As we reflect on the past year, it is evident that we have navigated through a period
of extraordinary challenges and profound shifts in the global landscape. The overall
growth of the Indian economy has outpaced global trends, although discretionary consumer
spending has been subdued, which has had a significant impact on the clothing industry.
Global uncertainties and geo-economic fragmentation further exacerbated these challenges,
demanding both resilience and strategic foresight.
As the world emerged from the shadow of the Covid-19 pandemic, new pressures arose
stemming from inflation and the geopolitical challenges posed by the Ukraine- Russia
conflict and the Israel-Hamas war. Attacks by the Houthi rebels on the sea routes caused
disruption, increased costs and lengthened transit times. The fallout of the "revenge
buying" during the previous year misled the trade into overstocking, which had to be
drastically reduced, impacting their ability to make fresh buying commitments.
Encouragingly, inflation has softened from the highs of the previous year and is expected
to continue to moderate. These developments suggest that monetary policy may ease in the
near term. Nevertheless, global GDP growth is anticipated to remain modest at around 3%
for 2024, reflecting the continued impact of these diverse challenges.
Amidst these global challenges, India has stood as a symbol of strength, leading the
way among major economies with its robust growth. India's progress has been driven by the
government's unwavering commitment to infrastructure development and economic reforms.
However, consumer spending post-COVID has been impacted by inflationary pressures, higher
interest rates, and rising consumer debt, leading to a temporary slowdown in discretionary
spending. Yet, the long-term potential of our economy remains robust, underpinned by
powerful structural drivers such as a young population, rising disposable incomes and
digitization. These factors continue to position India as a formidable growth opportunity
for decades to come.
Looking ahead, the Indian domestic clothing market is expected to touch USD 180 billion
by 2025, growing more than threefold from its 2015 value of USD 59 billion. This makes
India an attractive destination for global brands and retailers. The expected growth will
also bring about substantial changes to the manufacturing and retail landscape in our
country, creating opportunities for those who can adapt to the evolving market dynamics.
As global trade dynamics shift, particularly with China's share in global apparel
exports shrinking further, India is presented with a significant opportunity to capture
its rightful market share. However, the rise of Mega FTAs that exclude India poses a
continuing threat to our exports. To counter this, India is pursuing multilateral trade
agreements with major markets. In the absence of definitive timelines for these
agreements, it is imperative that Indian companies adopt a borderless manufacturing
approach - our initiative in Bangladesh is a step in this direction.
The rapid expansion of India's middle class is leading to increased purchasing power
and a shift in demand from unbranded to branded products. Historically, India's
discretionary spending has been lower than that of other major world economies, indicating
substantial headroom for growth. Improved credit availability and financial inclusion will
also support demand, particularly in the organized sector. With increasing urbanization
and rising income levels, the opportunity for premiumization within the market is immense.
Zodiac is attempting to capitalize on these trends by expanding its product portfolio,
with two new product launches during the year which have been well received, with more to
follow.
Digitization has been democratized in India through initiatives such as Aadhaar, Jan
Dhan Yojana and UPI. The availability of affordable data has led to a surge in mobile
phone usage and internet penetration, fueling the growth of e-commerce, online payments
and other digital services. At Zodiac, we have recognized these shifts and have embraced
digital transformation as a core component of our strategy. We have invested heavily in
enhancing our digital platforms, optimizing our e-commerce portal and using advanced
analytics to better understand and predict consumer behaviour. Our social media campaigns
and targeted online advertising efforts have become pivotal in reaching a broader audience
and engaging with them more personally and effectively. These initiatives have led to
handsome growth in our e-commerce sales, our best performing channel.
As we look to the future, the long-term outlook for the Indian fashion industry remains
positive, driven by several key factors expected to sustain in the coming years. India is
fast progressing on its ‘Viksit Bharat 2047' roadmap, with the ambitious goal of
becoming a developed nation by the 100 th year of its independence. This plan outlines
actionable and measurable goals in economic growth, sustainability, ease of living, ease
of doing business and social welfare. The government is planning a strong impetus to
manufacturing, setting the stage for sustained economic progress.
We remain confident in India's potential and in Zodiac's ability to navigate the
complexities of the global landscape. Our focus on innovation, sustainability, and digital
transformation, combined with our deep understanding of the Indian consumer, positions us
well to seize the emerging opportunities.
In closing, I wish to express my deepest gratitude to our esteemed shareholders for
their unwavering trust and support. Your belief in our vision and strategy continues to
inspire us to strive for excellence. I would also like to extend my heartfelt thanks to
our valued customers, whose loyalty drives us to constantly upgrade our standards. My
appreciation goes to our Board of Directors, management team, and all our employees for
their dedication and commitment to upholding our values and guiding us through these
challenging times.
As we move forward, we do so with a shared conviction that together, we will continue
to build on our legacy of excellence and navigate the future with resilience and purpose.
| Mumbai |
A. Y. Noorani |
| 8th August, 2024 |
Chairman |