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Page Industries Ltd
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Ladies and gentlemen, good day, and welcome to the Page Industries Limited Q2 FY '21 Results Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Anand Shah from Axis Capital. Thank you. Over to you, sir.
On behalf of Axis Capital, I welcome you all to the Page Industries Q2 FY '21 Earnings Conference Call. We have with us the senior management of the team represented by Mr. Sunder Genomal, Managing Director; Mr. Vedji Ticku, CEO; and Mr. K. Chandrasekar, the CFO.So I would just like to hand over the call to Mr. Genomal for opening remarks. Thanks, and over to you, sir.
Thank you, Anand, and good afternoon, everyone, and thank you for -- thank all of you for attending this call. We have had a very heartwarming experience when the markets gradually started to open up after the series of lockdown. Our distributors and retailers along with the sales team have always had tremendous respect and confidence for the Jockey brand and the Jockey business. But the message they keep sending us now is that they respect and the confidence levels have increased multifold, as they witnessed the resilience and strength of the brand during what is possibly the worst-case market scenario ever in the country. Even during this challenging market, we have continued to add retail partners across MBOs and, of course, EBOs.August was a turnaround month for us, where we just about reached last year's level of sales. September has seen double-digit growth over last year. And Q3 is looking even more encouraging. We believe that the India consumption growth story is very much intact. Our aspiration for a $1 billion top line in 5 years remains intact.As leaders by far in our categories of innerwear and athleisure and with our strengths, financial or otherwise, we believe that as our target market continues to grow, [Audio Gap] platform to take full advantage of this potential. So we will continue with our approach, which is to keep outperforming and now doing ourselves in all aspects of the business, and continue to capitalize and take full advantage of all our inherent strengths.We understand that given the size of the potential market, this is a marathon and not a sprint. To make ourselves future ready, we need to continue to make investments in digital and business transformation to strengthen efficiencies and hence, automation, speed to market. Some of you will recall, in past meetings, we talk about sales force automation; warehouse management systems; distributor management systems; ARS, auto replenishment system, and more recently, assortment generators; having a separate MIS sell for sales analytics; the JBA supply chain planning tool, this is a very powerful tool; and soon, business process reengineering.So all these things are going to happen. And we will continue to strengthen management as well with the best talent. And of course, we will continue to create newness [Audio Gap] development, marketing, brand building. And in part, because of the experience during this pandemic, there is renewed focus on becoming more efficient and optimal in all aspects, in every department, while at the same time taking care to eliminate any wasteful spend or activity.I have to say that we are blessed to have an amazing team and amazing partners in the front end and the back end. That's our channel partners, our vendors, our suppliers, franchisees and so on, who have all performed remarkably, showing their metal during the toughest of times. From our sales team and the [Audio Gap] who worked determinedly and walked the extra mile to achieve their goals, our associates on the shop floors who work industriously and tirelessly to catch up with the demand, while having to wear facemasks and face shields.I'm proud of the great values, the culture, the fashion, commitment, loyalty and dedication ingrained in every member of our team. A culture founded on empathy and mutual respect for every one [Audio Gap], not just as an employee but as a member of the family. This culture manifests itself in the kind of products that we deliver, resulting in great consumer experience, respect and love for the brand.Thank you all again. And I now hand over to Vedji for the Q2 update.
