Ladies and gentlemen, good day and welcome to Page Industries Limited Q2 and H1 FY 2027 Earnings Conference Call hosted by E&Y. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star and zero on your touchtone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. V.S. Ganesh, Managing Director, Page Industries, for his opening remarks. Thank you, and over to Mr. Ganesh.
Thank you very much. A very good afternoon to all of you, and thank you for joining us for Q2 FY 2027 earnings call. With me today are Deepanjan, our CFO, and Karthik, our CEO. I will start with some perspectives on how the quarter unfolded and the developments that mattered, after which Deepanjan will then walk you through the numbers. After that, we look forward to your questions. Consumption trends stayed positive through the quarter, and the demand momentum we saw in Q1 held on. Even with the festive seasons coming in Q3 this year, we performed very well during the second quarter. The response to our newly launched Disney and Marvel range has also been very encouraging. On cost, the environment remained very challenging. Cotton prices were elevated and volatile, and crude-oil-based raw material remained significantly higher.
As we shared last quarter, we had chosen to absorb a part of this inflation. The 2.5% increase we took in May 2026 was fully effective during Q2. This partially cushioned the pressure on cost. Despite these headwinds, our EBITDA margins remained healthy and within our planned range of 19%-21%. We will continue to keep balancing margin protection and value for our customers. As regards our transformation journey, it is moving ahead steadily. The S/4HANA implementation is progressing well, with go-live planned to happen during the Q4 of this financial year. The scale-up of our Distribution Management System is also on track. Our initiative to strengthen cybersecurity and our HR transformation program remain firmly on course. Together, these investments are aimed at making us a more agile and resilient organization, better equipped to serve our consumers and retail partners.
Turning to our distribution network, we ended the quarter with 115,426 multi-brand outlets, 1,662 exclusive brand stores, and 921 large-format stores. This broad presence across formats keeps our brand accessible to consumers wherever they choose to shop, and we will keep deepening our reach across all these store formats. Our e-commerce channel also grew strongly in the quarter on both marketplace platform as well as our own portal, and they contribute to a growing share of our business. We also launched a new distribution center in West Bengal, which strengthens our D2C capabilities in the eastern region for jockey.in and our partner marketplaces.
Looking ahead, we remain confident about the underlying demand, the strength of our brand, and our ability to execute with discipline. None of this would be possible without the continued trust and support of all our stakeholders, and I thank you for all the support which you all have been extending all these years. As we come out of Diwali, I hope it was a joyful one for you and your families. With Christmas just around the corner, I wish you all a very merry Christmas and a wonderful start to the new year.
With that, please allow me to pass on the call to Mr. Deepanjan, who will take you through the financial numbers. Thank you.
Thank you, V.S.-ji. Good afternoon, everyone, and welcome to today's call. Let me take you through the financial performance for the second quarter of FY 2027 and of the first half. Quarter two FY 2027 performance, sales volume was 59.7 million pieces, which is a growth of 5.5% over Q2 last year. Sales value was INR 14,396.1 million, up 11.5%, helped by the 2.5% price increase, which was fully affected in the quarter. EBITDA was INR 3,001.4 million, up 7.4%. EBITDA margin was 20.8% as against 21.7% last year. Cotton and crude-led raw materials remained elevated, and the price increase only partially cushioned this pressure. The margin stayed healthy and within our planned range of 19%-21%. Profit after tax was INR 2,025.4 million, a growth of 4% over Q2 last year.
Coming to the first half performance, sales volume was 121.66 million pieces, up 5.6%. Sales value was INR 28,600.6 million, a growth of 9.7% over H1 last year. EBITDA was INR 5,891.4 million, up 2.6%. EBITDA margin was 20.6% as against 22% in the same period last year, reflecting the cost inflation. Profit after tax was INR 3,953.5 million, broadly in line with first half last year. Coming to the balance sheet items, inventory days stood at 74.3 at the end of Q2, as against 74.8 at the beginning of current financial year. Net working capital days improved to 51.3 days from 55.85 days at the beginning of the current financial year.
