Equity Research: Sai Silks Kalamandir Ltd.

SSKL’s growth resilience and product affinity can be seen in its near-complete top-line recovery from the slowdown with improving CAGR.

Launched in 2005, Sai Silks (Kalamandir) Ltd (SSKL) is one of the largest apparel retailers in south India, offering products across ethnic wear (predominantly sarees) and value fashion. The retailer houses four popular brands—Kalamandir, Kancheepuram Vara Mahalakshmi Silks, Mandir and KLM Fashion Mall—straddling multiple price points. Their cluster-based presence (spanning 54 stores; 6,02,414 sq. ft) across the four southern states (Telangana, Karnataka, Andhra Pradesh, and Tamil Nadu) ensures superior operating efficiencies/unit economics.

Sai Silks (Kalamandir) Limited (SSL) is amongst the top 10 retailers of ethnic apparel, particularly sarees, in south India in terms of revenues and profit after tax in Fiscal 2020, 2021 and 2022. Through its four store formats, i.e., Kalamandir, VaraMahalakshmi Silks, Mandir and KLM Fashion Mall, it offers its products to various segments of the market that include 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. It leverages its store network of 54 stores as of July 31, 2023, to focus on spreading India’s vibrant culture, traditions and heritage by offering a diverse range of products which includes various types of ultra-premium and premium sarees suitable for weddings, 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.

The share of organized retailing in apparel has increased from 14% in Fiscal 2007 to 32% in Fiscal 2020. The evolution of the market, in its current phase, represents distinct segmentation of channels of organized retail for apparel. This phase also represents emergence of category leaders in respective groups of western (formal and casual), Indian, and athleisure. Historically, the ethnic retail trade of sarees was dominated by unorganized players in small format stores with a very few organized players. Today, SSL offers one of the widest portfolios of saree SKUs among women’s apparel brands in India with large retail outlets that provide customers a wide variety of options in ethnic wear across various price points. It commenced operations through its first ‘Kalamandir’ store in 2005 at Hyderabad, Telangana with a store size of 3,213 square feet and have over the years expanded to 54 stores in four south Indian states, i.e., Andhra Pradesh, Telangana, Karnataka and Tamil Nadu, with an aggregate area of approximately 603,414 square feet, as of July 31, 2023. As of July 31, 2023, its average store size, calculated on the basis of its operating stores, is 10,390 square feet for its Kalamandir format stores, 3,310 square feet for Mandir format stores, 6,099 square feet for VaraMahalakshmi format stores, and 18,400 square feet for KLM Fashion Mall format stores. Its stores provide a unique experience and customer service, which combined with its inventory and variety of SKUs that it offers, enables it to attract and retain a growing customer base that, as of July 31, 2023, exceeded over 5.98 million customers in India.

SSL’s ethnic wear and value-fashion products are available through its stores under four different format stores, i.e., Kalamandir, VaraMahalakshmi Silks, Mandir, and KLM Fashion Mall, as well as through e-commerce channels comprising its own website and other online e-commerce marketplaces. Based on the specific markets that it targets, it might opt for a combination of formats to optimize the space that it has available in addition to market feedback. Its stores are strategically located in prime areas of the cities in which it operates, to tap into the purchasing power of customers with a cluster-based model where it generally open new stores in the same city rather than extending its store network in other cities, in order to efficiently operate its stores. Further, due to the impact of COVID-19, SSL recognized the importance of expanding its sales through online e-commerce marketplaces and started selling its products through its own online website, www.kalamandir.com, www.brandmandir.com and www.kanchivml.com, www.klmfashionmall.com and www.kalamandirroyale.com as well as through other third-party online e-commerce websites which provides an omni-channel network to its customers, through online and offline channels. The seamless integration between its offline and online channels also ensures that its products are easily available to its customers.

SSL manage 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 with an aggregate area of approximately 164,000 square feet, as of July 31, 2023 and a designated storage space located at one its stores in Chennai, Tamil Nadu. Its products have been sourced from an aggregate of 4,832 master weavers, weavers and vendors from across India in the last three Fiscal years and upto July 31, 2023.

