pds multinational fashions
TRANSCRIPT
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KEY DATA
Rating Not rated Sector relative NA Price (INR) 1,339 12 month price target (INR) NA Market cap (INR bn/USD bn) 34.9/0.4 Free float/Foreign ownership (%) 33.4/3.7
What’s Changed
Target Price ⚊
Rating/Risk Rating ⚊
INVESTMENT METRICS
The next wave of outsourcing?
Our interactions with global retailers during our Feet on Street exercise recently suggest a new wave of outsourcing in the making in the global procurement space—an end-to-end compliant solution from designing to managing supply chain and final delivery. And our hunt for such a play took us to PDS Multinational Fashions (PDS), an asset-light and design-led platform that runs ESG-compliant supply chains
for leading global fashion brands and retailers.
Other than the sourcing vertical (RoCE 60%), PDS has a manufacturing vertical (~40% capital employed) aiming for a toehold in the US. Though loss making, this vertical is on the cusp of a turnaround. Net debt to EBITDA is down to 0.3x from 3.8x in FY17.
FINANCIALS (INR mn)
PRICE PERFORMANCE
The next wave of outsourcing? Asset-light and compliant solution
During our Feet on Street exercise with global technologists to gauge demand for IT
services, we discovered a new trend in the global outsourcing market. Our
interactions with global retailers unravel noticeable demand for outsourcing of
procurement services by large retailers and fashion brands. Global brands want to
focus their energies on core operations, defend their market share loss to online
players, and find a reliable solution to fill gaps in\/ the wake of the pandemic-led
disruption in the vendor space (bankruptcies) across the globe. Moreover, the
pandemic has led to a decadal shift (refer to Exhibit 3) from offline to online, thereby
enabling global brands to reach every corner of the world through digital stores.
Early mover riding potential wave; manufacturing turnaround ahead
PDS sets up exclusive teams to serve customers – key global brands/retailers – to
understand their sourcing requirements. Through its asset-light and platform-
based network, the company sources fashion-related products through partners,
and manages the entire supply chain within an optimal lead time. It also provides
market know-how and in-house design-led capabilities (150+ designers). PDS has
put special focus on sustainable practices across functions via its 40-member team.
Explore:
Outlook: Asset-light, compliant business model; not rated
PDS has seen stable growth in revenues (8% CAGR over FY17-21) despite the impact
of covid last year. Sourcing business, its key segment, clocks an RoCE of 60% owing
to asset-light operations. While ~40% of the current capital employed is invested in
the manufacturing business, which is still to break even, a turnaround thereof will
drive further improvement in overall company RoCE (currently 16%).
PDS has used the improvement in performance to cut its leverage, bringing net debt
to EBITDA to 0.3x (from 3.8x in FY17). Management is now targeting to take revenues
from USD1bn at present to USD2bn over the next three years with a ~200bp margin
expansion. The stock (not rated) is trading at 41x FY21 PE/ 15x FY21 EV/EBITDA. Its
five year trading average has been 27x LTM PE.
