Good evening, ladies and gentlemen, and welcome to the VIP Industries Limited Q1 FY23 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 the listen-only mode, and 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 desktop phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anindya Dutta, Managing Director of VIP Industries Limited. Thank you, and over to you, sir. Hello and good evening. Thank you for joining this call late in the evening. We've been putting late evenings ourselves to bring out our results faster, and I believe this is the fastest we have been till now, and hopefully we'll strive and we will improve further beyond this. Before we talk about the results, firstly I would like to tell you that at VIP, the whole team is very happy to have a disruption-free quarter one, the peak season quarter, which we were eagerly awaiting for the last two years, which were completely washed out because the quarter ones were washed out because of the pandemic. And with the conducive environment, and more importantly, with all the hard work that the team has put in, I'm quite delighted to announce the results. Our revenues were at INR 591 crore, which is the highest revenue quarter that we have ever reported. This is also a 5% growth over the pre-pandemic quarter one, which was FY20. Just to contextualize the environment, on one side, travel opened up in a very nice way. We saw sequential growth in airline passenger traffic both in April and May. However, the level of domestic passenger traffic was not the same as what was in Q1 of FY20. It was slightly lower, and we also saw a slight decline in the month of June. International travel has also opened up. While it's still gaining momentum, we didn't see much of corporate travel coming back, and that's not something that we were expecting to happen. By and large, I think travel is coming back, and that's quite helpful for us. The wedding season, we had no complaints. There were enough wedding dates within the quarter, and I think it was celebrated the way it should be, and we got the benefit of that. So did the schools and colleges opening helped us in terms of the sale that is dependent on the consumption because of schools and colleges. So overall, a very good conducive demand environment. But while we say that, I think there were equal or newer headwinds that we were facing. One, from the inflation side, we are dealing with an inflation that we have not dealt almost in one decade for the last one decade. We are almost at a 24% inflation over the same time last year. This inflation is not only putting pressure on our profitability but also could be a potential demand dampener. Besides inflation, one more key callout here is the Future Group and the closure of stores and the transition. I think it had a big impact on us. Almost 430 stores of Future Group across all its banners, only 44 were operational in quarter one for our business. We had a high dependence on this one account. Almost 15% of our revenues used to come from Future Group stores, all banners put together pre-pandemic, and that was extremely constrained in this quarter, and we had to look at avenues to regain the demand that would have happened because of Future Group. We are expecting this revival to happen by quarter three, hopefully. However, in spite of the headwinds, as you can see, the result has been quite good. Modern Trade, if I were to talk about the performance in channels, Modern Trade, which was the largest hit in this whole thing because of Future Group, did make up at least 50% of the loss through other accounts within Modern Trade, and a large part of it was also made up by other channels. Retail, in particular, when I say retail, I mean my exclusive business outlets have performed very well. It has come back to the same revenue as it was in quarter one of FY20, with almost 100 stores lower than what was in Q1 in FY20. Even general trade expanded and got the business very well. In fact, one of the things that general trade has taken on is to see how do we penetrate further down Pop Strata, and we had, in the quarter, 68 new towns opening up for us. Equally, e-commerce performed well in driving the growth, but e-commerce is a place where we always have much higher potential than what we are possibly getting, largely because of coming from a relatively lower share in e-commerce. So by and large, I think all revenue streams in terms of channels performed very well. In terms of our brands and categories, also, we had great performance both in the value segment as well as in the premium segment. VIP and Skybags brands created good buzz in the market with high-decibel campaigns. In fact, we were the only brands active on TV in the last three months. Campaigns like the wedding collection campaign with protagonist Vaani Kapoor or Chase the World campaign with Varun Dhawan really did well for us. Even on Caprese, we went back on air with digital and print brand activation, and the Caprese brand as well has come back to its pre-pandemic level. Besides the brand activation, many new launches were done in this quarter, and I'm very happy to share that some of our new products, whether it is in the tech themes, which was launched in the quarter, or it is in the high fashion zone that we had launched, all the new products have done extremely well during the quarter for us. So overall, the revenue has been pretty good. When we look at the gross margin, that's a bit of a dampener from what we were expecting, largely coming from the inflation that we experienced. We saw a gross margin, gross profit of 49, sorry, is it 50? 