With that, we can now take up questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants are requested to limit yourself to two questions per participant and rejoin for a follow-up. We take the first question from the line of Ashutosh Joytiraditya from ICICI Securities. Please go ahead.
Thank you for the opportunity. I have two questions. First one is on the volume growth in FY 2027. If we see for the first half, the volume growth is around say mid-single digit kind of range. I just want to understand what could be the growth drivers going ahead and how confident the management is to maintain the volume growth guidance for the full year, or is there any change to that? Thank you.
Thank you, Ashutosh, for the question. As Deepanjan pointed out and what we published is about a 5.5% growth in volume for H1 against an annual guidance of a double-digit volume growth. Largely, in quarter two, we have seen the shift in festive season when compared to last year, which has affected our primary volumes in terms of build-up to the season, which we believe we will be able to, in a way, compensate in quarter three. Given that, our guidance for the full financial year remains intact, and the targets that we are gunning for internally remains intact as well. There is no change in the outlook as far as the volume growth targets are concerned.
Okay, understood. Secondly, sir, on the FEMA news which came in, what would be the next step for the company, and could you highlight any financial or operational risks going ahead for the company? That would be really helpful. Thank you, and that was my last question.
On the FDI matter, that in fact happened last year. We identified it last year, and we had filed for the compounding application with RBI in May 2026. RBI had to come back with our status of our application by October, which they did, but yes, they asked us to approach the government for post-facto approval of the past non-compliance. We are now in the process of approaching DPIIT to take care of the earlier past issue. Currently, as we stand, we are fully compliant with the required FDI provisions. Yes, the outcome of the past compliance, how it will pan out, that is a bit early to comment as to any quantification. We do not see any impact on operations due to this matter.
Okay. Thank you.
Thank you. Next question is from the line of Videesha Sheth from Ambit Capital. Please go ahead.
Hi. Both my questions were pertaining to the earlier discussion only. One on the volume growth. When we look at the remaining part of FY 2027, the ask becomes as steep as 14%-15% odd. So Karthik, if you could please help us out as to how should we think about the building blocks or the moving parts as to how would you land up attaining that growth in the second half? One, of course, would be the timing shift of festivals, but if you could help us understand the same.
Sure. Yes, as we see it, the asking rate for H2, as you pointed out, is about 14% in volume growth to hit a double-digit number. Basically, three levers in terms of what will be different in H2 when compared to H1. One is obviously the build-up to the festive season has moved from September to October. This is both. Since we are largely a B2B company in terms of what we publish, the primary performance, that build-up will be realized in the month of October, November, as against what we realized in September. Both for a shift in festive, also in the online space, the build-up for the large fests that happens across large marketplaces during the festive season. These two pieces are large impacts.
The second one is in terms of a few key new introductions that has been planned for Diwali. That is largely going to be realized in the month of October and November. These are key categories in men's innerwear as well as bras, which is also backed by campaigns, marketing campaigns, and investments. These are largely the building blocks. Otherwise, from a tertiary point of view, I think we are well on course against what we have planned even in H1. The large impact that we are seeing is largely in primary because of this shift. Hence the confidence of being able to recover that 14% asking rate for H2.
Sure. Just a follow-up to this, since we are already halfway into 3Q, have you seen that double-digit growth momentum shaping up in the primary part of or the B2B part of the business?
I cannot comment on Q3, but what I would say is yes, we are on track against what we have planned for H2.
Sure. The second question was that, is there any intention or any follow-up price hike plans beyond the 2.5% hike taken in the month of May?
See, our initial attempt was to absorb the inflationary pressures partially. By doing so, we still, of course, a lot of operational efficiencies has come in to keep us within our targeted EBITDA range of 19%-21%, even in H1. But looks like the inflation persists. We've not seen softening of input costs, whether it is crude-led or whether it is cotton. We'll have to wait and watch. I think in the commentary that V.S. Ganesh made, what we will try and balance out is our targeted EBITDA range versus being affordable and accessible to consumers. It's almost a wait and watch to see when we need to effect the price increase.
In my view, I think it will come at some point, but we'll take it one month at a time and see when we need to press the button on another price increase.
