Good morning, ladies and gentlemen. I am Karthi Keyan, moderator for the conference call. Welcome to the Q2 and H1 FY 2027 earnings call of Sai Silks (Kalamandir) Limited. As a reminder, all participants will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. If you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone telephone. Please note, this conference is recorded. I would now like to hand over the flow to Ms. Garima Singla from Go India Advisors. Thank you, and over to you, ma'am.
Thank you. Good morning, all. It's my pleasure to welcome you on behalf of Sai Silks (Kalamandir) Limited. Thank you for joining us today for the Q2 and H1 FY 2027 earnings conference call. Today on the call, we are joined by Mr. Bharadwaj Rachamadugu, CEO, and Mr. K.V.L.N. Sarma, CFO. Please note that today's discussion may include certain forward-looking statements. Therefore, they must be viewed in conjunction with the risks that the company faces. I now invite Mr. Bharadwaj to present the company's business outlook and performance, after which we will open the floor for Q&A. Thank you, and over to you, sir.
Thank you, everyone, and good morning, ladies and gentlemen, and a very warm welcome to Sai Silks (Kalamandir) Limited Q2 and H1 FY 2027 earnings conference call. Before we begin, I would like to extend my warmest wishes to all of you and your families on the occasion of this festive season. May this auspicious period bring happiness, prosperity, and good health to everyone. I hope you had an opportunity to review our financial results and investor presentations available on the stock exchanges as well as on our company's website. Over the past two decades, Sai Silks has evolved from a single saree store in Hyderabad into one of the South India's leading organized ethnic wear retail platforms, built on customer trust, deep regional understanding, and a commitment to preserving India's rich textile heritage.
Our focus remains on scalable retail and sustainable growth, building a more productive and profitable retail network through differentiated brands, operational efficiencies, and disciplined capital allocation. The first half of FY 2027 witnessed a challenging discretionary consumption environment, particularly in the wedding and occasion-led categories. Q1 was impacted by Adhik Maas, while Dussehra-led festive momentum, which had commenced in September last year, shifted to October this year. This calendar shift, coupled with relatively high base in the corresponding quarter, weighed on consumer demand and our quarterly performance. Against this backdrop, our financial performance demonstrated resilience. Q2 FY 2027 revenue stood at INR 434 crore, compared with INR 444 crore in Q2 FY 2026, representing a decline of about 2.3% year-on-year. Gross profit stood at INR 183 crore, with gross margin improving by 20 basis points to 42.1%.
EBITDA stood at INR 62 crore, with a margin of about 14.2%, while our PAT stood at INR 31 crore, translating into a PAT margin of 7.2%. Encouragingly, sequential performance improved, with the revenue growing 15.7% and EBITDA increasing 18.8% between quarter one and quarter two, with EBITDA margin expanding by about 37 basis points over Q1 FY 2027. For the half year FY 2027 H1, revenue stood at INR 809 crore, compared with INR 823 crore in H1 FY 2026, representing a decline of about 1.7%. Gross profit stood at INR 340 crore, with gross margin maintained at 42%. EBITDA stood at INR 113 crore, with an EBITDA margin of about 14%, while PAT stood at INR 57 crore, translating into a PAT margin of about 7%.
The impact of subdued demand and the festive calendar shift was more pronounced in the same store sales, with an SSSG decline of about 10.6% in Q2 FY 2027 and 9.2% during the H1 FY 2027. Nevertheless, our ability to sustain gross margin reflects the strength of our sourcing capabilities, pricing discipline, and merchandise mix management. In preparation for the ongoing festive and wedding season, we have maintained higher inventory levels, ensuring adequate merchandise availability and a wider assortment to capture anticipated demand. Most importantly, we remain net debt negative, with a healthy cash balance of approximately INR 249 crore, providing financial flexibility to support seasonal working capital requirements and aggressive planned expansion. A key strength of our business is our diversified five-brand portfolio, serving consumers across all segments and all occasions.
Kalamandir catering to the middle class and upper middle class income segments, Vara Mahalakshmi focused on traditional silk and wedding wear, Mandir serves the premium ethnic wear segment, KLM Fashion Mall as ethnic value fashion segment, and Valli Silks offers affordable traditional ethnic wear. This differentiated positioning is enabling us to address a broad customer base while maintaining disciplined store economics. Our expansion strategy continues to be a cluster-led, with Karnataka remaining an important growth market this year. During H1 FY 2027, we opened six new stores, adding close to 56,000 sq ft of retail space, while rationalizing our portfolio through the closure of 1 KLM Fashion Mall store measuring about 20,000 sq ft. This stands to be the first store ever shifted from the current location to a different location. As of September 30, 2026, our store network comprises of about 86 stores, spanning 820,000 sq ft of retail area.
