Khadim India aims to complete distribution business demerger by September | Maqvi News

Footwear business Khadim India plans to complete its demerger of its distribution business by September this year. The business expects the move to enable it to boost its earnings before interest, tax, depreciation, and amortisation margin as well as its core retail business.                         

“We are already in the process of [the] demerger,” Khadim’s chief financial officer Indrajit Chaudhuri told the Press Trust of India in an interview. “Now, it is pending before the stock exchanges and then it will be placed before NCLT [the National Company Law Tribunal] for its approval. We expect that the process will be completed by September. The demerger will be effected after the approvals are in place.” 
 
Khadim India has a network of 732 distributors, ET Bureau reported. The business had found its distribution arm become detrimental to the overall performance of Khadim India Limited following the government’s decision to increase Goods and Service Tax on footwear priced under Rs 1,000 from 5% to 12% in January 2022. 

“Now the EBITDA margin in retail is 17% and after [the] demerger, we will be able to put greater focus, which will be reflected in the improvement of margins,” said Chaudhuri. “We expect the retail business, which is currently at Rs 500 crore, to surpass Rs 600 crore by 2025 to 2026.”