Good evening, ladies and gentlemen. A very warm welcome to the VIP Industries Limited 9M 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. If you need assistance during the conference call, please contact an operator by pressing star then zero on your telephone. Please note, 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. Good evening, everyone. Thank you for taking out time and joining the call. I'm assuming all of you have received a copy of the presentation and would have had the time to glance through it. I'm just going to take you through some of the highlights that I've mentioned in the presentation. At the outset, I'm quite happy to announce a good set of results. Our growth continued to be at a high. We had a 32% revenue growth over last year, and even when we compare it with base, it is quite impressive at 22%. Quarter one saw just a 5% growth, and after then quarter two, we scaled it up to 25%, and we now continue to be at 20%+. In fact, the volume growth on the business has been also quite good, 25% year-on-year and almost 18% over base. Just a callout here, this kind of a volume growth is happening on a completely altered supply chain at VIP. The revenue performance that I spoke about, if you would have noticed, it's quite well-rounded. It's good across brands and channels. Talking about brand first, you would have seen some exciting launches that happened in our portfolio during this quarter. Skybags did a FIFA collection which did very well. In VIP, we had a Highlander which is a rugged, hard luggage. In Carlton, we launched a couple of soft luggage, premium soft luggage range. And icing on the cake was our launch in Caprese with a range of products by Manish Malhotra. Not only the launches, the activations have been very strong. FIFA was activated with advertisements using endorsers as Kartik Aaryan and many other celebrities. You would have seen some of these activations in Mumbai. We tried to go quite high decibel on it. In fact, Manish Malhotra's launch was far bigger than just the volume, but it was more to drive the imagery on the brand. I would believe that since the beginning, we would have much more coming up on Caprese as we go ahead. Overall, at VIP, the premium portfolio has started to kick in as we had gone into a very high on driving the value portfolio. That was one key point on Q3. When I talk about channels, once again, all channel has played its role in the growth. In fact, not only the revenue growth, but also adding the strategic element and the task that each of the channel has to do. General trade is leading us into driving penetration and accessibility. It increased its town penetration by 80 more towns in this quarter now. We stand at about 942 towns. We are aiming to be in every town which is 50,000+ population. Equally, in EBOs, we have come back to a number of 443 EBOs. That does not include the 42 we have under fit-outs right now. Hopefully, we'll cross the mark 500 which we have taken the target for the year before March 31st. Pre-COVID, the highest store count was 485. Modern trade, another callout, we had some challenge and pressure during this in quarter one because of the Future Group issue that had kicked in. It's still there, but the good news is modern trade is moving beyond its expected numbers in the year and also above its base without Future Group. In addition to that, by the end of December, a large part of the Future Group stores that got shut has started coming up. Just to give you some broad numbers, 479 Big Bazaars that used to be there today have come up as Smart Bazaars in terms of 235 in numbers, right? So almost three-fourths of what stores used to be there has come in, and therefore, that's going to hopefully help us in the coming quarter. We were strong in these stores, and we should continue our dominance and our relationship with the stores and channels. Along with modern trade, e-commerce has also fired well. Although this is a year where we don't think that we have reached our full potential or we are ahead of what our expectation is, so there is a lot that's going on and would continue to happen on e-commerce. On a side note, we also have launched our D2C Caprese website. This has kicked in about four weeks back, so we are live, and we have started to get good, we would say, green shoots at least on the whole D2C business on Caprese. International business is also doing quite well in its own way. Our strategy of going deeper in our high-potential markets seems to be working, and the growth that we are seeing is largely coming from a lesser number of countries but far more deeper. For example, as of now, in UAE, we are starting to get double-digit market share in chains like Carrefour and Lulu. Sorry. So that was on channels. If you talk about our category performance, well, our small luggage continues to dominate in the recent past, but we have started seeing some early change of that in terms of soft luggage coming up. With our supplies picking up in soft luggage, I think that's quite promising. Backpack, in particular, is looking quite well for us in quarter three as well. Net overall good revenue growth, and a highlight here would be, as I started by saying, this is completely on a remodeled supply chain, and I would like to give you some numbers here. Currently, 73% of our volumes in quarter three were supplied by our own manufacturing facility in India and Bangladesh. In a way, this has been the