Our 100% company-owned, company-operated model provides direct control over merchandising, inventory, and customer experience, while relationships with more than 4,000 weavers, artisans, and vendors support differentiated assortments and sourcing efficiency. Guided by our PQRS philosophy, which is pricing, quality, range, and service, we remain focused on merchandise planning, inventory efficiencies, and improving productivity across our retail network. As demand improves and recently opened stores mature, we expected higher store productivity and better fixed cost absorption to support the operating leverages. Turning to our outlook, the festive season has been considerably brighter, with improving consumer sentiment and stronger traction across markets. The shift in Dussehra into October, coupled with favorable wedding calendar extending through the year-end, we are expecting a stronger demand in Q3, particularly all the formats, including KLM Fashion Mall as well as Vara Mahalakshmi Silks.
We expected business momentum to normalize in the second half, with a return to positive and double-digit same-store sales growth, supporting our expectation of double-digit revenue growth for the full year. Alongside, the anticipated recovery in demand, our continued focus on operational efficiencies, inventory optimizations, and improved store productivity should drive better operating leverage and support sustainable profitability. India is largely a fragmented ethnic wear market and continues to offer significant long-term opportunities for organized retailers like us. This, when supported by rising consumer aspirations and increasing preferences for customer-trusted brands. With a strong foundation built over two decades, our diversified brand portfolio and disciplined expansion strategy, we believe we are well-positioned to capture these opportunities while creating lasting value for our stakeholders.
Before concluding, I would like to express my sincere gratitude to all our customers for their continued trust and loyalty, our weavers and artisans, our vendor partners for preserving the craftsmanship and quality that define our brands, and our employees for their dedication and commitment. I would also like to thank our shareholders and investors for their continued confidence and support. With that, we can now open the floor for questions. Thank you.
Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press star and one on your telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and one again. Ladies and gentlemen, if you have a question, please press star and one on your telephone keypad. We will wait for a moment while the question queue assembles. Ladies and gentlemen, if you have a question, please press star and one on your telephone keypad. Ladies and gentlemen, if you have a question, please press star and one on your telephone keypad. We have the first question from the line of Madhur Rathi from Counter Cyclical Investments. Please go ahead with your question.
Sir, thank you for the opportunity. Sir, if I look at our business from a longer-term view, sir, we used to be closer to our inventory turns of three times during FY 2018 to 2020 period. That has reduced to closer to 1.5x, 2x right now. So the strategy of foregoing the higher margins, we have taken a hit on our balance sheet. So if you can help us understand that, how should we look at our business going forward? And what kind of inventory turns do we expect we can achieve in the medium term?
If you look at the inventory turn, the three-time turnover was even before our IPO times, because at that time, we had a completely different arrangement with a different company. During the listing, we have merged those two companies into one, as per the BRLM's request. Considering all of that, our inventory remained in the similar fashion of where it is currently. In fact, from the last three years onwards, we have continuously improved the inventory days by 20, 30 days. Currently, as we speak, our average inventory holding in each and every store is much lesser than what we used to have last three years ago. That is on account of the structural change that we have done with respect to company restructuring. The business, this business, if you look at, is a wedding-based business and festival-led business.
In this kind of industry, it is always optimal to keep a larger number of inventory for us to be able to deliver such high revenue per square feet numbers. Therefore, the inventory seems to be a little bit higher, but at the same point of time, we are also delivering the industry's best revenue per square feet. Looking ahead, there is still possibilities and provisions for us to normalize. Specifically when you look at Q2, because that is where we are, we will generally and naturally have an inventory built up by the end of September 30 and December 30. Again, in Q3 end also, we will have an inventory built up. This is on account of preparing for our festive and wedding calendar.
Dussehra, as you know, it fell in second week or third week of October, and therefore, by September 30, we naturally had all of our inventories readily available in the store so that we are well prepared for Dussehra. In a similar fashion, we will also have the inventory prepared in our stores at the end of December, because of Sankranti and Pongal season. Because inventory as a number, we take it at the end of the quarter. The number might look a little bit on the higher end, but broadly, inventory is a number that where we need to look at year on year. When you look at a year-on-year number, this is a number that will slowly get normalized.
