Shivendra Nigam CFO, Cantabil Retail India
Well-Positioned To Attract And Retain Customers
Since its inception in the year 2000, Cantabil Retail India has emerged as a pioneering force in the realm of retail, specialising in the exquisite curation of apparel and accessories. Nestled within the vibrant hub of India, it serves as the nerve centre orchestrating every facet of the product lifecycle with meticulous precision, from innovative design conception to seamless distribution channels, ensuring an unwavering commitment to unparalleled quality and trendsetting style. In this interview, CFO Shivendra Nigam outlines the company’s strategy for further growth
What are the key growth drivers for achieving revenue of ₹1,000 crore by FY27?
The management’s ambitious target implies a compound annual growth rate (CAGR) of 18-20 per cent. Initially set for FY26, this target has been slightly delayed due to a slowdown in consumer discretionary spending, and we should be able to achieve the same by mid-FY27 or close to FY27. In terms of revenue diversification, the segmental analysis of FY24 shows that men’s wear contributed 83 per cent, women’s wear 11 per cent, accessories 4 per cent and kids’ wear 2 per cent.
Geographically, the revenue distribution was 59 per cent from North India, 29 per cent from West India, 6 per cent from both East and Central India and 1 per cent from South India.
To achieve the revenue target, diversifying product offerings and expanding into untapped regions will be crucial. Store expansion and online sales are also vital components of Cantabil’s growth strategy. In FY24, Cantabil added 86 stores, bringing the total to 533, with a target of over 700 stores in the next two years, focusing on company-owned stores. The revenue from online sales more than doubled in FY24, reaching ₹33 crore, with a target of ₹45-50 crore for FY25. Cantabil Retail India strategically harnesses digital platforms and e-commerce channels to elevate brand visibility, engage customers and boost online sales.
Through meticulous search engine optimisation (SEO), we optimise website content and metadata, enhancing our online discoverability. Social media marketing (SMM) initiatives on platforms like Instagram and Facebook, coupled with influencer partnerships, facilitate authentic brand engagement and advocacy. Other strategic initiatives include entering the footwear and athleisure segment, which could drive additional revenue, and inaugurating our first exclusive brand outlet in Nepal, marking the beginning of an international expansion.
How do you plan to fund the increasing capital expenditure requirements without resorting to external financing?
Our strategy to fund the increasing capital expenditure requirements relies heavily on our robust financial health and efficient internal operations. We are generating substantial free cash flow from our sales, which allows us to reinvest directly into our business. Our robust performance in the market and our ability to maintain healthy profit margins contribute significantly to our internal accruals. This approach ensures that we do not need to depend on external financing.
In fact, external funding is best avoided since it often comes with additional costs and financial obligations. By leveraging our internal resources, we maintain greater control over our financial planning and sustain our growth trajectory without compromising our financial stability. Our commitment to prudent financial management and operational efficiency will continue to support our capital expenditure needs and drive long-term value for our stakeholders.
What is the company’s long-term vision and strategy for sustainable growth?
Our goal for FY25 is 20 per cent top-line growth, supported by strategic initiatives. We plan to open 80-90 new stores across Tier I, II and III cities, expanding our market reach and strengthening our brand presence. We are continuously opening 6-7 stores every month and plan to continue with the same in line with our expansion strategy to maintain sustained growth. To meet the rising demand and enhance quality, we are increasing our production capacity by 25 per cent, reducing reliance on external manufacturers and allowing for more agility in responding to the market trends.
We are also bolstering our team with 800 new employees to improve efficiency, customer service and support our expanding store network. While apparel still accounts for 95 per cent of our revenue, we are diversifying into accessories like footwear, active wear, luggage, etc., aiming to boost revenue and cater to broader customer needs. Our online sales are growing, and we expect them to contribute 7-8 per cent of the total sales next year. By enhancing our e-commerce platforms and digital marketing, we plan to capture more online shoppers and provide a seamless experience.
What is the company’s strategy for managing seasonal fluctuations in demand and inventory levels?
Cantabil’s strategy for managing seasonal fluctuations in demand and inventory levels involves a multifaceted approach that leverages both production and distribution efficiencies. By manufacturing a portion of its product line in-house, Cantabil maintains greater control over production schedules, allowing for more agile responses to changes in demand. By diversifying its product offerings, including expansion into accessories such as footwear, active wear and luggage, Cantabil aims to smooth out seasonal demand variability
The company’s workforce will also be strengthened by 800 employees, ensuring an adequate workforce to oversee peak periods of the festive season as well. Despite rising store rentals in FY24, Cantabil anticipates greater stability in operational costs, which will further support its ability to manage inventory and meet seasonal demand fluctuations effectively. Overall, the demand for Cantabil’s products is on the rise and the company is taking measures to strengthen its production and delivery channels.
How do you plan to maintain margins while expanding the business and increasing costs?
It is important for us to maintain gross margins of 55-56 per cent so that we will be able to achieve our EBITDA margins as well. It comes by leveraging robust growth drivers and implementing stringent cost control measures. By capitalising on current apparel trends, such as the rising demand for comfort wear and digital prints, Cantabil is well-positioned to attract and retain customers. These strategic initiatives will enable us to balance growth with effective cost management, ensuring sustained profitability and margins.