Thanks for that. Just one small clarification if I may. The FEMA-related, although you called out there won't be any impact on operations, possible to quantify what could be the impact on the P&L if it were not to hold up?
I think our best estimate going by the earliest precedences and the RBI guidelines that we have, there can be a penalty up to 0.75% of the amount that is involved. As per our estimate, the total amount involved in the contravention is around INR 48 crore. We may be levied penalty of almost 0.75% of that. There is a very extreme outlying chances that yes, there can be a very extreme penalty of 3x of the amount involved, but there is no precedence of such a levy.
Noted. That is all from my side. All the best.
Thank you. A request to all the participants, please limit to two questions and rejoin for a follow-up. Next question is from the line of Nihal Jham from HSBC Securities. Please go ahead.
Yes, hi. Good evening, team. Two questions. The first one was you mentioned about this festive shift. Like last time, you called out the logistics impact at sort of a three-day or a 3% impact. Can you sort of give a ballpark quantification? What was the lost sales because of the shift in festive to Q3?
No, I do not think we have quantified it that way. It is difficult to quantify because it is kind of moved from September to October. This is a function of three things, right? Puja billing, which largely happened in September last year, moved to October. Diwali has shifted from October to November. Like I mentioned, the festive buildup for e-commerce platforms for the Big Billion Days and Great Indian Festival fests. We are not quantifying it in terms of percentages, but what we have seen is, we have seen sharp decline in the month of September, largely because last year we had realized the sales in primary, which this year has moved to October.
Got it, Karthik. If we just call out, say, what the growth in July, August was like, that would automatically give us a sense of it is possible to give us a ballpark sense of July, August growth.
It is almost 2x what we have achieved for the quarter.
That is very helpful. My second question was that on the cost inflation part, can you just give a ballpark sense of what is it like the YoY inflation you mentioned about cotton, multiple products? I would believe that cotton is the largest part, but as a basket, what is the RM inflation in Q2 on a YoY perspective, and how is it trending currently, if you can just give that out also?
I think we touched upon this last quarter as well. The input cost purely from a raw material point of view seems to be inflated to the tune of 6.5%-7%, which of course has been offset by price increase to the tune of 2.5%, which was effected in Q2. We saw some level of softening in the month of September, but that is kind of rebound in October, back to operate at a level that we experienced in quarter one. As we stand today, the inflated input costs persist. Similar to the range of what it was in quarter one, which is about 6.5%, 7% higher than what it was last year.
Understood. That's very helpful. I'll come back in the queue for more questions. Thanks, Karthik.
Thanks, Nihal.
Thank you. Next question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Hi, good evening, and thanks for taking my question. Firstly, sir, I just wanted to touch upon the gross margin front again. Now, I know it's been answered partly, but I still see an acceleration in the contraction of gross margin at around 280 bps versus what it was last quarter. Now, this quarter is having a full impact of price hikes taken, plus there is actually a mix that has improved. I remember you called out last quarter that the mix was a little adverse, and I see the overall ASP plus mix growth is healthy this quarter. So, just wondering why would there be a higher gross margin contraction in 2Q versus 1Q, given all these factors would have played out?
It is also a function of the inventory that we have sold. We had mentioned it last time that in quarter one, we had pre-positioned a lot of our inventory in Q4 itself at prices much lower than what the input costs were in quarter one. We had a benefit of that in quarter two, I am sorry, in quarter one, in terms of gross margin. We had also pre-positioned the MRP increase of 2.5% in May. But the full-blown input costs, the inflated input costs, actually hit us from towards the end of June onwards, and we realized the price increase of 2.5% from July onwards. Hence, you are seeing a contraction in gross margins as far as Q2 is concerned when compared to Q1.
The benefit of the pre-positioned raw material is something that we exhausted in Q1 and did not carry it into Q2.
Got it. This is very clear. Second question is on the employee cost. Now, we are seeing wage inflation across the board, but I am only seeing a 4% increase in our employee cost, and this is against a good, healthy volume growth, which has got impacted by a delayed festive in any case. Just wondering how exactly are we able to manage these employee costs in such a narrow band, given the overall widespread inflation?
