When the rules change, the game has to change. And sometimes new realities call for new rules.
Indian venture Normak Fashions Pvt. Ltd., which is 50-per-cent owned by Normak Fashions Inc. of Concord, Ont., was born as a "100 per cent export oriented unit (EOU)" that enjoyed government taxation concessions and raw-material access in return for scarce foreign exchange dollars. Today the company is a creative new player in India's high-growth domestic economy, blazing a trail in costume jewellery.
Normak – which derived its name from its founder brothers Farokh and Gusti Noria and former partner Al Mackinnon – has come a long way since it launched in the 1980s, before the government dramatically abolished socialist controls in a reform program that started in 1991.
"It took me one year to get the foreign collaboration agreement passed by the Secretariat of Industrial Approvals in 1988, and thereafter, it took me about a year to start up the factory and in 1991 the 100 per cent EOU," recalls 53-year-old Gusti Noria, who heads the Indian operation, while his brother runs the Canadian arm. "It is much easier now."
After the recent economic downturn, Normak converted its former EOU with its more than 400 skilled workers into a completely domestic player.
India is the world's biggest importer of gold, fancied by old-world housewives in joint families, and rural households that own it as an investment. The country is also a major exporter of gems and jewellery, mainly from the western state of Gujarat, which has traditional artisans and a smart entrepreneurial class that sells polished diamonds and crafted Indian jewels worldwide.
But Normak chose a new field – costume jewellery, more about fashion and brand value than old wares. It seemed to be the right fit for India's emerging middle-class executives and knowledge workers who are embracing new trends in a global economy.
"We typically portray an Indo-Western kind of a look, which no other label is able to present," Mr. Noria says.
Normak has systematically built its brand, Estelle – targeted at upscale 21- to 35-year-olds – using a mix of gold, precious metals, glass stones, white metal and other raw materials. Its bracelets, pendants, ear-tops and accessories are popular among India's young urban women. The Estelle brand has been built with the help of celebrities such as Bollywood superstar Katrina Kaif, and it now has 25 exclusive showrooms in India. It's also sold at more than 50 large-format stores such as Shoppers Stop and Westside.
The company gets strong support from India's fashion design schools, led by the National Institute of Fashion Technology, which has several centres.
"The whole designing is carried out in-house by trained designers, most of whom are graduates of leading design institutes of India," Mr. Noria says. "What is available from Gujarat and Mumbai (in contrast) are cheap imitations of the real jewellery."
Mr. Noria chose to locate his factory in the southern city of Hyderabad, away from the western jewellery hub, because it's where he was born. He admits to a disadvantage to be away from the industry action, but it does not seem to have hampered the company's growth. Normak's main markets are, in fact, in the north and west of India.
Nurturing an up-market image and brand value has its own challenges. Mr. Noria says a lot of work goes into researching designs. Models are aligned to match or exceed international standards, with a guarantee of repair or replacement in case the jewellery is found to be defective. This is not a common practice in India's market.
Mr. Noria also points out the importance of managing regulatory authorities – which in India includes factory inspectors and customs officials. "It is enough to say that doing business in India goes beyond running factories and companies, and business leaders are busy involved in controlling the environment as well. Things have changed for the better (since 1991) and a lot still needs to be done in terms of labour reforms and general interference of the government in business."
All that, however, has not stopped growth. Normak, with annual sales exceeding $10 million, plans to have 100 independent stores in the next three years selling Estelle jewellery and other accessories across the country.
That is considerable for a small business founded by a pair of brothers with no family history in the jewellery business.
Special to the Globe and Mail
Narayanan Madhavan is associate editor of the business news pages of Hindustan Times, a leading Indian daily newspaper. He has previously worked for Reuters, the international news agency, as well as The Economic Times and Business Standard, India's leading business dailies. Though focused mainly on business and economic journalism with a strong focus on information technology and the Internet, he has also covered or written about issues including politics, diplomacy, cinema, culture, cricket and social issues. He has an honours degree in economics and a master's degree in political science from the University of Delhi.
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