Page Industries Ltd:Annual Report 2023-24 Analysis

Page Industries Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History: Page Industries Ltd. was established in 1994. It obtained the license to manufacture and distribute JOCKEY® International Inc. (USA) products in 1994. In 2001, it obtained the license to manufacture and distribute SPEEDO International Ltd (UK) products in India.

Headquarters Location: Bangalore, India

Company Vision: To be the leading manufacturer and marketer of innerwear, leisurewear, sportswear and swimwear in India.

Key Milestones in Their Growth Journey:

• 1994: Secured the license to manufacture and distribute JOCKEY® products in India.
• 2001: Obtained the license to manufacture and distribute SPEEDO® products in India.
• 2007: Initial Public Offering (IPO)
• Continued expansion of manufacturing facilities and distribution network over the years.
• Expansion into new product categories within innerwear, sportswear, and swimwear.

Stock Exchange Listing Details and Market Capitalization: Listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Market capitalization fluctuates based on market conditions and company performance. Please refer to current financial data sources for the latest market capitalization.

Recent Financial Performance Highlights: Please refer to the latest annual reports and quarterly results for accurate and updated financial information.

Management Team and Leadership Structure: The key managerial personnel include:

• Sunder Genomal - Managing Director
• V Ganapathi Subramaniam - Chief Executive Officer
• Pradeep Kumar Agarwal - Chief Financial Officer

Notable Awards or Recognitions:

• Page Industries has received various awards and recognitions for its performance, sustainability practices, and employer branding. Specific details on awards received can be found in the company’s annual reports and press releases.

Their Products #

Complete Product Portfolio with Categories:

• JOCKEY®: Innerwear, underwear, outerwear, socks and accessories for men, women and kids.
• SPEEDO®: Swimwear, water shorts, apparel, footwear and equipment for swimming and water-related activities.

Flagship or Signature Product Lines:

• JOCKEY® Men’s underwear range (particularly popular styles like the Modern Classic briefs)
• SPEEDO® Endurance+ range of swimwear.

Manufacturing Facilities and Production Capacity: Page Industries has multiple manufacturing facilities located in various parts of India. Production capacity details can be found in company reports and presentations.

Quality Certifications and Standards: Page Industries maintains quality certifications and standards relevant to the apparel manufacturing industry.

Unique Selling Propositions or Technological Advantages:

• Licensed manufacturing and distribution rights for well-known international brands (JOCKEY® and SPEEDO®).
• Strong brand reputation and customer loyalty.
• Wide distribution network across India.

Primary Customers #

Geographic Markets (Domestic vs. International): Predominantly focused on the Indian domestic market.

Major Client Segments:

• Individual consumers (men, women, and children) across different demographics.
• Retailers and department stores.
• E-commerce platforms.

Distribution Network and Sales Channels:

• Exclusive Brand Outlets (EBOs).
• Large Format Stores (LFS).
• Multi-Brand Outlets (MBOs).
• Online channels (own website and e-commerce marketplaces).

Major Competitors #

Direct Competitors in India and Globally:

• Indian Competitors: Lux Industries, Rupa & Company, Dollar Industries, Dixcy Textiles.
• Global Competitors: Jockey International (globally, but Page Industries is the licensee in India)

Competitive Advantages and Disadvantages:

• Advantages: Strong brand recall, established distribution network, licensed manufacturing agreement.
• Disadvantages: Premium pricing compared to some competitors, dependence on license agreements.

How They Differentiate from Competitors: Focus on quality, innovation, brand image, and strong distribution.

Future Outlook #

Expansion Plans or Growth Strategy:

• Expanding its distribution network to reach more consumers.
• Introducing new product categories within innerwear, sportswear, and swimwear.
• Focusing on enhancing its online presence.

Sustainability Initiatives or ESG Commitments: Page Industries is likely incorporating sustainability initiatives into its operations, such as water conservation, waste management, and ethical sourcing. Specific details can be found in their sustainability reports (if available) and corporate social responsibility disclosures.

Industry Trends Affecting Their Business:

• Increasing demand for comfortable and stylish innerwear.
• Growing popularity of athleisure wear.
• Rise of e-commerce and online shopping.
• Increasing consumer awareness of sustainable and ethically produced apparel.

Long-Term Vision and Strategic Goals: To maintain its leadership position in the Indian innerwear and sportswear market through continuous innovation, brand building, and expansion of its distribution network.

