Micromax Informatics is going to start importing completely knocked down (CKD) units from China and assemble its devices in India, cutting down on costs for the finished product as the market floods with Chinese smartphone makers ready to give local companies a run for their money.
With an ever-growing competition and plummeting sales, Micromax co-founder Vikas Jain told ET that his company is going to start importing completely knocked down (CKD) units for its phones from China, as opposed to the semi-knocked down (SKD) units which were previously being imported.
According to a Canalys report, Micromax have lost their second spot in the number of smartphones sold in the Indian market to Lenovo, while Samsung still dominates the market.
The company’s Rudrapur and Telangana factories churn out over 3 million phone units every month. The home-bred consumer electronics company is all set to invest Rs. 2000 crore for making phones, tablets and other electronics like television sets locally over the next five years.
Towards this end, the company plans to set up its third plant in Bhiwadi, Rajasthan and the fourth one in Bhopal, Madhya Pradesh. Most of the Chinese smartphone companies like Vivo, Oppo, Xiaomi and few others are already assembling smartphones in India and Micromax is going to be the first local company to join the band.
The Difference Between SKD and CKD?
Currently, most of the companies selling phones in India either import the entire handsets or the semi-knocked down (SKD) units, which require little manufacturing intervention to assemble them into the final product — although it requires a lot of low-skilled workers on the job.
CKD is considered a step up from SKD units as the former is more cost effective.
Making phones from completely knocked-down (CKD) units requires mounting of components on a printed circuit board (PCB) with the help of machines. PCB and other components have to be imported separately from China.
Assembly using CKD units can cut the overall manufacturing cost by 2%, which in turn means that the market price of the product will also go down.
CKD will help Micromax have better control over its device’s quality and design.
This combined with the lower pricing will give the Indian phone-maker an edge over its competition in the smartphone market.
This move is also in line with current PM Modi’s Make in India campaign which, according to CounterPoint, has helped create over 48,000 jobs in the mobile industry. CounterPoint’s estimates also show that more than 150,000 jobs will be created in the next four years.
Micromax had been steadily garnering more market in India, but with the advent of several different Chinese smartphone makers into the mid-range phone segment, the company has lost its footing and needs to ramp up its production while decreasing device costs to recapture the market.