Lava looks to set up handset manufacturing unit in North

In six years, Indian handset vendor Lava International Ltd has become one of the largest players in the country.

Now, the ₹3,000-crore Noida-based company is looking to set up its own handset manufacturing base in North India at an investment of approximately ₹500 crore. Investments will be done in a phase-wise manner.

According to Hari Om Rai, Chairman and Managing Director, Lava International, talks with regard to the land are already on with three State Governments. He, however, did not name the States.

“We are hopeful of finalising the details in another two months. The unit is likely to come up in North India,” he told BusinessLine .

Like most Indian vendors, Lava too is dependent on Chinese imports. Research and development and designing of its handsets are done at Bangalore (India) and Shenzen (China). The proposed plant will look to have assembly line operations and other backward integration processes. It is likely to have a monthly capacity of 5 million units, which can be scaled up to 10 million a month in the later stages. Lava is also looking to bring-in the component ecosystem at the facility.

As a part of its local manufacturing plans, the handset-maker is looking to start assembling work in its existing unit at Noida. Around ₹70-80 crore will be invested here and it will have a capacity of 1-2 lakh units a month.

The company is also on the lookout for expansion of assembling facilities for a bridge period i.e. till the manufacturing unit comes up.

“We are looking at short-term options for say 2-odd years (for expanding local assembly work),” Rai said, adding that expansion would mean that the monthly capacity go up to 2 million units.

Currently, Lava offers feature phone and smartphones under the “Lava” brand in the entry and mid-segments. Its other brand “Xolo” caters to the mid-to-high range smartphone segments. Offerings also include tablet PCs and accessories too.

According to Rai, local manufacturing will lead to better control over its offerings apart from cost savings. “Cost savings will come in the long run, but as of now we will have better quality control if we start local manufacturing,” he added. Market sources indicate that rising labour cost in China is one of the reasons forcing companies to look for options elsewhere.

While the average monthly labour cost in India is around ₹ 10,000, the same in China stands at around ₹25,000.

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