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Interview with Kshitij Kuthiala

Kshitij Kuthiala
Kshitij Kuthiala
Fintech Head
ReshaMandi
ReshaMandi

See ourselves as an end-to-end ecosystem for natural fibres industry
ReshaMandi, stepped in by introducing various technological innovations and market linkages during the pandemic to increase the profitability of SME retailers involved in silk trade by providing 20-30 per cent lower pricing for superior-quality products. Not only did it offer them warehousing and distribution options but also became a channel for retailers to buy a wide range of about 20-25 types of products coming from different parts of the country due to their vast network of weavers. Kshitij Kuthiala, Fintech Head at ReshaMandi, shares the company’s journey with Paulami Chatterjee as India’s largest B2B marketplace for silk, its core functions and long-term goals.

Tell us about your journey. What inspired you to found India’s largest B2B marketplace for silk?

Indian textile industry is 3000 years old, yet the queen of textiles--silk has seen no disruption in its supply chain since inception. Mayank Tiwari, CEO of ReshaMandi, travelled to Ramanagara, Sarjapura with an aim to interact with and help various farmers in selling their cocoons. He realised that tech intervention was needed to enable and empower farmers, so he reached out to our co-founder Saurabh Agarwal who was in the US at that time, but on realising the tremendous scope that the industry had, he joined hands with Mayank. The idea was so compelling to Saurabh that he built the entire tech ecosystem for ReshaMandi in 7 days!

As the outlines started to take shape, Mayank reached out to Utkarsh Apoorva, a serial entrepreneur from IIT Delhi with multiple exits, and an old friend to join the journey. Since then, ReshaMandi has been growing exponentially, and now we are working with more than 50,000 people which includes CRC owners, farmers, reelers, weavers, and retailers and there’s still a long way to go for us as a provider of full-stack solution for Indian natural fibre textile industry to empower and enable millions of Indian lives.
 

What were the hurdles faced by SME retailers involved in the silk trade during the pandemic and how did your technological interventions address their challenges?

Some prominent issues faced by SME retailers would be:

1.Working capital shortages
2.Higher inventories
3.Availability of high-quality inputs
4.Order cancellations
5.Price transparency

Here, ReshaMandi’s intervention includes:

1.Transparent pricing - via IOT + AI/ML techniques
2.Personalised lending: Catering to working capital and capital financing loans.
3.Khata in-app
4.Online payments etc

From a retailer’s perspective, 3 major challenges were the working capital, price, and availability of goods. ReshaMandi runs cocoons, yarn, and fabric through various tests like renditta, denier, etc to determine the price as well as to eliminate the possibility of fraud which automatically improves the end result for retailers in terms of price and quality. We work with 5000+ weavers across India which assures the availability of a wide variety of silk products to retailers that they can order directly on the app. Soon, retailers will also be able to avail business credit via our app to take their business to the next level.

How are you engaging with silk stakeholders: farmers, reelers, weavers, and retailers across the supply chain directly to prevent their exploitation by middlemen?

The major gaps between the stakeholders exist mainly due to geographical constraints, but other problems such as pricing are also significant. The middlemen who entered the market as problem solvers ended up creating more complications that affected the stakeholders’ profit margins considerably, they also eliminated transparency in many aspects.

With ReshaMandi, we are trying to close the gaps between our stakeholders with tech intervention in a simple way, because of which the stakeholders need not be worried about the availability of essential inputs and sales of their outputs.

What was the initial seed money you started with and what is the valuation of the company as on date?

In March 2021, ReshaMandi raised initial seed money of $1.7 million backed by Omnivore and Strive Ventures with participation from Axilor Ventures and Supply Chain Labs (Lumis). Further, we raised US $30 million in India’s Largest Series A funding for a B2B marketplace, led by Creation Investments and other investors, in October 2021. This round featured a mix of equity and some debt. The equity funding includes new investors such as 9 unicorns, venture catalysts, Sandeep Singhal from Nexus, Brijesh Agarwal, founder of IndiaMART, and Omnivore, debt investors include Northern Arc, Alteria, Innoven, and Stride Ventures. Our valuation jumped by 13x between our seed round and Series A funding.

What is the core function of ReshaMandi? How does it involve weavers and retailers under one umbrella?

