Sistema to foray into financial, retail sectors

Sistema, the largest private sector consumer services company in Russia, has plans to enter the Indian financial and retail space.

The company will enter the Indian market through its bank, Moscow Bank for Reconstruction and Development (MBRD), which has developed into one of Russia's leading retail banking networks. In the past, the MBRD acted primarily as an in-house treasury function for Sistema.

In 2006, MBRD accelerated the development of its retail banking business and increased its retail credit portfolio to $370 million from $58.2 million in the previous year.

Russian Prime Minister Victor Zubkhov today inaugurated Sistema first office in the capital, which will help the company bring its businesses ranging from telecom to media and real estate to India.

Disclosing company's plan for its retail foray, Alexander Goncharuk, president and chief executive officer, Sistema JSFC, told Business Standard that they were looking for opportunities in the sector. "But primarily, we want to enter the Indian market with retailing of mobile phones," he said.

Currently, Sistema has a presence in the Indian telecom sector, through a 51 per cent stake in Shyam Telelink, and plans to spend with partners between $4 billion and $7 billion to roll out a pan-Indian network.

Shyam Telelink was awarded unified telecommunication licenses for provision of fixed-line and cellular service in 21 Indian circles last month.

"The company will increase stake in Shyam Telelink to 74 per cent in the next 1-2 years from 51 per cent now," Goncharuk said.

He further said that the investment would a strategic one and initially focus on building out an integrated national telecommunications network and providing Indian customers with enhanced telecommunications services.

"At the moment we are focusing on telecom and we are keen to enter the Indian financial sector in the second stage," Goncharuk said.

"Entering into the Indian retail sector might be more difficult than entering in the telecom. But we will try," Alexander Chinyaev, Sistema's chief representative in India, said.

The company's retail business is operated through the Detsky Mir group and it owns the leading retailer of children's goods in Russia under the same name. The retail segment contributes around three per cent of Sistema's revenue.

The Russian giant also wants to bring its expertise in development, technology, infrastructure projects, health-care and tourism.

The company is also keen to tie up with Bollywood producers for producing Hindi films through Sistema Mass-Media, which produces 40 hours content per month for Russian media.