Transition can be a challenging time for any company. At Mouldings and Frames International (MFI), the need for a succession plan has been smoothly delivered and the business is moving from a family-run affair to a privately-owned entity.
MFI is the country’s leading exponent of picture frames having grown from a small, family-owned 3-man business, located in a tiny site on Grey Street, Durban. Prakash Gokool, Managing Director, takes up the story:
“My dad started the business and my brother and I joined in. We were family run until about 4 years ago when we brought in private investors as part of our long-term succession plan. My father wanted to do something unique within our Indian community and started-off with picture frames in small premises in the CBD area of Durban.
“Today we employ over 340 people and we’ve moved on to occupy 7 different sites around the Gale Street area of the city. Our major growth came when we started to supply the major retail chains with products around 25 years ago and we have grown into South Africa’s biggest supplier of frames, with approximately 70 per cent market share,” he describes.
The company’s main business remains manufacturing picture frames and framed mirrors – with most of the work carried out using local suppliers, although some of the glass and metal frames have to be imported.
“All of the polystyrene moulding is done locally though and we extrude Polyresin mouldings from 100 per cent recycled raw materials,” Gokool explains.
At a time when competition within the industry has felt the pinch of economic downturn, MFI has continued to enjoy growth, with its motto “offer the best quality, value-for-money products” standing the business in good stead.
Over time, the company has invested in modern machinery to help with the extrusion process – although Gokool says that the rest of the work is labour intensive and the challenge of succession again comes to light with the need to replace an ageing work force with fresh blood which will call upon the company’s in-house training programmes.
Arguably of bigger priority has been the plan for the smooth transition of MFI into a privately-owned business, as Gokool explains:
“I am 60 now and in the next 5 years my brother and I will look to retire, so we have been looking at a succession plan and 4 years ago we looked to outside investors. Today MFi is a division of Amber Bay Investments 71 (Pty) Ltd. and when we completed the sale of shares the workforce and management team received 10 per cent of the proceeds.
“I am delighted to say that we have built up a very strong management team and the focus of the business has not changed at all,” he asserts.
MFI’s green product range (Gokool suggests that the raw materials saves thousands of trees a year) of course has great appeal to the market and has been enhanced by a US $25,000 investment in machinery that has given the company the ability to recycle waste into raw materials. The company consequently collects plastic cups and scrap which is then crushed onsite – and according to Gokool, the whole recycling process has become much faster.
Further investment in a Pick software system has improved stock control and helps to calculate the cutting length of each 3 metre long moulding cone.
Picture frames come in a variety of shapes and sizes, ranging from 10 centimetres by 15 centimetres postcard frames up to 1 metre by 2 metre long mirrors and paintings. Gokool says that roughly 65 per cent of products are mass-produced, although the company also deals with bespoke orders, which are usually sold direct to the public.
However the bulk of orders – supplied to a customer base of more than 4,500 individuals and companies – from Independent Art Galleries and Picture Framing Outlets to large Blue-Chip Department and Home Décor group stores, are for the likes of Mr Price and Woolworths.
With new South African legislation coming into effect, the major retailers required products to be manufactured to ISO standard and Gokool confirms that MFI attained ISO 9001 accreditation a year ago and also operates to SABS standards.
Of course the retailers introduce all kinds of promotions during the course of the year and MFI has to be agile in order to fulfil demand – which reaches its peak over the Christmas period. Distribution is important and carried out in Durban, from where the company runs its own fleet of vehicles, delivering products around the country.
Over the last couple of years however, the company has started to use external logistics companies for longer-haul journeys. This need has increased as the company has sought overseas opportunities, building its business in Nigeria and across the Continent, as Gokool explains:
“It is a good business to be in and our competition is not fierce – in fact, when the economy took a downturn a number of competitors closed and we also acquired a few businesses.
“Obviously when the downturn occurred, things did go backwards in South Africa for a while and we started looking at more growth throughout Africa. Our export business really started 2 years ago and we are looking to focus on smaller galleries and the gift industry.”
An even more recent development was the launch of the company’s new website, which Gokool says has progressed “reasonably well – and is gradually building”.
With the management team in place, Gokool and his brother will be able to retire when the time is right, safe in the knowledge that the family business is in reliable hands for a long-term sustainable future. The next stage, he hopes, will be to build the franchise side of the business:
“We have already successfully opened a few franchises in Durban, called our Hall of Frame stores – and the hope is that we can expand this brand across South Africa over the next 5 years,” he confirms.