Go Fashion (India) Limited was first established in 2011. It is a company that is engaged in the business of women bottom-wear. The company offers high-quality goods in women’s bottom wear with a huge product portfolio of bottom wears in western, ethnic and other styles. The company also sells denim, linen, leggings and churidars in their product portfolio. The company is a one-stop solution company that conducts design and development, sourcing, retailing, and marketing under the brand ‘Go Colors’. It is the leading player and a pioneer in the women’s bottom-wear segment in the country. In this article, we take a closer look at the GO Fashion IPO Review and its possible future prospects.
The company has tie-ups with many retail outlets such as Globus Stores Private Limited, Reliance Retail Limited and Spencer’s Retail for their distribution network. The company currently operates 1332 LFS as of March 2021. It also operates its own 450 EBO’s – Exclusive Business Outlets. Go Fashions also sells their product through Multi Brand Outlets and other E-Commerce Platforms. Through its business operation, the company has set up a PAN – India presence with exposure to 27 States and Union Territories of the country. It also operates via shops in Malls, Residential Market Zones, Outlets at the Airports and Urban Centers in Tier II and Tier III cities. It operates most of its stores, shops and outlets on the Outsourcing Basis.
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the loans of the company, which be availed on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement
BASIS OF THE GO FASHION IPO OFFER:
- The company is highly benefited by being the first to start a business exclusively for female bottom wear.
- The company has a well-diversified product portfolio and a PAN India presence, making it the biggest brand operating in females’ bottom-wear.
- The company has an excellent Multi-Channel Supply, Network and Distribution Channel that has a high emphasis on the EBO of the company.
- The company has as strong business operational model.
- The company has efficient technology, extensive procurement and supply chain management.
- The company has in house design and skill development facilities to upgrade the quality of its products.
- The company has demonstrated an excellent financial track record in the past.
GO FASHION IPO DETAILS:
Go Fashion Limited, a company engaged in female bottom wear, has its headquarters in Navi Mumbai. The company has recently got approval from SEBI to float its IPO. As a result, the company has brought forward the IPO contains both an issue of fresh equity worth Rs.125 crore and an OFS been brought forward by the promoters and selling stakeholders of 12,878,389 equity shares. Check Day by Day IPO Subscription Details (Live Status)
The company stated that at the upper price band, it would raise the funds of Rs. 1,013.6 Crore. Through the OFS, the following will offload their equity shares of:
| VKS Family Trust | 7.45 lakh Equity Shares |
| PKS Family Trust | 7.45 lakh Equity Shares |
| Sequoia Capital India Investments | 74.98 lakh Equity Shares |
| India Advantage Fund S4 I | 33.11 lakh Equity Shares |
| Dynamic India Fund S4 US I | 5.76 lakh Equity Shares |
The company also stated that the funds been raised from the IPO would be used to start and set up operations for 120 new EBO’s along with general corporate purpose and working capital requirements.
| IPO Opening Date | 17 November 2021 |
| IPO Closing Date | 22 November 2021 |
| Issue Type | Book Building Type |
| Face Value | Rs.10/ Equity Share |
| IPO Price | Rs.655 – Rs.690/ Equity Share |
| Market Lot | 1 lot of 21 shares |
| Min Amount | Rs.14,490 |
| Maximum Lot | 13 Lots corresponding 273 shares |
| Maximum Amount | Rs.1,88,370 |
| Listing At | BSE, NSE |
| Issue Size | Rs.1,013.61 Crores |
| Fresh Issue | Rs.125 Crores |
| Offer for Sale | 12,878,389 Equity Share |
| Basis of Allotment Date | 25 November 2021 |
| Initiation of Refunds | 26 November 2021 |
| The Credit of Shares to Demat Account | 29 November 2021 |
| IPO Listing Date | 30 November 2021 |
| Basis of Allotment Type | % Of the IPO Offer |
| Qualified Institutional Buyer | 75 |
| Non-Institutional Investor | 15 |
| Retail | 10 |
FINANCIAL TRENDS OF GO FASHION IPO:
| Operating Revenue | Rs. 400 Crore |
| EBITDA | -63.36 % |
| Net worth | -1.18 % |
| Debt/Equity Ratio | 0.04 |
| Return on Equity | -1.25 % |
| Total Assets | 6.27 % |
| Fixed Assets | 1.62 % |
| Current Assets | 10.30 % |
| Current Liabilities | -5.82 % |
| Trade Receivables | -10.13 % |
| Trade Payables | -5.93 % |
| Current Ratio | 5.39 |
| Particulars | For the year with the amount in Crores | ||||
| 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | |||
| Total Assets | 548.37 | 519.19 | 404.13 | ||
| Total Revenue | 282.25 | 396.84 | 290.98 | ||
| Profit After Tax | -3.54 | 52.63 | 30.94 |
| EPS | Rs. 4.01 |
| RoNW | 7.76% |
| Price /Book Value | 13.65 times |
| NAV | Rs. 50.56 |
WEAKNESS AND THREATS OF GO FASHION IPO:
- The COVID-19 pandemic has heavily impacted the company. It affected the company upfront in terms of operation, supply chain and also the change in consumer spending, a pattern that impacted the company financially.
