Mafia Trends
Mafia Trends is coming out with an initial public offering (IPO) of 1284000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 28 per equity share.
The issue will open on September 22, 2022 and will close on September 27, 2022.
The shares will be listed on SME Platform of BSE.
The share is priced 2.80 times higher to its face value of Rs 10.
Book running lead manager to the issue is GYR Capital Advisors.
Compliance Officer for the issue is Shashank Poddar.
Profile of the company
The company’s business revolves around marketing and selling of Men’s & kids fashion such as Jeans, T-shirts, Shirts, Chinos, Formal trousers and Formal shirts, through a chain of clothing stores under the brand name Mafia. It is strategically placed across various small Indian towns and cities including Kalol, Vadodara, along with Ahmedabad. Outside of Ahmedabad, it has strategically placed ourselves in tier-2 & tier 3 cities, as it aims to penetrate its target market of young students, population belonging to transitioning class and middle income groups who aspire to wear affordable fashionable outfits. Considering its target market, it aims to deliver maximum value-to-cost benefits for its customers. So it appropriately follows the concept of ‘Value Retail’. Its locational presence would resonate with the customers untapped by its competitors, and give them a pocket friendly & more personalized shopping experience without comprising on the quality, brand value of their purchase. As there are very few brand who caters to Men & kid’s fashion, it has successfully initiated a brand which can stand out in the competitive space of clothing retail industry and generate value through brand loyalty.
The company’s comprehensive Enterprise Resource Planning (‘ERP’) backed supply chain management system comprises of collecting customer data, Invoicing, Products Management, Stocks Management, Store Expenses Management, Suppliers Data Management, Payments Management, Biller’s Management, Returns Management, Store Tracking Analytics, Key Performance Indicators Analysis, Stock transfers, Re-marketing and Campaigns. This helps it to strike an optimum balance between the adequate level of inventory while ensuring availability of certain specific products at all stores as per customer needs and trends, thus, avoiding any possibility of incurring loss of sales or having any dissatisfied customers. The company adopts an integrated ‘Proactive’ and ‘Reactive’ approach to managing its supply chain in which it plans its supply schedule based on the forecasted demand. This also helps it in understanding as well as adapting to the changing patterns in customer behaviour.
Separate ‘Above The Line’ (ATL) and ‘Below The Line’ (BTL) activities are conducted simultaneously to create a pull towards the brand and store. As part of its retention strategy, it targets to create more occasions for consumers to shop by organize events like annual days (men’s day / father’s day), drawing, dancing and painting competitions, treasure hunts and talent hunts to increase the number of footfalls and the footfall conversion rate. It has entered into inter-promotional and cross-promotional advertising, influencer marketing activities with some of the film production houses for promoting its brand. It has also sponsored a couple of local songs to support the industry and culture and channelize the power of music into its brand.
Proceed is being used for:
Industry overview
Indian retail industry is one of the fastest growing in the world. As per Kearney Research, India’s retail industry is projected to grow at a slower pace of 9% over 2019-2030, from $779 billion in 2019 to $1,407 billion by 2026 and more than $1.8 trillion by 2030. India ranked 63 in the World Bank’s Doing Business 2020 publication. India ranked 73 in the United Nations Conference on Trade and Development's Business-to-Consumer (B2C) E-commerce Index 2019. India’s direct selling industry would be valued at $2.14 billion by the end of 2021. Consumer spending in India increased to $245.16 billion in the third quarter of 2020 from $192.94 billion in the second quarter of 2020. India is the fifth-largest and preferred retail destination globally. The country is among the highest in the world in terms of per capita retail store availability. India’s retail sector is experiencing exponential growth with retail development taking place not just in major cities and metros, but also in tier II and III cities. Healthy economic growth, changing demographic profile, increasing disposable income, urbanisation, changing consumer tastes and preferences are some of the factors driving growth in the organised retail market in India.
Retail and real estate are the two booming sectors of India in the present times. The prospects of both the sectors are mutually dependent on each other. Retail, one of India’s largest industries, has presently emerged as one of the most dynamic and fast paced industries of its times with several players entering the market. Accounting for over 10 per cent of the country’s GDP and around eight per cent of the employment retailing in India is gradually inching its way toward becoming the next boom industry. As the contemporary retail sector in India is reflected in sprawling shopping centres, multiplex- malls and huge complexes offer shopping, entertainment and food all under one roof, the concept of shopping has altered in terms of format and consumer buying behaviour, ushering in a revolution in shopping in India. This has also contributed to large-scale investments in the real estate sector with major national and global players investing in developing the infrastructure and construction of the retailing business.
Pros and strengths
Targeting relatively untapped market: The company has strategically placed ourselves in tier-2 & tier 3 cities, as it aims to penetrate its target market of young students, population belonging to transitioning class and middle income groups who aspire to wear affordable fashionable outfits. Considering its target market, it aims to deliver maximum value-to-cost benefits for its customers. So it appropriately follow the concept of ‘Value Retail’. Its locational presence would resonate with the customers untapped by its competitors, and give them a pocket friendly & more personalized shopping experience without comprising on the quality, brand value of their purchase.
