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    Apple’s India head Sanjay Kaul quits amid company's slowest growth in 5 years

    Synopsis

    The development also comes on a day the company increased prices of all but one iPhone model by an average of 3.5% after the government raised the basic customs duty.

    Sanjay KaulOthers
    People aware of the development added that Kaul is likely to begin another venture in an industry that may not be directly connected to the mobile phones business.
    NEW DELHI: Apple’s India head Sanjay Kaul has put in his papers and will be moving out with immediate effect, people aware of the development said.

    The move comes at a time when the iPhone maker reported its slowest pace of growth in India in over five years for the fiscal year ended March 2017, which is expected to taper further.

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    The development also comes on a day the company increased prices of all but one iPhone model by an average of 3.5% after the government raised the basic customs duty (BCD) on mobile phones imported into India to 15% from 10%.

    The price hike, most analysts said, will force the Cupertino-based smartphone maker to manufacture more within India if it wants to retain or take share from rivals such as Samsung, Xiaomi, Oppo or Vivo who make most of their devices in the world’s second largest market. They added that Apple, which imports 88% of the devices it sells in the country and makes only iPhone SE in Bengaluru, could also give out more offers and discounts to protect its 2.2% market share.

    “Sanjay has moved on, he will no longer be heading India operations,” one of the people privy to the development told ET, asking not to be named.

    Apple didn’t immediately respond to queries regarding the exit of Kaul, a Canadian citizen who had been named country manager in May last year, after being sales director and head of iPhone sales since April 2011.

    People aware of the development added that Kaul is likely to begin another venture in an industry that may not be directly connected to the mobile phones business. He could not be reached for a comment.

    The exit of Kaul comes at time the Mac and iPod maker is struggling to increase its share in a price sensitive India where market leader Samsung has 22.8% share, according to Counterpoint.

    The company’s revenue growth for the year ended March 2017 also slowed to 17% on year at Rs 11,618.7 crore, compared with about 40% annually in the five years to FY16.

    “The choice for Apple is clear: To retain its existing market share, it will have to ramp up local manufacturing in India,” said Prabhu Ram, head of the industry intelligence group at CyberMedia Research.

    “Apple will certainly see its modest market share erode further. Increase in iPhone prices will push new customers to other exciting Android smartphone brands in India,” he cautioned.

    Worryingly for Apple, industry insiders and analysts expect the pace of growth in the current fiscal to remain sluggish due to tepid demand for the iPhone 8 and 8 Plus and the contribution of older and cheaper models to sales.

    Troubles may have already started mounting, as some large format retailers that ET spoke to said demand for iPhones had become less than the supply.

    “Now we have adequate stock but not enough buyers,” said one of the large retailers headquartered in Mumbai, who did not want to be named. The retailer added that with the price increase being passed on to consumers, sales may become tougher.

    “Apple enjoys huge brand premium and appeal in India, similar to all its other markets around the world. Consumers do not mind paying a premium for Apple products and in fact an Apple consumer doesn’t look at the price, the first thing while making purchase,” said Navkendar Singh, senior research associate at IDC India.
    The Economic Times

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