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Meghna Rathod    


Mumbai, India

An individual with masters degree in IT. Working as an computer teacher in school from last 5 years. I am highly interested in equity market and value investing. Looking forward to learn more in this sector and enhance my knowledge.

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MANYAVAR

Comments: 0 | Likes: 1 | Current Price: ₹ 1054


Vedant Fashions Limited

An Business Analysis


About The Company

Vedant Fashions Limited caters to the Indian celebration wear market with a diverse portfolio of brands. The company offers a one-stop destination with a wide-spectrum of product offerings for every celebratory occasion to its customers.

The company's brands include (i) Manyavar, (ii) Mohey, (iii) Mebaz, (iv) Manthan, and (v) Twamev. Vedant Fashions was the largest in India in the men's Indian wedding and celebration wear segment in terms of revenue, OPBDIT, and profit after tax for the Financial Year 2020.

The company operates its business through franchise-owned exclusive brand outlets (EBOs), with the remaining by multi-brand outlets (MBOs), large format stores (LFSs), and online platforms, including its website (www.manyavar.com) and mobile application.

As of September 30, 2021, the company had a retail footprint of 1.2 Mn sq. ft covering 535 EBOs (including 55 shop-in-shops) spanning 212 cities and towns in India, and 11 EBOs overseas across the United States, Canada, and the UAE.

edant Fashions Limited caters to the Indian celebration wear market with a diverse portfolio of brands. The company offers a one-stop destination with a wide-spectrum of product offerings for every celebratory occasion to its customers.

The company's brands include (i) Manyavar, (ii) Mohey, (iii) Mebaz, (iv) Manthan, and (v) Twamev. Vedant Fashions was the largest in India in the men's Indian wedding and celebration wear segment in terms of revenue, OPBDIT, and profit after tax for the Financial Year 2020.

The company operates its business through franchise-owned exclusive brand outlets (EBOs), with the remaining by multi-brand outlets (MBOs), large format stores (LFSs), and online platforms, including its website (www.manyavar.com) and mobile application.

As of September 30, 2021, the company had a retail footprint of 1.2 Mn sq. ft covering 535 EBOs (including 55 shop-in-shops) spanning 212 cities and towns in India, and 11 EBOs overseas across the United States, Canada, and the UAE.

Business Overview

Vedant is the largest company in India in the men’s Indian wedding and celebration wear segment in terms of revenue, OPBDIT and profit after tax for the Financial Year 2020 (Source: CRISIL Report). According to CRISIL, our ‘Manyavar’ brand is a category leader in the branded Indian wedding and celebration wear market with a panIndia presence, as of Financial Year 2020. The company have established a multi-channel network and introduced brands by identifying gaps in the under-served and high-growth Indian wedding and celebration wear category (Source: CRISIL Report). Company is focus on spreading India’s vibrant culture, traditions and heritage through their aspirational yet value for money brands at a diverse range of price points. The company offer a one-stop destination with a wide-spectrum of product offerings for every celebratory occasion and aim to deliver an aristocratic yet seamless purchase experience to their customers through their aesthetic franchisee-owned exclusive brand stores.

The company are focused on further enhancing their leadership position in the organized Indian wedding and celebration wear market and establishing their dominance in the premium and value segments of the men’s Indian wedding and celebration wear market through the brands, Twamev and Manthan, respectively, and in the women’s Indian wedding and celebration wear market through their brand, Mohey, launched in 2015. Through their diverse portfolio of leading and differentiated brands, including our acquisition of Mebaz in financial year 2018, a regional legacy brand catering to the entire family with a rich heritage and established presence in the states of Andhra Pradesh and Telangana, the company are able to better cater to the needs of their customers and the aspirations of the entire family yet remain value for money and service the varying financial budgets of their Indian consumers. In Financial Years 2019, 2020 and 2021 and the six months ended September 30, 2021, 92.20%, 91.14%, 90.14% and 88.09% of the Sales of their Customers, respectively, was generated by franchise-owned exclusive brand outlets (“EBOs”), with the remaining by multibrand outlets (“ MBOs LFSs ”), large format stores (“ including our website (www.manyavar.com) and mobile application. ”) and online platforms, The table below sets forth our brands as per their respective year of launch or acquisition (as applicable), the r elevant positioning in the market, the price spectrum of the product mix of each brand and the distribution channel through which each brands’ products are available in the market. 

