Thank you, Ikra. Good morning, everyone, and thank you for joining us today for the quarter four and full year FY '25-'26 earnings conference call of Sai Silks (Kalamandir) Limited.

On behalf of the management team, I extend a warm welcome to all of our investors, analysts, shareholders, stakeholders who are joining on the call today. I hope all of you had an opportunity to review our financial results presentation and investor materials shared with the stock exchanges and are available on our website as well.

Joining me today on our call is our Chief Financial Officer, K. V.

L. N.

Sarma. FY '26 has been an important and transformational year for Sai Silks (Kalamandir) Limited.

Despite mixed discretionary demand environment and increased competitive industry intensity, we still delivered strong double-digit revenue growth, significant profitability improvement, sustained margin expansion, and also focused on our retail expansion. Before I move into our business performance, I would also love to briefly touch upon the broader industry environment and evolving consumption trends that are shaping the ethnic women's ethnic Indian apparel market.

The Indian ethnic wear and occasion-led market continues to remain structurally strong, which is supported by the wedding economy, the rising disposable income, premiumization, and also the shift towards the organized retail from unorganized. One of the biggest structural drivers continues to be the wedding ecosystem.

India's wedding-led consumption remains highly resilient, and wedding as well as the festive purchases continue to drive a significant portion of spending across retail categories. At the same time, organized retail also continue to gain market share across India.

Consumers are more aware today, increasingly are preferring brands, and are trusting retailers due to the transparency that is available, better customer service, the omnichannel convenience, and a larger group of retail store network that they have. We're also seeing a strong growth coming from tier 2 and tier 3 cities, where rising aspirations, infrastructure development, and brand awareness is creating meaningful long-term opportunities for organized ethnic retailers.

From a region standpoint, South India continues to remain one of the strongest ethnic wear markets in the country, particularly in categories such as sarees and women's ethnic wear, which aligns well with our core positioning and brand strengths. However, the industry is also witnessing heightened competitive intensity, faster fashion cycles, increasing digital influence, which has an impact on the purchase behavior.

Overall, we remain very optimistic about the medium and long-term opportunity in the Indian ethnic retail market. The structural demand drivers for the category remain firmly intact, and we believe organized players with strong brands, deep regional understanding, and disciplined execution are well-positioned to benefit from this opportunity over the coming years.

Coming to our operational performance, I will first discuss the quarter four performance followed by the full year '26 highlights. During quarter four, from a retail expansion perspective, we added approximately 24,000 square feet of retail addition during the quarter.

We delivered a revenue of about 419 crore, representing a growth of 5.1% YoY, despite a relatively mixed consumption environment across certain mature markets. Our gross margin so stood at 42.08 compared to 41.71 last year, an increase of 37 basis points.

Our PAT for the quarter stood at 32.65 crores compared to 13.51 crores last year, an increase of about 140% YoY. Coming to the full year FY '26 performance, FY '26 again was a significant year in terms of expansion, operational strengthening, and profitability.

During the year, we have added 13 new stores and one extension store, taking our total network of our stores from 68 stores to 81 stores across five states. We added close to 78,600 square feet of retail space with a net retail addition of about 69,000, taking our overall retail area to about 7,85,000 square feet across five South Indian states.

For the full year, our revenue grew by 13.1% to 1,654 crore compared to 1,462 crore last year, while the same-store sales growth stood at +3%. Varamahalakshmi Silks and Valli formats led the growth majorly this year.

For the full year FY '26, our EBITDA grew by 128 basis points to 15.76 percentage compared to 14.48 percentage last year. Despite the changing market environment, we continue to maintain healthy gross margins at 42.07 percentage, reflecting an improvement of 30 basis points over last year.

Our PAT for the year grew significantly to 141 crores compared to 85 crores in the previous year, representing a very strong growth of nearly 65 percentage. Even after considering the one-time tax impact in the previous year, our operational PAT last year was around 105 crores against this 141 crore PAT that is achieved this year.

A substantial improvement of about more than 30% of PAT improvement demonstrated a strong operational efficiencies, disciplined cost management, and overall profitability across the business. Additionally, few other metrics such as the ROE has improved from 7.78 percentage to 11.78 percentage, while the ROCE improved from 13.7 percentage to 16.7 percentage, reflecting stronger profitability and improved capital efficiency.

Overall, FY '26 was a year where we successfully balanced expansion, profitability, operational discipline, and strategic investments for our future growth. While looking ahead into 2027, one of the key priorities for us will be to be able to focus on walk-ins across underperforming catchments.

We have identified potential stores where the trends have softened and targeted hyper-local marketing initiatives across along with localized digital and on-ground campaigns. This will help us improve customer acquisition and engagement.

