The Hindu Business Line : Modi Group turns focus on new business sectors

New Delhi, June 25 When Mr B.K. Modi forayed into the telecom space in 1995, he was a much bigger name compared to the likes of Bharti’s Sunil Mittal. He had a number of joint venture companies going for him, including Modi Xerox (photocopier machines), Modi Luft (aviation), Modi Olivetti (PC hardware) and Modi Alcatel (telecom equipment). But over the last 13 years, the BK Modi Group has exited from these joint ventures and has now liquidated its holding in Spice Communications, the telecom services company.

Explaining the rationale for the numerous exits, Mr Dilip Modi, Vice-Chairman, Spice Communication and heir to the BK Modi Group, told Business Line, “These decisions were taken given the circumstances that prevailed at that point. This proves that the BK Modi Group is flexible to move ahead into areas which offer opportunity rather than holding on to business for the sake of it.”

Setbacks

As far as telecom is concerned, Modi’s exit is not surprising given that Spice was not able to expand its network beyond the two circles of Punjab and Karnataka. While the company had launched services in Kolkata also, it had to sell out to Bharti Airtel in 2001, after its Australian joint venture partner Telstra decided to walk away.

That apart, the company faced a series of setbacks in the telecom sector between 2000 and 2002, just when the mobile market was picking up pace. First, it was disqualified from bidding for Videsh Sanchar Nigam Ltd, which was the only international long distance operator in the country at that time.

The biggest blow, however, came when Spice could not manage to get any new licence under the fourth cellular bidding conducted by the Government in 2001. Ironically, Idea Cellular, which has now bought out Modi’s stake in Spice, was created as a result of the fourth cellular bidding process.

“I think losing out during the fourth cellular bidding was the turning point for us. We had missed the bus for mobile services,” admits Mr Modi. The latest and decisive blow came recently when Spice’s application for new licences was rejected by the Department of Telecom.

Moves court

While the Modis have gone to court on that issue, they are not likely to get spectrum for another 8 months even if they were to get a favourable order from the court.

“We were facing a situation where we were uncertain about the future of this business given that there is no sight on spectrum availability for another year or so. By that time, existing operators would have added at least 60 million subscribers, making it very difficult for us to venture as a new operator,” Mr Modi told Business Line.

The younger Modi has taken over the reigns of the Group’s future and is betting big on their new businesses. This includes Cellebrum (value-added services for mobile), Spice Mobile Ltd (handsets), HotSpot (retail chain for mobile related products), Omnia BPO Services and Spice World (entertainment and multiplexes).

“We see a huge potential in these businesses. We have learnt from our past experiences that it is better to stay invested in areas where you think can become a big player,” said Mr Modi.

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