Business-Standard

Friday, Jun 14, 2013

Nivedita Mookerji | Bhadohi (near Varanasi) – 13 06 2013

Eastern Mills in carpet city Bhadohi has loose ends to tie up as IKEA bolsters link

Just as the cab speeds away from Varanasi airport to Bhadohi, about 50 km away, the scent of mangoes takes over. Mango is one of the three essential items any visitor must take home, says the driver, during one of his many paan (betel leaf) breaks. Silk sarees with Banarasi work and paan are the others, he recommends in a local dialect drawl.

To reach Bhadohi from Varanasi, or Benares as any old timer would call it, it takes about 90 minutes because of the narrow and bumpy road, lined with rice, wheat and sugarcane fields. Locals say in the past 20 years, nothing has changed in Bhadohi – the ‘carpet city’ – or the road leading to it.

In Bhadohi, carpet factories are located at every few yards. Many are home units, making it difficult to check under-age workers. The town, after all, is the largest manufacturer and exporter of hand-knotted carpets in India. Eastern Home Industries stands out in Rayan village of Bhadohi, owing to its size (it is spread across about 14 acres). The company makes carpets for Swedish furnishing chain IKEA.

While the group, Eastern Mills, started operations in 1947, its association with the Swedish retailer began four years ago. From separate factories, the group caters to other international buyers such as JC Penney, William Sinoma and Crate & Barell. IKEA accounts for 50 per cent of its sales volume; its revenue from export to IKEA is Rs 40-50 crore a year.

Zafar Iqbal Ansari, chairman, Eastern Home Industries, said it took the company many years to convince weavers about the advantages of organised labour and disciplined factory life. At Eastern, no work is carried home, ensuring there’s no child labour. This was partly triggered by a mandate from IKEA, which made unannounced visits through third-party auditors. Last counted, for its 65-odd suppliers and several sub-contractors in India, the Swedish chain carried out 413 audits in a year.

Women workers
Also, women have started working at its factories now, a rare achievement in a region such as Bhadohi, says Ansari. As one goes around the factory, one sees sisters Kamla and Laxmi are busy at a weaving machine, pausing only to look up briefly. Their total income, about Rs 20,000 a month, is sufficient to run a household in a small town. Hari Kumar and daughter Parvati take home a similar pay package. Many couples work together at this factory. Women workers, currently 10-15 per cent of the total, are increasing in number.

For a semi-skilled handloom weaver, the basic salary is Rs 10,000 a month.

Speaking to Business Standard, Jessica Anderen, head (purchasing) IKEA South Asia, says, “Our suppliers are long-term partners. We will grow with our existing suppliers who share our values and vision.”

Eastern has worked with Indian Institute of Technology-Delhi to design a prototype of what it claims is a women-friendly loom that does away with the manual beating process while weaving. The loom, which would mechanise the beating process, is being made in Karur, Tamil Nadu, and could cost Rs 50,000 each. There’s a business objective, too – this would help quicken the process of making panja (coloured cotton durries).

Ansari recalls how, even as there was much resistance to compulsory deduction of provident fund, the death of a colleague made employees put things in perspective. “It was an unfortunate incident, but thereafter, workers have not protested against PF deduction,” he says.

His son, Abdul Rahim Ansari, executive director of the company and a Mayo College alumnus, joins in. “I feel connected to the carpet business,” says Abdul, who’s trying to introduce new-age technology to the age-old business. His focus is on reducing wastage and building a lean and efficient system. For now, an incentive scheme of up to 75 per cent of the monthly package is offered to employees for efficiency and productivity, resulting in a lower number of water and washroom breaks!

History books suggest carpet weaving in the region dates back to the reign of Mughal emperor Akbar. It started when a few Iranian weavers, while travelling, stopped at a village in Bhadohi. Subsequently, they set up looms here. Tales of European soldiers weaving carpets to gift their relatives at home also abound. It was only three years ago that Bhadohi-made carpets secured the GI (geographical indication) tag – all carpets manufactured in the nine districts of the region – Bhadohi, Mirzapur, Varanasi, Ghazipur, Sonebhadra, Kaushambi, Allahabad, Jaunpur and Chandauli – a ‘handmade carpet of Bhadohi’ tag.

The Mirzapur-Bhadohi region is the largest handmade carpet weaving cluster, engaging 3.2 million people; Bhadohi employs 22,00,000 artisans in its export units. Of India’s estimated Rs 3,500-4,000 crore carpet export industry, the Bhadohi region accounts for at least Rs 2,000 crore, according to estimates.

A company executive lists the carpet series made for IKEA – Kattrup, Stockholm, Halmstad, Taby, etc. “Many of these names, sometimes tongue-twisters for the locals, are Swedish cities or towns,” he says, smiling.

At 40 per cent, America accounts for most carpets exported from this region, followed by Europe (25 per cent). However, when it comes to IKEA, the majority goes to Europe. “Our carpets are sold in at least 27 to 28 countries at IKEA stores worldwide,” says a company official. As is the case with other categories, in carpets, too, IKEA is focused on what sells best in Europe and its other markets. Bold designs in black and white, vibrant hues such as tangarine orange and Swedish yellow are favourites, says Abdul Rahim Ansari.

Handloom and panja are the two types of rugs Eastern makes for IKEA. While hand tufted carpets are made for other buyers, IKEA stopped purchasing these three years ago, owing to environmental concerns (these products had latex application). As for hand-knotted, something Bhadohi is famous for, these are too slow for IKEA, officials say.

