(INCLUDING MANAGEMENT DISCUSSION AND ANALYSIS)
Dear Members,
Your Company's directors hereby present the Sixteenth Annual Report
together with the audited financial statements of the Company for the financial year ended
March 31, 2023 ("year under review/ FY 2022-23").
#MDStart#
MANAGEMENT DISCUSSION AND ANALYSIS
Overview
During this year, industries experienced resurgence, with many sectors
either returning to or surpassing pre-COVID levels. However, this revival has not been
devoid of challenges, as geopolitical situations and inflationary pressures created
several uncertainties, especially in global markets. In the global context, India
continues to be a relative out-performer supported by domestic drivers such as strong
consumption demand, robust corporate balance sheets, Government's focus on infrastructure
and its appeal as an attractive destination for foreign inflows.
Global Economy Overview
The year 2022 witnessed a mix of positives and negatives, while there
was economic recovery led by pent-up demand, there were also challenges caused by
geopolitical tensions and a resurgence of COVID in China. These uncertainties gave rise to
various issues, including inflationary pressures and decline in consumer and investor
confidence. The global economy is anticipated to experience a slowdown in the current
calendar year due to factors such as rising interest rates, slowdown in consumption etc.
Per International Monetary Fund (IMF), global growth is expected to be 2.8% in 2023.
Although, with inflation beginning to ease, there is a growing sense of
optimism, particularly in emerging economies. These economies are expected to continue
being a major driving force for global growth, contributing a significant portion to
overall GDP growth in the upcoming decade. For 2023, GDP growth for emerging markets and
developing economies is expected to be 3.9% against 1.3% for advanced economies.
Indian Economy Overview
Indian economy has shown promising growth, with RBI estimating GDP
growth rate of around 7% for the fiscal year 2022-23.
India's economic growth in FY23 has been principally led by increase in
private consumption and capital formation. The nationwide vaccination drive had a
significant impact on the public's outlook, resulting in rise in consumer spending and
also return to restaurants, hotels, malls, and cinemas. This, in turn, improved corporate
balance sheets, which had a positive effect on the banking system, as it overcame the
challenges related to asset quality. Additionally, the robust collection of goods and
services tax (GST) and direct taxes also resulted in increased Government spending.
This path to sustained recovery continued to face several challenges,
including rising inflation, supply chain constraints, aggressive tightening of monetary
policy across the central banks of advanced economies. However, India has demonstrated
resilience by successfully navigating through these challenges without a significant loss
of growth momentum.
Indian Economic Outlook: Long Term Optimism
As we step into the fiscal year 2023-24, India is expected to
experience reasonably strong growth driven by multiple growth catalysts, leading to a GDP
growth rate of 6.5% as forecasted by RBI. India's prospects for FY24 are marked by
improving capacity utilization, Government's emphasis on capital spending, sustained
buoyancy in services and strong domestic demand.
Consumer demand particularly amongst the affluent class in metros and
tier I cities shall continue to remain strong. In addition to robust urban trends, the
improvement in aspirations of rural and tier M/III cities shall contribute positively to
the overall aggregate demand.
Despite unfavourable global factors that have dampened the near-term
growth momentum, the country's resilient domestic growth drivers are anticipated to
sustain and propel long-term economic growth.
India recently emerged as the fifth-largest economy in the world, and
will continue to be seen as one of the key contributors to world economy. The country is
an emerging manufacturing hub within global value chains, an expanding consumer market,
and a frontrunner in driving digital transformation across both public and private
sectors. The Government has been consistently taking proactive steps to support
businesses, whether it's through promoting trade liberalization, refining tax rates, or
maintaining an open approach towards foreign investments. At the back of these strong
measures, the Indian economy continues to outshine and make a compelling case of
investment for global investors.
Industry Review
Global Apparel Industry
After experiencing a huge setback during and after pandemic, the
worldwide fashion industry made a strong recovery in 2021 and continued to grow at the
start of 2022. However, the industry's momentum slowed down in the second half of 2022 due
to deceleration in spending, macroeconomic volatility, rising inflation, and weak consumer
confidence.
In 2023, the apparel industry's sales are expected to grow at a
reasonable pace as the demand recovers in second half of the year. Per Euromonitor, the
worldwide Apparel Market size is expected to grow from USD 1.37 trillion in CY 2022 to USD
1.48 trillion in CY 2023 at an annual growth rate of 8%. This Market is expected to grow
to USD 1.8 trillion in 2027 at a CAGR of 6%.
The Luxury category is expected to grow at a faster pace owing to its
superior resilience to inflation, compared to other categories. Casualwear and Sportswear
segment are projected to continue expanding, while Occasion wear is expected to gain
momentum due to re-emergence of events such as weddings and festive celebrations on a
grand scale following the pandemic. There is also an increasing demand for sustainable and
eco-friendly clothing, as consumers become more environmentally conscious.
With the direct-to-consumer (DTC) model gaining prominence, consumers
are looking for more personalized and convenient shopping experiences. Brands continue to
move beyond traditional retail channels and sell their products directly to consumers
through their online and offline channels.
The Indian Apparel Industry
As India undergoes rapid economic growth, number of individuals with
higher disposable income will be on a rise, fueling increasing spend on non essential
goods and services. The rapid urbanization of the country has also played a significant
role, as urban centres foster access to an array of lifestyle choices. Moreover, the
demographic landscape, has resulted in an expanding working-age group and an increase in
dual-income households, further boosting the demand for discretionary products. As India's
per capita income is experiencing rapid growth, among various categories, fashion apparel
is anticipated to exhibit the highest growth rate and maintain its position as one of the
largest segments. With increasing affluence, consumers are likely to enhance their fashion
preferences and keep up with evolving trends, driving sustained demand for apparel
products in the market.
The Indian Apparel Market expanded to approximately INR 5.5 trillion in
FY23. The market exhibited an uneven recovery, with urban markets demonstrating a more
robust bounce-back and surpassing pre-COVID levels in FY23. While on the other hand,
rural, tier III and IV markets have faced inflationary headwinds and hence remain in
recovery phase.
In this post-pandemic world, many fashion and apparel retailers have
continued to expand their retail footprint. The year 2022 highlighted that e-commerce and
omnichannel play became a permanent feature in the retail industry. Several brands have
increasingly adopted omnichannel play, leveraging their physical stores to fulfil online
orders and enhancing customer value proposition.
Outlook: Positioned for a significant growth
India's apparel market has been experiencing steady growth, supported
by several factors such as rising fashion consciousness, increasing young working
population, and the emergence of branded players. This growth trend, positions India as a
key player in the global fashion industry, especially when coupled with the country's
growing economy and increasing digital consumption. As a result, India is poised to become
a major fashion hotspot in the future with Indian apparel market expected to reach
approximately INR 7.5 trillion by FY25.
India's young population sets it apart from other major economies, and
this demographic advantage is anticipated to drive the expansion of organized retail. With
a median age of approximately 28.2 years, the younger consumer exhibits a greater
propensity for discretionary spending and possesses the ability to quickly embrace and
interpret fashion trends. Consequently, the anticipated contribution of "Gen Z and
Millennials" is expected to substantially bolster the growth prospects of the apparel
sector.
Technology continues to play an increasingly important role in the
Indian fashion industry, helping designers, manufacturers, and retailers to improve their
processes, increase efficiency, and provide
better customer experiences. E-commerce platforms have transformed the
Indian fashion industry, making it easier for customers to shop online for apparel and
accessories. Many Indian fashion brands have launched their E-commerce portals to sell
products directly to customers. To remain competitive in a digitally driven retail
landscape, fashion brands are investing in enhancing their retail technology prowess.
In this highly competitive apparel retail industry, the ever-changing
consumer preferences offer a great opportunity to companies and brands to evolve, which in
turn, is essential for brand success and market leadership. In the current landscape,
brands that are "agile to align" with rapidly changing preferences are more
likely to thrive and gain a competitive edge.
Key Trends in the Indian Apparel Industry
1. Continued Premiumization
Premiumization is significantly impacting the Indian fashion industry
by driving the demand for premium and luxury brands, designer fashion, and personalized
experiences. It has led to the emergence of appealing retail spaces, an increased focus on
quality and craftsmanship, and the growth of customized fashion offerings.
2. Emergence of new fashion categories
Post-pandemic, there has been a significant shift in consumer
preferences towards multipurpose clothing. This trend, is driven by various factors,
including changing lifestyles, increasing popularity of athleisure and streetwear styles
and is expected to continue gaining momentum.
3. Value fashion: A switch to branded fashion
In recent years, the Indian apparel market has witnessed significant
migration from the unorganized to the organized segment. This shift has made consumers
more sensitive to the price-value mix, leading to the rise of value fashion price-points.
This move towards value fashion has created enormous opportunities for
several retail players operating in this segment. These value fashion retailers offer
trendy and fashionable clothing at affordable prices, making it accessible to a wider
range of consumers.
With increase in brand consciousness across cities and towns and rising
disposable income, the value fashion segment is poised for continued growth and success in
the future.
4. Rise and Continued growth of E-com and D2C business models
As e-commerce growth normalises post-pandemic, it has moved beyond the
large cities to tier II, III and smaller towns across the length and breadth of the
country. The promise of easy access to large assortments at attractive prices has unlocked
large cohorts of buyers in under-penetrated markets.
The D2C brands continued to increase their presence across the
e-commerce landscape, showing a marked preference for driving user-engagement and sales
through their brand websites. Several brands have invested heavily in technology to build
a strong supply chain ecosystem and drive traffic to their brand websites. As reported by
a top E-commerce solution provider, brand websites experienced higher volume growth YoY
compared to marketplaces in the fashion segment. In the digital-first segment, fashion
start-ups currently account for one of the largest shares, while also displaying promising
potential for future growth.
Furthermore, social commerce, where social media platforms play a vital
role in the entire shopping process, from discovering products to completing the purchase,
has become increasingly important for brands across categories.
5. Omnichannel Shopping: Building delightful customer experiences
Apparel retailers are increasingly focused on providing customers with
a seamless and consistent shopping experience across multiple channels. Shoppers are now
looking for the omni experience, where they can seamlessly transition between online and
offline channels, access a broader range of products, and leverage the convenience of
digital tools while still enjoying the in-store experience. Hence, traditional EBOs are
now transforming into "store of the future" models incorporating virtual and
endless aisles, as well as online catalogues and trials.
This approach not only improves shopping experience but also enhances
customer lifetime value and fosters greater customer loyalty. To achieve this, many retail
players are collaborating with logistic companies to streamline their supply chain
management and provide an integrated and efficient experience for customers.
6. Fashion's Sustainable Future: The Shift Towards Ethical and
Eco-Friendly Practices
Consumers are becoming increasingly conscious of the environmental
impact of the clothing they purchase. As a result, sustainable fashion, also known as
eco-fashion or ethical fashion, is becoming an increasingly important trend in the
industry.
Brands are introducing organic cotton, bamboo, and linen, which are
grown without synthetic pesticides and fertilizers. Recycled materials, such as recycled
polyester and nylon, are also becoming more popular as they help to reduce waste and
pollution.
Another key aspect of sustainable fashion is the use of sustainable
production methods. This includes reducing water and energy consumption, using low-impact
dyes, and implementing fair labour practices. As consumers become conscious about their
purchasing power and environmental impact, it is expected that sustainable fashion
production will become increasingly important.
7. India's Growing Luxury Business
The increasing purchasing power and availability of a wide range of
branded products have resulted in the emergence of aspirational consumers in India. They
are now exposed to global brands and lifestyles, which have positively influenced their
perception towards luxury products. The luxury market in India is relatively untapped with
low penetration rate compared to several other developed and emerging economies. As a
result, the market in India presents significant opportunities for both international as
well as domestic brands.
Business overview
Your Company is India's largest pure-play branded fashion and lifestyle
entity with an elegant bouquet of leading fashion brands and retail formats.
Your Company's revenue stood at INR 12,418 Crore against INR 8,136
Crore last year, demonstrating a 53% growth. Company's EBITDA stood at INR 1,617 Crore
with margin of 13%. Your Company added
more than 500 stores as it expanded its network to 3977 stores
including 431 Pantaloons stores. Its total retail footprint increased to 10.8 million sq.
ft vs 9.2 million sq.ft. last year.
