History :
Fall of a Phoenix
Kothari Group was formed in the year 1919 in Madras by a professional lawyer from Kutch Chandulal Mothilal Kothari (CM Kothari) who wanted to be a daring entrepreneur in Madras City . Late Shri CM Kothari, in the year 1919, laid the foundation for the emergence of a multifaceted conglomerate with diverse business interest ( Kothari & Sons, Share, Stock and Exchange Broker / Madras Safe Deposit Company Ltd / Kothari Textiles Ltd to name a few ) . Along the way, he was the founder the Madras Stock Exchange in 1937.
The Chennai based Kothari Group was once seen as one of the strongest groups in Tamil Nadu and still has a good brand recall in the Southern States
DC Kothari was the first elected Indian President of the United Planters’ Association of South India in 1950 . Kothari Industrial Corporation Limited (KICL ) was their flagship company which listed on the exchanges in 1970 . However the family split between the siblings Dayanand Chandulal Kothari ( DC Kothari ) & Harshad Chadulal Kothari (HC Kothari) somewhere in 1980’s.
DC Kothari Group had business interests in fertilizers, tea, coffee, granite , leather products , sugar, textiles and plantations . However, the family fued and some wrong partnerships resulted in the downfall of the DC Kothari Group & KICL . The reference could be find here When a collaboration went wrong « Madras Musings | We Care for Madras that is Chennai
The family fued continued with the grandsons Pradeep Kothari ( DC Kothari Group scion) & his cousin Shyam Kothari ( HC Kothari Group scion) who also happens to be Mukesh Ambanis brother in law. This has been documented in the following 1993 article Behind the lines - India Today where it seems Reliance was trying to take control of KICL and Pradip Kothari reached out to CLB to avoid the hostile takeover of the crown jewel of the DC Kothari Group . KICL was valued over 100 cr back in the 1993 but clearly was struggling not to mention the stake held by Pradip Kothari was minimal 14% back . KICL was struggling and was delisted as a part somewhere in 1999-2000 . KICL seems to have amassed losses and by FY 2005-2006 , the accumulated losses had piled up over the years and majority of its businesses were either non functional or wound up . The major revenue still was from trading of fertilizers as the Fertilizer Factory was not in operation since 2001 . Source AR 2005-2006
Rising Back from the Ashes
- 2014-2016
The rise of the phoenix has started since 2014 when Mr. Jinnah Rafiq Ahmed hailing from a family business with diversified business interest in iron and steel industry / contractor for services provided Integrated Coach Factory showed interests in the Fertilizer Business of KICL . Gemini Fertilizers was started during the year 2014 as a joint venture with KICL . Gemini Fertilizers soon became one of the Gemini Fertilizers to become one of the leading Manufacturers of Single Super Phosphate which was manufactured at KICL factory at Ennore .
- 2017-2022
Mr. Jinnah Rafiq Ahmed seemed to have create an impact which resulted in Pradeep Kothari and the KICL board appointing him as the Vice Chairman and Managing Director of KICL . This would turn to be a pivotal movement for the KICL . Probably Mr. Jinnah Rafiq Ahmed could revive this 100 year old business. However , important point is while Mr. Jinnah Rafiq Ahmed was the Vice Chairman and MD , he did not own any shareholding in KICL . Mr. Jinnah Rafiq Ahmed was keen on setting up a Fertilizer Plant ( NPK ) plant in Qatar since 2018 based on one of his interviews, as Qatar was having a surplus of the inputs require ( Ammonia / Urea )
- 2022
The defining year for the Kothari Group . Mr. Jinnah Rafiq Ahmed seemed to have started building a revival plan for the company and the company identified the following areas for bringing back the old glory of Kothari Group
- Footwear
- Fertilizers
- Synthetic textiles
- Food sector
- Drone manufacturing and setting up training centers
The first business to shape the dream into reality was Footwear business. Mr. Jinnah Rafiq Ahmed has targeted the non leather footwear industry as the future engine of growth for Kotharis . China + 1 , the growth of non leather footwear industry , distributed supply chain post Covid could have been triggering factors alongwith the Tamil Nadu government impetus on making the TN the hub for non leather footwearindustry in India providing huge employment opportunities. To give an context , China Accounts for over 63% of footwear exports and India languishes at less than 2% .
Tamil Nadu Government was the first one to capitalize with the introduction of the Footwear & Leather Industry Policy 2022
TN Government is providing various incentives like Investment Promotion Subsidy, Land Cost Subsidy, Stamp Duty Incentive, Enhanced Incentive for Quality Certification, Enhanced Incentive for Intellectual Property Creation, Interest Subvention, Electricity Tax
Exemption, and SGST Refund on Capital Goods to projects being footwear and component clusters being setup in the state.
