Essar’s MobileStore close to buying a firm

The MobileStore Ltd (TMS), the mobile retailing venture of the Essar Group, is taking an inorganic route to expand footprint in the country. The company is in advanced stages of discussion with two mobile retailing firms for an acquisition.

Srikant Gokhale, chief executive officer, TMS, said, “We are in discussion with two players which have 100 and 300 stores respectively with pan-India presence. We will acquire a big mobile retail chain within this calendar year.” He did not name the companies TMS was in talks with.

Under the deal, which will not involve cash, TMS will merge the target company into itself by the way of change in the shareholding pattern wherein the latter will become a joint owner of the business.

TMS, which has around 1,200 retail outlets in 200 cities at present, is looking to more than double the retail footprint in the coming two years.

Industry experts said there are close to 500,000 mobile retailing stores in the country, with the organised market’s share between 7% and 8%. On an average 10 million handsets are sold every month, of which smartphones account for about 10%.

In an attempt to tap the rising smart phone sales, TMS is looking to increase the number of its experience stores from 150 to 500 this fiscal.

The experience stores, Gokhale said, focus on demonstrating the various advantages to customers besides making them familiar with the host of smartphone applications.

“The plan is to take the number closer to 500 experience stores within this fiscal, of which 100 will be new and balance 250 will be existing outlets converted into experience stores,” he said.

Spread across 800-1,000 square feet, its experience stores are mostly housed in the top 10 cities. The company said the cost for setting up an experience store was thrice the normal store, which costs Rs6-7 lakh. Converting an existing outlet into an experience store, however, costs about Rs5 lakh.

“We will have 200 franchise stores this fiscal, which will increase to 500 by the next fiscal. TMS has also conceptualised a FMCG format called ‘shop in a box’, for which it will partner with the kirana stores in small towns with no presence of organised retail. These stores will retail entry-level handsets, connections and related products,” said Gokhale.