Src : Economic Times 20 Dec 2008
Rashmi Pratap & Kala Vijayraghavan
MUMBAI
FIERCE competition in the mobile retail space has claimed its first victim. The RP Goenka group has sold its 50% stake in mobile and laptop retail chain RPG Cellucom to joint venture partner Arun Nagar, founder and owner of Dubai-based Cellucom. Industry analysts peg the valuation of the deal at around Rs 150-200 crore. However, this could not be independently verified. RPG group declined to provide details. While confirming the exit, a group spokesperson said, “This divestment is consistent with RPG’s focus on higher margin retail categories.”
Mr Nagar’s Cellucom has presence across Asia, Eastern Europe, South America and Africa. In October, he had announced plans to invest around Rs 300 crore on expansion in India and said the company was adding around 15-20 outlets every month. Currently, there are over 200 RPG Cellucom stores across the country and the company plans to set up 500 stores by March 2010. It is expected that RPG Cellucom will re-christen itself to reflect the change in ownership.
Cellucom, which is a mobiles and IT products retail chain, has now mandated Ernst & Young (E&Y) to find an Indian investor for the venture, said a source familiar with the development. It has approached retail chains including the Tata group’s Chroma, Essar Group-owned Mobile Store and Kishore Biyani’s Future Group for a possible joint venture as the business needs more investment. E&Y is also learnt to be approaching some private equity investors to explore the possibility of funding, the same source said.
Cellucom is learnt to have created an Indian holding company structure to comply with foreign direct investment (FDI) norms. FDI is not allowed in multi-brand retailing in India but is permitted in wholesale or cash & carry businesses. Regulation allows franchise agreements in back-end support like technical know-how, supply chain management and general support services to Indian retail companies.
With this exit, RP Goenka group’s retail businesses now comprise multi-format Spencer’s Retail, music stores chain Music World and Books & Beyond. “RPG will now focus on core operations and more profitable ventures. Retailers are looking at consolidation and only serious players will remain in the business,” said an analyst. Industry estimates suggest that handset sales business grew at around 15-20% last year but has seen 8-10% growth in 2008.
Rashmi Pratap & Kala Vijayraghavan
MUMBAI
FIERCE competition in the mobile retail space has claimed its first victim. The RP Goenka group has sold its 50% stake in mobile and laptop retail chain RPG Cellucom to joint venture partner Arun Nagar, founder and owner of Dubai-based Cellucom. Industry analysts peg the valuation of the deal at around Rs 150-200 crore. However, this could not be independently verified. RPG group declined to provide details. While confirming the exit, a group spokesperson said, “This divestment is consistent with RPG’s focus on higher margin retail categories.”
Mr Nagar’s Cellucom has presence across Asia, Eastern Europe, South America and Africa. In October, he had announced plans to invest around Rs 300 crore on expansion in India and said the company was adding around 15-20 outlets every month. Currently, there are over 200 RPG Cellucom stores across the country and the company plans to set up 500 stores by March 2010. It is expected that RPG Cellucom will re-christen itself to reflect the change in ownership.
Cellucom, which is a mobiles and IT products retail chain, has now mandated Ernst & Young (E&Y) to find an Indian investor for the venture, said a source familiar with the development. It has approached retail chains including the Tata group’s Chroma, Essar Group-owned Mobile Store and Kishore Biyani’s Future Group for a possible joint venture as the business needs more investment. E&Y is also learnt to be approaching some private equity investors to explore the possibility of funding, the same source said.
Cellucom is learnt to have created an Indian holding company structure to comply with foreign direct investment (FDI) norms. FDI is not allowed in multi-brand retailing in India but is permitted in wholesale or cash & carry businesses. Regulation allows franchise agreements in back-end support like technical know-how, supply chain management and general support services to Indian retail companies.
With this exit, RP Goenka group’s retail businesses now comprise multi-format Spencer’s Retail, music stores chain Music World and Books & Beyond. “RPG will now focus on core operations and more profitable ventures. Retailers are looking at consolidation and only serious players will remain in the business,” said an analyst. Industry estimates suggest that handset sales business grew at around 15-20% last year but has seen 8-10% growth in 2008.
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