Separately, market regulator SEBI has also sought clarifications from Lava Mobiles for its Rs 1500 crore IPO. The Noida-based smartphone brand and contract manufacturer had filed the draft prospectus in September 2021 that stated a fresh issue of equity shares worth Rs 500 crore, and an offer for sale component of 43,727,603 equity shares.
The Bharat FIH IPO includes a fresh issue of shares worth Rs 2502 crore and a stake sale by promoter group Foxconn’s subsidiary Wonderful Stars valued at Rs 2502 crore.
“While we have historically been able to finance our capital expenditure through equity contributions from the promoter selling shareholder, Wonderful Stars, this may not be the case once we are a publicly-listed company. We will have to finance our future growth from internal accruals and through external debt financing and equity fundraising,” the company said in its DRHP.
SEBI has issued its observations to Bharat FIH on June 10, which in the regulator’s parlance is equivalent to a green signal to list the IPO on the stock markets.
Bharat FIH, which said it is India’s largest electronics manufacturing service provider with a 15% revenue share, is indirectly part of the Foxconn Technology Group, owned by its subsidiary Wonderful Stars, according to the DRHP filed by the company in December 2021.
The contract manufacturer plans to use the net proceeds from the IPO to pay out cash dividends to its shareholders and pay for its continuing operations and future business growth and developments.
Bharat FIH derives most of its revenue in India from smartphone and smart TV market leader, Xiaomi and has operations across campuses in Andhra Pradesh and Tamil Nadu where it integrates manufacturing, warehousing, logistics, and accommodation facilities.
The contract manufacturer is also planning to expand into industries other than mobile phones, and into electric vehicles, televisions and hearables. It has also set up a Taiwan-based subsidiary, Bharat Taiwan Corporation, to explore technology transfer and collaboration with its R&D centres in India.
Bharat FIH’s standalone net profit in FY2021 was Rs 1619.15 crore, down from Rs 3897.13 crore in FY2020. The company’s revenues stood at Rs 1,59,066.57 crores.
Bharat FIH, along with Lava Mobiles, is among the companies approved under the government’s production-linked incentive scheme for boosting local smartphone manufacturing and exports.