Thank you, sir. Thank you for the opening remarks. And good evening, everyone, and let me take this opportunity to wish everybody Happy Diwali in advance. Coming to the quarter 2 performance. The revenue for the quarter 2, though we came a long way, they grew by around 4.5%, mainly due to July being below normal. We have had a very strong sequential growth, about 160% growth in revenue from the previous quarter. This was aided by relaxation in the lockdowns across the country and increasing propensity for online shopping. Our volumes fell short by 13.6% for the quarter as compared to Q2 of financial year '20, largely due to low volumes in the month of July.Retail partners across all channels continue to open during this quarter. Today, we have more than 95% of our MBOs fully functional. 100% of our EBOs have opened now. In fact, the good news is we have opened 60 new EBOs during this quarter. And more than 90% of our large-format stores have also reopened.The sales trend from June onwards is on an improving trajectory, and we are quite hopeful our full recovery by Q4 of this year, financial year '21. We have witnessed a good consecutive growth across all product categories and sales channels in August and September, along with the continued greater demand on the e-commerce side of the business and athleisure product as a category.Our manufacturing and warehousing facilities have returned to pre-COVID levels. As I had said in the previous earning call, we have retained all our workers and paid full wages to them through the entire lockdown, resulting in a high attendance of more than 95% as of date.On the marketing side, our branding efforts continue across all multiple channels, including online media and point of sale. Digital marketing has been an area of focus with e-commerce business showing a lot of promise and the recent spike due to the COVID.On the kidswear business, we continue to -- it continues to be our focus area, with very encouraging customer acceptance and feedback. Out of the 60 stores which we opened, the EBOs which we opened in this quarter, 10 of them were the junior EBOs, and all of them are -- have started doing pretty well, taking the total number of EBOs on the junior side 15, 1-5. We have also appointed all the distributors in the -- for the Jockey business -- for the junior business across 50 cities as Phase 1. We'll be shortly moving to other cities as a part of Phase 2.We continue to work on expanding our width and breadth within existing market geographies as well as strengthening our distribution in Tier 4 cities and rural areas. We see a great potential in these markets, and we are strengthening our distribution network in phased manner in these opportunity markets.Jockey currently is present in 2,870-plus cities and towns across the country. We will, as usual, continue our focused approach on all our core business verticals of men's innerwear, women's innerwear, athleisure for both men and women and socks and towel. And we are quite confident of maintaining growth going forward.With that, I will now request our CFO, Mr. Chandrasekar, to take you through the financial highlights. Thank you.
Thank you, Vedji. I welcome you all to the Q2 Page earnings call. And I wish you all a very happy and prosperous Diwali and festive season.Q2 has been good for us. So it has been a very good bounce back in Q2, as you've seen in the numbers. And the Q2 revenues have been up by about 160%, at INR 7,403 million, and we are only marginally down by about 4.5% on a year-on-year basis. The revenues for H1 are down by about 36% to INR 10,251 million because of Q1, as you know. The Q2 PAT is up by almost 380% to INR 1,109 million, which is almost at par with the Q2 of last year. And -- but for the tax rate change of 25% retrospectively last year in Q2, we would be almost at par with the Q2 of last year. So it's a very strong bounce bank.The PAT margin also at 15% is one of the best we have in the past few years. And that is because we have implemented a very tight OpEx control with 0 based. And as MD was saying, it is based on need to spend and being frugal about the times we're living in.As far as the first half, the PAT has become positive, we have come to INR 713 million. And the margins -- our EBITDA margins are strong. Similarly also the gross margins around the 40% [indiscernible] we have delivered in all the normal quarters in the past. And more importantly, if you've seen the earnings presentation, some of you may have gone through it, the cash and cash equivalent has increased to almost nearly 488% to INR 4,013 million. And again, this is because of pretty efficient working capital management and OpEx controls while also, at the same time, supporting all the business ecosystem, paying all the vendors ahead of time if required.So we have done a pretty good work in the past 2 quarters to get here. And our balance sheet continues to be net debt free. And we, again, haven't borrowed any funds in the first 2 quarters. Net working capital is INR 5,361 million, and it's again because the inventories have come down from a level of almost INR 7,186 crores at March, we had now -- sorry, INR 7,186 million, sorry, in September.So these are the financial highlights, and we can move on to the Q&A section, please.
[Operator Instructions] The first question is from the line of Bhargav Buddhadev from Kotak Mutual Fund.
Congrats for the good set of performance.
Thanks. Thanks, Bhargav.
Sir, my first question is that is it possible to share trends in secondary sales? How have they been? And also, has there been any sales loss on account of any supply constraints during the quarter?
So yes, in the earlier part of the quarter, we had some constraints. But coming towards the end of the quarter and now going forward into the third quarter, we are pretty fine because, as I said in my opening remarks that 95% of our people are back and our factories are running in full force. So that's not a problem. As far as secondaries as concerned, it's been one of the best years for secondaries in that sense. Our secondaries have been ahead of our primaries all these months of the quarter.
Okay. Sir, just want to clarify one thing. Did I hear properly that you said FY '22 -- FY '21 will end up flat over FY '20? Meaning, are you looking at full recovery? Is it what you said?
No. What I meant was that, look, as I said, from quarter 1 -- from quarter 1, where we were almost 25% of the quarter, and we have moved to the situation, we're saying by the end of quarter 4, we should be back to -- basically coming back to the normalcy and trying to match the numbers of last year. But whatever has been lost cannot be recovered, obviously.
Okay. Okay. Okay. And lastly, I mean, sir, these yarn prices have started rising again. We are hearing that they are almost up 10% to 12% in a month. So are we looking at taking any price hikes in order to pass on these yarn prices?
