Ladies and gentlemen, good day, and Welcome to Q3 and First Nine Months of FY 2023 Earnings Conference Call of Aditya Birla Fashion and Retail Limited. The call will begin with a brief discussion of the company's management on the Q3 FY 2023 performance, followed by a question-and-answer session. We have with us today Mr. Ashish Dikshit, Managing Director; Mr. Jagdish Bajaj, CFO; and Mr. Vishak Kumar, Director and CEO, Lifestyle Business. I want to thank the management team on behalf of all the participants for taking out valuable time to be with us. I must remind you that the discussion on today's earnings call may include certain forward-looking statements and must be viewed therefore in conjunction with the risks that the company faces. Please restrict your questions to the quarterly and half-yearly performance and do strategic questions only. Housekeeping questions can be dealt with separately with the IR team. 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 this conference call, please signal an operator by pressing star then 0 on your touch-tone phone. Please note that this conference is being recorded. With this, I hand over the conference call to Mr. Jagdish Bajaj. Thank you. Over to you, sir. Thank you. Good evening, and welcome to the Q3 earnings call for our company. The quarter saw the highest ever quarterly revenues for the company at both standalone and consolidated levels. This was driven by continued strong growth trajectory of our premium and luxury segment and strong resilience of the value segment. Aggressive network expansion, robust e-commerce performance, new category extensions, and successful brand building initiatives have consistently been our growth drivers that have helped us to deliver impressive double-digit revenue growth over pre-COVID levels for the fifth consecutive quarter. I would want to highlight one aspect of our business where we had to take a hiatus in view of the adverse impact of COVID as we emerged out of it. We have amplified our marketing investment since the start of the year. This quarter, our marketing investments have been approximately 2.3x of same quarter last year, and a part of this spend was utilized to build first ever national TV and digital launches, along with the spending on local activations, celebrity endorsement, influencer marketing, et cetera. Additionally, we furthered our deep investment into our new and nascent stage businesses for the purpose of aggressively growing the distribution network and building stock brand equity. I will talk about financial performance for our company for this quarter. Company delivered sales of INR 3,589 crore, which is growth of 20% over same quarter last year and 39% over pre-COVID. The company achieved a consolidated EBITDA of INR 467 crore. EBITDA margin was broadly in line if adjusted for higher investment in brand building and advertising, which was INR 125 crore, higher than Q3 last year, and also rental savings of INR 55 crore in Q3 last year, FY2022. The company continued with rapid network expansion during the quarter. Our branded businesses had an expansion of 245 stores, led by additions of 122 Reebok stores to our network and expansion of retail network in Lifestyle brands, Innerwear segment, and ethnic businesses. Pantaloons also continued their expansion journey with addition of 10 stores during the quarter. The company persisted in its efforts to strengthen its digital platform, placing particular emphasis on enhancing its omni-channel capability. E-commerce sales grew 33% YoY across the portfolio. We have continually expanded our omni-channel reach with now over 2,350 stores equipped with omni capabilities throughout India. This represents consistent advancement of our digital initiative as we continually adapt to the changing demands of our customers. Reebok completed its transition into a ABFRL operations with effect from 1 October 2022. This will build a strong, meaningful play in sportswear market. We are glad to announce that TMRW has completed the acquisition and integration of 6 of the 8 digital-first brands previously announced in the press release in November 2022. In terms of our YTD performance, sales grew by 63% over last year to INR 9,538 crore. Company posted EBITDA of INR 1,385 crore. It is important to note that marketing investments for YTD are INR 300 crore more than last year's. I am pleased to tell you that in line with our strategic objective, our other businesses, including Innerwear, Youth Fashion, and International Brands, have grown approximately 50% over last year, while ethnic business has grown to 13x of pre-COVID levels to reach INR 400 crore. I will now take you through the performance of individual businesses, starting with our Lifestyle brand business. Lifestyle brand maintained their remarkable business performance, achieved highest quarterly sales on the back of robust retail performance, as reflected in 5% LTL growth and strong e-commerce performance. This result is a testament to the strength of our brands and business model. Revenue for the quarter stood at INR 1,873 crore, 18% higher than last year. EBITDA stood at INR 3,017 crore. [crosstalk] INR 317 crore. The growth in this business segment continued to be driven by premiumization across brands, along with a strong rebound in occasion and workwear. Our womenswear is continuously growing and achieved 26% YoY growth. Also other categories like suits and blazers, denim, and T-shirts continued to receive strong consumer traction, as they posted impressive growth over last year. Retail business