Hi, good evening, everyone, and thank you for joining today's earnings call with the management of V-Mart Retail. From the management side, we have Mr.

Lalit Agarwal, Managing Director, and Mr. Anand Agarwal, CFO and CEO.

Without taking more time, let me hand it over to the management. Over to you, sir.

Thank you. Good afternoon.

Good afternoon, everyone. Thank you, IIFL Capital, Sameer, for hosting the call, and thank you for our investors and analysts for joining us today.

We definitely have started this new financial year on a on a better, healthy note. More importantly, this particular quarter is another step for us in the forward direction for improving the quality and the consistency of our execution.

We definitely are not only working on adding new stores, but but definitely driving more more sales from the existing ones with better products, customers, more relevant fashion, and the stronger performance in our zones, which are which are very important, along with the tighter discipline that we want to definitely adopt while while operating the stores. Anyway, let me just give you a little bit of what we are seeing in the market.

The the the sentiments in in the Bharat definitely remains positive. I would not call it uniform across the markets, but yes, it is definitely definitely looking very positive from our perspective as of now.

The the there is sensitivity on the household budget, no doubt about it. There are definitely comparisons that people are doing in both prices as well as the quality.

Yes, I think due to the war scenario, due to the crude oil prices, due to all of these situation, we believe that there is a there is an inflation which has kicked in for the consumers. There is a upward revision of prices that we are seeing with multiple FMCG companies.

We and that definitely is getting now passed on to the consumers as well, and and and consumers are feeling the pinch. There is a sensitivity on on that particular part.

Still, we are we are seeing customers and consumers buying. Affordability is still very important.

The value has to be visible and convincing. That is very, very important, otherwise we don't see a a consumption coming in.

The reasons for consumptions are certainly going up, are increasing, and then we we we saw Adhik Maas also in this particular quarter, where we had expected the Adhik Maas to be little little bad, the past precedents we have seen that Adhik Maas usually do not is not [the buying?] month.

Yes, this year, we saw a little better better Adhik Maas, and after and before that, weddings, festivals, or even family functions, or travel, and the school holidays, and, the these smaller celebrations are also now creating more occasions for the customer to buy. Then that is that is something which is becoming good.

Consumption is definitely has been occasion-led led and and will always be. The younger family members which you see, the Gen Zs, the younger audience, for them, it is also about, the influencer or the influencing mechanism of the trend and the fashion, which is also coming out very strongly, both in smaller towns as well and and the larger towns.

I think the the younger consumers definitely see the trends much faster, and they want that newness more frequently, which is becoming which is I think they are becoming more more confident, and they want to they want to only wear what they want to wear. That is what we are able to see from the younger audience, and that is what's continually moved even in smaller towns.

That is a good news which is driving consumption. The the monsoon and the agriculture outlook definitely has been little little hazy.

We are receiving multiple views in terms of lower monsoon, the El Niño effect, and all of that. As of now, even as of now, we are we have a little deficiency in the in the in the rain, maybe around 20%, but I think some part of it that is getting covered.

It started with 35%, 40%, but there's a lot of coverage which has happened in the month of July, in the later part of the month of July. I think definitely we are encouraged with the with the demand environment, but yes, we remain watchful because the impact of the monsoon or could be could be little non-uniform.

Because because there could be states where we would see higher rains causing floods. There may be states where we would see a little bit of deficiency, higher deficiency in monsoon, which we are already witnessing, and which could which could create a little deficiency in the demand pattern as well as well there.

Overall, we believe the geopolitical situation definitely has been has been making us very watchful, and we we we believe there is a or we have seen that there is a lot of volatility in the raw material and the supply chain cost, which has and and can influence the sentiment or even our pricing. Yes, our our our our approach remains very practical and very cautious, and that is what is driving our confidence as well.

I think overall, we did grew. Overall, our growth of 23% with 9% like-for-like like-for-like growth has been there, and which is which is which is the what we would call is the what, 11th quarter in the consecutiveness where we are delivering the the positive like-for-like growth.

That is definitely coming with lot of initiatives internally, lot of developments internally. The important point for us is the combination behind, these numbers.

The the the growth is not dependent only on, opening new stores. We we have opened new stores as well, but it is supported definitely by our sustained productivity and from our existing stores through better merchandise, sharper price architecture, because we we've really worked very highly on what what kind of price architecture should work, what kind of product lines should work, improving the store executions, more disciplined expansion.

