A chance visit by its senior management to a knockdown furniture factory in Thailand was all it took for Nilkamal Plastics Ltd to venture into an entirely new business: importing particle board furniture from south east Asia.
The continent's largest moulded plastic furniture maker has even set up a separate business division, @Home, for this new venture, which will see it compete with established players like Durian and Style Spa for a share of the Rs 150 crore (Rs 1.5 billion) branded furniture market.
In July this year, @Home opened its first retail outlet, a 14,500 sq ft showroom in Pune. Two stores in Mumbai and one in Ahmedabad will come up in October. Next in line are cities like Delhi, Nashik, Hyderabad and Bangalore. The group plans to open stores in about 25 locations in major cities and simultaneously set up over 40 franchisee operations in smaller towns over the next few years.
Those are big plans for a business that is still to prove itself. But Hiten Parekh, executive director, NPL, feels the retail venture is just the precursor to the group setting up a manufacturing base in India for particle board furniture.
Each store is being set up at an investment of Rs 1.5 crore (Rs 15 million) and NPL is aiming to earn Rs 15 crore (Rs 150 million) this year from the seven stores that will be operational by March 2006. Says Sharad Parekh, MD, NPL, "The customers have appreciated our productline and prices. The footfalls have been healthy with conversion rates at 40 per cent."
The company has spent about Rs 1.5 crore on outdoor and print ads; the spends are likely to increase as they expand. The stores are being promoted as complete home solutions destinations. In-house interior designers and 3-D imaging software will help customers select furniture. Mock rooms have been designed so customers can see the "final look" of what they plan to buy.
The company is sourcing most of the furniture from Indonesia, Malaysia, China and Turkey. Primarily into medium-density fibre and particle board, the stores will also stock a fair amount of rubberwood and glass pieces.
"We are pitching the brand at SEC A- and B+, while the prices will be aimed at SEC B," says Vaman Parekh chairman, NPL. Adds Hiten: "Once we have consolidated our presence in the market, we will expand the product portfolio to include kitchen and bathroom sets too."
NPL's moulded plastic business is also gearing up for growth. New, value-added products are being readied for launch later this year. NPL's moulded furniture division is ready with 12 Nilkamal Home Ideas stores set up on a shared expenditure basis with its distributors.