Silky Overseas Ltd. IPO: Key Details

Silky Overseas

• Silky Overseas is coming out with an initial public offering (IPO) of 19,05,600 equity shares in a price band Rs 153-161 per equity share.
• The issue will open on June 30, 2025 and will close on July 02, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 15.30 times of its face value on the lower side and 16.10 times on the higher side.
• Book running lead manager to the issue is Gretex Corporate Services.
• Compliance Officer for the issue is Sakshi Sareen.

Profile of the company

Silky Overseas is manufacturers and suppliers of bedding products, including blankets, bed sheets, comforters, and related items. Its manufacturing process is integrated and includes knitting, dyeing, processing, printing, and packaging, all conducted within a single facility. This approach allows for the efficient production of large quantities while ensuring that products maintain a consistent standard of comfort and durability. Its product range includes blankets, baby blankets, comforters, bedsheets, and curtains, all designed by a team of professionals and produced using appropriate machinery and techniques. The company holds ISO 9001:2015 certification, demonstrating adherence to quality standards as recognized by the United Registrar of Systems certification body.

It manufactures products based on the order specifications received from its customers to meet their requirements. Maintaining a range of products in its business provides it with an opportunity to cater to the diverse needs of different customer segments. Further, it has experience resources, and a network that can be customized and leveraged to cater to a wider range of bulk packaging containers as per the requirements of the customers. The company is enhancing its product range as well as its client base so the dependency on a few customers for sale can be avoided.

Its sales strategy is fundamentally organic, facilitated by customer-initiated interactions on its website. This approach highlights its dedication to delivering a seamless, user-friendly online shopping experience, meticulously designed to cater to the diverse needs of its clientele. The company’s sales are organic, driven by customer visits to its website where they place orders for its range of products. This approach highlights the focus on creating an efficient and user-friendly online shopping platform designed to meet the varied needs of customers. A screenshot of one of the best seller’s products which got more than 21000 reviews is attached beside.

Proceed is being used for:

• Setting up of additional storage facility
• Repayment/pre-payment of certain debt facilities
• Working capital requirements
• General corporate purposes 

Industry Overview

India’s textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, with the capital-intensive sophisticated mills sector at the other end. The market for Indian textiles and apparel is projected to grow at a 10% CAGR to reach US$ 350 billion by 2030. Moreover, India is the world's 3rd largest exporter of Textiles and Apparel. India ranks among the top five global exporters in several textile categories, with exports expected to reach $100 billion. The textiles and apparel industry contributes 2.3% to the country’s GDP, 13% to industrial production and 12% to exports. The textile industry in India is predicted to double its contribution to the GDP, rising from 2.3% to approximately 5% by the end of this decade.

India’s home textile industry is expected to expand at a CAGR of 8.9% during 2023-32 and reached $23.32 billion in 2032 from 410.78 billion in 2023. The Indian Technical Textile market has a huge potential of a 10% growth rate, increased penetration level of 9-10% and is the 5th largest technical textiles market in the world. India’s sportech industry is estimated around $1.17 million in 2022-23. The Indian Medical Textiles market for drapes and gowns is around $9.71 million in 2022 and is expected to grow at 15% to reach $22.45 million by 2027. The Indian composites market is expected to reach an estimated value of $1.9 billion by 2026 with a CAGR of 16.3% from 2021 to 2026 and the Indian consumption of composite materials will touch 7,68,200 tonnes in 2027.

The future of the Indian textiles industry looks promising, buoyed by strong domestic consumption as well as export demand. India is working on various major initiatives to boost its technical textile industry. Owing to the pandemic, the demand for technical textiles in the form of PPE suits and equipment is on the rise. The government is supporting the sector through funding and machinery sponsoring. Top players in the sector are achieving sustainability in their products by manufacturing textiles that use natural recyclable materials. The technical textiles market for automotive textiles is projected to increase to $3.7 billion by 2027, from $2.4 billion in 2020. Similarly, the industrial textiles market is likely to increase at an 8% CAGR from $2 billion in 2020 to $3.3 billion in 2027. The overall Indian textiles market is expected to be worth more than $209 billion by 2029.  

