Kolkata-based footwear manufacturer and retailer Khadim India Ltd has raised Rs 90 crore from private equity (PE) firm Reliance Equity Advisors. Khadim will use the funds to finance its expansion plan and to retire existing debt.

The PE will remain locked in for three years, following which the company may go for an IPO. According to Ishani Ray, Chief Financial Officer, Khadim India, the company issued compulsorily convertible debentures worth Rs 90 crore to Reliance Equity.

The debentures will be converted into equity shares at the end of this fiscal. Ray did not disclose the interest rate applicable to the debentures or the estimated equity stake of Reliance following the share conversion.

Khadim currently has a paid-up capital of Rs 12.1 crore, with majority control lying with the city-based Roy Burman family. The company, which operates under the Khadim’s brand, posted a nearly Rs 422 crore turnover in 2012-13.

While nearly 90 per cent of the business is contributed by footwear, Khadim’s also has four gold jewellery retail outlets (Sona Khazana).

It has two manufacturing facilities, both in West Bengal — one at Kasba in Kolkata with a capacity of 20,000 pairs a day, and another at Kakinara in North 24-Parganas district, with a capacity of 25,000 pairs a day.

Expansion Plans

Khadim has over 600 retail outlets, of which 112 are company-owned. According to Suman Barman Roy, the company’s Chief Executive Officer, Khadim plans to invest at least Rs 40 crore over the next three years to add 100 company-owned stores. Each store, having a size of 1,000-1,250 sq ft, will entail an investment of approximately Rs 40 lakh.

During the same period, another 80 outlets will be added through the franchise model. Focus will be on expanding presence in East, South and Central India. The company is yet to enter the North.

“We have been growing at 20 per cent annually. We hope to maintain the same momentum with our retail expansion,” Suman Barman said, adding that the preferred locations remain malls and high-street formats.
Focus Areas

Accessories (belts, wallets and bags), which account for 20 per cent of footwear store sales, are another area of focus for Khadim.

The company will target the youth and focus on the middle and upper-middle class markets. Previously into the departmental store format with “Egaro”, the company discontinued it after suffering heavy losses. There are no plans at present to re-enter the segment.

“We plan to concentrate on footwear. Currently, Sona Khazana remains an experimental format. Based on its success, we will take a call on it,” Suman Barman said.