Kizi Apparels coming with IPO to raise Rs 5.58 crore

Kizi Apparels 

• Kizi Apparels is coming out with an initial public offering (IPO) of 2,658,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 21 per equity share. 
• The issue will open on July 30, 2024 and will close on August 1, 2024.
• The shares will be listed on BSE SME Platform.
• The share is priced at 2.10 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 Monica Jain.

Profile of the company

The company is engaged in manufacturing and trading of readymade garments through its own Showrooms, distributors and malls and online platform. Its operations are built around five core sectors i.e B2B (White Label), B2B (Own Brand), Job Work (Cut to Pack), Value Addition to Semi-Finished Goods and D2C (Direct-to-Consumer). Majorly, there are 2 different categories in which the women’s wear is divided, Ethnic & Western Wear. It as a Company understood the requirement & hence created two different brands with different categories to cater to the need of the women. It has two brands, ‘Anutarra’ brand is for its ethnic women wear and ‘Kizi’ is its western women wear brand.

Western wear is characterized by its contemporary and modern aesthetics. It encompasses a wide array of styles, from casual every day to sophisticated formal attire. Jeans, T-shirts, dresses, blouse, skirts and suits are all staples of western fashion. Ethnic wear celebrates the rich diversity of cultures and traditions around the world. In various countries ethnic wear plays an integral role in showcasing heritage and identity. Traditional outfits like sarees, salwar kameez, lehengas and anarkalis are cherished for their intricate craftsmanship, vibrant colors and attention to detail.

Proceed is being used for:

• Repayment of Unsecured Loans 
• Long term Working capital requirement 
• General Corporate Purpose
• Meeting Public Issue Expenses.

Industry Overview

The Indian Textile and Apparel Industry is valued at over $100 billion, employing over 45 million people and accounting for 14% of the country's industrial production. India is a global leader in producing several textile products, such as being the second biggest producer of silk, cotton and Multimode Fibre (MMF). It is also a world leader in jute production, accounting for nearly 70% of global production. Additionally, based on capacity, the country has the second largest vertically integrated production base after China. This leadership position gives the country significant advantages, such as manufacturing strength across the value chain and a huge raw material base. The value chain includes weaving, spinning, garmenting and processing.

India is the world’s largest producer of cotton. Estimated production stood at 362.18 lakh bales during cotton season 2021-22. Domestic consumption for the 2021-22 cotton season is estimated to be at 338 lakh bales. Cotton production in India is projected to reach 7.2 million tonnes (around 43 million bales of 170 kg each) by 2030, driven by increasing demand from consumers. In FY23, exports of readymade garments (RMG) including accessories stood at $16.2 billion. It is expected to surpass $30 billion by 2027, with an estimated 4.6- 4.9% share globally.

The Government schemes such as the establishment of PM MITRA Parks and the PLI scheme are expected to boost investment in the industry, contributing to significant growth in production, employment and exports. These measures will help India turn into a global market leader.

Pros and strengths

Innovation: It is into women garmenting business, which requires creation of designs in terms of changing fashion. It has team of designers and other facilities to come out with new designs, which make its garments more of a fashion product and thus proving better in terms of price realization. It embraces innovation as a driving force, allowing it to evolve and adapt in a rapidly changing industry. Its dedication to staying ahead of the curve ensures that it brings fresh perspectives to fashion.

Geographic reach by E-commerce:  It sells its products through E Commerce platforms in India. Through these e-commerce websites, it has grown its business from Rajasthan to Pan India level. It ensures that all its products must trade on a similar price on e-commerce platform to ensure its customers trust in its prices and in its products. The company will continue exploring opportunities in various other parts of India where it can supply its products to enhance its geographic reach not only through e-commerce platform but also through local vendors.

Quality: The company is in the Business of producing customized goods according to buyer specifications, crafting garments based on their designs and quality standards. Its commitment to delivering unmatched quality is non-negotiable. Providing the desired and good quality products at reasonable rates help it in enhancing the company’s brand and maintaining long term relationships with customers.

Risks and concerns

Dependent on third party transportation service providers: The Manufacturing of Garments is its main activity, it purchases the raw materials from the market and prepares the readymade garments in its factory and sell the same in the market, its success depends on the smooth supply and transportation of raw materials, readymade Garments etc. from its suppliers to it and supply of Garments to its buyers/clients, both of which are subject to various uncertainties and risks. In addition to this, the garments may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of such materials which may also affect its business and its results of operation negatively.

Business is manpower intensive: Its business is labour intensive and it is dependent on the availability of its permanent employees and the supply of a sufficient pool of labourers at its factories. Unavailability or shortage of such a pool of workmen or any strikes, work stoppages, increased wage demands by workmen or changes in regulations governing hiring of labour may have an adverse impact on its cash flows and results of operations.

High working capital requirements: The company is engaged in manufacturing and trading of readymade garments through its own Showrooms, distributors and malls and online platform. As on March 31, 2023 the company’s net working capital consisted of Rs 670.63 lakh as against the Rs 369.03 lakh as on March 31, 2022. The Net working capital requirement for the financial year F.Y. 2023-24 is estimated to be Rs 1084.68 lakh. It meets its working capital requirements in the ordinary course of its business from capital, internal accruals, unsecured loans, working capital loans from the Banks etc.

Outlook

Kizi Apparels is mainly engaged in the business of manufacturing and trading of women garments. The company distributes its products through its own Showrooms, distributors and malls and online platform. It has two brands, ‘Anutarra’ brand is for its ethnic women wear and ‘Kizi’ is its western women wear brand. On the concern side, it operates in a highly competitive business environment. Growing competition in the domestic market from domestic players and/or the international players, it is subject to pricing pressures and requires it to reduce the prices of its products in order to retain and/or attract new customers, which may have a material adverse effect on its revenues and margins. 

The company is coming out with an IPO of 2,658,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 21 per equity share to mobilize Rs 5.58 crore. On performance front, The total revenue from operations of the company for FY 2023-24 was Rs 2,026.51 lakh against Rs 1,548.05 lakh revenue from operations for FY 2022-23. An increase of 30.91% in revenue from operations. The EBDITA for FY 2023-24 was Rs 161.34 lakh as compared to Rs 115.75 lakh for FY 2022-23. Meanwhile, it intends to invest in developing and enhancing recognition of its brands in the market, through brand building efforts, communication and promotional initiatives such as advertisements in print media, hoardings, organizing events, participation in industry events, public relations and investor relations efforts. It has entered into agreement with some of the leading Indian Brands and digital commerce platforms, to enhance the visibility of its brands and strengthen its recognition.