Lenovo Expects Around 30% Growth In this Fiscal and Plan to Begin Manufacturing Tablets in India

While this year is considered as the year of recovery, world-leading PC maker Lenovo expects to grow by 25-30 per cent in the current financial year due to increase in demand from education segment and large enterprises, a top company official said.

However, the growth may decline in the next financial year, Lenovo India CEO and Managing Director Rahul Agarwal quoted in media, adding that the company has always grown in double digits and will continue to maintain the trend.

Lenovo is also planning to start manufacturing tablets in India and expand laptop manufacturing by about 10 times.

"It has been a roller coaster ride this year, but we will grow by 25-30 per cent for the full financial year if we remove the ELCOT deal. The ELCOT deal was 1.5 million PCs which has not happened this year," Agarwal said.

"The consumer market is to be 4 million. It has been flat for the last 5 years. It is suddenly exploding because of learning from home and is growing by 40 per cent," he added.

In 2019, Lenovo India had bagged an order from ELCOT, the nodal agency for procuring electronic hardware and software for Tamil Nadu government and its schemes, for providing over 1.5 million laptops to students in the state.

Agarwal said B2B (business-to-business) demand is still muted and it may grow by 4-5 per cent for full year.

According to market research firm IDC, the Indian traditional PC market, inclusive of desktops, notebooks, and workstations, delivered a strong 9.2 per cent year-on-year growth in July-September quarter, driven by demand to learn from home.

Lenovo witnessed 40 per cent growth in the consumer segment in October-December period.

Agarwal said the industry is facing shortage of components, mainly display panels, which affected laptops, but Lenovo was able to cater to the spike in demand.

"Right now we are seeing shortages of panels for the next 3-6 months. It will impact shipment, but now we don't expect the market to keep growing because whoever has to buy a PC to learn from home has already bought.

"B2B is almost muted. When the economy comes back, then many companies who have put hold on their purchase will start buying," he said.

The company is now planning to increase laptop manufacturing facility by about 10 times at its Puducherry facility.

"We manufacture very few laptops -- major expansion is happening on laptops. We will grow laptop manufacturing by 10 times. Our goal is to meet 50 per cent of the India requirement by end of the year. We will see if the ecosystem grows, then we will expand further," Agarwal said.

The company is also going to start manufacturing tablets in India through an original design manufacturer.

"On tablets, we have been more focussed on the commercial side of business. We have 60-65 per cent market share. The consumer market was declining till the time pandemic happened. Suddenly people had to buy tablets," he said.

"The consumer market has exploded in the second quarter by more than 100 per cent. We are seeing that our tablets, most of them were being sold through retail outlets, but now a lot of them are going from our Moto store outlets, exclusive outlets, large format retail stores," Agarwal added.

He said tablet PCs with 8-inch screen size have the highest demand, and the company will initially make Lenovo M8 tablets in India to cater to requirements of government, consumers and students .

Agarwal said the company ramped up its after-sales service this year as many people went back to their hometown and started working from remote locations.

Lot of small towns are now getting covered with the company's service and 75 per cent of its consumer PC sales are from non-education segment.

"We have almost 1,000 service centres and cover 29,000 pin codes in India and we do not refuse service anywhere. Even if it is in a village, we find a way out," Agarwal said.

According to IDC, Lenovo was ranked second after HP in terms of shipment of personal computers (PCs) in India in July-September 2020 period. It was ahead of Dell, with a share of 21.7 per cent in overall shipments and witnessed a 27 per cent year-on-year growth in the consumer segment.

Lenovo registered a 46.2 per cent growth in its small and medium businesses (SMB) shipments as it prepared the channel to avoid supply uncertainties in the coming months, IDC said.

"SMB used to be around 2.2 million, but it will be flat this year. Enterprise is a mix story. Overall it is going to grow by 10 per cent, but a lot of it was only because of large software companies who had to buy laptops for their engineers because they had desktops," Agarwal said.

He said large scale purchases by enterprises are not expected in next financial year, and schools will also open sooner or later which will also taper down consumer demand.

"PC market growth will come down next year. When we look at Lenovo, the market has always been flat, but we have achieved double-digit growth. Our goal is to grow by double digits every year," Agarwal said.