Project OREO
Confidential Information Summary — branded men’s apparel, sole proprietorship, southern India
01Executive summary
Project OREO is a sole proprietorship that sources branded men's apparel and sells it to retail clients under its own labels. It makes nothing itself: production is bought in and the Business carries stock rather than plant. The proprietor is offering the business, its labels and its client relationships for sale.
Revenue grew 73% in two years to ₹2.52 crore, but gross margin fell from 20.95% to 5.54% and operating profit moved from ₹9.74 lakh to ₹7.64 lakh.
The case is therefore sales growth plus a shorter stock cycle, not margin: inventory fell from 536 to 227 days of cost of goods sold. Sections 05 and 08 carry the numbers a buyer will test first.
At book, the largest operating asset and 227 days of cost of goods sold. See section 05.
Basis of preparation
All figures are standalone proprietorship accounts for the years ended 31 March 2023, 2024 and 2025, in ₹ lakh (1 lakh = 100,000). FY2024-25 carries a chartered accountant’s signature; FY2023-24 and FY2022-23 were supplied without signature blocks. Operating profit excludes investment income and gains, carries no proprietor remuneration and is before tax.
The latest year closed on 31 March 2025, more than eighteen months before this document. FY2025-26 has since closed; its accounts have not been supplied and no figure here reflects it. Statements by management are labelled as such and are unverified.
02Investment highlights
Five points survive a first read of the accounts. Each is a number a buyer can check against the statements, and none depends on a projection.
Revenue up 73% in two years
Sales rose from ₹145.33 lakh in FY23 to ₹251.85 lakh in FY25, with growth in both years. The latest year added 39.9%.
CAGR 31.6%, FY23–FY25No plant, no machinery
Net fixed assets are ₹0.16 lakh and no capital expenditure was booked in three years. Production is bought in; the Business holds stock, labels and relationships.
₹15,917 net fixed assetsStock cycle shortening
Closing stock fell ₹20.90 lakh between FY23 and FY25 while sales rose 73%. Inventory days on cost of goods sold fell from 536 to 227.
227 inventory days, FY25Overheads of ₹52.7 thousand a month
Operating expenses fell from ₹20.71 lakh in FY23 to ₹6.32 lakh in FY25. That is why operating profit held at ₹7.64 lakh while gross profit more than halved.
₹6.32 lakh opex, FY25Receivables close to nil
Debtors were ₹1.47 lakh against sales of ₹251.85 lakh at 31 March 2025. Working capital is carried in stock, not in customer credit.
2.1 debtor days, FY2503Business overview
The Business designs men's apparel and sells it under its own labels, mainly to retail clients on a business-to-business basis. Production is bought in against orders, and fabric comes from an established supplier base according to management.
Own labels and design
The Business owns its labels, designs and client lists, which management names as the brand assets in the sale.
Retail client supply
Management states that about 80% of revenue comes from recurring business-to-business clients. Client-level data is not in the files; see section 06.
Bought-in production
Management states there is no factory, machinery or production labour liability. Wages of ₹0.81 lakh in FY25 sit within cost of goods sold.
04Business model & economics
The Business buys stock, brands it and sells it to retail clients, earning the gap between cost and invoice price. Overheads are small, so margin on goods drives profit. Customers pay quickly and suppliers are paid slowly.
Management statement, unverified. Client-level billing will be provided in the data room.
Share of sales kept after cost of goods, against 20.95% in FY23. Section 08 sets out what moved it.
Year-end trade creditors of ₹74.22 lakh against purchases of ₹215.09 lakh.
Sales are settled close to delivery: debtors are 2.1 days of sales. Trade creditors of ₹74.22 lakh and booked advances of ₹28.40 lakh sit against closing stock of ₹147.87 lakh.
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| Staff cost (salary and bonus) | 12.23 | 2.76 | 3.17 |
| Rent | 1.92 | 0.30 | 0.42 |
| Travel and conveyance | 3.53 | 1.17 | 1.75 |
| Other overheads | 3.03 | 0.88 | 0.98 |
| Operating expenses | 20.71 | 5.11 | 6.32 |
05Working capital & inventory cycle
Stock is the largest asset in the operating balance sheet and the first item a buyer will count. The inventory cycle shortened in both years while sales rose. Debtors are negligible, so the cash cycle is set by stock turn and supplier credit.
