Ladies and gentlemen, good afternoon and welcome to the Q1 FY 2026 Earnings Conference Call of VIP Industries Limited. 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 then zero on your touchscreen phone. Please note that this conference is being recorded. I will now hand the conference over to Ms. Devanshi Dhruva from Adfactors PR Investor Relations team. Thank you, and over to you, ma'am. Thank you. A very good afternoon to everyone, and welcome to the Q1 FY 2026 Earnings Call of VIP Industries Limited. From the senior management, we have with us Ms. Neetu Kashiramka, Managing Director, and Mr. Manish Desai, Chief Financial Officer. Before we begin the conference call, I would like to mention that some of the statements made during today's call may be forward-looking in nature and hence may involve risks and uncertainties, including those related to the future financials and operating performance of the company. I would now like to hand over the call to Ms. Neetu Kashiramka for her opening remarks. Thank you, and over to you, ma'am. Good afternoon, everyone. Thank you for joining the call. We announced our first quarter results for FY 2026 yesterday. Let me start by commenting on the operating environment. India's travel sector continues to be on the growth trajectory. Leading hotel chains have reported encouraging occupation data. Domestic air passenger traffic has also held on to sustainable growth. India's travel boom is also replicated in the continuous new entrants in luggage and travel-related industries. As mentioned in my previous quarter as well, competitive intensity continues in the sector, especially in the lower end of the market and more so in e-commerce channels. Multiple new entrants have been establishing exclusive partnerships with major e-commerce portals, leaving established players with a hard bargain. On the other hand, some of the established brands in the value segments are also becoming more aggressive through reduced pricing to gain market share. Coming to our quarter performance, for the first time in five quarters, volume growth has become a concern for us along with value. This is mainly on account of e-commerce secondary sales, which reported a sudden drop since the beginning of the quarter. This, in turn, impacted our primary sale drastically. A channel which was giving us higher double-digit growth actually degrew by 17%. We have definitely taken some immediate corrective actions on the same and are hoping to see revival in Q2, which is a big quarter for e-commerce channels. Moving on to the profitability, some one-time costs have pushed down our margins for the quarter. Without the impact of these one-time non-recurring items, our gross margins stood at 48%, and EBITDA margin is at 10%. Without the impact of these one-offs, we continue to report sequential improvement both in gross margin as well as EBITDA. In addition to our one-time expenses, this EBITDA margin also has an expenditure of recent mega marketing brands, which we conducted in April and May. I would further like to highlight that despite a double-digit degrowth in revenue, we have been able to hold an Adjusted EBITDA of 10%. This reflects our structural efforts on cost and expenses. Further, Bangladesh capacity utilization in the quarter was upward of 80% and generated operating profits of INR 8 crores versus a loss of INR 11 crores in Q1 last year. Our sustainable premiumization strategy continued to show green shoots, with Carlton reporting a double-digit growth in Q1. Hard luggage continued to be on the growth trajectory. We have always been committed to presenting best-in-class offerings to our customers, as is visible in all our new launches, which has been showcased in our presentation. In our endeavor to be a one-stop solution for travel, we continuously strive to address customer challenges. Lost luggage is a key concern for many consumers. To tackle the same, we are about to launch a first-time in-industry smart bag tag. Select purchases from House of VIP brands will get a QR-enabled luggage tag, making travel stress-free for all our consumers. Irrespective of Q1 challenges, we all know that VIP is still a household name and the most reliable brand in the category due to its quality, which will definitely help us gain market share going forward. Thank you and open for questions. