Indian Kidswear Market Presentation_Final (1)

8/10/2019 Indian Kidswear Market Presentation_Final (1)

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Overview of Retail Kids Apparel

market in India


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Outline

Domestic Apparel market. Key Demand drivers :Apparel retail/ Kidswear Kids Apparel :Market size ,growth and breakup. Distribution arrangement : Kids Apparel companies Competition/Major Players in Organized Kidswear

Segment Comparable Valuations in Apparel Retail /Kids wear

segment. Conclusion

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Domestic Apparel market The exports market is expected to show sluggish growth but the

domestic market will continue to provide strong growth opportunitiesfor apparel manufacturers.

72 per cent of India's total population still resides in rural areas andcontributes only 50 per cent to the total RMG industry in value terms.

Source :Crisil research,09 Source :Crisil research,09


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Organized sector Penetration/Untapped market Potential: Foroverall retail sector penetration is only 4% and for clothing ,organisedretail penetration is 17%. The levels of penetration in the top 67 citiesis expected to leap.

Key demand drivers

Source::Ibef Indian retail report 2008

2007 2008 2009 E

Organised penetrationin Clothing 12% 16% 22% Source::Ernst and Young Indian retail story 2007


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Key demand drivers Rising income levels and disposable income: the share of expenditure on

clothing is decreasing as people spend more on other items likecommunications, but the absolute expenditure on textiles is expected togrow, leading to demand for readymade garments. 4% of income earned byIndian households is spent on clothing, which includes kidswear.

Source :Crisil research,09

Source :NCAER report,09


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Key demand drivers Growing preference for ready-to-wear apparel against tailored

ones. Higher growth in urban population to lead to stable growth for

demand in urban readymade garments

Source :Crisil researchSource :Crisil research


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Age group distribution: At present overall 30% of the population isless than 15 years of age. The population group


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Kids Apparel :Market size and growth The total kidswear market including school uniform in India in 2007 is

estimated at Rs. 28,710 cr .This includes Rs. 11,450 cr uniform segment..(Source: dhrp in 2008 by Giny and Johny) The volume of market share of kids apparels in the total apparel market in

2008 at 24.9%, as against a 15% share in 2005. Industry players predict that the market is set to grow by 12% annually Estimated market size in 2009 end equals to Rs 35,000 cr

Source :rIndia Apparel Report, 2008 Source :Red Herring prospectus ,Giny & Johny 2008


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Details of Kids apparel Market Breakup of Kids apparel market : a) School uniform :39% b) Non

uniform-casual wear: 69% . The school uniform market is highlyfragmented with most of the customers requirements being met by thelocalized unorganized vendors.

According to media reports, the share of organised players in the kidsapparel market is only about Rs 3000 crore.

Source :Crisil research,2009 Source :Red Herring prospectus ,Giny & Johny 2008


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Details of Kids apparel Market

Category wise volume and value trends in kidswear segment : Thegrowth in value in the total kids segment between 2004 -07 is high inalmost all ranges

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CAGR

Value Volume

Super Premium 32% 14%Premium 28% 12%

Medium 19% 9%

Economy 13% 7%

Low 6% 3%

Total 14% 4%

School Uniforms 22% 9%

Total 17% 5%


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Supply and distribution channels: Kids Apparel companies

Exclusive Brand Outlets (EBO) : sell merchandise which belong to only one company.

apparel is directly sold to the final consumer , company may own the shop or may have it onrent , the realisations for the company are highest through this mode of distribution ,thecompany can get first- hand feedback of the consumers preferences, these stores also helpestablish the brand-image of the company. Typical size of EBO: 800-1000 sq ft

Shop-in-Shops (SIS): stores are located in large format stores (LFS) like Shoppers Stop,LifeStyle, Big Bazaar ,the manufacturer sells the apparel to the LFS, which in turn, sells it to

the consumer through its retail outlets, the manufacturers realisations are lower than thatthrough EBO.

Multi Brand Outlets (MBO) : These stores house apparels from multiple brands. Theapparel manufacturer sells the apparel to the MBO, who in turn, sells these apparels to finalconsumer. Since margins of MBO are higher, the manufacturers realisations are lower.

