Sai Silks (Kalamandir) Ltd. is gearing up for its initial public offering (IPO) set to commence on September 20. The ethnic apparel provider aims to raise Rs 1,201 crore through a combination of a fresh issue and an offer for sale.
The IPO comprises a fresh issue of 2.70 crore equity shares, valued at up to Rs 600 crore, and an offer for sale involving the sale of 2.7 crore equity shares, worth up to Rs 601 crore. The price band for the shares is fixed at Rs 210 to 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% will be allotted to retail individual investors.
**Issue Details**:
– Opening date: September 20.
– Closing date: September 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.
**Shareholding Pattern**:
The pre-IPO shareholding stands at 12,63,39,085 shares and will change to 15,33,66,112 shares after the IPO. The shares being sold will come from two promoters and five shareholders of the promoter group. Among the selling shareholders, promoters Jhansi Rani Chalavadi and Nagakanaka Durga Prasad Chalavadi will offload the highest number of shares, with 79.5 lakh shares and 64.1 lakh shares, respectively.
**Business Overview**:
Founded in 2005, Sai Silks (Kalamandir) specializes in providing ethnic apparel and value-fashion products. According to a Technopak report, the company ranks among the top 10 retailers of ethnic apparel, particularly sarees, in South India based on revenues and profit after tax for Fiscal 2020, 2021, and 2022. The company operates through four store formats: Kalamandir, VaraMahalakshmi Silks, Mandir, and KLM Fashion Mall.
Sai Silks caters to a wide range of customers by offering various items at different price points. Their product portfolio includes ultra-premium and premium sarees suitable for weddings, party wear, occasions, and daily wear, along with lehengas, men’s ethnic wear, children’s ethnic wear, and value fashion products that encompass fusion wear and western wear for women, men, and children.
The company utilizes its network of 54 stores to promote India’s rich culture, traditions, and heritage by providing a diverse array of products, all while spreading vibrant Indian fashion and style.
**Use of Proceeds**:
The funds to 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 two warehouses: Rs 25.4 crore
– Funding the working capital requirements of the company: Rs 280.07 crore
– Repayment or pre-payment, in full or part, of certain borrowings availed by the company: Rs 50 crores
– General corporate purposes.
**Risk Factors**:
– The business heavily relies on the sale of women’s sarees and is susceptible to variations in demand and changes in consumer preferences.
– The company is exposed to risks associated with leasing real estate, which could affect the business in case of adverse developments.
– The company operates in a fragmented market with unorganized and single-store players.
– Quality and consistency in customer service at stores are critical for the company’s success, which depends on its ability to attract and retain skilled personnel.
– The company is subject to labor unrest, slowdowns, and increased wage costs, which may impact its operations.
– The company procures its products from third-party vendors and master weavers without long-term formal agreements, which may affect the business, financial condition, and results of operations.