Industry Research:

India’s apparel market was INR 4,477.5 bn (USD 55.9 bn) in FY20 and reached a market value of INR 4,117.5 bn (USD 51.4 bn) in FY22 and is expected to grow at a CAGR of ~21% to hit INR 10,669.7 bn (USD 133.53 bn) by FY27 on the back of factors like rising brand consciousness, increasing digitization, greater purchasing power and increasing urbanization. Over FY20-27, the long-term trendline growth of apparel is expected to be ~13.2%. The branded retail and organised apparel retail are expected to grow faster at CAGRs of ~17.7% and ~19.9% respectively over FY20-27 as consumers increasingly shop with organised players

Men’s apparel constituted ~41% and women’s apparel share was estimated to be ~37% of the total apparel market in FY22. The balance of ~22% is contributed by kids’ apparel. Out of the total apparel market, Indian wear accounted for approximately 30% or INR 1,244.28 bn (~USD 15.5 bn) (FY22) and the balance 70% of the market comprised of western wear. The high share of Indian wear in the total apparel is a unique feature of the apparel market in India. In the women’s wear market, Indian wear contributed ~67% to the total market. For Indian women, Indian fashion is a mainstream need for both festive and daily wear uses, whereas, for men, it is currently restricted to occasion wear viz. weddings and festivals.

The women's apparel market contributed ~37% of the total apparel market of India in FY22 pegged at INR 1,530.86 Bn. (~USD 19.1 Bn.). This segment is expected to grow at a CAGR of 21.1% for the next five years to reach INR 3,987.24 Bn (USD 49.8 Bn) by FY27 (Source: Company RHP). Factors like sustained growth of Indian daily wear; continued demand for Indian festive wear; rising share of organised retail; design innovations and changing consumer demographics etc. are aiding the growth of the Indian women's wear market.

The share of organised retail in women's apparel which was 19% in FY15 increased to 31% in FY22 and is expected to reach 44% by FY27 (INR 1,754.39 bn). The emergence of organised retail channels (EBOs, LFS/MBO, Value Retail, E-Commerce) and the scale of organised players such as Biba, Fabindia, Reliance Trends, Trent, Westside, Shopper Stop, ABRFL etc. have managed to address the consumer demands better than unorganised segment enabling transition of consumer demands towards organised retail in the women apparel sector.

Indian wear is the largest segment within the women's apparel market in India and contributes around 67% of the women’s market in FY22. Despite having a high current share, the share of Indian wear in the overall women's apparel segment will continue to be resilient in future. In most major apparel markets (China, Japan, Southeast Asia, etc.), nearly the entire apparel category is made up of western wear. Indian fashion is influenced by Indian ethos and values which impact the apparel’s cut, shape, silhouette and nature of raw material used (not restricted to power loom but also extends to handloom fabrics). In this context, the Indian women's apparel industry’s categorization into Indian wear and western wear is significant, given the Indian wear’s size and its unique existence compared to other major markets.

In FY22, 73% of women’s Indian wear was sold through the unorganised/traditional channel. However, the share is expected to reduce to 60% by FY27, enabled by the growth of organised retail players (retail-led brands) taking a multichannel retail route, expansion of value retailers and LFS formats, and growth of e-commerce. The organised women's Indian wear was estimated at INR 277 bn in FY22 and is expected to grow at a CAGR of 30.4% for the next five years to reach INR 1,044 bn by FY27.

Women's Indian wear market is further segmented into key categories—saree and others (others including lehengas, Indian dresses/gowns, etc.) and SKD (sets, mix and match and others (dupattas/stoles etc). Within this, the saree market was valued at INR 523.93 bn in FY22 and is expected to reach INR 678.63bn by FY23. This category, though the earliest form of apparel for women in India, with a strong and large base, continues to grow despite the advent of different apparel for women in the form of SKD, lehengas, dresses, etc, showing that saree continues to be the choice of apparel for the majority of women in India.

The south Indian region was the top contributor to the saree market in India in FY22 with 50% of saree sales coming from this region. It was followed by east India, which contributed to 19% of saree sales, closely followed by the west and north regions, contributing 16% and 15% respectively.

The south Indian saree market, which was valued at INR 262 bn in FY22, contributes 50% to the overall Indian saree market. The organised south saree market was valued at INR 114 bn for FY22 and it is expected to grow at 28% CAGR (as per RHP) to reach INR 393 bn by FY27. The south saree market is split into the states of Tamil Nadu, Karnataka, Andhra Pradesh, Telangana and Kerala. With an estimated 32% market share and a value of ~INR 74 billion for FY20, Tamil Nadu is the market leader in south India for sarees. Karnataka is next, valued at ~INR 56 bn as of FY20.

