MULTI PRODUCT COMPANY WITH 3000 RETAILERS &
EXPORTING TO INTERNATIONAL BRANDS
MUDRA LIFESTYLE LIMITED
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PUBLIC ISSUE OF 9,580,000 EQUITY SHARES OF THE FACE VALUE RS.10/- EACH AT A
PRICE OF RS. [_] FOR CASH AT A PREMIUM AGGREGATING RS. [_] MILLION
(HEREINAFTER REFERRED TO AS THE “ISSUE”), INCLUDING EMPLOYEE RESERVATION OF
479,000 EQUITY SHARES OF THE FACE VALUE RS.10/ - EACH AT A PRICE OF RS. [_]
FOR CASH AGGREGATING RS. [_] MILLION AND NET ISSUE TO THE PUBLIC OF
9,101,000 EQUITY SHARES OF FACE VALUE RS.10/- EACH AT A PRICE OF RS. [_] FOR
CASH AGGREGATING RS. [_] MILLION (HERE IN AFTER REFERRED TO AS THE “NET
ISSUE TO THE PUBLIC”) AND THE ISSUE WOULD CONSTITUTE 26.62 OF THE POST ISSUE
PAID-UP CAPITAL OF OUR COMPANY.
THE COMPANY HAS MADE A PRE-IPO PLACEMENT OF [1,92,000_] EQUITY SHARES. THE NET OFFER TO THE PUBLIC CONSTITUTES 25.29% OF THE POST ISSUE PAID-UP CAPITAL OF OUR COMPANY
PRICE BAND: RS. 75/- TO RS. 90/- PER EQUITY SHARE OF FACE VALUE RS. 10 EACH
THE ISSUE PRICE IS 7.5 TIMES THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND 9 TIMES THE FACE VALUE AT THE HIGHER END OF THE PRICE BAND
BID/ISSUE OPENS ON: FEBRUARY 8 ,2007
BID/ISSUE CLOSES ON: FEBRUARY 14,2007
The Mudra Group started in 1986 with formation of partnership firm Olive Tex Silk Mills. The Group is in the textile industry having facilities for fabrics & garments manufacturing, processing, design development and sampling etc. Company manufactures fabrics and garments for domestic and export sales. Mudra Lifestyle limited was established as Bombay Fine Fabrics Private Limited on March 31, 1997. Company started its operations in 2002. Company is engaged in fabric weaving, processing and making garments. The brand “MUDRA” has built a strong goodwill for itself in the domestic market and commands a premium. We are gradually moving towards garment manufacturing mainly in the designer shirts and lady’s wear segments to capitalize on the huge opportunity unleashed by the removal of quotas. Company’s product portfolio consists of : Finished fabric, Processing Garments, Men’s Wear, Shirts, Lady’s Wear, Tops, Skirts, Kid’s Wear Presently Company sells its fabrics in domestic as well as international markets. In addition, company also uses the fabrics for internal consumption and at the same time sell it to other garment exporters. Company exports its garments and recently started with manufacturing garments for well known Indian brands. Company’s process house caters to its requirements and at the same time to do outside jobs. At present company has 177 automatic looms having capacity to produce approximately 10.62 million meters of woven fabric per annum and 700 sewing machines with production capacity of 3.15 million garments per annum. Company’s manufacturing facilities, having area of around 165,888 square feet, are spread across five locations in Bhiwandi (Sonale and Kalher) in Thane district, Bangalore, Daman and Navi Mumbai. Manufacturing facilities are fully backed by the facilities for product development, design studio and efficient sampling infrastructure to provide quality services to its customers in India and abroad.
The brand “MUDRA” has built a strong goodwill for itself in the domestic market and commands a premium. Company is gradually moving towards garment manufacturing mainly in the designer shirts and lady’s wear segments to capitalize on the huge opportunity unleashed by the removal of quotas.
Company believes that it has positioned itself as an integrated multi product, multi fiber and multi market player covering the entire textile value chain at length. Company ensures that its target market is a diverse mix of the domestic market, garment export trade and international market (exports) to ensure risk diversification and stability of earning. Presently company sells its fabrics to domestic as well as international market. In addition company also uses the fabrics for internal consumption and at the same time sell it to other garment exporters. Company exports its Garments and recently started with manufacturing garments for Indian well known brands. Company’s process house caters to its requirements and at the same time do outside jobs.
