Indian born Micromax, which has recently overtaken Samsung in India and have sold more than a million units in the last 12 months, are now looking for diversification. And the ever green Personal Computer market seems to have caught their fantasy.
As per a Reuter’s report, Micromax is seriously considering to enter PC market, and looking to raise some funds for their new endeavor. As per reports, the founders are willing to offload 20% stake for $1 billion (Rs 6000 crore), against a valuation of $5 billion (Rs 30,000 crore). They are looking for both equity market and venture capital world for raising fresh round of funds.
Last year, they crossed Rs 10,000 crore revenues.
Vikas Jain, one of the co-founders of Micromax said, “As we talk, both the options remain open. We have various (investment) i-bankers who have approached us with either of the options and we’re given to understand that there is sufficient amount of interest in Micromax.”
In March, we had reported about speculations that SoftBank can pick 20% stake in Micromax at a valuation of $1 billion. Nothing materialized henceforth, but their (rumored) valuation certainly increased 5 fold within 2 months!
As of now, 90% of Micromax’s revenue come from mobile phones, and the remaining 10% constitute sale of tablets and TVs. Jain further shared that as of now, they are producing close to a million units from their manufacturing facilities, and they expect to double the production by March, 2016.
It is not yet clear regarding the manufacturing of their PCs. Last year, they started operations at their own manufacturing unit in Uttrakhand but not every product they sell is manufactured there. Reportedly, they are assembling 60-70% of their products in China and Taiwan.
But PC Sales Are Going Down!
Although mobile sales in India have broken all records, PC sales haven’t been robust in India; infact in the last few years, it has actually dropped. In 2014, total of 9.6 million PCs were sold in India (as per IDC), which is 16.5% less than 2013. Overall, the PC industry in India grew at a negative rate of -0.4%.
In 2013, the PC industry registered a negative growth of -20%.
Commercial PC market in India is worst hit, as it witnessed a negative growth rate of -29.6% in 2014. Consumer PC sales are the only saving grace, as it registered a 1.7% growth in 2014, compared to 2013. The top three vendors in this segment are: HP with 25.6% share; Dell with 25% share; Lenovo with 22.1% share.
In 2013, HCL, the iconic Indian brand decided to shut down their PC business due to slow sales. They had a history of 39 years in this business, the decision sent shock waves across the industry.
And this phenomenon is not local. In 2014, Sony also shut down their PC business to focus solely on mobile business, and this decision has actually helped them to maintain their market share in the mobile segment.
Micromax is doing exceptionally well in India, as their both mass market and high end smartphones are breaking all records of sales, and they have established themselves as a powerful mobile brand. Diversifying into PC business can dilute their focus, besides burning lots of money.
We will keep you updated as more details come in.