Company's portfolio of products includes a diverse range of attires and accessories, each conceptualized by their designers who have experience in serving the distinct regional preferences of the Indian customer. Company's products are manufactured by artisans having an abundance of expertise in the Indian wedding and celebration wear market, supplemented by their own ingrained knowledge of the demands of Indian festiv als and weddings. The company's wedding portfolio also includes different ranges of creations for different members of the wedding entourage, besides unique personalization for the bride and the groom. Over the years, the company have built longstanding relationships with ve ndors and artisans, which have been critical towards us being able to command a dominant position in a market that was conventionally an unorganized market.

Company are assetlight in respect of their plant, property and equipment which enables them to achieve a h igh return on capital employed, primarily due to the nature of their sourcing and manufacturing operations, with a substantial majority of the sales being generated through their franchiseein developing manufa owned EBOs. As a result, company do not need to invest cturing facilities or a distribution system and by using economies of scale, company are able to optimize several costs such as their production and procurement costs, distribution costs and employee costs, thereby leading to improved profitability. Company omnichannel presence, through EBOs and online platforms, is designed in a manner such that products across their brands are available under one universal platform. As a result, company are able to make their products available to their customers through their preferred mode of shopping and purchasing. The success of their franchiseebased model is proven by the fact that as of September 30, 2021, approximately 73% of their franchisees have operated the stores for three or more years, and 65% of the Sales of their Customers by our franchiseeowned EBOs is derived from franchisees having two or more stores. Through their network of over 300 franchisees as of September 30, 2021, the company have a track record of commanding a high initial capital commitment from their franchisees and in return, provide all necessary support in connection with identifying and approving potential locations for new stores, managing multichannel advertising on a national and regional basis, store development and inventory management, management of the supply chain and provide detailed training programmes for store staff and franchisees. The company also incur lease costs in connection with EBOs operated by their franchisees on premises leased by them.

As of September 30, 2021, company had a retail footprint of 1.2 shopinmillion square feet covering 535 EBOs (including 58 shops) spanning across 212 cities and towns in India, and 11 EBOs overseas across the United States, Canada and the UAE, which are countries with a large Indian diaspora. In addition to their offline retail presence, their consumers also have the option of placing orders through the website (www.manyavar.com), their mobile application and through leading lateral ecommerce platforms. As their offline and online channels are integrated, their customers can place orders for their products either offline or online, and have the flexibility of buying products at one store and returning at another or browsing their product catalogues and placing orders online with doorstep delivery. The company also operate a QR-code enabled digital catalogue at many of our stores so that our customers can select a product of their choice from their entire range of offerings.

Technology is at the forefront of their operations and is essential to them being able to attain operational efficiencies in their sourcing, manufacturing, distribution and sales processes and delivering an enhanced retail experience to their customers. Most of their business operations are system-driven with limited manual intervention. The company utilise data analytics for capturing and analysing evolving consumer preferences and purchase trends across the country, and have developed a strong expertise and understanding of consumer preferences across India. The company also rely upon their technology platforms to monitor and manage store inventory levels on a real-time basis and integrate their stock and supply chain with the production cycle. The company back-end production processes, including their supply chain and inventory management are data-based and algorithmically managed with every stage system-driven, including the procurement of raw materials, manufacturing (on an SKU-identifiable basis), warehouse inventory management and store replenishment (including new store opening fill). As a result, the company have a record of every product sold at their franchisee-owned EBOs and are able to maintain synchronisation between store inventory, sales and billing cycles from each store. The company have also developed a mobile application and an upgraded website to support the customer product selection and sales processes.

Company's competitive strength

Company's key competitive strengths, which combined, lead to a high barrier to entry in the organized Indian wedding and celebration wear market, include:

  • Market leader in the Indian celebration wear market with a diverse portfolio of brands catering to the aspirations of the entire family. 
  • Large and growing Indian wedding and celebration wear market driven by an increased spending on such wear.
  • Differentiated business model combining the strengths of retailing with branded consumer play.
  • Omni-channel network with the seamless integration of our online and offline channels.
  • Technology-based strong supply chain and inventory replenishment systems driven by system-wide data analytics, strong processes and longstanding vendor relationships.
  • Experienced and professional founder-led leadership team. 

Company's Strategies

Expansion of footprint within and outside India

The company intend to focus their expansion effects in markets where they determine there is an increasing demand for their products, and where they can leverage their existing presence to expand the market share. Through their cluster-based expansion strategy, company have identified several cities and towns in both existing geographies where they have a presence and new geographies where they plan to establish their first EBOs. Between Financial Years 2016 to 2021, the company have increased their EBO retail space footprint from approximately 0.50 million square feet to over 1.1 million square feet, and aim to double their national footprint over the next few years.  

