2019, and
putting yourself in his shoes, what would your strategic road map
look like?
• How would that outlook change in March 2020 when the
implications of a pandemic, unimagined in May 2019, hit you?
 About the Industries
Indian Textiles and Apparels Indian Handloom

• Was highly fragmented • Players who believed in mass

• Intense competition from both production uses power loom
organized and unorganized sectors technology for the cost leadership
• Includes large corporate retail strategy
chains, small and dominant • Handloom is known for the
regional players superior quality and excellent
craftsmanship

Abo
• utdemand
Operates in a Niche segment with an increasing • There are no retail outlets for the B2C
• Believe in employment generation for the women from • Target Segment: Working women who had a knack for
the rural and tribal communities handmade aesthetic products
• There are no middlemen and distributers for the B2B • Advertises on the social media
• Uses cost plus pricing model
• Cost is almost equal to its competitors’
 Proble
• msnot cater the high demand with their low volumes of production
They could
• An increase in the operational costs is reflecting in the low profitability
• Stringiest Quality norms; Product Standardization; High Labor Costs and Shortage of Talented Craftsmen
• Dilemma to chose between Power looms, which offer scalability and cost efficiency v/s handlooms
weavers.

Power looms - Drawbacks

• Eco Tasar’s vision gets diluted on incorporating power looms in its value chain
• It will lose clients like Fabindia and Westun which strictly deal in handloom products
• This will decrease the demand of its products which will result in Ecotasar defaulting in its payments
to the contractual weavers and artisans.
• More than anything else, it will not be able to reap the benefits of an emerging demand and awareness
in sustainable fashion ( 15% - 20% yoy)
• Thus switching from hand looms to power looms is not a viable option for Pandya.
Roadm
apthe Demand
To meet
• Train more women to solve the problem of shortage of talented craftsmen and to increase the volume of
production
• Acquire local competitors who were freelancers or mom-and-pop store owners with low volume production
and brand loyalty
• Identify the bottleneck process and resolve it

To increase the profitability

• Use the value based model pricing and position as a premium brand
• Distribute through E-commerce. Brick and motor outlets may lead to higher operational costs, which we do
not want at this point
• Invest in advertisements and promotions to add the brand value
• Vertical integration by getting into retail chains.
COVID
Situation
01 Demand tanks 02 Transportation issues 03Working
issues
capital & cash flow
• Retail stores • Lockdown has
shutdown curtailed movement • There is no cash flow due for
• willingness to pay of running looms
customers decrease

Festive and winter season Uncertain export market

04 Livelihood issues 05 badly hit 06
• Movement in international
• Weavers, yarn • Demand supposed to increase in
market has abruptly stopped,
producers, silk rearers the months of Aug-Jan due to
• Eco Tasar’s larger share of
• Credit selling festive and winter season
revenue is through exports
• Lead time 2-3 months • But if stakeholders drop out of
company, Eco tasar wont be able
to produce anything at all
 Solution
Introduce Eco Tasar products to e-commerce platforms
• Touchless retail and delivery for the consumer

Immediate payment to stakeholders

• For short term, weavers & silk rearers need to paid immediately to keep their livelihood going.
• Use the governmental benefits to the handloom sector and MSMEs.

Marketing strategies needed - focus on vertical differentiation and slow fashion mov
• Move from Quantity to Quality
• Ride on the slow fashion wave

New product lines- ( medical appliances/ home décor)

• Demand for medical appliances skyrocketed. Tasar silk is regarded as tougher and more robust that mulberry silk
that is used in medical appliances. (Surgical masks, hearing device)
• Home Décor industry also saw a good increase in demand during lockdown.

Negotiate with Handloom Export retail Council for future export deals
• Export numbers could be increased
https://scroll.in/pulse/852123/lab-notes-tasar-silk-may-be-better-than-mulberry-silk-for-medical-applications
THANK YOU