India’s second largest and home-grown smartphone maker Micromax posted a staggering 130% year-on-year jump in turnover for FY14 to Rs 7,141.23 crore, according to the company’s 2013-14 balance sheet filed with the Registrar of Companies. Its net profit for the same period rose almost 50% to touch R284.10 crore.
Through a sustained marketing campaign (Hollywood actor Hugh Jackman is its brand ambassador) and by launching smartphones with the latest features at competitive price points, Micromax has managed to grow its business in a market that is crowded with global brands like Samsung, Apple, Lenovo and Sony; home-grown competitors like Karbonn and Lava; and Chinese entrants like Xiaomi and Huawei.
According to market intelligence firm IDC, Micromax shipped 2.58 crore handsets, including both smartphones and feature phones, during calendar year 2013, up from 2.19 crore handsets during 2012. The company’s market share increased to 10% from 6% during the same period.
The Gurgaon-based company grew its market share between January and June 2014 to 13%, by shipping 1.6 crore handsets.
Only Samsung sells more smartphones than Micromax in India and, according to IDC, the gap between the two is narrowing.
“Micromax’s handset volumes have grown significantly during calendar year 2013 from the previous calendar year, and we expect the July-September 2014 quarter performance of the company to be phenomenal,” said Karan Thakkar, a senior market analyst at IDC.
While Android-based smartphone makers like Micromax and Samsung are seeing a surge in demand, the same can’t be said of all handset manufactures, especially those operating on platforms other than Android.
India is one of the fastest growing markets for smartphones in the world with a slew of new offerings each year finding favour with the Indian consumers.
Apple, which sells premium products like the iPhone and iPad, saw its turnover touch Rs4,500 crore for fiscal 2014, a tenfold growth from 2010. Its net profit in the same period has grown three times to Rs 119.5 crore.
But not all companies have had a good run in the country. BlackBerry India, the Indian arm of the Canadian handset maker BlackBerry, saw its net profit decline sharply in fiscal 2014, by around 50% year-on-year to Rs 11.46 crore. The company’s revenues nearly halved to Rs 142.05 crore during the same period.
“Micromax’s handset volumes have grown significantly during 2013 from the previous year, and we expect the July-September 2014 quarter performance of the company to be phenomenal,” Karan Thakkar, a senior market analyst at IDC said.
The significant improvement in Micromax’s performance over the past two years can be attributed to the company’s ‘value for money’ proposition. Placing its products with specifications similar to that of foreign brands but at a significantly lower cost has also helped the company gain market share in the last couple of quarters.
“According to our research, most Indians replace their phones every one to two years and aren’t willing to spend Rs 40,000-50,000 on new smartphones,” Thakkar said. This gives a huge opportunity to Indian vendors like Micromax, Karbonn, Lava and Chinese vendors like Huawei and Xiaomi, which price their phones competitively while providing same specifications as other foreign brands.”
Thakkar also said that a lot of young Indians that were looking to buy smartphones with the latest specifications’ were more value conscious than brand conscious.
Commenting on the company’s performance, a Micromax spokesperson told FE, “We have always believed in bringing affordable innovation to Indian consumers, which is in sync with their interests and needs, and would continue to do so. We would continue to challenge the notion that great technology comes at a higher price by introducing innovative products that simplify needs of our consumers and wish to grow ahead of the market. Going forward, a large chunk of our efforts will be concentrated on coming up with products and services which act as solutions to the needs of the fast-evolving consumers.”
Ringing cash till:
Shipped 2.58 crore handsets during calendar year 2013, up from 2.19 crore handsets during 2012
Market share increased to 10% from 6% during the same period
Market share between January & June 2014 rose 13%