grew by 21% over last year on back of solid net addition of more than 110 stores during last one year and consistent same store sales growth. Further, e-commerce continued to be a strong sales channel, as e-commerce sales grew by 19% YoY, despite overall moderation in e-commerce growth across the industry. I want to reiterate that Lifestyle Business is one of the largest standard fashion e-commerce business in the country. Brand's marketing efforts reached back pre-COVID levels, resulting in a noticeable enhancement in overall brand recognition and awareness. Our expansion in small town India continued aggressively as we take our brands to these markets through an asset-light format. We are present across more than 505 stores in small towns, contributing profitably to the top line. Going on to the Pantaloons business. The Pantaloons division recorded highest quarterly sales of INR 1,159 crore with a growth of 9% over last year. EBITDA stood at INR 168 crore. This was achieved despite post-Diwali demand slowdown in value segment. Additionally, this growth needs to be seen in view of the shift of Puja to Q2 this year versus Q3 last year. A substantial portion of the customer base is located in tier two and tier three cities. Hence on account of inflationary pressures and weak consumer sentiment led to sluggish performance in these cities and towns. Pantaloons opened 10 new stores during the quarter to exit with 406 stores. Other business segment continued with its outstanding performance. The portfolio comprises of four business lines: active athleisure and Innerwear, youth fashion brands, super-premium brands and Reebok. During this quarter, the portfolio posted revenue of INR 363 crore, a 26% growth over last year. Let me begin by talking about Innerwear business performance. The revenues of this segment grew 10% over the same quarter last year, despite overall slowdown in athleisure segment. The segment continued to scale up rapidly and has reached 31,000 trade outlets. Brand also added 48 EBOs in the quarter to exit with 159 EBOs. The business launched its largest nationwide television and digital advertising campaign. Youth fashion segment, consisting of American Eagle and Forever 21, delivered strong performance. American Eagle continued to solidify its reputation as one of the leading aspirational denim brand, as it delivered 24% LTL growth. Brand opened five new exclusive brand stores in the quarter and is now available at 31 EBOs and 42 doors of departmental stores. Forever 21 also added five stores on a net basis during the quarter. The brand is back on expansion journey with 50% YoY revenue growth on the back of strong LTL growth and robust e-commerce performance. The Collective and other super-premium brands witnessed a sharp growth of 43% over last year with a very strong 24% LTL. The segment has consistently maintained strong profitability over the past few quarters. Online revenues continued to surge as our own e-commerce site, thecollective.in, recorded more than 60% growth over last year. Ethnic businesses, we have built a comprehensive ethnic portfolio across multiple occasions and price points. These include partnership with designers like Sabyasachi, Tarun Tahiliani, Shantanu & Nikhil, and House of Masaba, premium men's ethnic wear brand Tasva and Jaypore. The segment achieved revenue of INR 189 crore and has grown 66% year-on-year. Businesses continue to invest in brand building initiatives and new store openings. Sabyasachi's revenues grew by 23% over last year with a strong growth across all the categories. Brand crossed INR 1,000 crore plus quarterly revenue. [crosstalk] INR 100 crore plus quarterly revenue. We are pleased to inform you, Sabyasachi's newly opened iconic New York store has received an overwhelming response and is well poised to establish the brand as a truly global brand. Tasva, our premium men's ethnic brand, added 11 new stores in the quarter and is now available across 32 stores. The brand also launched its first comprehensive marketing campaign, which is currently live across prominent digital platforms and television. Brand and its products continue to be well-recognized by the consumers and the industry. Jaypore brand is present across 15 stores and witnessing a very strong traction across multiple channels. The brand continued to grow on the back of network expansion and growth in new categories that it has added, such as home and accessories. Revenue from the brand grew by almost 80% over last year. Shantanu & Nikhil delivered the highest ever quarterly revenue with 43% growth over last year. Brand is now available across 15 stores. Brand introduced sports inspired lifestyle category by launching Shantanu Nikhil Cricket Club. House of Masaba delivered highest ever quarterly revenue with 66% growth year-on-year on the back of healthy LTL growth of 61%. The newly introduced brand, Lovechild, has continued its expansion into new categories such as fragrances. Our products continue to receive favorable response from the customers. I wish to re-emphasize that the ethnic wear is a huge market opportunity where we wish to build a large, meaningful play through our comprehensive portfolio. With the way the portfolio is shaping up in terms of performance, we are confident of building a large and profitable business over the next three years. To conclude, our performance is backed by strength of our brands, our distribution capability, our deep consumer understanding, and our sharp focus on operational rigor. With the most comprehensive portfolio play in Indian fashion industry, all our new initiatives have demonstrated expected early indication of success, and along with our mainline businesses, we are confident that we are on right path to execute our stated strategy. Thank you. We are open to questions now. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask the question. The first question is from the line of Richard Liu from JM Financial. Please go ahead. Hi. Thank you. Just wanna check if you hear me? Richard, sorry to interrupt you. Can't hear you properly. Okay. Is this better? Slightly better. Okay. Let me try again. Sorry about this. Ashish, hi. Thank you for this. You know what, I have two questions. One is, you know, on the long range Madura margin, right? I mean, if I look at pre-COVID, which is the Q3 FY20 20 quarter, you did about INR 1,300 crore of top line that quarter, and this time around it is more like INR 1,870 crore, right? I mean, that's quite a bit of a increase versus that level. That time you reported a margin of about 17.3%, with a much, much higher revenue base. At this time, your margin is lower at 16.9%. I remember you all had very emphatically spoken about some structural cost savings that were affected during COVID, which were supposed to, you know, to keep margin higher on a permanent basis. In light of all that, can you please help reconcile this kind of margin that you've clocked this quarter? Okay. I'll give a first response, and I think Vishak can add to it. Richard, clearly, a large part of the margin shift this quarter is coming because of significantly higher quarterly advertising, which is a phasing issue and a sort of one-time large investment, having not made investments the last two and a half years. That's a significant shift. If you look at the shape of the business, it continues to remain as strong as it was before, in fact stronger over a period of time. The CAGR even if you look at it from 2020- 2023, ignoring or even counting, factoring in the COVID period continues to stay very, very strong. This is despite the fact that some of the trade and wholesale customers have fallen off. As far as structural margin is concerned, I think we are marginally better than where we were in FY2020 if you take care of the additional one-time advertising because we always did 3.5%-4%. This quarter was significantly higher on account of that. On your point about structural change in the cost structure, see, COVID went through a lot of pieces which were one-time, and there were few which were structural over a longer period of time. At this point of time as business is coming back, the difference is, I would say, not as noticeable as it was during the COVID period when you could take a lot of discretionary costs down, overheads which went down. Retail parts of the cost have come back, although the nature of our retail business is more variable than it was in FY2020. A testament to that is that during the times when things were not very good, Madura business managed to hold on to its margin a lot better than Tier 6 cost businesses. I don't know, Richard, if I've answered all your questions, and Vishak, if you have anything to add. Richard, does that answer your question? No. I got the flavor of A&P, but, you know, if I mean, if I add back A&P to both the quarter, would you be at a much higher level now considering that your top line is much better? At a percentage margin level, I wouldn't say much better, but better than what we used to be. This is, you know, a dramatically higher top line with a marginally better margin%, okay? Is the way I would read it. We have continued to grow very strongly, Richard, while holding on to the strong double-digit margins that you consistently enjoy. Okay. What about gross margin? There was also a thought at that time that, you know, that discounting as a concept is not gonna be so prevalent anymore. Do all those assumptions continue to hold, or we have gone back to pre-COVID behavior? Okay. Richard, here is the deal. I think, our discounts haven't changed too much vis-a-vis pre-COVID, but what you must recognize is that they have gone much higher during the COVID years. To that extent, we have brought it back to pre-COVID levels, so in that's, in that sense, progress. Okay? Is there room for further improvement in that? Incrementally, yes. Okay. Thanks, Vishak. I'll just move to Pantaloons, right? I mean, if I look at Q2 and Q3 combined so that, you know, we don't get into this Puja shifting thing, right? I mean, if I look at Q2 and Q3 combined, again, pre-COVID FY2020, the revenue was about INR 2,000 crore. This quarter it's about INR 2,250 crore, that's about 10% higher, right? Your store count is up from about 340 then to about 400+ now. What explains this? I mean, why will you keep investing in this business if this is the situation of the growth that you are able to garner after all these years? I think, Richard, one quarter or perhaps performance during this phase may not tell the whole story. Indeed this quarter has been weak, and finally post Diwali, which is the month of November, has further cooled down the business performance. If you look at FY2020 performance and compare that to FY2023, I think our same store growth is down by about -9% or something, and which is what is reflecting in the kind of numbers that you're talking about. I would tell, Richard, if you were to look at the value segment performance, there is a larger headwind that Jagdish talked about that we are experiencing in that. It's very different from what we are experiencing on the other side of the