50. A gross margin, gross profit of 50%, which was sequentially lower than the previous quarter, largely because the previous quarter had the price increase kick in. However, the cost increase or the inflation really took place in this quarter. So price increase was designed to cover part of the inflation, and it was designed to take a slight hit on gross margin this quarter because as we go ahead, we would possibly, with other cost reductions, we will neutralize we'll hopefully neutralize the impact of the inflation. With all that, very happy to say that our EBITDA is at 18.3%. The control on all other fixed costs was in line with what we had planned, and therefore it gave us an EBITDA of 18.3% and a PBT of INR 100 crore that we are reporting. We continue to stay strong on our fundamentals, whether it is building the channels or building the brand, and more importantly, building our supply chain. We've spoken about our own manufacturing and contract manufacturing share as part of whatever we are selling, and that scaled up to a 79%, which is quite heartening to see. Going forward, we are quite confident about the demand environment to remain stable while the inflation and the arrears on some of the channel, like Future Group we spoke about, will continue to put pressure on us. But as the overall environment stabilizes, we are more confident to work through these constraints and make sure the fundamentals that we are building help us to continue to deliver good results. With that, thank you, and I would now open the session for questions. Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the desktop telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hands up while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Karan Khanna from Ambit Capital. Please go ahead. Thanks for the opportunity. So Anindya, can you first talk about what's been the volume recovery versus pre-COVID during the quarter, and as a follow-up, what's been the revenue loss which the company would have seen during the quarter given the impact of Future Group? So the volume growth, Karan, is 8% on the base, which is FY20. The Future Group, while it's difficult to quantify what is the loss because the stores were not open, but overall, the consumer demand was caught in other avenues and other channels. So we had a plan to look at the catchment area wherever the store is shut, and we activated our own stores or MBOs nearby. We also took up fests and everything and whatever possible in all especially in malls where the stores were there. So if you see overall, I would think that we've kind of almost recovered of whatever the Future Group loss was in most of the other channels. But one cannot say for sure. There could be some loss. Overall, I think given the performance that we have had, it seems that large part, at least, of what could have potentially happened through Future Group was captured in other channels and other stores. On the raw material front, Anindya, if you can just talk about how's the situation now versus the previous quarter and what's your take in terms of going forward. If the raw material prices were to cool off, will the benefits be passed on to regain market share, which has been lost over the last two years? Yeah, Karan. So it's a little mixed bag in terms of what we are seeing in the market right now as far as raw material is concerned. There is some softening that we are seeing, but there is continued the same high inflation in many other components and raw material that we have. In the immediate quarter, I think we are already covered for the raw materials, so we expect the inflated conditions to remain for us in the immediate quarter. However, slightly more in the long term, it's quite volatile for me to predict right now what benefits could come in from where we are right now. As the benefit comes in, I think our strategy on competitiveness and profit remains the same, where we continue to walk a tight rope as long as we will continue to strive to gain share while we have healthy gross margins and overall profit. On the supply chain front, while your dependence on China has reduced to around 11%, can you give us some sense if there has been any disruption with respect to raw material procurement given the current lockdown situation in China? Also, what happens with the supply for backpacks, handbags, and premium luggage that are still imported from China? Yeah. So on the raw material front, yes, there has been quite a difficult condition in terms of disruption from China. Part of it was covered through a little bit of pre-planning, and some bit has happened. So a lot of the way you deal with the volatile situation, right, you're trying to bend things here and there to make the ends meet. So it's going on, but as China stabilizes, I think the flow will kind of stabilize. As far as buying finished goods from China, yes, on the high fashion portfolio, which is Caprese and backpack, part of it will continue to happen from China. Barring the disruption of days and weeks whenever we have had in the past or if it happened in the future, we are trying to cover that up with having extra inventory in some of the core areas that we believe will be high sellers. And lastly, in the recent annual report, you mentioned you were looking to add 120-150 EBOs this year via a selling expansion. This roughly implies a quarterly run rate of around 30-35 stores per quarter. With respect to this, can you help us understand if you're on track for this and how many stores would have opened since April? Just to reveal some numbers here, in this quarter, we have added 21 stores, and we have signed up 23 more stores within this quarter. I'm quite sure that we should be able to maintain the run rate. Great. Thank you, and all the best. Thank you. The next question is from the line of Bharat Chhoda from ICICI Securities. Please go ahead. Yeah. Thanks for the opportunity. Sir, despite there is a raw material inflation, it is incredible that you have maintained gross margin at 50% level. But if you look at EBITDA margins, then probably it is at 17.4% compared to probably Q1 FY20, where we had a margin of around 22.2%. So what has been the reason for this EBITDA margin being lower? Firstly, I think EBITDA margin is 18.3%, if the number is correct. We have converted ourselves to our own manufacturing, and that has changed the cost line from gross margin to more overheads and fixed costs. So as we expand manufacturing, our own manufacturing, that cost is more coming below the GC line. So really, the pressure is not below GC. The pressure is really in the gross margin line, which is purely happening because of the completely unprecedented, very high level of inflation that we are dealing with. Just to add, there were one or two additional expenditures like exchange rate fluctuation, which impacted the EBITDA margins. 