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Micromax to set foot in new segments, invests Rs. 200 crores in Consumer Electronics Segment

Micromax Consumer Electronics

Micromax is all set to foray in the consumer electronics segment to diversify its operations. The handset maker will invest Rs 200 crores into washing machines, refrigerators and air conditioners as it moves towards becoming a consumer electronics brand.

India: Micromax is all set to diversify its portfolio by investing Rs.200 crores on machines, refrigerators and air coolers, in the next 12 to 18 months, as it moves towards becoming a consumer electronics brand.

The company is anticipating the consumer electronics segment will now contribute to 30%, as opposed to 20% earlier, to the overall assessed revenue of Rs 5,400 crore by 2020. This will also be a 20% growth over its projected revenue for the year ending March 2019. The percentage of mobile phones in the revenue will decrease to around 70%, from 80%, as quoted by a top executive.

The co-founder of Micromax, in an interview said that the company wants to capitalize the brand value that has been built over the years and move further into consumer electronics

Semi-automatic washing machines, direct cool refrigerators and air coolers will begin sales across different cities by mid of March, and the company, which is struggling in the smart phone segment, is planning 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.

The company estimates its overall revenue to be approximately Rs 4,500 crore by March 2019, wherein a fifth part of total is expected to come from consumer electronics. The company is currently selling LED televisions, where it has around 6-7% of the market share.

The company is getting ready to make PCBs for televisions in India, which will be added into the existing local manufacturing of the segment and has already set up surface mounting technology lines. It is also assessing the production of refrigerators and washing machines and aims to sell only domestically produced products in these two categories within one year.

The co-founder also claimed that the funds for expansion will arise from internal cash reserves, however it is okay with raising funds through private equity or debt. The company does not have any plans for an IPO for next few years.

The company is planning to re-organize its market strategy, wherein it will focus on 4G phones and mid-segment smartphones. It will also implement a different set of distribution channel for each category which is different from current scenario where the distributors sell all phones in the company’s portfolio. Featurephones will have two layers of distributors, followed by dealers and retailers. For smartphones, only one layer of distribution will be needed.

According to TechSci Research, India is an emerging economy, with a growing middle-class population and rising per capita income. Built-in kitchen appliances are gaining popularity in India due to rising urban population, growing purchasing power, and increasing expenditure on promotional programs by companies to increase consumer awareness. With the production facilities of almost all major global players in India, the country is also emerging as a major production hub. The market penetration of air conditioners is also low in India, which offers a huge opportunity for leading air conditioner players. Moreover,. In the recent times, the outlook of consumers has changed drastically towards air conditioners. The country experiences extremely hot and humid summers for 4-6 months, because of which majority of air conditioner sales take place during this period. Introduction of super-efficient technologies, reduction of prices, increasing number of household units are some of the factors that are anticipated to boost the sales of air conditioners in India in the next five years.

According to the recently published report by TechSci Research, India Air Conditioners Market, By Product Type, By End Use Sector, By Tonnage Capacity, By Top City Competition Forecast & Opportunities, 2011–2021”, the air conditioners market in India is expected to reach US$ 6 Billion by the end of 2021. Light commercial air conditioners segment led the country’s air conditioners market in 2015 and is expected to maintain its position over the next five years, owing to their advantages like energy efficiency, low running cost, easy availability and integration of latest technologies. Southern states in India generate the highest revenue from air conditioners in the country, followed by northern states. Few of the leading players operating in India air conditioners market includes Voltas, LG, Daikin, Samsung, Blue Star and Hitachi, among others.

According to the recently published report by TechSci Research, “India Built-in Kitchen Appliance Market By Product Type, Competition Forecast and Opportunities, 2021”, built-in kitchen appliances market in India is projected to grow at a CAGR of over 17% during 2016 - 2021. Growing consumer expenditure on luxury goods, coupled with an increasing number of distributers and dealers of built-in kitchen appliances collaborating with leading online portals such as Flipkart, Amazon, etc., is expected to boost consumer adoption over the next five years. Demand for built-in kitchen appliances is predominantly concentrated in South and North regions of India. In 2015, both of these regions accounted for around 63% of the market share in India built-in kitchen appliances market, and these regions are expected to maintain their dominance through the forecast period as well.

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