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Overview of Retail Kids Apparel

market in India

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

Domestic Apparel market


The exports market is expected to show sluggish growth but the
domestic market will continue to provide strong growth opportunities
for apparel manufacturers.
72 per cent of India's total population still resides in rural areas and
contributes only 50 per cent to the total RMG industry in value terms.

Source :Crisil research,09

Source :Crisil research,09

Key demand drivers


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

2007
Organised penetration
in Clothing

12%

Source::Ibef Indian retail report 2008

2008
16%

2009 E
22%

Source::Ernst and Young Indian retail story 2007

Key demand drivers

Rising income levels and disposable income: the share of expenditure on


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

Source :NCAER report,09

Source :Crisil research,09

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 research

Source :Crisil research

Key demand drivers


Age group distribution: At present overall 30% of the population is
less than 15 years of age. The population group <15 years is going to
decline slightly by 2016 .The decline will be mainly in 0-4 years age
because of family planning and growth in urbanization.

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

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 highly
fragmented with most of the customers requirements being met by the
localized unorganized vendors.
According to media reports, the share of organised players in the kids
apparel market is only about Rs 3000 crore.

Source :Crisil research,2009

Source :Red Herring prospectus ,Giny & Johny 2008

Details of Kids apparel Market


Category wise volume and value trends in kidswear segment :The
growth in value in the total kids segment between 2004-07 is high in
almost all ranges
CAGR
Value

10

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%

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 on
rent , the realisations for the company are highest through this mode of distribution ,the
company can get first-hand feedback of the consumers preferences, these stores also help
establish 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 that
through EBO.

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

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

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 3000
crore 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. Many
international adult apparel brands such as Allen Solly, Arrow, Reebok
and Puma are entering the kidswear segment. But, the unorganized sector
remains the biggest challenge

Major players in organized Kidswear sector

Business activities primarily includes designing, manufacturing, branding and


selling of readymade apparels and other lifestyle accessories for kids.
Products Segment: 1. Super premium segment - Gini & Jony 2. Premium
segment - GJ JEANS UNLTD. 3. Mid-market segment - Palm Tree & Red
River 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; valuable
wear 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 of
Benetton known for its distinct Italian collection and Puma Kids a sportswear
lifestyle brand of apparel and accessories.
Distribution System: As on March 31, 2008 pan-India distribution network is
spread over 108 cities comprising of 60 EBO(49 franchised and 11 company
operated), 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 October
2010.

Major players in organized Kidswear sector

The Lilliput brand was set by the successful garment manufacturing and export
enterprise 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% company
owned and 30% franchise) and 250 points-of-sale in multi-brand outlets in 150
cities 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 export
accounting 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 Kidswear
for 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 of
40% in the next 2 years.

Major players in organized Kidswear sector

Catmoss brand was established in 2004 by Mr.Ashwin Chawla. the brand has
gained popularity in a very short span of time. .
Products Segment: The retail business caters to the middle and premium
segments. Catmoss is also venturing beyond the ethnic and party kidswear
apparel 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 to
introduce formal wear for young boys as well as an economy range in casual
wear.
Distribution System: The brand has 150 EBO all over India (78 company
operated and 72 franchised outlets). The brand is also sold through various large
format 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 a
whopping 78% growth
Financial goal include reaching a turnover of Rs 150 crore by the end of 2009-10
along with the launch of 75 new stores. Invest Rs 400 crore for rolling out 500
stores by 2011.

Major players in organised Kidswear sector

Brand

Lilliput

Product
Price Range
Range of apparel,
accessories and footwear for
children; GJ Jeans, baby
products
Rs. 400-2500+
Casual wear, footwear,
party wear, inner wear,
night wear, swim wear and
accessories.
Rs. 245-945

Catmoss

Ethnic and party kidswear


apparel

Weekender Kids(Primus Retail)

kids: upper-wear:
Rs. 299-699,
Sportswear and casual wear bottom-wear: Rs. EBOs: 36; MBOs:
for young parents and kids. 499-899.
25

Gini and Johny

Rs 300 -1,000

Source :Images Fashion website and general internet search.

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Retail Presence

Turnover (in
Rs cr)

Maket Share (Total


branded :Rs 3000 cr)

EBOs: 245 in more


than 79 cities; LFS:
252; MBOs: 500+

225

8%

EBOs: 225; MBOs:


250 (apparel), 180
(footwear)

310

10%

EBOs:125 ;LFS

100

3%

In 2007: 55 cr

2%

Comparable Valuations

Companies in Apparel Retail in India

Kewal Kiran Clothing


Koutons Retail
Provogue India
Zodiac Clothing Co.
Brandhouse Retails
Page Industries Limited

P/E
10.7x
12.3x
18.2x
14.2x
7.1x
25.6x

EV/Revenue
1.6x
1.3x
1.8x
1.2x
0.4x
3.0x

EV/EBIT
7.7x
6.5x
17.0x
10.0x
6.0x
18.3x

EV/EBITDA
6.6x
5.1x
13.8x
8.7x
5.1x
15.6x

Mean
Median

14.7x
13.2x

1.6x
1.5x

10.9x
8.9x

9.1x
7.6x

EBIT
EBITDA Square feet
Margin Margin
area
21.1%
24.7%
183,965
19.8%
25.2% 1,292,179
10.6%
13.1%
NA
11.9%
13.7%
NA
7.2%
8.5%
666,575
16.2%
19.0%
NA
14.5%
14.1%

17.4%
16.4%

Inventory
turnover
(COGS/Avg
inventory)
2.3
0.3
1.3
1.7
5.2
2.1
2.1
1.9

Sales per
square feet
in Rs
7859
8100
NA
NA
8286
NA
8082

Comparable Valuations
Companies in Children Apparel Retail in US

P/E
Children's
Place Retail
Stores (PLCE)
Carter's, Inc.
(Public,
NYSE:CRI)

EV/Reven
EV/EBITD
ue
EV/EBIT
A

EBIT
Margin

EBITDA
Margin

Inventory
turnover Sales per
Comparable (COGS/Avg square
store sales inventory) feet (in $)

15.1x

0.7x

10.4x

6.4x

7%

11%

2%

4.7

15.0x

1.1x

9.2x

7.9x

12%

14%

0%

4.7

22.9x

1.4x

9.2x

7.5x

15%

19%

-4%

4.5

Business
Specialty retailer of
childrens apparel and
350 accessories
Owns two children brands
and market apparel for
388 children
Specialty retailer operating
stores selling apparel and
accessories for children
564 under different brands

17.7x
15.1x

1.1x
1.1x

9.6x
9.2x

7.3x
7.5x

12%
12%

15%
14%

4.6
4.7

434
388

Gymboree
Corporation

Mean
Median

-1%
0%

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

Conclusion
The prospects of kidswear industry, a sub-sector of apparel and retailing,
essentially depends upon the growth of the economy and organized
retailing industry at macro level and personal expenditure and willingness
to 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 than
20%.
Growth opportunities for kidswear retail is very high in Tier II, Tier III
cities and in school uniform segment.
Entry of foreign kidswear manufacturers and the entry of major Indian
apparel 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 derail
the growth of the industry
19

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