How Prasad Chalavadi’s ‘sari with software’ business went the extra mile

Team Sai Silks (Kalamandir), left to right: Durgarao Chalavadi, Full Time Director, Operations Manager (Karnataka); Kalyan Srinivasa Annam, full-time director and head of publicity projects; Venkata Rajesh Annam, Senior Vice President of Operations (Andhra Pradesh); RB Bharadwaj, senior vice president of IT and e-commerce; Mohan Chalavadi, senior vice president of operations (Telangana); Jhansi Rani (seated), retail manager; Annam Subash, Procurement Manager; Prasad Chalavadi, Founder and Managing Director Image: Vikas Chandra Pureti for Forbes India

OOctober 2005, Hyderabad. Prasad Chalavadi starts the show with a request. “If you want to see the magic, please follow the instructions,” said the man from Vijayawada. A dozen enthusiastic young women and men, including a few employees of a 300-square-meter outlet where the show was staged, stood glued to the 37-year-old’s gestures and nodded in approval . Chalavadi came from a family spice business, went to Dubai and the United States after finishing college and his MBA, armed himself with software programming courses, and worked with an IT company for a few years. He then returned to India in 2003 and hosted his first show two years later.

The show begins and the spectators are given the first direction. The bottom button of the blouse, says Chalavadi, should not be too tight or loose. Same for the petticoat. “If it’s too tight, it won’t tuck in, and if it’s too loose, it can prevent creases from spilling out,” he explains. Now the second step. “Start draping the end of the saree,” he says. “It should be tucked in at the right side of the waist and only cover three-quarters.”

After a few more steps, Chalavadi pauses and scrutinizes the reactions of the spectators. He then goes into the penultimate act with a few more do’s and don’ts. First, make sure the saree does not get tangled with the petticoat. Second, use pins to tie off, but don’t use too many or the fabric will spoil. Finally, walk a few steps to get a feel for the saree. “Be confident. The magic happens when confidence merges seamlessly with the saree,” he says. The crowd cheers and disperses, a few shoppers come in to buy sarees at the ‘Kalamandir’ store, and Chalavadi, who founded Sai Silks (Kalamandir) in 2005, calls his manager after finishing his demonstration. “It’s only when you walk through the extra yard that you get six feet of love, beauty and grace,” he says.

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Fast forward to July 2022. Chalavadi is preparing to see how far his love for the six-yard can take him. Sai Silks (Kalamandir), which closed FY22 with operating income and profit after tax of ₹1,129.32 crore and ₹57.67 crore respectively, filed the Red Herring Draft Prospectus (DHRP listen)) for an initial public offering (IPO) of around ₹1,200 crore. The move makes Sai Silks (Kalamandir) the first saree retailer in India to go public. The company, which operates under four brands – Kalamandir, Mandir, VaraMahalakshmi and KLM Fashion Mall – derives more than 65% of its revenue from sarees. It has 46 outlets across Telangana, Andhra Pradesh, Tamil Nadu and Karnataka, and has played its cards right to cater to all segments of society.

Chalavadi explains the different brand pillars — he calls them the folds — of his company. Kalamandir, which started in 2005 and now has eight outlets, targets the middle and upper middle class by selling sarees in the price range of ₹1,000 to ₹1 lakh; Mandir, which was launched in 2011 and has three outlets, caters to the super-rich. The price range of sarees starts at ₹6,000 and goes up to ₹3.5 lakh.

How does the activity of Then there is the ethnic silk saree brand VaraMahalakshmi, which is for festivals, weddings and casual wear, and has a price range of ₹4,000 to ₹2.5 lakh. And the fourth and youngest “fold” is KLM. Launched in 2017, it is a value-added fashion brand for the family. “It’s for the masses,” says Chalavadi, founder and managing director of Sai Silks (Kalamandir).

But why an IPO? Chalavadi laughs. In 2005, he recalls, most of his friends, supporters and even those who didn’t know him asked him an almost similar question: why saris? Some found the move disconcerting. “How can software sell saris? they wondered. Others took a dig. “The guy has gone crazy,” they said. And some have become prophetic. ” Wait a minute. This guy is going to shut down,” they predicted.

Chalavadi was neither surprised nor shocked. “It’s human nature. Everyone likes to bet on winning horses,” he says. In 2005, he was considered a new kid on the block. “He entered the race but could never race,” said a saree retailer who had worked with a legacy brand for decades.