Your Company has strategically established a portfolio encompassing
various segments, categories, occasions, and price points. This empowers your Company to
cater to a significantly wider range of customer preferences and desires, allowing to
capture lucrative opportunities across multiple market segments and amplify the long-term
growth potential. By creating such a varied portfolio, your Company is poised to adapt to
ever-changing consumer trends and demands. The ability to respond flexibly to market
dynamics fosters resilience and ensures sustained growth over the long term.
By adeptly targeting ethnic, luxury and digital-first segments, your
Company has successfully unlocked new market segments, expanding customer reach and
solidifying the market presence. Your Company's focus on specific occasions ensures
customer relevance and engagement, instilling loyalty. Moreover, the accommodation of
different price points secures your Company's accessibility to a wide spectrum of
customers.
Today, your Company encompasses a collection of widely recognized
brands and retail formats that cater to a broad range of consumer needs.
A) Super Premium and Luxury Retail
The Super Premium and Luxury market has been consistently growing
through the COVID period aided by rising affinity for these brands.
The portfolio currently includes 'The Collective', one of India's
largest multi-brand retailers of luxury brands and select mono brands such as Ralph Lauren
and the iconic British brands such as Fred Perry, Ted Baker, and Hackett London.
The Collective, presents a truly unmatched retail concept, known for
its extensive selection of exclusive global brands. Curating the world's finest fashion
brands under one roof, this distinctive multi-brand retail format offers individuals with
a one-of-a-kind perspective to express their unique personal style. The apparel offerings
include formal, semi-formal, casual, denim and activewear from iconic international
brands. The expansive collection of accessories includes watches, shoes, ties, belts,
leather products, jewellery and sunglasses to create a perfect ensemble.
In FY23, the super-premium segment continued to grow profitably. The
business grew approximately 60% over last year on account of strong L2L growth, expansion
to newer markets and excellent performance in E-commerce channel.
By expanding its reach and presence in different regions, The
Collective has been able to tap into previously untapped customer segments and increase
its customer base. The brand's growing website traffic and conversion rates, targeted
marketing campaigns, and focus on E-commerce will help it to become one of the largest
luxury e-commerce portals in India. The brand has continued strengthening its visibility
and recognition aimed at maximizing buying efficiency, ensuring that customers have access
to a suitable assortment of products.
Your Company has announced strategic partnership with Galeries
Lafayette, Paris to open luxury departmental stores and a dedicated e-commerce platform.
This format shall bring more than 200 luxury and designer brands under one roof, enabling
your Company to create a world class destination of global luxury brands for Indian
consumers. The first store under this partnership is under work and is expected to be
launched next year.
B) Western wear brands
1. Lifestyle brands
Your Company's Lifestyle brands houses four of India's iconic apparel
brands, addressing diverse customer needs uniquely:
Louis Philippe: To inspire the quest for excellence
Van Heusen: To make professionals fashionable and trendy
Allen Solly: To encourage unconventional thinking in the
workplace
Peter England: To bring alive authenticity and trust in
relationships
Lifestyle Brands reported a revenue of INR 6,608 Crore up by 46% over
the previous year. The EBITDA margin was positive 16.6% at INR 1,095 Crore compared to INR
788 Crore in FY22.
The Lifestyle business, at the back of its robust L2L growth,
aggressive retail expansion and strong e-commerce growth achieved highest ever yearly
revenues in FY23, maintaining their leadership position and expanding their loyal customer
base to over 26.3 million satisfied customers.
Premiumization and casualization are the two key drivers contributing
to growth for these iconic brands. In the past year, along with formal wear, categories
such as denim, suits and blazers, T-shirts, and accessories have posted significant
growth. The womenswear and kidswear businesses have made remarkable advancements and are
ready for their next phase of growth.
The business also intends to enhance its women's product range across
various occasions and distribution channels.
After a two-year hiatus, the brands intensified their advertising
investments to strengthen the brand identity, renew their communication and engagement
with customers. Brands have maintained their momentum in expanding their digital presence
through brand.com and online marketplaces. Furthermore, the Buy Online Ship from Store
(BOSS) network has also grown to around 2000 stores facilitating rapid scaling up of
Omnichannel capabilities across the country. The small-town network has experienced
impressive growth with overall network of about 600 stores with a strong presence across
all the brands.
Lifestyle brands have cemented their leadership positions in the
respective segments and are now closer to their customers.
Overview of Key performance indicators ("KPIs"):
Lifestyle brands (Retail KPIs) |
FY18 |
FY19 |
FY20 |
FY21 |
FY22 |
FY23 |
Walk-ins (Crore) |
0.82 |
0.79 |
0.72 |
0.39 |
0.43 |
0.95 |
Conversion |
46% |
50% |
55% |
83% |
89% |
90% |
Average selling price ("ASP") |
1,747 |
1,714 |
1,626 |
1,680 |
1,701 |
1,881 |
Average bill value ("ABV") |
4,211 |
4,256 |
4,072 |
3,693 |
3,844 |
4,576 |
Items per bill |
2.4 |
2.5 |
2.5 |
2.2 |
2.3 |
2.4 |
like-to-like ("LTL") volume growth |
8% |
4% |
3% |
-9% |
25% |
26% |
LTL ASP growth |
0% |
1% |
1% |
-11% |
16% |
12% |
LTL value growth |
8.6% |
5.3% |
4.5% |
-19.6% |
46% |
40% |
No. of Stores |
1813 |
1980 |
2253 |
2379 |
2522 |
2650 |
Total Retail Area (mn. sq.ft.) |
2.40 |
2.56 |
2.83 |
3.01 |
3.24 |
3.55 |
2. Youth Western Fashion
American Eagle is among one of the top choices for "Premium
Denim" in India, given its reputation for premium product quality, diverse range, and
an elevated shopping experience across channels. These factors have helped the brand
establish a strong presence and resonate with Indian consumers. The brand's revenue grew
by 89% over last year on the back of strong L2L growth and improved accessibility. The
brand expanded into newer markets through owned stores and department store doors, well
supported by marketing campaigns that have resulted in increased awareness among its
target customers.
Forever 21 is building a viable retail and scalable E-commerce model,
and is rapidly evolving as a preferred brand for young and fashionable consumers. During
the year, the brand continued to expand in newer markets with a higher propensity for
fresher and more youthful fashion. Through the increased contribution of men's clothing,
the brand has successfully evolved into a comprehensive one-stop-shop for all fashion
needs. It has adopted a strategic approach to ensure deeper consumer connect by optimizing
store layouts and product assortments for a more impactful presentation of merchandise.
The brand is continuously enhancing its margins by leveraging improved scale and
effectively utilizing local sourcing to its advantage.
Reebok is an established global brand in the sporting goods industry
with a rich sports legacy. Reebok develops products and technologies that connects with
the consumers' fitness priorities - whether it's functional training, running, sports,
walking, dance, yoga or aerobics.
Your Company acquired Reebok India business through signing of
agreements in FY22, to strengthen its sportswear portfolio in the youth fashion space.
From 1st Oct 2022, the Reebok business transitioned into ABFRL and has
commenced expanding its presence by launching new stores, relaunching its website
Reebok.in, and initiating marketplace operations. The brand has also signed a set of new
ambassadors and launched a fresh marketing campaign "I Am the New" to build a
leadership position in sportswear category in the country. The brand continues to have a
strong focus on retail expansion, scaling digital business, offering multiple category
products, and rebuilding a fresh brand identity.
3. Van Heusen Activewear, Athleisure, and Innerwear
The innerwear and activewear market in India has seen several trends
and developments in recent years, driven by the growing demand for comfortable and
high-quality products and increasing popularity of online shopping. Per report by Wazir
advisors, the innerwear and activewear market is set to grow to approximately INR 1.1
trillion by 2025.
Your Company's foray into the innerwear and athleisure market through
its brand, Van Heusen, has met with notable success in a short period of time. Since 2016,
brand has consistently scaled its distribution network and now has a vast multi-brand
outlet (MBO) footprint of more than 32,000 trade outlets and the EBO network of 175
stores. The brand is also now available across key departmental stores, and large
e-commerce platforms.
The brand is making consistent efforts to enhance the sales experience
for both its distributors and end-consumers. It is achieving this by focusing on building
a robust online presence and refining its supply chain operations. Its ecommerce platform,
Van Heusen Intimates, caters exclusively to women's lingerie, lounge wear, athleisure, and
activewear needs and operates at the intersection of content and commerce.
Van Heusen Innerwear offers a comprehensive collection that blends
stylish designs with advanced product features, providing exceptional comfort and fit. The
brand is dedicated to its consumer-centric philosophy and continuously introduces
innovative products for both men and women. Each collection caters to different consumer
segments, offering a unique range of choices. The brand has successfully launched a pilot
kidswear line on its website and select MBOs.
The brand has accelerated its marketing efforts as it launched its
first-ever national television and digital campaign. Furthermore, the brand is working on
creating an impressive retail identity pegged on innovation and fresh fashion. These
initiatives are aimed at strengthening the brand's visibility and creating resonance with
its target audience.
The brand is relentlessly working towards enhancing the customer
experience, curating a relevant product assortment for both offline and online channels,
driving product innovation and category extensions, and establishing a strong position to
spearhead the growth of the brand.
C) Ethnic wear Brands
The ethnic wear market is the largest segment in Indian apparel
industry. This category accounts for around 30% of the overall apparel market in the
country and its organized market is expected to grow at a CAGR of over 17% per reports.
The market has witnessed high traction on account of a shift from tailored wear to
ready-to-wear, and rising interests of millennials to deepen the connect with their
culture. The market is characterized by a wide range of price points, with both high-end
and affordable options available. At the higher price point, the ethnic
market offers luxury and premium products that showcase exquisite
craftsmanship, intricate detailing, and high-quality materials. The ethnic market also
thrives at lower price points by offering affordable options that are accessible to a
broader customer base. These budget- friendly products embrace ethnic aesthetics and
incorporate cultural influences while ensuring affordability.
Your Company has already built a comprehensive portfolio and is present
across multiple occasions and price points. The collaboration with celebrity designers
such as Tarun Tahiliani and Sabyasachi allows your Company to have a strong play in the
luxury wedding and super premium space. TASVA was launched in partnership with Tarun
Tahiliani to specifically address the need for men's good quality wedding and celebration
ensembles. Brand Shantnu and Nikhil with their couture and pret line, is now ready to grow
further. Jaypore has established a viable retail model and the business is set to grow
rapidly across channels. Your Company also completed the transaction to acquire celebrity
designer Masaba's "House of Masaba" brand in FY23 that aims to create a young,
aspirational and digital-led play in apparel, beauty and personal care business.
Jaypore is India's leading premium artisanal brand for apparel, jewelry
and accessories with 18 exclusive offline stores across 9 cities and a robust e-commerce
platform which allows customers from around the world to purchase their products. The
brand witnessed approximately 90% growth over last year on account of strong offline
expansion and introduction of new categories like home, jewelry and men's wear.
Shantnu and Nikhil appeals to contemporary luxury shoppers with designs
that cater to the clothing preferences of millennials. They offer Occasion and Ceremonial
contemporary apparel for men and women across 15 stores in more than 7 cities. Apart from
the couture line, S&N by Shantnu Nikhil, the bridge-to-luxury brand launched in 2020
has been very well received by the customers.
TASVA
In partnership with Tarun Tahiliani, Your Company forayed into
affordable premium men's ethnic wear by launching a new brand, TASVA, in FY22. Tasva
addresses the ceremonial wear needs of Indian men with high quality products at sharp
price points. The brand offers an exquisite blend of innovation and tradition with
contemporary tailoring and fits. Tasva is now available across 51 stores in 30 cities. The
brand has rolled out a national campaign "Ek Naya Nazariya" in collaboration
with its newly signed brand ambassadors. The brand's products saw consistent traction at
the back of premium finish and feel, infusion of fashion and innovation and its
contemporary take on traditionalism.
House of Masaba was transitioned into your Company in FY23. House of
Masaba is a young, aspirational and digital-led brand across the affordable luxury segment
in the fashion, beauty and accessory categories. The brand has 8 stores in 5 cities and
poised for rapid expansion. The brand launched a new beauty and personal care line named
"LoveChild" with a wide range of products across categories. With its foray in
the promising apparel and beauty business, the brand is poised for accelerated growth.
Marigold Lane is a premium womenswear ethnic wear brand for
contemporary Indian women. Marigold Lane is present across 75+ Pantaloons doors and 11
select EBOs.
