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Kewal Kiran Clothing Ltd.

BSE: 532732 Sector: Industrials
NSE: KKCL ISIN Code: INE401H01017
BSE 00:00 | 30 Nov 490.30 6.10
(1.26%)
OPEN

487.80

HIGH

499.00

LOW

486.90

NSE 00:00 | 30 Nov 491.00 5.35
(1.10%)
OPEN

488.40

HIGH

498.60

LOW

487.00

OPEN 487.80
PREVIOUS CLOSE 484.20
VOLUME 10105
52-Week high 520.75
52-Week low 178.50
P/E 28.29
Mkt Cap.(Rs cr) 3,022
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 487.80
CLOSE 484.20
VOLUME 10105
52-Week high 520.75
52-Week low 178.50
P/E 28.29
Mkt Cap.(Rs cr) 3,022
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kewal Kiran Clothing Ltd. (KKCL) - Chairman Speech

Company chairman speech

On the Road to Expansion

The financial year gone by was eclipsed by the director effects of the COVID-19pandemic. The associated lockdowns triggered a major economic crisis for the society withuncertainty all around. Our heart goes out to all those who may have lost their loved onesduring this time.

The economy plunged into recession in Q1 incomparable to anything in the near past.With the improving scenario around Q2/Q3 of the past financial year there was rising hopeand positive sentiment amongst people which was short-lived and marred by the onset of thesecond wave of the pandemic.

The focus on vaccination immediate government and RBI measures localisedmicro-containment measures state-specific movement restrictions mobilisation of healthsupplies and ramping up of health infrastructure will be instrumental in helping us emergestronger from these difficult times.

The COVID-19 pandemic fundamentally altered how organisations operated and called forreassessment of the approach to operations with a cut towards all the unwarranted expensesand nofrills work environment. Cost saving was the new mantra and continuous adaptationwas the key to survival.

Agile Adaptation to the Changing Scenario

As an organisation we were on a constant learning strategy keeping all ourstakeholders’ interests in mind. In spite of the abrupt shutting down t of ouroffices manufacturing units k and retail outlets an agile adaptation ft to the new workfrom home culture B and digital technology ensured H continuation of operations and

• reduced the impact on the business

• during these times. Various cost

• B mitigation measures were adopted and as an organisation we prioritised costreduction measures especially involving discretionary spends across processes which hashelped us in navigating through these tough times.

The pandemic has also led to major learnings for our Company to further improve ourefficiencies as evidenced by not opting government offered moratorium and riskmanagement practices such as increased insurance coverage for some of the uncertaintywhich were never earlier envisaged.

I am proud of and grateful for the commitment and dedication of our employees displayedduring this year.

OUR PERFORMANCE

The surge of COVID-19 followed by localised lockdown affected the branded apparel andretail performance. Our Company was not immune to the unprecedented slump in the economy.The localised lockdown during the key festive season and deferred wedding season coupledwith fall in footfalls across retail outlets due to hesitancy and precautionary measuresamongst anxious shoppers led to subdued business sales during the year. However we wereable to minimise the impact to the extent possible and achieved nearly 60% of operatingincome of FY 2019-20. We achieved an operating income of Rs.302.73 crore in FY2020-21 ascompared to Rs.529.67 crore in FY2019-20 and total revenue (including other income) ofRs.319.77 crore in FY 2020-21 as against Rs.547.20 crore in FY2019-20.

The EBITDA of the Company stood at Rs.18.66 crore in FY 2020-21 as compared to Rs.95.08crore in FY 2019-20. Due to the implementation of timely cost-saving measures we wereable to post a profit after tax of Rs.19.42 crore in FY2020-21 despite the grim situationand loss in the Q1 FY2021.

Short-Term Strategy for Long-Term Gain

Consistent discounting tools have been the new normal to attract customers in times offalling demand. Consumers today are continuously looking for value and deals which leadto demand generation through discounts. In the world of fashion the inventory is largelydependent on seasons-spring summer fall and winter. Consequently we adopted discountingpractices for season- specific inventory that had piled during the lockdown across retailoutlets. These practices in the short term led to an improvement in sales but hurt ourmargins. We believe this is a temporary phenomenon and as a long-term objective we striveto strike the right balance between when and how often to use such discounting practices.

