Udaipur's Loha Bazaar - Writing its own Growth Story...

Established nearly a century ago, Loha Bazaar of Udaipur is well-known as the hub of iron trade and also for hardware products, both for industrial as well as non-industrial purposes. It is located in Chamanpura near Hathipol, which is the oldest part of the walled city area of Udaipur. The name “Loha Bazaar”, literally translates to, “iron market”.

The area Chamanpura where Loha Bazaar stands today, was historically called Shamshergarh. It was a dense forest under the daunting presence of the Shamshergarh Fort, which still stands tall.  It was a hunting playground for the royal family of Udaipur. The name Chamanpura, by which the entire location is called, was given by the grand priest of the Dawoodi Bohra community, Syedna Tahir Saifuddin.

The famous temple of the Hindu deity, Shani Maharaj is situated at one of end of this market. An epitome of religious harmony, the Loha Bazaar comprises of retail shops, wholesale marts, warehouses, residences and a decades old school - all spread evenly between the Shani Maharaj Mandir, two masjids and a kabrastan (Muslim Cemetery). The pride of this market is not just that of it’s contribution to Udaipur’s business growth, but also the harmony and secularism that has been established over the decades. Udaipur’s oldest and only Muslim Musafirkhana (Guest House) is located on the northern entrance of Loha Bazaar

A pioneering and praiseworthy step taken by Sanwa Enterprises, involves introducing women to the trading arena. Najma Jawariya was the first woman to set her foot on the trading floor of the male dominated Loha Bazaar, when she was hired by Sanwa Enterprises 13 years ago. Javed and Firoz Nath, owners of Sanwa Enterprises have set an example for the society and trading community by encouraging a female employee to be on the sales team.

Najma is the only female working in the entire market. A very healthy and supportive working environment is provided to her. Wage discrimination is out of the question as the presence of a female employee has resulted in more positives for the firm. For female customers it adds an element of comfort while making decisions regarding the purchases as they are able to take suggestions from a women’s perspective.

A brief history

The history of Loha Bazaar dates back to the pre-independence era (pre-1947), when iron used to be traded on the streets of Loha Bazaar. In those times Loha Bazaar was a section of a dense forest, and known as Shamshergarh (now the Model School area) where members of the royal family came hunting. The walls of the towering Shamshergarh still overlook the market and residential area. On one side of the dense jungle of Shamshergarh was the wall separating the jungle from the Swaroop Sagar lake and the other side was the Hathipol gate, which was one of the entrances to the walled city of Udaipur.

The legacy trading area of Shamshergarh gradually developed into a commercial cum residential area as 20-22 trading establishments were setup by members of the Dawoodi Bohra community. There is an interesting story of faith which substantiates why no other community set up shop here in those days.  Tokeer Bandookwala (owner of Bandookwala ISPAT Pvt Ltd), in his interaction with UdaipurTimes, explained that an ages old temple of diety Shani Dev Maharaj existed in the Shamsheergarh jungle, where the iron trading was done. This temple is located at the southern part of Loha Bazaar, near the Hathipol side of the jungle. The temple is also there now and is a rush destination for devotees, especially on Saturdays, when the Hathipol side entrance to Loha Bazaar is blocked so that devotees are not bothered.

According to Hindu mythology, Shani Dev Maharaj rode an iron chariot and that is why it is considered inauspicious to trade in this metal. Hence, the Hindus did not want to establish a business in this particular market, as they considered it a bad omen. The temple exists even today. Shani Dev’s followers do not purchase iron on Saturdays (Shaniwaar). However, as times changed, traders from other communities, viz. Sindhi, Jain, etc. began setting up their shops here and have contributed significantly to the growth of this market.