No. We -- see, we generally take care of this -- any kind of surges in advance, and we have already done what we have to do for the year. This is also because this is the old crop. The new crop is around the corner. And as soon as the new crop comes towards the December, January, the prices will soften again. This is a normal, which happens almost every year.
Okay. And lastly, on the kids front, is it possible to share how many outlets are we now present? We have total of about 67,000 outlets. What is the coverage area for juniors? And that will be my last question.
Yes. We are closely -- touching close to around 8,000 stores for the kids now all over. And as I said, we have 15 -- we have opened 15 EBOs for the kids as well during this time.
The next question is from the line of Aditya Soman from Goldman Sachs.
So firstly, in terms of the guidance of sort of normal sales by 4Q, I would have assumed that we'd reached much higher sales numbers given that we are already at double-digit growth in September. Is this because there was an evidence of pent-up demand that came through in September, given that we had, obviously, a meaningful decline in 1Q? And then on a related question, was there any -- also were the September numbers skewed -- September, October numbers skewed because of the supply constraints earlier in the quarter?
So as I said earlier, the earlier part of the quarter, it was still sort of reeling under COVID, and there were still many large cities, which were under lockdown. So that was primarily the reason for. And as I also said in my earlier -- reply in the earlier questions, we are also sort of getting our fleet right in terms of production in the month of June and July. And post that, August and September, it's only improving. And the sales are continuously on a rising trajectory from the month of August. And we are also seeing that going with the same pattern into the festive season. So it's not the pent-up demand. It's the actual demand, which was there and but -- got subdued because of obvious reasons.
No. No, I understand that. I think my question was -- look, I mean, if a consumer was looking to buy a pair of innerwear or athleisure in May and he couldn't buy it then, I'm assuming that, that same customer -- you've not lost the customers. The customers come back and made that purchase and -- whenever the stores were opened in July, August, September. Is that why -- I mean why you're pushing your normalization to 4Q? Why not have double-digit growth in 3Q itself?
No, yes, sure, why not. That's what I was trying to tell you because the trajectory of the sales has been only upwards post August. I cannot tell you the numbers for the third quarter, but the trajectory is still on the upstream. So probably what you're saying is possible.
All right. I understand. Very clear. And secondly, in terms of -- as you indicated that there's about 13.5% volume decline, and the sales decline was about 4.5%. Now this gap, is it largely mix because you sold more athleisure? Or is there an element of pricing in that as well?
So it is -- it was definitely a mix within the innerwear also because we also have premium and super premium products in innerwear. So there is a mix change there, as well as athleisure. As you now, I've been telling you, this year, athleisure has taken a front seat, and we have got pretty good demand on the athleisure side of the business.
And just a quick follow-up on that. So any sense you can give us on what the growth for athleisure has been, say, in 1H or 2Q, whichever way you want?
It's a double-digit growth. We don't talk about the actual percentages, but it's a double-digit growth for the athleisure business.
Next question is from the line of Nihal Jham from Edelweiss.
Sir, a couple of questions from my side. First is on our cost-saving initiatives, if I look at how the spend has moved to last year, there has been approximately a INR 10 crore reduction in other manufacturing expenses. So would it be right to assume that most of the incremental INR 30 crore reduction is driven by sales and marketing? If you could just elaborate a little more on that?
KC, would you like to...
Nihal, thanks for the question. There's a lot of work which has gone into the manufacturing overhead, mainly in terms of the factory overhead. And also selling and marketing, we did spend a bit -- a little less on the advertisement by about INR 172 million this quarter as compared with last quarter. Overall, there has been a reduction of about INR 450 million, if I take all the line items of selling, corporate and manufacturing. So the reductions have been across the broad.
Sure, sir. I think that's helpful. My second question, sir, was on the expansion part. As I see on the EBO side, you mentioned you've added 60 EBOs in this quarter. Just on the MBO account, that's been consolidated at around 67,000. So I just wanted to understand that on the MBO side, is it that we look at adding more MBOs after this quarter? Or that number you think will be around the similar trajectory for the remaining part of the year?
No. We -- as you know, now we constantly push that number between 5% to 10% year-on-year. So this year has been a little unusual for us, and we've not been able to open many more stores as we would have opened by this time. But I think now quarter 3 and quarter 4, we should be opening more stores on that side. And a 4% to 5% increase in stores is something which is pretty normal, and we will continue doing that.
Sure. And just very quickly, you mentioned about the secondary sales trends. Is it possible that you have a visibility of the tertiary sales also and if those numbers are similar to the numbers we are tracking? And that will be...
