India is a price sensitive market, and that has helped the Chinese companies with inexpensive offerings to grow rapidly in the region. This has resulted in brands like Xiaomi, Oppo, Vivo, and others making a dent in Samsung India’s market share and profits in the last few years. To compete with them effectively, Samsung has revamped its budget smartphone lineup with feature-packed models at lower prices.
While the strategy seems to have worked for Samsung to maintain its revenue lead in the Indian market, it appears it resulted in a decline in profits for the Korean company. According to an Economic Times report, based on Samsung’s filings at the Registrar of Companies (RoC) in India, the company’s total revenue in the country increased by around 11% from ₹ 55,511.9 crores ($1 billion = ~ ₹ 7,000 crores) in FY17 to ₹ 61,065.6 crores in FY18. Though the revenue has gone up, the company has much to worry about as the net profit declined by 10.7% to ₹ 3,712.7 crores during the same period.
The most profitable consumer electronics and smartphone brand in India
On its own, Samsung India’s mobile business revenue also witnessed a healthy growth of 37% at ₹ 37,349 crores, but here again, the gross profit dropped from ₹ 3,474.1 crores in FY17 to ₹ 3,415.9 crores in the last year. The trend of a spike in revenue and a drop in profit shows that while Samsung’s strategy to compete with the Chinese OEMs on price might have a positive bearing on its revenue and unit sales, it will hurt the company in terms of net profit. The numbers also show that the company operated on lower margins to counter the threat from Chinese OEMs.
The report also says that Samsung’s television business in the country saw its sales decline by around 3% to ₹ 4,512 crores, but the gross profit increased by an impressive 88% to around ₹ 222 crores in the last fiscal year. The contradiction shows that while Samsung might be doing poorly in unit sales of TVs, the company is doing well in the premium segment to improve its profitability.
Overall, Samsung is still the most profitable consumer electronics and smartphone brand in the country. It is also the largest television, frost-free, and side-by-side refrigerator brand in the country according to the regulatory filings. Though multiple reports have ranked Xiaomi as the largest smartphone vendor in the country, Samsung continues to be the revenue leader in the market. For comparison, Xiaomi’s FY18 revenue in India stood at ₹ 22,947 crores and Apple's at ₹ 13,097 crores. Oppo and Vivo, both of which are in losses, registered ₹ 11,994 crores and ₹ 11,179 crores in revenue respectively.
