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Page Industries Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 FY '21 Earnings Conference Call of Page Industries Limited. We have with us today from the management Mr. Vedji Ticku, CEO; Mr. V. S. Ganesh, CEO Designate, and Mr. K. Chandrasekar, CFO. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Vedji Ticku for his opening remarks. Thank you, and over to you, sir.
Thank you, Margaret. Good afternoon to everyone. I'm here with the Q4 and year-on-year business update. Revenues for quarter 4 financial year '21 grew by 63%, and the volume for the same period grew by 53%. Despite Q1 '21 being a complete washout due to lockdown, we achieved close to a full number of FY '21 -- FY '20, and we were down just by 3.82% year-on-year for the FY '21. This was achieved through some strong growth in Q3 and Q4 FY '21.On the retail front, all stores catering through our channel partners and our EBOs are all open with a specified 90% of our 78,000 MBOs are active. We added close to 14,250 new stores during the year. All our 930 EBOs are also open now. We added close to on 180, 1-8-0, new EBOs during this year. All the 2,361 doors of our LFS business partners have also reopened. E-commerce business continues to be robust and growing at a very, very steady pace.On the business side, the upward demand and sales trend of quarter 3 continued for quarter 4 as well. Unfortunately, now due to the second wave of COVID-19 and this subsequent lockdowns in Q1 '21 -- '22, we are closely observing the situation with respect to the health and safety of all our employees and channel partners. We will be resuming business cautiously once the lockdown is lifted and adequate -- with adequate safety measures. We definitely are more informed this time around and more prepared and much more confident than last year.On the marketing front, our branding efforts continue through multiple channels, including online media, regular media platforms. And as I said even in our last call, we have been focusing on our point-of-sale reach out, which we feel in these present times is one of the best ways to connect to our consumers.Our fixed business still continues to be the special focus area with very encouraging customer acceptance and demand. We now have 38 EBOs that are exclusively for Jockey Junior business. We have built a separate vertical with dedicated channel partners and sales force. We have already appointed Jockey Junior specific channel partners across 50 cities in phase 1 and intend to double this reach by the end of FY '22.Overall for the brand, we continue to expand our depth within existing marketing geographies as well as strengthening our distribution in markets, which are witnessing expansion of mature retail formats. Jockey is present through the country close to around 2,890-plus cities and towns. We still see a great potential in tier 3 and tier 4 cities as well as the rural markets. We have specific plans for strengthening our distribution network in a sales manner in these markets with the station focused on the rural opportunity.So as usual, we will continue to focus -- have our focused approach for each of our core business verticals of men's and women's innerwear and athleisure businesses, junior business, socks and towels and are confident of maintaining growth going forward. Our long-term outlook and optimism remains confident and bullish as ever.Lastly, as you are aware, I'm stepping down from the role of ED and CEO at the end of this month. It's been an incredible and memorable journey for me personally, and I'm thankful to all the stakeholders and all of you for your support and valuable inputs that you gave me during our various interactions from time to time.I now take this opportunity to introduce V.S. Ganesh, who will take over from me a few days from now. The transition has been smooth, and I'm very confident that Ganesh and team will take the company forward even more strongly, given the strength of our brand and the great team I leave behind.I now invite Ganesh to say a few words. Post that, I will request Chandrasekar to share the financial highlights with all of you. Thank you. Ganesh?
Yes. Thank you, Vedji, and good afternoon, everyone. As Mr. Vedji bids adieu to us, I want to thank him, first of all, for the outstanding contribution that he has done for close to 2.5 decades in shaping Page Industries. Mr. Vedji played a major role in making Page what it is today. His stewardship has been characterized by his innovative ideas, strategic thinking, and one of the most important things, which I felt personally so good was his ability to keep things simple.He has been instrumental in building a very strong culture for Page Industries and a very strong team. Today, Page is what it is today because of the team which we are blessed with and the culture which we inherit. In fact, it is that strength of the team and the culture that gives me confidence as I impart into this new role.As you all know, I'm not new to Page. I have been blessed to work very closely with Mr. Vedji and the leadership team for close to 7 years. And therefore, the transition to the new role is almost seamless. On behalf of Page and on my personal behalf, and I think I can take the liberty of saying on your behalf as well, but I would like to thank Mr. Vedji for all that he has done for us. And I am very confident that with the strong foundation that is now created, we can take Page to new heights. So thank you so much, and I will now request our CEO, Mr. Chandrasekar, to give the financial highlights. Mr. Chandrasekar?