2% of EBITDA margins actually impacted because of exchange rate fluctuation. If you see the slide, we have given other expenditure details. You will get that information. Okay. Related to this, probably for the full year, what kind of margin are we looking at? Probably this quarter margin would be the number we are looking at that, or we are looking at improvement in the EBITDA margin for this year for FY23 overall? We would love to maintain this for sure. But to be honest, it's quite volatile for us to kind of predict right now. But given the conditions stabilizing, I think anywhere between 18 and 20 is what we should aim for in the second half of the year. Okay. Sir, one question on this clarification about the volume growth you said is around 8% vis-à-vis Q1 FY20. Is that correct? That's right. But if you look at then, the value growth totally for that period is around 5%. So probably, is my number correct because we are having? You're actually right. The mix is in favor of the value portfolio, which is changing the value-volume equation to that extent. 25%. Okay. Yeah. Thanks for answering my question, sir. That's it from me. Thank you so much. Thank you, Bharat. Thank you. The next question is from the line of Tejas Shah from Spark Capital. Please go ahead. Hi. Thanks for the opportunity. Sir, in your opening remarks, you sounded a bit disappointed. I'm not sure if I read it correctly. But is it that there was a part of demand which was there and we could not cater to, or were you slightly disappointed with the demand itself because you also spoke about air passenger traffic not going to pre-COVID level in the quarter? Tejas, on a lighter note, I think you should see the time on the watch and decide, is it disappointment or fatigue. We just finished a long meeting. But absolutely not disappointed. Absolutely not disappointed. I think it's a brilliant performance, much awaited that we were wanting to get to, and this has added a lot of confidence in the team. Yes, there are many moving parts in the business, and we got to manage all of them. So the big, big, big good news is that as we speak right now, whether it is a fourth wave or not, I think the consumption of our products has become steady. And this itself is going to multiply all the efforts that we have been putting in in the last eight quarters to stabilize our business. I'm quite optimistic and confident about the future and quite happy with what we had happened. Please don't read that. Yeah. That helps, sir. Sir, second, I think Neetu also spoke about it in the previous question, that visibly, Aristocrat, Alfa, the contribution pre-COVID to post-COVID has actually picked up materially. And then as you also mentioned while answering the previous question, that is the reason of margin dilution also. But just wanted to know, is this focus largely consumer demand-driven also, or we were highly under-indexed in this segment, and that's why we have put a disproportionate focus on this part of the segment? No, I think it's a brilliant question because yes, it is coming from an under-indexed part in the value segment. Also, what is happening is that there is a higher tailwind in the value segment, which the pandemic has brought in with maybe unorganized market yielding into organized. So definitely, from every reason you see, it is very important to address that from a share gain and also from a growth point of view because that's where the market is going faster. In fact, our approach and our strategy was to see how do we cater to this more profitably, and therefore, the hard luggage and within that, the hard luggage made out of polypropylene is what we went after, and we put capacities. We invested CapEx behind it, and that's something is helping us right now to not only cater to that demand, also maybe relatively than what we would have otherwise done, we are doing it slightly more profitably. Sure. And sir, similarly, backpacks, if we see the saliency there, it has a wide gap between pre-COVID to now. So very intuitively, we would have thought that the pent-up demand of school and back-to-school and back-to-office would have normalized in this quarter, but it is not visible in backpacks saliency going back to the pre-COVID numbers. Any insights if you can share? So yes, on backpack, I think no, you're first of all right that demand with all the demand drivers has come back. I think what has happened from our side, which has not really fully worked for us, was the delay in the launch of the new collection that we had. So there was a miss from our side in terms of a slight delay in the launch of that, and possibly, we didn't get enough of what the demand brought to us in the last quarter. But again, fundamentals in place, I think this is just a correction. And in the series of many corrections, this is a slightly delayed correction that we've had. Sure. And sir, last question on the business model change that you spoke about, that after almost 10, 15 years, the focus is also coming back on domestic