Kalahridhaan Trendz
- Kalahridhaan Trendz is coming out with an initial public offering (IPO) of 49,98,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 45 per equity share.
- The issue will open for subscription on February 15, 2024 and will close on February 20, 2024.
- The shares will be listed on NSE SME Platform.
- The share is priced at 4.50 times higher to its face value of Rs 10.
- Book running lead manager to the issue is Interactive Financial Services.
- Compliance Officer for the issue is Kushang Thakkar.
Profile of the company
Kalahridhaan Trendz is engaged mainly in the business of manufacturing and trading of Fabric with embroidery works, trading of grey cloths, purchase of grey cloth and printing and dyeing for preparing suiting, shirting and dress materials for sale it in the B2B market only. The company is preparing the suiting, shirting & dress material products and focus on the whole sale market. The company is the first stage wholesalers, who directly supply the material to the wholesalers.
In case of Embroidery Segment, the company undertakes the embroidery work for its own business as well as on behalf of the other clients. In addition to this, the company also gets embroidery work out sourced. The company also deals in purchase and sale of grey cloths as well as the suiting, shirting and dress materials. It has two embroidery knitting machines having capacity of 15000 meters per day.
As a part of expansion of business activities, as a part of forward integration, the company also taken over the textile Dying and printing business unit on rent basis in February, 2018, where it is carrying out the dying and printing of suiting, shirting and dress materials for its own use as well as on job work too.
Proceed is being used for:
- Working capital requirement.
- General corporate purpose.
- Meeting public issue expenses.
Industry overview
India is the world’s second-largest producer of textiles and garments. It is also the sixth-largest exporter of textiles spanning apparel, home and technical products. India has a 4% share of the global trade in textiles and apparel. The textiles and apparel industry contribute 2.3% to the country’s GDP, 13% to industrial production and 12% to exports. The textile industry has around 45 million of workers employed in the textiles sector, including 3.5 million handloom workers. The textile industry has around 45 million of workers employed in the textiles sector, including 3.5 million handloom workers. India’s textile and apparel exports (including handicrafts) stood at $44.4 billion in FY22, a 41% increase YoY. Total textile exports are expected to reach $65 billion by FY26. The Indian textile and apparel industry is expected to grow at 10% CAGR from 2019-20 to reach $190 billion by 2025-26. The Indian apparel market stood at $40 billion in 2020 and is expected to reach $135 billion by 2025. The Rs. 10,683 crore ($1.44 billion) PLI scheme is expected to be a major boost for the textile manufacturers. The scheme proposes to incentivize MMF (man-made fibre) apparel, MMF fabrics and 10 segments of technical textiles products.
During April-November in FY23, the total exports of textiles stood at $23.1 billion. Exports of textiles (RMG of all textiles, cotton yarns/made-ups/handloom products, man-made yarns/made-ups, handicrafts excl. handmade carpets, carpets and jute mfg. including floor coverings) stood at $44.4 billion in FY22. India’s ready-made garment (RMG) exports are likely to surpass $30 billion by 2027, growing at a CAGR of 12-13%. In July 2021, the government extended the Rebate of State and Central Taxes and Levies (RoSCTL) scheme for exports of apparel/garments and made-ups until March 2021. This helped boost exports and enhance competitiveness in the labour-intensive textiles sector.
100% FDI is permitted in the sector. Cumulative FDI inflows in the textiles sector (including dyed and printed textiles) stood at $4.2 billion between April 2000-March 2023. The textiles industry in India is experiencing a significant increase in collaboration between global majors and domestic companies. International apparel giants like Hugo Boss, Liz Claiborne, Diesel and Kanz have already started operations in India. Since 2014, 59 textile park projects have been sanctioned under SITP and PPP with 40% government assistance of up to Rs 40 crore ($6 million). Of these, 24 textile parks are operational, as of July 2021. In February 2023, the union government approved 1,000 acres for setting up a textile park in Lucknow. Under the Union Budget 2021-22, Minister of Finance and Corporate Affairs, Ms. Nirmala Sitharaman, launched a ‘Mega Integrated Textile Region and Apparel (MITRA) Park’ scheme to establish seven textile parks with state-ofthe-art infrastructure, common utilities and R&D lab over a three-year period. In March 2022, the Bihar government submitted a proposal to Ministry of Textiles to set up a mega hub under the PM Mitra Mega Textile Park. In March 2022, Tamil Nadu Chief Minister Mr. MK Stalin announced that the State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT) will set up a mega textile park in the Virudhunagar district.
