Thanks for this wonderful extension Santosh. It makes our life much easier now. Any amount of appreciation for your selfless work in this area would not be enough.

What does EVA stand for?

Logistics-sector is a low margin and quite sticky business. Volume buyers (like recently IPO’d giants) are plenty. Then they fall short on delivery. Bajaj Electricals terminated their logistics contract with one such Logistics giant only after 2 years or so of business. Similarly Voltas.

Asset ownership OR light brings their own difficulties. It is advisable to not go by popular-names in this business – as effectiveness matters at the EoD. Delivery is a back end business and customers just need a company which does the job.

Essential metric to focus upon would be preTax ROCE, CFO into hand, management which is willing to forgo volume wrt margin. No point in running the company to ground for Brochure embellishments.

Investors have to be willing to be with the business rather than the stock.

Is anyone tracking emerald finance? I found below new product from their AR:

The company in line with its vision to expand its offerings and to serve retail customers at large has already started working on its own salary advance solution. This product entails tying up with employers to offer short term loan as salary advance. The amount lent is then collected through salary deduction.

This is a niche product in India. This product is in vogue in developed countries like US and Europe. The company feels that this can grow into a significant business in future. The company already has experience of this product due to its earlier partnership with Rainpay India Pvt Ltd.
This solution will be completely digital and will use the latest digital technologies to provide a seamless experience to both employers and employees. The company is building this solution through internal resources.

The consumption growth runway in India is a popular theme and Kalamandir is an opportunity to ride this with a focus on high end Saree business while the valuation looks reasonable relative to listed peers.
If the company can grow store count at 15-16% as promised, I think this is a company that can deliver 20+% earnings CAGR over the next 5 years.

South India has produced quite a few popular consumer brands with good economics which have created significant wealth for investors.
Further, Pan-India companies like Titan, Vedant or Trent which are not South based, also have a significant portion of revenues coming from South India.

From company perspective, I like their approach of cluster based expansion and exhaustive product range covering entire gamut of south Indian Sarees.
The opportunity on wedding wear and occasional attires also is clear with their Vara Mahalakshmi and Kalamandir stores showing strong SSG with decent unit economics and ROE. Mgt comment on opening only these type of stores going ahead in both TN and Telangana is a structural positive.

TN expansion is a reasonable opportunity for the company as despite the multiple brands present in the region, the unorganised market still remains high, almost 55%.

The key risk factor here will be pace of expansion as that will tilt the market share and the growth opportunity among the organised players. TN is home to multiple Silk Saree brands Pothys to Chennai Silks and Kalyan Silks. Similarly, RS Brothers Group, Chandana Group, J.C. Brothers Group, Kalanikethan Silks, Nalli Silks etc have strong presence in AP& Telangana. The fresh proceeds from IPO does give Sai Silks the upper hand at the moment.