TRICHUR: Kalyan Silks Trichur Pvt Ltd (KSTPL) or Kalyan Silks saw its net profit decline by about 33 per cent during 2023-24 (FY24) with its net earnings falling from Rs93.7 crore in 2022-23 (FY23) to Rs63.1 crore in FY24, according to a reliable document.
This is despite its operating income having grown marginally from Rs1,326.2 crore to Rs1,329.3 crore in FY24.
However, businessbenchmark.news doesn’t have any details regarding its expenditure to ascertain the reasons for the fall in profit during FY24.
Kalyan Silks is said to have incurred increased expenses on the employee costs as well as advertisement costs.
“Despite an improvement in gross contribution margins, KSTPL’s operating margins moderated by 120 basis points (bps) to 10.3 per cent in FY2024 due to an increase in employee costs and advertisement expenses,” a report from a leading credit rating agency noted.
Competition
“Kalyan like its peers must be experiencing intense competition from other major organised retailers and unorganised local players, exposing their profitability to limited pricing flexibility and fluctuations in input costs,” a textiles expert noted.
Kalyan Silks has a debt exposure of Rs115 crore including Rs85 crore in cash credit and Rs30 crore in term loans as of March 31, 2024.
After witnessing a healthy revenue growth of about 23 per cent in FY2023 on a year on year basis, Kalyan Silks’ revenues remained almost flat at Rs1,329.3 crore in FY2024 (provisional).
Expansion
The company has added two new locations of operations by opening stores in Kozhikode and Kollam.
It has plans for store additions through debt funding to the extent of Rs90 crore during the current financial year, according to the note released by the rating agency.
Though KSTPL’s liquidity position has improved over the last two fiscals, backed by steady earnings and relatively lower reliance on external debt and retention of its earnings, some analysts flagged the company’s geographical concentration as Kerala showrooms have contributed about 90 per cent to he revenues in FY24.
Kalyan has a healthy market position in the apparel retail market in Kerala and certain markets of Tamil Nadu and Karnataka, driven by the strong brand recall.
Kerala market
The Kerala market contributes most to Kalyan Silks’ revenues, with 20 out of its 24 apparel showrooms located within the state.
Also, it has recently opened six outlets catering to specific requirements of the Boys’ and Girls’ segments through its subsidiary, Fazyo India Pvt Ltd.
However, these stores are also located within Kerala and the entity derived 5.3 per cent of its income from its overseas subsidiaries in FY2024.