From a merchandising standpoint as well, we are undertaking detailed assortment correction initiatives to improve alignment between stock mix as well as the consumer demand patterns. Thank you, and I now wish to open the forum for questions and answers.

Thanks for the opportunity. Am I audible?

audible. Hello, Mr.

Rahul. You're audible.

Yeah.

Yes, Mr. Rahul.

Please go ahead.

Thanks for the opportunity. Sir, a couple of questions from my side.

How do we look at growth for the next year in terms of net square feet addition and also SSG, given in the previous call we had mentioned that we have a strong wedding season right up to one more quarter? Somewhere this quarter also the wedding seasons must have been good till now.

Just to understand, how do we look at the net square feet addition and overall SSG? Thereby what kind of revenue growth we are looking for FY '27?

That is my first question.

Sure. See, in terms of revenue addition, I think last year we have added close to 75, 78,000, close to about 10% of retail addition is what we have added.

This year we tend to actually plan a little bit more aggressive store expansion. We have identified potential locations and the pipeline is more streamlined and solid this year.

Therefore, we should be able to expect at least 20% more than last year's square addition easily. However, I think probably after H1, if there's something else and additional stores might come up, I'll keep you posted, but at least for now we should be able to expect at least 20% more than last year's square feet addition.

Now with that in mind, I think— Yes. Yes.

No. This was net addition, right?

Yeah. See, generally we don't.

Our net addition and the overall addition is same. Just in this quarter, we have reduced the capacity.

We did not close down any stores. We have reduced the capacity in one of our stores, and therefore that -9,000 square feet is there.

That's the first time I'm actually talking about the net retail addition. Otherwise, it's always the same thing.

We don't have any store closures that we anticipate in this year. Again, overall, to answer your question in short, yes, the net square feet addition in this year will be in the range of 100,000.

On the SSG front, the way we look at is we generally look at the wedding calendar. The wedding calendar is positioned comfortably this year.

There could be a small shift between quarter, but overall the number of wedding dates wise seem to be healthy. This is again spread between four quarters of Q1 and Q2, Q3, Q4.

We do anticipate a similar to a little bit better SSSG numbers than we've achieved this year. That's with respect to our SSSG front.

To your third question on the revenue guidance, I don't think with the proper stores that we're going to open, it will be difficult for me to give you a revenue guidance right now, because as I did tell you, we are aiming at 100,000, but there could be chances where we might end up opening a little bit more as well. Now keeping that in mind, our revenue targets will not have a right number if I can give you a number right now.

Broadly, if I have to give you, it should be more than the guidance that we have more than what we've achieved last year, '25-'26. Right.

Sir, with regards to the productivity at existing stores, typically we were targeting because Tamil Nadu has all the Varamahalakshmi stores, and we understand Varamahalakshmi is one of our best formats in terms of the growth. If we look at Tamil Nadu today, the average square feet for the entire year is roughly around 32,300.

How do we look at this number for the coming quarters? Because last two, three quarters it has somewhere been in the region of 95 to 98 crores.

See, overall Tamil Nadu averages are slowly picking up. See, the point here is tier 1, tier 2, tier 3, tier 4.

Tamil Nadu is one state that has split between all four tiers of stores. It definitely will improve, but it will not be a significant improvement.

I think YoY you should be able to see about 5% to 10% an improvement slowly. However, I think these mature stores, once they come into maturity levels, I think this will ignite the process a little bit sooner.

Okay. Last

Does that answer your question?

Sure. The last question, gross margins we have done reasonably quite well.

We have been able to maintain somewhere near 42% gross margins. Just this quarter, your EBITDA margin, in spite of having 42% plus gross margins, our EBITDA margins have been around 15% only, or it's around 14.x, primarily due to the increase in employee cost and the other expenses.

Within those two buckets, anything to read in terms of some kind of one-offs, waghera? Going forward, do we look at a similar kind of quarterly run rate for these expenses?

See, on the gross margin side, I think I have to give you, this year we have taken it as a very serious note. One of the top high-priority KPIs for us is to maintain the gross margin irrespective of the fact we're coming with the newer formats and lesser gross margin stores.

We have done a lot of activity around the improvisation in terms of gross margins, in terms of vendor discounts, and therefore we were able to maintain the gross margins at this level despite all these changing economics, right? When you talk about the EBITDA percentages, in quarter four, there are broadly two heads where our expenditure head: the other expenditure majorly driven by advertisement cost.

Advertisement cost, we have been reducing the advertisement cost and we have been split that between last year and this year. If you look at YoY, our advertisement cost reduced by almost about 10 crore rupees.

