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NAPS Global India

• NAPS Global India is coming out with an initial public offering (IPO) of 13,20,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 90 per equity share.
• The issue will open on March 4, 2025 and will close on March 6, 2025.
• The shares will be listed on SME Platform of BSE.
• The share is priced 9.00 times higher to its face value of Rs 10. 
• Book running lead manager to the issue is Aryaman Financial Services.
• Compliance Officer for the issue is Priyanka Marvania.

Profile of the company

NAPS Global India is a wholesale importer of textile products and acts as an established player in the garment manufacturing supply chain in Maharashtra, India. It primarily imports cotton and man-made fabrics from manufacturers in China and Hong Kong in bulk quantities and provide timely supply to vendors of garment manufacturing companies in Maharashtra. Man-made Textiles category with import of $1859 million has the largest share (34%) in the total imports ($5,425 million) during the period of April-October of FY 2024-25, as there is demand supply gap in this sector and its organisation has been able to develop strong procurement network in China and Hong Kong and hence is in a unique position to be a sought-after supplier to manufacturers and their vendors who require man made and cotton fabrics for their downstream processes.

It is a Mumbai based company having its presence in the textile industry for more than a decade. The company was found by its promoters Pankaj Jain and Ronak Mistry in the year 2014. Its promoters have their roots in the textile industry starting their journey from local shop and vendors to creating a company which has supply all over India and a solid network chain of suppliers established in China and Hong Kong with a vision to cater all demands of fabrics supply for the PAN India garment manufacturing companies. It is now embarking on being the public listed company with a vision to build a resonance with the stakeholders, establish presence PAN India and world-wide, to create and provide value to its stakeholders and reach each corner of its nation and serve in better way.

The company’s proficiency lies in understanding the specific requirement of its customers and based on which it procures fabrics with trendy colour combination, designs, clothing material and quality. Its business is predominantly conducted on a business-to-business model basis. It contends that its efforts to provide a one-stop shop for all of its customers’ needs in its product line, together with its competitive pricing derived from its understanding of the local market, thoughtful product selection, efficient supply chain management and timely delivery, have contributed to its expansion and success. 

Proceed is being used for:

• Funding working capital requirement
• General corporate purpose 

Industry Overview

India’s textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, with the capital-intensive sophisticated mills sector at the other end. The fundamental strength of the textile industry in India is its strong production base of a wide range of fibre/yarns from natural fibres like cotton, jute, silk, and wool, to synthetic/man-made fibres like polyester, viscose, nylon and acrylic. The decentralised power looms/ hosiery and knitting sector form the largest component of the textiles sector. The close linkage of textiles industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles makes it unique in comparison to other industries in the country. India’s textiles industry has a capacity to produce a wide variety of products suitable for different market segments, both within India and across the world.

The market for Indian textiles and apparel is projected to grow at a 10% CAGR to reach $350 billion by 2030. Moreover, India is the world's 3rd largest exporter of Textiles and Apparel. India ranks among the top five global exporters in several textile categories, with exports expected to reach $100 billion. The textiles and apparel industry contributes 2.3% to the country’s GDP, 13% to industrial production and 12% to exports. The textile industry in India is predicted to double its contribution to the GDP, rising from 2.3% to around 5% by the end of this decade. Textile manufacturing in India has been steadily recovering amid the pandemic. The Manufacturing of Textiles Index for the month of June 2024 is 106. India is the world’s largest producer of cotton. In the first advances, the agriculture ministry projected cotton output for 2023-24 at 31.6 million bales.

The future of the Indian textiles industry looks promising, buoyed by strong domestic consumption as well as export demand. India is working on various major initiatives to boost its technical textile industry. Owing to the pandemic, the demand for technical textiles in the form of PPE suits and equipment is on the rise. The government is supporting the sector through funding and machinery sponsoring. Top players in the sector are achieving sustainability in their products by manufacturing textiles that use natural recyclable materials. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. The growth in textiles will be driven by growing household income, increasing population, and increasing demand by sectors like housing, hospitality, healthcare, etc. The technical textiles market for automotive textiles is projected to increase to $3.7 billion by 2027, from $2.4 billion in 2020. Similarly, the industrial textiles market is likely to increase at an 8% CAGR from $2 billion in 2020 to $3.3 billion in 2027. The overall Indian textiles market is expected to be worth more than $209 billion by 2029. 

Pros and strengths

Long standing relation with suppliers: The company has established long-term relationships with a diverse network of international suppliers, strategically sourcing products from China and Hong Kong to minimize procurement costs. It operates a standardized procurement system, utilizing purchase orders to ensure flexibility and competitive pricing, and continually research optimal sources for quality and price. This diligence has fostered robust relationships with reliable suppliers, ensuring seamless operations. Its bulk purchasing capabilities optimize costs and mitigate supply chain risks, while prompt payments secure discounts and strengthen relationships. As a result, its robust supply chain network ensures consistent goods flow, minimizing stock outs, disruptions, and quality issues.

Experienced Promoters and Directors: The company is a concise organization with its Executive Directors and promoters taking the lead in day-to-day business activities. The dedication to build a successful organization percolates to each person working in the company. The company’s Board of Directors comprises individuals with significant experience across this industry and its functions. The company is managed by its Chairman & Managing Director Pankaj Jain and its Whole-time Director & Chief Financial Officer Ronak Mistry each have more than one decade of experience in garment and fabric industry which has been instrumental in growth of its business. Its Executive Director’s experience and their understanding of the industry & dedication for the company will enable it to continue to take advantage of both current and future market opportunities.

