Planet M banks on mobiles, IT for growth

Planet M, the entertainment and lifestyle chain of Videocon, is focusing on mobiles and IT products to garner higher revenues, after Videocon took over the chain from media house Bennett, Coleman & Co late last year.

The chain is expecting to get nearly 70 per cent of its revenues from mobile phones and IT products in a couple of years from a meagre 30 per cent now.

Interestingly, as a category, while mobile phones offer a gross margin of mere 6-8 per cent, for music it is a whopping 30 per cent. But the differentiating factor is the sheer size of both the segments and growth rates.

According to estimates, mobile and allied segments are a Rs 1 lakh crore industry and is growing at 60 per cent annually, whereas music and entertainment is a Rs 2,000 crore segment and growing at a mere 7-8 per cent.

"Planet M will leverage on its strength in the music and entertainment space converging around mobiles and software. Customers are increasingly going for convergence products and we will cater to that demand,'' said Subir Ghosh, the chief executive of Planet M.

The chain is rolling out nearly 400 stores and expecting a revenue of Rs 650 crore in FY09, nearly four-fold increase from now. The chain will have nearly 175 stores by March 31 this year.

To sell IT products and mobiles, which need a different expertise than that of music and entertainment products, PLanet M has got personnel on deputation from the group company Next, the consumer durables and electronics chain of Videocon.

Planet M has 25 flagship stores of 2,000-5,000 sq ft, 50 super stores with a store area of 1,500 sq feet and the rest with a store area of 500 sq feet.

When Next acquired Planet M in November 2007, Videocon Chairman V N Dhoot said that the group plans an over six-fold increase in Planet M's turnover from around Rs 150 crore now to around Rs 1,000 crore in a couple of years.

"We will invest Rs 500 crore and have 1,000 Planet M stores all over the country,'' Dhoot said. After the acquisition, Next has treated Planet M as an independent business unit.

Says K S Raman, director, Next, "Basically, we are not looking at Planet M to bring in revenues for Next. We are looking at it as an independent unit. Whatever synergies are there, we will share it with all our businesses.''

Apart from retailing mobiles and IT products, the Videocon group also has plans to launch laptops, mobile phones and gaming solutions under the brand name Videocon by the last quarter of 2008.

"We see a great opportunity in laptops, high-end mobile phones and the gaming segment," Sunil Mehta, director (sales and manufacturing), Videocon Industries, told Business Standard recently.

The new product lines will give Videocon Industries an additional turnover of Rs 1,400 crore within one year and the brand a younger profile, say experts.