No, I think the headcount has been optimal, but going forward, the headcount will go up as we ramp up Odisha operations as well as K.R. Pete two operations. So, what you have seen in H1 is more the ramp-up phase, which will have to accelerate a lot more in H2. So, by the sheer increase in headcount, you will see manpower cost in a way catching up on the business. As far as wage increase is concerned, as of now, a large portion of our wage increase impact is in Karnataka, which has been affected from April itself, and that has been well accounted in what we have published in H1.
This wage increase in Karnataka pertains to the retail store operations, not really the garmenting, which has still been left out?
No. There are two parts to this. The garmenting workforce wage increase was already affected in the month of April, which has been passed on to our workforce and is accounted in the budget. What was later on published towards the end of June, early July, was to do with more the support staff, and that did not include garmenting as an industry. That does not hit us in any form as of yet, which also is now sub judice, and it has been challenged and needs to be concluded in terms of way forward.
Got it, Karthik. Thanks for all this. I will come back in the queue for follow-ups. Good luck from here.
Thank you.
Thank you. Participants, kindly limit yourself to two questions and rejoin for a follow-up. Next question is from the line of Tejas Shah from Avendus Spark. Please go ahead.
Hi. Thanks for the opportunity. Couple of questions. First, Karthik, the fact that we are holding on to our double-digit volume growth guidance, looking at where we are in the end of first half, the ask rate is quite high from the second half. Would you say that on-ground checks gives you confidence that the primary double-digit growth is very much possible? Also, with all the digital transformation that we are doing, is it improving our demand forecasting capabilities as well?
Yeah. On the first question, yes. I think this is a combination of what's, in a way, resulted by design because of the shift in the season and how we planned our inputs and trade accordingly, both our schemes to the retailers as well as our planned secondaries. The confidence of the double-digit piece is still intact, and hence, we are holding ourselves accountable to it as of now and continue to carry that target for H2. Your second question, sorry.
On demand forecasting led by--
Demand forecasting, yes. I think demand forecasting as of now is largely principle-led, which is working very, very well for us. The digitization of this or the automation of this is still work in progress. That is something that we've initiated in quarter two, and we are piloting it across a few touchpoints, and that's been working very nicely. But what's important is the fundamentals are in place in terms of principles of auto-replenishment. That's working very, very nicely. Now, it's only a function of automating it so that we don't need too many hands running that system. But we've started that well, and we see that progressing.
Yeah, I will come back in a few. Thanks and all the best.
Thank you.
Thank you very much. Next question is from the line of Avi from 360 One Capital . Please go ahead.
Yeah. Hi, team. Thanks for the opportunity. Most of my questions have been answered. I just wanted to clarify two quick aspects. One, given the pricing and given where the input inflation is, would it be fair to state that margins have bottomed out in this quarter and should improve? And second, I just wanted to confirm that those three days of billing that we lost, now that has normalized or that still continues into the system? How is that kind of behaved? Those are the two questions. Thank you.
Thanks, Avi. Sorry, go ahead, Deepanjan.
On the second part, the three days of billing, that was a one-time aberration. I mean, there is nothing to normalize in that. That was a one-time incident which happened in Q1, and that has been flown back into the business in the normal course. On the margin front, yes, we are still will be within this 19%-21% margin range, even the coming H2. Though, yes, there has been elevated cost pressures, but even with that, we are quite confident it will be within this 19%-21%.
Deepan, just to clarify, we've taken the pricing flow-through pull should pass through. On the gross margin side, it should be bottoming out. Is the EBITDA margin anything else that I am missing out, which is why you are arguing, you are not kind of suggesting that these are probably the bottom margins? Or you are not[crosstalk].
Sorry, I didn't get you. Sorry.
No, Avi, so for example, quarter two is a good indication of both gross margin as well as EBITDA margin, considering the fact that the price increase has completely flown in, as well as the inflated raw material costs have been considered in quarter two. Now, whether margins improve from here will depend on largely input costs and if there is any more operational efficiency that we can drive. If I keep these two out, I think what we have achieved in quarter two is a good indication of what the margins would be as we go forward.