STRONG INFRASTRUCTURE
At present company has 177
automatic looms producing approximately 10.62 million meters of woven fabric
per annum and 700 sewing machines with production capacity of 3.15 million
garments per annum. Company’s manufacturing facilities, having area of
around 165,888 square feet, are spread across five locations at Bhiwandi (Kalher
and Sonale) in Thane district, Bangalore, Daman and Navi Mumbai.
Manufacturing facilities are fully backed by the facilities for product
development, design studio and efficient sampling infrastructure to provide
quality services to its customers in India and abroad.
FOCUS TO INCREASE GARMENTING CAPACITY
As on September 30, 2006, garments
comprised 23.99 % of company’s sales. Company intends to increase its focus
on garmenting both in the domestic and exports markets. Company is in the
process of increasing its manufacturing capacity for garments as a part of
this strategy. Currently, company is supplying garments to leading garment
manufacturers in India.
LEVERAGING THE KNOWLEDGE
Company started its business with
manufacturing of woven fabric and subsequently carried out forward
integration by commencing garmenting. Over the last 20 years, company has
gained knowledge of the weaving processes and the textile industry. Company
intends to leverage this knowledge in developing new fabrics and processes.
MANUFACTURING ‘IN TREND’ DESIGNS
Company is into manufacturing of
fabric and garments which require creation of contemporary and “in trend”
designs. Company has developed its design studios which are manned by
experienced masters and are equipped by modern machinery. Company has an
extensive database of more than 12000 designs for fabrics and introduces
more than 3000 new designs every season. Company has planned to strengthen
its capabilities in designing by continuously upgrading its design studios
both in terms of human resources and machinery.
EXPORTING TO USA, EUROPE & MIDDLE EAST
Currently Company is catering to
the Americas, Europe and the Middle East regions. Company intends to
increase its customer base in the existing markets and shall continue to
explore newer markets.
BRAND EQUITY OF ‘MUDRA’
Company sells its fabric both in
domestic and global market under the brand name “Mudra”. Company intends to
further strengthen its brand by investing in promotional and brand building
activities such as advertising, organizing conferences, participating in
national and international events.
WIDENING PRODUCT RANGE
Company primarily manufactures
men’s shirt, lady’s tops / bottom wear and kids wear. Company intends to
expand its product portfolio to men's trousers / other bottom wear, outer
wear / jackets and add more variety in women’s and kids wear.
STRONG RELATIONSHIPS WITH CLIENTS
Company believes in having strong
relationships with its clients so as to serve them over a long period of
time. Company’s aim is to continue to develop its relationship with its
clients not only in terms of increased sales but also in terms of increased
variety in products. Company’s aim is to achieve this by adding value for
its client through quality, speed and reliability of our product delivery.
EXPANDING THROUGH ACQUISITIONS
Mudra Lifestyle Limited believes in
growth via strategic investments / Joint Ventures in areas complementary to
its strengths. As a part of this philosophy company acquired a company Venus
Processors Private Limited (formerly known as Abhishek Processors Private
Limited) in 2001. Company has successfully amalgamated the company into
Mudra Lifestyle Limited. Company intends to grow by both organic and
inorganic route.
OBJECTS OF THE ISSUE
Company is a leading manufacturer
and exporter of fashion fabrics and garments with modern manufacturing
facilities at Bhiwandi (Kalher and Sonale), New Mumbai, Daman and Bangalore
backed by the facilities for product development, design studio and sampling
infrastructure to provide the quality services to its customers in India and
abroad. Company is engaged in business of weaving, processing and
garmenting. Company supplies fabrics and garments to various garment
manufacturers and brands.
Company intends to expand its manufacturing facility by setting up a new integrated unit having all the processes of yarn dyeing, weaving, process house and garment manufacturing. A techno-economic viability study of the projects has been done and the fund requirements have been calculated. Company’s plan is to finance the fund requirement through a mix of IPO proceeds, term loan and internal accruals. Company intends to utilise the entire net proceeds of this Issue towards part funding of its proposed Projects.
Main Objects of the Issue are:
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To part finance the proposed project consisting of setting up of an integrated unit having all the processes of yarn dyeing, weaving, process house and garment manufacturing near Bangalore and Tarapur ;
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To meet expenses for general corporate purposes / acquisitions; and
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To meet public Issue related expense
The other object of the Issue is to list company’s Equity Shares on Stock Exchanges as this will provide liquidity to its existing shareholders and enhance its visibility and brand name. This will also enable company to use its Equity Shares for strategic growth opportunities.