Got it. If I got this instance, what I understand is that we follow a strategy of taking cash discount. For the cash discount, we pay our vendors ahead of time, and that has led to higher inventory. I am just understanding that the inventory, two times inventory turns is not an ideal for a retail business. If you can help us understand that, is there a possibility of, or have you thought about increasing the payables so that we can make a leaner balance sheet and therefore maybe foregoing a few bits of margin, but that should make our balance sheet much leaner?
Sir, we will take all effective steps to improvise the balance sheet by the year end. But during the course of the year, since the seasonality is a major factor where we have to achieve better productivity, better profitability, et cetera, these changes on a month-to-month basis, year-to-year basis will occur. But definitely, there will be an effort to improve the balance sheet by the March end.
Got it. And sir, we were trying to get into the silver jewelry in our stores. So, what is the status of that and how has that been played out?
The silver jewelry part, just to give you a brief on the entire business. The silver jewelry business is a part of our existing store network. We have identified some service area in our current existing bigger size stores, and we wanted to experiment the silver jewelry as a category and see if this category is growing. But our initial reports, whenever we have seen whatever we have been having for the last year and a half, didn't seem to have such great growth potential. This business is something that we are okay to keep it in the existing store systems, but we don't plan to expand majorly on the silver jewelry business because what has happened in the last one year basically is the silver prices fluctuating too much, and the entire business is actually taking a nosedive at it.
Secondly, one more interesting category is emerging in the jewelry space, which is the fashion jewelry aspect. Suddenly, customers are choosing between fashion jewelry or a gold jewelry, and silver jewelry stands somewhere in between. It's something which is not giving us such exciting results as ideally we would want to have to help us take an aggressive decision to opening a store. With that, our investments in silver jewelry is very less. I think we have invested close to INR 6 crore-INR 7 crore in terms of the overall inventory. And even if you look at just the metal prices itself, it has appreciated by about more than 50%-60% from where we have initially started.
The business is self-sustainable so far, and I think for us to be able to expand aggressively on that business, we are trying to take it a little bit on a slower end. But in terms of absolute inventory level, we are net positive, and the business is doing decently fine.
It should be seen as an effective utilization of the store area where we have some small extra space and all that. In specific stores where there is a customer demand, customers are inquiring about these things are there. It is not part of the main business line, but as per the government-set specific places, they are also to utilize the space optimally.
Yeah.
Got it. And sir, have you thought about doing a Shoppers Stop type of model that Shoppers Stop has a jewelry, specifically jewelry brand, so that although the inventory risk is passed on to customer, myself can just benefit for whatever incremental demand comes from our customers? Because, sir, this seems to be a very adjacent area, sarees and jewelry going together. Is that a possibility or have you thought about that?
Yes, I think you are right on the fact that sarees and jewelries are categories which are quite adjacent to each other, and both of them actually help each other out. That was the reason why we have started the silver jewelry business on the whole. But to your answer to your question, if you are interested on the SIS category on our existing stores, see, all our existing stores, the average store size is around 6,000, 7,000 sq ft. This is only possible when the store sizes are much bigger and there is a lot of space for us to offer to the SIS player in that category. At this juncture, our saree inventory and the saree throughputs are much better than these players. And two, when we have a larger size stores, we can focus and we can figure out that this is a category worth exploring.
But when your store sizes are compact and when you need that minimum store size possible, we do not have a possibility for us to extend anything to the SIS players such as jewelry categories. We have explored one or two options in the past to have a lab-grown jeweler be a part of our existing network. But then the challenge was the store fit-outs and the store outlook, however it is being placed, we could not accommodate a comfortable space for him, and therefore, we had to go back into our traditional business plan. Moving down, I think down the line, I think once the stores sizes, average store size is increased, select stores, we can open and look at certain opportunities like that.
But majority of our stores currently speaking are optimally planned to have the inventories at adequate levels, so that there is no space for players like this to give them the visibility. Players in SIS, you need the visibility for them because as soon as they walk inside the store, the opening area or the welcoming area is where they ideally want their setup to be put. That is where the difference is coming at. We have planned and positioned our stores only around sarees, and therefore, this is a limitation. Moving down the line, I think if there is an opportunity worth exploring, we would definitely consider it.