The south Indian region is the leading one for sarees in India and it is home to the majority of the leading saree players. Players like Sai Silks Kalamandir, Pothys, Nalli, etc., all have origins in south India.

Shareholding Pattern:

Investment Rationale:

Among the leading ethnic and value-fashion retail company in south India having a portfolio of established formats with focused sales and marketing strategy:

SSL is amongst the top 10 retailers of ethnic apparel, particularly sarees, in south India in terms of revenues and profit after tax in Fiscal 2020, 2021 and 2022. The share of organised apparel retail which was 32% in 2020 is expected to increase to 48% in 2027. The share of organised retail in women’s apparel, which was 19% in Fiscal 2015, increased to 31% in Fiscal

2022 and is expected to reach 44% by Fiscal 2028, amounting to Rs.1,754.44 billion. Focussed approach towards offering consistent quality at affordable prices has been driving growth in the value fashion segment. The consistent delivery of this promise in tier II, III and IV cities has been aiding the transition of consumers from the unorganised traditional shops to the organised value retailers. It considers that the variety of products offered by it at different price points have allowed it to serve over 5.98 million customers since its inception.

SSL’s Formats
By leveraging experience in selling ethnic wear, the Company has over the years expanded its store portfolio to four formats, hybrids and derivatives thereof, each offering different set of products catering to the respective target segments and it continue to expand its product range to meet the demand of its different target segments.

Catering to Local Market
The Company designs and positions its stores in locations to target its customer segments and demographics. Its stores are strategically located in prime / central areas of the cities in which it operates, to tap the purchasing power of customers, with a cluster-based model. It generally open new stores in the same city rather than extending its store network in other cities, in order to efficiently manage its stores and inventory. SSL generally open retail outlets for each of its formats which serves as a one-stop destination for its customers which results into larger transactions per visit to its stores.

The Company has an experienced procurement team of more than 98 sourcing experts as of July 31, 2023, which acts as a key element towards effective stock selection and procurement. The procurement team identifies new trends and designs and interacts with the master weavers and third party manufacturers in order to ensure that its stores have latest and new designs.

Marketing Activities
SSL has a focused marketing strategy and currently has engaged popular south Indian actors as its brand ambassadors. Its focus on quality products, variety of products, customer oriented policies together with its celebrity endorsements have enabled it to develop strong brand recognition and customer loyalty. Its sales and marketing strategies aims to increase brand awareness and brand recall, acquire new customers, and strengthen and reinforce its brand image. Further, it constantly targets its customers through differentiated sales and marketing efforts, which include selling its products through live shows, and video-based commerce on social media platforms.

Leading ethnic wear retail brand in India with a scalable model, well positioned to leverage growth in the ethnic and value-fashion apparel industry in India:

SSL is amongst the top 10 retailers of ethnic apparel, particularly sarees, in south India in terms of revenue and profit after tax in Fiscal 2020, 2021 and 2022. it focusses on spreading India’s vibrant culture, traditions and heritage through its ethnic wear brands. It considers its business model to be scalable and efficient and it generally achieve immediate positive cash flow for its new format stores and achieve break even for capital expenditure incurred for setting up the exclusive format store within a reasonable period from store opening, depending on the store format. Between Fiscal 2022 and Fiscal 2027 the apparel market is expected to grow at a CAGR of 21% to reach US$ 133.53 billion in Fiscal 2027 on the back of factors like higher brand consciousness, increasing digitization, greater purchasing power and increasing urbanization. While the apparel market has de grown by approximately 4.1% to reach a value of US$ 51.47 billion in Fiscal 2022 due to negative impact of COVID-19 pandemic, the market is expected to recover at a higher pace of 21% between Fiscal 2022 and Fiscal 2027. growth of both branded apparel share and organized apparel retail share in apparel category will outpace the overall category growth. COVID-19 gave impetus to the growth of e-commerce which is expected to become a significant growth driver for the organized market.

The consumer trend has been shifting towards increased preference for private labels which provide quality products and an affordable price-point. The value-apparel category space is projected to grow at a rate of 16.7% between Fiscal 2022 to Fiscal 2027. Approximately 23% of the total demand of apparel is estimated to come from Tier III and Tier IV cities, 60% of which is currently estimated to be within the value segment. The organized value retailers have led the transition of the value apparel segment in these cities from being largely unorganized to being somewhat organized. It considers its brand to be strong, its business model to be scalable, and this, coupled with effective operational processes and proven track record of profitable expansion, position it well to capitalise on this market opportunity.

