Being Human' brand is a core strength of your company. It's a unique brand inthat it belongs to a charity organisation of the same name that is doing noble work in thearea of health and education for those disadvantaged.
I am very happy to present to you the very first annual report of The Mandhana RetailVentures Ltd. as a public entity.
A small personal anecdote first. When I started on my first job in the year 1972branded apparel was a rarity. A few years earlier two shirt brands were launched with verycompetitive advertising campaigns in print media. Some of you may remember Armour'and Liberty' shirts.
Unfortunately back then the market was limited since we didn't have as many youngconsumers with healthy personal incomes as now. There was no organised and vibrant retailsector either as we see today; retail today accounts for 20% of the GDP according toreports. These promising brands just faded away. Little that I knew then that one day Iwould be a part of a vibrant branded apparel industry and be associated with a leadingbrand such as Being Human'. A brand that has iconic Mr. Salman Khan associated withit. Naturally I am excited to be a part of this company!
As you know that prior to the demerger your company was a division of MandhanaIndustries Ltd which had groomed it well since it started as its apparel business in theyear 2011. And it has been positioned right in a competitive market. Now on its own thecompany has the advantage of having its own distinct personality to take advantage ofopportunities in the multi-crore branded apparel market. It has the responsibility now touse the freedom to implement strategies for efficiency in supply chain and effective brandpromotion. Given the competition the company also needs to continue to be agile torespond to fast-changing fashion trends.
Opportunities for your company lie in the much talked of demographic dividend'that India is expected to enjoy for the next thirty years. Rapid urbanisation is anotherdriver of the market opportunity. About a third of India's population will be in the agebracket of 18 to 34 by 2021 the core consumer of the Being Human' brand. This agegroup represents what behaviourists call as the aspirational class. They have rapidlygrowing personal incomes and account for an expanding pie of private consumptionexpenditure on apparel and footwear. Management Discussion & Analysis later in thisreport deals with the demand context in more detail. I recommend you spend a few minutesto read it.
Being Human' brand is a core strength of your company. It's a unique brand inthat it belongs to a charity organisation of the same name that is doing noble work in thearea of health and education for the disadvantaged. The brand is licensed by the companyand its work in the social arena has a wide and easy recall. The Company's customers andthere are about half a million loyal ones and expanding know the attributes of this brandwell.
The Company's surveys show that the customers know that when they buy BeingHuman' apparel they are doing good while looking good'!
The philosophy of your management is healthy growth with profitability. And thereforethe Company works assiduously to generate enough cash flow to invest carefully in designproduct development and brand promotion that will sustain profitable growth. Withcontinuing profitable growth the Company's stock will hopefully continue to beattractive for trading and that will provide liquidity to the holdings of shareholders.The company has adopted an asset light' business model so that its capitalrequirement remains moderate. The company does not invest in real estate for retail exceptin handful of cases that too largely by way of leasing arrangements.
It has taken on board entrepreneurial franchisees and leverages their initiative andenthusiasm for market expansion. At present Being Human' brand is present in about600 outlets in India Nepal the Middle-East Mauritius and there is one in France. Thisfootprint will only grow in the coming years. Your company also uses on-line channels andthey account for about 6% of revenue today. This digital footprint will be expanded in acalibrated manner in the coming years.
During the year under review your company achieved a revenue of INR 218 Cr. This is amarginal increment over last year. During the year under review the process of demergerand consequent reorganisation took disproportionate time of the company management.
Demonetisation also slowed the tempo in what is usually a busy festive season for theapparel industry. However your management was successful in maintaining the gross marginsslightly in excess of 50% and EBITDA margin at 18.41%. Net profits were steady at ahealthy INR 20.02 Cr.
With GDP growth anticipated at 7%+ this year and promise of a good monsoon which is inprogress as I write this letter there is a reason to be optimistic about expandingpersonal incomes and spread of feel good' factor that drives the demand forBeing Human' brand. Not that there are no headwinds; reported loss of mid-level jobsin IT industry is a cause for slight concern. There is also a sense of uncertaintyregarding possible transition pains of Goods & Service Tax (GST) implementation.Barring this and any other unforeseen circumstances we should be looking at a progressiveyear.
Lastly I must compliment the dynamic management team headed by Mr. Manish Mandhanathe CEO that has pulled through a difficult transition year fairly unscathed. On theBoard of Directors
I must acknowledge the support of Independent Directors Mr. Ramnath Pradeep and Mr.Kiran Vaidya; in them you have persons of vast experience integrity and an impeccableinstinct for corporate governance. I must also mention Mr. Sachin Jaju the youthfulNon-executive Director who brings his in-depth knowledge of textile trade and its supplychain to Board deliberations.
With best wishes