One in every ten feature phone user in India uses Lava, and it is now going to the public to raise money

• Lava International has filed its draft red herring prospectus (DRHP) for an IPO.
  
• The phone maker currently has a market share of 13.4% in the feature phone market in India.
  
• The company intends to use the IPO proceeds for marketing, acquisitions and other strategic initiatives.
  

Phone maker Lava International has filed its draft red herring prospectus (DRHP) with the Securities Exchange Board of India (SEBI) to issue fresh equity shares as well as offer existing shares to the public.

In its DRHP, Lava says that it will issue new equity shares worth ₹500 crore, and also offer 4.38 crore existing equity shares held by its investors via its initial public offering (IPO).

Finer details like the opening date of the IPO, or the price band per equity share are not known yet. However, Lava has underlined the quantum of IPO proceeds that it intends to utilise for different purposes:

Particulars	Share of net proceeds reserved
Marketing and brand building activities	₹100 crore
Funding acquisitions and other strategic initiatives	₹150 crore
Working capital requirements	₹150 crore
General corporate purposes	Balance net proceeds

Source: Lava International DRHP

The valuation that Lava is aiming for is not known yet, since the company is yet to finalise a price band for the IPO. However, the promoter group holds an 89.6% stake in the company and the company’s share capital stood at ₹125 crore as of 31 March, 2021.

Lava International was founded in 2009 as a telecommunications company. It has since manufactured smartphones, tablets and other consumer electronics items.

It was the first company in India to launch a smartphone powered by an Intel processor, the Xolo X900. Apart from Android smartphones, Lava had also teamed up with Microsoft to launch the Iris Win1, a Windows Phone-powered smartphone.

Here are some key metrics of Lava International that will help you get a brief idea about the financial health of the company:

Particulars	2020-21	2019-20	2018-19
Revenue	₹5,524 crore	₹5,283 crore	₹5,129 crore
Net profit	₹173 crore	₹108 crore	₹73 crore
Net worth	₹1,589 crore	₹1,408 crore	₹1,255 crore
Total borrowings	₹103 crore	₹177 crore	₹159 crore

Source: Lava International DRHP

Lava currently makes feature phones and sells them in India, Thailand, Sri Lanka, Bangladesh, Nepal, Indonesia, Mexico and the Middle East. According to a Frost & Sullivan report, the company held a market share of 13.4% in the feature phone segment in India in the financial year 2020-21.

Apart from making its own feature phones, Lava also offers solutions like sourcing, design, manufacturing and more to other original equipment manufacturers (OEMs).

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