highest-ever ratio reported in any quarter. Our capacities, as of right now, have increased 65%. Our own manufacturing capacities have increased 65% since the pandemic, and this year, we would be investing almost INR 100 crore in this financial year only to increase our capacities. Not everything of this has been spent, but in terms of actioning this plan and increasing the capacities underway, this is almost equally split between India and Bangladesh in terms of INR 50 crore each. We would have added almost 200,000 sq ft of manufacturing space this year alone. All this is leading to good gross margin, sequential improvement of almost 1.3%, and YOY improvement of 0.5%. This is largely happening on account of raw material prices and, thankfully, ocean freight. Overall, in terms of our pricing and realization, we've been positive. In terms of overall expenditure, fixed cost expenditure, I think it has been in line with our increased revenue, increased business. Advertisement expenditure increase is a conscious decision, and I think that's an investment that's going very well into our brands and for our future. So overall, EBITDA margin flow-through from above has been lower. One large reason other than increasing in advertisement is the provision we did on the Future Group doubtful debt. That's almost taking out 1% out of the EBITDA. The provision we took was of INR 6 crore. Lastly, I think we expect positive demand environment to continue in the coming quarter or the going quarter. We hopefully would continue on our growth trajectory to end the financial year on a good note and a high note. In terms of concerns, there is the COVID situation in China which erupted suddenly. We have high dependence on China. However, it seems like it is passing off quickly. Our teams are working on mitigating the risk, and quarter four is more about not just quarter four but also preparing for a very big quarter one. So that's underway. With this, thank you. I conclude my opening remarks, and I open the floor for questions. Thank you very much. We will now begin the question and answers session. Anyone who wishes to ask a question may press star and one or request on telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset 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, my first question is on your gross margins. So I think they continue to lag against your expectation of 50%-55% range which you've highlighted in the past. So is it fair to assume that the majority benefit because of cooling off in raw material prices is getting out in your market? Yes, Karan. The answer is yes. Second, as a follow-up, what I wanted to understand is that so you have 443 EBOs today. Can you help me understand the split between VIP and Carlton EBOs? VIP and Carlton EBOs is not part of our strategy. We are not doing Carlton EBOs specifically. We have done a few more as an experiment. I can tell you the strategic split which is company-owned and franchisee which is what we are driving. So 443 is the split is 160 and 283. 160, 283. So you think that there is room for perhaps improvement for cost efficiency there that both VIP and Carlton EBOs perhaps can be clubbed in one in certain geographies where you have both the EBOs in the same location? Karan, there are extremely few, so therefore, that's not something that we are looking at in terms of separately. There are a few that we have done Carlton, and maybe, yes, there could be opportunities, but we are talking in the order of magnitude of single-digit numbers. So what I'm trying to understand is that despite the roughly perhaps 10% difference in gross margin versus your nearest company, I think your EBITDA margins are largely in line with your competitors. So in light of this, perhaps what are the initiatives which you complete to further drive cost efficiencies? Yes. So I think we are more benchmarking our business and our P&L from that point of view. Revenue growth is absolutely important. Investing behind that growth in a more sure-footed manner which is building our supply chain and strengthening that is absolutely important. We have a mix of brands, and other than the value brands, the other brand needs to be advertised both in the form of brand-building advertising as well as transaction-building advertising which is more e-commerce. So I think one is in relation to competition. One is in relation to what is the right thing for the business, and I think this is why it's in the right direction. I think as the scale goes up, some of these ratios will start staying up better, and that's what, in the long run, one is looking for. Sure. So my second question is the e-commerce vertical. So we've seen that last quarter, e-commerce was 32% in terms of the revenue contribution. This quarter is 30%. So I understand there's some seasonality also in this, but can you help us understand if there has been any change in the market share in the e-commerce segment? To answer the first question, you're right. There is a strong seasonality in the sense that maybe more property and retail property-driven. So the big days and all that are really big for e-commerce. So it's not only for one company. I think for overall fashion, for a larger sector or industry, but quarter two is far bigger in the year as far as e-commerce is concerned. So e-commerce overall gained salience in overall market during quarter two for luggage industry. So to that extent, if you have lower share in a gaining