Good evening, ladies and gentlemen. A very warm welcome to the VIP Industries Limited Q3 and 9M FY 2022 earnings conference call. From the senior management, we have with us today Mr. Anindya Dutta, Managing Director, and Ms. Neetu Kashiramka, Chief Financial Officer. As a reminder, all participant lines will be in listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star and Zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anindya Dutta, Managing Director, VIP Industries Limited. Thank you, and over to you, sir. Am I audible? Yes, sir. Good evening, everyone. Thank you for joining on this call. At the outset, I'm quite happy to announce a good set of results for Q3. The last quarter was possibly one of the best demand environments since the pandemic started. With COVID well under control, travel came back in a big way. The airline passenger traffic was at its highest since April 2020 that we saw. Compared to the same quarter of 2019, airline passenger traffic was showing a recovery of 85%. Our results were in line with the trend, in fact, the better at 92% of 2019/2020. The sequential growth compared to previous quarter was at 20%, which in the pre-pan-pandemic years, what we saw, due to seasonality, it used to be in the range of 4%-5%. So definitely it was much ahead, and the revival was much better for us. The conducive environment from a COVID point of view not only fueled travel, in fact, from a travel point of view, some destinations like what we read or what we saw, Goa or religious destinations like Tirupati, Shirdi, Varanasi, et cetera, actually had higher traffic than the pre-pandemic levels. So not only travel but also celebrations and weddings had a flavor of revenge indulgence, which was quite heartening and reinforces our confidence of demand coming back to where the pandemic disruption left it. While the business environment was conducive in Q3, it's been a rollercoaster ride for the industry of these pandemic waves that we have experienced. It's been quite challenging for the business, constantly dealing with the ups and downs, and unfortunately, as we speak, we are in the midst of one more wave. However, thankfully, the severity seems to be much and lower health issues, and without any government-imposed lockdowns or other restrictions, the impact on the business seems to be much lesser. As the demand situation was getting better, inflation became a spoilsport. We are witnessing severe inflation in all our input cost materials, from plastics to metals to polyester yarns, and adding to them is the ocean freight and all logistics costs. Compared to the same quarter of the previous year, raw materials on an average is witnessing about 13% inflation, and that is not only eating into our cost efficiencies that we are building, but is also needing to take us price increases. We took a price increase in mid-November, and half the quarter saw some recovery of realization of the margin impact due to the price increase. You would have all received the results, but just to reiterate some of the highlights from the financial performance. Quarter three saw income from operations at INR 407 crore, which was 243 in Q3 of the previous year, and 337 of the quarter prior to this, and that's the 20% sequential growth I was talking about. Gross margin was at 49%. This is after netting off other income as compared to 47% in sequential quarter. This largely has come on our price increase and an improved mix. We kept tight control on our fixed overheads, and that delivered an EBITDA of INR 67 crore at 16%, as compared to 14% in sequential quarter, and from here, 8% in the same quarter previous year. Profit, PAT for the period, quarter three stands at INR 35 crore. This is as against INR 19 crore of quarter two, and a loss of INR 6 crore in quarter three of the previous year. So as a business, we continue to be very sharp focused on our fundamentals. If at all, the pandemic has disrupted something really big other than the demand, it has been on our supply chain, and we have taken this opportunity of the disruptive, disrupted period to build our supply chain back in a way that gives us much better control upstream and by doing our own manufacturing. In the long run, this will help us not only unlock cost efficiencies better, but will also make us cost leader and also improve our speed to market. Besides going higher on our own manufacturing and upstream control, there is one more area we have been taking up, and in a big way we have invested behind in the previous quarter. This is in hard luggage, and we see hard luggage as a proportion to the total, you know, luggage segment has been taking going higher in salience in a big way. I think somewhat, this is in line with the global trend and also, some bit of the hygiene factor during pandemic fueled it. This is also the supply chain, which is... Possibly less disrupted in hard luggage because of local manufacturing versus imports. So we've, as a business, we have improved, increased our capacities in hard luggage in a big way. In fact, after, after a long period of time, we have invested to the tune of almost INR 36 crore in increasing our capacities in hard luggage, and this is across the sites that we have in India and Bangladesh. Our core strength was always our brands, our new products and innovation, and our distribution through channels. And that's something that we have started to scale back in a big way and much more strongly than what we, what we had before. We saw a huge amount of new launches and a lot of pent-up, you know, launches done in the previous quarter, both in hard luggage and soft luggage. Mostly in hard luggage, saw a new range of products launched across channels. We are also continually, continuously working on streamlining our supply chain for better fill rates and availability. As we do this, the pandemic disrupted our organizational strength in terms of people, talent, and the overall structural adequacy, and that's something also we have it's been a hard work, you know, scaling back, but that's something that, you know, we're feeling good about in terms of where we are as we speak today. So going forward, I'm quite hopeful of having lesser or rather no demand disruption. While we'll have to battle in the short term, the high inflation, that's onto us, but we will continue to progress on strengthening our fundamentals. I'm quite confident we will further improve our results going forward. Thank you, and with that, we could take the questions now. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Karan Khanna from Ambit Capital. Please go ahead. Yeah, hi. Thanks for the opportunity, and, congratulations on a reasonably strong quarter. So Anindya, firstly, on the recovery, considering the quantum of price hikes which you have taken over the last couple of years, can you help us understand, what has been the overall extent of, volume recovery which you've seen versus Q2 FY 2020, which wasn't impacted because of COVID? Thank you, Karan. So the volume is moving in line with the value growth and recovery because overall, the ASPs of our products has not gone up significantly. It is just about 1% or 2% higher than 2019/2020, the same period. So from that point of view, the volumes continue to grow back, and the revival is not only in value terms, but also in volume. Sure. Sure. Okay. And so, okay, secondly, you know, in the investor presentation, you've given us a split in terms of, the mix across, Caprese and across all your brands. So can you help us understand internally, what mix across various brands are you striving to achieve in the next year or so, you know, when you see complete recovery? Yeah. So Karan, one, we are about the scale-up of the Aristocrat brand, because that represents our fight in the value end, and that's something that is very important for us to gain back some of the lost share. However, our main strength is in the brands VIP, Skybags, and those are some things that we need to get back in terms of proportion. So we are focused on growing both, and I think we have done a good job in coming back or powering up on the value end. The premium and the mid-premium end also had some headwinds which was external in terms of whether it's international travel or more, you know, premium consumption. Also, we had challenge in our supply chain to bring out these products better in the previous quarters, but that lot got corrected as we speak in Q3, for Q3. So I only think that mix will get more evened out better. We will come back to the strength that we had in VIP and Skybags, and hopefully, we have added, we would continue the, the, the growth in the Aristocrat brand, the way we have been able to get till now. Sure. So Anindya, you know, what I'm trying to understand here is that, with the company, you know, striving towards a similar revenue mix that you have seen in Q3 FY 2020, possibly with a higher share of Aristocrat, is it fair to assume that given your investments on the supply side, and, the price hike, et cetera, that you have taken on a like-to-like basis, your GMs or the gross margin should outpace those levels seen in Q3 FY 2020 or 63%, 63%? We would have been somewhere there, but for the inflation that has certainly come up. So unfortunately, you know, these forces are not all coming in our favor at the same point of time. So, the mix is getting better and will get better. However, what I foresee in the coming time, inflation versus price increase is something that we have to balance. And at this stage, price increase is something that we'll have to see also from a competitive point of view, because we are not willing to blink first on everything. Maybe that's something that we have done in the past. So we're going to keep a very strong eye on competitiveness as we look at pricing, and focus both on value and premium at the same time. Sure. And, you know, thirdly, on backpacks, given schools and colleges have recently opened across several states, any initial thoughts on the movement of this category in the second market, and, also the possibility on, you know, discounts to liquidate your current inventory? Let me take the second part of the question first. I think we are in a better position, much better now, because, you know, somewhere during quarter three, while it was not uniform across, but there has been sporadic demand basis school opening in different states for different, you know, sections of, you know, classes and colleges and all that. So we are in a better situation as far as the stock that we were carrying on backpacks. However, as you rightly said, that we are also expecting things to become extremely or far more normal with the next session as the school opens, and that's something should bring back, you know, a good tailwind as far as the backpack category is also concerned. Sure. And then lastly, on your expansion plans for Sinnar, is there any development there? How much CapEx will you incur, and what's the monthly volume off take, which you would expect from this plant, post-commissioning? So the CapEx is happening in Sinnar and a little bit in Nashik. So if you meant Sinnar is a separate site and Nashik is a separate site. So we are increasing capacity and adding machines and lines there. So both the sites are coming up. We are also starting to manufacture hard luggage in terms of producing shells in Bangladesh also. So, you know, in all, these three sites put together, we would... This is where we, I said that we have invested about INR 36 crore in plant machinery, as well as we have acquired some assets in terms of building and sheds in Bangladesh, and also as part of this investment. Sure. Great, thank you, and all the best. Thank you. Thank you. The next question is from the line of Jinesh Joshi from Prabhudas Lilladher. Please go ahead. Yeah, thanks for the opportunity. Sir, once this new capacity comes on stream and the raw material prices revert to the past mean, what kind of swing can we expect in our gross margins due to rising share of own manufacturing? So very difficult to exactly predict, you know, basis the inflation, you know, where and how, how and when it will get tamed down. But you know, in a very, you know, the picture that you're painting, I think our gross margins at that stage should be consistently in excess of 50%. But at this stage, I don't think it is either meaningful or relevant on my part to predict a gross margin number there. It's a volatile environment, and we are goal-seeking or targeting our best to keep our number at 50%+ as we speak. As everything becomes fine, and from a competitive point of view, also, we gain back the share that we are aiming to, we would start seeing the efficiencies of backend manufacturing coming onto our business, in the way