Videocon merges backend operations of retail arms for efficiency
Videocon Group is consolidating its retail operation across its three formats Next Retail, Planet M and Digiworld by merging their backend operations to form a common sourcing platform with the aim of bringing scale, improving profitability and fighting online sales by ensuring better bargaining power with the brands for margins.
The group has floated a new company, Techno Kart India, which will manage the backend operations of all the three retail formats such as sourcing, marketing, human resources, IT, warehousing and supply chain. "This structure will also free up a lot of working capital, make the operations efficient and offer an united front to the brands for better margins," said a senior official of the group, requesting anonymity.
"While the frontend of the three formats will be run separately by three companies at present, the plan is to eventually merge them into Techno Kart for leaner operations," he added.
The combined retail entity will have more than Rs 1,500 crore revenue, with Rs 800 crore coming from Next, Rs 500 crore from Digiworld and another Rs 200 crore generated from Planet M Retail. This will make Videocon the third largest consumer electronics and cellphone retailer in India by revenue after Tata-owned Croma's estimated Rs 3,200 crore revenue and Reliance Digital's revenue of around Rs 3,044 crore in FY14.
The new structure will also involve a change in management structure of the retail operations. Sanjay Karwa, who was the erstwhile CEO of Planet M Retail, is now the CEO of Techno Kart India. The three formats will have independent operation heads who will report to him. Digiworld will be headed by Rajendra Dungarwal, who was earlier handling Next Retail while Planet M will be steered by Ajay Kulkarni, who was with Provogue, and Next Retail will be run by Rajeev Sharma, who was earlier heading sales for the format. Emails sent to Videocon Group chairman and managing director Venugopal Dhoot and director Saurabh Dhoot did not elicit any response till the time of going to press. Saurabh Dhoot oversees the retail business from the promoter family.
The combined store count of Videocon's retail operation will be more than 1,150. Next Retail, which focuses on sales of multibrand appliances and TVs, has 150 companyowned stores and 400 franchise outlets while the cellphone-gaming-toys format Planet M has 75 company-owned stores. Digiworld, which till lately used to sell only Videocon Group brands and has recently started selling Samsung and Panasonic as well, has more than 500 franchisee-run stores and 40 company outlets.