Mandhana Retail - A strong, asset-light brand story

The Mandhana Retail Ventures Ltd (TMRVL) holds the global exclusive licensee of ‘Being Human’ Clothing.
It de-merged from Mandhana Industries Ltd and listed on December 14 2016.

The brand retails Mens, Women’s and Boys apparel through more than 600 selling points worldwide.
Being Human is a strong, asset-light, brand play with three USPs:

  • Fashion
  • Celebrity
  • Charity

CMP - 189
Market Cap - 410 Cr
Equity Capital - 22 Cr

Shareholding Pattern

Promoter Holding - 43%
Individuals < 2L - 12%
Individuals > 2L - 22% (Rakesh Jhunjhunwala 12%, Nimish Shah & Ramesh Damani 1% each)
Others - 23%

Global Distribution

Total Selling Points - 600-700

Domestic contribution to revenue: 70-80%
Offline Selling Points: 150-200
Online Selling Points: 5 major marketplaces
EBOs: 55-60
Contribution of India E-Comm to revenue: 10-15%
Contribution of EBOs and Shop-in-Shop to revenue: 55-70%

International Contribution to Revenue: 15-25%
Offline Selling Points: 200
Online Selling Points: 5 online stores in different markets
EBOs: 5

  1. From the segment reporting, we can notice that in terms of profitability (margins), both Domestic and International/Export Revenue are almost equally profitable.
  2. However, there is lesser capital employed in Export Sales than Domestic Sales as Export Sales.
  3. As analysed in the Financials section, the export revenue is highly fluctuating.


We can also calculate an annualised ROCE of 40%.

Brand Value

Being Human holds 3 major USPs:

Charity; - TMRVL pays a 5% royalty to the Being Human foundation. I consider this as a crucial advertising expenditure.

Designs & Quality at a great price points. From the feedback I received, everybody agreed that Quality and Design is on par with other premium brands.

Salman Khan The association with Salman Khan is a major pull especially in the Hindi heartland.

Manish Mandhana says that when Bhai’s controversy is doing the news rounds, sales actually go up - Manish Manhana on impact of Salman’s person life on Being Human brand - YouTube

For a brand that is only 5 years old, Being Human has a very high brand recognition and recall. Even amongst those who have not purchased, there is instant recognition. Hence, the only challenge for TMRVL is to convert this strength of high brand recognition into a purchase.


  • Only 1 family member on the board - Why was Being Human demerged from Mandhana Industries? - YouTube - By inducting professionals in the board, the management has re-assured its focus of creating a large, clean retail company independent from Mandhana Industries.
  • There are indications of diversifying into other retail properties as well.
  • Guidance of 20-25% revenue growth in FY 17.
  • Steady product extensions (boys and fitness wear) and international expansion.

Concerns and Risks

  • High Promoter Pledge (78%)
  • Fluctuating Export Revenue (Requires further study)
  • Salman Khan’s controversies would have little impact on sales as Quality & Design Focus is an equally important consumer pull.

  • I’m working on the Working Capital and Cash Flow Analysis.

Invite all forum members to share their opinion.


Check out the

This is the credit rating of the Mandhana “Industries”. Though it is already demerged from the parent company, the Credit Rating of “D” because of delay of payment of debt obligation and liquidity crunch could point to issues around financial management of promoters.

thanks @akshat96jain. I also hold about 10% in mrvl from both pre-and post de merger. I will try and post some research tthat convinced me to buy this in a few parts - may be 5-6 in number. I try and look at an investment from various perspectives - the promoter’s, industry expert (size, growth), competition,scuttle butt, customer/brand pulll, financials, risk-reward at CMP and asymmetry of upside vs downside and what can go wrong.

First part - industry insider’s view

I had talked to 2 people in the industry to get a view of the potential of the brand, I talked to the COO of a leading apparel brand.

  • he said cricket and bollywood are two big buckets of opportunties in india where there are no scaled up brands of clothing. Quite a few have made a promising start, like virat kohli’s WROGN

  • good thing with a celebrtiy led brand is that brand pull is easy to generate - as long as the celebrity remains in buzz. That’s also the risk on the downside. However, a value proposition needs to be worked out which transcends the celebrity’s short term performance alone.

  • being human is in a sweet spot - ppl think of it as bhai’s brand and esp in places like central/northern india, brand pull is tremendous. remember that there is a 300 mn populace in the hindi belt for whom brands like adidas etc. are not in the consideration set.

  • he thinks it has good margins as unlike foreign brands, over heads are not that high and it can be distributed in far more cities than for eg., a tommy hilfiger.

  • such brands can have better margins than men’s apparel as there is leesser competition, lesser over heads and superior pricing power and far lesser advertising costs - as celebrity is the promoter often and intelligent PR can give you publicity for free.