SSKL focuses on creating innovative designs with an emphasis on quality to offer new and varied products to its customers throughout the year. It does not design any of its products in-house. They outsource their design features and leverage the design infrastructure that is available with third-party manufacturers. From time to time, it interacts with independent designers to design its products which are then subsequently sent to the master weavers and third-party manufacturers.

The design process involves detailed analysis and research on prevailing fashion trends and consumer tastes and preferences, which the company collects through various system-driven processes that include data analysis, market surveys and feedback received from their artisans and vendors, as well as conversations between sales associates and customers.

Strong presence in offline and online marketplace with an omni-channel network:

SSL’sstoreformatshaveastrongofflineandonline presence. While it commenced its operations through its first ‘Kalamandir’ store in 2005 at Hyderabad, Telangana with a store size of 3,213 square feet, it has over the years expanded its stores to 54 stores in four major south Indian states, i.e., Andhra Pradesh, Telangana, Karnataka and Tamil Nadu, with an aggregate area of approximately 603,414 square feet as of July 31, 2023. Its average store size, calculated on the basis of its operating stores as of July 31, 2023, is 10,390 square feet for its Kalamandir format stores, 3,310 square feet for its Mandir format stores, 6,099 square feet for its VaraMahalakshmi format stores, and 18,400 square feet for its KLM Fashion Mall format stores, with wide variety of products across multiple price points, thereby catering to customers across all market segments.

SSL has expanded its presence in online e-commerce marketplace and started selling its products through its own online websites, www.kalamandir.com, www.brandmandir.com, www.kanchivml.com, www.klmfashionmall.com and www.kalamandirroyale.com as well as through other third-party online e-commerce websites which provides an omnichannel network to its customers through its online and offline channels. The seamless integration between offline and online channels also ensures that the products are easily available to its customers. As the pricing of its products is mostly uniform across its own online and offline channels, its customers have the flexibility to purchase its products online or offline through stores. SSL’s websites offer various features to assist customers, including virtual assist chat box, video call appointment to try its products virtually, and a search option to browse through the entire catalogue of its sarees. Its increased focus towards e-commerce has expanded the reach of its products and in Fiscal 2023, its sarees were shipped to 25 states and six union territories in India.

Track record of growth, profitability and unit economics with an efficient operating model:

SSL has organically grown its operations and has demonstrated an increase in its revenues and profitability. Its revenue from operations increased from Rs 6,772.48 million in Fiscal 2021 to Rs.11,293.23 million in Fiscal 2022 reflecting full recovery from the effects of COVID-19 which further increased to Rs.13,514.69 million in Fiscal 2023. Its Gross Margins were Rs 2,304.04 million, Rs 3,914.53 million and Rs 5,288.47 million, or 34.02%, 34.66% and 39.13% in Fiscal 2021, 2022 and 2023, respectively. Profit after tax was Rs.51.31 million, Rs.576.87 million and Rs.975.88 million in Fiscal 2021, 2022 and 2023, respectively. Its restated profit after tax margin was 0.76%, 5.11% and 7.22% in Fiscal 2021, 2022 and 2023, respectively. The Company’s business model has resulted in positive cash flows over the years, other than the year which witnessed the impact of COVID-19 pandemic with prolonged shut downs, as well as in the initial months during Fiscal 2022 when India experienced the second wave of the COVID-19 pandemic, which caused sporadic shut downs in the states in which it operates.

Experienced Promoter, management and in-house teams with proven execution capabilities:

The Company commenced operations in 2005 and is led by its Managing Director, Nagakanaka Durga Prasad Chalavadi who has more than 18 years of experience in the retail business. He has been instrumental in building store formats and its operational efficiencies. In addition, it has a committed and large senior management team that has extensive experience in the retail and fashion industry, which positions it well to capitalize on future growth opportunities. Its key managerial personnel, assisted by their teams, have been able to create a curated list of SKUs that has enhanced its brand appeal and continual improvements to its stores, that has enhanced the shopping experience of its customers. SSL’s heads of functional groups, such as marketing and e-commerce, sourcing and supply chain, finance and accounts, operations and sales, enhance the quality of its management with their specific and extensive industry experience.

