June 10, 2016

Micromax to start selling air conditioners


Micromax Informatics Ltd will start selling air conditioners (ACs) in the next 15 days as the Indian smartphone maker now looks to position itself as a consumer durables company, aiming to generate about 20% of its overall revenue from durables in the next 12 months.

Gurgaon-based Micromax is manufacturing window and split ACs at its Uttarakhand facility and will invest about Rs.200 crore in the category over the next year.

The company started selling televisions in 2014 and currently gets about 12% of its overall revenue from this segment.

Micromax closed fiscal 2016 with a revenue of about $2 billion and expects a growth of 25-30% by the next fiscal year.

“We want to establish ourselves as the leading consumer durables brand in the next couple of years,” said Micromax co-founder Rajesh Agarwal.

To offer a complete range of white goods, Micromax is looking to launch washing machines in the second half of 2017. Air purifiers and water purifiers could follow, Agarwal said.

Mint reported in April that the company was looking to expand its presence in the consumer electronics category by going beyond handsets, televisions and tablets.

Agarwal is aiming for a 5% share of the AC market by 2017. It is looking to sell about 50,000 units by December and about 200,000 by the end of the next calendar year.

To start with, the company will offer four models—one window AC and three split ACs, with prices ranging from Rs.20,000 to Rs.30,000. “Price will be our USP and we will try and offer best features at affordable prices,” Agarwal added.

The product will be sold both offline and online, and third-party service centres will be used to provide after-sales service.

To be sure, the AC market has been a difficult segment for most consumer durables companies in India. AC sales in the country have been subdued over the last three years and the industry has seen minimal growth due to rising power tariffs and increasing prices of air conditioners on the back of fluctuating foreign exchange rates and commodity prices.

India sold 4.10 million units in fiscal 2016, compared to 3.86 million units in fiscal 2015. The industry is expected to sell 5 million units during fiscal 2017, according to the Consumer Electronics and Appliances Manufacturers Association (CEAMA).

Micromax recently spent Rs.1.5-2.5 crore on rebranding. Micromax, backed by Sequoia Capital, TA Associates and Sandstone Capital, is aiming to be one of the top five handset firms in the world by 2020.