Info-tech

Sangeetha Mobiles plans to raise ₹500 crore from private equity

TE Raja Simhan Chennai | Updated on August 19, 2019 Published on August 19, 2019

L Subhash Chandra, MD, Sangeetha Mobiles Pvt Ltd   -  Bijoy Ghosh

To tap capital market in two years

Sangeetha Mobiles Pvt Ltd, a Bengaluru-headquartered multi-brand retail chain dealing in mobile handsets and mobiles accessories, plans to raise ₹500 crore from private equity in the next six months. This is the first time that the company plans to tap external funding to expand its presence beyond South India, said L Subhash Chandra, Managing Director, Sangeetha Mobiles.

Raising capital from external sources could be a precursor for the company’s plans to tap the capital market in two years. “Investment bankers are talking to us but it is too early to comment about it. Our ultimate goal is to go for an IPO in two years,” he told BusinessLine last week on the sidelines of an event here. “So far we have not diluted a single share but will dilute a small stake to raise PE funds before going for an IPO,” he added.

On the lack of interest by PE or venture capital firms in mobile retail sector, Chandra said that there is no concept of organised mobile retail store beyond South. Lower margin (nearly 4 per cent for Sangeetha) could also be a reason for poor interest among PE/VCs in this sector.

However, the mobile retail sector is becoming quite attractive considering that nearly two crore phones are sold every year with about 50 per cent of them being feature phones. The demand will come significantly from the second tier towns as all these feature phone customers will upgrade to smartphones. Today, the entry barrier is very small, and one can get a smartphone at ₹3,000, he said.

This financial year, Chandra expects revenue of around ₹2,000 crore as against ₹1,600 crore in the previous year.

Expansion

With a customer base of around 20 million, Sangeetha has 598 stores with 566 owned, and 32 franchisee-run stores. “With our own stores, we are planning to have a total of 1,000 in the next two years. However, if we roll out the franchisee model, which is still under consideration, the total number of stores could be 1,200 or 1,500 stores across India,” he said.

Chandra said Sangeetha sells around 7,000 phones per day with 80 per cent being smartphones. The average sale price is ₹14,000-15,000.

Published on August 19, 2019
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