A Study on Micromax

By Group 6:
1. Harbinder Singh Deepak (MP12023)
2. Ishwari Prasad Gupta (MP12025)
3. Nidhi Kumari (MP12042)
4. Rajesh Kumar (MP12053)
5. Santosh Kr.Singh (MP12063)

Contents
1.Introduction
2.SWOT Analysis
3.Porter five forces analysis
4.BCG Matrix analysis
5.Benchmarking exercise with competitors
6.Financials
7.Strategy An outsiders perspective

1.Introduction
Registered as Micromax Informatics Private Ltd. in
March 29, 2000 with its registered office in New Delhi.
Its 10th largest mobile handset manufacturer in the
world & second largest smartphone company in India.
Vikas Jain in a recent interview with ET admitted to the
fact of considering going public in 2014 depending on
countrys political situations post elections.
Mission:
Micromax is on a mission to successfully overcome the
technological barriers and constantly engender life
enhancing solutions.
Vision statement
The companys vision is to develop path-breaking
technologies and efficient processes that incubate newer
markets, enliven customer aspirations and continue to
make Micromax a trusted market leader amongst people.
The Micromax ideology stems from its rooted belief in
Innovation and delivering nothing short of the best.

1.Introduction

Micromax founders Rajesh Agarwal, Sumeet

Arora, Rahul Sharma and Vikas Jain - Nothing Like Anything

1.Introduction
Formation of
Micromax
Fiscal Year
Key Events
2000

Company was incorporated as Micromax Informatics Ltd.

2001

Started software-commerce & embedded technology

business.
Also developed digitally automated traffic information
security system for airport authority of India.
Started M2M distribution for Nokia fixed modules

2003
2005
2006
2008

Launch of self-branded products under the umbrella of

Micromax
Started business as mobile handset manufacturer
Tied up with BSNL for 3G data cards
Launched data cards with tie ups with Airtel

2010

Tied up with ONGC & MTNL for supply of data cards

Sponsored & co-sponsored many events

Product categories
The product range varies from dual SIM phones, 3G
Android smartphones, tablets to LED televisions and
data cards .
The mobile phone range from low priced handsets to
medium ranged bolt smartphones to high end Canvas
smartphones
Firm has been successful till date in competing with high
end mobile handset manufacturers with its low priced
innovative solutions.
Major Indian competitors include SPICE, LAVA, and
Sales
of the product
(Rs.
KARBONN,
ZEN, INQ
and other big high end players like
Cr.)SAMSUNG, NOKIA, and SONY

2.SWOT Analysis
Strengths

1.Market leader in fast

growing market
Market share of 18.8% in Indian market

2.Technical expertise
Many products patented
Introduced mobile with thirty day battery, dual SIM,qwerty
key pad handset

3.Strong distribution &

network reach
Presence in 560 districts through 125000 retail outlets in
India

2.SWOT Analysis
Weakness

1.New player among the

large big ones
A major chunk of industry is ruled by international players
(Samsung & Nokia) 38% because of a prior big customer
base

2.Dependence on OEMs
& suppliers
Engaged with 4 OEMS with contractual agreements and
has relationships with additional six OEMs for manufacture
of their products
These OEMs in turn are dependent on third party suppliers
to supply product components
But however none of the contracts are long term or
exclusive in nature
This internally has posed problems in ability to receive
quality products at low cost and meet customer
requirements

2.SWOT Analysis
Opportunities

1.Understanding of Indian
market
Micromax focused on the big chunk of untapped market of
the rural area which was an ignored market for the big
players
TRAI estimates that urban mobile teledensity will reach
125% by March 2014, with urban mobile subscribers
reaching 572 million, and that the rural mobile teledensity
will reach 60% by March 2014, with rural mobile
subscribers reaching 468 million
With the shift in income pyramid aggregate consumption
in India will grow from 17 trillion in 2007 to 70 trillion by
2025
Also with mobile service providers reducing the tariffs
(ARPU: Average revenue per user) to access the market of
lower Indian incomes has also pushed the market of
handset manufacturers in the segment.However, though
the ARPU is declining gradually, overall revenue remains
well supported by the increase in subscriber base.

Aggregate consumption in India

Shift in Income Pyramid

Declining ARPU Trend

2.SWOT Analysis
Threat

1.Threat of losing IP rights

The trademarks are not currently registered under the
Trade Marks Act, 1999 in India or in other countries in
which the firm operates and hence may lose its IP.
The firm also runs at the risk of not obtaining or renewing
any of the many approvals, licenses, registrations or
permits required for its operations

2.Dependence debt serviced

model
Its inability to draw money from public domain has pushed
the firm towards adding debt on its accounts which have
deteriorated its ratings and have implications of negative
covenants on the firm.

