Note 7 fiasco will burn Rs 6500 cr hole in Samsung India's balance sheet

Samsung's smartphone shipment to India may fall short of target by 4 million units in 2016, hit by global recall and halt in production of its flagship Note 7 smartphone, research firm CMR said on Friday.

While Samsung had unveiled the Galaxy Note 7 in July in India with a price tag of Rs 59,900, it delayed selling of the handset in India 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.

"This translates to Rs 6,457 crore in terms of revenues for the company. As per projected growth, Samsung was expected to touch revenues of Rs 45,446 cr in CY2016, an increase of 46 per cent compared to previous calendar year," CMR said in a report.

However, following the Note 7 issue, it can earn revenues of Rs 38,989 crore, translating into a growth of 25 per cent in revenues in 2016, it added.

The company did not respond to emailed queries on the report.

CMR said Samsung, however, will continue to maintain leadership in the smartphone segment in India.

However, its market share is expected to shrink by 4.2 per cent points and settle at around 25.5 per cent instead of estimated 29.7 per cent.

"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 USD 2.3 billion.

The global consolidated sales estimate has also been lowered by 2 trillion Korean won (USD 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.