This is a effective cost exercise that we have done, and some of the expenditure fell into Q4. Secondly, one more thing is the employee cost.

I think on the employee cost side, if you look at our store opening profile, majority of the stores, even in this 78,000 square feet, almost close to 50% to 55% of our stores opened between December 15th and March 15th. Therefore, a significant employee cost added to this.

That's number one. On the employee cost front also, there are other factors such as there's bonuses as well as the labor code impact to a certain extent.

All of this is where the EBITDA has actually took a beating in the quarter four. Otherwise, we should be able to expect an EBITDA decent EBITDA of about the full year EBITDA plus at least 50 basis points in the next year.

If I may add, Rahul, here that Q3 and Q4 will have a slight increase in respect of personal costs on account of issue of bonus. In one area, we will give in Q3 and one area we will give in Q4.

Labor code commitment is a continuing process, so that will be there in the same lines as it is today. Q1, Q2, we will not have that bonus thing, bonus expenditure that will be there.

If we are working out any variation, to the extent of bonus will be lesser personal cost on account of bonus should be there in Q1 and Q2.

Sure. Thank you so much, sir.

Quite helpful, and wish you all the best. Look forward to the 100k plus square feet addition going ahead.

Thank you, Rahul.

Hi. Good morning, sir.

Regarding this taxation issue, recently updated that Income Tax Department waived off this taxation demand from the promoter. That is about 50 crores form.

When it comes to company taxation issue, there is a 21 crores demand and we immediately paid that. Why would have not appealed that company side?

How they agreed to waive off this 51 crores taxation from the promoter side? Could you please explain?

The contention on which they have raised the demand was wrong. We cannot go into the nitty-gritty of what all has happened, but they have taken a contention which was not tenable at that point of time.

We went for an appeal, and the appeal was allowed, and finally the liability on the promoter came to around 50 lakhs plus or minus. The other thing was dropped because the contention of the original assessing officer itself was wrong.

Why we haven't appealed for this company's tax demand? Company it is

company's aspect is, in fact, a closed chapter last year itself. Having came to this, I have extensively explained about the company's taxation where we have agreed because we have given advances to the employees during the COVID period, and then we waived it off, initially keeping them as advances.

The income tax people have taken that it is to be re-added back, and then we have agreed for that. In respect of liability of the promoter, it's entirely a different issue involving some personal inter-se transaction between the promoter group, and then they have taken a wrong contention and gave the demand on which the promoter group have gone in for an appeal and it was allowed.

Both sides it was reasonably ended as of now, and the matters are fully closed by now.

I think the company side, I think last year Q4 itself the matter ended, and therefore the tax provisions have been made. That that's Q4 of '24-'25.

That

I know that one already provisions are made and paid. The question

is on

the investor community is reading concern about how this 50 crore is negotiated and how that 20 crore is paid immediately. That is the concern actually.

That's why I asked.

See, as I did mention, the whole point was transactions between the promoter group and family members. I think we did explain again, but probably if at all you need a detailed explanation on this, I can probably give you separately.

Broadly, the condition the case here is there has been some transactions during the family trust creation from the promoter group side. Right now all the shares currently that you see from the promoter group majorly are parked under the family trust.

During this entire transaction process, there has been some assets that has been moved between the promoters, and therefore the income tax authorities have highlighted that and have marked against a demand notice. Now, all of that, we had a proper representation made to the government, made to the department, and therefore they have waived it off and they've kept a nominal notice of about 25 to 50 lakh rupees that is what's supposed to be paid.

That has been taken care of.

Waiver, it is our contention is accepted and the demand dropped.

Yeah.

There is no waiver.

Is that clear?

Yeah. Fine.

Secondly on this the slowdown in the growth rate in Q4, and it's almost flatish about Q3. Usually, Q3 would be higher because festive season, but this time it's not much that.

Is it the more Valli stores addition in the last two quarters, is it that contributing for this slowdown because the ASP of Valli is low, and any other factor for the slow growth?

Not necessarily if you look at Yeah. If you look at in terms of our revenue contribution between H1 and H2, we are still Ideally, it is like that between 45 to 55 in that range it moves.

If you look at this year number '25-'26, it moved between 51 and 49, which looks like as if having a decent growth that we had. Nothing particular with respect to Valli Silks.

It's just that the factors, the overall factors, which is geopolitical factors could be, the consumption factors could be. In the month of late January to February, there has been some slow downs in the overall consumption pattern, and that's what has caused us to this kind of a +5%.