Sabyasachi aspires to establish itself as a global Indian luxury brand,
offering bridal wear, ethnic wear, handcrafted jewelry, and accessories. The brand
continued to grow profitably and has maintained its status as the preferred choice for
celebrity weddings. It has meticulously developed a strong presence by staying deeply
entrenched in the Indian cultural heritage. The brand has 8 exclusive stores across 6
cities including New York. Sabyasachi in line with its global expansion strategy opened
its first-ever exclusive brand store in New York in Oct 2022, which has been well received
by customers.
D) TMRW: A portfolio of digital-first brands
The Indian E-Commerce market is expected to be USD 135 Billion by FY27,
with 450 Million consumers. The growth is supported by strong underlying fundamentals such
as large consumer base with growing affluence, growing Internet and smartphone penetration
enabled by low data prices, and low shipment costs. Fashion and Beauty and Personal Care
are projected to be largest online categories with a market size of USD 37 Billion by
FY27.
India has also witnessed a massive scale-up of digital-first brands
with increasing share of E-Commerce garnering greater than USD 2 Billion funding in the
last 5 years. Consumers especially millennials and Gen Z that are digital native, are
experimenting and adopting new age brands with loyalty and repeat purchase behaviour
taking effect over time for leading brands. Brands that are 'Born on Instagram', 'Born on
Shopify' or 'Born on Marketplace Platforms' will continue to disrupt and grab share from
leading brands by adopting a cross-channel expansion path. The estimated addressable
market for digital-first brands in fashion and lifestyle is expected to be USD 15 Billion
by FY27.
In April 2022, your Company set-up a new entity "TMRW" to
capitalize on this growing opportunity. TMRW is well positioned to become a leading House
of Brands player by building on the strong ABFRL and ABG foundation, bringing in deep
E-Commerce as well as technology capabilities and an ability to deploy capital with a
long-term view. Your Company's strategy is to focus on
fashion and lifestyle category and build the next generation of iconic
brands that consumers love. TMRW shall work with D2C founders that have identified product
market fit and help them scale rapidly.
Your Company will have a focused play in few attractive sub-categories:
Large addressable market categories (e.g. Casual, Women's
Western, Women's Ethnic)
Emerging high growth categories (e.g. Athleisure and Active,
Expressive Wear, Women's Fashion, Beauty and Personal Care, etc.).
A healthy mix of brands with D2C and marketplace footprint
E) Masstige & Value Retail
1. Pantaloons
Pantaloons reported annual revenue of INR 4069 Crore, up by 55% over
last year, while EBITDA stood at INR 635 Crore compared to INR 368 Crore last year. The
EBITDA margin was 15.6% for FY23 up from 14% last year. The brand's performance has
remained strong, even though value and masstige fashion segment has been impacted by
sustained inflationary pressures, particularly in the second half of the fiscal year.
Pantaloons is one of the most widely known retailer in the masstige
segment of the Indian fashion retail industry. The brand recently marked its 25th
anniversary by launching several successful campaigns and engaged with its customers. The
brand continued to expand aggressively by adding 54 net stores to the network in FY23,
bringing the total number to 431 stores. This year, Pantaloons strengthened its private
label portfolio with the launch of "Coolsters" for tweens and "7 Alt"
a casual wear brand for men, while sharpening the design aesthetics of its existing
private label portfolio. Pantaloons has consistently pursued sharp markdown reductions,
resulting in better value realizations for its customers. This approach has enabled the
brand to enhance its reputation for delivering quality and fashionable products at
affordable prices to Indian middle-class customers.
Overview of KPIs:
Pantaloons (Retail KPIs) |
FY18 |
FY19 |
FY20 |
FY21 |
FY22 |
FY23 |
Walk-ins (Crore) |
4.6 |
5.4 |
5.7 |
2.3 |
3.6 |
6.2 |
Conversion |
22.4% |
24.3% |
26.1% |
31.5% |
26.2% |
21.6% |
ASP |
665 |
643 |
665 |
649 |
727 |
813 |
ABV |
1,842 |
1,880 |
2,001 |
2,075 |
2,325 |
2,468 |
Items per bill |
2.8 |
2.9 |
3.0 |
3.2 |
3.2 |
3.0 |
LTL volume growth |
-3.3% |
3.1% |
-2.1% |
-50.5% |
18.0% |
31.5% |
LTL ASP growth |
0.8% |
-1.7% |
4.9% |
-1.7% |
12.7% |
12.1% |
LTL value growth |
-2.6% |
1.4% |
2.7% |
-51.3% |
33.0% |
47.5% |
No. of Stores |
275 |
308 |
342 |
346 |
377 |
431 |
Total Retail Area (Mn. sq.ft.) |
3.76 |
4.02 |
4.36 |
4.46 |
4.92 |
5.72 |
HS vs Mall Store Mix |
39% |
40% |
42% |
42% |
44% |
48% |
HS - High street
Pantaloons has made significant progress in delivering delightful
shopping experience to customers across channels and geographies, with over 120 stores
adopting the brand's new retail identity and the launch of multiple innovative campaigns.
Additionally, the brand has scaled its E-commerce channel by introducing a mobile
application, while also making notable improvements in technology and logistics. The brand
is on track to build truly 'Phygital stores' through a revamped loyalty program and
improved digitalized shopping experience at stores leveraged through Omni-channel play. It
has scaled up omni-network to around 300 stores. With these advancements, Pantaloons is
well-positioned for significant growth in the future.
Pantaloons Private labels meeting needs of consumers across occasions
and age groups.
2. Style Up
Style Up's value proposition is uniquely designed for value-conscious
fashion shoppers, aiming to offer stylish and trendy everyday fashion at budget-friendly
prices. Style Up's consumer base is spread across diverse markets, spanning from metros to
smaller cities and towns, throughout the country.
In FY23, Style Up relaunched its identity, including a new logo,
refreshed products and enhanced experience at stores. This new initiative has received an
overwhelming response from its customers. Your Company will continue to assess the market
and its potential across various locations.
Business strategy:
1. Building Strong Brands
Your Company is known for having built India's iconic apparel brands.
These brands have attained their distinguished status through a continuous process of
product innovation, which is supported by a strong and expansive distribution network that
drives access to customers. Your company's success in building these brands has been
driven by world-class marketing campaigns that effectively connect with customers on a
deeper level. These brands represent your Company's most valuable strategic assets and are
continuously evolving to adapt to changing customer preferences.
With several brands in the growth phase, your Company has a unique
opportunity to transform these emerging brands into iconic ones. Your Company has already
built a meaningful presence in the innerwear, casual, sportswear, ethnic, super premium,
digital-first segments, and is further leveraging existing knowledge and insights to
foster the development and success of these brands.
2. Wide and Deep Distribution Network
Your Company's business boasts of an extensive distribution network,
making it a dominant player in the country's fashion retail landscape. With around 4000
stores and 32,000+ points of sale, your Company has strategically positioned itself to
cater to a vast customer base across regions.
As your Company has successfully established a strong presence in its
current markets with an extensive distribution network, it shall pursue expansion into
newer markets. Expanding its existing and newer brands into untapped regions presents an
exciting growth opportunity for your Company to broaden its customer base. Your Company's
strong brand reputation and customer loyalty cultivated in its current markets can serve
as a valuable asset in the new markets. Investing in localized marketing and understanding
the unique challenges and opportunities of each region will be instrumental in fostering a
strong connection with the target consumers.
3. Penetrating into tier II and III markets
Tier II and III markets continues to play a vital role in the country's
growth narrative owing to their progress in the real estate landscape, work environment,
quality of life and digital penetration.
With value space set to grow exponentially, tier II and III will be key
drivers of growth. Peter England Red, Allen Solly Prime, Van Heusen Gold, Louis Philippe
All Star are specific smalltown format of the Lifestyle brands. With a robust network
comprising 600 stores, these brands are set to fuel your Company's next phase of growth.
Pantaloons, too, is well placed to capture a significant portion of this opportunity with
evenly distributed presence across metros, tier I, II and III cities. Style Up was
relaunched with a new brand identity offering quality fashion for every occasion with a
special focus on small towns with population more than one lakh.
By actively targeting tier II and III markets, your Company is tapping
into a rapidly growing market segment, poised for exponential growth. Its commitment to
delivering value, quality, and high fashion that resonates with the aspirations of
consumers in these cities positions it as a preferred choice. Leveraging its extensive
network, brand strength, and understanding of local preferences, your Company is
well-equipped to capture a significant portion of the opportunity presented by tier II and
III cities, thus driving its growth and market leadership.
4. Online Acceleration
According to reports, online retail spending in India is projected to
increase six-fold to reach USD 300 billion by 2030 attributable to the rising number of
digitally influenced and online shoppers. Your Company remains uniquely positioned to
capture the above growth given its branded offerings across segments, categories and price
points.
In FY23, your Company launched a new super app for Lifestyle brands,
laying the foundation for the inclusion of other brands in the future. The launch of
Pantaloons.com and Pantaloons' mobile app witnessed significant traction, and are now set
to increase its share in overall portfolio through improved customer experience and
reduced lead times. Besides this, several other brands also continue to focus on their
website as brand.com plays an important role in establishing brand identity, and building
brand loyalty. Your Company will continue to build omni-capabilities to improve customer
retention, generate higher customer lifetime value for business and leverage extensive
store network.
By accelerating the growth of the online channel and leveraging the
power of digital platforms, your Company aims to seize the opportunities presented by the
evolving retail landscape, ensuring sustained growth and long-term success.
5. Building a Diverse Portfolio with presence in High-Growth Categories
Your Company is focused on expanding its portfolio by venturing into
attractive and new high- growth categories.
Van Heusen Innerwear has already established a strong presence in the
country and will continue to lead through an aggressive network expansion, product
leadership, and innovation capabilities.
Reebok is exceptionally well positioned to become one of the leading
sportswear brands in the country, with focus on retail expansion and scaling up its
digital business.
Your Company's brands such as Van Heusen, Allen Solly and Forever 21
has already built a reasonable presence in women's western wear category. It will continue
to nurture and scale it significantly. Pantaloons continued to strengthen womenswear
category by introducing new products to appeal young women.
The Fashion accessories market has experienced substantial growth,
driven by personalization, wide range availability with the convenience of E-commerce. The
Handbags and Footwear category of the Lifestyle brands have shown promising growth.
Sabyasachi's jewelry and accessories business is set to be a major revenue driver in the
coming years. Pantaloons has also expanded into the home category with 'Living Scapes' and
is actively strengthening and scaling up its accessories segment.
Your Company forayed into affordable premium men's and women's ethnic
wear by launching TASVA and Marigold Lane respectively. Collaboration with Tarun Tahiliani
and Sabyasachi allows your Company to have a strong play in the fast-growing luxury
wedding and designer wear market.
TMRW was set up with an aim to create a rich portfolio of digital-first
disruptor brands in fashion and lifestyle segment. TMRW has already established a strong
portfolio of 7 brands across multiple large and growing categories such as kids wear,
denim wear, casual, western wear and athleisure. Over the next three years, TMRW will
continue to acquire as well as incubate 30+ innovative, customer-obsessed brands within a
synergistic 'house of brands' play.
By diversifying its portfolio across these high-growth categories and
leveraging the strength of its brands, your Company is well-positioned to capture market
opportunities, drive growth, and deliver value to its customers and shareholders.
Building a meaningful play in super premium and luxury segment
The Indian luxury landscape is constantly evolving and has witnessed
significant growth in recent years driven by increasing income levels and wealth of the
country's middle and upper class, rise of E-commerce platforms and proliferation of
international luxury brands in the country. Luxury and super premium segment are set for
rapid double-digit growth over the next few years.
The portfolio of super premium brands has already surpassed its
pre-pandemic levels and shall sustain its growth trajectory. This achievement can be
attributed to the increased reach of the E-commerce channel, expansion to newer markets
and better engagement with consumers. In pursuit of capturing this lucrative market, your
Company has entered in a partnership with French luxury department store chain Galeries
Lafayette to extend its luxury play across all categories through a multi brand format.
Your Company plans to open destination stores in prime locations along with a dedicated
E-commerce platform to cater to other markets.
By leveraging this collaboration and capitalizing on the evolving
luxury landscape, your Company is well-positioned to establish a credible and impactful
presence in the super premium and
luxury segment. Your Company's commitment to deliver exceptional
quality, curated offerings, and an unmatched customer experience will drive growth and
solidify its position as a leading player in the luxury market.
