Galaxy Note 7 debacle may hit Samsung India revenue by Rs6,457 crore: CMR
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New Delhi: Research firm CMR on Friday said Samsung’s India revenues could take a hit of Rs.6,457 crore on account of recall of its flagship Galaxy Note 7, a claim that was refuted vehemently by the Korean major. In a report, CMR said Samsung’s smartphone shipments to India may fall short of target by 4 million units in 2016, translating into an impact of Rs. 6,457 crore in terms of revenues. “As per projected growth, Samsung was expected to touch revenues of Rs.45,446 crore in CY2016, an increase of 46% compared to previous calendar year. However, following the Note 7 issue, it can earn revenues of Rs.38,989 crore, which means a growth of 25% in revenues in CY2016,” the report said.
Debunking the report, a Samsung India spokesperson said the company is “appalled by the incorrect reporting of company’s financials based on reports by various research agencies”. “The reports covered in some news articles quote different revenue loss estimates for Samsung India. These research reports are not based on empirical facts. Such projections by any research agency or analyst, therefore, is incorrect,” he added.
Samsung had unveiled the Galaxy Note 7 in July in India with a price tag of Rs.59,900, but delayed selling the handset in the country after cases of battery exploding while charging were reported in various countries. The device was to be made available in the Indian market from September but the battery fiasco derailed the launch plans. “Samsung has not sold Galaxy Note 7 in India. However, we can confirm that contrary to these reports, we are headed for record sales of mobile phones this year,” the spokesperson said.
The CMR report, however, added that Samsung will continue to maintain its leadership in the Indian smartphone segment, but its market share will shrink by 4.2% and settle at around 25.5% instead of estimated 29.7%. “Though Note 7 is a high-end premium smartphone, the impact would be on Samsung spanning all across the segments,” CMR principal analyst for telecoms Faisal Kawoosa said. The issue is faced with the flagship model of the year, that too around festive season and as a result, customers’ confidence is shaken, he added. “A perception, right or wrong, gets built within the market that if the issue is with the high-end premium model, there could be issues in the other models too,” Faisal said.
Following the global recall and later halt in production, the world’s largest smartphone maker cut its quarterly operating profit forecast by a third to 5.1-5.3 trillion Korean won, translating into a hit of a whopping 2.6 trillion Korean won or $2.3 billion. The global consolidated sales estimate has also been lowered by 2 trillion Korean won ($1.7 billion) to approximately 47 trillion Korean won, after the company decided to permanently halt sales of the troubled Note 7 device, in less than two months after its launch.