Section One Furniture Industry In India

Meaning of Furniture
Furniture is the collective term for the movable objects which may support the human body (seating furniture and beds), provide storage, or hold objects on horizontal surfaces above the ground. Storage furniture (which often ma es use of doors, drawers, and shelves) is used to hold or contain smaller objects such as clothes, tools, boo s, and household goods. !t indicates everything which is used while doing interior wor . !n a house, various things li e sofas, bed, flooring, lighting, glass wor s, dining table, wall unit, chairs, bathroom fittings, carpet, ceramics etc. fall under the broad word "F#$%!&#$'(. !n an office also, things li e wor place, table, chairs, designed structures, conference table lights etc is categorized under furniture. Furniture can be a product of artistic design and is considered a form of decorative art. !n addition to furniture)s functional role, it can serve a symbolic or religious purpose. *omestic furniture wor s to create, in conjunction with furnishings such as cloc s and lighting, comfortable and convenient interior spaces. Furniture can be made from many materials, including metal, plastic, and wood.

The Global Furniture Sector: An Overview

Furniture has traditionally been a resource and labor, intensive industry that includes both local craft,based firms and large volume producers. -ass producing furniture became a viable manufacturing strategy with the advent of flat,pac or ready,to,assemble designed furniture. &his product innovation paved the way for firms to design, manufacture and ship products in large .uantities. Firms that mass,produce flat,pac furniture tend to supply products for the low, to medium,price mar ets. Solid wood furniture manufacturers have retained important niche mar et segments primarily for high,end, e/pensive and design,led products. &hese specialized products tend to be purchased locally while mass,produced0 large, volume products are sold locally and for e/port. Furniture is big business. &he global size of furniture mar et is estimated at 1 23 billion. 4ountries li e #S5, #6, 7ermany and !taly are the bigwigs in global furniture industry. &hey produce furniture products with latest technology which is not found in !ndia. &oday many companies li e Durian, Godrej & Boyce, and Tangent import furniture from western countries and sell it in the !ndian mar et. &his low ran relatively high import duties and low technological competency. may be e/plained by

SCE A!IO OF F"! IT"!E I #"ST!$ I I #IA

Introduction
!ndia is a country with population over 1 billion &he range of indigenous furniture available in !ndia includes both residential and contract system furniture, with an increased concentration in office and household furniture. !n the area of decorative residential furniture, !ndia has a heritage of e/.uisite handcrafted furniture, made out of tea , rosewood and walnut wood, which has strong colonial roots. 4urrently in !ndia, !ndian manufacturers use a three,tier selling and distribution structure that is distributor, wholesaler and retailer. &he most popular forms of !ndian furniture include home and garden furniture, office furniture, itchen furniture, bedroom furniture, upholstered furniture, seating, furniture parts and contract furniture in wood, metal, plastic, cane and bamboo. &hese furniture pieces are available in a variety of finishes. 4hoices range from anti.ue or e/otic loo ing furniture to painted furniture. 9opular items of furniture e/port are mainly a large variety of cabinets, cupboards, ethnic settees, beds, partitions, chairs, tables, frames, bo/es and bajots, and many other decorative articles. 5nother element is the greater attention that the local producers pay to include design and technological innovation in their supply. 5lthough still bound to a product model that is typically of the :ritish colonial style, the !ndian industry is ma ing great progress in offering furniture of a modern design to consumers who are increasingly demanding to standards of .uality and design found in western countries.

I%&act on Indian Econo%y

&he total size of the !ndian furniture industry is estimated by industry e/perts to be worth, appro/imately $s. 83333 crores currently, with an estimated ;<= of this falling into the unorganized sector. &he share of the wooden furniture mar et is estimated at !%$ >33 million. &he annual per capita consumption of furniture in !ndia is not more than $s. 1<33.

&he furniture industry in !ndia can still be considered as an unorganized sector. ?andicraft production accounts for around ;< = of furniture production in !ndia. &he furniture industry employs around 8,33,333 wor ers in !ndia. &his sector has some <,333 active companies of which ;= produce wooden furniture, 13= metal furniture and ;+= manufacture accessories and furnishing items in plastic. &he office furniture segment, particularly metal furniture, is much more advanced (in terms of size and technological innovation) than the home furniture one and a larger percentage of its production is e/ported. @ver the period 1AA>,1AAA, the average annual growth in the !ndian furniture industry reached 8 =. 5fter four years of prosperity, the !ndian furniture sector declined to 13= due to cyclical situation of the economy. !n the last 2 years, this sector has recovered from the 1AAA crisis and has shown 2 , 2.< = growth annually. *espite the forecast growth, !ndia is still a country with the furniture industry not particularly developed in comparison to western countries (#.S., 7ermany and !taly) and South 'ast 5sian 4ountries in terms of absolute value of the sector and percentage of 7*9 in the economy. &he furniture sector in !ndia only ma es a marginal contribution to the formation of 7*9, representing just a small percentage (about 3.<=). &he principle cause of this situation is that furniture production is typically a craftsmen(s activity and the process of industrialization which is fairly advanced in other industries is yet to be implemented in this sector. !ndia was the biggest furniture importer in +332,3<, with a 1B per cent share in furniture imports worldwide. !n +333, !ndia ran ed 2;th among furniture e/porters (C123 million) and 2Ath among importers (+3 million). 5 total of 13,2B> importers shipped furniture to !ndia during this period. &he current imports are mainly from #6, !taly, 7ermany, Spain, 4hina, 6orea, -alaysia, !ndonesia, the 9hilippines and Dapan. <

5ccording to a survey by global consultancy firm 69-7, !ndia has emerged as a ey F*! destination as foreign investors earn higher returns in !ndia than in other emerging mar ets li e 4hina, :razil and -e/ico. The return on every dollar spent in India has a better return than is the case with other emerging markets that have a more avorable environment,! it said.

>

Forests and 'oodwor(ing

Forests
Forest Consumption

&he forested area of !ndia amounts to about +3= of the total country, e.uivalent to >2 million hectares. $oughly 8; million
40%

1%

59%

hectares are dense forests, +< million hectares are open forests and a million hectares are covered by mangroves.

Dense Forest

Open Forest

Mangrove

&he central state of -adhya 9radesh owns +1 = of the country(s forests, followed in order by the states of 5runachal 9radesh (11 =), @rissa (B =), -aharashtra (B =) and 5ndhra 9radesh (B =). &he seven states of the north,east account for +> = of the country(s forests. !ndia is one of the largest consumers of wood in South 'ast 5sia. #ntil a few years ago the country had considerable .uantities of available tropical woods. &he most common species in !ndian forests are tea , rosewood, ebony, laurel, pine, cedar and rubber trees. &hese Eready to useF species were, until recently, freely e/ploited without recourse to particularly advanced technology. Subse.uently supply became scarcer due to unconditional and inappropriate e/ploitation and also due to growing concerns about the environment that led to policies for the conservation of the forests. !n the wood used for furniture in !ndia, tea accounts for almost <@=0 while Sal and deodar for about +3= 0 mahogany and balance 8@= between white cedar, silver oa and pinewood. !n order to conserve the forests, the cutting of soft jungle wood has been banned by the !ndian 7overnment. 4onse.uently there is a great potential for foreign companies to supply wood to !ndian companies.