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PDS IN Sensex
India Equity Research Miscellaneous October 19, 2021
PDS MULTINATIONAL FASHIONS VISIT NOTE
Corporate access
Financial model Podcast
Video
Sandip Agarwal Nihal Mahesh Jham +91 (22) 6623 3474 +91 (22) 6623 3352 [email protected] [email protected]
Year to M arch F Y18A F Y19A F Y20A F Y21A
Revenue 49,239 64,859 66,480 62,129
EBITDA 378 1,116 1,860 2,299
Adjusted profit -78 438 596 843
Diluted EPS (INR) -3.0 16.8 22.9 32.4
EPS growth (%) NM NM 35.9 41.5
RoAE (%) 3.6 13.2 17.0 22.4
P/E (x) NM 79.6 58.6 41.4
EV/EBITDA (x) 98.4 33.5 19.6 14.8
PDS
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Financial Statements
Year to March FY18A FY19A FY20A FY21A
Total operating income 49,239 64,859 66,480 62,129
Gross profit 6,746 9,476 10,987 10,276
Employee costs 3,064 3,794 4,360 4,143
Other expenses 3,304 4,566 4,768 3,834
EBITDA 378 1,116 1,860 2,299
Depreciation 164 263 522 677
Less: Interest expense 217 323 493 257
Add: Other income 244 161 265 374
Profit before tax 240 691 1,110 1,739
Add: Share of associates -13 -1 -69 -39
Less: Excp.item 0 0 136 0
Prov for tax 32 1 95 215
Reported profit 195 689 811 1,484
Less: Minority Interest 274 250 351 641
Profit Attributable to owners -78 438 460 843
Add: Excp.item (net) 0 0 136 0
Adjusted profit -78 438 596 843
Diluted shares o/s 26 26 26 26
Adjusted diluted EPS -3.0 16.8 22.9 32
DPS (INR)* 0.0 0.0 0.0 0.0
Tax rate (%) 13.2 0.2 8.5 12.4
*Dividend of INR15.8/share proposed in FY21
Year to March FY18A FY19A FY20A FY21A
Gross margin (%) 14 15 17 17
Employee exp (%) 6 6 7 7
Other exp (%) 7 7 7 6
EBITDA margin (%) 1 2 3 4
Net profit margin (%) 0 1 1 2
Revenue growth (% YoY) 7 32 3 -7
EBITDA growth (% YoY) -31 195 67 24
Adj. profit growth (%) NM NM 36 41
Year to March FY18A FY19A FY20A FY21A
Diluted P/E (x) NM 80 59 41
Price/BV (x) 6 7 6 5
EV/EBITDA (x) 98 34 20 15
Dividend yield (%) 0 0 0 0
Income Statement (INR mn)
Important Ratios (%)
Valuation Metrics
Year to March FY18A FY19A FY20A FY21A
Share capital 260 260 260 260
Reserves 4,386 4,422 5,326 6,208
Shareholders funds 4,646 4,682 5,587 6,469
Minority interest 792 309 525 687
Borrowings 5,521 7,001 7,472 4,866
Trade payables 4,797 7,476 7,289 8,924
Other liabs & prov 840 2,235 2,566 2,427
Total liabilities 16,598 21,703 23,438 23,373
Net block 2,258 2,976 4,218 4,091
Intangible assets 475 569 574 547
Capital WIP 304 145 206 47
Total fixed assets 3,037 3,689 4,998 4,685
Non current inv 733 621 653 968
Cash/cash equivalent 2,504 3,876 5,261 4,879
Sundry debtors 7,826 10,287 8,324 9,098
Loans & advances 70 77 644 602
Other assets 2,428 3,153 3,558 3,140
Total assets 16,598 21,703 23,438 23,373
Year to March FY18A FY19A FY20A FY21A
Reported profit -78 438 460 843
Add: Depreciation 164 263 522 677
Interest (net of tax) 146 217 330 172
Others 191 2,226 2,308 3,296
Less: Changes in WC -160 1,013 812 1,195
Operating cash flow 583 2,131 2,808 3,793
Less: Capex 868 1,365 557 265
Free cash flow -285 766 2,250 3,528
Year to March FY18A FY19A FY20A FY21A
RoE (%) 3.6 13.2 17.0 22.4
RoCE (%) 4.4 8.8 12.5 15.6
Inventory days 4 7 10 13
Receivable days 56 51 51 51
Payable days 37 40 49 57
Cash conversion cycle 24 17 13 7
Gross debt/equity (x) 1.0 1.4 1.2 0.7
Net debt/equity (x) 0.6 0.6 0.4 -0.0
Interest coverage (x) 1.0 2.6 2.7 6.3
Year to March FY18A FY19A FY20A FY21A
EPS growth (%) NM NM 35.9 41.5
RoE (%) 3.6 13.2 17.0 22.4
EBITDA growth (%) NM 195 67 24
Payout ratio (%) - - - -
Key Ratios
Valuation Drivers
Balance Sheet (INR mn)
Free Cash Flow (INR mn)
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Potential next big wave of outsourcing
Our more than two decades of tech sector coverage reminds us of the era when
IT outsourcing began. We recall that the US financial industry became a quasi-
tech industry due to a substantial jump in transactions, leading to a notable
jump in penetration of technology to improve efficiency and more so to manage
significant volumes of transactions.
