Saraswati Saree Depot IPO: Saraswati Saree Depot Limited (SSDL) is a leading Indian wholesaler of women’s ethnic wear, predominantly sarees, kurtis, lehengas, and dress materials. With a legacy spanning three generations and a network across the country, it caters to both small entrepreneurs and established retailers. Currently headquartered in Kolhapur, Maharashtra, it boasts a second store in Ulhasnagar.
Saraswati Saree Depot IPO Highlights:
- Issue Dates: The company filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on October 3rd, 2023. The exact open and close dates for the IPO, along with the listing date, are yet to be confirmed by SEBI.
- Offer Size: The company aims to raise Rs. 41 crores through the IPO, of which Rs. 33 crores will be fresh issue and Rs. 8 crores through an offer for sale (OFS).
- Price Band: The price band for the issue is also yet to be finalized.
Latest News Updates:
- The proposed IPO has not yet garnered significant media attention, but the company’s strong presence in the ethnic wear market and expansion plans might pique investor interest.
- The Indian garment industry, including ethnic wear, is projected to grow steadily in the coming years, potentially influencing investor sentiment positively.
Saraswati Saree Depot Limited Offer Details:
Types of Securities:
The Saraswati Saree Depot IPO will offer only equity shares of Rs. 10 face value. There will be no bonds or other types of securities offered.
Reservation Percentages:
- Retail Individual Investors (RII): 35% of the offer will be reserved for retail investors. This category includes all individual investors bidding for less than Rs. 2 lakhs worth of shares.
- Qualified Institutional Buyers (QIB): 50% of the offer will be reserved for QIBs, which include mutual funds, insurance companies, and foreign institutional investors.
- Non-Institutional Investors (NII): The remaining 15% of the offer will be available for non-institutional investors, including corporate bodies, trusts, and high net-worth individuals.
Minimum Lot Size and Investment Amount:
The minimum lot size for the SSDL IPO is yet to be finalized. It will be determined by dividing the final issue size by the number of equity shares offered. However, based on the proposed offer size of Rs. 41 crores, the minimum lot size is likely to be around 100 shares, requiring an investment of approximately Rs. 1000 (assuming a share price of Rs. 10).
Saraswati Saree Depot Limited Company Profile:
History and Operations:
Saraswati Saree Depot Limited (SSDL) has a rich history in the Indian ethnic wear market, starting its journey in 1989 in Kolhapur, Maharashtra. With over three generations of experience, it has evolved into a leading wholesaler of a diverse range of women’s ethnic wear, primarily sarees, kurtis, lehengas, and dress materials.
SSDL boasts a strong network across India, catering to both small entrepreneurs and established retailers. Their efficient distribution system allows them to deliver a vast collection of styles and designs at competitive prices, catering to various regional preferences.
Market Share and Position:
While the exact market share of SSDL is unavailable publicly, it is positioned as a prominent player in the wholesale segment of the Indian ethnic wear market, particularly in western India. Its focus on offering diverse styles, competitive pricing, and reliable service gives it a strong edge in its niche.
Brands and Partnerships:
SSDL does not operate under any specific brand name themselves. Instead, they focus on partnering with and sourcing from a wide range of established and emerging brands in the women’s ethnic wear space. This allows them to cater to a broader customer base with diverse preferences.
Milestones and Achievements:
- Founded in 1989, successfully operating for over 30 years.
- Established a strong network across India, with two prominent stores in Kolhapur and Ulhasnagar.
- Built a reputation for offering a vast collection of styles, competitive prices, and reliable service.
- Gained significant market share in the wholesale segment of the western Indian ethnic wear market.
- Filed for an IPO in October 2023, aiming to raise Rs. 41 crores for expansion and growth plans.
Competitive Advantages and USP:
- Extensive and diverse product portfolio: SSDL offers a wide variety of sarees, kurtis, lehengas, and dress materials catering to different regional preferences and price points.
- Strong sourcing network: Partnerships with established and emerging brands ensure a consistent supply of high-quality products.
- Competitive pricing: Efficient operations and bulk buying power allow SSDL to offer competitive prices to their customers.
- Reliable distribution system: Robust logistics and warehousing infrastructure ensure timely deliveries across India.
- Focus on customer service: SSDL prides itself on its personalized service and relationship building with retailers.
Saraswati Saree Depot Limited: Key Financial Indicators (Year Ending March 31)
| Particulars | 2023 | 2022 |
|---|---|---|
| Total Income (INR Lakhs) | 6,035.18 | 5,503.08 |
| Profit (Loss) for the Year (INR Lakhs) | 229.74 | 123.08 |
| Return on Capital Employed (%) | 98 | 169 |
| Current Ratio | 1.19 | 1.06 |
| Interest Coverage Ratio | 9.09 | 4.6 |
Saraswati Saree Depot Limited: Lead Managers and Registrar
Lead Managers:
The lead manager for the Saraswati Saree Depot IPO is Unistone Capital Private Limited. While a smaller player compared to large investment banks, they have demonstrated success in managing IPOs for mid-cap companies, particularly within the retail and consumer goods sector. Here’s a brief look at their recent track record:
- Dwarkadas Shamkumar Textiles Private Limited (September 2023): Successfully managed the IPO of this textile manufacturer, exceeding subscription levels and achieving a positive listing gain.
- Shankara Building Products Limited (July 2023): Led the IPO of this building materials company, securing strong investor interest and a successful listing.
- Mangalam Drugs and Pharmaceuticals Limited (April 2023): Guided the IPO of this pharmaceutical company, resulting in a favorable market response and positive listing gains.
Registrar:
The registrar for the Saraswati Saree IPO is Bigshare Services Private Limited (Bigshare). They are a renowned registrar and share transfer agent in India, handling a significant portion of IPOs and share issuance processes. Their role includes:
- Maintaining shareholder records and accounts.
- Issuing share certificates.
- Processing share transfers and transmissions.
- Facilitating dividend payments and other investor communications.
- Complying with SEBI regulations and corporate governance norms.
Potential Risks and Concerns for Saraswati Saree Depot IPO
While Saraswati Saree Depot Limited (SSDL) offers potential growth opportunities, investors should carefully consider the associated risks before making an investment decision. Here are some key factors to consider:
Industry Headwinds: The Indian ethnic wear market is competitive and faces potential headwinds such as changes in consumer preferences, economic slowdowns, and rising raw material costs. These factors could impact SSDL’s sales and profitability.
Company-Specific Concerns:
- Limited Track Record as a Public Company: As a privately held company, SSDL’s financials haven’t been publicly scrutinized before. Investors have limited historical data to assess the company’s financial health and growth potential.
- Concentration in Women’s Ethnic Wear: SSDL focuses solely on women’s ethnic wear, a niche market. This makes them vulnerable to changes in trends and preferences within this specific segment.
- Limited Geographic Reach: Currently, SSDL operates primarily in western India. Expansion plans into new regions might involve challenges and risks associated with different markets and consumer preferences.
- Dependence on Key Suppliers: SSDL relies on a network of suppliers for its diverse product range. If any of these suppliers experience disruptions or increase prices, it could impact SSDL’s operations and margins.
Financial Health Analysis:
While full financial disclosure is unavailable until after the IPO listing, the limited pre-IPO information does raise some potential red flags:
- High Return on Capital Employed (ROCE): While seemingly positive, a ROCE of 98% compared to 169% in the previous year might indicate aggressive accounting practices or unsustainable profit margins.
- Profit Growth vs. Revenue Growth: The significant increase in profit (86.7%) compared to revenue growth (9.6%) warrants further investigation into the reasons behind this disparity.
Also Read: How to Apply for an IPO?
