Lava International Files DRHP for Rs.1,500 crore IPO
One of India’s homegrown mobile phone manufacturers, Lava International, plans to hit the IPO market and has already filed the draft red-herring prospectus with SEBI. The next steps will be undertaken after SEBI approves the DRHP and gives its observations. Lava sells mobiles and other electronic accessories under the brands of LAVA and XOLO.
The IPO will comprise of Rs.500 crore by way of fresh issue. The balance will be an offer for sale of 4.373 crore shares by the existing promoters and some early investors in the company. While three of the promoters will be offering shares in the OFS, there will also be participation in the OFS from Unic Memory Technologies and Tupperware Kitchenware.
The proceeds of Rs.500 crore from the fresh issue component will be utilized for 3 demarcated purposes. Rs.100 crore will be allocated for marketing and brand building while Rs.150 crore will be set aside for inorganic acquisitions and strategic partnerships. The company will use another Rs.150 crore to invest in subsidiaries to fund their working capital.
Lava International manufactures, distributes and services mobile handsets, tablets and other electronic accessories. Despite having a manufacturing capacity of 42.52 million handsets at Noida, Lava is more into marketing products of other originators. For example, Lava has licensing agreements with Lenovo and Nokia to distribute their handsets and also handle the post-sale servicing.
Apart from manufacturing handsets, Lava also offers its mobile handset solutions to other OEM players. These solutions encompass sourcing, design, manufacture, quality testing, embedding of software as well as distribution. This has emerged as the new growth area and Lava wants to be fully prepared for the opportunities opened by the Make in India campaign.
For the fiscal year ended March 2021, Lava announced total revenues of Rs.5,513 crore and net profits of Rs.173 crore. In the outsourcing business 2-3% net margin is the norm. Profits were up almost 66% on a YoY basis for FY21.
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