Thank you, V. S. Ganesh. So I also thank and place on record my sincere appreciation for all that Mr. Vedji has done for us and for me personally as well, and also welcome V. S. Ganesh on the new role.As far as the getting into the financial highlights, you've seen that with the strong volume growth in Q4, the revenues are INR 8,808 million compared with INR 5,413 million of the quarter of the previous year. So the growth is 63%. The full year revenues are almost -- we almost caught up INR 28,330 million versus INR 29,455 million of last year with almost the whole of Q1 with the pandemic in FY '21. And so we are down about 4%, and we are quite satisfied and very happy with the kind of comeback in Q3 and Q4.Q3 was our best quarter in history in terms of top line and bottom line, and Q4 is the second best. And Q4 alone is the best Q4 in history because as you know Q4 is slightly weaker among the 4 quarters for us. So this despite the lockdown and a pandemic year is a great case for cheer and all thanks to the whole team, who have done enormous work during this financial year.The EBITDA margins for the quarter were 19% against only 11% for Q4 of FY '20. And for the whole of FY '21, it was around 19%, and it -- as against 18% of the previous full financial year. EBITDA margins in absolute terms were about 5% lower than Q3 being the best quarter compared in history as well as with Q4. But we also -- given the confidence of Q3, we started getting normal in terms of spending in advertisement and other corporate overhead in Q4. So business was up to normal. So a little bit of relaxation in OpEx was also there in Q4.The Q4 PAT was INR 1,156 million as compared with only INR 310 million in -- am I audible?
Yes, you are.
Yes. So the Q4 PAT of 1,156 million compares with the INR 310 million of the Q4 of FY '20, which is up by 272%. The PAT margin also has historically been pretty good, and it was at 13% for Q4. For the full year FY '21, the PAT margin was INR 3,406 million as against INR 3,432 million in financial year '20. It's only down by about 1%. The PAT margin is 12% for the full year.We had one of the best years in terms of working capital and the cash and cash equivalent. It continues to be at a healthy INR 4,350 million at the end of March, which is significantly better than we had last year. The net working capital is INR 5,128 million. It's slightly up compared to INR 4,579 million in March 2020. But the inventory has reduced by about INR 1,636 million. The debt has increased this year by about INR 633 million March to March and also better cash results by almost INR 3,000 million, which has increased the net working capital.So that is the synopsis on the financial results for Q4 and full year. I now request that the Q&A session be open.
[Operator Instructions] The first question is from the line of Avi Mehta from Macquarie Capital.
Sir, I wanted to just ask first on the demand side. How the situation has been in April and in the first quarter till date? And second, just a clarification on the current quarter. Was there any -- did we proactively try to ensure that channels are stocked up so that there is no stock-out situation like the way it was in first lockdown? And was that one of the reasons for the volume growth rate to be kind of -- sorry, volume growth rate to be this way?
Volume growth to be, sorry, Avi, the last part to be this...
The way it was -- is this volume growth more the steady volume growth, sir, on secondary side? Or is there some one-off over there? I just wanted to kind of clarify that part.
Okay. So first part of your question is about April and May, which obviously, no, I can't give you the indications about that. But all I can say is that the demand which was -- which carried through us from the third and the fourth quarters did continue, and we were on a good note until the lockdowns came in again. Because of the lockdown, we had to stop our factories as well here in Bangalore.There was a time when we were allowed to actually operate with 50% labor force. But we, as a corporate, decided against it because the situation was pretty bad in Bangalore at that point of time. So we took a conscious call keeping in mind that their health and safety of our workers. We did not open. So we have not been actually functioning for a month now from a production point of view.Coming to the second part of your question about the stock in the pipeline. We have enough stock in the pipeline, which is at our distributors and at the retail partners. So that's not a matter of worry at all. We also have a good stock number of days in our warehouse here in Bangalore. So as and when things open up, we should be in a good condition to continue where we left it, Avi.
And sir, there was no one-off. The secondary sales growth rate was also similar to what we saw on the primary side, right, sir? There was no increase in channel inventory.
Absolutely. In fact, in fact, the secondary sales were higher. Yes, there was a situation where towards the fourth quarter we were actually at places we were trying to fill up the stocks back at our distributor points.
Okay. Perfect. Perfect. And the second question was essentially on the margins. Now 4Q was almost, to some extent, closer to normal, if I may say, in this entire year. And then if I look at the EBITDA margin trajectory, it's more closer to the 19%, 20% level. How should I look at it from a going-forward basis? Would it be fair to look at us going back to 21%, 22%? Or is the new level likely to be a 19%, 20% level on the EBITDA side, sir?