in a sector which is gaining salience, you may tend to lose overall share. If it is for that quarter, it would be went out over a period of time. Sure. My last question is for Neetu. If you can help us understand what's the balance between the two groups and what was the deferred tax income that was credited to the P&L, if you can explain that with the lower current tax rate during quarter? Yeah. So the lower tax rate is on account of receipt of dividend from Bangladesh which we are, in turn, giving it back to our shareholders. Therefore, we gain the tax benefit, and that's why the effective tax rate is going to be around 18%-19% for the year. Sure. On your Future Group, any balance? We have around INR 12 crore of exposure fund. 12 crore. All right. That would be my last question. Thank you and all the best. Thank you. Thank you. The next question is on the line. Please go ahead. When you stop, please go ahead. My first question is generic to one. So if you can just respond to overall demand environment, specific observations if you have any on subtrends like premium versus mass-end and metro versus non-metro. And the last one, how's this entirety playing out? As in most of the categories, we are hearing that by the time December came, third quarter had a really tough time. So if you can touch upon the subtrends as well. So Tejash, on the demand part, I think till, as we say, fingers crossed, we are looking good. The demand seems to be good throughout quarter three, and it's getting driven by the same core that has driven the industry in the past. There is increased amount of travel, outing. There is good expenditure on non-weddings. We are also seeing things like backpack and all that is slowly possibly getting more year-round kind of purchase, and there is repeat happening. So overall, the demand seems good for the industry, and hopefully, it seems like, at least in the near future, while there are talks about various one is reading in the news and seeing there are questions getting raised in the other sectors. I don't see it right now for our industry in the immediate short term. In terms of geographies, yes, there is that higher demand in tier two, tier three, and downward cities. It's pretty measurable on my business, but qualitatively, we can give you a sense of that. Maybe that's also coming from the unorganized shift to organized, having a better play there or a bigger play there with more dominance of unorganized in the tier two non-pop-startup cities. Did that answer your question? That was the last question on that. Yeah. Yes, I think. Yeah. Just touching on unorganized to organized, it has been one of the few I've asked in the past. Sorry, your voice is? Yes. Tejas? Yes. Your voice is breaking, actually. Is this better? Hello? Yes. Yeah. Yeah. So this exposure, just to continue with China opening up, are you seeing or are you picking up any early trends of unorganized also bouncing back with China's hosting also getting sorted as we go on? Honestly, not seeing a trend, but yes, keeping a watch out for that because, yes, that could be a possibility. If not a major jump, but it will start fueling what was not fueled so well. So keeping a watch out, but no early signs right now. Sure. And last one, with the volatility that we have seen in margins in the recent past, how should we go for the margins for this year? And if you can give some kind of indicator as well, what would you advise around margins? As I said, I can't give you a definitive number, but it seems on the right track. I think the fundamentals that I've been talking about and what is there on the presentation continues to be pointing towards a better margin environment going forward in the coming year. The overall commodity and raw material prices are softening. The ocean freight is much lower than before. So it may not have kicked in into the business as of now, but it will as we go ahead. So on one side, the tailwind is prices coming down. On the other side, the headwind is also the mix and the value category growing and the unorganized sector pushing the growth further. So there will be some kind of offset happening, and it's difficult to predict that part because the volatility is more there and margin is a result of that. What's happening is we are pretty sure here that we will want to have a good balance between margin and share, right, and not trading off one for the other. Therefore, we will have to pick and choose our battle depending on how the environment is. Anywhere between 50%-53% is what we would try and keep a ship on is how I stand to it. Sure. Last one, maybe clarification, ma'am. You said that next ship for this year could be 80%. Did I have that correct? Yeah, you're right. Will it normalize by next year? No, it will be in the range of 18%-20% because we will continue to do this. Okay. Okay. Okay. Got it. Got it. Thanks and all the best. Thanks. Thank you. Thank you. The next question is on the line of Bhargav Buddhadev from Kotak Mutual Fund. Please go ahead. Yeah. Good evening, team, and congratulations on a good performance. My first question is on the Caprese brand. So just wanted to know what price points are we sort of targeting when we are looking at significantly scaling up this brand and also which channel will we be targeting to sort of scale up this brand? Thanks, Bhargav. Yes, I think it's a very pertinent question because it's something that we are starting off now. So