production. And that also means that that part of the value chain profit will be captured in our P&L. But at the same time, how should we think about capital return ROC going forward because Capex intensity should increase logically from here on? So if you can share some thoughts there. Our business, per se, is not too CapEx-heavy. Payback is 18-24 months. From that point of view, if you see return on capital employed, it is around 30%. It should not be. Ma'am, if you can share Capex plan for this year and next if you have. This year, we have a CapEx plan of around INR 50 crores. This will be for Nashik facility, or? Need not be only Nashik. It is a mix of all Bangladesh, Nashik, Sinnar, as well as some more. Okay. Okay. That's all from my side, and all the best. Thanks. Thank you. Thank you. Our next question is from the line of Jinesh Joshi from Prabhudas Lilladher. Please go ahead. Thanks for the opportunity. I have a question on exports. I understand the share is at about 3%-4% currently, but given the fact that most countries are now looking to kind of diversify their supply chain from China post the pandemic, are we seeing any increase in inquiries over there? I mean, basically, the reason I'm asking this question is because in the past, exports used to be about 10%-12% of our top line. So can we expect to reach that level in the near future? So Jinesh, firstly, I think international business could mean a very large opportunity for us, which we haven't exploited or explored in the past to that magnitude, but we would like to do eventually in the future. But we had a certain export business in the past pre-pandemic. Firstly, I think in this quarter, we've not only come back to that level, but we have surpassed that level. Quarter one, exports stand about 5% of our revenues. And this is not only the China and the supply, but also the export and the front-end team is working hard to reopen every country and every sector that we had. We had about 20-odd countries to which we were selling in the past. We have exceeded that in the last quarter. So two parts to that to see. One is to reactivate what we had in the past. I think we have reached, like in all other areas, reached and surpassed that base. With some gap from now, we would look at possibly going into international with a much bigger game plan. Sure. Any specific geography you would want to highlight? So in our existing business, I think Middle East and largely GCC is where the core of what we're doing lies. We had a change of channel partner in UAE. We have just about now entered the Saudi market. So these are the countries that are yielding well for us in the previous quarter. And what we see in the near term, we should be getting better and better there. And exports into many other countries in Southeast Asia or some European countries had also resumed what we had before. Sure. And secondly, I have a question on CapEx. I know this sounds a bit repetitive, but if I recollect properly, in the last call, we had stated that we have plans to incur CapEx of about INR 30-35 crores. But in the annual report, that figure was mentioned as INR 65 crores. And in response to the previous question, Neetu gave a figure of INR 50 crores odd. So I mean, I just want to kind of put the numbers in a better way with respect to what exactly I mean, which area are we spending into and the reason for divergence in numbers as well. This is for the previous year? No, FY23. So we will come back to you on the number part. Yeah, Jinesh, I will call you. Yeah, on the difference in number in whatever sources you are looking at. But what Neetu said, right now, it is order of the magnitude of INR 50 crore is what we have outlaid for this year. Yes. No problem. We'll take it offline. One just small clarification. I think we have some exceptional gain of INR 15 crore with respect to fire insurance claims. But I think total amount which we were supposed to receive was approximately INR 48 crore. So any specific reason why we have received a partial payment and not full payment in this quarter? So the survey report is not completely out. This is an interim payment which has come, and we have accepted because at least now it justifies that the claim is legitimate. So we are expecting around INR 41 crores-INR 45 crores of recovery on this, which will come only by quarter three, the balance money. Okay. Okay, madam. Got it. Thank you so much. Thank you. Our next question is from the line of Bhargav Buddhadev from Kotak Mutual Fund. Please go ahead. Yeah, good evening, team, and thank you very much for the opportunity. Sir, my first question is on the Future Group loss. I request you to use the handset mode. There's some errors. Yeah, can you hear me now? Yes, Bhargav. We can hear you. Go ahead, please. Yeah. Yeah, my first question is that offsetting the loss of the Future Group, which was about 15% of revenue, has been a commendable effort. So if the Future Group comes back, do we see this as additional revenue, or how should we look at it? No, it won't be. See, the way I said that there is an overall demand in the market, and shifting between stores or channels is quite possible. So as I said, the way we made up for it is by having a catchment area strategy. When it comes back, I think it will reorganize itself to that. But there is always Bhargav, and it's very difficult to quantify that always a particular retail chain or a store does drive the demand further overall for the category. And yes, to that extent, when it's fully functional, I'm hopeful that it will add something more than whatever because wherever else we are getting that kind of attraction may also continue at a higher base. There's no perfect science to this because finally, it is the consumer demand met through various stores or by different channels, and there is a lot of