Signoria Creation coming with IPO to raise upto Rs 9.28 crore

Signoria Creation

• Signoria Creation is coming out with initial public offering (IPO) of 14,28,000 shares of Rs 10 each in a price band Rs 61-65 per equity share. 
• The issue will open for subscription on March 12, 2024 and will close on March 14, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 6.10 times of its face value on the lower side and 6.50 times on the higher side.
• Book running lead manager to the issue is Holani Consultants.
• Compliance Officer for the issue is Swati Jain.

Profile of the company

Signoria Creation is engaged in manufacturing and marketing of women apparels like Kurtis, pants, tops, Co-ord Sets, dupattas and Gowns. It is popularly known and identified in apparel market by its brand name ‘Signoria’. Its brand is known for its Kurtis with traditional designs having wide range of colour, patterns and sizes. The company caters to those who are looking for clothing that is comfortable, stylish, and trendy. Its clothes are perfect for women who want to make a statement and stand out from the crowd.

The company's primary goal is to manufacture women's branded clothes under the Signoria brand. The company has placed a strong emphasis on using high-quality materials and adhering to strict quality control guidelines, which guarantees that the clothing is produced to the highest standards of consistency and quality, winning its clients' faith and confidence. Signoria is committed to creating only the best designs going forward. It places a strong emphasis on involving its clients in the manufacturing process, and it goes above and beyond to create samples and patterns to guarantee that its clients' ideas are accurately reflected in the final goods.

The company is managed by its promoters and directors, Vasudev Agarwal, Babita Agarwal, Mohit Agarwal having experience in the Textile and apparel industry and its President, Kritika Chachan having an experience in the cloth industry. With the passion of its promoters, dedication of its team, development of its brand, customer loyalty, growing trend in e-commerce and continued government support it aims to expand its operations on PAN India basis and become a popular brand among the masses.

Proceed is being used for:

• Funding working capital requirements of the company
• General corporate purposes

Industry overview

Women Indian wear accounted for around 71% of the total Women Apparel Market, implying women Indian wear is the mainstay for women apparel market in India. The balance 29% was accounted for by western wear. In this context, the Indian women apparel industry’s categorization into Indian wear and western wear is significant given the Indian wear category’s size and its unique existence compared to other major markets. The broad categorization of Indian and western comprise many subcategories. The women Indian wear category can broadly be classified into Saree & others (includes Indian dresses, Lehenga etc.) and SKD (including Sets, Mix & Match, Dupattas. Stoles). It also comprises of fusion wear, which is an amalgamation of other cultural influences on Indian wear.

Women apparel market in India is estimated at around 36% of the total apparel market of Rs 4,47,666 crore. The women apparel market is expected to grow from Rs 1,63,291 Cr in FY 2020 to Rs 2,53,733 crore by the end of FY 2025. It is expected to be the fastest growing segment in the apparel market in India, with a forecasted growth rate of 9.2% between FY 2020 and FY 2025. This market is projected to grow owing to factors like sustained growth of Indian daily wear; casualization of fashion leading to growth of new categories like fusion wear, denims, loungewear; rising share of organized retail; design innovations and changing consumer demographics.

Indian wear category offers a unique blend of comfort and fashion to the consumer making it the preferred apparel for most occasions. The category association revolves around comfort, ‘contemporisation’ as well as relevance of the occasion. Whilst the consumers in Tier I cities, compared to the metro-centric consumers, tended to be strongly governed by traditional usage of the saree, the Indian wear category is increasingly becoming the category sought for as it offers both conformity and style. Indian women wear in the form of Kurtis, Mix & Match, Saree, Indian dresses etc has found a universal appeal across states as these categories are being worn by women across the country.

Pros and strengths

Established Manufacturing facility: Its Registered office and the manufacturing facility are located at Jaipur in Rajasthan. It has in the process of setting up a new manufacturing unit in RIICO Industrial Area, Mansarovar, Jaipur. Its manufacturing units are equipped and capable to carry out end to end manufacturing activities starting from designing of products to production and testing of finished goods and packaging thereafter. Its dynamic setup not only gives it better control over quality but also benefits it with cost advantages compared to its competitors who resort to job work for various activities in the complete manufacturing process.

