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Iris Clothings Ltd.

BSE: 535123 Sector: Industrials
BSE 05:30 | 01 Jan Iris Clothings Ltd
NSE 05:30 | 01 Jan Iris Clothings Ltd

Iris Clothings Ltd. (IRISDOREME) - Chairman Speech

Company chairman speech

I am indeed delighted to present to you the FY2018-19 Annual Report of Iris ClothingLimited. At the onset I would like to thank all the shareholders for their overwhelmingresponse to the IPO and look forward to their continued support. This being the maidenreport post public listing our intent is to provide to you a substantial understanding ofyour Company's business performance and prospects.

The initial journey

Let me start by taking you back to our inception. Iris Clothings Limited started as asmall proprietary firm in 2004. Back then we were just into contract manufacturing untilwe stepped up to design and manufacture kids wear for own marketing under the brandDoReMe. You would be glad to know that your Company had pioneered the concept ofbranding and MRP pricing in this segment which then was largely unorganised. Eventuallyour products found great acceptance in the market for its quality and design. We werewitnessing increasing demand from retailers as well as distributors who were alsopromoting. From having to

push our products in the initial days we were now witnessing a strong pull andDoReMe solidified its position as a reputed and trusted brand.

The initial euphoria kickstarted the building of a strong enterprise over the nextdecade. We expanded distribution network and manufacturing infrastructure wasstrengthened. Backward integration was achieved capacities were expanded and bettertechnology adopted.

Dedicating FY 2018-19 to building competencies

Having done all the initial hard work the big question that struck us was what next.

With this started our quest in FY 2018-19 to capitalise on our solid foundation andtake the business to the next level. I am happy to state that we are making steadyprogress in this direction. This year in many ways will be remembered as an inflectionpoint for us.

The very first thing we did was to get the Company publicly listed on the NSE's SMEplatform. The move provided us enough funds for better managing working capital andaugmenting growth along with providing our brand a massive boost.

Secondly we focussed on expanding capacity and enhancing operational excellence. Forthis a capex of Rs 14 Crores was committed towards setting up a new integratedstate-of-the-art manufacturing facility in the vicinity of our existing plant at Panchla.Spread across 45000 sq ft the unit is comprehensively larger than our existingfacilities and will contribute to consolidating our manufacturing activities in a singlelocation. The unit will help expand our capacity by 15000 pieces per day to 45000 piecesper day and provide definite synergies and supply chain economies in addition to thelocational advantage of skilled labour and raw material availability.

Equipment of our Sankrail plant has already been shifted to this new unit and we expectit to begin commercial operations by July 2019. This new unit will facilitate us inexploring new growth avenues and meet the rising demand for our products.

In another strategic move we launched several kids wear products including dressesjumpsuits and pants using woven and denim fabric. Until now we only did hosiery-basedproducts and these new fabric lines will facilitate us to diversify product line. Besideswoven fabric provides more scope for design experimentation and will contribute tostrengthening and premiumisation of portfolio as they are of superior quality.

Amidst all these we did not lose sight of our performance. Despite a challengingmacroeconomic environment we grew our revenues by 17% to Rs 62 Crores in FY 2018-19.Profit after Tax stood at Rs 5 Crores growing 52% over the previous year

We have also entered into royalty agreement for using Minions and Jurassic Worldgraphics on our products. These being very famous global franchisees will ensure strongdemand.

Going into FY 2019-20

The future holds immense opportunities for us. We have taken rapid strides towardsstrengthening our business to drive long-term growth and profitability. Expansion ofmanufacturing capacity will bolster our capabilities and open new avenues of growth andfor that stabilising the new unit will be an important agenda.

With more capacity in hand obviously we will need to step up our marketing activities.We have planned an extensive channel partner loyalty and engagement programme to drivetheir stickiness and boost morale. In addition to this we intend to increase ourdistribution footprint by adding distributors in newer geographies. We expect this tocontribute to deeper market penetration and expand our reach to markets with morepotential especially in Southern India where we intend to scale.

Understanding the importance of e-commerce in today's business scenario we will befocussed on building a right business model for deeper penetration into this channel. Wealready have listing with FirstCry and Hopscotch where our products have seen goodsuccess. We will look forward to more e-commerce listing and making good of this channel.

Having expanded our capacity and entering the woven fabric segment we will be activelypursuing to build on our market leading brand by intensifying innovation and productdevelopment. We also intend to launch another line of kids wear brand Oxcgen in India inaddition to our existing brand.

In conclusion

Overall I am confident that a combination of all these factors will take your Companyto a higher growth trajectory. Before closing I would like to extend my gratitude to ouremployees for their persistent hard work and support. I would also like to warmly thankour distributors suppliers partners bankers customers and all our shareholders fortheir sustained trust and confidence reposed in us. I look forward to interacting with youall in the coming year as a much stronger organisation.

Warm Regards

Santosh Ladha

Managing Director