Swetha Kannan, Anjali Prayag on The Hindu Business Line, June 13, 2009
Bangalore, June 12 Jewellery major Gitanjali group is in advanced talks to pick up a major stake in the Bangalore-based mobile retail chain, MobileNXT.
Confirming this to BusinessLine, Mr Vijay Menon, Founder Director, MobileNXT, said there was a proposal from Gitanjali to invest in MobileNXT. While it is also talking to a few others, discussions with Gitanjali are in an advanced stage.
In response to an e-mail query to Gitanjali, a company spokesperson said, “We are in talks with various companies and it would be premature for us to comment on anything at this stage.”
Currently, media company TV18 holds one-third stake in MobileNXT, while the rest is held by the promoters, Mr Romy Juneja and Mr Menon.
MobileNXT has so far obtained venture capital funding to the tune of $8 million in two tranches and is close to breaking even, said Mr Menon. “We need investor help with that,” he added. If and when a strategic investment is made, the stakes held by everyone will be diluted. More details will emerge as and when a deal is struck.”
Currently, there are 30 MobileNXT retail outlets in tier 2 and 3 towns in the country – mainly in Karnataka and Tamil Nadu, apart from a few stores in Punjab, Gujarat and Kolkata.
Given the market conditions, MobileNXT wants to focus on consolidation of existing stores rather than engaging in store expansion.
“The mobile phone business is a high volume business but margins are low. Our strategy now is to raise capital and make ourselves profitable,” said Mr Menon.
Towards this, MobileNXT plans to retail complimenting products in the personal accessories space such as eyewear, watches and even jewellery, said Mr Menon.
For the financial year ended March 2008, MobileNXT clocked a turnover of Rs 30 crore.
Gitanjali group is a $900-million company with interests in jewellery manufacturing and retail.