Bella Casa Fashion & Retail Ltd Management Discussions.

1. 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. 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.

Fashion & Lifestyle Category in India:

Regarding nominal GDP, India currently ranks 7th in the world, while in PPP terms, it is the 3rd largest economy with an estimated GDP of USD 3200 bn in FY20. Indias retail sector in FY20 is estimated to be approximately USD 1002 Bn. Food & Groceries (F&G) currently has around 65% market share. A study of the developed world shows that this share comes down and stabilizes at around 55% with economic progress. A rising share of discretionary spending always replaces a declining percentage of F&G. Fashion & Lifestyle (F&L), the primary discretionary category in the Indian retailing basket. Following major trends will contribute to the growth of the market:

? more purchasing power driving growth in primary discretionary spend,

? better access and availability of products,

? acute brand consciousness,

? increasing urbanization and increasing digitization.

Exhibit 2.1: Share of various Categories in Overall Indian Retail Basket
FY 2015 FY 2018 FY 2020E FY 2025P
Total Retail (USD bn) 559 806 1,002 1,805
Food & Grocery 67.5% 66.7% 65.8% 65.0%
Apparel & Accessories 8.3% 7.9% 7.7% 7.6%
Jewellery & Watches 7.3% 7.7% 8.1% 8.5%
Consumer Durables & Appliances 5.2% 5.9% 6.8% 7.3%
Home & Living 4.2% 4.3% 4.4% 4.4%
Pharmacy & Wellness 2.8% 2.9% 3.0% 3.1%
Footwear 1.2% 1.2% 1.2% 1.3%
Others 3.5% 3.4% 3.0% 2.8%

Source: Wazir Analysis

With this space of Fashion & Lifestyle business (market size of more than US$100 Bn in FY20), the fastest growing segment is the branded apparel sector. It is projected to grow at a 13.4% CAGR over the next ve years against the 10% CAGR projected for the apparel sector. Therefore it is clear that industry tailwinds will support a well-managed business in the Fashion & Lifestyle Industry.

We are approaching the F&L opportunity from two sides.

(a) By building our brands in B2B & B2C space: Bella Casa, Indigo, Nayak and Chanderi are targeted at different consumer and distribution networks in India. We continue to scale them up.

(b) By building a contract manufacturing facility for producing national brands and private labels of large retailers in India.

Both approaches have immense synergies in the form of shared design and product development teams, common manufacturing facilities and joint vendor partners. However, while cash flow in the contract manufacturing business is better, the branded business is a long-term play with implications for the companys longevity.

We continue to follow the following principles in our business to maximize the potential benefits of our strategy:

1. Get efficient, pass benefits to customers, repeat:

We will ruthlessly optimize shop floor efficiency, inventory and receivables, and product sourcing pass benefits to the customer. Grow scale. Leverage scale to get better terms.

2. Go above & beyond in helping your distribution partners:

In a country as diverse as India, having a person on the ground who wants your brand to win is vital. We will continue to invest in workman training, make CAPEX investments at the distributor, and help them manage and turn inventory fast

3. Dont play annual games in decadal markets:

Building brands, strengthening supply chains, and developing distribution take time

Markets suggest tweaks to optimize for the year. However, we will not lose sight of the long-term goal.

In the last seven years, we have grown our PAT 10X and expanded our capacity by 3X.

4. We are also a technology company:

Technology is helping us to manage logistics better, forecast demand and retailer stocking efficiently, enhance worker productivity and source customers cheaply. As a result, we are integrating technology in each function and at each step.

5. Build for longevity:

India is a multi-decadal story. Most sectors will grow phenomenally as the country, and its people grow

We are sharply focussed on the fashion & lifestyle market and continue to reinvest our winnings to grow.

We will compound with Bharat.

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) In uence 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 smart phone market has resulted in the growth of e-tailing in India. Due to ease of ordering online, lack of time, exible 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 t. 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 work wear is also driving demand for ethnic wear.


(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 2021-22, your Companys total sales registered a percentage increase of 59.48 %. Net Revenue being 20638.35 Lacs in FY 2022 as against 12941.34 Lacs in FY 2021. Return on net worth of the Company in FY 2022 is 25.67% as against 9.03% in FY 2021.


Particulars 2021-22 2020-21 Change %
Total Income 20,638.35 12,941.34 7,697.01 59.48
Total Expenditure 19,101.48 12,206.02 6,895.46 56.49
Earning Before Finance Cost, Depreciation 2173.61 1171.25 1,002.36 85.58
& Amortization and Tax (EBIDTA)
Less: Finance Cost 467.36 322.67 144.69 44.84
Less: Depreciation & Amortization expenses 169.38 113.26 56.12 49.55
Pro t Before Tax and Exceptional Items 1,536.87 735.32 801.55 109.01
Less: Tax Expenses 420.68 195.12 225.56 115.60
Comprehensive Income 7.70 12.01 -4.31 -35.91
Total Comprehensive Income for the period after Tax 1,123.88 552.21 571.67 103.52


S.No. Particulars 2021-22 2020-21
1 Debtors Turnover Ratio 4.42 3.18
2 Inventory Turnover Ratio 2.17 1.85
3 Interest Coverage Ratio 4.29 3.28
4 Current Ratio 1.71 1.66
5 Debt Equity Ratio 0.8 0.77
6 Gross Pro t Ratio 16.58% 14.55%
7 Operating Pro t Ratio 9.74% 8.21%
8 Return on Net-Worth 25.67% 9.03%
9 Operating Cost Ratio 90.26% 91.79%
10 Pro t before tax to Sales 7.47% 5.71%
11 Net Pro t Ratio 5.46% 4.30%
12 EBIT 9.74% 8.21%
13 EBIDTA 10.56% 9.09%


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 sta 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.

For and on the behalf of the Board of Directors
Harish Kumar Gupta
Chairman & Whole- Time Director
DIN: 01323944
Date: 12th August, 2022
Place: Jaipur
Registered O ce-
E-102, 103, EPIP, Sitapura Industrial Area
Jaipur-302022 (Rajasthan)
Tel No.- 0141-2771844
CIN- L17124RJ1996PLC011522