The most expensive rugs and carpets from this region cost $40-45 a sq ft; a five-by-eight carpet costs Rs 90,000. Consumers pay up to Rs 4 lakh for these at stores across the world. IKEA deals in products that are much cheaper. The factory price for a standard rug sold to IKEA is Rs 8,000-9,000; the retail chain might sell it at a higher price.

The time taken to make a standard Kattrup durry (panja) could be three to four days, with two people working on it. Eastern ships out 3,000-4,000 pieces of rugs/carpets every week. The order-to-ship out cycle for a panja durry is about 12 weeks. It could take another four weeks to reach the stores – a total of five months. For handloom, the order-to-ship out cycle is about four weeks.

The process of shipping out goods, however, follows many layers of checks and inspections, including those by third-parties engaged by IKEA. At the factory, the products undergo a metal-detector test to check for needles or pins.

Eastern Mills works with in-house designers, as well as those from the retail chain. As for automation, the company has switched to mechanised warping, which is five times more efficient than the manual mode. However, in case more colours are used, manual machines are useful. For drying rugs, too, a manual process is considered better.

Apart from the global economic slowdown that hit carpet export trade (though it is projected to grow 30 per cent this year), there are many infrastructure problems; lack of good connectivity tops the list. Once out of the factory, it takes five to six days to ship out the products, as Mumbai is the closest port. With China giving competition, though primarily for machine-made carpets, the industry here is worried.

Driving back to Varanasi, India’s oldest city and one that draws many to the Ganges and the choreographed aarti at sunset, one comes across heavy traffic of trucks, containers, bikes and even cycles carrying rolls of carpets, perhaps on the way to an international destination.

THE BENARASI LINK

  • 50% of Eastern Mills’ sales volume comes from IKEA
  • Eastern ships out 3,000 to 4,000 pieces a week to the Swedish chain
  • Punja durry takes 12 weeks to ship out, handloom rugs 4 weeks
  • Women form 10-15% of workforce at Eastern
  • Of the Rs 4,000-crore carpet exports, Bhadohi accounts for Rs 2,000 crore
  • Mirzapur-Bhadohi region engages 3.2 million people in the carpet industry
  • 40% carpets in the region are exported to the US, 25% to Europe

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Innovation from IKEA

IKEA, the Swedish home furnishings company, has unveiled its latest specially designed Punja loom, in Bhadohi, Uttar Pradesh. The new Punja loom has been co-created with IKEA’s supplier Eastern Home Industries.

It is designed to produce better quality durries while increasing the productivity by 25 -40% and this implementation will increase the production of Punja durrie in India, according to a press release. The ergonomic design and ease of use will reduce work related health issues as well as encourage more women weavers to join the workforce.

Commenting on the occasion, Jessica Anderen, Trading Area Manager IKEA South Asia said, “IKEA has been sourcing from India for 26 years and is committed to creating a more sustainable life for many people.

The new Punja loom is a great example of leading change, with business in the core and people as the biggest asset! As we continue to expand we will build long-term relationship with suppliers to enable more innovation and investments in modern technology.

IKEA constantly focuses on improvements and efficiency to be able to increase capacity, improve products and lower the costs, all this to safe guard a long term sustainable business!”

IKEA looks to scale up furniture sourcing from India

 

Bhadoi: Swedish furniture chain IKEA, which is in the process of establishing its first shop in India, is looking to scale up sourcing of furniture from the country and also plans to procure bigger items for its global operations.

The furniture giant, which intends to invest around Rs. 10,500 crore in India, has been sourcing many products, including textiles, carpets, metals, plastic, lighting and decorative items, for its global sales for last 26 years.

“We are really into many different things. We are also sourcing small furniture as of now but are looking for bigger furniture. We can see great opportunities to do a lot more in many different segments,” IKEA South Asia Trading Area Manager Jessica Anderen told PTI here.

When asked about the kind of big furniture the company is looking to source, she said it would be both wooden and metal.

IKEA, which inaugurated its latest designed Punja loom here, used for producing durries, had sourced goods totalling $450 million from India across segments in 2012-13 fiscal from its network of 54 suppliers and is looking to double it in the next five years.

“…it would be fantastic if we can double the business in the next five years in India,” she said, adding that it would also depend how much capabilities India has.

When asked whether it has roped in new partners for its sourcing from India, MsAnderen said: “We are constantly mapping and looking into other areas… However, it would depend on factors such as expertise, raw material, right partners and location.”

IKEA, which sources its carpets from Bhadoi for its global operations, has developed the new punja loom for carpet weavers under its ‘made by people’ project.

The new Punja loom has been developed in southern India and installed on a pilot basis at Eastern Home Industries, IKEA’s supplier of carpet.

Ms Anderen said IKEA was unable to source the required number of carpets from India and implementation of the new Punja loom may solve the problem as it is designed to produce better quality products and increase productivity by 25 to 40 per cent.

After getting approval from the government for its Rs. 10,500 crore investment, IKEA is exploring four cities — Delhi & NCR, Mumbai, Bangalore and Hyderabad – to open its first store.

“We are looking for four major cities. Delhi & NCR, Hyderabad, Bombay and Bangalore. For the moment it’s all open,” said an IKEA spokesperson, adding that the company is analysing the market and factors such as availability of land.

IKEA is “discussing with different states to buy land… we have quite a lot of prerequisites on how we open an IKEA store to reach as many as possible, as metro line connected to the site and so on. We hope we would be able to have some good news in the near future”, she added.

Story first published on: November 28, 2013 16:56 (IST)

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