Thank you, Nirav. Good evening, everyone.

On behalf of Campus Activewear Limited, I welcome you all to the company's Q1 FY27 conference call to discuss the performance of the company and to answer your questions. We have with us the management team comprising of Mr.

Nikhil Aggarwal, Whole-time Director and CEO; Mr. Uplaksh Tewary, COO; and Mr.

Neeraj Gupta, Finance Controller. Before we proceed this call, I would like to draw your attention to the fact that today's discussion may contain forward-looking statements that are subject to various risks, uncertainties, and other factors which would be beyond management's control.

We kindly request to bear in mind that there might be uncertainties while interpreting such statements. Please note that this conference is being recorded.

We would now like to start the session with opening remarks from the management team. Afterwards, we would open the floor for an interactive Q&A session.

I would now hand over the conference call to Nikhil sir for his opening remarks. Thank you, and over to you, sir.

Good evening, everyone, and thank you for joining us today for our Quarter 1 FY27 earnings call. We are extremely pleased to begin FY27 with a relatively strong quarter, delivering 12.2% revenue growth, 11.7% volume growth, stable EBITDA margins of 15.9%, and 17.7% growth in profit after tax.

We believe these results reflect the continued strength of the Campus brand, healthy consumer demand across categories and channels, and disciplined execution across the organization. What makes this performance particularly noteworthy is the operating environment in which it was delivered.

During the quarter, businesses continued to navigate geopolitical uncertainties, volatility across global supply chains, and inflationary pressures on key raw materials. In addition, we absorbed a significant increase in labor costs following statutory minimum wage revisions, as well as approximately 2.5 crores of additional depreciation arising from the commissioning and ramp-up of our new manufacturing facilities at Paonta Sahib and Pantnagar.

Despite these headwinds, we remained focused on protecting profitability through calibrated pricing actions, disciplined cost management, and operational efficiencies. A key point I would like to highlight is that the impact of our pricing actions is not yet fully reflected in our ASP growth.

During the quarter, we implemented MRP increases of approximately 8% across key product categories, resulting in an underlying ASP increase of around 5% in our core stuck-on category. However, this improvement was largely offset by two temporary factors: first, the revised accounting treatment for Walmart, that is Flipkart and Myntra, which came into effect from July 2025, resulted in lower revenue YoY due to GT charges being netted off from sales this quarter.

This suppressed the ASP by approximately 2.5%, which will bounce back Quarter 2 onwards. Second, we witnessed an exceptional recovery in our school shoes business, with revenue from this category growing by nearly 50% YoY.

We've moved this entire business from DIP to stuck-on, which has a much better ASP and is a margin accretive category versus DIP. While strategically very encouraging, the inherently lower ASP of school shoes as a category diluted our blended ASP by another 2%.

As these temporary effects normalize, we expect the underlying benefits of our pricing initiatives to become increasingly visible from Quarter 2 onwards, supporting both reported ASP growth and a stronger margin profile in the quarters ahead. Beyond the financial performance, the quarter once again demonstrated the resilience of the Campus brand.

Growth was broad-based across channels, categories, and geographies, with particularly encouraging momentum in our women and kids portfolio. Consumer response to our latest product launches remained highly encouraging, reaffirming our ability to anticipate evolving consumer preferences and delivering compelling value across price points.

Operationally, we also took several strategic steps to strengthen the business for the future. In anticipation of a stronger festive demand, we recorded our highest ever Quarter 1 production and continued this momentum into July, being the highest ever production month ever, proactively building inventory to ensure superior availability across key channels and categories.

This was a conscious strategic decision that positions us well for the upcoming season. The quarter also marked the launch of ÉLAN by Campus, our entry into the rapidly growing neo-casual footwear segment, further expanding our addressable market and reinforcing our ambition of becoming a comprehensive lifestyle footwear company.

Alongside this, we continued investing in product innovation, refreshed our brand identity with the unveiling of our new logo, and strengthened our partner ecosystem through one of our largest ever distributor meets, where we've received record orders, giving us a very good visibility of the upcoming festive season. Looking ahead, we remain confident in the structural growth opportunity within India's branded footwear market, supported by a strong brand, expanding distribution, continuous product innovation, enhanced manufacturing capabilities, and disciplined execution.

