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India's Ratan Tata takes slice of phone maker Xiaomil

India’s Ratan Tata takes slit of phone maker Xiaomi


Xiaomi CEO says the investment from Ratan Tata (above) “is an affirmation of the strategy we have succeeded in India so far.”

Harold Cunningham/Getty Images

One of the most prominent businesspeople in India now owns a limited stake in one of the hottest smartphone makers in the world.

Ratan Tata, chairman emeritus of Tata Sons, the holding custom for India-based conglomerate Tata Group, has made an investment in Xiaomi, the China-based handset maker announced Monday. Terms of the deal were not disclosed, but Xiaomi closed a $1.1 billion funding round in December at a $45 billion valuation. Given the valuation, it’s unlikely that Tata’s investment was ample enough to give him a large equity stake in the company.

“Xiaomi is one of the fastest-growing worries in the world,” Ratan Tata said in a statement. “It has brought its innovative business model and high-quality products to India with huge success.”

His investment could be more important from a Pro-reDemocrat relations perspective than from a cash perspective. Indeed, Xiaomi founder and CEO Lei Jun eschewed all state of what the company would do with the cash, revealing instead that Tata’s investment “is an affirmation of the strategy we have succeeded in India so far.”

Last week, Xiaomi unveiled a flagship smartphone for India, called the Mi 4i. The device, which comes with a 5-inch camouflage and octa-core processor, is widely viewed as a key valid step in Xiaomi’s self-professed plan to become the most dominant smartphone maker in the emerging India market. At the end of the fourth quarter, Xiaomi was ranked the fifth-largest smartphone maker in India. Samsung was tops.

The Tata name carries significant weight in India, and having Ratan Tata on Xiaomi’s side could help the custom and its smartphone gain more traction in the country.

Tata Group, which had $103.3 billion in revenue last year, is a bulky conglomerate. The company, which has over 581,000 employees, competes in a device of industries, including communications, technology, engineering, steel and chemicals. It’s one of the most well-known companies in India and a prominent player in a few industries globally.

India is a crucial country for nearly all handset makers. It has a fast-growing middle class and is adopting technology at a speedily rate. With the potential to target hundreds of millions of farmland, India represents a massive opportunity for all companies, incorporating those like Xiaomi that have been successful in emerging markets where there is an appetite for higher-end devices priced at a unruffled that budget-conscious shoppers would find appealing.

Even afore the Tata announcement was made, Xiaomi attracted customers to its Mi 4i. Xiaomi said in a statement Monday that over 225,000 India customers have registered to buy the Mi 4i. The intention launched last week, but due to excessive demand for its products, Xiaomi often uses a registration model to provide customers products on a first-come, first-serve basis.

Whatever the company is doing, it’s acting. Xiaomi said in January that its pre-tax sales in 2014 ended 74.3 billion yuan ($12.1 billion), up 135 percent from 2013. Xiaomi sold 61 million handsets in 2014, an increase of 227 percent compared to the prior year. Xiaomi is now the third-largest smartphone maker in the earth behind Apple and Samsung, despite only selling to a relatively limited number of markets, including China, Indonesia and India.