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CHAPTER-1

INTRODUCTION A product only made by human hands without using of machinery or equipment is called handicraft. Handicrafts represent traditional art heritage and legacy of customary craft skills of a region. The rich cultural ethnicity has made Indian handicraft products such as metal ware, pottery, sculpting, stone crafts and jewellery, a rage in national and international markets. Handicrafts Industry has emerged as dynamic and vibrant sector of the economy. Indian labour intensive industry has evolved as a major contributor to Indias export revenues, with an industry growth rate of 20% p.a. US and Europe together account for over 65% of the Indian handicrafts exports. The major strengths of the Indian handicrafts are its cheap and abundant labour, low capital investment and the quintessential uniqueness of these crafts, since most of them are handmade. All these characteristics give Indian handicrafts a competitive edge in terms of prices and distinctiveness. Skilled Indian artisans have consistently adapted and evolved to successfully meet demands of the still-growing industry. Handicrafts Industry is a fast growing area and there is a need to provide support to it in view of its recognized potential for generating employment.

1.1.

STATEMENT OF PROBLEM There is a good demand for handicrafts in foreign market. Handicrafts

industry is a major source of earning Foreign exchange which helps in the further development of the country by increasing foreign exchange reserves. Therefore it is vital to know the contributions and problems of Handicraft industry as it is main source of earning foreign exchange after tourism and exports. It is necessary to protect such industries as it is part of Indian culture and a small percentage of population rely on such occupation for earning their daily living. The statement of the study is selected as PROBLEM FACED BY HANDICRAFTS INDUSTRY WITH REFERENCE TO CRAFTERS SHOP, COCHIN. 1.2 OBJECTIVES OF STUDY a) To study the problems of crafters shop with regard to their manufacturing and export of handicrafts 1.3 SCOPE OF THE STUDY Exports and imports are two forms of international trade. In todays world, every trade activity has its own set of problems. The main purpose of this study is to assess the problems faced in exports of crafters a shop dealing with handicrafts and antiques.

1.4 RESEARCH METHODOLOGY The study uses both primary and secondary data for the analysis. The primary data includes discussions with employers and employees of the shop. Secondary data covers information from their financial statements, websites, and journals. In this study the researcher has used percentage analysis and is presented in the form of bar diagrams, pie diagrams and cylindrical diagrams. 1.5 PERIOD OF STUDY The study covers for the period of study for 3years starting from 2009 to 2012 1.6 LIMITATION OF STUDY Any study conducted will always have its limitations. The environment of export keeps on fluctuating according to the taste and preferences of the consumer. Thus, data is subjected to bias, errors and prejudices. Data is curtailed only to one industry due to limited time period and to 3years which is too short period to reach any general conclusion. In spite of limitations more care has been taken to make the study more useful.

1.7 CHAPTERISATION CHAPTER-1 CHAPTER-2 INTRODUCTION THEORITICAL AND COMPANY PROFILE DATA ANALYSIS AND INTERPRETATION FINDINGS,SUGGESTION AND CONCLUSION

CHAPTER-3

CHAPTER-4

CHAPTER-2 THEORITICAL AND COMPANY PROFILE


TRADE AND COMMERCE Trade basically refers to the sale, exchange or transfer of goods. It helps in making available goods produced to the ultimate consumers. Trading activities are classified on the basis of volume of goods traded and on the basis of geographical boundaries within which trade takes place. All activities ensuring the free flow of goods from the producer to the consumer comes under commerce. Commerce includes two types of activities, firstly, activities ensuring sale or exchange of goods which are called trade. And Secondly, activities which facilitate trade are called services or auxiliaries to trade. Commerce thus includes trade and aids to trade. On the basis of geographical boundaries trade is classified into internal trade and external trade. When trade takes place within the boundaries of a nation, it is called internal trade or Home trade or Domestic trade. Such trade facilitates movement of goods from the production point to various consumption centers located within the country. Where trade takes place beyond the boundaries of a nation, it is called external trade or foreign trade or International Trade. Where goods are purchased from a foreign country, it is called import trade and when goods are sold to a foreign country, it is called export trade.
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When goods are imported for export to other countries, it is called Entrepot trade. Under Section 2(e) of the Foreign Trade Development and Regulation Act, 1992, EXPORT has been defined as taking out of India, any goods, by land, sea or air.

