Company Overview
Khadim India Limited, the second-largest footwear retailer in India, filed its Annual Report for FY 2025-26 and audited consolidated financial statements, reporting challenging operational performance amid muted consumer demand and structural changes.
Financial Performance
Revenue from operations declined 12.2% to ₹3,670.95 million (FY25: ₹4,180.33 million), while Profit After Tax plummeted 83.8% to ₹31.39 million. EBITDA decreased 27.6% to ₹472.85 million with margins contracting to 12.9% from 15.6%. The company recognized an exceptional item of ₹18.20 million related to the implementation of new Labour Codes, primarily impacting gratuity and leave encashment benefits due to changes in wage definition.
Strategic Restructuring
Khadim completed the demerger of its distribution business to KSR Footwear Limited effective April 1, 2025, transferring net assets of ₹882.04 million. This created a focused retail operation with 851 stores (78% franchise-operated) and an asset-light business model. The demerger was sanctioned by NCLT Kolkata Bench and resulted in KSR Footwear becoming a separately listed entity.
Operational Metrics
The retail network rationalization involved closing 35 loss-making company-owned stores. Premium sub-brands British Walkers and Sharon contributed approximately 15% of total sales, with British Walkers achieving ASPs above ₹5,000. The Skechers partnership expanded from 10 to 20 pilot stores, generating ₹1.5-2.0 crore revenue. Digital commerce grew to 5% of revenue with a target of reaching 10%.
Capital Structure & Financing
The company maintained a negative net cash position of ₹(932.75) million with total borrowings of ₹1,218.31 million. Working capital management showed improvement with inventory days reducing from 137 to 125 days and absolute inventory value decreasing by nearly 6% to ₹1,288.92 million. No dividend was recommended for FY26 due to inadequacy of profits.
Regulatory Compliance & Governance
The financial statements received an unmodified audit opinion from Ray & Ray Chartered Accountants. Key audit matters included revenue recognition and Labour Codes implementation. The board composition includes 5 directors (2 executive, 3 non-executive independent) with Mrs. Upama Mukherjee resigning as Independent Director effective April 6, 2026.
Outlook & Strategy
The company focuses on premiumization through its British Walkers and Sharon brands, asset-light expansion via franchise models, and digital commerce growth. Eastern and Southern India remain key markets, with gross margin improvement targeted at ~50 bps in FY27. The 45th Annual General Meeting is scheduled for September 24, 2026.