We believe Campus is very well positioned to continue delivering sustainable, profitable growth and long-term value for our stakeholders. Thank you, and I would now like to hand over the call to the moderator for the Q&A session.

Hi, Nikhil and team. My first question was on the MRP increase of 8% undertaken in key products.

This seems to be a little higher versus the industry, what gives the comfort that volumes or market share gain momentum won't be impacted given that key products would be in the economy segment where demand would have an element of elasticity?

Hello, yeah. This price increase was done on effective 1st April, since the input RM pressures started coming into the business effective March itself where the entire geopolitical situation turned, and from April onwards, even the minimum wage impact started coming into the system across states that we operate in currently, right?

So, 8% is a reasonably fair price hike that has gone, and the input cost were under pressure, and pretty much over the last 3 months, we've been able to pass on these costs by absorbing some through better negotiations into our ecosystem, as well as passing on the relevant price increase into the market. And 8% is a reasonably fair price hike, and the same has been accepted in the market because this was done about 4 months back now.

Price hike is effective 1st We haven't done any further revisions. The effective price increase happened effective 1st April, and we have not seen too much of resistance to the price increase so far.

The volume has grown

despite

of the price hikes.

Absolutely.

Sure. Are you all evaluating another round of price hike considering that RM inflation might not be fully absorbed?

Or has it been fully absorbed by this 8% hike?

RM inflation has been fully absorbed, and in fact, as the volatility subsides, we believe that, and we will not be obviously taking the MRP correction again, like we won't go down on the MRPs, right? We expect that as and when the market stabilizes with respect to raw material, we should have that benefit flowing back into the P&L.

Sure. The second question was on volumes.

Now volumes in the base quarter were disrupted due to, I think, some warehouse transition which was being undertaken, and also lower sales of open footwear. On a relatively weaker base, what drove the lower growth in volumes?

Was it impacted because of demand or any channel dynamics? Any thoughts around that, please?

The growth is tapered to a certain extent by two factors primarily, right? There is a a a revision of the way we account our Walmart businesses, right?

The the Flipkart and the Myntra reporting measures are different, and they were effective July last year, July '25. Quarter 1 is not a like-to-like comparison of these two businesses.

Last year, there was no GT charges in our business, and this year, it it has, and it has about a 2.5% direct impact on our revenue. Parallely, we have also transitioned over the last 3 months our entire franchise business from an outright business-based model to a to an SOR model where we control the entire inventory and and discounting of these products, right?

It's a complete transition of our 158 franchise stores, which is almost now completed. This quarter would bake in about a a reasonably strong 25% plus degrowth on our franchise business because of the transition of the model where we had to basically take change the way we account these this last year it was a pure outright business model with our franchise network.

Now we've completely converted into an SOR model. About another 2% to 2.5% of revenue growth has been tapered off there.

Combined, just these two factors has had about a 4.5% to 5% impact on our growth, which are temporary factors effective only to this quarter. We do we see franchise to be very aggressively growing quarter going ahead as a channel, as well as GT being normalized because from July effective last year, this is part of the base number itself.

The growth is about 4% not a like-to-like comparison, if we add that 4%, that would be the normalized growth that we would have seen this quarter.

Just to give you one data point, our FOFO stores, we've opened basically a total EBO stores of about 18 stores this quarter, which is the highest in the last six seven to eight quarters, and the reason for that is one is the SOR model that Uplaksh just mentioned that has led to a lot of confidence coming back to our franchisee partners.

Sure, maybe I'll just clarify it offline again. The last bit was in terms of price segments.

Going forward, where are the new launches and marketing investments being focused towards? Is it more towards the north of 1,500 price points or on the economy range?

What is expected to drive the FY27 growth?

It's actually all across, right? For us, every price point is strategically very important.

It plays a specific role in our portfolio. Therefore, the plan that we make at the beginning of the year is supposed to cater to every single price point, and that's how we look at it.

Of course, the focus is on premiumization, which we've continued to invest behind with respect to the newer categories, premium categories that we've launched.

Got it. I'll get back in the queue.

Thank you.

Hi, sir. Good evening.

Again on the same question regarding the price points. If I look at it on a 2-year CAGR basis, the price of the product's revenue which is up to 1,500 have actually degrown by 7% CAGR.