3-Year Trend Analysis of Key Financial Metrics #

• Revenue: Decreased from ₹47,142 million in FY23 to ₹45,817 million in FY24, a decline of 2.8%.
• Profit Before Tax (PBT): Remained relatively stable, with ₹7,565 million in FY24 compared to ₹7,581 million in FY23, a marginal decrease of 0.2%.
• Profit After Tax (PAT): Decreased slightly from ₹5,712 million in FY23 to ₹5,692 million in FY24, a reduction of 0.4%.
• Operating Profit margin: Increased slightly, from 18.61% to 19.47%.
• Earnings Per Share (EPS): Basic and diluted EPS decreased marginally from ₹512.15 in FY23 to ₹510.31 in FY24.
• Return on net worth: Decreased from 46% to 38%.
• Debt-Equity Ratio: Decreased from 30% in FY23 to 12% due to repayment of borrowings.

Business Segment Performance #

• The Company operates in a single business segment: manufacturing and trading of garments. Therefore, segment-wise financial reporting is not applicable.

Major Strategic Initiatives and Their Progress #

• Capacity Expansion: Ongoing projects include the expansion of the tape dyeing unit in Hassan (operational by Q1 FY25), completion of ‘Cup Moulding’ and ‘Hook n Eye Forming’ projects, and the near-completion of the Odisha Project (by end of FY25).
• Distribution Network Expansion: Opened 205 new Jockey Exclusive Brand Stores (EBS) in FY24, reaching a total of 1,382. Speedo brand presence extended to 1,050+ stores and 32 EBSs across 90+ cities.
• Digital Transformation: E-commerce channel grew by 30% during the year and the Company is executing initiatives for improvement of D2C channels.
• Technological advancements: in enterprise supply planning, production automation and RFID implementation.
• Sustainability Initiatives: 10 out of 31 long term sustainability targets achieved. Quarterly sustainability audits and awareness sessions conducted.

Risk Landscape Changes #

• Economic Environment: The Company faced subdued demand in the retail industry, with consumer expenditure shifting towards travel and leisure. Excess inventory in the innerwear and athleisure segments led to unsustainable business practices in the market.

ESG Initiatives and Metrics #

• Environmental:
  • Reduced energy intensity by 18% against the FY19-20 baseline.
  • Reduced GHG emission intensity by 29% against the FY19-20 baseline.
  • Sourced 27% of total energy from renewable sources.
  • Achieved Zero Liquid Discharge (ZLD) at the tape dyeing unit in Hassan.
  • Recycled 1127 MT of plastic packaging waste in FY24, achieving 100% of the EPR target.
  • Diverted all types of waste from landfills.
• Social:
  • Maintained a high proportion of women employees (74% of total employees).
  • Provided health checkups for 100% of employees at three manufacturing units.
  • Recorded 4,34,21,792 safe working hours.
  • Conducted awareness programs on Prevention of Sexual Harassment (POSH) across all manufacturing facilities.
• Governance:
  • Assessed and maintained Gender Pay Parity.
  • Conducted sustainability assessments for all critical suppliers.
  • Improved internal compliance scoring.

Management Outlook #

• Optimistic about future prospects: The Company expects continued healthy sales growth and profitability, driven by brand equity, product innovation, and expanding distribution networks.
• Focus on long term objectives by way of intensifying general trade distribution, large format, EBO, customer experience, robust supply chain and growing D2C business.
• Market Recovery: FY25 is anticipated to be a year of market recovery.
• Commitment to Sustainability: The Company is committed to integrating sustainability into all core business functions, with specific targets for energy, emissions, water, and waste management.

Detailed Analysis #

Financial Analysis of Page Industries Limited #

Balance Sheet Analysis #

3-Year Comparative Analysis (INR Millions) #

Assets #

Liabilities and Equity #

Significant Changes in Major Line Items (>10% YoY) #

• Capital Work-in-Progress: Increased by 58.6% (FY23-24 vs FY22-23) and 135.4% (FY22-23 vs FY21-22), indicating substantial ongoing investments in expanding production capacity or infrastructure.
• Right of Use Assets: Increased by 15.4%, indicating the company continued adding to their operational leases.
• Inventories: Decreased by 26.6% (FY23-24 vs FY22-23), suggesting improved inventory management or lower production/sales volume.
• Cash and Cash Equivalents: Substantially increased, signaling improved liquidity position.
• Other Bank Balances: Increased significantly from a lower base, indicating higher funds kept in deposits.
• Other Financial Assets (Current): Increase of 136.14% due to changes in accruals and other receivables.
• Other Non-current assets: decreased by 53.55% because of changes in advances to supplies.
• Borrowings: Decreased to zero, indicating the company has paid off its short-term debts.
• Other Financial Liabilities: Increased by 1.8%, minor growth in accruals and other payables.
• Liabilities for Current Tax(net): Increased by 489.06% because of taxes payable.
• Net employee defined benefit liabilities:. Decreased by 53.71% (FY23-24 vs FY22-23).
• Other equity: Increased by 16.61% (FY23-24 vs FY22-23)

Working Capital Trends #

• Current Assets: Decreased from ‘19,615.93 million in 2022-23 to ‘18,755.13 million in 2023-24.
• Current Liabilities: Decreased significantly from ‘11,935.99 million in 2022-23 to ‘9,381.89 million in 2023-24, primarily because of repayment in borrowings.