Got it. Sir, just one final question. Just a final question. Sir, SEBI has allowed an open market share buyback. Sir, Sai Silks' share is trading at less than our book value. Sir, I would just suggest the management if they can look at a share buyback either through open market route or so that it can be helpful for all our shareholders and the promoter shareholding can increase to 75%. That is just a suggestion. Thank you so much and all the best.
See, when share price is at INR 780, buyback of shares is not an appropriate option by investing substantial funds into the share buyback. Instead, if we deploy these funds into the business itself, it will give much more returns. That is how we have thought about it. Broadly, I would consider that if the PE is above the industry average, then share buyback would maybe an advantageous thing. But at the current levels of PE, the board discussed and decided that it is not an appropriate time for us to consider the share buyback option from the company.
Thank you, sir. We request the participants to restrict yourselves to two questions in the initial round and join back at the queue for more questions. The next question comes from the line of Sanket Kalaskar from 360 ONE. Please go ahead with your question.
Thank you for the opportunity, sir. Sir, as you have mentioned that in H1, there have been certain challenges, there were Adhik Maas and shift in the festivals. Can you quantify, sir, like how was the demand in this Navratri versus last year same period? Also, if you can provide us SSG for the same period with respect to all the brands format we operate in. That's it.
For the future, I mean, H2 should be highly encouraging because everything, the wedding season and the festival season has come into the H2 only. We can confidently say that we will stick to our original projections that we have given at the year beginning, despite a small setback in the H1.
To elaborate on this, since Navratri season has ended and we are in the Diwali season, the last year Navratri versus this year festive growth, I think we have grown by more than 27%-30% in the overall festive to festive business last year to this year. You can understand that whatever the numbers that we are declaring right now because of in negative SSG is primarily on account of the festive shift in terms of the calendar, because last year Q2 Dussehra has moved to Q3 Dussehra. This is a technical change between one month and the other. Broadly, if you have to paint a picture on how this Navratri is so far gone, it is not just about having a recovery in footfalls. I think we have seen all KPIs grow. Your ASPs, ABVs, in all metrics, in all formats showed considerable growth.
And we believe that this is going to continue because after Dussehra, Diwali, and after Diwali also, there is a continued wedding calendar that is being there. So therefore, with all of these factors considered, we are quite optimistic about not just recovering the lost SSG, but also be able to deliver the initial target of our overall growth.
That's good to hear, sir. So my second question, as you are expecting double-digit SSG in second half, as well as double-digit revenue growth, can you list down all the factors which will provide, and what are the initiatives which you have taken that will show such kind of SSG growth in second half?
See, I think fundamentally, the majority of what we do is only that the festive shift has happened. Secondly, we are also trying to reconsider our pricing strategies to see if there is a possibility there because of the increased pricing and because of the raw material increase, our overall product value is getting increased. And wherever it is impossible to pass the benefit to the customer, we are trying to see how much we can absorb. This is only undercurrent that we are trying to continuously do in the last quarter around this. Secondly, I think the major factor fundamentally boils down to just Adhik Maas and the festive calendar moving from H1 to H2. These two factors is something that will enable.
If you look at our new stores also, I think our new stores are in Tamil Nadu and Karnataka, and these stores also do perform well during the Diwali season. And unfortunately, it is not a similar quarter-to-quarter comparison, and therefore, that is the reason why we are saying that we will be able to move this business to H2. And the Dussehra festive demand growth compared to what we have done last year to this year is a testament to the analogy that we will still be able to recover this loss, because a 30% growth from last year to this year is quite good. And this is a similar trend in when you take all the formats put together. Our KLM Fashion Mall format also did deliver a much higher growth number compared to last year number.
With all of these things, in fact, we believe the customer sentiment is also getting back, and this will be able to continue at least till January, February, and that is where majority of the festivals are actually positioned as well.
Also, on the efforts in this peak season, we have analyzed the areas where the productivities are lower and made an effort to reach out to the customers through advertisements, direct channels, et cetera, so that the visibility is created much better. Then the productivities in those areas, particularly in Tamil Nadu area, where in some parts of the Tamil Nadu area, where we thought we would need further visibility, we have made an effort on that through advertisements, et cetera. Then expecting that this year, Tamil Nadu productivity should improve on account of these efforts.
