BK Modi group mulls merging its twin mobile retail entities
March, 26th 2009
The Rs 2000-crore plus BK Modi group is weighing the possibility of merging its twin mobile retail entities, HotSpot Retail Pvt Ltd and Cellucom India, and bringing them under the Spice brand. The move, that is still being debated upon internally, comes barely two months after the group concluded a 100 % buyout of Cellucom India, from its Dubai-based founder Arun Nagar.
Interestingly, Cellucom India was acquired earlier this year through HotSpot Retail, a subsidiary of India Televentures which is an investment company controlled by B.K. Modis son and SpiceCorp vice-chairman Dilip Modi. Cellucom India is now a wholly-owned subsidiary of HotSpot Retail. As the groups mobile retail arm, HotSpot Retail deals in cellphones, connections and accessories across its 475 outlets nationally. Cellucom India, in turn, offers the full spectrum of IT products like laptops, PDAs and accessories, besides diverse mobile handsets at its 115-odd outlets across India.
When contacted, Mr Dilip Modi told ET: "Theres no immediate plan to merge HotSpot Retail and Cellucom India. Our present concern is to undertake back-end integration of both corporate entities. We will also look at integration of their respecive product-lines by getting their synergies going. While HotSpot Retails mainstay happens to be its suite of mobile handsets and accessories, Cellucoms strengths lie in its comprehensive suite of IT products accessories. Any merger decision can only be debated after weve intergrated the back-end of both mobile retail entities and have evolved a unified go-to-markets strategy."
Such backend integration must also necessarily touch the combined employee pool of the two companies and the buzz was that quite a few employees at Cellucom India have already been laid off as part of this exercise. Some accounts put the figure vaguely at 200, although this couldnt be confirmed.
Responding to the issue, HotSpot Retail CEO Sanjeev Mahajan told ET: "When we were combining the backend of both HotSpot Retail and Cellucom, we made an internal assessment of the best available talent in both organisations. I cannot share specifics, but the number of layoffs is a fraction of what is being quoted."
Though early days, senior executives in the BK Modi Group indicated that brand intergration exercise is also underway in some ways, to which ofcourse, Mr Mahajan said : "We are in the process of evolving a single brandname to maximise the synergies of both the HotSpot and Cellucom mobile retail formats. One of the options being explored is bringing both entities under the Spice mother brand banner.