COMPANY PROFILE Crafters shop was established in the year of 1989 as an exquisite antiques shop and is regarded as one of the finest handicraft sellers in Kerala. It is located in the Quaint old quarter of Mattancherry in Cochin. The shop has an excellent alluring collection of handicrafts, furniture, antiques, sculptures, curios, souvenirs and ancient memorabilia of ancient and medieval India. They are considered as one of the primary manufacturers and dealers of crafts. HISTORY OF CRAFTERS Mr. Johnny L. Malayil and Mr. Sunny L. Malayil, the two brothers are the founding partners who commenced their business in the name of Crafters with initial capital of Rs.2,00,000/-. They were enlightened by their father Mr. Lewis Malayil, who lited the idea of opening a handicrafts shop. Now they have reached up to the international level and have created a record of exporting handicrafts in more than 64 countries worldwide. Crafters Company is a manufacturing merchant exporters company and is certified members of Archeological Survey department of India (ASI). Their customers range from retail foreign tourists to hotels, resorts, wholesalers, retailers, departmental stores, governments, etc.

They have a workforce of nearly 140 skilled people within Kerala. The cooking vessel known as URULY, created by the company in 2004 which weighs exactly 3184 Kgs and completed within 13 months achieved a place in the ' LIMCA BOOKS OF RECORD' that year . It is regarded as one of their greatest achievements in business history. They usually sell products of antiques type which is not more than 100 years old. The company possesses a fair, good & healthy competition in the market. All good products must sell well is their mantra. The company is planning to invest in diversified business like luxuries and resorts.

QUICK FACTS ABOUT CRAFTERS Year of establishment Legal status of firm Nature of business Turnover Management (key members) 09TH September, 1989 Partnership Exporter , retailer Up to US$ 0.25 million Mr. Johnny L Malayil, Mr. Sunny L Malayil Jew Town, Mattancherry, kochi, kerala-02 In Limca Book of Records Spices, Caf Worlds biggest URULY

Office location Awards Other business Achievement

MAJOR MARKETS Australia South America Middle East East Asia North America South East Asia South/West Europe Caribbean North Europe South/West Africa East/Middle Africa

North Africa Central America Indian Subcontinent East Europe

PRODUCT PROFILE OF CRAFTERS SHOP 1. HANDICRAFT ITEMS Kerala artifacts Himachal artifacts Nagaland artifacts Tanjore Paintings Clay/Terracotta jars 2. FURNITURE Chair Door Sofa/Settee Windows/Partitions Wooden Figures/Box Coffee Tables
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Panels Cots 3. ANTIQUES Lanterns & globes Mirror Frames Old Kerala Bronze mask Silver Mirrors Uruly 4. SCULPTURES Pillars-stone & wood Sand Stone Figures 5. OTHERS Marble items Tiles

EXPORT PROCEDURE It includes the steps given below Obtaining importers, exporters code number [IEC] Obtaining Registration-Cum-Membership Certificate [RCMC] Market Research Receiving & confirming the export order Manufacturing goods Excise clearance Pre- shipment inspection and quality control
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Customs clearance Port procedures Obtaining bill of lading Submission of documents to bank

EXIM POLICIES RELATED TO HANDICRAFTS 2009-14 Duty free import entitlement of tools, trimmings and embellishments is 5% of FOB (Free On Board) value of exports during previous financial year. Entitlement is broad banded, and shall extend also to merchant exporters tied up with supporting manufacturers. Handicraft EPC (Export Promotion Council) is authorized to import trimmings, embellishments and consumables on behalf of those exporters for whom directly importing may not be viable. Specific funds are earmarked under MAI( Market Access Initiative)&MDA(Market Development Assistance)schemes for

promoting Handicrafts Export CVD (Countervailing Duty) is exempted on duty free import of trimmings, embellishments and consumables. New towns of export excellence with a reduced threshold limit of Rs.150 Crores shall be notified. Machinery and equipment for effluent treatment plants are exempt from customs duty. Products and entitled to higher incentives.

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Terminology COUNTERVAILING DUTY (CVD):It is the additional import duty imposed to offset the effect of concessions and subsidies granted by an exporting country to its exporters.

MARKET DEVELOPMENT ASSISTANCE (MDA):MDA is allowed to delegations travelling abroad for market survey sponsored by the Export Promotion Council, Commodity Boards and other organizations. The amount granted under MDA varies from 25% to 60% of the actual expenditure incurred. It is also allowed on export publicity, including exhibition and service contracts abroad. MARKET ACCESS INITIATIVE (MAI):It is an export promotion scheme launched in 2003 with an objective to work as a catalyst to promote Indias export on a sustain basis.

