‘Global firms are eyeing India for fashion jewellery’

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: Estelle is synonymous with fashion jewellery. And Normak Fashions Pvt Ltd, manufacturers and exporters of Estelle branded jewellery, enjoy 10% market share in the Indian organised fashion jewellery market estimated at Rs 600 crore. It also has the unique distinction of being a preferred buyer for leading fashion brands in the West including Disney, Givenchy, Tommy Hilfiger, Jones New York and Napier. Now, after creating a niche for itself in the market with a strong brand recall, the company, under the leadership of Gusti Noria, is planning to extend the brand name to the accessories segment by franchising its label. In an exclusive interview to fe’s BV Mahalakshmi and Kavitha Venkatraman, Gusti Noria, the company’s managing director, talks about his future plans for the brand, capacity constraints and competition. Excerpts:

You have come a long way in the fashion jewellery market. How was the journey?

The idea to start a company for fashion jewellery came up in 1987. It was set up to do contract manufacturing for companies in North America as during that time outsourcing of jobs was happening in a big way because of the huge labour cost there. We wanted to take advantage of the situation and started commercial production in 1989 with an initial investment of Rs 1 crore. In those days, getting an advance licence would take three months and the turnaround period was four weeks. It used to be very difficult. But today the scenario is different. We have a factory in Hyderabad, a 100% export-oriented unit, to target countries in the US, the UK, Canada, Australia and Hong Kong. The capacity of the facility is three lakh units per month and we enjoy the status of a preferred buyer for several international fashion brands.

What are your plans for expanding in the domestic market?

In the case of domestic market, we prepared for our foray after understanding the nitty- gritties of trade through our exposure to the international market. We set up a separate factory in Hyderabad to cater to the domestic market. It has a production capacity of two lakh units per month. Both the facilities were built using machinery and materials imported from North America and all the senior personnel were trained from Canada and the US. Even today the key personnel visit North America annually to enhance their knowledge by spending time at various factories in Toronto and Providence.

How fast is the fashion jewellery market growing in India today?

Over the past two years, the market has been doing really well and is growing rapidly. Our factory is running at full capacity. We are thinking of expanding the capacity by 100% with an investment of Rs 10 crore to Rs 15 crore in the near future. The only hitch is that it will be extremely difficult to manage yet another factory as the business is entrepreneurial in nature. We will firm up our expansion plans on capacity addition within a quarter as we see a growing demand for fashion jewellery worldwide. Currently, domestic revenues contribute about 60% of the overall revenues while exports account for 40%. This was not the case two years ago.

What is the growth prospect of fashion jewellery market in India?

According to a report, the organised fashion jewellery market in India is estimated to be around Rs 600 crore and is expected to touch Rs 1,500 crore by 2010. There are probably five to six organised players operating in the country. And lot of jewellery gets unauthorised entry into the market. However, we hold about 10% share in the organised market and will continue to grow in the future. There is a stiff competition in the fashion jewellery market as people copy the designs and sell it in the market. We work very hard to ensure the design is not copied. We have patented over 1,000 styles but still there is a threat to the designs developed by our research and development team.

How acceptable is the Estelle brand in the international fashion world today?

Brand Estelle has earned good credibility in the international market. We have the unique distinction of being a preferred buyer for leading fashion brands in the West like Disney, Givenchy, Tommy Hilfiger, Jones New York, Napier and several others. In fact, Disney sources kids’ fashion jewellery from us. It is a significant thing because their quality specifications are very high especially for kids’ jewellery. The permissible limit of lead in kids’ jewellery is 0.02%. Our designs range from earthy and ethnic to chic and western, upmarket and evergreen in their appeal.

Where does your team get the design inspiration from ?

The design inspiration comes from the European, American and Indian milieu, thus making hi-fashion jewellery at par with the international quality standards. Incidentally, our jewellery has hypoallergenic features as we use surgical steel earring posts and clutches, nickel-free plating technology and electrophoretic lacquering. Most of the raw materials such as copper, few alloys and all stones (crystals, pearls) are still being imported.

Are international companies looking at India for outsourcing jobs in the fashion jewellery market?

Many global manufacturers are looking at India for fashion jewellery. The main reason is the cost arbitrage in terms of manufacturing. For instance, in the western markets, the labour cost in the segment works out to nothing less than $21 per hour, while in India, for the same amount of work, the cost works out to anywhere between Rs 4,500 and Rs 5,000 per month.

Are you planning to expand your network of stores?