Is this because of curtailment of certain ASP of products or how should we look at it?

No, it's basically we recognize that we've left some price points behind with respect to economical price points. We're working on it, and within the next couple of months, these price points will be fully covered by the portfolio that you've seen.

There is no intentional gap with respect to that. This is something that we're working on and will be covered in the subsequent months before the season begins.

Correct me if I'm wrong. Basically, in 1Q FY25, these two segments, less than 1,000 and less than 1,500, both put together, did somewhere around ₹200 crores of revenue.

Now they have gone down to ₹180 crores because you have voluntarily left some products. Is that what you are saying?

There are multiple factors to it, right? The products, when there is an 8% price hike that you do, a lot of products sitting in the 1,499 now sit in the 1,649 segment now.

There is a shift of the way you report these product categories, no, because there's a natural 8% hike that you've taken. Normally, last 3 years, I think we have never taken across-the-board price hike the way we have done on 1st April.

The entire way you report your numbers has been shifted a bit. Our growth also disproportionately has come from shoes over the open footwear category, right?

There has been a share shift towards slightly higher on the closed shoe, and that has also affected the way you are seeing that number, right? We are not exiting any price points.

We are there below 1,500 remains 999 to 1,500 remains a very core part of our shoe segment of our business. Other things, which is this price hike, has of course changed the way we report our numbers, plus a small shift in the share of our slipper and sandal business as compared The growth is slightly higher on the closed shoe business as compared to the open footwear, that has also led to a slight increase in the share of categories.

Okay. Understood.

The second question is can you put some light on how the sneaker portfolio has done in this quarter, and after the production started from the Pantnagar facility and Haridwar facility, was there any incremental delta growth that you're seeing in terms of sneaker portfolio?

Sneaker has been an extremely key lever of our entire brand repositioning, being relevant, and the investments in Haridwar II as well as Pantnagar and Paonta Sahib have been in those directions as well. We are looking, since the scale is now getting bigger, this year, we are looking at a close to 30% growth on this category, and we are investing, and our product launches as well as the category growth are in sync with that.

Our anticipation from a volume growth is to the tune of 30% for this category. Because now the base is significantly higher.

We were growing at close to 100% earlier, but since the base is now a bit higher, we are looking at about a 30% growth on this category this year.

Okay. Understood.

One last bookkeeping question. If I look at the annual assembly capacity, 2 years back it used to be 36 million pairs, now it is 31 million pairs.

Why is this change?

This is actually the DIP capacity that we let go of, right? Last year, we called it out.

We had a four basically 4 to 5 million capacity of DIP that we sort of shut down because it's a very old, archaic technology and very cheaper, economical price points which were not viable for us. Therefore, this is something that we have which I just called out in my remarks is the sport shoe segment that we moved from DIP completely to stuck-on now, right?

This is a much better, higher ASP segment with more margin accretive than DIP. It is just a recalibration of the DIP.

The stuck-on is the main portfolio, which is going very strong with respect to capacity.

Got it, sir. That's it from my side.

I'll join the queue.

Hi. Thanks for the opportunity.

My first question was on volume growth. This 50% growth in school shoes which is seen, how much would that have contributed to volume growth of this quarter?

When you said that the dilutive impact on ASPs would go away in the coming quarters, the positivity in terms of volume growth would also go away, right? Just wanted to get that clarification.

No.

Hi, Umang. We are targeting mid double digit growth, as we have highlighted before, right, for the year, and we are very much on track with that.

That would be a combination of both your volume and ASP. ASP, we are looking to deliver back again 6% to 7% at least, right, which will come back from Quarter 2 onwards, and the balance would be volume growth.

Volume, of course, there has been about 40% approximately share of school shoes in our volume growth this quarter, right, which would get normalized from next quarter.

Understood. On similar lines, margins, are you still confident that on a full year basis, 17% to 19%, which was our kind of aspiration, there's no reason not to be in that band?

Absolutely, Umang, yeah. 100% confident of delivering that.

There is no reason not to deliver the margins.

Understood. Just one last question on other expenses ex of A&P.

This mid-teens kind of growth is some part of minimum wage also sitting here through a processing charges or is it entirely in your staff cost?