Loha Bazaar has seen over fiver generation of entrepreneurs, the oldest among them being Gulab Bohra &Company. Established in 1898 the journey of Gulab Bohra & Company began with the Late Gulam Hussain Ji. He used to help the poor and needy by purchasing scrap from them. With time his shop became famous by the name “Gulam ji ki dukaan”. As a result of his generosity Maharana Fateh Singh Ji used the phrase “थां गुलाम कोणी, ठाणे तो गुलाब जू महेक्नों है” (You are not a Gulam (slave); you are meant to give fragrance like the Gulab (Rose).” This marked the beginning of the legendary firm Gulab Bohra.

In the 1920’s – 30’s, Gulab Bohra collaborated with UK based companies and were major suppliers to the British Railway project.  In 2021, after completion of 123 successful years, Gulab Bohra is said to be the king of this market. Today they have total seven shops in the loha bazaar. Currently, their 5th generation is carrying forward the family’s legacy.

Abbas Ali (owner of Gulab Bohra power tool & machinery) says that the reason behind this huge success is the vision laid by their ancestors, which still stands strong, viz. first, to bring in continuous innovation; second, providing outstanding quality and never compromising on quality. Several trading establishments have set up shop and prospered individually as well as provided employment to thousands in Loha Bazaar.

In the 1950’s, a manufacturing unit of handloom wire started for the first time in Loha Bazaar. After 10 years, in 1960 weights and measures were introduced. Growth picked up pace as a result of this modernisation and the market started flourishing. Loha Bazaar was then the one stop shop for all iron and hardware related items, to markets in the vicinity ot 10km radius around Udaipur. Material from here was supplied to Chittor and as far as Ajmer from here.

Iron prices today are 20-22 times higher and India is the 2nd largest producer of iron and steel. Mostly the transportation was done through horse carts and buses. Hathipole, area near loha bazzar use to be the horse cart stand and also was the only bus stand in Udaipur. In course of time around 1976, the bus stand was removed completely and shifted to Udiapol. Hamid Hussain Gurawala, owner of Royal Iron traders in his interaction with UdaipurTimes said, “Then “Chaman Hotel” was the one and only hotel in the entire area of Chamanpura. Also there was an open toilet covered by a fence where shops and houses have been built.”

Among the first generation entrepreneurs is the 38 year old establishment Kathawala Traders, which was established in January 1983. Kathawala Traders are specialist providers of nuts and bolts and hand tools. Though there are other traders who deal in these kind of products, Kathawala Traders have the advantage of specialisation in nuts and bolts and are identified in the market with respect to their inventory.

The Black Swan of Loha Bazaar

While the Loha Bazaar is synonymous with iron and hardware, an enterprising and bold step was taken 3 quarters of a century ago, when Sadiq Ali Mulla Ali Mohammed set up a business, trading in Ropes. This was a unique initiative since the market was known for Iron and hardware. It has been 70 years now and Sadiq Ali Mulla Ali Mohammed and Sons is a name to reckon with in the ropes and net product range. Their uniqueness and innovation identfying this product range as complementary to the hardware business has helped the business flourish over 70 years now.

The market structure of Loha Bazaar

Loha Bazaar has few big firms and large number of small firms that are highly dependent on each other. Individually the big firms dominate in some selective segments. Few amongst them are Gulab Bohra & Company, Sanwa Enterprises, Bandookwala ISPAT, Kathawala Traders, Kadar Rasiyaji, Agrawal BT and Sons, Royal Iron traders, United Iron traders, Ajanta iron, etc. All of them have taken this market to new heights of success. As per Abrar Kathawala, partner at Kathawala Traders, the yearly turnover of the market is in the range of approximately Rs. 250-300 Crores. Loha Bazar traders fall in the category of honest tax payers and a significant amount of GST revenue comes from this area.

Abrar added that trading units in Loha Bazaar deal in industry specific as well as generalised iron and hardware products – many identical and a few differentiated. He said that the market is divided into 2 segments, viz. Pig Iron (kacha loha) and hardware. Hardware has relatively more number of firms than pig iron. The main reason for this is the administrative restriction on the plying of large and heavy vehicles that carry pig iron slabs. This has resulted in the many big units moving out to industrial areas like Sukher and Madri. This benefits them in two ways - no administrative barriers and reduction in transportation costs.  In rural areas, the infrastructure is being enhanced and ultimately this has resulted in the increase of demand of iron and steel materials. So basically it can be said that the market has the element of perfect competition, monopolistic competition as well as oligopoly.

