Make in India: Lava paving the way for mobile manufacturing ecosystem

Lava, one of the key India-based handset OEMs, made its first foray in to the Indian mobile phone market in 2009. Lava, with its understanding of the Indian mobile phone market, has been posting strong growth ever since and has expanded beyond India to become a multi-national mobile phone brand. In 2013 the company was the first to launch a 4G – LTE enabled smartphone in India under the name of its sub brand Xolo, beating the likes of Samsung, Sony and LG into the market. This showcased that the company was committed to its goal of becoming the top mobile phone brand in India.

The company started manufacturing in India to better control and enhance the quality of its products, helping to further develop the brand’s reputation among consumers. Lava is also planning to establish a design house in India with personnel trained at its China R&D center. Lava claims to be the only mobile phone company outside China to have end-to-end control over its product design and quality.

Table 1: Lava handset and smartphone growth over the years

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Lava Make in India Plan:

In line with the ‘Make in India’ philosophy, the company started in-house manufacturing at its Noida facility in April 2015. Counterpoint Research analysts had an opportunity to visit its Noida facility where the company manufactures both smartphones and feature phones. The company is also investing in two green-field manufacturing projects in Greater Noida and Tirupati.

Lava has presented a phased manufacturing plan to the government where it will increase local value addition from the current 7%-10% to 70% in the next five years. It is already sourcing chargers, USB cables, earphones and packaging materials locally. In the next step of the localization, the company is planning to support component players and source batteries that are locally packaged in India. Along with batteries the company also aims to locally source speakers, vibrators, receivers and shells during 2017. The company is also in talks with display and PCB players with the aim of locally sourcing these components toward establishing surface mount technology (SMT) lines in its facility in the coming years.

Lava Manufacturing Operations Overview

Infrastructure Overview:

  • The Noida facility started with an output of about ten thousand mobile phones a month both including smartphones and feature phones. It currently produces 1.5 million phones a month with eight assembly lines and four packaging lines running 24×7.
  • The Noida facility has yield rate of 98%.
  • The company aims to export mobile phones from India by 2018, after the completion of the two proposed greenfield manufacturing facilities, land for which has already been allotted by the Uttar Pradesh and Andhra Pradesh governments.
  • With its second manufacturing plant operational, the total production capacity will jump from current 1.5 million mobile phones a month to 2.5 million.
  • The company is investing a total of INR 2,615 crore (US$ 393 million) on its expansion plan and Make in India effort.

Table 2: Lava market share in India Market

lava-market-share

Conclusion

  • One of the top five mobile phone brands in India and an advocate for the Make in India initiative, Lava became a partner in the Make in India efforts of the Indian government.
  • As part of its expansion plan, Lava is setting up India’s first product design facility for mobile phones in Bangalore, India to have a complete grip over its operations from design to after sale services.
  • Having operations in India would potentially mean cheaper shipping operations to places like Africa, enabling even more affordable products being made available to the price sensitive markets like those of Kenya and other African countries.

The detailed analysis and further insights regarding Lava manufacturing operations are available on our research repository site.