So Avi, I can probably -- sorry, I just -- I think we have me and KC have answered this question quarter after quarter. And we have always believed that 2021 is something, which we would always want to be. There will be these one-off quarters here and there. So I would rather likely refrain from commenting on a quarter-to-quarter outlook. I think, yes -- so if you look at the overall year per se, our vision continues to be in that 21% plus EBITDA margins. That's our goal always.
Okay, sir. Okay. And lastly, sir, bookkeeping. The volume growth in the quarter, I missed that -- or for the year, if you could kind of give us a sense, sir?
For the year?
Yes, for the year.
So we didn't say that. So for the quarter it was 54%.
The next question is from the line of Aditya Soman from Goldman Sachs.
So first question in terms of now when we think of revenues on a full year basis, if we compare revenues are sort of flattish from when we compare with FY '19. And if you look at EBITDA, it's flattish even when compared with FY '18. Now we understand there's been sort of one-off events, obviously, in FY '20 and '21. But shouldn't consumer demand not get impacted at least for sort of essential category like innerwear?And now this revenue has been flattish despite, obviously, I'm assuming there's been some upsurge in athleisure and then we've seen a launch of Jockey Junior. So how do we put this into context? I mean would it -- would the underlying industry itself have declined for innerwear? Or is there -- is it that we are losing share on innerwear?
Aditya, actually, if you look at the other way around, if you look at the number of days we got to operate in the last financial year, it was basically a 9-month year versus a 12-month year. And if you look at the volume and the value, it's almost equal to the previous year. So that way if I compare it to number of days like-to-like, we almost have 20% growth in that sense because we really didn't get the first quarter to operate at all last year.The demand in quarter 3 and quarter 4, as Mr. Chandrasekar said earlier, quarter 3 of FY '21 was the best-ever quarter in the history of Page. So that should give you some idea about how the demand is changing. So yes, we had the plus points of our supply chain being very strong, and we could reach the products even with all those constraints we had last year to the -- to all the distributors and hence, the retailers.So as far as demand, I don't see that there's been any reduction of demand. In fact, we said last year, there was an improvement in demand, especially with our athleisure business. Our athleisure business had a very, very healthy growth. It was like never seen kind of growth percentages year-on-year in the athleisure. And I very strongly believe all these new trials, which have happened during the last year are going only to add more business and volumes to that side of the business. The kids business, again, grew by almost 75% to 80% year-on-year.So these businesses are actually going to add on and grow from here because there has been huge trials. And at end of the day, we all know that we are an affordable, value-for-money premium brand. And once people taste our products, then it's more of a repetition business for us. So I actually am very positive about the demand going forward Aditya, if that answers your question.
Yes. I mean, it partly does. I think the context of my question was actually that I mean for a category like innerwear demand should not -- I mean, the number of days, yes, while it is -- we cannot ignore that, the number of days and I believe that there was also an element of pent-up demand coming in 3Q and 4Q, which is why you're seeing some of the record quarters. I'm assuming consumers who could not shop in 1Q and 2Q have gone ahead and made those purchases in 3Q and 4Q. But if you think of this -- I mean, on the market share front, any context you can give us especially on innerwear, both men and women?
See, unfortunately, there is no market share study in our industry as yet. So we don't have the like FMCG products where they can actually point to their market share month-on-month or quarter-on-quarter, we do not have that. We have always given the analogy of how we look at the penetration of our products in each of these segments. And if you remember, Aditya, we have discussed about the total market size of 150 million men and women and currently, our understanding is that we cater to only 20% of those in the men's business and around 6% to 8% on the women's side of the business.So the market is immense and huge and growing and ballooning, if I can use the word. And it's all up to us how do we get our act right in terms of distribution and reach out to those people, which I think last year, to a large extent, we were successful in doing that. As I said in my opening talk that we opened close to 14,000 new outlets, and we opened 180 new EBOs even during the pandemic year last year. So that is only helping us to reach these consumers faster and in a more planned way. And so that's my take on that, Aditya.
Understand, very clear. And just last question on cash flow. Would this be -- so would this inventory level be sort of new normal, both on inventory and we've also seen a sharp increase in payables. What's the reason for that?
Chandrasekar, would you like to take that?
Yes. We have been -- thanks for that question. We have been buying up inventory because there was a threat of the raw material prices moving up. And also, if you compare March to March, last March wasn't -- I mean there was a lockdown and people were getting paid, but there were not many arrivals of inventory nor even the sales was not happening. So it's not a comparable one. Yes, your question whether the inventory is sustainable, yes, the inventory would further go up, and we would rather have more inventory, so as there is no loss of sales.
