Sai Silks (Kalamandir) IPO: All You Need To Know

Sai Silks (Kalamandir) Ltd. will launch its initial public offering on Sept. 20.

The ethnic apparel provider plans to raise Rs 1,201 crore via a fresh issue and an offer for sale.

The issue will comprise a fresh issue of 2.70 crore equity shares worth up to Rs 600 crore and an offer for sale that will offload 2.7 crore equity shares worth up to Rs 601 crore. The price band is fixed between Rs 210 and Rs 222 per share.

Out of the total IPO size, 50% is reserved for qualified institutional buyers, 15% for non-institutional investors, and the remaining 35% is to be allotted to retail individual investors.

• Issue opens: Sept. 20.

• Issue closes: Sept. 22

• Total Offer Size: Rs 1,201 crore.

• Fresh issue size: Rs 600 crore.

• Offer for sale size: Rs 601 crore.

• Face value: Rs 2 apiece.

• Fixed price band: Rs 210–222 per share.

• Minimum lot size: 67 shares.

• Listing: NSE, BSE.

The pre-IPO shareholding stands at 12,63,39,085 and will change to 15,33,66,112 after the IPO.

The shares offloaded will come from two promoters and five shareholders of the promoter group. Out of the selling shareholders, promoters Jhansi Rani Chalavadi and Nagakanaka Durga Prasad Chalavadi will offload the highest amount of shares, that is, 79.5 and 64.1 lakh shares, respectively

Incorporated in 2005, Sai Silks (Kalamandir) provides ethnic apparel and value-fashion products. According to a Technopak report, the company is among 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 company operates through four store formats, i.e., Kalamandir, VaraMahalakshmi Silks, Mandir and KLM Fashion Mall

With a variety of items at various price points, the company caters to customers in all market categories, including those in premium ethnic fashion, ethnic fashion for middle-class consumers, and value fashion.

The company leverages its 54-store network to focus on spreading India’s vibrant culture, traditions, and heritage by offering a diverse range of products, which include 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 funds that will be raised will be employed for the following purposes:

• Funding capital expenditure towards setting up 25 new stores: Rs 125.08 crore

• Funding capital expenditure towards setting-up of two warehouses: Rs 25.4 crore

• Funding the working capital requirements of the company: Rs 280.07

• Repayment or pre-payment, in full or part, of certain borrowings availed by the company: Rs 50 crores

• General corporate purposes.

• The business is highly concentrated on the sale of women’s sarees and is vulnerable to variations in demand and changes in consumer preference. In FY23 sarees contributed 68.38% of total revenue.

• Firm is exposed to risks associated with leasing real estate and any adverse developments in that respect could affect the business.

• Company operates in a fragmented market with unorganized and single store players.

• Quality and consistency in customer service at stores are critical for company's success, which depends on their ability to attract and retain skilled personnel. Any failure in this respect could impact reputation and operations. As of July 21, 2023, the company had 4,873 employees and 85 contract laborers.

• Company is subject to labor unrest, slowdowns and increased wage costs, which may have an effect on operations.

• The company procures its products from third-party vendors and master weavers. It does not enter into long term formal agreements with such vendors and may not be able to procure sufficient quantities or desired quality of products from them in a timely manner or at acceptable prices, or on an exclusive basis, which may affect the business, financial condition and results of operations.