!n !ndia natural rubber plantations cover <+3,333 hectares with another >,333 hectares replanted almost every year since 1AA2. 6erala state (South !ndia) produces A<= of the total supply of rubber wood in !ndia.

'oodwor(ing
&otal production currently amounts to about 1 million cubic meters. ?owever, almost 23= of the rubber wood is used as firewood, the pac ing industry claims a further 22=, and only about 1>= is used for the plywood and panel industries. !n the case of the round wood0 construction, joinery and pac aging consume +<= of the !ndian round wood and the furniture sector uses only the ;=.

Good for fuel is the main use of the wood in !ndia and other use as production of chipboards, -*F, pulp paper or saw wood account for marginal percentage in the total !ndia Good consumption. &o serve the demand, !ndia imports wood (logs) from countries li e -alaysia, !ndonesia, -yanmar, !vory 4oast, %igeria, 7hana, South 5frica, %ew Healand and to some e/tent of South 5merica. &hese logs are imported through various ports in !ndia. ?owever there are several infrastructural constraints, which may impede further growth in these imports in the near future. &herefore it is e/pected that over the ne/t few years until this infrastructure gets built up, saw timber will also have a mar et in !ndia.

)roduction of !ubberwood
&here are reportedly over 23 factories manufacturing rubber wood in !ndia, mostly in 6erala State (South !ndia). 5ndamans &imber !ndustries in 5ndamans !slands is the largest manufacturer of rubberwood in !ndia reportedly with annual turnover of over #S1 1+ million. &here are other companies li e *''4@, 7rowell !ndia, etc which produces rubberwood.

*a%boo Material *oards

!n the recent years, !ndia has developed a new ind of board made with bamboo these 2,by,; foot mats are soa ed in resin, then hot,pressed together in various thic nesses to form bamboo mat board, a substitute for plywood. &hese boards are generally as strong as or stronger than their plywood e.uivalent and are less e/pensive. &he advantages of the bamboo board areI &he big advantage of producing bamboo mat boards is that since hardwood trees ta e 23 to ;3 years to reach a worthwhile logging size, but bamboo is ready to harvest in just two to five years. #sing bamboo not only gives hardwood forests a chance to regenerate, it also fights soil erosion. &his plant grows best in areas of heavy rainfall, which are prone to erosion after logging, and its shallow root system holds soil well. @ne of the ey benefits of bamboo mat board is that it can be manufactured by small factories right where the bamboo is grown.

Technology Transfers
&hrough the !nternational %etwor for :amboo and $attan (!%:5$), bamboo mat board is now being promoted beyond !ndia(s borders. 5t a wor shop that was organized in 1AA2, !%:5$ introduced :-: to seven other 5sian nationsI :angladesh, 4hina, Jao 9*$, -alaysia, %epal, &hailand, and Kiet %am. &his technology could also be transferred to 5frica and Jatin 5merica. !n the !ndia(s case :-: has already replaced about +3,+< = of plywood sales. &his figure could increase through better promotion and new contracts, particularly from the !ndian government, which is the biggest plywood consumer L for its offices and railway carriages. 4urrently more than 13 plywood factories have already started ma ing the boards in bamboo, growing areas of !ndia. A

Furniture )roduction
9roduction for home use comprises mainly sofas, dining tables, and seating, professional production is destined for offices and companies and the institutional furniture sector serves mainly hotels, schools and hospitals. &he non,organized sector is very strong in the !ndian furniture industry ;< = of local production). &his ;< = is lin ed to craftsmen wor ing alone or as many two or three assistants. &hese craftsmen use
25% 65%
Wood Metal Plastic

Raw Materials Used 10%

e/clusively solid,wood and produce furniture on re.uest. 5bout >< = of the furniture produced in !ndia is in wood, +< = in metal and the remaining 13 = in plastic.

@n the other hand, there is furniture produced on a medium,large scale and intended for professional use, which is provided by the organized sector. Finished products are offered in modular systems in standard sizes and customized. &he segment with the largest no. of medium,large companies is the office furniture. &he plastic is the most used raw material mainly because it is a new raw material that has been introduce in !ndia recently and also because it is a really cheap raw material. !n the recent year also the chipboard, -*F and bamboo,board have become popular in the production of furniture. &he most common solid woods used to produce furniture in !ndia areI &ea wood (>3M ) and $ose wood (1<,+3=). !t should also be remembered that for the majority of companies the production of furnishing items is only a side line and besides often furniture producers import foreign brands.

13

)roduction &rocess and +alue Chain

4ut logs are carried to the sawmill, which obtains its primary inputs from the machinery sector. From there, sawn timber moves to furniture manufacturers who, in turn, obtain inputs from the machinery, adhesives and paint industries and also draw on design and branding s ills from the service sector. *epending on which mar et is served, the furniture then passes through various intermediary stages until it reaches the final customer, who after use consigns the furniture for recycling or refuse.

11

)roduction *rea(u&
&he !ndian furniture industry consists of various sectors in which the manufacturers are not as specialized in the production of a specific type of furniture as in other industrially advanced countries. &he manufacturers, that are either industrialists or craftsmen, produce various types of furniture and it is difficult even using .uestionnaires and contacting them to get a real picture of the production by types of furniture. !n addition, official statistics are not available either at the national or at the local level.

Breakdown of Furniture rodu!tion

15% "% 5% "0%

6% 6% 15%
Upholstery Kitchen Bedroom Parts Hotel/contract Other

20%
Dining room Corporate Office

7lobally, domestic furniture accounts for ><= of the production value whilst corporateNoffice furniture represents 1<= of the production, hotel furniture 1<= and other furniture (mainly parts of furniture), <=. &he upholstered furniture and the bedroom furniture sectors are the largest ones within the furniture industry respectively representing 83= and +@ = of the total production. &wo other sectors have almost the same weightI the itchen furniture sector (>.<= of total production) and the dining room furniture one (>.<=). @ther domestic furniture (garden, home office, small furniture) accounts for 2 = of the total production.

Furniture Consu%&tion

1+

End user,s &rofile in India

@bviously the purchasing power is completely in the hands of the upper segments of the !ndian population. @ne study carried out by the Gorld :an attributed 88= of private consumption in !ndia to the richest 13= of the population (in terms of per capita income), whereas the poorest decile of the !ndian population claimed only 8= of consumption. !f the richest +3= of the population are considered, the .uota of total consumption attributable to this group is around 2B=.