Expanding footprint within India through owned stores and franchise network by leveraging brand appeal:

The saree and others category (which includes lehengas, Indian dresses and gowns) is expected to grow at a CAGR of 19% from Fiscal 2022 to Fiscal 2027, to reach Rs. 1,248.37 billion in Fiscal 2027. In order to maintain the position as a leading apparel and saree retailer in south India, SSL will continue to focus on expanding its network of stores in south India and other regions of the country. It is currently present only in south India and intends to deepen its penetration in those regions, where there could be potential for further expansion. It intends to continue to follow its cluster-based expansion model and expand its presence in across south India in order to ensure better operational control over its stores. SSL further intends to leverage its experience to expand its operations by opening new stores, hybrids and derivatives thereof in key cities across India.

SSL’s expansion into newer markets offers it potential for market share gains, increased brand recognition and economies of scale. It intends to open approximately 30 additional stores and these are planned over the course of the next two Fiscals with more focus on expanding VaraMahalakshmi Silks store formats. It also intends to focus on expanding of the KLM Fashion Mall in order to tap the growing potential of value fashion brand and propose to open 5 additional stores through a franchisee model. It also wishes to explore further franchisee and B2B models with the objective of tapping the unorganized market as well as improve return ratios through additional margins. It will continue to adopt a methodical approach in evaluating and selecting suitable locations for the establishment of new stores, such as target customer segment concentration, market potential and accessibility. It anticipates that such expansion will further increase its market share in the value-fashion brand segment and increase its profitability and revenue from operations.

Leverage technology to bring cost efficiency and enhance customer experience:

SSL intends to further improve its operating efficiency through global best practices. It currently uses an in-house ERP system that was developed by Soul of Pluto Tech LLP, a member of its Promoter Group. The measures that SSL intends to undertake include investing further in its IT infrastructure by migrating into better software resources at the back-end of its operations in order to improve productivity and time savings. The Company intends to expand and upgrade its existing warehouses to optimize its inventory and supply management. It intends to strategically expand its warehouse operations as well as implement new technologies to further expand and improve customer deliveries and enhance customer buying experience with faster dispatches. The Company intends to also undertake data analytics that will allows it to better understand customer preferences, improve sales and help scale its operations. Further, it is in the process of launching its loyalty program “Smile Rewards” for customers of KLM Mall stores through a new CRM software system which will allow them to earn points and shopping vouchers on purchases, which can be redeemed.

Strong Sourcing, logistics, and warehousing:

SSKL is primarily a retail-focused company, which directly procures all of its products from master weavers for its sarees and third-party (3P) manufacturers for other products. Their arrangements with master weavers and other 3P manufacturers are on a purchase order, non-exclusive basis, to comply with the quality standards and other requirements such as time and place of delivery specified by them.

The company has sourced products from an aggregate of 4,832 master weavers, weavers and vendors from across India over the last three years. Once it has analysed and allocated its sourcing requirements, it emphasizes interaction among its purchase team, to review its master weavers and 3P manufacturers' performance and production status. As of July 31, 2023, the company had 98 employees in its purchase team. It also regularly visits master weavers and third-party manufacturers to ensure trade efficiency. It manages its inventory and logistics as well as warehousing for all its channels, from its four warehouses in Karnataka, Andhra Pradesh, Telangana and Tamil Nadu with an aggregate area of approximately 164,000 square feet as of July 31, 2023. All products are barcoded, which ensures systematic movement of its inventory.

Strong Marketing and brand promotion

They have a focused marketing strategy and engage popular south Indian actors as their brand ambassadors. Their sales and marketing strategies aim to increase brand awareness, acquire new customers, and strengthen and reinforce their brand image. In FY20, FY21, FY22 and FY23, their advertisement expenses were INR298/INR114/INR492/INR622mn respectively and accounted for 2.5%, 1.7%, 4.3% and 4.6% of sales respectively. The company considers its products to be high quality, having been created from select materials and conceptualised by experienced artisans. As a result, they do not typically run any end-of-season discount sales etc, which, in their opinion, reduces the value of the brand in the long run.

Management Profile:

Ravindra Vikram Mamidipudi is the Chairman & Independent Director of 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 is the Managing Director of Company. He is also one of the Promoters of the Company and has been associated with Company since its incorporation. He holds a bachelor’s degree in commerce from Nagarjuna University and master’s degree in Business Administration from Institute of Management Education, Pune. He also holds post graduate diploma in computer applications from Institute of Computer Software Sciences. He has more than 16 years of experience in the retail sector, including as one of the partners of the erstwhile partnership firm under the name ‘Sai Silks’ (now converted into Company) and is responsible for the overall management, finance, internal controls and security systems of the Company.