Compete or Collaborate?

When firms are interdependent, they have the choice of competing against other firms or collaborating amongst themselves. By competing they may increase their own market share at the expense of their competitors, but by collaborating, they decrease uncertainty and the firms together can control market behaviour.

Their high degree of interdependence means that they are likely to change their prices according to their competitors. For example, if prices of hinges, al-drops most importantly iron sheets changes, other firms are likely to do the same. There is a cut throat competition in the market not in terms of innovation, customer services or any other factors but prices. When the firms agree to fix prices or take part in anti-competitive behaviour, they form a collusive oligopoly. In an informal agreement, the firms behave as a monopoly and choose the price that maximizes output.  However, if they are a few big firms with similar costs and rising demand, the agreement is likely to last.

However, the problem in this market is that it usually faces a price war, where firms are continuously cutting prices. This results in huge loss on account of the chances of earning extra normal profits. The assumption is that when a rival firm increases its price, other companies will not follow, but if a competing business decreases its price, then others will follow.

As highlighted by Abbas Ali, of Gulab Bohra Power Tools and Machinery, the advent of Internet and availability of information allows customers to obtain knowledge related to price. However, other factors such as quality of material, right fit to requirements, etc are not something that they can get from the internet. As a result customers are losing on account of quality of the products. They may get a better price but not better quality. Hence both the parties suffer. The firms are becoming price takers and not price makers, resulting in reduced customer satisfaction.

Challenges and opportunities

In today’s time the major challenges faced by this market is the entry barrier.

New firms may have a difficult time entering the market as it requires huge capital investment. They require two things, one is their own capital, not borrowed. Second, their self-owned property. Since, the firms are already making lesser than normal profits so it will help new firms if they have these two things to make healthy profit, as they neither have to pay rent nor interest on borrowed capital. Another barrier turns out to be labour scarcity. In Udaipur, the availability of blue-collar labour is scarce.  Another issue of existing firms is that they cannot expand their business because of the requirement of space i.e. huge warehouses. As iron is a heavy material it requires a lot space to store the stock. With increase in population, the requirement of residential area increases as a result commercial space suffers.

Again, Availability of internet has also made a huge impact on the working of the business. To scale up, producers need huge markets that can increase demand but Udaipur being a small city, this problem is at a standstill for the businessmen. But as Abbas Ali pointed out, “Shakespeare didn’t do MA but people today who do MA read about Shakespeare, likewise it’s all about how you make your position, doors are wide open for everybody.”

Therefore, despite the challenges, firms in Loha Bazaar are doing exceptionally well and their future generations are looking forward to stepping into the shoes of their parents and taking the businesses to new heights. In the near future, this market is going to flourish but eventually it will move to the outskirts. A big salute to all the biggest, oldest and most successful enterpreneurs of this market as their contribution in the growth and development of Udaipur is commendable.

This post would not have been possible without the help of inputs from Mr. Abbas Ali Nath, Mr. Feroz Ali Nath, Mr. Javed Ali Nath, Mr. Abbas Ali (Gulab Bohra), Mrs. Najma Jawariya, Mr. Abrar Kathwala, Mr. Fariyad Ali, Mr. Hamid Hussain Gurawala, Mr. Maqbool Ahmed, Mr. Ashiq Ali RV, Mr. Arafat Hussain KR, Mr. Farhat Mandiwala, Mr. Tokeer Bandookwala and Mr. Faisal Bandookwala.

Photo Courtesy: Mr. Abrar Kathawala, Mr. Abbas Ali, Ms. Farhina Ansari (UT), Mr Aslam Kathawala.