PACRA Upgrades Entity Ratings of Khaadi Pakistan (SMC-Pvt) Limited

Khaadi Pakistan (SMC-Pvt) Limited (Khaadi or The Company) is a distinct player in the retail fashion industry. Having been in the business for over two decades, Khaadi has been able to deliver growth and expansion resulting in a large customer base and strong brand equity. It has become synonymous with innovation and quality while ensuring affordability for its target customer base. The basket of the products offered includes Unstitched Fabric, Ready to Wear (Eastern and Western), Catalog, Accessories, Fragrances, Home, and many more. The business model of Khaadi, as envisioned by its founder and CEO, has been the self-propelling force for the expansion of the entity. The retail network has reached half a million square foot physical presence. The brand has outreached outside Pakistan as well. Khaadi designs its outlets to give walk-in customers more than a shopping experience. After the successful launching of its first Experience Hub store in Karachi, the Company established four more Experience Hub stores, 2 in Karachi and 2 in Lahore, where the customers are envisaging in shopping experience better than any other retail outlet in Pakistan. Re-branding of the logo is the leverage of distinct plans of the Company which will further unfold in the upcoming years. IFC invested $25mln in Khaadi Corporation, and the first tranche of $15mln is already received in Oct22. The equity injection is being utilized to support its strategic vision of expansion across Pakistan and Internationally to give Khaadi a strategic depth that will be instrumental in its exceptional growth in the future. The entity has a strong management structure in place, with professionals leading their respective roles. The reported numbers for 9MFY23 reflect the stable position of the Company. Sales mix represents a major contribution in Fabric (FY22: 66% of total revenue (FY21: 67%). The upward revision in ratings reflects the commencement of the expansion plans to increase market share by opening new stores in strategic locations and at the same time conversion of existing store design to Experience Hub philosophy, a strategy which has worked extremely well since it was implemented.
The ratings are dependent on the recovery in the business performance and relative position of the entity. The financial profile is also expected to improve as anticipated. Governance of the Company is expected to take positive support from the initiatives undertaken by the sponsor shareholder including creation of a new five members’ Board of Directors of the holding company which consists of three renowned Pakistan’s business personalities as independent directors and one IFC’s female nominee director from Turkey.

About the Entity
Khaadi is a multinational Pakistani retail fashion brand. It started operations in 1998 by offering kurtas and loose fabric made from the hand-woven fabric of both Eastern and Western touch. Khaadi has now an exceptional retail network with 45 stores in Pakistan, 5 in UK, and 4 in UAE. The Company has a good market share in the retail segment within the country. The Company has laid its foundation on the back of brand strength, retail market, fashion design, marketing, supply chain, strategy, and finance.
Mr. Shamoon Sultan is the founder and CEO of Khaadi. He is the man with the passion and vision to take Khaadi to a level where it competes with the high street fashion brands globally. Khaadi has grown under his leadership. Now a strong oversight and invaluable contribution from the newly established Board of Directors consisting of three independent directors will further complement the above achievements and its strategic placement in the target market. Furthermore, a team of thorough professionals also assists him.