Rahul Sharma, co-founder of Micromax, is not a superstitious believer. But when he refocused his attention on the struggling consumer electronics company, one of his decisions was to return to the company’s old office at Udyog Vihar Phase V in Gurgaon. Earlier, when the flight was good, Micromax relocated its base approximately 1 km away to a larger office in the adjacent Stage 4.
Back in the same building where it began it’s journey in smartphones more than a decade ago and where it has climbed to dizzying heights, is a symbol of what the company aims to achieve in the future – writing the same success story again.
“We want to regain our old position,” Sharma says. “This is the goal, we would not Have Otherwise made this return.” “We Understand the perfect place for esta market and you will have a product Disrupting Micromax All These wonderful points. We have the infrastructure and the manufacturing setup and are investing a lot of time in research and development. We are here to disrupt.”
As any market leader will attest, getting to the top is no easy task. The hardest part is staying there. And since 2015, Micromax has found out exactly that. The past decade has been one of the two contrasting halves of a company that was founded in 1991 as a distributor of computers.
The company was one of the first to enter the smartphone market in India in the late 2000s, and it has seen a massive surge in the first half of the last decade. By the end of 2014, it had overtaken the long-standing market leader and Samsung in South Korea as the nation’s largest smartphone maker. It was like David dropping Goliath, but it didn’t last long.
“People usually come shopping without any brand preference. They list their requirements and budget and rely on us to guide them. Before the Chinese entered the market, Samsung was the only brand people demanded. Then Micromax joined this league,” says Amol Ragwad, who runs A multi-brand mobile outlet in Kanpur. “This is when I knew Micromax made it big.”
The entry of seasoned Chinese players such as Xiaomi, Oppo, Vivo and OnePlus and India’s rapid switch from 3G to 4G supported by the cheap data plans launched by Reliance Jio has led to the company’s offering. It cannot withstand the attack.
Micromax’s descent during the second half of the decade was as dramatic and fast as its journey to the top. From 19 per cent in 2014, its market share declined to just 0.5 per cent in 2019 in India’s smartphone market of 158 million units – the second largest in the world.
In the process, the company’s revenue, earnings, and valuation declined, while private equity investors also dismissed. In 2015, the unlisted company was valued at Rs 21,000 crore, but today it is less than Rs.1,500 crore. Revenue in 2014-2015 was Rs 10,451 crore and was making a profit of Rs 364 crore. By 2018-19, revenue shrank to less than the quarter at Rs 2,443 crore, with a profit of Rs 145 crore.
“We are not alone,” Sharma says. “All others have also lost their business to the benefit of the Chinese.” “What was happening was that we were feeling a stroke of the guards and could do nothing but ducks. They came in hordes and it was hard to pinpoint the real players. They weren’t making money, but they were buying market share. We have the bandwidth to compete, so it is.” I decided to hold back. To use the cricket analogy, I knew we’d get a full throw at some point. We needed to wait and hit that outside the park.
Micromax is preparing for its second rounds, and the full draw has come in the form of anti-China sentiment after the two countries clashed in the Jalwan district of Ladach on June 15th. Most of the focus is on smartphones, a product that has come to symbolize China’s growing influence in India.
Any real drop in demand, no matter how small, for Chinese products here, will provide a huge opportunity for Micromax. The timing seems a good fit for the company to arrange a big comeback, but will it be able to pursue that premise?
The Nationalism Card
The impact of anti-China sentiment is already emerging in the market. In the second quarter of 2020, the share of Chinese smartphone makers fell to 73 percent from 82 percent in the first quarter. Sharma says they began working on return plans more than a year ago when the United States and China embodied themselves in a global trade war.
Relations with India will suffer a breakdown, anti-Chinese sentiment will turn negative and the company will be ready to embark on its second roles, however, this was not expected. “It’s more of a coincidence,” Sharma says. “You can not make things like phones and build a fast ecosystem. It takes a lot of time.”
“We have been working on this for a year now. The geopolitical tensions are continuing for the past two years. Separately, we have been working very actively with the government here to work on building the entire ecosystem.”
Ecosystem refers to the hundreds of components that go into smartphones, which are either not manufactured in the country at all, or where the range is low. India imported $ 28 billion worth of electrical components and machinery from mainland China and Hong Kong in the past fiscal year.
Policymakers want India to reduce its dependence on China and become self-sufficient. In April, the Ministry of Electronics and Information Technology launched a product-related incentive plan for smartphone manufacturing, which provides a 4-6 percent incentive for increased sales at FY20 levels.
