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Sai Silks (Kalamandir) – IPO Alert

sai silks ipo alert



The Indian apparel market is expected to grow at a CAGR of 21% to reach US$ 135.53 billion in FY27 on the back of factors like higher brand consciousness, increasing digitization, greater purchasing power and increasing urbanization. While the CAGR of the total apparel market between FY23 to FY27 is expected to be approximately 13.2%, the branded apparel and organised apparel retail are expected to grow at a CAGR of 17.7% and 19.9% during the same period. The saree and others category (which includes lehengas, Indian dresses and gowns) is expected to grow at a CAGR of 19% from FY22 to FY27, to reach INR 1,248.37 billion in FY27.In the apparel market historically, the ethnic retail trade of sarees was dominated by unorganized players in small format stores with very few organized players. Sai Silk’s founders recognised the opportunity and in order to address the gap in the market, it commenced operations in 2005 to become one of the top 10 retailers of ethnic apparel.

Sai Silk Kalamandir Ltd. (SAI) is amongst the top 10 retailers of ethnic apparel, particularly sarees, in south India in terms of revenues and PAT in FY21, FY22 and FY23. 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 group and value-fashion, with a variety of products across different price points, thereby catering to customers across all market segments. It has a store network of 54 stores as of July 31, 2023, with an average store size of 10,390 sq. feet 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. In order to maintain its position as a leading apparel and saree retailer in South India, Sai Silk will continue to focus on expanding its network of stores in South India and other regions of the country. SAI’s expansion into newer markets offers them potential for market share gains, increased brand recognition and economies of scale. SAI intend to open approximately 30 additional stores and these are planned over the course of the next two fiscals with more focus on expanding its VaraMahalakshmi Silks store format. The cost of expansion of the new stores is expected to be INR 1250.84 million. Due to the impact of COVID-19, SAI also recognized the importance of expanding sales through online e-commerce marketplaces and started selling products through its online websites from FY21, and as well as through other third-party online e-commerce websites.

Total income increased by 19.94% YoY to INR 13,589.20 million in FY23. The company’s profit for the year increased by 69.17% YoY to INR 978.88 million in FY23. The company’s ROE and ROCE were reported at 27.96% and 23.55% respectively in FY23.

Objects of the issue:
1. Funding for opening new stores
2. Funding set up of two new warehouses
3. Funding working capital requirement
4. Repayment of borrowings
5. General corporate purposes

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