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on the touchscreen telephone. If you wish to remove yourself from question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, please wait for a moment while the question queue assembles. If you have questions from the line of Tejas Shah from Avendus Spark, please go ahead. Thanks for the opportunity. From the numbers, it appears that saliency on modern trade and e-commerce both has declined. You partly addressed the e-commerce part in your opening remarks, but anything specific that you can call out on both these channels? And are you more concerned about the demand at consumer end, or is it more to do with competitive intensity in both of these channels? I think it is more to do with competitive intensity. There is no issue on consumer demand per se, and both these channels are having a similar issue of lower price points. Bags are getting sold at less than INR 100. Cabin luggage at INR 1,100. Are those players making money according to assessment, or are they losing money as we speak? According to me, they will be losing, and some of these are new entrants. They have just entered. Some of them have actually had, I think, exclusive partnerships with some of the portals, so they are only available on that portal, so that's actually a volume gain. Okay. Offline modern trade, some of the other category players have called out that one large player is kind of consolidating its presence in terms of stores. So did you also face any of this? Yes. Same thing, actually. Okay. Okay. And then last, despite all the challenges and controversy, Carlton actually did well in the quarter. So is it largely the primary sales which got booked and will have some follow-up effect later? And how should we think about the future of that brand now? So Carlton is never only primary because 80% of the Carlton revenue comes from our stores, which is direct billing to consumer. So there is no big primary per se. So Carlton, whatever sales is actually sales to the consumer. So there is no after-effect. However, in July, we had some disruption because of that judgment. I hope you must be following it. So there was a judgment whereby we were restrained from selling from 1st July. And then that order got, I think we started selling from 1st August. So 30 days, we were not able to sell Carlton. Okay, and where do we stand on that now? So as of now, we are still the legal battle is on, but yeah, the restriction on selling has been removed, but still it is in the court. So we'll have to wait and watch. Okay. Thanks. And I'm not sure if Mr. Dilip Piramal and Radhika are on the call, but please convey my congratulations on building one of India's most iconic luggage brands. Wishing them very best as they pass on the baton now. Thanks a lot. Yes, definitely. Thank you. Thank you. The next question is from the line of Shirish Pardeshi from Motilal Oswal. Please go ahead. Yeah. Hi, VIP and team. Thank you for the opportunity. On slide 18, you have given the value and revenue split. I was more curious if you put together modern trade and e-commerce, and if I go back your commentary five minutes that we have lost volume. What percentage of volume comes from these two channels put together? Is it substantially very high? 50%. Close to 50%. Close to 50%. Okay. And this volume loss is primarily in the lower end of the luggage, or it is across? It is lower end. Absolute lower end where actually we did not exist, but now we are coming there also. So that's where it is. So we are going to have some play with Alfa. We have one brand called Alfa. We are going to fight this battle through Alfa. Within that 50%, this lower end would be again substantial? Yes. Yes. Okay. 90% of our revenue on e-commerce is actually at this point. Okay. And the second question on the old inventory and what is the status today? And maybe on the insurance claim, I could see something, but what is pending and what is that we can expect by when we will get the insurance claim back? Sorry, referring to a Bangladesh one? Yeah. Yeah. So, Bangladesh, I would say that we did receive close to INR 7 crores in this last quarter, and we are hopeful of getting further into the quarter two. However, if I look from the claim submission perspective, the collection, even with the future one, will fall around 15%. The balance also we are aggressively pursuing with them, and hopefully, in the next six to seven months, we are expecting to collect all our legitimate dues from the insurance. After this, there are INR 30 crores pending. Okay. That's helpful. There were two parts to the question, right? Insurance and? Insurance and. Right, Chief? So it was only for insurance, right? No. What is the take-on? Inventory. He asked about old inventory. Yeah, so sorry, what was your question regarding the old inventory, Shirish? How much is left now as of June 25th, 2025? I would say that if I look from the composition of the basket perspective, it will be somewhere between 15%-18%, which we are pursuing for liquidations in the coming quarters. have taken a INR 150 million provision also in the quarter one. Considering the veracity of the sale, we did take provisions. What number I'm showing, what I just told you about it, that's what we are targeting to liquidate as well. Okay. That's really helpful. Thank you and all the best. Thank you. Thank you. A