Post-covid-19, we spot a similar situation in the procurement space of large
retailers and fashion brands. We believe the aforementioned trend has become
stronger and stronger as the intermediary, similar to tech outsourcers, has in-
house design capabilities, a compliance team and a strong system to monitor
both the seller and buyer, including inventories and working capital.
Our discovery of above trend led us PDS, one of the key intermediaries in the
space in India. We interacted multiple times with PDS top management (Mr.
Pallak Seth and Mr. Sanjay Jain) over the last few weeks. Our initial observation
on this is in the right direction and that a big outsourcing wave is emerging in
the procurement business.
We recall that the US financial industry became a quasi-tech industry due to a
substantial jump in transactions leading to a notable jump in penetration of
technology to improve efficiency—and more so to manage significant volumes of
transactions.
In pursuit to become tech savvy and move operations to technology, large part of
the US financial industry got engrossed in building technology ecosystem ( leaving
behind their core i.e. financial business) and were managing internal technology
departments, recruiting , training, etc. thereby burning not only lot of financial
resources but also dedicating substantial management bandwidth in non-core
operations.
Sooner rather than later the US financial sector realised the trouble they were
getting into. And then they started outsourcing technology functions to external
vendors and consultants and that in turn gave birth to outsourcing for Indian tech
vendors.
Post-covid-19, we are experiencing a similar situation in the procurement space of
large retailers and fashion brands as they are seeing a tremendous jump in volumes
led by online reach, wherein their digital stores are bringing global customers to
their doorsteps. At the same time, significant consolidation in global supply chain
has led to a substantial reduction in the vendor space, has led large brands and
fashion retailers to focus on their core business and shift the tedious and tough job
of procurement to established and reliable intermediaries.
PDS
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Increase in online and digital activities
Source: We are social, Hootsuite
Faster adoption of digital payments
Source: Bain & Company
Sharp acceleration in US e-commerce penetration
Source: McKinsey Retail Practise
Increase in online and digital activities
Source: Company, Edelweiss research
Faster adoption of digital payments
Source: Company, Edelweiss research
We believe the above trend to become stronger and stronger as an intermediary,
similar to tech outsourcers, has in house design capabilities, a compliance team and
a strong system to monitor both the seller and buyer including inventories and
working capital.
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Amazon Revenue YoY growth
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PDS
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Commentary on technology
Source: Edelweiss research
Our discovery of the above trend led us to PDS management as we realise that, in
India, PDS is one of the key intermediaries thereof. We interacted multiple times
with PDS top management (Mr. Pallak Seth and Mr. Sanjay Jain) over the last few
weeks. Our initial observation on this is in the right direction and that a big
outsourcing wave is emerging in the procurement business.
If this evolves as we believe it would, then other than global players, even PDS may
be a big beneficiary of the above new wave of outsourcing. We attempt to explain
the business model in detail as we set out to further understand the above wave and
key players globally.
PDS
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Key highlight: The business model
PDS sets up exclusive teams to serve its customers - key international brands
and retailers globally to understand their sourcing requirements. Through its
asset-light and extensive platform-based network, it sources multiple fashion-
related products through partners in key markets and manages the entire
supply chain execution for customers, and within an optimal lead time. It also
provides market know-how, in-house design-led capabilities (150+ designers).
The company has put special focus on sustainable practices across functions
with a commitment to make a positive difference to the entire ecosystem. It has
a 40-member team to maintain Social, Technical and Ethical Compliance
standards across 200 factories.
