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Page Industries Hits Record High After Jockey Extends Licence

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Shares of Page Industries Ltd. gained as much as 6.6 percent today to hit an all-time high after the company said it has extended its licence agreement with Jockey International till December 2040.

“The extension of the licence agreement showcases Jockey’s confidence in Page Industries,” Sunder Genomal, managing director at Page Industries, told BloombergQuint. “We are the best performers for Jockey among the 45 licensees it has across the world.”

In 2009, Jockey had extended the contract with Page Industries till 2030. “There will be no change in the terms and conditions with Jockey despite the extension,” he said.

There is a lot of scope for expansion in the menswear segment, according to Genomal. The men’s segment comprises 70 percent of Page Industries’ innerwear business, while womenswear comprises the rest. The segment for women, Genomal said, is fragmented because of the presence of various regional brands. He, however, expects growth there too. “I see no reason why it won’t be equal in the future.”

Page Industries’ stock ended 4.03 percent higher in a flat Mumbai market. The stock has risen 7,211 percent since its 2007 listing.

Other Key Highlights

  • Company expects the share of e-commerce in the business mix to reach 10-12 percent over the next five years.
  • Targets 1,000 exclusive brand outlets by 2021.
  • Comfortable with the current promoter shareholding.

Watch the full conversation here:

Here are the edited excerpts from the conversation:

What does the extension of the contract mean? This contract was up to 2030. To what extent can this extension of 10 years mean in terms of business for Page Industries?

With the kind of confidence that Jockey has in Page Industries and as well as in India, it is expected because we have been with Jockey as a group for 60 years now. So, we are very much part of the Jockey family. We have the best-performing licensee in the world.

They have 45 licensees across the world. The brand has been strong in 130 countries. India outperforms all other countries. The confidence level is very high. It is not something new that we have done. In 2009, they extended the contract to 2030. So, it is just a repeat, and will continue.

Are there any conditions for this extension concerning minimum shareholding, royalty payments or any other clause which have importance to minority shareholders?

No. There is no change in terms and conditions of the contract from Jockey from the beginning, which is from 1994. It was in 1959 when we had a contract with them in the Philippines. So, it is the same terms and conditions.

How are Page Industries and Jockey approaching the women’s innerwear segment in India? In ratio, how do you see men vis-à-vis the womenwear section shaping up for Page Industries?

Our strength has been mostly in men. We have innerwear and outerwear. About 70 percent of innerwear products is that of men’s and the remaining 30 percent are of women. There is no reason why it should not be equal at some point.

We are taking very aggressive steps in feminine garments. You may have seen our recent campaign for Jockey Women. The loss in the female garment segment is because the segment has many regional brands. Our penetration in the female garment segment today is around 6.5 percent of our potential, whereas it is 18 percent for menswear segment. So, it is not like male garments are saturated. There is still a long way to go.

We are aggressively growing the female garment segment. We are very confident of being able to do that because even today we are the largest national player in women’s innerwear. But we will continue to grow the male garments segment as well.

Many regional players who were in the mass segment are now moving into the premium segment. What does it mean for the market share for all categories that Page Industries is present in and what can we expect over a span of the next couple of years?

Our penetration is still very small not only in the segment for women, but also for men’s market which is ballooning at the rate of 10 percent, according to Boston Consulting Group in terms of households in our target market. In terms of spending, it is 16-18 percent.

Our brand penetration in all categories is only 8-9 percent. It is true that a lot of lower economy players are trying to upgrade, which is fine as it creates more amenities for categories.

As far as we are concerned, given where we are and the strengths that we have, we feel that we have an incredible competition within ourselves. So, it is important for us to keep outgrowing and outperforming ourselves. We have got the back and front end.

How does e-commerce play a growth engine for the company? Do you think it is the big opportunity for you? When the online sales pick up in future will that be the large pie of total revenue share versus the traditional brick and mortar stores which you have been doing well in terms of distribution?

I don’t see e-commerce becoming a larger pie. It was 2 percent-plus of the previous year and it is now around 3 percent. We had a growth in the e-commerce segment and we expect that it will continue to grow. It might reach 10 percent five years from now or maybe 12 percent.

Brick and mortar space is where we get maximum growth. We are planning to have 1,000 exclusive brand outlets by 2021. We have 500 brand outlets at present. While the e-commerce channel is growing, we feel that the brick and mortar is also going to play a significant part.

We also have our online marketplace. We deal with our online partners like Myntra, Amazon and Flipkart, among others. We have a healthy market share in the online marketplace.

Do you think you have to monetise the stake that you hold for a variety of reasons or do you think this shareholding point is where you are comfortable at and that there could be no further sales in the near term?

Right now, I am very comfortable personally. I don’t have any personal requirements.

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