Expansion has been very good. All the all the there's been lot of discipline which we have driven there.

That definitely this has given us more confidence in the the quality of growth, because the quality of growth this time has been very, very good good. It has not been one-sided.

We have seen definitely See, we've had to really work more. As we go too deeper into it, we see more more opportunity coming out of it.

There's lot of work to be done, and this should not be judged We should not be judged from one quarter to other quarter, and that is what we have been always speaking about. I think our focus will remain on maintaining this consistency rather than chasing short-term growth or or or driving a headline growth.

We we we at V-Mart has always been very clear on these these things. I think, yeah, our our major focus still continues to be on product, on our customer proposition.

We definitely want to bring much more fresher fashion, with better newness, which which which we have reflected also in our days of inventory. Our our days of inventory has been continuously reducing.

That gives us a very clear confidence as well, and that is that is that is also rising. Even the price laddering plays a very important part in our value retailing in our business, so that is also something that we have been very thoughtful of.

Our our our we have been always always looking at the the very, very deeper into assortment, deeper into price points, and then and how do we how do we distinguish between customer what demanding enough variety or demanding more more depth? How do we how do we avoid decluttering or overloading the stores with with unproductive choices?

Also, we are we are actually working on these areas, which is which is driving some better customer experiences as well. We are really working hard to improve our full-price sell-throughs, reducing our dependence on the sales, the discounts or sales, or end of season sales.

That is something that we have been driving. That will That is also because of our healthier inventory cycle or that will drive inventory healthier inventory cycle as well.

The objective is not simply to increase the gross margin, but our our objective is to improve the the rupee gross margin, absolute profitability, better throughput, faster fashion, and healthier entry. I think that is where we are really working hard on.

You'd see these things coming in out as a as a picture. Then and you would see you even see that because even our our inventory prudence is is very, very hard, and our shrinkages have grown because of that.

I think regional relevance is something that we have been also working on. We believe India is divided into so many states with so much of cultural mix.

That is also very important and and preference as it changes state by state. We're trying to drive derive and we're trying to really work hard on better analytics so that so that we're able to make a little more relevant assortment for our customer segment.

Then and that is how we're integrating our AI piece and and But on the other side, on supply chain side, we are also trying to integrate with our designers, the fabric mill owners, the vendors, and how do we how do we create ideas that can move faster from trend identification to the stores, and that is where we're really working hard. For us as a market, South India has been a very good market.

Unlimited has continued to show very encouraging results, so that is something which has been the highlight of this quarter. We we still believe new store is an important area.

We our performance in the new store has been very encouraging, especially in Southern India. Other new stores that that we opened last year as well as this year has been giving us very good results.

That supports our confidence in our site selection process and in in in relevance of our format and unserved market underserved market. I think that is very important.

We will still have very disciplined expansion. We will evaluate every store, every opportunity through the quality of catchment, the rentals, the ROI, expected throughput.

It's all of those are very, very important. We do not want to take any decision, hasty decision which we have to repent later on.

We've seen the markets in our market We've seen our competitors also, the competition, taking such kind of activities, doing such kind of things. At times, we also feel that we should we should also get swayed away with these thought process of opening little more faster and more aggressively stores, but we we still want to be very, very we want to be correct rather than rather than repent later.

Yes, we will we suddenly believe as we have done earlier also, selective refurbishment is also very important, and refurbishment also has really helped us a lot to become more relevant and become more charming in the in the market. We have seen more national, regional players opening stores, customer expectation also rising.

This is definitely both, as per me, more retail stores bringing in opportunity as well as challenges in the market. Opportunity in terms of more more consumers coming into organized frame of of mind, but challenging always whenever there's a new store opens opening, there is some amount of experimentation, some amount of research that a customer will will do on these things.

Yes, for us, we believe the market is there's a lot of market which are still to be served, underserved by by organized by organized retailers. There is a long-term the long-term opportunity, which still remains very significant.

For us, our omnichannel drive, our LimeRoad direction remains very clear. The marketplace losses has been reduced.

We we continue reducing that particular side. The team is really working hard to generate higher efficiency, better or greater financial and economic execution discipline.

We we definitely are not pursuing revenue, but still our our revenues have grown this year, our our with our sustainable economics wherein we have reduced our losses, this the first year. We definitely are using the platform to build our online and offline capabilities together and understand the omnichannel customer more deeply.