Thanks a lot. That clarifies. My apologies for the misunderstanding. Thank you. That is clear. Thanks.
Thank you.
Next question is from the line of Jignesh Kamani from Nippon India. Please go ahead.
Yeah. Hi. Just to reiterate, the 3%-3.5% kind of revenue growth which we, revenue growth we witnessed in 1Q was fully made up in the second quarter, right? In the 11.5% kind of revenue growth, right?
Yes.
Understood. When we interact with some of the dealer, distributor, and the EBO owner, some of them highlighted they faced a supply chain issue some part of the days, particularly in men's innerwear and the women's outerwear segment. Have we lost any revenue, at least on the primary side, because of the supply bottleneck in the 2Q?
Yes. I think from a supply and order fulfillment point of view, we've historically operated at a 98%-99%. That has dropped to about 96% to 97%, and that's largely in men's innerwear and women's outerwear, like you've indicated. There has been about 3%-4% order loss that we've experienced at a primary level, as far as inventory availability is concerned. But that is something that we are ramping up to make sure we're able to supply to the true demand in H2.
So, that has been ironed out, the issue, or still we are facing that issue and probably it might take one or two more quarters?
Not one or two more quarters. It's largely about ramping up to demand. As we stand today, it's improved. It's not still back to the 99% levels, but it's hovering about 97%, 98%. I think there is still scope of about 1%, 1.5% improvement.
Is it safe to assume that it has not materially impacted the secondary demand?
To an extent it has, but not completely translated to secondary demand. I would not rule out that it has not impacted secondary or tertiary at all. It is to an extent has impacted, but at least it gives us the confidence because these are controllables and something that we can ramp up for us to meet the true demand.
Understood. Thanks a lot.
Thank you. Next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Yes. Hi, thanks for taking my question. Sir, I wanted to better understand this July, August comment that you made of double-digit growth that we've sort of seen for the full quarter. This is inclusive of that three days of benefit, or it's like for like? If you could just throw some light there.
No, no. Whatever we lost of the three days has been fully recovered in July itself. Hence, we've seen better performance in July, and that's sustained through August as far as primary numbers are concerned. While tertiaries kept pace as far as September is concerned, we've had an impact in primaries, largely because the buildup to the season has been deferred this year.
Karthik, just to better understand this, if we assume double, then it suggests 11%, right? If we have three out of 60 days benefit, that is actually a 5% kind of a benefit. So 11% minus 5% is 6%. Is this, I would say, an underlying demand that we should sort of understand? Is this for July, August, is 6% the right metric to look at?
No, no. What I meant was, between July and August, if not for the September demand, we should have, in a way, reached about 11%, 11%-12% when I said double. That was not to count what we had, in a way, lost in the month of June. That would have been over and above by about 2%-3%, which we lost for the quarter reporting, but it would have come in in the month of July.
Okay. Okay, got it. Lastly, sir, you mentioned that tertiary sales are running ahead of primary, right? If there is festive shift, that tertiary demand will also get impacted, right? In addition to that, obviously, we have been ramping up our ARS system as well. Why is there this mismatch? Because from a demand perspective?
No, not from a growth point of view. Let me retract and rephrase what I had said. I was not referring to growth. If I look at the kind of performance we had witnessed in the month of July as well as in month of August, that was in line with September as far as tertiaries are concerned. We have not seen a dip in tertiary in September when compared to August. It kind of kept pace. From September to September last year, there is naturally a drop across the chain, whether it is tertiary, secondary, or in primary, largely to do with the festive season.
The impact was small because it was only Puja, because even last year, Diwali was in October. This year it is in November. So October to October, we were fine as far as tertiary is concerned. September, we saw a small dip. But the bigger dip was in primaries and secondaries. That is mainly because you build up to the season in terms of stockholding at the stores. That is something that got deferred from quarter two to quarter three.
Got it. Got it, Karthik. Thanks for taking my questions.
Thank you. Next question is from the line of Ashish Kanodia from Citi. Please go ahead.
