SEBI approved Sai Silks Kalamandir IPO – Do you invest?

sai silks kalamandir limited company review
sai silks kalamandir limited company review

Sai Silks Kalamandir Limited Company Review

Sai Silks Kalamandir limited company review filed a DRHP document for INR 600 crores fresh issues and 18,048,440 Equity Shares offer for sale (OFS). The company was incorporated as a partnership firm under the name and style of “Sai Silks” on August 10, 2005, in Hyderabad, India. Subsequently, the company converted into a public limited company in the name of ‘Sai Silks (Kalamandir) Limited” in Hyderabad, Andhra Pradesh, India on May 14, 2009. A certificate of change of name was issued on May 21, 2009, from the Registrar of Companies. The registered and corporate office of Sai Silks (Kalamandir) Limited’ is in Bathina Apartments, Ameerpet, Hyderabad 500 016, Telangana, India.

Description Of the Business

  • Sai Silks Kalamandir is one of the most coveted ethnic fashion brands in South India.
  • The company has nine stores spread across Telangana, Andhra Pradesh, & Karnataka and planning to expand across India.
  • Its brands or products are highly acclaimed by users across the age group.
  • SSKL was awarded “Most Admired Company of The Year” in the Business Leader of The Year Awards by CMO Global in 2022.

Sai Silks Kalamandir Limited Business Overview

The company sells apparel. Sai Silks Limited is the largest retailer of ethnic apparel, particularly sarees, in south India in terms of revenues. The company sells its products under various popular brands such as below.

  • KALAMANDIR is the flagship brand that has served a massive customer base for the past 16 years with stores spread across Telangana, Andhra Pradesh, and Karnataka.
  • BRAND MANDIR that offers Rare Eternal Pure Kanchivarams, hand-picked picked Real Zari Kotas, Mesmerizing Uppadas, Handmade Paitnis, Heritage Rich Patolas, Pure Georgette Chiffon Party Wear, and Designer Sarees.
  • KANCHEEPURAM VARAMAHALAKSHMI SILKS meets the ethnic-wear and traditional expectations of modern women. This offers a wide range of apparel from bridal collections to festive, party, and casual wear sarees.
  • KLM Fashion Mall offers an exuberant collection of the latest and trendy ethnic wear, fusion wear, party wear, festive wear, occasion wear, wedding wear, and modern wear for men, women, and kids at the best prices.

These brands cater to customers across all market segments that include premium ethnic fashion, ethnic fashion for the middle income, and value fashion. Within the above brands, Sai Silks (Kalamandir) Limited has four types of store formats.

  • Kalamandir,
  • VaraMahalakshmi Silks
  • Mandir
  • KLM Fashion Mall

Sai Silks Kalamandir Limited Owners

The company is run by experienced Promoters.  

Mr. Nagakanaka Durga Prasad Chalavadi has been the promoter and Managing Director of the company since its incorporation. He has over 16 years of experience in the retail sector. Mr. Nagakanaka is responsible for the overall management, finance, internal controls, and security systems of our Company.

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Sai Silks Kalamandir Limited Company Review Revenue and profits

The company engaged in selling apparel in South Indian states. The earnings mostly depend on market conditions in that region. The total income has declined from INR 1179.6 Crores in FY 2020 to INR 679.1 Crores in FY 2021. Total revenue was severely impacted by the spread of COVID-19 followed by lockdown in FY 2021. However, the total income again reached the pre-covid level of INR 1133 Crores in FY 2022. Profit after tax has increased from INR 42.1 Crores in FY 2020 to INR 57.1 Crores in FY 2022 which is a growth of CAGR of 35% between the Fiscals 2020 and 2022.

Sai Silks Kalamandir Limited company insights for Investment

Sai Silks Kalamandir Limited has been registering strong EPS over the years except FY 2021. However, the debt-equity ratio is on the higher side over the years. Though the return on equity, and ROCE, look strong, Net cash flow from operating activities has declined.  Looking at the numbers below I will not invest in the company’s IPO.

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All amounts in INR Million except percentages
(Year ended March 31)
Revenue from Operations11,755.606,772.4811,293.23
Total Income11,786.176,790.9511,330.16
Profit After Tax for the Year420.96 51.31576.87
EBITDA Margin8.82%9.21%11.78%
Return on Equity20.00%2.16%21.22%
Return on Capital Employed24.39%8.51%21.71%
Net Debt / Equity1.181.361.38
Earnings Per Share-Diluted (in INR)3.590.434.79
Net Cash from Operating Activities852.63 -152.00455.98

Sai Silks Kalamandir Limited Company Review – Peer comparison

Retail apparel in India is highly fragmented. Retail-led brands like FabIndia, Biba, Soch, Neeru’s, etc. are focused on Indian ethnic wear. Most of the competitors are also coming up with online stores.  Fabindia & Soch are more saree centric compared to other SKD-dominant peers. However, brands like Nalli, The Chennai Silk, Kalamandir, Kancheepuram Vara Mahalakshmi Silks, Pothys, etc. are focused predominantly on Sarees as their core product offering. The only differentiator among these players may be the unique design that each one is following and the brand name. Hence, the competition in this business is huge and there are very few entry barriers.

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Sai Silks Kalamandir Limited Company Review – Risk Factors

Of course, Sai Silks (Kalamandir) Limited is a leading apparel retail brand in India with a scalable model. The company has created a brand name in South India. It is well positioned to leverage growth in the ethnic and value-fashion apparel industry in India. The company has a strong presence in the offline and online marketplace with an omnichannel network.

Revenue Comes from
Different states in India
Year ended March 31 (In %)
Andhra Pradesh33.13%38.56%36.78%
Tamil Nadu7.72%6.57%6.78%

However, the company is present only in South India. More than 45% of the revenue comes from only one state, Telangana. Any natural calamity in that state such as a flood or drought will have a significant impact on the company’s top line.

Below are all company insights for investment – Do you invest?

  • The Retail Market in India was valued at US$ 750 Bn in FY 2021 and is expected to grow at a CAGR of 9.5% to reach US$ 1,080 Bn by FY 2025.
  • Indian economy will also grow at an average rate of ~7% annually.
  • The interest of millennials seems to be moving toward traditional or ethnic fashion. We are witnessing youth in India wearing ethnic clothes at parties, and other celebrations. Players in this sector can gain benefits from these cultural and economic changes.
  • Sai Silks Kalamandir is planning to leverage its brand recognition and experience to open new stores across the country.
  • The company intends to open approximately 25 new stores throughout the next two Fiscals.
  • However, the success of the stores in other states is yet to be seen where a lot of other offline and online brands are already present.
  • However, there are many players in this segment in India. Many of them are well-established with a presence across India.
  • Fab India, Biba, etc. are present across India both online and offline stores. Sai Silks Kalamandir does not have any presence in north India. It takes a lot of time to create a brand name in other states.
  • Hence, I will not invest in this company’s IPO when I have a lot of other opportunities available in the market. If I invest it will be for listing gain.