PDS Limited , a prominent player in the global fashion industry, has announced the divestment of its entire stake in Grupo Sourcing Limited, a step-down subsidiary based in Bangladesh. This strategic move, aimed at enhancing profitability and addressing loss-making verticals, marks a significant step in PDS Group's ongoing efforts to streamline its operations.

Transaction Details

The sale agreement was signed on May 27, 2025, with the necessary regulatory approvals received on August 12, 2025. The buyers are Mr. Zamal Uddin Ahmed, the existing business head of Grupo Sourcing Limited, along with his family members, Ms. Shorif Samima Nasrin and Mr. Rafsan Ahmed Rabbi. PDS Limited received a consideration of approximately ₹21.26 million (BDT 29.52 million) from the transaction.

Financial Impact

Grupo Sourcing Limited's contribution to PDS Limited's consolidated financials was relatively small but notable:

The divestment of this loss-making entity is expected to have a positive impact on PDS Limited's overall financial health.

Strategic Implications

This divestment aligns with PDS Group's strategic initiative to improve profitability by addressing underperforming segments of its business. By selling Grupo Sourcing Limited, PDS aims to focus its resources on more profitable ventures and strengthen its core operations.

Regulatory Compliance

The transaction has been conducted in compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. PDS Limited has confirmed that the buyers are not members of the company's promoter group, and the transaction was carried out on an arm's length basis, ensuring transparency and fairness.

Conclusion

With the completion of this transaction, Grupo Sourcing Limited has ceased to be a step-down subsidiary of PDS Limited. This move demonstrates PDS Limited's commitment to optimizing its business portfolio and enhancing shareholder value through strategic divestitures of non-core or underperforming assets.

PDS Limited , a global fashion infrastructure company, has reported a 14% year-over-year revenue growth to ₹2,999.00 crores for the first quarter, despite facing market challenges and margin pressures.

Key Financial Highlights

• Gross Merchandise Value (GMV) increased by 19% to ₹4,634.00 crores
• Gross margins declined by 139 basis points to 19.4%
• EBITDA stood at ₹51.00 crores with a margin of 1.7%
• Profit After Tax (PAT) was ₹20.00 crores with a margin of 0.7%
• Net working capital days improved to 10 days from 17 days in the previous quarter
• Net debt reduced by ₹156.00 crores compared to March

Performance and Challenges

Despite the challenging global macroeconomic environment, PDS Limited demonstrated resilience in its operations. The company's existing businesses grew by 7%, while new verticals delivered an impressive 85% growth year-on-year. Sales to the Americas increased by 26% year-over-year, showcasing the company's ability to navigate the complex U.S. tariff landscape.

However, the company faced headwinds that impacted its margins. The gross margin decline was primarily attributed to market disruptions, including customer bankruptcies and administration issues affecting key accounts such as Gerry Weber and Matalan. These high-margin businesses saw significant reductions in revenue, impacting overall profitability.

Strategic Initiatives and Future Outlook

PDS Limited is implementing several strategic initiatives to address the current challenges and position itself for future growth:

1. Cost Optimization: The company has engaged Boston Consulting Group (BCG) to drive cost optimization initiatives, targeting ₹25.00 crores in opex savings and ₹30.00 crores in COGS savings for the second half.

2. Diversification of Sourcing: In response to shifting trade dynamics, PDS is strengthening its sourcing capabilities in regions like Central America, Africa, Vietnam, and Bangladesh. The company is also capitalizing on the recent India-UK Free Trade Agreement to enhance its manufacturing presence in India.

3. Customer Expansion: PDS has successfully onboarded several major U.S. retailers, including Walmart, Target, American Eagle, PVH, Ralph Lauren, Ross Stores, and T.J. Maxx, setting the stage for future growth in the American market.

4. Technology Adoption: The company is implementing AI-driven solutions across its value chain, focusing on pricing, costing, and sourcing to improve efficiency and competitiveness.

Management Commentary

Sanjay Jain, Group CEO of PDS Limited, commented on the results: "The first quarter has been one of measured progress delivered against a backdrop of a challenging and evolving global macroeconomic environment. Despite external headwinds, PDS has remained agile and responsive, leveraging our asset-light model, diversified sourcing footprint, and deep customer relationships to stay relevant and create value."

Looking ahead, the management expects margin pressures to continue in the first half but anticipates recovery in the second half through various efficiency measures and new customer acquisitions. The company maintains its outlook for mid-teens growth for the full fiscal year.

PDS Limited's performance in Q1 demonstrates its ability to navigate complex market conditions while laying the groundwork for future growth and profitability improvements.