SD Retail Limited
Company
| Website 🔗 |  |
| Business Activity | Manufacture |
| Division | Apparel |
| Sub-class | Sleepwear |
| Location | Ahmedabad, Gujarat |
| Establishment Year | 2004 |
Management
| Managing Director | Hitesh Pravinchandra Ruparelia |
| Educational Qualifications | Higher Secondary Diploma in Computer Technology |
| Experience | Over 20 years of experience in the textile industry |
| Annual Salary | ₹ 107.89 Lakhs |
| Total Number of Employees | 237 |
About
SD Retail Limited is a company that designs, manufactures, outsources, markets, and retails sleepwear under the brand name “Sweet Dreams“. Sweet Dreams is a sleepwear-focused company that caters to both men and women of all ages, including kids. The company offers one of the widest portfolios of sleepwear products among apparel retailers in India, in terms of fabrics, colours, and styles.
Products and Services:
SD Retail Limited offers a wide range of sleepwear for the entire family, including pyjamas, night sets, nighties, and t-shirts. The company also offers products in adjacent categories, such as loungewear, workout wear, athleisure, and work leisure pants.
Clients:
SD Retail Limited’s clients include retail suppliers, large format stores, franchise-operated stores, distributors, and some retail customers.
Manufacturing Process:
The company outsources most of its manufacturing operations while handling all aspects of design in-house. This allows them to maintain an asset-light model concerning plant, property, and equipment. The company’s in-house manufacturing process is highly flexible and customizable, allowing them to manufacture the most complex garments and giving them the flexibility of designing the most fashionable clothes.
Raw Materials:
SD Retail Limited procures raw materials such as fabric, accessories, and embellishments on its own for the products, depending on the fashion trends and season. The company sources its raw materials from local markets as well as all over the world.
Distribution Network:
Multi-channel distribution network: The company has a multi-channel distribution network, including exclusive brand outlets (EBOs), large format stores (LFSs), multi-brand outlets (MBOs), and online channels. This allows the company to reach a wide range of customers.
The company also sells its products through e-commerce platforms such as Myntra, AJIO, Nykaa, Flipkart, Amazon, and its website.
Manufacturing Process Flowchart
Revenue – Category
Revenue – Region
Audit and Legal
Auditor’s Remarks:
The auditors have issued an unqualified opinion on the company’s financial statements
Non-Compliances and Other Issues:
The company was issued a notice on May 25, 2024, for allegedly claiming an excess input tax credit of ₹ 32,71,599.
Untraceable Records:
Certain records of transfers involving the promoters and records before 2006 are not traceable. This could raise concerns about the company’s record-keeping practices.
Contingent Liabilities:
As of March 31, 2024, the company’s contingent liabilities were as follows:
- Contingent liabilities – related to Service Tax/GST: ₹39.93 lakhs
- Contingent liabilities – related to Income Tax: ₹5.10 lakhs
Legal Cases:
Cases Filed Against the Company
Insolvency and Bankruptcy: Royale King Fashion Pvt. Ltd. & Ors. vs. SD Retail Limited & Ors.
Filed before the Hon’ble National Company Law Tribunal, Ahmedabad. This case pertains to an insolvency petition filed against the company under Section 9 of the Insolvency and Bankruptcy Code, 2016. The operational creditor claims that the company owes Rs. 627.08 lakhs as of March 12, 2020. The company has disputed the petition based on non-maintainability.
N.S. International vs. SD Retail Pvt. Ltd. & Ors.
Filed and pending before the Court of Civil Judge Senior Division, Ludhiana. This case involves a claim for the recovery of Rs. 22,79,195, along with interest, for goods supplied to the company.
Tirupati Foam Limited vs. Mr Utpal P. Ruparelia trading as Grace Knit Apparels & The Registrar of Trademarks
Filed and pending before the Hon’ble Intellectual Property Appellate Board, Chennai. This case involves a petition for the removal/rectification of the trademark “Sweet Dreams” registered under Class 25. The petitioner claims to be the prior owner of the mark under Class 20 and has sought the removal/rectification of the company’s mark.
Cases Filed by the Company
Dishonoured Cheques:
There are 17 cases on various individuals and companies related to non-payment and dishonoured cheques with a total amount close to Rs. 1 Crore
Tax Proceedings against the Company:
GST Demands:
S D Retail Limited has been issued with a summary order raising a demand of Rs. 7,21,068/- (Rs. 3,60,534/-
towards GST + Rs. 3,60,534/- towards penalty) for F.Y. 2019-20.