fungibility between them. So when it comes back, it is going to be quite a. It will be a very welcome situation when Future Group fully becomes operational. Secondly, on the LFS side, we understand that VIP has to address the competitors. Is that a request? Can you please repeat your question? Your audio is broken. Sorry, we couldn't hear you. Yeah, your voice is quite disturbed. There's a lot of. Yeah, can you hear me now? Can you hear me now? Yeah, better. Yeah, I'm saying that on the LFS side, earlier, VIP wasn't that aggressive, and they were giving away businesses to competitors. But now we understand that your team has become fairly aggressive, and they have started increasing their share on the LFS side. If you can sort of elaborate briefly on this side in terms of what is the penetration and the opportunity over here? Sorry, can you help me understand LFS? What do you mean by that? The Shoppers Stop and all such kind of formats. What? Okay. Okay. Okay, the Lifestyle stores you mean. Yeah, yeah, yeah, yeah. So what I. Hello? Yeah, yeah, no, I was just trying to understand your question. So I don't share the same perspective that we were not very aggressive, and we are aggressive now. We are aggressive across. And the LFS side does represent for us the premiumization agenda that we have, whether it is with Caprese or whether it is with luggage, and therefore, VIP and Skybags. That sector for us is more high-yielding for premium and more fashion-related range within our brands. So we will continue to be aggressive on that, and it's more about segmenting it right and putting the right agenda, the right strategy behind each of these channel segments that we have. My third question is, which areas of talent, in your opinion, are we still short of, and what are we doing to sort of fill these gaps? Extremely relevant question. This is something that we've been working very hard in the last four quarters in terms of building up the team. We are at, I would say, relatively much better position than what we were about a year back. But we continue to look for better and more higher talent in e-commerce. Definitely, that's one area, and also along with that in the innovation side and therefore design and product development side. So these are areas which are very strategic, and these are going to be a newer journey for us going ahead. And therefore, that's an area which is more under focus for talent build from here onwards. And other areas that were under priority have kind of been done. My last question is that now with currency depreciation being so sharp and we being more sort of backward integrated and also sort of manufacturing more in India, is it fair to say that we are now fairly well-placed as opposed to our competition, both organized and unorganized? I would say we are relatively better, but the glass is still half empty. There is a lot to do in terms of our raw material, in terms of finding out and alternate sources of raw material. We're still dependent on China for a large part of our raw material and streamlining all that. So the agenda isn't over. I think we have made a very solid big start. We could be ahead. But what we see is that there is still some more to go before we can really say that we have consolidated on this one strategic shift that we had done in the organization. Okay. Great, sir. Congratulations once again and all the very best. Thank you. Thank you. The next question is from the line of Ankit Kedia from Phillip Capital. Also, participants, please enter star one if you wish to ask a question. Mr. Kedia, please go ahead. Thank you. Sir, just wanted to understand how has been the online performance for the quarter? So, Ankit, the online performance was good both sequentially as well as on the base that we had both the last year and the 19-20 base. We have handsomely grown by excess of 50% on all accounts. So, as I said, while having said that, we think that it could always be better because this is where we do not have the share that we have in other channels or even our overall share in the market. So there is a catch-up game that we are playing as far as e-commerce is concerned, mostly in the marketplaces. Sure. And sir, my second question is, what is the learning from the Future Group which we have had having a high dependence on one group? So incrementally, would Reliance also have a high single-digit market share for us or revenue contribution for us along with canteen sales? So are we de-risking ourselves to a particular group, or we continue to have high dependence on a particular channel or group? No, I don't think we can see it like that because a particular retail chain, depending on how big the retail chain is, brings us a certain opportunity. And the idea is to maximize in each one of these channels in terms of our share and salience. So it is not about in our hands to de-risk by saying that if a chain is doing very well, we don't want to have high share because we want to have low dependence. That doesn't make sense. So yes, the situation that has happened in the last quarter is unfortunate. I could only say unfortunate because of our high dependence. But one cannot have a strategy of lower dependence on a chain, which would only happen if you decide to have lower share in that chain. Sir, what would be our dependence on Reliance today? Because a lot of the stores would be taken over by Reliance now. Yeah, so when that happens, we will get a sense of what volumes they are stabilizing, what is this question would be more to Reliance in terms of where they are seeing the Big Bazaar volumes overall and for my category, how much they will come back to. But that's something only Future will tell us. Sure. And sir, my last question is on the A&P spends. The quarter, we have had around 5.5% of A&P spends. Do you think for the full