Bella Casa Fashion & Retail Ltd Management Discussions.

Indias GDP Growth

India is the worlds 7th largest economy and is expected to be in the top 3 global economies by 2050. India ranks 7th in the world in terms of nominal GDP and is the 3rd largest economy in the world in PPP terms. Sustained high real GDP growth of over 6 per cent since FY 1991 has led to a fundamental transformation of the Indian economy. Indias GDP is estimated to be ~USD 3200 bn in FY 2020.

Company Overview

Your company has the vision to be one of Indias largest manufacturers in the Fashion & Lifestyle (F&L) business. F&L category is worth more than Rs 1.2 lac crore in the Indian Retail Market and is expected to grow at 7% per annum until FY25. (Indian Fashion Market by Wazir Analysis, June 2020). This market includes price segments of value, premium, super-premium & luxury across segments of mens casual wear & formal wear, womens formal, casual & ethnic wear and kidswear.

As India closes in on becoming the worlds sixth-largest fashion market, the opportunity for a vertically integrated company like yours to design innovative products, efficiently manufacture them at low cost and then distribute them through or supply to large retailers and platforms is humongous.

Indian Fashion Market Overall Apparel Market:

The overall apparel segment size in FY 2020 was estimated to be USD 67 bn. The market is projected to grow at ~10 per cent and reach USD 107 bn by FY 2025. This growth is expected to be driven by factors such as more purchasing power driving growth in primary discretionary spend, better access and availability of products, acute brand consciousness, increasing urbanization and increasing digitization.

Western Wear & Ethnic Wear Mix:

The apparel market in India is dominated by the western wear market (contribution ~69 per cent in FY 2020), and it is expected to grow and contribute ~72 per cent by FY 2025. With an increasing number of working women, a shift towards aspiration rather than need-based buying is expected to drive the western wear market in India. On the other hand, the ethnic wear market is also expected to grow at ~7.8 per cent and reach nearly USD 30 bn in FY 2025 from USD 20.6 bn in FY 2020. Women dominate this ethnic wear segment wear as Indian women, Indian and ethnic fashion is a mainstream need for daily wear use (in addition to strong occasion wear). In contrast, for Men, it is currently restricted to occasion wear viz. weddings and festivals.

Growth enablers for Fashion Business:

(i) Youth as a growth driver:

Youth (15 to 29 years old), who comprise 26 per cent of the consuming population, is a key growth driver of western wear in the country. Increasing disposable income, comfort, quality and brand consciousness are significant reasons behind increasing acceptance of western wear among this young population.

(ii) Influence of International Brands:

The entry of international brands in the country is one of the biggest drivers of western wear. Their entry has widened the perspective of consumers, which has resulted in higher acceptability of new trends and styles in the market. With the increasing exposure to international fashion trends, the Indian consumer today is aware of global trends and has given him more variety to choose from.

(iii) Online penetration of Western Wear:

Increased internet penetration coupled with the burgeoning smartphone market has resulted in the growth of e-tailing in India. Due to ease of ordering online, lack of time, flexible return policies, and the cash on delivery, the youth of India are more likely to purchase western wear online.

(iv) Growing preference for occasion-specific clothing is making ethnic wear the most preferred choice for social functions

Indian consumers no longer stick to formal or casual attire for family functions and marriage ceremonies; they prefer ethnic wear that reflects the uniqueness of the Indian cultural ethos. This trend has extended to national days like Independence Day and Republic Day when ethnic wear leads over other categories. Innovative marketing and promotion (by brands) that links days of national importance to displaying patriotism through ethnic attire have contributed to the growing demand for ethnic wear for such occasions. Many corporates, both Indian and international, have started encouraging ethnic dressing during Diwali, Holi.

(v) The ethnic wear consumers are seeking association with brands:

The ethnic wear consumers have started inclining towards branded apparel due to better design, quality and fit. In addition, growing disposable income, increasing aspiration levels among youths are driving factors for branded ethnic wear market in India. Consequently, in recent years, the ethnic wear market has witnessed a high growth trajectory of existing brands and the entrance of many new brands. While the Indian brands compete with international brands in western wear categories, they have an edge in ethnic wear products. The proliferation of brands is more distinguishable in womens ethnic wear as, unlike men, women use ethnic wear as formal wear. In addition, the growing acceptance of ethnic wear as workwear is also driving demand for ethnic wear.

This analysis explains the rationale behind the companys expansion program to 12Mn Units/Annum from 6 Mn Units in a year marred by Covid-19.


(i) The Indian textile industry is set for strong growth, buoyed by both strong domestic consumption as well as export demand

(ii) Urbanization is expected to support higher growth due to change in fashion & trends.


(i) 100 per cent FDI (automatic route) is allowed in the Indian textile sector

(ii) Increased Competition from Local & Big Players.(iii) Our operations are in unorganized sector, is prone to changes in government policies.


During FY 2020-21, your Companys total sales registered a percentage decrease of 20.87 %. Net Revenue being 12941.34 Lacs in FY 2021 as against 16353.72 Lacs in FY 2020. Return on net worth of the Company in FY 2021 is 4.81% as against 7.98% in FY 2020.