The scheme specifically favors domestic brands. International companies are totally excluded in the case of phones costing less than 15,000 rupees, a category that accounts for 75 percent of smartphone sizes. There is no such requirement for domestic companies.
Also, local firms need to invest only Rs 50 crores in the beginning and Rs 200 crores gradually over four years to take advantage of the incentives, while for others, it is Rs 250 crores initially and Rs 1,000 crores over four years. Sharma believes this will help create a level playing field for domestic brands against cash-rich Chinese companies.
“It’s a great scheme and makes us competitive in the market,” he says. ” It’s not that everything comes from outside. Even today at least 50-60 per cent of the supplier ecosystem is already in place. This scheme will help push the MSMEs to invest more.”
While this concerns the manufacturing side of the business, Sharma believes the current mood of the nation will save him a lot of dollars on marketing – a key area the Chinese have made everyone else, including Samsung.
“This whole anti-China thing is going to cost us a lot of marketing dollars,” says Sharma. “This time, it’s not just business alone, it’s about the country and something I feel with my heart. Within a week after the lockdown was lifted, all of our smartphones were sold out – everything we have, including stocks that are 2-3 years old.
It is when we started wondering what was going on. Then we realized that people only want Indian products. We want someone from India who comes and makes it work. “
“Consumers buy Chinese phones because they have no choice. But if I give you a great product, which is as good as the competition with our secret sauce that has the best features, and it’s from Micromax, an Indian brand, it will be different now.”
What the company aspires to is to regain its lost glory when it was one of the top 10 phone companies in the world. He even had Hollywood star Hugh Jackman as his brand ambassador. To regain this position, Micromax plans to launch at least 20 smartphones over the next two years, and has prepared a War Fund to fund its expansion plans.
Besides the Chinese attack, the company has struggled with the move from 3G to 4G. Its dependence on supplies from China left it with a large surplus of 3G phones in stock when the market switched to 4G connectivity in 2016. When it was ready with its own devices by the end of the year, the de-trading revealed its weakness in the digital realm.
“I do not want to focus too much right now what went wrong, but we learned what we learned. We will focus a lot on R&D and investment there. We will have minimal dependence on external (imports). First we will focus on the software side of it and we will do it 100% 100 here in India. Then slowly within 12-18 months we’ll start building the capacity of other devices, “he admits.
While the focus is now firmly on the mobile market, the company is also looking at the television sector. It does not differ much from the strategy adopted by other smartphone makers, including Xiaomi, Oppo and Realme, which has diversified into smart TVs.
Seen as a logical stretch, Micromax was one of the first to do so in 2012 itself. But as in the case of smartphones, its presence in this category has also diminished in front of the Chinese companies, which is something they want to correct.
With its plants in Bhiwadi and Telangana, the company has the capacity to produce 20 million phones annually and 4 million televisions.
“At the moment, we have 25 models, including 15 smart TVs with prices ranging from 8,500 rupees to 50,000 rupees. We have a 3 per cent share in the market currently, but we would like to be among the top five players like us two years ago,” according to the spokesperson In the name of the company.
In the past, the company has been involved in other consumer electronic products such as tablets, air coolers, air conditioners, refrigerators, water purifiers, and even washing machines. These are all products that require high investment, relatively low volume and margins.
Not surprisingly, the flirtation was short-lived and the ban on air conditioners no longer produced any other products. Even in air conditioners, it has no plans for a major expansion.
“They thought the strategy of getting these high-cost buying items and selling them in India would work just as it did in smartphones,” says one industry insider. “Consumer durables are not used in India. Consumers demand after sales service where brand credibility is important. Micromax had nothing.”
An Uphill Task
The Indian smartphone market has changed in the last few years and will remain dynamic due to the inception of 5G. So, the likelihood that Micromax will overtake its larger, more technology-oriented competitors is questionable.
“It’s a matter of scale now. The only non-Chinese brand with real scale is Samsung. Do you expect Micromax to start making 100 million smartphones a year a year and a half from now when 5G is around?” Says Navkindar Singh, Research Director, IDC: “I don’t think it’s possible, so don’t pile up the numbers.” The range doesn’t come overnight.
