Once touted as India’s answer to iconic brands such as Nokia and Samsung, the Indian smartphone maker Micromax seems to be biting the dust in its home turf.
The Gurgaon-based company, founded by Rahul Sharma in 2000, has been witnessing a steep decline in revenues for the last two fiscal. Revenues have almost declined by more than half since 2016.
According to its financials for the fiscal year 2018, Micromax has reported a 26 per cent decline in its revenues to ₹4,430 crore as against ₹5,614 crore in FY17. In FY16, the company hit nearly ₹10,000 crore mark in revenues.
The profits have also plummeted by 76 per cent at ₹104 crore in FY18, thus speaking volumes about the company’s deteriorating financial health. In contrast, the company had tripled its profits at ₹365 crore in the year ago period, according to its financial data sourced by BusinessLine from business intelligence platform, Tofler.
While the revenues and margins are falling, it seems that the company is taking steps to contain the expenses. Its total expenses for FY18 at ₹4,293 crore, a decrease from the previous year.
Micromax, which in its earlier days came out with several innovative features including a month long battery life, was the most popular phone brand with its sales in India exceeding those of global player Samsung.
However, by the end of 2015, the brand, which sold phones under the sub ₹10,000 category, started to lose its dominant position as consumers across the country ditched the brand for newer players such as Xiaomi, Vivo and Oppo, among others. By 2016, these Chinese brands had taken the market by storm with more impressive camera features and 4G on their devices, while Micromax was still going after the declining 3G phone market, said experts.
According to Prabhu Ram, Head-Industry Intelligence Group, CMR (CyberMedia Research), “Micromax failed to grasp the fundamental market shifts in the India handset market. The failure to grasp changing market realities and consumer expectations meant a rapid erosion of market share for the likes of Micromax.”
In 2018, Micromax won a ₹1,500-crore deal from the Chattisgarh government to distribute 50 lakh smartphones. In an election year, the company could hope to capitalize on more such sops. However, that’s not a viable market strategy, claim experts.
Ram added that to stay relevant, Micromax will have to focus on getting its specs and value proposition right with its new offerings. “It would have to avoid picking battles with the likes of Xiaomi,and instead build on the strengths, whether it be their strong offline retail channels, or emulate the brand positioning strategies that the likes of OnePlus devised to define and own the ‘aspirational premium segment in the entry-level and affordable segment.,” he said.