Understand. And then on payables, we've also seen a very sharp increase in payables.
Yes, payable, again, as I told you, there were not many arrivals because of the lockdown in the second half of March last year. So we were only paying off the vendors. There were not many purchases or arrivals happening. So if you look at both receivable and payables, they were lower last year in March, mainly due to this lockdown, whereas this year, this Q4 was a full quarter.
Yes. Yes. But when I look at the payables level even compared with sort of FY '19, that seems quite high, so I was just wondering what was the change?
Payable in FY '19? Yes, payable has gone up because as I told, we are buying up. We're buying -- we're trying to prebook some of the raw materials because there were -- due to the certain disruptions, there were shortages in supply, so we are buying up.
[Operator Instructions] Next question is from the line of Bhargav Buddhadev from Kotak Mutual Fund.
Congratulations for a strong execution. My first question is on the distribution expansion, as you mentioned that despite the COVID period, we've almost seen a 20% increase in the quarter due to infrastructure...
[Operator Instructions] Sorry to interrupt you Mr. Buddhadev. Your audio is not very clear, sir.
Can you hear me now? Can you hear me?
Yes, it's slightly better.
So sir, as you mentioned, we've seen almost a 20% increase in our distribution expansion in the last 12 months. So my first question is, is it fair to say that our dependence on the top 6 cities would have sort of come down post this expansion, assuming that most of this expansion would have been outside of the top 6 cities?
So yes and no. The contribution of our top 6 cities for the initial 2 quarters, obviously, was nil because they were the most effective cities in the first part of the pandemic. But in the second half, in fact, that was the time when we started working harder on the Tier 3 and Tier 4 cities, and we got most of our stores opening up there. And then when quarter 3 and quarter 4, when these cities came back, so it helped us to get those demands back. And also, we opened many stores in even these cities during the quarter 3 and quarter 4. So the number of stores, which have been opened, have been opened across all the metros, Tier 1, Tier 2 and Tier 3 cities during this year.
Okay. Okay. My second question is on the coverage of the ARS. If you can help with what percentage of area would be now covered under ARS?
So Bhargav, unfortunately, last year after we all doing so much of hard work, while we have reached close to 100%, it was almost 87%, 88% was done, then we had to stop because of various challenges, which last year brought in. There was a time when we also had to stop the ARS because what was happening is all the bigger distributors were getting saddened with the smaller and the medium size distributors have not been able to get their orders because once the orders come in and the FIFO and that's basically the stocks -- the production also was not keeping pace with demand. So we had to let go our ARS for a few months. But starting April, we are back on ARS. So answering your question, we are close to around 90% reach as of now on the ARS.
Okay. And my last question is to Mr. Ganesh. So I presume that Tickuji has come from a sales and marketing background, and we've heard several distributors also sort of talking very good about Mr. Tickuji, especially in the meeting for it. So given that Mr. Ganesh is coming in from more of a supply chain and production background, would you, Mr. Ganesh, also be keenly involved in the sales and marketing front?
Yes, very much. He's going to be -- he's going to take my position, right? So earlier, Mr. Ganesh was reporting to me. And we used to work together on the market and while I used to work with earlier corporate line -- then posted Gagan on the front end. And then there's other gentleman called Rahul Shukla, who used to manage the retail business. So all of these people are going to report to him now, and he'll be managing the entire -- more business across front and back end.
The next question is from the line of Nihal Jham from Edelweiss.
Sir, a couple of questions from my side. First is, what is the average price hike we've taken across the portfolio, if you could just give a sense of that?
So Nihal, as you know that we take everything between 3% to 4% generally, the hike. This year, it has been between 4% to 5% for obvious reasons because the rates of our raw material had gone slightly more than our usual input rates that used to be -- the inflation is slightly more than previous years. So it's basically the same 3% to 5% what we do. That's what we have done this year as well.
Sir, that's helpful. Why I asked this question is because as I noted that last year was an aberration, generally, we used to work with a higher gross margin, but I'm only looking at the raw material part of it, not the other contributions we've seen in terms of costing. So that seems low. So is there a thought where we want our pricing to be kept efficient and more the volume growth to be driving? And then that's the thought we are working with just want to know...
See, while gross margins are important to any company, it's also, end of the day, market share supersedes everything. Our prime focus is market share, of course, with an eye on our gross margin and EBITDA, so that goes without saying. But yes, to answer your question, market share is something which we are always focused on.