Kalyan Srinivas Annam is the Whole-time Director of Company and has been associated with Company since 2009. He holds a bachelor’s degree in law from Nagarjuna University and a post graduate diploma in business management from Institute of Marketing and Management, New Delhi. He has approximately 15 years of experience in the retail business, including as one of the partners of the erstwhile partnership firm under the name ‘Sai Silks’ (now converted into Company). He is responsible for projects, strategic planning, brand building and business development of Company and leads all related media and advertising activities for the Company. He is also responsible for the legal administration activities of the Company.

Doodeswara Kanaka Durgarao Chalavadi is the Whole-time Director of Company and has been associated with the Company since 2009. He holds a bachelor’s degree in commerce from Nagarjuna University and master’s degree in computing from Griffith University, Australia. He has approximately 12 years of experience in the field of retail business. He is responsible for the procurement and marketing activities of Company. He was previously associated with FIS Management Services, LLC.

Pramod Kasat is an Independent Director of Company. He has been a Director of Company since February 18, 2022. He holds a bachelor’s degree of engineering from the Birla Institute of Technology & Science, Pilani and master’s degree in management studies from University of Bombay. He has extensive experience in investment banking and has been associated with companies in infrastructure, real estate, pharma, industrials and logistics amongst others. He is a Managing Director, Investment Banking at Intellecap, an investment banking arm of Aavishkaar Group, handling a wide array of corporate finance advisory functions. He is on the board of Advanced Enzymes Ltd, Natural Capsules Ltd, Fermenta Biotech Ltd as an Independent Director. He was previously associated with IndusInd Bank, Credit Suisse, Citibank in senior roles and with Shilpa Medicare Limited, Supreme Infrastructure India Limited, Capri Global Capital Limited among others as an Independent Director.

Sirisha Chintapalli is an Independent Director of Company. She has been a Director of Company since April 12, 2019. She holds a bachelor’s degree in commerce from Nagarjuna University. She is also an associate member of the Institute of Cost Accountants of India and the Institute of Company Secretaries of India. She has extensive experience in finance and secretarial work. She has also been registered as an Insolvency Professional with the Insolvency and Bankruptcy Board of India. She has also passed the Professional Education Examination- II conducted by the Institute of Chartered Accountants of India. She was awarded the Smt. G.P. Poddar Memorial Award and the SIRC Silver Medal by the Institute of Company Secretaries of India in July 2001. She was previously associated with CCL Products (India) Limited, International Seaport Dredging Limited, L&T Shipbuilding Limited and Sibar Autoparts Limited.

Kunisetty Venkata Ramakrishna is an Independent Director of Company. He has been a Director of Company since June 4, 2022. He holds a bachelor of technology degree in computer sciences and engineering from National Institute of Technology, Warangal (formerly known as Regional Engineering College, Warangal) and post graduate diploma in management from Indian Institute of Management, Bangalore. He has over 25 years of experience in private equity/venture fund management, having worked in organisations like ICICI Venture Funds Management Company Limited, the Carlyle India Advisors Private Limited, Technology Development and Information Company of India Limited, Tata Engineering and Locomotive Company Limited and Kotak Mahindra Bank Limited. He was most recently the CEO-Private Equity at Kotak Investment Advisors Limited.

Financials:

Balance Sheet

Profit & Loss

Cash Flow

Valuation & Opinion:

SSKL’s growth resilience and product affinity can be seen in its near-complete top-line recovery from the pandemic blues by FY22. In FY23, it continued to improve its performance (up 21% YoY; INR14.52bn; FY16-23 revenue CAGR: 17.7%). EBITDA expanded (10.3% in FY20 vs 14.7% in FY23), led by continued premiumisation across formats and price hikes. RoCE/RoE has also improved. Company looks strong and profitable in longer run with increasing number of store outlet and improving online marketing along with good brand development initiatives taken by the company for the improving growth and sales of the company.

Key Risks:

1. Business is currently highly concentrated on a single product category, i.e., women’s ethnic sarees product. Company’s sales of women’s sarees are dependent on a number of factors,and may decline as a result of increased competition, pricing pressures or fluctuations in the demand for or supply of our products and other factors outside our control.
2. Current locations of the stores may become unattractive, and suitable new locations may not be available for a reasonable price or acceptable terms, if at all. In addition, they are exposed to all of the risks associated with leasing real estate and any adverse developments could materially affect their business, results of operations and financial condition.

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