The company continue to carry out in-depth market research and analysis to identify potential locations for expansion, and intend to increase their sales in India as well as the underserved international markets where they have established a presence. The company have developed independent growth strategies for each of their brands, and intend to expand the footprint of our Mohey brand (along with our Manyavar brand) by establishing exclusive Mohey brand stores in clusters where they have an established dominant position, increasing the presence of their Twamev brand products through cross-selling at their Manyavar stores, and increasing the penetration of our Manthan and Manyavar brands by increasing sales volumes through the wholesale channel, MBOs, LFSs and online channel. The company also intend to further expand the footprint of their Manyavar brand by continuing to open new EBOs in new areas, cities and markets, and expand the international presence in markets with a large Indian diaspora, strong-rooted Indian traditions and high spending power such as the United States, Canada, United Kingdom, the Middle East, South East Asia and Australia. The development, ownership and operating experience in India provides us with the experience and resources to facilitate such expansion and the potential to achieve market share gains, increased brand recognition and economies of scale. 

Scaling up their emerging brands through increased up-selling and cross-selling initiatives  

By owning multiple brands catering to the Indian wedding and celebration wear market and operating each within the same omni-channel network, they are able to significantly up-sell and cross-sell their products through their existing retail channels. As they maintain strong operational synergies within their EBO network, the company are able to leverage the strong brand recall and established presence of their Manyavar brand to introduce their customers to our emerging brands such as Twamev and Mohey. As a result, the company are able to up-sell their Twamev brand products to Manyavar customers who may be looking for a premium offering, or cross-sell their Mohey brand products at Manyavar stores, thereby achieving an increase in order value and the number of items a customer may buy. Moreover, through their Manyavar and Mohey brands, the company recently introduced their ‘Man-Moh’ range, a coordinated jodi collection for the bride and the groom.

Enhancement of brand appeal through targeted marketing initiatives  

Overall, company's marketing initiatives are established to enhance two factors of growth that believe are critical sales drivers in the Indian wedding and celebration wear market. These are firstly, expanding the addressable market by increasing the trend of dressing in Indian s wedding and celebration wear (as opposed to western formals and casuals attire) not only at wedding celebrations but also at country-wide festivals such as Diwali, Navratri, Rakhi and Eid, regional festivals such as Durga Puja, Pongal, and other occasions such as birthday parties and wedding-anniversary celebrations, among others, and secondly, increasing the awareness of their brands and creations, but both within and outside India in their existing and potential markets.  

Vedant's Product Portfolio

The table below sets forth details of our core product portfolio by brand, as of September 30, 2021x`

Company's Retail Channel

EBO network

EBO network is integral to their business operations and sales from EBOs constituted the largest portion of the Sales of our Customers for the Financial Years 2019, 2020 and 2021 and the six months ended September 30, 2021. We opened our first EBO in Bhubane shwar of over 1.2 , Odisha in 2008, and as of September 30, 2021, had an aggregate million square feet of EBO retail space across 212 cities and towns in India and A virtual representation of an outlet of our EBO retail network is 8 cities internationally. below. The map below sets forth the geographic distribution of our EBO retail network across India, as of September 30, 2021.

Multi-brand Outlets (MBOs)  

In addition to our EBO retail network, they also sell their products through third-party owned MBOs (including shop-in-shops). The company participate in exhibitions across India to display their products and designs. During the six months ended September 30, 2021, products were sold across 825 MBOs (including shop-inshops) in 27 states and 332 cities across India, and MBOs accounted for approximately 5.88%, 6.34%, 6.30%, and 7.35% of the Sales of their Customers in Financial Years 2019, 2020 and 2021 and the six months ended September 30, 2021, respectively. 

Large Format Stores (LFS)  

In addition to their franchisee-owned EBOs and MBOs, they also sell a portion of their brand products through LFSs operated by third party retail organizations. The company commercial agreements operate on a margin basis, with a uniform maximum retail price of all products fixed by them and applicable on a pan-India basis. These agreements are nonexclusive in nature and renewable on a mutual basis. The company supply their products to LFSs and receive periodic payments as per agreed terms towards all sales of their products made by LFSs.  During the six months ended September 30, 2021, their products were available across 145 LFSs in 20 states and 43 cities across India, and LFSs accounted for 1.19%, 1.52%, 1.33% and 0.88% of the Sales of their Customers in Financial Years 2019, 2020 and 2021 and the six months ended September 30, 2021, respectively. 

Manyavar Special

Journey So Far

Wide Pan-India Reach and Presence including International Markets

Financial Highlights

Shareholding Pattern

 

Disclosure:

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure:

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure:

Source - Vedant's RHP, Company's investor presentation, Annual report. Dis - This is not an recommendation as it is for a knowledge purpose only.

Disclosure legality:

I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.

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