Connecting with consumers - Intex

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B u s i n e s s I n d i a u t h e m ag a z i n e o f t h e c o r p o r at e wo r l d

Connecting with consumers Premier League’s Rajkot team – Gujarat Lions – which in its first appearance itself has proved its mettle by reaching to the semi-final stage. Acquisition of an ipl team, market observers view, has been a master stroke, since it has transformed the Intex brand image altogether, providing it with massive visibility in the market. In fact, the last three years have been quite eventful for the R6,200-crore entity, as it has been growing at Narendra Bansal: an impressive cagr of 82 creating a distinct per cent. Most importantly, place the growth has been well backed up by profitability, as its pat has jumped from a mere R9 crore in 2012-13 to R153 crore in 2015-16. Intex has received many awards and accolades for its performance. The company was awarded ‘The Fastest Growing Brand in Indian Telecom Sector Award’ at World Brands Summit 2016 held in Dubai. More recently, it has been felicitated with ‘India’s most trusted brands award 2016’, under the mobile category, by ibc InfoMedia (a division of International Brand Consulting Corporation, USA), which has expertise in providing consulting to organisations that are interested in developing their brand value strategy. “Despite a competitive market place and other macro and micro economic challenges, Intex as a Intex is gearing up to commence its next growth phase company has done well in creating a distinct place for itself in the with diversified portfolio base Indian mobile business,” says Faisal Kawoosa, principal analyst, telecom, ntex Technologies (India) Ltd has has positioned itself in the afford- CyberMedia Research (cmr). “Its come a long way ever since it made able segment of the market, has also recent marketing initiatives coupled its humble beginning way back in started exporting (40,000 units of with product offering, have paid off 1996 as a small shop selling, it and smartphones per month last year) to well for the company which is now computer accessories at Naya Bazaar markets in the Middle East, saarc, looking to enter the next phase of its in the Chandni Chowk area of Delhi. Africa, Vietnam and Spain. Intex growth.” cmr has been a front runThe Delhi-based company has today has recently signed up with Mukesh ner in market research, consulting emerged as the second largest mobile Ambani-led Reliance Jio Infocomm and advisory services, covering the phone player, along with Lava (the to supply 4G handsets. These hand- it, telecom, semi-conductor & elecfirst is Samsung, with 23.2 per cent), sets will be enabled with voice over tronics and other sectors. with a share of about 9.8 per cent in lte feature. “Intex mobile handsets are well-acthe domestic market. Intex, which The company also owns Indian cepted in the market,” says Anupam

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Consumer electronics foray The company has ramped up its manufacturing capacity recently across five facilities which, apart from mobile handsets, also caters to the requirements of its diversified portfolio, comprising it and mobile accessories, like key boards, multimedia speakers, Web cameras, power banks, data cards, modems, mobile chargers and batteries as also consumer electronics like led tvs, washing machines, refrigerators and air purifiers. The company is in the process of expanding its consumer electronics portfolio by adding new products which, along with it peripherals, contribute 30 per cent to its revenue, whereas the mobile and mobile accessories vertical constitutes 70 per

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Gupta, Next Generation Mobile, Mumbai, a distributor for Intex mobiles in the Mumbai region. “The company has lived up to consumer’s expectations, as it responded proactively to the changing market conditions. While it has aggressively priced its products, it has not compromised with the quality and services”. The distributor also works with mobile players like Micromax, Lava, Samsung and others, sells around 50,000 Intex mobiles per month out of its total sales of 100,000 mobiles per month. While Intex has established well in the market, it is now gearing up to boost its product offerings for achieving a sustainable growth trajectory. Over the last couple of years, there have been concerted moves to strengthen its r&d and manufacturing capabilities, to adequately support its mobile handset portfolio that produces about 2.4 million handsets per month (75 per cent feature phones and 25 per cent smartphones) for the market which, as per International Data Corporation (idc), a research firm that tracks the mobile market, stood at 72.3 million units in CYQ3 2016, with an 18.1 per cent growth over the previous quarter. In fact, Intex, which used to outsource almost 100 per cent of its mobile handsets production to vendors in China till 2014, is now manufacturing/assembling 90 per cent of its total production in India.