Can you repeat? In the A&P?

The other expenses other than A&P, the growth is slightly higher than what we were building, just wanted to check what is the reason behind that.

Yeah. Hi, Umang.

Neeraj is Neeraj. In other expenses, basically, ₹5 crore is sitting for minimum wage increase for the quarter.

Understood. Understood.

That makes sense.

₹5 crore is on account of minimum wage, ₹2.5 crore on account of advertisement and marketing. Like Nikhil said, we have done a great distributor meet plus logo launch, right?

And ₹2.5 crore is the cost of indirect cost of the newly commissioned plant, which were not there in the base number last year, like Paonta Sahib and Pantnagar.

Understood. Okay.

Thank you so much and all the best.

Thanks.

Yeah. Thanks for taking my question.

Congrats on the good set of results. You spoke about sneaker, right?

Approximately, what would have been the sneaker contribution towards volumes?

For

Quarter 1? In Quarter 1.

Give us a second.

About 12% to 13%. Hello?

Okay. Thank you.

Hello, am I audible?

yeah. Thank you for the opportunity.

I just wanted to understand that following a healthy start to FY27, are you comfortable of sustaining the double-digit volume growth for the full year? What are the key assumptions underpinning your outlook?

Hi, Shraddha. Yes, we'll be close to double digit.

We cannot promise a double-digit volume growth, but it will be high single digits for sure, right? It will be a combination of both ASP and volume growth that will lead us to mid double-digit overall growth, right, for the year.

Of course, we are focused on the same growth vectors that we called out earlier as well. Those are the key priorities for us.

The women and kids segment is doing exceptionally well, great response there, and same with sneakers as a portfolio. Then school shoes, like we just called out, is back on track.

That should give additional leverage with respect to additional volumes over and above our budgeted plans. These are basically the product categories that we've focused on at this point, which would lead us to incremental growth over our budgeted numbers.

Sure, that was quite helpful. I just wanted to understand that how has the ÉLAN been received so far, and what role do you expect it to play in driving premiumization and ASP growth over medium term?

So

ÉLAN is almost a 2-month-old launch now, and it is doing extremely well. It is selling currently in about 100 odd 110 of our own stores, as well as actively selling on Amazon, Myntra, and our own brand.com.

These are the core points of sale as of now, right? We have seen extremely positive response.

It is a very, very new category that we have entered from a product positioning. We have never done products of this sort.

It of course has a rub-off effect on the brand perception and the value, as well as the ASP accretion, right? This product normally, from a selling price, sells between the 1,899 to 2,599 price bucket today, right?

It is significantly on the higher end of our entire portfolio. Whatever incremental sales we see in this category, it's too early to call out what kind of volume that we'll reach in this category because it's such a 60-day-old category, but the initial signs are extremely positive.

We would expand with a further launch of a new set of products in the same category during festive again. That is our level of conviction on this category that we've already launched our first set of products, and we have already logged in our next set of orders for the same category.

We believe that this category is here to stay, and we see very high potential on this category because it's completely new, and we are able to cater to a newer set of consumers through this category who were earlier not considering Campus because the product profile is very different from what we were initially

making. Value proposition.

Yeah. The value proposition of the product, as well as the brand equity, is extremely high on this.

Sure. Okay.

Just one last question from my side. You have built the inventory ahead of the festival season.

What is your current reading on the demand visibility, and are the secondary sales tracking in line with the expectation?

Normally, we, as an organization, like to build inventory prior to festive, primarily because the demand that comes during festive is significantly higher than our capacity to produce in that quarter, plus the challenges of lower production volume during Chhath Puja and Diwali, because there the factory do not operate at full capacity during those tenures. By default, it's a strategy that we have believed in, and we believe the inventory is completely under control.

There has been a bit of tapering of demand in the last quarter across the board. There was factors of geopolitical as well as certain factors like Maharashtra and Gujarat suffering due to the flood situation there.

Of course, there were factors that affected certain amount of demand, but our demand reading is still very positive. We believe that we will have very strong, and we do not want inventory to be the reason why we are not able to fulfill our potential as an organization.