we had thought out. Can you share the price hike which we have taken in this quarter? So, uh- We took a 4% price hike in this quarter, which was effective November fifteenth. So we got a one and a half month in price. Sure. One last question: Can you share the progress on EBO expansion? Because, if I recollect properly, in the last call, we mentioned that we would probably reach a count of about 460 by end of FY 2022. So, what is the update on that front? So I think that we had a very good quarter. From October, November, December in scale back. Most of this progress, most of the opening of new outlets are EBOs are happening through the franchisee route. So on a base of somewhere about 220 such franchisee outlets, we opened about 45, or we signed up about 45, so work is in progress there. However, you know, this month and now as we speak, it's been some bit of a setback there, so let's see where we hit. But I think, you know, these disruptions are just something that is, you know, digressing, or slowing us down, you know, the weeks and months that is going into this. We'll be coming closer to that number, if not on 31st March, maybe by 30th April, given, you know, we come back quickly in February. Sure, sir. Thank you so much. Thank you. The next question is from the line of Aditya Lalpuria from B&K Securities. Please go ahead. Good evening to the entire management. I've got a couple of questions. So I wanted to know, like, what will be the CapEx plan for full year 2022 and 2023? And, as far as I recollect, we are planning to spend INR 15-20 crores on increasing our Bangladesh capacity. So can you provide an update on that? So as I said, this is something that we have done now, which I spoke about, INR 36 crore. And, there is some routine CapEx that we do in refurbishment and then, Sure. Yeah, so that, that's a similar kind of an amount is something that we can expect to be spending for the subsequent year in terms of capacity expansion. Okay. What will be the sales contribution from our Bangladesh operations in this quarter and nine months? You mean to say from what we sold, what, what percentage came from Bangladesh? Yes, yes. For this quarter, it was about 45%. ... Okay, okay. And so like, we have given the brand-wise contribution. Could you also tell us the brand-wise contribution for the nine-month period, like the way we have given it for the quarter-wise? So can you do it for the nine-month period as well? I don't have it right now in front of me. Maybe we can, Can share it later. We can share it. Yeah. Okay, okay. That's all from my end, sir. Thank you. The next question is from the line of Bhargav Buddhadev from Kotak Mutual Fund. Please go ahead. Yeah, congratulations, team, for a very good performance. Thank you. You mentioned that Bangladesh contributed to 45% of revenue in the third quarter. Is it possible to highlight from next year onwards how much this contribution can increase to? Let me answer that question slightly differently in terms of, you know, own manufacturing versus outsourced manufacturing. So, own manufacturing, I'm expecting it to increase to almost 65%-70%. This will be between Bangladesh and Nashik and Sinnar overall. T he exact split is something that. L ike, we could work it out and give it to you separately. So from what the key point is, let's say 2019-2020, our own manufacturing was in the range of about 40%, which is going to go up to 65%-70%, and that's the underlying shift that we are talking about. And the other extreme is importing from China, and that contribution, which was as high as 50% in 2019/2020, will come down to less than 10% in the coming year, or even now as we speak, it is less than 10%. Okay. And what was the share of own manufacturing so far in nine months? So far in nine months, on an average- Sixty. Would be about 58. Yeah. Fifty-eight. About 58%. Okay, 58, okay. Secondly, but- Sorry. So there's a big scale of quarter on quarter that is happening on, on that. It's a very fast-paced, scale-up that is going on in Bangladesh as well as Sinnar. And just since you have given me the opportunity, I would like to talk about Bangladesh. Scale-up is not only in total volumes, but also in terms of the complexity it is taking on in, producing the categories. So it used to produce only about three categories, and today, Bangladesh, or in the near future, Bangladesh will produce all the five categories that we are in, and is already producing more than 300 SKUs per month. Okay, understood. Secondly, if I look at your net current assets, has gone up to about INR 343 crore, versus INR 260 crore in March. And as against this, the cash and investment balance, has declined, by about INR 100 crore during this nine-month period. So is it fair to say inventory has gone up, versus March levels of INR 300 crore in December? There is a working capital investment of around INR 69 crores, if you see from March to in the nine months, and balance is on CapEx, some investments on CapEx. What is the inventory as on December? Inventory as on December has not gone up substantially. It's just gone up by INR 25 crore. Okay. Understand. And if I look at your ad spends, this quarter, it was about 2.3% of revenue. So will this be the trend going forward as well? And if I look at your employee cost, is it fair to say that the third quarter number can be annualized in FY 2023, or it can also exceed from this? Not on the ad spends. I think that is something that we go to increase in terms of our investment in building our consumer franchise. This disruptive environment, you know, going up, going down, certainly is kind of, you know, within the quarter, held back decisions on investments in that. But quarter three actually started to see a lot more activity happening from our side in terms of building, you know, consumer preference for our brands using promotions as a... as well as a lot of digital marketing. So to answer your question, that, that ad spend percentage or, or level will go up in the coming year. On the employee front, is it fair to annualize the third quarter number, or would be higher than that? Slightly higher. Maybe slightly higher, but- Not much. It won't go back to what it used to be before. So I was trying... What I was trying to understand is, are we okay with the current employee strength in terms of investing in growth, or we are still looking to plug the gaps? So