year, around 5% would be the ballpark number we would maintain our A&P spends at? Yeah, somewhat like that. Yeah. Sure. And sir, just a feedback, thank you for the excellent presentation and the annual report. I hope to continue getting these data points. If you can just add channel-wise data also in the presentation, it would be very helpful. Thank you, Ankit. I take that feedback. We'll see what we can do. Thank you. Thank you. The next question is from the line of Akhil Parekh from Centrum Broking. Please go ahead. Hi. Thanks for the opportunity. Sir, your first question is on what is the share of PC-based hard luggage and the PC-based hard luggage, sir? Sorry, Akhil, can you come back on that question? I quite didn't understand what you were looking for. No, I'm saying the contribution of polypropylene-based hard luggage to the total sales and polycarbonate-based hard luggage to the total sales. Total sale of hard luggage? No, in that breakup. Or the overall company sales? No, no. Within that, the breakup of polypropylene-based hard luggage and polycarbonate-based hard luggage. We can share the data. Don't have it ready right now. Maybe offline, we could connect with you and give you the data. If you want a ballpark, I can give you some understanding. It's roughly between hard luggage, it's a 70/30 kind of a split. But precise numbers, I'll share at a later time with you. If you can highlight margin differential between PC and PP luggage. Well, margin is a price-dependent variable, but I can tell you what is the per-kg cost difference between a polypropylene and a polycarbonate. Polycarbonate is almost 70% more than a polypropylene on a per-kg basis of the raw material. But margin-wise, it doesn't differ much. It is 1%-1.5%. Yeah, because the pricing is different, right? So we are using polypropylene to more fight in the value game, and polycarbonate more is in the Skybags and VIP in the premium segment. So margin is a derivative, as I said, of pricing. Sure, sure. This is helpful. Second question is in the difference between, say, a landed cost of a Chinese-manufactured luggage vis-à-vis in-house manufactured luggage in India. How much that is? Again, difficult to give one number on that, but I could tell you from Bangladesh manufacturing, and this, I think, I would be repeating. We've spoken about this in previous calls. In Bangladesh, the raw material and the duty arbitrage overall on an apples-to-apples comparison is about 15% for us. Sir, the question is on the value segment growing at a faster pace. You briefly alluded that there is a transition which is happening from unbranded to branded. But would it also be possible that there is a downtrading happening where a VIP consumer is kind of going for an Aristocrat product given that the RM inflation is very high? We are observing that in many of the categories where value-conscious consumers are moving towards a lower-priced product. Would that be a possibility by any time? Yes, I cannot deny a possibility. Knowing that there is a possibility, we, from our side, do everything in our product mix that we create to make sure that looking at the target audience who should be buying a VIP and Skybags, the features that we put on that and the way we sell it, the way we market it, make sure that we retain the VIP and a Skybags customer in VIP and Skybags. And we try and get the affordability segment consumer in Aristocrat brand. But that being the strategy, it cannot be 100% watertight. There could always be a possibility of cannibalization happening in terms of downtrading. Sir, if I can ask the last question, if you can mention or broadly allude to the average selling price across the three key brands, basically, VIP, Carlton, and Aristocrat. No, Akhil, I won't have that right now. It varies from channel to channel and from range to range. There is no one average number that can be put as a reference here. Okay. Okay. Sir, thanks a lot, and best of luck. Thank you, Akhil. Thank you. Thank you. The next question is from the line of Chirag Lodaya from ValueQuest. Please go ahead. Yeah. Thank you for the opportunity. Sir, my first question is on understanding this Gross Margin improvement because of structural shift to own manufacturing and third-party versus China sourcing. So what are the sustainable gross margins, according to you, going ahead? I understand currently there is a bit of inflation, but in a normalized scenario, if we have to assume versus pre-COVID, what kind of improvement one should expect? So you are right. As of right now, from where we are seeing, the volatility makes it difficult for us to put a specific number. But an underlying 53%-55% GC is what we are aiming at in a stable environment. Given the construct we have, I think 55% is quite possible on a consistent basis once the volatile situation eases out. Okay. Okay. And you mentioned that Bangladesh manufacturing landed cost is 15% cheaper versus China sourcing coming to India. How it would be when it is compared to third-party sourcing in India? No, so I'll tell you how that Bangladesh 15% is coming. I gave you a very simple, very broad-based duty arbitrage. When raw material comes into Bangladesh versus finished goods coming into India, the India duty is 15%, whereas in Bangladesh, raw material has no duty. Assuming that my conversion cost is same as China, which ideally should be lower in Bangladesh, then the 15% at least remains as an advantage over the China finished good import. Comparing with India sourcing, now it all depends on whether the RM is coming from if you were to assume the RM is coming from China, then the 15% definitely remains because Bangladesh production cost in terms of people and other costs is lower than India from where we are producing. But the comparison is not always apples to apples because India sourcing