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Micromax IPO – Company Details

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Forum: Initial Public Offers (IPO's)
Posted By: Vendicatore
Posted On: 12/18/2010 8:20:44 AM
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Last Update: 2/5/2011 12:39:17 AM
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Posted on 12/18/2010 8:20:44 AM

Micromax IPO – Company Details
Delhi based mobile handset Company, Micromax Informatics, the India’s biggest native mobile handset seller, is planning to hit the markets. Micromax has already filed draft red herring prospectus with the SEBI. With a history of less than 3 years, company’s success is phenomenal. It is selling more than 1 million phones per month and is the leader in the market among the domestic players that includes Spice, Zen, Videocon, Lemon etc. with around 4.1% market share. In the market which was already crowded by the big players like Nokia, Samsung, LG and Motorola, the competition given by the company is commendable.
Indian firms have raised a total of $14 billion through share sales in 2010 and running on the same road Micromax is planning to launch an IPO of 2.15 crore shares to raise around $150 million. This IPO will take the company close to $1 billion mark.
JM Financial, Citigroup, Edelweiss and Nomura are the book running lead managers to the issue. The IPO may hit the markets early next year. The major part of the money raised will be used in setting a new manufacturing plant and the rest in acquiring additional market share. Micromax has plans of expansion in South Asia, Middle East, Africa and Latin American. It entered Nepal in January. The company is also trying to locate its manufacturing unit in India.
Micromax Informatics is the third largest handset provider in India, as measured by volume and is just below Nokia and Samsung, as said by Micromax. Earlier in January 2010, the company sold a minority stake of $45 million to the US based Private Equity firm, TA Associates to fund its growth.
Micromax offers entry level handsets from Rs1000- Rs2000 range to the high end models pricing up to Rs15000. The company’s marketing strategy is the bottom-up approach with first capturing the lower end rural Indian market which has comparatively less saturation of big players. The firm is now concentrating on students and young professionals with its new Wi-Fi enabled, QWERTY and touch screen models in the Rs5000 range. Recently Micromax launched an Android phone (A 60) at a price tag of Rs7999.
The Indian cellphone market is one of the fastest growing markets in the world with around 15 million new mobile subscribers per month and in this ever increasing and emerging market, the prospects for the firm like Micromax Informatics are always shining. It is also signing deals with Bharti Airtel Ltd., Tata Teleservices Ltd where customer receives the handset free for subscribing to a particular mobile service.
The interesting feature of the IPO is, the company is going to offer a discount of 10% to retail investors. Even the government offered only 5% discount to retail investors.
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