5nalyses carried out by important world researchers and the classification of !ndian consumers conducted by research institutes are still not enough to provide an estimate of the size of the potential mar et. ?aving said that a .uarter of the world(s poor lives in !ndia and a not very large number of rich people, we still need to .uantify that middle class of consumers that forms the potential mar et for foreign companies wishing to sell on the !ndian mar et. u%ber of fa%ilies -%illions/ Annual inco%e range -./ Jess than 2A3 2A3,>B> >B>,18;2 18;2,>>1< -ore than >>1< TOTA0 "rban <.8 B.1 1>.; 1>.> 3.; 2>.> !ural +B.B 8>.A 8B.8 1<.A 3.2 11;.+ Total 88 22 <2.1 8+.< 1.+ 1>2.;

!n !ndia there are 88 million families, or roughly +33 million people, have an average annual income of over #S1 1,833. &his section of the population is more or less the !ndian mar et for consumer goods including furniture. *ata for income distribution is however not sufficient to be able to determine the size of the mar et, which varies according to the type of goods considered. &he number varies from 833 million people to 133 million according to the consumer good in

18

.uestion. &his situation may be the result of a lac of uniformity within the middle class and of the huge differences in the prices charged in different areas of the country for the same product. 4onsumer purchasing power in !ndia seems to be more closely lin ed to the location of the consumer than to the income. Family habits therefore play a greater role in determining the size of the mar et than the distribution of income. !f only consumer durables are considered of an international level, an estimate, felt by many local observers to be rather pessimistic, put the number at around <3 million (which would still ma e !ndia a larger mar et than any 'uropean country). *espite the increasing urbanization of the country, the richer section of the population does not necessarily live in the large cities. !t is certainly true that in the four largest cities (4alcutta, -umbai, %ew *elhi and -adras), which are home to about >3 million people, there is a concentration of the more EwesternizedF population in terms of tastes, but it is e.ually true that in the rural areas there is a large part of the wealthier classes

5lso the population that resides in the country is, in turn, 83= concentrated in villages that often have the same number of inhabitants. So far foreign investors and local companies have ignored this segment of the mar et, which remains firmly rooted in its own cultural and religious traditions and has not been affected by the consumerism typical of the urban population. :ut if this segment were approached with targeted mar eting strategies, the number of people effectively ma ing up the !ndian mar et for consumer goods would increase significantly.

Consu%&tion

12

Furniture #ales
15%

20% 65%
Ho sehold Office Contract

&he !ndian mar et for furniture is worth appro/imately 83,333 crores and roughly ;<= of this comes from the non,organized sector (craftsmen). &here are few !ndian companies that produce or sell brand name furniture. &he home furniture segment claims ><= of furniture sales, the office segment +3= and contract the remaining 1<=.

1<

#istribution and Sales Channel

!ndian companies operate directly on the mar et and through distributors. 5 number of companies, especially those with a predominance of local customers, sell direct to customers without passing through distributors. &he majority of these companies are involved in the production of office furniture and in some cases they have dozens of free,lance salesmen wor ing on a commission basis. &he larger companies have their own commercial offices and showrooms in all the larger cities in !ndia. -any organizations prefer, however, to operate via organized outlets. &his enables them to reduce sales costs and to concentrate on productive aspects and on improving productivity and .uality. !n many cases the companies that sell through commercial

1>

organizations rely on the same for customer services and are only directly involved in the case of large .uantities. !ntroducing foreign products to !ndia(s mar ets re.uires careful analysis of consumer preferences, e/isting sales channels, and changes in distribution and mar eting practices that are continually ta ing place. !ndia is a very big country in terms of area and a new company should in a first approach forget spread its product in the whole !ndia. :esides huge distances separate the most populous cities, as e/ample, from *elhi to 4alcutta there are more than 1.<33 6m and almost the same distance there is between *elhi and :ombay. !n !ndia it is easily to tal about two inds of consumers. @n one hand there is the urban population, which is widely dispersed and rather has higher buying power than the rural areas. @n the other hand there is the rural !ndia, which constitutes B3 percent of the country(s population0 this is more than B33 million people. #sually the rural !ndia habitants have low incomes than the urban areas. %evertheless relevant figures show how in the rural mar et has been a rapid growth in last years. &he main reason for such growth, apart from awareness created by various media channels (&K and radio), has been the adaptation of distribution channels to the needs of the rural mar et. 4ertainly there are still hurdles to be crossed in order to penetrate this mar et. First problem is one of logistics, the huge differences at an economic and cultural level among the various areas of the country. Secondly the distribution system that is not yet sufficiently structured.

1B

:ut if these are tac led with mar eting policies that are targeted and attentive to the internal diversities (thus not only directed at the part of the population that inhabits the large urban centers) and based on an understanding of the traditions, habits, and lifestyles that evolve from Ebeing presentF in the country, in the not too distant future the !ndian mar et could be a source of satisfaction for many sector companies.

#istribution
*istribution coverage is the prime ey point for a company pretending sells its

products in !ndia. !ndian consumers are dispersed. &hey are serviced by an efficient, but fragmented, trade system consisting of over 2 million retail and wholesale outlets, spread over many urban and rural population centers. &he ability to physically deliver one(s goods to the consumers, therefore, remains a source of significant competitive advantage. 4urrently in !ndia, !ndian manufacturers use a three,tier selling and distribution structure, which are distributor, wholesaler and retailer. 5 typical company operating on an all,!ndia basis could have between 233,+833 distributors, always depending of the product and the final consumer. &he retailers served directly by a company(s distributors may similarly be between +<3,333,B<3,333. *epending on how a company chooses to manage and supervise these relationships, its sales staff could vary between B< and <33 in number. &ypical gross percentage margins for a distributor, wholesaler and retailer, are 2,<, 8,2 and 13,1< respectively. Gholesaling is profitable by maintaining low costs and turnover high. -any wholesalers operate out of wholesale mar ets and serve the final consumer. !ndia has appro/imately 2 million retailers, mostly family,owned or family,run businesses. !n recent years, there has been increased interest by companies in improving their distribution logistics in their effort to address a fiercely competitive mar et. &his in turn has led to the emergence of independent distribution and logistics agencies to handle this important function. -ar eters are increasingly out,sourcing some of the ey functions in the distribution and logistics areas, and loo ing for more reasons to reach the consumer better. 1;

$ecent years have also seen innovative trends by companies in utilizing distribution channels for products with synergy. Ghile there are no major national store chains, departmental stores and supermar ets are mushrooming in many of the cities, as well as in other towns all over !ndia. -ost cities have well nown mar et districts and retail sales outlets are almost always locally owned. :uying and selling is often a process of bargaining and negotiation. @utside the major metropolitan areas, !ndia is an intricate networ villages. 9oor roads ma e many rural districts inaccessible. !ndia has both organized and unorganized channels for selling goods. Smuggled goods such as computer parts, cellular telephones, gold and a vast range of imported consumer goods are routinely sold through the thriving EunorganizedF sector or blac mar et of the economy. :y avoiding ta/es and customs duties and using cash transactions, unorganized merchants offer better prices than those offered by the organized sector. ?owever, with liberalization and more and more foreign companies coming to !ndia, the volume of business in smuggled goods has fallen significantly. -ost products being sold through the smuggled channel are now sold in !ndia through direct channels. !n selecting a distributor, the following considerations are importantI :usiness reputation and business standing0 :usiness capacity and salesmanship0 '/pertise and previous e/perience in the line0 Financial capacity and willingness to invest in the line0 4reditworthiness. !n addition, an ideal distributor will have the capacity to offer customers the re.uired assortment of products and services and a willingness to e/tend credit. &he distributor will be able to provide storage facilities, showrooms, shops, service wor shops, salesmen and service commensurate with the e/pected volume of business. of rural

1ow to )ro%ote Furniture Sales in India

1A

 5dvertisements in important national N regional news papers, interior and furniture magazines, participation in furniture trade shows and organizing wor shops and product seminars will ma e a company stand out in the competition.

!t is not necessary to have an all !ndia distribution networ of dealers N franchised shops from the very beginning. !nstead of thinning out, it is better to concentrate in same regions N zones and to consolidate before e/pansion.

%o !ndian or foreign company has held product display shows in !ndia e/cept to some e/tent 7autier (France). 5 furniture company should ta e lead in this direction and hold shows in good hotels of !ndia for the consumers, it will become a big hit.