PDS entered into manufacturing in 2017 and has 36mn meters of capacity across
India, Bangladesh and Sri Lanka. The expansion into manufacturing has primarily
been done to increase presence in the USA. While the business is loss-making at
present, PDS is focused on improving performance through collaboration with
its sourcing business, and it is on the cusp of a turnaround.
It is targeting multiple avenues to expand business potential. These include: i)
retail & channel expansion; ii) geographic expansion; iii) product line expansion;
and iv) service offering expansion. Senior business heads have been on boarded
to drive business in new geographies and categories, and with new customers
along with redesigned compensation structures to drive performance.
Asset-light, compliant business model with end-to-end capabilities
PDS has developed a multi country and a multi-product sourcing network. PDS’s
platform-based business model provides the flexibility to operate across categories
and geographies. The company is asset light, which enables it to serve customers as
per their requirements with a shorter lead time, by sourcing from its network of
manufacturing partners and vendors globally.
PDS’s global reach
Source: Company, Edelweiss Research
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PDS is a confluence of companies with varied strong domain expertise. It provides a
flexible, global-scale platform for collaborators. PDS provides a global plug-and play
platform to fashion industry entrepreneurs. These entrepreneurs join PDS as
collaborators and become an integral part of its business, leveraging the PDS brand
name to supply to major fashion brands and retailers.
PDS offers its customers (brands and retailers) a range of products sourced from its
partners sustainably. It offers them the expertise of an in-house design team,
located in fashion capitals of the world that are on the ball with design techniques
and technologies, not to mention latest fashion trends and preferences.
As per the company, brands and retailers are moving away from lowest-cost
suppliers to sourcing partners that understand emerging trends, have multiple
collaborations with production facilities across several locations or in-house
capabilities that are compliant with applicable regulations.
PDS client list
Source: Company
PDS has, over the last two decades, developed the following capabilities to serve
customers better:
Design team: It has a team of 150+ designers based out of London, Hong Kong,
New York, Barcelona, Dusseldorf, New Delhi, Shanghai, Colombo, Santiago and
Brussels; they provide insights into latest trends in the fashion industry. The
company produces over 10,000 new styles/month.
Market intelligence: The domain expertise of its sourcing partners enables PDS
to gather up-to-date information.
Expertise in technical aspects, wash and sustainability: In-house product
development, design, sampling and technical teams that provide expertise and
market know-how in managing a global trade.
Scalability: PDS’s partners benefit from its global presence, offering them
economies of scale due to sourcing operations and opportunities to collaborate
across businesses. This enables its business to have optimised cost structure
through shared resources. PDS sources ~1 million garment pieces/day from 500+
partner factories.
PDS
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Focus on sustainable and ESG-compliant operations
The global fashion industry landscape has been evolving rapidly, with increased
focus on sustainability and digitalisation. This trend is likely to accelerate in the post-
pandemic world, with greater integration of ESG considerations across the supply
chain.
PDS has put special focus on sustainable practices across various functions such as
responsible procurement, eco-friendly manufacturing, ESG-focused investments,
not only from the standpoint of compliance, but also from the company’s
commitment to make a positive difference to the entire ecosystem. It has a 40-
member team to maintain Social, Technical and Ethical Compliance standards across
200 active factories. Team reports directly into PDS board, independent of
businesses.
For factories PDS interacts with, it has a Supplier Code on Conduct in place and zero
tolerance policy. Also, a financial evaluation is carried out for all factories on a
monthly basis in relation to wages, payment timelines, delivery performance, etc. It
also has a policy of zero tolerance on unauthorised sub-contracting.
End-to-end capabilities to address customer needs
Source: Company, Edelweiss research
To cover its business risks, PDS undertakes the following steps:
Credit: Along with regular monitoring, PDS has Secured Credit Payment
terms from customers and also takes insurance cover – Euler Hermes,
Atradius, ECIC Hkg, ECGC India.
Customer concentration: No single customer accounts for more than 15%
of group’s revenue; top 20 customers make up only 70% of total revenue
(Top 10: 56%).
