How domestic mobile maker Jivi is taking on Chinese-made phones, giant JioPhone, and other competition
With India’s mobile manufacturing industry projected to touch Rs 135,000 crore this financial year (FY 2019-20), things are ready to hot up.
When it comes to mobile phones in India, the Chinese rule the market. Take Xiaomi, Oppo, Vivo, and Transsion for example. According to IDC data, Xiaomi alone accounts for 29.7 percent of all smartphone shipments.
However, Make in India brands like Micromax, which saw its sale slide down with the onslaught of the Chinese made phones, is slowly pushing up. Other brands like Karbonn, Lava, Intex, Jivi, and iTel, are following close behind riding on their feature phone and low-end smartphone strategy led by none other than JioPhone.
In fact, a recent Internet and Mobile Association of India (IAMA) report estimates that by 2020, 96 percent of mobile phones to be sold in India will be locally manufactured. According to the report, India’s domestic mobile manufacturing industry is set to grow this new financial year (FY 2019-20), with projections to touch Rs 135,000 crore. In FY 2016-17, it was estimated to be Rs 94,000 crore.
Another report quoted in Business Standard stated that “the mobile handset manufacturing ecosystem in India has helped the country save a whopping Rs 3 trillion by replacing imports of completely-built units with locally manufactured and assembled handsets during the past four years.”
The report added that in the past four years, India's mobile handset and components manufacturing industry has enabled the establishment of over 120 new manufacturing units, generating employment for over 450,000 people.
In this context, it was interesting to catch up with Murthy Bjas, Group Director & Global head of Jivi Mobiles. Bjas told SMBStory, “We are on steady progress with a clear agenda and objective for the India market. Despite a sizable market share of feature phones being captured by JioPhone in the last few quarters, Jivi Mobiles has not lost its volume share in the marketplace. And the icing on the cake is that we have been able to grow our ASP (Average Selling Price) by a clear 20 percent.”
With its HQ in New Delhi, Jivi Mobiles was launched in 2011 across India with a ‘rich on features, value for money’ proposition for the Indian customer. Its turnover is close to Rs 500 crore, with a YoY growth of 15 percent plus in 2018-19. With the launch of a series of new smartphones in the coming months, Bjas says they expect their turnover to double in FY 2019-20.
Find out more about the growth strategy of Jivi Mobiles in this interaction with Bjas, who has over two decades of rich and prolific experience in the telecom, devices, and FMCG domains.
Excerpts from the interview.
SMBStory: Today, there are many more home-grown handset manufacturers, plus there's stiff competition from China-made brands. How are you differentiating from the competition?
Murthy Bjas: To us, India is many markets in one market. And there are sizeable segments and needs which are to be addressed. While it is one of the most competitive markets, it is also the largest growing mobile market in the world. As a brand, we have been working to create the incremental value to the end user through better design, innovation, and user experience with more utility features. Our roadmap for the New Year is filled with an array of products designed with strong customer insights and opportunity segments in the Indian market. The strongest differentiation is balancing the right price point with a strong value for money proposition.
SMBS: What have been the challenges in terms of sustaining and growing the business?
MB: There is immense competition from Chinese brands making it difficult for us to increase our average selling price. The emergence of JioPhone in the low-end segment has made us tighten the screws in the category. We are redefining our strategy to overcome such challenges.
SMBS: How did the company grow and scale?
MB: We as a group started our journey as an importer & distributor of brands like Nokia and later extended our distribution network to brands like Philips (pan India), Phicomm (pan India), Apple iphone (Delhi). We have launched our own brand of mobile phone Jivi in 2011 in North and East India and later extended it to pan India. We recently launched this brand in countries like Bangladesh, Nepal, Sri Lanka, and Myanmar.
SMBS: Who are the founders of Jivi Mobiles?
MB: Gurdeep Singh Suddan is the Founder of Magicon Impex Pvt. Ltd., which manufactures Jivi phones. He is an entrepreneur with a specific interest in financial modelling and creating a strategy for various businesses. An engineering graduate with 41 years of experience in leading and managing the business affairs, Gurdeep has worked in establishing and driving manufacturing businesses of instrumentation cables and cords, manufacturing of electronics components and electrical fans for Crompton Greaves Ltd. At Magicon, Gurdeep is managing the overall business of import and distribution of Jivi Mobile phones and financial fund management.
SMBS: Where and how do you manufacture the phones?
MB: Currently, we have one manufacturing unit based in Delhi, which has a seven lakh unit capacity. The current unit has eight assembly lines. While the current facility focusses largely on feature phone production, we are in the process of investing in our second manufacturing facility based out of Lonavala. The focus of this unit is to drive our smartphone agenda in India and international markets. We are investing in SMT technology which will help us build smartphones in India.
SMBS: What is the history of the group?
MB: The group started its operation in 2004 as an importer and distributor of innovative products and services with its corporate office in New Delhi. In India, it started operations with imports and distribution of branded mobile phones (Nokia, Sony, Motorola etc.) along with extending after-sales support.
SMBS: What were the key milestones in your journey?
MB: In a short period, we have appointed 650 distributors across India and are consistently managing eight to 10 percent market share in most of the HSM (Hindi-speaking markets) and the northeastern states in the feature phone category.
We are among the first few brands who have set up a manufacturing unit in April 2016 and we manufacture the complete range in this unit which has a capacity to produce seven lakh phones per month. Jivi has launched a tele-shopping channel, Jivi Shoppe, where we have been promoting our owns phones.
SMBS: What is your advice to people who want to set up a business in the same sector?
MB: There are sets of challenges and opportunities in every sector. The mobile handset industry is showing growth YOY and it is expected to cross 300 million phones in 2019. There will be immense competition in this sector as many Chinese giants are already pumping a lot of money in the marketplace and existing players are also fighting hard to maintain their share of the business.
SMBS: How do you manage critical areas such as supplier management, cash flow management, and capital management?
MB: We have a strong business partnership with Conplex International Limited (CIL) based out of Hong Kong that manages our suppliers. CIL is our interface with the production houses in China and has been working with us for the past eight years in ensuring that Jivi as a brand becomes a preferred choice to the end customer.
On the cash flow management, we are one of the few Indian companies which work on cash-and-carry model. This ensures that we are strong on our cash flow management and our financial governance is strong to overcome any minor hurdles.
SMBS: What is your distribution channel strategy?
MB: In the last many years, our channel strategy was more focused on general trade and reaching out to all the markets up to one lakh population groups with direct distribution. In the last three quarters, our focus has moved beyond the one lakh population markets to reach up to 10K population markets.
With close to 50 percent of the market still on feature phones and teledensity in rural markets still at 56 percent, we see a large opportunity of driving the feature phone agenda in the lower population markets. In the next one year, we will double our retailer reach on-ground and expand our distributors from the current 600 to 1000 plus.
On the smartphone strategy, we have a whole new range of phones being launched in the next quarter. The go-forward strategy here is to be more focused on the online share of the opportunity. The changes in the ecommerce marketplace will help many more players like us to reach out to a lot more online players for balancing our presence between offline and online.
SMBS: What are your future prospects?
MB: We are on steady progress with a clear agenda and objective for the India market. Despite a sizable market share of the feature phone segment being captured by JioPhone in the last few quarters, Jivi Mobiles has not lost its volume share in the market. The icing on the cake is that we have been able to grow our ASP (Average Selling Price) by a clear 20 percent. This is a positive sign for the brand. We will continue to be focused on driving innovation and value for money product offering across the feature phone and the smartphone categories. While we build a strong quality product, the distribution will be relentlessly driven to reach all markets with service being a key differentiator.
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