Higher VAT In West India Is A Roadblock: iVK Mobile
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Anil Kaushik, CEO, iVK Mobile says, "VAT is very high in that region and the sales tax is around 15 per cent, which impacts the dealer-pricing and the MRP. But all states where we have a common sales tax, we are focusing and moving ahead."
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Wednesday, May 23, 2012:
iVK Mobile Pvt Ltd set up shop in India in July last year and launched its first mobile phone in the market in September. Since then, the company is strategically capturing the market share with its low-end mobile phones and feature phones. So far, the company has feature phones in the price range of Rs 1,000 and Rs 3,600. Focusing on customer needs, the company was the first to launch a 3,000 mAh and 4,000 mAh mobile phone in India. The company also plans to launch an Android 4.0 tablet and Android 2.3 smartphone this month itself and get into the high-end product segment too. We speak to Anil Kaushik, CEO, iVK Mobile Pvt Ltd to know more about the firm and its expansion plans in India.
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Tell us about iVK Mobile's journey so far.
iVK Mobile Pvt Ltd is the name of the organisation, which is a joint venture between iVK and one of the Chinese partners. This Chinese partner actually represents a company called Guo Xin Tong, which is the world's biggest mobile manufacturing company. It manufactures around 1,20,000 phones per day and 3.6 million phones per month. It not only manufactures phones, but whatever goes into a phone like the battery, the charger, the earphones, keypad and even the labels, everything is manufactured in-house. There are about 20,000 people working in the mobile manufacturing focused factory in China.
When did you start the joint venture?
The organisation was registered way back in the month of July, 2011. The first product was launched sometime in mid-September.
What is the SICT connection?
SICT is the brand name of the China-based organisation. We have launched the brand SICT as a joint venture in India so that we can actually mark our space in the mobile market of India. We sell about 5,00,000 mobile phones per month in India indirectly.
Can you elaborate more on the indirect sales?
We supply our products to most of the mobile brands in India, directly or indirectly. There are so many brands in India. These brands buy goods from various manufacturers of China or the so-called integrators from China. Those integrators either buy the product or the components to manufacture their products in China and then ship them in India. So, most of the local brands, directly or indirectly, are involved with us. Though SICT as a brand, is being sold only by iVK.
After having launched in the month of September, our journey has been very good but we are still striving for better. Even in the last six months, when the mobile industry was going down in the market, fortunately we were able to establish SICT as a brand in the areas wherever we started the business. We have really made an impact in the market in terms of competition, market awareness and even in terms of customer satisfaction.
Besides India, what other countries do you have a presence in?
SICT, as a brand, is available in Africa and Arabian countries. It is also available in Europe and many other Asian countries.
There are so many players in the handset market, so how do you plan to survive the competition?
I don’t feel there is competition because the market is so big that each player has a role to play himself. The market continues to grow, so if I have entered the market, probably I have taken some part of the growth, which has not affected the other brands in the country. So, actually there is not really much competition that we talk about. But from the customer’s point of view, when a customer sees a product which is new in the market, he does get attracted to it. For instance, iVK was the first in the country to launch a 3,000 mAh battery phone. We were also the first to launch a 4,000 mAh battery phone, which is a very specific focus on the market needs. It is just trying to bring a product to the customer, which meets his demands and needs.
Where all have you been able to create a market for yourself in the past six months?
We have been doing good in Haryana, Rajasthan, Delhi, Himachal Pradesh, Bihar and in West Bengal. We are doing reasonably fine in Uttar Pradesh (UP). We had to do some realignment in UP and reduce the sales but now the sales have started growing there too.
What kind of re-alignment?
It is a very tough market in UP and the strategy that we had taken up for UP was the same that we had taken up for other places. But, at the same time, it was also in-line with anyone else who was working in UP. That is when we realised that we had to do something different in UP and that is how the process started. Now, we have a re-aligned business model in UP and things have started moving. Earlier, we were doing only two zones – East zone and the West zone of UP. Now, we have bifurcated further into smaller segments for a better focus and a bigger market share.
How about presence in South India?
We have just started in Karnataka. This month, we are also starting in Andhra Pradesh. So, step by step and month wise, we are starting in the South region as well. Post that, we will be moving to the Manipur and the Assam belt.
What is the kind of market share you are looking for?
Our strategy has been that we must capture the first one per cent of the market share and then move to 10 per cent. We have already captured more than 1 per cent in a few states. In Haryana, Himachal Pradesh and Rajasthan we have more than 10 per cent market share. In other states like UP, it is not 10 per cent yet but it should be better now that we have re-aligned. In West Bengal, we started in the last week of March, so we have not reached that one per cent per say, but by next month we will achieve this kind of percentage of the market share. Regarding the PAN-India target, eight to 10 per cent is the bare minimum that I am looking forward to in the states where we are present. It is a per state target right now and cannot be PAN- India because we are not present in many states yet.
We are not doing any business in West India as of now, primarily because VAT is very high in that region and the sales tax is around 15 per cent, which impacts the dealer-pricing and the MRP. But all states where we have a common sales tax, we are focusing and moving ahead.
What are your expansion plans for the next three years?
My target is that by the end of the year, we should be touching more than 1,00,000 units per month. I have defined my target with reference to each state. In the month of March, we have already touched 60,000 units in a month in India and our average sales are 45,000 units per month, as of now.
What is your retail strategy?
We are going into pure distribution channel. There are three kinds of strategies in distribution. One is the normal distribution channel, second is modern trade, which includes mobile stores and third is the enterprise or a corporate channel. Right now, we are focused only on the distribution channel and have not focused on the modern trade.
Upasana Rajpal, EFYTIMES News Network
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