The Power of I 2014

Metal mettle

'Pital Nagari' Moradabad’s brass handicrafts business has a brand new sheen, thanks to this company Designco

A winter morning drive from Delhi to Moradabad in western Uttar Pradesh is a visual delight. The early morning fog can’t dim the bright yellow mustard fields on either side of the highway as you exit the National Capital Region, which soon give way to lush green fields of tall sugarcane stalks. And then the landscape changes, becoming more industrial than agrarian. Where there is sugarcane, there are sugar factories, and they dominate the view along the highway leading to Moradabad town. As you reach the outskirts, having travelled about 160 km already, innumerable hoardings on both sides of the road point to the other industry that’s popular around these parts: handicrafts. Vivid images of brass figurines and massive urns jostle for space with huge typefaces that announce companies that have been in this business for 50 years and more. 

The city was established in the 17th century by Shah Jahan’s son, Murad, who named it for himself. And, say locals, the traditional business of brass and other metal-based handicrafts has been continuing since then. Locating a specific company among the thousands of handicraft exporters in Moradabad, then, isn’t easy. We stop several times to check if we are on the right track and, finally, turn into a small gate set into a 12-foot high boundary wall. There’s no board confirming that this is the headquarters of Designco; instead, there is a big sign prohibiting photography on the premises. The massive compound, a swanky BMW and several SUVs are the only hint that here’s one of the largest government-recognised trading houses in the country — the blue façade of the office building and the wooden décor inside don’t seem to have been updated since the 1980s, when the business was started by Narayan Kumar Lohia. 

Lohia had two businesses in Uttar Pradesh — making spectacles and making torches — when he decided to leverage the city’s expertise to tap the export market. He set up Designco in 1981 with his 20-year-old son, Vinay Kumar, investing over ₹4 lakh in the business. The seed capital came from his other businesses. Business was slow in the initial days, with the West Asian market, which Designco was targeting, not giving the kind of volumes that would justify going after other markets. In 1987, the company got its first big order, from US-based discount department store chain Kmart, and, since then, there’s been no looking back. 

Now, Designco has 60 customers around the world. It employs over 1,600 people and clocked ₹350 crore in revenue last year, up from ₹315 crore in FY12, and aims to cross ₹1,000 crore in the next five years. The Lohia Group, meanwhile, has grown to become a ₹4,000-crore entity, with interests in manufacturing electric two-wheelers, warehousing, brass rolling and real estate. Lohia’s other sons look after these businesses, while VK and his son, 26-year-old Anubhav, focus on Designco. “This was the first business venture that the group started. It remains an important and main business for us,” avers Anubhav, who currently looks after the brass rolling business as well.

But the nature of the handicrafts business in Moradabad is changing, points out VK. Brass is no longer the predominant metal in ‘Pital Nagari’, as Moradabad is often called. “Brass used to cost just ₹10-15 per kg a decade ago. Now, it is as high as ₹500 a kg,” adds Anubhav. The rising price of the alloy as well as changing customer requirements is prompting businesses to switch to other metals and other handicrafts. Designco, too, has been keeping with changing times and demands. Which is why, even as businesses down shutters elsewhere in the city, the company is growing by leaps and bounds. It is a supplier to some of the best-known retail chains, such as Target, Kmart, Walmart, Kohl’s, Lowe’s, Bed Bath & Beyond, Pier 1 Imports, Sears, Costco, Yankee Candle, JC Penney, Big Lots and Pottery Barn in the US, and Indiska and B&Q in Europe, among others. “Nine out of 10 handicrafts at any Target store will be from Designco, and 30% of Pottery Barn handicrafts are made by us,” says a visibly proud Anubhav. 