Hence, we have been able to build the right set of products. We already had the indication of the distributor meet, which gave a very strong visibility on what we need to produce ahead of the curve, and we have invested directly in those products, believing that being ready with those products will give us the first right to win during when the demand fully reaches its potential.

Sure. Thank you so much, and all the best for future.

Thank you.

Hey, sir. Hi.

Thanks for the opportunity. I just wanted to build upon the previous question.

Your commentary for upcoming festive season sort of seems to be very positive. You also indicated that manufacturing levels are at an all-time high.

Can you highlight as in what is your growth expectation for the upcoming season based on whatever manufacturing you're doing? Secondly, there is some shift in the festive season, right?

This time around, Diwali is in November, do you expect growth volatility in Q2 because of this?

Correct, right. Normally, the big festive events would be closer to November, because Diwali is in November this year.

Big events like BBD will be starting in October vis-a-vis September last year. There would be a bit of shift of revenue between September and October.

The build-up to these festivals from an outright buy for Flipkart or any other buys from an outright channel point of view happens significantly earlier. We do not see much of a difference.

Of course, the marketplace operations, because the date of the event shift from 22nd say September last year to maybe 5th or 6th October this year, there would be some marketplace operations or revenue shifting from quarter-to-quarter, but we don't see a very, very significant movement in the split of the quarter.

On the first part, sir, as in you must be having some planning from that perspective, from what you're targeting for the upcoming season.

As Nikhil mentioned, we are looking at a mid double-digit growth as an overall annualized impact of our business, closely split between ASP and volume. That is the direction that we're working on, and we believe that we are on track to be hitting these numbers.

That is our aspiration, and we believe that our groundwork as well as the build-up to the festive is on the right track for that. Okay.

Second, sir, this is kind of to understand that impact because of accounting change by Walmart. I understood that revenue growth would have been impacted by this change, but was there a impact on EBITDA per pair also because of this accounting change, right?

Our EBITDA growth also in this quarter is 11%, how should we see? Revenue growth at 15-16% and EBITDA growth at 11%, is this a comparable number versus last year?

Wanted to take your views here.

On the Walmart piece, it's just an accounting treatment. Earlier, this was treated as a commission element, which would go from an expense item.

Now it has been netted out directly from the top-line revenue. It's an accounting treatment primarily.

There is no change from an absolute EBITDA working standpoint, right? It's the same exact number, which was earlier an expense item, now it's a revenue reduction item.

When the settlement comes from the partners, they net off their commission and their GT charges, and they settle the transaction. Earlier, there was a separate invoice that would get received against this.

This would completely get normalized from July, because July last year is when this was introduced between Myntra and Flipkart both.

No, exactly. That's what I'm trying to sort of understand.

Whatever EBITDA per pair you were making earlier, this time around also you are making the same EBITDA per pair. How should we see your revenue growth, right?

You indicated that 4% to 5% is just because of this, so that adjusted your revenue growth would stand at 16%, then why is your EBITDA growth 11% is what I was trying to understand.

There's also been a proportionate increase in costs with respect to HR, like employee cost, and the other SG&A, which Neeraj just called out. HR also, there is actually an element of 10% would so 15% is the overall HR impact, of which 10% would be annualization plus increments, and 5% is basically new hiring, right?

There is some impact of that along with other SG&A. Yeah.

The 5% you mentioned, 4.5% to 5%, had two components to it: about 2% driven by the GT impact and about 2.5% driven by the franchise model transition, right, where we have changed the model from an outright business model to a SOR business model completely. That 5% was not driven by the Walmart transition.

It was a split of two change of model: one is Walmart and one was the franchise operations.

Got it. Just last thing, sir, from a employee expense perspective, what is your expectation as percentage of sales for this complete year, FY27?

It would be proportionate to last year. Like how it was, it would be in the same proportion as a percentage.

On a full year basis, you don't see that hurting you, right?

Not at all, because whatever increments and the additionals we had to do, it's already been baked in. We're not seeing any additional cost from here on.

Okay. Thank you, Nikhil, Uplaksh.

Thanks for taking my question.

Thank you.

Thank you for the opportunity. Just wanted to understand the outlook for opening the number of stores this year as you have accelerated in this quarter.

Will FY27 and future years see a higher number of openings by Campus?