market, which is where most of our premium brands are, which are enjoying the steady comeback that consumers have seen in the higher end of the market. This is borne out both in terms of consumer segments as well as geographical positioning. Tier two, tier three towns are seeing much lower recovery and much lower productivity even at this point of time as we speak. That's something that Pantaloons is suffering from and experiencing that. I think it's a phenomena which we will have to grind through as we speak. What will actually, you know, revive the sentiments at the value end? I mean, we are seeing a lot of these sort of comments also at, let's say, the lower priced consumer goods players. Everybody is thinking that the government is gonna do A, B, C, D. You know, I mean, isn't that more of a hope than anything else? I mean, what will happen to revive the sentiments at the value end? I think overall there has been a demand disruption during pandemic for the lower end of the MSME customers, smaller markets. I don't know whether job loss is still relevant in those markets, but definitely there's been a slowdown and curtailment of discretionary income and expenditure at that end. I think the longer term picture, and we have seen it before, it's not the first time we are experiencing that, there is an equally strong recovery that happens when consumer sentiments improve. I think when you look at the premium end and the value end, we are also seeing the resilience at the top and the challenge at the bottom. At least for our business, I don't think government alone and those factors are perhaps too macro for us to comment upon in terms of how they would deliver into our performance. Some of it could also be a recovery post strong festive, because that period indeed saw both Puja and Diwali saw good recovery, and it's months after that which has actually cooled us down. Hard to put one factor which could change it. I think overall consumption and economy will have to improve for this to start to seeing a meaningful shift as far as that part of the market is concerned. Okay. If I can just slip in one more question. You know, on Reebok, if you can help us understand, you know, how much did it bleed? Why did it bleed? You know, what did the P&L look like, and what will it look like when you get to a decent shape? I think there's a one-time effect in transition. We transferred a whole lot of inventory and business, and there was a one-time impact on accounting that into it, which you saw in this quarter. It's a strong business. We expect it to get to close to double-digit EBITDA margins sooner than later. I think that that was the shape of the business before we acquired. You know, any business which has not been looked after for some time does require a little bit of investment and revitalization. I don't think it's a long journey. It's a very short, nine to 12-month journey that we will have to do, but we'll have to see that period through at this point of time. You're talking about double-digit margin, you know, despite the royalty that you'll have to pay, right? I mean, because I guess the earlier, operation. Did it also have a royalty construct into it? Yeah. We'll have to deliver that post-royalty, I mean, that's our margin. Okay. You think you can get to that in about nine to 12 months' time? No. I think nine to 12 months is what it would take us for turning it around. Perhaps maybe another 12 months after that. It's very hard for us to right now because it's just three months into our operations. We are fixing parts of the businesses, making sure the inventory system gets in control, which itself is six to nine months away from us. Lots of stores need refurbishment at this point of time. It's a fundamentally strong business which is a 350-400 store a business, so we have a good base to work on in that sense. Got it. Thank you very much, Ashish. Wish you all the best. Thank you. Next question is from the line of Garima Mishra from Kotak. Please go ahead. Yeah. Hi, am I audible? Yes, you are. All right. Thanks so much for the opportunity. Jagdish, could you please help us with the period ending net debt number and any major investments or outflows towards promised investments that we should expect over the next two or three quarters? The net debt on 31 December 2022 is INR 340 crore. The board has approved investment in TMRW between INR 400 crore-INR 500 crore. Out of that, I already made around INR 120 crore. This is the only outflow which we take. Okay. The remainder, let's say INR 350 crores-INR 400 crores for TMRW, what is the time horizon that you have in mind in terms of investing it? It'll be this quarter or at best spill over into next quarter. It's not a very long. That is right, next six months. Okay. Understood. Specifically for TMRW, the investments that you have, I know there are some details of those that have been disclosed, but is there any sense that you can give us in terms of the cash investment or let's say the cash loss you may have to incur towards ramping up this portfolio in, let's say, FY 2024? It's hard to give a number. You will have visibility of that very much quarter and quarter. If you look at this quarter, we have about INR 19 crores of loss for TMRW consolidated level. We expect it to marginally go up in the immediate short term and then subsequently depend on the performance of the portfolio companies. Okay. As and when you deploy the remainder INR 350 crores-INR 400 crores of the corpus, this loss number may actually increase if, let's say, the acquired companies are