Mandhana Retail Ventures Ltd Management Discussions.


World economic activity moderated from 3.8% in 2017 to 3.6% in 2018. This slowdown can be attributed to weakening market sentiment, trade policy uncertainty and concerns regarding Chinas outlook. However, the US witnessed a boost due to the fiscal stimulus, while the Eurozone faced slow growth due to the reduction in net exports. Trade-related disputes dominated the markets during 2018, which slowed global trade growth significantly below the 2017 average. Certain other factors that contributed to the fall in economic growth are the trade dispute between the US and China, a stricter banking credit regime in China, stabilising monetary policies in some of the larger advanced economies, stress in some developing economies such as Argentina and Turkey and disruption in the automotive industry in Germany post the issuance of new emission norms.


Global growth is expected to decline to 3.3% in 2019 before picking up slightly to 3.6% in 2020 [Source: International Monetary Fund (IMF) and World Economic Outlook, April 2019]. Higher trade policy uncertainties and sharp tightening of global financial conditions are likely to act as key risks to global economic growth in 2019. The slight boost to the economy in 2020 would be on the back of significant monetary policy accommodation in major economies due to the lack of inflationary pressures. In the US, fading effects of fiscal stimulus and increasing interest rates will control economic growth. China has also ramped up its policy stimulus to counter trade tari s. Also, the prospect of the US-China trade tension is expected to improve.


Despite marginal growth to 6.8% this fiscal, the Indian economy remains the fastest growing major economy in the world. Increased consumption, rising disposable income and subsequent increase in spending contributed to propelling Indias economy. Government reforms such as the Goods and Services Tax (GST) led to the development of a more organised economy. The governments push to infrastructure, visible in projects such as metro rails, freight corridors and port development, has increased the Gross Fixed Capital (GFC) from 9.3% in FY18 to 10% in FY19. India improved its ranking in the World Banks Ease of Doing Business index by 53 positions in the last two years, to now assume the 77th position among 190 countries.


According to the International Monetary Fund (IMF), India is expected to grow at 7.3% in CY19 and 7.5% in CY20. Benign inflation expectations, reduction in repo rates and sustained policy reforms that boost investment, ease banking sector concerns and emphasise infrastructure development are expected to bode well for the economy.


India is Asias third-largest retail destination and the worlds fourth largest after the US, China and Japan. Retail accounts for ~8% of the total employment in India and over 10% of its Gross Domestic Product (GDP). As one of the fastest-growing major economies, India is experiencing high growth in the consumer and retail markets, thus generating large investment and business opportunities.

Food and grocery drive the majority share of Indian retail, followed by the apparel and footwear, consumer durables and Information Technology (IT) segments.

Indian retail operates through various business models that are adapting to the evolving trends in preferences and the accelerated use of technology and the internet. There are four primary models: cash and carry (or wholesale trading), single-brand retail, multi-brand retail and e-commerce. That said, the market is highly fragmented, with traditional formats (or ‘kirana stores) dominating the conversation. Backed by growth in income, increased digital adoption and a significant demographic dividend, online shopping is witnessing a steady rise.

In January 2018, the Indian Government permitted 100% Foreign Direct Investment (FDI) in single-brand retailing under the automatic route. To strengthen regulation and competition, the government has amended the consolidated policy vis--vis FDI in e-commerce entities (applicable to all e-commerce marketplace entities w.e.f. February 1, 2019). The amendment prohibits equity participation by e-commerce players in the vendor entity, restricts ownership and control over the inventory of the vendor entity, and restricts the exclusive sale of products on the e-commerce platform of the marketplace player.


• Expanding aspirational middle-class income groups

• Rapid pace of urbanisation and industrialisation

• Favourable demographics

• Rising internet penetration

• Evolving consumer profiles as well as attitudes

• Government-led structural reforms and policy initiatives


• Rising share of millennial consumers

• Incorporating multi-channel retail strategies

• Leveraging social networks

• Personalising product experiences

• Emerging focus on wellness, convenience and comfort

• Imbibing digital and technology in every aspect of the value chain

• Adopting sustainable business practices that address the triple bottom line


India is primarily a consumption-driven economy and its retail market is expected to touch $1.2 trillion by 2021, wherein the share of organised retail is projected to grow from 9% in 2017 to 18% by 2021.

Consumer experience will be the key focus of retailers and technology will be a facilitator in that regard. Mc Kinsey estimates Indias apparel market to be worth $59.3 Billion by 2022, making it the sixth largest in the world. In view of the rising appreciation, global trends awareness, growing aspirations and better purchasing power across the middle-class and upper middle-class, luxury apparel brands have the most advantage in the current scenario.


Incorporated in 2011, The Mandhana Retail Ventures Limited (TMRVL) has swiftly emerged to be one of Indias prominent branded apparel retailers. We are one of the leading mens apparel brands in India. We are the global exclusive brand licensee of ‘Being Human – The Salman Khan Foundation vis--vis designing, manufacturing, retailing and distribution of mens wear, womens wear and accessories. We primarily cater to the mid-level and premium segments, with the objective of attracting the new-age urban consumers.