TERM LOANS TIED UP
The rupee term loan component of
the Projects Cost has already been tied up and as against the debt component
of Rs.1,008.4 Million, company has received final sanction letters from four
banks totaling to Rs. 1450 million details of which are as under:
ATTRACTIONS OF EXPANSION PROJECT
Product Mix:
Company will manufacture
approximately 25,000 meters per day of narrow width (+190 cm) fabrics in
weaving division. Entire quantity will be internally consumed in the
processing division .The Grey fabric will be of large varieties ranging from
thread counts 200 to 600, made out of fine yarns. The processing division
will have a capacity of approximately 100,000 meters per day of fabric. The
final product will be 100% bleached, and dyed and/or printed. Company has to
procure 80,000 meters of Grey fabric from outside.
Weaving:
Company will install 84 looms
initially, which will be entirely imported. The looms will be of AIR JET and
RAPIER technology, which has the advantage of high speed and productivity
and a lower overall cost of operation. The weaving preparatory machinery
will also be imported.
Processing:
The processing division would use
continuous process technology .The processing division, which includes
printing also, will have a capacity of 105,300 meters per day.
Garmenting:
An in-house garmenting unit
consisting of various machines will cater to the requirements of making
garments and packing them into pieces as per customer requirements.
Location:
The new project relating to dying,
weaving and process house will be set up at Tarapur and garment unit will be
setup at Bangalore and the Company has already acquired 10.57 acres at
Tarapur. Further, the Karnataka Industrial Areas Development Board has
allotted 2.12 acres at Bangalore in favour of the Company. As per GEL
appraisal company requires 10 acres of land.
BASIS FOR ISSUE PRICE
The Issue Price will be determined
by the Company in consultation with the BRLM on the basis of assessment of
market demand for the Equity Shares offered by way of Book Building Process.
Qualitative Factors
Integrated production facilities
Company is an integrated textile
company having competencies in weaving; processing and garmenting.
Integrated facility helps it in reducing lead time and providing better
control over costs.
Designing capabilities
Designing is a critical element of
both fabrics and garments. Company ha two dedicated and well equipped design
studios in Mumbai. Designs are prepared by qualified, skilled and
experienced employees. The studios are equipped with latest design software
including CAD/CAM that increases the productivity and the quality of
designs. Company has an extensive database of more than 12000 designs for
fabrics and introduces more than 3000 new designs every season. The design
team comes out with new designs and ideas based on the current trends in the
international and domestic markets.
Low turnaround time
The company has all the facilities
such as design studios, sampling units, weaving units, processing units and
garmenting units, in-house. This helps the company in compressing the time
required by the company in delivering the final product after receiving the
order.
Experience of Promoters
The promoters of the Company are
qualified, well versed, have wide experience in this area of business and
have a long term vision and passion for the business.
Sampling capabilities
Company has all the facilities like
desk looms, sample dyeing, sample printing, washing and processing
facilities to produce fabric samples per designs developed by our design
studio. Company’s dedicated in-house facilities enable it to compress the
required time substantially. Company blieves that its above-mentioned
capabilities give it an advantage over other fabric and garment
manufacturers.
Quantitative Factors
All figures are taken from our restated
financial for the standalone entity. We merged our group companies in FY 06;
hence the figures for FY 05-06 are not comparable to the figures of earlier
years
1. Earning Per Share (EPS)
Year EPS (Rs.) Weight
March 31, 2004 3.01 1
March 31, 2005 7.45 2
March 31, 2006 9.04 3
Weighted Average 7.50
Note: EPS represents basic
earnings per share calculated as per Accounting Standard 20 issued by
Institute of Chartered Accountants of India.
2. Price/Earning Ratio (P/E) in relation to
Issue Price of Rs. [ ]
Based on the yearly results of FY
06 weighted EPS is Rs. 9.04 on Equity Share of face value of Rs. 10 each
3. Return on Net Worth (RONW)
Year RONW % Weight
March 31, 2004 20.31 1
March 31, 2005 22.31 2
March 31, 2006 24.31 3
Weighted Average 22.97
Note:
1. Return on Net Worth is arrived
at by dividing Profit after tax (PAT) by total shareholders' funds (Net
Worth) at the end of the year.
