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PRIVATE equity major TA Associates has picked up a minority stake in domestic handset maker Micromax for about Rs 225 crore, a top company official with the cellphone company said. While the exact stake amount could not ascertained, the Micromax executive added that it was less than 20%, valuing the handset maker at about Rs 1,000 crore.

The fund raised will help Micromax expand its handset business to Africa and Latin America. The company is all set to launch operations in Nepal later this month, after which it plans to kick off its Africa operations in February-end and operations in Latin America before the end of this fiscal.

TA Associates is a global PE major with a portfolio of over 300 companies across various sectors. In India, it has invested in Idea Cellular and GlobeOp Financial Services, a specialist BPO company. TA Associates confirmed the development, but declined to comment on the specifics of the transaction. “As a fast-growing, profitable company in a growth industry, Micromax ideally fits TA’s investment profile,” said Naveen Wadhera, director, TA Associates Advisory, who will join the Micromax board of directors. “The company’s emergence as a leading mobile handset brand in only 18 months is remarkable. This is one of the largest technology investments in India in the past year, and will provide additional support to help continue the company’s growth trajectory,” he added. TA will get two seats on Micromax’s board.

Micromax business director Vikas Jain said that the company had sold 7 lakh handsets in December 2009 alone and plans to finish the year with sales of about a million handsets, which he said would take it to the third slot in sales after Nokia and Samsung.

He also added that Micromax’s success was due to its ability to create a niche segment in the market within a short period by making the aspirational technology available to the masses. “For instance, we have a lot of firsts to our credit in our product portfolio. We were the first to introduce handsets with 30 days battery backup, with dual SIM/dual standby. We were also the first to launch handsets that could switch between networks (GSM -CDMA) using gravity sensors and open market CDMA handset in the country,” he added.

According to Mr Jain, the handset maker was targeting Rs 1, 500 crore revenue by the end of this fiscal and Rs 3,000 crore for the next year. Micromax has also set aside a Rs 100 crore budget for brand building initiatives as it expands it footprint to urban India. “Currently the company has 26 models in the market, 23 of these are dual-sim handsets. We are also number one in querty keypad handset segment, selling 80,000 handsets a month,” he added.

In addition to Micromax, smaller hander brands like Lemon Mobile, Airphone, Lava Mobiles, Onida Mobiles and Karbonn Mobiles, all of which have been launched in the last 15 months or so, have all lined up marketing budgets of Rs 50-100 crore as they seek to tap the world’s fastest growing mobile market. All these smaller new entrants combined now command a 10% market share in the country. India sells about 12 million new mobile handsets every month, most of which are in the low-priced entry level segment

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