There is no confirmation on where these funds will be utilised.

Xiaomi injects Rs 3500 crore into India business
Atom Investment Monday, March 18, 2019 - 20:24

As if any confirmation was required of the significance of the Indian operations for Xiaomi, the company has made an investment of Rs 3,500 crore in its Indian entity, Xiaomi Technology India. As per the mandatory filing with the Indian government authorities, this amount has been brought in through the Chinese major’s Singapore firm Xiaomi Singapore Pte. Ltd., which holds almost 100% of the Indian company’s equity. There were two tranches, of Rs 2,000 crore and Rs 1,500 crore. The lower amount came in first in January and the Rs 2,000 crore tranche in March.

The company has not made an official announcement on this nor responded to queries on the subject. Therefore, there is no confirmation on where these funds will be utilised. But those in the know say that the company plans to push some of its other products like water purifiers, washing machines, laptops and refrigerators, which it sells in its home market, but has not made much headway here. The opening of its offline Mi Home stores will now be used to showcase these products and market them effectively. The funds now brought in could be used for expanding these offline stores in more cities across the country as well.

Xiaomi has managed to capture the No.1 position in the Indian market in terms of the number of mobiles phones sold though the South Korean major Samsung still clocks a much higher revenue; almost 50% higher than Xiaomi. Samsung used to be the leader earlier, selling more phones.

Market observers point out that Xiaomi found it easier to sell its mobile phones through ecommerce sites like Flipkart where it did not have to spend much on marketing them. Now that it has reached a consolidation stage and the offline model will definitely demand ad spends etc. the funds are being invested.

Interestingly, Xiaomi has not set up its own manufacturing unit in India. There are only contract manufacturers who make and supply its products.

Television is one sector where Xiaomi has entered the Indian market and has made some decent progress. It would want to replicate these successes in other products in the white goods category as well.   

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