In December 2021, the Ahmedabad-based towel manufacturer, Nandan Terry, filed for the Red Herring Draft Prospectus (DRHP) with market regulator Securities and Exchange Board of India (SEBI), with plans to raise Rs 254.96 crore from its first initial public offering (IPO).

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

Belong to the heritage textile industry Chiripal GroupRonak started Nandan Terry in 2016, and in the span of about seven years, he managed to see the company reach revenue of Rs 538.52 crore (in FY21 ), in addition to being profitable.

In a frank conversation with SMBStory, Ronak shares that they are in the process of getting final approval for the IPO, after which they will announce the listing. He also shares what’s in store for the relatively new company and its plans ahead of the IPO.

The story of creation

Growing up in an environment where conversations about textiles were a daily affair, Ronak knew he wanted to open a business in this segment when he returned to India from the United States in 2014 after completing his studies.

After working as a management trainee for over a year, Ronak felt confident in the ropes and launched Nandan Terry with an initial capital of Rs 500 crore. Explaining how he managed the huge start-up capital, he informs that Rs 350 crore was funded by banks, Rs 90 crore by Chiripal promoters and Rs 60 crore came from internal charges.

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

Apart from domestic markets, Ronak says that from the beginning, they have also focused on international markets like the United States and Europe. Ronak points out that since they already have a manufacturing and supply chain structure in place, they focused on relationships with exporters.

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

The Terry Group supplies some of the best-known clothing brands, but Ronak refuses to share their names with SMBStory citing confidentiality. Moreover, he says that although they are B2B focused, they plan to explore the B2C space by launching their own brand in the coming years.

Market potential and planning for an IPO

India being one of the largest textile producers in the world, many domestic players such as Bombay Dyeing, Raymond, Welspun Group, etc., occupy a share of this market. Moreover, according to a report by Apparel Resources, the global market for this segment is expected to reach $25 billion by 2025, up from $52 billion currently, of which India’s share is expected to be $8 billion.

Until 2019, about 40% of Nandan Terry’s business came from exports, according to Ronak. However, since the pandemic, this number has increased to 50%. “We have seen how the business is exiting China due to COVID-19, and being a cotton-rich country, India is in a strategic position,” he says.

Ronak says while China may have dominated the market all these years, things are turning around now.

The pandemic, he believes, has opened up market opportunities for India, which he points out is another reason why he decided to explore public issue fundraising. “I expect capital markets to grow very strongly in India. In addition, the textile industry has developed over the past two years. People weren’t going out much, so they were redoing their homes. Moreover, with the emphasis on hygiene, the demand for towels has also increased. »

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

Currently, the company has only one unit in Ahmedabad where spinning, weaving, processing and sewing takes place, but sometimes help comes from Chiripal’s textile units.

In the coming days, this relatively young company has several initiatives in sight – from the launch of an IPO to the launch of its own brand of towels to the manufacture of bathrobes (from April). It remains to be seen how it will cope with the considerable competition in an exceptionally aggressive market.