Sai Silks (Kalamandir) Limited is amongst the top retailers of ethnic apparel, particularly sarees, in south India. Through its four store formats, i.e., Kalamandir, VaraMahalakshmi Silks, Mandir, and KLM Fashion Mall as well as through e-commerce channels. It offers its products to various segments of the market including premium ethnic fashion, ethnic fashion for middle income, and value-fashion, with a variety of products across different price points, thereby catering to customers across all market segments.
OBJECTS OF THE ISSUE
- Funding capital expenditure towards setting up 25 new stores and two warehouses.
- Funding the working capital requirements of the company. Payment of borrowings.
KEY MANAGERIAL PERSONNEL
Ravindra Vikram Mamidipudi
Chairman & Independent Director of the Company. He has been a Director of the Company since February 18, 2022. He is a fellow member of the Institute of Chartered Accountants of India. He has approximately four decades of experience in finance sector. He is a partner at M. Anandam & Co., Chartered Accountants since 1981.
Nagakanaka Durga Prasad Chalavadi
Managing Director of the Company. He is also one of the Promoters of the Company and has been associated with the Company since its incorporation. He has more than 16 years of experience in the retail sector and is responsible for the overall management, finance, internal controls and security systems of the Company.
Konduri Venkata Lakshmi Narasimha Sarma
Chief Financial Officer of the Company. He has been associated with the Company since March 1, 2022. He has been associated with the Company since March 1, 2022. He holds a bachelor’s degree in commerce from Osmania University. He is also a fellow member of the Institute of Cost Accountant of India. He has over 35 years of experience in Corporate Finance.
Matte Koti Bhaskara Teja
Company Secretary and Compliance Officer of the Company. He has been associated with the Company since November 5, 2018. He is also an associate member of the Institute of Company Secretaries of India. He has approximately 8 years of experience in secretarial work.
COMPANY PROFILE
- SSKL has a network of 54 stores as of July 31, 2023, in four south Indian states, i.e., Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu.
- It offers a diverse range of products which includes various types of ultra-premium and premium sarees suitable for weddings, and party wear, as well as occasional and daily wear; lehengas, men’s ethnic wear, children’s ethnic wear, and value fashion products comprising fusion wear and western wear for women, men and children.
- It offers one of the widest portfolios of saree SKUs among women’s apparel brands in India with large retail outlets that provide customers with a wide variety of options in ethnic wear across various price points.
- The Company directly purchases the products from the master weavers, weavers, and vendors. It manages its inventory and logistics as well as its entire supply chain for all its channels from four of its warehouses in Karnataka, Andhra Pradesh, Telangana, and Tamil Nadu, and it
COMPETITIVE STRENGTHS
- Among the leading ethnic and value-fashion retail companies in South India.
- Scalable model, well positioned to leverage growth in the ethnic and value-fashion apparel industry in India.
- Strong presence in offline and online marketplace with an omni-channel network.
- Track record of growth, profitability, and unit economics with an efficient operating model. Experienced Promoter, management and in-house teams with proven execution capabilities.
KEY STRATEGIES
- High competition, pricing pressures, and fluctuating demand could hurt sales.
- The company relies heavily on sales in Southern India, which could be affected by adverse developments in the region.
- Maintaining sufficient inventory leads to high costs.
- The company operates in a fragmented market with unorganized competition.
- The company procures products from third-party vendors without long-term agreements. The growth of online retailers and discounting trends could hurt pricing ability.
- Sales are subject to seasonality.
COMPARISON WITH LISTED INDUSTRY PEERS (AS ON 31ST MARCH 2023)
FINANCIALS (RESTATED CONSOLIDATED)
OUTLOOK & VALUATION
SSKL is the leading ethnic apparel retailer in the southern region of the country, with a network of 54 stores. The company has a strong presence in the offline and online markets with a track record of consistent growth and profitability. It is also strategizing to expand its footprint with a plan to set up 25 new stores.
However, concerns related to high competition, dependency on third-party vendors, regional concentration, and high cost are also there.
The issue is coming at a P/E valuation of around 27.3x, which seems fairly priced. Thus, after checking all the factors, this IPO could be considered for listing gain and long-term holding.
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