  • there is no reason why you cant havea 500-1000 cr. celebrity led brand in india given the size of the apparel industry.


some results from scuttle butt - that was done on 2-3 stores and with some employees of mrvl

  1. The main reason for the customer to walk for the first time is Salman Khan Branding (Mumbai, Indore and Kerala).
    . The Fit of the clothes and color variation for every season is good which brings the repeat customers to shop. Quality is also good.
  2. In Mumbai there are a 6 direct shops and the sales increase is around 15% and there is no sales increase because of movie release or the store guy was not able to articulate. But in Bangalore and Kochi they said, during Sultan, new stocks with Sultan was released and the sales increased.
  3. In a lot of shopsi, NRI are buying lots too carry it back to their coutnries
  4. Repeat customers factors - The fit and variation in design every season and CSR brings the customers back to shop.
  5. All the shops told, there are lot of repeat customers in the shop.
  6. Other brands dont have the branding element but Being human has the Salman brand which pulls the customers in to the shop.
  7. Age group is mainly 15 to 35 and more college guys.
  8. In December sales was dull and it quickly recovered in Jan.

These are running notes - i try and avoid opinions as they lead to biases - if this turns out to eb wrong, i can figure out what went wrong with my interpretation of the same.


Inputs on positioning/competition/customer behaviour - based on various sources - again transcripts to avoid biases.

Positioning and strategy

  •      Business is better in malls vs high street. Looking only at malls now. Why? Pricing is mid top premium – ties with mall spending where spending power is better in high street
  •      Normally look at brand mix in mall – ucb, tommy, levi-pepe have to be there – price points less than tommy and ucb but higher than spiker, mufti (dindian brands)
  •      Chennai (asked for Chennai franchise) - In talks with Palladium in Chennai  for self run outlet owing to Phoenix connection. Planning only 1 store in chennai so not looking otherwise– doing quite good business in Bangalor

Store economics

  •      1000 ft store economics – breakeven in 2 years, maybe even 1.5 years
  •      Sales  you can expect 20 lacs per store per month (Phoenix Bangalore doing sales 24 lacs per month, Mumbai 40-50 lacs palladium, Vijaywada store 15 lacs), margin 33% for franchise, take out other costs  - 2 lac rental, .5-.6 lacs salaries 4-5 ppl, .5 lacs electricity, internert, etc, .5 lacs other misc – 3 lac PBT
  •      Expect 15% yoy ssame store sales growth
  •      Franchise term Normal 5 years but extend to 9 years

Franchise strategy and pipeline

  •      Growing slowly . When entering a city watch the store in store sales. If that is going good open own store. Second store sales based on first store performance.  
  •      Have 60 stores including international– 30 own, franchise 30.
  •      Could have done 100 stores if wanted, selectively  chosing
  •      Main expansion in east and north east – guwahati, bhubhuneswar, siliguri  – shop in shop sales high so choosing them. Currently VP is in Kolkata for evaluating.
  •      First we evaluate the property , advise based on our evaluation of economics. Dont want franchise to lose money and shut down
  •      Should not take more than 2 months to start the store from deal date
  •      Store manager is on mandhana roll to control store
  • SSG is in the range of 10-25 % - 10 % + for a store of more than 3 years and 25 % for 1st to 2nd year.stores stabilize by year 3.

  •      Advertising 50-50  for mandana and franchise – on festivals or store openings
  •       Team from being human foundation also evaluates and needs to sign off. Alvira Khan is taking care of business in Being Human (bit scary?)
  •      20 stores in pipelines for evaluation, some deals done
  •      Think 5 year agreement with sallu bhai protects brand risk


  •      Sallu wearing being human is key advertising strategy, he is in the news wearing our shirts
  •      Being in touch app– 10-15 days since launch. No data on users. Keep discounts there and use to market

Isolated experience but wanted to high light. My wifey is a Bhai Fan and we were in 1MG mall in Bangalore. She came across this Being Human Store. She ended up buying 4 t-shirts for me (good design and fit). However, after first wash two t-shirts got discoloured. I was planning to take this back to the store but did not have time. Never been to the store again. Hopefully this is isolated incident. But never faced similar issues with known Brands Like Tommy and UCB

Not invested but negative bias because of personal usage experience.


Note Following key points/observations -
a. Recently contract renewed with Being human till 31st Mar 2020 only. But not sure on terms. Also not sure post 2020 what T&C, if at all continues to get rights.
b. How long company could sustain on licence brand?
c. Management credibility - the way behaved last 8-10 months not disclosing - defaults etc.

Disc: Not invested.

looking at the q3 results, the following are my observations

  • distribution led growth has a lot of legs
  • decent growth inspite of demonetizaton shows the leg the brand has
  • products/quality/design is a godo differentiator and is on par with international brands

The brand can eb about Rs. 400-450 ccr. in about 2 years time with a PAT of Rs. 60-75 Cr. IMHO. This is a fact that i have verified with people in the fashion industry - the risk is on execution and of course on the celebrity - salman khan here.

the comparison with peers is interesting - peer 4 is page industries - which trades at 60 + PE and this trades at about 10-11 FY 17 PE.

A 80% discount and a 50% discount to other peers like indian terrain makes the downside not significant. Besides, RJ is supposed to have bought at about Rs. 120-130 off market again providing some cushion on teh downside.

in the next post, i will try and cover all negatives and the post after that all the optionalities.