Currency: PDS buys and sells in the same currency. If Buy & Sell are in
different currency immediate forex cover to be taken.
Multi Country
Sourcing
• Bangladesh
• Cambodia
• China
• Egypt
• India
• Jordan
• Myanmar
• Pakistan
• Sri Lanka
• Turkey
• Vietnam
Multi Product
Sourcing
• Apparel
• Home
• Accessories
• Footwear
Market
Intelligence
• Creative inputs based on market intelligence
Product
Development
• Fabric innovations
• Trend research
• Mood board
• Graphics
• Sampling
Global Quality
Compliances
• BSCI
• WRAP
• SEDEX
• LEED
Sustainability
• Support customers for enhancing sustainability footprint
Speed to
Market
• Digitalisation of value chain improves turnaround times for better go to market
Cost
effectiveness
• Margin improvement through
• Strategic sourcing
• Favorable credit terms for retailers and suppliers
From a risk management perspective,
as a global organisation, PDS has
identified six focus areas (6 Cs):
Customer Dependency, Credit,
Currency, Cost, Compliance and
Compliant Capacity
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Focus on turning around manufacturing operations
PDS entered into manufacturing in 2017. It is focused on achieving a turnaround of
its manufacturing facilities through collaboration with its sourcing business. The
company has been seeing good traction and targets to double production and
increase efficiencies, which should, as a first step, lead to near breakeven and a self-
sustaining business. Its manufacturing business is at the cusp of a turnaround, with
special focus on Bangladesh manufacturing facilities.
PDS – Manufacturing capabilities
Particulars Progress Apparel,
Bangladesh
Green Smart Shirts,
Bangladesh
Nor Lanka,
Sri Lanka
Parc Designs,
India
Total capacity (# Machines) 2,500 2,000 320 1,000
Compliance Accord Compliance All local
guidelines
All local
guidelines
All local
guidelines
Focused manufacturing/ Speciality Primarily focused on
bottom wear
Formal and casual
shirts/blouses for ladies,
men and kids
Specialises in knit, kids
wear
Specialises in Ladies Softs
and girls-wear
Major customers Next, C&A and Express Next, Primark and
Bestseller
ASDA George, Next,
Primark Bestseller and Matalan
Ownership pattern Subsidiary Subsidiary Based on job-work
arrangement
Held through minority
stake
Source: Company, Edelweiss Research
Key priorities for this segment are:
Focus on doubling production at facilities
Focus on large order volumes versus small order volumes
Enhance customer service to ensure repeat orders and referrals from
existing customers
Manufacturing segment performance
INR mn FY18 FY19 FY20 FY21
Revenues 887 2,446 3,100 2,846
Segment EBIT -526 -471 -572 -1,037
Source: Edelweiss Research, Company
PDS
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Expanding into value-accretive business models
PDS is targeting multiple avenues to expand business potential. These include:
Geographic: Europe and the UK are predominant markets for PDS accounting for
nearly 84 per cent of its total business, and it is targeting to increase the share of
current customers across Europe, which is its largest market. It is looking to
expand its footprint in the US market on the back of manufacturing capabilities.
The company is also building teams focused on Australia, New Zealand and
Scandinavia targeting geographic expansion.
Product extension: PDS’s strong presence in apparels is now being expanded to
other categories such as home fashion and active wear across existing markets
Channel extension into new age online and D2C brands.
Senior business heads have been on-boarded to drive business in these new
geographies, categories and with new customers.
PDS’s multipronged expansion
Source: Edelweiss Research, Company
PDS has undertaken various strategic actions to deepen engagement with team
members and partners and accelerate the value creation process. On-boarding of
Group CEO, complemented with a team is one of the major strategic initiatives to
augment the value creation process. It is also targeting to align employee interest
with that of the shareholders and proposes to roll out ESOPs covering the wider
team of business leaders.
The company has also introduced a Joint P&L plan to facilitate partnerships between
individual business units, driving better collaboration across businesses and
providing higher serviceability to our customers.