We oversee functions of apparel design, quality, distribution and branding in-house, while outsourcing apparel production to select trusted vendors. We sell our apparel via Exclusive Brand Outlets (EBOs), Shop-in-Shops (SIS), franchisee outlets, distributors and e-commerce channels. We do not own any premises, but we take the same on lease for our EBOs. The premises for franchisee outlets are largely owned or leased by the franchisee partners themselves. The SIS counters operate in reputed multi-brand retail and department stores. Such an operating model allows us to remain ‘asset light and leverage a diversified distributor profile to maximise our reach.

Segment-wise Revenue

(Rs. in Lakh)

Point of Sale EBOs Franchisees SIS Distributors E-Commerce Others Domestic Export Total
Net Sales 5,890 3,208 8,298 (88) 1,939 326 19,573 2,414 21,987
Gross Profit (GP) 3,685 1,887 4,883 (67) 1,141 (129) 11,400 974 12,374
GP (%) 62.56% 58.84% 58.84% 75.76% 58.84% (39.50)% 58.24% 40.34% 56.28%
Profit Before Tax 10.45
Income Tax (69.36)
Profit After Tax (PAT) (58.91)

Operational Review

India is a confluence of tastes and preferences. It remains a complex market that presents challenges as well as opportunities. The apparel business is still largely unorganised. However, the country is increasingly becoming a focal point for the fashion industry. We are aggressively pursuing growth and widening our geographical reach by targeting the fashion consciousness with a strong value-for-money proposition.

Points of Sale (POS)

We are expanding our footprint in Tier II and III cities by tapping into the spending potential of the middle-income groups. During the year, we opened four new stores, of which three were EBOs and 1 was a franchisee. As of 31st March, 2019, we have a well-established network of 265 POS spread across the country.

Digital Footprint

Innovation is a business imperative to remain relevant. We are disrupting traditional business models and leveraging digital partnerships with start-ups in a dynamic retail landscape to stay ahead. Myntra is our largest e-commerce partner and we are actively exploring other opportunities to diversify our ecosystem.

Net Sales 1,939 Lakh
Global Sales 8.82%
Domestic Sales 9.91%
GP 1141 lakh
GP 58.84%

Performance Review

During the year, we achieved sales 21,987.25 lakh, reflecting a decline of 15.25% over 25,944.93 Lakh in FY18. Our EBIDTA margin decreased to 2.92%, from 8.08% in FY18. Net loss after tax stood at 58.91 Lakh, as compared to net profit of 902.72Lakh in FY18.

(Rs. in Lakh)
Particulars Year ended
31.03.2019 31.03.2018 31.03.2017
Total Income 22,204.12 26,073.71 26,136.18
Net Profit for the Period before tax 10.45 1,551.14 2,282.14
Net Profit / (Loss) for the (58.91) 902.72 1,397.98
Period after tax
Total Comprehensive
Income for the Period
(Comprising Profit / (Loss) for the period (after tax) and Other Comprehensive (58.18) 902.72 1,407.25
Income (after Tax)
Equity Share Capital 2,208.26 2,208.26 2,208.26

Strategic Review

As a responsible corporate, we are largely focused on generating long-term value for our shareholders. We appreciate the mosaic of Indian and international sensibilities which today dominates the domestic apparel trends. Our strategy mandates us to better understand how Indians consume, what colour they consume, what kinds of design they consume and what touch points and personalisation will benefit us. This involves a multi-pronged approach wherein we are innovating our business model and creating a strong pipeline of new products that appeal to the middle-income earners.

Human Assets

Our people are at the heart of everything we do and we implement a variety of initiatives to augment their operational capabilities. We strongly focus on training and development to enable the future growth of the organisation.