Yeah. Thank you for the opportunity. Again, on the volume growth, I think, too many things has happened so far. One, we saw June getting impacted because of logistics issues, and then, we have a shift in festive, Puja, Diwali, all being in different months. I think the best way to understand how the volume growth trajectory is really looking like is if you can help us understand how is the YTD performance, because Diwali is already over, and in the base year also, Diwali was already over by this time. If you look at YTD to YTD performance, like almost 10.5 months, what kind of a volume growth you have seen on the primary side?
Because tertiary could again be very different, but not necessarily a number, but if you can help us understand if you look at this data till November, are you on track on the double-digit volume growth?
Ashish, unfortunately, I cannot share with you October and November performance, being a listed organization, until we complete the quarter. But the confidence of still maintaining the outlook is coming from the fact that against the plans we had for ourselves for the year, we are tracking on that plan as we stand today.
Look, I hear you, Karthik, and that is why I said I am not looking at numbers, but when you put a guidance that you want to achieve a double-digit volume growth, and then we saw Q1 getting impacted, Q2, I think when we were getting into Q2, we knew that there is a shift in festive season. So at least when you look at the YTD performance, are you still in the guidance range? At least that is what I am trying to understand.
Yeah, that is what I am saying. While from a growth rate point of view, it is what we have published, but against target versus achievement, we are on track.
Got it. That is all from my side. Thank you.
Thank you. Next question is from the line of Rishi Mody from Mody Advisory. Please go ahead.
Yeah, hi, guys. Can you hear me?
Slightly muffled. Can you speak through the handset, please?
Is this better?
Yes.
Yeah. First question I had was if you could just comment on the competitive intensity in the market. Are you seeing increased doubles, decreased doubles? Any qualitative comment on that?
As far as quarter one and quarter two is concerned, I think the competitive intensity has been subdued. We've seen a high level of consumer offers and discounting during the festive season, which was largely in October and November. But as far as overall presence of competition, both online, offline, it's been subdued when compared to what we've experienced in the last three years.
Okay, got it. Second is more just trying to understand our supply chain issues, right? So, what's the root cause analysis? Like last quarter, we had three days of missed orders. Again, this time, our fulfillment rates dropped, despite investing so much into ARS and now SAP HANA and all. I'm just trying to understand, is this some structural issue here with our logistics and supply chain, or would you just help us understand why this is a recurring pattern right now?
Quarter one was, I wouldn't say anything structural about it. And honestly, whether we realize that on the last three days of June or the first three days of July does not structurally impact the organization's health and our ability to cater to demand. And that was not to do with availability. It was to do with delivering primary numbers at the point of sale, which is, in our case, distributor. I wouldn't attribute much to that. As far as quarter one, and like Deepanjan had pointed out, it's a one-off case which we kind of salvaged in July, and we are back on track in terms of delivery. In terms of specifically quarter two, we've had absolutely no issues in terms of logistics and making available our build stock to the distributor point.
Now, in terms of product availability itself, there were two specific categories where we had a bit of stress, which again does not impact consumer level as much as it impacts factory. That is largely because of the inventory that we hold across the value chain, whether it is at the retail store or at the distributor point or at our warehouse. There are three levels of inventory buffer, which is anyway built in the way we design. We have two new plants this year, which is ramping up. The efficiencies are not optimum as we stand today, and we are building up those efficiencies so that we can meet demand.
I would not, in a way, look at it as a structural issue. It is something that we need to, in a way, work on harder as far as execution is concerned, so that we are able to leverage that 1%, 2% which we might have lost because of non-availability.
Okay. All right. I can chalk it up to the factory issues, which can get solved rather quickly in maybe a couple of quarters here and there.
Yeah, like I said, these are largely within our control, and hence, it is a good piece to have. It is not something which is beyond our control to achieve.
Okay. Anything to read into your distributor accounts dropping QoQ for the last two quarters as well as the MBO network drop-off by about 1,000 touchpoints? Like, smaller numbers, 2% here or there, but still I am assuming that they are. I am just trying to understand, is there something concerning you or something you are not sure speaking to these guys?