Income Tax Demands:
Multiple income tax demands are pending/under dispute with an aggregate value of less than Rs. 10 Lakhs
SWOT Analysis
Strengths
| Strong distribution network: SD Retail Limited has a strong pan-India distribution network, with a presence in all major metropolitan areas and Tier-3 cities. The company also has a growing online presence. |
| In-house design expertise: SD Retail Limited has a team of experienced designers who can create innovative and stylish products. |
| Strong unit economics: SD Retail Limited has a strong track record of profitability, with a gross profit margin of 53.36% in fiscal year 2024. |
| Asset-light model: SD Retail Limited outsources most of its manufacturing operations, which helps to keep its costs low. |
Weaknesses
| Reliance on a single brand: SD Retail Limited’s products are sold under a single brand, “Sweet Dreams.” This reliance on a single brand could make the company vulnerable to changes in consumer preferences or damage to the brand’s reputation. |
| Product/category concentration: SD Retail Limited’s business is primarily concentrated on the sale of women’s sleepwear. This concentration in a specific product category could make the company vulnerable to changes in demand or fashion trends. |
| Dependence on third-party manufacturers: SD Retail Limited relies on third-party manufacturers for its products, which could lead to supply chain disruptions or quality control issues. |
| Lack of long-term agreements with suppliers: SD Retail Limited does not have long-term agreements with its suppliers, which could expose it to price and supply fluctuations for raw materials. |
Opportunities
| Expansion into new product categories: SD Retail Limited could expand into new product categories, such as loungewear and athleisure. This would help to diversify the company’s product portfolio and reduce its reliance on the sleepwear market. |
| Expansion into new markets: SD Retail Limited could expand its operations into new markets, such as South and East India. This would help to increase the company’s market share and brand awareness. |
| Increased online presence: SD Retail Limited could increase its online presence by investing in its website and e-commerce platforms. This would help the company to reach a wider audience and capitalize on the growing e-commerce market in India. |
Threats
| Competition: The sleepwear market in India is highly competitive, with both domestic and international players. SD Retail Limited faces competition from both organized and unorganized players. |
| Changing consumer preferences: Consumer preferences in the sleepwear market are constantly changing. SD Retail Limited needs to be able to adapt to these changes to remain competitive. |
Porter’s Five Forces1
| Threat of New Entrants | MODERATE – HIGH |
| The sleepwear market in India has low barriers to entry, as it does not require significant capital investment or specialized knowledge. This means that new companies can easily enter the market and compete with existing players. However, SD Retail Limited has a strong brand reputation and a loyal customer base, which could make it difficult for new entrants to gain market share. |
| Bargaining Power of Suppliers | LOW – MODERATE |
| The bargaining power of suppliers in the sleepwear market is low. This is because there are many suppliers of raw materials and finished goods, and companies can easily switch between suppliers. |
| Bargaining Power of Buyers | MODERATE – HIGH |
| The bargaining power of buyers in the sleepwear market is high. This is because there are many companies selling sleepwear, and buyers can easily switch between brands. |
| Threat of Substitute Products or Services | MODERATE |
| The threat of substitute products in the sleepwear market is moderate. This is because people have their definition of sleepwear and could choose to wear other types of clothing to bed, such as loungewear or athleisure. |
| Rivalry Among Existing Competitors | HIGH |
| The sleepwear market in India is highly competitive, with both domestic and international players. SD Retail Limited faces competition from both organized and unorganized players. |
Peer Comparison
The company’s performance on various financial and operational metrics compared to its peers for FY 2024 is as follows:
| Particulars (Rs. In Lakhs) | SD Retails Limited | Go Fashions (India) Limited | Bella Casa Fashion | S.P. Apparels |
| Revenue from Operation | 16,255.89 | 76,282.80 | 23,009.88 | 94,832.00 |
| EBITDA | 1,334.80 | 24,243.61 | 1,899.64 | 17,590.30 |
| EBITDA Margin | 8.21% | 31.78% | 8.26% | 18.55% |
| PAT | 759.76 | 8,344.74 | 1,020.55 | 11,146.00 |
| PAT Margin | 4.67% | 10.94% | 4.44% | 11.75% |
Green Box
SD Retail Limited plans to expand its capacity by setting up 90 new exclusive brand outlets (EBOs) in the next two fiscal years. 65 of these EBOs will be company-owned and company-operated (COCO), and 25 will be company-owned and franchise-operated (COFO).
IPO Funds:
The objects of the issue are as follows:
- Funding capital expenditure to be incurred by the company for setting up new exclusive brand outlets (EBOs): ₹1648.85 lakhs
- Funding working capital requirements of the company: ₹3500.00 lakhs
Industry Outlook:
Growing sleepwear market:
The sleepwear market in India is expected to grow at a CAGR of 15.12% between fiscal years 2024 and 2029. This growth is being driven by factors such as increasing disposable incomes, changing fashion trends, and a growing awareness of the importance of comfortable sleepwear.
Amber Box
Seasonal Variations:
The company’s sales are subject to seasonal variations, which could lead to fluctuations in its results of operations.
Funding Requirements:
The company has significant ongoing funding requirements, which may be difficult to meet if it cannot raise additional capital.
Capacity Utilization:
The average Capacity Utilization of the company is about 85%.
Negative Operating Cash Flow:
The company has experienced negative cash flows from operating activities for FY 2024. This could indicate potential financial difficulties, and investors should assess the company’s ability to generate positive cash flows in the future.
Red Box
The company’s debt-to-equity ratio is 1.04, and its debt-to-asset ratio is 0.35.
Outstanding Legal Proceedings:
The company is involved in certain legal proceedings, including a pending application under the Insolvency and Bankruptcy Code, 2016 and trademark-related disputes. There are multiple litigations related to multiple trade receivables and payables, implying poor relations.
Lack of Long-Term Agreements with Suppliers:
The company does not have long-term agreements with its suppliers, which could expose it to price and supply fluctuations for raw materials.
Lack of Long-Term Contracts with Customers:
The company does not have long-term contracts with its customers, which could lead to revenue volatility.
Images
- The force value of “LOW” is considered good Click Porter’s Five Forces article for more information. ↩︎
Disclaimer: The above information/document is based on publicly available sources and has been issued solely for educational and informational purposes and should not be considered as investment advice or as a Buy/Sell recommendation, or as a research report. Although due diligence has been done to ensure the accuracy of the data presented, the website or authors are not responsible for any decision arising out of an inadvertent mistake or error in the data presented on the website. The authors may also have equity shares in the companies mentioned in this report adhering to provisions of regulation 16 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. The investor is advised to consult his/her investment advisor and undertake further due diligence before making any investment decision in the companies mentioned. Authors are not liable for any financial gains or losses due to investments made as per the information provided on this website (StocKernel.com).