FROM THE DESK OF THE CHAIRMAN AND MANAGING DIRECTOR
Ashapura Intimates is revolutionising the intimate and relax wear segment by banking onthe shape & fit brand and fabric quality factor
I am pleased to present the Annual Report 2016-17 of your Company. It has been nearlytwo decades since we first conceptualised this non-existent segment of intimate and relaxwear in a country like India where it was literally a taboo to speak of intimate wear andthe markets were primarily operated by diverse small unorganised players. Having pioneeredthe evolution of this segment today we stand as a much mature organisation.
Quite a few realities greatly excite me about the future of the Company.
The fact that we are the only dedicated branded player in the segment with no majorcompetitor.
That the industry segment we operate in is headed for a robust growth.
That our dealings with super distributors enables us to operate at low workingcapital.
That our integration across the value chain and operational efficiency leads to higherreturns generated on every rupee invested.
That our designing competencies makes us an industry trendsetter.
While the financial performance was great initiatives at the operational front wereeven better strengthening our capabilities for stronger and sustainable performance. Theyear saw us actively reaching out to more customers and promoting brand as we focussed onadding more Exclusive Business Outlets (EBOs) and initiating the Shop-in-Shops (SISs)concept compared to thrust on existing Multi-Brand Outlet (MBO) model that we followedearlier. This shift in focus from MBO to EBO and SIS shall assist us in building brandhaving better control over stock and inventory and improving margins. We launched 4 EBOsand 75 SISs during the year with a targeted 100 and 500 new launches respectively overthe next five years.
Merger with Momai Apparels Limited (MAL) our erstwhile manufacturing subsidiary byvirtue of management control is another important development. It will bring in moretransparency efficiencies and synergies within the merged entity while removing thehurdles of overlapping and complexities in compliance. Besides the funds inflow fromopen-market sale of AIFL's 20% stake in MAL was effectively utilised to pay-off debts theimpact of which may be reflected in improving profit and return ratios in the comingfinancial year.
We continued converting distributors into super-distributors resulting in ourreceivables cycle declining in the past two years to 80 days which in turn aided ourworking capital cycle reduction to 139 days (on a standalone basis) as on March 31 2017.With that our working capital cycle stands amongst the best in the industry. We alsoinitiated centralised pre-booking of orders from countrywide dealers contrary to existingpractice of booking at the season's onset to better forecast demand plan production andprevent opportunity losses from supply shortfalls.
designing will remain our differentiating factor as we target attracting more consumerswith consistent launch of trendsetting products 11
It would be important to bring to your attention two important post balance sheet dateevents - the launch of a new male-oriented brand TRICCI and new product categoryairportwear. These will further strengthen our portfolio while opening up new revenuestreams in the fast-growing men apparel segment and rapidly growing aviation industry inIndia. In FY 2016-17 female segment accounted for 65-70% of our sales which means a mere30-35% of sales came from men's and kids Rs.segment combined in spite of the fact thatmen's apparel segment at an estimated $ 28.9 bn in CY (Calendar Year) 2017 is the largestsegment in India. Besides the men's segment is even the fastest growing segment estimatedto grow at a compounded rate of 8.53% during 2016 to 2020 a huge untapped opportunity.
I also see significant upside potential in our newly launched airportwear categoryconsidering the fact that India's air passenger traffic has witnessed upwards of 10%growth in recent years. International Air Transport Association expects India to beamongst the five-fastest growing markets adding 337 million new passengers during 2016 to2036. Besides with only a handful of international players operating in this segmentwhose prices are way higher it will be interesting to see how this segment develops.
The market scenario for other business areas that we operate in remains positive.Between 2016 and 2020 the sportswear and kidswear segment is expected to grow at a CAGRof 12% and 10.67% respectively and reach $ 8 bn and $ 18.9 bn respectively. The innerwearmarket pegged at Rs. 24000 Crores in 2015 is likely to grow at a CAGR of 13% and reachRs. 47000 Crores by 2020. The marked shift in the consumer buying pattern towards brandedapparels and westernwear will catalyse this growth and assist players like us. Goods andServices Tax (GST) is another positive development that I believe will reduce thecompetitiveness of unorganised players and benefiting the branded organised players likeus.
Our strategy going forward shall be to continue operating in niche segments and focuson branding and premiumisation. Product designing and quality control shall remain ourdifferentiating factors as we target attracting more consumers with consistent launch oftrendsetting products. These initiatives shall charter our path towards brandpremiumisation while generating more brand loyalty ring-fencing our business fromcompetition and enabling us to enhance market share.
I hereby thank all our stakeholders for their continued trust and faith in us. We areat an important inflection point in our journey from where the initiatives undertakenshall make our business less cyclical and more profitable. We are confident of deliveringa stronger performance while growing the shareholders Rs.worth. I would also like to thankall our employees for their untiring efforts towards taking the organisation to newerheights.