PDS Takes Stake in Nobleswear, Eyes $2.5B in Revenue

Mayu Saini
·5 min read

On its way to scooting past the $1 billion turnover mark this year, Mumbai-based PDS Limited, which works with more than 600 factories around the world, announced the acquisition of a 26 percent stake in Sri Lankan manufacturer Nobleswear Private Limited last week.

The investment comes as Nobles has more than doubled its revenue over the last three years, amounting to a total $16.58 million in financial year 2023.

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Made through its subsidiary in Sri Lanka, Norlanka Manufacturing Limited, the acquisition expands the comprehensive fashion solutions portfolio for PDS, giving it additional reach in its strategy to broaden its manufacturing footprint in key locations. PDS also reserves the right to acquire an additional 24 percent stake at the same valuation over the next three years.

“This approach aligns with our overarching strategy to enhance efficiency, and drive sustained growth,” said Sanjay Jain, group CEO of PDS, describing the move as a “pivotal milestone in PDS’ strategy to broaden its manufacturing footprint in key locations.”

PDS, which is listed on the leading stock exchanges in India, reported consolidated revenues of 105.77 billion rupees, or approximately $1.27 billion at the present exchange rate, in financial year 2023, which ended March 31.

“Twenty-percent growth year-on year, the team has pulled all the rabbits of their hat,” Jain told Sourcing Journal.

Not boastful, he attributed the growth to a “good business model” and the “‘right movement into the future,” referring to a strong manufacturing base, as well as the ability to be an all-around service provider, which he described as more relevant than ever, given the shifting global scenario. PDS offers customized solutions to global brands and retailers across services like product development, sourcing, manufacturing and brand management. The roster of more than 200 brands and retailers, includes Zara, Walmart, Amazon, Mango, Top Shop, Jack Wills, Superdry and Myntra. “Moving up the value chain from being just a manufacturer of garments to design-led sourcing, to sourcing as a service to wholesale distribution of brands to actually now—complete brand management. At every such step you see us as a one-stop shop global fashion infrastructure company, there is a recognition that from a strategic footprint perspective, PDS can offer one more option at each level to the customer,” he beamed.

Apparently, it is working.

Company revenue grew 42.1 percent in the financial year 2021-22.

In June, PDS signed a long-term strategic partnership with Authentic Brands Group (ABG), which included a global brand development, marketing, and entertainment platform. This means taking on Ted Baker’s design and merchandising functions and also servicing wholesale distribution accounts in UK and Europe for the brand. It also intensifies the relationship with ABG—which includes an agreement with the group’s Forever 21 brand in the UK and Europe region.

In a detailed analysis, HDFC securities Limited, one of the foremost brokerage firms in India and a subsidiary of HDFC bank, observed that PDS is able to identify the “right product for the right market and the right factory which is further supported by a strong compliant supply chain and a core understanding of different geographies and markets. The capabilities of PDS platform enable multi-country sourcing from countries like India, Bangladesh, China, Pakistan, Sri Lanka, Myanmar, Turkey, and Vietnam,” it noted, while adding that it had “expertise in robust risk management” and an “entrepreneurial business model.”

Safak Kipik, CEO of Spring Near East Manufacturing Company Limited and an entrepreneur based in Istanbul, for instance, who chose to work with PDS Limited as a sourcing partner from Turkey believes it is a win-win situation.

“The big players and retailers are also looking for strategic partnerships with suppliers—they are willing to commit to more business, but their expectation from the suppliers is growing too, and in return for more commitment we want them to make investments— as in sustainability, etc. It is much easier and more strategic not to work in a vacuum for smaller companies,” he said.

While geopolitics seems to be a challenge for business around the world, especially when it crosses so many borders, Jain observed that he was not worrying.

“Geopolitical changes do have a bearing on our business,” he remarked.

“Although over the last couple of years there has been inflationary pressures, high interest rates, changing consumption patterns, the Sri Lankan economic and political crisis, how have we organized ourselves to mitigate these risks?” he asked. “We operate in the value segment, and there has been the least disturbance in this segment. We have a well-diversified geographical mix, including the US, U.K. and Europe. The currency we have chosen is in terms of the dollar denomination; the banking hubs that we have chosen are in Hong Kong, and lastly, we are watchful. When we delivered second-quarter results we said we have delivered 30 percent growth, but we didn’t say we are going to be cautious the next few quarters given the high inventory. We will try and do better.”

In addition, the company has been keeping sustainability as a flag pole, he said. In June, the Bangladesh facility won a $1 million round of funding by Good Fashion Fund, to support the company’s investment in a modern in-house washing plant at their factory’s Adamjee EPZ location in a Dhaka suburb. The company is also focusing on textile waste. Paul Wright, head of ESG at PDS globally, said, “We’re almost at that tipping point, and we need to create an ecosystem where waste is ­­perceived as a value commodity.”

Is this kind of growth sustainable?

“PDS has an ambition to cross the $2.5 billion top line mark over next four to five years, powered by geographic expansion, operational excellence, strategic investments, collaborative partnerships and a high-margin, asset-light business model,” Jain said.

“I don’t believe we’re being overly optimistic,” he added.