Sai Silks is amongst the top 10 retailers of ethnic apparel, particularly sarees, in South India in terms of revenues and profits. Through their four store formats, i.e. Kalamandir, VaraMahalakshmi Silks, Mandir and KLM Fashion Mall, they offer products to various segments including premium ethnic fashion, ethnic fashion for middle income and value-fashion, with variety of products across different price points through a network of 54 stores.
Commencing operations in 2005, they offer one of the widest portfolios of saree SKUs among women’s apparel brands in India
The Indian apparel market size in FY ‘20 was USD 55.9 billion (Rd 4,477.50 billion) and reached a market value of USD 51.4 billion (RS 4,117.50 billion) in FY ‘22. Between Fiscal ‘22 and Fiscal ‘27 the apparel market is expected to grow at a CAGR of 21%
Organized retailing share of Apparel has increased from 14% in FY ‘07 to 39% in Fiscal ‘22 among apparel sales. In other words, in the last thirteen years, organized retail not only captured the new incremental demand, but it has also succeeded to shift the demand away from unorganized apparel retail.
Apart from the demographic and urbanization, growth of organized retail, the rapid evolution of organized retailing models for apparel is a key reason that has also enabled this growth.
The share of organized apparel retail is expected to increase further to 49% by Fiscal ‘27 and that will continue to support of branded apparel as well
Strengths And Risks
+ Market Leader in South: : Sai SIlks is among leading ethnic and value-fashion retail companies in South India with a portfolio of established formats with focused sales and marketing strategy. Company designs and positions its stores in locations to target its customer segments and demographics.
+ Scalable Business Model:: Their business model is scalable and efficient. It generally achieves immediate positive cash flow for new format stores and achieves break even for capital expenditure incurred within a reasonable period.
+ Omnichannel Network: : They have a strong offline and online presence. With its first Kalamandir Store in 2005 at Hyderabad, with a store size of 3,213 sq feet, they have expanded to 54 stores in four major south Indian states with an aggregate area of approx 603,414 sq feet. They have also expanded their presence in the online e-commerce marketplace.
+ Growth & Profits: : They have organically demonstrated an increase in our revenues and profitability. Revenue from operations increased from Rs. 6,772.48 million in FY ‘21 to Rs. 11,293.23 million in FY ‘22 reflecting full recovery from the effects of COVID-19, which further increased to Rs. 13,514.69 million in FY ‘23.
- Fragmented Market: : Since they operate in a market which is fragmented, there is no certainty that they will be able to attract customers who prefer buying products from the unorganized sector/single store players and gain market share which could adversely impact our business.
- Niche Segment: : Their business is highly concentrated on the sale of women’s sarees and is vulnerable to variations in demand and changes in consumer preference.
- Geographic Concentration: : They generate sales from stores located in Southern India and any adverse developments affecting operations in these regions could impact business.
- Inventory Cost: : The nature of business requires them to maintain sufficient inventories and high inventory costs. Inability to maintain an optimal level of inventory can impact business.
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