Otherwise, one more reason why we had a little bit of less of a growth here is because our store additions, again, even in Q4, the two stores, the 25,000 square feet, again came between March 10th and 15th. If at all we would have gotten a chance to open in maybe Jan or February, a significant revenue contribution would have been added overall.

It is just that the alignment of the store opening date happened to be at the late of the quarter four, and therefore that particular store opening revenue didn't actually contribute to the overall top line.

Understood. Regarding this new store openings, 85,000 or 90,000 square feet, what could be the split between the formats?

Could you give some rough number, how many Varamahalakshmi, how many Valli, that kind of?

See, at this point of time, giving an exact number on the formats could be difficult, but again Varamahalakshmi, Kalamandir, Valli are the formats that will lead the expansion for us. We still don't plan to add any KLM stores.

It's just going to be Varamahalakshmi, Kalamandir, and Valli stores that will lead the overall expansion that we anticipate in this financial year. We hopefully plan to pivot into new state this financial year.

Thanks for the opportunity. Sir, can you give us the format-wise breakup of sales for FY '26 and '25 as well?

Normally, format-wise sales are something that dissemination of the information is detrimental to the interest of the company. Broadly, Varamahalakshmi did around—

52% of the overall.

52% of the overall thing. The component of Varamahalakshmi is increasing in the overall pie.

How much did you say for VML? How much as percentage of sales?

It's about 52%.

Okay. KLM, if you can talk about KLM how much decline have we seen in this financial year?

KLM, I think the decline has been around low single digit, hovering about 3% or so was the overall decline for KLM format. The action plan we are working on the action plan as well, and one of the store reductions that we have done from this net retail addition, I think 9,000 square feet of KLM reduction we have done to be able to have improved margin and improved profitability from that store.

These are the factors why KLM has shown a decline. Otherwise, the plan for us this year again will be able to continuously change these product mix and still be able to achieve a positive SSSG growth on KLM front.

Sure. Sir, on the state-wise sales, if you look at it, our two major states, Telangana, Andhra, haven't seen growth.

In fact, Telangana FY '23 we did 600 crores of sales, and FY '26 we are at 500 crore. Andhra 443, and we are ending this year with 474.

Of course, there would have been an impact of KLM on this sales, but, broadly, these two states have been significantly underperforming for us. One of the states which was doing well for us because of the new addition of stores was Tamil Nadu.

Tamil Nadu also in last two quarters, we have started seeing a bit of flattening out as well as, decline in sales in Q4. We are saying Tamil Nadu we should not be expecting, more than 5%, 10% of overall growth for FY '27 also without any store addition.

What are we doing to, at least increase the scale sales from Telangana, Andhra? There is one thing on addition of net square feet, but our SSSG has to increase significantly for us to improve our profitability as well as, see higher growth rates.

See, I do agree that Telangana has been a slower growth, and this is majorly on account of KLM. All the other formats seem to add growth.

I think even if you look at AP, it's grew by almost 15%, Karnataka grew by 27%, and these growth is driven by majorly square feet addition. On the SSSG's fronts particularly, I think because of the KLM format, we have been seeing some dip because majority, I think more than 60% of our 60%, 65% of our stores of KLM is located in Telangana.

That's the impact of that. I think we are having plans on the KLM front to be able to revive that to still be able to deliver positive SSSG.

Apart from just the KLM front, all the other formats are continuing to deliver a positive growth both on the SSSG front as well as on the store retail addition front. The reason why you're not seeing a significant jump is all the new stores that are coming up are not based out of in Telangana, majorly are getting added in outside of Telangana, and those are the ones that are contributing to the overall revenue.

Again, in this year, we did add like a few stores in AP and Telangana, and those stores have not had a full run of operations. Once they run, probably they will also start adding.

These are Valli format stores.

Sure, sir. Sir, if you can give me for Telangana and Andhra particularly, what would be the Varamahalakshmi SSSG in this states, Telangana, Andhra Telangana and Andhra?

At least I think it should be in the high single-digit number.

Okay. At least VML continues to see decent SSSG in Telangana and Andhra.

Yeah. Definitely, yes.

High single-digit number overall is what is there, and I think similar trends will be in AP, Telangana as well. Yes, you're right on that.

Sure. Sir, on the new square feet addition of 100,000, of course, you're saying we'll be expanding in VML, Valli, and Kalamandir, but if you can give us where in which states will this expansion come?

Which new state? I think we talked about entering Mumbai and Maharashtra, particularly.

If you can broadly give where will this new addition come, and how will that have an impact on our margins, given we are entering the new states, there'll be some higher advertising expenses, store opening expenses, and other things which will come as we enter new states?

