Lava Intel to raise Rs 100 cr

Lava International, a new entrant into the booming mobile handset market, is looking to raise Rs 100 crore in working capital over the next six months to finance its channel expansion plans. The amount is likely to be raised via internal accruals as well as term loans from banks, Lava International Ltd chief executive officer Balakrishna Rao said.

“All our current funding is through internal accruals. For the next 4-5 months, we have chalked out arrangements with banks for term loans. Over the next six months, as we widen our distribution network and stabilise our distribution network, we will need Rs 100 crore. In this instance, we will achieve financial closure in the next 10 months,” Rao said.

With an eye on the pre-paid market, Lava has been working on setting up an exclusive distributor network across India. The Indian market is estimated around 15 million subscribers per month. Lava has 400 distributors all over India and is said to be looking at appointing 700 distributors across the country by the end of fiscal 2010 focussed on the Tier-II and smaller towns.

Lava presently has 21 distributors in Karnataka and will raise the distributor count to 45 by the end of the month, Rao said. The company has so far launched GSM handset models supporting Bluetooth and GPRS, and priced between Rs 2,000 and Rs 4,000.

The mobile market in Karnataka grew at 60 per cent last year with a total subscriber base of 21 million. It has been witnessing increasing action as Reliance Communications, Aircel and Idea Cellular entered the arena currently dominated by Airtel, Vodafone and BSNL.

Bangalore, with a penetration rate of 78 per cent, has been seen as holding huge potential for the growth of the handset market. Telecom companies say that as penetration rates touch the 100 per cent region, callers who take multiple connections will spur the growth of the mid-range handset market.