Pros and strengths
Prime location of its manufacturing Unit: The manufacturing unit are located at the outskirts of the Ahmedabad City on Narol Circle and thus enjoys the good connectivity with different parts of the states, which makes the movements of the raw- material as well as finished products very easy and comfortable. Thus, it helps in procurement of raw material and dispatch of its finished products to the various clients. Road, rail and air connectivity from Ahmadabad to the various states of India is easily available.
Quality assurance: All products that dispatch from the factory premises are inspected by the packing and dispatch department. Further, quality check is done at every stage of manufacturing to ensure the adherence to desired specifications. Since, the company is dedicated towards quality of products, processes and inputs; it gets repetitive orders from its buyers, as it is capable of meeting their quality standards, which enables them to maintain their brand image in the market.
Unique kind of product: The company is in to unique kind of product manufacturing which has huge market opportunity. Very few embroidery factories are in the market and therefor there is a tremendous demand in the market for its products.
Risks and concerns
Maximum revenue comes from top 10 customers: The Revenue from top ten customers in the FY 2022-23, FY 2021-22 and FY 2020-21 was 66.28%, 60.68% and 45.07% of the total turnover. The loss of any customer or a decrease in the volume of orders may severely affect its revenues and profitability, if it is unable to develop and maintain a continuing relationship with its key customer or develop and maintain relationships with other new customers. The loss of a significant customer or a number of significant customers due to any reason whether internal or external related to their business may have a material adverse effect on its business and results of operations. Any decline in its Quality standards, growing competition and any change in the demand for its services by these customers may adversely affect its ability to retain them.
Dependent on few suppliers for raw material: The purchase from top ten suppliers in the FY 2022-23, FY 2021-2022 and FY 2020-21 was 64.44%, 66.17% and 75.17% of the total purchase of material. The loss of any supplier due to any reason or disruption of the supply by the supplier, if the company is not able to agree with the terms and conditions for the supply of material or it is not able to find the alternative supplier of raw material with same terms and conditions at which it is buying the material, may severely affect its revenue and profitably. The top ten suppliers are not related to the promoters or promoter group.
No agreement with any of its labours who are on Job work basis: The company has 80% of its labours on the Job Work basis in its organisation. It has neither any written agreement nor any commitment with any of its job work labours. In absence of any type of the commitment with the job workers, the company is not sure that they will continue to work with it as job workers and the commercial terms will be favorable to the company. If the company is not able to get the job workers, efficiency in working of job workers, upward revision in the rate will disturb its production and increase in the manufacturing cost which will affect adversely its financial performance and profitability. However, the company is getting job workers easily from the local market only, hence, it is not required to entered in to any such type of contract with the job workers.
Outlook
Kalahridhaan Trendz was founded in 2016 and is a company that dyes and processes textiles. The company is engaged in manufacturing and trading of fabrics with embroidery, trading of grey fabrics, buying of grey fabrics and printing and dyeing of suiting, shirting and dress fabrics for sale in the B2B market. The company's manufacturing facility is located in Ahmedabad, Gujrat, and has a production capacity of 1.00 lakh metres per day. As on December 31, 2023, the company employed a total of 12 permanent employees in various departments. On the concern side, the top ten buyers of its product and top ten suppliers for raw material contribute majority of revenue and source of Raw Material. It does not have long term agreement with the customer or supplier. The loss of any Customer or a decrease in the volume of order by any customer or any disruption in supply of raw material by any supplier may adversely affect its revenues and profitability.
The company is coming out with an IPO of 49,98,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 45 per equity share to mobilize Rs 22.49 crore. On performance front, the company has reported a marginal rise of 0.15% in its total revenue at Rs 18,416.85 lakh in FY23 as compared to Rs 18,390.14 lakh in FY22. Moreover, the company has reported 170.52% rise in its profit after tax at Rs 666.01 lakh in FY23 as compared to Rs 246.20 lakh in FY22.
The business model is based on client relationships that are established over period of time rather than a project-based execution approach. The long-term client relationship with large clients fetches better dividends. Long-term relations are built on trust and continuous maintaining of the requirements of the customers. It forms basis of further expansion for the company, as it is able to monitor a potential product/ market closely. Moreover, to satisfy the customer demands for the printed quality suiting, shirting and dress materials of its existing customers as well as new customers, it has started process house operations, wherein it is carrying out the dying and printing of suiting, shirting and dress materials. Thus, it is expanding the business and customers also.
Download APP