Far, with the stores that we have in pipeline, majority of our stores are coming in Karnataka, and our Kalamandir format in Karnataka is the one which is leading this expansion front. However, there is a new format that are going to come up, which is Varamahalakshmi Silks in Andhra and in Tamil Nadu as well, we have a few stores which are lined up with Varamahalakshmi Silks as well.

On the margin profile, it will not have much of an impact. Varamahalakshmi and Kalamandir do have a little bit of a margin profile difference, but overall the still the goal for us is to be able to maintain similar margins without having an impact overall.

Gross margin side. I think there could be some more additions of the stores coming in, which I could probably be able to comment probably at H1 ending to give you a little bit more clarity in terms of the newer square feet that comes up.

At this point of time, it will be Kalamandir. The state that will lead the expansion is Karnataka.

To your question of Maharashtra and other zones, yes, we are in advanced stages. I think probably this year you should be able to see at least one store outside of our core markets.

Sure, sir. Sir, last question on our H1 outlook for this year.

If you look at last year, Q1 and Q2 were pretty heavy. We saw some Q1 because of Q1 FY '25 having a low base, we had a very good Q1, and Q2 also because of early Diwali and Dussehra this year, we had a very good Q2.

Given the high base of first half in this in last financial year, how should we look at the growth for this financial year? Will we be able to grow at least 10%, 15%, 10%, 12%, or we'll have higher sales in the second half compared to H1, as we had seen in last year?

Okay. See,

I think this year H2 should lead than H1. There are a couple of reasons why.

The first is I think Dussehra is now moved back to Q3 instead of Q2. Two, there's some in Q1 there's some slowage in terms of the Adhikamas that is going to kick in, which is going to start in probably about four, five days and last till mid-June.

The point here is when you look at the wedding date calendar, right, I think the dates more or less are spread out. What I'm trying to say is it still does have an evenly spread out calendar, and keeping all of that in mind, whatever is maybe the slowage that we can see in probably one month here should probably be moved to Q2.

This is the kind of movement that could happen. Overall, the growth should be evenly spread out between H1 and H2, and this year I'm expecting that H2 should be better than H1.

In April, how much growth have we seen compared to last year? Yes.

If you're talking about April, I think April was about low single-digit positive overall EBITDA.

Okay. Thank you and wish you all the best.

Yeah.

Thank you, Ankit.

Thank you for the opportunity. My first question is on the depreciation expense.

It has gone down meaningfully this quarter. Are we looking at smaller formats lately or some asset-light expansion, if you could clarify on that?

No, no, the depreciation includes the 116, AS 116 workings. Because some of the some of the leases will expire long-term leases will expire and some new ones with a small store small store format will come with an extended lease period than all that.

It is mainly on account of the leases AS 116 workings that it has come down slightly. Two of the major leases have expired, and obviously when the lease period is extended, we have an extended lease period and then one lease period expires and the other kicks in, the calculations depending on the calculation, there will be a change in that.

Right, sir. How do we see it in FY '27?

Should it go back to normal or?

It will be the same for this period. During the year, we will be contracting for further stores now.

When we contract for the further stores, the right-of-use of assets and thereby the depreciation thereon will be kicking in that.

Right.

It's not a owned

Go ahead.

No, it's not a owned premises, no. Everything goes by the lease rentals, lease periods, and then the workings thereon.

Obviously when we are targeting 1 lakh square feet further during the year FY '27, there should be an increase in the depreciation part.

Right. Regarding the margins, you mentioned that there was an impact of the bonus payout in Q3 and Q4.

Would it be possible to quantify the impact, the bonus impact?

It ranges I think Q4 we seem to have disbursed about four 4 crores bonus. We spread it over the year, some in Q3, some in Q4, and the impact during the quarter was to the extent of about 4 crores.

Right. In terms of basis points, how much would it be?

Basis points 60 crores [Telugu?] .

No, I have a few more questions.

Go ahead.

Hello? Yeah.

In terms of the wedding calendar, you mentioned that the dates are spread out evenly. What about the absolute number of wedding dates throughout the year?

Are they the same or is there any difference?

Okay. To answer your wedding dates calendar, I think in terms of the absolute number, we have around extra dates than compared to last year.

Yes, I think more than 5% to 10% of extra dates is what we have compared to last year.

Great. Regarding the revenue outlook for FY '27, you mentioned that it will be better than FY '26.

If you could clarify, FY '26 we have done 13% or so revenue growth. Should we be between 15% to 20% or 20% to 25%?

The reason why I'm unable to give you a number is on the SSSG front, we should be able to similar to a little bit better than last year, which is more than 3%. On the revenue growth front, from the way we stand, it's all coming down to this net, total retail square feet addition that we are able to do.