The table below sets the balances behind the chart.
| ₹ lakh | FY23 | FY24 | FY25 |
|---|---|---|---|
| Closing stock | 168.78 | 169.09 | 147.87 |
| Debtors | 2.11 | 1.23 | 1.47 |
| Trade creditors | 97.67 | 72.34 | 74.22 |
| Advances, booked as a liability | 78.56 | 45.43 | 28.40 |
| Inventory days (on cost of goods sold) | 536 | 366 | 227 |
| Debtor days (on sales) | 5.3 | 2.5 | 2.1 |
| Creditor days (on purchases) | 188 | 158 | 126 |
Closing stock stands at ₹147.87 lakh, 12.5% below FY24 on 39.9% higher sales. Creditor days fell from 188 to 126, so suppliers fund less of the stock than two years ago.
Stock is a profit input
Closing stock is deducted from cost of goods, so each rupee of valuation moves gross profit by a rupee. In FY23 closing stock rose by ₹80.56 lakh in the year gross margin was 20.95%.
A physical count, an ageing schedule and the valuation basis are for the data room.
06Customer mix & concentration
Customers are retail businesses that reorder branded apparel; management attributes repeat orders to consistent quality and long-standing relationships. The accounts carry no advertising expense in any of the three years.
Concentration cannot be assessed from this document
No customer-level billing has been supplied, so concentration, retention and customer movement are not shown and are not estimated.
They will be provided in the data room on a net-of-tax basis, under fixed letter codes released only after NDA. GST returns will allow sales to be cross-checked.
07Financial snapshot
Revenue has risen in each year while profit has not followed. The balance sheet is stock funded by suppliers, advances and loans from individuals.
The profit and loss below shows how revenue converts to profit in each year.
| ₹ lakh | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (sales as booked) | 145.33 | 180.00 | 251.85 |
| Cost of goods sold | 114.88 | 168.58 | 237.89 |
| Gross profit | 30.45 | 11.42 | 13.96 |
| Operating expenses | 20.71 | 5.11 | 6.32 |
| Operating profit | 9.74 | 6.31 | 7.64 |
| Add back: depreciation | 0.02 | 0.02 | 0.02 |
| EBITDA | 9.76 | 6.33 | 7.65 |
| Other income and gains, net of transfer expenses | 0.19 | 0.63 | 16.75 |
| Net profit as booked | 9.92 | 6.94 | 24.38 |
- Sales grew 23.9% in FY24 and 39.9% in FY25; the two-year CAGR is 31.6%.
- Gross profit in FY25 (₹13.96 lakh) is 54.2% below FY23 (₹30.45 lakh).
- Net profit as booked rose to ₹24.38 lakh in FY25, of which ₹16.75 lakh is net investment income and gains outside operating profit.
The weakest number: gross margin
Gross margin was 5.54% in FY25 against 20.95% in FY23. A one-point move in cost of goods is worth ₹2.52 lakh, which is 33% of FY25 operating profit.
08Quality of earnings
Operating profit is gross profit less operating expenses; EBITDA adds back depreciation of ₹1,813 to ₹2,255 a year. Neither includes investment income, proprietor remuneration or tax.
The bridge below shows what moved operating profit between FY23 and FY25.
Between FY23 and FY25 gross profit fell by ₹16.49 lakh while operating expenses fell by ₹14.39 lakh, of which staff cost is ₹9.06 lakh. The accounts do not separate price, mix and input cost, so the cause of the margin fall is not documented. Purchase-level and invoice-level data will show it.
Add-backs
None made. Investment income (₹22.87 lakh gross in FY25) and its ₹6.12 lakh of transfer expenses are excluded from operating profit, not added back.
Cash conversion
Not derivable. No cash-flow statement or bank statements were supplied; operating cash flow against EBITDA will follow in the data room.
Leverage
Borrowings were ₹117.74 lakh at 31 March 2025, or 15.4× FY25 EBITDA (14.2× net of cash). No finance cost is booked in any year.
Capex
Nil in all three years. Net fixed assets of ₹15,917 are furniture and a mobile phone.
