Business

Saturday June 28, 2008

Kamdar to add new stores and start franchise scheme


KUALA LUMPUR: Textile retailer Kamdar Group (M) Bhd, which dropped a proposal to pay dividends to shareholders after creditors shot down the plan, said it will continue to add new stores despite concerns that consumers may spend less on clothing due to rising fuel and food prices.

“We got to take advantage of the situation and be aggressive in our pricing and expansion strategy,'' chief executive Jayesh Kamdar told reporters after the company AGM yesterday.

He added that the group was confident of achieving its targeted growth number in the current year ending Dec 31, 2008 (FY08).

“We expect a better year ahead based on our performance in the past six months,'' he said.

Kamdar reported a slight loss in the first quarter ended March 31 due to taxation. The first quarter is also traditionally the weakest period for the retailer.

Over the next two months, Kamdar will open its first two stores in Sabah and Sarawak - one each in Kota Kinabalu and Kuching. The company is also waiting for the green light from local authorities for an outlet in Taiping, Perak.

Kamdar currently has 22 stores across the peninsular, mostly in smaller towns. It plans to add 50 new outlets in the coming years under a franchising scheme with local entrepreneurs.

“Banks, however, are quite reluctant to give financing to our potential franchisees,'' Jayesh said. He added that Kamdar had already lined up three or four potential entrepreneurs for its franchise programme.

“Kamdar has a good profit track record and a good brand name. We believe the franchising scheme will work with enough support.'' he said.

Earlier this month, bondholders blocked the retailer's proposal to pay a final dividend of 5% for the financial year ended Dec 31, 2007 after the group's bond rating fell below a level pre-agreed upon by the parties involved.

Rating Agency Malaysia Bhd in November 2006 downgraded Kamdar's RM60mil bond issue that will expire in November 2009 to BBB2 from A3 previously, largely to a weak industry outlook.

Kamdar needs to seek bondholders' consent before it can pay dividends if the debt papers fail to maintain a bond rating of A2 or above.

Jayesh said he hoped the issue with the bondholders would be resolved, as the company had remained profitable despite the tougher operating environment.

Last year Kamdar reported a 5% growth in revenue to RM177mil, while after-tax profit surged 64% to RM4.8mil.

Kamdar derived 55% of its sales and profits from textiles and home furnishing last year, targeting customers in the middle and lower income groups. In-house brand apparel made up the rest.


KAMDAR : [Stock Watch] [News]


For latest MSEB indices, charts and other information click here

  • E-mail this story
  • Print this story