After growing in the export market despite the pandemic, Nandan Terry is now eyeing an IPO

Nandan Terry, a B2B textile company based in Ahmedabad manufactures towels. Half of its business comes from the export business spread across 18 countries. It is also affiliated with the textile giant, Chiripal Group.
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In December 2021, Ahmedabad-based towel manufacturer, Nandan Terry, filed for the draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (SEBI), with plans to raise Rs 254.96 crore from its maiden initial public offering (IPO).

The B2B company, which manufactures various kinds of terry towels and towelling products from Gujarat, is projected to reach Rs 1,000 crore in revenue by the end of the current fiscal year, according to its CEO, Ronak Chiripal.

Belonging to the legacy textile business Chiripal Group, Ronak started Nandan Terry in 2016, and in a span of about seven years, he managed to have the company reach a turnover of Rs 538.52 crore (in FY21), in addition to being profitable.

In a candid chat with SMBStory, Ronak shares they are in the process of getting the final approval for the IPO, post which they will announce the stock market listing. He also shares what lies ahead for the relatively new company, and its plans ahead of the IPO.

The inception story

Having grown up in an environment where conversations around textiles were a daily affair, Ronak knew he wanted to open a business in this segment when he came back to India from the US in 2014 after completing his studies.

After working as a management trainee for over a year, Ronak felt confident about the tricks of the trade and launched Nandan Terry with an initial capital of Rs 500 crore. Explaining how he managed the whopping starting capital, he informs that Rs 350 crore was financed by banks, Rs 90 crore by promoters of Chiripal, and Rs 60 crore came from internal accruals.

However, he is quick to note that while Nandan Terry has raised capital from Chiripal’s promoters, it is not a wholly-owned subsidiary of the group.

Besides domestic markets, Ronak says their focus has also been on international markets like the US and Europe since the beginning. Ronak highlights that since they already have a set-up of manufacturing and supply chain, their focus was on exporter relations.

Today, Nandan Terry has certifications from the likes of Better Cotton Initiative, Customs-Trade Partnership Against Terrorism (CTPAT), Business Environment Performance Initiative (BEPI), Global Recyclable Standards, and more. It also exports to about 18 countries including New Zealand, Australia, Dubai, Kenya, Israel, Canada, and more. The company has 900 employees.

The Terry group supplies to some of the most well-known apparel brands, but Ronak refuses to share their names with SMBStory citing confidentiality. Additionally, he says that even though they are B2B-focused, they do plan to explore the B2C space by launching their own brand in the coming years.

Market potential and planning an IPO

With India being one of the largest producers of textiles the world over, there are numerous domestic players like Bombay Dyeing, Raymond, Welspun Group, and more that occupy a share in this market. Additionally, according to a report by Apparel Resources, the global market for this segment is slated to reach $25 billion by 2025 from its current $52 billion, of which India’s share is expected to be $8 billion.

Up until 2019, about 40 percent of Nandan Terry’s business came from exports, according to Ronak. However, since the pandemic, this number has jumped up to 50 percent. “We have seen how the business is moving out of China because of COVID-19, and being a cotton-rich country, India holds a strategic position,” he says.

Ronak says that while China may have been leading the market all these years, the tables are turning now.

The pandemic, he believes, has opened up market opportunities for India which, he remarks, is another reason why he decided to explore raising funds via public issue. “I expect the capital markets to grow very strongly in India. Moreover, the textile industry has grown in the last two years. People were not going out much, so they were redoing their homes. Additionally, with the focus on hygiene, the demand for towels has also seen a jump.”

From the funds raised through the IPO, Ronak hopes to expand and enhance Nandan Terry’s manufacturing capabilities and capacities. “We might outsource manufacturing from neighboring units or sign an agreement with them,” he adds. According to him, this will help serve the customers better by giving them the choice of a wider variety of products.

At present, the company has only one unit in Ahmedabad where the spinning, weaving, processing, and stitching happens, but sometimes help is taken from Chiripal’s textile units.

In the days ahead, this relatively young company has several initiatives lined up - from launching an IPO to starting its own towel brand to getting into bathrobe manufacturing (from April onwards). What remains to be seen is how it matches up to the considerable competition in an exceptionally aggressive market.

Edited by Anju Narayanan

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