So we have visibility of tertiary sales in our own EBOs. So we do not have it for the MBOs. So yes, it's keeping pace. The tertiary and the secondary sales have been quite buoyant starting August onwards.
The next question is from the line of Arnab Mitra from Crédit Suisse.
My first question was on the e-commerce part of the business. What is the current salience that e-commerce is having on your business? Are you seeing the traction there continuing despite the lockdown kind of now fully gone? And any changes you have made on your side in terms of being able to service the demand better, get the entire range and reduce the lead times?
Yes, Arnab. So I think that's the silver lining of this year, which has pushed us so badly on all other fronts. E-commerce is one area where it's really helped the business on that side. As I said in my previous call, there was a certain amount of struggle in the previous quarter because the demand on that side was so high and where we had to really work on our infrastructure.It took us around 1, 1.5 months to put up the relevant and required infra for the new demand. And we have seen now that the demand is close to around -- the average demand has gone up by 2x, though initially it was almost 3, 3.5x of last year. So it seems to have settled down at around 2, 2.5x of the average we used to do on the EBO side. So I guess -- sorry, on the e-commerce side.And as I said, e-commerce, we have 3 different -- we have our own store, which is jockey.in. And then we do outright and then we also do marketplace. So the outright and the marketplace also has seen a huge growth during this time. So we see this as a positive welcome change. And so we are also gearing up the infrastructure further to sort of offset any demand increase going forward.
Sure. And my second question was on margins. So other than the INR 17 crore reduction ad spend, which possibly could come back as the festive season begins and business normalizes, would you say that the rest of the cost savings or the margin expansion and the cost from lower cost that is sustainable, and therefore, you are now going to be consistently in that historical margin band of 21%, 22% which you are still couple of years back?
Yes, that is a expectation and the work that we are putting in. And we are not increasing on the current spend without that bringing additional revenues or cost savings. And secondly, in terms of whether the cost, the margins will sustain, the answer is yes. We already have shown good margins in Q2. And also going forward, there will be some -- definitely some increase in spend on advertisement. Secondly, on the digital transformation [ hit ] back a bit this year. So those investments will come, but they're all productive sort of investments into the future of this business.
The next question is from the line of Avi Mehta from Macquarie.
Sir, we understand that urban continues to remain under stress. You had highlighted that, that kind of had weighed on our performance versus peers. Is that something that is still continuing? Or has there been an offsetting factor?
Sorry, could you repeat? I didn't get your question, Avi.
Sir, what you had said is, last quarter, it said that we were impacted more versus peers because of our urban salience, almost 60% comes from the top cities. Given that what we understand is urban continues to be under pressure, what -- has that trend continued? Or there has been some offsetting force, which has kind of helped to counter that?
No, we have come a long way since the quarter 1, while there are certain pockets in the metros. What I said last time is close to around 38, 40 cities, which is -- it gives us that number. And obviously, the bigger number were coming from the metros. And now most of the metros are actually back, barring Bombay, which is still not at its -- what the -- where it should be. But besides that, most of the metros are back, including Chennai, now. So we have come a long way since that, Avi.
Okay. Okay. So that doesn't -- no longer remains a headwind, which was...
No, no. It's still slightly lower, but it's not something which would impact us anymore.
Perfect, sir. And sir, the other -- just there was a provision that we had created for slow-moving inventory in the first quarter. Have we written that back in this quarter by any chance or any part of it? And related, if you could just explain the slide on the gross margin. What all goes into the other expense -- other manufacturing costs? And how do we look at that? Those 2 would...
Yes, Avi, good question. Slow-moving inventory still continues. It hasn't come down greatly. But as we go into Q3 and Q4, all the slow-moving inventory will get sold. So it will definitely come down. As far as the gross margin based on some of the discussions in the last quarter, I have given because people tend to contribution [ of country ].Other manufacturing costs has wages, it has all the factory overhead, like power and fuel and all those things, which you need to run a manufacturing unit. So we typically only look at gross profit margin. And I have been saying that we have been in the band of 39% to 40% all through history. And so that also has come back. First quarter, as you know, was an exception.
Perfect, sir. And if I may, just a bookkeeping question, sir. Was there a price increase we had indicated, price increase that was taken in few products? Any weighted average price increase that you could share? And the other income, do you expect that to -- it's more a timing impact? Because your cash levels have gone up very sharply. Congratulations with that.
There wasn't any significant price increase. It was only an adjustment for some of the underpriced products. Vedji will explain to you that. And what was your second one?
The other income has dropped Q-o-Q despite cash...