somewhere, the Caprese brand may have been going towards, let's say, a price point of INR 1,000 and below. We are definitely looking at the mid-premium and the slightly above range. So anywhere between INR 2,000-INR 4,000 range is what will be the mid part of what the brand should have once we get enough scale and will also do enough which is above INR 5,000 as well. So I won't say we are shifting from Big Bazaar to VIP. We're just repositioning ourselves to what the brand started off with which is where there is a larger void where there's a play of great design and great brand, and therefore, there is a value creation happening. So that will be, let's say, a sweet spot would be about INR 12,500-INR 3,000 if I was to narrow it down somewhat. That's on the brand and the pricing. In terms of channel, we are looking at more direct-to-consumer in all forms to begin with as we create penetration. So it's not only the e-commerce focus, but that's why we have started experimenting with not experimenting. We have launched our D2C website, and we've done all the preparation in terms of backend to enable its scale-up. So that will be another key go-to-market tool. We could also be looking at and then so there are some pilots going on where we are looking at exclusive experience stores which will be in malls where we would bring in the Caprese premium experience to the consumers. But as I said, that's a pilot stage. If it works commercially, that's something that we could scale up in a big way in the coming year. Secondly, just wanted to know in terms of what has been the progress in terms of backward integration. So we were looking at manufacturing trolleys and beams subsequently to further make ourselves more competitive. So where are we in terms of our game plan? Well, I can't tell you concrete stuff right now, but that's something that's on. There are a couple of pilots that have happened on that in terms of understanding what model will work. You will see me talking about it or rather doing it in the coming financial year, right? I think we are more focused on making sure that as I said, availability and the whole supply chain was hugely stressed in terms of us scaling up to the demand. And with every going quarter, I think the demand is higher than what we expected. And so therefore, that has been the big focus. But as we scale, as we cross that peak in the coming quarter which is quarter one, these are some of the priorities that will be taken on in a big way. And lastly, on the e-commerce bit, I believe we are number three in terms of market share on the e-commerce side which is lower as compared to offline. So any key learnings from some of our competitors where we can sort of take cue and sort of implement and increase our market share? Or do we want to continue to dominate offline and be a third or a second largest player on the online platform? So Bhargav, one, I think number three is not something that I see it as, but you're right that there is no definitive data to corroborate that. But one thing is sure that we do not in the other share, whatever I have shared in the other four channels, I don't have that, and I definitely don't have leadership in e-commerce. So whether it is number two or number three is not so important. I think what you're asking, and the answer is that everything we are doing is to make sure that we strive and get first to our majority share, to our leadership market share, and then to aspire for a fair share within that channel. So what are we doing to sort of boost up because essentially, we believe some of our competitors are spending a lot to acquire traffic? So are we going to go into that direction, or will we focus more on product launches to create a differentiation? No, I think we're doing all that is required, as I said. So therefore, if there is spend, then it's all about the intensity of spend and not about whether one is doing that or not. So whether within the portals like Amazon or Flipkart, are you spending more on performance marketing? So you would have noticed us feeding our brands through thematic advertising and other digital mediums, right? But you've not seen, let's say, competition doing too much of, let's say, advertising in other mediums, let's say, till about quarter three. And possibly, most of that was getting into e-commerce. We are looking at that or rather, we have kind of made our plans to balance it out slightly more in favor of e-commerce going forward. So we will increase our intensity of spend in e-commerce. The other part is portfolio and pricing as well. So there's a bunch continuously happening. The pivots are the same. I think the continuity and the intensity is important. And as we are going, we're continuously increasing that. So it's not about starting something. It's more about increasing the intensity of what we're doing. Thank you for the clarification and all the very best. Thank you, Bhargav Buddhadev. Thank you. The next question is on the line of Manish Poddar from Motilal Oswal Asset Management Company, VC. Please go ahead. Yeah. Hi, Sudha. Actually, just wanted to understand three set of questions. One is if I look at manufacturing, so now 73% is their own manufacturing. What does it target after 2025? So this 73% is what revenue, what sales have happened. How 73% of that has been manufactured in-house, right? So in terms of pure sourcing, we are looking at an in-house split of about 60% in the coming year, right? And