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Company Description
PDS Multinational Fashions manages supply chains for major brands and retailers
worldwide. PDS operates a global network of over 50 offices in 22 countries with
3,000+ employees and 5,000+ associates and factory workers across Europe, North
America, the Middle East and Asia.
It has a large network of factories, which have been technically and ethically audited
to industry standards. PDS caters to 190+ leading global brands and retailers with
c.1mn garments shipped daily.
The company has three key business segments: i) Sourcing; ii) Manufacturing; and
iii) PDS Venture Tech Investment.
Segment summary
Segment Revenue EBITDA CE
Description
Sourcing 60.7 3.2 5.1 Managing the entire supply chain execution of
customers
Manufacturing 2.9 -0.8 5.1 Own manufacturing capacities spread across
Bangladesh, Sri Lanka and India*
PDS Venture Tech NM NM 1.9 To develop new partnerships and invest in
businesses that fit its vision
Total (INR bn) 62.1 2.3 12.6
Source: Company, Edelweiss Research
Note: CE refers to capital employed, * Investment in India is via a minority investment
Sourcing
PDS manages logistics and the complete global supply chain for its customers. The
company differentiates itself from other suppliers and sourcing firms by investing
capital in factories to upgrade their facilities and improve efficiencies, thereby
bringing about cost savings for retailers. It can hold stock for customers either at
source or PDS Multinational Group’s own warehouses in the UK, Germany, the US
and Canada.
In addition to consumer products available through its international sourcing
network, PDS has expertise in custom product design and development to provide
total global sourcing solutions to customers. PDS Multinational Group’s product
development and design specialists are based in Europe (including the UK), the US,
Canada, Australia and South America, and track the latest consumer trends in the
fast-paced global market.
PDS works closely with management teams to understand their business model as
well as near- and medium-term goals and sets up exclusive teams to service each
retailer on a direct basis. All of its clients have unique sourcing needs, and PDS builds
a manufacturing supply chain for their individual requirements and operating
practices in order to meet their goals. Dedicated teams are set up for each of its
customers to ensure service and confidentiality.
Each team works closely with the buying teams of customers and works on product
development/design to ensure quality goods that meet end consumers’ demands
and are on retailers’ shelves in a timely manner.
PDS also provides market intelligence, trend analysis, raw material procurement and
industry pricing to help meet end customers’ demands and preferences, while also
meeting quality benchmarks and improving time to market.
PDS
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PDS Sourcing business key functions
Source: Company, Edelweiss research
Manufacturing linkages # of facilities
Bangladesh 240
China |Myanmar | Cambodia 103
Turkey | Jordan | Egypt 90
Sri Lanka 60
India 40
Pakistan 10
Vietnam 3
Source: Company, Edelweiss Research
PDS product mix
Source: Company, Edelweiss Research
PDS geography mix
Source: Company, Edelweiss Research
Manufacturing:
PDS started its manufacturing business in 2017. It has a created its own
manufacturing capacities spread across three countries – Bangladesh, Sri Lanka and
India – where it has as many as 130 production lines.
Managing the entire supply chain execution of end-customers
Provides in-house expertise and market know-how on managing global trade
In-house product development, design, sampling, and technical teams
100% pre-sold, no inventory risk, asset-light
Designers based in London, Hong Kong, New York, Barcelona, Dusseldorf, New Delhi, Shanghai, Colombo, Santiago and Brussels
Men's wear36%
Ladies wear33%
Children wear18%
PPE & Others
9%
Essentials4%
UK & Europe
88%
North America
8%
Asia, Middle East
4%
Others0%
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PDS
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PDS’s manufacturing facilities
Company Location Clients Capacity
(mn pieces)
Capacity
(Machines) Highlights
Nor Lanka Sri Lanka ASDA George, Next,
Primark 2.2 320 Specializes in Knits, Kids wear
Parc Design India Bestseller and
Matalan 6.1 1,000 Specializes in Ladies Softs and Girls-wear
Green Smart Shirts Bangladesh Next, Primark and
Bestseller 12.2 2,000
Formal & Casual shirts/blouses for Ladies,
Men and Kids
Progress Apparel Bangladesh Next, C&A and
Express 15.5 2,500 Primarily focused on bottom wear
Total 36.0 5,820
Source: Company, Edelweiss Research
PDS Ventures Tech Investment
PDS invests in ventures that focus on creating a sustainable value chain for the
fashion industry, reducing wastage or sustainable usage of raw materials, and using
advanced analytical tools to improve revenues and profitability.