Digital Transformation Roadmap
Your Company remains committed to its digital transformation journey,
leveraging the strength of its brands. It has made significant strides in enhancing its
digital presence and capabilities and continued focusing on building a brand-led
E-commerce ecosystem that seamlessly integrates with its offline business model.
Through in-house development, your Company has created a robust
E-commerce platform that empowers individual brands or a group of brands to have their own
dedicated websites, mobile sites, mobile apps, and virtual stores. This approach allows
for a tailored and immersive digital experience that aligns with the unique identity of
each brand. Additionally, seamless integration with over 10 different marketplaces further
expands the reach and visibility of the brands in the digital landscape.
A key aspect of the digital transformation roadmap is the
implementation of a unified order management and supply chain system. This system provides
a single view of inventory, including warehouses and stores, across all digital channels.
The integration of inventory data ensures efficient fulfilment processes and enables
seamless omnichannel capabilities. Customers can enjoy a consistent shopping experience,
whether they choose to shop online or in-store, with the convenience of accessing a wide
range of products and services. Your Company has successfully established a robust
omnichannel infrastructure, with around 2000 brand stores and around 300 Pantaloons stores
now fully omnichannel enabled.
This year, your Company achieved significant milestones in its digital
transformation journey.
- Pantaloons scaled up its website and mobile app, incorporating
hyper-personalization capabilities.
- Lifestyle brands launched a new multi-brand website and app with
plans to add more brands in the future.
- 'TASVA' introduced its dedicated website.
- 'LoveChild' by Masaba, the newly launched cosmetics brand, flagged
off its own website.
These initiatives enhance the online shopping experience and cater to
specific customer preferences. Your Company continues to invest in digital platforms to
engage customers and drive growth.
Your Company has prioritized the enhancement of its e-commerce
platform, focusing on personalization, hyperlocal capabilities, content management, and
performance optimization.
Integration with analytics and marketing automation platforms enables
customer funnel tracking and real-time notifications. The implementation of a cloud-based
Point-of-sale system across over 2000 stores enables seamless omnichannel capabilities and
quick delivery of online orders.
Core IT systems have been modernized and automated, including the
upgradation and consolidation of multiple ERP platforms across businesses and the rollout
of cloud-based ERP for new businesses. A company-wide data warehouse has been established
for reporting and MIS, promoting data democratization. Innovative developments include a
Single View of Customer mobile app for Store Managers, a Markdown Management System
utilizing AI/ML, and analytics. These initiatives strengthen your Company's digital
infrastructure and optimize operational efficiency.
Human Resources
Your Company's philosophy of 'The Biggest Brands and Best People' fuels
it to give its best. While your Company has several well-known brands under its umbrella,
the people behind the brands make it a power-house. You Company's unique Employee Value
Proposition (EVP) - 'A World of
Opportunities' makes it a preferred employer for professionals in the
industry.
FY 23 Human Resource Achievements
Unwavering commitment to fostering internal talent growth,
resulted in 17% of employees getting new roles.
Consumer grade experience of key HR processes provided to 24,810
retail employees by implementing Alt Life HRMS program through simplified, tech-enabled
app-based HR process.
o Power BI Dashboards were launched for HR & Business teams with
Line manager and store manning dashboard receiving the highest usage
o Institutionalized HR Service Delivery for seamless employee
experience, standardization of processes under a single platform
Ethnic businesses experienced valuable talent infusion from
Jewellery, Beauty and Personal Care, and accessories sectors. Furthermore, a successful
talent ramp-up has been achieved for TMRW, further enhancing the overall strength of the
organization.
Deployment of Gig workforce in 150+ stores of Pantaloons PAN
India resulting in manpower savings. Also, 850 apprentices hired in MFL in FY23 resulting
in savings.
Significant boost in engagement as a result of our strategic
focus on cohort-based properties on social media, in line with EVP. Additionally,
successfully designed and launched campus initiatives, namely Pantaloons Next Top Designer
(NTD), which garnered an impressive 900+ applications, and Showstopper, which received a
staggering 10,965 applications from over 300 esteemed business schools.
In a pioneering move within the industry, we successfully
implemented a Digital Health Assessment with follow-through for over 9,900 front-end, head
office, and zone employees.
o This initiative marks a significant milestone, underscoring our
commitment to prioritizing employee well-being.
o Furthermore, targeted programs focused on enhancing physical, mental,
emotional, and financial wellness were launched.
Developed a solid footing on social media, with a surge of
12,000 (500% growth over LY) new followers on our Instagram account "Life At
ABFRL", and an astounding 140,000+ fresh additions to LinkedIn family which makes it
a total followership of 400 K.
1. Talent Management and Career Growth
The Employee Value Proposition at ABFRL has two key pillars
Career growth and development. Focused initiatives under these pillars prepare our
employees to unleash their potential and achieve personal and professional goals aligned
with the organisation's strategy.
Your Company has institutionalised Talent Councils that actively review
the organisation's talent pipeline, succession plans for key roles and requisite
development interventions. The succession
planning ensures that all roles are reviewed for their criticality by
the management team and a strong pipeline of talent is identified as successors for these
roles. We have in place annual career conversations, which are structured to understand
employee aspirations, provide them a clear vision of their career path.
To support continuous learning and growth, your company has partnered
with well-known educational platforms, and your Group's inhouse Gyanodaya Campus for
classroom programmes. These provide employees with a plethora of opportunities to develop
and grow in their careers. Exposure to leaders through mentorship and coaching help
employees learn from the experiences of industry stalwarts and be future ready. All these
initiatives and efforts by the organisation have helped retain employees and keep them
engaged.
Your Company's focuses on the career movements of employees to ensure
they get diverse experience in terms of functions, geographies, and formats to facilitate
your Company's efforts to build all-round leaders across the organisation. Your Company
drives the philosophy of giving diverse experiences to young talent in the formative years
of their career and emphasise 2*2*2 experience (2 Business units * 2 Functions * 2
Locations).
Young Talent
Your Company has a Young Talent Program that is designed to attract and
nurture young professionals across various disciplines such as Business Management,
Fashion Management, Chartered Accountancy, and Retail Operations.
Learning and Development
Transition to circular economy is changing the way your Company works.
In this evolving ecosystem, the focus is on behavioural and functional learning,
knowledge, and skills development of employees, empowering them with the right knowledge.
This also enables us to develop future-ready leaders.
The learning of employees is anchored by our internal
capability-building academy, ABFRL University as well as Gyanodaya, the Aditya Birla Group
Global Centre for Leadership. There are several leadership development programs that are
focused on strengthening three key areas - Leading Self, Leading Digital, and Leading
Others. These initiatives help build competence in the following areas: Personal
Leadership, Financial Acumen, Immunity to Change, Digital Transformation, Employee
Relations, Sustainability, Problem Solving, Analytics, and Presentation Skills.
2. Rewards and Recognition Remuneration and Benefits
Our approach to rewards at ABFRL is drawn from our overall people
philosophy.
Your Company has a comprehensive, agile, balanced and inclusive
approach towards remunerations and benefits and our rewards programme aims to attract,
engage and retain top class talent in the industry. Our rewards value proposition is
anchored in Total Rewards where we incorporate both the monetary (Fixed Compensation,
Variable Pay and Long-Term Incentives) and the non-monetary elements (Benefits,
Recognition and Work-Life Effectiveness).
Pay decisions are rooted in pay for performance, long-term potential of
the individual and competitiveness with respect to our market peers.
We strive for absolute non-discrimination in pay because of gender,
age, and/or experience of the individual and we have fairness measures in place for
specific scenarios such as maternity leave and talent mobility across the businesses. We
continuously review our people productivity to prepare the organization to be future-ready
in the context of changes happening at Work, Workplace and Workforce.
Our reward approach lays significant emphasis on programmes that
incentivize both short-term and long-term business performance. We have also put in place
fairness measures in certain scenarios such as maternity leave, inter- or intra-business
transfers.
Recognition
There are multiple platforms for recognition for employees and teams,
whether at the ABG level, ABFRL level or at a business level. The ultimate celebration of
success happens at the Group's annual event - Aditya Birla Awards, which recognizes
outstanding players and teams, who have displayed commitment and passion towards their
craft.
Enrich Your Life
Your Company's vision is to provide a fulfilling workplace for our
employees, where everyone feels valued and supported as an individual, and not just an
employee. At ABFRL, we are consistently working towards creating a supportive, friendly
and happy workplace. Our Leave Policies, Work from Home policy, Flexible Work
Arrangements, and Employee Wellness Programmes aim to impart a healthy work-life balance
for employees to better manage their professional and personal commitments.
Employee Wellness Initiatives
Employee Wellness has always been one of the priority areas in
enriching life and strengthening the Employee Value Proposition at ABFRL.
In this regard, we pioneered a three-pronged approach - Physical,
Emotional and Financial Wellness initiatives to rollout a holistic employee wellness and
wellbeing agenda.
Digital Health Assessment (DHA)
To focus on the health and wellbeing of our employees and encourage our
workforce to stay healthy and focus on their health, Company launched a holistic wellness
initiative for its workforce. The stages of the initiative include: -
o Self-guided Digital Health Assessment
o Stratification of all employees in high, medium and low risk
categories o Company sponsored diagnostic tests for employees in high risk categories
o Graded support programs to employees in high and medium risk category
and work stress reduction plan
o Rolling out wellness policy for store employees
Businesses also adopted a policy of allowing employees to take a 7-day
break from work and do something purposeful, something which allows them to follow their
passion like voluntary teaching, donating, investing in self-learning and development etc.
Values
The organization's core values of Seamlessness, Passion, Speed,
Commitment and Integrity have guided the actions of your Company and are the key to why
your Company attracts the best talent. These values come alive in the daily processes and
practices that leaders and employees follow.
Communication
Your Company encourages open and honest communication among teams and
through leadership. There are various formal and informal platforms including open houses,
town halls, and anonymous survey touch points through, which employees are encouraged to
ask questions and share feedback. The open work atmosphere across the Company has ensured
two-way healthy communication between leadership and employees. The VIBES and HR
stakeholder survey have helped management understand the pulse of employees across various
experiences and stages. Your Company has engaged top talent across businesses through a
series of interventions planned and implemented for various groups. There were regular
leadership connections and development journeys designed for high-performing employees
across your Company.
Sustainability
As a responsible consumer-centric organisation guided by the Aditya
Birla Group's key principles since its inception, sustainability has been deeply ingrained
in your company business strategy and is fundamental to ABFRL's endeavours. As the market
leader, your company prioritises meeting consumer demands by striving to deliver products
with better environmental and social footprints.
Your Company believes that economic growth must be achieved in synergy
with environmental and societal interests. Thus in 2013, your Company embarked on a
structured sustainability programme, 'ReEarth for our Tomorrow' which comprised of 10
Missions namely Energy, Carbon Footprint, Green Building, Water, Waste, WASH Pledge,
Safety, CSR, Packaging and Sustainable Products with annual targets, clear
responsibilities and timelines. ReEarth is a movement to give back more than we take from
the ecosystem.
After achieving significant milestones in 2021, your company embarked
on 'ReEarth 2.0', shifting focus from being process-led to product-led with a 2025 agenda
that emphasises product design and development, customer-centricity, and supply chain
sustainability. This 2025 roadmap aims to achieve ambitious sustainability targets and
business goals while balancing risks and opportunities for all relevant ESG initiatives.
Your Company has put in place a strong governance mechanism that
effectively oversees its sustainability agenda and goes beyond just meeting compliance
requirements. The Management Committee periodically reviews sustainability strategy and
initiatives, while the Risk Management and Sustainability Committee (RMSC) monitors and
reviews the risk management plan and other delegated functions related to sustainability.
Organisational risk and governance practices are mapped in-line with the Task Force on
Climate-related Financial Disclosures (TCFD) and Committee
of Sponsoring Organisations (COSO), globally accepted climate risk
framework and Enterprise Risk Management framework respectively.
Your Company is committed to transition to sustainable fashion by
building adaptable and flexible high-performance business models, promoting life cycle
thinking, sourcing responsibly, embracing circular economy principles, and ultimately
mitigating or eliminating negative impacts on the environment caused by the use of fossil
fuels.