loss-making or they are just startups and not really profitable. Yeah. It is a combination of, s ee, most of our companies that we have acquired, whose accounts that you see currently in the books, are marginally profitable at consolidated level. However, there is an overhead cost, which is the TMRW company cost, which is incurring this overhead, which is what you're seeing in terms of losses. As we increase investments, it'll depend on the quality of portfolio businesses that we'll build. Also, some of these businesses are very scalable, that's the reason for investment, which would require a deeper loss in those businesses. The trajectory would indeed depend on the quality of business at the entry and the U.S. investment required to take it to the next level. It could go up, and possibly will go up is my guess, looking at the way digital business eventually turn out, but the range will be between 20- 30-35 kind of number. Ashish, what will be the operating income? It will be coming accounts. We will do it by the time. [inaudible] Of course. What Jagdish is saying that all this is covered as a part of overall funding that we have given it. I think your question is specifically around the losses that will come in the books of PBA forward. Yes, that is correct. One more question on Reebok. Could you help us understand the revenue and EBITDA made in this business specifically in the Q3? INR 34 crore revenue. As Ashish was saying, around, you know, INR 13 crore EBITDA loss. Got it. Understood. Let Vishal give you a more detailed answer. Okay. Garima, it's like this. In the Reebok business, we've transferred the business from 1 October 2022. Okay? If you look at a pre-royalty component of EBITDA, in fact, in Q3 itself, we would be close to breakeven on that. Okay? It's as the business scales up in quarters to come. Can you hear me? As the business scales up in quarters to come, okay, we will keep getting some of the benefits of that leverage. There is a fixed cost organization that we put up. There is a network of retail stores which is being fast ramped up. Okay? There is also a lot of investments into replenishment systems, warehousing, et cetera, all of which kick in in the next few quarters. Okay? With that is what Ashish was trying to say earlier. In the next 12 months itself, we'll be able to get this into some kind of steady state and then get into double-digit margins from the year after. All right. Understood. The last question from my side, if I may. Ashish, you mentioned that the advertising expense was indeed very hefty this quarter. How one-off or non-recurring should we expect this number to be? Because given you are seeding new businesses, ramping up new brands, it may continue at this pace for the next few quarters. I just wanted your thoughts on this. No, you're right, Garima. There are advertising spends this quarter coming as a very large sum because that has come back both in existing business, which we felt for a fair bit of period had not seen visibility, as well as new businesses that we are seeding. Your point is valid about the new businesses. Although even for them, this was the right time to advertise and create visibility because it's the season, we were launching Tasva, we had a network of about 30, 35 stores. Similarly, Innerwear where we had not had the opportunity to build because of COVID since launch a really impactful national campaign. Those businesses also saw, I would say, exceptional level of one-time investment. It doesn't mean that these businesses will not get advertising support, but this would not be in the proportion that we ended up spending this time. The same is true about the lifestyle brand business, which is the other place where advertising spend was nearly three times the normal spend that we have done in past. Because there is a sense that we needed to get back and make our brands more visible, having left about 2.5 y ears of that period. This is definitely an exceptional spend for the quarter as it appears. It reflects our investment in brand velocity, which we have always done between 3.5%-4% is what we have been investing over a long period of time. I don't expect the trajectory to shift. That this quarter that was up by almost 200-250 basis points, depending on which business you are talking about. In the core business, it was 200-250 basis points. In the new businesses, this was obviously a one-time initial launch expenditure. Our overall advertising spend will remain in the range that we have always done in the past, and the new businesses will continue to get support ahead of their revenue at this point of time. Perhaps all that impact cumulatively is somewhat coming together and therefore looking so much bigger in this quarter. Understood, Ashish. Thank you so much, and wish you all the best. Thank you. The next question is from the line of Varun Singh from ICICI Securities. Please go ahead. Varun Singh, may I request you to unmute your line from your side and go ahead with the question, please. Am I audible now? Yes. Yes, you are. Okay. Thank you, Sir, for the opportunity. My question is on the marketing investment. If Sir, I may ask that how have we decided to allocate this resource? Like how much in which for which brand? Look, we have a large portfolio of brands, and each one is in a different stage of existence. Many of them have been around for long period of time, but still have something new to say about themselves. Some are very new and therefore just need to build awareness. Expenditure is of course aligned with the strategy that we