Koutons Retail India Limited

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Koutons Retail
Koutons, the largest apparel retailer in India, started their business in 1991 with the formation of a partnership firm „M/s Charlie Creations‟. The first manufacturing unit (with a capacity of 20,000 apparel per annum) was set up in Delhi in 1993. On Nov 25, 1994, the promoters, Mr. DPS Kohli, Mr. BS Sawhney and Mr. GS Sawhney incorporated the company as „Charlie Creations Pvt. Ltd.‟ which was later renamed as „Koutons Retail India Private Ltd.‟ in Feb, 2006. The company went public in early 2006 and thereby became Koutons Retail India Limited (KRIL) with effect from June27, 2006. KRIL is primarily an integrated apparel manufacturing and retail company in India. They are in the business of designing, manufacturing and retailing under the brand names Koutons and Charlie Outlaw. Their main target customers are middle class consumers who are keen to trying out new fashions falling in the age group of 22 – 45 years. Find below a brief timeline of Koutons. 1991- Started as Charlie denim jeans showroom 1994 – Incorporated as Charlie Creations Pvt. Ltd 1997 – Diversified in non-denim apparel, awarded with Best Menswear Collection 1998 – Brand Koutons was launched 2002 – First exclusive brand outlet of Koutons opened 2006 – IPO. Name changed to Koutons Retail India ltd in June 27, 2006 2007 – Listed on BSE and NSE Koutons Financials

Koutons has reported the fastest growth in its sales and profits among its listed and closest peers partly due to a smaller base. The Company's restated total income and profit after tax were Rs 4036.17 million and Rs 344.87 million respectively as of and for the year ended March 31, 2007 compared to Rs 1583.85 million and Rs 131.98 million respectively as of and for the year ended March 31, 2006. (Exhibit 1). Koutons do not have any stock option scheme or stock purchase scheme for the employees of the company. Industry Overview

The Indian retail sector, which is believed to be at an inflexion point, is valued at USD 270 billion (2006) with Food and Grocery being the dominant sector followed by clothing, textiles and fashion accessories which contributes nearly 9.5%.The organized retail sector on the other hand has grown with a CAGR of 30% and stands at about USD 12.4 billion (2006) which is only 4.6% of the total retail market thus demonstrating its huge future potential. In the organized retail sector the major share is held by the clothing and accessories sector (39%) growing at a rate of 30.3% during 2005-06, followed by food and grocery (11%). The Indian apparel retail industry(which mainly consists of sale of all menswear, womenswear and infantswear) grew by 12.3% in 2006 to reach a value of $20 billion (INR 880.9 billion); the CAGR growth for the period 2002-06 being 11%(Exhibit 2).The share of the organized apparel retail has grown steadily to reach 18.9% in 2006. Considering an anticipated CAGR of 10%, the apparel retail industry in India is expected to reach USD 32.1 billion by end of 2011. Fuelled by strong economic growth, favorable demographics, easy availability of credits, availability of retail space, rising level of disposable income, rise in dual income families and shift of life style pattern, organized retail in India is expected to grow tremendously in the next few years. The emergence of the mall culture in India acts as catalyst in this growth story. By the end of 2007 approximately 68 million sqft of mall space is expected to come in India, majority being equally shared between North Zone (39%) and West Zone (33%). According to a 2005 KPMG retail survey report, the Specialty and Super Market format have the highest potential for growth (45%) followed by Hypermarkets(36%) and Discount Stores (27%). In terms of opening up of new retail outlets, the apparel retailers and brands attained a growth of 113% in 2006 compared to 84% in 2005. As on 2006, major share in the Indian apparel retail market is accounted for by Menswear (45%), followed by Womenswear (36.1%),...
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