The company has exclusive licence of brand “Being Human” one of the well known and promising brand in Indian. The brand is promoted by Bollywood superstar Slaman Khan. The superstar has a huge fan following and with this power he makes a movie to do a great business. His each movie crosses a mark of 100 Cr. Can his charisma help this company do the business at the same level as his movies do and attract the investors.

Pros…

  1. Company entered into global exclusive Trademark License Agreement on the 24/08/2016 to design, manufacture, retail and distribute men’s wear, women’s wear and accessories under “Being Human” trademark until March 31, 2020.
  2. Cash flow is important as it becomes payment to the things that makes a business run. In textile industry inventory need to be maintained at all the level in supply chain which is often taken on credit. Here the manufacturer has to pay to the supplier earlier than it receive from the buyers. So maintaining cash in hand is must for smooth functioning of the business. Despite the cash crunching due to demonetisation in Nov-17, company was able to generate positive net cash flow of 27 lakh Rs.
  3. Table shows the cash flow from operating, investing and financing activity. In all the past three-year company has a positive cash flow from operating activities such as sales.It shows that company is generating liquidity from its operations. In FY-16 &17 it had negative net cash flow from investing and financing activity. Negative cash flow from investing activity shows that company is using cash for making investments in assets such as land, plat & machinery, or in some other company by way of shares or bonds. Negative cash flow from financing activity shows that company is using cash to pay interest, repayment of borrowing and dividend. By combining all the three, Company is generating cash inflow from operating activities which it is using for investment purpose and repaying its liability. It is an ideal condition for any business.
  4. The table shows the value of day inventory, payable, receivables and cash conversion cycle of the company for FY-16 & 17 and of industry.Days of inventory on hand are the number of days for which company has stock to sell without any production. Days Receivables are the number of days in which creditor of the company will pay it back. Days payables are the number of days in which company will pay back to its suppliers. Cash conversion cycle is the number of days in which the company will able to convert its current assets and liabilities into cash.For FY-16 company is almost close to the industry benchmark, however cash conversion cycle for the company is higher than that of industry benchmark because it is paying back to its supplier at a faster rate than industry standards.However, in FY-17 company’s performance was not good it has deviated significantly from its own past performance as well as from industry standard. The reason is the cash crunch brought on 9th Nov 2016 which stayed till 30 Dec 2016. Although company is expected to rise from the temporary effects of demonetization and continue to perform better or up to the industry standards.
  5. The central government is planning to finalize and launch the new textile policy in the next three months. The policy aims to achieve US$ 300 billion worth of textile exports by 2024-25.

Cons…

  1. Company is highly dependent on exclusive Trademark License Agreement with “Being Human” brand. Risk associated with having a single brand in the portfolio is a major concern. The license stands till 31st march 2020 and there lies an uncertainty of what after that.
  2. With sales of total Rs. 219.35 Cr. In FY-17 company had shown no growth and sales remained at the same level as that of FY-16.
  3. Exports level are deteriorating from total of 45.34 Cr. in FY-16 to 34.54 Cr. in FY-17.
  4. Major raw material for the textiles is woollen. Prices of woollen are volatile and highly depends on the weather. Since FY-14 production of cotton has continuously declined year-on-year. Which will be increasing the price of cotton.
  5. Cloths pricing more than 1000 Rs. are taxed by 12% of GST. Whereas, the tax rate in neighbouring countries like Bangladesh and China is relatively less. Most of the apparels of Being Human cost more than Rs. 1000. So the company will face competition from other branded clothing manufacturer from other countries.

Disclaimer: This Blog, its owner, creator / contributor is not a research analyst and expressing opinion only as an individual investor in Indian equities. He/She is not responsible for any loss arising out of any information, post or opinion appearing on this blog. Investors are advised to consult financial consultant before acting on any such information. All information in this blog is posted for personal study, All information posted on blog is as available in public domain. Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

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