Absolutely, Tickuji, that's very clear. The second question from my side is that over the year, you have alluded about how strong athleisure has grown. And earlier, we used to at least share the numbers in terms of the bifurcation. If it is qualitatively possible just to give a sense of how each of the 3 major segments, that's the men's innerwear, women's innerwear and athleisure performed for this entire year. It will just help get a better sense, because I would assume that that's the way you would classify if that's comfortable?
Yes, fair enough. See, as you know, we have stopped giving percentages of each of these categories. But in terms of growth, if I take volume growth, it's only athleisure and the junior business and the e-comm business, which have actually shown some positive growth. More or less have been -- the others, which is the men's innerwear, women's innerwear, have been flattish or some of them even slightly degrown in volume over last year. But in terms of value, all of them have grown.
Tickuji, I just wanted to wish you all the best and thank you so much.
The next question is from the line of Arpit Shah from Stallion Asset.
Last time we spoke, we spoke about your new rural product line, right? I just wanted to have an update how is that progressing. And if you can quantify how many new distributors you've signed up over there? Do we have any EBO strategy? And what kind of differential pricing we have between our regular and rural products?
So Arpit, we don't have any specific rural product as such. So we have created a rural bucket, which is number of products which are from our existing portfolio itself. But these are the products, which are the sort of bread earners of the fast-moving products. So this -- what we have done is so that initially, so when you get into the rural market, you have to keep 2 things in mind. One is the MRP, or the value for money, for those kind of markets because that plays a very important role there; and two is also the sustainability of our -- these new distributors who are going to operate on the rural side.So in order to see that the distribution ROI method -- ROI is managed and put into play, so what we have done is we have created a booking of around 35, 36 products, which are the best-selling products. And also at the same time, we have kept the MRPs of the products in mind, and that is what we are penetrating the rural market with. So there is no separate product, which is a rural product as such. I hope that answers.
Yes. So would these be exclusive distributors for you or they will be distributing for some of the competitor brands also in these areas?
No, they could be doing others. So we don't have specific distributors, but we only keep in mind that it's not conflicted. They cannot keep a brand, which is in our segment and which conflicts with our products.
Got it. Got it. So now for the last 2 or 3 years, we have been trying to correct a lot of things at least, right? So can we go ahead -- like in the next, let's say, 3 or 5 years, can we see Page back again at 15%, 20% kind of growth rates after all things that we've corrected in the last 2, 3 years? Is that -- is there a new growth that we can start expecting from Page again?
I would completely believe that, Arpit, because that's -- as I said earlier in one of my replies, with the kind of market size available out there and kind of penetrations we have, there's no reason for this not to happen. If you remember, if you've been -- actually, last 3 years have been actually very, very sad for various seasons. We started with demonetization, then the GST implementation disrupted the market. When we were just trying to get out of that, and then COVID hit us.I think all those things are behind us. And with the kind of demand what we saw in the last 2 preceding quarters, I see no reason that why we should not be back at those numbers. We still believe that the next 4 to 5 financial years, we want to hit that INR 1 billion mark, that's still the aim of the company. And every person of the company is working towards that goal.
Got it. And just one last question. Did we see any attrition from a distributor network due to implementation of ARS in last 1 year?
No, last year, there have made -- they are very happy about ARS because they are understanding that the ARS is actually helping them to get better ROIs, to have healthy stocks, because we're also helping them to liquidate their old stocks. So the only positive of the COVID has been that when -- in the initial quarter, which was the quarter 2, and we did not -- the supplies were still being managed from our end and our factories were just opening, there was a demand in the market. So we were able to sell a lot from our slow-moving products, which were at the channel partners end. So most of that has got sold out. And now especially with the ARS, they are very happy, because they understand that it's for their benefit in the long run. So nobody has left us because of ARS.
[Operator Instructions] The next question is from the line of Pratik from Credit Suisse.
My question was on the input cost inflation. Sir, what kind of inflation are we seeing here? And how do you see this trending going ahead?
K. C.?
We had the inflation impacting Q4 is only about 1.2%. But going forward, we had estimated that it could be in the range of 5% to 7% going forward when we were looking at it in March. But again, the pandemic has come, and there is not that much demand. So it's not something right now, we are able to predict accurately, but the kind of increases which you are talking about in Q4, that's not happening, that's not happening.
Okay. So the 4% to 5% price hike that you mentioned earlier, as of now, you see that is sufficient to pass on...