The LimeRoad team, the the team's digital or analytical and technology capabilities are also contributing to the growth of wider organization. Then as as we believe the the sales we are reporting separately in the LimeRoad as a number, but ultimately it is also affecting our V-Mart and the overall businesses or Unlimited business as well.

The customer is We are seeing customer increasingly moving from online discovery to offline and even offline to online. There's both the sides that we are seeing is becoming increasingly present and then and and is becoming very valuable.

We we definitely are doing lot on technology and AI. They are not separate projects for us, but very, very very, very important to us.

They're practical enablers and better for for better retail disciplines. We are using them.

We are applying data and technology across lot of areas: demand forecasting, design, trend identification, or even assortment planning, or replenishment. There are various things that we had been doing.

We are doing, and we're trying to do in a much better way, whether it is customer communication, or CRM management, or store productivity increments. Lot of a lot of areas are there where we are trying to work on this.

Our aim is to definitely make the organization faster, more analytical, and more responsive. There's definitely lot of work.

We have also completed an important leadership transition. Anand has taken over the responsibility of the of the business also.

He's CEO in addition to his role. Transition has really played out well, remains fully aligned, and I I am closely involved in the overall direction, the performance, and the long-term development of of the company.

There's definitely lot of work. The team has really grown up.

I I I wish the the departing CEO Vineet very well for his future. I would definitely like to thank our store team, merchandising, sourcing, our our our partners who has really worked hard, the entire digital technology teams who are really working with with us.

I think they are very important to us to our our our success and our growth. We will definitely continue.

I'll I'll pass on this to with Anand, and let Anand continue with the detailed explanation of the of the results in this this particular quarter. Over to you, Anand.

Thank you, Lalit, and good evening, everybody. Let me take you through some of the key highlights from this quarter, and then we can open the session for questions.

Quarter 1 has been a very strong, broad-based growth quarter with overall revenues growing 23% year-on-year, and the SSG is also growing 9%. Overall, this marks the 11th consecutive quarter of sustained growth, reflecting continued progress on planned merchandising and product upliftment, disciplined store expansion, and also sharper operating controls, with V-Mart actually delivering 8% same-store sales growth, and Unlimited significantly outperforming with a 13% same-store sales growth.

The continued execution of strategic projects around merchandising and operations through technology and process-led improvements continues to power us as we look forward to sustainable healthy growth and move ahead with healthy network expansion without diluting any productivity. When I look at the sales, the summer season started late in April.

In fact, and May was also impacted by Adhik Maas, which Lalit also talked about. The wedding season, in fact, was also relatively shorter this year by three days versus last year.

Despite this, the customer engagement remained healthy, with footfalls up 39%, and the memo count also up by 18% year-on-year. The apparel ASPs also grew by 2%, reflecting better customer connect, which was led by product improvements and also improved operations.

The Unlimited format in South India continued its strong momentum, delivering 33% revenue growth and 40% EBITDA growth for the quarter, with sales per square feet reaching ₹710 per square feet, which is also up 18% year-on-year. This performance reinforces our long-standing confidence in scaling the format further across the Southern markets, as the new stores opened in the last one to two years has started to deliver significantly better SPSF numbers than the acquired legacy stores.

As we had been speaking about this for the last four years, it's just a matter of time where the new stores averages start to take over the old legacy store numbers, and we should see continued progress coming in from South India in Unlimited. Coming to margins, gross margin for the quarter declined 80 bps to 34.5%, primarily on account of a mix change and regular provisioning on aged inventory, which in fact Lalit has also spoken about where we are very stringent on how we handle our inventory.

The inventory provisioning is as per our consistent policy, the benefits of which will get reflected in the upcoming quarters as the older inventory gets liquidated. Irrespective, the inventory productivity continued to improve with overall days of inventory reducing by 8% year-on-year to 86 days.

In fact, the inventory per store also decreased by 5% to around 1.5 crores at quarter end. The inventory remains very healthy and should continue to get better as the sales productivity increases with the similar inventory base, improving days of inventory, and lowering working capital utilization even further.

Moving on to expenses, total expenses increased by 15%, well below the 23% revenue growth, providing a comfortable 150 bps operating leverage, which more than made up for the gross margin contraction. This was delivered through continued discipline on rent, manpower, and other costs, even as we scale the network.

The LimeRoad marketplace also continued to improve, with losses reducing by 39% year-on-year and 7% quarter-on-quarter, despite an 18% increase in NMVs. This is the first time in the last eight quarters wherein we have seen a healthy increase in NMVs, while simultaneously reducing the EBITDA loss, which is already come down to a very insignificant and manageable range.