The other income is because we had -- this quarter, we didn't get subsidies what we got in the Q2 of last year. So that is more a timing issue. So it's not a significant difference to the bottom line anyways.
The mispricing, Vedji, what was that?
Yes. So Avi, as I said, even in the last meeting, see, we generally work on weighted average EBITDAs. So there were these few products which we felt were way below the minimum expected EBITDAs. And those are the ones which we had touched somewhere in the month of June. So that would be -- which I explained even in the last time. And it was a few products here and there within -- across all the ranges. So it's not the regular one that we chose to do, like most of our products will get touched once in a year. So this was more from the point that they had to have some kind of basic EBITDA to be in the reckoning. So those were touched. So it was a very small increase this year.
[Operator Instructions] We move to the next question from the line of Sameer Gupta from India Infoline.
I have just 2 questions, sir. So we are seeing double-digit sales growth in September and that trend has continued in October. Just wanted a little more color on this, sir, because even before COVID, we have not seen such strong demand tailwind. So is it also to do with people spending more time at home and there is a convergence from formalwear to athleisure, people are spending more on athleisure versus formal? And when this trend reverses, as when people start to go back to offices, this trend should also normalize. Any color on that, maybe segment-wise you can share? Because you said athleisure has grown double digits for the quarter. That would mean that double-digit declines in innerwear for you. Is that understanding correct?
No, Praveen (sic) [ Sameer ]. Hello. Praveen (sic) [ Sameer ], can you hear me? We cannot, as a company, have a double-digit growth, if only one of our verticals or business grows at -- with double digits. So everything has to grow overall in a double-digit percentage basis. So having said that, both our innerwear as well as outerwear have grown during this period. Athleisure, yes, it's grown at a higher percentage, for sure.Coming to the second part of your question, whether this is a trend, which is just for some time and then the work from home finishes, we don't think so, Praveen (sic) [ Sameer ] because it's also created a lot of trials. There are a lot of people who have tried the Jockey products for the first time. And as we know from our experience from the past, trying the Jockey product, whether it's innerwear and outwear, we started way back with innerwear, and the stickiness to our products is very, very high. So once people try and they see actually the quality of the product and they see that the kind of value for money they are getting on their purchase, we see that this trend is going to only go bigger and because this market is also ballooning and growing year-on-year. So I think this was the -- the silver line was that we were able to create many more trials during this year.
Got it, sir. That's very helpful. Just another question, and this is related to your gross margin calculated on the cost of goods sold that you report in your results. So I see that from 1Q to 2Q, there is a sharp increase in my gross margin, and that was largely a drop in 1Q that we had seen. And also, we had taken an inventory write-down of around INR 107 million in 1Q. So in 2Q, is the improvement partly because there has been any kind of reversal in this provision? And -- or if it's not, then what is actually driving this Q-o-Q margin improvement?
There is no reversal in provision for inventory or anything. It's a purely operational. The COGS which we report and the gross margin and contribution as it appear [indiscernible] in between the goods sold and the revenue. So there is no unusual impact in the margin of this quarter.
I'm actually comparing, sir, versus 1Q. So...
You cannot compare first quarter, because first quarter is unusual and the labor cost, everything is under-absorbed. So that reflects in your contribution and gross profit margins. The first quarter is really not comparable.
And sir, as this new crop comes in, this input prices should see some more softening. And to that extent, our margin should see some more increase from this level. Is that understanding correct?
We have actually seen Q1 about minus 3% overall weighted average cost improvement in the raw material. But when we go to Q2 -- we didn't buy much in Q1 because of the lower sales and we had inventory. So we didn't capitalize on that. When we went into Q2, we had about 0.53% increase overall on a weighted average based on the consumption mix that we do. So we don't anticipate any great. If at all, there is an improvement, yes, it would hit -- it would improve the P&L, yes.
The next question is from the line of Mihir Jhaveri from Avendus Capital.
Just 1 clarification, sir. Sir, you said that basically -- again, I'm repeating that, the September has been double digit. So basically, is it fair that if the run rate has been much better than you can see in the second half, we can see a decent double-digit growth. Is it fair to assume that way? Was that the kind of a guidance which you were trying to give? Just that clarification, sir.
See, what I was trying to say is the trajectory starting the month of August has been on an upswing, and it has continued throughout. And especially with the festive season around, it continues to be there. So we're quite hopeful that we could do much better going forward.
The next question is from the line of Bharat Shah from ASK Investment Managers.