could have India raw material sources. Depends on product, depend on specification, and many things like that. But overall, as I said, I gave you the comparative numbers largely coming from duty point of view. Okay. So basically, you are trying to suggest Bangladesh manufacturing, we are as competitive as China despite China having massive scale. So is that fair understanding? Only on the conversion cost if you keep the raw material aside because if you're buying the raw material still from China and there is a freight cost, right, that is happening for the raw material to come in. So that freight cost partially is getting offset by the labor cost advantage that we have in Bangladesh. But again, given the current situation and the freight cost, that equation does not work out in letting it off completely. But pre-COVID freight cost, if you were to say, and the lower labor cost in Bangladesh, I think, offset each other. And to that extent, it brings us at least to the parity or maybe slightly lower because we're still buying raw material from China. Okay. Got it. Got it. Clear, sir. And with current freight rates, what would be the arbitrage? Is there arbitrage, or today we are modifying that because of higher freight costs? No, the freight rate is higher. There is not a perfect setup that is happening. Thank you. Mr. Lodaya had a question to join the queue for any follow-up, as I said, all participants waiting for their turn. Also, before we take the next question, I'd like to remind our participants to limit their questions to two per participant. The next question is from the line of Kirti Dalvi from ENAM AMC. Please go ahead. Good evening, all. Just a couple of questions. First, if I see the tax rate on a consolidated as well as on a standalone level, it seems to be a little higher. So is there any one-off? And second thing, what is the sustainable tax rate we are seeing for the 2023 and 2024? So this is high on account of dividend which we have received from Bangladesh. When we give dividend from VIP India, this will get offset under Section 80M. So that impact is 5%. Okay. So for the year as a whole, probably the tax rate will drift to a normalized rate, 25% now? Yes, slightly lower because Bangladesh tax rate is 15% and India will be 25%. So blended, it is going to be around 22.5%-23%. Okay. Also, second question, obviously, Q1 has some base impact of last year. But would it be fair to assume a mid-teens kind of growth probably balance here given probably all your future stores will come back, and we are seeing a little uptick in the travel as well? Sorry, I didn't follow the question. So we. I didn't follow the question. Go ahead. We are looking at a similar growth if you take the base as a normal base, on a normalized base. Kirti, you got it? Seems we have lost the line for Kirti. We will move to our next question. That is from the line of Niteen Dharmawat from Aurum Capital. Please go ahead. Yeah. Thank you for the opportunity. As you mentioned, we have shifted operations to Bangladesh, and we hear some economic issues over there. So what is the risk that we see in case there is some disproportionate economic issues faced by the Bangladesh economy, and what will be our fallback option in such a scenario? Once again, this whole economic situation that you're talking about in Bangladesh is not something that we are aware of. In fact, it's all in the news that the Bangladesh economy in the last 10 decades has done the best rank among the highest. So overall, it seems like a very progressive economic environment. Yes, I mean, overall, any source of manufacturing or any country does have a risk, and we will evaluate that risk and continuously prepare for that. China would have been also a risk in a pandemic environment when the sourcing that we were doing from China prior to the pandemic. So I don't think the risk is high or something that needs to be addressed as of right now or in the near future. Got it, sir. Thank you so much. It's a very recent news, actually. It has come today only, so we might not have gotten attention to it. But that's okay. We'll discuss it later on. Yeah, yeah. No, as you were talking, I'm being. A week ago, we read that it is a fastest-growing economy in the world over the last one decade. Okay. Thank you so much. Thank you. The next question is from the line of Ankit Kanodia from Smart Sync Services. Please go ahead. Thank you, sir, for taking my question. Sir, we have already addressed most of my questions. Just one question related to if we step back and look beyond, say, maybe a couple of quarters or maybe four quarters, looking at directionally where we are today and as we see currently for this quarter, our contribution from Aristocrat and Alfa is a bit higher, which is our lower-margin product, right? And maybe inflation pressure also eased out. A nd by that time, probably some of our problems of Future Group also subsided. And if the travel direction continues to be strong, so how do we see ourselves in that sense? Because we are also spending a lot on our advertising and promotion spend. So how do we see that reflecting, say, when we look? I'm not looking at any numbers, but directionally and qualitatively, if you would like to see, say, three to four quarters beyond, how do you see VIP? That exactly is the space where we are wanting to reach given the situations that we have been dealing with. Yes, we have been focused on more difficult things like changing our supply chain and all that. The value end growing is a necessity for us right now because that's where the market is growing. That's where share is to be given. Equally, we have to look at how do we get our costs right so that the value end is played profitably as well, relatively lower than the premium segment, and finding the right balance because as we go