At this point of time, we seem to have a healthy square feet opening which is spread between Q1, Q2, Q3, Q4. Keeping that in mind is why I said that we will have a better number compared to last year kind of a number.

The reason why I'm not able to give you a number is because I should still plan for exactly how much square feet, and that's the why I said I'll probably give you be able to give you this number at the end of H1 where I'll have a visibility for the number of stores that I will be able to open till March. Overall, we should broadly if you look at, we should be able to do much better than this year's 13 number, something in the ranges that you mentioned of.

Right. Sir, gold has become more expensive more so with the duty hike today.

As a result of that, should we see some part of the wedding budget that was earlier earmarked for jewelry now moving to apparel like sarees, etc.? There are

two things. I think gold is directly and indirectly also in the same range, right?

Our raw materials also do have gold pricing, gold embedded into our products. I think all the zari that we use in the products is all made from silver and gold.

Again, metal price do have an impact overall. When this sort of a phenomena happens and generally what happens is the product ASP also start shooting up.

Just in the last six months to seven months, we have seen some increase in the overall pricing and that has caused the change in the consumer behaviors. If you look at that, generally it should yield into positive trend, because gold is becoming too expensive.

The alternative for gold right now are picking up with respect to such as silver jewelry and other similar categories. Again, in terms of sarees also, it's the same thing.

I think the budgets now have moved beyond about which was about 1 lakh kind of a purchase today stands about 60,000 or 70,000 on that front. The bill values are also decreasing into that extent.

Yes, that's that.

On a lighter note, sarees and these ethnic wear has no foreign exchange involved. We are expecting that some of the money that was discouraged to be spent on gold might come to apparel and particularly sarees in the wedding season.

We are hopeful that we should have a better offtake by getting the money diverted.

That's pretty clear. Just my last question.

You mentioned that you would want to venture in at least one new state this year. Would that lead to significant marketing expenses as you would like to establish your brand in a new state?

Thank you, and that's all from me.

See, yes, it is possible, but we still would We have budget on the advertisement sides to be still be able to run the 4% kind of a number only, which is a similar number compared to this year. We will reposition that at whenever required.

Yes, when we go to a new state, it does require some noise to be made, and we'll definitely go all in when we go to a new state, get the local influencers or celebrities to be able to influence and be able to showcase that, we are now present in that brand. Most of our store formats also when we open, apart from a certain formats like Varamahalakshmi, most of the formats whenever we open stores, we make a loud bang.

Not just during the opening, even post that also we do that for us to be able to get the eyeballs that we could get. That's something that we do for every store.

This year particularly on the advertisement and marketing front, irrespective of the global the BTL activity, we started focusing on the ATL activities as well, and focusing more on digital marketing and hyper-local marketing campaigns. That is something that we will continue to do next year as well in few of our weaker performing stores in terms of the walk-ins.

To answer your question, broadly, the advertisement expenditure should be the similar range compare in the same as how this year ended up in terms of percentage points.

Right. Thank you, and all the best.

Thank you.

Good afternoon, sir.

Hello, Ankit, sir. How are you?

I'm fine, sir. Sir, a couple of questions.

Now, considering the store addition plans, you mentioned about adding 1 lakh square feet and a better SSG, compared to FY '26, what kind of EBITDA margins we can look at in FY '27?

EBITDA margins since the Varamahalakshmi component is continuously growing within the entire pie, and we should surely see an improvement in the EBITDA margin this year also, because broadly I would say there is a potential of improving to the extent of another 4,000 to 5,000 per square feet in Varamahalakshmi format in Tamil Nadu. Mostly that will add to the improvement in the margin profile as such.

Also one other thing is of course, that is not directly related, but since the company is totally debt-free and the company has enough resources for completing the entire expansion with the internal generations, there will not be any further borrowings and we expect that the company will not have borrowings for the next two, three years. All these square feet additions and improved activities should improve on a total Leave out the EBITDA margins.

EBITDA margins is one point, and subsequent to EBITDA, there is no interest cost, no major interest costs will be there. The difference between EBITDA margins and the PAT margins would also shrink.

Thereby, the PAT margins, you will be able to see much better improvement than it was earlier.

Okay. Because a few quarters back you had guided for around 200 basis point EBITDA improvement every year.

We were targeting some 19% margins by FY '27 at EBITDA levels. What are the new estimates?

Where do you see? Because we have not seen much improvement in FY, '26.

No,

the target would be the same. The target I think this year we have reached about 16 point odd, and our target with the plan of action on Varamahalakshmi and the I think we should be able to reach at least 18.