Trainings Conducted in the Year

Sr. No. Details of Learning Objective of Training No. of Employees Covered
1. Managerial Excellence Fundamentals of coaching, mentoring, leadership, motivating the team and the art of giving constructive feedback to managers to help get the best out of their teams. 50
2. Workshop on Music Learning Pursuant to the Copyright Act of 1957, it is mandatory for all those who play pre-recorded music in the form of gramophone records, music cassettes, CDs, on radio, TV, audio-visual, etc. for non-private purposes or in public places and/or commercial establishments and/or non-commercial establishments to take prior licence from the copyright owner or licensing authority. Various music-licensing companies have been approaching for taking mandatory music licenses under the Copyright Act. There is a lot of confusion and lack of clarity in this regard. Hence, this workshop was organised by the Retailers Association of India to give guidelines on compliances to retailers on this point. 3
3. Intelligent Visual Merchandising in Connected Retail Connected retailing trends, the concept of unique experience propositions for retail, smart visual merchandising trends, Visual Merchandising (VM) data science, planning omni-channel VM, planning VM yield in sync with sales. 2
4. Retail Technology Conclave Advanced technologies such as Artificial Intelligence (AI), Virtual Reality (VR), Augmented Reality (AR), drones, advanced analytics, coupled with the Internet of Things (IoT), are helping make retail business smarter. Together, they are helping create magic at different touch points, gather insights rather than data, and connect with consumers to create something that is not just meaningful for them but also for the business. The Retail Technology Conclave (ReTechCon) 2018 focused on helping retailers understand all that is smart and cutting-edge in retail. Consumers are getting smarter by the day; this workshop enabled retailers to catch up with them. 2
5. Excellence in Store Operations Focused on the means of achieving great retail performance by virtue of enhancing the store productivity and profitability by adopting proven best practices. 3
6. Manning Modern Retail (MMR 2019) - 12th HR Conclave RAIs HR Conclave, Manning Modern Retail (MMR), is the platform where various stakeholders of the retail industry come together to discuss the long- term road map with respect to HR strategy, not just for their own organisations but for the industry as a whole. It is also the forum for HR heads to collectively create an action plan and pledge their support in establishing practices and policies that would define retail industry as a preferred employer. 2
7. Retail Leadership Summit (RLS) – 2019 The main theme of RLS 2019 was Customer Experience - Key to Mindshare and Market Share and various HR and marketing strategies that the Great Place to Work is following. By 2020, customer experience will overtake price and product as the key brand differentiator. It is the fulcrum on which a brands success will be built. RLS 2019 aimed to assimilate people from various factions and formats of retail to talk about what could create new brand salience and experiences that helps increase mindshare and, thus, market share. 5
Total No. of Employees Trained 67

We recruit top talent from different backgrounds and take steady steps to nurture and retain them. We firmly believe in inclusive growth and being an employer of choice. Currently, we have 42 differently abled employees working in our Exclusive Business Outlets across the country. As on 31st March, 2019, our workforce strength is recorded at 537.

Risks and Mitigation

Key Risk Description Mitigative Action
Intense Pricing Rivalry Various brands, both domestic and international, are entering the highly attractive Indian retail space and this is intensifying competition. We are targeting the aspirational emerging city consumers with a strong focus on value-for- money.
Brand Continuity and Licensing Agreement Our core strength lies in our exclusive deal with ‘Being Human – The Salman Khan Foundation and the extension of our agreement with it. The current licensing period extends until March 2020 and we face the risk of its discontinuance. We enjoy a strong relationship with the Foundation and are in the process of renewing the licensing deal.
Procurement We source our products for procurement and manufacturing from multiple vendors. Any disruption in procurement affects our business continuity. We engage with stakeholders to efficiently source our products at competitive rates to maintain our gross margins and ensure timely execution.
Sensitivity to Consumer Spending Consumer spending, a function of macroeconomic conditions, is critical to our business. Change in any of these conditions (growth rate, interest rates, inflation expectations, etc.) directly impact consumer sentiment. Our core market is India whose economic outlook remains favourable on most counts.
Shift in Preferences Sales levels and margins depend on our ability to foresee changes in fashion and respond swiftly. If our clothing line is not aligned with consumer preferences, our sales would be lower and such stock would have to be heavily discounted, affecting profitability. We have a capable in-house team of product planners, designers and supply chain experts to identify changes and respond to them at the earliest.


We have set up a comprehensive system of internal controls, along with a structured internal audit process, vested with the task of safeguarding the assets of the organisation, and ensuring reliability and accuracy of the accounting and other operational data. Internal audit is conducted for all the processes to identify risks and verify whether all systems and processes are commensurate with the business size and structure. These internal controls are verified by the Audit Committee to monitor existing systems and take corrective measures, wherever required.

Key Financial Ratios

Details of significant changes (i.e., change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof, including:

Ratio 31st March, 2019 31st March, 2018 Change (difference between the ratio as on 31st March, 2019 and 31st March, 2018) Reasons for change in Ratios
Debtors Turnover 7.64% 11.71% (35%) Debtors turnover representing credit sales divided by average debtors, have reduced on account of delay caused in realising the amount from the debtors.
Interest Coverage Ratio 1.04 9.75 (89%) (i) Interest coverage represents earnings before interest expenses divided by interest expenses;
Net Profit Margin (0.27%) 3.48% (108%)
Return on Net Worth (0.88%) 13.39% (107%)
(ii) Net profit margin represents profit after tax divided by revenue from operations; and
(iii) Return on net worth represents profit after tax divided by Networth.
The decrease in the aforesaid ratios is mainly attributable to the decline in the revenue of the Company and consequently leading to net loss in FY 2018-19 as compared to net profit in FY 2017-18.
The trend of value retail is the primary reason for this slowdown. Another factor is the global value retail brands, which bring with them size, scale, variety and attractive prices because of their strong global presence and large-scale operations. However, we are undertaking prudent strategic measures to solve structural challenges and gain ground once again.

Note: Figures in brackets represent negative number.