Upwardly Mobile: Nothing Micro About Micromax

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Although he’s never driven a truck in his life, Rahul Sharma’s past, present and future is memorably connected to a truck battery. I In August 2007, in the powerless village of Behrampur in West Bengal, Mr Sharma saw an Airtel PCO being powered by a truck battery. Every night, the PCO owner would lug the battery 12 km to an adjoining village on his cycle, charge it there overnight, and lug it back to Behrampur in the morning. In late 2007, when Micromax decided to diversify from PCO devices into the business of mobile handsets, the PCO owner of Behrampur was the inspiration for its first product. The company designed a battery that could last 30 days on a single charge and give 17 hours of talk-time. Micromax asked vendors in China and Taiwan to manufacture 10,000 handsets with these battery specs. The X1i, priced at Rs 2,249, was an instant hit in rural India, and Micromax’s handset business was on its way In just 30 months, by staying with this philosophy of making handsets that address specific user needs and are also affordable, it’s come a long way. Says Rajesh Agarwal, one of the four promoters: “We sell a million handsets a month now. With a market share of about 10%, we are a close second to Samsung.” There are many views on that 10% figure. Citigroup put it at 10% in February, a top executive of a rival says it’s 8%, IDC India says it was 4.8% in 2009. According to IDC, Nokia had a market share of 54.1%, Samsung 9.7% and LG 6.4% Never mind the quibbling over numbers. Fact is, the company is mounting a serious challenge to the slippery No. 2 spot in the mobile handset business. In the past four years, the second spot has been lost by Motorola, Sony Ericsson and LG. Samsung has held it for the past 24 months, but Micromax is catching up. “We will be No. 2 by the end of this fiscal,” says co-promoter Vikas Jain Decided to be different

Micromax, its promoters say, posted revenues of Rs 1,600 crore and a net profit of Rs 150 crore in 2009-10. Early on, they decided there was no point in aping the leaders. “We had two options — compete on price or be different,” says Mr Jain. “We decided to be different.” In its case, different meant a longer battery life or a phone that had two SIMs.

Micromax has taken the utilitarian philosophy to the mid- and high-end also, with a reasonable degree of success. But here’s where it gets tougher. Says Romal Shetty, national telecom head, KPMG: “In the mid- and high-end, customers expect certain service quality. Micromax’s challenge will be to achieve such quality standards, and convey the same through branding and positioning.” Asks Ajay Parmar, head (institutional research), Emkay Global Financial Services: “Their biggest challenge will be brand stickiness. Will their existing customers buy Micromax again?”

Before it found its centre, Micromax dabbled on the fringes, changing its identity repeatedly. Rajesh Agarwal started Micromax in 1991 to distribute IT peripherals. One of his neighbours in Pitampura, in West Delhi, was Rahul Sharma. In Delhi’s Jamia Millia University, Mr Sharma was friends with Sumeet Arora, a junior. And one of Mr Arora’s friends was Vikas Jain. It would be eight years before they would come together to do business. After college, r Jain moved to the US and joined GE, Mr Arora joined Blue

Star and Mr Sharma worked with an auto components company called Bundy Engineering. In 1999, all three quit their jobs to join Mr Agarwal. They set up Micromax Technologies, an IT education company dealing in e-commerce and embedded technologies.

The four divided responsibilities on functional lines, which hasn’t changed since. Mr Jain, 35, is the business director; Mr Agarwal, 45, managing director, handles finance; Mr Sharma, 34, executive director, oversees marketing; and Mr Kumar, 35, is the chief technology officer. While they don’t say how the equity is divided among the four, they do say...
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