roughly about 20%-25% will be, let's say, outsourced within India and maybe have about 10%-15% at the outer limit. This is including Caprese from China. That's the rough breakup, but it's not a limiting thing. So I think depending on what's making more commercial sense, the split can get larger. So would it be right understanding that if I look at the data change in manufacturing from pre-COVID till now, the last part of this and even if you are saving at least for there, a large part of that has got depleted by the mix of higher share of is that how it is? Yes. Also the fact that this is the time where the ocean freight and the inflation was very high. Would a larger part be the mixed part rather than the inflation? That is what I'm trying to ask you about because if I do a rough match of the margins. Maybe 70% mix and 30% rough match. We can examine this closely and come back. This is our immediate or detailed judgment. Okay. Just one more question. One is on these Future Retail stores as you said now under the new entity. So how many stores are we reaching now? You're reaching out 3,400 stores. And I think earlier, we were doing, I think, 400-odd stores. How many stores do we reach now? No, we reach to everything that is open. What I was telling you is that under the banner of Reliance, out of the 279 Big Bazaars, Smart Bazaar, which is the Reliance banner, is 235 stores. And I reached all the 235. As in when they are opening the stores, they intend to open all the 279 back. Okay. Specifically from the beginning of year, which was about 45 stores, now we are reaching 265 stores. You're right. Okay. Just one more thing. If I'm just insurance balance payment, when is that expected to come across? Hopefully, in this quarter. Okay. So there is no, let's say, continuity or increase. Just the timing of things is the difference. Yeah. So it's in this last leg. Okay. Fair enough. Thank you. All the best, guys. Thank you. Yeah. Thanks. Thank you. The next question is on the line of Tushar Sarda from Athena Investments. Please go ahead. Yeah. Thank you for the opportunity and congratulations on good service. I wanted to know when you increase your manufacturing, how much can gross margin expand because you will have other manufacturing costs which should be in the P&L, right? So just on the material side, the expansion should be a lot more. Yeah. So therefore, the comparison is versus not manufacturing and buying from China. So the labor cost advantage and the D2C arbitrage, the D2C arbitrage was largest. So it is more compared to our earlier supply chain where we were buying from China. Actually, we bring in the raw material, make it in Bangladesh, and bring it to India. The D2C is not there. So there is a 15% advantage in the raw material part of it which is like you see about 50% of our business, right? So that's a definitive advantage. Now, there is a labor cost advantage which could be offsetting with increase in freight or other areas, right? So straight away, there is this advantage that is there in manufacturing, at least. So I mean, what kind of gross margin will you target? I'm assuming that you can set up the facility you will manufacture yourself, right? All the things are equal unless the cost in China really comes down. Like-for-like basis, if the raw material prices are the same for both China and Bangladesh, we will have a 3%-4% benefit if all the other factors remain the same. Okay. So what kind of gross margin one would look at three years down the road when things are normal, right? Now, inflation is distorting all the numbers, so. Did you say three? Yeah. Three years down the road when things are normalized. I think then going back to about 55% is what we have put as an ambition. We are goal-seeking that, and I think it's all about putting the right strategy at the right time in place too, in chunk there, along with share and growth. Okay. Okay. Thank you very much, and all the best. Thank you. We'll proceed to the next question. Thank you for the minded participants. We'll submit the question to two more participants. At that time, let's see if I join with you for any follow-ups. Thank you. The next question is on the line of Nihal Mahesh Jham from Nuvama. Please go ahead. Yes, sir. Thank you so much for speaking to the management. So a couple of questions from my side. First, on the e-com channel, as you're aggressively targeting to scale that up, what is your experience till now being in terms of the kind of margins this channel gives us? Actually, if you look at a lot of the other categories, there is a lot of discounting and a lot of old seasoned stuff which ends up being sold which ends up impacting the kind of margins you make on this channel. So has your experience till now of the 30% sales that we've seen been similar, or we have seen a different experience? And going forward also, we expect this channel to be non-margin failure too. So you're right. There is a pressure on margins in some of channels which is trying to gain, let's say, volume through attractiveness on price. However, when you see for my business, the net margin, when I take out the direct selling costs in other channels using promoters and all that, I don't see the difference to be so big. In fact, in some quarters, the gross margin, the e-commerce margin is actually better only. So I think in the long run, this is something that is going to not only stay but will grow significantly. It