“Value-for-money and best customer experience are hallmarks of Karbonn”

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Karbonn, incepted in 2009, is a leading provider of smartphones, with cutting-edge technologies that are innovative and user-centric, to the Indian market. In a span of just 5 years Karbonn has emerged as the Top 3 smartphone provider in India. Expertise in bringing latest technology innovations at price points that define ‘value-for-money’ is the hallmark and brand attribute of Karbonn.

Shashin Devsare, Executive Director, Karbonn Mobiles, asserts, “We are a customer-friendly company that provides the latest innovations to the customer at the most affordable prices. Consumers do experience and recognize the value we are offering them; otherwise, we would not have become India’s 3rd largest smartphone provider in just 5 years time. We have two R&D centers, one in Bangalore and one in Delhi. Most smartphone projects get divided between these centers. We do all the software validation, spec-defining and product designing ourselves in India, then we forward them to our manufacturer (EMS—electronics manufacturing services provider) in China. When the assembled devices come to India, we add some values like software apps, etc to them here.”

A joint venture of New Delhi-based Jaina Group and Bangalore-based UTL Group, Karbonn is headquartered in New Delhi and offers a range of mobile communication devices under the ‘Titanium’ Series of smartphones and ‘K Series’ of feature phones. Karbonn also offers a mobile eco-system ‘Karbonn Smart,’ a one-stop-shop for the sophisticated needs of the highly evolved Indian mobile consumer. The inroads that Karbonn made into the Indian handset market in terms of affordability and innovation have established it as a strong competitor and a trend setter.

Karbonn’s market coverage
Shashin clarifies, “In terms of sales volumes and the number of handsets sold, we have maintained our Top 3 position for the last 7 quarters. In our opinion, a strong brand also should maintain good profitability in an ethical manner than simply rolling out volumes. We are well-known as a brand that provides variety and innovations and the way consumers are accepting our brand itself speaks volumes about the brand loyalty we command in the market. We maintain consistent visibility of the brand to win the trust of the channel partners and consumers. We maintain good after-sales-service to maintain the trust. We have over 900 service centers (100+ are our exclusive service centers and 800 are multi-brand service centers) across India and over 12 service centers outside India. Most important thing is we cover 92% of the districts in India with particularly strong presence in UP, Bihar, Jharkhand, Maharashtra, Andhra Pradesh and Karnataka. Otherwise, we are evenly present across the country. About 30% of our smartphone users are from C&D class cities and the percentage is increasing.”

Today, Karbonn had a product portfolio spanning over 225 feature and touch phone models, over 65 smartphone models and over 10 tablet models to serve the diverse needs of the Indian mobile market. Present in over 85,000 retail counters, Karbonn reaches out to people across the length and breadth of the country, with over 92% penetration across the Indian geography. Karbonn is currently in the process of creating presence in 40 countries including Africa, South & South East Asia, CIS, Eastern Europe and Middle East, plans to broaden its international footprint further by expanding to 65 countries by the end of 2014. Over the years, Karbonn has achieved an impressive distribution footprint which today involves 15+ e-commerce partners, 17+ modern retail partners and top teleshopping partners like StarCJ, Home Shop 18 and ShoppingZone. Karbonn aims to expand to 1000 service centers in the coming months (from the present 900), ensuring effective after sales-support to its growing consumer base.

Online retailing has its own merits and limitations
Currently, there is a hot debate going on regarding big price differences between the online portals and the traditional channels, for the same brands and models. This difference is upsetting the MOP and always keeping traditional channel on the backfoot, as per the critics. With regard to this controversy, Shashin explains, “At Karbonn, we follow 360 degree distribution model where we are present everywhere, online, offline, shopping networks, newspaper HRLs, traditional channels, etc. Customers should be able to get our products whichever way they feel convenient. Having said that, I would like to add that it is important to maintain price parity between different channels. Online for us is basically for the early adopters or first movers, who want the latest things at the earliest. For that, online is one of the best channels. For that purpose, we have tie-ups with some online portals. Our recent smartphone that runs on Android One is an exclusive launch on Snapdeal. Every channel has its own place and importance.

