Nivaka Fashions Ltd Management Discussions.


Indias textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. India is the worlds second-largest producer of textiles and garments. It is also the fifth-largest exporter of textiles spanning apparel, home and technical products.

The textiles and apparel industry contributes 2.3% to the countrys GDR 13% to industrial production and 12% to exports. The textile industry has around 45 million of workers employed in textiles sector, including 3.5 million handloom workers.

Indias textile and apparel exports stood at US$ 33.80 billion in FY20. COVID-19 has impacted the Indian textile and apparel exports and the total exports is expected to reach US$65 by FY 2026.

The Indian textile and apparel industry is expected to grow to US$190 billion by FY 2026.

The strong performance of textile export is reflected in the value of export from the sector over these years. Textile export increased to US$38.70 billion in FY19 at a CAGR of 4.22% over FY16. It reached US$29.45 billion in FY21.

The major growth drivers of the global apparel market will be the developing economies, mainly China and India, both growing in double digits. China will become the biggest apparel market in market size; while India will be the second most attractive apparel market by 2025 the possible FTA with the EU could be a game changer for Indias clothing exports.

This requires a leap of faith by India, to harvest the opportunity, more so given the USs increasing protectionism and Chinas hegemonic ambitions.

The global luxury industry is slowly and gradually making inroads in the Indian industry and showing the signs of growth suggesting its going to stay here for long. It has seen steady growth over the recent past and it is commonly believed to be one of the most appealing and profitable industries in the world. In addition to its economic value, luxury fashions brands help develop the best fashion products for the market. The luxury fashion brand management is complex in general, and the luxury fashion brands should adopt a coherent approach in order to succeed. The downward brand extension, co-branding or passing of of luxury features to non-luxury segment brands may help the sustainably faster growth and expansion of the market for the later segment.


The Indian retail industry is one of the fastest growing in the world. Retail sector in India is undergoing a definite transformation in terms of its structure and scale. Indias retail sector is experiencing exponential growth, with retail development taking place not just in major cities and metros, but also in Tier-II and Tier-III cities. Healthy economic growth, changing demographic profile, increasing disposable incomes, urbanization, changing consumer tastes and preferences are the other factors driving growth in the organized retail market in India. Indias population is taking to online retail in a big way

The retail sector in India is emerging as one of the largest sectors in the economy. It contributes 10% to GDP and 8% to employment.

As per Forrester Research, in 2020, Indias retail sector was estimated at US$883 billion, with grocery retail accounting for US$608billion.Themarketisprojectedtoreach~US$1.3trillion by 2024.

India will become a favorable market for fashion retailers on the back of a large young adult consumer base, increasing disposable income and relaxed FDI norms.

Revenue of Indias offline retailers, also known as brick and mortar (B&M) retailers, was expected to increase by Rs.10,000-12,000 crore (US$1.39-2.77billion)Ain FY20.

According to the data released by the Ministry of Statistics & Programme Implementation (MoSPI), Indias Consumer Price Index (CPI) based retail inflation eased to 4.2% in April 2021, compared to 5.5% in March 2021.

According to the Ground Zero Series findings of the consulting firm Red Seer, the retail sector is expected to recover 80% of pre-Covid revenue (amounting to US$780 billion) byend-2020.

The organized retail market in India is growing at a CAGR of 20-25% per year. The unorganized retail sector in India has a huge untapped potential for adopting digital mode of payments as 63% of the retailers are interested in using digital payments like mobile and card payments.

The sector has been on a path of steady growth since the last decade and half due to many factors such as growing urbanization, rapid economic growth and the resultant rise in purchasing power and consumerism. The visible aspects of the transformation are proliferating shopping malls, e-commerce operators, modern retail, foreign retailers and fast upgrading traditional retailers.


India has occupied are makeable position in global retail rankings. The country has high market potential, low economic risk and moderate political risk.

According to a study by Boston Consulting Group, India is expected to become the worlds third largest consumer economy by reaching US$ 400 billion in consumption by 2025. India ranked first in the Global Retail Development Index 2017 based on rising middle class and rapidly growing consumer spending.

Business activity among micro-retailers is reaching near norm al levels, as they are adopting digital business tools to drive efficiency and growth. The micro-retail players are increasingly taking up digital book-keeping solutions, as it makes this task simpler and there is a demand coming from small towns and hinterlands.


The Year under review the company achieved a 1% growth in topline and the bottom line has grown to 61.53 lacs. Last year the company was plagued with delays in store operations due to covid induced lockdowns and restriction and hence the stagnant numbers in topline . However the management is confident of returning to topline growths in the current year. With newer stores getting operational in current years the company is expected to create better brand visibilities and awareness in the current year.

The company is in a continuous approach to achieve highest standards of operational efficiency. The company has this year took on job work basis manufacturing facility to start its own production. With more 80 machines available to the company on job work basis we shall be able to handle its own brand manufacturing and scale the same. With own brands available in the market and on the website the company would be able to improve its margins.


The company continues to run a lot of marketing and promotion scheme across the year. The company in the current year had spent above 10 Million rupees with Facebook and google in the year as its promotion and advertising spends. During the year the company also carried out a lot of outdoor media advertising and marketing which has help develop the brand further.


The Company had identified the key risks and control process to mitigate the same. Further, the Company continues this process of Enterprise Risk Management in order to identify the new risks and to define and establish the control process to mitigate the identified risks. Further, the Internal Control Framework for financial reporting, organization structure, documented authorities and procedures and internal controls are being reviewed on continuous basis and any issues arising out of the said are addressed appropriately.

The Company is continuously upgrading its internal control systems by measuring state of controls at various locations. Controls in backend system have been strengthened.


India is the fifth largest preferred retail destination globally. The sector is experiencing exponential growth, with retail development taking place not just in major cities and metros, but also in tier II and tier III cities.

The organised Indian retail industry has begun experiencing an increased level of activity in the private label space. The organised retail sector is forecast to witness strong growth in the coming years.

The share of private label strategy in the US and UK markets is 19% and 39%, respectively, while its share in India is just 6%. Stores like Shopper Stop and Lifestyle generates 15 to 25% of their revenue from private label brands.

Indias price competitiveness attracts large retail players to use it as a sourcing base.

Global retailers such as Walmart, GAP, Tesco and JC Penney are increasing their sourcing from India and are moving from third-party buying offices to establishing their own wholly-owned/wholly-managed sourcing and buying offices. Luxury retailing is gaining importance in India. This includes gourmet retailing, accessories and jewellery among many others. Luxury market of India is expected to grow to US$ 30 billion by the end of 2020 from US $ 23.8 billion in 2017, Supported by growing exposure of international brands among Indian youth and higher purchasing power of the upper class in tier II and III cities, according to ASSOCHAM.

And we at Nivaka we feel we are rightly placed to take advantage of this opportunity.


The state of external environment, including factors like interest rates, inflation, growth in economic activity, rationalization of tax structure, job creation and consumer sentiment continues to be the biggest source of threat as well as opportunity for the Company. Any slowdown in the economic activity in the Country, significant job losses or high rates of inflation can severely impact the consumption and therefore growth of the Company.


The company has clocked in an EPS of Rs. 0.06 this year as compared to 0.00 in the last year.


Particulars 2020-21 2019-20
Sales 2179.39 2155.18
Profit Before tax 59.56 (83.14)
Net Profit 61.53 (83.14)
Share Capital 1026.9 1026.9
EPS 0.06 0.00


Statement in the Management discussion and Analysis describing Companys objective, projections, estimates, expectations may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic markets in which the Company operates changes in the Government regulations, tax laws, statute and other incidental factors.