No more top brass

A decade ago, Designco’s portfolio comprised mostly brass items. Now, it offers products in 12 categories, from garden décor, lighting, tableware and bathroom accessories, to niche products such as Christmas (tree ornaments) and Valentine Day’s products (heart-shaped knick-knacks) and gifts for pets (how about a handcrafted feeding bowl with inlay work for Fido?). It makes as many as 2,000 different products every year, of which candle sticks, lamps and lanterns are the most popular, says Anubhav. The material used ranges from metals, including brass, aluminium and steel, to wood and glass. “Nowadays, clients aren’t fussy about the material being used. They are more interested in the end product and the finish. We can offer brass-like antique finish even on other metals such as mild steel, which is cheaper to produce,” he adds.

While the portfolio is clearly geared towards a Western audience, the designs aren’t necessarily from abroad. Designco has seven designers, one of whom is based in the US, who work with product development teams to create designs either independently or based on a client’s requirements. Prototypes are then made and sent to clients or potential clients for approval. Once a design has been okayed and the order bagged, bulk supplies are made. 

Designco has two factories in Moradabad, one for metal and one for wood. Glasswork is done in a town nearby. While the prototype is almost always made entirely by hand, once in production, the mix between machine work and hand is about equal. All raw materials are sourced locally. The wood, for instance, comes from state government auctions of mango wood — western Uttar Pradesh is as famous for its mangoes as it is for sugarcane. The widespread use of machines and low transport costs for raw materials help keep Designco’s prices competitive, says Anubhav. 

As we enter Designco’s factory, we pass a couple of young men discussing the finish of a half-sun metal wall hanging, with vicious-looking spikes as rays. They are part of the design and product development team of the company, giving final shape to a product that will end up on a store shelf in the US, Europe or Australia, bearing a different label and carrying a much higher price tag. Designco exports all that it produces and almost all of it is contract manufactured for big brands. The retail price of its products, then, can be several times the cost. For instance, the company has put on display in its showroom a lamp shaped like the Eiffel Tower. Designco supplies the lamp at $6 a piece, but it retails at close to $19-20 in the international market.

There’s no typical order size, says VK. The value of an order can range from ₹5 crore to ₹30 crore, while volumes can range from 1,000 pieces to 10,000 and even more. “Being a fashion product, we have to create new designs every four to six months. Based on clients’ needs, every year we design 1,000 completely new products while another 1,000 are older products with some variations,” says VK. Assuming a cost of ₹5,000 for designing and developing each of the 2,000 prototypes, the annual design expenditure is roughly ₹1 crore. Still, that’s small change for the company, which has been growing consistently at around 15% every year since the 1980s and has been debt-free for the past five years. 

What’s more, the Lohia family claims it has not faced a single bad year in the over 30 years it has been in this business. “Even when most exporters took a hit during 2008-09, Designco continued to grow,” says VK. “We took a cut in our margins and, in fact, added nearly 30 new European customers,” adds Anubhav.  

Competition? What competition?

Speak with other handicraft businesses in Moradabad and they’re all praise for Designco. The Lohias, though, worry that imitation is turning out to be the sincerest form of flattery — other companies flagrantly copy their designs. Now that Designco has a full-fledged office in the US, it plans to start copyrighting and patenting its work. So, is competition a big threat, then? Not from the Chinese, according to VK. China-made products may be low-priced and of good quality, he accepts, but they can’t match Indian work for design and finish. He points to a large metal-base lamp and adds, “Hamare products mein karigari hai (Our products have craftsmanship). The Chinese can make a similar lamp with similar metal. But they can’t replicate the intricate design on the base. These hundreds of lines have been done over several hours and days by our artistes. That is the value we bring and that is what our clients want.”

Certainly, there is great appreciation for Designco’s work both within India and outside. It has been consistently winning awards for excellence in handicrafts export from the government of India and various export organisations. It has also won vendor appreciation awards from its suppliers. “We keep winning some award or the other,” says VK, almost dismissively. The recognition will come in handy, though, as Designco looks to nearly triple turnover in the coming years. A new factory is planned adjacent to the current one, for which land has already been acquired. “We can do it, as long as we maintain our control over quality, design and price,” says VK.