India welcomes the first FDI in the furniture industry! Japan’s Sumitomo Forestry picks up 26% equity stake in Spacewood

The central government has been trying hard for quite some time to attract foreign investments. It is now bearing fruits as Japanese housing, building material trading firm Sumitomo Forestry has picked up 26% stake amounting to $13-14 million in Indian furniture maker Spacewood.

This will be the first Foreign Direct Investment (FDI) in furniture industry in India.

Under this alliance, Spacewood along with Sumitomo Forestry Crest Co., Ltd., a 100% subsidiary of Sumitomo Forestry, is going to set up a new manufacturing facility for the production of pre hung doors. The production unit would be set up in Nagpur for an investment of Rs 25 crore.

According to Spacewood co- founder Kirit Joshi, this association has brought significant opportunity of growth to Spacewood. “As far as I know, this is the first FDI investment in our industry. Home segment is currently dominated by carpenters. However, there is a major shift towards readymade products.”

Spacewood is a major player in this category, with a pan-India distribution network and tie-ups, he said.

In the next couple of years, the furniture maker is also looking for expansion. It is planning to increase its retail foortprint from existing 15 stores to about 50 stores in the next couple of years. This would incur an investment of Rs 20 crore for the 35 stores, added Joshi.

"India has become a very important strategic market for us and we will continue to invest and look for opportunities here," said Ozaki, General Manager, Sumitomo Forestry in the statement.

KPMG Corporate Finance was the exclusive financial advisor and DSK legal was the legal counsel for Spacewood Furnishers.

(Image: Indiatimes)