I don't have a question for this quarter, but a little broader discussion. So as an observer and invested in Page Industries for more than 10 or 11 years, growth has relatedly been easy for all of Page, except some occasional periods of [ editing ]. But generally, it is moving smooth and easy. Prior to pandemic, if we see the previous 2 years, we have been mired with number of challenges, maybe some external, some internal. Externally things have been softer for the economy. Internally, maybe with the relentless growth, we might have been a bit more self-satisfied.Since -- in this 2-year period, what I have observed is that there has been a significant effort to improve the character of the business to prepare for a capacity of the business to improve going ahead. So technology initiative, business transformation, product portfolio revamping, people hiring, et cetera, and the design capabilities.Can we say today with all that, that has happened plus maybe whatever the internal issues that we may have needed to deal with, are we today willing to -- are we saying that we have crossed the hump and, hopefully, in some time, we should be ready to resume more akin to both Page we have seen earlier in terms of the growth? Because eventually, growth is the way of life.But I'm delighted about 2 things. In these 2 years of tough time, one, we maintained the discipline of the sales. We did not surrender to cheap sales by easy credit and all those kind of things, which are easy to do. So we kept it tight. And I'm really, really delighted. And secondly, that we kept the discipline on raising the cash flow and the working capital tightly. So are we going forward over 3 to 5 years, finally, in the difficult phases behind?
Mr. Bharat Shah, thank you, thank you very much for your observations. We know that you have been very closely following our company, and you have been our shareholder for a long time. While you know what happened in last couple of years, and we have discussed on these programs many a times, I would say yes. I think we have come a long way. So these 2 years also have helped us to put a lot of things and a lot of new interventions put together to help us to grow towards that vision of 1 billion in the next 4 to 5 years. We strongly believe that we are in the right place now to go for it, especially these first quarter where all of us had ample time to put our heads together and plan first this difficult year and then the way forward. I think we are all poised and ready to take the big leap forward, Mr. Bharat Shah.
Okay. So which means the future is looking superior than these 2 difficult past years. I'm not particularly concerned about this pandemic period. That's unusual. So that can be left out from the calculation. But the future is now looking -- can we believe that the market much superior than these 2 years maybe?
I would very strongly view that, sir.
The next question is from the line of Akhil Parekh from Elara Capital.
Sorry, can you hear me?
Yes, we can hear you, Akhil.
A little closer to the phone, sir. We're unable to hear you.
Okay. Many congratulations to the management for a very good set of numbers. I just have 2 specific questions to Mr. Genomal. One is, you have mentioned that our internal target is to reach USD 1 billion sales target. Any external or any internal steps that we are taking to accelerate the sales growth rate? That's my first question. And second is on the audit, which was taking place in regards to the Norges Bank issue. Any update on that would be very helpful.
Well, yes, sure. So in terms of the -- what we're doing to accelerate the growth rate, that's something that's ongoing, right? There has been no relenting. We don't leave any stone unturn, whether it's innovating or refreshing our products, our marketing, our visual merchandising, strengthening our sales force. But all these [Audio Gap] that's ongoing. That's unrelenting. We never stopped doing those things. In fact, all our time is consumed on how we can outperform and outdo ourselves in every respect. So that's something that's always ongoing.And I -- it's -- we know -- as I said, we're very confident about the India growth story. We know that's very much intact. We, of course, have this $1 billion goal that we are hopeful that we will be able to reach. It's not a big ask from our calculations in terms of what we feel the market size. And I think as long as we continue to strengthen and take full advantage of the platform that we are in, I think we are very, very -- we're in a sweet spot to take advantage of that potential.So all these things I mentioned in my opening remarks are things that we've been doing, we are continuing to do. That's important to remember. It's not like we're just starting now because of COVID or, no. These are things that we've always been doing. But yes, we keep on refreshing and reinventing ourselves over the years.Our strategy remains steadfast to our strategies. But obviously, at the end -- but obviously, they continue to evolve. But the essence remains the same. Our fundamentals are very, very strong in the back end and the front end. It's something that we are very proud about. And it's -- we are going to continue doing all that. No let up and no stone will be left unturned to continue trying to accelerate our growth.On the other question of -- yes, just to remind everyone, the background is, just to give you a perspective, we have about 15 manufacturing and warehousing locations employing around 17,000 people. The issue referred -- that you referred to by the council of FX Norway pertains to one of our units in Bangalore, where we employ approximately 1,000 people. And these allegations were made by -- in 2018 by a handful of disgruntled employees to the council. And -- so that's long and short of it of what happened.So a few