The core function of ReshaMandi is to create an ecosystem for all the stakeholders of the natural fibres industry-- starting with the Indian silk industry which involves CRCs (Chawki Rearing Centers), farmers, reelers, weavers, and retailers. We not only work with weavers and retailers but vertically integrate end to end in the supply chain. ReshaMandi, the world’s first and only digital silk supply chain enterprise, is solving problems for each stakeholder using a combination of technology, technical advisory, and on-the-ground assistance. ReshaMandi’s full-stack problem acts as a layer of trust ensuring transparency, fair pricing, and increased incomes for all stakeholders in the silk ecosystem.

Which are the regions of India where you are connected with the silk farmers and weavers so far?

ReshaMandi’s presence spans over 20+ cities across India covering more than 1000+ pin codes where we have a physical presence.

As mulberry silk farmer clusters exist in south Indian states and Maharashtra, we work with more than 35,000 farmers from all over Karnataka, Maharashtra, Andhra Pradesh, Telangana, and Tamil Nadu. We have set up over 18 procurement centres for farmers.

As for weavers, we work with most of the important clusters from Andhra Pradesh, Rajasthan, Madhya Pradesh, Bihar, Telangana, Karnataka, Gujarat, and Uttar Pradesh engaging more than 5000 weavers from these states.

Ever since the pandemic happened, has the online industry seen more of an uptick? Please share your views.

The pandemic has definitely pushed various online solutions to the forefront. The solutions, though originally developed and used to deal with the limitations caused by COVID, are relevant even after the lockdowns and may continue to be useful long after. The pandemic also caused an increased adoption of online solutions among customers who did not actively use that medium before.

The same goes for ReshaMandi and the larger B2B space as well, farmers were able to place their orders online for essential inputs for silkworm rearing as well as sell cocoons to us directly from the shed as our team also provided logistical support to them. Then the cocoons were delivered directly to the reelers and so on. Most of our stakeholders’ accessibility problems during the pandemic were solved with our application and other tech interventions.

How has ReshaMandi led to standardisation of the highly unorganised textile industry?

Indian silk yarn was considered to be of fairly sub-standard quality when compared with foreign silk, and the big gap in demand and supply caused weavers to import huge quantities of silk from outside India. Despite being the second-largest producer of silk in the world, we are still an export deficient country. This shows that there were big gaps in the quality demanded by all stakeholders in the silk supply chain.

ReshaMandi understands that these problems are to be solved at a grassroots level. We solve this by bringing in scientific methodology and quality transparency amongst stakeholders. Now, when a farmer sells cocoons to ReshaMandi, we set a price for it based on the quality grade we determine based on the renditta score and other set parameters, along with this the propriety tech interventions like AI-ML based quality grading that can be used to measure easily by clicking the picture of cocoons on a phone camera; IoT devices combined with constant expert advisories help them in improving the quality and quantity of cocoons. This results in improved standards across the stakeholders which ultimately improves the quality of the end product i.e silk fabric.

We have brought a change in the way cocoon, yarn, and fabric’s quality is measured in the Indian silk industry, which was majorly reliant on the rule of thumb methods to measure the quality with no standardisation and transparency, with the adoption of scientific methods.

How much has the silk saree industry been affected in terms of production and sales during the pandemic?

Barring a small slump in the beginning, during the complete lockdowns, production has not decreased. We are seeing a shortage of production, with the current uptick in demand and hence, prices are soaring due to supply shortages. These supply shortages are mostly due to the shortage of working capital. There is an urgent need to fulfil the increasing demand for silk cocoons, yarns, and fabric credit that could help stakeholders expand their businesses.

What are your long-term goals? How do you plan to expand your current setup?

Indian silk industry employs over 10 million people in India, and ReshaMandi is working with 50,000+ people which though significant is still not even 1 per cent of the market. So we definitely have a long way to go in terms of numbers. We also don’t want to just restrict ourselves with silk. In the long term, we see ourselves as an end-to-end ecosystem for the natural fibres industry. We are already making early inroads into cotton, jute and wool, and are also continuing to engage in market research for other natural fibres we can standardise as we build the backbone for natural fibres in India.

We eventually strive to make India a global textile hub when it comes to natural fibres which will support the cause of ‘Aatmanirbhar Bharat.’ Progress in this area will also be instrumental in creating new avenues and opportunities for employment.
Published on: 05/01/2022

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.

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