4ompanies can have a design studio in !ndia. &here is complete vacuum, a sort of dearth of good designers in !ndia, especially for hotels, office and itchen industry in !ndia.

!n fact the !ndian companies can consider opening a design school in !ndia for aspiring students, which will generate big business (financial gains) for them in !ndia, besides giving them strong brand e.uity.

+3

International Trade

$ndian %&ports
15% 10% 24%

5% 2% 2% 14% 5% 5% 14%

4%

U! #taly Belgi m

"ermany Denmar$ %etherlands

UK Canada Others

France "reece

!n +338, the main e/ports were to the countries li e #S, 7ermany, #6 etc. 5lthough the growth rates show that there is definitely a greater propensity to opening the local mar et to the influence of foreign producers, incoming and outgoing trade flows are still modest. &he e/port is much higher than the imports but slowly the gap is bridging.

+1

!ndia was the largest importer of furniture goods in +338. &he main imports were done from 'uropean countries, #6, #S etc. &he demand for furniture items manufactured in these countries is slowly rising in !ndia.

$ndian $mports
'% 11% 4% 19% 14%

5% 6% 5% '% 12% '%

"ermany U! (apan

#taly Denmar$ Poland

Korea #rish &ep' !)it*erland

UK France

#uties Structure
Ghile importing furniture in !ndia, the following duty structure is applicable. &he goods may be imported by a company, institution or private individuals. #uty !mport *uty 4ounter Keiling *uty (4K*) 'ducation 4ess (+= of 4K*) ++ )ercentage +3 = 1> = 3.8+ =

&otal *uty

8>.8+ =

Ghile e/porting, there is no duty to the !ndian e/porters. &he duty is nil. ?ence the government is also favoring !ndian '/porters by encouraging e/ports which has resulted in increased e/ports from last few years.

)roble%s Faced by Foreign Co%&anies in India

)roble%s fro% Indian Govern%ent Side
9oor labor laws vNs. Ouality of wor ers , @utdated labor laws ma es it a bit difficult to sac ! dismiss ! retrench surplus or staff. 9ower generation shortages and steep electricity prices P -ore consumption , more the tariff brac et. 9ower cuts have forced most organized companies to have their own in, house captive power plantsN diesel generator sets.

+8

 !nvestment Q resources constraints L 5ttitude of !ndian ban s Nfinancial institutions, besides 1+= to 1<= high lendingNinterest costs. @utdated and primitive ban ing systems 9oor infrastructure , :ad .uality of roads cause delays in shipment deliveries. *irty industrial areas , %o maintenance is done for years. 4orruption , 4auses delays and irritants. ?igh and varied ta/es P Ghich country would have so many types of ta/esI 4ustomsNimport duties, countervailing duties 4K* ), Special additional import duties, e/cise duty ( manufacturing ta/ ), 4entral Sales &a/, State Sales &a/, @ctroiNmunicipal ta/, turnover ta/, !ncome ta/, corporate ta/ etc.

)roble%s fro% Indian *usiness Co%%unity side

9oor communication systems , -any S-'(s don(t ac nowledge or respond to urgent mails in time. &he .uality of letter writing is outrageous and subservient. *isregard of :rand valuation , For many !ndian companies selling products at cheapest possible price is the only criteria rather than brand building e/ercise. *irty industrial areas , 9oor roads, unclean and unhygienic.

+2

Ouality apprehensions and attitude , 5lthough due to e/ports and 4hina threat many !ndian companies have incorporated 1<3N #J etc., the attitude is still primitive.

&ransparent in financial issues , *ue to high ta/ation policies of !ndian government (see above noting) many companies sell their goods to end consumers without any recorded invoice. &his generates blac money.

9oor reporting systems , -ost things are controlled by owners( family and reporting system is non,e/istent in small companies.

#nsure of re.uirements , -any !ndian companies want foreign alliances N technical collaborationsNjoint venture without even bothering to now what it means to them.

#nfocused approach , &hey want to do it all, have it all, have strange attitude. Jac of professionalism L closely held companies wants to run the show their way and lose out in national and international mar ets.

%o importance of $Q* and -ar et $esearch Study (-$S) , For them just copying a design N product and selling it cheaper than the original itself is a great achievement.

$egular delays in supplying the end products to consumers , &his leads to legal and commercial complications. &he attitude is too casual.

9oor pay masters to employees , Gant to have .uantity not .uality in employment. &his leads to poor .uality of wor ers and production. E%o problemF attitude has created all the problems. . &hey cannot and it leads to poor taste.

Action )lan For The Furniture Industry

&he action plan for the industry could be on the following linesI *ench%ar(ing &erfor%ance: 'nterprises need to develop a mechanism to compare performance with competitors in other countries. :enchmar ing with most efficient +<

producers on all cost parameters is a must to improve the performance and remain competitive in the globalized scenario. *etter value chain %anage%ent: !mproved value chain management can reduce costs and increase fle/ibility. 5 wide sourcing base can increase fle/ibility when it comes to securing raw material from the cheapest source with the .uality and design the buyer e/pects. Such fle/ibility will be a critical competitive factor in the future. :y optimizing the supply chain, lead,time will also be reduced. Increase &roductivity: !nvestment in human capital and high,tech machinery to increase productivity and production of internationally cost and .uality competitive goods. 2uality consciousness: &o survive in the integrated world mar et, the industry has to focus on the international standards of .uality and e/cellence. &o achieve internationally comparable and .uality standard finished goods, it has to be ensured that .uality parameters are maintained at each level of production from raw material to the finished product. !ntroduction of latest technology can provide world class .uality in this industry. #esign 3 Trend: &here should be a constant watch on the design trends in the furniture mar et in the country as well as worldwide. &he design preferences of the consumer changes often. ?ence the companies should strive hard to be in par with the latest design trend Modern %anage%ent &ractices: 5longwith technology upgradation, adoption of modern management practices is also very essential to ac.uire that essential competitive edge. -anagement practices li e D!&, &O-, supply chain management etc form an important lin between technology adoption and ac.uisition of competitiveness. 5doption of such practices will result in cut,down in manufacture and delivery lead time, improving product and process .uality and improving plant

+>

e.uipment maintenance. -anagement accountability through stricter code of corporate governance is also necessary for balanced corporate growth. Innovative &roducts: &he industry has to focus on innovation for surviving the stiff international competition. "9roduction innovation( should be considered as a dynamic process and not as a one time process. 4ontinuous innovation in the product is the sure way to win the race in the global mar et. 4ompanies should have a research and development team who constantly loo out for innovating the products since the taste of the consumer changes fre.uently. #evelo& 4e5a&&lication: ',applications can be employed not only to sell, but also to e/change information across electronic networ s at any stage of the supply chain. ', applications facilitate sourcing and supply chain management0 production planning, design and forward integration, including internet sales. &he main goal of e,application is to increase fle/ibility and to shorten the overall value chain, thus reducing lead,time. 5 shift to e,applications also highlights that a company is both competitive and willing to adjust to the demands of the mar et.