weeks back, we have engaged with the council. We have very cordial meetings with them, in fact. And we've provided them very objective point-by-point evidence, which we believe flatly displodes the allegations of the report because we know no such things happened, what was alleged. So the council has appreciated our response -- receiving our response, and they've confirmed that as per their policy for reassessment, because we ask for a reassessment, that they would have to do an independent audit of the facilities themselves at the earliest possible time.So we welcome that because we wanted them to see themselves what we are all about and not listen to some third-party allegations. And so for that permitting, they have said that probably around middle of next year is when they hope that they would be able to come and do a reassessment. And we, in fact, told them to try and do more than 1, do 2 or 3 factories to get a flavor of what our policies and our systems are like. We're hopeful that after they do that, it will be a positive outcome, and that will happen after that reassessment.Meanwhile, you would have heard that WRAP, which is Worldwide Responsible Accredited Production, headquartered in U.S.A., has conducted a very rigorous inspection of that unit referred to in the councilors report, and -- in the month of October, on the 20th and -- or 21st, 22nd of October. And they're very satisfied with the state of affairs of the unit. They actually investigated point by point all the allegations made by this handful of employees to the council by interviewing quite a number of people, close to 100 people, picked at random, sampled from various departments.And they have kind of indicated to us that they haven't -- they try to dig and dig and dig and try to get information, but that wasn't coming out. All those allegations, none of those allegations was coming out. So basically the truth has prevailed. And they, in fact -- we are expecting certification of compliance for that particular unit from them in the coming weeks, which we're going to post in our website.
The next question is from the line of Raj Motiwala (sic) [ Ayaz Motiwala ] from Nivalis Partners.
This is Ayaz.
Sir, we are unable to hear you. Can you speak a little closer to the phone?
Yes, I'm right at the phone actually. Is it better?
Yes, better.
And I'm sorry about that. Sir, you've had a very detailed presentation that you put out and you have been putting it out for a while. I would like to get the breakup of your revenue across men, women, kids and athleisure in your core innerwear business, if you can share that. And my second question is linked to [ dress ] breakups.
We used to do this earlier, around 2, 2.5 years now. We have stopped giving this breakup for obvious reasons because this was sort of not helping us, but helping a lot of people who are trying to compete with us. So we are not giving these breakup details anymore. Sorry about that.
Sure. No. The reason I asked that, and as Mr. Genomal also has brought out, that you are ready for the opportunity. And in your presentation, you've bought out the gross market opportunity across each of these 4 sort of verticals, which talks of an opportunity size of probably a INR 1 lakh crore plus market. My focus is one, only on the women innerwear side of the business, where you opened some exclusive outlets, and that market is obviously much larger, as you pointed out in your presentation.So my question to you, sir, is as we reflect on the development on online and your EBO experience, do you think you have found a formula to be able to crack open the women innerwear market, which from the past numbers for you has a much lower contribution, while the market size is much larger? And if you can expound on that, please?
The points you've brought in are absolutely correct. The human market is larger in terms of the revenue size and also the number of pieces for obvious reasons because there is -- there are bras, and bras has also many SKUs in terms of size and cup sizes. And then also the usage of panties is much higher as compared to innerwear in men.So absolutely right. We also understand that our penetration levels are quite lower. Our understanding is that while our penetration levels in the market what we cater to the segment -- of market what we cater to, whether it's 19% to 20% on the men's innerwear, it's only 5% to 6% on the women's innerwear. So yes, you're right, we have a long way to go there.The response from our EBOs, especially the EBOs for women has been very clearly reflecting on the fact that if you have the right products and especially with our value for money proposition, there is a huge market. And so we have some plans, which I may not be able to open up currently because they have -- they are still to be worked upon in terms of execution. So we have some major plans going forward for the women side of our business because we understand the headroom is very, very large, and we need to do a lot of work on that side. And we are looking on it while we are passing this year.We are also working separately on a separate focus, both -- while we already have a separate focus on the product side, which is on the back end, we have some plans to create a focus across the vertical coming from the -- starting from the product development to actually -- to the sales. So there is some work happening on that. And probably, I'm sure you will see we'll be having much more faster inroads into this market in the future coming years.
Sir, my last question is just on the new product launches, that is a slide which you put out, Slide #18, and they seem to be quite impressive products. And a larger focus, it seems, is on the daywear or athleisure, as it's called. So is that a big segment for your business right now and also growing very rapidly?