Cost leadership and time bound execution: The company promotes cost leadership and timely execution of client’s orders. The timely fulfilment of the orders is a prerequisite in its industry and the cost leadership entails cost efficient manufacturing processes. Its management has carried out various steps for the purpose which involves identification of quality raw materials, harmonious relations with workforce, aligning the manufacturing process i.e., the supply of products with the demand and the use of latest and highly efficient manufacturing facilities which enhanced its ability to meet large and varied orders on a timely basis.

Existing relationship with the clients: It focuses on building sustained and long-term client relationship with its clients and constantly tries to cater customer needs with products in demand. Since it is only engaged in B2B business model, its existing clients provide it mandate for continuous services. It trusts that its existing relationship and goodwill serves as a competitive advantage in gaining new clients and increasing its business with existing clients.

Risks and concerns

Dependent on top 10 customers:  It significantly depend on its selective customers for major portion of its sales and any loss of any of the customers for any reason (namely, failure to negotiate on acceptable terms, dispute with customers, adverse change in financial condition of such customers like bankruptcy or liquidation or other financial hardship, merger or decline in their sales, reduced or delayed customer requirements, plant shutdown, labour strikes or other work stoppages), could have an adverse effect on Its business, results of operation and financial condition.

Do not have long term agreements with suppliers: It do not enter into any long-term supply contract with any of its raw material suppliers and typically source raw materials from third party suppliers under contracts of shorter period or from the open market. The absence of long-term contract with other parties except as herein before mentioned at fixed prices exposes to volatility in the prices of raw material, which may reduce its profit margins. It may face a risk that one or more of its suppliers may discontinue their supplies to it, and any inability on its part to procure raw material from alternate suppliers in a timely manner, or on commercially acceptable terms, may adversely affect its business, financial condition and result of operations.

Working capital requirements: Its business is working capital intensive and requires a significant amount of working capital for smooth functioning. A significant portion of its working capital is utilized towards trade receivables and inventories. It intends to continue growing by expanding its business operations. This may result in increase in the quantum of current assets particularly trade receivables and inventories. The results of operations of its business are dependent on its ability to effectively manage its inventory and stocks. To effectively manage its inventory, it must be able to accurately estimate customer demand and supply requirements and manufacture and trade inventory accordingly. Any mismatch between its planning and actual consumer consumption could lead to potential excess inventory or out-of-stock situations, either of which could have an adverse effect on its business, financial condition and results of operation.

Outlook

Signoria Creation is engaged in manufacturing and marketing of women apparels like kurtis, tops, gowns, dupattas etc. It is popularly known and identified in the apparel market by its brand name ‘Signoria’. Its brand is known for its Kurtis with traditional designs having wide range of colour, patterns and sizes. On the concern side, the apparel manufacturing industry is highly competitive and fragmented. Its competitors include numerous apparel designers, manufacturers, and other established companies. Some of its competitors are larger and therefore better placed to take advantage of efficiencies created by size, and have better financial resources or greater access to capital at lower costs, and may be better known nationally.

The company is coming out with an IPO of 14,28,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 61-65 per equity share. The aggregate size of the offer is around Rs 8.71 crore to Rs 9.28 crore based on lower and upper price band respectively. On performance front, revenue from operations has increased by 62.06% to Rs 1914.92 lakh for financial year 2022-23 from Rs 1181.60 lakh for the financial year 2021-22. This is driven by increase due to pent- up demand after opening of economy on lifting of COVID restrictions and also due to participating in PAN India exhibition by spending Rs 31.65 lakh on Business promotion and Rs 3.62 lakh on Advertisement during 2022-23. Profit after tax of the company jumped by 242.14% at Rs 231.05 lakh for financial year 2022-23 as compared Rs 67.53 lakh for the financial year 2021-22. Going forward, the company intends to improve operating efficiencies to achieve cost reductions to have a competitive edge over the peers. This can be done through continuous process improvement and technology development. It continues to invest in operational excellence throughout the organization. It ensures a strong quality commitment by its employees.