Macroeconomic Scenario
As per International Monetary Fund, World Economic Outlook Report of April 2022, the
global GDP is estimated to decline from 6.1% in 2021 to 3.6% in 2022 and 2023. This
outlook comes at the back of the ongoing war in Ukraine and subsequent sanctions on Russia
that are expected to reduce global growth in 2022. The impact of the war has spread widely
in the form of rising global commodity prices, labour supply, trade and financial linkages
and humanitarian effects. Inflation has been on the rise, even before the war began and
has led to monetary tightening by central banks in both advanced, emerging and developing
economies. The financial markets have been volatile given the increased expectation of
tighter policies in the coming months and worries about the war.
As per FICCIs Economic Outlook Survey, Indian GDP is expected to grow by 7.4% in
2022-23. Agriculture and allied activities are expected to grow at 3.3% in 2022-23, while
services and industry sector are projected to grow by 8.5% and 5.9%. Although the threat
from pandemic continues to remain in the forefront, the Russia-Ukraine war is posing a
significant challenge to the countrys recovery. The sharp rise in crude prices has been a
significant shock to the macro-economic framework, as India is a net importer when it
comes to meeting its energy requirements. Hence, inflation is believed to be the most
significant risk in India. Private consumption has been tepid for most part of 202122
making it the weakest link in the progress of recovery. Moreover, purchasing power has
been further restrained given the rising inflation especially for low & lower-middle
income households.
Indian Textile and Apparel Industry
The textile and apparel industry of India is highly diversified given the wide range of
segments it encompasses. While the industry covers products like traditional handloom,
wool, handicrafts, and silk products on one side of the spectrum, the other side consists
of the organized textile industry that manufactures products on a much larger scale. The
organized textile industry in India is categorized basis the use of capital-intensive
technology and further involves spinning, weaving, processing, and apparel manufacturing.
India is the second-largest producer of textiles and garments in the world. Moreover,
it is the sixth largest exporter of textiles that includes apparel, home, and technical
products, with a 4% share of the global trade in textiles and apparel. The industry
contributes 2% to the countrys GDP and 7% of industry output in value terms. Textiles,
apparel, and handicrafts made up 11% of Indias total exports. As per Invest India, the
textile and garment market of India stood at US$ 103 Bn in FY2021 and is forecasted to
touch US$ 190 Bn by FY2026. The market size of the apparel industry of India was US$ 40 Bn
in 2020 and is expected to reach US$ 135 Bn by 2025, as per IBEF.
India enjoys a comparative advantage given the abundant availability of raw materials
like cotton, wool, jute, and silk, and access to skilled manpower at competitive wages.
The forecasted market expansion will be majorly driven by growing preference for brands,
rising per capita income and higher disposable incomes.
The industry enjoys significant support from the Government of India as well. The
government allows 100% Foreign Direct Investment (FDI) in the textile sector. Total FDI
inflows in the sector stood at US$ 3.9 Bn between April-December 2021. Moreover, to
improve Indias manufacturing capabilities and enhance exports, the Government of India
introduced a Production-Linked Scheme (PLI) for Textiles with an outlay of Rs. 10,683 Cr.
The scheme has two parts - (1) Minimum investment of Rs. 300 Cr required to receive an
incentive of Rs. 600 Cr; (2) Minimum investment of Rs. 100 Cr along with a minimum
turnover required for an incentive of Rs. 200 Cr. Around 61 applicants have been approved
under PLI for Textiles out of the 67 applicants received.
Kids Apparel Industry
The Indian kids apparel market is forecasted to grow from US$ 17 Bn in FY2020 to US$ 23
Bn in FY2026, reporting a CAGR of 5.9%. Traditionally, basic function-style kids apparel
used to be the trend, which was mainly catered by the unorganized sector. However, the
industry was undergone a major shift over the years. Today, parents are becoming more
brand conscious and exhibit an inclination towards high quality apparels for their kids.
The shift has
been driven by growing number of nuclear families and dual income households coupled
with changing preferences mainly influenced by frequent international travels, growth of
social media, and awareness of global fashion trends and brands. Parents have been willing
to spend more on their kids and want them to wear the latest fashion branded apparel. This
trend has been more prevalent in Tier I & II cities. Growing retail expansion and
internet retailing have been major contributors to the growth of kids wear market in
India.
The market has a huge customer base of ~120 Mn children between the age group of 0-4
years and ~250 Mn children between 5-15 years, making it a lucrative segment to cater to.
The kids wear segment is expected to grow faster than the dominating menswear and
womenswear segments by 2023, with a larger focus on apparels for new-born babies and
toddlers.
