Xiaomi turns profitable in third year in India
Xiaomi together with another Chinese smartphone maker Oppo Mobiles, added over $2 bn of sales in India, considering the latter too grew by 754% last year to Rs 7,974.3 cr.
Xiaomi Technology India saw sales surge 696% to Rs 8,379.3 crore with net profit of Rs 163.9 crore during FY17, its third year in India. A year ago, it had revenues of Rs 1,046.2 crore with net loss of Rs 46.9 crore.
The financial performance in India is likely to help the Chinese smartphone maker’s prospects about an initial public offering where it is seeking a valuation of at least $50 billion.
After China, India is the second largest market for Xiaomi where during the July-September quarter, it caught up with market leader Samsung in volume shipments, as per market tracker IDC.
“The entire revenue is generated through sale of cellular phones, accessories, spares and services. Directors expect the performance of the company during the current financial year to improve as estimated,” Xiaomi said in its regulatory filings.
In fact, Xiaomi together with another Chinese smartphone maker Oppo Mobiles, added over $2 billion of sales in India, considering the latter too grew by 754% last year to Rs 7,974.3 crore.
Both overtook the country’s two largest homegrown mobile phone makers, Micromax and Intex, and Japan’s largest electronics maker Sony India last fiscal, highlighting the growing clout of Chinese companies in the electronics space.
An email sent to Xiaomi India did not elicit any response till Wednesday press time. The company, in an interview to ET earlier this year, said it clocked $1billion in revenue from its India operations last calendar year, and is on its way to more than doubling it this year.
A senior executive with a leading cellphone retail chain said Xiaomi’s performance last fiscal despite demonetisation reflects the huge craze the brand has built in India. “In fact, even now demand is more than supply for some Xiaomi handsets, and in offline stores whatever supplies come they are sold out instantly,” he said.
Tarun Pathak, associate director at Hong Kong-based market tracker Counterpoint Research, said part of growth for Xiaomi last fiscal was at the expense of the competition, but it got a major pie of the Rs 6,000-10,000 price band where consumers were upgrading. The researcher estimates Xiaomi will grow by 3.5 times its volume sales in India this year.
“However, now that Xiaomi is expanding into brick-and-mortar retail, they need to be careful since it’s a difficult channel and has its own challenges. But that expansion too will further aid its numbers in India despite a high base,” said Pathak.
According to Counterpoint Research, Chinese firms controlled more than half of the Indian smartphone market as of September this year, compared with 33% a year earlier. The share of Indian brands has narrowed to 14% from 33% in the same period.