As a result of a healthy SSG and sustained operational efficiency, our pre-Ind AS EBITDA grew 36% year-on-year to 83 crores, with margin expanding to 7.6% from 6.9%. On a reported basis, post-Ind AS, EBITDA grew 27% year-on-year to 161 crore, with margins expanding by 50 bps 50 bps to 14.8%, reflecting better cost absorption and productivity gains.

This translated into a 39% year-on-year growth in PBT to 60 crores, and 41% year-on-year growth in PAT to 47 crores. CapEx for the quarter stood at 38 crores, primarily towards store new store additions and selective refurbishments.

The business generated positive cash flows of 76 crores. We continue to run an asset-light, debt-free balance sheet, with bank limits utilization down to near-nil levels, and continued zero long-term debt.

On the new store additions, we added 15 stores for this quarter and closed one, taking our total network strength to 591 across 335 cities, encompassing now 51 lakh square feet. Our expansion guidance for the year remains unchanged at 90-plus, as we continue expansion with a healthy store pipeline in place.

While remaining slightly aggressive on new store openings, we shall remain we shall still remain very disciplined on rentals, space productivity, and profitability, rather than focusing on only store count additions to ensure delivery of sustainable growth. On the upcoming quarter, while Quarter 2 is a small quarter, and with Durga Puja also shifting by 19 days, thereby falling into Quarter 3, there should be a negative impact on both sales and margins for the quarter versus last year.

This is purely a timing issue and should be recovered very well with good festive-to-festive growth in Quarter 3. That is all from my side, and I now request Sania to open the house for questions.

Yes, hi. My first question was on the gross margins.

If you could elaborate on the mix change point, that is it that certain price points or particular categories underperformed or outperformed during the quarter?

I think because of the gross margin, they may not be a particular category mix change. The gross margin is largely an outcome of the price at which you buy versus the price at which you sell and the schemes or promotions that you run during the year, or the provisions that you do.

Yes, there is a little bit of mix change in terms of the product lines, and as per the fashion lead or their fashion trend, there are areas where we have worked a little more better, which has resulted into a better ASP as well. The ASP is not an inflationary ASP, it is more related to the mix change of product lines.

For example, instead of one kurtas or one one one lower, you would sell more combination or sets, which could increase or we sell a little more combo products, which could increase their ASPs. Similarly, the mix change has resulted in those areas and those betterment.

Sure. Of the 80 basis points of compression, did both mix change and provisioning contribute equally, or if you could share the breakdown, please?

Hi, this is Anand this side. It's not a equal proportion.

It will vary from time to time. The mix change is more from a customer's perspective.

We have not changed the stock mix deliberately to inflict a gross margin change. It's just customer preference, which is happening from time to time, which is also dependent on how the festive changes, how the season changes, how the demand patterns change across regions.

The provisioning is a very thought-out and a very long-standing, more than 10- 15-year-old consistent policy, which happens every quarter. While the proportion may not exactly be the same, but not very significant difference between the two.

Sure. The second question was on the conversion.

What has driven the decline in conversion from mid-40s to 38%, 39-odd percent? Because even if I account for newer stores being added, the impact on conversion seems a little steep.

We've seen this drop in conversion for some time now and at least for the last one or two years. There are two reasons.

One is there has definitely been some errors in the past wherein in terms of how we used to count the numbers in the previous years. That is some small amount there.

We pointed out that earlier as well. The second also is that as we are seeing far far greater competition in the market, we are seeing customers going across the market, moving on to more number of options available, checking out things which are available at nearby stores, and then coming back to buy again.

Which is basically increasing the number of the footfalls, but decreasing the number of memo count. Irrespective, the memo count has gone up by 18%, which remains a very healthy number.

Huh, got it. Just last bit, if I may, how are you looking to pass the RM inflation, or are there any price hikes which have already been undertaken?

See,

definitely there is been a increase in the raw material prices, you cannot avoid it. What we forecast and what we analyzed the forward sales or the forward purchases that we are trying to anticipate, almost 80% of that purchase is largely impacted by crude.

There will be a crude impact which will come into the picture, and it has come into the picture and already a part of the cost ecosystem. Yes, we are trying to deviate, or we are trying to nullify the effect of by trying to create efficiencies and better productivity with our vendors and trying to change the mix and trying to change the filaments or the yarn mix in the product lines by some part.

