Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
PDS Limited (NSE: PDSL) Q4 2026 Earnings Call dated May. 18, 2026
Corporate Participants:
Shirley Rodrigues — Corporate Finance & Investor Relations
Sanjay Jain — Group Chief Executive Officer
Sadiq Sunasara — Chief Financial Officer
Unidentified Speaker
Pallak Seth — Executive Vice Chairman
Analysts:
Samvit Patel — Analyst
Kiran Gadge — Analyst
Rohit Balakrishnan — Analyst
Unidentified Participant
Madhur Rathi — Analyst
Rudraksh Raheja — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the PDS Ltd. Quarter 4 and FY26 earnings conference call. 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, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shirley Rodriguez.
Thank you. And over to you, Ma’. Am.
Shirley Rodrigues — Corporate Finance & Investor Relations
A warm welcome to all participants to PDS Limited’s Q4 and FY26 earnings call. Our presentation and financial results are available on the company’s website and stock exchanges. Please note that anything said on this call which reflects our outlook for the future or which may be construed as forward looking statements must be viewed in conjunction with the risks that the company faces. The conference call is being recorded and the transcript along with the audio will be available on the company website and stock exchanges.
Today we have with us the management which includes Mr. Palak Seth, Executive Vice Chairman, Mr. Sanjay Jain Group CEO and Mr. Sadiq Sunasara Group CFO. I now hand over the call to Mr. Sanjay Jain to make the opening remarks.
Sanjay Jain — Group Chief Executive Officer
Thank you Shirley. Greetings to everyone. Thank you so much for joining the earnings call. The year 26 was a year that tested the resilience, agility and execution capabilities of global apparel supply chains. The operating environment remained very challenging throughout the year shaped by cautious consumer sentiment, the evolving trade dynamics, the rampant geopolitical disruptions and the continued inventory discipline across global retailers and brands. Notwithstanding the challenges, we delivered GMV growth of 5% to approximately 19,666 crore and revenue growth of 4% to Rupees 13,110 crores for FY26.
Importantly, this growth came in during a period where the broader apparel industry globally grew only very modest and remain highly value led in nature. Within this context, our ability to maintain stable though a modest growth, but we did grow in the challenging time frame. It reflects continued customer retention and increasing relevance of scaled compliant and flexible sourcing platform like PDS. And as we are into the year FY27, our order book as of early April stand at about 5074 crores reflecting a growth of approximately 11% and thereby are providing an encouraging visibility into FY27 plus.
Within this order book there is momentum building in in higher value sourcing and service engage in North America. In fact, while our order book on the whole is up about 11% in North America it is up closer to 30% as compared to same period last year. We continue to deepen our presence in the US through new customer additions and stronger scaling across existing strategic accounts. A key milestone during the year was securing a new sourcing as a service mandate with a leading US Value retailer with a relationship having the potential to scale beyond approximately 475 crores over a period of time.
This further validates our long term strategy of building a higher value service led sourcing platform rather than operating as a purely transactional sourcing partner. We also witnessing green shoots across the UI market with now close to five strategic partnerships established across leading global retailer and the brand ecosystem in US. Structurally we believe the global sourcing landscape continue to evolve in favor of diversified asset light and compliant supply chain platforms. Retailers are increasingly consolidating their vendor base and seeking partners who can offer agility, diversification and speed to market compliance and integrated sourcing capabilities across multiple regions.
While customers continue to remain cautious with shorter order cycles and selective order deferments in certain regions, we are not witnessing any broad based cancellations and now are beginning to see stable throughput across the core sourcing platform. We informed you about the Certa 475 crore scalable order sourcing as a service in US and we are also witnessing a buildup of healthy traction in our UK and European markets for sourcing as a service orders as well. Alongside growth we remain very sharply focused on profitability, cash generation and importantly capital discipline.
One of the important achievements during FY26 was a strengthening of our balance sheet and operating cash flow through disciplined working capital management. Almost across all our verticals and tighter operating controls, the net working capital days reduced from about 17 days one year back to about four days at the end of FY26. In fact we added the new lobster business about two years plus back and if we take that out of a calculation which we are now increasingly trying to make that working app efficient for the rest of the business.
The mainly sourcing and manufacturing it is almost down to zero days or even slightly negative as well. Business generated operating cash flow approximately 780 crores during the year and net debt reduced from about 374 crores one year back to close to about 100 crores and this is despite the addition to the debt by way of the Nick Gallery acquisition wherein the acquired company had its own debt as well. The consolidated position came down from 374 crores to about under 5 crore net debt. We remain focused on rationalizing loss making verticals curtailing investment into new businesses, strengthening our governance around capital allocation and embedding stronger cost discipline across the organization.
Our investment into new vertical reduced by approximately 27% during FY26 while several restructuring and portfolio optimization initiatives are already beginning to improve the profitability trajectory of the business. In fact, in some of our mature businesses as well, we took some call to rationalize the cost structures as well. Alongside the financial discipline, we continue to sharpen our strategic positioning for the next phase of growth. Importantly, we are now transitioning from our tactical cost stabilization to structural efficiently driven transformation.
