IPO should be driven by need for funds: Micromax cofounder

Written by Anand J | Updated: May 3 2014, 13:23pm hrs
MicroMicromax should be among the top two in the open market for dongles: Vikas Jain. Reuters
Micromax, the country's second largest smartphone seller after Samsung, is looking to earn $1 billion in sales in FY14 on account of its performance in the Saarc markets. The company had recently launched handsets in Russia. In an interview with Anand J, Micromax cofounder Vikas Jainspeaks about the company's plans for an IPO, upcoming devices onthe Windows operating system and the new wearable devices Micromax is planning. Excerpts:

How successful has the Rs 10,000-plus price point category been How has it helped your margins

We have never played purely on pricing. We are looking to add value to our portfolio of products to remain profitable across segments. It would be wrong to assume that the margins are lower on feature phones. One segment does not make for the expenses of the other segment. Our average selling price (ASP) for phones has gone up from Rs 1,700 to Rs 2,800. Instead of pushing the older technology, we are more interested in upgrading the technology and maintaining those standards.

With the handset market so commodified, where are you investing

We are looking as to what experiences we can give to the consumers. We are also looking at what a consumer wants in a 4.5-inch or a 5.5-inch display and are working on providing value additions to the consumer. Simultaneously, we are looking at user interface (UI) and software aspects. For instance, how a camera app can help create an image that is a replica of one's personality. The integration of the ecosystem of Google with the phone is also being taken care of.

What can we expect from the Windows phone coming from the Micromax stable

What happens is a lot of me too players, who want to launch similar products and probably play on the price part of it. In doing so, they take away the consumer experience. Hence, there is enough caution at Microsoft about the minimum experience they want to offer on a Windows device. You need a certain RAM to run Windows apps. We are looking at 1GB of RAM and more, depending on what kind of apps we see people using on those handsets. We are enthused by what Microsoft is doing. Both the companies were willing to come together and go to market together, provided both can add value to the consumer.

You said Micromax might touch $1 billion sales in FY14. What next Are you looking at wearable devices

The numbers will keep growing. What is driving us is the awareness as to what is the next level of consumer experience we can give. We feel the current form of wearable technology is promising. It is more like an accessory now but has to become a primary device. The key utilitarian apps are still missing, such as those on health and telemetry. The end consumer is not looking at carrying more electronic devices. It will be a success only if it could do something which has not been done so far. We are working on a few wearable technology devices but all the R&D products will not see the market. It also depends on our estimation of how big the market could be, we might chose to launch it commercially.

How has been the success for the company in other electronic devices

Today, Micromax should be among the top two in the open market for dongles. In 15 months of launch, we are closer to double digits in market share and we had key learnings on the way.

You saw quite some success in neighbouring markets. You are now expanding in Russia. Why Russia

Our volumes and scale in India help us in the other Saarc markets and these devices have brought a lot of value to the consumers. Russia is interesting because it is a fairly evolved market in terms of consumer preferences and we have generally done well where there are aspirational consumers. The scale in India has given us the power to leverage in a 4G market like Russia and learning from those experiences in other geographies will be key. In Africa, where pricing is the key, we try to refrain from entering such markets. So we missed out that market deliberately despite being big.

Can we expect an IPO after the election

We will see the financial environment of the country and the requirement of funds for the company. The company is profitable, so the requirement of funds needs to propel us towards an IPO rather than us wanting to go for one. If there is a good M&a opportunity, we would look at raising money from primary or secondary markets. We keep looking at companies in other markets but have not found anything exciting yet.