- The company has a high revenue dependence from the sales been registered in Tier-I cities.
- The company is vulnerable to the risk associated with the real estate on the lease. Any negative news in this context can hamper the efficiency and productivity of the company.
- The company also need to make sure that they manage the retail network along with the distribution and supply chain properly for the growth of their business.
- The company need to look at the sites of their EBO’S and their private stores. The company needs to shift most of its stores to commercial areas to attract more customers to its store operations.
- The company is under trial due to a legal procedure against them.
- The company still needs to make up a revival and growth strategy post covid peak to regain the profits. The company incurred short-term pressure on profitability, revenue, and financial margins. Last year, the company also registered a loss due to the lockdown and disruption in their manufacturing and supply chain network.
- The company need to ensure that their quality remains perfect for retaining and expanding their customer base.
- The company is engaged in a highly competitive market where it faces competition from many organized and unorganized players. The company is also vulnerable to growing competition from E-commerce platforms and websites.
- The company is also vulnerable to the pricing, availability and supply chain of the raw materials required to make its final product. It is dependent on a third party for the raw material and as well as the supply chain.
- The company also need to update its designers with the current market trend and changing consumer pattern to remain the leader position in the sector.
- The company is engaged in a very high working capital requirement business that holds a high amount of inventory of all the product ranges in their stores.
STRENGTHS AND GROWTH ASPECTS OF GO FASHION IPO:
- The company has adopted a cluster-based strategy for their EBOs operation. It enables the company to be in sync with its COCO model. It helped the company to attain improved operational control and efficient store profitability.
- The company operates in a business of high growth, potential and yet unorganized market. The company benefits from the rise in consumer demand and the structural shift of the people toward branded goods.
- The company is one of the largest companies engaged in women’s apparel stores.
- The company has a diversified product portfolio across all the lines of the bottom wear from ethnic to fusion and western and denim.
- The sector is expected to grow with a CAGR of 12.4% till FY25. Go Fashions being a market leader and the category creator, will hugely benefit from the sector’s growth.
- The company has established a PAN India presence and a Multi-Channel Distribution network. It is a pioneer in the women’s bottom wear category through its flagship brand’s strong presence.
- Go Fashions also carry out product development regularly. Till now, it has conducted 44 such phases for a deep understanding of consumer patterns and interests.
- The company has significantly expanded their LFS operation from 925 stores in 2019 to 1332 stores in 2021.
- The company has a healthy operational and financial risk profile. It is due to the low gearing indicator and strong debt coverage. The company in the past also funded its CAPEX plan through investments made by the PE firms and the net internal accruals of the company. For the CAPEX plan, the company didn’t raise any Debt-ridden plan.
- The company operates on an Asset-light manufacturing model. It helps them to maintain their return metrics. The manufacturing of the company is outsourced to vendors. It helped the company to improve in the operating margins, profitability, return on capital employed.
- The company is in a strong Liquidity position with no external term loans, solid-liquid investments, and healthy cash flows.
PROMOTERS:
- Prakash Kumar Saraogi
- Gautam Saraogi
- Rahul Saraogi
- PKS Family Trust
- VKS Family Trust
| Pre-Issue Share Holding | 57.47% |
| Post Issue Share Holding |
CONTACT DETAILS:
Go Fashion Limited
Sathak Center, 5th Floor, New No. 4,
Old No. 144/2, Nungambakkam High Road,
Chennai, Tamil Nadu 600 034
Tel: +91 44 4211 1777
E-mail: companysecretary@gocolors.com
Website: www.gocolors.co.in
REGISTRAR:
KFin Technologies Private Limited
Selenium, Tower B,
Plot No 31 and 32, Financial District,
Nanakramguda, Serilingampally
Hyderabad, Rangareddi 500 032,
Telangana, India
Tel: +91 40 6716 2222
E-mail: gofashion.ipo@kfintech.com
Website: www.kfintech.com
LEAD MANAGER(S):
- ICICI Securities Limited
- DAM Capital Advisors Limited
- JM Financial Limited