We have -- so there are many aspects as Vedji was trying to explain that we would only pass on as much as we need to the customer to maintain 21% EBITDA margin on an average for a full year. And that means we also have done a lot of work on OpEx, so that also contributes significantly this year to the EBITDA margins. So the net impact, which remains unabsorbed due to RM price increase and increments and inflation and so on is the resulting price increase. So once we get a firmer idea on where the raw materially headed, once the lockdown is lifted, then we will look at the annual price increase sometime in late Q2 or Q3.
The next question is from the line of Tejash Shah from Spark Capital.
So Vedji, for last many years and in fact in the recent past also, we have seen relatively stronger growth from men's innerwear player at the mass end of the parameter popular end. Obviously, the target segment is not same as ours. So just wanted to know what is the trend that we are reading there? Is this down trading? Or is it premiumization happening from unorganized to organized at that segment?
So I would believe it's the latter one, which is premiumization happening at the unorganized end and also the fact that after GST, a lot of brands also started to sort of play a little bit more in the right way. And that's why these numbers are fairly different from what it was showing earlier. So that's what's happening on that front. But I'm very happy that so many people are coming with a fold of branded innerwear. Eventually, when they upgrade, it's going to be us. So I'm actually quite positively looking at what's happening at the mass segment.
Okay. And sorry, I missed your comments on our manufacturing status as of now. So are we back to normal? Or are we still running below our optimum capacity there?
No, we are currently closed. Our factories at this point of time are closed, and we have been so for a month now. There's a lockdown in Bangalore until the 7th of May -- sorry, 7th of June. And post that, we will start to resume our operations.
Sure. That's all from my side Vedji. I wish you all the best for your all future endeavors and Mr. Ganesh, best wishes for your new role.
Thank, Tejash.
Thank you. Thank you.
The next question is from the line of Prerna Jhunjhunwala from B&K Securities.
Congratulations on good set of numbers. Sir, I had one question on e-commerce segment. How it has played a role in our growth? And what would be the contribution improvement? Because this year, if physical stores are not operating post May, but e-commerce has been operating throughout the year, so just some color how that segment has performed for us? And how do we look at that segment going forward as channels?
So e-comm business for obvious reasons is a very important channel for us at this point of time because of the prevalent situations. And even otherwise, then looking forward, the way the things are changing in this country, and there's a huge change happening towards the -- positive change happening towards the online side of the business. So we have been working very closely with our teams there on the e-commerce side.Last year was a huge year for us. We had close to around 80-odd percent growth on our e-commerce business. And contribution wise, we also doubled. We used to be around 4-odd percent, we are close to 8% now. We were at one point of time close to 12%, but at the end of the year, also because -- also the channel business came in very strongly, we ended up at close to 8%, which is by far a large number. In fact, I was thinking that 10% would be something what I would be very happy with. So we're very close to that number already, Prerna.
Second question will be on your strategy for women's category. We understand that women's category is a higher opportunity, given our penetration is only 5% to 6% as compared to men's wear. We cater to 20% audience. How are we focusing -- what is our strategy to have a higher growth in that segment?
So men's innerwear, in terms of contribution, is still our largest contributor to the business. We have some very, very strong products there. The only way to augment that side of the business is distribution and distribution, that's -- there's no other way, which we very clearly understand. And as I said, last year, we had one of the best years in terms of widening our distribution, close to around 14,600 stores got added there and also we opened 180 EBOs.I think those plus there are some new exciting ranges, which are -- we have not been able to launch them for obvious reasons. We are just holding onto them for the time being. I think with the combination of both distribution and a product, that will be the way forward for demand in the innerwear business, Prerna.
Okay. So which means all the EBOs will be men plus women that you've opened is how I understand it.
So yes -- so the ones we opened last year, we also had some junior stores, which are exclusive junior stores in the total number, close to around 30-odd stores, which were clearly junior stores. We also have opened, which had men's and women's stores with them. We opened stores, which carry the entire range. But since our ranges are getting bigger, there are some stores where we are opening only women's stores. We closed -- we have close to around 50-odd such stores already, which are purely women's stores. And we also are going to -- in the near future, we may also have to have only athleisure stores because the kind of range we have now, we are ready to actually have stores, which can cater to only our athleisure business.
Okay. Sir, one question, if I can, with related to this answer. Do you think there could be any cannibalization with this store segregation? Because we were earlier observing that because they are full range stores, then the throughput will be better, because when a person comes with a family, then he can buy for everyone. But now that we are having targeted stores planned for even athleisure wear, do you think it would be -- will it be ROI positive for us on a longer-term basis?