4. Minimum Return on Increased Net Worth to
maintain pre-issue EPS - [ ]
5. Net Asset Value (NAV) per share
a. Net Asset Value per share
(NAV)
Rs.
NAV per share as on September 30, 2006 20.36
NAV per share as on March 31, 2006 16.19
NAV per share as on March 31, 2005 13.37
NAV per share as on March 31, 2004 14.83
Issue Price [ ]
NAV after the Issue [ ]
Note: Net Asset Value Per Share =
Equity Share Capital plus Reserves Surplus less Miscellaneous Expenditure to
the extent not written off /No. of Equity Shares
b. Issue Price [ ]
c. NAV after the Issue [ ]
6. Comparison with Peer Group
EPS P/E RONW NAV
Mudra Lifestyle Limited* 9.04 [] 24.31 16.19
Bombay Rayon Fashion Limited**
4.4 37.9 18.3 31.3
Celebrity Fashions Limited** 5.0 22.5 10.1 90.5
*Data as of March 31st, 2006
**Source: Capital Markets Vol. XXI/08 dated October 9 2006 – October 22, 2006. Price per share has been taken as the closing price on Septmber29, 2006. EP Figures are TTM figures. NAV figures are for full year.
7. The face value of Equity Shares of Mudra Lifestyle Limited is Rs. 10 and the issue price is [] time of the face value. The Issue Price of Rs. [] will be determined by the Company in consultation with the BRLM, on the basis of assessment of market demand for the Equity Shares by way of Book Building, and on the basis of the above factors.
KEY STRENGTHS
Experience of our Promoters
Promoters have over 20 years
experience in this business. The promoters have varied experiences in this
industry and are supported by a team of professionals. The promoters have
successfully managed an acquisition, amalgamations and consolidations in the
business and were able to bring out the synergy in the business.
Integrated production facilities
Mudra group was started in the year
1986 with a small loom-shed. The healthy growth in the last 20 years saw it
expanding to 177 looms with a forward integration to processing and garment
manufacturing. Today company has 12 units engaged in production. Company has
already an integrated textile company having competencies in weaving,
processing and garmenting.
Flexibility of production facilities
The looms and stitching units in
company’s plants are capable of handling different types of yarn and
fabrics. This gives the company an ability to customize the production
according to the latest trends in the industry. The state of the art
machines in the manufacturing facilities allow it to manufacture garments
with high customization. Various complex designs can also be incorporated in
the fabrics that company manufactures.
Stringent quality check
The Company believes in providing
the best possible quality to the customers. There are regular quality checks
in place that prevent any defective material from reaching the customer.
Quality control measures are in place at every step in the manufacturing
process. The Company also has a well equipped quality control laboratory.
Designing capabilities
The company has two dedicated and
well equipped design studios in Mumbai and one in Bangalore. Designs are
prepared by qualified, skilled and experienced employees. There is also an
information system in place that keeps a database of all the designs created
for future reference. The studios are equipped with latest design software
including CAD/CAM that increases the productivity and the quality of
designs. Company has an extensive database of more than 12000 designs for
fabrics and introduced more than 3000 new designs every season. The design
team comes out with new designs and ideas based on the current trends in the
international and domestic markets. The new designs are then sent out to the
laboratory for various testing of the garments before the designs are
released to the sampling unit for the further marketing and sales purposes.
These design studios generate proprietary designs for fabric and garment
business and at the same time work on designs supplied by the customer for
the garments. The design studio takes feedback from the customers on the
samples already sent and modifies the design according to the suggestions.
This process is followed till the customer approves the design sample.
Sampling capabilities
Company has capabilities to produce
fabric and garment samples as per designs developed by our design studios in
Mumbai and Bangalore. Company’s design and sampling department is well
equipped with facilities like desk looms, sample dyeing, sample printing,
washing and processing facilities. Company has one fabric sampling unit, one
garment sampling unit in Mumbai and one sampling unit in Bangalore. These
units provide samples to the customer for selection. The fabric sampling
units create fabrics in smaller yardages.
Low turnaround time
The company has all the facilities
such as design studios, sampling units, weaving units, processing units and
garmenting units, in-house. This helps the company in compressing the time
required to deliver the final product after receiving the order.
