Lava re-enters smartphone space; investing Rs 800 crore to expand operations

Home-bred handset maker Lava International has made its comeback to the country’s smartphone market and is making an investment of Rs 800 crore to support its smartphone business and expand manufacturing capabilities under the PLI scheme over the next five years, Hari Om Rai, chairman and managing director said.

The company has enhanced its production capacity to 30 million smartphones and 45 million feature phones and is further looking to expand. It has also shifted its research and developing and design facility from China to India.

Lava is targeting 5% smartphone volume market share by the end of this calendar year. It will also enter the 5G space later this year with affordable handsets.

“We are targeting Rs 6,000-Rs 10,000 smartphone range and will soon enter the mid price range…5G shift is happening in the market and we will be there. This is an important change for the industry and Lava. We will launch 5G phones in the Rs 15,000-Rs 20,000 price segment,” Sunil Raina, President and Business head, Lava International separately told ET.

Lava launched the world’s first customisable smartphones along with four other models. Raina said that control over the product supply chain has allowed Lava to offer this service in India. “This control wasn’t there previously. We are now developing phones end-to-end. We have control over software, designing and manufacturing. This allows us to give value to customers,” he added.

It has also launched its Z up service which allows customers to upgrade specifications of their phones in the first year of purchase.

Asked if Lava is prepared to tackle the ongoing shortage of components, Raina said that the situation is improving for the entire industry. “The chipset situation is easing out. However, there are shortages of displays and ICs. But, we are prepared.”

Lava International, which is known for its vast offline distribution network, is now focusing on the online channel with its partnership Amazon. It will also start selling handsets through its own ecommerce website.

Raina said that the company is strengthening its manufacturing operations to support its smartphone business and for B2B business contracts under the PLI scheme.

Lava, along with Bhagwati (Micromax), Padget Electronics, UTL Neolyncs and Optiemus Electronics, has been approved under the Production Linked scheme (PLI) by the Indian government. All local players have proposed production output of Rs 1.25 lakh crore over the next five years.

It started making Nokia branded smartphones and is in talks with Motorola for similar tie-ups, ET reported.

Lava is also actively looking for western companies as part of its push into contract manufacturing. It has been working with US companies like AT&T and General Electric (GE) to provide them with affordable smartphones.

“Lava is one such OEM which has capacity to sustain and take make in India vision in the right direction with design and IP capabilities. But, they will have to fight it big to make a dent in the market with aggressive strategy. Smartphones is still a tough market for home-bred players and we need to see how Jio disrupts the market further,” said Faisal Kawoosa, analyst at TechArc.