Noida-based S Mobility, formerly Spice Mobility Ltd., is planning to shut down both its mobile handset manufacturing units at Baddi, Himachal Pradesh, underscoring the weakness in the feature phone market as customers make the leap toward smartphones.

The company is also kicking off a restructuring process that will involve the transfer of its mobile handset business to Spice Retail Ltd, a wholly owned subsidiary, according to a company notification. The transfer will happen by way of a slump sale at book value.

“We had kept a skeletal presence at Baddi over the past few months, with the hope of reviving production, but the board believes that production will be unviable at current low volumes,” R. Bothra, Vice President, Corporate Affairs, was quoted as saying in the notification.

S Mobility now completely depends on third-party makers of handsets to sell its products, which it distributes under the brand name ‘SPICE’.

“The closure of the said units would not have impact on the company’s performance as our handsets are now contract manufactured and customised for Indian conditions before importing,” Mr. Bothra added.

The company, according to people with direct knowledge of the matter, is turning its focus from mobile to mobile Internet services and will be concentrating on newer technologies like 3G and 4G.

The last year has seen S Mobility witness continuous pressure on its core handsets business, while revenues from its services unit showed traction for the quarter ended March 31, 2013.

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