“Disruptions of Covid notwithstanding, we have managed to protect our topline and expand margins and profitability,” says Jain, explaining PDS’s asset-light business model, supported by strong financials. “While the UK and Europe, our key geographies, faced a prolonged period of lockdown, we have witnessed good traction whenever lockdown was lifted in these markets. Now, with the rollout of vaccines and the opening up of stores, growth in these markets is being restored. Further, we are proactively and cautiously making inroads into new geographies, such as the US, South Africa and Australia, amongst others. PDS has on-boarded senior business heads to drive business in new geographies, categories, and customers.”

Genesis of a Multinational

During 2003-05, Pallak established sourcing operations in India, China and Bangladesh. Later, he opened operations in Canada and the UK too. Over the last one year, the company has expanded operations in India, China and Bangladesh and now has a presence in over 22 countries globally. PDS Multinational was created after the demerger of its sourcing, distribution & marketing division from Pearl Global Industries. The company is listed on the stock exchanges in India.

Today, PDS has a global footprint and operates with a well-diversified base of marquee customers across geographies. It operates a network covering over 50 offices, 22 countries, over 3,000 associates and 5,000 factory workers, worldwide. The company has created end-to-end capabilities in design and product development, multiproduct and multi-country sourcing reducing time to market and providing cost-effectiveness to its customers. It caters to leading retailers and brands, including Zara, Tesco, Walmart, Mango, Top Shop, George, Superdry, Amazon, Myntra and Primark, among others.

“The PDS platform is supported by cutting-edge technological solutions, providing tools for agility,” affirms Jain. “Thus, it has demonstrated robust growth, profitability, and returns on capital employed for its sourcing business. The focus over the next 12-18 months is on further strengthening our capabilities in our manufacturing facilities by driving higher orders, across leveraging group business, and increasing efficiencies.” Sustainability, including compliance and ethics, is one of the key building blocks of the PDS platform, he adds. “PDS has a keen focus on promoting sustainable material, low-impact manufacturing, and investing in a sharing circular economy.” In line with this strategy, PDS is primarily focussed on sustainable and responsible sourcing. 

 Platform model

“We are able to identify the right product for the right market and the right factory, which is further supported by a strong compliant supply chain and a core understanding of different geographies and markets,” explains Jain. “With one million pieces production per day, 500-plus partner factories and 150 designers, PDS, which started out as a single entity model, later grew into a hub-and-spoke model. This was followed by a platform model, till their final evolution took the form of a collaborative model.” About 10 per cent of these volumes is through PDS’s own manufacturing, while the rest is through global vendors. 

“In this, PDS has a focus on ethics and compliance, with its team maintaining social, technical and ethical compliance standards across factories,” adds Jain. “Our platform capabilities enable multi-country sourcing from countries like India, Bangladesh, China, Pakistan, Sri Lanka, Myanmar, Turkey and Vietnam. Similarly, multiproduct sourcing for all categories pertaining to apparel, fashion and home furnishing has also been well established. Supported by creative inputs from their market intelligence, we have steadily perfected the product development aspect of their business through innovative fabrics, extensive trends research, graphics and most importantly, sampling.” This has enabled speed to market and finally cost-effectiveness, along with margin improvement through strategic sourcing and credit terms for retailers and suppliers.

There are various players in the industry operating the apparel sourcing and manufacturing space. Some brands and retailers also have their sourcing arms. The industry has a fragmented value chain with some players operating in the purely asset heavy manufacturing business with limited capacities and others just operating in a trading and agency model with limited margins. 

“However, the PDS platform has created an integrated platform with design teams, compliance teams, manufacturing capacities and a large vendor base along with an ability to cater to and from across geographies and across categories,” discloses Jain. He is focussed on growing PDS’s existing business by turning around the manufacturing facilities that the company created a couple of years ago. The company plans to operate with an asset light model not requiring capex.

PDS is looking to build its presence in the US, Australia, Scandinavia and South Africa, among others, as also work on category expansion in sports, leisurewear and home-wear. It has created a 6,000-machine capacity, with 130 production lines spread across Bangladesh, India and Sri Lanka, with an annual in-house production of 36 million pieces.

Green Smart Shirts and Progress Apparel in Bangladesh constitute 77 per cent of this capacity, which are LEED, Platinum and Gold certified facilities. “We are targeting to double its topline in 2021-22, resulting in near break-even levels, while being self-sustaining on cash in these facilities. We are partnering with leading funds for co-investing in select opportunities along with developing new partnerships that fit our vision,” says Jain.

Meanwhile, PDS has made investments in fashion-tech companies, such as Atterley, Unspun, BuyWith and ToTheMarket. It has also added consumer-tech companies like Zwift and Brawn to its investment profile, along with companies that are focussed on other technologies, such as Cerebra, Monolith, Alacrity and Boardroom.

Such investment opportunities have enabled PDS to strengthen its focus areas, such as sustainability, technology and consumer brands, says Jain. Through these investments PDS has enhanced its value proposition for its customers, vendors and stakeholders further, enabling it to create collaboration and synergies within its ecosystem. About 16 per cent of the capital employed today is attributable to PDS’ investment portfolios.

The ESG agenda

“PDS has a compliance vision – to uphold the reputation of our customers, business partners and our organisation, by ensuring ethics, integrity and technical expertise are uncompromisingly practiced in our audit processes,” says Jain. To achieve this, the company has put together a team to maintain its social, technical and ethical compliance standards across its factories. And this team reports directly to the board. “PDS’ ethical stance is an ongoing process, not just a tick-box exercise,” adds Jain. “We carry out rigorous audits into any new supplier, but it does not stop there. Our process is ongoing, ensuring our vendor partners are always in complete compliance with local social, labour, human rights and environmental standards. PDS operates a Zero Tolerance Policy focussed on child labour, forced labour, discrimination, harassment abuse, including any unethical practices,” he discloses.