from an exit point of view, we are almost very close to where we want to be, and that's why I said it'll go up marginally from here. But not for the nine-month period or, you know, twelve-month annualized from now backwards. So, you know, that investment in terms of people and structure has been going up, but we have reached close to, you know, close to where we want to be. And, you know, that won't be too many, too much of addition there from where we are today in January. Sure. And my last question is that 48% of revenue comes from hard luggage, so would it be fair to say this is fully in-house manufactured? And as this percentage of in-house goes to 60%, does that mean that even on the soft luggage, we are looking at increasing manufacturing capacity of our own? Hard luggage is 60%, right now in quarter 3, and 40% is soft luggage. The entirety of the hard luggage is manufactured in-house. Soft luggage, we don't manufacture in India. It gets manufactured in Bangladesh, but the India manufacturing is necessary for the CSD part of the business, so that gets outsourced. But even that outsource partner is an exclusive partner, where we have far better control on the cost structures of the product and the overall economics of how the product gets, you know, made there. To that extent, in soft luggage, we have almost 70% of the production, 70%-75% of the production in-house, and the remaining one-fourth gets outsourced, but in a much more controlled way. Okay. Sorry, just one last question. So if I look at share of Aristocrat has increased about 30%, this quarter versus 30% during pre-COVID. So as we enter FY 2023 and possibly international travel also resumes back, do we see the share going back to the pre-COVID levels of 30%, or how should we look at it? No, I don't think it will go back to 30% because the market always has been slightly bigger there compared to what our salience of that category was. And that was a very conscious effort- Mm-hmm. and attempt to gain back share there. However, VIP and Skybags will definitely scale up from where it is today. Great. Thank you very much, and all the very best. Thank you. Thank you. The next question is from the line of Niket Shah from MOSL AMC. Please go ahead. Yeah, thanks, thanks for the opportunity. I just had one question. Given the fact that Q1 is our best quarter historically, and India has not seen a very strong Q1 because of the first wave and the second wave, how as a company are you prepared for this Q1, given the fact that most of us believe that this is an endemic and things will revert back back to pre-COVID levels in terms of travel and in marriages? So, just trying to understand your preparedness for the first quarter in terms of your inventory and production back end. So firstly, I would say thank you for asking that question. I think you are bang on, and we resonate exactly the same, you know, same conclusion that we have—you have, that quarter one is the biggest quarter for this industry. You know, we are quite relatively sure that we should, we will not have a disruption there. So we are looking forward to a good quarter one, and we are quite well prepared than what we ever used to be, before during the pandemic stage. But yes, a lot of things are happening, you know, as we speak, the ramp-up is happening, month-on-month, so we have some way to go, but I think relatively feel quite confident about doing a good job for quarter one. Would you also like to comment on the product mix that you would like to achieve, given the fact that we are looking at a very strong Q1 across the board? Not for luggage as such, but just generally for summer businesses as well. In terms of the hard luggage and soft luggage mix, or the brand mix you wanted to understand? Yeah, brand or pricing, essentially, not hard goods. I think Aristocrat would, the value add will continue to have the similar dominance. It may go down a few percentage points, but that's a guesstimate at this stage right now, in terms of, you know, share, the salience between the brands. But as I said, once again, that VIP and Skybags would come back in terms of, you know, the share of the overall revenue and volumes. So we'll see exactly what kind of mix comes up, but we'll continue our progress in Aristocrat, maintain that level of, you know, market share. And we'll make sure that our VIP and Skybags brands comes back. Sure. And, if you, on just one more question on the export part of the business, would you like to spell out anything, in terms of any, progress that you would have made in the last couple of quarters? Or how should one think about export business, over the next one or two years? So it's, like, like the domestic business, that is also inching back to where it was in terms of where we had distribution. Largely in the GCC countries and Middle East, the demand has started coming back. We had, our distribution, there, the brand is salient there, and therefore we kind of, you know, on a similar kind of revival is coming back there. But besides that, as of right now, we have nothing much to share in terms of, you know, the plans or, things that can happen in the immediate future. Any B2C brands that you plan to launch only for online? Is that a thought process and any, any update on that? No, there is quite a few, but I don't think we are at a stage where we could start sharing or talking about that part as of now. No. Appreciate. Perfect. Thank you so much, sir. Best of luck. Thank you. Thank you. The next question is from the line of Ankit Kedia from Phillip Capital. Please go ahead. Just a couple of questions from my side. You know, first on gross margins, where you said you're targeting around 50% on gross margins. Now, with own manufacturing share increasing from 50-60% to around 65-70%, shouldn't the gross margins ideally be going up, even factoring in that, you know, the premium brands, you know, you're confident the share of premium brands in FY 2023, so VIP, Skybags, would start to inch up? We've already taken price hike in the system. And going forward, if inflation is under control, do you think the gross margin guidance of 50-51% is slightly conservative? Yes, in the statement that you made, the big assumption is inflation to come back to where it used to be before, in terms of raw material prices. When that happens, definitely we will have the advantage of own manufacturing