Our BCG led COTS transformation initiatives are now getting institutionalized through an internally named project Project Pulse. Our Enterprise wide Digital Blackboard, Integrated Sourcing, Supplier governance, procurement workflows, pricing, intelligence and importantly the Master Data Management are all getting unified into an AI enabled platform. Thereby, whatever BCG gave us recommendations on procurement efficiencies we believe should get institutionalized. We believe this initiative should keep giving us benefit year over year and in some of our large verticals.
Besides the initiatives related to procurement efficiencies, we also witnessed room to improve the OPEX and the utilization thereof. And in the later part of the year we took measures through, you know, in case we had to take some calls for redundancies. We took that and provided for that in the later half of the year as well. As we enter FY27 we continue to remain mindful of ongoing macroeconomic and geopolitical uncertainties. We believe the foundations of the business have materially strengthened.
Now we’re entering the new year leaner, more disciplined, operationally sharper and strategically better positioned to benefit from the emerging sourcing ships and improving trade tailwinds globally. With this I would like to hand over to Mr. Sadiq Sunasra, our group CFO, to walk you through the financial performance for the quarter and full year FY26.
Sadiq Sunasara — Chief Financial Officer
Thank you Sanjay. Good evening everyone. Let me take you through the key financials and operational highlights for Q4 and FY26. For FY26 the business delivered GMV of approximately 19,666 crores reflecting 5% year on year growth while revenues grew 4% to 13,110 crores. From a margin perspective, gross margins for FY26 improved by 48 basis points to 20.6% supported by procurement efficiencies, disciplined sourcing and some one off opportunities in Q3. On the OPEC side we witnessed encouraging sequential improvements during Q4.
Employee expenses remained largely flat versus the previous quarter while other expenses declining by approximately 6% quarter on quarter reflecting tighter operating discipline and ongoing cost optimization initiatives and these are despite the additions in PNL of NEAT Gallery in manufacturing and one vertical of GSCL Michael E in sourcing side. EBITDA for the year was 385 crore versus 457 crore last year. Other income almost doubled to 99.7 crores in FY26 primarily driven by FX gains and mark to market gains of around 19 crore on PDS Venture investments.
We are witnessing positive traction across our venture tech investment portfolio with improving value realization and it is now moving towards a self sustaining model with new investments will only be done from cash realized from exits. Finance cost for the full year was 14.65 crores, higher by about 16% compared to last year. If we remove NEAT Gallery interest component, the interest cost on a like to like basis was only higher by a around 3%. There’s a decline of approximately 5.4% sequentially supported by stronger operating cash flows and improved working capital efficiency.
Effective tax rate for FY26 was 13.5% compared to 10.1% in FY25. As guided earlier we have full impact of pillar 2 now in our ETR at India standalone levels we have taken an impairment of about 14 crore on investment in BBS lifestyle vertical BTA. On account of this and other losses have reduced our Q4ETR to almost 7.7%. PAT for the year was 178 crores versus 241 crore in FY25. Our profitability improved during the quarter with Q4PET increasing almost 95% quarter on quarter to 72 crores compared to 37 crores in Q3 driven by improved operating leverage, tighter control on operating costs and moderation in finance costs.
During the year we undertook several restructuring and rationalization initiatives including the closure of Design ARC Branch and Lilly and sid, consolidation of Design ARC Asia and Design ARC Licensing business into Politic GEM Vertical and other exits from loss making businesses such as Grupo and jcraft verticals. We are engaged in strategic discussions with business heads of other verticals identified as part of our portfolio optimization initiatives to improve overall profitability and capital efficiency.
From a segment perspective, the sourcing business remained resilient contributing revenues of approximately 12,399 crore with EBIT of 266 crores. The manufacturing segment also delivered strong performance during FY26 with revenues growing 31% year on year to approximately 1034 crores and EBIT increasing to 57 crores translating into EBIT margins of approximately 5.5%. The performance was supported by operational improvements, better factory utilization and the successful integration of GRID Gallery acquisition.
Our balance sheet continued to strengthen materially during the year. Anjay had briefly mentioned the numbers Net debt reduced sharply to around 105 crores as of March 26 from 374 crores in March 25. Despite the consolidation of approximately 98 crores of debt from NEAT Gallery acquisition, net working capital remained tightly managed at around four days supporting strong operating cash flow generation of approximately 780 crore during the year. CAPEX during the year was almost reduced by more than half compared to FY25 reflecting disciplined capital allocation.
Our leverage ratios remain comfortable with net debt to EBITDA at around 0.36 and normalized return on capital employed at approximately 25% reflecting improving capital efficiency and stronger balance sheet quality. Lastly, I am pleased to share that we have proposed a dividend payout of rupees 3.3 per share, of which rupees 1.65 per share was paid as interim dividend amounting to around 42% of FY26 pack, maintaining our capital return track record. With this we now open the session for queries from all the participants.
Thank you.
Operator
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 the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Hitendra Pradhan with Maximil Capital. Please go ahead.
Unidentified Speaker
Hi sir, thanks for the opportunity. So my first question is with regards to the gross margin. So sir, what is our outlook for gross margin and EBITDA margin for this year? If you can elaborate like you know on the vendor side and as well as the on the client side, you know how the situation is currently stacked up and we can you know further gain on gross margin from Europe.