Still, there has been some increase in the prices. There will be some more increase.

Some part of that is definitely getting passed into the product, but it is not going to be huge and which will impact the consumption of our consumers. That is how we're being a little more cautious and vigilant how do we pass it on.

Just to clarify, till now there have been no changes in V-Mart's pricing, right? Going forward, you'll be taking the same to some extent.

Till now and going forward is all a mix of what you have bought and what you will buy or what you are buying today. There's always a little bit movement.

What you're buying today is the orders that you have placed 4 months back. What you will be buying tomorrow is going to be something which is going to create more impact.

Okay. Thank you.

Thanks.

Hi. Good evening.

Thank you so much for the opportunity. Sir, few questions.

Firstly on the memo growth, very strong high double-digit growth last four, five quarters. Could you split that between old and new stores?

Is the trend similar or is it very different? That's the first question.

See,

memo growth from a new store is all new memo, so that is 100% growth which is coming from new. The old stores definitely, as we have seen the like-for-like growth where we are seeing 9% like-for-like growth coming in, 3% almost 2% to 3% coming out of ASP growth, which is increasing the ABS, otherwise everything is coming out from the memo growth.

The memo growth is coming definitely from larger inflow growth or customer footfall growth, because we are also seeing a conversion being dropped a little bit. We are seeing real memo growth coming out of the customers who are really coming back and wanting to buy from us.

Okay. Let's say stores which have opened over the last 12 months are seeing similar memo growth versus stores which are more than 12 months older.

Is that fair?

Rahul, see, I I can't you have to understand this piece. Stores which are not been operative in the last year in the same month definitely had no memo, the growth is 100% there.

We are not comparing those stores. We are comparing like-for-like memo growth here.

Overall memo growth you're already seeing. Definitely the month-on-month we don't generally chase, because it it's a seasonality game, month-on-month growth doesn't happen.

It is It is like-for-like year year-on-year.

Right.

It's largely coming from like-for-like, largely coming from like-for-like. It's largely coming from like-for-like, largely coming from like-for-like.

I understood that. My bad.

Just on the average transaction size, last two to three quarter I think you've seen a revival now. There is no more declining.

Is that a sustainable trend going forward?

Definitely we want to keep that sustainable by increasing or bettering our services in the store, by bettering our product mixes, and even improving on the product lines which we believe are driving higher ASPs and driving better or giving better product to the customers. I think all of that is inclusive in the memo growth in the ABS growth.

The ticket size growth is suddenly a better confidence-increasing measure, wherein we are seeing some ASP growth because of mix change, as well as we are seeing some UPT growth, which is the unit per transaction, which is also growing.

Got it, Lalit ji. Just lastly on this 90-plus store number, this is a net number or the gross number?

Definitely it'll be a gross number. When we are saying plus, it may go a little extended.

Yes, we don't intend to close down lot of stores, but yes, you may see seven to 10 stores, eight to 10 stores getting closed also this year.

Got it. Sorry, just the last thing on inventory.

Of course you've done a great job on optimizing that. Is there more to that number further or are we optimized now?

Rahul, dil hai ki maanta nahin, bhai. Kaam bohot karna hai aur bohot fast pace hai.

Let us let us keep working, not not narrate too many things.

All right. Thank you so much, sir, and all the best.

Congratulations, Anand, for your elevation and to Suraj as well. Thank you.

Hi, good evening, everyone, and thanks for taking my question. Congrats on a good set of numbers.

Sir, firstly just wanted your color on these minimum wage hikes which have been announced in some of the states. I believe UP is a big state for us and even Karnataka now with Unlimited, and we have seen a good quantum of minimum wage hikes announced there.

One, how much of it is already there in this quarter number? I see an acceleration in employee cost increase.

How much of it is remaining to be factored in coming quarters?

Definitely minimum wages growth is both as an opportunity as well as the challenge in terms of cost management and opportunity in terms of consumption enhancement. We believe that opportunity should be larger in a longer term.

Yes, in a shorter term, immediately the minimum wages is impacting our salary bill and our wage bill. I think out of the three months, it has been of two months already included in this last quarter.

Certainly, there has been few more additions which are coming in. Karnataka still hangs in between, whether it is acceptable or not accepted.

Still, there will be an increase, and so we are trying to generate betterment through either efficiency or better sales. We are trying to either create better efficiency out of the same employees or the lower employees that we have, and we are also trying to generate a little bit of more sales.