Alliances *etween Indian And E"5"SA Co%&anies

Since the economy in !ndia is booming up, it has become a land of opportunities for foreign investors. -any foreign furniture companies have realized the potential of furniture mar et in !ndia and have started investing in !ndia and have entered into tie,ups with !ndian companies. &he agreement between 7autier France and the :irla 7roup of !ndia from 4hennai gave rise to 7autier !ndia, which offers the models of the French parent company. 4hairtech (France) is preparing a joint venture with a local seating producer, Kishal 4hairs (-umbai).

+B

 &he Swiss company Jista (office furniture) has signed an agreement for product development with -atri/, a Koltas Jtd company that produces modular office furniture. &he 7ermans Gilhelm :olt Q 4o. 67 and 'rich :olte have technical agreements with 5rvind Furniture for on,the,spot production of furniture. Steelcase (#S5) sells its products in !ndia through the most important !ndian producer of office furniture, 7odrej Q :oyce. 5nother #S company, ?erman -iller, chose Featherlite as its !ndian partner. Sauder (#S5), a specialist in $&5 furniture, has set up a joint venture and a technical agreement with the !ndian company Sammarth @verseas Q 4redits 9vt. Jtd (?yderabad). &he !talian companies 5rrital 4ucine and *ivani 4hateau d(5u/ both have !ndian partners to sell their goods on the local mar et. 5nother !talian company, Saporiti, specializing in upholstered furniture, has built a productive plant in 9ithampur in collaboration with a local company 9innacle !ndustries.

Gestern companies are already present on the !ndian mar et, but greater satisfaction is undoubtedly in store from the local mar et with the economic development of the country and, most importantly, with the involvement of larger groups of urban and rural residents in this development. &he improvement in living conditions, which is not confined to the large urban centers, will definitely produce a further increase in the demand for furniture of western style.

+;

+A

Section Two Case Study

83

The )osition of Furniture Industry then and now

Ghen tangent opened its first showroom in +33+, it got a negative response because an average !ndian consumer found it costly. !n +33+, very few companies had entered the mar et of e/clusive imported furniture and now hundreds of such companies e/ist in the mar et. &he government also favours this industry and supports the growth. 5ccording to -r. 6unjal &ha ar, an average common man is not able to buy imported furniture. :ut the scenario will change in coming years. !t is very costly to manufacture furniture of world class .uality made from machines in !ndia. &he labour costs are very high and the raw materials is also found in some specific countries. ?ence it is feasible to import such furniture instead of manufacturing it. &he customers are shifting from hand made furniture to machine made furniture because carpenters can not ma e furniture of such .uality and design which is made by machines in other countries. In " # $% years, this industry would de initely boom, since the consumer is increasingly being conscious about looks, design and budget& , says -r. 6unjal &ha ar.

Section Three
81

A s&ecial sna& shot67

Modular Office Furniture

Overview
%ew paradigms now define the design of wor place furniture. &he human factor is no longer the incidental element. ?aving ac nowledged the lin between productivity and well,

8+

being, the path was set for what is now called EergonomicsF or furniture design as if people mattered. &he understanding of form and functionality developed into a more scientific approach to designing the wor space and changed the way corporate !ndia loo s. Ouic to follow the trend set by the corporate world0 small business too has adopted the new loo and in so doing, created an enormous mar et for wor place furniture. &he manufacturers( story is lighting to retain the !ndian pie. &his recent dramatic change is driven by the changing profile of business, and the pace of twenty,first century life. &he cost of rental and the fact that most offices need to be occupant,ready yesterday "have necessitated the .uic solution L offices that can be put together fast, with minimum fuss and ma/imum efficiency. !n addition, the development of specialized niches in the corporate function, has created whole new office environments such as communication (call) centers, while the older EnewF sectors L information technology (!&), ban ing, F-47 and telecom are sprawling displays of the versatile, new office loo Ghile this loo incorporates all the right elements of ergonomic design, its also the new corporate signature. Stuffy cabins with boring, often ugly, functional furniture are out. 5n open conversational setting, complemented by elements of elegance and style, is the pretty new face of the business world. &he e/plosion in the mar et has pushed the @ffice furniture majors , 7odrej, :lowplast !ndia, Featherlite, 9SJ -odular @ffice Systems, % $ Dasani and Shapoorji 9allonji.

! gained nowledge from some ey players of this industry, who provided valuable insights into what are available, trends and materials, to illuminate the dynamics of the mar et, but could only confirm that the e/act proportion of office furniture to the total furniture industry is hard to assess.

88

&hey manufacture significant numbers and cater to an enormous mar et, but the manufacture of office furniture is not their core business. Furniture accounts for a fraction of the total range of manufacturing of the !%$ 1; billion 7odrej group, at !%$ 2 billion (233 crores), while the !%$ B.< billion Shapoorji group has a turnover of !%$ 8<3 million in the office segment. Similar proportions hold true for the !%$ < billion 9SJ group, whose office furniture accounts for just !%$ 133 million. &his recent focus on office furniture saw most companies starting manufacture after 1AA3 or in the early +333s. 'ven 7odrej, who are perceived as being in the E:usiness ForeverF, set up their office furniture division only in 1AA+. &his period also saw the entry of smaller, more focused manufacturers into the offi>e furniture mar et such as Steel Q Goods and K8 'ngineers. -anufacturers appear segmented at opposite ends of the office furniture spectrum, with the larger furniture majors offering complete office solutions (des ing, storage, seating, cubicle structures), including design and layout, and a group of chair specialists (5mber, 'urotech, 'uromic,) stic ing to their core competence. :ehavioral scientists tell us that matchbo/ structures enclosing individuals and cutting out visual and other communication, decrease productivity. @pen offices improve teaming, eliminate non value added activity, and are the new design mantra. Jeading manufacturers have developed variants of this system. 7odrej, for instance, offers five variants of the open plan office with panel, tile, column, des and combination spine and fin based systems. Such systems are modular, fle/ible, and upgradeable and can address needs for acoustics, privacy and cable management while ma ing it easy to configure offices to suit different wor profiles. %ot withstanding the change in trend towards integrated wor stations, freestanding des s continue to remain an important element of office furniture. Senior e/ecutive tables have become more stylish and functional, and may be upgraded with side or bac units for an independent wor place.

82

-ost manufacturers offer a range of products at varying price .uality levels. 5 mid, range e/ecutive suite consisting of des ing and storage, would vary in price between %9 8<,333 to !%9 1<3,333, while the upper ranges would start at about !%$ +33,333 and zoom upward,depending on the design component and the degree of customization. &he enormous demand for call center modules has inspired manufacturers to offer systems ranging from !%$. B,333 to !%9. +<,333.&he continuous enhancement in information technology has made an impact on conferencing e.uipment as well, leading to a range of pre,wired, modular conference tables of varying contours and finishes. 4hairs too have undergone a major metamorphosis, with the ma/imum research and studies being carried out on seating systems. 9rices for chairs range from %9 8,<33 for regular seating, with 4'@ level seating going up to !%$ 1<3,333. &he middle range of seating at the !%$ 18,333, 12,333 is most popular. E&he current trend is for office furniture that is not only functional but also aesthetic. 5 few decades ago, the "people( factor, played almost no role in determining the design of the office. @ffices are being increasingly designed by professionals who, apart from seeing that the spaces wor with optimum utilization, are able to add an aesthetic touch. &he atmosphere in the office can greatly influence wor output and an increasing emphasis is being placed on ma ing the modern office as pleasant as it is functional, &his is not always easy, given the increasingly smaller wor spaces to contend with. !n such a set,up, going modular is a great idea.F $anjit :a shi , ?ead, -ar eting :9 'rgo 8<