There are 200,000 mobile phone outlets in the country. Online may be a good platform for launching, particularly for the first movers, but it cannot reach every segment and it can never be a complete substitute to the traditional channel. About 15% of our sales come from online channel and the rest come from traditional channel. We made it a policy to strictly maintain the price parity irrespective of the type of channel. I do not say we have 100% control over maintaining the price parity in this case, but we are increasingly going forward to maintain that. We closely and regularly monitor our online distributors for what prices they are selling our models.”

Karbonn’s mission is to deliver outstanding values, continuous innovation and an exceptional user experience to the today’s smartphone-driven generation. Karbonn is committed to ‘Massifying Technology’ which means reaching the consumers at all levels, starting from the grass root level, and opening the gates to the technological innovations.

Can we make ‘Make in India’ dream come true?
Recently the government of India has launched ‘Make In India’ program, and the question remains how far it is viable and practicable. In relation to this, Shashin adds, “We do want to invest in manufacturing in India, but there are many ifs and buts. The question should be zoomed back to the govt. I don’t think our stances change from what I am going to explain you now. Among all the Indian companies, Karbonn is in the best position to kick-start manufacturing in India, because our partner UTA has been into manufacturing telecom equipment for the last two and half decades. They have the experience and expertise in setting up SMT lines, appointing local suppliers, managing logistics, warehousing, etc. We sell nearly 2.5 million handsets a month. For setting up a manufacturing unit government may offer us subsidized electricity, land, tax-cuts, etc but that is only one side of the story. The big hindrance to ‘Make in India’ is non-availability of components which are essential for making manufacturing meaningful; lack of proper infrastructure; lack of appropriate skilled manpower; and last but not the least lack of decisive and forward-looking government policies. It is the responsibility of various stakeholders, including government, to logically think what they need to provide the vendors who want to manufacture in India. For example, the telecom equipment providers are heavily dependent on importing components from China and Taiwan. Dynamics of the industry are rapidly changing in terms of how you arrive at the bill of materials. Most critical components such as chipsets, memory, camera, display, battery, etc are not available in India. We have to provide the best experience to the customer and that experience needs to be cost-effective, relevant and simplified. There is a long list of things that needs to be satisfied before we transform ‘Make in India’ program a reality. In a nutshell, I would like to say that we will be happy to see ‘Make in India’ program become a reality, but given the limitations of government policies and the prevailing ecosystem, we have to really wait and see how this system will take shape. To be successful in a competitive market, what one needs is the first mover advantage. Today, many foreign brands are coming to India. They are cutting prices and they are partnering with online retailers, etc. For instance, if a big brand like Karbonn wants to start its manufacturing in India, then how such a decision is financially and competitively feasible compared to the decision of manufacturing in abroad (say in China). It is a critical ‘buy or make’ decision based on financial feasibility. We are nobody to teach the government, they know everything. Our concern is not the investments into opex; we are concerned about the investments into capex.”

Karbonn’s philosophy and customer-orientation
Regarding present Karbonn’s activities, Shashin clarifies, “Our objective was never to be No 2 or 3. Our objective has always been giving the best value for the customer for a particular price point. Second, we focus on doing healthy business where everyone, the channel, customer and we, should feel pleasant and comfortable. Volumes and sizes are not important for us. For the last 5 years, Karbonn has been run completely by internal accruals (of funds) and with no funds from the external sources. A1 series, S5, Titanium, etc series have been very successful. Now we are getting good response from A5, S2+, S5+ and new Titanium series. We have deals with local app developers, where we ourselves upload the apps into phones so that consumers do not have to download them. Karbonn is the first provider to have forged alliances with Tier 1 service providers like Airtel and Vodafone to provide free data access to the consumer for a limited period on buying a Karbonn device. The objective is to give the user, experience and comfort. Our tie-ups are across an array of devices. Our smartphone range starts from 3.5k and goes up to 20k.”

Recently, many vendors started offering Firefox OS. On this front, Shashin clarifies, “Today 90% smartphones run on Google or Android OS, so naturally most phones in our portfolio have these OSs. We are also launching phones with FireFox OS soon. Recently, we launched a low-cost Windows OS smartphone. As a leading brand, it is our principle to provide all the possible new innovations and variety to the consumer. Any OS takes some time to evolve and establish. A good OS to be successful should have good app ecosystem, besides giving ease-of-use and speed to the user.”