Distributors : The apparel manufacturer sells the apparel to the distributor, who in turn, sellsit to either MBO or SIS, who in turn, finally sells it to the consumer. Since two agencies areinvolved in this mode, the manufacturers realisations are much lower than that earned viaother modes.


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Competition in Organized Kidswear Segment

Like most other retail segments in the country, the kidswear segment is

dominated by the unorganized sector. In kidswear market only Rs 3000crore is in organized sector. According to media reports,branded kidswear market is growing at more

than 20% per annum. In the organized sector, the major brand in the Indian kidswear segment

are :

Gini & Jony Limited, Liliput Kidswear Private Limited (Liliput), Catmoss Primus Retail(Weekender Kids), DS Corporation (Ruff Kids),

Raymonds Limited (Zapp)

The competition is tightening in the kidswear segment. Manyinternational adult apparel brands such as Allen Solly, Arrow, Reebokand Puma are entering the kidswear segment. But, the unorganized sectorremains the biggest challenge


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Major players in organized Kidswear sector

Business activities primarily includes designing, manufacturing, branding andselling of readymade apparels and other lifestyle accessories for kids.

Products Segment: 1. Super premium segment - Gini & Jony 2. Premiumsegment - GJ JEANS UNLTD. 3. Mid -market segment - Palm Tree & RedRiver 4. Niche segment - Gini & Jony Knowledge Wear -uniform.

Their collections are: Gini & Jony Happy Style - a range of apparel, accessories

and footwear; rugged and youthful collection of denims from GJ Jeans; valuablewear from Palm Tree; accessories and baby products from GJ Baby. Gini & Jony has also got in three well known international brands under one roof

- Levi's Kids which is known world over for 'freedom & self'; United Colors ofBenetton known for its distinct Italian collection and Puma Kids a sportswearlifestyle brand of apparel and accessories.

Distribution System: As on March 31, 2008 pan-India distribution network isspread over 108 cities comprising of 60 EBO(49 franchised and 11 companyoperated), 28 Distributors, 124 SIS and 38 FSO. These 28 Distributors sell our

products to 706 MBO, across India. Revenue: It is eyeing a Rs 300 crore revenue in FY10 against Rs 225 crore in

FY09. Gini & Jony plans to raise up to Rs 125 crore through an IPO by October2010.


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The Lilliput brand was set by the successful garment manufacturing and exportenterprise called Anand International. In 2003,it entered into kids apparel

business. Products Segment: Complete wardrobe for 0-12 year old which includes casual

wear, footwear, party wear, inner wear, night wear, swim wear and accessories.The brand caters to middle and premium segment.

Distribution System: The brand sells through 225 exclusive stores (70% companyowned and 30% franchise) and 250 points-of-sale in multi-brand outlets in 150cities across the country. The brand is available in major chains like Shoppes Stop,Westside, Lifestyle, Ebony, Pantaloons etc.

Revenue: Lilliput clocked a turnover of Rs 310 crore last year with exportaccounting for a third of it. Market Leader with greater than 10% market share.

In November 06, Inivison PE picked up 24 per cent equity in Lilliput Kidswearfor about Rs 45 crore ($10 m).That values the company at about $42 million. Future Plan: Lilliput said that it plans to launch an IPO by 2010 end. The brand

plans to tap the potential of South India and Tier II cities.It is targeting growth of40% in the next 2 years.


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Catmoss brand was established in 2004 by Mr.Ashwin Chawla. the brand hasgained popularity in a very short span of time. .

Products Segment: The retail business caters to the middle and premiumsegments. Catmoss is also venturing beyond the ethnic and party kidswearapparel segment and would soon be introducing kids accessories like shoes, belt,

etc for both boys and girls in the age group of two to 14 years The brand plans tointroduce formal wear for young boys as well as an economy range in casualwear.

Distribution System: The brand has 150 EBO all over India (78 companyoperated and 72 franchised outlets). The brand is also sold through various largeformat stores like Lifestyle,Globus etc

Revenue: It has a turnover of Rs 100 crore in FY 09. It has the distinction of being the fastest growing kids wear brand in the country and has registered awhopping 78% growth

Financial goal include reaching a turnover of Rs 150 crore by the end of 2009-10along with the launch of 75 new stores. Invest Rs 400 crore for rolling out 500stores by 2011 .


