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India Infoline News Service / Mumbai Apr 02, 2008 10:54

According to media reports, Videocon group chairman said that we have expressed our interest in acquiring Motorola’s handset business. We learnt from a reliable source that they will be selling it and when they do we are sending an expression of interest.

The Videocon group is planning to bid for Motorola’s troubled handset unit, if the US-based company decides to sell the loss-making business. According to media reports, Videocon group Chairman Venugopal Dhoot has been quoted as saying that Videocon is in the initial stages of evaluating a bid.

"We have learnt from a reliable source that they (Motorola) will be selling it and when they do we are sending an expression of interest," he added. According to a financial daily, the group has hired a leading investment banker to convey its interest to buy out the mobile handset business of Motorola.

Motorola, on March 26 said it plans to split into two companies next year amid pressure from billionaire investor Carl Icahn to spin off the handset business that it pioneered 25 years ago. The board is looking for a new CEO for the mobile handset business, Motorola said.

Motorola spokespersons declined to comment on the news.

Motorola’s handset business may be worth about US $3.8bn, according to Merrill Lynch. That’s more than double the market value of Videocon Industries Ltd., the Videocon group’s listed company. Some analysts say Motorola won’t sell its mobile handset business to Videocon as it does not have a global brand value.

Having said that there are definite synergies to be had as Videocon group’s subsidiary Datacom has received license for launching pan-India mobile operations and is awaiting allotment of spectrum.

The group plans to invest Rs60bn on the mobile services business across all the 23 circles in India. It is looking at a subscriber base of 25mn in the next three years. India adds around 7-8mn new mobile users every month.

So, the potential is quite big given the tele-density of just 25% in the country. At the same time, the challenges too are quite a few. One is the stiff competition among global mobile phone makers and low margins of the business.

Second, how will Videocon fund the acquisition, considering the ongoing turmoil in global credit markets. Another issue is how to revive the Motorola brand, which has seen its market share erode considerably over the past 12 months. Motorola has lost its No.2 spot to Samsung due to lack of strong products.

Last year, Motorola sold over 159mn mobil e phones globally. Its market share is down to around 14%, just behind Samsung, and way below Nokia, which is the No.1 brand with a market share of close to 40%.

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Yesterday BSE Sensex was down by 833 points closed at 16630 one another biggest fall in history of market. The much awaited Reliance Power IPO listed in NSE at a price of Rs. 530/- touched high of Rs. 590/- and rolled down in minutes and closed at Rs.373/-. The predicted price range for this share was Rs.600-900 but the listing price of Rs.530 sent a negative shock wave in investors. The whole market was down due to Global cues. Investment Experts suggest that investor should not book the looses and wait for the stability. It is expected that market will further move down between 14500 – 15300. In last week Real Estate firm Emaar MGF & Wockhardt Hospitals pulled back their IPO offering from the market due to poor response. Here i would like to mention that since the time Reliance Power IPO came into market all the major/reputed shares like ONGC, SBI, NTPC, RPL, RCom etc. are down due to slow down in USA economy (the biggest economy in the world) and other global cues. In next 3-4 month market will recover and so the Reliance Power will also recover.

Government will definitely complete its duties in the budget and look out that investors interested is protected.

Today I think market will open at move upward in starting sessions.

Lets Wait and Watch.

In previous two three years many big international as well as Indianb usiness groups had announced their entry in Retail Market. Some of them have already started their business by opening their stores in metro cities. From consumer point of view i can say that currently the stores opened by these companies are selling the goods at price higher than the market while in their marketing campaign and advertisement these companies make big promise to provide the goods at price less than everywhere in market. Entry of these big players not only brings the capitalism but also increase unemployment against the picture presented by these companies and few politicians because this concept will totoally destroy the earnings of peoples working as Wholesaler and Retailer. These peoples will become unemployed and the problem of unemployment will increase and also leads to other social problems. A retail who is curring doing his own business have to work like a labour in this stores and his earnings will be also less than current level without any ray of hope for future increments. The money / resources / capital of economy will goes in hand of big capitalist who will exploit poor peoples of country. In other words instead of leading the country twowards development with this method society and country will fall in the dealth of wall means poverty and exploitation of poor peoples.

From consumer point of view i can say that currently the stores opened by these companies are selling the goods at price higher than the market while in their marketing campaign and advertisement these companies make big promise to provide the goods at price less than everywhere in market. 

Please send me your view on above.

On January 15 the public issue of Reliance Power (Anil Dhirubhai Ambani Group) opened and oversubscribed 10.2 times on same day which is a historic in Indian share market history. I hope that it will be oversubscribed 50 times by its last date i.e. 18^th January 2008 because peoples are selling their existing holding in big quantities to invest money in this IPO and the BSE sensex and Nifty sensex is going down continuously.

All over the country peoples are opening demat account in large number as it is necessary to have a De-Mat account for bidding in IPO. Reliance is issuing 26 crores shares in this price bank of Rs.405-Rs.450 with a discount of Rs.20/- per share. Company has spent a lot of money and using various methods for advertisement of this IPO. From Mumbai dabbawalas (Sex Sigma rated) to TV channels everywhere company is giving ads.

The grey market sources said that the price of share after listing will be approx. Rs.900 although it is not a reliable information but looking at the history of reliance group one can definitely rely on the goodwill of company. Company has around 13-14 power projects based on coal, gas and hydroelectric.

If we look at the power sector, it has great potential and all the shares of power sector companies like NTPC, Power Grid etc. are performing well.

Even many mutual fund companies are planning to launch their new offering immediately after the Reliance Power IPO in a hope that the refund sent to bidders may be attracted for their funds.

Please provide me your views for this IPO.