Perimeter
Standalone proprietorship books on one basis. The same books hold residential property of ₹97.20 lakh and investments of ₹25.44 lakh, outside operating profit and the operating balance sheet.
Related parties
Loans of ₹111.52 lakh are from three individuals whose relationship to the proprietor is not stated. No interest is charged to the profit and loss account.
Recency
The latest year closed on 31 March 2025. FY2025-26 has since closed and is the largest single gap in this file; its accounts and GST returns will be the first data-room items.
09Management & organisation
The Business is run by its proprietor, supported by salaried staff whose number is not stated. There is no board and no separate management layer in the files.
| Role | Headcount | Cost in FY25 accounts |
|---|---|---|
| Proprietor (sole owner-operator) | 1 | None charged |
| Salaried staff | Not stated | ₹3.17 lakh (salary and bonus) |
| Wages, within cost of goods sold | Not stated | ₹0.81 lakh |
| Accounting support | External | ₹0.36 lakh |
As a proprietorship the Business has no separate legal personality: its tax registration and bank accounts are in the proprietor’s name. Management states that the Business needs 2–3 hours of owner oversight a day, which is a statement and not a measured figure.
Key-man dependence
Supplier, client and brand relationships sit with one person, and no second-line manager is identified in the files. A transition period and client introductions are open points for the term sheet.
10M&A proposition
The proprietor is offering the business as a going concern: the labels, designs, client relationships and stock. As a proprietorship it transfers as a business, not as shares. Price and perimeter are not set in this document.
The fastest of the three years, on an operating expense base of ₹6.32 lakh. See section 07.
Listed by management below. None is quantified and none is supported by an order book.
Management’s statement of the oversight the Business needs. Not independently measured.
Menswear brands and retail groups
Seeking a sourced, B2B-led label with an existing retail client base.
Distributors and wholesalers
Adding a private label to an existing book of retail clients.
Owner-operators and family offices
Acquiring a small, asset-light apparel business with no plant to replace.
Value-creation levers, per management
- Pan-India sales team to widen the retail client base
- Online direct-to-consumer store, not yet launched
- New categories: jackets and accessories
- WhatsApp and website order automation
These are management’s own, not a forecast and not validated by the adviser. They carry no weight in valuation until tested; at 5.54% gross margin, growth adds little profit unless margin recovers.
Use of proceeds
The seller has not stated one. This is a sale of the business, so proceeds go to the proprietor; no primary capital is being raised.
11Risks & mitigants
The risks below are stated as they appear in the files. Each mitigant names what will be provided or agreed, not what is assumed.
Overheads were cut by ₹14.39 lakh, which kept operating profit at ₹7.64 lakh. Purchase and invoice data will let a buyer test whether the FY25 margin is the level to underwrite.
Fixed costs are ₹6.32 lakh a year, so any margin recovery drops through largely intact. A one-point move in cost of goods is worth ₹2.52 lakh.
Days are down from 536 in FY23. A physical count, ageing and valuation basis will be offered at diligence, and transfer value can be set on the count.
No security or covenants appear in the files. Loan terms and settlement at completion belong in the perimeter discussion (section 10).
Management puts owner oversight at 2–3 hours a day. A transition period and client introductions are open points for the term sheet.
Customer ledgers and GST returns will be provided in the data room and will show concentration, repeat rate and customer movement.
FY2025-26 accounts and GST returns for all periods will be supplied. GST returns let sales be cross-checked independently of the accounts.
Operating profit and the operating balance sheet already exclude ₹97.20 lakh of residential property and ₹25.44 lakh of investments, which are not part of the offer in section 10.
12Process & next steps
The process is adviser-led and starts with an NDA. Nothing in this summary identifies the Business, and it should not be forwarded.
NDA
Sign the confidentiality agreement; the project name and fixed customer codes are released.
Data room
Customer ledgers, FY2025-26 accounts, GST returns, stock list, supplier terms and loan terms.
Meeting and stock count
Proprietor meeting, with inspection of stock and the labels and designs.
Indicative offer
Non-binding offer stating price, perimeter and treatment of stock and loans.
Adviser
CA Dhiraj Ostwal & Co. — Transaction Advisory. Quote project code SEL-ORE on all enquiries.