Swedish furniture maker IKEA has identified the first four Indian states where it wants to open stores

August 13, 2013 Leave a comment

August 12, 2013, 11:12 a.m. ET

IKEA Shops for Land in India

RAJESH ROY And JENS HANSGARD

NEW DELHI—Swedish furniture maker IKEA has identified the first four Indian states where it wants to open stores, a senior government official said Monday. IKEA Chief Executive Officer Mikael Ohlsson conveyed the company’s plan to Indian Trade Minister Anand Sharma during a closed-door meeting on Monday, said a Trade Ministry official who attended the meeting. IKEA is in the process of purchasing land in the states of Andhra Pradesh, Maharashtra, Haryana and Karnataka, and it could take four to five years before the first stores open, the official said.“It’s not quite correct that we are limiting ourselves to these states,” IKEA spokeswoman Josefin Thorell said. “We are looking at big cities and are beginning to start a dialogue with authorities in states with big cities.”

IKEA stores need to be close to big cities and be strategically placed close to main roads and public transport, she said.

The states contain or are adjacent—as in Haryana’s case—to India’s four largest cities. The city of Noida in Uttar Pradesh may also receive a store, said the Indian Trade Ministry official.

The company plans to spend 105 billion rupees ($1.72 billion) to open 25 stores across the country.

The company is also collaborating with local suppliers to source products made of bamboo, as well as hand-loom fabrics and handicrafts. IKEA is partnering with India’s National Institute of Design to design products for the local market. The company plans to significantly increase its sourcing from India in the next five to six years, said IKEA’s Ms. Thorell.

The company received the final approval for its investment from India’s federal cabinet in May, more than a year after it first submitted an application with India’s Commerce Ministry. IKEA applied to open stores in India in June last year, after the country amended its laws in late 2011 to allow 100% foreign ownership in single-brand retail ventures. Before that, foreign companies were allowed to own only up to a 51% stake in such retail operations.

All that remains is for IKEA to receive approval from individual states and municipalities to open a store, said the official in the Trade Ministry.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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