It is a cyclical pattern because any year that you look at it, this is a coverage number which improves quarter-on-quarter because it is cumulative, and there are a large set of retailers who buy only once in a year. Typically, that happens during the festive season, or let us say, during a period where we offer a certain scheme on certain ranges. The best comparison of this would be to look at the annual number versus the annual number, because through the year, you are always catching up to the annual number of the previous year and then growing beyond that.
So a good indication, even if you are looking at a trend line or a pattern, is to look at it year-on-year for the last three years, four years, where we have, I think, consistently added about 7,000 to 8,000 outlets to our network, and that would not be any different this year. I think we will look to add anywhere between 8,000 to 10,000 outlets to our overall network by the end of this financial year.
Q3 should see a jump in this count is what my inference is, given it is festive season.
Q3 and Q4, yeah.
Okay. All right. That is it from my end. Thank you.
Thank you. Next question is from the line of Rahul Agarwal from Ikigai Asset Manager. Please go ahead.
Hi, good evening. Just a couple of questions. Firstly, on Odisha and K.R. Pete, where are we on in terms of utilizations? How are you thinking of ramp-up? You also mentioned headcounts will go up, so just some bit of flavor on how do we see both these units ramping up from here? That is the first question.
Well, for both the units, we are on track as far as plan is concerned, and the complete ramp-up will take another 1.5 year . I think we will, in a way, reach our peak capacity by end of next financial year. As of now, we are operating at about 40% of where we want to be, or not where we want to be, where we can get to as far as these two plants are concerned. I would imagine by end of next financial year is where we will be hitting peak capacity utilization, as far as these two plants are concerned.
Got it. Some qualitative feedback on for the quarter and for the festive season, in terms of men innerwear, women innerwear, outerwear, and athleisure, just in terms of qualitatively, how are the growth trends?
No, by the nature of our current penetration levels, and not specifically for the festive period, I am talking to you about YTD performance as well as what we can expect in H2 as well, is that athleisure or outerwear as a business, as well as women's innerwear as a business, will be a notch above men's innerwear in terms of growth rates. That is not unique to this year. That is a pattern that we have seen over the last three to four years, partly by design in terms of where our investments are going and partly because of the headroom that there is to grow given our penetration levels.
Got it. Lastly, any other contingent liability which where issues are pending to be sorted out apart from this FEMA thing which we have discussed?
No, I think there is one issue on our Middle East partner, which we have already disclosed in the FY 2026 annual account, so that the status quo remains, that remains a contingency disclosure as of now.
Thank you. Rahul, may I please request you to come back for a follow-up question?
Okay. Thanks.
Thank you. A kind request to all the participants, please limit yourself to two questions, and we join for a follow-up. Next question is from the line of Prerna Jhunjhunwala from DAM Capital Advisors. Please go ahead.
Thank you for the opportunity. First question is on FEMA. Just wanted to understand what actions you have taken, which brands. Online sales have been reduced. Could you just help us understand what specific actions have been taken brand-wise so that we can understand it better?
Largely the issue of FDI is restricted to the restriction on selling imported goods in online space. Today, what we have done is we have restricted selling of imported goods only for Jockey products, whereas Speedo is being catered through third-party franchising.
Okay, understood. Speedo is not a direct sale from our company now going forward?
Yeah, that is the change we have done. Speedo is no more a company-to-consumer direct business. It is through a third-party franchising.
Understood. This is helpful. Second question is on ASP breakup. Could you help us understand that this 2.5% would be largely price improvement, but from where is the premiumization improvement and mix improvement coming in rest of the ASP? That will be helpful.
Premiumization is a natural process which happens every quarter. We see premiumization or consumer scaling up even within each category. Say, within say men's premium in innerwear, people do scale up to higher price points. Also, if we have better sales of outerwear, we get a price advantage. And the third aspect is, yes, if you have a higher sales in say EBOs or higher sales in online, we get a price advantage there as well because of, one, we have a full price sales as far as B2C channels are concerned, and even the margin structures are different in EBOs and also in other channels. Combination of all these three things results in this premiumization.
Understood. Thank you and all the best.
Thank you. Next question is from the line of Nalin Shah from NVS Brokerage. Please go ahead. Nalin Shah?
