Lava charts fresh listing plans

The company is also gearing up to enter the wearables market next month with India-made smartwatches under the sub-brand ProWatch.

Lava International president Sunil Raina told Mint that the company was exploring all options to raise funds, including private equity investment, a public listing, or a combination of both with an investor coming in before the initial public offering (IPO). 

“For the next two to three years we will need about ₹500 crore, some of it will come from our accruals but a large part of it will have to come from outside. We are exploring both options simultaneously, either an investor comes in or we go public or both,” he said.

Raina recalled Lava’s previous plans to secure funding, which did not take off due to volatile market conditions. In September 2021, Lava International Ltd filed a draft red herring prospectus (DRHP) with markets regulator Sebi to raise about ₹500 crore through a fresh issue of shares and private placement of about ₹1,000 crore.

On the size and timing of the fundraising, Raina, who was appointed managing director in November last year, said that the company was looking for funds immediately as it was seeing tailwinds from the Indian market as well as growing export orders. Exports have risen by 20% in 2023 over the previous year.

“Our strategy of giving premium phones at all price points has helped us grow by 200% in the smartphone segment. We’re increasingly focusing on ₹10,000- ₹20,000 price segment, and all our devices are 5G enabled. In feature phones, we have a 25% market share,” he said.

Lava has an in-house capacity of 42 million feature phones and 25 million smartphones a year, which is currently at 70% utilization. The production takes care of the Indian market as well as exports to over 25 international markets, including Sri Lanka, Nepal, Bangladesh, Qatar and Latin American countries. South American countries are serviced by B Mobile, a brand it acquired in 2021. 

As the only Indian player among global smartphone brands in the country, Lava intends to channel the raised funds towards research & development (R&D) focused on software for its phones, and brand building to compete with its peers, a large majority of which are Chinese. 

Lava has a 2% market share as of December 2023 in the smartphone market. It doubled this share over the previous year on the back of Blaze 5G, its 5G device below the ₹10,000 price threshold, targeting the mass market. It operates in price segments going up to ₹25,000 where all its models are 5G enabled.

Lava’s existing capacity will be used for making the ProWatch brand of smartwatches which is planned for retail next month. It is also building its app for the watch, Raina said. He added that the company will follow the same principle of giving a near-stock Android experience to consumers, removing bloatware or pre-downloaded apps that come with the device, across all its smartphones as well as the new watch models.

“We feel we have a good chance to break into this market because we’ll be competing with Indian brands. And we’ve been the survivor among all Indian mobile phone brands,” he said. Lava began selling smartphones in 2010, when it competed with Indian brands Micromax, Karbonn, Intex and global brands like Nokia and Samsung. It is the only Indian brand among the lot which continues to sell phones as of today.

In the smartwatch market, 80% share is with Indian brands like Boat, Noise, Fire-Boltt, Boult Audio, and 54% market was under the retail price band of ₹2,000, as per Counterpoint data from last month. OnePlus, Xiaomi, Samsung and Apple are the other competitors in the segment but on the premium end.

The top executive said that the recent plan of the government to build local mobile phone brand would add fuel to Lava’s growth.

“As an Indian brand deeply invested in this sector, it’s great to see such an ambitious initiative to develop and strengthen the handset ecosystem. This move not only fosters innovation but also promotes self-reliance, aligning with our commitment to advancing India’s technological capabilities,” he said, adding that the brand will collaborate with policymakers and industry partners in this endeavour.

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Published: 27 Mar 2024, 03:54 PM IST