See, our first effort is towards opening, we call it, a full family store where we have all the ranges. But then we have to have at least 2,500 square foot stores now, which practically may not be possible always. But our first aim is always to open a full store where we have all the ranges.Coming to the -- when I said women's stores, there have been many specific women-oriented markets, for example, in Delhi, there are these markets which are -- which cater to the women's side of the business. So it's prudent to have a store we sell women's lingerie in those kind of stores. There are floors in the malls, which are dedicated to the men and women or vice versa. So there it makes sense to open these kind of stores.When I talk about athleisure stores, there could be a store in -- there could be -- we could have 3 stores in the mall. We already -- today, there are many malls where we have 2 stores, where we have all stores and we have a women's store in the same mall and also a junior store. So there's a mall in Bombay where we have 3 stores, where we have a women's store, a junior store and an all range store already.So we are not opening them in places where we will lose an opportunity of having the consumer to miss our other ranges if they have -- if they go to one of these range stores. But at the same time, we also don't want to lose an opportunity. If we have a smaller store available, the market will have make use of it and have one of our ranges at least being presented.
The next question is from the line of Swagato Ghosh from Franklin Templeton.
Sir, on the e-commerce channel, I want to understand what is the margin like and how does it compare with our regular offline channels?
Our margins are more or less same. It's not -- there's not a huge difference because the cost of managing that business is much higher than the channel business. The logistic costs, the -- and we also -- as you know, we have all this managed by third party, our distribution and logistics by a third party. So the cost of doing that business is much higher than our regular business of channel business. So it's hardly because -- it's probably a couple of points better, but not very significant.
Okay, okay. That's helpful. And the other question I had on the distribution point that we added about 14,000 this year. Can you just put this number into perspective, sir, that how many more channels are possible to be added because not all point of sales would be suitable for selling our brand? So probably how much of the market is still like untapped by us, and in how many years can we get to those outlets as well?
See, growing by around 8% to 10% year-on-year is something, which I believe is possible for next decade because the markets are also evolving at the same time with every passing year, especially the Tier 3 and the Tier 4 towns. There's a huge -- we're talking of a 5 lakh minus and -- sorry, 50,000 minus towns and 50,000 plus towns, there's a huge change happening there. And we can see the imagery of the retail is slowly changing. What was through -- 5 years back for a Tier 2 city is now happening in Tier 3 and Tier 4 cities. So there's a huge change happening out there, and that's the opportunity we see. And as we very clearly see that our products can very easily fit at these kind of outlets.Also, as I talked about the rural business, that's something which we are very seriously looking forward this year with that bucket of products, which we have created for that market. And we have some very strong plans, which will be -- the team will be working on this year. So answering back your question, anything between 8% to 10% year-on-year for next 10 years, no problem at all.
Okay. And sir, one quick last question is what was the number of distributors -- like what was the growth in the number of distributors this year? Was it proportionate to our sales growth or was it higher or lower?
Number of distributors, no, there's no proportion between sales and number of distributors in that sense. But yes, we -- it was not different from the previous years. We had some distributors who moved on, and we had some additions as well. But nothing different or significant to talk about as compared to previous years.
The next question is from the line of Bharat Shah from ASK Investment Managers.
Yes. Really, I have no question, but I just wanted to put on record, I've known Vedji Ticku over a period of time. And I think philosophy, culture and the brand building of Jockey owes a lot what he has done. So I just wanted to essentially place on record what he has done to the business and to the brand.
Thank you, Mr. Bharat. Thank you so much.
And if I can just add in one point, booking junior, in some ways, it links to the future, because if you catch them young, then at some day become adult customers for your brand. So is this the way the value opportunity is being seen and being built?
Absolutely, Mr. Bharat. If you remember around 2 years back, just 1 year before the onset of COVID, we -- if you remember in one of these such calls, I had said that we are going ahead and investing into this business. And even before we had any distributors in place, we had close to around 50 salespeople which we invested in because we wanted them to go and convert and create this whole setup. I'm very happy today. We have at least 50 towns and cities where we already have -- which is the first phase, which we have completed, and we have distributors in all of these cities and towns. We have opened around 38 EBOs for this business. And you are absolutely right, the whole idea is catch them young because once they are with you in the -- with the brand at a very early age and once they grow, they continue to be with you. So that's how we are looking at this business. And it's also profitable. And it's also a different market for us. So it's not infringing into our existing business, the men's and women's business. This comes and sits like a cherry on the top for the moment, even if we want to work on a slightly lesser EBITDA for this business. But in the long run, it comes into our fold of adult business and helps the brand overall. That's entirely the philosophy of having the junior's business, the focus on it.
Vedji, thank you, and wish you all the very best in whatever you chose to do ahead.
