Chinese smartphone makers, Oppo and Vivo continued their scorching pace of growth in the Indian market in FY19, with both the brands together pushing parent BBK Electronics Corp’s India revenue near the Rs 40,000 crore milestone in their fifth year of operation.
As per latest filings made by Oppo and Vivo, the combined sales of these two brands grew by 67% to Rs 38,726 crore in the fiscal ending March 2019 on a relatively higher base.
On a standalone basis, Oppo’s sales went up by 80% at Rs 21,524.6 crore, while Vivo grew by 54% at Rs 17,201.79 crore in 2018-19. BBK Electronics also owns OnePlus and Realme smartphone brands whose India sales for FY19 are still not available.
In 2017-18, their combined revenue was Rs 23,148 crore whereby BBK Electronics had become the second largest smartphone maker in India marginally ahead of ace rival Xiaomi which was at Rs 23,060 crore. Samsung led the Indian mobile phone market by sales in FY18 at Rs 37,349 crore. Xiaomi and Samsung are yet to file their India financials for last fiscal.
However, BBK Electronics is still not making money in India with both Oppo and Vivo yet to breakeven. As per the filings, the combined losses of Oppo and Vivo went up in FY19 by 47% to Rs 707 crore. While Oppo’s net losses went up by 93% to Rs 688 crore in last fiscal, Vivo managed to reduce net losses to Rs 19.09 crore from Rs 124.29 crore. In contrast, Xiaomi and Samsung were profitable in FY18.
Analysts said the losses of Oppo and Vivo went up last fiscal in India since they have considerably hiked their fixed assets such as property and equipment, and manufacturing more inventory than that can be sold.
“Owing to the impending hike in customs duty on mobile phones, BBK Electronics is aggressively increasing its manufacturing capacity in India,” said Mohit Yadav, founder of business intelligence platform Veratech Intelligence, who analysed the financials for ET.
“The same is evident by the increase in the cost of materials consumed which was at 68% in Vivo and 109% in Oppo. More importantly, the inventory has increased by almost 300% in Vivo and 200% in Oppo. This shows BBK’s confidence in Indian markets. The company does not see a slowdown in cellphone consumption happening anytime soon,” said Yadav.
In response to an email, Oppo Mobiles India said the country continues to be a high-priority market and the company has been investing significantly to raise the bar in manufacturing, research and development and increase touchpoints. The company said it has grown by 41% in 2019 which has been attested by market researcher IDC.
Vivo Mobile India did not respond. The company on Wednesday announced the roll-out of phase one of its new manufacturing facility in Uttar Pradesh as part of its Rs 7,500 crore investment plan in India.
By market share, three of BBK brands – Vivo, Oppo and Realme – are the third, fourth and fifth largest smartphone brands in India. OnePlus was leading the premium smartphone market in India (handsets priced Rs 30,000 and above) despite close competition from Apple and Samsung.
As per IDC India’s latest report, Vivo had 15.1% share in April-June quarter as compared to 12.6% in the same period of last year, Oppo had 9.7% share (7.6%) and Realme 7.7% as compared to 1.2% in corresponding period of 2018. Xiaomi led the market with 28.3% share in April to June followed by Samsung at 25.3%.