How Karbonn became a Rs 2,400cr telecom behemoth

I
was bitten by the entrepreneurship bug early in life. Immediately after
graduating in commerce from Delhi’s Bhagat Singh College in 1991, I
decided to set up a business, much to the chagrin of my parents.

My
father was a government official and wanted me to follow in his
footsteps. Instead, I planned a distribution business, opting for this
route because it was not as capital-intensive as manufacturing.

The
risk was also more manageable since all I had to lose was the
commission. My gamble paid off, and today, the Jaina Group is a Rs 2,400
crore venture with interests in telecom and consumer durables.

The
beginnings were humble. In July 1991, I set up an office in a small
garage attached to my father’s Delhi home. I borrowed Rs 5 lakh from my
parents, friends and relatives, and used it to redo the office interiors
and register the company. Since I wanted the company to bear my family
name, I chose Jain Marketing, but as the name was already taken, I
picked Jaina Marketing.

My first product was unbranded electric
juicers. On the first day, I approached the owner of a huge store at
Lajpat Nagar, Delhi. Not only was I a novice, unaware of the workings of
the market, I also had no sales pitch.
The shop owner assumed the
rate was for a dozen pieces and placed an order for 12 juicers for the
next day. My joy turned to shock when I was paid just Rs 1,600 for the
entire consignment, whereas I was expecting Rs 19,200. However, I
decided to bear the loss, but then the shop owner placed another order
for 24 juicers.

At this point, I told him that the price had been
revised to Rs 1,600 per piece. Expectedly, he was shocked and when he
demanded an explanation, I told him that since he was my first buyer, I
had quoted a discounted rate. He was impressed and not only did he pay
in full for the remaining 11 pieces, but also confirmed the new order.
He also gave me valuable tips on selling and steering clear of dubious
traders.

Before the year was out, I had employed four people and
added other products like Eagle flasks to the product repertoire. The
turnover in the first year of operations was a healthy Rs 1.25 crore.

By
1996, we had managed to diversify and started distributing products
like Symphony coolers, Ray-Ban sunglasses, water purifiers and
electronic products from reputed companies like Philips.

Our
foray into the telecom vertical followed soon. In the mid-1990s, mobile
phones were just beginning to make a foray in the country, so we decided
to make the most of it.

In April 1996, we opened a small
showroom at Kailash Colony and started dealing in mobile phones from top
companies, such as Nokia and Samsung. Two years later, we went into an
expansion mode by opting for national distributorship. By 2005, we were a
150-strong team spread across the country and became the India
distributors for players like HTC, LG andMotorola.

Having a huge
dealer network in place, we were able to keep track of the market pulse
and this is how we realised that the time was ripe to introduce our own
brand. We joined hands with Bangalore-based United Telecoms Limited
(UTL) to launch our own brand of cell phones, Karbonn.

The idea
was to get into tier II and III cities and eventually move to the
metros. We initially invested Rs 40 crore, and by March 2009, we had
successfully launched the brand with five models costing between Rs
2,000 and Rs 6,000.

These handsets are manufactured in Shanghai,
Taiwan and Korea, though the product designing and testing is conducted
in India. We advertised heavily to gain visibility, and it paid off
since we enjoyed a good response from the market. We sell around 20 lakh
phones a month, which include 5 lakh smartphones and 15 lakh
feature/touchscreen phones. Till date, we have invested around Rs 250
crore in the venture.

Soon, we may be able to start
manufacturing Karbonn mobiles in the country. In addition to a UTL unit
in Bangalore, which will be operational shortly, we have finalised the
location of another manufacturing plant in Chennai. We are simply
awaiting a more favourable policy on mobile phone manufacturing for
entrepreneurs.

The Jaina Group is going great guns, with around
650 employees spread across 85,000 distribution outlets and 1,000
service centres around the country. We deal in 25 types of mobile phones
and tablets, and are now eyeing a sales target of Rs 1 billion.

Though
we already have a presence in countries like Nepal, Bangladesh and Sri
Lanka, we plan to expand our reach to regions like South Africa and
Middle East in the near future. Nearly 7-8% of our revenue comes from
the export market, but given the untapped potential of the domestic
market, we aim to reach out to Indians before focusing on the
international footprint