Sanjay Jain — Group Chief Executive Officer
Could you kindly repeat your question briefly? Again we all could not hear it clearly.
Operator
We request you to please speak a little louder and closer to the mic. Sorry,
Unidentified Speaker
Sorry no, just was asking for the outlook on gross margin and EBITDA margin for this year. Sir, on the gross margin if you can elaborate on the you know if we can further kind of gain from these labels specifically from the vendor side or on the client side because you know situation is bit difficult Macro wise, as you mentioned highlighted. So if you can elaborate on the gross marks inside, that would be helpful.
Questions and Answers:
Sanjay Jain
Yes, I think as we mentioned at the end of our third quarter call that we are anticipating an average 40 to 50 basis point improvement in the gross margin in the next one or two years every year. So we remain at that number. So this year if we all go well, we should see a gross margin improvement of this order. I think slightly more than that, a 50 to 75 basis point. We are targeting that it should reflect in terms of improvement in the EBITDA margins for the current year the benefit of gross margin.
Secondly, the current costs between gross and EBITDA reflect a lot of restructuring initiatives as well which have been one time costs. As we look forward to make recovery, we should see slightly better than gross margin improvement in the EBITDA margins.
Unidentified Speaker
Yes, on that point, sir, if we exclude the investment into the associates, I mean you had guided that, you know that that would kind of moderate down. I think it was, it is currently at 120cr and you know it will come down further. But you know, excluding that the other expenses seem to have spiked this year as well. So you know sir, what will drive the efficiency gain in the other expenses, you know that you are saying that you know then that would contribute to our EBITDA margin gain.
Sanjay Jain
Yeah. So I think firstly we need to make a like to like comparison of the other expenses. For example, while on the whole increase appears to be 16% for the entire year. But if we exclude Net Gallery, the GST acquisition that we did, it is more closer to about 11% or so. And some of the one or two drivers of this increase is for example, we had an impact of royalty payment related to our brand sales while we were in the mode of curtailment of certain brands. But we could not in the near term bring down our royalty obligations.
So that was one. And as Sadiq also mentioned that the businesses that we have taken a call to shut down, you know, there are some provisions related to that as well. So I guess as you know our top line traction build up as these one offs go away, you should see efficiency of that coming in as well.
Unidentified Speaker
Got it sir. And sir, final one on the working capital. So there has been significant kind of improvement this year seems to be led by our account receivables as well as I think, you know, other liability. So sir, this 16 to 17 days of working capital, is it sustainable or you know, we can expect some other kind of increase considering the global situation. I mean, you know, on the logistics side or from, you know, the. If we, you know, do gaining more clients on the US or European markets, I mean, can it like kind of, you know, improve further from this level or working capital date can increase from here?
I mean, if you can give your thoughts on that.
Sanjay Jain
I think on a lighter note, we are surely not going to allow it to go back to 17 days. And I think, you know, we’ve come a long way. Our endeavor throughout the year would be to try and keep it at current levels. You know, you may see some fluctuations quarter by quarter. But for the entire year our endeavor would be to maintain where we are at present.
Unidentified Speaker
Okay. Okay, thank you and I’ll join the queue.
Operator
Thank you. Ladies and gentlemen, in order that the management is able to address questions from all participants in the queue, you are requested to please restrict yourselves to two questions only. You may rejoin the queue for follow up questions. Our next question comes from the line of Samit Patel with DT Partners. Please go ahead.
Samvit Patel
Yeah, hi, thanks. Can you hear me?
Kiran Gadge
Yes, please.
Samvit Patel
Yeah, so first up, you know, just looking at the PPT in your top 10 verticals, when we look at poetic gem and simple approach, we see that there’s been a sharp erosion in the margins that they’ve had in PBT terms. Can you just throw some light on what’s happened there?
Sanjay Jain
So as I said earlier, some of the BCG led exercise initiatives which were twofold on procurement efficiency and also in general the operating efficiency of manpower deployment and try and make the best use of it. So poetic gem, simple approach were two key verticals who participated through that exercise. And while we started early on efficiency, procurement efficiencies, on the manpower and other opex, the initiatives got into implementation in the second half. So therefore on the whole, actually, you know, across these verticals there has been an reduction in the manpower and redundancy cost were also built in, you know, in terms of, you know, trying to make it more efficient.
So therefore, to answer your point with that backdrop, what you see here is, you know, more an impact of, you know, the one time redundancies, you know, than anything else. And we should see now with that behind us, we should see that these two verticals, we are very positive on them, that they should bounce back to an increasing trajectory of profit.
Samvit Patel
Understood, that’s helpful. And the second question I had is on when we look at this year, it’s been challenging for us. When we look at our top 10 customers, two of them had a lot of challenges in this year going into FY27. What is the outlook for our top 10. We
Sadiq Sunasara
Cannot hear you. Sorry,
Samvit Patel
Sorry. Yeah, so I’m saying going into FY27, what is our outlook for the top 10 customers that we have in terms of growth?