Future trends in smartphone market
Regarding future trends, Shashin envisions, “In future, we may find more 4k ultra HD TV coming on smartphone displays. 3D on smartphone has flopped because one has to wear 3D glasses which nobody likes. People want to see sharper, brighter and clearer picture and that desire is never going to end. Second important factor is transferability and Internet of Things. Now people are looking for smartphones that can talk to their TV, computer, home appliances, etc. Next, higher resolution of displays is going to be a desired feature. Data consumption is going to skyrocket in India in the coming months. According to a report, data consumption is going to jump 200% in the next 3 years. Within this data consumption pie, video consumption is going to form a major share. For that, higher processing capabilities and more advanced processor architectures will be needed. In a nutshell, future smartphones need to do more things, more things simultaneously and more things faster with superior quality. Our 4G devices are in the pipeline. We are also launching 2G and LTE combination; and 3G and LTE combination. Multi-mode PCDAs are also in our consideration. Cloud usage will gain momentum by next year. At present, availability and coverage of networks is still limited. A major initiative is needed from the government as well from service providers to increase the availability of network across the country. Even 3G is available only in 52+ cities. Regarding operating systems, if a new OS has to evolve, the winner will be the one which will lead the evolution the fastest way—it has to be easy to use, attractive, faster, efficient and hassle-free. To add to that, a robust ecosystem should be developed for the developers who develop the OS.”

Karbonn Inception Date:  April 2009
Karbonn Smart Inception Date:  2012 – Mid March
Feature Phones launched till Q4 2013:  230+ Feature & Touch Phones
Smart Phones launched till Q4 2013:  70+ Smart Phones
Tablets launched till now: 10+ Tablets – Sizes 7 inch , 8 inch & 10 inch
Service Centers: 870 + Service Centers Across India

Key Markets :
12+ Service Centers outside India
North – UP East & UP West
West – Maharashtra
East– Bihar & Jharkhand
South– Andhra Pradesh & Karnataka

Global Presence:
Currently creating presence in 40 Countries including South Asia , Middle East & Africa, will expand to 65 countries by end of  2014

Financial year 2011-12: Revenue Rs 1500 cr; 10 Million Units Sold
Financial Year 2012-13: Revenue Rs 2400+ Cr; 15 % Smart Devices Sales out of Total Sales
Financial Year 2013-14: Revenue Rs 4500+ CR; 7-8% exports contribution to sales

Current Figures (Q4) :
Monthly Sales Average – 650K Smart Devices
Monthly Sales Average – 2.4 million Total Devices
7-8 % is the exports contribution to sales

Projections 2014-2015: Expected revenues 8000 CR
Marketing Spends :
150 Cr financial 2011-2012
200 Cr financial 2012-2013
250 Cr financial 2013-2014
300 Cr in 2014-2015 (projected)

R & D Spends: 8 – 9 % of Total Revenue
Average Selling Price:
Rs 5000 for Smart Phones
Rs 2000 for Feature Phones

Partners :
Ecommerce Partners: 15+ Ecommerce Partner
Modern Retail Partners: 17+ Modern Retail Partners
Teleshopping Partner: Teleshopping – Star CJ, Home Shop 18 & Shopping Zone
Retail Partners: 85000 Retail Counter, 92% Penetration in Indian Districts
Processor Partners: Broadcom, Qualcomm & Mediatek
Network Partners: Vodafone & Airtel
Entertainment Gameloft, T.N.B., 100@Games, Hungama, Saavn, FunOnGo, SonyLIV,

VAS
Business: MoneyControl, Network18
Entertainment: Gameloft, T.N.B., 100@Games, Hungama, Saavn, FunOnGo, SonyLIV
Utilities: BBM, WhatsApp, Maxthon, Opera, Intuit, Network18 SMS Service, Celltick UI, CleanMaster, Battery Doctor, Photogrid, Ureword, True Caller, Pokkt
Shopping: Uahoy, Mydala, Celltick, OLX, Amazon, Mzoo Software

No of products in the market and their price range

CATEGORY NUMBER OF PRODUCTS PRICE RANGE
Features phones launched till Q4 2014 230+ feature & touch phones Range starts from Rs.1000-2500
Smartphones launched till Q1 2014 70+ smartphones Range starts from Rs.2999-20,000
Tablets launched till now 10+ Tablets – Sizes 7 inch , 8 inch & 10 inch Range starts from Rs.6,000-8,000