TN Government Signed MOUs of 2250 crs with Kothari Group and 4 other brands to setup Footwear and Footwear Component Clusture. Source : TN launches leather products policy, inks MoU worth â‚ą2,250 crore | Latest News India - Hindustan Times
Kothari Group partnered with Evervan Shoetown Group of Taiwan who are one of the biggest contract manufacturers for Crocs / Nike / Adidas / New Balance / Sketchers and Fila to provide them with the technological assistance to setup the mega factories and also be a partner in enabling other component manufacturers to setup component manufacturing factories in Tamil Nadu . You can find the list of MOUs signed by TN Government in 2022-2023
Key MOUs signed by the Kothari Group back in FY 2022
- Kothari- Evervan Group - 1700 Cr ( 1200 Cr Non Leather Footwear + 500 CR Component Cluster )
- Kothari- FUJIAN HUACHANG GROUP - 400 Cr ( Component Manufacturing)
- Kothari- ZHONG BU DEVELOPMENT SINGAPORE - 48 Cr ( Component Manufacturing )
- Kothari- AITECK AUTOMATION - 24 Cr ( Component Manufacturing )
- Kothari- MING XING (TAIWAN) SEWINGMACHINECO -24 Cr ( Component Manufacturing )
- Kothari- LONG JOHN TSUNG RIGHT INDUSTRIAL - 48 Cr ( Component Manufacturing )
In all , Kothari Group had committed to over 2200 Crs of Investment in setting up the Non Leather Footwear and Component Manufacturing Cluster .
A new company was formed Phoenix Kothari Footwear Limited with the following shareholding pattern
Mr. Jinnah Rafiq Ahmed - holding 30% in his personal capacity ( while the brand name of Kothari was used , Mr. Jinnah funded it in personal capacity as he was not owning any stake in KICL )
Evervan Shoetown Group ( Phoenix Power (Singapore) PTE Ltd ) - holding 70%
Based on my understanding , Phoenix Kothari Footwear Limited would act as an holding company structure and every footwear factory which would be created would be created as a wholly owned subsidiary of Phoenix Kothari Footwear Limited
- 2023
JR ONE KOTHARI FOOTWEAR PRIVATE LIMITED - The 1st footwear factory for Crocs construction was commenced in 2022 itself the foundation stone being layed by CM Stalin .
The Phase 1 Capex was Rs. 400 Cr and was expected to employ 4000 people . The phase 1 was expected to produce 10 million pairs of the Crocs each year with a future Phase 2 planned to expand the capacity to 20 million pairs .
The factory was completed in a record time of 1 year by Nov 2023 and was inaugurated by the CM virtually along with many of the ministers.
The scale and ambitions of Mr. Jinnah are huge and it was merely a function of time that he would need to resort to Capital Markets for funding and what better way than bringing back the past crown jewel of DC Kothari Group back to the BSE . The seeds for the process was started in 2023 itself and resulted in the share listing on BSE IN 2024
2023 - 2024 Process and Sequence of Events leading up to the relisting and subsequent events informed to the BSE
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20-05-2023 : Reduction in the Share Capital by existing Promoter Group. 66.27 lacs share of FV Rs 5 per share from the old promoters group were reduced . The post reduction share capital was 1.24cr shares of Rs 5 each Bse Link
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04-10-2023: Sale of Fertilizer Plant at Ennore partially to M/s. Coromandel
International limited . This piece of land as per the filings accounted for approx 22% of KICL revenue Bse Link -
16-02-2024: Multiple Agreements to sell on Amazon Marketplace. I guess they have license right to sell footwear of over 8 brands on Amazon Marketplace . 1 such agreement . This agreement marked the foray of KICL as a brand in the ecommerce space Bse Link
This marked a step towards KICLs foray for selling footwear on ecommerce marketplaces
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28-03-2024: Revokation of Suspension from trading of the shares on BSE.Bse Link
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06-07-2024: Agreement with Kickers an iconic UK brand for exclusive rights to manufacture and sell their footwear across 8 countries Bse Link
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29-07-2024: Preferential Allotment with increase in the share capital. 3 cr new shares issued @ Rs.14.33 per share . 2 crs new shares ie 66.67% of the preferential allotment consumed by Rafiq Ahmed increasing his stake from 0% to 47.08% . Open Offer also triggered for additional 26% stake which would increase his stake to 73.08% if subscribed fully. Outcome of Open Offer to be declared by 10th to 17th Jan 2025. Bse Link . Bse Link .
This event marks the significant milestone in DC Kothari Group as now Mr. Rafiq Ahmed for the first time owned 47.08% of the company shares with an additional 26% which could be got from the Open Offer
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14-08-2024: Incorporation of Subsidiary Kothari OTB India Limited with the OTB Pens from Brazil for the Manufacture and Market invisible Pen used in footwear industry. This marked the footwear component manufacturer which was signed directly with the listed entity KICL instead of the privately held Phoenix Kothari Footwear Limited . This was also because now the new promoter was holding 47.08% of the listed entity which was not the case previously Bse Link .
