IPO-bound Imagine Marketing, the parent of boAt, will aggressively scale up manufacturing in India. It plans to achieve its four-year worth of objectives of shifting manufacturing of its electronics products to India in over the next one year to reduce its dependency on China, a senior company official said.
Earlier in January, boAt had announced its 50:50 joint venture (JV) with Dixon Technologies to manufacture bluetooth-enabled hearables in India. The JV aims to clock in ₹1,000 crore in revenue over the next four years.
Speaking to BusinessLine, CEO, Vivek Gambhir, said that the company will eventually start manufacturing its other products in India too.
Though he didn’t divulge more details on location of boAt’s first manufacturing plant with Dixon in India or the investment needed, he said, “The JV just got signed. We expect it to be operational soon. This budget, the government has given lot of impetus to manufacturing locally in India by correcting some of the issues with inverted duty structure. Finally, Make in India is actually viable. Through this JV, we have very aggressive plans to start moving manufacturing within India. In the last one year, we have been working with around 15 suppliers or so to be able to build the ecosystem, understand what it takes to manufacture and scale.”
Gambhir added, “The current mandate is to manufacture bluetooth enabled hearables largely for Indian needs, but as we gain traction over the next few years, the mandate will be to make in India and export to the rest of the world. For the current fiscal of FY22, most of the manufacturing was happening in China, some of it in Vietnam and very small portion in India. This will change significantly now as we start manufacturing here..”
Increase in prices
To promote Make in India, the basic custom duties (BCD) for electronic devices including headphones, earphones and loudspeakers were hiked in from 15 per cent to 20 per cent in the Union Budget 2022. This comes at a time when there has been other shipping costs levied on products getting imported from China amidst geopolitical issues.
Gambhir said that the company will be temporarily increasing prices of its products starting from April 1, 2022 to cope up with the increasing costs.
“We don’t have a choice and have to take a price increase similar to other industries. Any kind of changes in duties are generally passed on. As we start producing more in India and start getting the benefits of manufacturing in India, we will then look to pass these benefits to our consumers as well. But for now we don’t have any other alternative,” he said.
Gambhir also urges the government to look at a Production Linked Incentive (PLI) scheme for manufacturing wearables and hearables wherein they could participate.
Multi-category and channel expansion
boAt was started in 2016 by Aman Gupta and Sameer Mehta as an audio gear brand, but through its diversification and acquisition of several other brands, the company now also offers smart wearable, personal grooming, mobile accessories. Over the past one year, boAt acquired smartwatch brand Tagg, gaming accessories brand RedGear, men’s personal care brand Misfit and Singapore-based KaHa to enhance its wearables category.
Within a year, wearables have grown to contribute around 15-20 per cent of the company’s revenue from being minuscule a year ago, and going forward boAt will be building on this segment. The company will eventually build a house of electronic lifestyle brands and has set up a separate merger and acquisition team to track on opportunities.
Over 80 per cent of the sales for the company is happening through e-commerce channels, 3-4 per cent from their own website and rest from offline network of 20,000 stores which includes modern trade stores and general trade stores. Gambhir sees an opportunity of reaching 2,00,000 offline stores and penetrating deeper in tier-3 and tier-4 cities.
The company recently entered Nepal and is evaluating the Middle East and other Southeast Asian markets, where it plans to venture over the next six to 12 months. This year, boAt is also targeting team expansion by 30 per cent. It currently has a team of around 400.
Published on
March 23, 2022