will be a game of getting more scale here. And also to start the premiumization journey here through marketplace operation, right, where the pricing is ruled by the brands, and you are listed everywhere. So it's a long journey. It's not long. It's a journey. I think this is not a channel that we had a head start at all, right? Compared to not only within the industry but others, I think we are catching up. What I see in the long will become that this channel will become large and a major channel for my consumers to buy VIP products. Therefore, we have to get the margin and share both right in this channel. Got that point. Just a follow-up on this was that currently, what are the channel pricing practices that we are following? Do we have a different range of SKU itself, or are we trying to keep the pricing similar across our franchise EBOs and the distribution channel? So increasingly, the e-commerce and it's a separate set of products because that's where the channel conflict is highest because the price discovery is the easiest for anybody on e-commerce. But yes, within our other, let's call it, the physical channels also, there are ranges which are different, right? That does add to some complexity. So we're trying to find the right balance between where we would like to see exclusives and where we want to see a common range there. So it's a mix of both. In non-e-commerce, there are some ranges which are exclusive for our channel, and the rest is common. This mix is only slowly changing in favor of more common products. Understood. My last question was on the Caprese. Do we still have the target of maybe wanting to reach INR 500 crore of top line in this segment in the next couple of years? Well, I can't put a number to that, but what you're saying sounds too aggressive. We're trying to see it's a very, very fragmented market, right? So if at all anything, in three years' time, I would like to take an ambition of being in a fragmented market, the brand of choice, the market leader in this. Now, that translates into what INR crores is something that we'll have to work out and either come back or maybe take as a management target here. Right. This is just a follow-up if I may, but if I look at this category, which is a ladies' handbag segment, has not seen any brand really scale up beyond the INR 100 crore-INR 150 crore kind of market. So what, as per you, has been the limitations, and what are the aspects that we are targeting to improve which can scale us to be a much bigger brand, not specifically maybe the number I mentioned? I think go-to-market has been a limitation in this because this product needs a close experience as people buy it. So therefore, and you also haven't seen very large companies coming into this category. So I think e-commerce, direct-to-consumer commerce is changing that. And also to that extent, we may not have been fully able to leverage our national network in the bag business into this which possibly all other players may not have. So go-to-market is possibly one key pivot on which scale-up or a brand share in the category can go up on. Yeah. But you're right that globally, this is a very fragmented market. So I don't expect consolidation at all to happen. It is a very large space, right? So therefore, even getting within such a fragmented market, a high share or market leadership will be a very, very strong ambition. Thank you, Mr. Jham. I have a question to join the question queue for any follow-ups. The next question is on the line of Akhil Parekh from Centrum Broking. Please go ahead. Hi. Thanks for the opportunity. My first question is, would it be able to highlight what would be the price differential for an unbranded luggage which is arriving from China? Whether we say a mass-branded luggage, and has the price differential between the two declined meaningfully over the last two years since the onset of flagship? No, I'm afraid I don't think I will be able to give you a specific answer on that because we haven't tracked a particular product and compared it with this because the product two products are not alike. I mean, this is the features. It could be quite differently costed and differently priced before, right? But once again, I would think that it is there are all reasons to believe that the gap is narrowed. Clearly, let's say a large part of bag making is high labor cost. And for our labor cost in China and in Bangladesh and in India, it's significantly in favor of first India and then Bangladesh. Bangladesh would be most favorable. So to that extent, that definitely is a difference that should change there. The other thing is productivity. Even if you keep the raw material from China as same raw material, right, if at the source of the raw material price is same to all the three, this is an advantage to India and Bangladesh over both labor cost. Today, we are seeing productivity is coming at par. There is no major difference in technology. I think productivity is over a period of time. At least in my Bangladesh unit, I'm getting closer to China productivity already. Oh, sure. This is helpful. And just a complementary question to that is we have diversified our supply base, and we have also found vendors based in Turkey and Bangladesh. What are the challenges which unorganized players might be facing from diversifying their supplies? Because I believe that they were largely dependent on China prior to the pandemic. And because of the disruption