This resulted in an improved working capital position due to a greater decrease in current liabilities compared to current assets.

Asset Quality Metrics #

• Inventory Turnover Ratio: The ratio of 1.51 in FY'24 against 1.62 shows a decrease in inventory turnover.

Debt Structure and Maturity Profile #

• Debt-Equity Ratio: Decreased from 0.30 in 2022-23 to 0.12 in 2023-24.
• Lease Liabilities:
  • Non-current portion: ‘1,420.50 million (2023-24), ‘1,218.00 million (2022-23).
  • Current portion: ‘428.00 million (2023-24), ‘363.98 million (2022-23).

Off-Balance Sheet Items #

There are no significant off-balance sheet items explicitly mentioned that are not already included in contingent liabilities. Contingent liabilities related to tax disputes are disclosed.

Income Statement Analysis of Page Industries Limited (FY2024) #

Revenue Breakdown #

By Product Category #

• Innerwear and Leisurewear: ₹45,361.04 million (FY2024), a decrease from ₹46,712.44 million (FY2023).
• Others (including swimwear): ₹455.67 million (FY2024), an increase from ₹429.49 million (FY2023).

By Geography #

• India: ₹45,642.34 million (FY2024), a decrease from ₹46,954.86 million (FY2023).
• Rest of the World: ₹174.37 million (FY2024), a decrease from ₹187.07 million (FY2023).

Cost Structure Analysis #

• Cost of Raw Materials Consumed: Decreased to ₹11,333.62 million (FY2024) from ₹13,939.60 million (FY2023).
• Purchases of Traded Goods: Decreased significantly to ₹6,115.04 million (FY2024) from ₹14,370.10 million (FY2023).
• Change of Inventories: Decreased to ₹3,397.22 million (FY 2024) from a increase of (₹7,457.27) million (FY2023).
• Employee Benefits Expense: Decreased to ₹8,036.12 million (FY2024) from ₹8,848.06 million (FY2023).
• Other Expenses: Decreased to ₹8,212.09 million (FY2024) from ₹8,814.01 million (FY2023).
• Finance Cost: Increased to ₹448.93 million (FY 2024) from ₹412.82 million (FY 2023).

Margin Analysis #

• Net Profit Margin: Remained stable at 12% in both FY2024 and FY2023.
• Operating Profit Margin: Increased slightly to 19.47% in FY2024 from 18.61% in FY2023.

Non-Recurring Items #

• Impairment: ₹36.09 million (FY2024)

EPS Analysis #

• Basic EPS: ₹510.31 (FY2024), a slight decrease from ₹512.15 (FY2023).
• Diluted EPS: ₹510.31 (FY2024), a slight decrease from ₹512.15 (FY2023).

Cash Management #

Cash Flow and Liquidity Analysis #

Detailed OCF, ICF, FCF Components #

• Operating Cash Flow (OCF): FY24 saw a significant increase in OCF, reaching ₹10,804.66 million, compared to a negative ₹16.08 million in FY23. Major positive drivers were the profit before tax and a decrease in inventory levels, contributing significantly, showing improved operational efficiency.
• Investing Cash Flow (ICF): FY24 showed a net outflow of ₹3,699.18 million, primarily due to the purchase of property, plant, and equipment, and investments in bank deposits.
• Financing Cash Flow (FCF): FY24 saw a net outflow of ₹6,214.13 million, mainly from dividend payments and repayments of short-term borrowings.

Working Capital Management Efficiency #

• Inventory levels significantly reduced from ₹15,952.64 million in FY23 to ₹11,703.02 million in FY24, indicating enhanced inventory management.
• Trade receivables turnover was consistent, and slightly decreased, at 30.07 in FY24 compared to 30.30 in FY23.
• The Current Ratio improved, from 1.64 to 2.00

Capex Analysis #

• Overall Capital work-in-progress increased from ₹1,504.51 million in FY23 to ₹2,386.84 million in FY24, signifying ongoing investment in expansion.
• Key investments were made in projects like tape dyeing unit expansion, cup moulding, and hook & eye forming, with new facilities like K R Pete and Odisha Project.