PDS Venture Tech Investment also focuses on investments in sustainable
technologies, circular economy, carbon neutrality, and waste & water management.
And it collaborates with leading ESG-focused funds, which invest in ventures
promoting the use of environment friendly materials and building sustainable
communities.
PDS is continually exploring opportunities for developing new partnerships and
investing in businesses that fit with PDS’s vision.
PDS Venture Tech Investments & Others
Source: Company
Through these investments, PDS enhances its value proposition for customers,
vendors and stakeholders. The company partners leading funds for co-investing in
select opportunities.
PDS
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History & Timelines
PDS’s genesis dates back to 1999, when the promoter family established its flagship
companies – Norwest Industries Limited in Hong Kong and Poeticgem Limited in the
UK. PDS gradually expanded operations via a hub-and-spoke model and on-boarding
entrepreneurs and their teams on a pre-defined criteria of product specialisation,
geographical advantage or customer base.
Instead of acquiring companies, it partnered them. It then graduated to a platform
model, where existing setups were made part of the PDS group in a plug-and-play
format.
Key events
Year Event
1999 • Promoter family established first flagship companies Norwest Industries in
Hong Kong, Poeticgem in UK
2003-2005 • Received approval for sourcing operations in India
• Established sourcing operations in China, Bangladesh
2007-2008
• Entered into denims through establishment of Zamira Fashion in Hong Kong
• Launched direct marketing operations in Chile under the names – PG Group
and PG Home
• Marked entry into non-apparel category of home wear and home furnishing
• Formed division in UK for design, supply and manufacture of licensed apparel
products
2009-2010 • Launched Bangladesh direct marketing operations
• Established direct marketing business operations in India
2012-2013
• Established operations in Turkey, Germany, Sri Lanka and Spain
• Expanded direct marketing offices in Melbourne, Australia
• Commenced Corporate Services operations in Bangalore
• Received license for operations in Myanmar
• Set up leased manufacturing operations in Sri Lanka
2014
• Listed on Indian Stock exchanges post demerger
• Launched NAVEX to strengthen PDS’ code of conduct for global compliance
• Entered into JV with Techno Germany
• Launched operations in Cambodia
• Fabric sourcing division setup in Shanghai
• Launched sourcing operations in Pakistan and Belgium
• JJ Star operations started in South China
2016-2017
• Launched manufacturing facilities in Bangladesh under Progress Apparels
(Bangladesh) Limited and Green Smart Shirts Limited
• Forayed into Technology business to develop and offer cloud-based software
and mobile application in HRM-Qandle
2018
• Commissioned the two manufacturing units in Bangladesh
• PDS Towers inaugurated in Gurgaon, India
• Acquired a manufacturing unit in Sri Lanka (erstwhile TRINCO factory)
• Strategic investment in Atterley.com Holdings, an online fashion retailer in UK
2019-20
• Acquired Kik Services Unit Limited in Bangladesh (Techno Sourcing Bangladesh
Ltd)
• Acquired Lilly & Sid Ltd, UK engaged in branded kids apparel
2020-21
• Appointed Group CEO for driving sustainable growth, profitability and value
creation
• Business Heads on-boarded to drive business in new geographies and
categories
Source: Company, Edelweiss Research
Edelweiss Securities Limited
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Management Overview
Mr. Deepak Seth, Chairman: Mr. Seth is the founder and Group Chairman of the
four well-known apparel manufacturing and sourcing and education groups with a
footprint in more than 20 countries – PDS Multinational Fashions Limited, Pearl
Global Industries Limited, PDS Multinational Group Limited, Lerros Moden GmbH
and Pearl Academy of Fashions.
