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Asian Fabricx gears up for IKEA's India operations

The Karur, Tamil Nadu-based supplier is focusing on automation, worker benefits to beat labour shortage

Nivedita Mookerji  |  Karur (Tamil Nadu) 

Asian Fabricx factory dedicated to IKEA in Karur, Tamil Nadu

This seemingly sleepy town, almost sandwiched between Bangalore on one side and Kanyakumari on the other, breathes textile. About two and a half hours' drive from Coimbatore on an easy morning, with lush coconut trees, mills, car & bike showrooms, medical colleges and shops such as 'Coffee Prince' and 'Flying Cakes' lining the roads leading to the town, Karur is quite unlike Tamil Nadu's other textile bastion, Tirupur, which is more about latest fashion, designers, international buyers and now, somewhat idling factories. Karur doesn't offer much in terms of shopping and entertainment or leisure, and while textile is its mainstay business, a local points out the town is also known for supplying mosquito nets to the World Health Organisation. Finance, truck transportation and bus-building are among the other prominent businesses here.

The town is also home to Asian Fabricx, one of the oldest and largest Indian suppliers to IKEA, the world's largest furniture and furnishing chain, which recently secured the Cabinet's nod to invest Euro 1.5 billion (Rs 10,500 crore) in India to set up retail stores. Six to seven hours away is Tuticorin, the closest port that ships out bedspreads, curtains, kitchen linen and cushions made by Asian Fabricx to European shores, to be sold across 300 IKEA stores worldwide. Tuticorin has yet another link to the Euro 27-billion Swedish chain - Ramesh Flowers, an IKEA supplier that deals with dried flowers for potpourri, home fragrances and the works, with a 100 per cent women workforce, is located in the city.

The sprawling 12-acre complex that houses the Asian Fabricx corporate office and factory dedicated to IKEA, business with which accounts for 65 per cent of the supplier's revenue, has a surprise element: No shoe is allowed inside the plush corporate office. Visitors are made to take these off at the entrance; top executives, including the managing director, walk around barefoot or in socks.

This dust-free initiative might have nothing to do with the efficiency of machines; it is more of a local practice. That said, all processes at this factory have to follow rigorous steps, monitored closely by the Swedish chain, before any product is put in a box with a green tag, meaning it has been cleared.

V Ashok Ram Kumar, managing director at Asian Fabricx, whose association with IKEA dates back to 1982, says, the company had started in 1974 with 15 employees; now, it has 2,000, of which 60 per cent are women. The fact that it produces about 1.5 million metres of fabric a month for IKEA gives away its scale and size.

Apart from this dedicated IKEA factory, Asian runs a dyeing unit in the town, as well as another facility for other buyers such as UK's B&Q and French chain Castorama.

Just a few days ago, soon after it secured the Cabinet clearance, IKEA had invited all its prominent suppliers (there are 65 in India) to its Gurgaon headquarters, to discuss plans for the coming years. Kumar, who attended that meeting, is hopeful of growth in business once IKEA starts operations in the country.

The partnership talk focused on growth and gearing up to double the Swedish chain's India sourcing from the current $500 million, in a few years.

The right fit
Currently, IKEA's sourcing from Asia, including China, accounts for 32 per cent of its global sourcing; it sources 64 per cent from Europe and the rest from America. Within South Asia, 70 per cent of the total volume sourced comprises textiles, including rugs and towels.

Despite the company planning to double its India sourcing, in a recent interview, IKEA India head Juvencio Maeztu had told Business Standard the company would wait for the right locations and affordable prices before rolling out stores in the country.

Perhaps, it's a similar search for the right fit that makes processes at IKEA supplier factories, including the Euro 46-million Asian Fabricx, quite long-drawn. For instance, it might take as many as 48 days to make and ship out a bedcover or a table linen from the time the order is placed, in contrast to a much shorter time-cycle for many other buyers.

While external lab research takes time, IKEA's approval procedure is lengthy, too. Executives from the company's quality team come here every week to inspect and ensure zero defects in products. Sometimes, samples are sent to Sweden for approval.

Kumar lists manpower shortage as a challenge in this business. "We certainly need more people when there's a sudden increase in order volumes." To beat labour shortage, automation is being focused on. For instance, 'Indira', a bedspread in white, blue and black and a favourite of Europeans for decades, has seen a transition from handloom to shuttle-less or auto looms. IKEA terms Indira an iconic product,

As one walks from one block to another, officials stop to explain the technology behind the machines used in the labs. The launderometer, which looks somewhat like a mini bar in a hotel room, is used to check colour-fastness by keeping the raw material in a condition chamber. While the cobb tester assesses water absorption property, the GSM cutter determines the gm per sq metre, or weight, of a fabric and the sanforising machine reduces shrinking.

To study fading, the Xenotest machine, the latest addition (secured for about $40,000), lodges fabric for five to six days and tries to imitate sunlight. After the washing, bleeding, shrinking and fading processes in the lab, if it is felt a correction isn't possible, the item is scrapped.

The overall cycle at the plant is multi-layered - yarn, dyeing, winding, warping, weaving, checking, sanforising, cutting, sewing, finishing, testing and finally, dispatching. Also, there are steps to ensure goods are easy to export; compressed packing of cushions is one such instance. A machine sucks out the air inside and then seals it; when a customer opens the seal, anywhere in the world, the cushion comes back to shape.

Apart from transition to automation, various aspects, too, have also changed at the factory. Earlier, 80 per cent of the yarn was dyed before weaving into fabric; now, to reduce costs, most weaving is done without dyeing the yarn.

A visit to the company's dyeing plant, located close to it, shows the 12-18-hour process of dyeing, a controversial issue, after the recent Madras High Court order against polluting units led to many closures. Compared to the fabric-dyeing machines, which weigh about 1.5 tonnes each and can take in 1,000 bedspreads at a go, officials are keen to demonstrate their acumen in reusing the water and salt through many petri dish experiments.

Ruling out under-age labour or possibilities of worker unrest, officials list the benefits at Asian - fixed wages, full-time employees, salary-linked bank accounts and automated teller machines for all, a baby care centre, a dining hall, a kitchen and staff buses. Workers, who could be working in shifts or in a nine-to-six band, are also entitled to a break every two hours.

Considering what is made at Karur is perhaps sold in Europe, America and other global markets at much higher prices, does Asian Fabricx have any retail plans? Officials smile but deny any such plans as of now.

First Published: Tue, June 11 2013. 00:47 IST
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