Timely Measures for Survival

Based on our time-tested way of conducting business well-capitalised balance sheetnet debt-free status disciplined cost control and prudent financial practices wesuccessfully protected the interests of all our stakeholders in this particularlychallenging year. Despite the impact on business the financial risk profile remainedstrong backed by healthy capital structure comfortable debt protection metrics and strongliquidity providing the much-needed confidence to face untoward events in the future.

KKCL has a strong financial position with net cash balance (cash and investments minusborrowings) of Rs.252.1 crore as compared to Rs.187.39 crore in previous financial year.We reduced short-term borrowings to Rs.46.4 crore from Rs.88.0 crore in previous year.

Our conservative nature in financial management has led to a strong liquidity base ofRs.298.5 crore as on March 31 2021 in the form of current and non-current investmentsagainst nil term debt. We have been able to enhance our liquidity position as compared toprevious financial year through cost rationalisation in the form of reduction ofnon-essential spends working capital optimisation through healthy realisations and promptliquidation of inventory. We strongly believe that maintenance of adequate liquidity isthe critical for businesses like ours to tide through these rough waters. This will helpus to regain a strong foothold when the economy recovers.

FUTURE GROWTH STRATEGY

Balancing Expansion and Profitability

We continue to leverage the sectoral opportunity by presenting a wide portfolio ofproducts in India’s organised apparel market to meet the diverse consumer demand inIndia. The adoption of digitalisation in our business which started before the onset ofCOVID-19 played an important role especially with frequent lockdowns affectingstore-level operations. Our renewed perspective on considering the digital channel as akey distribution medium will bring us closer to customers. Moreover this digital strategywill evolve without impacting profitability and cash generation and enable us to capturethe growth potential of different consumer segments like the tech-savvy and millennialsgoing forward. We are already beginning to see green shoots of this digital pushinitiatives. Our sales from online retail platform rose from 7% of total sales inFY2019-20 to nearly 16% of total sales in FY2020-21. We will continue evaluating thisstrategy on a cost benefit analysis in terms of visibility and potential sales generation.

With stores gradually opening across the country with easing of lockdown restrictionswe hope for positive demand outlook. The festive season which is expected to bring inrenewed demand for branded apparel and higher footfalls and ticket size sales would be thekey driving factor for sales for the apparels as was seen during the end of first wave.Our plan is to focus on growth through accelerated store additions across geographieswhere we can leverage our customer loyalty. Further we plan to rationalise certain storesto improve profitability.

With a strong balance sheet we are chasing high business growth in the coming timeswhile prioritising our primary business ethos of profitability in mind.

Further due to the ever-changing environment the past year has taught us to be moreadaptable and flexible.

This has resulted in the adoption of " strategic measures such as periodicassessment of business models identification of strategic and tactical opportunities toimprove effectiveness and the reduction of avoidable costs.

We shall continue building on these initiatives in the future as well.

OUTLOOK

The future belongs to businesses that can sail through these turbulent waters withtime-tested measures as the industry goes through a phase of consolidation. Many brandshave fallen by the wayside on account of the unprecedented slowdown in the economy coupledwith internal challenges.

As the number of cases subside and with planned easing of restrictions and return ofnormalcy we are more optimistic cognisant of the enormous opportunity ahead of us. Ihave no doubt that with a strong balance sheet resilient business fundamentals strongbrands robust infrastructure well-entrenched distribution and a culture of innovationwe are geared to exceed the demands and aspirations of modern fashion-conscious consumersand expect to achieve double digit growth in the coming years on the back of strong demandand conducive business environment.

Let me conclude by thanking all our Board members our investors our employees and allour good- wishers for their tremendous support during these times. A special word ofappreciation and gratitude for our customers who continue to repose their brand loyaltyand their association with us keeping us motivated to strive for more. Wishing all of youthe best of health and happiness.

Kewalchand P. Jain

Chairman & Managing Director.

.