“Making a mistake is not a crime, but making the same mistake twice is,” Sunil Raina, who is president and business head at Lava International says. Raina of course is referring to how home-grown Lava missed out on boarding the 4G bandwagon at the right time, something that rivals caught on to early, and the rest as they say, is history. But Lava has—seemingly—learnt its lesson and it is now committed to “not making the same mistake twice.”
“We are already working on the roadmap to add 5G smartphones to our portfolio in 2021 itself. Rest assured, we will be part of the transition as it happens this time,” Raina reiterates, while speaking to Financial Express Online over video call.
Raina joined Lava in 2010 as head of marketing and product. He went on to handle multiple roles, including heading Xolo, Lava’s ‘online-only’ sub-brand, before being asked to handle the complete business for Lava International two and a half years ago. The reason why Raina joined the company was simple. He was “quite impressed by the vision of the founders who wanted to build a global brand out of India.”
That journey has been far from simple, but, that unfaltering focus has surely helped as and when the going got tough. Raina has seen Lava go through a myriad of phases and emotions. And its big market comeback in 2021. Raina does not consider it a comeback though—because to make a comeback, you must be gone somewhere, and Lava has always been around, apparently.
“When you are in a highly competitive business, there are always phases and stages that you go through. Sometimes you have to stay silent, sometimes very aggressive. You have to make the right move at the right time,” he says adding, “I don’t know how people see it, but we see it as a continuation of what we have set out to do.”
“It’s a very natural process that when a country is at a certain stage, the brands are also not global at that time. But there is a time when the country hits that threshold point, and then things start to look very different from there on,” Raina explains taking examples, from BBK to Samsung. “China has been doing manufacturing and design for over two decades. And it is only after two decades, that they have been able to produce global brands. Same is the case with Korea, Japan, so on and so forth.”
That said, most of these brands figured out a way to crack the fundamentals of the business early—unfortunately, India did not.
“When I joined this industry, there were maybe 300-400 different brand names floating around. And many of them thought this trading opportunity was going to last forever wherein they will just buy two phones from China and sell them in India, and this was never going to end,” and because they did not invest (in building the fundamentals), “we are at a stage today where there are very few Indian companies left who are trying to put up a fight.”
Closely examining the journey of both India and China, through the 80s and beyond, it is easy to understand why India could simply not do what it is doing today, say 10 years back. While China built skills to supply goods to the rest of the world, India—being the trading economy that it was—was sitting on the other end of the spectrum. Needless to say, Lava was also part of this process.
Lava started off by manufacturing in China. The company set up its own office, design house (R&D) there employing some 700-800 people, mostly Chinese, some Indian. Raina says the company had complete control over operations, but it was still not as strong as it would have liked. But there was no other way as the “phone making skill was just not there in India whether it be manufacturing or design or software.”
But the moment it got the opportunity, which was in 2016, Lava set up local R&D, sent its in-house engineers to China for training for two years, following which it started working on building products out of India. Starting with feature phones, which were easier—and faster—to make, Lava went on to set up its own manufacturing plant in the country. Those two factors saw Lava jump from 5% market share for feature phones in 2018 to over 20% today. Smartphones followed soon after.
Today, India is trying to do “the same thing that China did in the 80s. We may be late, but this is the right direction nevertheless” and Lava seems ready for the next phase.
In the last four or five years, Lava has expanded heavily on manufacturing and R&D and, government’s poster PLI scheme is a “done deal.” The company currently employs about 3,000-4,000 people with a large product (and product marketing) team including 100 odd engineers for research and development.
The company has deployed strong sales, distribution, and service infrastructure with roughly 1,000 plus distributors who directly supply to over 100,000 retail outlets in the country. Raina says Lava is the only company in the country which has a singular distribution, wherein it supplies directly to its distributors and they in turn directly supply to retailers.
“Most other companies either outsource design and have their own manufacturing, or they outsource manufacturing and have their own design, or they outsource both. We have built this unique proposition, wherein both design as well as manufacturing are in our own control,” Raina says, something that allowed Lava to dabble with idea of ‘customized’ phones and bring them to life as the company’s next big comeback vehicle.
The idea is to make the whole idea of use and throw obsolete by tailor making smartphones before and after purchase. The trick is it offer ‘precisely’ what buyers need and Lava is leaving that choice to end-users. Plus, it will also help Lava become very nimble and efficient in upstream and down-stream supply chains. The services—called My Z, Z-Up—are part of Lava’s all-new Z-series budget phones that include the Z2, Z4 and Z6.
Lava says it will offer 66 ‘unique’ ways to tailor-make its new Z-series phones with options of “increasing or changing RAM, ROM, front camera, rear camera(s) and even the colour of the phone.” My Z will allow buyers to choose between 2GB, 3GB, 4GB or 6GB RAM, and pair it with 32GB, 64GB or 128GB ROM in a combination of their choice, alongside the option to choose between dual (combination of 13MP and 2MP) or triple rear camera (combination of 13MP, 5MP, and 2MP) and 8MP or 16MP selfie camera before purchase. Z-Up, on the other hand, will allow Z6, Z4, and Z2 owners to upgrade their phone’s RAM and ROM within the first year of purchase by paying “only an incremental charge for upgraded components.”
“Assuming that you buy a Z2 or an equivalent of Z2 through MyZ program and want to update this phone to say 4GB/64 GB, it will cost you additional Rs 1,949,” Raina says.
My Z will be available from the company’s online store. Shipping will take 7 to 10 days. Z-up will be available at Lava service centres with the company promising upgrades within an hour (after setting up a prior appointment).
Lava is also working on adding more phone configurations to the list. “It looks like we will be doing it but how fast we can do it, that is the question.”
Lava’s vision for 2021, is to reach 5% market share. That is the target. The first milestone. 5G is going to be a key focus for the year.
Though it would depend on factors like chipset, Lava is hoping ultra-affordable 5G phones—for as low as Rs 10,000—would be a reality soon. That is a price segment that Lava usually likes to operate in, but with 5G, the brand will “have to definitely go higher into the Rs 15,000-20,000 price segment,” and it is open to going into that space.
A possible revival of Xolo could be also on the cards. “When it comes to Xolo I think, we are still kind of trying to see how we can position it so it does not end up competing with Lava, and if we can provide something to differentiate it in the market and not make another copy of Lava.”