Indian handset maker Micromax will invest Rs 200 crore into washing machines, refrigerators and air coolers, over the next 12 to 18 months, as it diversifies into new segments and moves towards becoming a consumer electronics brand.
The company expects consumer electronics to contribute 30%, up from 20% now, to the overall estimated revenue of Rs 5,400 crore by 2020, which will also be a 20% growth over its revenue estimate for the year ending March 2019. The share of mobile phones in revenue will come down to around 70%, from 80% now, a top executive said to ET.
Semi-automatic washing machines, direct cool refrigerators and air coolers will begin selling across top cities by mid of this month, and the company, which is struggling in the mobile phone space, plans to take 3% share of the market in each of these consumer electronic segments, which have a market of 3 million, 12 million and 4 million, respectively. “We want to capitalise the brand value Micromax has built over the years and move deeper into consumer electronics,” said Rajesh Agarwal, co-founder of Micromax Informatics to ET.
The Gurgaon-based company expects its overall revenue to be around Rs 4,500 crore by March 2019, of which over a fifth is expected to come from consumer electronics. The company presently sells LED televisions, a segment where it has a 6-7% share.
Agarwal added that the company is preparing to make PCBs for televisions in India, which will feed into its existing local manufacturing of the segment and has already set up surface mounting technology lines for the same. It is also evaluating production of refrigerators and washing machines and aims to sell only India made products in these two categories within one year.
Agarwal said that the funds for expansion will come from internal cash reserves, although it is open to raising funds through private equity or debt. “We’re open to everything, but we’re not actively pursuing anything. We don’t have plans for an IPO for next couple of years,” he added.
ET reported that the company is also re-organising its go-to market strategy, under which it will focus on 4G feature phones and mid-segment smartphones. It will also adopt different set of distribution channels for each category, a change from present where all distributors sell all phones in the company’s portfolio. “Feature phones can have two layers of distributors, and then dealers and retailers since the number of towns to be addressed have to be more than smartphones,” he added.