Gionee, the Chinese mobile brand is selling off its Indian operations. The smartphone maker is offloading its 74% shareholding to the promoter of Indian mobile brand Karbonn Pardeep Jain. The existing minority shareholder, Arvind R Vohra, with 26% equity, will continue to stay invested.
According to reports, in a deal worth $29.25 million to $36.65 million (Rs 200-250 crore), the Indian combination will get to use the Gionee brand in the Indian market on lease for 10 years, possibly extended later. The Indian combination will comprise the Jaina Group which is the holding company of the Karbonn brand and Arvind Vohra. The agreement has been signed by all the three entities, it is learnt.
The documents include the letter of intent as well as the non-disclosure agreement. It is also understood that around half of this consideration, around $125 million might go towards the licensing part.
The new management has plans to revamp the brand launch new phones to coincide with the Indian festive season around October. They have a tough task on their hands with the other Chinese brands like Xiaomi, Oppo and Vivo having captured a major portion of the market in the country.
Vohra will continue in the new setup since he was the CEO when the Chinese were operating the company and later took a back seat as an Executive Directors, leaving the day to day operations to the majority shareholder. He may play a key role yet again with a lot of lateral movement from the Karbonn management to lend support. Interestingly, this information on the Chinese selling their stake comes after earlier reports that suggested that they planned to invest Rs 650 crore into the Indian operations this year.
There is no dearth of demand for mobile phones, particularly smartphones in the Indian market with the segment clocking impressive growth rates. Gionee has to come up with the right combination of hardware components and features and some aggressive pricing policy to succeed in luring the buyers.