Yeah. This thing, at the outset, I just want to only understand regarding this FEMA violation thing that what is the kind of period for which we are talking about this violation thing, and whether the auditors of the company, have they given any kind of their comments or the estimate as to how do they feel in terms of the quantum, that what kind of a penalty, et cetera, if any, which can be levied under the FEMA regulations or your internal calculation? Just to understand the financial impact of the entire this violation.
I think this point we covered already. Yes, the auditors have given their comments as to this matter, both in annual report of FY 2026 as well as in this quarter.
The financial impact, as I explained, can be as low as 0.75% of the amount involved. In our case--
Sorry, can you come again? What is the quantum you said?
0.75% of the amount involved. So the amount involved is INR 48 crore.
What is the amount involved is? INR 48 crore.
Yes.
Oh, it is a very negligible amount. That means it is very negligible.
Yeah. See around INR 4 million to INR 5 million.
Okay. Pardon?
Period of around 2014, 2015 till 2026.
Oh. I think it was maybe through oversight and not having a complete idea that this is not permitted under the FEMA regulations, is it?
Yes, it is an inadvertent issue that had happened, and we understood that.
Okay. What could be the value of the goods traded on account of this, approximately?
Sorry, I didn't get you.
What is the value of the goods traded during this period, which could be liable to be treated as a violation?
As I said, the amount involved is INR 48 crore.
Oh, that is very, very negligible. No problem. Thank you very much. Thank you.
Thank you. Next question is from the line of Sameer Gupta from IIFL Capital Services. Please go ahead.
Hi, thanks for giving me another opportunity on the follow-up. Just taking it from Jignesh and Rishi during the call. Now we are gunning for a target of double-digit volume growth, and this was at the start of the year. Then I am just not able to understand how exactly are we not prepared for this ramp-up issue that we faced, given that these are fairly new factories which will take time to ramp up, and we technically, logically being the organization that we are, should have been ready for this in terms of our outsourcing capabilities. Your thoughts on this?
Yeah. Let me clarify on this. The issue is not overall inventory. If you look at it, the number of days inventory we are holding, it is very healthy. As Karthik said, we have three layers of buffers. There are enough inventory at the distribution point, at the finished goods, and the WIP which we have. It will not affect the consumer availability immediately. The issue has been on specific SKUs. Some of the styles and SKUs, the demand has been much higher than what we thought. Usually there is a lead time to procure the raw material for the upside orders and to service. Usually, the industry norm is usually they take three months.
We have done lot of work to bring in agility, and we actually serve the customer requirement within a month or 1.5 month . That is why the impact has been less, and we are able to recover faster. As Karthik explained some time back, there is no structural issue. These are at a SKU level, the demand spikes which we saw. There has also been lot of geopolitical tensions and issues, which affected some of our imported goods. In fact, some of the SKUs where the raw material has to be imported, because of the issues in the Middle East and all that, the lead time increased, some containers got stuck, and it took more time for us to clear. It was not a capacity issue. These were to do with some of the global disruptions which we went through.
We have taken enough measures to counter all this. In fact, we increased the buffers for these. As we speak, you might know there is lot of turmoil happening in Bangladesh, but our proactive measures have ensured that this is not going to affect us adversely. We have taken lot of corrective actions to absorb these shocks.
This is very, very helpful, Karthik. Thanks a lot, Mr. V.S. Thanks a lot. One follow-up, pertaining to something else. This INR 48 crore number that you are talking is cumulative over the last 12 years, or how should I look at it?
Yes, it is cumulative over 12 years.
Cumulative.
Great, sir. That is all from me. Thanks again, and all the best.
Thank you very much. Ladies and gentlemen, we will take that as the last question. I will now hand the conference over to Mr. Deepanjan for closing comments.
Thank you all for joining us today and for the thoughtful questions. While the operating environment, particularly on the input costs, continues to evolve, our focus remains clear: serve our consumers better, strengthen our brands, execute with discipline, and build a business that creates enduring value. We look forward to engaging with you again next quarter. Thank you, and have a good day.
Thank you very much. On behalf of Page Industries Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.