From being a $10-million company, Datawind, better known as the manufacturer of low-cost tablet, Aakash, is now aspiring to become a half-a-billion-dollar company in just 12 months. Datawind CEO Suneet Singh Tuli shares with Piyali Mandal how, riding on Aakash, the company's valuation has tripled and how it is planning to raise more capital to fund expansion in 2012. Edited excerpts:
Recently, your product elicited huge interest when it went for sale online. In 14 days, 14 lakh devices were per-booked. Did you anticipate this kind of demand?
Not in my wildest dream I could have imagined this. Six months ago, the expectation for the tablet market was 2.5 lakh units a year. While talking to distributors, we would say we want to produce one lakh units in India, and they told us that if we were to sell 2,000 units a month, we should be happy. Now, we are looking at producing over four lakh units a month.
In pre-booking, where did most demand come from?
It was from individual buyers across the country, the profile of whom are similar to that of Internet users' in the nation. Among them, 75 per cent were males and 25 per cent women, and 80 per cent of them were below the age of 35. So, it is the young male who is keen on buying our product.
Based on the initial success, what is your revenue target?
We are looking to close the year (by December 2012) with revenues of $400-500 million.
As you grow from $10 million to $400 million in a year, the capital requirements would be huge. What kind of investment are you looking at?
We are looking at investing $100 million this year. We will use the fund for maintaining inventories and opening new plants in India.
How are you planning to raise the amount?
We are getting expressions of interest from Indian and foreign investors. We are in active negotiation with equity partners and private equity funds. We are comfortable with 10-15 per cent stake dilution.
What are the valuations you are getting?
Investors are valuing our Indian entity at Rs 300-500 crore. This is three times the valuation a year ago.
Are you looking at hitting the capital market?
The idea is to do two rounds of financing and then go for IPO.
What kind of demand you are experiencing globally?
A lot of demand is coming from countries such as Thailand, Turkey and others. This is mainly from educational institutions.
Are you going to export?
Yes. Initially, the four plants (one old and three proposed) would cater to the demand in India. Later, we are thinking of exporting the product, depending on demand.
After the launch of Aakash, we have seen various sub-Rs 10,000 category tablets hitting the Indian market. How do you see competition shaping up in the low-cost segment? Do you think Aakash is going to sustain the demand momentum?
For any such device to be successful in India, it has to do good Internet. If it can't deliver that, it will not click with users. It must have mobile connectivity. All cheap devices coming in the Rs 5,000-6,000 range are Wi-Fi compatible only. All our devices will have mobile connectivity. We are tying up with telecom operators to launch a Rs 98 monthly plan for users. This is a common man's tablet, hence affordability is key.