Thank you. Thank you very much, Mr. Bharat.
The next question is from the line of Sameer Gupta from IIFL.
Hope all of you are stay -- safe and healthy. Sir, first question is on working capital. I know this has been asked in some form. But just wanted to clarify, so your inventories, if I look at days of sales, FY '21 is around 71%, which is historical Low, creditors at 28 days, which is a historical high. Now considering that sales this year have been lower and these numbers are on full year basis, so even considering that, this seems to be on the lower side.So just trying to understand working capital as a whole at 20 days -- when I look at other current assets also and liabilities, is 20 days working capital a good enough number to go ahead, sustainable? Or would we see some form of reverting back to around 40 days, which is around -- which is what has been historically?
It's a good question. The net working capital is about 66 days at the end of March 2021. It was around 57 days in -- at the end of March 2020. The only thing is the complexion has changed. We had about 89 days of inventory in March 2020, which has gone down to about 71 days. So that is why I told earlier on the call that we are building up, we are rebooking inventory and buying. And also because if you look at the kind of 60% growth in Q4, it's a little bit gone ahead of us in terms of consumption. So we are building back the inventory. The payable around 28 days is because we have bought inventory a lot towards the end of the quarter. So does it answer your question?
I'll come back maybe on this, but -- I'll go to the second question then. Sir, margin, we have endeavored to 21% plus, 22% something that we are seeing in a more normal state. But just trying to understand, so we are facing new competition coming in from the likes of ABFR and Levi's, the more prominent apparels, they are getting into innerwear. Also, with higher growth coming from the athleisure categories, which is likely on the lower margin side, how does this stack up, sir, 21% versus current 19%? Just trying to understand that.
Vedji?
No. I think EBITDA with the competition, I didn't understand what -- how does EBITDA get affected by some apparel brands coming into the innerwear side of the business, Sameer?
There will be some pressure on pricing, I would assume and given the pace of competition, but if that is not a problem, then...
I see it that way. No, I don't think that's -- if you would have followed our company for some time now, we have never looked at our business that way. We have looked at the business in a way where we have a product. We want to make sure that we reach our value-for-money products to our consumer. We keep a very close eye on how much we need to sell every year. And of course, then our gross margins and EBITDA, that's how we look at our business.The market size is very, very large, Sameer. We have to understand that we are catering to a market, which is almost 5x what we said in terms of -- in the men's business and it's almost like 7% account -- penetration for us on the women's side. So market and the competition doesn't make a difference in that sense because if the market was finite and we were all fighting for a small pie, then what you are saying is true.But since the market is so huge and also believing that every year with the kind of disposal incomes, which are coming to the hands of the middle class now, so that's never a constraint. It's all about how do we get our act right, how do we have our -- the -- all the gross margins, which, obviously, that means we should have a very strong control on our labor cost, factory overheads, our corporate overheads and, of course, in selling and marketing costs have to be managed to arrive at our EBITDA eventually. And that's what we have done for all these years, year after year. And we very strongly believe we can do it for decades to come.
That's very helpful, sir. Answers a lot about my questions. Just one, if I can sneeze in. So it's more for clarification, really. So you mentioned 90% of MBOs open in 4Q. My sense was that 4Q was more of a normal quarter. So the 10% remaining, like -- is it like there is some structural issue? And other follow-up on that would be, any similar number you can give for the current situation? How much of percentage of MBOs will be opened currently?
So Sameer, if you -- I didn't say open, I said active.
Active, yes, sorry.
Yes, yes. So when I say active means somebody who buys from us at least once in 2 months. So open, all of them are open. In quarter 4, all of them were open. But 90% of them were active within the -- yes, so that's what I was trying to say.
Sir, any number on the current quarter, sir, given the situation of lockdowns in different parts of the country in different ways?
No, since all of -- almost the whole country is under lockdown right now, right? Though it's not announced like last year by central government, this year it's done by state governments. So -- but predominantly almost 90% of the country is under lockdown. Yes, so most of the stores are closed at this point of time.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question. Please accept our sincere apologies for not being able to answer all questions from the participants. I now hand the conference over to Mr. K. Chandrasekar for closing comments.
Thank you, Margaret. It was, as usual, a very learning session for us and also being able to share one of the best quarters we had in Page. Hopefully, we will come back to normal business and people will remain safe. And we have endeavored to answer all your questions. And still, if you have, you can send us via mail and we'll be more than happy. So I wish you all the best and remain safe and healthy, yes. Thank you very much.
Thank you. On behalf of Page Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.