| At
a time when promoters are falling over each other (well, almost)
to get listed on the stock exchanges, one business conglomerate
is bucking the trend by delisting its shares. The Ruias of the Essar
Group have informed the exchanges that they will be delisting their
three listed companies, Essar Oil, Essar Steel and Essar Shipping.
At a time when the Indian stock markets appear set for a long term
secular rally (short-term bursts of volatility notwithstanding),
the Ruias, it would seem, are losing an opportunity to create market
wealth. However, the group has an explanation. Says Manish Kedia,
VP (Corporate Affairs) for the group: "Delisting will give
more flexibility in operation and management. Secondly, with the
promoters holding more than 85 per cent in Essar Oil and Essar Steel,
there is no meaning in them being listed."
Industry analysts are less charitable. As one points out, being
listed means one has to comply with regulations. For instance,
at least half of a company's board has to be made up of independent
directors. For a group with such a high shareholding, this norm
may be a bit difficult to digest. What's more, all three companies'
prospects are bright, as they can ride a booming economy. Says
Harsh Khandelwal, AVP (Corporate Development & Strategy),
yes Bank: "The group may want to keep the wealth with itself
rather than distribute it among shareholders." However, shareholders
may still have one last card up their sleeve-they might just not
sell if they consider the exit price bland.
-Mahesh Nayak
Talking
Shop
Mobile retailing is a Rs 75,000 crore opportunity.
If you can't make mobile
phones or provide cellular services in the world's fastest growing
telecom market, do the next best thing: Sell handsets and airtime
via a chain of stores nationwide. There's good reason to do so.
The mobile retailing industry is worth Rs 75,000 crore, and is growing
at a little over 20 per cent annually. However, most consumers are
accustomed to buying their phones, airtime, ring tones, wallpapers
etc., from their not-always-friendly neighbourhood shop, which typically
stocks as many as 20 brands, and which also serves as a convenient
stopover for exchange or repair. If customers have preferred this
option, it's because of the paucity of specialty stores-stores that
linked across the country by one brand and a single standard of
service. Of late, though, a number of players-ranging from unknown
promoters in smaller towns to sister companies of service providers
to established multi-format retailers-have sniffed out the opportunity
in mobile retailing.
Consider, for instance, Mobile Magic, launched in 2004, based
in Nagpur, and focussing on smaller towns. The company is present
in four states (Maharashtra, Madhya Pradesh, Chhattisgarh and
Gujarat), and is opening five new stores each month. On one fine
day in May, Mobile Magic plans to create a big bang of sorts by
launching 100 stores across the country, simultaneously. "Our
emphasis will be in tier-II, -III and -IV towns. We will also
be present in metros but just for representative value. We want
to have evenly distributed network of franchisees across India
with 350 stores by 2007-end and 3,500 by 2010," says Vivek
Palod, one of Mobile Magic's founding partners. Mobile Magic has
an in-house training centre in Nagpur, dubbed MMIT (Mobile Magic
Institute of Technology), where engineers are trained to offer
service; a testing facility for manufacturers/operators to test
their products before launch is also available. These engineers
will be absorbed by Mobile Magic in their showrooms across the
country.
Rumi Juneja and Vijay, two former Motorola managers, staked
out the organised retail industry across many countries before
coming up with the Mobilnxt chain of stores, which has received
$1 million (Rs 4.4 crore) from a few HNIS and VC firms. "Internationally,
technology product retailing has moved towards value-added customer
support services," says Romi Juneja, co-founder, Mobilnxt,
which is based out of Bangalore. Mobilnxt already has 22 stores
with an average area of 300 sq. ft in nine tier-I and tier-II
cities, and will set up another 150 this year.
The organised retailers have their own plans. Subhiksha is putting
up stores in small towns (for new subscribers) as well as the
metros (for the replacement market). Says Managing Director R.
Subramanian: "South, North and West-these were the focus
areas for us for our supermarkets business, and we are following
the same logic across the country for the mobile market too."
RPG's Cellucom, which has just one standalone store currently
(14 with its hypermarkets), is targeting 400 stores by the year-end.
"The stores are still at an 'evolving stage'. In the coming
few days, there will be more brands retailed as well as a range
of accessories and spare parts will be added to the stock,"
says Sanjiv Goenka, Vice Chairman, RPG Enterprises. Meantime,
Essar Telecom Retail has also launched multiple formats for its
mobile retail venture, The MobileStore. Classified into large,
medium, compact and shop-in-shops, the MobileStore has categorised
its mobile device offerings into four key consumer segments: business,
lifestyle, fun and value. Essar, which says it will invest $250
million (Rs 1,100 crore) in the venture for the next two years,
is opening two stores daily, starting with the metros.
Then there's Spice Telecom's retail venture, HotSpot, which
like Mobile Magic, has its own training academy. HotSpot, which
is present in Delhi and the NCR, currently has 50 outlets, and
is aiming for 450 by the year-end. "Starting from April,
we will be opening at least one shop daily," says Sanjeev
Mahajan, CEO, HotSpot. Apart from the existing brands in India,
HotSpot also retails its own brand of mobile phones. The company
recently launched its sub-Rs 1,000 handsets.
Mobile Magic, Mobilnxt, MobileStore...they all sound like clones
of each other. But Palod of Mobile Magic insists that marketing
and sales activities will determine the difference. "We bundle
our product with freebies like Free SIM cards, sunglasses, travel
bags, free airtime etc. We also give added features like Spycall
or Blackballer preloaded. No other retailer offers this,"
he explains. Of course, these chains will also have to contend
with the stores of the manufacturers themselves-Nokia's Concept
stores and Motorola's motostore, with a team of motoexperts in
tow. The neighbourhood SIM card peddler never had it so bad.
-Pallavi Srivastava
One
House, One Face
Publicis flags off the India Media
Exchange.
After equities and commodities, it's time for a media exchange,
although this one offers little opportunity for common punters
to trade and make (or lose) a fortune.
Global advertising giant Publicis Group Media (PGM) has unveiled
an India Media Exchange by bringing together the media-buying
functions of two PGM-owned media houses in India, Zenith Optimedia
and Starcom MediaVest Group. Initially, all traditional media-buying
for both houses will be done by IMX. As Jack Klues, Chairman,
PGM, who was in Mumbai to launch IMX, puts it: "There will
be a time when other media forms will fall under IMX, but everyone
believes that traditional media is the proper starting place."
Klues is quick to point out that IMX will never trump or supersede
the two brands, but simply service them. He goes on to explain:
"Let's be honest, IMX has been built in this market to improve
the overall visibility of Zenith Optimedia and Starcom MediaVest,
and the clients they represent. The IMX structure improves our
visibility to media owners amidst bigger competitors (like GroupM)
out there." So is this an attempt to take on GroupM, WPP's
media-buying agency, which is the largest in India? "GroupM
and PGM are, to some degree, parallel organisations. The difference
is that GroupM can behave like an operational brand; it publicly
pursues or services clients as a collective. PGM will not,"
points out Klues, adding that IMX is not a visible or an operating
brand (which GroupM is).
To be sure, IMX is the second agency of its kind in the world
from the PGM stable. It has already commenced the CMX (the China
Media Exchange), and Klues doesn't rule out other such PGM exchanges
in other countries.
-Deepti Khanna Bose
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