The success story of Intex

The failure confounded Narendra Bansal. After all, he had built a₹600-crore business selling computer accessories in the 10 years since he had set up his company, Intex Technologies, in 1996. It had seemed the right time to diversify.

“Intex was by then a relatively well-known brand. We had made some money too; it was no longer a hand-to-mouth existence,” recounts Bansal of the 2004-07 period.

But the attempt fell short, miserably. Irrespective of what he launched — from computers and laptops to LED TVs and inverters — there were no takers. He still tried and introduced feature phones in 2007.

“I ran ads, created a network of dealers and even tied up with Disney to develop content for the phones,” says Bansal. The ad campaign for the dual-sim phone featured Kajal Aggarwal, a leading star in the southern film industry.

Even glamour didn’t work. In two years, Intex sold less than 40,000 handsets.

Bansal and his family did not feel so confident anymore. His three brothers even wondered whether Intex was meant to sell only computer accessories.

Bansal didn’t let emotion cloud his thinking. The entrepreneur in him wanted to give handsets another shot; especially when other Indian brands were starting to do well and denting the fortunes of multinationals such as Nokia and Blackberry.

“It is not that the customer does not want an Indian brand… there is something that we are not doing right,” Bansal recalls telling his close associates.

They then dug deeper into the business and researched the market. Finally, they saw light.

“Until then we had been a B2B player, dealing only with dealers. We hadn’t thought from the perspective of a customer,” says Bansal. Their first dealer, for instance, used to earlier sell motorcycles. Another dealer was from the pharmaceuticals industry.

They had little knowledge about handsets. Within months they were knocking at Intex’s doors with unsold handsets. Why, even his employees and his family members refused to use an Intex handset.

This Eureka moment saw Bansal get a new network of dealers and handsets with the latest features. It made a telling impact and the handset business fuelled Intex’s revenues from a little over ₹1,000 crore in 2012, to ₹3,600 crore in 2015, and over ₹6,000 crore in the 2016 financial year.

“The one reason for the phenomenal growth is that they concentrated on one particular price band of $50-55 (₹3,000-3,500),” says Tarun Pathak, senior telecom analyst, Counterpoint Technology Market Research.

Handsets now fetch 65 per cent of Intex’s turnover, propelling the company to the second-largest Indian handset-maker slot, even briefly overtaking market leader Micromax in 2015.

“Our market share increased from 1.1 per cent in 2012 to 12.7 per cent by the end of the fourth quarter of 2015,” says Rajeev Jain, Intex’s chief financial officer.

For Bansal, the vindication came closer home when his two children kept aside their iPhones in favour of Intex handsets.

“When I first asked for an Intex phone, he didn’t give me,” says Bansal’s daughter Ishita. “He said that I have to earn it. The day I told him that I will use the phone with care, he gave me one.”

She, in fact, joined the company this year as management trainee and CSR representative. Unlike several other first-generation promoters, Bansal wants to keep ownership separate from management.

“If my family wants to contribute, they need to earn the position. Nothing can be emotional,” he says.

On his own

Back in 1980, sentiments didn’t prevent Bansal from refusing to join the family’s grain trading business. His father had a shop in Old Delhi’s Naya Bazaar. “Growing up I didn’t find any inspiration in the business, or in the shop environment with its mattresses and easy-going air,” recalls Bansal.

The restless teenager turned entrepreneur even before completing high school.

First he sold audio cassettes, sensing an opportunity in his neighbourhood’s penchant for Bollywood songs. It earned him enough to pay his school fees. “I was adamant about meeting my needs from my own pocket,” he says.

The earnings also took care of his indulgence at the now iconic Delhi food destination Fateh ki Kachori.

His entrepreneurial pursuits continued even after joining college (Delhi University’s Swami Shraddhanand). “I had a knack to see what was in demand and how to supply it,” he says.

His brothers and two sisters love to narrate the story of how their eldest sibling once bought a printer from one shop and sold it to the shopkeeper next door, pocketing a cool profit of ₹1,000 in the process.

“The game is about ignorance. People don’t know where to get things from,” says Bansal of one of his early learnings in entrepreneurship.

At the time cordless phones were a rage, and Bansal found a way to stand apart from the crowd. “I gave an ad in Navbharat Times, offering pick-up and drop facility for anyone who wanted their cordless phones repaired,” he says. When that venture outlived itself, Bansal was ready with another — he and his friend stationed themselves at Birla Temple, a Polaroid camera in hand, selling tourists their pictures pasted on keychains. There was only that much this business could grow, however, and Bansal shifted gears.

After completing college, he moved his act to Nehru Place, arguably Asia’s largest market for computers and accessories. If a product such as floppy disk was in demand, Bansal found a way to source a cheaper version, often from friends based in Taiwan or HongKong. To get Ethernet cards, he flew to Taiwan, scanned the Yellow Pages at his hotel and made random calls to prospective suppliers. “I got the product at half the price prevailing in Nehru Place and made 100 per cent margin,” he says.

