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Rationalise GST: A laundry entrepreneur’s plea

There is no business that is as crowded as the laundry business. New entrants are few, but they have to compete – in the minds of customers – with hundreds of dhobis in each city, some of whom have been washing a neighbourhood’s clothes for generations together.

We would like some kind of training opportunity that would provide these skills to employees. One of our greatest challenges is that we are being forced to spend our time training them on the job.

Saabina Siraj, Director of Favone Laundromat Pvt Ltd

This is the story of how a young entrepreneur – with no prior experience in or connection to the laundry business – took the plunge and created a market for herself where none existed before. Saabina Siraj, Director of Favone Laundromat Pvt Ltd, a Thiruvananthapuram-based laundry service which operates under the brand name Fabriclean, explains what worked for her business, and why the laundry industry needs trained manpower and reduction in GST rates to be able to grow.

Tell us how Fabriclean started out.

Our company was founded in January 2016. My husband and I started the business when we were very young. We both had master’s degrees after finishing our MBAs; my husband did his MTech as well. As a result, we both come from an engineering background and have technical knowledge of this industry.

However, there was a lot of social stigma, and we had to work a lot around it. But I’m happy to report that our perseverance paid off. Over the last seven years, people have come to us to tell us that their perception of launderers has shifted.

How has your business been different from other retail laundries?

Many laundromats have their own processing units within their outlets, but these are all small. We operate on a hub-and-spoke model. We currently have city-wide outlets connected to a central processing plant with imported machinery. We also offer pickup and delivery services. Everything collected will be brought to our central plant, where it will be sorted and processed before being dispatched back to the original collection centre.

How has this model helped you capture a significant market share in your region?

Our infrastructure gives us a USP within our region itself. We have captured the city’s semi-premium and premium markets, which did not previously exist in those segments. There were previously regional dry cleaners, but we have now captured the market in this segment.

We can also work with a variety of materials, and offer a variety of services including various types of laundry, dry cleaning, and pressing.

What challenges is your business facing regarding the lack of skilled employees?

We have no opportunity or means of acquiring skilled workers. Most of our laundry employees require training after they begin working for us. These are the traditional dhobis who have worked in their family business for generations or as launderers in recent years.

The number of people who follow their family profession has recently decreased, leading to a shortage of people with launderer skill sets. As a result, we as a company have to take the time to train them from the ground up.

We would like some kind of training opportunity that would provide these skills to employees. The majority of our skilled employees come from states like Uttar Pradesh, but even so, the number of employees in this sector is small. More skilled workers are required.

Maybe government institutes can start some kind of training programmes where we can train young people and then hire them. One of our greatest challenges is that we are being forced to spend our time training them on the job.

The GST rates have been a topic of contention for the entire laundry industry. What do you believe needs to be done, and how will this help all stakeholders?

The laundry industry is regarded as a luxury industry, with the assumption that it is meant for the cleaning of only designer clothing. There is a huge market in the mid-range, which can be tapped even more than what is currently being done. This is one of the reasons we have asked for a GST reduction. To make laundry and dry cleaning more accessible, we need to reduce the tax from 18% to 5%.

When we lower the GST tax bracket into which we follow, it will incentivise many of the current small and medium-sized enterprises (SMEs) to register as entities and become a part of the formal ecosystem. Once this occurs, many of the unorganised small-time players in the laundry business, such as dhobis and others, will become part of the formal economy. .

They would be incentivised to form a company and follow government regulations in order to be a part of the entire ecosystem. This would make sure that they also become tax-paying entities and also follow the rules laid down for the laundry industry.

This industry is much larger than the government or the Ministry of Industry gives it credit for. There are many opportunities, and no matter what we do, we will need the government’s assistance to move things forward.

What can we look forward to from your company in the near future? How do you plan to grow?

Fabriclean is currently in the process of developing its app. Once this is completed, our entire process flow will not be restricted to Thiruvananthapuram; we will be able to communicate with anyone in the city, or the state for that matter. We could bring the items back to our central plant and work extra shifts to make it happen.

At this time, we are also planning an expansion into Dubai, where we will launch the app as well. We would collaborate with various partners over there. We will follow the same process with slight modifications.

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