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Kewal Kiran Clothing Annual Report 2023 Summary

1. Kewal Kiran Clothing Limited (KKCL) has undergone a significant transformation from its denim-focused beginnings to becoming a vibrant lifestyle brand in India over the past three decades.

2. Their diverse portfolio includes iconic in-house fashion brands like Killer, Integriti, LawmanPg3, Easies, and Desi Belle, appealing to a wide range of apparel and accessory enthusiasts across the nation.

3. KKCL's integrated approach, encompassing design, manufacturing, branding, and retailing, ensures high-quality, stylish products. They've established an extensive distribution network, reaching customers through Exclusive Brand Outlets (EBOs), Large Format Stores (LFS), E-commerce, and Multi-Brand Outlets (MBOs). This approach has solidified their position as a beloved and successful apparel fashion brand in India.

4. Their product portfolio includes a variety of fashion essentials, from denim jeans to shirts, T-shirts, women's wear, and versatile trousers, complemented by accessories. Iconic brands like Killer, Easies, Integriti, Desi Belle, and LawmanPg3 resonate with the distinct personalities and desires of their customers.

5.Their success is attributed to their efforts to achieve high sales growth, a robust balance sheet, and a strategic partnership with the Board of Control for Cricket in India (BCCI) to become the Official Sponsor of the Indian Cricket Team. They believe that their association with cricket across these mediums had a positive impact on enhancing our brand visibility and aspirational value as it has helped the Brand 'Killer' to reach out to the millions of cricket fans, across gender, across age that are spread across the country and overseas.

6. The company offers a diverse range of high-quality clothing and fashionable accessories across various categories, from everyday casual wear to formal office and party attire. This product diversity reinforces the company's strong market position. Their strategic efforts, such as expanding their Exclusive Brand Outlets (EBOs), increasing product categories, and improving supply chain efficiency, have contributed to their growth and positioned them for a promising future.

7. The company has notably expanded its distribution network by adding 97 EBOs in the fiscal year 2022-23, bringing the total to 453 EBOs as of March 31, 2023. This expansion has helped enhance brand visibility and raise awareness. The company's emphasis on diversifying distribution channels and product offerings has led to strong financial performance.

8. They have evolved from denim-focused brands to comprehensive lifestyle brands and introduced new product categories like winterwear, casual blazers, and athleisure collections, enabling faster inventory turnover, a year-round product range, and increased customer spending.

9. The company boasts over three decades of experience and state-of-the-art manufacturing facilities, ensuring high-quality and timely product deliveries. Their dedicated teams in design, merchandising, marketing, and procurement continually work on innovative design concepts across product categories to meet evolving market trends and customer preferences. Regular bi-yearly trade shows help improve supply chain planning and inventory management.

10. Consumer preferences have shifted toward branded apparel, creating strong demand for organized players.

11. India's textile and apparel industry faced demand slowdown and supply chain disruptions due to high inflation and COVID-19 lockdowns, but it showed signs of recovery in FY2022. Exports increased significantly, and the sector began rebounding with improved EBITDA margins.

12. The Indian textile and apparel industry has a promising future, benefiting from a young population, rising incomes, and low organized retail penetration. Government support, including the PLI scheme, will further boost the industry's growth potential, with a projected 10% CAGR from 2019-20 to reach US$190 billion by 2025-26.

13. It achieved a remarkable 28.28% year-on-year growth in operating revenues, driven by volume growth and improved realizations.

14. COGS improved as a percentage of operating income, mainly due to better average realization and reduced cotton prices.

15. The company has evolved from a denim-focused brand into a lifestyle brand, diversifying its product categories. In FY2023, the company expanded its product range to include jeans, trousers, shirts, t-shirts, jackets, pullovers, and winterwear. It also introduced an Athleisure collection and casual blazers.

16. Key product sales in FY2023 included:

  • Jeans: Contributed 51.19% of total apparel and lifestyle accessories sales, with revenues of ₹39,630.35 lakhs.

  • Trousers: Contributed 8.71% of total sales with revenues of ₹6,746.42 lakhs.

  • Shirts: Contributed 21.51% of total sales with revenues of ₹16,651.85 lakhs.

  • T-Shirts: Contributed 4.79% of total sales with revenues of ₹3,706.64 lakhs.

17. The Company has 453 existing retail stores as on March 31, 2023 and 49 stores are in work in progress phase. Of the 453 stores, 206 stores are in K-Lounge format, 222 stores are Killer Brand EBOs, 24 are other Brand EBOs and 1 is a factory outlet format. The Company has added net 97 stores during the FY2023 and continues to focus on adding more such EBOs.

18. Risks and Concerns:

  • Discretionary spending on fashion wear can be impacted during periods of higher inflation, affecting consumer confidence.

  • Increased competition and foreign brands entering the Indian market may lead to pricing pressure and higher advertising costs.

  • Continuous product innovation is essential to align with changing fashion trends and consumer preferences.

  • The company faces credit risk associated with extending credit to franchisees and distributors.

  • Commodity price fluctuations can affect the cost of raw materials, impacting business, cash flows, and operations.

  • Inflation can make cost estimation and control more challenging, especially when price points in the apparel sector tend to remain constant over time. Cost control becomes critical to achieve desired margins.

The company, with its integrated business model, strong brand appeal, and experienced teams, is well-positioned to navigate these risks and capitalize on opportunities in the apparel and retail sector.



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