Micromax eyes comeback in India's smartphone market with corpus of Rs 500 crore

KEY HIGHLIGHTS

• Micromax plans to launch at least 20 new products in next 2 years, to invest Rs 500 crore in R&D and manufacturing by end of next year

• Company aiming to regain lost glory in smartphones where it had 19% share in 2014. Its share has slid to 0.1% in Q2 2020

• Anti-China sentiment has provided the company with the necessary tailwind. Government's PLI scheme also helping

• Wants to reduce component imports in the next few years. Also looking at exports out of here

Indian consumer electronics brand Micromax is making a grand comeback in the domestic smartphone market hoping to capitalise on the rising anti-China sentiment in the country. Chinese smartphone manufacturers such as Xiaomi, Vivo, Oppo, Realme and One Plus account for over 70 per cent of India's 158 million shipments per annum smartphone industry.

With co-founder Rahul Sharma back at the helm of the company, Micromax has prepared a war chest of Rs 500 crore for R&D and manufacturing to be spent by the end of next fiscal and plans to launch at least 20 new models over this period. The first of its new smartphones would hit the market by the end of September.

"We want our old position back in this market and to do that we will launch multiple phones. We know the pulse of this market and understand the sweet spots. Our phones will come in all those sweet spots and we would look to disrupt the market," says Sharma. The campaign against using Chinese goods started by some organisations like the Confederation of All India Traders (CAIT) is a big factor working in the company's favour. Analysts say consumers are now actively looking at non-Chinese phones but some are dismayed by the lack of options and are forced to settle for the Chinese ones. The comeback of Micromax seeks to exploit this opportunity.

"We have been working on the comeback for much longer. We actually sensed an opportunity on a global scale when the US-China trade war began over a year ago. This anti-China feeling in India is recent and you cannot plan on launching smartphones overnight," Sharma says. "It works in our favour. Somehow it feels like the universe is conspiring to help us in our endeavour. This is a very important and significant industry and in future you do not want to see anybody in India holding a device which is of a different country of origin. It has to be Indian."

Before the Chinese trooped in, Micromax had grown to become the second-largest player in the market and was giving a tough fight to the then leader Samsung. The entry of the brands from across the border with their deep pockets saw Micromax getting outspent in the market. It had a mere 0.1 per cent share in smartphones in Q2 of 2020. Pockets of those brands remain deep but the government's Rs 41,000 crore PLI scheme which incentivises domestic companies over foreign firms will aid Micromax in the renewed fight against the Chinese.

"The scheme is very helpful. The incentive of 4-6 per cent in incremental sales makes us competitive in the market. Almost 90 per cent of the market today is for phones less than Rs 15,000 so that suits us too," he says. "We have the infrastructure and manufacturing set up in place and over the next few years we will build the entire ecosystem of components within the country beginning with the software and then the hardware."

The company is also looking at this as an opportunity to export which will give it additional scale. The more phones it produces and sells, the more competitive it will get against the global players. Currently, the company has a cumulative production capacity of 20 million phones per annum - feature and smartphones combined, in its two factories in Bhiwadi in Rajasthan, and Telangana.

"This is not only a national but a global opportunity. Many different countries are looking to move away from China since most of the brands have been banned due to the US-China conflict. India has the best chance in the mobile phone industry as global players since the market is very sales oriented," Sharma says. "Countries like the US, UK, Europe are looking at opportunities to source from elsewhere. Which can give us additional scale and ensure Micromax can combat the Chinese," he adds.

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