I am pleased to present to you the Annual Report for fiscal 2019.
FY2019 was a challenging year for your Company. Our revenue for the year stood at'7991.81 million as against र 7487.06 million in the previous year recording a growth of6.7%. The gross profit was at र 3027.20 million as against र 2833.99 million marking anincrease of 6.8%. The gross margin remained stable at 37.9%. The EBITDA stood at र 569.39million versus र 756.83 million for the previous year. There was a reduction in the EBITDAmargin from 10.1% to 7.1% while our PAT declined from 5.1% to 2.6%. This reduction in ourPAT was primarily due to currency fluctuations and competitive market dynamics. We alsofaced a decline in our overall footfalls which had an adverse impact on the performanceof the retail segment.
To closely examine the root causes of these market dynamics on our business wecommissioned a reputable agency to conduct an in-depth survey. This revealed a real needfor strengthening our overall brand positioning. To this end we have re-calibrated ourstrategy to focus more on our marketing plans to enhance consumer affinity towards ourbrand instead of overly depending on in-store promotions to drive sales. We are alsore-aligning our brand to resonate more closely with a younger increasingly styleconscious target audience.
To strengthen our brand communication and visibility we bolstered our promotionbudgets significantly and took aggressive steps across multiple brand buildingactivations. For the first time ever we chose to take on three highly recognisable brandambassadors: Farhan Akhtar Kangana Ranaut and Dinesh Karthik. As highly differentiatedactors and athletes we believe their star value mass appeal and vast following byyouthful India will take our brand to newer heights.
For quite a while we have understood the strong emotional connection that Indians havewith cricket. In this vein we continued our sponsorship deals with Kolkata Knight Riders(KKR) and Chennai Super Kings (CSK) during the twelfth season of Indian Premiere League(IPL). Moreover we took our marketing endeavours further up a notch by selling figurinesof MS Dhoni and Suresh Raina exclusively through Khadim's retail outlets. A special lineof KKR branded products was also sold via both Khadim's retail and online channels.
Magnifying Our Presence
There has been an upsurge in the footwear industry in India over the years owing to ahigher disposable income among consumers. The footwear industry is set to experiencesustained growth in the coming years driven by an increased traction in design andinnovation. While branded footwear currently accounts for 44.5% of market share by 2021this segment will stand at half of the market size aided by the growth of both organisedand online retail. This growth can be attributed to the increased adoption of footwearinto the fashion market and the shift from unbranded to branded footwear. At Khadim's weplan to leverage industry growth through our uninterrupted focus on the efficientexecution of our key strategies.
While we took strong initiatives on the branding front we also instituted awell-calibrated expansion strategy by adding 46 new retail stores and 89 distributorsduring the year under review. Furthermore we are exploring other untapped markets throughour twopronged market strategy of exclusive retail and multi brand distributors. As ourbrand outreach continues to grow our total network count stands at 799 retail stores and544 distributors today.
Our retail segment saw a growth of 1% against the expected growth of 10-12%. Duringthe year under review there was a reduction in the sales volume.
The margin in our retail segment was lower than budgeted on account of variousdiscount schemes run by the Company for bolstering sales. Through our repositioning of ourbrand and introducing exciting new designs in line with evolving fashion sense we remainfocused on enhancing the performance of our retail segment in the years ahead.
In our distribution segment we observed lower margins due to an increase in rawmaterial cost and foreign exchange fluctuations. However our distribution businessrecorded a growth of 16.32% YoY in the sales volume during the year under report. Goingahead we are expecting to see a further improvement in the growth of this segment withour strategy to deepen Khadim's geographical penetration.
Our institutional business recorded an uptrend during the financial year. The revenueof this vertical stood at र 695.52 million for FY2019. As a low margin business we arecontinuously looking at ways to improve both volumes and margins to make this part of ourbusiness more accretive and meaningful.
As mentioned earlier we have taken bold steps in building a strong brand connect withour customers. While we hold a good velocity in Tier I and II cities in Eastern India weare also working towards establishing our geographical footprints in metro cities andgeographies beyond East. Furthermore our strategy to drive premiumisation through ourstrong range of sub-brands will observe exclusive activities with a purpose to align ouroperations with the growth strategy of our Company.
To strengthen our management team we have invested in seasoned experts in leadershiproles to head respective verticals. We have also initiated internal restructuring of ourpeople and processes in order to enhance our operational efficiency and productivity. Weare hopeful that our brand positioning will gradually improve and our performance willrebound.
Standing at this juncture I am optimistic about our future growth prospects for themany pertinent reasons mentioned above. As a company with more than two decades ofhistory we've seen several ups and downs in business cycle and have emerged strongerthrough them. Going forward I am confident in our strategic approach to this currentbusiness cycle and to the next phase of quality growth.
I would like to thank our dedicated management team and skilled workforce for helpingus succeed in sustaining resilience. I also express my sincere gratitude to my colleagueson the Board and to all the shareholders.
Finally I would like to acknowledge the support of all our stakeholders. I lookforward to your continued support and trust in our journey ahead.
Siddhartha Roy Burman
Chairman & Managing Director