 "An employee stands at the counter of Micromax mobile phones at a showroom in New Delhi")
The promoters of the telecom handset company Micromax are working on a revamp of the company and the brand, with competition putting pressure on market share in the past year.
Micromax will focus more on software solutions and services that can be offered through smartphones, such as payment of utilities. Its four co-founders say they aim to take the brand among the top five globally by 2020.
Rahul Sharma, one of the four, told this newspaper: “We are rebooting Micromax. We need to change, as times have changed. We want to stay a leader.”
It has had a tumultuous ride in the past five quarters. Top executives have left due to differences with the promoters. Last year, Vineet Taneja, chief executive, and Sanjay Kapoor, chairman, had quit. And, the brand lost nearly four percentage points in market share among smartphones between December 2014 and December 2015, from 18 to 14.1 per cent.
Sectoral sources point to disagreement over how to run the company, between the promoters and professionals, for trouble in the recent past. When asked, Sharma said the promoters were always in charge and provided direction. “We don’t have any legacy issues. Many people have also joined back,” he said, adding they were not in a search for a new chief executive.
Currently, the four co-founders, who own nearly 80 per cent of the equity, lead from the front. Sharma looks after mobile products and branding. Vikas Jain is in charge of partnership development, services, tablets and the computing business. Rajesh Agarwal takes care of the international and LED businesses, and manufacturing. The legal and information technology departments are supervised by Sumeet Kumar, the fourth co-founder.
To achieve the ambitious target of getting into the top five global mobile companies, Micromax has targeted markets abroad, such as the Commonwealth of Independent States (Russia, Ukraine, Belarus, Armenia and Azerbaijan, among others). “We need to take our overseas sales to 30 per cent of the total from 10 per cent currently,” said Vikas Jain.
Experts say the initiative is more an obligation than a choice. Chinese handset majors like Xiaomi and LeEco are putting pressure on established Indian brands by offering superior hardware at a cheaper price. They are also focusing on offering services to provide better consumer experience, helping hold back consumers in a market where brand loyalty is on a decline. Recently, Xiaomi tied-up with Hungama and Chinese peer LeEco held hands with Yupp TV and Eros to provide exclusive audio and video contents on their handsets.
“The days of differentiating oneself by hardware specifications are gone,” says Tarun Pathak, senior telecom analyst, CounterPoint Research. He feels Micromax needs to look beyond the sub-Rs 6,700 ($100) price category. “They should focus on the above Rs 17,000 ($250) category,” he said, apart from increasing its footprint abroad.
To differentiate its brand and products, Micromax will emphasise more on digital solutions and keep investing in software-based solution providers, Jain said. It also plans to revamp its online arm, storemicromax.com, and plans to launch a full-fledged digital store within 2016.
To strengthen its base, Micromax is setting up two units in Madhya Pradesh and Rajasthan, to be ready in a year.
“Once our four plants become operational, we will be producing five million units a month,” said Jain. It currently makes handsets and LED television sets at its Rudrapur unit in Uttarakhand. The second plant in Telangana will become operational in months.
Winds of change
* Micromax revamping begins with new logo and tagline, increased focus on services ecosystem
* Cofounders remain in charge, to provide direction in future as we always did: Rahul Sharma
* Aims to become top five global handset brands by 2020 from current tenth
* Management sets target of 100 million connected devices among consumers by 2018, production capacity to be five million per month March, 2017
* Unveils 20 devices at one go which can be inter-connected; sets 25 percent annual growth target
* To increase portfolio by venturing in other consumer electronic categories
