Upcoming Vedant IPO: How Will The New Manyavar Listings Perform?

Vedant Fashions Limited has been the largest apparel company in India for men’s Indian wedding and the celebration wear segment in terms of OPBDIT, revenue, Profit After Tax (PAT) for the Financial Year 2020, as stated by the CRISIL Report. According to the report, the “Manyavar” brand is the leader in the category of branded Indian wedding and the celebration wear market having a pan-India presence, as of the financial Year 2020.

The company states that they have established a multi-channel network and has also introduced the brands by identifying the nicks in the under-served and the high-growth Indian wedding  and celebration wear category. The company focuses on spreading the vibrant culture of India, the Indian traditions and heritage via their aspirational yet value for money brands at a diverse range of the price points. 

They also offer a one-stop destination with diverse product offerings for all the celebratory occasions. The company aims to deliver an aristocratic yet seamless purchase experience to their customers via their aesthetic franchisee-owned exclusive brand stores.

Furthermore, the company is focused on enhancing their leadership position in the organized Indian wedding and celebration wear market as well as establishing their dominance in the premium and the value segments of the Indian wedding and celebration wear market for men via their brands Manthan and Twamev, respectively, and also in the women’s Indian wedding and celebration wear market via their brand “Mohey” that was launched back in 2015. 

The company Vedant Fashions Limited mentions that through their diverse portfolio of the differentiated and leading brands, inclusive of their acquisition of Mebaz in the Financial Year 2018, a regional legacy brand catering to the complete family bearing a rich heritage and the established presence in the States of Andhra Pradesh and Telangana. 

The company believes that they are able to better cater to the requirements of their customers and the aspirations of the entire family but remain value for money and service the varying financial budgets of their Indian customers. In the Financial years 2019, 2020 and 2021 as well as the three months that ended in June 30, 2021. 

92.20%, 91.14%, 90.14% and 87.79% of the Sales of their customers, respectively, had been generated by the franchisee-owned exclusive brand outlets (their “EBOs”) with the remaining by the multi-brand outlets (“MBOs”), the large format stores (“LFSs”) and online platforms, including their website (www.manyavar.com) and the mobile application.

Vedant states that they are asset-light in respect of their plant, equipment and property that enables them to achieve a high return on the capital employed, basically owing to the nature of their sourcing and manufacturing operations bearing a substantial majority of their sales being generated via their franchisee-owned EBOs.

As a result, the company does not need to invest in developing the manufacturing facilities or a distribution system and by utilizing the economies of scale. They are able to optimize various costs like their production and procurement costs, employee costs and distribution costs, thereby leading to improved profitability.

The omni-channel presence of the company via the EBOs and the online platforms has been designed in such a manner that the products across their brands are made available under one universal platform. Thus, they are able to make their products available to their customers via their preferred mode of payment and shopping. 

The success of their franchisee-based model has been proven by the fact that as of the 30th of June, 2021, approx 70% of their franchisees have operated their stores for three or more years, and 61% of the sales of their customers by their franchisee-owned EBOs has been derived from the franchisees bearing two or more stores. 

Via their network of over more than 300 franchisees, they possess a track record of commanding a high initial capital commitment from their franchisees. In return, offers all necessary support in connection with the identifying and approving potential locations for all new stores, managing the multi-channel advertising on a national as well as regional levels, the store development and inventory management, supply chain management. The company also offers detailed training programmes for the store staff and the franchisees. They also incur lease costs in connection with the EBOs that are operated by their franchisees on the premises that are leased by them. 

As of the 30th of June, 2021, the company had a retail footprint of 1.1 million square feet covering 525 EBOs including 55 shops in shops that span across 207 cities and towns in India, and the 12 EBOs overseas across the United States, the UAE and Canada. These are the countries having a large Indian diaspora. 

For achieving a deeper connection with their consumers, the company utilizes targeted marketing campaigns via the digital and social media, multiplex cinemas, billboards, live events, and television advertisement. Vedant Fashions believe that they have developed a strong brand identity via effective brand advertising and the distinctive marketing campaigns for their brands. The company attempts to connect with their customers at an emotional level via various subtle messages that the customers can easily relate to. 

These messages include messaging theme that are completely value-based, embedded around the traditional cultural values like – “Diwali Wali Feeling”, “Shaadi Grand Hogi”, “Pehno Apni Pehchan” “Apno Wali Shaadi” and “Shaadi ka Kharcha Adha Adha”. Some of the campaigns of the company are also based on the specific categories of persons like the groomsmen or specific celebrations and occasions.

The Vedant Fashions Limited is headquartered in Kolkata and is led by their Founder, Chairman and Managing Director, Mr. Ravi Modi, who is a first generation entrepreneur and has proven his flair for the art of brand building as well as retailing with the success of his brands. He is supported by an expert management team whose achievements have been recognized by a number of industry awards that includes the Global Award for Retail Excellence (2020), India’s Retail Champions (Speciality Retail) in 2020, and Best Men’s Ethnic Wear Brand (East) in 2019. 

Since 2017, the company has also benefited from the support, guidance and the expertise of the marquee investor, Kedaara Capital, through Kedaara Capital Alternative Investment Fund – Kedaara Capital AIF 1 and Rhine Holdings Limited.

In the Financial Year 2021, 44.22% of the Sales of their customers has been generated by their franchisee-owned EBOs from the Tier-1 cities, 42.05% from the Tier-2 cities and 12.31% from the Tier-3 cities. The remaining 1.42% of the sales of their customers by their franchisee-owned EBOs has been generated from the international markets. 

For the Financial Years 2019, 2020 and 2021, the revenue from the operations had been INR 8,007.42 million, INR 9,155.49 million and INR 5,648.16 million, respectively. Vedant Fashion’s EBITDA for Financial Years 2019, 2020 and 2021 had been INR 3,379.54 million, INR 3,987.65 million and INR 2,817.05 million, respectively. The ROCE for the Financial Years 2019, 2020 and 2021 had been 48.24%, 47.80% and 34.07%, respectively.

As per CRISIl, the market for men’s Indian wedding and celebration wear has been estimated to be worth approx INR 133 billion as of the Financial Year 2020 and has been projected to increase to INR 170 billion to INR 180 billion by the Financial year 2025.