fully visible. But I don't expect that to happen in the, in the- In the near future. ... near future. ... So despite shares of own manufacturing increasing, you are saying that, you know, margins could continue to bleed because we are not able to take price increases due to competition, and volumes could be a challenge again? That's right. It's a very fine balance. There is cost efficiencies that is getting built because of, you know, our upstream control. However, that is getting negated by, by the sharp inflation that we have had. And any, any, chance of, you know, huge price increases to cover up for that is going to get restricted basis our competitiveness aspiration that we have. So just to add, so, and India mentioned that there's a 13% inflation, and we have taken price increase of 4% two times, so therefore 4%-5% is absorbed in the GC. So the efficiency is equal to that absorption. Sure, ma'am. Second question is on the A&P spend. You know, if you're looking for the bumper Q1, you know, will our A&P spend next year, if everything is sitting today, you know, looking good, will it go back to that 5%-6% range of A&P, which we used to have previously? Or we'll still be conservative and, you know, thinking some bad can still happen and, you know, conserve cash? No, we won't. We have never been pessimistic about this. We deal with the volatility. So we're not going to be expecting bad things to happen. So our A&P will definitely go back to 5% levels in terms of our plans. We would plan to put that kind of money to continue to strengthen and build our brands. Neetu ma'am, just on the provisioning, we have done around INR 7.5 crore provisioning in nine months. You know, would it get reversed going forward, or do you think this provisioning is your- That is with regards to the Big Bazaar. Mm-hmm. We all know it's in the public domain. As of now, nothing is happening, but whenever things improve and somebody buys that business and we get our money, we get reversed. In fact, that amount is INR 22 crore. The provision overall created in last year and now, it's INR 22 crore for Big Bazaar. Sure, ma'am, that's helpful. Thank you so much, ma'am. Thank you. Participants, if you have any questions, please enter star and one. The next question is from the line of Amandeep Singh from Ambit Capital. Please go ahead. Thanks for the opportunity. While most of my questions have been answered, I had one question on the supply chain. So what we hear is that there has been unavailability or delays in supply, supplies across the micro market, even by the larger players like yourself, with supply chain issues seeming to be higher for the smaller and the unorganized players. So in that context, can you help us with your thoughts on what is happening on the ground, given over the last 1.5-2 years, you have taken a lot of initiatives to improve your supply chain? So in fact, the last 18 months has been a struggle on our part also to get to bring supplies to wherever demand was. And that's also because we took the tough route of you know changing from importing from China to making it ourselves. So you know in a short span of 4-5 quarters, we kind of developed capability and capacities to make produce in-house. This should result into better supplies in the long term and in futures, and in future to come. And it will be in a more controlled fashion, as in we will have a better control over that because we are manufacturing it ourselves. As far as the market is concerned, yes, we have seen sporadic supply issues, and largely it's to do with you know China as well as the you know freight becoming quite prohibitive for smaller importers to bring in products from China. So to that extent, it would be too much projective at my end to look to tell to even talk about what could happen in the future. But there seems to be headwinds as we see right now for you know smaller or very regional importers to bring in products from outside and at extremely competitive rates. So that dynamics may change, but it's something that only you know future will tell, and it's very difficult to predict that right now. I believe there is a double whammy of organic demand growth and also grabbing some share from the unorganized players. So from that perspective, will it be possible to give some sense on how has been the mix now between the organized and unorganized players versus pre-COVID? No, I'm sorry. I would not have numbers to do the to leave that, and I think it's the feel on the numbers, which I think you also have, that unorganized sector has got some hit during the last 18 months. But I am sorry, I, we, there is no secondary data on exactly what is the mix of, you know, organized versus unorganized on an ongoing basis. Sure, that's helpful. That's all from my side, and all the very best. Thank you. Thank you. Thank you. The next question is from the line of Arpit Narvekar from Bajaj Allianz. Please go ahead. Hi, congratulations on a good set of results, and, thanks for taking my question. I had two questions. First, if you could share, what is the percentage of sales through the online channel this quarter? And secondly, what are your demand expectations for 4Q? 13%. Sorry. To answer the first question, online, the e-commerce channel was about 13% for this quarter. I missed your second part of the question. Is it possible to share some color on your expectations and demand for the fourth quarter, given that there was a COVID hit? ...so, you know, as I was saying in my opening remarks, that, thankfully, and that's the good part, the overall severity of the wave three seems to be far, far less. It's also within the country is happening in waves, and not all cities that they are peaking at the same time. And the government imposed lockdown and restrictions are virtually not there as much, or nowhere close to what was before it was in wave one. So given all this, the demand has not disrupted, anywhere close to what happened in wave one or wave... So that's the silver lining that we have. But we are in the midst of it, and, there are still some parts of the country, I think Mumbai has become much better, but there are other parts of the country which are, which is still heavily dealing with this. So we are. I'm quite hopeful that, we would kind of, you know, go through this wave without having the kind of impact that the second or the worst one was the