Warring brothers put Onida on block

Two members of the Onida founding family have broken off with the third main shareholder and begun talks with a rival group led by Videocon and Kishore Biyani’s Future Capital to sell a substantial stake in the main holding company.

In a development fraught with enormous implications for the consumer durables industry and for one of India’s best-loved TV brands, Sonu Mirchandani and Vijay Mansukhani, who together hold 66% in Guviso, the holding company for Mirc Electronics, have put their stake on the block. Sharp differences with Gulu Mirchandani, Sonu’s brother and the chairman and managing director of Onida, are said to be the main reason.

Gulu, who holds the remaining shares, has been the public face of the company. Sonu and Vijay Mansukhani, the co-brother (Vijay and Gulu’s wives are sisters), have stayed in the background till now, but now want a change in their position. Vijay is on the board of Mirc Electronics, but Sonu is not. Sonu Mirchandani runs Monica Electronics, which manufactures a range of white goods including CTVs. Under an arrangement with Monica, Mirc markets these products under the Onida brand.

The two partners are also believed to be upset about Gulu’s control over the company. They feel that they should also have equal share and deciding power. The holding company’s name, Guviso, has been formed by the first two letters of the three individuals.

The development is significant for the consumer durables industry, which has often been plagued by low margins, heavy promotional costs and stiff competition. But Onida has always managed to keep its head above water. It is the third-largest colour TV brand with an estimated market share of about 10%.

It is one of the few Indian brands to have survived the onslaught of the aggression displayed by multinationals, especially the Korean companies in a fiercely-competitive durables market. The brand enjoyed an iconic status with its famous ‘Neighbour’s Envy, Owner’s Pride’ tag line. It is expected to fetch a valuation of Rs 600-800 crore, though its market cap is just about Rs 320 crore

(Source: Economic Times