Mumbai: Indian textiles firm SKNL expects the market regulator Sebi’s approval for its unit’s $250 million initial public offering (IPO) by February-end and expects to list by March, a top official told Reuters.
“The DRHP (draft red herring prospectus) has been filed, it is under evaluation of Sebi (Securities and Exchange Board of india), so we are hoping to get their clearance soon... probably by end of February,” managing director Nitin Kasliwal said in an interview.
The firm will use the proceeds of the issue to fuel growth of unit Reid & Taylor and to pay off debt, he added. It has mandated JP Morgan and UBS AG, among others to manage the issue.
S. Kumars sells apparel under a variety of brands at different price points, from ‘Reid & Taylor’ which caters to the premium and upper-middle segment of the suiting market to ‘Belmonte’ suits and shirts for the economy segment.
Kasliwal had told Reuters in March that it was talking to private equity firms to spin off ‘Belmonte’ but did not comment on the development when asked on Thursday.
Growth firm, input costs a concern
On Thursday, SKNL posted an 18% growth in Oct-Dec net profit at Rs796.9 million on higher volumes and better margins.
“Because we are in the branded business we have been able to increase the prices and maintain margins,” he said over the telephone.
Its operating profit margin rose by 1.6 percentage points to 19.6% in the quarter to December. Kasliwal expects its topline to grow at 30% in FY11 and FY12.
He voiced concerns over rising prices of raw materials such as cotton - which hit a record high this week on supply woes.
“Raw material prices are a big concern. Therefore, we have increased our selling prices both last quarter and this quarter. So, hopefully, we should we able to maintain the margin,” he added.
Margins are likely to rise to 21% in FY12, Kasliwal said, aided by its international business, which is expected to grow by 25-30% in FY11, Kasliwal said.
“Our international business is at a new level. We are growing much rapidly because we are also getting market share and we are re-establishing ourselves,” Kasliwal said.
Its international brands include Hickey Freeman, Bobby Jones, Hart Schaffner Marx, Exclusively Misook and Austin Reed.