As discussed in detail at COP 27, waste management is one of the key
material issues and a major bottleneck for the fashion sector. To address it, ABFRL is
creating closed loop systems where waste generated is recycled or reused and converted to
useful resources. The entire non-hazardous waste across your company's facilities is
either recycled or reused, and a small quantity undergoes composting. 'Zero Waste to
Landfill' has been achieved across operations and going forward, your company is exploring
innovative ways to reuse production line waste in inhouse products, thereby reducing ever
increasing demand for raw materials. Along with existing collaboration with International
Council for Circular Economy (ICCE) and Circular Apparel Innovation Factory (CAIF), your
Company has taken a large stride in its circularity journey by entering into a
collaboration with the 'GIZ', a German Government agency, in a 'private-public development
partnership project' which aims to strengthen circular business practices for the Indian
market.
Your Company also participates in and collaborates with various global
platforms and ESG indices. These strategic collaborations and participations have helped
your Company stay relevant by ensuring alignment with global as well as national
sustainability agendas, and presented it with an opportunity to benchmark its
sustainability performance against both domestic and global peers.
Across the years, your Company's sustainability journey has been widely
appreciated and has garnered global recognition and accolades. This year too, your Company
received accolades from prominent forums and organisations. Some of the notable instances
include:
Retained Asia's most sustainable company and a global rank of
8th (eighth) at the S&P Global - Corporate Sustainability Assessment in the textiles,
apparel and luxury goods sector
Achieved a global rank of 12th under Textiles and Apparel sector
with a score of 12.15 (Low Risk Category) after being assessed for the 1 st time by
Sustainalytics, a global ESG Rating Standard of repute
Received ESG India Leadership Awards 2022 in the category of
Leadership in Green Supply Chain by ESG Risk
Committed towards being a signatory of United Nations Global
Compact through adhering to its 10 principles
Awarded ESG Trailblazers at the ESG World Summit and GRIT Awards
2022
ABFRL - LBRD WAREHOUSE of Aditya Birla Fashion and Retail
Limited, Bengaluru, achieved Platinum certification under IGBC Green Factory Building
Rating System
Received TRUE Zero Waste Gold certification for its
manufacturing site from Green Business Certification Inc. (GBCI)
This year, your Company is planning to validate its climate and
emission-related energy and emission targets through the Science Based Targets initiative
(SBTi). This additional step will help align internal goals with the international target
of keeping the global temperature below 2?C.
At ABFRL, sustainability and fashion are not a paradox, and over the
years, sustainability has been integrated into the brand and embedded in the business
core. Your Company is committed to maintain its unwavering focus on sustainable fashion,
and plans to leverage innovation and technology as catalysts for the journey ahead.
Risk management
Your Company recognizes the importance of a robust governance structure
and effective risk management in ensuring sustained performance and growth. This year,
significant strides have been made in enhancing the risk management framework. An
integrated approach has been adopted, combining the COSO framework with the Task Force on
Climate-related Financial Disclosures (TCFD), to strike a balance between financial,
social, and environmental priorities. This approach aligns risk management with
performance and strategy, delivering long-term value to stakeholders.
To oversee the identified risks and mitigation plans, a dedicated Risk
Management and Sustainability Committee (RMSC) has been established. The committee,
supported by the Chief Risk Officer, Head of Sustainability, and Risk Management
Committees, continuously monitors and evaluates risks from strategic, operational,
financial, environmental, and compliance perspectives. Internal and external business
environments are carefully monitored to identify potential risks and opportunities.
Periodic assessments by the established committees and internal
functions ensure ongoing evaluation of risks. Mitigation plans are implemented to manage
key risks and minimize residual risks, safeguarding the company's interests. This
proactive risk management approach provides the foundation for effective decision-making
and resilience in the face of evolving challenges.
Key risks:
1. Changing customer trends
Over the last few years, consumer preferences, behaviours, and
consumption pattern have changed triggered by COVID leading to deep ramifications on how
people buy and consume goods and services. This behavioural change coupled with
technological emerging trends are re-shaping the retail landscape in India with long-term
implications. These factors have the potential to negatively impact your Company's ability
to accurately forecast customer demand, leading to a higher rate of inventory obsolescence
and/or missed sales opportunities. Further, demand continues to grow for cheaper
merchandise curtailing the market for quality fashion.
To manage this risk, your company has implemented several strategies,
including establishing new segments across different occasions and price points through
brand extensions and sub-brands, pursuing growth opportunities via acquisition, joint
ventures, and licensing, and exploring new partnerships with e-commerce partners. Your
Company also focuses on innovating its product lines and expanding its consumer base by
adopting a category approach. This approach allows your Company to better target the needs
and preferences of consumers and differentiate the products from those of competitors.
2. Global Slowdown and impact of adverse Macro Indicators
Global slowdown has a bearing on Indian economy and consumption,
leading to enhanced volatility in the markets. This can lead to slowdown in exports
market, disruption in supply chain, fluctuation in raw material prices and increase in
cost of capital. Inflationary pressure and consequent rise in interest rates can dampen
the consumer sentiments, particularly in small towns.
Your Company has offerings across occasions, categories and price
points ensuring wide reach. Your company continues to innovate by introducing new products
or designs that appeal to customers and can help the company maintain or increase its
market share. These strategies help in adapting to market fluctuations and addressing
changing consumer preferences.
3. Increase in competition intensity
Your Company operates in a highly competitive industry which is
characterised by rapid shifts in consumer trends and technology. This dynamic environment
can lead to pricing and demand volatility, impacting the competitive landscape. Due to the
expansive nature of our business, your Company faces competition from various domestic and
international players operating in retail, wholesale, and e-commerce space. Some of these
competitors may have access to greater financial and marketing resources and, therefore,
giving them an advantage in adapting to customer needs and taking advantage of
opportunities or responding to threats.
In order to maintain its position as a leading apparel company, your
Company has implemented a range of strategies, including extensive brand building,
leveraging technology to enhance the customer experience, establishing omni-channel
networks, and forming partnerships with both online and offline market players to have
multi-category play.
4. Data security
Due to increased digital exposure in business, there is a threat to
leakage of critical business information, customer information and sustenance of
operations in the event of a cyber-attack, internal data breach and downtime of critical
business systems. This could potentially result in financial losses and have a negative
impact on the brand image.
The risk is mitigated through establishment of Disaster Recovery (DR),
Business Continuity Plan (BCP), Data Loss prevention (DLP) and Security Information and
event management (SIEM) technology. Periodic monitoring and reporting of incidents are
conducted, including the identification of root causes for each incident and ensuring that
they are addressed appropriately.
5. Talent retention and attraction
With your Company rapidly expanding on multiple fronts there is need of
talent in key functions like design, marketing, retail and e-commerce. The fashion retail
industry being extremely fastpaced and competitive there is shortage of skilled
professionals who can help meet the needs of consumers and stay ahead of trends. The
fashion retail industry is also facing competition from other industries for top talent
with expertise in digital marketing, e-commerce, and data analytics.
Your Company continuously keeps abreast with leading employment
practices in the industry placing strong focus on developing, motivating, and retaining
the best talent for our existing as well as new ventures. Your Company's approach to
talent retention and development is well- crafted and structured, complemented by targeted
interventions that foster leadership growth within the Organization.
6. Quality and cost of retail space
Your Company operates via both online and offline channel. But at
present, the majority of its sales come from the physical store network. With increased
demand for retail space from apparel
and other industries like healthcare, education, jewellery etc.
availability of quality retail space has become a challenge. Owing to huge demand and
lesser availability of properties across key locations, rental costs have increased
significantly as compared to pre-pandemic levels.
To address this issue, your Company continues to build relationship
with most prominent mall owners and real estate developers across the country to remain a
preferred partner of choice. Your Company is also committed to securing long-term leases
to ensure continuity. In addition to that, your Company has implemented processes to
enhance store appeal by investing in retail identity, renovating and rebranding, and
improving customer navigation for an enhanced customer experience.
7. Execution Risk
Your Company has built meaningful presence in several high growth
categories like Ethnic wear, Luxury, Innerwear and Athleisure and digital-first, in line
with its portfolio strategy. These businesses currently are in expansion phase with
significant investments being made in network expansion, brand building and organizational
build-up. It is very important these initiatives achieve necessary scale and
profitability, to help Your Company realise its overall long-term strategic goals.
Road Ahead
As per a large research house, India's GDP is predicted to surpass USD
7.5 trillion by 2031, making it the third-largest economy globally. This economic
expansion is expected to result in more than 2 times rise in per capita income by 2031,
leading to a shift in consumer spending patterns from basic necessities to discretionary
items. As a result, the demand for apparel products is likely to increase, presenting
significant opportunities for the Indian apparel industry to grow and thrive in the coming
years.
Your Company has already laid a solid foundation that enables it to
take advantage of the future growth in the apparel industry. In previous years, your
company adopted a portfolio-oriented strategy focused on offering a wide range of products
across multiple segments, occasions, and price points, in response to shift towards
branded products and changing consumer preferences.
Also, as part of its strategy, your Company has upgraded its digital
capabilities, recognizing the importance of digital transformation in today's market
landscape. By investing in its digital infrastructure, your Company is better equipped to
cater to evolving customer needs, offer personalized and seamless experiences, and enhance
its overall competitive position in the market.
The ongoing efforts of your Company exemplify a commitment to
proactively adapt to the ever- evolving business landscape. This dedication sets a solid
foundation for sustained achievements in the future. By combining these factors with an
extensive portfolio of well-established brands, your company is positioned to seize
opportunities for expansion and gain a stronger foothold in the industry, ensuring
continued success.
Financial Performance and Analysis
Particulars |
Standalone |
Consolidated |
|
Year Ended March 31, 2023 |
Year Ended March 31, 2022 |
Year Ended March 31, 2023 |
Year Ended March 31, 2022 |
Revenue from Operations |
11,737 |
7,824 |
12,418 |
8,136 |
EBITDA (1) |
1,705 |
1,174 |
1,617 |
1,203 |
Finance Costs |
424 |
340 |
472 |
351 |
Depreciation |
1,114 |
947 |
1,227 |
997 |
Profit / (Loss) Before Tax (1) |
166 |
(113) |
(82) |
(145) |
Current Tax |
(2) |
- |
14 |
21 |
Deferred Tax Assets / (Liabilities) |
(36) |
33 |
37 |
47 |
Net Profit / (Loss) After Tax (1) |
133 |
(81) |
(59) |
(118) |
Particulars |
Standalone
(Comparable)* |
Consolidated
(Comparable)* |
|
Year Ended March 31, 2023 |
Year Ended March 31, 2022 |
Year Ended March 31, 2023 |
Year Ended March 31, 2022 |
Revenue from Operations |
11,737 |
7,824 |
12,418 |
8,136 |
EBITDA (1) |
671 |
273 |
509 |
275 |
Finance Costs |
160 |
132 |
172 |
134 |
Depreciation |
262 |
215 |
304 |
235 |
Profit/ (Loss) Before Tax (1) |
250 |
(74) |
33 |
(94) |
Current Tax |
(2) |
- |
14 |
21 |
Deferred Tax Assets / (Liabilities) |
(36) |
33 |
37 |
47 |
Net Profit/ (Loss) After Tax (1) |
216 |
(41) |
56 |
(67) |
Standalone performance
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
Net Working Capital (2) |
1,357 |
705 |
Net Fixed Assets (including cwip) |
1,488 |
674 |
Deferred Tax Asset |
317 |
353 |
Capital Employed |
3,162 |
1,732 |
Investments (3) |
1,401 |
835 |
Right-of-use assets |
3,043 |
2,279 |
Goodwill (4) |
1,860 |
1,860 |
Total Capital Employed |
9,466 |
6,705 |
Net Worth |
3,787 |
2,882 |
Debt |
2,030 |
1,207 |
Lease Liabilities |
3,649 |
2,616 |
Notes:
(1) Includes other Income of ' 110 Crore (Previous year:' 94 Crore).
(2) Net working Capital
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
Inventory |
3,764 |
2,729 |
Trade Receivables |
835 |
754 |
Cash and Bank Balances |
643 |
108 |
Other Assets |
2,123 |
2,009 |
Less: Trade Payables |
3,663 |
3,336 |
Less: Other Liabilities |
2,345 |
1,560 |
Net Working Capital |
1,357 |
705 |
(3) Investments includes ' 1,391 Crore towards investments in
Subsidiaries and Joint Venture (Previousyear:' 828 Crore).
(4) /4s on March 31, 2023, goodwill (after testing for impairment in
accordance with the Ind AS - 36 issued by the Institute of Chartered Accountants of India)
stands at' 1,860 Crore.