Keshav Bansal: our efforts pay off

cent of the company’s turnover. Three of the five manufacturing facilities of Intex are located in Noida, which commenced their operations in 2015, while the other two are located in Baddi (HP) and Jammu (J&K) with operations dating back to 2010 and 2004, respectively. The company, which employs over 3,500 people, is now setting up a large integrated manufacturing facility (spread around 20 acres) in Greater Noida. Coming up at a total investment of around R1,500 crore, this modern facility, expected to go on stream sometime next year, will double the company’s mobile handset capacity to 4-5 million units per month. At this new facility, Intex is trying to consolidate its manufacturing activities spread across five separate locations, which in turn will help in streamlining its entire manufacturing process. Intex is also planning to make some of the components like speakers, pcbs, casings other than batteries and chargers in this facility. The company is increasing its manufacturing/assembly ability across its product basket, and towards this end it is also expanding its vendor network in India. It boasts of an r&d Centre in Delhi as also one in China for physical testing of products; it is also in talks with a few Korean and Chinese firms for technical collaborations that will aid to its u 115 u

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manufacturing initiatives in the long run. Over the last few years, Intex has invested about R300 crore to build up its r&d, design and product development capability. The company has created a separate team of 100 professionals for this function. “First we used to import the components in semi knocked down (skd) form, but now we are bringing the material in the completely knocked down (ckd) form,” says Amitabh Khurana, general manager, technical & manufacturing, Intex. “We are assembling everything at our manufacturing unit,” adds Khurana. “In the last couples of years, we have made concerted efforts to enhance our manufacturing capability, to produce mobile handsets, as also other products,” says Narendra Bansal, 53, chairman & managing director, Intex Technologies. “These can help us keep pace with the fast-changing dynamics of the market and meet the growing expectations of our customers in a most effective manner. They will also provide us with the muchneeded control over the product quality and supply chain and thus help us with a greater maneuvering ability. Moreover, our efforts are also in line with the government’s ‘Make in India’ initiative”. Bansal is looking to double the company’s revenue in the next three-four years. A first generation entrepreneur,

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Intex is asembling everything in its manufacturing units

Bansal is a self-made man, his father was a small grain merchant in old Delhi’s Naya Bazaar. Born in a village in Rajasthan in 1963, he attended the primary school in his village and then his family moved to Nepal, where he finished his secondary education from Vishwaniketan High School. In 1980, the family moved back to Delhi, where he graduated in commerce from the Delhi University. Bansal had an entrepreneurial streak from the beginning and wanted to establish his own business. His father’s grain business never appealed to him. Business sense Much before he could complete his education, he had started trying his hands in various things. In 1980s, the music industry was at an inflection point and audio cassettes were gaining popularity with music enthusiasts. Bansal started trading in these compact cassettes. He bought them from various manufacturers and sold them to the retailers in Lajpat Nagar Market and Palika Bazaar in Delhi. He was successful in establishing a thriving business and continued the business model with new products, including video cassettes and video cassette recorders (vcr s) till 1987. He always had a technology-orientation and, with the arrival of floppy disks in 1987, he sensed a great business opportunity in a new

and upcoming field. With the same business model of distribution and trading, he expanded the portfolio from floppy disks to hard drives and rams. “The various businesses I dabbled around during my initial years also included taking pictures of visitors at Birla Mandir in Delhi and selling key chains with their framed pictures,” reminisces Bansal. “In fact, I have been looking at all possible opportunities available around me.” These trials and errors continued till 1993, when Bansal realised that these sporadic efforts might not bring him the desired scale he was looking for. He formed a company named International Impex, which dealt in selling of floppy disks, ethernet cards and other accessories under the brand name Intex (the brand which has now become a household name). In 1996, the company was formally incepted as Intex Technologies, an it peripheral firm, which would import these products and sell them in the domestic market. In that first year, Intex notched up revenues of R1.18 crore. That may sound paltry, when compared with the R6,200 crore topline the company posted in 2015-16, but it was a good beginning. “Sticker lagane se brand nahin banta hai (You don’t make a brand, just by putting stickers) – that is how my friends used to taunt me 20 years ago,” recalls Bansal. “Now we are the u 116 u