Dividend and Share Buyback Trends #

• The Company declared and paid four interim dividends totaling ₹3,457.70 million in FY24, compared to ₹2,900.00 million in FY23.
• A further interim dividend of ₹120 per share was declared after the balance sheet date (May 23, 2024)

Debt Service Coverage #

• The debt service coverage ratio was 2.66 in FY24, a decrease from 11.45 in FY23 due to repayment of cash credits.
• Total Borrowings (current) reduced to zero, improving from ₹2481.98 in the last reporting period

Liquidity Position and Cash Conversion Cycle #

• The Company’s liquidity position improved, evidenced by a substantial increase in cash and cash equivalents, from a negative balance of ₹559.49 million to ₹331.86 million.
• The current ratio increased from 1.64 to 2.00, indicating improved ability to meet short-term obligations.

Financial Analysis: Key Ratios and Trends #

Profitability Ratios (3-Year Trends) #

*ROA calculated by using the formula= Net Income/ Total assests. *ROIC is provided in the PAGE INDUSTRIES - AN OVERVIEW, Weaving progress,performance, insights and value creation section

Analysis:

• ROE has decreased significantly, from 46% to 38%.
• ROA has remained stable around 21%.
• ROIC has maintained high by increasing from 50% to 51%.
• Net and Operating Profit Margins have shown slight improvement.
• There is a significant deviation in Interest coverage ratio, a decrease of approximately 77%.

Liquidity Metrics #

*Quick Ratio= (Current Assets-Inventory)/ Current Liabilities *Cash Ratio= Cash and Cash Equivalents/ Current Liabilities

Analysis:

• The Current Ratio improved, from 1.64 to 2.00, indicating a better short-term solvency position.
• The Quick ratio also has improved, as current assests were more than current liabilities.

Efficiency Ratios #

*Asset Turnover Ratio= Revenue from Operations/ Total assests.

Analysis:

• Asset Turnover Ratio has slightly decreased, indicating a marginal reduction in asset utilization efficiency.
• Inventory Turnover Ratio has declined, from 1.62 to 1.51, suggesting a possible slowdown in inventory movement.
• Receivables Turnover Ratio remained stable.

Leverage Metrics #

Analysis:

• Debt-Equity Ratio has significantly decreased, showing a reduction in financial leverage.
• Interest coverage ratio is not available in the documents.

Working Capital Ratios #

*Net Capital Turnover Ratio= Revenue from Operations/ (Current assets - Current liabilities). *Working Capital Ratios were not provided but only net capital turnover ratio, hence calculated it.

Analysis:

• Net Capital Turnover Ratio decreased, indicating a reduction in the efficiency of working capital utilization to generate revenue.
• The company is using its working capital efficiently.

Business Segment Performance Analysis #

Revenue and Profitability #

• Overall revenue decreased by 2.8%, from ₹47,142 million in 2022-23 to ₹45,817 million in 2023-24.
• Profit before tax decreased slightly by 0.2%, from ₹7,581 million to ₹7,565 million.
• Profit after tax decreased marginally by 0.4% from, ₹5,712 million to ₹5,692 million.
• The Jockey brand achieved a turnover of ₹45,817 Million, as against ’ ₹47,142 million, previous year
• The Speedo brand achieved a turnover of ₹456 million in the financial year 2023-24, as against ‘429 million in the previous year.
• E-commerce channel witnessed substantial growth of 30% during the year.

Market Share and Competitive Position #

• Page Industries is positioned as a leading player in the premium innerwear and athleisure market.
• Independent brand health studies indicate Jockey holds a strong Brand Health Index and Brand Spring score, significantly higher than competitors in both men’s and women’s innerwear categories.
• Speedo is aiming to be a dominant brand in premium swimwear.

Key Products/Services Performance #

• Jockey’s product line spans men’s, women’s, and kids’ innerwear, athleisure, socks, and accessories.
• Speedo’s product line includes swimwear and swim-related equipment.
• The women’s wear and athleisure lines demonstrated significant revenue growth.
• Socks expansion is complete, with 215 new knitting machine, our total capacity has reached 576 machines.
• The Indian domestic textile and apparel market has grown from US$ 50 bn in 2010-11 to US$ 138 bn in 2023-24

Geographic Distribution and Market Penetration #

• Jockey brand is distributed across 2,750+ cities and towns in India.
• Jockey has a retail network of over 108,052+ stores, including Exclusive Brand Stores (EBS), Large Format Stores (LFS), Multi-Brand Outlets (MBO), and online channels.
• Jockey has 1,382 EBS, including 43 ‘Jockey Woman’ EBS and 64 ‘Jockey Junior’ EBS.
• Internationally, Jockey has 13 operational EBS in UAE, Sri Lanka, Qatar and Oman.
• Speedo brand is available in 1,050+ stores and 32 EBSs across 90+ cities in India.