Offices are trying to move away from airless, box-like rooms to better-ventilated, well-lit, ergonomically sensitive spaces
Ji e any other furniture, office storage needs have changed. Gith office space becoming more and more e/pensive, it has become imperative to develop storage systems that store more in less footprint space. 5 clear demarcation of personalized and centralized storage, which could be modular and integrated with system furniture to stand above centralized storage, is the trend of the day. -ultipurpose storage facilities incorporate the facility to store a variety of material (bo/ N flat files, boo s, ledgers) in predetermined, easily identifiable areas. &he change in the design and planning of office spaces has been complemented by changes in what ma es up furniture and systems. &he old standard of wood and steel has been replaced by more technologically advanced and ecologically friendly fiberboard, glass and metal. 5 combination of materials li e wood and steel brea the monotony of one material, 8>

while the use of technologies li e membrane pressing has led to the development of stylish des ing systems at affordable prices. E-aterials used in manufacture tall into two categoriesF, according to $ajan :ahri of 9SJ, Ecore material and finishing material(. &he core materials need to be sturdy and supportive by definition, steel or aluminum as framewor materials, supporting particleboard, -*F and pre,laminated board. Finishing materials span the gamut from laminate, veneer, fabric, glass and 9K4 edge lippingF

%ew needs and new patterns of manufacturing have engendered a new activity , the design of office furniture. *esigning of storage, for instance, is a science that involves a study of the flow of documents, fre.uency of their use, the type and size of document binders before designing a proper solution. 5s 5nil -athur of 7odrej sees it, E%o more is the emphasis only on aesthetics or engineering, today(s designs integrate not only aesthetics and engineering but material services, ergonomics, and human behavioral sciences.F So who brings this bas et of varied s ills to the tableR E5 product designer trained in ergonomic normsF according to 5mber(s 6 * %irmal, E5n engineerF says -anjit Shandil of Steel and Goods, E5n architectF, says Shapoorji(s 4habbra. Several manufacturers have their own in,house design teams, who wor in tandem with the architect and design community to create products that are a contradiction in terms , customized system furniture. !n reality, the large volumes re.uired by each project ma e it

8B

feasible to create products that vary within a band, offering a degree of customization to each project. Jarge manufacturers li e 7odrej push out the boundaries of the concept with a fully integrated design center and nowledge center where their design cell directly interfaces with the architect and design community. 5nil -athur of

7odrej tells , "&he world over, furniture manufacturers are moving towards being solution providers , right from designing the layout and furniture to e/ecution of the project. &heir e/perience and research in office furniture and designing have made them e/pand their horizons into the area of interiors. Gor ing in tandem with the 5Q* community, the large manufacturers today offer a "Single Gindow 4oncept( to customers.F Gith several global majors selling up communication centers in !ndia, industry pundits foresee enormous growth in the demand for call center and software industry modules, and have started manufacturing need,specific modules for these industries. &he need to stay on top of things in a large, but increasingly competitive mar et, has inspired manufacturers to add value or maintain their stance various ways, starting with .uality control. &he bigger players have international certification on .uality norms. For 8;

instance, :lowplast follows 5%S! Q :!F-5 norms and has received !S@ A331 certification by :KO!, :elgium for "design, manufacture, supply, installation and servicing of office furniture systems(. Similarly, 7odrej boasts !S@, A331,+333 and 1;3,12333 certifications as well as manufacture in accordance with :!F-5 standards.

!n addition, several of the top < manufacturers have turned overseas for inspiration, buying technology, or products, or both from the mar et leaders of 'urope, the #S5 and @ceania.( See bo/ 5bove) 5ll roads, both !ndian and international, lead to the design of office spaces as if people mattered. &his is the new mar eting mantra. 5nd it wor s. 'rgonomics is the driving concept of the new office. &he importance of ergonomic seating is underscored by the fact that an average office wor er spends appro/imately ;3,333 hours seated, during his career. :y adopting uni.ue communication strategies, companies attempt to create an edge over competition as well as carve a niche for themselves in the mar et. Ghile ergonomics became the buzzword in industry circles, some went a step further, as did 7odrej who made the E?ealth,SeatingF platform their own. 7roup 9resident 9 * F Jam puts it succinctly, EFurniture is an essential part of good health. Ge do not merely sell pieces 8A

of furniture, li e chairs or tables, w sell healthF. So while 7odrej cornered the niche on health, :low9last e/plored the pleasure principle. 5s $anjit :a shi, ?ead -ar eting :low 9last 'rgonomics e/plains, EGor stations are designed in a manner that facilitate teamwor and allow free flow of information, while at the same time respecting the employee(s privacy. &he underlying philosophy being to create a healthy wor environment that raises the motivation level of employees creating "9leasure at Gor ( -ere mantras don(t do the tric . !ndian manufacturers have their mar eting plans in place, coupled with a game plan to target mar et their products to their main clients , corporate or the main decision ma ers. !n most cases, this is the specific architects and designers who wor with large projects and are responsible for the design and layout, including the interiors, of large office projects. -anufacturers have various strategies to attract and directly interact with the specifier. Some organize custom moc ups of furniture especially for individual architects0 a procedure which D 6 4habbra of Shapoorji says is both tedious and e/pensive. @thers offer the architect a range to choose from at showrooms or specialized design centers, such as the 7odrej 6nowledge 4entre. Jarge manufacturers with a serious scale of operation have an all !ndia networ of showrooms or franchisees. 5ll manufacturers also have partners and tie,ups with retailers across the country, gaining visibility without the burden of showroom costs. :low9last have over 1333 installations across !ndia, with showrooms in ; metros, complemented by a tie,up with 23 business associates across !ndia. 9SJ has a presence in the 13 largest mar ets, while 7odrej is !ndia(s largest office furniture manufacturer employing more than ;33 employees, a distribution networ of over >23 dealers, +2 branches and 81 showrooms, all , !ndia. &he smaller companies usually have a regional focus, with national aspirations. Steel Q Goods with a focus on the -umbai mar et relies on a mar eting team to ensure the product reach across the country, as does 5mber which sees >3 percent of its material being absorbed into the -umbai N 9une mar et, and the rest being dispatched to other regions via its mar eting networ .

23

Several manufacturers e/port a part of their production, mainly to 'urope and the #S5. &he base support to the mar eting plan is their promotional plan, which, on overview, appears conventional rather than adventurous, with all companies favoring advertising and trade fairs in appro/imately a B3 83 or >3I 23 ratio of ad spend. Ghat has been the government response to all this frenetic activityR $ajan :ahri of 9SJ says the recommendation of the <th 9ay 4ommission to incorporate modular structures into offices was a step in the right direction. ?owever, most manufacturers agree that the burden of e/cise and other ta/es diminishes the attraction of manufacturing. 5 glance around the country confirms the dominance of the big five manufacturers, who account for most office furniture retailed in the secondary mar ets. 5n educated guess at the size of the office furniture mar et in %ew *elhi puts it at about 13 billion !%$, where branded products account for between 13 and +3 per cent of the total. -ar et leaders 7odrej control an estimated >3 percent of this. $egional manufacturers also handle a significant share of the pie. &hese include the 4ontinental 7roup (Jine5 furniture) in *elhi, 'rgote and 'urost 9roducts in :angalore and Steelco in 6ol ata.