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largest Indian handset brand (along with Lava),” he adds. By 2000, Intex introduced multimedia speakers (which he later started manufacturing) and expanded its business outside Delhi. It ventured into Chennai. Business expanded rapidly, riding on the booming economy and, by 2003, the company’s turnover had touched R32 crore. In 2004, the company set up its first manufacturing facility for multi-media speakers in Jammu, which turned out to be a big success story for the company. In fact, it was its success in the speaker category that made the company a household name. The company has a capacity to produce 1.8 million units of multimedia speakers annually. By 2006, consumer electronics, with offerings like dvd players, lcd/ led tvs, induction cookers, home theatre solutions were introduced to the business. As the market dynamics changed swiftly after 2000, the company saw big opportunity in telecom and, in 2007, it entered the mobile handset business, which is today driving the company’s topline, which surged to R6,213 crore in 2015-16 from R3,652 crore in 2014-15 – a phenomenal jump of over 70 per cent. The company started its mobile journey with feature phones and then, in 2012-13, it introduced smartphones in its portfolio. Ever since the mobile phones came into its portfolio, the company has been ramping up this business. In the last decade or so, Intex has changed – from consumer electronics and it peripheral company to mobile company. “In fact, we want to be known as a mobile company, which also has a strong portfolio in consumer electronics,” says Bansal. “While we will continue to expand our mobile business, we will also consolidate our consumer electronics business where we are in the process of introducing quite a few new products in coming months”. Bansal is planning a growth of over 20 per cent cagr in the next five years. “As an organisation, we are preparing ourselves for future,” contends Rajeev Jain, cfo, Intex. “We have brought in a whole lot of changes

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across our structure, functions and processes and many more changes are in the pipeline. We are investing across our capabilities. This will help us in maintaining our growth momentum on the financial front. Our aim is to grow profitably”. Intex is looking to raise funds in future, exploring various available options (ipo/pes and others). So, what will be the strategy, going forward, to generate this kind of growth trajectory? While the focus remains on the mobile business, Intex is expanding its portfolio of consumer durables. Betting big on the rapid growth in the consumer durables segment, Intex Technologies is consciously looking to increase its consumer durables portfolio. The company has now forayed into refrigerators (R10,900-14,300), and added to its washing machine portfolio with fully-automated washing machines (R14,999). It has signed Bollywood actor Madhuri Dixit as brand ambassador for both these products for two years. During Diwali, it forayed into the air purifiers segment. Intex air purifiers come in four models and are available exclusively on Amazon’s online platform at a price of R11,999-25,999. The company has also strengthened its led tv portfolio with the launch of four new smart led tvs, starting at R27,999. The company is also looking to enter the air-conditioners segment next years. Having been in the it peripheral business during the initial years, it had forayed into the consumer durable space with dvd players in 2004 and then introduced lcd tvs in 2006. “Looking at the market dynamics, we would like to strengthen our consumer electronics business,” says Nidhi Markanday, director & business head, consumer durables & it peripherals, Intex. “This will not only help us sustain our growth momentum but also provide the much-needed hedging mechanism to face market vagaries”. Intex is also looking to increase the contribution of consumer electronics/ durables and it accessories verticals to about 40 per cent in the next two-three years, from the present 30 per cent. It is also looking to

Ishita: managing CSR activities

introduce microwaves, room heaters, close circuit tv cameras and cash-counting machines in the near future. Intex is already making (assembly) led tvs at its Baddi facility. Going forward, it is also planning to make washing machines, air-purifiers and refrigerators at its upcoming facility in Greater Noida. Though the company has been sourcing a large portion of its requirements from overseas (Chinese) vendors, it is also gradually building up a strong vendor network in India, to support its manufacturing requirements. Apart from various benefits that this may accrue to the company, this will also help it leverage various sops the government is providing under its ‘Make in India’ initiative. Brand image The company’s expansion efforts in the consumer-electronics segment are being viewed as a strategic move. First, it will provide it with a diversified portfolio to help build its consumer base where audience base is more or less the same. Thus, it will also help it counter its competitors (mobile players) like Micromax, Xiaomi and Mitashi, as also Videocon and others. Secondly, the company now wants to fully leverage its brand image, which it has built in the last few years, on the back of u 117 u

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marketing and sales measures it has put in pursuit to expand its footprint in the field of mobile phones. Intex is spending almost 4 per cent (2015-16: R300 crore) of its revenue on sales/ marketing. It has roped in actors like Farhan Akhtar and Madhuri Dixit, as also south Indian movie actors like Mahesh Babu for AP; Surya for Tamil Nadu and Sudeep for Karnataka. Besides, Intex has built up a strong sales and marketing team of 500 odd people. It boasts of a network of 2,000 distributors, catering to more than 110,000 retailers and dealers. Further, the company also has more than 100 exclusive outlets (Intex Smart World), which act as a single touch point for customers. Importantly, the company has got over 1,500 service touch points. Apart from offline presence, Intex products are available on ecommerce platforms. Currently, it sells about 10 per cent of its mobiles online and is looking to leverage it further. Intex is also planning to expand its geographical reach. Though it has reasonable footprints in North and West India in mobiles, it is now looking to expand its reach in southern and eastern markets. For the last one year, the company has moved to overseas market, where it aims to sell 10-15 per cent of its mobile portfolio (smartphones) in the next three-four year. On the consumer durable front, Intex has a strong presence in south and western India. “We want to create an offering with a desired mix of mobile handsets and consumer electronics,” says Keshav Bansal, 24, director & marketing head, Intex. “Our recent efforts on the marketing front have paid off quite well as we have not only able to create a strong marketing infrastructure but also managed to build up our brand image considerably. Our acquisition of an ipl team has been a big boon to our brand”. The only son of Bansal (who also has a daughter, Ishita, 20, who is heading the company’s csr activities), Keshav, a bachelor in business administration & management from Manchester Business School, has played a big role in revamping the company’s marketing and sales