Debt on the books

3.Porter five force model

(a) Threat of substitute products-A lot of active research and
development into mobile phone technology has been underway.

Networks
infrastructure

Operators are upgrading their networks to advanced

wireless and other fourth-generation (4G) services,
many new entertainment and communications services
are becoming available.

Storage

Development in miniaturized hard disks and flash

drives to solve the storage space issue has already
taken place; therefore this has paved the way for
phones to become portable music libraries and players
similar to an iPod.

GPS

Cell phones having GPS positioning may be coupled

with accelerometer positioning, to cover underground
or indoor positioning. This leads to maps and help
finding group members nearby, or identifying
strangers. When coupled with camera phone, the GPS
technology also allows users to take a picture or snap
the exact location and angle at which the picture was
taken.

3.Porter five force model

(b) Threat of new entrants

Since the capital requirement to start the businesses of

mobile manufacturing is high and further the mobile
manufacturing technology is also hard to acquire, the
threat of new entrants is low. A great sum of money must
be invested to attain the economies of scale, and it is
difficult to enter the market with existing firms already
operating on cost and differentiation strategies

3.Porter five force model

(c) Industry Rivalry

Cell phone cost: Customers want

better services and products at a lower
cost.
Bundle functions into just one cell
phone: For example E-mail, text
messaging, internet, various mobile
applications etc.
New technology improvement: For
example day by day improving the
mobile software, providing new and
unique applications for users

3.Porter five force model

(d)
Bargaini
ng
power of
supplier
s

Cellphone manufacturers look to

suppliers for cellphone parts-chips,
batteries (lithium batteries in most
cases), sim cards, etc.
As there's a large number of
suppliers, they don't have
much power in influencing the
decisions
of
cellphone
manufacturers.
Manufacturers can easily switch to
another supplier if one raises the
price over the desired amount or
the quality of the supplies have
become undesirable.

3.Porter five force model

(e)
Bargaini
ng
power of
Buyers

Customers have a huge influence

in the types of phones, their
features, looks and functionality
that manufacturers produce
Customer loyalty is almost
non-existent.

switching cost is almost nonexistent.

4.BCG Matrix
This method is well known as Portfolio
Management Tool which is based on Product
life cycle theory.

4.BCG Matrix

Market
Market Growth
Growth Rate
Rate (Cash
(Cash Usage)
Usage)
Low
Low
High
High

Relative Market Share(Cash

Generation)
High
Low

Stars

Question
Mark

Canvas
android
Smart
Phones

Bolt Smart
Phones

Cash Cow

Dog

Touch Screen
(X367, X457)
Dual Sim Ph
(X102, X660)

Qwerty
Keypad
Phones
Bar Phones

5. Benchmarking :-Strategic mapping with respect to competitors

(a) Pricing

The pricing policy of Micromax is very aggressive

vis a vis its competitors. One of its directors was
once quoted saying that Our thinking starts from
the consumer and so we decide the market
price first and the device later. If we compare
some of the popular products of Micromax with the
products of its competitors, we can see how
Micromax is so aggressive in its pricing policy.

5. Benchmarking :-Strategic mapping with respect to competitors

(b) Product Innovation:- Micromax has a lot of innovative and creative products to its credit, which gives its product portfolio a versatile look. Micromax was first to introduce:

Mobile handsets
with 30 days
battery backup

Mobile handsets
with Dual SIM
card

Handsets
Switching
Networks (GSM
- CDMA) using
gravity sensors

Aspirational
Qwerty Keypad
Handsets.

(c) Market
Positionin
g:-

(d)Supply
Chain
Manageme
nt

Micromax has been shifting its

positioning very fast as
compared to its competitors.
To start with Micromax
entered the market in entry
level and mid-segment mobile
phones.. Taking this journey
forward the company now
offers the phones with latest
technology in competition
with the world leaders.
Micromax also redefined the
distribution channel in the
mobile handset industry. As
against the competitors
giving its distributors a 60day credit, Micromax denied
any credit to its distributors
but offered to supply handset
on regular basis to keep
inventories at a bare

Key Takeaway from the financial data

Ratios

Interpretations

1. Debt
Equity
Ratio

Company does not have any long tern debt. Primarily

run by the shareholders fund

2. Current
ratio

Although the current ratio is slightly better than the

industry but is not better enough to substantiate the
claim of the company that its working capital
management is better than competitors.

3.Fixed
Assets
Turnover
ratio

Here lies the key difference. Actually Micromax is

highly focused towards product innovation and
distribution channel. The manufacturing of the
product has been largely outsourced and hence the
firm is enjoying such a high asset turnover ratio.

Strategy From the outside

Thank you