PRADNYA GAONKAR RANE
A BE degree holder in Electronics and Telecommunication who later pursued MBA from the acclaimed Goa Institute of Management, Gaurish Kambli from Mapusa quit his job at a reputed company to venture into a start-up business in his own land, Goa.
“The last company I worked with was Wipro that wound up their project that I was associated with in Goa. They offered me a high-paying package in Delhi and Mumbai which I was not willing to take up. I decided to start my own business and this was somewhere in June 2017. I explored a few options to begin with like cashew nut processing but realized that the market was dominated by imported products. During this period the no to plastic campaign was picking up and even the Chief Minister had made a statement about banning plastic in the state. That triggered the idea to start up with non-woven bags that are being commonly used these days,” says Gaurish.
Just two years ago, he had purchased a plot at the Industrial Development Corporation at Pissurlem and it was needed to put it into use within three years of purchase or else face a penalty of 25 percent. This was the push button to get started with the business idea. In July 2017, he started with the wholesale trading of the non-woven bags to understand the sales of the product in the Goan market. The sales picked up very well specially with the hotel industry which has a major stake in the tourism sector. He looked into the sales of these bags for around six months -- he purchased the bags in bulk from outside the state and established his market in Goa. It was more of a one to one sale where he used to directly meet his clients and strike the deal without any middlemen. Meanwhile, he started the construction of the factory in October 2017 where he purchased the manufacturing unit of the non-woven bags which cost him around Rs 25 lakh. The manufacturing of the bags started in last week of March 2018.
“I started the project with a strategy to target direct sales. This is a low-margin business and involvement of agents would mean more cost. The main consumers of these bags are hoteliers, supermarket and takeaways. Since hotels and supermarkets use the product for their own branding, printing cost was also included. I took up this part too,” adds Gaurish. While testing the market for the product, Gaurish realized that almost 80-90 percent of it had turned to non-plastic bags which was definitely a positive sign. With regards to the sales of the non-woven bags, the issue arose mainly with the low-margin consumers like the daily wage vendors, vegetable sellers, fruit vendors etc who couldn’t afford the bags. With the bigger establishments the price of the bags got included in their product cost. “A wada pao wala who gets a return of Rs 1 after selling a wada for Rs 10 cannot afford to spend Rs 2 on the bags. That would cut down on his profit margin,” explains Gaurish.
Speaking about his product, Gaurish recommends the non-woven bags for the durability, reuse and although not 100% biodegradable, the fabric bags get degraded into fine powder within 4-6months.
While he is content with positive response to the product in the market, Gaurish highlights the fact that finance plays a critical role when it comes to starting a business in any sector. “I wanted to apply for Rs 2 lakhs loan under the Pradhan Mantri Mudra Yojana started by the Central government for start-up businesses. This was my working capital but none of the banks were ready to approve the same. Even Axis bank, where I am a salary account holder, did not approve my loan proposal but were ready to give me Rs 2.25 lakh credit card. They insisted on an income certificate for a business start-up. I presented the salary statement but they did not approve of the same. Several complaints to the authorities concerned drove me back to the bank saying that it is upto the bank to approve the loan. The eligibility criteria given by the scheme developers did not match that of the banks,” highlights Gaurish. A lower capital loan of Rs 50,000 was easily approved but that was not sufficient for the business. He later managed to apply for a personal loan with the help of a friend.
Despite all the glitches, Gaurish managed to set up his manufacturing unit to give in the best product to the consumers. Like in any other product in the markets these days, there is a lot of mixing of low quality raw materials where the quality of the product is at stake. Gaurish did not want to fall for it and compromise on the quality. “The market is of two types, price sensitive and quality sensitive. If I incline towards price then quality would take a beating and I couldn’t afford to do that. I went for the quality and priced the product on a higher side,” says Gaurish. The raw materials are brought in from places like Hyderabad, Chennai which again gets included in the cost. Since he went for an automated manufacturing unit which has considerably cut down on the labour cost. He feels that once the volume of the orders increases, it will also shift the profit margin and would also give him the idea of the operational cost.
In the monsoon season, Gaurish is focusing on the daily consumers of the product like the city restaurants, super markets which do not face the fluctuations of the tourist season and is hoping to increase the volume of the orders to establish himself in
the business.
