Taiwanese mobile phone manufacturing giant Foxconn’s Indian unit Bharat FIH Ltd on Wednesday filed the draft papers for a proposed initial public offering (IPO) on the Indian stock exchanges, which will see the company raise Rs5003.8 crore.
The Foxconn unit claims to be the largest Electronic Manufacturing Services (EMS) provider in India, with approximately 15% market revenue share in fiscal 2021, and more than twice the revenue of the second largest EMS provider in the country, it said citing a Frost & Sullivan report, in its draft prospectus.
The proposed IPO will see the company raise fresh capital to the tune of Rs 2,501.9 crore, which will be utilized to fund capital expenditure requirements towards upgradation and expansion of its existing campuses; investment in a subsidiary for financing its capital expenditure requirements; fund working capital requirements; and for other general corporate purposes, the company said in its draft prospectus.
Foxconn currently operates out of three campuses based in the states of Andhra Pradesh and Tamil Nadu.
In addition, a Foxconn unit which holds the shares of the company will sell part of its stake worth Rs2.501.9 crore.
“We are the largest mobile phone manufacturing and assembly services provider to Xiaomi Technology India Pvt Ltd, which is the leader in the Indian smartphone industry with 27% and 26% market share by volume in Financial Year 2021 and the six months ended 30 September 2021. In those periods we had a 39% and 50% share of Xiaomi’s mobile phone sales by volume,” the company said in its draft prospectus.
Foxconn added that since March 2021 it has been expanding its India business into industries other than mobile phones, with a focus on high growth industries that benefit from market tailwinds, including mechanics, electric vehicles, televisions and hearables.
“Some of these industries are expected to benefit from regulatory support such as production-linked incentive schemes (PLIs), which are part of the Government of India’s “Aatmanirbhar Bharat Abhiyaan”, or Self-Reliant India, campaign, which seeks to provide a range of PLIs and other benefits for manufacturing in India. Our applications for PLIs for the mobile phone, telecom and networking products, and IT hardware industries have been approved in October 2020, October 2021 and July 2021,” it said.
The company said that given the significant under penetration and increasing per capita usage of these products in India, the country’s total addressable EMS market is expected to grow to $135 billion by financial Year 2026 with a CAGR of 30.3% between financial years 2021 and 2026.
For the fiscals 2019, 2020 and 2021, the Foxconn unit recorded revenues of Rs 34,345.38 crore, Rs26,635.55 crore and Rs15,854.85 crore, respectively.
“Our business experienced revenue contraction on account of market factors affecting the mobile phone industry and our OEM customers, as well as the effects of the COVID-19 pandemic. Despite the challenges affecting our business and industry, we generated revenues from operations of Rs10,155.79 crore in the six months ended 30 September 2021, compared to ₹6,394.57 crore in the six months ended 30 September 2020,” the company said.
For the six months ending 30 September 2021, it reported a profit of Rs89.17 crore, compared to a profit of Rs 88.18 crore.
Investment banks Kotak Mahindra Capital, Citigroup, BNP Paribas and HSBC are advising the company on the share sale.