MRVL.pdf (232.5 KB)

  1. RJ,RD and NShah being shareholder gives lot of comfort.
  2. Amy Jackson is now endorsing for women.
  3. Watches and accessories can increase the footfall to stores.
  4. And in the End …Bhai Rocksssss…Biggest brand

Hi Rajiv - Thanks for report.

5% of net sales as royalty to BH foundation is not getting reflected in results statement. Is I am missing something?

Good discussion @akshat96jain and @varadharajanr,

A very basic question, probably it may sound naive also.

  • What will happen to MRVL, post expiry of licensing arrangement with being human in March 2020? I am sure, there will be a clause for renewal post that but typically such renewal is based on mutual agreement. one major risk that I see is that company is not able to renew its licensing agreement beyond 2020 then the basic growth driver of the business goes away. Any views on the same?
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@bkasal - The license fee is given separately in the Info Memorandum.

Another concern is the 27 crs Provision for Tax (as on June 16). By when will they have to pay this down & is there any interest payable on this? For analysis, I think we should treat this as debt.

On the term of the agreement, my understanding is that the original license period was until 2030. Not sure why the term was reduced by 10 years along with an increase in license fee.

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In Share holding pattern, promoter pledged shares is very high:

Licensing arrangement till March 2020 signifies that

  1. Being Human Foundation is aware of the Brand pull and probably they would increase the Royalty fees when the Brand is well established , in other words Profitability reaches to certain level.

  2. Mandhana’s must be caught wrong somewhere and Limited licensing period is to keep them on toes so that Charity does not suffer because of them.

3.Though Risk is definitely there but we must consider that Association is from 2011.

4.Agreements are always mutual and Businesses,associations always prosper in good faith.I don’t think Mandhana’s are left with any other option but to hold onto Being Human.

My views can be biased as i m invested .

Let’s do some quick back of the envelope math - (Note - All data is from the original post of Akshat96)

Ttm Revenue = 240 cr
Domestic Rev = 70-80% - take 75% = 180 cr
Contribution of EBOs and Shop-in-Shop to revenue = 55-70% Take 65% (optimistic) = 0.65*180 = 117cr
Total Offline selling points = 200
Which works out to 58 Lakhs/year per offline selling point = 4.5 lakh approx / month/ store in sales! Which is peanuts and won’t even cover the cost of rent+salaries+OH for an EBO in a mall/high street or will barely break even in the case of a store in store.

Questions -

  1. If there was such a big brand pull/ brand following of “being human” Why isn’t it showing in the numbers? Extremely lack luster sales to date, which raises questions on the veracity of store break even economics etc (I’m just talking top line, not even going below that)
  2. The way store in store works for say a shopper stop or any other multi brand retail outlet is that shelf space is limited and at a premium and they want to maximize revenue/sqft. And have 100s of brands in the waitlist wanting to get the products on the shelves of these retail outlets. If a brand does not hit pre determined sales numbers within 18-24 months (depending on store) the brand is pulled form the stores shelves and given to those brands that can generate the max sales. So I would add getting kicked out of store in store outlets as among the risks, not to mention the impact that will have on the BS in terms of a spike in inventory if this were to happen, higher working cap requirements, potential fire sale to liquidate inventory etc. So far Inventory up 40% YoY, sales up 27% approx, no cash on hand, the company could be in serious trouble if even one of the multi retail outlets pull their products off the shelf.

Just playing devils advocate to take the conversation further. Good luck to all!

Disc: Not invested, don’t plan to.

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Saw an advertisement in the newspaper today. Salman Khan has launched electric bikes/ bicycles under the Being Human brand. Any idea if MRVL will be selling these too?

EDIT: Here’s the link

What is their target market? Not even once have I heard anyone talk about Being Human brand…So i personally have not witnessed any brand pull. Also, there is a store close to where I stay. Never have I seen that store buzzing with people even during festivals…There is also the issue of counterfeits … how is the company handling that?

Thank You for Pointing the high pledge ratio . Please refer to this link of Mandhana giving interview to CNBC on December 15nth just after the purchase done by RJ . Here he has mentioned that after the stake sale to RJ the promoter pledge will reduce to 55-60% . However in the disclosure which you have shown the pledge is showing 78% . Why is there a Difference ?

Varinder: I also want to understand one more thing you don’t own the brand which is Being Human – it is lease to Mandhana Retail Ventures. What is the years in terms of signing agreement with Salman Khan, till how long it is valid and whether any extension is due or not?
A: The exclusive license agreement of Being Human was signed for a 9 year term and we have finished approximately five and half years of that and we still have three and half years left of that term. The brand basically was created by Mandhana Industries Limited from scratch. It was a foundation of Salman Khan Being Human Foundation and it was our idea to create it into a brand. ** we originated the brand and as the first term of contract ends in 2020 March but we are looking to renew that in the next six months for another term of 9 years.

This is portion of interview where manish mandhana clears the air.


I only posted the data showing the pledge %, they have submitted to stock exchanges for end of December 2016 quarter- refer the links given in the post