K K Silk Mills Eyes Growth with SME IPO; Funds to Back Tech Upgrade and Debt Reduction
By Shishta Dutta | Published at: Jun 27, 2025 03:27 PM IST
Mumbai, 27 June 2025: K K Silk Mills Ltd has submitted its Draft Red Herring Prospectus (DRHP) to the BSE for an upcoming initial public offering (IPO) totalling 77,00,000 equity shares, all as part of a fresh issue. The company plans to list its shares on the SME platform of the BSE.
As outlined in the DRHP dated 26 June 2025, the IPO is being conducted under Chapter IX of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. There is no offer-for-sale (OFS) component in this issue.
IPO Snapshot
| Particulars | Details |
|---|---|
| Issue Size | Up to 77,00,000 equity shares |
| Face Value per Share | ₹10 |
| Price Band | To be announced |
| Issue Type | 100% Book Built |
| Market Maker | After Trade Broking Pvt Ltd |
| Book Running Lead Manager | Axial Capital Pvt Ltd |
| Registrar | MUFG Intime India Pvt Ltd |
| ISIN | INE0EOJ01014 |
| Listing | BSE SME |
Purpose of the IPO Proceeds
The net proceeds raised from this public offering will be allocated to the following:
| Objective | Amount (₹ in lakhs) |
|---|---|
| Replacement of plant & machinery | 601.15 |
| Repayment/prepayment of secured borrowings | 1,500.00 |
| General corporate purposes (up to 15% of gross proceeds) | [●] |
Financial Overview
K K Silk Mills has demonstrated steady financial growth over the past three years. The company’s operations span domestic and international markets, with a production unit of 5,422 sq. mtrs. based in Umbergaon, Gujarat.
Restated Financials (₹ in lakhs)
| Metric | 9M FY25 | FY24 | FY23 | FY22 |
|---|---|---|---|---|
| Revenue from Operations | 15,831.02 | 19,054.12 | 18,880.69 | 17,236.94 |
| Net Profit | 351.06 | 226.20 | 106.10 | 44.19 |
| EBITDA Margin (%) | 6.77 | 4.90 | 4.40 | 4.30 |
| PAT Margin (%) | 2.21 | 1.18 | 0.56 | 0.26 |
| Net Worth | 3,855.16 | 3,504.09 | 3,280.86 | 3,176.43 |
| Total Borrowings | 6,067.61 | 5,169.26 | 4,806.17 | 4,450.03 |
Note: FY25 figures are for the nine months ending Dec 31, 2024
Promoter Shareholding and Capital Structure
Prior to the IPO, promoters collectively hold 87.45% of the company’s equity.
| Promoter | Shares Held | % Pre-Issue |
|---|---|---|
| Mr. Manish Kantilal Shah | 38,48,600 | 25.76% |
| Mr. Nilesh Kantilal Jain | 54,36,336 | 36.39% |
| Mrs. Ashaben Manish Shah | 37,80,064 | 25.30% |
| Total Promoter Holding | 1,30,65,000 | 87.45% |
The company executed a 1:1 bonus issue on 11 March 2025, allocating 74,69,680 equity shares to existing shareholders.
Machinery Modernisation Strategy
The company plans to modernise its manufacturing setup by:
- Replacing 26 existing Jacquard machines with electronic models from reputed global suppliers such as Jiangsu S&S and Hangzhou Wiltop, at a total cost between ₹265 lakh and ₹315 lakh.
- Acquiring 11 used Picanol Gammax looms from Germany, with an investment of ₹286.42 lakh.
This upgrade aims to boost productivity and fabric quality by 15–20%, facilitating growth in both domestic and export markets.
Debt Reduction Plan
K K Silk Mills intends to use ₹1,500 lakh from the IPO to reduce its working capital borrowings from banks such as State Bank of India, Union Bank of India, Yes Bank, and Bank of Baroda. As of 31 May 2025, the company’s total outstanding debt stood at ₹5,769.61 lakh.
Valuation Metrics and Promoter Acquisition Costs
After the bonus issue, promoters’ average acquisition costs remain significantly below the expected IPO pricing:
| Promoter | Avg Cost (₹) |
|---|---|
| Manish Kantilal Shah | 4.40 |
| Nilesh Kantilal Jain | 2.68 |
| Ashaben Manish Shah | 7.90 |
Valuation ratios such as P/E and Return on Net Worth (RoNW) will be disclosed following the announcement of the final price band.
Company Background
- Incorporation: August 1991
- Line of Business: Manufacturer of knitted fabrics and readymade garments
- Promoters: Manish Shah, Nilesh Jain, Ashaben Shah
- Production Facility: Umbergaon, Valsad district, Gujarat
- Proposed Listing: BSE SME platform
The company anticipates a stronger financial footing and enhanced production efficiency following the IPO. Exact issue dates and pricing will be declared in the upcoming weeks.
REF: https://www.bsesme.com/download/373122/SME_IPO InPrinciple/DRHP_20250626214924.pdf
Disclaimer: At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.
If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.
Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations
