Wipro Consumer in talks for furniture business buyout

Co aims to wrap up acquisition with $20-m investment

Wipro Consumer Care and Lighting (WCCL), the FMCG arm of $7-billion Wipro, is in talks with two firms for a possible acquisition in the furniture space. People with knowledge of the development told FE that one of them is an Indian firm, while the other is an overseas player. WCCL is looking to wrap up the acquisition with an investment of around $20 million.

The sources, however, did not want to reveal the identity of the firms at this stage, as that would lead to complications in the matter. ?WCCL is talking to both the firms simultaneously,? they said.

When contacted Vineet Agarwal, president, WCCL, said, ?We don?t comment on market speculation.?

The organised office furniture market in India is pegged at anywhere between R2,000 crore and R3,000 crore, where Wipro claims to hold the No. 2 position with the bulk of the business coming from corporate clients. Other players in the Indian market include Godrej Interio, BP Ergo and Featherlite, while international labels include Herman Miller Furniture, Haworth, Steelcase, and Vitra. Experts point out that the office furniture space is growing at steady rate of 20-25% year-on-year.

?The overall furniture business is doing very well. Both our chairs and furniture business is seeing good growth. We have launched international designs in this segment,? Agarwal said. Wipro?s modular furniture business did particularly well during the quarter ended June, growing 15%, the company said at its quarterly earnings meet last month.

Recent deals in this space include a buyout of the privately held Indian office furniture company BP Ergo by NYSE-listed HNI Corp, which is seen as the second largest office furniture manufacturer in the world. Business historian Gita Piramal sold her stake in BP Ergo for an undisclosed amount early this week.

Ikea, the world?s largest furniture retailer, is also looking to set shop in the country through wholly-owned subsidiaries. According to reports the Swedish furniture major proposes to invest R10,500 crore in the Indian market.

In the first quarter ended June, WCCL posted a revenue growth of 30% at R979 crore over R755 crore during the same period last year. Profit was up 27% at R114 crore against R89.5 crore, a year ago.