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M. Ramesh

New brand `Aartin' to be retailed through small dealers

Chennai , Sept. 25

Mr R. Arumugam, Partner, Sivasakthi Wood Works, is decided about two aspects of his furniture business — one, to gain global recognition for the `Nitraa' brand and, two, to not convert the partnership firm into a company.

"What is the use?" he counters when asked why Sivasakthi Wood Works wants to remain a partnership firm. The firm, which eyes a turnover of Rs 85 crore this year, has achieved somesuccess in popularising its furniture brand `Nitraa' in the South. Business is growing both in India and abroad.

"We have also not had any problems in accessing institutional funding," Mr Arumugam says, debunking the belief that partnership firms face hardships in dealing with international customers and getting bank funds.

Indeed, Sivasakthi's long-time banker, Karnataka Bank, is just about to sanction a term loan for the firm's Rs 8-crore expansion plan. The expansion is to get into a different but related line of business — retailing laminated particleboards.

The company boasts some other interesting developments, too, that are not very common among SME companies.

For example, even as the `Nitraa' brand is being promoted through TV ads, Sivasakthi is launching another furniture brand — Aartin — meant for sales through 75,000-odd `small dealers' in the country. A B2B portal has been launched to enable dealers to make their purchases online.

Chinese venture

It has taken some space at a wholesale furniture showroom in Guangzhou, China. As many as 40 items of furniture are to be displayed in the shop where large international retailers, including Wal-Mart, come looking for buying opportunities.

A new range of wall-mountable beds and hydraulically operated bed boxes, is to be launched next month.

Mr Arumugam believes that the time is ripe for such new ventures because the Nitraa brand is gaining popularity. To illustrate this point, he notes that last month Sivasakthi opened a showroom in Kolkata, expecting to sell Rs 10-lakh worth in a month. The showroom achieved the sales in three days flat.

Turnkey projects

Also, the brand is attracting a lot of `unbranded sales'. Large IT companies are placing turnkey orders for the entire office-woodwork. Recently, a Rs 10-crore `turnkey project for 10,000 workstations' was obtained from an IT major. Sivasakthi, Mr Arumugam says, is able to compete on pricing without any let-up in quality essentially because of higher productivity at its plant, which in turn owes to a high degree of automation.

The company imports boards and coverts them into furniture.

(Incidentally, the six-month suppliers' credit is used effectively for working capital management.

Thanks to a guarantee from Karnataka Bank, the foreign bank that the suppliers open the letters of credit with, offers a further six months credit to Sivasakthi. Thus, the firm gets a credit of one year — first six months at zero interest and the next at Libor-linked rates. All imports are necessarily denominated in euro, "because it is more stable". As such, Sivasakthi has found no need to take a cover, too.)

Franchisee model

With competitiveness and quality set, the only task before Sivasakthi is to promote the Nitraa brand and keep expanding the sales network.

Today, Nitraa is sold through 15 exclusive outlets, and about 50 non-exclusive dealers. Nine of the exclusive outlets are owned and the rest franchised. Mr Arumugam says that the firm would prefer the franchisee model. Another 25 franchised showrooms are to be opened by the end of the financial year.

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Sivasakthi plans global footprint for Nitraa furniture brand

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