Chalavadi remained unfazed. His belief in science, data and numbers helped him stay focused. “I was moved when I opened the first two stores,” he recalls. But after that, the emotion faded into the background. The business, he points out, is about managing inventory and cash flow. “If you master those two, then you’re sorted,” he says. The first-generation entrepreneur began rewiring the orthodox saree business.

For centuries, the sari industry was largely unorganized, relying heavily on a complex web of relationships between weavers, employees and retailers, and dominated by a few regional sari brands with their pockets of influence. .

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Chalavadi, after analyzing the flaws and weaknesses, became a geek. “We started tracking the movement of every product from production to sales counter,” he says. Machine learning and artificial intelligence have been used to anticipate and predict demand for thousands of Stock Keeping Units (SKUs) and take stock of product aging. “I have appropriate systems and software in place,” he says.

Its “sari with software” strategy seems to be paying off. In its recent memo, ratings agency CARE outlines what has worked for the Hyderabad-based retailer. The company’s business operations, the note points out, have benefited from the promoters’ long-established track record and extensive industry network developed over the years. Moreover, it is financially backed by its promoters who regularly inject funds to support the growing scale of the company’s operations, the note points out.

With other family members such as Chalavadi’s wife, brothers and in-laws now part of the business, the organization has a defined structure and role for all.

The entrepreneur is now betting big on a promising future. What gives Chalavadi hope is the resilient nature of the business. As long as the institution of marriage exists, sarees will remain in business, he says. Depending on their social and economic status, people will trade up and down but still buy sarees. “It’s an evergreen business,” he says. Even in the wake of cyclical economic patterns – take, for example, the 2008 global financial crisis – or a black swan event like the Covid-19 pandemic, demand will rebound.

The numbers seem to back up the saree retailer’s claims. From a peak of ₹1,175.46 crore in FY20, operating income fell to ₹677.14 crore in FY21, but there was a sharp rise during of the next exercise. “I strongly believe there is a very bright future for the saree industry,” says Chalavadi, adding that the company has diversified over the past few years. “We are no longer a saree-only company,” he says.

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Chalvadi’s wife, Jhansi Rani, who handles the company’s retail, marketing, sales, administration and human resources, is involved in his project. “Saree is an emotion. I don’t see it as a product,” she says. Jhansi Rani has also been an integral part of the team responsible for sourcing products and maintaining relationships with suppliers from different parts of the country. “His [Chalavadi’s] the passion for the business is unmatched,” she says.

For brand experts, the success of Sai Silks (Kalamandir) is linked to the innovative sales model devised by Chalavadi. Any retail industry is used to two types of format, says Harish Bijoor, who runs an eponymous brand consultancy. The first is the retail kirana style, where the retailer or salesperson sits behind the counter. Second, the modern retail format which is a DIY model. “Prasad has rolled out assisted selling,” he says. The in-store consumer experience, having a huge range of sarees at an unbeatable price, is what has helped it carve out an edge over its rivals and grow rapidly in 17 years.

The challenges, however, remain. One of the most important is reported by CARE. The retail business has low barriers to entry and is highly competitive due to the presence of countless unorganized players. The industry is hugely varied, with a hand-spinning and weaving sector at one end of the spectrum, and the sophisticated, capital-intensive factory sector at the other. The e-commerce industry is also growing at a rapid pace in the country and poses a threat to physical retail, the CARE note said.

The second challenge could come from former players. In its key markets of Telangana, Andhra Pradesh and Karnataka, the company faces intense competition from RS Brothers Group, Chandana Group, JC Brothers Group, Kalanikethan Silks and Nalli, the note adds. Geographic concentration of revenue and presence could pose a challenge.

How does the activity of Kalamandir’s first outlet was launched in Hyderabad in September 2005

Bijoor points to another potential problem. “Another Sai Silk may emerge in about three years,” he says. The company must therefore not only remain constantly at the forefront and innovate with fashion, but must also feel the pulse of the consumer. “He constantly has to play a sharp and differentiated game,” he says.

Chalavadi, for his part, says he is well prepared. “I have built a viable business model and will ensure that it always remains so,” he says, adding that the company’s greatest benefit has been its financial discipline. Is he afraid of failure? Chalavadi smiled. “If you worry about failure, you will never succeed,” he says, adding that every individual will have to go through the failure phase. “But what matters is how you come back and what you learn,” he says.

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(This story appears in the August 12, 2022 issue of Forbes India. To visit our archive, click here.)

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