Imagine Marketing Ltd., the owner of audio and wearables brand boAt, has sought the market regulator’s approval for a Rs 2,000-crore initial public offering.
China Reliance
For the financial years 2019, 2020 and 2021 and the six months ended 2021, the Delhi-based company’s “all or substantially all” of its contract manufacturing is from several manufacturers located in China, with a developing group of manufacturers in Vietnam and India.
“In the event that China is affected by any adverse conditions that disrupt production and/or deliveries from our contract manufacturers, our ability to deliver our products on a timely basis could be negatively affected,” the company said in the draft prospectus. “Any new regulations promulgated by India or China, which further restrict trade and investments, could adversely impact our business.”
Online Sales
Imagine Marketing is reliant on e-commerce platforms such as Amazon and Flipkart for sales.
Of its total revenue in FY21 and six months ended September, 85.84% and 83.2% of its revenue from operations was derived from online marketplaces. Of this, 84% and 75% was derived from its “top two online platforms”.
“Our arrangements with our top two online marketplaces are on a non-exclusive basis,” it said. Only about 7% of revenue comes from offline retail.
Few Risks
Fails to successfully identify and respond to changing customer preferences and market developments in a cost-effective and timely manner.
Fails to compete successfully against existing or new competitors.
Any shortage and cessation in supply from contract manufacturers or component suppliers.
Subject to risks associated with overseas procurement, such as geographical concentration and foreign currency exchange risks.
Ability to raise foreign capital may be constrained by Indian law.
Pricing pressure from customers, online marketplaces or distributors may affect gross margins and ability to increase prices.
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