Yes, last year was actually an anomaly where we did some correction, right, which we called out previously. This year, we're back on track with respect to at least 80 to 120 stores is what we're targeting.

Let's say give more or less about 90 to 100 stores is what we should achieve by the end of this year. We're well on target to achieve that.

Yes, the new SOR model for FOFO is also significantly helping us, not just with respect to getting new partners on board, but also displaying the kind of inventory that we want to showcase at the EBOs, right? This gives us much better control as a company with respect to what we want to sell versus the partner deciding what they want to sell.

Any strategy which areas you are focusing on opening these stores: metro, non-metro, Tier 2, Tier 3, or because you launched a new brand logo, how is it aligning with the store opening? Could you help us understand this as well?

Our expansion plan so far also has been a Tier 1, Tier 2, Tier 3 expansion, and we continue to expand across all portfolios. We would have 40-odd stores in Delhi NCR as we speak, and about 15-plus in Bombay, plus we will be in all Tier 2, Tier 3 towns as well.

Our current penetration is a bit lower in a couple of states like Kerala and Tamil Nadu, and only one store in Northeast. Other states, we're pretty much having a reasonable presence today, and we will further keep building.

Just to give an example, Gujarat being one of our top states with about 60-odd stores, right? In there, we will have a store in Anand as well as a store on CG Road.

We will cover all aspects of the market. Of course, the store size, the rentals, the facades, of course, will be a factor to determine what kind of markets we enter into, but it will be a pan-India expansion strategy.

Focus would of course be some pockets of our focus will be Rajasthan, Maharashtra, MP, CG. We have seen extremely good growth and positive response in these states, they'll overpower the expansion, but it's not that the other states will not be part of the expansion strategy per se.

Okay.

And Go ahead. Yeah.

No, sorry. You continue, then I'll ask.

I'm saying even the transition that has happened, the first state to completely transition to the SOR model was Rajasthan, which happened in the month of March, and we have seen extremely positive like-to-like SSG growth in these markets. They pretty much are hitting the numbers that they delivered in last year's Diwali in this quarter, right, because we are able to control promotions as well as inventory very regularly.

Hence, we are already seeing very strong the impact of this change of model. We believe once a quarter with 100% of our transition, when the impacts are coming, it'll have a very, very strong impact from a revenue growth point of view for this channel.

We have been able to add a lot of partners also this year, about eight new partners have been added from the franchise model. We are operating on a slightly more exclusive state-wise partner, but we have been able to now add one or two more partners in all big states, right, so that we have a multiple partner strategy in these states as well.

You're focusing on one particular franchisee getting a master franchisee for a state or something like that?

Yes, that was the model so far also. The 150 stores that we've opened was operating on the same principle.

They were having some partners having sub-franchisees under them, but we would only be dealing with the master franchising only in those cases. Also now we're adding a set of new partners.

There were about eight-nine master franchisees that we were earlier operating with, now that number would increase to about 16. We would not be dealing with partners who are just opening one or two stores, that's not the model that we want to expand into.

A partner normally in a stable state would at least have five to six stores in their portfolio.

Understood. How is the new logo feedback, and what was the basic purpose of changing the logo, and how is it aligning with our strategy?

The logo has been going into the products since December of last year. We had a grand event to launch it and make it into a public event in the month of May, and it has been extremely positively accepted in the market.

All the products that have been launched since January have all been done with the new logo and the new identity, and we've been extremely positively impacted. The reason since you mentioned why did we do it, it was to connect to a much younger audience, as well as do a brand refresh, and do an identity change, and we believe this was the feedback, and we're listening to the market, and there was a demand for us to be more attractive to a younger audience, and this has helped us connect to them as well.

Understood. One more question on the franchisee part.

Who is paying the rent? Is it the franchisee partner or the company?

Any store metrics that you can call out in terms of what kind of guarantees or in what kind of ROCEs the franchisees will be earning on this brand?

On the model, we do not pay any rent. We only pay rent for our own company-owned, company-operated stores.

The franchisee-owned and franchisee-operated stores, the entire dynamics from agreement to rent to store operations are controlled by the franchise partner. The only change in this model is that we control inventory and discounting now.

They pay us a deposit on the inventory, and we supply the inventory, and we control the discounting as well as the promotions around it, and we control the entire replenishment cycle.