Segment-wise CAPEX and ROIC #

• ROCE: 51%.
  • Tape dyeing unit expansion of 35,000 sq. ft. in Hassan.
  • ‘Cup Moulding’ and ‘Hook n Eye Forming’ projects were completed.
  • Hook n Eye metal dyeing is another project undertaken, which is underway.
  • TPL (Third Party Logistics) finished goods warehouses are in operation in Hoskote and Narsapura near Bangalore.
  • New E-commerce warehouse at Delhi, NCR to serve the North region.
  • Premium vertical at KR Pete is underway, with plans for a new facility spanning 250,000 sq. ft.
  • The Odisha Project, set to be one of the largest in the industry, is nearing completion. Spanning 28.5 acres with a built-up area of 6.5 lakh sq. ft.
  • Socks expansion is complete, with the addition of 215 new knitting machines, our total capacity has reached 576 machines

Operational Efficiency Metrics #

• Production capacity: 280 million pieces/year.
• Focus on enhancing supply chain productivity and modernization of the distribution management system.
• FY'25 appears poised for market recovery.

Growth Initiatives and Challenges #

• Growth Initiatives:
  • Intensifying general trade distribution.
  • Expanding large format stores and exclusive brand stores.
  • Growing D2C business.
  • Improving customer experience.
  • Strengthening product portfolio.
  • Continuous improvement in partner and consumer engagement.
  • Brand building.
  • Ensuring a robust supply chain.
  • Strategic sourcing from refined limited supplier base.
• Challenges:
  • Subdued overall demand for the retail industry.
  • Shift in consumer expenditure towards travel and leisure.
  • Excess inventory in the innerwear and athleisure segment.
  • Unsustainable business practices in the market.
• Projects either under consideration or in progress
  • RSL (Restricted Substance List), Oekotex, ZLD compliant sourcing.
  • Implementation and enhancement of the production floor management system.
  • Line scheduling and planning system.
  • Maintenance Software and Asset Management.
  • Colour grouping / Roll Management / Cut Plan.
  • Lab management software.
  • Supply Chain Control Tower.

Risk Framework #

Strategic Risks #

• Severity: High
• Likelihood: High
• Trend: Increasing
• Mitigation Strategies: Brand building, market expansion, intensification of the general trade distribution, expanded store network, digital transformation, product innovation (women’s wear and athleisure).
• Control Effectiveness: Partially effective. Brand equity remains strong, but revenue from operations slightly declined year-over-year.
• Potential Financial Impact: Revenue may decrease, and reduce market share and profitability if mitigation strategies are not fully successful.

Operational Risks #

• Severity: Moderate
• Likelihood: Medium
• Trend: Stable
• Mitigation Strategies: Modernizing the distribution management system, streamlined operations, Third Party Logistics (TPL) for finished goods, and backward integration and automation.
• Control Effectiveness: Good. The Company managed production levels. Capital-intensive projects, and value-added projects are proceeding as planned.
• Potential Financial Impact: Increased production cost to supply chain issues.

Financial Risks #

• Severity: Moderate
• Likelihood: Low to Medium
• Trend: Stable
• Mitigation Strategies: Hedging to manage foreign currency exposure and a system to monitor credit risk.
• Control Effectiveness: Good. The debt-to-equity ratio improved significantly.
• Potential Financial Impact: Interest rate risk could impact profit before tax.

Compliance/Regulatory Risks #

• Severity: Moderate to High
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Established Vigil mechanism/Whistle Blower mechanism and Internal Complaints Committee.
• Control Effectiveness: Good. The Company reported no material orders from regulators.
• Potential Financial Impact: Fines, penalties, or legal settlements.

Emerging Risks #

• Severity: Moderate
• Likelihood: Medium
• Trend: Stable
• Mitigation Strategies: Integration of ESG risk into the overall enterprise risk management.
• Control Effectiveness: Developing. The Company’s sustainability initiatives, and partnerships.
• Potential Financial Impact: Increased environmental, social, and governance concerns could effect business in the form of reputational risks, and operational disruptions.

Strategic and Management Analysis #

Long-Term Strategic Goals and Progress: #

• Goal: To be a 1 billion USD (revenue) company by FY 2026, driven by increased market presence, diversified product portfolio, innovation, and R&D.
  • Progress: FY24 revenue was ₹45,817 million, down from ₹47,142 million in FY23, indicating a challenge in meeting the growth target.
• Goal: Reduce emissions intensity by 15% by FY 2025 and 30% by FY 2030 (against FY 2019-20 baseline).
  • Progress: Achieved a 29% reduction in GHG Emission Intensity in FY24.
• Goal: Zero Liquid Discharge by FY 2024 (Unit 21).
  • Progress: Achieved with the installation of a Low-Temperature Evaporator (LTE) system.
• Goal: Zero waste to landfill by FY24.
  • Progress: Achieved zero waste diversion to landfill.

