boAt Owner Imagine Marketing Seeks SEBI Nod For Rs 2,000-Crore IPO
The IPO will comprise a fresh issue and an offer for sale by promoters and investors.
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.
The IPO will comprise a fresh issue worth up to Rs 900 crore and an offer for sale of Rs 1,100 crore by promoters and investors, according to the company’s draft red herring prospectus filed with the Securities and Exchange Board of India.
Promoters Aman Gupta and Sameer Mehta will sell shares worth Rs 150 crore each in the IPO.
South Lake Investment Ltd. will pare shares aggregating to Rs 800 crore.
Imagine Marketing—founded in 2013—will use Rs 700 crore of the net proceeds towards repayment/prepayment, in full or part, of certain borrowings, and the rest for general corporate purposes, the draft IPO filing said. “The prepayment or scheduled repayment will assist the company in maintaining a favourable debt-to-equity ratio and enable utilisation of our internal accruals for further investment in business growth and expansion.”
The company’s operating revenue has grown sixfold since FY19. In the first six of months of FY22, it has reported revenue worth Rs 1,547.8 crore. That’s more than the full-year revenue for FY21 at Rs 1,313.7 crore. Its operating income stood at Rs 123 crore in FY21 against Rs 73.73 crore a year ago.
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.
