Foxconn Group’s Bharat FIH, which is facing revenue decline amid a shortage of new orders, has decided to shut down a subsidiary it launched just three years ago, which focuses on R&D and supply chain initiatives.
According to the company’s latest filing accessed by FE, Bharat FIH’s board of directors has approved a resolution to close Bharat Taiwan Corporation (formerly known as Rising Stars Taiwan Corporation). “As the company’s revenues have been decreasing continuously over the last few years, the directors decided to consolidate the overall businesses and reduce costs wherever necessary,” said the latest resolution. In 2021, Bharat FIH had set up two subsidiaries—Bharat Taiwan Corporation and Rising Stars Hi-Tech —with a focus on research, product development, engineering, and supply chain services. Now, amid declining revenues and profitability, the company is consolidating its operations. This marks the first time that the Foxconn Group company has publicly acknowledged its business challenges.
The consolidation follows a business decline and string of leadership exits at one of the largest players in the electronics manufacturing services (EMS) sector. Bharat FIH’s fortunes began to decline due to a slowdown in orders from its primary client, Xiaomi, after the government scrutiny on Chinese businesses in India intensified. “We derive most of our revenue from Xiaomi. This concentration exposes us to several risks that could materially affect our revenue and profitability,” Bharat FIH mentioned, in its Draft Red Herring Prospectus (DRHP) for its now-scrapped Rs 5,000 crore IPO. As of 2021, Xiaomi accounted for as much as 96% of Bharat FIH’s revenue from operations.
Financial data sourced from Tofler shows that Bharat FIH’s total income plummeted to Rs 12,128 crore in FY23, down from Rs 26,669 crore in FY20, with the company slipping into a net loss of Rs 33 crore compared to a net profit of Rs 390 crore in FY20. The company is yet to file its FY24 financials.
Originally founded in 2015 as Rising Stars Mobile India at Sri City, Andhra Pradesh, Bharat FIH expanded its manufacturing footprint to Sunguvarchatram and Sriperumbudur near Chennai in 2017. Over time, it broadened its capabilities to include manufacturing casings, mechanical components, PCBAs, and final assembly for mobile devices. As a leading player in the electronics manufacturing services (EMS) sector, Bharat FIH employs over 25,000 people, with 90% of them being women.
Reports earlier suggested that the company is also planning to shut down its manufacturing facility in Sri City, Andhra Pradesh due to a massive drop in orders. Bharat FIH had previously indicated plans to diversify into high-growth sectors beyond mobile phones, such as mechanics, electric vehicles, televisions, and hearables.
In its latest filings, the company stated it has developed an extensive business and action plan to explore emerging opportunities, though it did not provide a specific timeline. The company also witnessed a series of exits, starting with its former managing director, Josh Foulger, who joined contract manufacturing firm Zetwerk as president of its Electronics division. Additionally, three independent directors, including Celeris Technologies chairman V Sumantran, Sify Technologies co-founder Ramaraj R, and former IT and telecom secretary Aruna Sundararajan, also departed.