reminder to all the participants, you may press star and 1 to ask questions. The next question is from the line of Jinesh Joshi from PL Capital. Please go ahead. Yeah. Thanks for the opportunity. My question is pertaining to the inventory provision aspect. I mean, you mentioned that in this quarter, we took a provision of about 15 crores, and I think if I remember right, in the last quarter, that number was about 5 crores. And in response to previous participants' questions, you mentioned that the old inventory sitting on the balance sheet is about 15%-18% of the total basket. Yes, Jinesh So continue. Yeah. So basically, the question is, given the quantum as 15%-18%, should we expect further provision going ahead, or I mean, have all the accrual things been taken care of? So let me tell you, Jinesh, it all depends upon how I'm in case of raw material, how are we putting into the liquidation utilization, and in terms of the FG, how I'm putting on the sale on the liquidation side. Or I forget about the liquidation. But the sale of those inventories, based upon those velocity of the going on the range and the SKUs and the categories, the provision has been decided. And looking into the quarter two, which is the festival period and the gifting period, we are reasonably sure that we should be able to liquidate most of these low-moving inventories and will not require to make any additional provision. But it all, as I said, we do measure out the velocity and then take appropriate call in order to carry out the provision books of accounts. Got that. And when we provide for it, I mean, does it technically imply that this inventory predominantly will get sold below cost? Is that what the inventory? No. No. No. We never sold it below cost. Even during COVID, we were sitting with more than one-year inventory. Still, we never sold below cost. Then in that case, what does this provision pertain to? So basically, the provision will mean that there is a risk to that extent, and therefore I am providing. Let's assume there is a hypothetical example. If there is a INR 50 crore of inventory sitting with us, slow-moving, if let's assume in a quarter I sell all that 50 crores, then this INR 15 crore will get reversed. So basically, the time it takes to liquidate and taking into the past, what the trade is reflecting, the provision gets lumped out. So just to give lead to the example of what MD said, out of INR 50 crores, and we would go as a range-wise and category-wise, I'm finding that the percentage of sale in the quarter for the inventory more than one year falling short of the threshold what we agreed, those differences for delta gets provided on a cost basis. That doesn't mean it is a loss already. It is just an anticipation. In anticipation to be more conservative, we are providing. Understood. Understood. And Madam, beyond the inventory provisioning number of INR 150 million, I think we have also stated in our PPT that there was some run-off cost, which may be affecting other expenses. Could you specifically call out what is the quantum and the nature of this cost? The quantum is close to around INR 10-INR 11 odd crores, and this is comprising of many heads. We would not like to spell out very clearly on this front. But these are the one-off and non-recurring in nature. Yeah. Legal and professional. Sure. One last question from my side. I think in the last call, we had mentioned that for FY 2026, we are planning an inventory reduction of about INR 150 crores and a net reduction of approximately INR 130 crores. So is it possible to kind of call out what kind of reduction have you achieved in March, or maybe if you can just share the inventory or debt number as of March, that would be helpful. It's shared in our presentation, actually. I would say that in terms of the inventory reduction, it was around INR 20-22 crores. I am talking about the net of provision. Otherwise, if you add the provision, it goes INR 35 odd crores. In terms of debt reduction, we remain at the level of March 2025, but we have not moved out anywhere on the 2025-26. We are still hopeful that we should be able to control or reduce the inventory and debt at the targeted level. Understood. Thank you. Thank you so much and all the best. Thank you. A reminder to all the participants, you may press star and 1 to ask questions. The next question is from the line of Manu Chandan from the MC Pro. Please go ahead. Hi. My name is Manu Chandan here. So my question is to Neetu. You have been mentioning about this in your previous conference calls as well. But there's a change in consumer behavior pattern. The replacement cycle has shortened, and the ownership of luggage has increased. People are going in for lower-ticket luggage. And that seems to be playing out as you were referring to the competition at the lower end. So how does this fit in with your