Sanjay Jain
The 11% growth that we have said in the overall order book. I think across our top 10 clients, you know we should see growth more in the vicinity of about 7, 8%, you know, slightly lower than the average. It is the new verticals that will fire the growth. It is in North America that will be firing the growth. But an average 7, 8% overall growth across the top 10 accounts. We feel positive on that.
Samvit Patel
Thank you.
Operator
Thank you. Our next question is from the line of Rohit from I thought pms. Please go ahead.
Rohit Balakrishnan
Hello. Yes please. Hi. Hi Sanjay. So just you mentioned that gross margin. You are expecting sort of to improve 50 basis points over the next 2, 3 years every year and the flow through should be slightly higher to EBITDA. So like 50 to 75 basis points, is that okay first was that clarification? Is that correct?
Sanjay Jain
Yeah, 40 to 50 basis point average gross margin and slightly higher translation into EBITDA margin. Yeah,
Rohit Balakrishnan
So just, I mean on this point, so just wanted to understand like if one were to look at the cost structure today, I’m looking at the employee cost and other expenses. Of course you mentioned there were some one offs. You alluded to that. And at the same time we’re looking at some deduction as well at an aggregate level based on the VCB program. I’m only talking about the OPEX right now. So from here on, like if, let’s say if we were to revert back to let’s say 10, 12% of opex revenue growth, how do you see the OPEX growing on a normalized level?
I’m not saying that that will be the growth rate that we are aspiring for or that will be the growth rate that you will come to. But just wanted to get a sense that what would be the operating expenses that one should sort of look at given a lot of it is one off or something like that from here on.
Sanjay Jain
So I think allow us to answer it in this manner that we will continue to be extremely cautious for this year. You know, global tailwinds are to everybody’s knowledge, we’ve had a tough year. We’re starting on a good order book note. But I think we’re maintaining a mid single digit growth outlook for the current year and then closer to about 10% or so plus growth in the profits. So therefore if we have to achieve this, you know Then we will, we have been trying to curtail costs. You know, of course the redundancy have to be provided so next year.
To answer specifically your point, I think the growth in the employee cost and other expenses, you know, should not exceed our overall growth in the top line. That I think is clearly we are seeing, you know, as a driving factor inside all our verticals. So that’s, that’s something that specifically I can tell you that the growth in expenses should be slower than growth in the top line.
Rohit Balakrishnan
That’s very good to hear, sir. And just one more thing on the US business. So there was one anomaly that I was noticing. So in the, in the presentation for nine months we had said that there was a 30 crore negative, meaning that you invested 30 crores and for the full year it is 22 crores. So does it mean that there was some kind of a return to profitability or profitability or achievement that business in Q4? I mean, I’m just trying to understand that a bit better
Sanjay Jain
I think. Allow us to make a note of your query. Our team is here and we will surely look into it in terms of what is the plausible reason of that. And you know, I think we will surely circle back to you by this evening or tomorrow in terms of what you observed as a variance.
Rohit Balakrishnan
Okay, so but just from a broader term, the US business is still sort of not scale. Right. So then I mean without getting into specific, I’ll wait to hear from you, but because I think we were looking at getting into Black in the US direct business from somewhere in 27, so early 27. So does that, I mean given the expectation of growth accelerating, does that still hold? And
Sanjay Jain
See the US business did make smaller money in the fourth quarter. I think as we had anticipated, it is, it is PBT positive for fourth quarter. Yes.
Rohit Balakrishnan
Okay. Okay. And so just maybe more longer term and more. So let’s say, I mean we are cautious for the cr. I understand given so much of volatility. But let’s say let’s extend this horizon to maybe two years from here, let’s say FY28 or 29. I mean we had that objective of getting to 5% pattern. I understand that we are way behind there, but like from here on, I mean of course given so much of volatility, one would assume that a business model like ours would be very much favored by companies. So what I mean from our positioning with the customers and our positioning especially with our newer customers, I mean given all that, how do you, let’s say three years out you’re starting FY27 now, let’s say FY29.
How do you see like what would be the baseline achievements or baseline metrics that you would want to sort of definitely you feel confident today given wherever your conversations are going across different geographies, different types of customers. I mean if you could maybe talk a bit in terms of numbers because that will help us because business model wise I know we are fairly, I mean it is all for us to see what I mean the value that we bring. But if you could maybe contextualized in terms of financial numbers.
I know it’s difficult but if you can just. And I’m saying like let’s not talk about next four quarters. I’m saying let’s talk about maybe two, three years out.
Sanjay Jain
Yeah. So I think firstly allow me to request that post this we move to the next participants. Our teams are available to answer and I also have Palak joining from London. So we divide answer to your question if required in two parts. Let me request Palak to give you a two, three year strategic outlook in terms of how we see things evolving from there. And you know, I’ll surely supplement that with numbers as you asked. Palak, over to you please.
Pallak Seth
Yeah, yeah. Hi Sanjay. Hi everyone. So what we are definitely seeing, you know, both in the us, UK and European markets that the retailers are under pressure to cut costs and restructure the organization. So what that is doing is definitely bringing opportunities to platform like PDS where they’re coming to us for various services. So as Sanjay mentioned earlier, you know, the sourcing as a service business model that we had started around two years ago is having some very large active conversations with retailers who are talking about cutting overhead in their sourcing operation in Asia and giving PDS the option to run those businesses.
