- Envisages Sri Lankan operation to double in size by 2026 to $200M
- Expresses confidence in Sri Lanka’s ability to deliver amidst economic headwinds
- Recognizes Sri Lanka’s workforce and innovative sustainable manufacturing processes as key strengths
Earlier this year, global fashion infrastructure platform PDS Limited announced the unveiling of a centralized cutting plant in its Sri Lankan subsidiary Norlanka, located in Malwana. With a fully digitalized and integrated system, starting from mill inspection to warehouse operations, fabric inspection and the cutting process, this initiative is a testament to how multinational companies can collaborate effectively with local manufacturers, by leveraging technology.
Founded over 24 years ago in Hong Kong, PDS has been growing steadily, creating a network that oversees the end-to-end manufacturing process of apparel. Despite global economic challenges that have impacted apparel manufacturers worldwide, the Company generated USD 2 Bn in Gross Merchandise Value and is poised to more than double its revenue in the next 4-5 years.
Priding itself as a global collaborative platform catering to over 300+ brands, the Company has expanded to over 22 countries, providing a global plug-and-play platform for entrepreneurs in the areas of designing, sourcing, manufacturing and brand management, serving leading global brands and retailers. This unique business model not only operates in an asset-light manner, infusing scalability and robustness into the business, but also promotes a large entrepreneurial ecosystem throughout its entire value chain.
Executive Vice Chairman of PDS Pallak Seth says, “We are looking to further expand our manufacturing footprint to include Egypt and India, while also exploring other strategic locations. Establishing a green field manufacturing plant is challenging, time-consuming and costly in the current context due to the challenges in finding manpower. Therefore, our models involve acquiring businesses by taking the majority stake and integrating them into the PDS Platform, allowing manufacturers access to our global network of designers and vendors.”
Manpower and Innovation – Sri Lanka’s Strength
Reflecting on the PDS journey when it established a presence in Sri Lanka over ten years ago to set up Norlanka, Seth observed that the country possessed the strength of a knowledgeable workforce and a rich vendor base.
“Sri Lanka is a great manufacturing destination that offers excellent quality and commendable health and safety standards, particularly for baby products and intimate wear,” he explained. “In just a few years, we generated a revenue of USD 100 Mn by adopting a customised model designed specifically to meet consumer needs. We are now regarded as the preferred vendor for retailers who would otherwise find it challenging to manage and collaborate with smaller factories. PDS is the conduit that ensures designs and financing are provided to factories. This leaves room for the factories to focus on manufacturing.”
In the world of global manufacturing, PDS views its subsidiary Norlanka as a thriving success story, poised for remarkable growth. The Company aspires to achieve a staggering revenue of USD 120 Mn this year, with ambitions to double its business within the next 3-4 years.
In order to reach this target, PDS has several initiatives in the pipeline. The Company recently invested in a manufacturing base in Trincomalee for babywear and partnered with a further 2 to 3 factories to enhance its capacity.
The Company also established a centralized cutting plant in close proximity to the commercial capital Colombo, opening up capacity, adding value and creating further investment opportunities for vendors and customers.
“There are good apparel manufacturing facilities in Sri Lanka that are USD 10 to 50 Mn in size, which have demonstrated governance, compliance and are future-ready,” stressed Seth. “PDS is interested in investing in such companies so we could help them grow to become USD 100 Mn businesses. With our extensive financing resources and global network and collaborating with 350 retailers worldwide, we also seek to bring these opportunities to Sri Lanka, fostering mutually beneficial partnerships with local stakeholders.”
Embracing Solar Technology to Drive Sustainable Manufacturing
As the only global apparel manufacturer in the world with a structured corporate venture capital arm ‘PDS Ventures’, the Company strategically invests in the sustainability and circular economy space. Set up six years ago, it has already invested over USD 25 Mn into founders that have emerged from prestigious universities like Stanford, Oxford, Cambridge and Imperial. PDS has made 60+ such investments over the years in a host of selected companies bringing innovation in material science, traceability, manufacturing technology or post-consumer waste and has taken a strategic stake in these investments.
Seth noted that when it comes to sustainability, Sri Lanka has shown great commitment towards sustainable manufacturing practices. Norlanka is the first facility to install a solar power plant generating over 70,000 kilowatts (kWh) among its 45 companies across the globe.
“Also, the human capital in Sri Lanka is so evolved and developed,” commends Seth. “It is because of this that we see the industry moving forward speedily. Our Global Head of ESG and Director of Sustainability & Innovation drives this global agenda, while compared to other countries, our Sri Lankan team possesses the unique ability to understand and drive this sustainability agenda.”
According to the PDS Group Sustainability Report 2023, Norlanka Manufacturing has adopted several sustainable practices, aligning itself with ESG goals and the United Nations’ Sustainable Development Goals. The Company hopes to become a net-zero landfilling organisation by 2024 and achieve carbon neutrality by 2025.
Seeing Opportunity in Crisis
Despite a decline in orders across the globe due to rising inflation and a slowdown in the growth of developed economies, PDS saw Norlanka emerging as a reliable partner for both retailers and customers. “From a national perspective, as long as GSP+ remains in place and Sri Lanka continues to nurture relationships, the country should be well-equipped to navigate these challenges. While focusing on doubling business, Sri Lanka must also ensure it can keep up with increased production demands. Wherever there is a crisis, we should be able to see an opportunity. As the middle market is gradually disappearing, pricing is a challenge – retail must become more agile.”
Seth added that while the main operations of PDS are based in the UK, the Company is exploring means of leveraging the US and UK clientele that frequent those markets. “For this, we have representatives from Sri Lanka to showcase the country’s manufacturing capabilities. What truly sustains the country is its workforce and human capital. Given that Sri Lanka is a small country with limited human capital, worker efficiency becomes crucial.”