IPO Alert: Women’s wear brand GoColors files papers for a public issue

The retail market in India was valued at ₹59.7 trillion in fiscal 2020 and is expected to grow at a CAGR of 6.23% to reach ₹80.7 trillion by fiscal 2025. The apparel and accessories industry accounted for 7.9% of retail in 2020. Moreover, the woman’s apparel segment increased from 19% in 2015 to 27% in 2020 and is expected to reach 42% by the end of 2025.

Go Fashion India Ltd-owned GoColors, recently filed draft papers with the Securities Exchange Board of India to raise funds via a share sale. The initial public offering consists of a fresh issue of ₹1.25 billion and an offer for sale (OFS) of up to 12.88 million shares by its existing shareholders and promoters.

GoColors will use ₹337.3 million from the net proceeds towards launching 120 new exclusive brand outlets (EBOs) across the country. Further, the company plans to utilize ₹613.98 million for the funding of working capital and the remainder would be used for general corporate purposes.

Extensive Portfolio

GoColors is one of the largest women’s bottom-wear brands in India, with a market share of approximately 8% in the branded women’s bottom-wear market in fiscal 2020. The company is engaged in the development, design, sourcing, marketing, and retailing of a range of women’s bottom-wear products.

The Chennai-based company offers the widest portfolio of bottom-wear products among women’s apparel retailers in India in terms of colours and styles, which include churidars, leggings, dhotis, harem pants, patiala, palazzos, culottes, pants, etc.

GoColors has an extensive network of 450 exclusive brand outlets, 15 kiosks, and 11 franchises, that are spread across 23 states and union territories in India. The company’s distribution channels include Reliance Retail Ltd, Central, Unlimited, Globus Stores Pvt. Ltd, and Spencer’s Retail among others.

Key Figures

For FY21, the company’s revenue from operation was at ₹2.50 billion compared to ₹3.92 billion a year ago. Net loss for the period stood at ₹35.4 million against a profit of ₹526.3 million last year.

Meanwhile, the Covid-19 outbreak had a substantial impact on the company’s operations. There were temporary as well as permanent closures of all physical sales channels including stores, kiosks at malls, and franchise stores, along with a decline in footfalls and sales, and reduced operating hours.

The revenue from operations declined by 36% and 26 stores were permanently closed. The Covid-19 pandemic had an impact on the company’s liquidity as well. Any such outbreak in the future would cause a lot of financial and operational loss.