IKEA entry spurs Godrej Interio talks with Italian, Indian companies

The company expects to announce atleast one acquisition in the next quarter

At a time when Swedish furniture major IKEA is entering the Indian market, homegrown furniture maker Godrej Interio is actively seeking acquisitions in India and Italy. The company expects to announce at least one deal next quarter.

The subsidiary of Godrej & Boyce Mfg Co Ltd is in talks with two companies in Italy that specialise in design and technology, with an estimated revenue of Rs 200 crore each, for possible buyout, said Chief Operations Officer Anil Mathur.

“We are also negotiating with two companies in India, one based in the northern region and the other in the south. These are small companies with turnover not exceeding Rs 100 crore,” he said.

The company is looking for acquisitions in India to boost manufacturing capacity in the northern and southern regions of the country, where it does not have a strong presence. “Acquisition of an Italian design or technology firm will help the company is expanding product offerings, which in turn will boost our consumer business,” he added. Mathur said the company had room to fund acquisitions on its own and could avail of funds from the parent company if required.

Godrej Interio plans to increase sales to Rs 5,000 crore by 2016-17, a growth of a little over 20 per cent year-on-year. The present turnover is Rs 1,500 crore. Mathur says the company will spend about Rs 120 crore in raising capacity at different factories over the next two years. About Rs 25 crore will be spent on retail expansion in this period.

Godrej Interio currently gets about 75 per cent of revenue from institutional sales and the remaining amount from retail consumer sales. The latter share is expected grow up to 40 per cent in the next five years, said Mathur.

As part of plans to boost the consumer business, Godrej Interio is planning to double its retail space from about 500,000 sq ft to a little more than 1,000,000 sq ft in the next one year. It aims to open about 60 exclusive retail outlets during 2013, mainly in tier-II, tier-III and tier-IV towns. In 2012, it opened 50 such retail points across the country.

The company recently entered into a marketing tie-up with Korea’s Sejin for marine accommodation solutions, Japan’s Itoki and the US-based Knoll Inc for office furniture. It also has an agreement with Netherlands-based LINET Group for hospital and nursing home furniture.