So hopefully in the next two, three months we’ll have some large contracts signed and they’re normally four to five year contracts so they’re not businesses which every quarter we have to start from zero. These are long term contracts where PBS can then predict its revenue and bottom line based on some of the discussions. Similarly on the design led sourcing business which is the core of the company, we are again seeing that there are a lot of retailers who are restructuring the organization, reducing their own design function and depending on certain vendors to bring them those opportunities.
So overall the markets are tough but the macroeconomic condition that is pushing our retailers to cut costs, restructure the organizations is throwing a lot of opportunities towards bds. In the last two to three years, you Know, we took a conscious decision to invest in few new verticals and I think you know, out of the 20 new verticals we have started, 12 or 13 of them have actually now succeeded and have become profitable. And they are all these, you know, the businesses that we have started will all scale up in the next two to three years based on the traction and the customer base that they’ve been able to onboard.
We have seen the only segment in PDS which we are currently considering how to carry forward and what they perform is the entire brand’s business. You know, because the brand wholesale business is more challenged. So PBS is trying to rationalize this portfolio on the brand business business. But designless sourcing, sourcing a service structurally is really working in our advantage. Customers cutting costs, outsourcing more activities and fortunately for us there are not too many other competitors who can professionally work with the retailers on these large opportunities.
So the good thing is if there are any global sources contracts coming up, it’s only PDS and Lian Fung which are actually in the RFQ stage at the end. So I think overall we are remaining quite confident. Last 12 months we have not started any new vertical or invested any new business. We continue to next 12 months we probably will continue not to also make any new investments. But the investments we have made last three years, many of them have started working quite well and we lay the foundation for future profit and growth of the company.
Sanjay, you want to add anything on top please? Yeah,
Sanjay Jain
Thanks Palak. And I think in terms of cancellation of that through numbers while I will again emphasize our continuation of caution for current year but we remain very positive about mid teens growth from medium to long term outlook. And I think everything is in place first and foremost this year 26, 27 we got to make sure restoration of our profitability and then changing gears to scaling up growth thereafter in the next year. So therefore to answer your point, medium to long term mintage growth that you also historically achieved in the past, we are very positive that that is very much doable.
Operator
Thank you. Our next question is from the line of Vinod Krishna from Avendus Wealth. Please go ahead
Unidentified Participant
Sir. I’m audible sir.
Sanjay Jain
Yes please. Yeah.
Unidentified Participant
So in continuation with the last participant. See I’m new to the company so if you pardon me, if you have answered my like, let’s say you add new customers like Walmart and you are also working with retailers, brands and PE players. So my doubt was because sourcing of textiles runs into I don’t know how many tens of billions of dollars so when you try to scale up with each customer because they are not going to completely shut down their procurement departments or sorting, how will we get the get into them and start gaining wallet share?
Can you explain more in detail like the value proposition of PDS and why we will win over the long run and because why where is this question coming from? Is given such a huge opportunity market should not really force us to post very, very low growth rates. Right. And we and how confident of you are achieving that 555 in the coming, I won’t say decade, but at least before this decade, like in the coming seven, eight years. So I think you understood my question, right? How do you Because Walmart is not going to shut down their procurement department, but they still have onboarded you means there is some dynamic playing over there that some kind of vendors or manufacturers they wanted through you or some kind of categories they wanted through you.
So if you can explain us why you can scale with Walmart kind of players and why they allow because they’re not going to close down everything. So that’s our understanding. If you can explain it would help us understanding the PDS ability to scale in the long run.
Sanjay Jain
You want to take that first? Yeah,
Pallak Seth
Yeah, yeah. I can, I can, I can take that first. So I think, you know, if you look at a retailer’s typical procurement model, especially people like Walmart, approximately 15 to 20% of their sourcing is through their sourcing offices. Currently 70 to 80% is through third party party. So, you know, so there is, if you are a direct factory based out of India, Bangladesh or China, Vietnam of these countries, typically your source of getting those orders is going to the local offices of Walmart or other similar retailers and taking the tech packs and executing those tech packs and confirming the orders.
But large part of the business is still run from your New York domestic wholesalers or third party vendors, you know, so the buyers are given a clear opportunity to buy from wherever they can get the best price and design and value equation. So today, day and age, very few retailers are insisting that the business happens only through their procurement offices. This is where designless sourcing ends up becoming more and more useful and meaningful to our customers. So that is on the Walmart piece.
But then there are other retailers. For example, we are talking to one of the largest French supermarkets. They are one of the largest supermarkets which have got huge procurement happening in Asia, but they are becoming a food first business. So there they have a strategic intent to diverse the entire sourcing. So in that case then PDS is talking to their friend supermarket that we could potentially do sourcing as a service and then take on the headcount and payroll they have across countries in Asia and then become their sourcing operation and run the entire procurement on their behalf through the sourcing and service business model.
So you know the industry is very dynamic, right? So the way the whole market is to going going there is opportunity for different formats and different retailers to exist. And similarly for the supply companies, I would say, you know, if you’re a factory today sitting in Asia and you’re not in the top five factories in any one country, a large manufacturing group, it’s very difficult to get any traction from any retailer today. So you know the retailers also consolidating their supply chain. And if you’re just another factory having some production in some part of part of Asia, you’re not able to attract the right customer strategically as well.
