Micromax might be on a comeback trail. After ceding considerable ground to Chinese smartphone brands, especially Xiaomi, in the last two years, the homegrown handset-maker has registered a significant jump in profits. In FY17, Micromax’s profits nearly tripled to Rs 365.8 crore, as per a filing with the Registrar of Companies, ET reported. That is mostly due to a tightening of costs, wherein marketing expenses have been cut down majorly. While tripling profits is cause for cheer, Micromax continued to record a decline in topline for the second consecutive year.
Revenues have dropped more than 42 percent to Rs 5,614 crore in FY17 compared to Rs 9,825 crore a year ago. This essentially means that Micromax sales have halved in two years. In 2014-15, revenues stood at Rs 10,450 crore for the biggest homegrown phone manufacturer. And that is the year Xiaomihappened to the Indian smartphone market. Micromax’s sales took a direct hit as its Chinese rival soared and eventually developed a stranglehold over the budget-phone segment, where Micromax was the leader. Xiaomi became India’s largest smartphone vendor at the end of Q3 2017, going past even established incumbents like Samsung.
Micromax chief Rahul Sharma has said in the past that his company’s lackluster sales performance was due to the dearth of 4G phones in its portfolio. 4G and 4G-LTE handsets are par for the course now, and the revolution has been ushered in by telecom providers who are dishing out attractive 4G plans day in and day out. As a result even the sub-5,000 segment is flooded with 4G-enabled handsets now, and much of that has been led by Xiaomi.
Micromax, however, is clear that it wouldn’t partake in the rat race and would rather focus on long-term profitability. “Some of the Chinese brands were selling a smartphone worth Rs 20,000 at just Rs 12,000. While we have been all throughout fighting the competition, last year we decided to hold back and not participate until the dust settles,” Sharma explained.
This year, Micromax has joined the low-cost feature phone bandwagon, where telcos are seen to be partnering with domestic budget-phone makers to crack open the sub-3,000 segment of the market. It joined hands with Vodafone to launch India’s “cheapest'” 4G smartphone — Bharat 2 Ultra — that is available at an “effective price” of Rs 999. “The Bharat-Series, has been aimed for acquisition of the first generation smartphone users. [It] will help bring in the next phase of smartphone adoption by hand-holding consumers to upgrade them from feature phones to smartphones,” Micromax said in a prior statement. - BGR