|The Rs. 21,000-crore China-based mobile-phone maker Transsion Holdings - owners of brands 'Itel', 'Infinix', 'Techno', 'Oraimo' and 'Spice' is looking to ramp up its manufacturing facility in the country.|
From semi knocked down (SKDs) condition, the company is now going for complete manufacturing of handsets in India.
According to Arijeet Talapatra, Senior VP, National Sales, Distribution & Retail Head, Transsion India, by June this year, the company should be able to move away from SKD kits to completely-knocked-down (CKD) manufacturing at its Noida facility.
“Within the first quarter of this fiscal, we should have full-fledged manufacturing at Noida. By full-fledged, I mean CKD kits and not SKDs. The facility would be used across all our brands,” he told BusinessLine .
Talapatra did not share the capex details or the vendors they have tie-up with; but maintained that CKD manufacturing would entail certain cost benefits to the company which it would pass on to the consumers. In China, Transsion is mostly known as a third party manufacturer for global brands.
Tweaking tax structures
Incidentally, the push for ‘Make in India’ not withstanding, mobile phone manufacturing was primarily through SKD units. Because of a loophole in the law — that charges no tax on imported phone components — many handset makers went for this route, In SKD, all the key high-value components are already soldered to the main printed circuit-board. This circuit board, and the microscopic chips on it accounts for over half of the value of the phone.
However, in this year’s Budget, the Centre tweaked customs and excise duty structure for the telecom sector. While, Customs duty on cellular phones (completely built up) were increased to 20 per cent (from 15 per cent); on some low-value components, the hike varies from 10 to 15 per cent. The key components such as printed circuit-board, however, remains untouched.
With changes in the Customs duty, the percentage value addition done in India is expected to rise from about 10 per cent currently to 17 per cent in a year, sources say.
With India being Transsion Holdings’ second most important market globally after China, the company is banking on its omni-price point strategy and multiple brands to take on the dominant players. For example, Itel and Spice, primarily feature phone brands, are focussing on entry level smartphones priced as low as Rs. 2,500 and going up to Rs. 10,000.
Typically, Itel will target feature phone users looking for upgrade (to a smart-phone) and aim for the “bottom of the pyramid” users. At least 8-10 smart-phone models, all in the sub- Rs. 10k range, are expected to be launched, by Itel, this year. ‘Spice’, meanwhile, will be mid-range player with a strong off-line presence. In fact, ‘Techno’, priced between Rs. 6,000 and Rs. 20,000, will focus on flagship offerings in the mid to mid-premium range. But, there is a catch. It will be an “offline” brand.
For youngsters and the tech-savvy ones, Transsion will focus on the ‘Infinix’ brand. Higher specs and a mid to premium price points (between Rs. 9,000 and Rs. 20,000) will be its key USPs.
“We will cover all price points. Mulitple brands help us take on competition rather than one brand cannibalising its own products at different price points,” Talapatra said.
In the accessories space, it will push a new brand Oraimo.
“Sometimes a multiple brand strategy can work. At least there wont be perception problem for consumers. Often, mass brands fail to make a mark in the premium category. And a premium one reducing prices just for the sake of volumes isn’t good either,” an analyst said requesting anonymity.