Index Mall in Udon to begin construction in 2 months

PITSINEE JITPLEECHEEP (BangkokPost.com)

Index Living Mall Co, the home-furnishings retail chain, has signed an agreement with an Indian partner to open a franchise in India next year. Index Living Mall is expected to be the first foreign home-furnishings chain to open in Mumbai, which now has 20-30 small furniture shops.

''India has huge market potential, reflecting the boom of the overall economy during the past four years,'' said Kijja Pattamasattayasonthi, Index's managing director.

He said he expected the import tax on furniture in India to decline substantially in the future if free trade talks with Thailand were successful. India currently imposes a 30-35% import tax on furniture.

Mr Kijja said that under the memorandum of understanding, the two parties would collaborate on the development of home-furnishing products with an Indian company, which he declined to name.

''Our partner is a leading listed firm in the retail and industrial sector in India. We'll disclose the name when the time is proper,'' he said.

The Indian partner would make investments in outlets, while Index would supply products and expertise to the partner. Franchise fees have yet to be finalised.

Under the agreement, the Indian partner will open seven Index Living Mall outlets during the first five years. Each requires an investment of up to 300 million baht for a space of 6,000 to 7,000 square metres. The first outlet is expected to open in Mumbai in the first quarter of next year. The company expects to gain annual sales of about 50 million baht from the Indian outlets.

India will be the company's second foreign market after Indonesia, where it currently has six outlets. Dubai is also in its business pipeline.

For the domestic market, the company plans to spend 2.4 billion baht to open three new outlets next year. Construction of a 400-million baht project in Phitsanulok will start next week and work on a 500- million-baht outlet in Udon Thani will begin in the next two months. The remaining 1.5 billion baht will be used to expand an existing outlet on Rama II Road in Bangkok.

The new projects will bring the total number of Index Living Mall outlets in Thailand to 16 next year. Mr Kijja said expansion would stop in Thailand when Index had reached a total of 20 outlets.

Last week, it opened a 20,000-square-metre Index Living Mall in Chiang Mai, at a cost of 800 million baht, to capture the rapid growth of the housing and hotel industry in the North of Thailand. The company expects to break even within 10 years at the Chiang Mai outlet.

Apart from Index Living Mall, competing home-furnishing outlets in Chiang Mai, include Global House, Home Pro and Cement Thai Mart.

Mr Kijja was confident that its new outlet would see positive market response as it offered a good product range in both modern and traditional styles to suit various tastes.

''We're not worried about economic slowdown and rising oil price and interest rates because it is a normal cycle. We will worry if the oil price fluctuates too much as it would make it difficult to map out our business,'' he said.

The company expects its sales to reach six billion baht this year, with annual growth of 10-15% for the next three years.