Nairobi Business Ventures (NBV), which operates a chain of shoe stores under the brand name KShoe, has converted its short-term debt into long-term loans to ease finance costs on its cash flows.
The shoes and leather accessories vendor saw its non-current loans in the nine months ended September increase by Sh41.4 million to Sh65.5 million while its current loans reduced by a similar margin to Sh15.3 million.
The firm, which listed at the Nairobi bourse’s Growth Enterprise Market Segment (Gems) by introduction last June, saw the conversion of the bank overdraft into a long-term loan nearly halve finance costs during the period by Sh1.67 million to Sh3.2 million.
“During the period under review, the Bank of Baroda converted an overdraft we had with them into a term loan. This eases our repayments,” the firm’s chief executive Vasu Abotula said in an interview. NBV, which operates six outlets in Nairobi (two in the city centre and one each at Village Market, T-Mall, Capital Centre and Ongata Rongai) is now planning to open at least four more this year.
Raj Srungarapu, the firm’s managing director, said two of the upcoming outlets will be based in the city centre while the rest will be situated within shopping malls around the capital.
The firm projects that it will use between Sh60 million and Sh80 million in the expansion. The firm’s KShoe brand, which targets the upper middle class, retails for an average Sh12,000, higher than the bulk of other retailers in the market.
“Generally the economy did not do so well last year. Customers’ spending power has reduced substantially,” he told the Business Daily.
“We had marketed our products aggressively and offered discounts on some shoes to cushion our margins. We are, however, optimistic that this year will be better that the last.”
NBV’s loan conversion and expansion plans come on the back of the firm reporting that its half-year sales increased by 7.8 per cent, even as its after-tax profit for the period hit the Sh1 million mark.
The shoe vendor closed the period with revenues of Sh34.7 million, compared to Sh32.2 million recorded during a similar period in 2015. The firm’s net profit went up by 5.8 per cent to Sh1.03 million compared to the previous year’s Sh982,343.
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Note: The results are not exact but very close to the actual.