Economies of scale
Company has its units spread over
different locations like Navi Mumbai, Bhiwandi (Sonale and Kalher), Daman
and Bangalore. Even though the units are spread over different locations,
the raw material procurement and purchase functions are centralized in
Bhiwandi. Thus, this allows company the advantages of economies of scale as
it gets advantages of bulk discounts and negotiate favourable terms of
purchase.
BUSINESS STRATEGY
Increased emphasis on Garment
business
To continue focus on fabric weaving
To continue focus on contemporary design
Further expansion of customer base
Strengthening the Brand Equity
Expansion of product range
Strengthen relationship with our clients
Continuing expansion of facilities
Expansion through inorganic growth
Marketing & Selling Arrangements
Company has a pan India presence with a network of over 75 dealers and also supply globally to various customers in Americas, Europe, Asia and Africa. In the domestic fabric markets, we have a detailed network of dealers covering a large part of the country via a number of retailers. Internationally, company supplies to countries like Brazil, Mexico, United Arab Emirates, Saudi Arabia, Morocco, Sri Lanka, Syria, Lebanon etc. Company supplies to its customers in Middle East, via its dealer in Dubai, under its own brand. Company supplies to the international garments market via both the buying houses as well as directly to the manufacturers. Company supplies to a large number of countries including Brazil, Mexico, United States, United Kingdom, Ireland, Canada amongst others,
• Fabric – Domestic Sales Dealers
Company has a network of over 75 dealers which in turn caters to more than
2000 retailers spread all over India. Company’s fabric is sold under the
“MUDRA” brand, which is well established in the domestic market.
Domestic Readymade Garment Manufacturers
Company has strong relationships
with domestic garment manufacturers. Company is a leading supplier of fabric
to reputed national brands. Company believes that it has created a strong
reputation in the segment because of its ability to create fashion and
supplement it with timely delivery and consistent quality.
• Fabric – Export Sales
Readymade Garment Exporters
Various global brands have chosen
the Company's Fabric for its innovative designs and insist that exporters
use these fabrics for making garments as per designs specified by the
buyers.
International Buying Houses / International
Garment Manufacturers
Company is a preferred fabrics
exporter to various overseas markets. Shirting fabrics and dress material
are been exported to USA, Europe and Middle East countries. Company is now
concentrating on developing export of shirting fabrics to other territories
too.
• Garments – Domestic Sales
o Garment manufacturers
Mudra lifestyle Limited sells
readymade garments directly to leading national brands. Company sells
directly to these brands on confirmed orders.
• Garments – Export Sales
Direct selling to International Brands
Presently Mudra Lifestyle has a global presence and is presently
catering to various international brands fromAmericas, and Europe. The
company sells directly to these brands on confirmed orders.
Preferred garment manufacturer International Buying Houses Mudra Lifestyle Limited is a preferred garment manufacturer for many international buying houses.
Established Distribution network
Company has an established network
of dealers, distributors, agents, etc. as part of its present marketing set
up.
Design and Development Studio
Company has an in-house designing
development unit. It has two state of the art design and development studios
fully equipped with latest equipments including CAD facilities. The design
team comes out with new designs and ideas based on the current trends in the
international and domestic markets. The new designs are being then sent out
to the lab for the various testing of the garments before the designs are
released to the sampling unit for the further marketing and sales purpose.
These design studios generate proprietary designs for fabric and garment
business and at the same time work on designs supplied by the customer for
the garments.
Key Events in the History of the Mudra Group
Year Key Events
1986 The Group commenced the
business of woven fabric
1993 East Coast Polytex was formed to start manufacturing facilities for
woven fabric at Daman
1997 Mudra Exports (India) was formed to export woven fabric and garment.
Mudra Lifestyle Limited was incorporated
for undertaking business of woven fabrics.
Mudra Synthetics Private Limited was incorporated
for undertaking business of woven fabrics at Sonale in Thane District.
1998 Picanova Fabrics Private Limited was incorporated for undertaking
business of woven fabrics at Sonale in Thane District.
2001 Mudra Impex was formed to start manufacturing facilities for garment at
Daman and export the same. Acquisition of Venus Processors Private Limited
engaged in Processing, printing and dyeing.
2004 Takeover of partnership firms by Mudra Lifestyle Limited Start of
Garmenting Unit at Bangalore.
2005 Awarded contract to Gherzi Eastern Limited for technical appraisal of
the Expansion Project
2006 Consolidation of group companies Company sales cross Rs. 100 Crores
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