Co-working solutions major Awfis Space Solution is entering the business of manufacturing and selling furniture, aiming to cut costs and diversify its revenue stream.
In a regulatory filing, the company said that it has received shareholders’ approval for the new business.
“The proposed addition will enable the company to directly engage in the sourcing, production, and sale of furniture, fixtures, and related goods required for setting up coworking spaces,” it said.
“This vertical integration is expected to bring in significant cost efficiencies in the setup and maintenance of co-working centres,” it added.
According to sources, the company does not have any plans to open retail stores for furniture, and will only focus on selling the products to its existing clients initially.
“They will enter the space with modular chairs,” a person aware of the developments said.
In the filings, Awfis said that apart from supplying furniture, it will also offer ancillary services like repair, cleaning, upholstery, packing, and moving services to the buyers.
“The board believes that this strategic move will contribute positively to the overall growth and profitability of the company,” the company said.
In addition to its main business of developing co-working spaces, Awfis has a separate construction fit-out projects vertical which contributes around one-fourth to its total revenue. This includes a design and build vertical, where it develops full offices for its clients as per their requirements.
The new business is likely to help that vertical save money substantially.
In the January-March quarter, Awfis reported an 8X year-on-year jump in its net profit to Rs 11.2 crore. In a post-results investor call, Amit Ramani, chairman and MD of the company, said that its focus will be on continued expansion of the design and build business.
He had hinted at entering the furniture business and said it was “a natural progression towards a backward integration”.