Competitive Advantages and Market Positioning: #

• Page Industries is positioned as a leading player in the premium innerwear and athleisure market, holding exclusive licenses for JOCKEY and Speedo brands in multiple regions.
• Extensive distribution network: Over 108,052+ retail touchpoints, 1,382+ exclusive brand stores, and a growing e-commerce presence, demonstrating wide market reach.
• Strong brand equity: The Jockey brand is recognized for quality, comfort, and innovation. Studies cited show high brand health and equity scores.
• Backward integration: 14 manufacturing units, with 280 million pieces/year capacity, allow for better control over quality and costs.

Innovation Initiatives and R&D Effectiveness: #

• Investment: 0.4% of R&D and 12.6% of CAPEX was invested in specific technologies to improve the environmental and social impacts of products and processes.
• Focus areas include: tape dyeing unit expansion, cup moulding, Hook n Eye forming, production floor management system and supply chain optimization and a sustainability focus with increasing use of renewable/sustainable materials, and OEKO-TEX certifications.
• Product Development: Ongoing initiatives in raw material development, including elastic ring-making automation and bra strap-making automation, show commitment to product improvement and cost control.

Management’s Track Record in Execution: #

• Successfully completed several expansion projects including the tape dyeing unit, cup moulding project, and setting up of TPL warehouses.
• Launched its B2C E-Commerce Channel and tied up with leading online retailers.
• Demonstrated commitment to sustainability with significant progress toward environmental targets (emission reduction, waste management, water usage).
• Met and adapted to challenging market conditions.

Capital Allocation Strategy: #

• Significant CAPEX investments in technology, infrastructure, and expansion projects (e.g., Odisha project, socks expansion).
• Focus on long-term capacity building to meet projected market growth.
• Dividend payouts: Four interim dividends declared and paid during FY24, totaling ₹4,127 million.

Organizational Changes and Their Impact: #

• Redefined “Pride of PAGEian” values, emphasizing Integrity, Respect, Excellence, Innovation, Responsibility, Customer Orientation, and Entrepreneurship.
• Strategic focus on diversity with commitment to equal opportunity employer and believes that diversity fosters creativity.
• Reorganized salary structure of Managing director and Deputy Managing director by integrating Variable pay component into fixed components.
• Ongoing implementation of Risk Management framework and an Integrated Management System comprising ISO9001, 14001, 45001 and 50001.

ESG Framework #

Environmental Metrics and Targets #

• Energy intensity decreased to 52.41 GJ/Million Minutes Produced, achieving an 18% reduction against the FY19-20 baseline.
• GHG Emission (Scope 1&2) Intensity was 7.64 tCO2e/Million Minutes Produced, achieving a 29% reduction against the FY19-20 baseline.
• 27% of total energy consumed from renewable sources.
• 86% of STP-treated water was reused within company premises, reducing freshwater consumption.
• Achieved zero waste diversion to landfills.
• 100% of vendors (Fabric, Elastic, Yarn) are Oeko-Tex certified.
• Targets include a 15% reduction in emissions intensity by FY2025 and 30% by FY2030, aligned with India’s NDCs against the FY2019-20 baseline.

Social Responsibility Programs #

• CSR spending for FY23-24 reached ’ 84.66 million.
• CSR spending increased by 30% compared to the previous year.
• ’ 92.23 million of unspent CSR amount was transferred to the Unspent Corporate Social Responsibility Account as per regulations.
• 3,669 students benefited from the educational programs.

Governance Structure and Effectiveness #

• The Board of Directors comprises a balance of Executive, Non-Executive, Woman, and Independent Directors.
• Four Board meetings and four Audit Committee meetings were convened during the year.
• An Internal Complaints Committee (ICC) is in place, compliant with the Sexual Harassment of Women at Workplace Act, 2013.
• The Board have risk management oversight.
• The board conducted performance evaluation of itself.

Sustainability Investments and ROI #

• 0.4% of R&D and 13.2 % of CAPEX investments in FY23-24 were directed toward technologies improving environmental and social impacts.
• Specific projects included a tape dyeing unit expansion, cup molding and hook & eye forming projects, and expansion of the premium vertical at K.R. Pete.
• The orissa project focused on facilities for Central Stores, Cut-to-Pack, and Elastics & Socks manufacturing.

Regulatory Compliance and Future Preparations #

• The Company is compliant with applicable environmental laws and regulations, including the Water (Prevention and Control of Pollution) Act, Air (Prevention and Control of Pollution) Act, and Environment Protection Act.
• The company has a Whistle-Blower Policy that is compliant with Section 177 of the Companies Act 2013.