Now we have already reached?

Yes,

16 we have already reached. It should be possible that we should at least reach 17.5 to 18 guaranteed.

17.5 to 18 guaranteed. Okay.

Sir, just wanted to understand that, since you mentioned that you have enough financial resources to expand your retail network, just wanted to understand why you are constraining you to just 1 lakh square feet and not adding 1.5 or more lakh square feet? Is there any execution challenge, or you don't see that kind of a demand in the industry, or you feel that the balance sheet doesn't allow this?

Why only 1 lakh and not 1.5 lakh?

That is the target we have put in for the current year. Surely we will make an effort to increase the square footage.

It's not as though we try to locate a place and put up a store and do it. There is a lot of work, preliminary work that goes in to locate a store.

Currently, we have an visibility of approximately 1 lakh square feet on which we have closed the entire process of identification of the stores and then the other modalities of it. That is how Mr.

Bharadwaj was mentioning that at the end of H1, towards the H2, we will be able to give perhaps we can give an indication that store addition would be slightly better than this 1 lakh also. It's not about the resources, but consider that we have never closed a store on account of operational issues.

There is a lot of work, preliminary work that goes on while locating the stores. Once that is located, obviously we will have enough resources to put up the stores.

We should surely make an effort to go well beyond 1 lakh square feet this year. See,

adding to this, I would want to mention that it is always not about adding too much square feet. It is also about retaining and maintaining the margin profile, maintaining the EBITDA profile, maintaining the profitability profile aspect of it.

I think it is fair to say at this point of time that in our industry, we command one of the highest gross margins. Again I'm talking about a saree retailer here.

We are commanding a highest EBITDA margins and PAT margins. The challenge is not opening retail stores and be able to be okay with reduced margins.

The challenge is to be able to identify carefully, handpick carefully, and be able to handhold these stores. Majorly, I think we have seen many in the cases in the market that too aggressive expansion also can cause consolidation of stores.

Our goal is not about opening the stores for the sake of just because there is a healthy funds in the cash system, and then be able to look at a system where we had to consolidate the stores. I think the careful approach that we have been taking and slowly start incrementing this process and continuously delivering that growth year-on-year is our prime focus.

I think during our older conversations also, I think I've mentioned the same thing. While we do have the balance sheet support to open more, I think here it all comes down to the strategy piece where it is all about being able to maintain the similar kind of productivity levels, efficiencies, while still focusing on the growth.

When you try to balance this, I think it has to go with a balanced approach, and neither one can take precedence and one cannot take. That's the approach overall.

Overall, if you look at YoY, we are continuously improving the retail square feet addition YoY.

Okay. Sir, mathematically, since even if I take a 15% kind of a top line growth for next year, this FY '27, and you did mention about 17.5% EBITDA plus no increase in interest costs, at least a 200 basis point improvement in net margins.

This gives me a PAT of around 200 crores for FY '27. Are you guys also targeting that level?

We will discuss this. May is too premature to discuss the finer aspects of this, but surely we will make an effort to improve our turnovers vis-a-vis profitabilities continuously.

The specific mathematics we'll discuss in the Q2 call.

No problem. Sir, my last question is, where do you see your inventory days in FY '27 and your debt levels?

We have seen slight increase in inventory days in FY '26.

Even in this year you would have seen despite adding 70,000 square feet, the increase in inventory was only 34 crores. That there is a concerted effort, constant vigil on that and to improve the inventory days.

If you are following us, you would have remembered that I think second half of '23, year '23 or '24, FY '24, when we put a KPI on the inventory part, there was a huge reduction in the turnover during that quarter. We are broadly balancing between the inventory optimization and the sales achievement, and accordingly we will be taking a call on that.

Surely there's an effort to continuously improve the inventory turnover.

Any target, sir, for this year? How much Because 180 days was the last year's inventory days, which is still too high.

Any targets here?

It's it's a continuous thing. See, if I if I convey a KPI on this within the system, then it is taking a negative toll on the inventory part, sorry, the sales part.

We will make an effort to continuously improve that.

If I

if I have to broadly give you an indication,

from the year

from the year FY '24 to this date, if you see the see our balance sheet, we have improved we have reduced the inventory per square feet by around 1,000 rupees. What was around 1100 11,533 has come down to 10,480 or so.

That's a concerted effort, but we have to make get an equilibrium between the inventory days and the sales achievement that we that we'll continuously monitor. One more thing

On the overall other side to this is I think the format that we open. I think Kalamandir has a different inventory requirement, KLM has a different Varamahalakshmi has a different inventory requirement, and the store opening dates also does have an impact, right, at the end of the year?