There is no change in our books.

Sorry?

Inventory will be in your books, you'll book it when it is sold to the customers then?

Yes, the final accounting treatment will be settled once the transaction happens finally, which is similar principle of how a big modern trade accounts like Lifestyle and other operate across. It's the same principle on which we are operating.

Unit economics, from an ROI point of view, it will range from an 18% to 30% range depending on store-to-store economics, it'll really be in that range.

Understood. Thank you, and I'll come back in the question queue if required.

Thank you.

Hi. Thanks for the opportunity, and congrats on a decent quarter in this environment.

In Gujarat, can you please help us understand what's the mix from different channels, your trade, D2C online, and D2C offline?

Of course, our big business is trade, but our franchise business is also extremely big in this market. The franchise business in the territory approximately would be about 75% of the trade business here as of now, right?

Online business, we do not have very, very clear indication of the exact data. We'll have to get back on that information specifically to Gujarat.

It's amongst our best performing states today, and post about for the last 3 years when we've started focusing on west, Maharashtra from a GT point of view, GT for just to give a perspective, for general trade, Maharashtra is now our second biggest state after UP, right? Gujarat also has significantly grown in the last 3 years since we have focused on the west market, right?

I will have to get back on the share of the marketplace operations business from Gujarat, I don't have that number on me as of now. For GT as well as for franchise, this entire growth that I'm talking about, the 60 stores that we've opened, the first store opened in 2021 only, right?

This entire growth that we're talking about is less than a 4-year growth for the entire Gujarat market.

Understood. Sir, how does the trade growth in Gujarat compare to rest of your company during this period that you expanded your D2C offline presence in Gujarat ahead of other states?

Of course, from a franchise point of view, it is the fastest growing territory for us, with more than 60 stores already operational today. Right, so that is incremental.

Even if a store in a dynamic at ₹6 lakhs per month, that's a ₹70-₹80 lakh of secondary revenue coming into 60 stores in a year, it's a good amount of secondary revenue that comes from the state from a model that did not exist earlier. In the same interim period, our general trade also has grown at least a 20% to 25% higher growth than our rest of the country.

It's not that this growth has come at the back of our general trade business subsiding in that territory. We have still grown double digit on Gujarat for our general trade business along with adding 60 of the mono-branded stores through a franchise network.

Right. If I could just add one more question to that, that sounds very counter-intuitive.

Can you help us understand what's happening in the marketplace? How does your D2C offline, whether EBO store or a franchise store, impact your trade business and vice versa?

Because it seems very counter-intuitive. I would have imagined that your franchise business cannibalizes your trade business, but that's not what you're saying, Uplaksh Tiwari (COO):

We have never competed with the franchise channel through a pricing lens. It's through a differentiated product lens, as well as a service lens.

The consumer will never find a cheaper product in our EBO which he will not find it in the multi-brand channel. It's never a price-cutting strategy, which some brands might adopt, we have not adopted that strategy.

It's a product exclusivity and an experience adjustment. Genuinely believe there are two: one is your share in the pie, of course, and you can take away share from other players also in the market, and there would be natural growth of the category within that state.

Right, my business cohort doesn't remain fixed year-on-year. The size of the market is also changing, as well as I can take away share from other players as well.

We have done a very good job on retail expansion. We are one of the fastest growing stories.

To open 50 stores in less than 36 months is almost 1.5 stores every month in a state is a very commendable story, and that has also helped build the credibility of the brand in that state. More and more GT partners looking at the EBO network of a company would want to get associated with the brand, and would reach out to local distributors to start working with Campus.

Wherever we have added franchise businesses, it has had a positive ramification on the rest of our business and not the other way around. It has a very positive ramification on the visibility of the brand, on the availability of the brand, and how the brand is perceived in these markets.

Understood. Sir, if I may just one more question, what drove slower growth in open footwear this quarter compared to other products?

It's not a negative growth, it's a slightly lower growth. Sandals specifically work on a slightly different technology of hot and cold, which was dependent on the CNG supply in our factories, which was restricted during the war period.

There was some constraint of supply on the sandals category, which led to a bit of production lag, right? You'd be aware, right, there was some restriction that the government had laid

on On LPG

LPG supplies to our factories, right? That was one of the factors, plus the growth is lower, but it's not substantially lower.

