Samsung India’s Growth Falls To A Ten-Year Low
Samsung expanded at the slowest pace in India in more than a decade in 2014-15, triggering restructuring, headcount reduction, beefing up of product portfolio and cutting of flab, to reverse the trend at the country’s largest consumer electronics and mobile phone maker. As per the annual return form filed with the Registrar of Companies, Samsung India Electronics’ turnover in 2014-15 was Rs 38,868 crore.
Turnover, as defined in the Companies Act, 2013, is the aggregate value of realization of amount made from the sale, supply or distribution of goods and services rendered by a company. Samsung India’s gross revenue, including excise and other income, grew 3% to Rs 41,575 crore from Rs 40,392 crore in 2013-14, officials said.
This could not be independently verified, though, since the data is not yet available from the registrar. The meagre growth is a huge setback for the company, which grew 40% in the past two years and has been growing its business 10-15% a year since it entered India in the late 1990s.
In 2013-14, Samsung overtook ITC to become India’s second-largest consumer-facing products company by revenue, and appeared in a position to overtake Maruti Suzuki in the current fiscal to take the top slot. However, Maruti Suzuki closed 2014-15 with sales of Rs 49,970 crore.
According to two senior industry experts, Samsung’s revenue in 2014-15 was impacted due to poor presence in the sub-Rs 10,000 smartphone segment where Chinese rivals such as Xiaomi and Lenovo-Motorola combine and Indian firms gave it a beating, and neglecting the white goods business, which saw a revival during the year. The mobile phone business accounts for more than 70% of Samsung India’s revenue.
Samsung India president HyunChil Hong had in March indicated to ET that revenue growth in 2014-15 would be slower, but said that it will outpace industry growth rate. A large revenue base also impacted the company’s growth, he had said. In 2014-15, smartphone market grew 40%, while the growth was 25% and 10% for television and home appliances, respectively.
Hong, who took charge of Samsung India a year ago, has restructured the business several times, cutting expenses, reducing manpower, making the organization leaner and sharpening focus on the television and home appliances business where operations have been restructured twice this year. He has also strengthened the smartphone business, including launch of several sub-Rs 10,000 models to take on the Chinese and Indian brands, foray into e-commerce with dedicated models and even overtaking Apple in the premium segment.
“Hong is under pressure from headquarters to grow the business this year. While it has managed to hold onto the smartphone business this year, it has failed to cut much teeth in appliances,” said another senior industry executive, requesting not to be identified. In appliances business, rival LG India has strengthened its business this year with a new chief and newer entrants such as Bosch-Siemens have adopted a more aggressive strategy.