I think, again, talking about the inventory piece, again coming to this decision after H1 could be a better way to look at it.

No problem, sir. Okay.

All the best. Thank you so much.

Thank you.

Thanks for the opportunity. Sir, many questions were asked by the earlier analyst.

My question in connection to the earlier analyst that the future expansion and the maintenance of the margin. Within how many days the new store is open will match the EBITDA margin of the matured store, and within how many days they achieve the break-even?

Or at what revenue level they will achieve that break-even?

Depending on the format, Varamahalakshmi format will give a payback within 8 to 9 months, whereas to reach the EBITDA margins to get the store matured, it will be approximately 1.5 years to 2 years. The maturity part we consider is that we leave out the year in which the store was established, and we leave one out one more year for the store to see the three cycles of a wedding dates and other things, and then go on to the base figure.

Obviously, for the stores to store to mature and get established to the average EBITDA margins of the company, it will be anywhere between 1.5 years to 2 years. In respect of formats like Kalamandir, etc., it will be slightly higher.

Sir. Sir, we are operating the different format stores, but our blended GP margin is around 40+ percentage and EBITDA is around 12% to 13%, sir.

Which format is generating the higher GP and higher EBITDA compared to the other format? Are we expanding in particularly in that format or we are expanding the all formats?

See, they are location-based. Say, Tamil Nadu, Varamahalakshmi format is the best format which gives higher gross margins and higher EBITDA margins.

Whereas, we have seen Kalamandir format has a good brand value in Karnataka, particularly Bangalore and other places. When we have expanded in Tamil Nadu, we expanded on Varamahalakshmi format.

Now that we are expanding in Karnataka, particularly Bangalore, with Kalamandir format. Each format will have a different metrics depending on the location where its brand value is there.

Currently, Kalamandir, as see, we have reached some kind of a reasonable size in Tamil Nadu where the stores are in the process of maturity and improving the productivity. Now we see a potential in Karnataka, particularly Bangalore, where the Kalamandir format is in good brand has a brand equity.

Obviously, current expansion will include Kalamandir format and also on a need-based Varamahalakshmi formats. Broadly, I think it should be about 40

to 60. [Telugu?]

. We should

This year we should implement approximately in the range of 60:40 between Kalamandir and Varamahalakshmi formats.

Okay. Ultimately all format are generating the near to equal margin EBITDA margin or it generate the different set between the one format to another format?

No. See, Varamahalakshmi format will definitely give better EBITDA margins, but it cannot be put everywhere.

It cannot be unlimitedly expanded. Wherever there is a potential for that, we will be placing Varamahalakshmi format.

The other places, though Kalamandir format in Bangalore might give a lesser EBITDA margin, but it has a potential to give higher turnovers, and by volume we will be able to achieve the absolute number of absolute amount of the EBITDA there. We make an analysis of these two between the volumes and the margins, waghera, and then we take a call on that.

That's how we're this year Kalamandir in Bangalore also is a focus area along with Varamahalakshmi in general.

Okay. Sir, my last question is related to inventory.

How do you identify the slow-moving item, particularly there are many number of sarees kept in the store? There must be some slow-moving items.

How do you clear that inventory? How do you value the inventory at the end of the year?

Inventory valuation is the same principle. It is the cost or market value, whichever is lower.

Valuation part it is very much predefined. With regard to the see, saree we have one advantage is that is it fits all sizes.

It fits everyone, and then size is not a constraint. Then it can be stored depending on the product like cotton saree, or a silk saree, or a georgette, etc.

The shelf life is much longer there. That is And secondly, we have many number of stores, and then we keep moving the stock from one place to other depending on the suggestions that we that comes from out of our AI and machine tool suggestions.

We have an elaborate packages built within the company where they will be continuously monitoring and the data analytics give which area, which place the these kind of sarees are getting sold, and accordingly we move the product. There will not be any issue on that with regard to the aging of the sarees and keeping the sarees marketable above the cost price.

Only if it comes to below the cost price only, we need to be providing anything for that. In respect of sarees, we also have the provision of converting them into half sarees or baby frocks, etc.

Since we have a other formats like Kalamandir and KLM where these products can be put, we will be putting these things there. Then we ensure that each product is fully sold in whatever form, and then the expected margin out of those product is realized.

Thank you. That's all from the my side.

Thank you, sir.

Thank you.

Thank you, Ikra. Thank you again for joining today.

I think we had a good year '25-'26, and we look forward to having a healthy year '26-'27, and looking forward to connecting you back at our Q1 results. Thank you everybody for taking time and joining today.

Thank you so much.