So the value proposition period offers is clearly there. You know, that is why we are looking at close to 20,000 crore GMV this year and some of the discussions happening that will continue to grow in the years to come.
Operator
So your comment about the services
Pallak Seth
Business. We are the only services business industry. When we reach, when we approach a customer PDS says we have got four core services. One is manufacturing where we own our factories as well. We have factories in Bangladesh, Sri Lanka and India. Second is strategic vendor model with design less sourcing designing to the retailers private label. And we got around 600 factories approved across Asia where PDS become the vendor to the retailers. And these factories are attached under PDS to those retailers.
So for example the Primark or Kohl’s PDS is the window on record and under us maybe 30 or 40 different factors have been approved in different parts of the world. Periods of the design, development and sales. And then procures good from these parties and maintains a gross margin of 15, 17, 18% whatever maximum we can get in that design and sourcing model. So first is manufacturing. Second is strategic vendor which is design led sourcing. Third is agency which is we call sourcing as a service where we become retailer sourcing operation and under entire operations in different parts of the world.
And fourth is the brand business where we a lot of brands have been sold to IP companies and then PBS take those brands and then help distribute on the wholesale basis. So the first three businesses we are quite confident the manufacturing, the design, the sourcing and sourcing the service definitely you know this profit business model on the brand side we are evaluating our portfolio, how much to keep and what to invest in the future or disinvest. So out of the four services three are actually gaining a lot of traction and there’s huge value proposition from the customers that they see and continue to give us opportunities.
So hopefully answers your question.
Unidentified Participant
Thank you very much for detailed answer. So the 5 billion GNV. We
Operator
Request you to please rejoin the queue if you have any further questions. Thank you. Our next question is from the line of Amador Rati with countercyclical investments. Please go ahead
Madhur Rathi
Sir. I’m trying to understand that when the global Apparel market is 1.9 trillion and our GMV is 2.22 billion, which is 0.1% of the market share, then why have we chosen to get into the brands and started competing with our customers instead of why not first get a 1% market share and then try to diversify into non core areas.
Sanjay Jain
So I think the offering of private label stroke brands has been very synergistic to our offerings. The customers through their loyalty programs came to this conclusion that they can do some customized offering in their stores and they invited us to participate in that. It went very smooth and fine because there has not been any inventory risk as well and our brand business has been growing steadily. It is when we went ahead with the Threadbaker arrangement whereby we relied on while we did our own diligence but we relied a lot on, you know, a very large private equity bad ABG group, you know, having the ownership of Ted Baker brand and having appointed their own franchisee to run the UK and US operations.
Everything looked good. It is when these retail franchisees, you know, went into administration that the agency sales of new lobsters to Ted Baker got impacted. So therefore what we started has seen good traction. We relied upon, you know, a large players appointment of the third party franchisees. So I think that did not work out well. So that is where you hear a bit of caution. You know, as Palak also rightly said, manufacturing we are very positive sourcing as a service, very positive designer sourcing, very positive brands.
We are carefully evaluating, we have curtailed a few. So I think in the, in our journey brands has been a mixed kind of success. But that’s fine. I think we seem to have taken the corrective actions and the focus for the near term shall continue to be the three segments that Palak mentioned and the brands being run by us more in the shape of private labels without any inventory risk being taken.
Madhur Rathi
So the 124crore log that we did last year, when will we break even and what Is the loss expected for FY27 and when will we reach our EBITDA? That we did four years back of 475 crores in FY23. After that we raised 400, 450 crores also. So basically since FY23 the net worth has gone up by 70% but the EBITDA has collapsed. So I mean are you satisfied with this performance?
Sanjay Jain
So I think I will answer what you asked first that we had in the Last financial year FY25 168 crore of investments across new verticals. And we had foreseen that in the coming two years firstly in FY26 we will try and bring that down by 1/4. We’ve actually brought it down by 27 and had we much said we will be able to bring it down to about 80 crores in FY27 we remain positive that we will be able to bring it to 80 crores. Beyond that a 50 to 60 crore every year is going to be a recurring investment.
That is the way my model is that we bring new partners on board and they take about 12 to 24 months of gestation. So that’s the answer to your first point. I think as this happens, number one, as we discussed earlier in terms of gross margin improvement, impact and the EBITDA margin we should see us seeing an EBITDA improvement. Of course we are not happy with the last 1824 month performance. So therefore we tightened our belts and took some. Of course the global environment have been tough as well.
But notwithstanding, I think we are not happy and we are trying to get into a stage wherein our performance should be reflective of whatever platform is due. So I guess next few quarters the measures taken, initiatives taken should see the translation of that into numbers,
Rudraksh Raheja
Right? That is from end. Thank you so much and all of us
Sanjay Jain
Thank you.
Operator
Thank you. Our next question is from the line of Kiran Gadgi with Knifestone Capital Management llp. Please go ahead.
Kiran Gadge
Hi, good evening. Under BCG initiative we had cogs and OPEX cost savings if you could provide full year number for both.
