CE Info Systems, the owner of digital map maker MapmyIndia, has submitted a draft Red Hering Prospectus (DRHP) for an initial public offering of Rs 1,200 billion (IPO). The IPO consists of a sale of 75.5 lakh shares by its existing shareholders and promoters, including investors Qualcomm Asia Pacific, Japanese card maker Zenrin,

“The aims of the offer are to carry out the offer for the sale of up to 7,547,959 no-par shares by the selling shareholders and to achieve the advantages of a stock exchange listing of the ordinary shares”, it said in the DRHP. At the time of filing the DRHP, PhonePe holds 36.11 percent of the shares on a fully diluted basis and Zenrin is investing 17.82 percent, it said.

The central theses

  • The total Indian addressable market for cards and location-based messaging is expected to grow to $ 7.74 billion in 2025
  • This industry is expected to grow from 2019 to 2025 at the Average Annual Growth Rate (CAGR) of 15.5 percent
  • MapMyIndia registered Rs 192 crore on March 31, 2021
  • The company’s profit doubled in FY2021 to Rs 59 crore from Rs 23 crore in FY2020.

Background: The company was founded in 1992 by siblings Rakesh and Rashmi Verma. It claims to have a 90 percent share of the automotive market. It claims to have BMW and TATA as customers, aside from tech companies like Apple and Amazon.

What do you intend to do with the investment?

Build a broader software stack: MapMyIndia in the DRHP announces to increase the reach of its digital maps and geospatial products in terms of geographic coverage as well as functions and functions. “Our Digital Map Twin of the Real World, an AI-powered 4D, HD, information-rich map that digitally and geospatially depicts the real world in near real-time, is a never-ending exercise that will help us build and own one An asset that will continue to become more and more valuable and monetizable in the future for a growing number of use cases, ”it says.

Develop innovation and technological skills: MapyMyIndia said it will continue to develop the automation aspect of its mapping platform by investing in artificial intelligence and machine learning, which would allow it to create better content at a lower cost. “For example, we’re working with ISRO to integrate our digital twin map with their huge catalog of satellite imagery and Earth observation data that would then be available to app developers, businesses and government organizations,” it says.

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Pursue selective strategic acquisitions: The company in the DRHP said it will continue to pursue acquisition and investment goals to open up new business areas and regions, to attract new customers, diversify revenue streams and attract employees. “We have also started to create and publish digital maps for countries outside of India such as Sri Lanka, Bangladesh, Nepal, Bhutan, Myanmar, the United Arab Emirates and Egypt,” it says.

Impact of Covid-19 and some other risks

Automotive Sector Performance: MapMyIndia said that part of its business is dependent on the automotive sector and that any adverse changes in conditions affecting the sector could adversely affect its business, results of operations and financial condition. “The sale of cars fell sharply in 2020 due to COVID-19 and the Indian car market already went through a difficult phase in the 2021 financial year, as sales fell by 7.9% compared to the 2020 financial year,” it said.

Cyber ​​security and performance issues during CoWin integration: As a technology-based platform, MapMyIndia generates large amounts of location, behavior and demographic data according to its own information. “We are exposed to risks associated with handling and protecting large amounts of data, including protecting the data hosted on our system, detecting and preventing unauthorized data disclosure and transmission, preventing attacks on our system by third parties or fraudulent behavior or improper use by our employees, and maintenance and updating of our database, ”it said.

That being said, the company said there may be performance issues during their operations and service phase.

We have experienced downtimes and performance problems in the past due to dependencies on our infrastructure providers or due to technical system errors. For example, when the cowin.gov.in portal went live on March 1st, 2021 and there was a sudden surge in online traffic to its portal which has our map APIs embedded in it, we experienced several hours of slow performance, prompting our systems stabilized to meet the surge in demand – MapMyIndia DRHP

Future business impact of Covid-19 not known: The company said the spread of Covid-19 had forced it to change its business practices (including employee travel, employee work locations, and cancellation of physical attendance at meetings, events, and conferences), adding that based on further action, it would do more Can take action about the situation in the future. “The extent to which COVID-19 will affect our future results will depend on future developments that are highly uncertain and unpredictable, including new information regarding the severity of the coronavirus and the measures taken worldwide to contain it or for treatment. ”its effect among other things. Existing insurance coverage may not provide all of the costs that can arise from all of these possible events, ”it said.

Ongoing case between MapMyIndia and the Government of India: MapMyIndia said a lawsuit between the company and the Government of India (Ministry of Defense, Survey of India, Ministry of Defense (Army), Commissioner of Police, New Delhi) is pending in the Delhi High Court. MapMyIndia has filed a petition asking the Delhi Supreme Court to pass an order to repeal orders in 2018, 2019 and 2020 by the Government of India to “disable our MapMyIndia website and seize the server that is hosts this website and the company’s data ”. .

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While the Faculty of Science and Technology (DST) Guidelines were issued in February 2021 and replace everything else on the subject that has been issued by the Government of India or its relevant departments and ministries and allows Indian companies to generate, distribute, among other things, geospatial data, including maps publish and / or create (subject to the provisions on attributes in the black lists as specified in the DST guidelines) without the need for approval from the government of the government or any other department of the government of the government, the instructions were given by the Delhi High Court and our petition is still pending before the Delhi High Court on the date of this draft of the Red Herring Prospectus – MapMyIndia DRHP

Policies that can work in favor of MapMyIndia

  • Liberalization of the spatial data sector: In August 2021, the Ministry of Science and Technology announced the deregulation of the geospatial sector in India. Under the old Geospatial Directive, MapMyIndia said in the DRHP, there were strict regulations for the mapping and collection, use, storage, etc., of geospatial data. “Given the government’s dominance in the sector, it has been difficult for private companies to obtain permits from various departments to map and collect geospatial data,” it said.
  • Digital India Land Records Modernization Program: This program, which seeks to digitize the existing land records and develop an Integrated Land Information Management System (“ILIMS”) across the country, has been extended to 2020-21.
  • Permits for drone operations out of line of sight: MapMyIndia said the country’s recent permits regarding BVLOS operations would help the company. Drones are increasingly being used for land surveying work.
  • Drone rules, 2021: The 2021 drone rules that recently came into force have further simplified drone regulations. MapMyIndia said, “Certain security features including the geofencing function and the real-time tracking beacon will be mandatory soon and will give a boost to the geospatial data market in India.”

Read: Summary: Draft Drone Rules 2021 Eliminates Multiple Standards, Focuses On Boosting Industry

Policies that may prove restrictive

Personal data protection law: The company said that the adoption of the draft PDP law in the future could introduce additional compliance requirements for the company. “In addition, the combination of increased security concerns about the size and accuracy of map databases could lead to more restrictive rules on map databases,” it said.

Invoice for non-personal data: MapMyIndia mentioned the NPD committee set up in 2019 by the Department of Electronics and Information Technology to recommend a regulatory regime for Non-Personally Identifiable Information (“NPD”). The NPD committee has released two reports to date that recommend, among other things, a framework for regulating the NPD (defined as any data other than personal data), access and disclosure of NPD to governments and businesses, the DHRP said.

A look at the MapMyIndia competition

In the Risk Factors segment of the DRHP, MapMyIndia competes with other companies with similar offerings on the basis of reputation quality, pricing and customer relationship. Here are a few screenshots that shed some light –

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