!ecent #evelo&%ents As #iscussed At Inde8 Furniture Fair In Mu%bai9 Se&t7 :;;<

21

Ghat the world at large glibly refers to as "call centers( encompasses the entire :9@ and call center industry. 5s one might e/pect, it(s hardly as simple as that. &he gamut of bac office operations falls into several segments, some of which are voice based (real call centers) and those that provide non,voice, based bac office services including data processing, transcription, pay roll processing, legal analysis and software development for specialized uses. &hese include call centers and :9@s for data processing, 69@S involving a more specialized and better educated staff including scientists, doctors or lawyers, !&'S and !& offices. !capil 5garwal says the profile of outsourcing to !ndia has itself changed, E5s the importance of !ndia(s .uality labor and talent pool is widely being recognized, we will go higher up in the value chain.F 'e don(t treat all so tware companies the same way and all B)*+ the same way, -ach company has an inner cultural pre erence which is di erent rom other companies and which we try to understand,& 5r. Dessy Dacob (Dessy Dacob associates) 'ach niche has its special design re.uirements. *iscussing the differences in profile, 5r. Dessy Dacob, Dessy Dacob 5ssociates, :angalore adds, The average age group in a typical B)* ranges rom $. to /0 years and // to 1% years in a so tware company, while in corporate o ices the age group is 0% to +% years, 2 B)* or a call center has a college campus atmosphere, so the o ices have to be un, young and happy so that it can cater to that age group,& &he reputation and scale of operation of the service provider or manufacturer is a factor in who initiates the buyer,seller dialogue. Jarge architect firms are directly contacted by the client who then continues the interaction with the architect, while the project management consultant joins the e.uation further down the line. !n other cases, the project management consultant assumes a more pivotal role, coordinating and initiating activities starting from the architect to all service and product suppliers. &he ne/t point in the interaction is the design brief, which varies in length and detail, depending on the e/perience of the client. &he novelty of the industry itself means that several clients are first,timers who re.uire a high degree of hand,holding including visits to offices 2+

with a similar design profile as a familiarization e/ercise. 5rchitects then confer with their clients to understand their corporate culture after which they wor out several design options, one of which finally selected by the client. 8* images and moc ,ups follow and the job enter the e/ecution stage. &he issues peculiar to this industry have also necessitated sector,specific solutions. 5r. :rinda Somaya, Somaya Q 6alappa 4onsultants, says, E&he biggest change has been in terms of the services that go into any one of these commercial spaces. Ghen ! began many years ago, it was furniture, accessories, flooring, ceiling, lighting and air conditioning. :ut today it is the communication system, the security system, the data cabling and the computer systems that are very important. ! thin the s ill of the architect lies in how they are able to integrate all the services.F 5r. Sanjeev -ehta, *irector, 'thi.ue, -umbai adds, E&he heart of a :9@ is data cabling and the server room plays a major role.F

Ghile architects say design does not change drastically from a regular software development or other !& office to a :9@, issues li e space and the schedules that :9@ staff wor , become factors in designing these spaces. 5r. 5sha 6ushalappa says, E:9@s are more intense as we fit in 1333 28

employees into a limited space, while in the !& sector, the same amount of space houses only <33 employees.F &he space crunch is balanced out by efficient ?K54, as the conditioned air must be well circulated to combat o/ygen, deprivation and the lethargy it induces. &he fact of employees wor ing shifts creates a bottlenec which architects must factor in. 5r. Dessy Dacob says, E'mployees have to record their log in and log out time. &here could be 233 people waiting to go out and another 233 waiting to come in, so we have multiple access control with biometric logLin and out systems.F :roader (> foot) passages reduce congestion and claustrophobia. !ssues arising out of repetitive wor addressed by creating "brea such as fatigue and frustration are out( spaces ranging from interesting cafeterias to in,house

gymnasia and chill out zones where employees can re, energize before they get bac to the grind. 5rchitects must also accommodate the fact that shift continues in to the night and the atmosphere of the bpo must replicate a day time environment ma ing lighting a central issue. E&he biggest change has been in terms of the services that go in to any one of these commercial spaces. ! thin the s ill of the architect lies in how they are able to integrate all the services.F P:rinda Somaya &he new industry segment has brought a whole new ethos of wor culture with it. 5n interesting anomaly that(s everywhere in the :9@ related construction and interiors industry is that there is a lot of business, but no one is ta ing anythingfor granted and competition has become frenetic. 5s in most things, the fallout has been of both inds0 while professionalism has certainly improved, the competition is sometimes gruesome, with aesthetics and design being the first casualties. &he industry that turned time on its head for the staff of the :9@ services industry has also had an effect on the timelines associated with set up. 5rchitects and builders across the board e/claim over how .uic ly projects are put together. $egarding the fit out, 5r. 5shish 7upta, Senior 5rchitect, *esign 9lus, *elhi says, E&he time ta en to set up a :9@ is 8< days to 8 months, and 4ompletion to an e/tent depends on the size of the project but not much. !f it is about <33,333 to a million s.uare feet, it can be done in 8 to 2 months.F

22

E:9@s hove completely changed the landscape of interior construction industry. &he scale of projects has gone up tremendously in terms of area and the budgets available have increased. :9@s, call centers and such big projects demand different ind of office buildings which comply with their re.uirements.F, alhan mattoo,planet 8 studios pvt ltd &he e/planation lies in another outcome of the :9@ industry. -anufacturers and suppliers of furniture have become far more organized as well as professional0 several have set up large,scale mechanized manufacturing facilities using 7erman or !talian machinery to do the job better. 9ra ash 7urba/ani, 4'@, &S! Kentures (!ndia), :angalore says, E*eregulation in imports of material has helped. &oday, things li e furniture and high,end e.uipment can be easily imported. &here are !ndian companies who are in collaboration with foreign manufacturers and manufacturing in !ndia0 so there is an efficient technology transfer.F E&hings have changed dramatically over the years in the construction industry. &he .uality of wor manship and e.uipment used has changed drastically. &oday we use laser technology to level the ceiling which was not there twenty years ago., pra ash gurba/ani tsi ventures (!ndia)

2<

2>

The Mar(ets 3 The Future

&he way it wor s for the greater part of the industry is that builders set up a complete building and thereafter lease out parts of it, floorwiseorotherwise, to S9@sorcall centers for a period of between three and five years. 5r. Ken atesh says, EGe have a healthy mi/ of both in the south. Ge did almost a million s.uare feet of fit outs last year and we are doing two million s.uare feet of new shells.F

324D*5 )6T 7TD 8 -9:* *;;I<- 3=3T->3 7TD,>9>B2I

:uilders and developers with a highly diversified portfolio are still focused to the residential and commercial project mar et, with the upstart S9@ industry .uic ly growing within the portfolio. &he share of this industry in the portfolio of a well,established developer with a much diversified range would be in the region of 1; to +3 per cent. %ewer entrants li e $egenesis, 9une move this up to 83 to 23 percent of their portfolio. 5rchitects too have seen a rise in the importance of the :9@ segment in their portfolios, with the older and larger architect firms putting this figure around the 13 per cent mar ,and the newer firms (dwp interics, 'thi.ue) seeing the segment account for almost half their business. 6shitij Jimaye, *irector, San alpan, -umbai says the last two years have seen a drastic increase in the proportion of :9@s in their portfolio from between +< and 83 percent to over 2; percent.

