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Virgin, Essar hitch up for retail

The Essar group plans to roll out 2,500 outlets in India at an estimated cost of Rs 1,500 cr, reports Indulal PM.
None | By Indulal PM, Mumbai
UPDATED ON MAR 20, 2007 11:55 AM IST
The Ruias of Essar are talking to billionaire entrepreneur Richard Branson for a big play in telecom retail. Virgin Media, where Branson is a major shareholder with a little more than 10 per cent stake, is tying up with Essar Telecom Retail, which recently launched exclusive telecom product retail outlets branded "The Mobile Store." An Essar group spokesperson declined to comment.

The UK-based telecom major NTL:Telewest had acquired Virgin Mobile in April 2006, leaving the Branson-owned Virgin Group with a 10.5 per cent stake.

The proposed strategic tie-up will help Essar Telecom Retail to offer a wide range of products and services. Virgin Media, the mobile virtual network operator, also sells handsets and other products through its 5,000-odd retail outlets. Essar can bring in products of other global telecom equipment makers since Virgin has many international marketing alliances. Sources said Essar was drawing up big retail plans based on the anticipated growth in the demand for mobile phones. According to industry estimates, annual sales of handsets are estimated to increase to 300 million by 2008 from the existing 50 million. In 2005, total handset sales were 21 million.

Ruias call off delisting

The Ruias have called off their plan to delist group company Essar Shipping. This is because its reverse book-built process received a partial response and a price beyond the floor. The offer was for 61 million shares against the total book size of 100.3 million shares. The maximum number of bids received were at the price of Rs 50.30, against the floor price of Rs 31.62.

The Essar group is planning to roll out 2,500 outlets in the country at an estimated investment of Rs 1,500 crore. Rewant Ruia, son of Essar group Vice-Chairman Ravi Ruia, has been given charge of the business. After soft-launching a retail shop in Ghaziabad four months ago, Essar Telecom Retail has been expanding its presence in the metros. The first phase will have 800 stores in 33 cities. Stores are being launched in Cochin, Bangalore, Hyderabad, Chandigarh and Ludhiana.

Essar Telecom Retail has tied up with vendors like Motorola to sell handsets and is planning to provide both GSM and CDMA handsets.

The fast-paced expansion has forced Essar Telecom Retail to go in for major recruitment. Rajiv Agarwal, who was with the Essar Group’s BPO services provider, Aegis, has joined as CEO of the telecom retail venture.

In addition to 100 senior executives, the company has recruited several mid-level executives.

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