Gita Piramal divests 95% stake in BP Ergo to HNI Corp

MUMBAI: Gita Piramal, business historian and the author of Business Maharajas, has divested her entire 95% stake in office furniture company BP Ergo for an undisclosed amount to American furniture major HNI Corp.

Investment banking officials said the total enterprise valuation of the company is around Rs 200 crore.

The deal will help the world’s second largest furniture company to own capacities capable of providing furniture to two lakh people annually in a fast-growing market like India.

BP Ergo’s manufacturing facilities are located at Nagpur in Maharashtra and Nalagarh in Himachal Pradesh.

“By attracting investment from HNI, BP Ergo has broken the myth of Indian manufacturing losing its global edge,” said Gita Piramal. The current management team led by CEO Vikram Sharma will contnue to run operations.

Rajeev Gupta, ace investment banker and former MD of Merrill Lynch, was the advisor to the transaction. “BP Ergo is a top laboratory for CEO training. Dr Gita Piramal has created a powerful platform to attract and nurture talent,” said Gupta.

BP Ergo was originally started by Dilip Piramal as an associate company of VIP Industries. It began operations started as a small-manufacturing unit at VIP’s factory in 1992. The company, which has an employee strength of 600 people, follows a direct-selling business model.

Foreign players import furniture to Indian market as they do not want to grapple with the complexities of manufacturing goods in India. “China is a major supplier of office-furniture for India,” said an industry source.

India becomes only the third country to have a manufacturing base for HNI. Headquartered in Muscatine, HNI Corp built a leading US presence before entering China in 2006. In choosing India, HNI has bypassed the the traditional US MNC route of entering Asia after Europe and Latam.

Moulded office funiure market in India is growing at a fast pace as companies are bringing global systems and practices. Office furniture market in India is estimated to be in the region of Rs 5000 crore. But organised sector has a share of only 22%. “This share is bound to grow,” said an industry official.