Dip in Xiaomi Orders Impact Foxconn's Bharat FIH, Affecting Operations and IPO Plans

India IPO

Updated July 04, 2024

According to a source aware of the development, the unit stopped its level 10 operations on June 30, and some of its operations are being shifted to Sriperumbudur near Chennai

Dip in Xiaomi Orders Impact Foxconn's Bharat FIH, Affecting Operations and IPO Plans

Foxconn's Bharat FIH is winding down operations at its Sri City facility in Andhra Pradesh due to a significant drop in orders from Xiaomi. According to sources, Bharat FIH ceased its level-10 operations on June 30 and is transferring some activities to Sriperumbudur near Chennai. This shift has impacted the company's plans for a Rs 5,000-crore initial public offering (IPO).

“IPO plans are shelved. While level-five and -six operations cover mechanics and board assembly, level-10 handles mobile phone finishing," said a source. Bharat FIH, formerly Rising Stars Mobile India, started in 2015 at Sri City and expanded to Sunguvarchatram and Sriperumbudur in 2017. It manufactures mobile phones, EVs, TVs, and hearables.

Bharat FIH has not commented on the situation. The Sriperumbudur unit focuses on assembly, testing, marking, and packaging. Media reports indicate the recent exit of three independent directors: InterGlobe Aviation chairman Venkataramani Sumantran, Sify Technologies cofounder Ramaraj R, and former IT and telecom secretary Aruna Sundararajan.

"The company was overly reliant on Xiaomi and Nokia and didn't diversify. Foxconn focuses heavily on Apple's manufacturing," a source stated. The company, producing devices under Rs 15,000, didn't qualify for the production-linked incentive (PLI) scheme.

Last year, Bharat FIH planned to invest around Rs 400 crore in its subsidiary Rising Stars Hi-Tech. A subsidiary of FIH Mobiles and a Foxconn Technology Group company, Bharat FIH had also intended to launch an IPO. The downturn in business has derailed the IPO plan, which included issuing new shares worth Rs 2,502 crore and an offer for sale of up to Rs 2,502 crore by the promoter group and Foxconn unit Wonderful Stars.

Bharat FIH has expanded to manufacturing casings, mechanics and components, PCBA (printed circuit board assembly), and final assembly of mobile devices. Post-Covid, the company had over 25,000 employees, 90 percent of whom are women.

In January 2024, Josh Foulger, the country head of Bharat FIH, was the first to leave after nine years. He played a crucial role in the company's expansion in India and in securing Xiaomi Corp as a key customer.