in China, they have not been able to get enough supplies based. So any specific challenges which they might be having, and they might not be able to get their supplies from India and Bangladesh? Well, they need to then have manufacturers in India and Bangladesh who are scaling up to supply to the unorganized sector. So I mean, that's the challenge in terms of there is no ready capacity so much that could take over. So this could be fueling many setting up a manufacturing happening. I mean, that's something that I'm saying more as a theoretical answer to your question that that is the only way supplies can happen. And the challenge for them would be to not find vendors in India or who has the capacity to give them the products that first China was giving them. Sorry, fair enough. That's what I was directly asking because they don't have a manufacturing base, and that's why they're not able to manufacture in India and Bangladesh. Yeah, that's right. Yeah. Manufacturing base in the past. That's why the whole industry was going to China. Got it. Got it. And my second and last question is on the gross margins front, right? The value segment continues to do well. Say hypothetically, Aristocrat reaches that 40% mark of the total sales, will we still be able to achieve a 50%-60% of gross margin? Yes, I think it should be given that the prices, raw material prices, and our manufacturing efficiency is going up. The benefit of that will start taking in, right, as we go along. So I think it will go even if Aristocrat reaches the mark that we are saying. But as I said, these are things that are not with one change that will happen. I think it's a gradual change that needs to happen. And one is pushing things in that direction. Thank you. Mr. Parekh, your question is joining the queue for any follow-ups. The next question is on the line of Harsh Shah from InCred Capital. Please go ahead. Thanks for taking my question. From a longer-term point of view, when I look at your presentation, that showed that the organized sector share has increased from 45% in Q13 to 60% in Q22. But when we see, let's say, 3, 5 years from now, we are only expecting that to be 60%. And secondly, even if we look at the presentation, we've covered a lot of ground over the last 3 years. Enterprise is being 90%. So when we look at the growth in the luggage space over the next 3-5 years, if we were to exclude the growth, would you see our luggage space grow over the next 3-5 years? I think the industry, in terms of value term, should easily grow anywhere between 15% thereabouts CAGR over the next three to five years. The underlying volume growth could be lesser. But I mean, this could be the aggressive side of the growth that I would put. But yeah, expecting a 15% CAGR over the next five years, given the India's context, should not be something that we could be shy of. So 15% is something which we are targeting for the industry and not just something, right? We can grow at a higher pace given the kind of things we haven't seen. Yeah. And depending on the category, what share we have, and yes, of course. But if the industry is growing at that pace and given our share ambition that we would have and continue to have, it will define our growth objective. Okay. And then secondly, how do you look at the within the fashion space, how do you look at the mass segment and our participation and presence there? Because much of the, I mean, unbranded players are there, and that's a big opportunity for us. But on the fashion space, the margins there are quite low. So how do you think of the fashion space, the mass fashion space? So you're right. Actually, in every category, there is a low-price segment. It is always the largest part of it. That's why every category looks like a pyramid. But this is not where we would want to dive into the low-price ones to begin with our margin. I think for us, it is a huge opportunity to grow in the mid-segment itself, right? That's what we are targeting to begin with. But yes, there will be something that we will do to figure people to upgrade from the low price to the mid-price. Okay. So we are not looking to replicate what we've done in Hard, Aristocrat, in the luggage space, in the fashion space? Well, yeah, in simple terms, if I was to answer, no. Okay. Okay. Fine. Thank you so much, sir. Have a good day. Thank you. Next question is on the line of Ankit Babel from Subhkam Ventures. Please go ahead. Yeah. Good evening, sir. A couple of questions. So you people are targeting a gross margin of around 62%-63% in FY24. So what would be the EBITDA margins if you achieve those gross margins? 20%. 20%. Okay. If I look at the current, you people are also planning a turnover of around INR 4,000 crore by FY26. This is around a 25% CAGR. So can we see the expectation of 25% revenue growth from FY34 onwards? I don't know which remark you are talking about. I don't remember having spoken about an FY26 on this. I think it's been more a directional one in terms of the growth. I maintain what I said in the past. Today, the market is too volatile for us to have a good and a safe prediction for that long. Yes, we are predicting where it could grow more to build our supply chain and all that point of view. There, we are being aggressive so that we build supplies given the good growth rate. I don't think it's fair to right now discuss in detail about whether it is 4,000, whether it is 3,500, or 4,500 for that matter. Okay. But