Future Projections and Guidance #

Management Guidance and Assumptions #

• The Company’s financial year 2023-24 had a reduced revenue and static profitability due to subdued demand.
• Management anticipates market recovery in FY25.
• Management maintains the primary focus on enhancing supply chain and productivity.
• Management emphasizes sustainable sales practices, maintaining operating margins, and optimizing inventory.
• E-commerce channel growth is a priority, with a 30% growth achieved in the year under review.

Market Growth Forecasts #

• The Indian apparel market is poised for substantial growth.
• The Indian domestic textile and apparel market is projected to grow at a 9% CAGR from 2023-24 to reach USD 250 billion by 2030-31.
• The innerwear market in India is projected to reach INR 75,466 crores by 2025, at a CAGR of 11.2%.
• The women’s inner & comfort wear segment is expected to sustain a CAGR of 13%, reaching an estimated INR 55,535 crores by 2025.
• Men’s inner & comfort wear segment is projected to realize a CAGR of 11.5%, reaching a market value of INR 26,952 crores by 2025.
• The kid’s inner & comfort wear segment is projected to grow with a CAGR of 8.5%, reaching INR 8,819 crores by 2025.
• The global athleisure market is expected to grow at a rate of 8-10% annually. In India, athleisure market is projected to grow at a CAGR of over 10% in the next five years.
• The Asia-Pacific region, specifically India and China, is expected to experience a higher growth rate for swimwear.
• India’s e-commerce sector is projected for exponential growth, with a CAGR of 27% to reach US$ 163 billion by 2026.

Planned Strategic Initiatives #

• Intensifying general trade distribution.
• Expanding large format stores and exclusive brand stores.
• Growing the Direct-to-Consumer (D2C) business.
• Improving customer experience.
• Strengthening the product portfolio.
• Continuous improvement in partner and consumer engagement.
• Continued brand building.
• Ensuring a robust supply chain.
• Continued investment in technology, brand promotion, and expanding market reach.

Capital Expenditure Plans #

• Completion of the tape dyeing unit expansion in Hassan, scheduled to commence operation by Q1 of FY25.
• Completion of ‘Cup Moulding’ and ‘Hook n Eye Forming’ projects to enhance bra-making capabilities.
• Hook n Eye metal dyeing project underway, expected to commence operation by Q1 of FY25.
• Operation of TPL finished goods warehouses in Hoskote and Narsapura, and a new E-commerce warehouse in Delhi, NCR.
• Expansion of the premium vertical at KR Pete, with a new facility, in two phases: sew-to-pack operations by Q1 of FY26, and elastic manufacturing capabilities by FY27.
• The Odisha Project, a large-scale facility, is nearing completion and will likely be ready by the end of FY'25, including facilities for various manufacturing processes.
• Completion of Socks expansion, increasing capacity to 576 machines.
• Application for NABL accreditation for the Tirupur plant lab in FY'25.
• Planned implementation of solar energy supply to all manufacturing plants, with a capacity of around 7 MW.
• Ongoing and planned projects, include strategic sourcing, IMS, RSL, Oekotex, ZLD, and implementation of various production and management systems.

Efficiency Improvement Targets #

• Reduce energy intensity (GJ/Million Minutes Produced) by 17% by FY 2023-24 against FY 2019-20 baseline. Achieved 18%.
• Reduce emissions intensity by 15% by FY 2025 and 30% by FY 2030 against the FY 2019-20 baseline. Achieved 29% reduction in GHG Emission.
• Improve water-use efficiency by 20% by FY 2030.
• Reduction in Fresh Water by 20% by FY 2025.
• Achieve Zero Liquid Discharge by FY 2024 (ETP at Unit 21). Achieved with the installation of the Low-Temperature Evaporator (LTE) system.
• Zero Waste to Landfill with 100% traceability by FY 24. Achieved in FY2024.
• Automation of Enterprise Supply Planning systems.
• Implementation of RFID or proximity cards in manufacturing.
• Optimization of processes that will improve production cost, such as Cutting Marker optimization, and elastic ring making automation.

Potential Challenges and Opportunities #

• Challenges:

  • Subdued overall demand in the retail industry, with consumer spending shifting towards travel and leisure.
  • Accumulation of excess inventory in the innerwear and athleisure segments.
  • Unsustainable business practices emerging in the market.
  • Fluctuating economic conditions.
  • Intensifying competition from international brands and D2C startups.

• Opportunities:

  • Substantial growth potential in the Indian apparel market, especially as consumer spending recovers.
  • Emergence of new consumer classes in India.
  • Strong brand equity and image of the Jockey and Speedo brands.
  • Expansion into untapped regional markets and demographic segments.
  • Growth potential in women’s wear and athleisure segments.
  • Expansion of e-commerce and digital channels.
  • Increasing consumer awareness of sustainability and demand for quality-driven products.
  • Strategic partnerships for design and technology innovation.

