Dear Shareholders,
It gives me immense pleasure to present the Company's Annual Report for
fiscal year 2023-24. Despite a challenging macro environment marked by muted demand and
inflationary pressure, we sustained our retail sales, expanded our presence and reinforced
retail market leadership.
Our strategic focus on opening new stores supported by an asset-light
model, improving EBITDA margins, demerging our distribution business and product
improvisation coupled with focused marketing initiatives, has been crucial to our
performance in FY 2023-24.
We are building a robust foundation for long-term growth and increased
visibility by fostering strong customer connections and leveraging cutting-edge technology
and an engaged workforce.
Macro Economic Landscape
In FY 2023-24, the global footwear market was mainly driven by changing
consumer preferences, technological advancement and emerging trends. Despite weak demand,
the Indian footwear segment benefited from a burgeoning middle class, rapid urbanisation,
increased digitalisation, expanding rural markets, higher disposable incomes, and a
growing preference for branded and premium footwear. Favourable government initiatives
such as the Production Linked Incentive Scheme (PLI) and Make in India further accelerated
growth, creating opportunities for both established brands and new entrants.
The Company faced several headwinds, including high inflation impacting
raw material prices and sales, particularly in our core markets of Tier III and IV cities
and softness in discretionary consumer spending. We also faced heightened competition with
the emergence of new organised players and local competition. Furthermore, the Company has
taken all the initiative to implement a regulatory shift in accordance with the stringent
Bureau of Indian Standards (BIS) quality norms.
Performance Highlights
Notwithstanding such challenges, we managed to retain our retail sales
at the previous year's levels though a reduction in credit limits impacted our
distribution business. In FY 2023- 24, Revenues stood at ' 6,149.04 Million, reflecting a
6.87% decrease from ' 6,602.64 million in FY 2022-23. Despite this, our Gross Margin
improved significantly to 45.4%, an increase of 350 basis points year-on- year, driven by
a higher contribution from the retail division.
Operating EBITDA margin rose to 11.54% of net sales, compared to 10.98%
in the previous year. However, Profit After Tax fell to ' 63.16 million - a 63.93%
year-on-year decrease from ' 175.07 Million.
Retail and Distribution gross margins enhanced to 56.1% and 38.5%,
respectively, up from 53% and 34.9% in FY 2022-23. These improvements underscore our
commitment to operational excellence, superior product designs, effective brand
premiumisation and targeted marketing campaigns.
Growth and Expansion Focus
Changing consumer behaviours, rising disposable income, growing fashion
awareness and increasing popularity of digital channels have contributed to the growth of
the retail segment and broader brand penetration beyond metros and mini-metros. Backed by
an asset- light model, we focused on a favourable product mix, affordable prices and
expanded footprint to capitalise on these opportunities and drive retail growth during the
fiscal year.
Our dedicated team worked on improving product designs while launching
new products to make them more appealing with vibrant and trendy designs to our
aspirational customers across Metros and Tier I, II & III cities. We continued to
pursue sub-brand premiumisation to improve sales and margins with a strategic focus on
metros and mini-metros.
To strengthen the performance of our distribution division, we
implemented a robust credit mechanism. Additionally, we have expanded our PU and EVA range
alongside rationalisation of price and improvement in product design and quality.
As we advance our growth strategy, our decision to demerge Khadim's
distribution segment in FY 2023-24 signifies a transformative step for our Company.
Demerging Distribution Business
By demerging our distribution division into the newly formed KSR
Footwear Limited, we aim to boost operational efficiency and accelerate growth while
minimising risks. This strategic move will enable us to create sector-focused entities,
attract investors with targeted interests, and streamline our management structures. We
have secured approvals from BSE and NSE and are now awaiting the final approval from the
Hon'ble National Company Law Tribunal (NCLT), Kolkata Bench, for our demerger scheme.
Bifurcating our retail and distribution segments will unlock significant value for each
vertical, paving the way for focused growth and enhanced stakeholder value.
Focused Marketing
During the fiscal year, we amplified our brand recall through targeted
marketing campaigns, strategic partnership with influencers and investments across both
digital and traditional media. Highlights include our festive campaign, 'Cholche Khadim
Cholbe Khadim,' celebrating our steadfast commitment to affordable fashion tailored to
evolving customer needs. We also welcomed Abir Chatterjee and Ishaa Saha, renowned Bengali
Actor and Actress as our Brand Ambassador, harnessing their popularity to bolster our
visibility among younger audiences in the East and North East regions of India.
Optimising Core Capabilities
By leveraging our key strengths and maintaining a technology focus
approach, we stay attuned to our core principle of making affordable fashion for everyone.
Our manufacturing facilities are equipped with advanced testing
laboratories, ensuring smooth adaptation and transition to new BIS regulatory
requirements. We are also actively guiding our vendors through the BIS registration and
product testing to ensure compliance.
Operating state-of-the-art warehouses helps us drive operational
excellence and maintain a robust supply chain. During FY 2023-24, we modernised our
warehouse application with modern WMS to further streamline operations. We continue to
embrace technology for automation and optimisation, enhancing operational and efficiencies
alongside improving customer satisfaction. Additionally, we invest in digital capabilities
to expand our reach to the rising demand among digitally savvy consumers.
Prioritising employee engagement, we continue to invest in dedicated
leadership programmes and internal training to make our employees adaptable to evolving
industry and customer needs. As we advance, we stand committed to fostering a culture of
collaboration and empowerment, enabling our employees to thrive and significantly
contribute to our growth and customer satisfaction.
Outlook
As we chart our path forward, we intend to seize growing segment
opportunities, expand our store network and optimise working capital post-demerger to
boost sales value and enhance retail profitability. Our strategic focus includes plans to
raise ' 149.20 Million to scale operations and diversify our portfolio to accelerate
growth and deliver lasting shareholder value.
In closing, I want to extend my deepest gratitude to our shareholders,
loyal customers, employees, trusted business partners and the broader community for your
ongoing support. I am especially appreciative of our esteemed Board of Directors for their
strategic insights and guidance.
Confident in our long-term strategy, we are committed to leveraging our
brand strength, customer loyalty and market potential to drive sustainable growth and
deliver enduring value to our shareholders. Together, we are poised for a future of
exciting opportunities and continued success.
Warm Regards,
Siddhartha Roy Burman
Chairman & Managing Director