what are the expense opportunities you people are foreseeing in the coming years? So as of right now, we are more focused in going deeper into the markets we are, right? But we had roughly about an INR 100 crore business in exports pre-COVID. And I think we are much more than that coming back in this year itself and closing on. So I think we will take very aggressive growth on this. But compared to what is the size of the opportunity, it is not going to be like we wanted to take a share of the global market and stuff like that as yet. The focus is very, very large India and the India growth opportunity. But all the markets that we have high either right to success or already a good foot in the door kind of a thing is where we are going to go deeper. It will be an aggressive growth in VIP that will take in the coming years. Maybe we'll look at about a INR 2 crore-INR 300 crore business in 2 years' time. Okay. And so lastly, what would be advertisement cost Q3 versus last Q3? 60 crore versus INR 9 crore. INR 29 crore versus INR 9 crore. Similar that, yeah. INR 29 crore now versus INR 9 crore last year. Okay. Okay. In the percentage of this, what kind of advertisement will you target going forward? 5%-6%. 5%. Thank you so much, sir. Thank you. Next question is on the line of Pulkit Singhal from Dalmus Capital Management. Please go ahead. Thank you for the opportunity. So first question is on modern trade contribution. Pre-COVID, it was 30%, and now it's 29%. Can you help us understand how much was the Future Group contribution back then? How much is it now in Q2? And given that these stores are opening up, should we expect a sudden bump-up going ahead? What do you want to know? Yeah. I'm just getting the numbers for you. But before that, yes, as the stores start, we are seeing the stores which are becoming operational fully. When I say fully, it means that in its full degree, our sales are coming back. So there should be a big bump-up that we should get. But also, what we saw when Future Group stores were down, in the catchment area, the other stores were able to take the top of this. And that was a conscious strategy. So I won't expect to have this as a complete consumption growth, but it will kind of get into a new equilibrium within the catchment area. As far as your first question is concerned on what was the contribution of. Future growth. Future growth to modern trade. That is 44%. Future growth to modern trade was 44% pre-COVID. What is now? It's around 23. It's about 20-22, but we can come back to you with more definitive numbers once we kind of look into this. Understood. Right now, to answer, I think confirming it's 44 versus 22 as we speak now in Q3. Yes. Your market share, I mean, you have a dominant market share within these stores. Does that continue even now? Yes, it continues in these stores. In fact, in modern trade, because of this future growth issue, the modern trade theme was pushing gain in market share in weaker accounts like Vishal Mega Mart. We weren't as strong in Vishal Mega Mart before. And some more entry into some more regional chains. So that's also been much better than what we were before in those weaker chains. But in the larger chains, we continue to have a good share. Okay. And we have some amounts I think I don't know what you mentioned. I'm getting them out. Aristocrat, is that supposed to be written off in the future quarters? Sorry. We are not able to hear you. 12 crores. The amount that is receivable, the doubtful, I mean, that's supposed to be written off in the future quarters? Yeah. As of now, we don't have clarity because there are some stocks lying, and it is coming back. So we will get clarity only maybe by the end of next quarter. Okay. Second is on the raw material cost. I thought that the benefits were supposed to play out third quarter onwards because prices picked up in second quarter. If you could just help us understand where are the raw material costs right now versus what you have booked in third quarter so we get a sense of how much of benefit can flow through. Obviously, I understand you'll pass some bit of it based on the market, etc., but then just to get a sense of where we are. We got only one-third of the benefits. The benefits started actually coming only in the last month of the quarter, starting. So, also the fact that as of right now versus what we have with us in terms of stocks and the pricing and how the luggage industry works is also we got to cover whatever is from China. We got to cover a little ahead in time because of the Chinese New Year and all that. 4-5 months of lag. Yeah. So we could work on the exact percentage there, but it is lower, maybe about 4%-5%. Overall, weighted average price could be lower in the market today versus what we are operating on or what we are using. But don't hold me to this number. I think it's something that we can check on this and come back to you. Thank you. Ladies and gentlemen, those would be our last questions for today. I now hand the call over to Ms. Neetu Kashiramka from VIP Industries for closing comments. Thank you, and over to you, ma'am. Thank you, everyone, for joining the call, and happy Independence Day. Any other clarification, you can call. Oh, sorry. Republic Day. Thank you, everyone. Thank you. Thank you very much. Ladies and gentlemen, on behalf of VIP Industries Ltd., we conclude this conference. Thank you for joining us, and you can now disconnect from.