Thank you, sir. We have the next question from the line of Dhwanil Desai from Turtle Capital. Please go ahead.
Hi, Dhwanil here. Hello. Sir, my first question is, you know, you talked about, you know, very good H2 that you are expecting with double-digit SSG. But at the start of the year-
Sorry, Dhwanil, could you please repeat your question? I think I lost you in between.
Yeah, sir. I think you talked about a very strong H2 with double-digit SSG coming through. At the start of the year, you were expecting 15% kind of a growth for the full year, considering that, so 5% will come from SSG and 10% will come from the festive addition. Are we on course with that? In order to do that, you have to grow in H2 by 35%, 30% on an annual basis. How feasible is this given the scenario that you are seeing today?
We need to achieve double-digit growth in SSG because we have to outpace the negative SSG in the first half and then give the desired overall SSG of around 5% on an annual basis. We are confident that second half will see a better SSG, which will meet the company's overall annual requirement.
We are still thinking around INR 1,900 crore of top line with 9%, 9.5% PAT margin. Is that a fair way to look at it?
Anywhere, see, last time when we mentioned, we mentioned that somewhere between INR 1,850 and INR 1,900 is where we should end up at, and we are sticking to that. There is no changes. INR 1,850-INR 1,900. It is the overall turnover that we are. Sorry, it is not PAT, I meant the overall turnover that we have mentioned, and we will stick to that. There is no changes, and we believe that it is quite possible from where we currently stand.
Got it. I think we were looking at some margin improvement at EBITDA level and slightly better improvement in PAT margins. That also will come through with the scale and growth coming back, right?
See, half yearly, because of negative SSGs, you are seeing these kind of numbers, but I think in the second half, it should considerably improve.
Okay.
Because you naturally expect in a better period. Sorry, just repeat.
Expect around 17.5%, 18% margin in H2?
Yes. Even last year also, we were achieving those kind of EBITDA margins, and with this high-end activity and encouraging results, we should expect that in the second half.
Got it. The second question is on the KLM side. So KLM, generally over a longer period, I am not talking about a particular quarter or a half year, but has been a repetitive challenging time. For last three, four years, not much growth is happening. We are also not adding stores. Our position is given that a lot of value retailers have come up which only focuses on value. Given that, how you guys are thinking about KLM, and how do we ensure that KLM doesn't drag the overall company level SSG and profitability?
This year, KLM should, I mean, KLM is on the path of recovery, and this year, we should see a marked improvement in KLM performance. So once, perhaps, it would be an appropriate time for us to discuss about KLM at the end of the third quarter, where there can be a clear path towards recovery, and we can confidently tell you how it is happening.
Okay. But any interventions that you are making to ensure KLM continues to at least deliver positive SSG? What are the things or steps that you are taking, if you can talk about that?
When we are saying it is improving, then obviously, with our interventions only, we are making a specific effort to improve the KLM's operations, whereby it will contribute better than what it was contributing last two years.
Okay. And sir, this quarter, the presentation was not out, so if you can I am not sure whether it was kind of delayed or anything, but if you can put that out, it will be very helpful.
It is uploaded on our website, but there is a small transition between the company, so there might be a small delay, but it is right now available on the website.
Yesterday evening itself, I think the PPT is uploaded. I think. But if at all there is any issues, please do let us know. We will try to share it with you.
Got it. I will come back to you.
Thank you.
Thank you. We have the next question from Resha Mehta from GreenEdge Wealth Services. Please go ahead with your question.
Yeah. Thank you, Diwali wishes to Bharadwaj and team. I have a couple of questions. First on the growth that you spoke about, right? H2 we are seeing good momentum with Diwali, right? What is the downside risk to this as we go ahead, especially in the context of poor rainfall, and we do have our footprint in some micro markets which are agrarian in nature. Just your thoughts on the poor rainfall impact on demand, possibly going ahead.
See, I think the downside, honestly speaking, the market is still showing signs of recovery. I think we had one of the best Dussehras so far, and the Diwali season is also one of the best Diwali that we've had in the company. I was also having a little bit of a doubt whether the El Niño effect will have a lasting impact on the consumer spends this year. I also thought maybe the MDR charges on the UPI also could have some impact in the overall profitability. But fortunately, all these things have been pushed to later half of the year. So far, I don't see anything materialistic that could potentially hamper. There are minor issues, like you have the cyclone effect in Andhra. We had to close down stores for a day.
