CIOReviewIndia Team | Wednesday, 06 January 2021, 14:37 IST
During the initial years of the previous decade, the smartphone accessories and wearable devices segments of India were dominated by world-famous brands like Apple and Samsung. It was before the Chinese brands stole the market with their affordable devices in 2014.
In this heavily competitive market, BoAt, an Indian consumer electronics startup, looked to brand their artifacts in 2016.
boAt was initially renowned for its headphones, which resonated with budget-friendly prices with the consumers.
Soon, it diversified into more high-end products. In 2020, boAt witnessed the supply chain expansion getting disrupted in China due to the shutdown of factories in the country.
It was followed by a demand shock once the Covid-19 lockdown got lifted in India and the consumers unleashed their pent-up demand for non-essential products in different categories.
In the past few months, boAt announced its intentions for bringing its supply chain to India with plans to start local manufacturing this year.
Now, boAt raised $100 Mn from an affiliate of Warburg Pincus.
Warburg Pincus is a New York-based private equity firm. boAt will utilize the fund to conduct research and development of new devices.
The funding round valued the company at $300 Mn.
The cofounder of boAt Aman Gupta said to Inc42 that the new funds will be stored for company’s R&D efforts, which are led from a dedicated hub in Bengaluru.
This would in turn bolster the company’s ‘Make in India’ ambitions. With these plans, the company has not yet started manufacturing its devices in India.
Gupta said, “boAt would focus its R&D efforts to widen its presence in the smartwatches sub-segment, while also looking to come up with gaming peripherals such as joysticks, headsets, gaming mice and keyboards.”
Although the global electronics majors dominate the audio and mobile accessories space worldwide, boAt seems to have disrupted the status quo.
boAt is the fifth-biggest wearable brand in the world. It is tied with Fitbit at 2.6 percent market share, which is, in India, boAt’s biggest player in the space, ahead of Apple, Samsung and Xiaomi.
boAt last raised funds in September 2020 in a debt funding round which was worth INR 25 crore from the Innoven Capital, and before the recent funding, from three investors, boAt acquired an amount of INR 67 crore, with reports from 2020 stating of sell of 15,000 units per day.
The competitors of boAt include heavyweight names of Samsung, Apple, Huawei, Xiaomi and Fitbit, and 200-plus local and global electronics brands. Also, Portronics, Zebronics, Noise, iBall and ICCON are considered as main competitors.
Sameer Mehta, cofounder of boAt also said, “Going forward, with the government’s support, we will focus on building capabilities in domestic R&D and undertake vertical integration across both the hearable and wearable space to establish India as a global supplier.”
When growth projections are considered, Gupta explained that boAt had closed FY20 as an EBITDA-positive entity, with a revenue band of INR 701 crore, a YoY growth of 196 percent and profit of INR 49 crore. The YoY increase was clocked at 470 percent.
The drastic impact of the pandemic is predicted to be felt in the balance sheet of the current financial year – FY21.
Gupta said, “Our business was impacted. From the Covid-19 lockdown meaning closure of business in India for more than two months to supply chain disruptions in China because of the shutdown of factories there, I think we’ve seen plenty.”
boAt claims to have recorded an amount of INR 33 lakh in sales in the third quarter of the current financial year.
Gupta said, “Pent-up demand and expansion across product categories meant that sales volumes spiked well. We are hoping for a 30-35% growth in FY21.”
According to Gupta, the fundraising is an approval signature for India’s D2C (direct-to-consumer) startups. However, whatsoever the name suggests, pure-play D2C is virtually non-existent in India as high competition among consumer brands. It chirps that no company, except maybe the big tech-gods can afford to outshine others in the widely popular marketplaces like Amazon and Flipkart.
The story of boAt rhythms to the same keys, sticking to an omnichannel approach, while selling its products both through renowned online e-tail stores and its website and offline multi-brand like Croma.
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