|By Saifur Rahman| Intex Technologies Ltd, an Indian technology accessories manufacturer with an annual turnover of US$1 billion, is investing INR 25 billion that will push its annual turnover ten-fold to US$10 billion in 5 years, a senior official told The Arabian Post.
India is currently the world’s second-largest telecommunications market and has registered strong growth in the past decade and half.The total mobile services market revenue in India is expected to touch $37 billion in 2017, registering a Compound Annual Growth Rate (CAGR) of 5.2 per cent between 2014 and 2017, according to research firm IDC.
Leading research firm Market Research Store says, the Indian telecommunication services market will likely grow by 10.3 per cent year-on-year to reach US$103.9 billion by 2020.
“The new investment is part of a long-term vision that will solidify our position in the market and reduce dependence on Chinese products,” Kesav Bansal, Group Director for Marketing at Intex, told the Arabian Post. “We are setting up a number of manufacturing units in parts of India, while also rolled out 100 Intex SmartWorld retail centres across the major cities of India, to expand our market share.
“We, along with our franchise partners have invested Rs1.5 billion in the Smart World venture – which helped us to raise our mobile handset market share to 12 per cent in India’s domestic market.
“The objective is to eventually create a global information and communication technology company in ten years so that Intex becomes a global brand name.”
Intex started by Kesav’s father Narendra Bansal and uncle Sanjay Bansal as a two-man operation on a second-hand motor cycle (Scooter) in the 1990s to fix customers’ Ethernet cards and other accessories repair services. Their reputation for good workmanship spread across New Delhi and eventually led to the establishment of Intex Technologies in 1996 as an IT and telecom hardware supplier. The company entered the lucrative mobile handset business much later that is currently been dominated by some Indo-Chinese ventures such as Oppo, Micromax, Lava and a few other brands. Most of these brands rely on cheap and efficient Chinese factories.
However, Intex wants to make a difference by investing in India, create new jobs and control the full supply chain and marketing. India’s telecom market is overheating from competition with the entry of Mukesh Ambani’s Reliance Jio – which is offering free voice calls with data – something others will have problems matching with. In response to this, British telecom services company Vodafone has recently merged its India unit with Idea – creating the largest telecom services company in India.
With customers getting free voice call options, sale of smartphones will multiply in India. Intex’s decision to invest in India could not have come at a more appropriate time.
Kesav, a second-generation businessman, is getting ready to take over from the first generation. The company’s vision aligns with the Indian Government’s economic vision – that is to invest in India under the Make in India initiative to increase industrial output, export and create more manufacturing jobs in the country.
“Investment in manufacturing is a very tough but sensible decision, especially when you are in a long-term game. We could have easily outsourced manufacturing to other countries and benefitted the short-term output. This would have saved us from the capital expenditure that we are making now,” he said.
“However, we are here for the long term. We have a long-term vision to contribute to the Indian economy. Our investment in manufacturing will create 3,000 more jobs, in addition to the 12,000 people on payroll,” he says.
Intex’s investment decision comes at a time when Apple announced plans to produce iPhone at an upcoming facility in Bengaluru, owned by its partner Wistron.
If this trend continues, India could become the next manufacturing outsourcing destination after China and help current Indian government’s plans to turn India into a global manufacturing hub.
Although Intex has been in business for quite some time, the company did not invest much on brand-building, something that Kesav said he wants to change. Within the last few years, Samsung, iPhone, Micromax, Oppo, Lava and others have taken a large chunk of the market share while Intex entered the mobile handset market.
“The success of any consumer electronics depends largely on branding – along with user-friendliness, quality and pricing. Although we have been delivering quality products and services at a very reasonable price, we did not invest much in branding – that I am currently working on to change,” he says. “We have an aggressive branding programme that will change the brand positioning of Intex in the next few years.”
As part of the brand-building, Kesav Bansal has taken the ownership of Gujarat Lions team in the Indian Premier League.
Intex currently has a 12 per cent share in the mobile handset market in India, Bansal claims. “We grew our business at CAGR of 82 per cent in the last few years and last year it jumped by 100 per cent,” he says.
Branding would be very crucial in the coming months as mobile telephony is expected to penetrate deeper into the society while competition hots up across India.
The future growth will come from smartphone segment as most Indians telecom operators are bundling out data along with voice packages.
Total number of smartphone shipments in India stood at 25.8 million units in the quarter ending December 2016, and smartphone shipments during 2016 stood at 109.1 million units, up by 5.2 per cent year-on-year. Broadband services user-base in India is expected to grow to 250 million connections by 2017.
Smartphone subscriptions in India is expected to increase four-fold to 810 million users by 2021, while the total smartphone traffic is expected to grow seventeen-fold to 4.2 Exabytes (EB) per month by 2021, according to the Ericsson Mobility Report India.
According to a study by GSMA, smartphones are expected to account for two out of every three mobile connections globally by 2020 making India the fourth largest smartphone market. India is expected to lead in the growth of smartphone adoption globally with an estimated net addition of 350 million by year 2020.