Xiaomi infuses Rs 3500 Cr in Indian arm

The Chinese smartphone maker Xiaomi has just invested Rs 3,500 crore into its Indian entity in an effort to bid to strengthen its stranglehold in the Indian market.

As per the latest data from the Hong Kong-based market tracker Counterpoint Research, Xiaomi had a 28 per cent share of the Indian smartphone market in 2018, compared with 19% in 2017.

Samsung, Vivo, and Oppo were almost stagnant in both the years with market shares of 24 per cent, 10 per cent and 8 per cent, respectively in 2018.

In what is the biggest by the Chinese company since it entered the country over four years back, Xiaomi infused the money into Xiaomi Technology India in two tranches this year: Rs 2,000 crore on March 1 and Rs 1,500 crore on January 17.

The firm, counted among the world’s largest technology startups, did not mention in its filings where it would use the funds.

However, according to market watchers, Xiaomi is expected to utilise the funds to enter the white goods sector — such as water purifiers, washing machines, laptop market, and refrigerators — as well as to expand its company-owned Mi Home retail stores to sustain the leadership in the Indian smartphone market.

The money has been infused by the holding company, Xiaomi Singapore Pte Ltd, which owns 99.9% of the Indian entity — the balance 0.1% is owned by Xiaomi HK Ltd, which did not make any fresh investment.

Under the first transaction in January, 3,786 shares of Xiaomi Technology India were offered to the holding company at a premium on a rights basis, while for the second one, in March, 6,959 shares were allotted.

The company had primarily grown sales in India by relying on online sales in Flipkart and Amazon where operating expenses were much lower than selling through brick-and-mortar stores while betting on digital marketing and word-of-mouth publicity.

Xiaomi also does not own any manufacturing units in India as its contract manufactures smartphones, televisions, power banks and accessories.

Xiaomi Technology India’s sales in 2017-18 grew 175 per cent to Rs 23,060 crore, while its net profit went up 79 per cent to Rs 293 crore.

By revenue, Samsung is still the largest smartphone company in India. It had a mobile phone business revenue of Rs 37,350 crore in 2017-18.

Samsung has in recent months cut down on profit margins on a number of new models of smartphones in a desperate attempt to wrest back leadership in the Indian market.

According to another report, Xiaomi is gearing up to give tough competition to Samsung by coming up with a foldable smartphone at a competitive price of Rs 74,999 this year. In the next few months, the rivalry between the companies is expected to intensify to the benefit of Indian consumers.

The development was reported by ET.