Ebco Pvt. Ltd., the largest Indian player in the furniture fittings and architectural hardware segment, recently sold 80% stake to Warburg Pincus LLC, a global private equity firm. The deal valued Ebco at ₹3,000 crore. However, Ebco’s promoters, led by Managing Director Geoffrey Nagpal, continue to hold a significant minority stake and are actively involved in the growth of the business. WoodNews finds out what this means for the company and the furniture manufacturing industry…

Inside one of Ebco’s three factories near Mumbai lies a legacy of 60 years of metal-working expertise.

By DHANANJAY SARDESHPANDE

Founded in 1963 as a tool room that supplied to blue-chip companies, Ebco diversified into furniture fittings in 1987. Today it offers a wide range of fittings and architectural hardware that spans nearly 5,000 products – from bed and wardrobe fittings, window and door hardware, kitchen systems and accessories to office furniture fittings and lighting.

The company has three factories north of Mumbai along with in-house design, research and development capabilities. It has built an extensive distribution network of 6,000 retail outlets across the country and exports to Italy and Dubai.

The company’s brands are Ebco, Livsmart and Worksmart. The four pillars of this venture are Managing Director Geoffrey Nagpal, his brother Ashley Nagpal (Technical Director, looking after design, development, manufacturing and quality), Geoffrey’s son Nishant (sourcing and procurement) and Rajesh Nair (sales and marketing).

What are the strengths of Ebco’s business? “Our innovation and design, sourcing and production technology, marketing… We thrive when all these strengths come together. My job is to blend it,” Geoffrey says.

Anish Saraf, Managing Director, Warburg Pincus India, is on record saying: “Ebco has been a pioneer in this industry with its innovative, functional and high-quality products. We believe it is well-positioned to capitalise on the tailwinds in the furniture manufacturing industry in India.”

The four pillars at Ebco are (L-R) Technical Director Ashley Nagpal, Managing Director Geoffrey Nagpal, Nishant Nagpal (sourcing and procurement) and Rajesh Nair (sales and marketing head).

The beginning

According to Geoffrey, in the first two decades, Ebco was a tool room that supplied companies such as IBM, Siemens, Larsen & Toubro, Lucas and Telco (now Tata Motors). This experience brought in a very strong culture of technical expertise, product development and sampling, component inspection and testing, and quality consciousness.

This culture has paid the company rich dividends. It continues to be the largest supplier to the Indian defence forces of cartridge links used in semi- and fully automatic firearms. Starting with the 7.62-mm rifles to heavier calibre weapons, Ebco has supplied ordnance factories with these highly critical components for ammunition.

“We have supplied billions of these,” Geoffrey notes. “In fact, I realised how many zeroes are there in a billion only when we took stock of our ordnance factory business!”

But this type of activity in Mumbai was not remunerative. Geoffrey and Ashley were always looking to diversify. “We came across this furniture hinge which we started manufacturing. From there, we have been developing two products literally every week. Last year alone we put out 153 new products,” he recalls.

Livsmart linear lights in wardrobe application is an indicator of Ebco’s innovations in the furniture lighting sphere.

Products & expansion

The Indian furniture market is like an ocean, but with very few competitive and reliable suppliers. “About 23 million Indians are born every year, and if 5 million Indians sleep on beds, of which 1 million of those beds use your products, you have 80,000 pieces selling per month,” he adds for perspective.

Slides and hinges account for 40% of Ebco’s revenues. These have wide-ranging applications in kitchens, wardrobes and office furniture. But Geoffrey thinks there is untapped potential in sofas and beds – “So we are focusing there.”

Ebco deals directly with India’s largest furniture manufacturers in Mumbai, Bengaluru, Nagpur, Hosur and furniture clusters in Rajasthan for their requirements and to understand their new challenges.

The retail trade in India is a peculiar one because of the predominance of carpenters and contractors in furniture making. “You won’t find this in the West, or Dubai. There, everything is project oriented. You will get orders for 400 apartments, thousands of these fittings, hundreds more of those accessories,” he notes.

“India has this retail trade that feeds the small-scale needs of carpenters and small contractors. That said, for us, this trade is quite a large chunk of our sales, almost 80%,” Geoffrey adds.

More factories

Ebco operates three factories north of Mumbai with multiple press machines, roll-forming machines and automatic assembly machines. Manufacturing slides and hinges requires separate plants, machinery and assembly machines. Ebco’s first ball-bearing slide line was bought from Taiwan and has been running successfully for nearly a decade.

Each factory has a testing laboratory. Even for the products that Ebco imports it has a separate lab for testing. “When you have product failure, how will you know? When the market sends your stuff back? That will shut down your business, right?” he adds.

“The new plant which we are starting up will completely up the game. You will get a very good slide. The quality will be top-notch. It will apply a little balm on our conscience for raising the price,” Geoffrey remarks. “We have imported two more lines, and I can see the need for another two!”

His experience with Chinese component manufacturers has egged the Ebco management into adopting greater automation in production. “Of course, the Chinese have evolved over the last 20 years. You give us a little time and we will do it,” he asserts.

Geoffrey’s team is looking to Gujarat to expand the company’s product line and greater business flexibility. (Watch this space for updates).

BIS standards

The introduction of compulsory certification by BIS (Bureau of Indian Standards) is seen as a game-changer for the furniture manufacturing industry. “The old basket is being tossed into the air. Some (component and fittings suppliers) will fall off, some will have a hard landing, some will disappear,” feels Geoffrey.

In India, only 35% of furniture fittings and components are branded. Even among the branded, there are suppliers who don’t manufacture their products, he informs. Small traders will be affected unless they source products from small Indian manufacturers of “decent” slides.

There is a BIS committee that proposes standards, which are published to seek comments. However, Geoffrey notes, that the criteria should be based on the performance of the fitting or component. What about legacy stock that exists because of the range, finishes and sizes? “You should be able to sell it; you can’t scrap it,” he adds.

He is afraid that, in the short term, Indian consumers are going to be affected because they will have less choice. Also in the short term, prices are likely to go up and sub-standard local manufacturers will fill the China gap.

That said, Geoffrey says his company has accepted the challenge but wants to do it (certification) systematically. “If you make a wrong turn, you have time to make amends. If you have no time, you go on with the wrong,” he remarks.

Big takeaways

When Geoffrey joined the company, its turnover was ₹16 lakh per year.  Half a century later, Ebco’s turnover has crossed the ₹1,000-crore mark. But everything is not about making money, feels Geoffrey. “It is also about what the country needs, what the consumer needs, what lasts long, and is made in India.”

“If we are to be faulted, we have been too conservative in the past decade. We are a brand which has vast distribution, we launch new products regularly. We now want to take it to the next level, with expansion and a more professionally managed business. And let’s not forget one thing: we are competing with the Germans!”

He asserts: “See, we have not gone to some low-level investor; Warburg Pincus is a globally reputed investor known for picking great companies. We had offers from a few multinational companies, but they would have subsumed the Ebco identity and brand. We did the right thing – at this juncture, we are completely entwined in the running of our business.”

When Warburg Pincus conducted due diligence, Ebco not only had a good turnover, but it also had a good EBIDTA. “That means you’re very profitable and successful,” Geoffrey notes, then signs off: “Of course, there’s scope, there’s always scope to improve!”

Versatility at work comes from Ebco’s multi-screen monitor arm (L) and electric box modules. The company offers nearly 5,000 fittings and architectural hardware solutions.

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