It'll be about a 4% to 5% lower growth than rest of the category. It's not that we are not focusing on the category.

The focus on the other category, the sneaker build-up, the women's build-up, as well as school shoes build-up was much stronger.

This is the only category where you had production constraints because of CNG, is it?

There would be constraint, of course, from a raw material standpoint, CNG because it works on a slightly different machine, right, which is a hot and cold machine which works on this current model of supply of LPG. Hence, there was a constraint.

Broadly, the other categories, we've been able to manage them. That is also something that we're very proud of our team.

In such a challenging scenario, they've been able to maintain production with no constraints.

Thank you so much, sir. Sir, I have one more question, but I can get back in the queue.

Or can I go ahead with it? Sir, price hike you mentioned that you've taken in starting April, but you're saying it'll flow in partly in Q2.

How is that? Could you help understand?

The factor of school shoe, right, the change in the product mix primarily is a Quarter 1 phenomenon, right, which will start tapering out in Quarter 2. I will not have as big a school shoe share going ahead into the season, because this is the biggest quarter for school shoes, right?

That is, as well as GT as an impact, which was a Quarter 1 only phenomenon, will also play into about a 2% change in my ASP mix. These two factors would naturally lead to a 4% to 5% ASP improvement naturally, and rest of the newer product and new category, once there's an annualized impact, because I was also selling some of the FG that was existing on 31st March in my business, so that product also is part of my sale in Quarter 1.

Once my entire production and entire inventory starts moving towards a newer price point, automatically that will further flow in into my ASP.

The raw material pricing also, as it comes down, which we're expecting it to start tapering now, that will also have a positive impact.

Hey, sir. Thanks for the follow-up opportunity.

Sir, I wanted to check you mentioned you have taken 8% price hike, is this ballpark in the range which has been taken by other players also in the industry? Sub-part to it is since we have taken price hikes now, is this also a result of reduced competitive intensity, which is giving you this confidence of taking such price hike?

Yes, as far as we know, there have been other players also who've taken price hikes in similar range or slightly lesser. We've been able to deliver very, very reasonable volume growth after such a steep price hike also, right?

That gives us a confidence in the brand and the ability to be able to continue delivering it. In fact, the dealer meet happened in May, right?

That is after the price hike, where we collected record orders and volume. That again reinforces our confidence going into the season.

Nikhil, broadly, this would be primary level confidence, right? As in can you give us some indication which gives you confidence that consumer has also sort of accepted this price point maybe in your D2C channels, etc.?

Are you getting that confidence?

Absolutely, we also track secondaries. We have a very strong secondary tracking mechanism.

Of course, like Uplaksh mentioned that we've seen little bit of tapered demand. That is again on the back of our secondary data that we track.

We are able to know exactly how the demand is behaving, right? Having said that, we also know that the entire industry has been forced to take a price hike.

It is not out of option or it is by force, everybody has to do it. Therefore, this is the new norm now.

The prices have gone up, and the customers will actually have to accept. They won't be any other choices left for them.

This is unfortunate, but this is how the inflation is working right now in the country.

Our multiple businesses, right, which we are directly connected with the consumer, right, we had a mid double-digit growth on our marketplace operations, we had a 20-odd percent growth on our SSG level on our company-owned stores, our brand.com grew over 100% this quarter over last year, right? The businesses where we are controlling the entire value chain, we have seen extremely strong growths, right?

We have been able to pass on those prices as well as grow these businesses. That gives us that confidence that in a more stable and a much more positive demand environment, we will be able to grow significantly better as well.

Got it. Sir, typically, when there is such level of RM inflation, the unorganized competition just goes for a toss, right?

Are you seeing that happening in the industry, maybe in terms of reduced competitive intensity also?

There were constraints, without taking too many names here, there were production constraints that we were able to find that happened to some smaller or unorganized players as well, because, of course, the costs have gone up, the working capital gets under stress. There were challenges that we are aware of.

To what impact will it affect their supply during festive is something that we'll have to find out when the time comes, but in this quarter for sure there has been constraints at certain competitions in unorganized and organized as well.

Thank you, sir. Thank you for taking my questions.

Thank you.