2B

4ommenting upon the constitution of the :9@ segment within the larger !& arena, 5r.Ken atesh says0 E:9@s and call centers form 13 percent of the projects that we do, because we have a pretty diverse portfolio. Ge do lot of data centers, software development companies, labs and testing facilities and hardware assembling facilities. &he percentage of the !& sector would be about <3 to << percent.F 5r. Sunil 7ambani of 5rchitect ?afeez 4ontractor also says they have a highly diversified portfolio, including residences, commercial comple/es and airports, ma ing their :9@,centric business a small proportion, but important part of the total. lnspite of the huge volumes of business, industry e/perts have only short term e/pectations for what(s called the call center boom. Some put the figure atjust three years0 others let the wave ride to five, while few e/pect it to last much longer than between three and five years. :angalore,based furniture manufacturer -anohar 7opal, *irector, Featherlite 9roducts, has seen the diversification within the !& industry at first hand and he predicts that there will be more specialized !& enabled services coming in, which will generate the need for their own specific furniture.

2;

Materials and Manufacturers

-aterials available on the mar et include the entire gamut of plywood, marine ply, veneers, glass and steel. ?igh wearing materials li e vitrified tiles, ceramic tiles, wooden flooring, granite flooring, laminated flooring, vinyl flooring, !talian marbles etc. are preferred for flooring. 5reas which are higher circulation zones normally have hard flooring and areas which are more cozy have wooden or vinyl flooring and the office areas have carpeting. !n call centers normally glass is not widely used as it(s a non acoustical material. Solid partitions made of gypsum, laminate, plywood or -*F are common. %ewer materials li e column cladding and innovations li e glazing partitions are in over the last couple of years. Gooden wor tops have given way to the range of options offered by membrane press technology. E%obody uses wood nowadays. -@' and rubber wood are common. &ables are tuc ed with aluminum and -S traming,Fsays 5r. Sanjeev -ehta. @thers innovate with local materials. 5r. Daisim mentions wood and clay products, while 5shwin #ttur ar, Good 4ulture, 9une says materials and panel,based industry has not changed in the recent past, but the real advances have been madein furniture hardware, which ma es for a superior product. 5ccording to 5durthi S. $ao, *irector, Form *esign, -umbai, materials can vary according to the weather conditions in different cities in !ndia. 5luminum is highly recommended in cities li e -umbai, 4hennai and 6ol ata where humidity is high. Ge source it from jindal and also from a local supplier from 7ujarat,F he says. 6amal 4haran, -anaging *irector, 'rgote Seating Systems, :angalore, says that all the component parts of the chairs they manufacture are available on the !ndian mar et, with only the gas lift mechanism being imported from 6orea, &hailand or 4hina, whereas 7anesh 6udva of 9entavision 9vt. lid., :angalore, says, they always import components tram countries li e -alaysia and 4hina. 9raveen :ohara, 'rgoma// !ndia 9vt. Jtd., 4hennai, says the !ndian mar et services all their re.uirements.

2A

;2<T*:= *; *;;I<- 3=3T->3 2T D2>24

-9:*

Furniture as the single largest component of the interiors budget (;@ to B3 percent) commands a healthy respect in the industry as is evident by the number of mid sized companies who have either entered the manufacturing industry or diversified into the manufacture of :9@ specific products or re,organized themselves to better service the industry. &he rampant growth in the industry has attracted several smaller manufacturers or interior contractors of varying scale to enter the lucrative !&'S furniture mar et. Firdaus 4hindhy, 4hindhy(s !nteriors, 9une, active in turn ey projects for residential furniture began manufacturing to cater to this new segment of the mar et four months ago and plans to e/pand further through a tie up with an !talian brand soon. Similarly, 9an @ffice Systems 9vt. Jtd., 9entavision 9vt. Jtd., :angalore0 -agnaa -odules and Systems 9vt. Jtd. and 'rgoma// !ndia 9vt. Jtd., 4hennai who were earlier supplying finished products to renowned branded players, have moved away to create their own brands. 5mong the manufacturers, several medium and small players say they import almost all their machinery from !taly and 7ermany0 still others buyall their re.uirementof pneumatic machinery in !ndia from dealers of imported machinery and tools. Jarge players in the industry pay attention to .uality to match international standards for manufacturing facilities. E5ll the e.uipment that we have is either 7erman or !talian. &he investments are getting very heavy. !f we have to retain the position that we are in, we need to invest more in the business,F says -anohar 7opal, *irector of Featherlite

<3

9roducts, and :angalore. 4onstant investment in upgrading technology or adding on new operations seems to be an imperative for the larger players. 6.5. 9arameswaran, 4@@, Style Spa, 4hennai, says, you have to invest in (to service) certain segments because they will have some specific re.uirements in terms of machinery and support activities0 we have invested in a paint shop where we underta e various inds of painting li e powder coating on metal as well as on wood bases.F E!f !ndia has to really come up in furniture mar et, all furniture manufacturers should came together and put up their furniture far world e/posure, so the world mar et nows that !ndia is also capable of giving good furniture at a reasonable price.F amal charan , ergote seating systems.

<1

Costs of fit out

Ghile the general loo of the furniture for the !&'S industries follows a norm, what lur s below the laminate creates a .uality N price divide between products. Suppliers mention that the price ranges of the products supplied to :9@s and call centers do differ (see bo/) and the mar et will always have a segment of buyers who are solely price driven rather than product or people driven. &hough design conforms to certain standard norms, the demand is for sturdy products that can handle a high degree of wear and tear, for at least three or four years. 5ccording to the general consensus, furniture accounts for about <3 percent of the budget0 while another 1< percent goes into the air conditioning, +3 to +< percent goes into the wiring and electricals and the rest goes into furnishing, murals and other artifacts. 5rchitects and interior designers come up with contrasting figures on the overall spend on the interiors. Ghile some state that the base prices for interiors start at !%$ <33 per s.uare foot, the average figure agreed upon by the most stand sat !%$ 1+33 per s.uare foot while fit,outs for -%4s stretch this amount to !%$ <333 per s.uare foot L the cost of Etrue international standards.F 5ll this e/pertise comes at a cost. 5rchitects and designers fees add to the bill, but are seen as an acceptable part of the e/penditure on set up and fit out. Some bill clients by the project, with a one time cost (lump sum fees) while others charge a percentage of the turnover of the project or a per s.uare foot rate. !nterestingly, the fee by the hour norms that e/ist in the #S5 have not yet hit !ndian mar ets. E@ur service charges vary from about minimum of < percent to over 1+ percent, depending upon the comple/ity and the amount of services re.uired,F says 5r. 6. Daisim, while 5r. 5jit Dam says, EGe charge a fee for our consultancy that depends on various factors li e the size of the project and scope of wor .F 5r 5shish 7upta puts this figure at 2 to < percent of the total project cost and 5r. Sanjeev -ehta says larger spaces get a lower charge. EFor e/ample if you charge !%$ < per s.uare foot for a small project, the rate for 133,333 s.uare feet would come down to !%$ 8 or !%$ 2. &he charges are now !%$ 13 to !%$ 11 per s.uare foot,F he concludes.

<+

Section Four Conclusion

<8