Page Industries’ journey is only beginning: Chandrasekar K CFO
Chandrasekar K, CFO, shares Page Industries’ upcoming road map. Edited excerpts from his interview to ET Now:
ET Now: What aided the strong operating performance?
Chandrasekar K: In terms of revenue in Q1, we are not back to where we can be. We reported a 76% growth in the top line compared with Q1 of last year, and about 128% growth in profit after tax. In terms of revenue, we only did Rs 500 crore as compared to the usual Rs 800 crore in a quarter.
We learnt from last year’s lockdown experience, so we were much more nimble and were able to capitalise on whatever days were not under lockdown, in the geographies that were not under lockdown. We were to able to supply quickly. Now, July is looking even better.
With store rentals moderating and raw material costs rising, how likely are you to see pressure on costs? How are you planning to sustain margins without hurting demand?
We did see a 2.8% spike in the RM cost in Q1. But then, we always price to take care of cost increases. For example, if the RM cost is 2.8% it would have an impact on the selling price only up to half as much. We do not have to raise prices by 2.8%.
We have been delivering 21%-plus EBITDA margin in all the months not under lockdown. So far, so good.
Are you seeing an uptick in footfalls? Also, are traditional channels picking up, or is it still the online sales?
Online definitely did well in Q1, with a 19% share in total revenue. It was the same pattern as last year’s Q1.
Ecommerce is becoming stronger and stronger by the day. In FY20, ecommerce was in the range of 3% to 4%. It became an average of about 7% to 8% in FY21. We hope this trend continues.
Can Page be competition-proof? There are new players like Birla Group and Arvind…
In a pandemic situation, the economy depends on people coming to shop and on people having an income. A pandemic of this size and proportion definitely upsets all businesses.
We are looking at how can we best run the business in terms of optimising the resources we had, ensuring that we have leaner opex, avoiding some of the capex including advertisement we had postponed in FY21.
When there is no lockdown, we are best placed to do business in a way that gives us the margins.
Page has innovated a lot in the innerwear category. What should we expect next?
The next big innovation is the Jockey junior segment. We are looking at in a very big way. The size of the kids’ market in India is about Rs 80,000 crore, but there are no strong the national players in the segment.
Besides, no segment has yet seen saturation. The men’s innerwear and the premium segment have only had about 18% to 20% penetration. Women’s is hardly 6% to 8%, and athletes’ wear is about 8%. So there is scope to do a lot more.
I believe we are only present in one-fourth of the geography that we can possibly be present in. The market is so huge that all categories have a feature.
But kids’ wear, it’s quite something else. We are looking at it and investing in it in a major way.
Is online going to be a game changer for Page in terms of costs and margins?
In terms of margins, ecommerce has been slightly better. But then of course, there are commissions to pay to the organised platforms in which we operate. Where we have our own ecom presence, the margins are definitely better.
We are present on all platforms — Flipkart, Nykaa, Zivame, Paytm and so on.
As far as jockey is concerned, we are very clear on our pricing policy. We do not offer any discounts online, we do not participate in any off-season sale. The price of a jockey product will be the same across all geographies — online, offline, across seasons.
The Indian innerwear market is pegged to grow at 11% in the next decade. How do you see Page capturing the opportunity? Also, has consumption patterns changed post pandemic?
The consumption pattern is just the same. People are consuming typically. The outerwear segment, of course, has picked up momentum because wardrobe habits are now back to the pre-pandemic pattern.
Innerwear has always been a stable consumption story. The size of the men’s innerwear market is estimated at Rs 14,000 crore, while women’s is about Rs 30,000 crore. Sports/athleisure is about Rs 64,000 crore. All these are FY20-21 estimates. So, the size of the pie is very huge.
The estimated growth of 11% will come from: (a) the product being available, (b) getting the product to the customer, (c) and the premiumisation of the Indian customers. Jockey scores on all these fronts.
How is it that you plan to sustain dominance?
It’s definitely a function of distribution and availability. There are many things that are better now for us than yesterday — order fulfilment to channel partners, being closer to customers, taking the brand to Tier-3, Tier-4 and even the rural markets.
We are innovating in terms of product design, in terms of availability, in terms of our own digital transformation in being connected with the last mile all the time. This journey, as I told you, is just beginning. We have been 25 years in India, and we are still only present in one-fourth of India in terms of the number of cities and towns.
While ours is still a very large presence and as a company we have done very well, the growth story is going to go on for many more decades.
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