Yes. That's what I said earlier. It's relatively the largest -- like after women's innerwear, this is the second largest in terms of percentage contribution. So it's a large business for us. And we also see that there's a huge scope because this market is growing very fast, especially with all the gymwear and the yogawear which we are working on right now and the kind of ranges which we have. Actually it's a mix of athletics and leisure. So we are focusing on both of these. And these are very core products, and they do not go out of fashion.We also have some ranges on the performance side, which is called Move, which is in the markets and doing pretty well. These products are something what you see, the Nike Dri-FITs. These are comparable products at probably 60% of the prices. And they are available in the market, doing pretty well for us. So there is a huge scope there. And I think this year, as I said earlier, helped us to create a lot of new trials, and we're very, very bullish about this side of the business.
The next question is from the line of Ankit Kedia from PhillipCapital.
Sir, in the initial remarks, you mentioned around the digital transformation. Can you emphasize more details, how will that help us at the back end? Because on the assortment generator, I believe that you're implementing JBA also by December. And also at the warehousing, we are now we are doing full fulfillment with DHL. So some input could be helpful.
So all the automation, what we have been working on, so the whole idea is to create a seamless supply chain, which starts from the basic understanding of what we need to sell and then eventually having those products ready in our warehouse before the day we want to sell them. So to have this whole process in place, so we are starting with, as Mr. Genomal said in her opening remarks, so JDA is one of the tools, which will help us to plan through all this, which is basically creating the demand tool and then eventually actually putting it into the SAP for having the production done for the same demand, which is created by this tool.Then going forward, we have the distributor softwares where the DMS, the distribution management software. So once the goods leave our warehouses and reach the distributor management software, the whole idea there is that we have a very clear vision about understanding about what the stock is at the distributor, which is further linked to the ARS, which is the automatic replenishment system, which basically joins the distributor stocks with the paid stocks so that as and when it comes below a certain level or the tank which has been predefined, there's an automatic order which is raised from the distributor and supplied from the Page warehouse.And for the tertiary sale, there is SSA, which is a Sales Force Automation, which basically is helping us to get the orders from the market and to be built in the real time. So earlier, in the past era, all the orders will be collected by the day end and then the next day the billing would have happened. So today, all the orders which come before 2:00, get almost delivered on the same day by the evening. So the whole idea is to basically create a supply chain where we can see that there is 0 sales loss and the consumer gets what they want, whether it's in MBO, EBO or a LFS store, they're all getting linked with this technology to help us to have this seamless supply chain.
Excellent. That's helpful, sir. Sir, my second question is on your CapEx part. With the $1 billion revenue plan, what kind of CapEx would we need over next 2 to 3 years? And can we expect the Anantapur facility to come in quarter 4 on stream?
So I will leave the second part of the question for our CFO. So we are actually going in with our Orissa plant first. We'll be starting that very soon. The activity is there. It got a little delayed because of the COVID. So that is something which we are going to work on. It's a very large facility, which we're going to create there in Orissa. It's a place near Bhubaneswar. And then eventually, we may come back to the Anantapur. That's not decided as yet. On the CapEx part, I would request KC to...
Yes. Thanks, Vedji. So far, this year, we haven't planned any specific capacity expansion exercise. Still, we will be spending close to about INR 730 million this year, though in the first half we've only spent about INR 80 million. So the rest will come in the next 2 quarters. When we are going into next year, we haven't firmed up the plans for FY '22 CapEx yet. But if there is capacity expansion, it is roughly above -- about -- above INR 2,000 million, including all the normal CapEx and the capacity expansion and the digital transformation put together.
Sir, just a follow-up. What's the logic of going to Orissa? We have always been next to Karnataka, in and around that region. So why did we select Orissa now?
So we also don't want to have all eggs in 1 box. That is not everything in 1 state because when we are growing, we would have to reach the other parts of the country as well. In fact, going forward, we may have even warehouses in different parts of the country, especially something in the North, to reach the consumers faster because everything is getting done from one place, [ which you cite ] from a long-term perspective and risk management to have presence in a couple of states, to have -- predominantly from the risk management point of view.
Sure. And sir, my last question is on the women's side of the business. Can you tell us what is the total retail reach we have in women's compared to men's in terms of the stores?
It's close to around 40% of our total number of stores, or 45% to be precise.
Ladies and gentlemen, we apologize. Due to time constraint, that was the last question. I now hand the conference over to Mr. Chandrasekar for his closing comments. Over to you, sir.
Thanks for attending and listening to Page earnings conference. So as always, we continue to learn from you and also during this period. We also appreciate all your questions, and thanks for your continued support for Page Industries. Happy Diwali to all of you. Have a great time. Bye-bye.
Thank you, members of the management. Ladies and gentlemen, on behalf of Axis Capital, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.