Company Overview
Iris Clothings Limited ("Iris" or "the Company") is a fast-growing
kids apparel company that is engaged in designing, manufacturing, branding, and selling
garments. Our products are sold under the brand - DOREME, which was launched within a year
of starting the business in 2005. DOREME started its sales through distributor- retailer
network based out of Mumbai. Since then, the brand has been steadily gaining popularity
from word-of- mouth publicity. It has also gained acceptance in the retail stores given
its high-quality and stylish range of collection and our ability to continuously launch
new products with varied designs.
We currently operate out of 4 key manufacturing sites based out of Howrah in West
Bengal. Our brand has good presence in 26 states across India with Maharashtra, Rajasthan,
Gujarat and NCR being our key markets. We have over 125 distributors who are selling our
garments, and this network is expanding as we speak. While most of our sale happens
through this distribution network, we do around 10% of sales directly through online
e-commerce channels like FirstCry and Hopscotch.
Our Products and Segments
The Company is dealing in only one segment i.e., manufacturing and trading of readymade
garments and clothing accessories in the kids segment through its brand
- DOREME. DOREME offers a wide range of apparels for infants, toddlers, and junior boys
and girls that suit both their indoor and outdoor requirements. This includes
- tops, t-shirts, trousers, shorts, dresses, polyfil suits, loungewear/nightwear,
sweatshirts, hoodies, padded suits, and accessories.
Our Strategies
Expanding Product Portfolio
Iris has carved a niche for itself by focussing on kids segment and has established a
strong brand - DOREME. It offers a wide range of affordable and good quality apparels for
infants, toddlers, and children in their pre-teens, serving both their indoor and outdoor
requirements. The Company aims to keep expanding its product offerings to provide a
greater choice to customers. Iris has plans to enter and expand the undergarments and
sportswear vertical in the coming year.
Integrated Operations
Iris is an integrated player with 100% in-house infrastructure right from Design
conceptualization, Raw material procurement, Manufacturing & Branding and finally
Selling this to Distributors. Being completely backward integrated allows the Company to
have better quality control, be cost- efficient and have healthy operating margins.
Manufacturing Prowess
Iris has four manufacturing facilities and 9 units at Howrah, West Bengal.
• Foreshore Road, Howrah - This plant has 4 units for stitching and
finishing with fully automated stitching machines from Japan and from a renowned
indigenous brand; and 1 unit for dispatch.
• Pachla, Howrah - Iris set up its first fully modernized stitching and
finishing unit here with online processes. The Company further enjoys locational advantage
in terms of skilled labour and raw material availability.
• Uluberia, Howrah - Iris consolidated all the manufacturing activities in
a single location and has installed fully automated cutting machinery from Italy and
printing machinery from US and Poland. The Company has also employed a fully modernized
stitching and finishing unit with online processes.
• Srijjan Industrial Park, Bombay Road - The Company set up its third fully
modernized stitching & finishing unit with online processes and also has 1 unit for
dispatch.
Constant Innovation & Quality Consciousness
The Companys growth driver has been its designing skills and constant innovation in
its product line. 5-10% designs are repeated every year, but 90% new designs are launched
every year.
Iris ensures adherence to the desired standards of quality and specifications for its
products and processes by undertaking adequate and stringent quality checks. This
has helped the company in building strong customer trust and securing repeat business.
Wide Network of Distributors
The DOREME brand has good presence in 26 states across India with Maharashtra,
Rajasthan, Gujarat, and NCR being the Companys key markets. Iris had over 125
distributors as of March 31, 2022. While most of the sale happens through this
distribution network, the Company does around 10% of sales directly through online
e-commerce channels like FirstCry and Hopscotch. The Company also exports to Mozambique,
Africa.
Iris has been expanding its presence in Tier II & III cities and has plans to add
distributors in newer geographies especially in South India, to deepen market penetration,
increase visibility and expand reach to markets with higher potential demand. Moreover,
the Company keeps participating in various industry exhibitions and tradeshows to increase
its visibility among the trade partners. Iris has planned an extensive channel partner
loyalty and engagement programme to drive their stickiness and boost morale.
Enhancing Brand Visibility
For a larger part, ever since the Company started operating, the brand has been
steadily gaining popularity from word- of-mouth publicity. However, Iris plans to enhance
its digital marketing and branding initiatives to better mirror the customers
fast-changing needs. The Company plans to undertake activities to enhance its brand recall
and customer connect on social media channels. This would eventually drive traffic to its
exclusive online platform that is expected to launch in FY2023.
