Imagine Marketing Limited, the parent company of consumer electronics brand, was pinning hopes of becoming the first Direct-to-Consumer (D2C) brand in India filing for public listing. And now, this dream seems to be turning into a reality after it successfully managed to file its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in January 2022 to raise Rs 2,000 crore from the public markets.
An IPO will be a crucial step in its journey of being a lifestyle company, which operates a house of brands, says Vivek Gambhir, CEO of Imagine Marketing.
He adds that the timing of the IPO will depend on SEBI’s approval and will be based on discussions with its bankers, without commenting on the current impact of sliding market sentiments on the decision.
One of the country’s largest direct-to-consumer (D2C) brands, Imagine Marketing will utilise Rs 700 crore to prepay its borrowings, with the remaining amount earmarked for general corporate purpose.
Warburg Pincus affiliate South Lake Investment will sell shares worth Rs 800 crore in the company as part of the secondary offering.
Vivek joined the company in February 2021 from Godrej Consumer Products and was among the first senior hires made by the company in preparation for its public listing. In charge of house-keeping at the company and with a sharp focus on profit and loss metrics by his own admission, Vivek says that raising the profile of the company will help it attract global investors and open opportunities for partnerships, as well as merger and acquisitions.
Founders of the company, Sameer Mehta and Aman Gupta, who own 28.26 percent stake in the company each, will continue to focus on their current roles, with Sameer taking the lead on product development. Aman, now a household name due to Shark Tank India, will continue as the Chief Marketing Officer and will focus on brand-building, says Vivek.
“We have been profitable since day-one, but we are in the stage where we are evolving our business to become a multi-category, multi-brand , multi-channel and multi-geography player. The IPO will help us grow as a lifestyle centric company with a house of brands, establishing a strong presence in new categories such as wearables,” Vivek tells YourStory.
boAt founders Aman Gupta and Sameer Mehta
House of brands strategy
Founded in 2016, the company started out with headphones, and now has its presence across categories such as smartwatches through the acquisition of TAGG, gaming accessories through its acquisition of RedGear, and men’s personal care accessories through its sub-brand, Misfit.
The company also acquired Singapore-based KaHa Pte Limited in January 2022 to enhance the design, electronic firmware, and algorithm development for its wearables category.
While the company has not set aside any particular funds for future acquisitions, its expansion into new categories will be a factor of launching in-house brands and strategic acquisitions, says Vivek.
According to data available with Counterpoint Research, boAt recorded the highest growth in the sub-$50 TWS hearables market globally year-on-year for 2021, though Xiaomi clocked the highest sales in the segment. In the smartwatch category in India, boAt accounted for 26 percent of the market share in 2021, within a year of its launch. This was only second to Noise, which commanded 27 percent of the market share.
In its DRHP, Imagine Marketing said that it was also targeting collaboration with technology companies to develop smart devices, combining internet-of-things and Imagine Marketing’s expertise in speakers and audio – such as smart speakers, among others. It will also collaborate with system-on-chip technology companies in the receiver and sensors space, said the company in its DRHP.
As the global demand for sub-$50 TWS hearables continues, boAt has identified its next frontier – developing markets including the United Arab Emirates, Southeast Asia, and Nepal. The company launched its products in Nepal in February 2022. It said it will leverage its partnership with online marketplaces to make its foray into the new markets.
boAt also relies heavily on Amazon and Flipkart, which contribute 75.02 percent of its revenue from operations. It currently has an offline presence across 23,000 retail stores, a footprint the company intends to grow.
“Being omni-channel is a critical part of our strategy and 15 percent of our business comes from offline. We want to be where our customers want to shop and we expect to grow our distribution through offline channels,” said Vivek. He added that the company’s own website accounted for 3 to 4 percent of business at present.
Diversifying supply chain
As the pandemic disrupted the China-centered supply chain for electronics companies globally, Imagine Marketing has committed to spend Rs 40 crore as part of its joint venture with contract manufacturer, Dixon Technologies. The company will partner with Dixon to manufacture its bluetooth-enabled headsets for now.
“While China continues to be a majority of our supply chain, we have opened up in Vietnam and have started working with Dixon in India as part of our Make in India efforts,” says Vivek.
The company said it partners with over 10 suppliers for contract manufacturing services in India as part of its DRHP.
With operating revenue of Rs 1,313.73 crore for FY 2020-21 and profits of Rs 86.53 crore for the period, Imagine Marketing hopes to turn a corner with its imminent IPO to generate profits and expand the brand beyond the Indian market.