The eight-year-old company operates 16 outlets across Andhra Pradesh, Tamil Nadu and Karnataka.
“We propose to take on leased properties to set up these outlets, which should be operational during the third quarter of next fiscal,” Prasad Chalavadi, chairman and managing director of Sai Silks (Kalamandir), told mediapersons here on Tuesday.
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The company will be entering the capital market through an initial public offering (IPO) to raise around Rs 89 crore. Besides funding its expansion strategy, the proceeds of the issue will be utilised for brand-building exercise (Rs 8.5 crore), re-payment (Rs 91 lakh) of term loan to State Bank of India, and close to Rs 60 crore for meting long-term working capital requirements.
Following a book-building process, Chalavadi said, the company has fixed the price band in the range of Rs 70 to Rs 75 per share. The issue opens on February 11 and closes February 13, 2013.
As of March 31, 2012, the networth of the company was at Rs 47.65 crore. It has reported revenues of Rs 263 crore in the 2011-12 financial year, of which Rs 163.02 crore was from sarees, dress material and other clothings, while Rs 99.50 crore was from gold, silver and diamond jewellery.
The net profit for the same period was at Rs 11.69 crore.
According to him, the company will be offering a ‘safety net’ scheme to original resident retail investors, under which the scheme providers (promoters and promoter group) will buy the retail investors’ shares at the issue price if the market value of the equity shares falls below the issue price.
“The scheme will remain open for a period of six months from the date of credit of the equity shares in the investor’s demat account, and the safety net providers will buy those shares to a maximum of 1,000 shares,” he said.