As a percentage of sales, the employees cost should not grow, is our focus. That is how we are trying to balance that out.

Got it, sir. Just a follow-up here on Karnataka.

One, has this been effected or is it under stay for the retail piece? I believe the garment piece also, there has been some pause over there, but still if let's say the worst were to happen, we have a

As of now, it has not been implemented. It is on stay.

On the retail side also, on your stores also?

Yes, yes, yes. Okay.

Okay. On the garmenting piece, sir, right now, it was not included at all, but let's say worst were to happen, what is the vendor exposure to Karnataka?

Not too much, maybe less than 5%.

Got it, sir. That's helpful.

When we say it's not affected, we have not also made any provisions for it for the increase yet in our numbers?

In Karnataka? No,

no.

It is not too material.

Oh, okay. Fair, sir.

Second question is on the raw material basket, and I know we touched upon this last time around also, but inflation and El Niño not a good combination. How are you looking at it?

What is the kind of RM inflation right now that we are facing in the incremental orders that we are going for? More importantly, how are you approaching this?

Is it striking a balance between growth and margins for this year or let it be because this is likely to be a one-off year, and if margins are contracted in one year, let them be, we'll recover it back when things normalize? What is the approach?

See, as I spoke earlier also while replying to Rahul. Basically, as I said, there is a price increase in the raw material or the yarn prices or the product prices, both from a crude perspective as well as the cotton yarns have gone up.

Increase in yarn is there, increase in minimum wages is also there, increase in packaging prices, ink prices, dye prices has also been there. There is a pressure which is getting built up.

There is suddenly lot of technical moves that we have to do in terms of managing the product lines or the cost of the product. We certainly have not tried to compromise on our margins yet, with a very, very small exception.

We are trying to create still more efficiency measures and trying to work on the product. There could have been a little bit of rise in the product prices also.

We are seeing some maybe 10 around 10% rise in the overall raw material prices out of which some prices are being passed on, some prices are being discounted because of the efficiency measures that we are trying to suggest to the vendors. Overall, and maybe some margin loss that we are doing, maybe to a percentage which is lower one, maybe 0.5% to 0.75% of margin compromise also that we have to do.

That is how we are trying to manage between all the three.

Got it. This 10% increase in RM is a blended level of cotton yarn, polyester yarn, and other dyes that you mentioned?

Yeah.

Got it, sir. That's all from me.

Thanks and all the best. I'll come back in with you for follow-ups.

Thank you, Sameer.

Sir, congratulations on a great set of numbers. I had only one question.

I wanted to know what sort of SSG does the management expect for this year?

Ashish, this is a very straightforward question, very difficult for us to answer. Yes, we would definitely want to continue and better the last year's SSG that we had.

High single-digit?

Mid to high single-digit, yes.

Okay. Thank you, sir.

That's all from my side.

Thank you, Ashish.

Hi, sir. I hope I'm audible.

My question is with regards to the medium-term margin trajectory. What kind of

SSG Hitesh, you are breaking a little bit. Can you go to a better network?

Sir. Am I audible now?

Yeah. Better.

Yeah. Sir, my question is with regards to the margin trajectory.

What kind of SSSG will you be needing for the operating leverage to kick in for next two to three years? Our mature cohort is kind of high, and so far the SSSG has been really good.

Going forward, with the inflation and all the cost pressures, what kind of SSSG you are targeting so that the margin expansion can happen?

Hitaindra, see, inflation is not new for India, and neither for us. Historically, we have seen and we have managed inflation every year.

The form of inflation may vary, sometimes it is related to oil, sometimes it is related to something else. Historically what we have analyzed is that 3% to 4% of SSG is enough to offset the kind of the inflationary pressures that we see.

There is some amount of wage hike which will happen every year. There is some amount of rental hike that will happen every year.

In fact, most of the expenses that we have in the business, almost 90%, 95% of the business expenses are fixed in nature. Except for marketing, almost everything else is fixed.

The inflationary pressure that we have seen is manageable whenever we have SSG of roughly around 3% to 4%.

Got this. Thank you, sir.

Good evening, sir. Congratulations on a good set of numbers.

Unlimited is seemed to do extremely well even compared to the core V-Mart. With this, the gap between the core V-Mart and Unlimited is coming down.

Shouldn't we see a more acceleration in the store additions here, because majority of the store additions so far are happening in the core V-Mart format? Hello?

