Domestic handset-maker Lava has tied up with Egyptian FMCG firm Easy Group to enter the African market via Cairo as the Indian smartphone industry gets more competitive.
“We have formed a joint-venture with Easy Group to sell our handsets in the Egyptian market which will mark our entry into the African market,” Lava’s chairman Hari Om Rai, said.
The company, which expects to report revenue of $1.5 billion in 2016-17, expects to start phone shipments in the next four to five months, and will initially sell phones in the $300 bracket. Egypt is the second largest mobile market in Africa, with sales of about 1.5 million handsets a month, the company said.
The move also assumes significance as the North African country is looking to increase Internet penetration to 50% by the end of 2016. Also, Lava will be the first Indian company to enter the Egyptian market where Samsung, Huawei and Lenovo are also present and are among the popular brands.
“Egyptian market is also like India and hence it will be easier for us to gain momentum in the market,” Rai explained adding that the company has 50:50 ratio of revenue from domestic and international markets. The company sells its phones in several international markets, including Thailand, Bangladesh, Indonesia, Mexico and Pakistan.
“Lava has divided Egypt into 50 distribution territories and plans to set up 1,500 retail points with the help of Easy Group,” a top spokesperson from Lava’s Africa division, said.
“The partnership will create 2,000 direct and 5,000 indirect employment opportunities in the next six months and over 10,000 employment opportunities in the next five years,” he added.
Lava was in fourth place with a share of 8.6% of the overall Indian handset market in the second quarter of 2016, according to Counterpoint Research.
However, in the smartphone segment, Lava slipped out of the top five, with Reliance Jio Infocomm Ltd’s Lyf range of phones capturing 6% of the market in the second quarter.
The company has earmarked an overall investment of Rs.2,615 crore for expanding its existing manufacturing units along with setting up new ones to increase production capacity to 216 million units per year in the next five to eight years.
This includes the company’s manufacturing plant in Tirupati, Andhra Pradesh, which will become operational in 2017 with a production capacity of 5 million phones a month.