Micromax could flounder after arrest of co-founder on bribery charges

Micromax’s unparalleled growth since its launch in 2000 might come across a stumbling block after the arrest of its founder member and MD Rajesh Agarwal by the CBI over bribery allegations. Agarwal has now stepped down from active duty in the company for the time being, says the Times of India .

Micromax has also issued a formal statement, which was reported in NDTV: “Rajesh Agarwal, co-founder, Micromax Informatics Limited has stepped down from his duties and recused himself from the responsibilities. He will focus on the legal proceedings to clear his name of the alleged charges.Following the media reports that owners of Micromax have been arrested by CBI, Micromax Informatics Limited clarifies that Manish Tuli has no association with the company. Rajesh Agarwal was present in his personal capacity with Manish Tuli.”

According to the NDTV report, the CBI allegedly ‘caught’ Agarwal and promoter Manish Tuli handing over Rs 30 lakh to New Delhi Municipal Corporation junior officials, who claimed to be there on the behalf of a superintendent engineer. Agarwal has been sent into custody for seven days, and six other people have been arrested.

“We need police custody to unearth the entire conspiracy between the accused and the unknown public servants,” the CBI prosecutor said.

Micromax was founded in 2000 as a company that offered IT solutions, but after it switched to the manufacturing and distribution of mobile phones, it became extremely popular. Now Micromax is third only to Samsung and Nokia in the Indian cellphone market.

The phone company, though it became known for its phones in the Rs5,000 to Rs15,000 range, has recently been trying to shed its ‘affordable’ image.Shubhodip Pal, chief marketing officer at Micromax, said to the_ Times of India ,_“While the Rs 13,000- Rs 20,000 is currently the sweet spot in the smartphone segment, we want to further increase our presence in the premium-end with relevant products.”

In fact Micromax’s latest flagship device the Canvas 4, not only offered decent specs but also software features such as ‘Kiss to unlock’, ‘Smart pause for video’. The phone itself was priced at Rs 17,999 much higher than the earlier Canvas HD phone which had a Rs 14k price tag. The Canvas 4 is retailing at nearly Rs 19,000 (white version) on websites like Flipkart, Amazon.in, etc.

It remains to be seen whether the latest development will trip up the company - or whether it’s already too big and successful an enterprise to be taken down over one bribery case.