Sanjay Jain
So I think part teams should be able to separately give you, you know, specific inputs. As I recall we had foreseen, you know that annually about 40 to 50 crore we should be able to save in our procurement and similar number in our OPEX as well. So I think we are well on track. But to your specific ask, I think there was also earlier an ask on some specific details of new vertical. Both these points you have taken a note and our teams would Be in touch to answer that.
Kiran Gadge
Okay. And we saw degrowth in H2 for simple approach, crayons, slider vertical. So if you could talk about them,
Sanjay Jain
I think simple approach, I would pick the first. You know, I think it’s S2 has been an aberration. So we should see the vertical getting back in growth from H1 itself. So that’s number one. I think Crayons is largely serving the US markets and they have been as you know, the turbulence due to the tariff impact and otherwise. But structurally beyond the US impact crayons is looking fine both in terms of top line and profitability. So these two, we are very positive that in H1 itself you should see them posting both top line growth as well as profitability growth.
Our vertical collider may take one or two more quarters. It is very leanly, very low cost structure, profitable business. But it may take one or two more quarters to get the growth back. But on the whole these three put together aggregate should have an ascent growth.
Operator
Thank you. Our next question is from the line of Rudraksha Raheja with I thought financial consulting. Please go ahead.
Rudraksh Raheja
Thank you for the opportunity, sir. I hope I’m audible.
Sadiq Sunasara
Yes please.
Operator
Yeah, I wanted to ask on the Red Lobster division, how much revenues and profit before tax did we do in this for FY26?
Sanjay Jain
Yeah, so just go with your second question while we’re just taking out in few seconds the numbers please. Yes
Operator
Sir. Circling back on the operating expenses part, you mentioned that if we remove the from other expenses the growth rate would have been 11% instead of 16%. Could you quantify similar figures for employee expense as well? Like how much can be growth can be attributed to one off which we hope won’t be repeated in FY27.
Sanjay Jain
Yeah, I think our employee cost last year was circa 1211 crores. This year has been about 1310 crores. So this is almost an increase of what crores or so? I think the knit gallery and the GSE were about 50 to 60 crores out of this 100 crore increase. So if I take that out, our employee cost would have gone up apple to apple about 40 odd crores as compared to the same period last year which is almost an increase of three, three and a half percent. In terms of percentage. In terms of percentage done.
So this is, this is answering your point. Does it answer your question before I come to New Lobster?
Operator
Partially, sir. So just one small clarification. Since GSCL and Netgallery both would be part of our business going forward, whatever base we have for revenues in last two quarters, let’s say that should be ideally continue for next year as well. And whatever growth we may do on top of that would be additional.
Sanjay Jain
Yeah. So 1318, the 1310 crore that we have as an employee cost is the base now. I think now there would be if at all any merit increase or any initiatives in terms of employee cost efficiency should be on the base of 131 0. That’s the new base that we have right now.
Rudraksh Raheja
Understood, sir. Yeah.
Sanjay Jain
In terms of your question on you know, a new lobster, we had, you know, for the entire year income from operations of approximately 500 crores and similar period last year was about 480 odd crores. So it’s almost an increase of about 4%. But there has been a decline in the gross margin of the business by about 10% from about 30% last year to about 20% this year. Mainly because the agency business of, you know, new lobster almost dried away. So therefore the gross profit which was 150 crores came down to almost about 100 odd crores this year.
And therefore as a result because of the 4% growth, but the margin decline, the profit after tax of the business which was circa about 30 odd crores last year has actually increased this year to almost about 38 odd crores or so. So it’s kind of that the situation where it stands, you know, and we are, we are working on it to try and you know, bring the business closer to firstly cut losses and bring the business to profitability. But this is where it stands that the decline in gross margin impacted the profits of the business.
Operator
Understood. Sir, could you help us understand you have highlighted in your PPD this new lobster turnaround with a red circle which signifies there are some initiatives that you are still undergoing here. Could you help us understand that?
Sanjay Jain
I’ll request Palak to first give us thoughts and then you know, if required, I’ll submit the numbers.
Pallak Seth
Yeah. So as Sanjay mentioned, you know, out of most of our subsidies, new lobster, which is a Ted Baker business remains one of the bigger challenges especially around the bankruptcy of the retail partners. You know that ABG had chosen. Those bankruptcies had not happened and this business would have been highly profitable. But it is what it is now. You know, the financial situation of those retail partners was not what was expected. So we are in close discussion with abg, the brand owner and discussing with them.
Either they have to give the finance contribution every year for us to be able to maintain and run the head office of the business or they have to then find A new retail partner who will then be able to ramp up the volumes and give us adequate turnover required to be able to maintain the infrastructure of the entire buying and design operation of New Lobster for Ted Baker. So they are the discussions we are having right now. So hopefully we’ll have some conclusion in the next four to six weeks. In this current financial year they’ve already agreed to a financial contribution of around $2,500,000 which will be paid to New Lobster on a monthly basis which will help us in improving our profitability.