first wave. Yeah. If I may ask one follow-up on this, are you seeing some demand for backpacks with school opening happening in fourth quarter, like in January and so? No, not as much in January, for sure. But we saw that coming in quarter three, because as I was saying that there has been school opening happening quite sporadically across the country in various cities. So the demand is... On an average, the demand was much better in Q3 for backpacks than prior to that. But typically, the season for the next session of schools and colleges, all that starts around mid-March and thereafter. So we are awaiting that time to come and see what kind of, you know, environment exists, and therefore, what kind of demand will come at that point in time. We are getting ready for a good demand to happen in the coming quarters. Okay, thank you so much, Anindya. Good luck. Thank you. Thank you. The next question is from the line of Manish Poddar from Nippon India AIF. Please go ahead. Yeah, hi, sir. So just one, a few more questions, you know, following up to the previous ones. So when you say that the revenue recovery is back to 92% for the company level, would you be able to help me with a similar number for backpacks? It's much lesser than that, significantly lesser than that, but let me- Forty-five. Huh? You have a- Forty-five. It's only 45%. So, any sense, let's say, you know, how much would be the gross margin impact due to this? Because I believe margins on backpacks are relatively higher. Not really. It was marginally higher pre-COVID, but we don't have a profile of gross margin, which is so acutely or anywhere, acutely in favor of backpacks. So, this didn't have a gross margin impact, so as to say. Okay. So, then just getting to the channel bit. So first of all, are you now supplying to this big box retailer or, or, you know, where, where you have done a provision or, you all are not doing any sales up there at all? You mean Big Bazaar? Right. Yeah, no, we are, we are very much supplying to them and selling. With, it's currently the operations of buying and selling is managed by Reliance. So, the front end is Reliance operating it. And so therefore, these outlets and stores are significantly active for us, and there has been a big... a good amount of bounce back that has happened in Big Bazaar from sales point of view. Okay. And, would you be able to help me, what is the nine-month growth for, let's say, the e-com channel and the CSD channel? Nine-month growth on? Over. E-com channel. For this year versus... For the e-com and the CSD channel, individually. We don't have- The growth is not there, right? Means it's a high growth. Last to last year was a very bad period. So if we have to see growth over- Actually, that's not something that we see. We are seeing it always- Nineteen, twenty. the growth over the base, which was 2019-2020, right? 2020-2021 was a complete washout year, so everything will look good there. But the real comparison is with the year prior to that. And an e-com channel, compared to that, had about 16% growth over nine-month period of 2019-2020. So, would it be fair, let's say, let's say when you said 92% is the revenue recovery right now, let's say nine months and let's say, for Q3, sorry. Yeah. The e-com and the GT would be doing better than modern trade and CSD? E-com is- I'm trying to understand which channel is lagging, broadly. So e-com is obviously at the top of the growth stack. Let me give you some figures for channel for the quarter, and that would kind of contextualize it. So e-com channel for the quarter grew by about 23% over 2019-2020. Whereas modern trade was almost flattish, but it was at 100%, 101% of 2019-2020. General trade is still down at 95%. What's pulling down our growth is actually retail channel, which is our EBOs channel, which is at -32%. And CSD is also much lower than what it used to be in 2019-2020. For the same quarter, we are lower by about 17% there, so about 83% of recovery. The smallest part of the business is institution, which is even more down at -30% for the quarter. Got it. One last one then. I believe the warehouse consolidation is done, right? The consolidation of all the warehouses in Bhiwandi. So the benefits, have you all started to accrue in the last quarter, or this will start accruing from the coming quarters? Something has done. From a cost point of view, some benefit has flown into there, but that is something that we piloted only in West in terms of putting, consolidating the warehouse. The pilot experience has not been really very favorable given the conditions we are in right now, and it was not helping the revival of the business. Our ability to service customers was slowing down. So we kind of held it at this stage right now, and we would re-ignite the project once more stable environment is there. And right now it's only West that we have done, and that operation has stabilized. There is a benefit that has come in terms of the rental saving. But we need to really see the offset of that with freight costs- Interesting. and the customer satisfaction in terms of, you know, delivery. So that's work in progress. Okay. Okay, fine. Thank you so much. Thank you. Participants, we request you to limit your questions to two per participant. The next question is from the line of Tejas Mehta from Kotak Life. Please go ahead. Yeah, thank you for the opportunity and congrats on a very strong number. I just have, you know, one question on, you know, margins and price hike. While you've taken price hikes to the extent of extent. What I'm really trying to understand is, we expect a very strong Q4 and hopefully a much stronger Q1. We also have a favorable two-year base because both FY 2021, 2022 were impacted. I also believe that the industry will be far more impacted because of the supply chain issues. And unlike, you know, many other industries, your industry is kind of duopoly or maybe three players control. So in that context, what really refrains us from taking aggressive price hike? So when I mean by aggressive... Sorry, I lost you for the last part that you were saying. What refrains you from taking price hikes, which can, you know, cover entire inflation because of, you know, the positives, which I just in terms of stronger demand, duopoly market? Or is it the conscious strategy to maybe improve our market share very necessarily at the cost of the