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Consumer electronics startup Hammer will increase its manufacturing capacity for smartwatches to 3,000 units per day next year, from the current 1,000 units a day, in a bid to match the increased consumer demand, particularly from cities in southern India.
The company has recently rented a manufacturing facility in Hyderabad, where it will start operations in April next year. The plant has a capacity of up to 5,000 units a day. Hammer currently has a manufacturing plant in Panipat, Haryana where it produces its entire smartwatch range and about 65% of its audio products.
“It’s purely a demand-driven decision because manufacturing is a very operations-heavy thing. You can go under capacity but going over capacity in manufacturing leads to a lot of losses in terms of inventory piling up,” its founder and COO Rohit Nandwani told fe in an interaction.
He added that at present the company is manufacturing 30,000 smartwatches a month, but their sales point is 42,000 units. Encouraged by the growing demand, Hammer expects to end the financial year with sales of Rs 70-80 crore, which is nearly a 166% jump over the Rs 30 crore it had raked in a year ago.
In the last year or so, the company has largely pivoted towards smartwatches, which now make up about 80% of its sales. However, when it initially started operations in 2019, audio products were the core of its business. Now only about 15% of its sales come from wireless earbuds and headphones.
Even though it now makes up for a small part of the business, Nandwani added that audio products saw a strong uptick this festive season, when its average selling price also rose from Rs 1,200 to Rs 2,200.
“In terms of revenue, surprisingly in this Diwali season, audio did really well. There were a lot of pull factors for audio products compared to smartwatches. In terms of growth, October month did 2x sales compared to the business-as-usual period in September,” he said.
Hammer holds a 1.7% market share in the smartwatch category in India, which is dominated by Internet-first brands such as Fire-Boltt, boAt, beatXP, and more. As per the latest data from Counterpoint Research, Fire-Boltt dominates the market with a 28% share, followed by Noise and boAt.
But overall, the smartwatch segment is seeing strong demand at present. In the July-September quarter, India’s smartwatch shipments grew 21% on year, due to high inventory build-up for the festive season in October, as per Counterpoint.
To grab a bigger chunk of the smartwatch market, Hammer plans to start investing in offline distribution at the end of FY25. “We wanted to cross Rs 100-crore mark, purely being an online-first brand, and then get into offline business. At present, our products are available in about 250 million Croma stores,” Nandwani said.
The company generates about 30% of its sales from its own website, about 20% from online e-commerce sites such as Amazon and Myntra, and the rest from retail partners such as Ferns and Petals. Hammer has so far been bootstrapped but it plans to raise growth capital from external investors after it crosses Rs 100 crore in annual sales.
As for its bottomline, the company generated Rs 1.2 crore or 6-7% of its sales as net profit in FY23 and hopes to maintain this percentage in this financial year as well.
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