Revenue
Your Company reported revenue of ' 11,737 Crore during the financial
year, recording a growth of 50% over the previous year.
Earnings before interest, tax, depreciation and amortization
("ebitda")
EBITDA of the Company, including other income is ' 671 Crore on
comparable basis (previous year EBITDA of ' 273 Crore). The reported EBITDA of the Company
is ' 1,705 Crore (previous year ' 1,174 Crore) factoring impact of Ind AS 116. The EBITDA
margin for the Company marginally decreased from 15.00% to 14.50% during the year.
Finance cost
Finance cost for the year was ' 160 Crore on a comparable basis,
increased from ' 132 Crore in previous year, as a result of higher borrowings. The average
borrowing cost for the Company remained flat to 7.66% as compared to 7.67% in the previous
year due to higher proportion of
long-term borrowings. The reported finance cost of the Company is ' 424
Crore (previous year ' 340 Crore) due to the impact of Ind AS 116.
Depreciation
Depreciation increased from ' 215 Crore in the previous year to ' 262
Crore during the year on comparable basis. The reported depreciation of ' 1,114 Crore
(previous year ' 947 Crore) includes the impact of Ind AS 116.
Dividend
In view of accumulated losses of previous years, your directors have
not recommended payment of any dividend for the year under review.
Borrowings
Borrowings have increased from ' 1,207 Crore in the previous year to '
2,030 Crore with Net Debt increasing from ' 562 Crore in the previous year to ' 1,237
Crore. The Company has raised ' 1,269 Crore through fresh borrowings and have repaid
borrowings of ' 447 Crore during the year with average borrowing cost at 7.66%.
The credit ratings of the Company by CRISIL Limited, ICRA Limited and
India Ratings & Research during the year has improved to AA+ (Stable) [previous year
aa (Stable)].
Non-Convertible Debentures ("NCDs")
During the year under review, the Company has issued and allotted
50,000 Listed, Unsecured, Rated, Redeemable NCDs of the face value of ' 1,00,000 (Rupees
One Lakh only) aggregating to ' 500 Crore (Rupees Five Hundred Crore only) on Private
Placement Basis, under Series 9.
The Company has repaid Series 6 NCDs of ' 500 Crore (Rupees Five
Hundred Crore only) during the year. The details of outstanding NCDs as on March 31, 2023
are disclosed in the 'General Shareholder Information' forming part of this Annual Report.
Standalone Key financial ratios
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
Debtors Turnover Ratio (times) (1) |
14.77 |
11.55 |
Inventory Turnover Ratio (times) (1) |
3.62 |
3.50 |
Interest Coverage Ratio (times) (1) |
2.25 |
0.14 |
Current Ratio (times) |
1.13 |
1.03 |
Debt Equity Ratio (times) |
0.28 |
0.17 |
EBITDA Margin (%) |
14.53 |
15.00 |
Operating Profit Margin (%) (1) |
5.03 |
2.90 |
Net Profit Margin (%) (1) |
1.13 |
-1.03 |
Return on Net Worth (%) (1) |
3.97 |
-2.89 |
Return on Average Capital Employed (%) (1) |
7.30 |
3.52 |
The formulae used in the computation of the above ratios are as
follows:
Ratio |
Formula |
Debtors Turnover Ratio |
Revenue from Operations/Average of opening and closing Trade
Receivables |
Inventory Turnover Ratio |
Revenue from Operations/Average of opening and closing
Inventories |
Interest Coverage Ratio |
Earnings Before Interest* and Tax/Finance Costs* |
Current Ratio |
Current Assets/Current Liabilities (excluding Lease
Liabilities accounted as per Ind AS 116) |
Debt Equity Ratio |
Debt#/(Net Worth+ Lease Liabilities - Right of use) |
EBITDA Margin |
EBITDA/Revenue from Operations |
Operating Profit Margin |
Earnings Before Interest and Tax/Revenue from Operations |
Net Profit Margin |
Profit After Tax/Revenue from Operations |
Return on Net Worth |
Profit After Tax/Average net worth |
Return on Average Capital Employed |
Earnings Before Interest and Tax/Average Capital Employed |
*Finance cost/interest comprise of interest expense on borrowing and
excludes interest on lease liabilities and interest charge on fair value of financial
institution.
#Debt = Borrowings (excluding Lease Liabilities accounted as per IndAS
116) - Cash and Bank Balance (includes FD) - Liquid Investments.
Details of significant changes (i.e. change of 25% or more as compared
to the immediately previous financial year) in the key financial ratios:
1. Debtors Turnover Ratio, Interest Coverage Ratio, Operating Profit
Margin, Net Profit Margin, Return on Net Worth and Return on Average Capital Employed -
Ratios have improved due to increased revenue and profitability.
Consolidated performance
At consolidated level, your Company reported a revenue of ' 12,418
Crore (previous year ' 8,136 Crore) and EBITDA of ' 1,617 Crore with EBITDA margin at
13.00% (previous year ' 1,203 Crore with EBITDA margin at 14.80%).
DIRECTORS' RESPONSIBILITY STATEMENT
The audited financial statements of your Company for the year under
review ("financial statements") are in conformity with the requirements of the
Companies Act, 2013 read with the rules made thereunder ("Act") and the
Accounting Standards. The financial statements reflect the form and substance of
transactions carried out during the year under review and present your Company's financial
condition and results of operations, fairly and reasonably.
Your Directors confirm that:
a) in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to material
departures, if any;
b) accounting policies selected have been applied consistently and
reasonable & prudent judgements and estimates were made, so as to give a true and fair
view of the state of affairs of your Company as at the end of the year under review and
the profit of your Company for the year under review;
c) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the Act, for safeguarding
the assets of your Company and for preventing and detecting fraud and other
irregularities;
d) the annual accounts of your Company have been prepared on a 'going
concern' basis;
e) adequate internal financial controls were laid down and followed by
your Company and such internal financial controls were operating effectively;
f) proper systems have been devised by your Company to ensure
compliance with the provisions of all applicable laws and such systems were adequate and
operating effectively and
g) the Company has been in compliance with the applicable Secretarial
Standards issued by the Institute of Company Secretaries of India.
SHARE CAPITAL
a) Equity share capital
Details of changes in paid-up share capital during the year under
review, are as under:
Paid-up Equity Share Capital |
'in Crore |
At the beginning of the year, i.e., as on
April 1, 2022 |
938.29 |
Changes made during the year: Allotments made
pursuant to: |
|
1.1. Employee Stock Option Scheme, 2013 &
2017 |
0.27 |
1.2. Preferential Issue* |
10.22 |
1.3. Rights Issue |
|
(i) Receipt of final call money |
0.01 |
(ii) Receipt of call money pursuant to
annulment of forfeiture |
0.02 |
(ii) Forfeiture due to non-payment of first
and/or final call money |
(0.02) |
At the end of the year, i.e., as on March 31,
2023 |
948.79 |
*During the year under review, the Company has received ~ ' 770 crore
through preferential issue by way of:
i. 1,02,16,450 fully paid up Equity Shares (Face Value : ' 10 and
Premium : ' 278.75 per share)
ii. 6,58,00,866 warrants, upon receipt of 25% of the Warrant Issue
Price (i.e. ' 72.1875 per warrant) as warrant subscription money. Balance 75% of the
Warrant Issue Price (i.e. ' 216.5625 per warrant) shall be payable within 18 months from
the allotment date.
b) Preference share capital
The paid-up preference share capital of your Company as at the end of
the year under review stood at ' 50.50 Lakh (same as at the end of previous year). The
details of Preference shares are as below:
Class of preference shares |
Redemption date |
5,00,000, 8% Redeemable Cumulative Preference
Shares of ' 10/- each |
March 29, 2024 |
500, 6% Redeemable Cumulative Preference Shares
of ' 100/- each |
October 12, 2024 |
DISCLOSURES IN TERMS OF THE PROVISIONS OF THE ACT & SECURITIES AND
EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS,
2015
("SEBI Listing Regulations")
A. Board of Directors ("Board")
(i) Number of meetings
The Board met 8 (eight) times during the year under review. The details
of such meetings are disclosed in the Section 'The Board of Directors' of the Corporate
Governance Report forming part of this Annual Report.
(ii) Appointments and resignations
a) Appointments/Re-Appointments
(i) Mr. Ashish Dikshit, Managing Director (DIN: 01842066) was
re-appointed for a further term of 5 (five) years w.e.f. February 1,2023. His
re-appointment was approved by the Shareholders vide Postal Ballot on June 23, 2022.
(ii) Mr. Vikram Rao (DIN: 00017423) was re-designated as an Independent
Director for a period of 5 (five) years w.e.f. May 18, 2022. His re-designation was
approved by the Shareholders vide Postal Ballot on June 23, 2022.
(iii) Mr. Pankaj Sood, Non-Executive (Nominee) Director (DIN: 05185378)
was appointed w.e.f. September 20, 2022 pursuant to the Share Subscription Agreement dated
May 24, 2022 between the Company and Caladium Investments Pte. Ltd. His appointment was
approved by the Shareholders vide Postal Ballot on October 20, 2022.
(iv) Ms. Ananyashree Birla, (DIN: 06625036) and Mr. Aryaman Vikram
Birla (DIN: 08456879), Non-Executive Directors were appointed w.e.f. January 30, 2023.
Their appointments were approved by the Shareholders vide Postal Ballot on March 28, 2023.
b) Resignations/Retirement by Rotation
(i) Mr. Himanshu Kapania, Non-Executive Director (DIN: 03387441)
resigned w.e.f. closing hours ofJanuary 27, 2023, due to increased engagements across wide
range of businesses and other pre-occupation.
The Board placed on record its sincere appreciation towards the
valuable contribution made by Mr. Kapania during his tenure.
(ii) Further, in accordance with the provisions of the Act and the
Articles of Association of the Company, Ms. Sangeeta Pendurkar, Whole-time Director (DIN:
03321646) and Mr. Vishak Kumar, Whole-time Director (DIN: 09078653), are due to retire by
rotation at the ensuing Sixteenth Annual General Meeting and being eligible, have offered
themselves for re-appointment.
Resolutions seeking their re-appointment alongwith their profiles as
required under Regulation 36(3) of SEBI Listing Regulations form part of the Notice of
Sixteenth Annual General Meeting.
(iii) Board evaluation
The Company has devised a framework for performance evaluation of
Board, its committees and individual directors in terms of the provisions of the Act, SEBI
Listing Regulations and the Nomination Policy of the Company.
During the year under review, the Board carried out the evaluation of
its own performance and that of its committees and the individual directors. The
performance evaluation of Non-Independent Directors and the Board as a whole was carried
out by the Independent Directors.
The evaluation process consisted of structured questionnaires covering
various aspects of the functioning of the Board and its committees, such as composition,
experience and competencies, performance of specific duties and obligations, governance
issues etc. The Board also carried out the evaluation of the performance of individual
directors based on criteria such as contribution of the Director at the meetings,
strategic perspective or inputs regarding the growth and performance of the Company etc.
Further, pursuant to the applicable provisions of the Act, the
performance evaluation criteria for the Independent Directors is disclosed in the Section
'Directors Details as on March 31, 2023' of the Corporate Governance Report forming part
of this Annual Report.
(iv) Declaration of independence
The Company has received necessary declaration from each Independent
Director of the Company stating that:
(i) they meet the criteria of independence as provided in Section
149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations ("said
declarations").
(ii) they have registered their names in the Independent Directors'
Databank.
Based on the said declarations received from the Directors, the Board
confirms, that the Independent Directors fulfill the conditions as specified under
Schedule V of the SEBI Listing Regulations and are independent of the management.
B. Committees of the Board
The Board has constituted five committees, viz. Audit Committee,
Corporate Social Responsibility Committee, Risk Management and Sustainability Committee,
Nomination and Remuneration Committee and Stakeholders' Relationship Committee and is
authorised to constitute other functional Committees, from time to time, depending on
business needs.
Details of all the committees, along with their charters, composition
and meetings held during the year, are provided in the Section 'The Board Committees' of
the Corporate Governance Report forming part of this Annual Report.
C. Corporate Social Responsibility ("csr")
The Board has, pursuant to the recommendation of the CSR Committee,
with a vision "to actively contribute to the social and economic development of the
communities in which your Company
operates and in doing so, build a better, sustainable way of life for
the weaker sections of society and raise the country's human development index",
adopted a CSR Policy and the same is available on the website of the Company i.e.
www.abfrl.com
The scope of the CSR Policy is as under:
i. Planning Project or programmes which the Company plans to undertake
falling within the purview of Schedule VII of the Act and
ii. Monitoring process of such project or programmes.
