Xiaomi Almost Doubled Its Profits in 2013: Report

Xiaomi, which recently entered the top three positions of smartphone makers worldwide, has reportedly nearly doubled the net profit it earned in 2013.

The Chinese smartphone maker, according to a report by the Wall Street Journal, earned a profit of CNY 3.46 billion (roughly Rs. 3,500 crores) in 2013, an 84 percent jump from 2012's CNY 1.88 billion (roughly Rs. 1,900 crores). The handset maker's revenue is said to have more than doubled to CNY 27 billion in the same period.

WSJ claims to have viewed a confidential document Xiaomi is using in pitches to secure a $1 billion (roughly Rs. 6,140 crores) bank loan for overseas expansion. Notably, Xiaomi was recently rumoured to be seeking fundraising that could value the company at over $40 billion (roughly Rs. 2,46,000 crores).

(Also See: Xiaomi Now World's Third-Largest Smartphone Vendor, Claims Another Report)

Xiaomi's reported profits while selling smartphones and dirt-cheap prices would certainly change analyst opinion that the firm has been sacrificing its margins at that rate. Notably, the company's cheapest handset Redmi 1S costs CNY 699 (Rs. 5,999 in India), while the costliest handset is priced at CNY 1,999 (roughly Rs. 20,000). It has been also noted that the firm, instead spending too much money on major marketing and advertising efforts, has been interacting with users directly through social networks and forums. China, Xiaomi's home turf and the largest smartphone market in the world, also has more than 600 million Internet users.

(Also See: Xiaomi Beats Samsung to Become China's Top Smartphone Vendor: Canalys)

Other Chinese firms have been doing very well in the recent past, with Lenovo and Huawei also among the top-five smartphone manufacturers since. The two firms have also followed a similar model of low-price smartphones (if not as cheap as Xiaomi), and are also starting to use similar marketing tactics.

The document suggests that Xiaomi last year spent CNY 876 million (roughly Rs. 880 crores) in 2013 in sales and other marketing expenses, whereas it spent less than half, CNY 416 million (roughly Rs. 420 crores) in 2012. WSJ adds that 94 percent of Xiaomi's revenue in 2013 revenue was generated from sales of the firm's handsets, while 1 percent was contributed by services like mobile games. Xiaomi has enjoyed much success expanding its services outside of China, in markets like India, and its flash sales of the Mi 3 and Redmi 1S handsets have seen great demand.

(Also See: Huawei, Lenovo See Huge Gains in Global Smartphone Market Share: IDC)

The firm has done excellently in China in the past year, outpacing Samsung to become the top vendor in terms of shipments in Q2 - according to data by Canalys, and Q3 data by Kantar Worldpanel Comtech.

The third quarter also saw some surveys peg Xiaomi as the third-largest smartphone manufacturer in the world, before being displaced quickly by Lenovo thanks to the completion of its acquisition of Motorola Mobiltiy.

(Also See: 1,00,000 Redmi 1S Smartphones Go Out of Stock in 4.2 Seconds: Xiaomi)

As we mentioned earlier, the Chinese smartphone maker is also said to be fundraising options that could value the company at over $40 billion (roughly Rs. 2,46,000 crores), which would make it the world's most valuable private company. Other reports on Tuesday placed the possible valuation even higher, at about $50 billion (roughly Rs. 3,08,000 crores), which is five times higher than the last financing round in 2013 which valued Xiaomi at $10 billion (roughly Rs. 6,150 crores).