In what appears to be a pre-IPO investment, low cost handset company Micromax has raised Rs. 200 crore ($43 million) from three investors – Sequoia Capital, Sandstone Capital LLC and Madison India Capital. Micromax had previously raised $45 million from TA Associates in late 2009. With this round of investment, Mohit Bhatnagar, MD at Sequoia Capital, will join the board of the company.
The company apparently reported revenues of Rs 1600 crore and a net profit of Rs 150 crore in 2009-10, according to The Economic Times. ET adds, quoting unnamed sources, that Micromax is looking to raise Rs. 600-800 crore via an IPO. A Voice & Data survey earlier this year had put Micromax at 4.3% marketshare.
Micromax is one of many low cost handset companies that have come in over the last two years or so, and completely changed the dynamics of the handsets business in India, virtually knocking established players like Nokia out of the low cost handset market. Indian handset companies – Micromax, Lemon, Spice Mobiles, T-Series, Lava International, Karbonn Mobiles, Intex, Accord, Wyncomm, Oscar, Max Mobile, Meridian Mobiles among many others, source devices from China. These devices are priced low, often are lower in performance, but still have the features of high-end phones. The pitch – Value For Money – works well with those who change their handsets often, and want to own a device that looks high end, but doesn’t cost as much.
Additionally, many of these handset manufacturers have managed to develop handsets with features attractive for Indian consumers:
– The X1i and others, with standby battery life that lasts upto 30 days.
– The GC series, with handsets that support both GSM and CDMA networks
– Qwerty handsets at low cost (around Rs. 2000)
– Touch screen handsets as low as Rs. 5000-5500
Micromax started operations in 2002 as an embedded software and e-commerce solutions company, but came into prominence only after it entered the handsets business in 2008. It now has a presence in 23 states in India, and a sales network in Nepal, Sri Lanka and Bangladesh.