Just because the situation has suddenly turned in your favor doesn’t mean you can make 2 million phones overnight. This takes investment and commitment. If local brands start this journey and plant seeds today and remain disciplined, they can see the fruits of their efforts two years later. “
It is also not known how long consumers will continue to avoid Chinese products. Geopolitics affected consumer sentiment in the past as well, but it never continued beyond a point.
“It’s something we asked and we discussed it with several people,” says Sharma. “The result is that this time is different.” “This is not in the short term.
People have lost their jobs and livelihoods, or have seen profits decline. Moreover, there has been the Ladakh case, which is related to the safety and security of the country. This is another emotional issue.”
Another problem that plagued the company in the past was its lack of focus on core businesses as it sought to diversify into other areas such as televisions and air conditioners – products that are still part of its portfolio.
A former company employee told Business Today that lack of focus cost the company dearly when the Chinese attack began. He is not convinced that it is any different today.
“The distraction has cost the company. There were differences of opinion between the CEO (Sanjay Kapoor, formerly Airtel) and the promoters and the impact on morale,” he adds. “What I hear from my colleagues who are still in the company is that they just want to use the current sense to scale the business and make money fast with this.
The long-term vision and plan are not there.” Experts believe that the competition in the smartphone market will intensify in the coming days.
“The Chinese are very competitive. They will not only turn away at the first bump on the road. Xiaomi has been surprised not only by maintaining its leadership in the market, but by a high share – almost a third of the market. Vivo also has Vivo, Associate Director, Counterpoint Research,” said Tarun Pathak, Associate Director, Counterpoint Research .
“The opportunity is now available, but the window will close soon. What lies next is a tough mill in the market where every rupee has to be won. If they have a reasonable strategy, they are willing to struggle and fight, he might break it.”
Micromax back in India with ‘IN Mobiles’
A boycott of Chinese companies is called for following the outbreak of unrest on the Indochinese border Local cell phone companies like Micromax and Lava spoke of a return to the market amid marginal tensions.
Lava has also launched a new smartphone, but Micromax has not launched a smartphone in India recently. Now Micromax has announced its return to the market. Micromax’s CEO and Co-Founder posted a video about the return to the wireless market.
Rahul Sharma said that he admits that he made some mistakes, but it happened because everything was new to him.
The company introduced “IN Mobiles”, which means IN to India. Also Read – Micromax Days Sale Event Has Impressive Deals On Flipkart: Details
Some media reports have suggested that Micromax could launch a new line of smartphones next month.
The included devices cost between Rs 15,000 and the budget price. According to reports, the company may offer MediaTek Helio chipsets for these devices, which will be introduced in the latest version of Android.
Micromax is an Indian smartphone brand and there was a time when the company had a strong and reliable position among users.
But as Chinese smartphone brands began to dominate the Indian market, consumer sentiment towards all Indian brands, including Micromax, weakened.
But after the recent ban on some Chinese apps in India, people are turning to Indian brands instead of Chinese smartphones.
This is why Micromax is once again gearing up for a strong comeback in the market, and the company hinted at it through its official Twitter account. Micromax India tweeted a video from their official face account –
Sharma said, “We may have spent Rs. Currently 5,000 segments as this segment is also shrinking in the country.
People are looking for more impressive products. ” He added, “It’s going to be a very nifty experience for us – close to the standard Android experience. No blueprints, no ads, nothing. We’re not going to take your data, we won’t.” “
Rahul Sharma, co-founder of the company, spoke about it in a recent interview. Before the official announcement, Micromax is teasing about launching new phones through its social media handles. Micromax has not brought any new devices to market for a long time.
However, the company continues to have a presence in the market with older phones.
Micromax had previously shared a post with a video on its official Twitter account on the occasion of the 74th Independence Day. In this, the company made it clear that it will soon be launching a new smartphone in India. In addition, the company’s co-founder, Rahul Sharma, wrote in his tweet: “Let’s make a fresh start”.
It’s clear that the company is poised to make a comeback in the market and will see a new Micromax smartphone soon.
The last smartphone launched by Micromax was the Ion Note, which launched last October. Buyers can still buy it and the listing online listing shows its price at Rs 8,199. It is believed that Micromax could benefit from the anti-China stance. The company is talking about offering premium features for new phones.
P.L.I. Regarding the program, the government has launched the initiative to promote mobile phone production in India. Under this program, the government will provide a 4% to 6% incentive for mobile phone manufacturing in India.
The government expects this to increase the number of Made in India smartphones. In addition, millions of jobs will be created. Micromax’s name is also one of the companies that benefit from the PLI system.