Pros and strengths

Purchase of higher quality thread count fabric at a lower price: Fine lines begin with higher thread count, to get higher thread count one requires high-quality of cotton that depends on the length of the individual fibers. High thread count bedding is used in all Western countries as it is the status symbol for the riches, as the higher the count the better the fabric. By procuring surplus or slightly imperfect fabric in bulk from its suppliers, it benefits from advantageous pricing, allowing it to acquire these materials at a reduced cost. This strategic sourcing enables it to offer modified and customized products to its customers at discounted prices. Its ability to obtain these fabrics at a lower expense translates into significant cost savings, which it passes on to its customers, ensuring that they can enjoy high-quality, tailor-made products at affordable rates.

Infrastructure and integrated capabilities to deliver quality products: To cater to the growing demand from its existing customers and to meet the requirements of new customers, it intends to invest the embroidery machines, which will help to improve the efficiency and the quality of work. The company provides quality products to its customers. It is devoted to quality assurance. Its quality products have earned it goodwill from its customers, which has resulted in customer retention and order repetition and also a new addition to the customer base. It provides products with competitive rates.

Good storage for inventory management: It has a storage area for surplus or slightly imperfect fabric and finished goods. It stores the fabrics as per the different grades and quality in order to optimize the inventory. There is a daily stock report of both surplus or slightly imperfect fabric and finished goods that indicates the inventory levels and any deviation from minimum stock levels is flagged for action. Care is taken to strictly follow the inventory levels and balance them with market trends and customer requirements.

Risks and concerns

Maximum revenue comes from few customers: The company is dependent on a few customers for a major part of its revenues. The company has garnered 67.26%, 71.95% and 61.25% of its total revenue from top 10 customers in FY24, FY23 and FY22 respectively. The company presently does not have any long-term or exclusive arrangements with any of its customers and it cannot assure that it will be able to sell the quantities it has historically supplied to such customers. Further, its customers could change their business practices or seek to modify the terms that it has customarily followed with them, including in relation to their payment terms.

Geographical constrain: The company’s production unit is located in the state of Haryana, India. Its processing operations and consequently its business is dependent upon its ability to manage this unit, which is subject to operating risks, including those beyond its control. In the event of any disruptions at its unit, due to natural or man-made disasters, workforce disruptions, delay in regulatory approvals, fire, failure of machinery, lack of continued access to assured supply of electrical power and water at reasonable costs, changes in the policies of the states or local government or authorities or any significant social, political or economic disturbances or civil disruptions in and around Panipat, Haryana its ability to produce its products may be adversely affected.

Business is subject to significant seasonal fluctuations: The company’s major sales come from the sale of blankets, i.e. 64.63% of total sales as on financial year ended on March 31, 2024. The sale of blankets is higher in winters, in India the winters starts from late October and continues till early march. The company realizes major sales in these months. These seasonal fluctuations can be influenced by various factors, including Weather conditions, Industry-specific events which often vary throughout the year, with increased spending during certain seasons or holidays. If the company is unable to effectively manage these seasonal fluctuations, its revenue and profitability may experience significant volatility. This could negatively impact on its ability to generate cash flow, invest in its business, and meet its financial obligations.

Outlook

Silky Overseas manufactures bedding essentials, specialising in blankets, bed sheets, and comforters. The company's manufacturing process encompasses knitting, dyeing, processing, printing, and packaging all under one roof. The company sell its products under the brand name Rian Decor. The company has strong infrastructure and integrated capabilities to deliver quality products. On the concern side, the company is dependent on a few customers for a major part of its revenues. Further, it does not enter into long-term arrangements with its customers could adversely affect its business and the results of operations. Moreover, its business is subject to significant seasonal fluctuations, which could materially impact its financial results.

The company is coming out with a maiden IPO of 19,05,600 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 153-161 per equity share. The aggregate size of the offer is around Rs 29.16 crore to Rs 30.68 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operations increased from Rs 6830.76 lakh for the financial year ended March 31, 2023, to Rs 6970.49 lakhs for the financial year ended March 31, 2024, representing a growth of 2.05%. Moreover, the company’s profit after tax increased by Rs 455.26 lakhs from Rs 98.22 lakh in FY 2022-23 to Rs 553.48 lakh in FY 2023-24, which is driven by several strategic improvements.

The company’s strategy is focused on introducing new product to cater to the requirements of its customers as well as garnering the attention of more customers. The company started its business with only one Product that is Blanket Manufacturing and trading & gradually it added multiple products like bedsheet, curtains, comforters etc. in its product portfolio. Adding new product not only helps in strengthening the relationship with the existing customer network through a wide range of products but also onboarding new customers from untapped geographies. Identifying and developing new products is a continuous exercise that its management team engages into as that there is an immense demand in the global markets for unique designs, good quality and competitively priced products.