Choosing a mobile phone, these days, is a near impossible task. Given the fast changing technology and array of features available for a consumer, manufacturers are identifying their niche so that they can capture consumer attention. When Sudhir Hasija decided to exit the mobile phones distribution business for Samsung and start his own mobile manufacturing company, his broad level philosophy was to offer value for money to his customers. Positioned in this space, he incorporated Karbonn Mobiles (Karbonn) in April 2009 as a joint venture between New Delhi-based Jaina Group and Bengaluru-based UTL Group. The company is spearheaded by Pardeep Jain, managing director and Sudhir Hasija, Chairman. Headquartered in New Delhi, Karbonn offers a range of mobile communication devices under the Titanium series of smartphones and K-Series of feature phones. It also offers a mobile eco-system – ‘Karbonn Smart’ – a one-stop-shop for the sophisticated needs of the highly evolved Indian mobile consumer. The average selling price of a Karbonn phone is Rs. 5,000 for smartphones and Rs. 2,000 for feature phones.
Hasija also spent a lot of time in understanding the needs of the Indian youth and those in the Tier-II and Tier-III cities. “That’s why we started with the Dual SIM phones. This was probably our USP over the others (at the time) especially as none of the other MNCs offered it and we took off from there,” he shares. One of his strengths is the rich experience he holds in the field of mobile distribution. In 1997, he started as the distributor of Alcatel and soon shifted to Nokia and was with them till 2003. He then became a Samsung distributor for the whole of South India and within eight months, an exclusive national distributor for Samsung. In 2009, he decided to set out on his own.
Since inception, Karbonn has grown well. By FY13, the company had a product portfolio spanning over 225 feature and touch phones, over 65 smartphones and over 10 tablets to serve the diverse needs of the Indian mobile market. It currently has a monthly sales average of 2.40 million devices out of which 25 per cent comes from smartphones. From an annual revenue of Rs. 1,500 crore in 2011, the company closed FY14 at Rs. 4,500 crore, of which around 8 per cent came from the export market. Hasija plans to take this revenue number to Rs. 8,000 crore in the FY15 on the back of new tie-ups and an entry into newer markets.
Taking on competition
Karbonn is a homegrown mobile manufacturer. Hasija, a first generation entrepreneur, believes that to build one’s own brand there should be a clear vision, funding and most importantly, experience. According to him, one of the main reasons for Karbonn’s growth is its strength in distribution, which plays a major role in this industry. “Having worked with MNCs, I have learnt a lot about the distribution system and its do’s and don’ts. I wanted to learn from the mistakes that were being made and decided to build the best distribution system in the market,” states a proud Hasija. Currently, the company’s distribution footprint includes more than 15 e-commerce partners, 17 modern retail partners and top teleshopping partners like StarCJ, Home Shop 18 and Shopping Zone. It has more than 85,000 retail counters, with over 92 per cent penetration across the Indian geography.
After-sales service is also a very essential part of its business. With over 870 service centres across India and over 12 outside India, the brand’s aim is to cross 1,000 centres by the end of the current financial year, ensuring effective after-sales support to its growing consumer base.
It is important to have personal relations. “I know almost 60 per cent of my distributors by name and know 30 per cent of the major retailers in Bengaluru, Chennai and Hyderabad,” he says. Hasija makes it a point to meet the company’s distributors and spend half of most working days in the market as it helps him understand what the customers require and stay on top of the market trends.
Just like any other consumer product, mobile phones too require constant development. “We saw that there are two gods in the country. One is cricket and the other is Bollywood. Straight away, we sponsored IPL and that really paid off,” states Hasija. Continuing with its strategy of sponsoring events, the company’s marketing budget is Rs. 250 crore for FY 14, which it plans to increase to Rs. 300 crore in FY15.
It’s Karbonn Kochadaiiyaan Signature Phone Series marked a partnership with India’s first 3D motion capture computer-animated film ‘Kochadaiiyaan – The Legend’, which stars actor Rajinikanth. The series offers Kochadaiiyaan movie content including songs, dialogues, videos, images, screen-savers and an augmented reality app. “We will be definitely tying up with more movies. Recently, we tied up with a Telugu movie,” shares Hasija.
Travelling the world
Currently, Karbonn is in the process of creating a strong presence in 40 countries including Africa, South & South East Asia, CIS and the Middle East. The company is also expanding its footprint in Eastern Europe, which is a major target market. It plans to broaden its international footprint to 65 countries by 2014.
Recently, Orange Electric, a manufacturer of electrical and lighting products, partnered with Karbonn, to market its products in Sri Lanka. A complete range of Karbonn phones will be sold under the Orange brand. With its tie-ups and entry into newer markets, the company expects exports to contribute around 20 per cent of the total turnover from the current level of 8 per cent by the end of this fiscal.
Improving technology, constantly
Karbonn has many technology partners like Broadcom, Qualcomm & Mediatek, to entertainment partners like Gameloft, Hungama, Saavn and utility partners like BBM, WhatsApp, Celltick UI and more. With technology and mobile features evolving so fast, the company’s research and development team stays on top by being in constant touch with the vendors, finding out their changes in advance to start working on Karbonn’s feature changes accordingly. “I know what chip is coming out in the third quarter itself. We have already started working on our launch around Diwali as we now have this information,” shares Hasija.
In India, over the last two years, the industry has leant more towards smartphones – around 24 per cent of the market – and Hasija expects this number to increase to 35 per cent by the end of this year. “China is totally into smartphones. However, India is still buying feature phones and will continue to do so for the next four to five years, after which the market will be dominated by smartphones,” says Hasija.
Google has announced that it will introduce a sub-USD 100 (about Rs. 6,000) smartphone, starting with India, by October this year, as the US-based technology player eyes the next one billion Android Operating System (OS) users. And one of the homegrown companies to produce the device is Karbonn. “When Google announced the Android One initiative for emerging markets, it said phone vendors would be allowed to bundle third-party applications on to the device. If you look at Google’s plans for Android One, the volumes will be huge, with margins automatically rising up in great volumes. It is going to open up a very big market and by being a partner in this initiative, we aim to reach out to a large number of people,” says Hasija. Today, mobile technology has a great impact on people’s lives and with this initiative the company wants to reach out to a large section of the population that does not have access to a smartphone in India. “We are very positive towards the acceptability of this next generation of affordable smartphones and are keen to utilise these critical turnkey solutions to bring quality, budget smartphone solutions to next-gen Indians,” he adds. With an intention of becoming a truly Indian yet multinational company, Hasija is all set to make Karbonn a Rs. 8,000 crore player by the end of the current fiscal.
Google tie-up on an Android OS smartphone which will hit the market before Diwali
Strengthen presence in Eastern European market
Reach Rs. 8,000 crore turnover by FY15
Build more after-sales service centers
Year of Incorporation: 2009
Founder: Sudhir Hasija
City: New Delhi
Turnover: Rs. 4500 crore