Karbonn Mobiles wants to be the Maruti of cell phones

New Delhi: The iPad Mini or the 4th generation iPad, launched by Apple on 23 October may not have India on it’s A-list- but in a price sensitive market, Apple’s loss is the local manufacturers’ gain.

Even as a recent CyberMedia Tablet Market Review for Q2 2012 saw Micromax leading India’s tablet market with a market share of 18.4 percent - beating both Samsung and Apple with market shares of 13.3 percent and 12.3 percent, respectively - other local manufacturers are also dipping their fingers into the country’s tablet and mobile telephony pie.

One such player is Karbonn Mobiles, a joint venture company between Bangalore based United Telelinks Limited and Delhi based Jaina Marketing & Associates. The company presently has 42 products in the market - four of them are tablets.

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The company on 17 October launched its Android based 3G tablet, Agnee , which will hit markets before Diwali. The Agnee will be Karbonn’s fifth tablet to hit the market. Heralding it as the beginning of more innovation to come, Pradeep Jain, managing director, Karbonn Mobiles had said at the launch, “Our aim is to usher in a new revolution in the tablet market with 3G technology for advanced communication and data usage, thus creating a new wavelength wherein Karbonn Mobiles can demonstrate it’s technical stewardship.”

[caption id=“attachment_506799” align=“alignleft” width=“380”]  The A7 Karbonn Mobile. Image courtesy: Karbonn Mobiles.[/caption]

But Karbonn Mobiles’ beginnings were as modest as its ambition now is bold.

From distribution to manufacturing

For managing director Pradeep Jain and chairman Sudhir Hasija, Karbonn Mobiles was born from the thought of owning one’s own mobile phone company rather than doing business for others.

The acquaintances-turned-friends-turned business partners knew each other for about 10 years before they joined hands to start Karbonn Mobiles in 2009. Jain was already a mobile phone distributor for almost a decade and a half when they started the company and Hasija ran his telecom manufacturing, services and distribution business. Jain’s company, the Jaina Group, launched HTC in India in 2005. Today, it is the distributor for HTC in India and South Asia, and for Motorola and LG in India.

“We were into distribution for about 15 years before we set up Karbonn Mobiles. The distribution business was tough and we thought why not manufacture our own phones instead of just distributing phones for other companies. It’s like living in a rented house: one lives there till one has to but everyone eventually wants to move into their own house,” Jain told Firstpost.

The company began its operations in 2009 manufacturing simple feature mobile phones. They gradually moved on to smartphones and tablets, even as India’s local manufacturers took its market by storm. Karbonn Mobiles is one among the many local companies, like Micromax, that is competing with international brands like Samsung and Apple for India’s smartphone and tablet space.

The Trajectory

Presently the company has eight smartphones, 30 feature phones and four tablets available in the market - its smartphones are in the price range of Rs 4,400-12,000, its feature phones cost Rs 1,190-3,000 and its tablets cost between Rs 5,490-9,990. The company, Jain said, aims at launching an average of two to three products each month.

Karbonn Mobiles, which has a monthly average sales of 50,000 phone units, has till date sold 30 million devices, according to Jain. This trajectory can be noted in its sales numbers since it began. In its first month of operations in December 2009 Karbonn sold 25,000 phones. In 2010-11 its sales were close to 2.15 million phones, and in 2011-12 the company sold six million feature phones. The company’s revenue saw a similar upswing - in 2010-11 the company’s revenue was Rs. 1,500 crore, 2011-12 saw revenues increase to Rs 1,600 crore and Jain told Firstpost that the company was aiming to hit a revenue of Rs 2,800 crore this fiscal year.

It’s employee strength too has also gone up, starting with 70 permanent and no contract employees in 2009 to 823 permanent and close to 400 contract employees presently.

Karbonn, the Maruti of the mobile industry?

Claiming a distribution footprint of over 98 percent across India’s districts, Karbonn devices are available in more than 72,000 outlets and has over 800 service centres - to ensure efficient, convenient and quick after sales support. The company is aiming to replicate the Maruti model - in after-sales effort and mass scale.

“We want to be the Maruti of the mobile phone industry - both in after-sales service and customer service, and also in becoming the number one in our business. Customer service is the backbone of any business success and it is our dream to be like Maruti,” Jain told Firstpost.

“The Indian consumer is quite complex and wants everything - a good product, from a good brand, at a good price - and we are trying to cater to all of that,” Jain said.

And while the joke may be on the mobile phone in rural India, where there are fewer toilets than cell phones, Jain told Firstpost that his company was trying to change the way India’s poor lead life through a more efficient use of cell phones, smartphones, tablets and the Internet.

“When people have exposure, their lifestyle will change. Mobility is the first step,” he said, adding, “We are trying to affect the way rural India lives by manufacturing affordable, yet quality products that they can use. We are also trying to make it as user friendly for them as possible - by incorporating things as simple as local languages and software which they can use to communicate with the rest of the world without the burden of illiteracy.”

Affordability over profits

Even as the company tries its best to provide good products to its customers at a reasonable price, it believes that smartphones and tablets will be the next telephone revolution in India.

“Of course our Internet penetration needs to increase but once that happens people will hang on to it and grab it with open arms,” Jain said.

“When we first started using mobile phones it was tough - we didn’t know how to operate them or use them to our benefit except making calls. Now, we use a cell phone for anything and everything from crop updates, radio, banking, booking tickets and various purchases. We got used to it. It’s not missile technology and we gradually got used to it,” he said.

Jain said that if the Indian consumer was allowed to explore the realm that smartphones and tablets take them to through the Internet, the result will be equally life changing, especially for rural India.

[caption id=“attachment_506800” align=“alignleft” width=“380”]  A Karbonn Android Tablet.[/caption]

As part of their strategy, Karbonn plans to target youngsters - who make up almost 60 percent of India’s population. They see an opportunity where youngsters can introduce and expose their elders to the functions and various uses of smartphones tablets and the Internet.

Their strategy is also to keep their products affordable. And how does the company do that?

“We want to give customers a good product at competitive prices. To enable this, we have margins of not more than 15 percent. We keep these low so that we can sell at more affordable prices. Compare this with other international companies like Samsung and Apple and their margins are over 30 percent,” he said.

As good as the best

Despite India remaining a price sensitive market where cheap local manufacturers like Karbonn and Micromaxx are constantly trying to make cellphones/smartphones as per the mass markets needs, Jain believes that it is local brands like his which can compete with the best in the world.

“We don’t think our products are even one percent less than the best international devices. It’s time for the international standard devices to be made locally in India and we wanted to take that initiative.” Pradeep Jain, managing director, Karbonn Mobiles told Firstpost.

“Everyone has a starting point and we have crossed that point by manufacturing our own international quality cell phones. Who knows we may be the next Samsung or Apple,” he said.