In the grand chessboard of India’s smartphone market, where foreign players have long dominated with deep pockets and aggressive pricing, a homegrown challenger is quietly fortifying its ramparts. Lava International, the indigenous smartphone and accessories brand, is gearing up for an audacious expansion, arming itself with a war chest of ₹500 crore ($58 million) in fresh funding. As the company inches towards a public listing, it aims to carve out a formidable presence in an industry where Chinese brands have historically held sway.
The Calculated March to an IPO
The company’s executive director, Sunil Raina, remains circumspect about the valuation of this fresh fundraising round, but an earlier attempt at going public in September 2021 had pegged Lava’s worth at ₹14,000 crore ($1.7 billion). The IPO, he suggests, is not an immediate priority but a strategic tool to be wielded when the company’s market position justifies it. “We will consider an IPO only when we build up a certain scale,” Raina explains.
This cautious optimism belies the challenges ahead. In a hyper-competitive market where the government’s ‘Make in India’ push has seen several domestic manufacturers falter under foreign competition, Lava seeks to rewrite the script. The company is channeling funds into bolstering its market penetration, strengthening both online and offline retail channels, and ramping up marketing efforts to reclaim lost ground.
A Battle Against the Odds
The company’s resurgence comes against the backdrop of a tumultuous financial year. Data from Counterpoint and estimates shared by Raina indicate that Lava will sell approximately 1.5 million smartphones in 2024. However, in the fiscal year ending March 2024, Lava’s consolidated revenue saw a 25% year-on-year decline to ₹3,646 crore ($426 million). Its net operating profit took an even sharper hit, plummeting 85% to ₹11.6 crore ($1.4 million).
Compounding its woes, the arrest of its erstwhile managing director, Hari Om Rai, in October 2023 on money laundering charges linked to BBK Electronics-backed Vivo, cast a long shadow over the company’s credibility. Yet, the brand has remained steadfast, choosing to turn adversity into opportunity.
Expanding the Battlefield
For Lava, the road to resurgence lies in aggressive expansion. Raina acknowledges that the company’s market share has remained muted despite governmental incentives for local manufacturing. To counter this, the brand is executing a multi-pronged strategy: greater marketing spends, increased outreach to a wider consumer base, and heavy investments in software research and development (R&D).
“This year, we expect to report 10% annual growth, both in terms of device shipments and revenue,” Raina asserts. “About 80% of our sales still come from offline channels, but we’re ramping up marketing and outreach efforts this fiscal to reach out to a wider customer base.”
A key pillar of Lava’s long-term strategy is intellectual property (IP). The brand sees investments in R&D not just as a means to stay competitive but as a vital hedge against price wars with Chinese and global brands. “IP is a way of earning a bigger margin in the long run,” Raina explains, hinting at a future where proprietary technology may allow Lava to command premium pricing.
The Looming Question: Can Lava Turn the Tide?
In many ways, Lava’s resurgence represents the larger narrative of India’s battle for self-reliance in the tech sector. The company stands at a critical juncture where execution will determine whether it can become a true counterweight to foreign dominance or merely another footnote in the industry’s volatile history.
With the impending infusion of capital and a recalibrated strategy, Lava is, at the very least, ensuring that the battle for India’s smartphone market remains far from a foregone conclusion. The coming months will reveal whether this is the dawn of a new domestic champion—or merely another valiant yet futile stand.