The CSR Policy of the Company inter alia includes the process to be
implemented with respect to the identification of projects and philosophy of the Company,
along with key endeavours and goals i.e.
Education - to spark the desire for learning and knowledge;
Health care - to render quality health care facilities to people
living in the villages and elsewhere through our hospitals;
Sustainable livelihood - to provide livelihood in a locally
appropriate and environmentally sustainable manner;
Infrastructure development - to set up essential services that
form the foundation of sustainable development and
Social cause - to bring about the social change we advocate and
support.
CSR initiatives taken during the year
Your Company's CSR activities are mainly focused towards Education,
Health and Sanitation, Water, Digitisation, Sustainable livelihood, Institutional Building
and Social Causes.
An annual report on CSR activities of the Company for the financial
year 2022-23 is annexed as Annexure I to this Report.
D. Key Managerial Personnel ("kmp")
During the year under review, Ms. Geetika Anand, Company Secretary and
Compliance Officer resigned w.e.f. closing hours of November 30, 2022, in order to pursue
other opportunities within the Aditya Birla Group. Mr. Anil Malik was appointed as the
Company Secretary and Compliance Officer w.e.f. December 1, 2022.
Pursuant to Section 203 of the Act, the KMPs of the Company as on March
31, 2023 are:
i. Mr. Ashish Dikshit, Managing Director;
ii. Ms. Sangeeta Pendurkar, Whole-time Director;
iii. Mr. Vishak Kumar, Whole-time Director;
iv. Mr. Jagdish Bajaj, Chief Financial Officer and
v. Mr. Anil Malik, Company Secretary and Compliance Officer.
E. Remuneration of Directors and Employees
Disclosure comprising particulars with respect to the remuneration of
Directors and employees, as required to be disclosed in terms of the provisions of Section
197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, is annexed as Annexure II to this Report.
The statement containing names of top ten employees in terms of
remuneration drawn and the particulars of employees as required under Section 197(12) of
the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this
report. Further, the report and the accounts are being sent to the Members excluding the
aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for
inspection and any Member interested in obtaining a copy of the same may write to the
Company Secretary.
F. Employee Stock Option Scheme and Share Based Employee Benefits
Grant of share-based benefits to employees is a mechanism to align the
interest of the employees with those of the Company, to provide them with an opportunity
to share the growth of the Company and also to foster long-term commitment.
Employee Stock Option Scheme and Restricted Stock Units
Your Company regards employee stock options as instruments that would
enable the employees to share the value they create for the Company in the years to come.
Accordingly, in terms of the provisions of applicable laws and pursuant to the approval of
the Board and the members of the Company, the Nomination and Remuneration Committee
("nrc") has duly implemented the:
(a) 'Employee Stock Option Scheme - 2013' ("Scheme 2013");
(b) 'Aditya Birla Fashion and Retail Limited Employee Stock Option
Scheme 2017' ("Scheme 2017") and
(c) 'Aditya Birla Fashion and Retail Limited Employee Stock Option
Scheme 2019' ("Scheme 2019"), to grant the stock options, in the form of Options
and Restricted Stock Units ("RSUs"), to the employees of the Company.
All the Schemes of the Company i.e. Scheme 2013, Scheme 2017 and Scheme
2019 are governed by the Securities and Exchange Board of India (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021 ("sebi sbeb & se Regulations")
and in terms of the approvals granted by the shareholders of the Company, the NRC inter
alia administers, implements and monitors the aforesaid schemes, thereby governing the
grant of share based benefits to its employees, in the form of RSUs.
A certificate from the Secretarial Auditor of the Company, confirming
that the aforesaid schemes have been implemented in accordance with the SEBI SBEB & SE
Regulations and will be open for inspection at the ensuing Annual General Meeting.
Stock Appreciation Rights
Your Company has also instituted a 'Plan for Stock Appreciation Rights
Plan, 2013' ("sar Plan 2013") in the year 2013 and 'Aditya Birla Fashion and
Retail Limited Stock Appreciation Rights Scheme 2019' ("sar Scheme 2019") in the
year 2019.
The SAR Plan 2013 and SAR Scheme 2019, do not give rise to any right
towards any equity share of the Company and hence, they are not covered under the
provisions of SEBI SBEB & SE Regulations. On exercise of the SARs granted under the
said plan/scheme, the employee exercising the SARs becomes entitled to receive cash, in
terms of the respective plan/scheme.
In terms of of the provisions of Regulation 14 and Part F of Schedule I
of the SEBI SBEB & SE Regulations, details of the aforesaid schemes is available on
the website of the Company i.e. www.abfrl.com.
G. Related Party Transactions ("RPTs")
All RPTs entered into during the year under review were approved by the
Audit Committee, from time to time and the same are disclosed in the financial statements
of your Company for the year under review. Further, pursuant to the provisions of the Act
and the SEBI Listing Regulations, the Board has, on recommendation of its Audit Committee,
adopted a Policy on RPT and the said policy is available on the website of the Company
i.e. www.abfrl.com.
Further, in terms of the provisions of Section 188(1) of the Act read
with the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 23 of the
SEBI Listing Regulations, all contracts/arrangements/transactions entered into by the
Company with its related parties, during the year under review, were:
in "ordinary course of business" of the Company;
on "an arm's length basis" and
not "material".
All transactions with related parties are in accordance with the policy
on RPT formulated by the Company.
Accordingly, Form No. AOC-2, prescribed under the provisions of Section
134(3)(h) of the Act and Rule 8 of the Companies (Accounts) Rules, 2014, for disclosure of
details of RPT, which are "not at arm's length basis" and also which are
"material and at arm's length basis", is not applicable and hence does not form
part of this Report.
H. Dividend Distribution Policy
In terms of Regulation 43A of the SEBI Listing Regulations, your
Company has formulated a Dividend Distribution Policy, with an objective to provide the
dividend distribution framework to the Stakeholders of the Company. The policy sets out
various internal and external factors, which shall be considered by the Board in
determining the dividend pay-out. The policy is annexed as Annexure III to this Report and
is also available on the website of the Company i.e. www.abfrl.com
I. Strategic Initiatives during the year
a) Preferential Issue:
During the year under review, the Company has raised capital by way of
a Preferential Issue as detailed below:
Event date |
Details |
May 24, 2022 |
Approved issuance of Equity shares and Warrants on a
preferential basis to Caladium Investment Pte. Ltd ("Caladium") aggregating to
2,195 Crore. |
Jun 23, 2022 |
Received approval of shareholders by way of Postal Ballot. |
Aug 30, 2022 |
Caladium received approval of Competition Commission of India
for its proposed acquisition in your Company. |
Sep 20, 2022 |
Approved allotment of: |
|
(a) 1,02,16,450 Equity Shares of face value of ' 10 each at a
per share price of ' 288.75 fully paid-up, which inter alia includes a share premium of '
278.75 aggregating to ' 294.99 Crore. |
|
(b) 6,58,00,866 Warrants at a per share price of ' 288.75 per
warrant, each warrant being convertible into or exchangeable for 1 equity share of the
Company of face value of ' 10/- each, aggregating to ' 475.00 Crore which is 25% of the
total consideration payable for the Warrants as on the date of allotment (the remaining
75% payable on conversion). |
|
Post allotment of Equity Shares, Caladium holds 1.08%
equity stake in the Company. |
b) Acquisition of stake in brand "Masaba"
The Company has acquired 52.44% stake in Brand 'Masaba' in May, 2022 by
signing of definitive agreements thereby making it a subsidiary of the Company.
c) Strategic partnership with "Reebok":
On December 14, 2021, the Board approved acquiring exclusive online and
offline rights to the global brand 'Reebok' for the Indian market and other ASEAN
countries and purchase of certain assets of 'Reebok India Company' including inventory by
way of entering into a Licensing Agreement and a Purchase Agreement, respectively. As part
of the transfer of global ownership of 'Reebok', various agreements have been signed
between the Authentic Brand Group, US and Adidas. Upon signing of definitive agreement(s)
and necessary approvals, aforesaid assets relating to Reebok has been transferred to the
Company effective from October 1, 2022.
d) TMRW: A portfolio of digital-first brands
The Company on April 11 2022, incorporated its new 'House of Brands'
entity, Aditya Birla Digital Fashion Ventures Limited to build a portfolio of digital
first brands in the fashion & lifestyle space. The Company invested ' 315.5 Crore
during the year under review in the entity for acquisitions and the operational activities
associated with the acquired brands.
J. Proceeds from Rights Issue, Preferential Issue and Non-Convertible
Debentures:
The utilization of funds raised have been mentioned hereunder:
Mode |
Object |
Amount allocated |
Amount utilized |
Rights Issue |
Repayment of certain borrowings of the
Company |
745.00 |
745.00 |
|
General corporate purpose |
244.26 |
242.49 |
Preferential Issue |
Strengthening the balance sheet, pursue
growth in existing business, expand new lines of business, strengthen digital and
omni-channel |
770.00 |
770.00 |
Non-Convertible Debentures |
Refinancing of existing debt and General
corporate purpose |
500.00 |
500.00 |
There has been no deviation in the use of proceeds of the Rights Issue,
Preferential Issue and NCDs ("aforesaid Issues") from the objects stated in the
respective Offer documents as per Regulation 32 of SEBI Listing Regulations. The Company
has been disclosing on a quarterly basis to the Audit Committee, the uses/application of
proceeds/funds raised from the aforesaid Issues and also filed with the Stock Exchanges on
a quarterly basis, as applicable.
K. Subsidiaries, Joint Ventures, Associate Companies
As on March 31,2023, the Company has 14 (fourteen) subsidiaries and 1
(one) associate company.
During the year under review, following Companies became subsidiaries
of the Company. However, the Company did not become a part of any joint venture during the
year.
Sr. No. Name of the Company |
Relationship |
Date of becoming subsidiary |
1. Aditya Birla Digital Fashion Ventures Limited |
Wholly owned |
April 11, 2022 |
2. Aditya Birla Garments Limited |
subsidiary |
June 15, 2022 |
3. House of Masaba Lifestyle Private Limited |
Subsidiary |
June 1, 2022 |
4. Pratyaya E-Commerce Private Limited |
Step down |
July 22, 2022 |
5. Imperial Online Services Private Limited |
subsidiary |
August 12, 2022 |
6. Awesomefab Shopping Private Limited |
|
August 24, 2022 |
7. Bewakoof Brands Private Limited |
|
February 15, 2023 |
8. Next Tree Products Private Limited |
|
|
Pursuant to the provisions of Section 129(3) of the Act, read with the
Companies (Accounts) Rules, 2014 and in accordance with applicable accounting standards, a
statement containing the salient features of financial statements of your Company's
subsidiaries and associate in Form No. AOC-1 is annexed as Annexure IV to this Report.
In accordance with the provisions of Section 136 of the Act and the
amendments thereto and the SEBI Listing Regulations, the audited financial statements,
including the consolidated financial statements and related information of the Company and
financial statements of your Company's subsidiaries, joint ventures/associate companies
have been placed on the website of your Company viz. www.abfrl.com.
Your Company has formulated a Policy for determining Material
Subsidiaries. The said policy is available on the website of the Company i.e.
www.abfrl.com. However, the Company does not have any material subsidiary as defined under
Regulation 16(1 )(c) of the SEBI Listing Regulations.
L. Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
Your Company consciously makes all efforts to conserve energy across
all its operations. A report containing details with respect to conservation of energy,
technology absorption and foreign exchange earnings and outgo, required to be disclosed in
terms of Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014, is
annexed as Annexure V to this Report.
M. Vigil Mechanism
The Board, on recommendation of its Audit Committee, has adopted a
Vigil Mechanism/Whistle Blower Policy and the details of which are provided in the
Corporate Governance Report forming part of this Annual Report.
Adequate safeguards are provided against victimization to those who
avail the mechanism and direct access to the Chairperson of the Audit Committee is
provided to them. The details of establishment of Vigil Mechanism is also available on the
website of the Company
i.e. www.abfrl.com
N. Risk Management
Your Company has framed and implemented a Risk Management Policy in
terms of the provisions of Regulation 21 of the SEBI Listing Regulations, for the
assessment and minimization of risk, including identification therein of elements of risk,
if any, which may threaten the existence of the Company.
