Gionee Indias minority shareholder Arvind R Vohra buying out the Indian arm of Gionee and entering into a long-term brand licensing deal, three senior industry executives said. They expect the total deal size to be Rs 200-250 crore including Rs 125 crore to be paid outright for brand licensing.
The deal is likely to be closed in 2-3 weeks, the executives said. Emails sent to Vohra, Jain, Gionee India and the Chinese firms global sales director David Chang, who handles its India operations, did not elicit any response till Tuesday press time.
Pardeep Jain, promoter of Karbonn Mobiles holding entity Jaina Group, and Vohra signed a letter of intent and non-disclosure agreement with Gionee Communication Equipment, parent company of the Chinese smartphone brand, for acquiring its 74% stake in Gionee India last Thursday in Hong Kong, The balance 26% in the company is already with Vohra and his family.
According to the sources, the Indian partners will have over 10 years of right to use the Gionee brand and, apart from an outright payment to Gionee for the brand licensing, they will also pay a royalty to the Chinese company.
They said Vohra and Jain have already indicated to trade partners that they will revive the Gionee brand before the festive season in October with feature rich yet aggressively priced smartphones that can compete against market leader Xiaomi.
Vohra was Gionee Indias CEO but stepped down last July when the Chinese firm decided to directly control the Indian operation. Chang was subsequently appointed to lead India operations but Vohra continued as executive director by virtue of his shareholding.
Once an aggressive brand, Gionee India took a back seat in the past few months due to financial woes of its parent.
In January, a Chinese court had frozen Gionee chairman Liu Lirongs 41.4% stake in the smartphone maker for a period of two years because the firm failed to pay a number of its suppliers, according to media reports.
As per estimates, Gionee currently has around 2-3% share in the Indian smartphone market and industry executives feel it may not be difficult for Vohra and Jain to revive the brand since it still has a connect with consumers and both the promoters are seasoned professionals in the mobile phone business.
While Vohra had launched Gionee in India in 2012 before the entry of other Chinese brands such as Xiaomi, Oppo and Vivo, Jain has been in the mobile distribution business since 1995 for brands like HTC, Samsung, Motorola and LG before starting Karbonn.