M&A Critique
Mandhana Industries Demerges Retail Business

Mandhana Industries Demerges Retail Business

Textile and apparels manufacturer Mandhana Industries (MIL) announced that it is in the process of demerging its retail business comprising of brand Being Human into an independent entity called ‘Mandhana Retail Ventures Limited’ (MRVL).

The Board of Directors of MIL in a meeting held on 22 November 2014 approved the demerger of retail business into an independent entity, namely, MRVL.

The Company will be filing the Scheme of Demerger with the stock exchanges and the High Court as per extant regulations. After demerger and subject to approval from regulatory authorities and shareholders, the Retail Business comprising of Being Human brand and other brands will be known as MRVL.

Mandhana Industries is a multi-divisional textile company spread over multiple geographical locations

Mandhana Industries Demerges Retail Business


As consideration for the demerger (technically called a vertical split), Every shareholder of MIL holding three (3) equity shares of Rs. 10/- (rupees ten each) will receive two (2) equity shares of Rs. 10/- (rupees ten each) of MRVL.


Mandhana Industries is a multi-divisional textile company spread over multiple geographical locations.

Mandhana industries engaged in two vertically integrated segments, Textiles and Garments.

MIL was listed in 2010 on national bourses with a turnover of over INR 1500 million in FY 2013-14 and the market cap of over INR 9000 million.

Its operations and facilities enable it to manufacture a wide variety of value-added fabrics and garments through its integrated operations comprising of dyeing of yarns and fabrics, weaving operations for fabrics, processing solutions for both fabrics and garments, garment manufacturing etc.

Mandhana Industries has diversified customer base which includes international clients like Tommy Hilfiger, H&M, Espirit, Levi’s etc.

Mandhana Industries entered into retail segment with the brand the brand ‘Being Human Clothing’ having an exclusive global license agreement with Being Human- The Salman Khan Foundation’ for designing, marketing and distributing ‘Being Human Clothing’ line.


Mandhana Retail Venture Ltd. was incorporated in the year 2011 with the intent that the retail operations pertaining to the brand Being Human would be carried out in this company. However, later on, it was decided that the retail operations for the brand Being Human would be carried out as a division of Mandhana Industries Ltd. However, due to the growing revenue of Being Human Brand compared to Textile Business, the Company decided to demerge its Garment Operation into the separate company.

The Retail Business of MIL comprising of Being Human brand and other brands will be known as MRVL.

Tentative capital investment in Being Human is around INR 150cr.

Being Human Brand Started with 5 stores in 2012-13, expanded to 17 stores during the year 2013-2014. Currently, the brand has 35 stores across India. The brand is also marketed through a network of 99 shop-in-shops.


After considering the overall functioning of the retail industry, Board of Directors of MIL proposed to divest the retail division of MIL into MRVL for more focused and concentrated efforts in developing the brand and business reputation.

Textile business comes in Business-2-Business category and Garment business comes under Business -2-Customer category which requires the high amount of expenditure on promotion, advertisement etc.

Manish Mandhana, Joint Managing Director, Mandhana Industries Limited said, “The demerger is a decision cohesively taken by the Board in order to align the focus of Mandhana Retail Ventures Limited to the retail business. Given the success of Being Human clothing brand, we are now looking forward to increasing the portfolio of brands and new retail concepts that the company would introduce considering the robust growth in consumerism in our country especially amongst the youth which is the key driver of our economy.”


It is not clear whether entire Garment business is getting demerge or only Being Human and other brands (Part of Garment business) is getting demerge. For below calculations, we have assumed Entire Garment business is getting demerge.

Mandhana Industries Demerges Retail Business

It can be seen that revenue share of brand ‘Being Human’ in the garment as well as in whole MIL is growing rapidly.

The revenue share of Textile amounted to 80% and Garment was 20% for FY 2014. About 65% of garments exported to more than 25 countries.

The revenue share of Garment business for quarter ended on 31.03.2014 went to 26% against 18% for the quarter ended on 31.03.2013 and its EBIT for quarter ended on 31.03.2014 went to 40% from 29% in the quarter ended on 31.03.2013.  While revenue share of Being Human in the garment business for quarter ended on 31.03.2014 was 44% against 18% for the quarter ended on 31.03.2013.

Rs. in lakhs

                                         Revenue for Quarter Ended On
30.09.2014 31.03.2014 31.03.2013
MIL-Textile 38831 33071 44603
Garment Sector 7740 11295 9629
Being Human NA 4970 1733
Revenue For Year Ended On
31.03.2014 30.03.2013
MIL-Textile 123140 141903
Garment Sector 29598 24326
Being Human 13100 NA
Capital Employed As On
31.03.2014 31.03.2013
Garment 20139 18947
Textile 80667 73978
MIL 100806 92925

From above data, one can see Being Human Brand contributes substantially to the growth of Garment sector.

The growth rate of Textile Business was only 9% as compared to Garment Business growth rate of 21% for FY2014 and for the half year ended on 30.09.2014 growth rate for Textile was 10% while that of for Garment business it was about 30%.

Capital Employed as on 31.03.2014 in Garment business was INR 20139 Lakhs grew by 6% against capital employed as on 31.03.13 INR 18947 Lakhs, while for Textile business growth rate was 9%.

Company’s Cost of material consumed in FY 2014 down by about 27% to 56216 Lakhs from 76604 Lakhs in FY 2013, while it’s Purchase of Stock in Trade in FY 2014up by about 42% to 42656 Lakhs from 30063 Lakhs in FY 2013. This shows the company is shifting its focus from textile business to Garment business mainly in Retail Sector.

Total sales of Being Human Brand for F.Y 2013-14 was 131cr. Being Human’s EBITDA margins for the same period was 27%. The growth rate of Being Human sales in FY 2014 vs FY 2013 was 191%.If the growth rate remains same for Being Human brand than expected sales for FY 2015 will be around INR 400 Cr.


  • Above financial shows, growth of Being Human is much higher than the growth of Garment Business.
  • Demerger will help MIL to concentrate on its growing Garment business
  • After the success story of Being Human, Company is looking forward to brand equity.
  • Demerger will separate rapidly growing Garment business from the slow growing Textile business.
  • Demerger will help Mandhana Industries to do retail business in a more focused manner strengthening Being Human and other brands.

M & A Critique

1 comment

  • Hi..can u provide more updates on Fy 1516 being human revenues n pbt and pat..thanks