Sai Silks (Kalamandir) Ltd IPO – Quick Review

Sai Silks (Kalamandir) Ltd IPOSai Silks (Kalamandir) Ltd IPO – Quick Review

After the north based V-Mart Retail IPO hit market last week, now the IPO wind has moved towards South India. Sai Silks (Kalamandir) Ltd has come out for IPO.

Hyderabad based Sai Silks (Kalamandir) has come out for public issue for Rs 89 crores of shares @ at a price band of Rs 70 to Rs 75.

About Sai Silks (Kalamandir) Ltd

Sai Silks (Kalamandir) Ltd is incorporated in 2005 is in the retail business of Sarees in the brand names of Kalamandir, Mandir, Varmahalakshmi.  It has presence over south India with over 16 outlets spreading across Hyderabad, Bengaluru, Vijayawada, Guntur, and Kancheepuram. It mainly focuses on Women’s Ethnic wear. Company sells products like Sarees, Women dress materials, Kids wear, Mens wear, gold jewellery and silver jewellery. The promoters are Mr.Chalavadi Naga Kanaka Durga Prasad and Mrs. Chalavadi Jhansi Rani.

Current public issue details

  • Issue price: Rs 70 to Rs 75 per share
  • Minimum bid: 200 shares
  • IPO opens: 11-Feb-2013
  • IPO closes: 13-Feb-2013
  • Leader managers: Ashika capital Ltd and Vivro Financial services Ltd
  • Listing: BSE/NSE

Purpose of the IPO: The funds would be used for the following purposes.

  • Setting up of retail Outlets
  • Expenses to be incurred for Brand Promotion
  • Pre-payment of term Loan facility
  • Meeting Long term working capital requirement;
  • General corporate expenses
  • Issue expenses

Safety Net Scheme for Retail investors

Company is also offering the safety net to investors for the six month. The safety net assures the protection of their investments till six month period. If the share price plunges below the IPO price within 6 months, the promoters would buy back shares from the retail investors. This is only for the shares issued through IPO and not for subsequent purchases through stock exchanges. Such safety net scheme is promoted by only a few companies. Earlier Usher Agro have done similar safety net scheme in 2006.

Recommendation:  Company is growing year on year.  Its EPS in the last 3 fiscals is Rs 4.63. Its 7 months EPS (not annualised) is Rs 3.47. It has not given any details of its peers, hence it is not comparable with any of the listed companies. ICRA has assigned the IPO Grade-2 to this offer which means “Below average fundamentals”.  Thought there is safety net for retail investors, considering the low IPO grade and low EPS, retail investors can stay away from this IPO.

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Sai Silks (Kalamandir) Ltd IPO – Quick Review

Suresh KP


  1. Unscrupulous promoters and their shady investment advisers have apparently devised an innovative method to beat the pre call auction for IPOs that has successfully such dishonest promoters away from capital market. Black money of these unscrupulous promoters will now be used to obtain subscription of shares offered for retail investors [around 50% of the issue in this case] and will be bought back through the safety net with their white money generated through a complex web of transactions. WONDER WHY SEBI DOES NOT SEE THROUGH THIS GAME.

  2. Check their draft prospectus. It is having negative cash flows for the last 6 years.. Safety net or not— it is a bad option for retail investors. Not sure how the price band is fixed at 75..

  3. sorry, I don't understand the recommendation .. if there is safety net, then why should we refrain from applying to this stock. The worst case scenario is we will get our money back … and best case operatiors might give good return.

    Based on this .. i think everyone should apply.


    1. Hi, Except for Safety net, I could not see any other positive factor in this, hence my recommendation was to stay away from this. Thanks for your feedback

        1. Ajay, The conditions are the safety net is for upto 1,000 shares and they should have purchased from IPO and not from secondary market after it is listed in NSE/BSE.

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