Healthy financial performance: The company has maintained a healthy balance sheet. It strives to maintain a robust financial position with emphasis on having a strong balance sheet and increased profitability. On account of an increase in sales, its total income increased from Rs 1,348.42 lakh for Fiscal 2022 to Rs 4,788.30 lakh for Fiscal 2024. Its revenue from operations has grown at a CAGR of 88.30% from Rs 1,334.40 lakh in Fiscal 2022 to Rs 4,731.29 lakh in Fiscal 2024, while its Net Worth has grown from Rs 83.23 lakh as of March 31, 2022 to Rs 380.62 lakh as of March 31, 2024. Its restated profit after tax has grown at a CAGR of 182.02% from Rs 18.26 lakh in Fiscal 2022 to Rs 145.22 lakh in Fiscal 2024. The company has prudently utilized its resources, which has enabled it to fund its expansions through its internal accruals. Its operational and financial performance will allow it to take advantage of the growth opportunities in the ever-growing fabrics and garment industry.

Risks and concerns

Maximum revenue comes from limited customers: The company has garnered 78.81%, 83.16% and 93.27% of its total revenue from its top 10 customers in FY24, FY23 and FY22 respectively. In the event of loss of one or more set of such customers on whom it is dependent for its business, it cannot assure that it may be able to offset such loss of business by identifying a new customer of its products. The company does business with customers on Purchase Order basis and do not enter into any agreement with its customer and it not has fixed customer base. There can be no assurance that it shall get repeat order flow from its customers. It cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect its revenues and profitability.

Geographical constrain: The company’s operations are susceptible to local and regional factors, such as accidents, political factors, economic and weather conditions, natural disasters, and demographic and population changes, the outbreak of infectious diseases and other unforeseen events and circumstances. The company has garnered 95.48%, 85.23% and 82.09% of its total revenue from State of Maharashtra in FY24, FY23 and FY22, respectively. Further, the company has not entered into any agreement with its customers for long term sales. Any change in governmental policies or occurrence of natural disasters in any of this states/ union territory may impact on its business, results of operations and cash flows.

Dependent on a few suppliers for supply of raw materials: The company is dependent on a few suppliers for procuring the fabrics for supply of its products. For the period ended December 31, 2024 and financial year ended March 31, 2024, March 31, 2023 and March 31, 2022, its top ten suppliers accounted for around 98.83%, 91.82%, 84.16% and 99.81% of its total purchases, respectively. The quality of materials, the transparent pricing, location advantage, etc. are also some of the major reasons the company prefers to procure these raw materials from these suppliers. The company has developed a robust network chain with its suppliers which has ensured a consistent and reliable flow of goods thereby reducing the risk of stockouts, disruption in supply chain and quality issues. Any failure of the supplier to deliver the raw materials in the necessary quantities or to adhere to delivery schedules or specified quality standards and technical specifications would adversely affect its business operations and its ability to deliver orders on time and at the desired level of quality.

Outlook

NAPS Global India is a wholesale importer of textiles and a key player in Maharashtra's garment manufacturing supply chain. The company has Pan-India operations with an established supplier network in China and Hong Kong. The company procures and supplies fabrics to garment manufacturers in India, leveraging a strong supplier network in China and Hong Kong. It understands customer needs and offers trendy designs and colour combinations, primarily in a business-to-business model. On the concern side, the company is significantly dependent on few customers for its revenue. The loss of any one or more of such customers may have a material effect on its business operations and profitability. Moreover, majority of revenue contribution comes from the Maharashtra which contributed 72.27%, 95.48%, 85.23% and 82.09% of its revenue from operations for the period ended December 31, 2024 and in Fiscal 2024, 2023 and 2022, respectively.

The company is coming out with an IPO of 13,20,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 90 per equity share to mobilize Rs 11.88 crore. On performance front, the company’s revenue increased 82.73% from Rs 2,589.26 lakh in fiscal 2023 to Rs 4,731.29 lakh in fiscal 2024. The increase in the year 2024 was due to increase in the demand of its products, better order management, better pricing and availability as compared to last year. Moreover, the company’s Profit after Tax increased by Rs 118.06 lakh or 434.49%, from Rs 27.17 lakh in fiscal 2023 to Rs 145.22 lakh in fiscal 2024. 

The company's strategy is to focus on enhancing fund-based capacities to drive business growth, capitalizing on established relationships with Chinese suppliers and a strong Indian customer base. It aims to scale up operations through forward integration, diversifying its product portfolio by venturing into custom-made garments alongside its existing fabrics business. This strategy requires optimizing working capital to support 1-2 months of Work-in-Progress inventory. To improve profitability, it will negotiate better raw material procurement costs through favorable payment terms, leveraging its supply chain network to explore new PAN India markets. It will augment working capital capabilities by increasing access to liquid funds, reducing credit periods with suppliers, and efficiently managing receivables and payables. This strategic approach will enhance its order-taking appetite, increase volumes and revenues, improve profitability, and exploit market opportunities, maintaining its competitive edge in the garment industry.