These are all some things that took a day off in the overall business. But we don't anticipate anything particularly on that front that there are reasons that I could foresee at this juncture that could help us not receive or not reach the target as we wanted to have.
In fact, our major markets like Andhra Pradesh and Tamil Nadu have an inverse El Niño effect because they had a lot of rain abundance. We would not think that the crop, et cetera, will get affected because of the El Niño effect in these two markets, which are going to be our major market in the next two, three months.
And in terms of the wedding calendar, are the dates adequate versus last year, or how does it pan out basically?
Yes, ma'am. I think the dates are adequate. I think wedding date outlook is something that I have given earlier as well. We are having a healthy pipeline of wedding dates. It is evenly spread out as well, which is a very positive sign on the overall wedding dates calendar. We see majority of our wedding dates falling in Q3, and to a certain extent falling in Q4. The only difference that we will anticipate would be in Q4, wherein the Ugadi season, which is in Karnataka, is delayed by a couple of days and moves into Q1 of next year. But again, coming back to the wedding date analogy here, I think it is evenly spread out and having a healthy calendar. A few more dates compared to what we had last year.
And in fact, I saw a report where next year looks to be more promising. As in, it is around 63, 65 wedding dates in a year. Next year looks to have about 98 wedding dates, just as a corollary. As of this year also, the wedding dates are more even in the second half and are in fact with our expectations.
And you know, on the-
Sorry, we are out of time for this. Mehta, could you please run back with Q?
One last question we can take, Karthi, just like I can see. Yes, ma'am. Please, ma'am.
Okay.
Yeah. Thank you. Just a quick one on the inflation side. I think most apparel players are seeing inflation in fabric. How are we seeing inflation in our portfolio? How are we managing that? If price hikes on a blended basis, if any, we have taken. Lastly, on the competition, I think last time you spoke about some regional competition in AP and Telangana, which reduced footfalls in our stores. We were seeing consolidation happening. Anything if you could comment on regional competition? These two questions.
On the regional. Sure. On the regional competition part, let me take that question first. There are people who are opening stores even in the late of Q2 also, we have seen considerable store openings happen. What the interesting thing that is currently happening in the market is a lot of people are now putting up exhibitions. They are putting up a small. They are taking a function hall and they are trying to put a lot of exhibitions in order to move the sales and bring that differentiated and bring that clearance exhibitions kind of a format is what a lot of people are putting. That is there across AP, Telangana in this year, and we are anticipating that this will continue during Q3 and Q4 as well.
What we have done is, we have countered that by having a very interesting advertisement and marketing strategies to be able to go at a store level. That advertisement effort actually paid off during the Dussehra season, irrespective of the fact that these exhibitions are there out there in the market. While on a broader term, competition sometimes will steal a footfall or by a bit. I think this Dussehra, I think we were able to counter that by having aggressive marketing campaign that we've had. Therefore, we were able to have a very good festive so far. On the price increases, particularly for Sai, I think broadly, the raw material prices has increased quite a bit. I think close to 5%-6% of raw material prices have increased.
We are trying to price as much as possible and pass the benefit, I mean, pass the entire pricing to the customers. While that's a continued strategy that every store we try and do these activities to ensure that the customers are not walking away from the stores because of increased prices. One major element that we would always will focus is, no matter what these price fluctuations in terms of raw materials move up and down, we are always ensuring that the customers find our products cheaper than what they could find to a nearby competition store. That would be the fundamental analogy before we do our pricing strategies.
Understood. Thank you so much.
Thank you, ma'am.
Thank you. We have the next question from the line of Rahul Jain from Credence Wealth. Please go ahead.
Thanks for the opportunity. Because of numbers, considering that the fairs and festivities shift this year. Sir, the first question is with regards to Tamil Nadu. Since we were not able to go through the presentation, I have just now checked, it is there on the website. It wasn't there on the exchanges. I have not been able to go through the entire presentation properly. Tamil Nadu, we were guiding that the Vara Mahalakshmi stores to scale from about INR 30,000 per sq ft towards INR 45,000-INR 48,000 sq ft by end of FY 2027. Till the half one, how has been the kind of numbers from Tamil Nadu stores? How do we expect further productivity gains to come in at Tamil Nadu? What is right at?
