MyValueResearch

Zodiac Clothing Company Limited

Zodiac Clothing Company Ltd. (ZCCL), incorporated in 1984 and promoted by M Y Noorani and Others, is into manufacturing and exporting of ready-made apparel and clothing accessories. It operates through brands, such as Zodiac, ZOD! and Z3.. The company has three plants located in Bangalore, Umbergaon (Gujarat) and Mumbai. The shirts unit in Bangalore exports most of its production to European countries. Zodiac is unique amongst Indian garment exporters for being the only Indian company to export shirts under its own label.

The company has 7 manufacturing plants and 16 offices across India, UAE, Germany (Duesseldorf), the UK (London) and the USA (New York) employing about 3,500 people.
Company makes and sells business shirts, premium shirts, wrinkle-free trousers, silk ties, cotton trousers, formal shirts, leather belts, leather wallets, imported shirts, luxury and designer shirts and ties and accessories. The company’s subsidiaries are Multiplex Collapsible Tubes in India, Zodiac Clothing Co. S.A. (Switzerland) and Zodiac Clothing Company LLC (UAE).

Investment Rationale

· The company has a very derisk business model i.e. production-against-orders model, as 90% of its production is pre-sold, over 60% of the production is sold in the export market all of which is pre-sold, and the balance 40% is sold in the domestic market.

· The company caters to the middle and higher end of the garment market where the demand is good and price realizations are better.

· Over the next few years, the company’s share of the domestic market is going to be higher due to its conscious effort to increase domestic presence.

· ZCCL sells its products under the brand ‘Zodiac’ and ‘Zod’, through a network of owned stores, large retailers and multibrand outlets. The company also caters to bulk orders for private labels of international retailers and brands, as well as institutional buyers.

· The company has been able to reduce overall raw material cost by almost 10% over the past five years by investing in highly mechanised machines, thus improving productivity. Raw material cost is kept in control by sourcing from low cost countries like Italy, Taiwan and China.

· ZCL is well positioned with an export portfolio in the US, UK and EU markets, as well as a small presence in Latin America and the Middle East.