1. Khadim India plans IPO for PE fund Fairwinds’ exit

Khadim India plans IPO for PE fund Fairwinds’ exit

Home-grown footwear retailer Khadim India is planning an initial public offer (IPO) within a year.

By: | Mumbai | Updated: June 20, 2017 5:50 AM
Khadim, Khadim India IPO, PE investor, Fairwinds Private Equity Khadim has initiated discussions with ibankers for IPO, Ishani Ray, chief financial officer, Khadim India confirmed to FE.(Khadim India website)

Home-grown footwear retailer Khadim India is planning an initial public offer (IPO) within a year. The listing will help PE investor Fairwinds Private Equity (formerly Reliance Equity Advisors) exit the company. Khadim has initiated discussions with ibankers for IPO, Ishani Ray, chief financial officer, Khadim India confirmed to FE. The size of the issue of fresh shares, the CFO said, will not be more than Rs50 to Rs60 crore, while the offer for sale would depend on the valuation. The footwear manufacturer reported a gross turnover of Rs650 crore and profit of Rs40 crore in FY17. Ray said the company was exploring an IPO to allow existing PE investors to exit. “In the process we may raise funds for expansion, debt repayment and such other business needs,” she explained.

Fairwinds, which invested about Rs90 crore in Khadim in 2013, is expecting a return of 3 to 4 times on its investment which would amount to Rs270 crore to Rs360 crore, sources said. Khadim India reported a revenue of about Rs550 crore in FY16 and an Ebitda (earnings before interest, taxes, depreciation and amortization ) of Rs60 crore. Consumer brands can fetch attractive valuations of around Rs780 crore to Rs900 crore for Khadim, experts say, is not unreasonable. Pinaki Ranjan Mishra, partner and national leader, EY, said, “The footwear market in India is estimated to be around Rs55,000 crore and is growing at 12% to 13% year-on-year. Khadim’s ebitda of around Rs60 crore is in line with the industry standards.”

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Ankur Bisen, senior vice president of Retail and consumer Products, said the footwear industry had evolved from a basic need-based one to a fashion and style category. “The organised footwear category is pegged at around Rs13,000 crore and is growing fast. This is a good time for a footwear company to get listed since the market is growing,” he said. Khadim, which entered the footwear business in 1993, currently runs 829 retail outlets; of these 162 are company owned and operated while the rest are franchise stores. The company on an average opens around 70 to 80 stores every year with a mix of company owned and franchise outlets. The company sells products ranging from Rs92 to Rs3,599.

Khadim was established by Satya Prasad Roy Burman in 1965 after the acquisition of a small shop in Chitpur, Kolkata. In 1993, the firm entered into retailing. After Satya Prasad’s death in 2013, his son Siddhartha Roy Burman took charge as chairman and managing director of the company.

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