Modular kitchens were never a popular concept in India back in 2002. Every household kitchen was built or renovated along with the local carpenters. Designs were available through a variety of catalogues that had to be tediously customized as per needs. However, in the decade gone by, modular kitchens have become a favored option. Anil Gupta, Director, Luxus India Pvt Ltd, uses the same concept to explain the onset of sliding wardrobe solutions in India.
Coming into existence
After graduating from IIT Bombay in 1989, Gupta joined a struggling luggage moulding company. The aim was to learn the functioning of a small enterprise and, more importantly, creating efficient systems for resource utilization. Since then, Gupta has always treaded a different path. He also started an interactive multimedia company with his wife. However, family problems hindered their progress and so he decided to take up a regular job.
After being in the IT consultancy space in Norway for over 10 years, complacency and monotony set in, he says. In 2008, he decided to return to India and start something on his own in the country. Having lived there for a decade, Gupta was always impressed with European-style wardrobes. Unlike Indian wardrobes, these were developed with a fair bit of finesse and technology. Finding his focus, he began researching about the market for wardrobes in India.
“The Indian market offers two types of wardrobe qualities. The first are the low-priced, low-quality Chinese goods that would not be an option for buyers looking at quality. The second are the exquisite, imported, high-quality and exorbitantly-priced wardrobes imported from European countries. Such wardrobes would never suit the pockets of middle-class families in India,” says Gupta. Thus, there exists a large section of consumers with no option but to get the desired furniture made at affordable prices with the services of the carpenter. This was the potential market section that Gupta decided to tap. He wanted to provide specialized European-styled sliding door wardrobes at a competitive Indian price. To this end, it was essential to set up manufacturing units in India.
With this idea in mind, Gupta approached Jacek Kozlowski, Chairman, Komandor, a company which designs and manufactures modular furnishing systems. Its primary product includes sliding-door systems. There were four prerequisites for the setting up of such units: good quality of raw materials, high-grade machinery, right technology for processing and a well-trained and adept workforce. Gupta proposed the idea of setting up production units in collaboration with Komandor as a technology partner. “Kozlowski said that the time and market was perfect for such a business to be launched in India,” recollects Gupta. In 2009, Luxus India Pvt Ltd was set up with manufacturing models fully compliant and synced with Komandor’s technology.
The total investment in the project was about Rs13 crore. A quarter of this investment was financed by a loan and the residual amount was sourced by the Gupta family. Production began in October 2011; the setting up of the manufacturing units and obtaining business permits took two years (2009- ’11). Gupta explains that Luxus operates on a ‘zero inventory model’, where unlike other furniture stores it is not constrained by the need for large rental spaces and physical furniture. This model helps in reduction of functional costs. There are software systems installed at every outlet that allow a visual, flexible and interactive design process as per the customized needs of the consumer. They also come with a price calculator which gives instant cost estimates and alters as per design specifications. The company also has an academy for training individuals in the installation process.
Luxus is growing across the wardrobe supply chain where off-shelf sales (exclusive Luxus outlets) and institutional sales (supply to business apartments, already existing furniture stores) are the primary dealer networks. In addition to these, ‘Xina’, a specially- designed wardrobe catalogue, can be used for ordering furniture by retailers that show very little interest in investing in the software. At the moment, there are 12 Luxus outlets across five cities in India.
The initial set-up cost of the Luxus franchise would be around Rs12.5 lakh, the legal agreement signed is for a period of five years while it takes two months for the set-up to be fully functional. Pre-operational (training, marketing activities) and post-operational support (technical support, branding) is also provided by Luxus to its franchises.
The company clocked sales worth Rs4.5 crore in the first year of its operations and is targetting Rs25 crore in sales for the second year. Breakeven is expected in June 2013 when sales are expected to touch X12 crore. To ensure increased demand, Gupta is creating national branding and engaging in heavy marketing. He plans to open 100 showrooms in the next five years and service the software for the use of interior designers and local manufacturers. “The market for customized furniture is huge. Big industrial houses are investing in this segment. Eventually the local carpenter services will dwindle. Specialized solutions are what customers will depend on,” signs off Gupta.
“EVENTUALLY THE LOCAL CARPENTER SERVICES WILL DWINDLE. SPECIALIZED SOLUTIONS ARE WHAT CUSTOMERS WILL DEPEND ON”