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Major players in organised Kidswear sector

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Brand Product Price Range Retail PresenceTurnover (inRs cr)

Maket Share (Totalbranded :Rs 3000 cr)

Gini and Johny

Range of apparel,accessories and footwear forchildren; GJ Jeans, baby

products Rs. 400-2500+

EBOs: 245 in morethan 79 cities; LFS:252; MBOs: 500+ 225 8%

Lilliput

Casual wear, footwear, party wear, inner wear,night wear, swim wear andaccessories. Rs. 245-945

EBOs: 225; MBOs:250 (apparel), 180(footwear) 310 10%

CatmossEthnic and party kidswearapparel Rs 300 -1,000 EBOs:125 ;LFS 100 3%

Weekender Kids(Primus Retail)Sportswear and casual wearfor young parents and kids.

kids: upper-wear:Rs. 299-699,

bottom-wear: Rs.499-899.

EBOs: 36; MBOs:25 In 2007: 55 cr 2%

Source :Images Fashion website and general internet search.


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Comparable Valuations

P/E EV/Revenue EV/EBIT EV/EBITDAEBIT

MarginEBITDAMargin

Square feetarea

Inventoryturnover

(COGS/Avginventory)

Sales persquare feet

in RsKewal Kiran Clothing 10.7x 1.6x 7.7x 6.6x 21.1% 24.7% 183,965 2.3 7859Koutons Retail 12.3x 1.3x 6.5x 5.1x 19.8% 25.2% 1,292,179 0.3 8100Provogue India 18.2x 1.8x 17.0x 13.8x 10.6% 13.1% NA 1.3 NAZodiac Clothing Co. 14.2x 1.2x 10.0x 8.7x 11.9% 13.7% NA 1.7 NABrandhouse Retails 7.1x 0.4x 6.0x 5.1x 7.2% 8.5% 666,575 5.2 8286Page Industries Limited 25.6x 3.0x 18.3x 15.6x 16.2% 19.0% NA 2.1 NA

Mean 14.7x 1.6x 10.9x 9.1x 14.5% 17.4% 2.1 8082Median 13.2x 1.5x 8.9x 7.6x 14.1% 16.4% 1.9

Companies in Apparel Retail in India


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Comparable Valuations

P/EEV/Reven

ue EV/EBITEV/EBITD

AEBIT

MarginEBITDAMargin

Comparablestore sales

Inventoryturnover

(COGS/Avginventory)

Sales persquare

feet (in $) BusinessChildren'sPlace RetailStores (PLCE)

15.1x 0.7x 10.4x 6.4x 7% 11% 2% 4.7 350

Specialty retailer ofchildrens apparel andaccessories

Carter's, Inc.(Public,NYSE:CRI) 15.0x 1.1x 9.2x 7.9x 12% 14% 0% 4.7 388

Owns two children brandsand market apparel forchildren

GymboreeCorporation

22.9x 1.4x 9.2x 7.5x 15% 19% -4% 4.5 564

Specialty retailer operatingstores selling apparel andaccessories for childrenunder different brands

Mean 17.7x 1.1x 9.6x 7.3x 12% 15% -1% 4.6 434Median 15.1x 1.1x 9.2x 7.5x 12% 14% 0% 4.7 388

Companies in Children Apparel Retail in US

Recent M&A in Children apparel market in US : In June 09, Dress Barn which operateswomens apparel specialty stores acquired Tween Brands, speciality retailer in teen girls market.The deal multiple was EV/EBITDA=5.5 x


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Conclusion The prospects of kidswear industry, a sub-sector of apparel and retailing,

essentially depends upon the growth of the economy and organizedretailing industry at macro level and personal expenditure and willingnessto spend on kidswear at micro level.

Indian kidswear industry is one of the most happening industries in India.with the projected annual growth in organised kidswear retail of more than20%.

Growth opportunities for kidswear retail is very high in Tier II, Tier IIIcities and in school uniform segment.

Entry of foreign kidswear manufacturers and the entry of major Indianapparel houses indicate the importance of kidswear industry and their

intention to cash in on the opportunity. However, the dominance of unorganised players, uneconomic scale of

operation by small unorganised players, low brand penetration could derailthe growth of the industry

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Indian Kidswear Market Presentation_Final (1)

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