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CHAPTER-3 DATA ANALYSIS AND INTERPRETATION

The process of evaluating information and facts using analytical and logical reasoning to examine each component is known as Data Analysis. Data from various sources is gathered, reviewed, and then analyzed to form some sort of finding or conclusion. TOOLS USED The data collected is presented in a tabular form which includes the following: Bar diagrams ( clustered cylinder and stacked cylinder ) Pie diagrams

1. TOTAL SALES OF HANDICRAFTS Table no: 1 Year 2009-10


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Total sales 41200000

2010-11 2011-12

31800000 53800000

TOTAL SALES (Rs.)


60000000 50000000 40000000 30000000 20000000 10000000 0 2009-10 2010-11 2011-12 41200000 31800000 TOTAL SALES (Rs.) 53800000

Chart no: 1 showing volume of total sales of Crafters shop

INTERPRETATION In the year 2009 10 there is a growth in the total sales. Whereas in the next year 2010 2011 there is a slight fall in its growth due to global recession. But in the next year 2011 2012 the sales is again increasing in a profitable way.

2. EXPORT SALES OF HANDICRAFTS Table No.2


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Year 2009-10 2010-11 2011-12

Export (Rs.) 18900000 18700000 1400000

EXPORT (Rs.)
20000000 15000000 10000000 5000000 0 2009-10 2010-11 2011-12 EXPORT (Rs.)

Graph no:2 showing the volume of export sales of Crafters shop

INTERPRETATION From the above table it can be said that the Crafters shop is facing a huge drop in the export sales due to the affects of the global recession. 3. DOMESTIC SALES OF HANDICRAFTS Table no: 3 Year Domestic Sales (Rs.)
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2009-10 2010-11 2011-12

11800000 18000000 18200000

Domestic Sales

18200000

11800000 18000000

2009-10 2010-11 2011-12

Graph no.3 showing domestic sales of crafters shop INTERPRETATION From the above diagram it clearly shows that there is a constant increase in the domestic sales from the year 2009-10 to 2011-12. This indicates that Crafters shop is doing well in marketing and promotion efforts which have led to increase in sales of the shop. This has been due to increase in foreign tourist arrival in Kerala and favorable investment climate for them. 4. INTER-STATE SALES OF HANDICRAFTS Table No: 4
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Year 2009-10 2010-11 2011-12

Inter-State Sales (Rs.) 10500000 11300000 21600000

INTERSTATE SALES (Rs.)


25000000 20000000 15000000 10000000 5000000 0 2009-10 2010-11 2011-12 10500000 11300000 INTERSTATE SALES (Rs.) 21600000

Graph no: 4 showing volume of interstate sales Crafters shop INTERPRETATION From the above graph it is easy to understand that the interstate sale has been showing an increase in trend for the shop in last three years. This shows the shop is moving in a profitable position. 5. PRODUCTS EXPORTED BY CRAFTERS SHOP Table No.5

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Products Handicrafts Antiques Furniture Wall Hangings

Sales In % 55% 15% 25% 5%

SALES IN %
5% 25% 55% 15% HANDICRAFTS ANTIQUES FURNITURE WALL HANGINGS

Graph no.5 showing products exported by Crafters shop

INTERPRETATION From the above pie diagram it is clear that the shop exports more than 50% of handicraft products in the market. The second most selling products are furniture which is manufactured by them. 6. TOTAL LABOURERS Table no.6
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Year 2009-10 2010-11 2011-12

Skilled Labourers 115 126 140

Unskilled Labourers 45 66 80

150 100 50 0

115 45

126 66

140 80 SKILLED LABOURERS

2009-10

UNSKILLED LABOURERS 2010-11 2011-12

Chart No.6: A comparative 3-D cone diagram showing classification of labourers on the basis of their skill

INTERPRETATION From the above graph we can see that skilled and unskilled labour go hand in hand. So it is necessary to give training and improve the efficiency of unskilled labours in order to attain more efficiency to compete in the market.s

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7. PROCUREMENT OF RAW MATERIALS


Table No.7

Source of raw materials Tanjore Rameshwaram Rajasthan Local Market

Contribution 35% 20% 25% 30%

Contribution
30% 35% Tanjore Rameshwaram Rajasthan Other locations

25%

20%

Chart No.7: A Pie Chart depicting the contribution of raw materials from various sources

INTERPRETATION From the above graph it is clear that the procurement of raw materials is more from Tanjore as one of their most selling products are Tanjore paintings. 30% of raw materials are procured from local markets. 25% of raw materials comes from Rajasthan and only 20% is obtained from Rameshwaram.