But that financial contribution will is only for 12 months. So we are asking them to extend it for another 24 months after the 12 month period is over or replace that with additional turnover coming through a new appointed detailed franchise partner. So we are very actively trying to address this issue because for us also this is one of the bigger pain points and hopefully you know, we will have some positive conclusion the next four to six weeks with our discussion with abc. Sanji, want to add anything further?
Sanjay Jain
No Palak, I think we answered the numbers earlier and you answered on the thought process going forward to address solutions.
Pallak Seth
Yeah,
Operator
Thank you.
Pallak Seth
Brand is doing well. It’s still very strong brand, you know, but just the volumes are not there to support the infrastructure we are carrying to run the brand. We just opened a concession in Selfridges. So when a brand ends up becoming in Selfridges in UK definitely you know the Selfridges would not take the brand unless they see value in the brand. And also Aditya Birla, the franchise park in India is planning to open 10 more stores in the next two years. The bank continues to perform and has strong consumer connect.
Just economic and financial model we have to work out with ABG because they are quite committed. They also want the brand to grow and to flourish from where it is currently.
Operator
Thank you.
Pallak Seth
Our
Operator
Next question comes from the line of Dwanil Desai with Turtle Capital. Please go ahead.
Rudraksh Raheja
Hi, good afternoon everyone. So I have large clarifications on the earlier answers that you have given. So the first question Sanjay is that we talked about 11% order book growth and mid single digit revenue growth while we also said that the US business order book is up by 30%. Europe also last year, you know, from the days the Metallon and Gary Weber has gone out. So are we expecting very sharp degrowth in Europe because this kind of doesn’t add up.
Sanjay Jain
You know if I slice the order book growth for example UK and Europe, it’s a low single digit about growth in order book. Asia is looking at about 8, 9% growth in order book and America is faster than 30%. So it’s not de growth in terms of order book but when we talk about the 5, 6% growth versus 11% order book. Yes, we are being cautious because last year also saw from time to time some pushback from the customers to hold the shipment. You know we deal with good creditable customers so eventually they take shipments.
But there has been a pushback. The customers have been cautious on inventory buildup as well. So it is this caution, you know that is kind of holding us back. You know, we hope that the order book growth translates into top line growth. But whatever one has witnessed in the past few quarters makes one cautious about it.
Rudraksh Raheja
Got it. A second question is, you know you talked about 40 to 50 bits margin improvement and you know, new investment going down by another 40 odd crores. So if I add both of this up it’s 90 to 100 crore kind of a number flowing through EBITDA now because our financing, the debt style is kind of, we are managed balance sheets are. So if we don’t increase the finance cost and not much of a capex. So ideally this all should flow through the path. Right. But you talked about 10% patch growth so I’m not able to reconcile.
Sanjay Jain
So I think I don’t have a difference of opinion from the math you just did. I think you know, a 5% top line circa 10% bottom line is where we stand, you know, in terms of extreme caution and you know, hopefully things should get delivered better. That is where we stand. And as quarters passes by, as we keep delivering, you know that should allow us to relook at it. But this is where, this is where it stand as of now. We need to be prepared for the global headwinds that are there. So that’s where we are coming from.
Rudraksh Raheja
If this to translate whatever that you are saying that means that 1900 crore EBITDA Delta will come right. If we kind of able to pull it off with this thing. Or am I missing something?
Sanjay Jain
No, I think slicing it into pieces, a 40, 50 basis point gross margin. Yes, we are geared towards that. Curtailment of expenses lower than the top line growth. We are geared for that. So all goes well, it should translate into, you know, it should translate into commensurate profit. Yes, yes it should be. On that mention we are, we are restraining from committing to new investments for one more year. You know we would of course be signing sourcing as a source service contract but in a typical manner, the way we take new verticals on board, you know, through the PNL we are restraining for 12 more months.
So therefore all of this should translate. But, but this is the stand right now.
Rudraksh Raheja
Last question. So in US this quarter till nine months, I think US growth was 19% and for the entire year it is 10%. So looks like that there was some degrowth in Q4. Is that the understanding correct? And given that we are from a low base, we have penetrated into so many accounts, you know, should we expect that 25, 30% plus kind of a growth in FY27 or how should we look at it?
Sanjay Jain
See if I. If I’ve understood your question right, I think our Americas top line in quarter four has been pretty much flat. It’s in terms of dollar terms is about 0.4% up sequentially in quarter four it has slightly come down as compared to quarter three is, you know, it’s about 4,5% lower. But I think tariff situation. In fact, one of the participants asked a question on crayons that crayons has declined in H2 and we. Yes, it has declined but it has got a stable order book like Costco as client, etc.
But that’s history. Today where we stand is a 30% growth in America’s order book as compared to same period last year. So we should see now more traction building up in terms of growth for America.
Rudraksh Raheja
Thank you. That’s it from my side.
Sanjay Jain
Thank you.
Operator
Thank you ladies and gentlemen. We will take that as a last question for today. I would now like to hand the conference over to the management for closing comments.
Sanjay Jain
Thank you so much, EY team, and thank you so much for all the participants who took time to be part of the call. And we shall be in touch with you at the end of the next quarter and extending greetings to all of you. Stay safe. Thank you.
Operator
Thank you on behalf of PDS Ltd. That concludes this conference. Thank you all for joining us. You may now disconnect your lines.