margin headlines? So it's a mix of both. I don't think the assumption of duopoly and, you know, three players, and still it is a fragmented bit of market, while the unorganized sector is going to be not as potent as it used to be before. But there is still, you know, an agenda of gaining back some shares that we have lost, and we lost more because of supply chain and many other issues in the past. So, as I said, we could take a price increase and, you know, net off or offset the raw material inflation. But we're going to do that keeping a very strong eye on, is it making me incompetent? And that's something that we are not wanting to do right now. Okay. Okay. And is it your assumption that the smaller guys and the unorganized guys would be far more impacted than larger players like us in terms of the raw material availability or in the? Logically speaking, yes, but we haven't seen a lot of that as we speak right now, and maybe that's also to do with the timing and the disruption that keeps happening. I think in the next two quarters and quarter one, we will have a better sense of that. So while we are hopeful, but we are not expecting that to play up, and therefore, in a way, we are, you know, the assumption would be that we'll have to still fight it out and get the revenues and our growth. So from that point of view, we are approaching it more from a, you know, level playing field, somewhat continuous. In terms of raw material, I believe we had some maneuvering between the types. Sorry to interrupt, Mr. Mehta. Your line is breaking up in between. Is this better? A little better, if you can continue now. We didn't hear the question, so you'll have to repeat it. No problem, Neetu. In terms of the raw material, I believe we were, you know, having some maneuvering in terms of polycarbonate and polypropylene, you know. Where we are right now and have the benefits of this, or we can see some, you know... Yeah, so, you're right. Polypropylene-based hard luggage has a fundamental economic advantage over polycarbonate from a cost of input material point of view. And, to leverage more on that, the CapEx that we are talking about is entirely for increasing our capacity in polypropylene, which is an injection molding or injection molding-based manufacturing. So the entire stuff that we are doing right now is on polypropylene. We have headroom in our polycarbonate-based luggage manufacturing, so we didn't need to invest in that. So overall, we are gearing up for a larger, much larger growth in hard luggage, in the coming year. Sure. Got it. Thank you so much, and all the best. Thank you. Thank you. The next question is from the line of Abhishek Agarwal from Gemsquest Capital. Please go ahead. Yes. Thank you. Thank you for giving me the opportunity and, congratulations on good set of numbers. So just, one question, with respect to our brand, Carlton. So whenever I go through some of the e-commerce sites, I find Carlton products, many. So just wanted more details regarding, I mean, what is our plan, the business plan in terms of, various categories that we are into and how do we see this, segment? ... So So Abhishek, sorry, your line is also breaking. If you can, you'll have to repeat it, or maybe you're too close to the phone. Yeah, just repeat. Hello? Yeah, better. Yeah. I just have one question towards brand Carlton. So whenever I shop through this e-com site, I have so many categories of products in brand Carlton. Say, for example, apparel and bags and... So just wanted to understand, what are our business plans in this category? The question is not very clear, but let me try and paraphrase. And what's our plan for the brand Carlton? Yes, yes. Carlton, in terms of new categories of product that we are into. This is the operator. We are not able to hear the management line now. Am I audible now? Yes. Yes, sir, you're audible, the management is not. Please hold while we reconnect them. So we are- We have the line for management connected. Sir, you may proceed, please. Yeah. So we... The brand Carlton that we have is in luggage and some travel accessories that we sell under the brand, namely neck pillows and pouches. That's there in e-commerce as well. From the brand plan on Carlton as such, this is the premium most end of our portfolio. As of right now, till about now, we haven't done much there because the premium end was not... The most premium end was not the biggest focus, given, you know, the disruption had taken a bigger toll at that side. But going forward, we will look at one in the categories and product segments that we are in. We're going to kind of bring in more innovation and products there. Like other brands, we're going to kind of, you know, continue the progress that we were doing prior to the pandemic. Sir, and just to follow up, any plans with respect to getting into other categories, and what kind of business potential do we see for this brand? So, you know, no, overall, we are into a few categories. Luggage is one, we are into backpack, and we are in ladies' handbags and, and travel accessories. So these are the categories, what we, we have in our business, right now. And in the immediate future, in the coming year, we are mostly, you know, focused on only these, and I don't see anything new getting added in terms of a big category in, onto our portfolio. Sir, some of the items like footwear and belts and all this kind of stuffs, are they not sold or manufactured by us? Under the brand Carlton? Carlton, yes, yes. No, that's not manufactured by us. Okay, okay. Sure. Thank you. Thank you, and all the best. Thank you. The next question is from the line of Namit Mehta from KC Capital. Please go ahead. Hi, from my side, can you talk a little bit about the viability of Chinese imports today and the implications of that on the unorganized sector? And if you can talk to it a little bit, you know, both from the near-term perspective in terms of freight costs and so on, as well as structurally from a medium and long term in terms of other cost factors in China vis-a-vis Bangladesh and India. So I think, I think the freight, as we speak right now, is the biggest, biggest cost factor that has become extremely unfavorable from... I'm talking about ocean freight from China into India. We all know about the kind of, you know, costs or price hikes that has happened on container freight. Besides this, I also believe