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8. ARRIVAL OF CUSTOMERS IN CRAFTERS SHOP Table no.8 ARRIVAL OF CUSTOMERS LOCAL PEOPLE 40%

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NATIONAL INTERNATIONAL

20% 40%

ARRIVAL OF CUSTOMERS

40%

40%

ARRIVAL OF CUSTOMERS LOCAL PEOPLE INTER-STATE INTERNATIONAL

20%

Graph no.8 showing arrival of customers to crafters shop INTERPRETATION The above diagram shows that foreigners as well as local people are more interested and are looking forward for traditionally handmade handicraft products. This indicates a high potential for the development of a traditional handicrafts markets.

9. DEMAND FOR GOODS IN CRAFTERS SHOP Table no.9 DEMAND OF PRODUCTS (TOP 5 OF THE SHOP) TANJORE PAINTINGS 40%

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URULY MARBLE ITEMS KERALA ARTIFACTS OLD KERALA BRONZE MASK

10% 20% 10% 20%

Chart Title
OLD KERALA BRONZE MASK 20% KERALA ARTIFACTS 10%

TANJORE PAINTINGS 40% MARBLE ITEMS URULY 20% 10%

Graph no.9 showing demand for top 5 products INTERPRETATION Among the top five products of the Crafters shop, it is clear from the above diagram that Tanjore paintings are the most selling one. Marble items and old Kerala bronze mask shows normally good demand whereas Uruly and Kerala artifacts have only 10% demand compared to others CHAPTER-4 SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION FINDINGS The study is done on the basis of SWOT Analysis.
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Strengths Cultural heritage and tradition Growth in tourism Established Skill Potentially large pool of workers Growing community interest in Handicraft development Low capital investment Organized knowledge

Weaknesses No unique skills Inefficient training Tourism operations not linked to Handicrafts Lack of designing marketing strategy Projects lack vision, not businesses Oriented, lack adequate funding, have no Business or marketing plan and are Running on a shoestring budget Lack of awareness of international Standards by many players in the market No access to capital
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Lack of specialization Opportunities Cultural heritage to draw from Large pool of skilled and unskilled Labor Growth and investment in tourism market Rising appreciation for handicrafts by consumers in the developed countries Large discretionary income at disposal of consumer from developed countries Threats Competition of other handicraft products Irregular and expensive inputs and inconsistent availability Better quality products produced by competitors

From the above we can also infer about the factors which helped in the export growth of Indian handicrafts industry. They are Rising demand of handicrafts in the western countries like US and Europe.
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Foreigners attaching more prestige value to antique handicrafts. Emergence of E-Commerce and Internet. Though the global recession has hit the exporters adversely they are performing well in the domestic economy. The company shows

SUGGESTIONS The Crafters shop must change their marketing strategy and device a new marketing strategy to stay competitive in the market. It must make a study on the taste and preferences of the consumer and thereby make product according to their expectations with affordable prices.
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The government should draft new guidelines to provide more subsidies to the handicraft manufacturers and sellers expenses with revenue in the off season and peak season. Another problem which the Crafters shop faces is the lack of skilled labours. Therefore the shop must give adequate to communication and marketing trainings to enable them to deal with the foreign customers in a better manner. The Crafters shop must undertake enough strategic planning inorder to take decisions regarding the expansion and diversification program. Central government must frame special incentives for handicraft sector in the form of insurance and credit packages from the financial institutions.

CONCLUSION Presently handicrafts are being considered as vocational media and it is also opted for style statement and the leisure pursuit. Looking at the sales trend of the data collected we can see a distinct growth in the case of the Crafters shop but on the other hand looking at the potential of the market this growth is not satisfactory. Moreover the sector is still reeling under the pressure of recession and is yet heave a sigh of relief.
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BIBLIOGRAPHY Web sources www.crafters.org www.yahooanswers.com www.wikipedia.com

Published Sources Author: Dilip and Amith kumar- Project Management, Kalyani

publications. Business Studies XI- SCERT (State Council of Educational Research and Training)

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