Yes, Avinash. You're absolutely right.

The Unlimited business looks little more attractive. Our ability to attract the lower mass audience or the lower age group audience, also has become better.

Our things are working in the Unlimited market. Definitely we would want to grow a little more larger there.

It is also very challenging in Unlimited market to make a very good profitable expansion. We are certainly working a little more hard on trying to accelerate the rate of expansion in the Unlimited market.

Should we see a higher number of store additions compared to the last year, or how should we see this going forward?

Certainly. We will have to see higher number of stores opening compared to last year from the Southern market.

Okay. Second thing, Unlimited rentals are generally higher than the core V-Mart.

This quarter, actually we have seen a good improvement in the margins for Unlimited as well. With this, should we assume that in the next maybe couple of years, should we see the margin gap between these two at a pre-Ind AS level should merge?

The margin gap always has been where Unlimited, from a gross margin perspective, always has been delivering better gross margin because of the pricing change that we do there. On the EBITDA lines, certainly because of the old, aged ancestor stores where their cost level were high, it used to deliver a little lower margin.

Yes, slowly and gradually, we are expecting almost similar margin should come in from both Unlimited as well as the V-Mart stores.

Okay. That's it from my side.

Thank you.

Thank you.

Yes, sir. Thanks for the opportunity, and congratulations on a very strong set of numbers.

Sir, just an extension to your comments on the gross margin per se. Sir, you did mention even in the last quarter that we will be doing some bit of a tactical moves as far as the kind of garmenting we use or the kind of fabric we use to control the kind of gross margins we have.

Sir, but on an overall basis, looking at the kind of raw material impact the industry is going through, what is the kind of risk do you foresee, especially on the gross margin end for the year in general? Do you expect that we would be able to hit the same kind of gross margins which we did in the last year, or we still carry a risk of that getting impacted?

No,

I think we are very confident. See, there may be Like like this year, this quarter also, we are reporting 0.9% lower gross margin.

Definitely there is it is not because of the cost of the product or it is not because of the lower higher discounting, it is more because of the higher provisioning that we are doing for our aged inventory. Yes, similarly, we will always be little more buoyant on our on our sales or on our revenue or on our customer proposition or even on our freshness.

We will want to retain that. We will still work, try to work more on the rupee gross margin rather than the percentage gross margin.

That is what our focus is now, and that is what we are we are focusing on. Even if we are growing at a rupee gross margin by a healthy number, that is what we are trying to drive.

They for us, important thing is also to drive a little better customer proposition, and and give the customer a little better confidence over the prices. That is also very important, because we we saw that in the in the year 2023, you remember that.

Where we had we had increased the prices, but the customer did not pay us, and then we had massively demotivated the customer at that point of time. We don't want to take a complete call.

I think overall, the risk over the gross margin may not be very high, but the risk over the supply chain could be a little higher, that in the same gross margin, how do you how are you able to generate or better have the have the consistent supply chain in the system. That is going to be a little higher because the scarcity of crude continues, the the pricing that remains very unstable.

For us for our vendor to close them close those the product the supply chain in the backward side and then and then integrate and deliver it to our warehouses at the right time, that should be the the most important challenge that we are trying to focus on, and that is a risk that we we see in the in the forward times. We are we are very careful, we are very conscious of that, and we are working with the teams.

Our team is working with the vendors so that we are able to get our deliveries on time so as to make our festivals good.

Right, sir. Sir, but any say a range which we are looking for in terms of the price increases, sir, because like you rightly mentioned last time when we had taken a slightly higher price increase, the kind of customers we service to does get shifted to other players.

So Yeah. Yeah.

We should not

we should not exceed we should not exceed 3% to 5%. A range between 3% to 5% of ASP increase is what something that we are focusing on, wherein there's a mix change also, as we have already reported 2% increase this year in this quarter.

There's a mix change also which is driving this, and there's some amount of inflation which will also kick in in here. Because of the inflation, 2% to 2% to 2.5% of price increase can come in on a overall level.

Okay. Perfect, sir.

Thank you so much, sir, and all the best.

Thank you, Kunal.

Thank you once again. Thank you, everyone.

I definitely continue to seek support from all the shareholders, from all the analyst in trying to understand our business model in the tighter way. We definitely are building a long-term business.

We continue to learn, correct, and improve, because in retail, the work is never complete, and we will continue doing all of that. Thank you so much.

Have a great day.

Thank you.