Footwear maker Khadim expects demerger to be completed by March: Official

Footwear major Khadim India Ltd is expecting to complete the demerger of its distribution business by March 2025 with a subsequent listing in the bourses by May, an official said on Monday  The company is also exploring quick commerce partnerships with platforms like Zepto for utility products such as school shoes and EVA slippers to boost sales, he said.

The Kolkata-based footwear maker had earlier announced the decision to carve out its distribution business and manufacturing activities into KSR Footwear Ltd (KFL) to improve margins and valuations.

"The demerger is pending before the NCLT. An order is expected by the end of this month or March. As of now, the planned effective date of the demerger is April 1. Listing of the demerged entity (KSR) will take place within May," Khadim's chief financial officer Indrajit Chaudhuri told PTI.

This strategic move is expected to unlock substantial value for its core retail business, which comprises approximately 890 stores under the Khadim brand, accounting for nearly 66 per cent of the total revenue.

"We are expecting a margin expansion of 100-200 basis points for a full-year operation in FY'26," he said.

The distribution business contributed 31.2 per cent of revenues in Q3, ending December 2024. The company has also onboarded 50 new distributors, bringing the total to 776.

To improve sales, the footwear retailer has implemented several measures, including reducing prices on existing products and introducing new ones with lower maximum retail prices (MRPs) to attract consumers, the official said.

Khadim aims to expand its 4-5 per cent online revenue share by optimising product selection and digital marketing.

"We are exploring quick commerce partnerships with platforms like Zepto, and focusing on utility products such as school shoes and EVA slippers to drive sales," Chaudhuri said.

Khadim is also set to launch an athleisure segment in the spring/summer season as part of its diversification strategy.

This, along with higher-margin products, is expected to boost gross margins in the coming quarters, the official said.

The company is transitioning underperforming franchisee stores to a commission-based model, where it manages operations while franchisees earn a sales commission.

"This strategy has yielded positive results in 30 stores, with plans for further expansion to boost sales and profitability," Chaudhuri said.

Additionally, Khadim is taking steps to reduce fixed costs, particularly in its e-commerce operations, by outsourcing warehousing and converting fixed costs to variable ones. This move is expected to improve overall profitability, he said.

The company reported a 2.5 per cent year-on-year revenue growth in Q3FY'25, reaching Rs 160.2 crore.