Scenario Analysis and Sensitivity to Key Assumptions #

• Revenue Growth Sensitivity: Revenue is highly sensitive to overall economic conditions and consumer spending. A slower-than-expected recovery in consumer spending or increased competition could significantly impact revenue growth.

• Cost Management Sensitivity: Profitability is sensitive to raw material costs and operational efficiency. Fluctuations in input costs or delays in efficiency improvement projects could impact margins.

• Expansion plan sensitivity: The Company Capex plans are a major factor in potential growth. Delays, or lower-than-expected returns, could negatively impact.

• Inventory Management Sensitivity: Since “excess inventory” is cited, the company’s ability to accurately forecast demand and manage inventory levels will be critical.

Audit and Regulatory Analysis #

Auditor’s Opinion and Qualifications #

• The Independent Auditor’s Report by S.R. Batliboi & Associates LLP provides an unqualified opinion on the Ind AS financial statements.
• Proper books of account as required by law have been maintained, except related to the audit trail feature in accounting softwares.
• Books of account and financial statements are not in agreement.

Key Accounting Policies and Changes #

• The Company follows Ind AS, as notified under the Companies (Indian Accounting Standards) Rules, 2015.
• Revenue recognition occurs upon the transfer of control of goods, net of returns, allowances, trade discounts, and volume rebates/incentives, using a five-step approach.
• Changes applied in accounting policies regarding the definition of Accounting Estimates.
• Amended accounting policies on Disclosure of accounting policies.
• Changes applied in accounting policies related to Deferred tax on assets and liabilities.
• Inventories are valued at the lower of cost (weighted average) and net realizable value.
• Depreciation is calculated on a straight-line basis over the estimated useful lives of assets, as prescribed under Schedule II of the Companies Act, 2013, with certain assets (vehicles) depreciated over a management-determined useful life di/ffering from Schedule II.
• Lease liabilities are measured at the present value of lease payments. Right-of-use assets are depreciated over the shorter of the lease term or the asset’s useful life.
• The company recognizes remeasurement gains or losses on defined benefit plans.

Internal Control Effectiveness #

• The auditor’s report includes a separate opinion on the adequacy and operating effectiveness of internal financial controls over financial reporting.
• The auditor’s opinion states that the Company has maintained, in all material respects, adequate internal financial controls over financial reporting, and such controls were operating effectively as of March 31, 2024.
• The Company has used account software that have a feature of recording audit trail (edit log). Audit trail is not enabled for changes made in certain areas.

Regulatory Compliance Status #

• The Company has complied with the conditions of Corporate Governance as stipulated in SEBI (LODR) 2015.
• The Company states compliance with applicable environmental laws and regulations, including the Water (Prevention and Control of Pollution) Act, Air (Prevention and Control of Pollution) Act, and Environment Protection Act.
• The Company complied with statutory requirements, except for some instances with delays for undisputed statutory dues.

Legal Proceedings and Potential Impact #

• The Company is involved in pending litigations, primarily related to tax matters, detailed in Note 40(b).
• There are disputed tax liabilities related to income tax and customs duty.
• There are demands related to Employee State Insurance.
• The Company contests claims and is involved in ongoing legal proceedings.

Related Party Transactions #

• All related party transactions were conducted on an arm’s length basis and in the ordinary course of business.
• There were no materially significant related party transactions that presented a potential conflict of interest with the Company.
• Detailed transactions are presented under note 41.

Subsequent Events #

• The Board of Directors declared an interim dividend of ₹120 per share on May 23, 2024.

Analysis of Accounting Quality #

• The adoption of Ind AS and adherence to a five-step revenue recognition model indicates a structured approach to revenue recognition.
• The use of weighted average cost for inventory valuation is a standard and acceptable method.
• The consistent application of depreciation on a straight-line basis, with a review of useful lives and residual values, supports reliable asset valuation.
• The use of actuarial valuations for defined benefit plans, with detailed disclosures on assumptions, enhances the reliability of these obligations.
• The differences between carrying amounts and fair value are negligible and reflect low risk.

Regulatory Risk Assessment #

• The ongoing disputes with tax and customs authorities represent a regulatory risk, with potential financial implications if decisions are unfavorable.
• Compliance with SEBI Listing Regulations and the Companies Act indicates a commitment to regulatory adherence, but ongoing monitoring is essential.
• Full compliance with maintenance of cost records and the cost auditing is not applicable.
• Risk management committee are present and overseeing the risk mitigation and monitoring.