Indian electronics firm has Moto device biz in its sights

Videocon fancies a bit

Posted in Mobile, 2nd May 2008 15:47 GMT

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Indian consumer electronics supplier Videocon has been on the blower to Motorola with a view to taking control of the mobe co's devices division for an undisclosed price.

The news comes from Business Week, which quotes Videocon chairman Venugopal Dhoot as being serious about the bid, despite the objections of analysts and Motorola's insistence that the devices division is not for sale.

Videocon supplies and manufacturers consumer electronics from more than a dozen factories in India, and boasts facilities in China, Mexico and Japan to name just three. Its enormous ambition extends to interests in oil and gas production.

That ambition snagged it a mobile phone licence in India last year, and the company is planning to launch a network in the next few months despite considerable competition in the Indian market. So snaring Motorola could be seen as a synergistic fit.

The company's majestic motto is "India today, the world tomorrow". It surprised everyone in 2005 by buying up Thomson's picture-tube business, and the local subsidiary of Electrolux in 2006 - so there is some precedent, even if it's nothing on the scale of Motorola.

A more important problem could well be the cultural differences between the two companies. Videocon is a typical Indian company, made up of various cross-holdings and a web of registered entities. Integrating with Motorola's American-style infrastructure would require significant work, and pain, on both sides - though one can assume that most of the pain would be on the Motorola side.

We've not been able to contact Videocon for comment, but it certainly has enough cash; and with 120 million handsets sold in India during 2007, its local expertise could turn out to be more important than compatible management styles.

There is still the nagging matter of Motorola denying the handset business is up for sale. It wants to see the division spun off into a stand-alone company, but stand-alone phone manufacturers are few and far between. The very fact that Dhoot is willing to make an offer like this is indicative of the state Motorola has got itself into. ®

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