Particulars 2020-21 2019-20 Change %
Total Income 12,941.34 16,353.72 -3,412.38 -20.87
Total Expenditure 12,206.02 15,143.13 -2,937.11 -19.40
Earning Before Finance Cost, Depreciation & Amortization and Tax (EBIDTA) 1171.25 1802.81 -631.56 -35.03
Less: Finance Cost 322.67 482.38 -159.71 -33.11
Less: Depreciation & Amortization expenses 113.26 109.84 3.42 3.11
Profit Before Tax and Exceptional Items 735.32 1,210.59 -475.27 -39.26
Less: Tax Expenses 195.12 297.51 -102.39 -34.42
Comprehensive Income 12.01 2.7 9.31 344.81
Total Comprehensive Income for the period after Tax 552.21 915.78 -363.57 -39.70


S.No Particulars 2020-21 2019-20
1 Debtors Turnover Ratio 3.18 3.86
2 Inventory Turnover Ratio 1.85 2.64
3 Interest Coverage Ratio 3.28 3.51
4 Current Ratio 1.66 1.68
5 Debt Equity Ratio 0.74 0.75
6 Gross Profit Ratio 14.55% 16.56%
7 Operating Profit Ratio 8.21% 10.38%
8 Return on Net-Worth 9.03% 16.56%
9 Operating Cost Ratio 91.79% 89.62%
10 Profit before tax to Sales 5.71% 7.42%
11 Net Profit Ratio 4.30% 5.61%
12 EBIT 8.21% 10.38%
13 EBIDTA 9.09% 11.05%

Explanation on Key Financial Ratios: -The changes in the ratios are due to adverse impact of the COVID-19 pandemic on the performance of businesses of the Company.


Financial Risks

The Companys policy is to actively manage its foreign exchange risk within the framework laid down by the Companys forex policy approved by the Board. Given the interest rate fluctuations, the Company has adopted a prudent and conservative risk mitigation strategy to minimize interest costs.

Commodity Price Risks

Volatility in prices of raw materials, energy inputs and finished goods may adversely impact profitability. The Company proactively manages these risks through forward booking, inventory management and proactive vendor development practices. The Companys reputation for quality, product differentiation and service, coupled with the existence of a powerful brand image with robust marketing network mitigates the impact of price risk on finished goods.

Interest Rate Risk

Any increase in interest rate can affect the finance cost. The Company is mitigating these risks through Continuous monitoring of interest rate trends.

Regulatory Risks

The Company is exposed to risks attached to various statutes and regulations. The Company is mitigating these risks through regular review of legal compliances carried out through internal as well as external compliance audits.

Human Resources Risk

Your Companys ability to deliver value is dependent on its ability to attract, retain and nurture talent. Attrition and non-availability of the required talent resources can affect the performance of the Company. The Company is mitigating these risks by Continuous benchmarking of the best HR practices across the industry and carrying out necessary improvements to attract and retain the best talent and Regular review, monitoring and engagement on personal development plans of high performers and high potential employees.


The outlook for the Indian textile industry continues to be positive. The factors which contribute to the India advantage are expected to continue over the medium term. This is expected to help India enhance its market share further in the other key geographies.


Your Company has in place internal control systems and procedures commensurate with the size and nature of its operations. Internal control processes which consist of adopting appropriate management systems and implementing them are followed. These are aimed at giving the Audit Committee a reasonable assurance on the reliability of financial reporting and statutory & regulatory compliances, effectiveness and efficiency of your Companys operations. The Internal Control Systems are reviewed periodically and revised to keep in tune with the changing business environment.


The Company firmly believes that motivated and empowered employees are the cornerstone of competitive advantage. The Companys employee value proposition is based on a strong focus on employee development, providing a satisfying work environment, performance appraisal and counseling and appropriate empowerment.

The Company continues to maintain and enjoy a cordial relationship with its employees, providing a positive environment to improve efficiency with regular investments in upgrading the knowledge and skills of the employees


• Further widening of our customer base

With the growing opportunities available in the market, we will endeavor to continue to grow our business by adding new customers in existing and new geographies, new market segments. We are looking towards expanding our customer base in Middle East countries. We are also making efforts and diagnosing the domestic markets for our own brands product. With the widening of the customer base for our Brand product, we can leverage the production capacity and the experience of our production team. We aim to do this by effectively leveraging our marketing skills and relationships and focusing on total customer orientation.

• Reduction of operational costs and achieving efficiency

Apart from expanding business and revenues, we have to look for areas to reduce costs and achieve efficiencies in order to remain a cost- competitive company. We try to reduce the wastages and control the production on the production floor through effective supervision. Our focus has been to reduce operational costs to gain a competitive edge.

• To build up a professional organization

We believe in transparency, commitment and coordination in our work, with our suppliers, customers, government authorities, banks, financial institutions etc. We have a blend of experience and sufficient staff for taking care of our day-to-day operations. We also consult with external agencies on a case-to-case basis on the technical and financial aspects of our business. We wish to make it sounder and stronger in times to come.

• Focus on a cordial relationship with our Suppliers, Customer and employees

We believe that developing and maintaining long-term sustainable relationships with our suppliers, customers and employees will help us in achieving the organizational goals, increasing sales and entering into new markets.

• Optimal Utilization of Resources: -

Our Company constantly endeavors to improve our production process, skill up-gradation of workers, modernization of machinery to optimize the utilization of resources. We analyze our existing raw material procurement policy and manufacturing processes to identify the areas of bottlenecks and take corrective measures wherever possible. This helps us in improving efficiency and putting resources to optimal use.


The statements in the "Management Discussion and Analysis Report" section describes the Companys objectives, projections, estimates, expectations and predictions, which may be "forward-looking statements" within the meaning of the applicable laws and regulations. The annual results can differ materially from those expressed or implied, depending upon the economic and climatic conditions, Government policies and other incidental factors.