See, Tamil Nadu currently in H1, we had reached about INR 36,000 per sq ft where we have now. We have identified certain stores where the visibility, vis-a-vis the productivity is lower, where we made an effort to create further visibility to various kinds of advertisements and other things. By H2, normally the productivity should increase, even subsequent productivity should also increase. With these efforts that we are making in Tamil Nadu, the overall improvement, there should be a substantial improvement by year-end in Tamil Nadu as well.
Okay, sure. Sir, in last few store additions, Kalamandir format in Bangalore and Mysore, that has been dominating the sq ft addition and the store addition. Typically, are we seeing some kind of growth which is happening in Karnataka and there the store addition has been in Kalamandir, not in Vara Mahalakshmi. Just to understand the strategy behind this or just to understand what is driving this.
Okay. So see, when we try and put up stores, I think the analogy and logic is that we wanted to have multiple formats that we would want to open in one location. Pre this year, I think last year, by the end of last year, if you look at the overall store count in state-wise store count, Kalamandir always operated at a lower store count compared to Andhra and Telangana, despite having a huge potential. That is what we have activated this year. The previous year and before year, Tamil Nadu took a leading front in terms of the overall expansion. While we try and do the expansion, the analogy is that once we have expanded with that particular format, after we have our learnings in that specific area and wherever we open, it is time for us to expand with a newer format.
What we would ideally want is like, in Bangalore, we have opened, there are only very few Kalamandir stores, and even the number of stores overall in Karnataka was much lesser. Therefore, we have actively taken plan to open a Vara Mahalakshmi Silks stores as well as Kalamandir stores as much as possible in these markets. Now, I think Karnataka majorly, I think we will slow down a little bit in terms of the Karnataka expansion while we start actively expanding into Tamil Nadu again. The logic is simple. I think we would stick to the idea of a cluster-led expansion model, wherein we identify one location and we penetrate with one brand. Slowly, once the one brand starts maturing, we will ideally start adding the second brand in place. Therefore, it gives us operation leverage with respect to warehousing and administrative leverage.
That has been the model even if we, right from the beginning, that is how we have always been working upon. Currently, what we will ideally be doing is like, though we wanted to focus into the core markets, we are actively exploring newer markets, which is outside of these four states that we are currently looking at. Probably very soon you should be able to see us informing or modifying the market that we are opening our stores into newer territories, could be Maharashtra, Kerala, and other markets as well. Again, the logic will be that we will open a few stores, look at how the stores are performing, understand the consumer behavior, and then slowly start expanding and aggressively adding new store formats. That is broadly the logic on how we would look at the store expansion front.
There is nothing limiting with regards to not opening Vara Mahalakshmi and opening Kalamandir. We have five beautifully designed formats to five different consumer segments, and the goal is to add these formats based on that particular market. With that being said, Vara Mahalakshmi Silks stores will continue to open in the next years to come as well.
Just to clarify, with regards to the margin guidance for the current year, earlier when we had given a target set around INR 1,850 crore-INR 1,900 crore of sales, we had mentioned that EBITDA margin for the entire year FY 2027 should be somewhere around between 17.5% to 18%. So, to one of the earlier questions, we did allude that we will go to that 17.5%, 18% margins. So, are we talking that for the whole year as those margins for the year as a whole?
I would suggest that we discuss this at the end of the quarter. Looking at the current level of operations, we hope to do it, but we would confidently say about this at the end of the quarter.
Sure. Just one last question, sir, with regards to Valli. So, post the end of the last year, we haven't expanded on the Valli stores, and it's almost a year now since opening the Valli store. So, could you share some details on the unit economics of this particular format with regards to the EBITDA margins, with regards to the IRRs and the sales per square feet, the payback periods for the Valli format? Going forward now, do we start again opening up some stores for Valli?
Valli format, we are waiting for it to mature because they were opened in the last year only. Valli format basically is designed to be in line with the Kalamandir format. By this year end, we would know broadly whether sticking to that.
Okay. Fair enough. Thank you so much, sir, for the insights, and wish you all the best. Wish you all a very happy Diwali.
Thank you. Thank you.
Thank you. Due to time constraints, that was the last question for the day. Now, I hand over the floor to the management for closing comments.
Thank you, everybody, for dialing in and being a part of our SSK story. From where we currently stand, we are having a very exciting and an encouraging festive quarter and a wedding quarter. Looking forward to connecting with you all in the next quarter earnings call. Thank you so much for connecting and wish you all the season greetings.
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