ahead and in the scenario that you're painting, what was very core to us, which is represented in the VIP and Skybags brands, should come back in terms of not relative salience but in overall absolute throughput and in growth terms. So that will be quite a good; that's what we are aiming for to get and hoping some of the environmental things will settle down as you go along, which will settle down, I'm pretty confident, in the future. So I think we'll emerge much more stronger than what we were before the pandemic as things stabilize from here on. Great. Sir, one last follow-up for this. How do we see competition evolve pre-pandemic and post-pandemic? Because post-pandemic, we must have seen some of the unorganized players shut shop, and they're facing a lot of problems. How is the competition in the organized space right now, and how different it is from the pre-pandemic, if you would like to give some color there? I think the competition is only intensified given one constraint in the demand environment that is bound to happen. Therefore, a lot of pressure on profitability and all that comes in because in a constrained demand, the large players put in everything that they have to get to revenue. So as that eases out, I think overall, the industry profitability will stabilize. But competition, I would see, will only intensify going forward in this space. It is a very small category compared to if you see overall India and all other consumer categories; it's a smaller category. The penetration was low. Given where our country and economy is, I think the penetration is only going northwards from here. And with that, I think as the overall industry grows, the competition will only intensify. I think whatever we are doing is to ready ourselves to participate in that with a better strength than what we had before. Sure. Thank you so much, sir. Thank you. The next question is from the line of Pulkit Singhal from Dalmus Capital. Please go ahead. Thank you for the opportunity. Sir, my first question is regarding the seasonality in the business. There used to be a certain level of seasonality pre-COVID where second quarter was down 20%-25%, and then gradually picks up, and first quarter is the best. This time around, do you expect it to be somewhat different given some kind of pent-up demand, etc.? I mean, the level of seasonality to be lower, or do you think it will be the same level as seen previously pre-COVID? I think the seasonality from a demand point of view will have a similar pattern. But just an interesting insight that if you were to really look at a slightly longer horizon, the acuteness of the seasonality over a period of time has kind of reduced. And I think that's also happening because, let's say, one of the vectors of growth is holiday and travel. And that has changed a lot from only summer vacation to many, many vacations. And marriage dates are becoming more freer than what it used to be before and all that. So it's a gradual change, which has also been visible, if you see, in our seasonality over the years. But in the near term and just about the past pre-pandemic, I don't think. I don't see any reason why it'll be very different for the industry overall. Right. No, I would just check it from a pent-up demand perspective as well because sometimes people may not travel entirely in first Q, and they may look to probably travel in second quarter as well. So I'm just wondering whether that is kind of playing out. We don't know that, but we'll hope for that. We are ready for that, for sure. Right, right. In terms of markets, I know previously, I mean, last quarter, we talked about low 40s. How are things progressing in the marketplace? Are we still around similar levels given the impact of modern trade, I mean, Big Bazaar and Future Group, or are we improving now, or just getting a sense of that? So I think we are definitely holding share overall. But it's a feel. And as numbers start coming out for the industry, we will also get a sense of how that is happening. So yeah, I think definitely holding onto the share that we had is what we are hoping for, if not improving. Okay. Lastly, I thought high inflationary environments are typically bad for unorganized players and that allows the organized people to kind of take share from them. Is my understanding incorrect, or they have kind of managed it much better, or are you seeing that kind of happen? Are you saying between organized and unorganized players? Yes, yes. This market share bit that we are talking about is, let's say, in the top three companies' relative market share basis for specific data that comes out. So correlating numbers is difficult to what you're saying. But yes, inflationary environment, disruptions, and supply situations all favors large players. Always has been for all kinds of businesses and categories. And to that extent, we would be having the tailwind have had the tailwind, the organized players, and may continue to do so because if China was a source of products for unorganized players directly or indirectly, I mean, finished goods or raw materials, that is going to go through some is going through some disruption. It'll be some time before it resumes fully. Understood. Great. Thank you, Anindya. Thank you. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to Ms. Neetu Kashiramka from VIP Industries for closing comments. Thank you, and over to you, ma'am. Thank you, everyone, for joining this call. Sorry about keeping this call so late this time. Next time, we'll definitely try and make it to your timings. Thanks. In case you have any other questions, you can definitely connect with me. Thank you. Thank you very much. Ladies and gentlemen, on behalf of VIP Industries Limited, that concludes today's call. Thank you all for joining us. And even now, disconnect your lines. Thank you.