that the China's cost efficiencies are has taken a beating because also of the shutdown of capacities and scaled down. But from our side, we won't have too much of, you know, exact understanding of, you know, what has gone there to make them not look as competitive. But certainly, as we see, even for our imports, we would find it quite difficult to bring in something and make it quite competitive in the market. How long will this run, last, and is it, long term and, a sustained kind of a situation? Again, that's something very projective, and I, I don't think that I'm at a position to kind of predict that at this stage. Thank you. The next question is from the line of Niket Shah from MOSL AMC. Please go ahead. Hi, I just had two questions. One is, if you can comment a bit on discounting, which is happening in the industry, in the sense that typically first quarter we don't see, but we do see in the second and third and the fourth quarter sometimes. So on the industry-wide, has discounting come up? That's the first question. And the second question was, apart from luggage, we do sell some amount of accessories in our store. It's very small, but very high margin. Any thoughts on that? ...So on the first question, you know, the pandemic saw some severe amount of discounting by all players, including us. And that was, in a way, some bit of distress and liquidation that was happening, and it continued for a good period of almost four quarters. Starting February of last year, we started reducing it, and by, you know, somewhere by the end of the second wave, we had completely taken out any amount of extra discounting to liquidate inventories that we were running from VIP. So from that point of view, discounting is off the table. Now, the discounting or the discounts are more promotion-led, and therefore it has more, you know, it has a particular purpose of, you know, either cross-selling, upselling, or creating, giving a value proposition to the consumer. So it's come back to what it used to be normally as a selling lever that we were using. I forgot the second part of the question. Sorry, can you say ask me the second question? Second was on the, apart from bags, we do sell some amount of, if I may use the word, accessories, along with it, and that's a very small part of our business, but I'm assuming that's very high margin. So any thoughts to ramp that up? That's completely China imports, and in the near future we'll continue to do, to be that. Since it's a very small part of the business, that's not something that is bothering us too much right now. But we would continue that because I think it, it brings in a lot of value to our exclusive outlets, and consumers seek that. So, you know, it, it, it from a continuity point of view, we will, we will be continuing in those categories, but it's not going to be any, any big game that we'll play there. In terms of a channel margin, we typically see very high channel margin in a luggage business. And they typically make 2x than what the manufacturer even makes. So do you think there is room for that to get corrected or adjusted over a period of time, given it's just a two-player industry to some extent? I mean, two or three-player industry now. No, I don't see that, and I have no reason to expect that in the short term, at least. It's a high volume in the sense, you know, the space required is quite high. To that extent, the margins in the trade is also to do with the return on the investment and the spend that the person does. So it is there, and I don't see that to be a big play going forward. One final question to Neetu ma'am is, if you're selling to Big Bazaar currently, then shouldn't be the provisions reversed at the first place? Because if that account is active, then why do we carry provisions, so? So I'll tell you, the way it is working is the earlier balance is frozen as on one date. That's done for everybody, not only for us. And the new business is happening in a different account, and the monies are coming based on the due dates. So whoever gets the deal, whoever buys the business, will clear all those old accounts. That's how it is. Okay. Awesome. Thank you. Thank you. The next question is the last question from the line of Prolin Nandu from GMO. Please go ahead. Yeah. Hi, I hope I'm audible? Yes, you are. Yeah, yeah. So thanks a lot for taking my question. So just one question, right, I mean, from my side, would be on your plans, you know, in e-commerce space. So just wanted to understand, do we have a strategy to regain leadership in this segment as well, just like we have in an offline kind of a market? And, I mean, do we have a team? Do we have an infra, or do we have, you know, some strategy? If you can give some color on this, that would be great. Of course, we have a strategy, and we have a team and a whole setup that is catering to the business. And, as I was saying, that we have progressed in a very big way over the last four quarters in terms of improving our capability to serve and to sell through this channel. So it's very much there, and it's in line with the industry standards, yeah. Sure. But, I mean, is there a timeline, I mean, you know, that we have set internally as to by what time? Because we have been gaining market share there, right, in terms of times, and we have been a late entrant in terms of at least, you know, having a dedicated sort of a strategy. So any timeline by which, you know, we can probably gain that leadership position in that segment? Well, I don't have a timeline as such, but the expectation is to, you know, we have come pretty close, there. So, you know, sometime in the coming year, we should definitely try and be what we would call as a fair share, depending on overall the consumer share that we have in terms of the relative share to competition, should start reflecting in e-commerce as well. That's great. Thanks a lot, and all the best. Thank you. Thank you. As there are no further questions, I now hand the conference over to Ms. Neetu Kashiramka from VIP Industries for closing comments. I can just say that it's a beginning of good days, and looking forward for a better Q4 and Q1. Thanks, thanks, everyone, for joining this call. Any further questions or queries, you can connect with me anytime. Thank you. Thank you. On behalf of VIP Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you, everyone. Thank you.