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11-12-2024: 2nd Preferential Allotment with increase in the share capital. by another 3.52 cr new shares issued @ Rs.25 per share. 33% subscribed by Mr Rafiq Ahmed and interesting thing is Qatari Ruling Royal Family ( Al-Thani ) through F J GlobalTrading And lnvestment now owns 9.08 % of KICL. This triggered my interest further why would a Qatari Ruling Royal Family ( Al-Thani ) invest merely Rs. 17cr in an unknown micro cap.
I have done even further investigation to identify who are the other people who have been given stake in the company at Rs. 25 per share . I have tried to figure out who are the possible investors and the list of prominent investors include people from TVS Srichakra / Rajalakshmi Group / Coromandel International Ltd. The list also includes many people from a Corporate Connections Chennai Group CorporateConnections® India | Executive Business Networking where Mr Rafique Ahmed seems to be an active member . Attached is the details where u can see the linkedin profiles
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11-12-2024: Subsidiary in Qatar has also be announced .This subsidiary will have 70% investment by KICL & 30% by FJ Global the Qatari Royal Family . Bse Link . This subsidiary to my knowledge will be to create the 1.2 million tonne NPK fertilizer plant which was proposed in Qatar . According to this report Kothari Industrial Corp: Kothari Industrial Corp plans fertilizer unit in Qatar | Chennai News - Times of India the cost of the project could be well in excess of 7000 Cr .
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11-12-2024 : It is announced that KICL will acquire the 30% stake held by Mr. Rafiq Ahmed in M/s’ Phoenix Kothari Footwear Limited under the listed KICL at agreed valuation . Bse Link . This according to me is the biggest news of all the annoucements as the footwear manufacturing business will now be a part of the listed KICL . As per the MCA records , the existing share capital of M/s’ Phoenix Kothari Footwear Limited is over 105 cr out of which Mr Rafiq Ahmeds contribution of 30% can be valued at Rs. 31.5 CR at the FV .
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14-12-2024 : Kickers First Store Opening in VR Mall Chennai. Bse Link
This marks the start of the B2C Retail Operations of the Company. It is expecting a 500 Cr expansion in their retail operations with over 100 exclusive Kickers brand store and over 700 retail counters over the next 2 years Kothari Industrial plans to open 100 exclusive Kicker fashion stores in India and eight countries in two years - The Hindu
Future Aspirations of KICL
- Creation of 2 New Factories for the leading non leather footware companies in the world in 2 different districts of TN with the existing partners Evervan Shoetown Group . Below will give u an rough idea of the CAPEX we are talking about based on the employment opportunities planned to be generated .
Asset Turn has been identified by 2023 AR of Pouchen Pg. 144 and we can see the Fixed Assets Turnover Ratio to be around 4 times except FY 2020 ( due to Covid )
Net Profit has also been assumed at 5% based on the 2023 AR of Pouchen
| Brand | Capex ( in Cr) | Employment | Asset Turn | Total Revenues at Peak Utilization | KICL Share (30%) | Net Profit ( 5% ) | Remarks |
|---|---|---|---|---|---|---|---|
| Crocs | 400 | 4000 | 4 | 1600 | 480 | 24 | Cross Currently is working at less than 50% capacity to my knowledge . Only 1700 people employed |
| New Factory 1 | 1300 | 13000 | 4 | 5200 | 1560 | 78 | |
| New Factory 2 | 2300 | 23000 | 4 | 9200 | 2760 | 138 | |
| Crocs Phase 2 | 800 | 8000 | 4 | 3200 | 960 | 48 | |
| Component Cluster | 700 | 2000 | 2 | 1400 | 420 | 21 | Not sure about asset turns |
| Peak Capex | 5500 | 50000 | 20600 | 6180 | 309 |
The expectation of the annoucments of the next 2 Factories by the Kothari Group can be expected by early this year as early as January 2025.
This can also be derived from the fact that CM Stalin has been visiting across multiple countries seeking for investments in TN . The post by CM MK Stalin on X derives that the TN government is looking for Partnering with the major footwear brands like Nike to invest in the India and TN
In a recent interview , Mr Rafiq Ahmed has hinted of an announced the commencement of construction of the second factory as early as Jan 2025 with a completion date of within 1 year
To understand the TAM size of the opportunity which is being targeted by Kothari in the non-leather footwear space , he has also hinted in the above video that currently India is manufacturing 7% of footwear production in the world which is expected to increase to over 25% which is 4X the current production . Also as India’s per capita income increases, the number of pairs owned by an Individual of non leather footwear is bound to increase as well.
Disc : Biased and Invested 2% of my PF
WIP thread …