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Office Furniture Industry in India

The furniture industry in India is highly fragmented; a high proportion (85%) of the national production of the furniture is contributed by the small size firms. But the industry composition of office furniture is different; the office furniture industry has less degree of fragmentation particularly when it comes to metal and plastic furniture. Traditionally, timber wood has been the source of furniture raw material but due to the lack of timber, India is forced to import timber from neighboring countries. States such as Uttar Pradesh, Orissa, West Bengal, Gujarat, Maharashtra, Kerala and Tamil Nadu has high concentration of wooden furniture.

In 2007, US$ 1469.7 million of office furniture was produced with an average growth of 15% from the year 2002 to 2007. The office furniture market is estimated to be US$ 3000 million by 2013. The production of the office furniture is comprised of 40% Operative desking, 30% seating, 10% Executive Furniture and 10% others (storage, cabinet etc.).

The consumption of office furniture is US$ 1,721 million (annual growth rate of 15.3% from 2002 to 2008). This is attributable to the rapid growth witnessed by the Indian economy and the development of the office working environments by upgrading the facilities provided to their employee for enhancing their productivity. This had led to the modern and innovative design furniture in offices.

As per the industry experts, two third of the Indian furniture consumption is home furniture, one third is equally distributed between office and contract furniture. While the home furniture is still driven by the "traditional" design and materials, the opportunity for the modern and innovative design lies in the office furniture space. Given the rapid growth in the service sector and adaptability of the western style of living and working, the sector of office furniture is going to grow fast in near future.

' Indian Office Furniture Manufacturers '

The office furniture market is not highly concentrated, 15-20 local manufacturers comprise 25%-30% of the total market. Out of these 15-20 players only few are big industrial groups such as Godrej, Wipro. The smaller companies meet the rest of the 70% of the market demand.

The leading Indian Office furniture manufacturers are: Godrej, BP Ergo Limited, Wipro, Featherlite, Hawroth, Merino, Durain, Geeken, Archdeep Interiors, V3 Engineers, Methodex systems, Eurocaustic, Continental Group, Ergomaxx and Om Vishwakarma Furniture.

India Leading Manufacturers - Office furniture Production (2008)

Source: CSIL - based on interviews, companies financial statements and press releases

The office furniture consumption

The demand for office furniture is determined by the following factors -


 * 1) GDP growth rates
 * 2) Demography: Workforce composition and Employee per sector
 * 3) The non-residential construction sector

India's GDP has grown around 8-9% since 2003. This has largely driven the demand for the office furniture as areas like IT and ITES had witnessed a huge growth. The rise in population and growing young workforce has further fueled the growth of this sector. The real estate boom had contributed to the demand of the office furniture - the office sector, the retail sector, hotels and hospitals have all contributed to the demand. In Indian context, the most important factors that qualify an office for meeting requirements are - the availability of staff, ease of access by car and public transport and regional growth potential and the technical infrastructure.

In 2005-06, the commercial construction investments by different sectors are as follows: Retail (13%), Hospital (36%), Hotels (8%) and office space (43%). The projected percentage of the commercial construction investment by different sectors are as follows: Retail (8%), Hospital (22%), Hotels (7%) and office space (62%). This further substantiates the growth potential of the office furniture business in India.

''' Office Furniture Distribution '''

The most important channel of sales in India for office furniture is "Direct Sales" - it comprises 50% of the sales. Companies mostly sell through their headquarters or local agency to the customer or through their stores. 32% of the projects are contract projects (contract refer to a situation when simple furnishing supply is accompanied by a series of collateral services under the contracting formula). Independent dealers account for about 10% of the sales. But with the entry of modern retail format, the sales and distribution channel composition is likely to change as customer look for convenience.

How the distribution channels looks like? - Local manufactures sell their product through showrooms, the intermediary here could be either the independent dealer or companies' subsidiaries or branch offices. Foreign manufactures give products to importers who then either sell directly through their showrooms or through a retailer.

According to the Doing business in India 2008 (World Bank Group), in order to export goods to India companies have to prepare documents:
 * 1) Bill of lading
 * 2) Certificate of origin
 * 3) Commercial invoice
 * 4) costumes export declaration
 * 5) inspection report
 * 6) packing list
 * 7) technical standard
 * 8) terminal handling receipts

In order to import goods from India the necessary documents are:
 * 1) bill of lading
 * 2) cargo relase order
 * 3) commercial invoice
 * 4) customs import declaration
 * 5) inspection report
 * 6) packing list
 * 7) technical standard
 * 8) Terminal handling receipts

Source(s): The above data/information is sourced from a Centre for Industrial Studies (http://www.csilmilano.com/index.html) published report on Office Furniture Market in India.