He is an active member of the Apparel Export Promotion Council (AEPC) of India and
held the post of ‘Vice Chairman’ of the Eastern Region of AEPC for two years. He is
also an executive member of the Apparel Exporters and Manufacturers Association
(AEMA), and was awarded ‘Udyog Ratna’ Award by the Haryana government in 2006
for his entrepreneurial skills.
Mr. Seth is an economics graduate from St. Stephens College, University of Delhi,
and an MBA from Jamnalal Bajaj Institute of Management Studies, Mumbai.
Mr. Pallak Seth, Vice Chairman: Mr. Seth is a leading entrepreneur. At the age of
21, he started his entrepreneurial journey by setting up an apparel sourcing business
in Hong Kong. In 1999, he established Norwest Industries, which has today
diversified into PDS Multinational Group Limited. He supports founders to solve
market frictions and leveraging technology as an angel investor alongside trusted
partner.
Mr. Seth had co-invested alongside many investors such as Sequoia Capital, Social
Capital, Sherpa Ventures, Storm Ventures, Sierra Ventures and helped
entrepreneurs through customers, co-investors, and partner introductions. He is
also Executive Director on the Board of Lerros GmBH, Germany, and External Advisor
to Bain Advisor Network, Bain since 2019.
Mr. Seth is a Bachelor of Arts in Economics and International Business with Magna
Cum Laude distinction from Northwestern University, USA. He is an alumni of
Harvard Business School.
Mr. Sanjay Jain, Group Chief Executive Officer: Mr. Jain was appointed as Chief
Executive Officer and Whole Time Key Managerial Personnel of the company with
effect from January 15, 2021. Prior to this, he was the CEO at Future Retail and Group
CFO for Future Group India. At PDS, he is vested with the responsibility of driving
growth, transformation, operational excellence, and value creation initiatives across
the company and its subsidiaries.
Mr. Jain is a graduate from Kurukshetra University and has completed his masters
from the University from Delhi.
Board of directors
Person Designation
Mr Deepak Seth Chairman (Non-Executive and Non Independent)
Mrs Payel Seth Non-Executive and Non Independent Director
Mr Pallak Seth Vice Chairman (Non-Executive and Non Independent)
Dr. Ashutosh Bhupatkar Independent Director
Mr. Ashok Kumar Sanghi Independent Director
Mr. Ashok Kumar Chhabra Independent Director
Ms. Saraswathy Venkateswaran Independent Director
Mr. Parth Gandhi Additional Non-Executive Non-Independent Director
Source: Company, Edelweiss Research
PDS
Edelweiss Securities Limited
16 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset
Additional Data
Management
Chairman Deepak Seth
Vice Chairman Pallak Seth
CEO Sanjay Jain
CFO Ajai Singh
Auditor M/s Walker Chandiok & Co
Holdings – Top 10* % Holding % Holding
Payal Seth 53.3 LTS Investment 1.2
Deepak Kumar 12.1 C Mackertich 1.2
Dhireshbhai Shah 6.2 Brescon Ventures 1.1
Mukul Agrawal 2.8 Pallak Seth 1.1
Premier Investment 2.2 Pearl Global 0.2
*Latest public data
Recent Company Research Date Title Price Reco
Recent Sector Research Date Name of Co./Sector Title
Rating Interpretation Source: Bloomberg, Edelweiss research
Daily Volume Source: Bloomberg
Rating Distribution: Edelweiss Research Coverage
Buy Hold Reduce Total
Rating Distribution* 177 55 19 252
>50bn >10bn and <50bn <10bn Total
Market Cap (INR) 228 39 3 270
*1 stocks under review
Rating Rationale
Rating Expected absolute returns over 12 months
Buy: >15%
Hold: >15% and <-5%
Reduce: <-5%
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