BIBA Group's revenue drops by 13% to Rs 758 crore in FY24, reports a loss of Rs 95.5 crore

Biba Group, composed of BIBA Fashion Limited (BFL) and Kashida Apparels Private Limited (KAPL), reported a 13% drop in its consolidated revenue to nearly Rs 758 crore in FY2024, reflecting softer market demand and challenges linked to the implementation of SAP at a critical business phase.

According to a recent assessment by rating agency ICRA, the internal issues surrounding the new software rollout affected sales during the peak selling period, while weaker demand across the high-fashion garment retail industry contributed to the company’s subdued top line.

Profitability and cost pressures

The Group’s operating profit margin (OPM) tumbled from approximately 21% in FY2023 to around 7% in FY2024, largely because of the under-absorption of fixed overheads and one-time expenses tied to bad debt and distribution losses. The company reported a loss of Rs 95.5 crore in FY2024 compared to a profit of Rs 53 crore in FY2023.

While the management has moved to rationalize costs—closing non-performing stores and reducing employee expenses—these measures have so far been insufficient to prevent margin erosion.

As a result, the company’s debt coverage metrics, including its interest coverage ratio, are expected to remain weak in the near term, hovering at about two times in FY2025.

Another key concern for the Group is its inventory management. By March 2024, the company was carrying nearly Rs 416 crore worth of stock, significantly blocking working capital. In response, the management increased discounts on its merchandise, which has helped clear some of the older inventory and supported an 8% increase in revenue between April and October FY2025. 

These discounting measures helped bring inventory down to around Rs 346 crore by November 30, 2024. However, the need to offer steep discounts continues to pressure profit margins.

Brand expansion

Biba Group’s flagship label, BIBA, still accounts for 85-90% of overall revenue, underscoring a high brand concentration risk. Although the company introduced Rangriti in 2014 to broaden its market reach by tapping into the value segment, BIBA remains the dominant contributor to sales.

This places added importance on keeping the BIBA brand relevant in the fast-changing fashion landscape, while also striving to expand Rangriti’s footprint to achieve better revenue diversification. The Group’s extensive distribution network underpins its operational profile.

As of October 31, 2024, Biba Group managed 443 exclusive brand outlets (EBOs) and over 700 multi-brand outlets (MBOs). The EBOs have helped BIBA directly engage with customers for branding and promotions, while the MBO channel widens the company’s reach across India.

In addition, the Group leverages online marketplaces as well as its own e-commerce platform, which has played a vital role in growing sales over the years.

Manufacturing structure and future growth

Despite adding some in-house capacity through KAPL, Biba Group largely follows an asset-light business model by outsourcing manufacturing to vendors on a job-work basis. This setup reduces capital expenditure and enables quicker scalability.

KAPL, set up in June 2022, is located in Indore and began operations in the fourth quarter of FY2024, with an annual capacity of 1.89 million garments. It is expected to meet about 50-60% of BIBA’s total production needs once fully operational.

The company believes this backward integration will eventually allow more control over quality, cost management, and product availability, though a timely ramp-up of KAPL’s utilization will remain crucial.

Despite its recent hurdles, the Group’s liquidity appears adequate. As of November 30, 2024, Biba Group held free cash, bank balances, and unutilized credit lines totalling Rs 20-30 crore. These resources, coupled with cash flow from operations, are expected to cover planned capital expenditure of Rs 20-30 crore, debt repayments of around Rs 12 crore in FY2025 and Rs 15 crore in FY2026, and additional working capital needs.

ICRA has assigned a Stable outlook, anticipating that improving sales momentum and ongoing cost rationalization efforts could help Biba Group gradually regain healthier levels of profitability.

The company’s ability to successfully manage inventory, reduce the need for excessive discounting, and adapt to evolving consumer preferences will be important for sustaining its financial stability.

ICRA notes that a meaningful recovery in the Group’s operating profit margin hinges on higher volume growth from existing and new business segments, alongside well-managed stock and overhead controls. At the same time, any larger-than-planned debt-funded expansion or renewed demand slowdown could affect Biba Group’s liquidity and overall credit metrics.

Biba Group traces its roots back to 1988 when founder Meena Bindra began selling ethnic garments under the BIBA name. The firm converted to BIBA Fashion Limited in March 2022. With a core focus on designing and marketing women’s ethnic wear through its brands BIBA and Rangriti, Biba Group has become a prominent player in India’s apparel retail space.