The big break came when Bansal and his brothers started assembling computers. As

business grew, it was time to register a company and get a brand. “Everyone who was importing or exporting had companies named along the lines of ‘impex’. I brought in the international part, thus Intex. Never knew that one day it would become this big,” he says.

Each month Intex sells about 1.5 lakh speakers, more than any other company in India.

Other bestsellers include mouse and power banks — over one lakh each a month. The company’s domination in the computer accessories business is almost complete.

Bansal’s brothers have moved abroad. One of them, Sanjay, lives and sells Intex products in Dubai. The senior brother doesn’t come clear on shareholding. “I own 100 per cent shareholding. I’m like their father. Officially it (ownership) might be with me, but belongs to them.”

But as the debt-free Intex looks for funds to expand, investors might want a clearer picture.

Bansal would also have to explain a few other challenges facing him and Intex.

Value for money

Seated in his office in Okhla Industrial Estate, a dusty and messy commercial neighbourhood in Delhi, Bansal is chatting with an expat woman. Words like design, interior, colour are exchanged. Perhaps the Chairman and Managing Director is discussing his new cabin at Intex’s new office in an upcoming high-rise. At present, his staff work out of four buildings in Okhla, each as nondescript as the other. The only signs of the company’s growing prosperity are an Audi and Porsche squeezed amongst other cars in the narrow parking bay of the building used by Bansal.

A high-rise tower for a new office address will be incongruous for a person who loves to flaunt his pedestrian lifestyle, quite unlike the dashing Rahul Sharma, the Micromax cofounder who is as much in the news as his company.

Bansal doesn’t wear a watch, nor are there signs of any other accessories. “I don’t need them. As if those who wear a watch are on time!” he counters, stressing on the 10-minute early start to our meeting.

“If I wear something expensive, that is from my children. If someone shows me a ₹50,000 shirt, I ask what is wrong with one that costs ₹500,” he says. He doesn’t like window shopping, advising his children to make a list of needed items and stick to it.

A vegetarian who loves two pegs of his favourite drink at the end of a day, he drives a ‘second-hand’ Audi handed down by his son, who now drives the Porsche. It used to be a Honda Accord before the Audi. “I don’t believe in wasting resources…you should look good, but that doesn’t mean only a ₹50,000 shoe will look good,” says the crorepati who still prefers street food to fivestar gourmet fare.

The purchase of IPL’s Gujarat Lions franchise for ₹10 crore does herald winds of change.

“This was not a business proposition, but more for building brand image,” says Bansal’s son Keshav. The 24-year-old started off in the logistics department before taking over the marketing function. More flamboyant than his father, Keshav was a regular feature on TV channels during the IPL season. Bansal was present in the stadium for three matches, but made sure he was sitting far behind in the stands to escape the camera.

The senior Bansal might, however, need the attention. The computer accessories business has remained stagnant for three years in a fast-maturing market. “We are planning to introduce more products,” says business head Nidhi Markanday, who had started off as Bansal’s secretary and rose to head the company’s IT and consumer durables business.

In the white goods vertical, too, Intex is adding more products, including automatic washing machines and refrigerators, as it builds on a business that turned black last year. Even as the company attempts to increase its share in the tier-3 and tier-4 markets, it has the market leader Videocon to contend with.

The bigger challenge is in the country’s handset market, once among the fastest growing in the world and now slowing. This is especially true for feature phones (Intex sells more of them than smartphones),which clocked 150 million units in 2015, as compared to 180 million a year before.

Though Intex has held on to its number three position in the smartphone market, behind Samsung and Micromax, its volumes dipped in the first quarter of 2016. “Going forward, the competition will be tougher, as the Chinese players have become aggressive and are eating into the shares of Indian companies,” says Pathak.

There is one silver lining in the Indian handset industry. Even as volumes are projected to increase at snail’s pace of five per cent by 2020, the collective value of phones being sold will grow faster, at 12 per cent. Intex dominates the sub-₹5,000 price segment. It will have to re-innovate to reclaim value.

“Every quarter, five per cent of feature phone users shift to smartphones.We plan to increase our share in the ₹7,000-12,000 market,” says Keshav, whose idea to rope in movie stars as brand ambassadors helped Intex improve market share in the southern states.

The onus is on Bansal and he is trying to come out of the shell that he had built around himself. “I used to think that I don’t need to come out, that the company should speak for itself. But now I realise that is not enough,” he says.

He is taking one small step at a time. In July, he shared his entrepreneurial story with the students of IIM-Ahmedabad. He would love to have the story of Intex become a case study at the premier management institute.

That might take some more time.

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