strategy of premiumization that you have been referring to all along? There are two things which are happening in the country. Okay. One, especially in our industry, one, there is a premiumization which is playing out, which is already visible because Carlton has grown by double digits. However, the lower end. But if you see the population of our country, 85% of the people fall in the lower category. And that is where the growth which we are seeing in that end is much larger than what we can see on the top end. But as a base, premium is definitely growing faster or equivalent to what is lower end is growing. But the lower end is 80% of the market. I mean, what you're suggesting where the competition is hitting you hard is in the e-com channel. Do you think that e-com channel is predominantly that bottom 80%? Not only e-commerce, as I said, 80% of the revenue today is coming from the lower end of the spectrum. Maybe products below INR 3,000 is where, so these products are not only sold on e-commerce. It is sold across. Do you see VIP kind of revamping the entire portfolio in light of this? Do you see a need for revamp? Actually, yeah. So I would like to refrain from too much of a future-looking statement in this call, mainly because we are in the transition phase where shareholder change is going to happen soon. So there might be some strategy changes, and therefore we are not talking. I will refrain myself from talking on too much of a futuristic strategy, etc., on this call. Okay. Understood. Thank you. Thank you. A reminder to all the participants, you may press star and 1 to ask questions. The next question is from the line of Prerna Jhunjhunwala from Elara Securities. Please go ahead. Thank you for the opportunity. I just wanted to understand the margin for this quarter at around 4%. Given this quarter is largely marriage season and where premium sales also take a good jump, do you think that margin should have been better in this quarter as compared to our past performances? Like in last year, same quarter, we were at 8%, and this year we are at 5%. So from that perspective. If you see the Adjusted EBITDA, it is 10% because inventory provision is not something which is a normal time we keep doing every month or every quarter. And there were some other expenditures. If I remove that, our margin was 10%. Also understand our revenue has a de-growth of -12%. In spite of a -12% de-growth, if we are able to generate an Adjusted EBITDA of 10%, it is better. Otherwise, if let's assume I would have done a flat revenue, then this margin would have been almost 12%-13%, 4% better. Okay, and I miss your initial commentary. Why would we have a degrowth in this quarter given that last year, same quarter, was also weak? Mainly because of competitive intensity. I actually narrated it during my opening remarks. Still, I can repeat, so mainly because we had a big primary reduction in our e-commerce channel because the secondary that e-commerce channel degrew mainly because of new entrants into the marketplace, so luggage was sold at INR 1,100 at the lower-end cabin size, which impacted our secondary and therefore primary did not happen, and for the first time, our e-commerce channel after eight or nine quarters had a degrowth. That impacted our first quarter in a big way. Okay, and then I also noticed the share of modern channel weakening in this quarter. What could be the reason for the same? Because one of the large chains is actually consolidating and reducing the number of stores, which has impacted our overall modern trade share. Okay, Okay And will that impact continue? We'll have to wait and watch. Okay. There's no indication from the large chain that you're talking about of any further consolidation as of now? No. Not yet. Okay. And any CapEx plans for the year that you would want to call out? Nothing major. It will be maintenance CapEx. Maintenance CapEx. Okay. And any color on Caprese? Any movement over there on demand and supply perspective? So as of now, it is maintaining its saliency. Nothing big. We have enough other categories. This actually is something where focus is less because of the other challenges. Okay. Understood, ma'am. Thank you and all the best. Thank you. Thank you. A reminder to all the participants, you may press star and 1 to ask question. Is there no further questions from the participants? I now hand the call over to Mr. Manish Desai from VIP Industries Limited for closing comments. Over to you, sir. Yeah. Good afternoon to all of you, and thank you for attending the call. I hope that we have been able to answer all your observations. If there is still left out anything, we are there to answer it, or we are there to connect with you. Thank you, and have a very good evening. Okay. Thank you. Thank you. On behalf of VIP Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line. Thank you.