Diversified procurement network: The company source its products from the regions where such products are widely available or manufactured, to minimize its procurement costs. Its procurement team does these analyses and contacts the suppliers or the manufacturers and chart out the procurement plan. As it source apparels from multiple cities and from multiple suppliers, it doesn’t face any threat of bargaining power from the suppliers. This helps it to get variety products, at lesser cost due of economies of scale. Further, it has established strong relationships with its vendors, suppliers and manufacturers to ensure a smooth, efficient and uninterrupted supply of products.
Efficient supply chain management: The company’s comprehensive Enterprise Resource Planning (‘ERP’) backed supply chain management system comprises of collecting customer data, Invoicing, Products Management, Stocks Management, Store Expenses Management, Suppliers Data Management, Payments Management, Biller’s Management, Returns Management, Store Tracking Analytics, Key Performance Indicators Analysis, Stock transfers, Re-marketing and Campaigns. An efficient supply chain system is the backbone of retail operations and it is very essential to strike an optimum balance between the adequate level of inventory whilst ensuring availability of products at all stores as per customer needs, as well as reducing its operational costs.
Risks and concerns
Entire business operations based out at single warehouse: The company’s business operations are based out of a single warehouse located in Ahmedabad, Gujarat. Accordingly, it relies exclusively on its warehouse for its continued business operations to earn revenues, pay its operating expenses and service its debt obligations. Any significant disruption, including social, political or economic factors or natural calamities or civil disruptions, impacting this region may adversely affect operations. Any failure of its systems or any shutdown of warehouse for any reason could result in significant increase of costs and delays in execution of orders. It does not has a diversified base of operations, and local disturbances which would have a material adverse effect on its business, and consequently on its operations and financial condition.
Faces seasonality in business: The company typically operates its business activities to match & predict fashion trends. So, it focus on having products both of recent & current trends, as well as products of trends which are slowly catching up with the masses and is driving demand. Moreover, its business usually has peak demand during festival seasons. This makes its purchases and revenue booking cyclical in nature. Further, majority of the festivals are concentrated in the second half of the financial year. That makes its accumulate inventory for diverse customer needs for the peak buying season. As its revenues are not evenly distributed in all four quarters of every financial year, its revenue and profits may vary significantly during different financial periods and certain periods may not be indicative of its financial position for a full financial year and may be significantly below the expectations of the market, analysts and investors.
Dependent on third party transportation providers: The company’s success depends on the smooth supply and transportation of finished products from third party manufacturers to it and from it to its customers, both of which are subject to various uncertainties and risks. It uses third party transportation providers for the delivery of products. Transportation strikes have had in the past, and could again in the future, have an adverse effect on its supplies and its deliveries to and from its outlets and suppliers in a timely and cost-efficient manner. In addition, products may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of products which may also affect its business and results of operation negatively. A failure to deliver its products to its customers in an efficient and reliable manner could have a material and adverse effect on its business, financial condition and results of operations.
Outlook
Incorporated in 2017, Mafia Trends is engaged in the business of marketing and selling Men's fashion which includes apparel such as Jeans, Tshirts, Shirts, Chinos, Formal trousers and Formal shirts. Mafia is a fashion brand that provides affordable outfits yet premium. The company's business is based on the primary concept of 'Value Retailing' following which the company aim to provide the latest fashion trends in apparel and non-apparels for men with an added focus on the demands of the youth and young generation. Its comprehensive Enterprise Resource Planning (‘ERP’) backed supply chain management system comprises of collecting customer data, Invoicing, Products Management, Stocks Management, Store Expenses Management, Suppliers Data Management, Payments Management, Biller’s Management, Returns Management, Store Tracking Analytics, Key Performance Indicators Analysis, Stock transfers, Re-marketing and Campaigns. On the concern side, the company’s business requires a significant amount of working capital. In its business, working capital is often required to finance the purchase of garments. Further, it is also required to maintain adequate stocks which require sufficient working capital.
The company is coming out with a maiden IPO of 1284000 equity shares of Rs 10 each at a fixed price of Rs 28 per share to mobilize around Rs 3.60 crore. On performance front, the total income of the company for fiscal year 2022 was Rs 715.28 lakh against total income from the fiscal year 2021 which was Rs 400.80 lakh. An increase of 78.46% in total income. Profit after tax for the Fiscal 2022 was at Rs 81.79 lakh against profit after tax of Rs 27.00 lakh in fiscal 2021, a 202.93% increase. This was due to optimization of financials by clearing of debts, trimming of workforce & removal of rented properties from operations. Meanwhile, the company’s aim is to set up stores in close vicinity of its existing stores which provides better recognition amongst the population of those districts and therefore, creates a better visibility of the brand. The company also intends to strengthen its sourcing capability by identifying new and more efficient suppliers to reduce costs, increase speed of delivery and reduce lead times, including by identifying large manufacturers both in India and overseas.