The policy is reviewed periodically by the Risk Management and
Sustainability Committee along with the key risks and related mitigation plans. More
details on risks and threats have been disclosed hereinabove, as part of the Management
Discussion and Analysis.
Further, in view of the ever-increasing size and complexity of the
business operations, your Company is exposed to various risks emanating from frauds.
Accordingly, the Board, on recommendation of the Audit Committee, has adopted an
Anti-Fraud Policy and a Whistle Blower Policy, to put in place, a system for detecting
and/or preventing and/or deterring and/ or controlling the occurrence of frauds.
O. Nomination Policy and Executive Remuneration Policy/Philosophy
In terms of Section 178 of the Act and Regulation 19 of the SEBI
Listing Regulations, the Board of your Company, on recommendation of the NRC, had adopted
a Nomination Policy, which inter alia
enumerates the Company's policy on appointment of directors, KMPs and
senior management. Further, the Board, on recommendation of NRC, had also adopted a policy
entailing Executive Remuneration Philosophy, which covers remuneration philosophy covering
the directors, KMPs, senior management and other employees of the Company.
Both the aforesaid policies, as amended from time to time pursuant to
the amendments in the applicable regulatory provisions, are available on the website of
the Company i.e. www.abfrl.com
Salient features of the aforesaid policies are as under:
(a) Nomination Policy
The Nomination Policy is enacted mainly to deal with the following
matters, falling within the scope of the NRC to:
institute processes which enable the identification of
individuals who are qualified to become Directors and who may be appointed as key
managerial personnel and/or in senior management and recommend to the Board of Directors
their appointment and removal from time to time;
devise a policy on board diversity;
review and implement the succession and development plans for
managing director, executive directors and officers forming part of senior management;
formulate the criteria for determining qualifications, positive
attributes and independence of directors;
establish evaluation criteria of Board, its committees and each
director and
recommend the Board, all remuneration, in whatever form, payable
to senior management.
(b) Executive Remuneration Policy/Philosophy
This Policy supports the design of programmes that align executive
rewards - including incentive programmes, retirement benefit programmes, promotion and
advancement opportunities - with the long-term success of the Stakeholders of the Company.
The executive remuneration program of the Company is designed to
attract, retain, and reward talented executives who will contribute to our long-term
success and thereby build value for our shareholders and intends to:
provide for monetary and non-monetary remuneration elements to
our executives on a holistic basis and
emphasize "Pay for Performance" by aligning incentives
with business strategies to reward executives who achieve or exceed Group, business and
individual goals.
P. Business Responsibility and Sustainability Report
Your Company's sustainability initiatives are aligned with the Aditya
Birla Group's sustainability vision, which mainly comprises of responsible stewardship,
stakeholder engagement and future-proofing. Accordingly, under the aegis of the Aditya
Birla Group's sustainability vision, your Company is strengthening its 'ReEarth'
programme, to design a roadmap, which will align with the group level sustainability
policies and international frameworks.
Through this mission, we hope to create a future ready organisation,
which can pre-empt imminent challenges and address the needs of all stakeholders.
In accordance with our sustainability vision and in terms of Regulation
34(2)(f) of the SEBI Listing Regulations, a Business Responsibility and Sustainability
Report forms part of this Report.
Q. Auditors and Auditors Report
(i) Statutory Auditor
Price Waterhouse & Co Chartered Accountants LLP (FRN:
304026E/E-300009), were appointed as the Statutory Auditors of the Company at the 14th
Annual General Meeting ("agm"), for a term of five consecutive years, till the
conclusion of the 19th AGM to be held in the year 2026.
Further, the Auditors' Report "with an unmodified opinion",
given by the Statutory Auditors on the financial statements of the Company for financial
year 2022-23, forms part of this Annual Report. There has been no qualification,
reservation, adverse remark or disclaimer given by the Statutory Auditors in their Report
for the year under review.
The notes to the financial statements are self-explanatory and do not
call for any further comments.
(ii) Secretarial Auditor
Pursuant to the provisions of Section 204 of the Act, M/s. Dilip
Bharadiya & Associates, Company Secretaries (FRN: P2005MH091600), were appointed as
the Secretarial Auditor of the Company, to conduct secretarial audit for the year under
review.
The Secretarial Audit Report given by the Secretarial Auditor of the
Company is annexed as Annexure VI to this Report. There has been no qualification,
reservation, adverse remark or disclaimer given by the Secretarial Auditor in his Report
for the year under review.
(iii) Cost Auditor
During the year under review, your Company was not required to maintain
cost records under Section 148(1) of the Act. Hence, the provisions related to appointment
of Cost Auditor is not applicable.
Further, no fraud in terms of the provisions of Section 143(12) of the
Act, has been reported by the Auditors in their reports for the year under review.
R. Material changes and commitment affecting financial position of the
Company which have occurred between the end of the Financial year, to which the financial
statement relates, and the date of the Report
On May 5, 2023, the Board of Directors approved the acquisition of TCNS
Clothing Co. Ltd. The acquisition is subject to approval of the Competition Commission of
India, SEBI and other regulatory approvals and is planned to be achieved in the following
manner:
(a) acquisition of between 1,41,92,448 to 1,98,76,757 equity shares of
TCNS Clothing Co. Ltd ("Target Company"), representing between ~22.0% and
~30.81% of the Expanded Share Capital of the Target Company, as defined in the Public
Announcement from the promoters of the Target Company for a consideration of ' 503 per
equity share (subject to closing adjustments);
(b) making an open offer for up to 1,87,08,227 equity shares,
constituting 29.0% of the Expanded Share Capital, at a price of ' 503 per equity share
from the public shareholders of the Target Company, conditional upon a minimum level of
acceptance of 1,30,23,918 equity shares, constituting ~20.19% of the Expanded Share
Capital ("Minimum Level of Acceptance") and
(c) subsequent to completion of steps (a) and (b), amalgamation of the
Target Company (as a going concern) with the Company under the Companies Act, 2013 read
with relevant circulars and regulations of Securities and Exchange Board of India, and
other applicable laws. Equity shares of the Company will be issued to the shareholders of
the Target Company (other than the Company) in the ratio of 11 fully paid up equity shares
of ' 10 each of the Company for every 6 fully paid-up equity shares of ' 2 of the Target
Company ("Share Exchange Ratio"). The effectiveness of the Scheme will be
subject to inter alia the approval of Competition Commission of India, National Company
Law Tribunals and completion of the acquisition and filing of the approved schemes with
the Registrar of Companies.
S. Other Disclosures
In terms of the applicable provisions of the Act and SEBI Listing
Regulations, your Company additionally discloses that, during the year under review:
there was no change in the nature of business of your Company;
it has not accepted any fixed deposits from the public falling
under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.
Thus, as on March 31,2023, there were no deposits which were unpaid or unclaimed and due
for repayment, hence, there has been no default in repayment of deposits or payment of
interest thereon;
it has not issued any shares with differential voting rights;
it has not issued any sweat equity shares;
no significant or material orders were passed by the regulators
or courts or tribunals which impact the going concern status operations of your Company in
future;
it has not transferred any amount to the Reserves;
it has not raised any funds through qualified institutions
placement as per Regulation 32(7A) of SEBI Listing Regulations;
it does not engage in commodity hedging activities;
it has not made application or no proceeding is pending under
the Insolvency and Bankruptcy Code, 2016 and
it has not made any one-time settlement for the loans taken from
the Banks or Financial Institutions.
It is further disclosed that:
there is no plan to revise the financial statements or
directors' report in respect of any previous financial year;
particulars of the loans, guarantees and investments as required
under Section 186 of the Act are disclosed in the financial statements of your Company for
the year under review and
details pertaining to unclaimed shares demat suspense account of
your Company are disclosed in the 'Shareholders' Information' forming part of this Annual
Report.
CORPORATE GOVERNANCE
Your Company is committed to maintain the highest standards of
Corporate Governance and adheres to the Corporate Governance requirements set out by the
SEBI. The report on Corporate Governance as stipulated under the SEBI Listing Regulations
forms part of this Annual Report.
Your Company has duly complied with the Corporate Governance
requirements as set out under Chapter IV of the SEBI Listing Regulations and M/s. Dilip
Bharadiya & Associates, Company Secretaries, vide their certificate dated May 22,
2023, have confirmed that the Company is and has been compliant with the conditions
stipulated in the Chapter IV of the SEBI Listing Regulations. The said certificate is
annexed as Annexure VII to this Report.
ANNUAL RETURN
Pursuant to the provisions of Sections 92(3) and 134(3)(a) of the Act
and the Companies (Management and Administration) Rules, 2014, the Annual Return in Form
no. MGT-7 is available on the website of the Company i.e. www.abfrl.com.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has put in place adequate internal control systems that
are commensurate with the size of its operations. Internal Control system comprise of
policies and procedures are designed to ensure sound management of your Company's
operations, safekeeping of its assets, optimal utilisation of resources, reliability of
its financial information, and compliance.
DISCLOSURES PURSUANT TO THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company has in place a policy on Prevention of Sexual Harassment
at Workplace, which is in line with requirements of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition
and Redressal) Act, 2013 ("posh Act"). The objective of this
policy is to provide an effective complaint redressal mechanism if there is an occurrence
of sexual harassment.
This policy is applicable to all employees, irrespective of their level
and it also includes 'Third Party Harassment' cases i.e. where sexual harassment is
committed by any person who is not an employee of the Company.
Your Company has also set up an Internal Complaints Committee at each
of its administrative office(s) which is duly constituted in compliance with the
provisions of the POSH Act. Further, the Company also conducts interactive sessions for
all the employees, to build awareness amongst employees about the policy and the
provisions of POSH Act.
During the year under review, the Committee has received 30 complaints,
out of which 29 complaints were resolved with appropriate action and 1 complaint was
pending at the end of the year.
AWARDS AND RECOGNITIONS
Your Company has been a proud recipient of many awards and recognitions
during the year under review and significant ones amongst them are as under:
"Most Admired Retail Group of the year" at MAPIC India
Retail & Tech Awards Sep 2022;
"Best In-House Magazine Award" for 'InTouch'
newsletter at the Silver Feather Awards 2022;
Silver in the "House Journal (Print)" category for
'InTouch' newsletter at the Public Relations Council of India (PRCI) Excellence Awards
2022 (12th edition);
"Best Loyalty Program in Retail Sector - Single
Format" by Louis Philippe at the Customer Fest Awards 2022 (16th edition);
"Most Admired Retailer of the Year" for
"Kidswear: Allen Solly Juniors" by Allen Solly at MAPIC India Retail & Tech
Awards Sep 2022;
Pantaloons won "Champion of Champions" (Loyalty
Program of the Year), "Rewards Program", "Best Loyalty Program",
"Best Use of Contest/Promotion in a Loyalty Program" and "Best Integrated
Media Loyalty Campaign" at The Customer Fest Awards 2022;
Pantaloons won - Gold for Sheros and Silver for Creative
Excellence in Advertising in the Fashion, Jewellery & Lifestyle category at
Exchange4Media PrimeTime Awards 2022;
Diamond in the "Internal Communication Campaign"
category at the 12th Public Relations Council of India (PRCI) Excellence Awards
2022;
ESG India Leadership Awards 2022 in "Best Green Supply
Chain" category by ESGRisk, Acuity Knowledge Partners;
"ESG Trailblazers" at the ESG World Summit and GRIT
Awards 2022;
Madura Clothing won 8 Golds for its "Kaizen & Poka yoke
concepts" at the Quality Circle Forum of India (QCFI) in 2022-23 and
Haritha Apparels Limited and Crafted Clothing Limited won Gold
for "India Green Manufacturing Challenge (IGMC)" 2022-23.
ACKNOWLEDGEMENT
We take this opportunity to thank all the customers, members,
investors, vendors, suppliers, business associates, bankers and financial institutions for
their continuous support. We also thank the Central and State Governments and other
regulatory authorities for their co-operation.
We acknowledge the patronage of the Aditya Birla Group and above all,
we place on record our sincere appreciation for the hard-work, solidarity and contribution
of each and every employee of the Company in driving the growth of the Company.
|
For and on behalf of the Board of Directors |
|
|
Ashish Dikshit |
Sangeeta Pendurkar |
Place : Mumbai |
Managing Director |
Whole-time Director |
Date : May 22, 2023 |
DIN:01842066 |
DIN:03321646 |
#MDEnd#
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