Corporate Reports operations ever since he took charge in 2012, two years after joining his father’s business as a trainee. It was Keshav who was instrumental in acquiring the ipl team. Bansal candidly accepts that it was an outof-the-way move, which has brought in windfall gains for the company in a much shorter period. The brand has now got a distinct visibility in the market – something Intex would like to cash in on. While, all these years, the company has tried to position itself in the affordable segment of the market by targeting consumers in Tiers II and III cities (as also rural), it is now looking to move up the pyramid to fulfill consumer aspirations. Even as feature phones (price range: R700-1,500) continues to be its mainstay, Intex has changed its strategy in smartphones, where it has introduced handsets in the higher price brackets (R8,000-9,000) up from its sub-R5,000 pricing. “The acquisition of an ipl team has certainly helped the company in building its brand,” says Harish Bijoor of Harish Bijoor Consultants. “The brand image (particularly the visibility) has improved in a big way. Now, it will have to meet the growing expectations of customers. The market is changing very fast on the technology front and keeping pace with it will be a major challenge”. New brands So far as the consumer durable market is concerned, India will continue to be an attractive market in the backdrop of favourable indicators, like growing income levels and changing demographics. Having grown at a cagr of 15 per cent to about R10,000 crore, the market is expected to grow 17 per cent y-o-y in the next five years, in the presence of multiple national and regional players such as lg, Samsung, Bajaj Electricals, Videocon, Godrej, Onida and many others. Though competition is intense, the pie is big enough to accommodate it. However, experts are of the view that a lot will depend on how the players position themselves in the market. Second rung cities, as also rural market, are still highly under-penetrated.


On the other hand, the domestic mobile handset market, which has a presence of over 100 brands/ vendors like Samsung, Lava, Lenovo, Jio, Xiaomi, Micromax, Karbonn and Gionee, has continued its growth trajectory. The overall market (56 per cent feature phones and 44 per cent smartphones) is expected to grow to 308 million units annually by 2020 at a cagr of 5 per cent from 256 million at present. As per the cmr report, gradually, more and more mobile phones are being manufactured in India. Currently, about 66 per cent of the phones are made in India in order to leverage the Indian market effectively. Though, in the last few years, the smartphone market has grown faster than that of feature phone in India, idc India believes that migration from feature phone to smartphone has slowed down, helping Indiabased vendors to maintain their dominance in overall mobile market. Though feature phone market has consolidated with a few key vendors, it is also witnessing the emergence of new brands. “Entry of new vendors has extended the feature phone supply since past few quarters. However, with the entry of Jio in the feature phone market, this category is expected to grow significantly. This in turn might further slow down the feature phone to smartphone migration,” says Navkendar Singh, senior research manager, idc India. With all these developments in place, Intex, which has its 70 per cent of mobile portfolio in feature phones, with a distinct positioning in the affordable segment, is likely to be a u 118 u

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gainer, even as it is strengthening its smartphone offering. The company had tried to broaden its smart phone offering recently by introducing higher value handsets to meet the aspirational needs of its customers. In the last few years, the company has been able to enhance its brand image significantly, with welldesigned sales and marketing efforts and this is something the company is now trying to leverage across other verticals. The conscious move to expand its consumer electronics portfolio is a strategic move, which will help it sustain its growth momentum. Also, the diversity will provide it with the much-required hedging mechanism to face the vagaries of market. Increasing its presence in manufacturing is also a move that will help the company in responding to the market condition quickly and effectively, as also realising better margins. Moreover, this will also help it leverage the emerging macro-economic factors. All this will help the company to prepare it to commence its next growth phase in a market which is becoming more matured, and consumer expectations are going high. However, it remains to be seen, how Intex performs in this new phase where challenges will be quite severe and one has to be very proactive in responding to market dynamics. Adapting to the fast changing technological needs of the market will be a big test. One will have to consciously try to be relevant and keep pace with the time. u ARBIN D GUPTA [email protected]