sales recovered and margins improved, with money from a share issue to be used to retire debt and expand.

The retail chain’s profits for the financial year ending March 2010, revealed for the first time, were up 313 percent from the year before when sales were flat because of the economic slowdown.

Odel’s sales last year rose 23.8 percent to 2.41 billion rupees, while margins increased to 5.8 percent from 1.7 percent the year before, its prospectus said.

About 150 million rupees of the initial public offer opening on July 5 will be used to expand the number of Odel outlets, and 100 million rupees to retire short-term debt, Channa Amaratunga of CT Capital, the lead managers, told media at the launch of its IPO.

Odel, a well-known Sri Lankan brand with 11 stores, serves upper and middle-class customers, about 40 percent of whom are foreign tourists and residents.

Odel plans to issue 16.7 million shares at 15 rupees a share which would push up its total share capital by 11.52 percent to 144.95 million shares.

Amaratunga said 1.2 million shares are allocated to employees, 3.0 million shares to retail buyers and 12.5 million shares to high-net-worth and institutional investors.

After the IPO, Odel founder and chief executive Otara Gunewardene’s shareholding would fall to 55.77 percent from 63.03 percent, its prospectus said.

Ajith Gunawardene, the elder brother of Otara Gunawardene, and deputy chairman of the John Keells Holdings conglomerate, is also a shareholder of Odel whose stake will fall to 27.88 percent from the present 31.51 percent.

Odel’s profitability had see-sawed in the past five years, its prospectus showed.

In the financial year ending March 2006, Odel made a net profit of 29.5 million rupees, which rose in 2007 to 74.9 million, but fell in 2008 to 67 million and was down again to 34.3 million rupees in 2009.

However, its revenue growth had been more stable. In 2006 Odel had revenue of 1.57 billion rupees, in 2007 1.68 billion rupees, in 2008 1.94 billion, and in 2009 1.95 billion rupees.

About 75 percent of its revenues come from the sale of clothes, while the rest is made up of rent, high-end ornaments and other collectables.