Developments in FY2022
Increased production capacity
The Company did ~Rs. 3 Crores of Capex and increased its installed capacity from 27,000
pieces to 30,000 pieces manufactured/day. With this additional capacity, the Company aims
to manufacture between 24,000 and 27,000 pieces/day by FY2023 from the current level of
22,500 pieces.
Entered infants wear vertical
The Company expanded into product portfolio and launched the infants wear vertical in
December.
Outlook
The Company will continue with its innovation-driven strategy and keep launching new
products. It will be focussing on launching and scaling up the undergarments
and sportswear segment, and the recently launched infant wear segment where it sees
strong growth prospects. Iris will constantly enter new markets in both domestic and
international locations. While in India, it will keep increasing its footprint in Tier II
& III cities; globally, it will be targeting newer regions in Middle East, Africa, and
West Asia. The Company further plans to increase its market share in existing markets on
the back of innovation and by strengthening its distribution network. Lastly, Iris will
focus on growing its online business along with its offline business.
Opportunities and Threats
The growth is expected to be driven by factors such as increased purchasing power,
driving growth in primary discretionary spend, better access and availability of products,
brand consciousness, increasing urbanisation and rising digitisation. The Company is in
the process of evaluating various options for the same and plans to grow domestically and
internationally keeping in view the new opportunities created.
Indian markets are likely to emerge as one of the largest markets in the next few
decades, therefore many international apparel brands have commenced operations in India
increasing the competition intensity. However, by being focussed on providing good quality
garments at affordable prices Iris is less exposed to this threat.
Risks and Concerns
Due to the ongoing war, rising commodity prices can be a cause of concern for the
Company. However, given the long-standing relationships with suppliers, the Company has
the ability to exercise better price at the time of raw material procurement. Iris has
been taking advantage of locational synergies as well when it comes to raw material and
skilled labour availability.
Internal Control Systems and their Adequacy
The Company maintains adequate and effective Internal Control Systems commensurate with
its size and complexity. It believes that these systems provide, among other things, a
reasonable assurance that transactions are executed with management authorisation. It also
ensures that they are recorded in all material respect to permit preparation of financial
statements in conformity with established accounting principles along with the assets of
the Company being adequately safeguarded against significant misuse or loss. An
independent Internal Audit function is an important element of Companys Internal Control
System. This is supplemented through an extensive internal audit programme and periodic
review by the management and the Audit Committee of Board.
(Rs.in Lakhs)
| Particulars |
FY2022 |
FY2021 |
% Change |
| Total Income |
11.176.75 |
8.824.43 |
26.70% |
| Earnings Before Interest, Tax, Depreciation & Amortization |
2,155.93 |
1,714.06 |
25.80% |
| Less: Depreciation & Amortization |
559.95 |
531.04 |
5.40% |
| Earnings Before Interest & Tax |
1,595.98 |
1,183.02 |
34.90%, |
| Less: Finance Costs |
238.50 |
301.44 |
-20.9% |
| Profit Before Tax |
1,357.48 |
881.58 |
54%, |
| Less: Total Tax expense |
342.78 |
228.28 |
50.2% |
| Profit After Tax |
1,014.70 |
653.30 |
55.3%, |
We strongly believe that our employees have been the key pillars of our success in this
market. Therefore, we continue to empower and motivate our workforce to unleash their
potential so they can achieve individual excellence and enhance their contribution in
achieving departmental goals. The Company provides a diverse and an inclusive work
environment that helps the employees feel a sense of belonging and companionship with
their team. Because of our inclusive work culture and ability to offer opportunities for
career growth, we are able to attract and retain the best of talent. The employee strength
of the Company stood at 1378, as of March 31, 2022.
Statements in this report on Management Discussion and Analysis, describing the Company
s objectives, projections estimates, expectations, or predictions may be forward looking,
considering the applicable laws and regulations. These statements are based on certain
assumptions and expectation of future events. Actual results could, however, differ
materially from those expressed or implied. Important factors that could make a difference
to the Companys operations include finished goods prices, raw materials costs and
availability, global and domestic demand supply conditions, fluctuations in exchange
rates, changes in Government regulations and tax structure, economic developments within
India. The Company assumes no responsibility in respect of the forward-looking statements
herein, which may undergo changes in future based on subsequent developments, information,
or events.
For and on behalf of tine Board Iris Clothings Limited
| Place: Howrah |
Managing Director |
Whole-time Director |
| Date: July 27, 2022 |
(DIN: 03585561) |
(DIN: 03585488) |
+91-9892691696