have laid out for each brand. It's not a top-down allocation, although there is a judgment at the top. It's primarily done as a part of the annual planning for each of the brands, and it plays out differently in different quarters. Okay. Okay. sir, I was just thinking that if you could talk about Lifestyle brands and Pantaloons broadly, something in that direction. Okay. Sure. Pantaloons business being a retail brand typically operates with 2% as its marketing cost, sometimes 1.5%. At the peak, it would go to 2%, 2.5%. Lifestyle brands on the other side operate between 3%-4%, but in peak periods like this quarter could have gone up to maybe 5.5%. On an annual basis, our branded business operates between 3.5%-4%, and our retail business operates between 1.5%-2%. Understood. Understood, sir. Yeah. That's it from my side, sir. Thank you very much. Thank you. Next question is from the line of Tejas Shah from Spark Capital. Please go ahead. Hi. Thanks for the opportunity. Just one question, kind of an extension of the previous participant's question. How do you measure ROI on brand investment? And, is there any kind of method on which quarter or which year, considering that the broader economic environment was muted after October, is it like that, there is an agility in the process that if we see that, the response from customer is not coming, we can actually postpone the plan and we can, kind of, repurpose it for some other time period? It is, Tejas, though sometimes it's hard to take a very short-term measure on it. Advertising, as you know, and you watch so many businesses across categories, is a longer term, and there is a lot of residual effect of advertising which plays out over a longer period of time. Having said that, remember, a part of our business is experiencing exceptional growth momentum. Lifestyle brand business, if you look at Q1, Q3, including this quarter and continues as we speak, is experiencing very, very strong business momentum. So this is very much in line with our strategy. Advertising is aiding the brands to stand out, convey the new categories in which they want to play, whether it's in Louis Philippe Jeans or Van Heusen Flex or in Allen Solly category. Each of the brand has a growth driver which is being supported by advertising. Much unlike the overall mood that your question seems to be indicating, that part of the business is actually enjoying a very good run, the advertising is supporting the kind of momentum that the business has picked up. On Pantaloons, that's why you don't hear that comment about it, because we are careful about spend after October, we have taken steps to curtail that. On the new businesses, where some of them are yet to be proven, I think they require the initial awareness building and the message to go to the broader consumers, that's why whether Tasva or Innerwear, we saw advertising in significant manner after a long period of time. We continued, those businesses I don't think are experiencing. Most of the challenges in the market post-Diwali are really at the value end of the market, and we have been more watchful about spending money in that part of the market. Sure. Just second question on this Tasva. So you spoke about awareness that requires to be there for the new brand. If I see, if I'm not wrong, we actually engaged with, we had a Bollywood celebrity for national celebrity for Tasva launch. When I see that the on-ground presence is just 35 stores. How come that awareness actually converts into demand even if somebody wants to engage with the brand or experience the brand based on the spend that we have done? Is it like, I understand it's always chicken and egg between distribution and advertisement, but I was as a consumer or as an analyst, I was actually intrigued that we spent so heavily at a time when our on-ground presence was not that high. Just wanted to know your insight on why, how we approached the Tasva's launch. I think, Tejas, you have answered the question in your question. In many ways, there is a bit of a chicken and egg. Do you build retail distribution with a high fixed cost investment in inventory and then wait for demand creation to happen? Or do you do one before the other? I think there's a very strong wedding linkage to this category. Tasva is a brand which was launched about six, nine months back. This is the first wedding season that the brand has seen. I also wish we had 100 stores instead of 30 stores at this point of time. But that would have meant you would have had that much cost, which would have seen no advertising and no awareness. I think some of these things have to be done in this manner. We have created a reasonably strong initial visibility for the brand. It would help not just the existing stores, but also finding new stores and getting consumers, because it's a, it's a slow process, and we needed to build that awareness even for the stores which are gonna come in next three to six months. Sure. lastly, what will be our EBO strategy for Tasva as we go along? Will it be FOFO, COCO or mix of both? Initially, as we had said, early on at the launch stage, we wanted first 40, 50 stores to be COCO stores because we want to make sure that we establish the brand strongly, both in terms of where we want these stores to be, the quality of store, the experience, and also to establish proof of concept even for potential franchisees. We didn't want it to be held back till that model is proven and franchisees come in. As we go forward, like all our brands, this will increasingly move from a pure COCO model to a FOFO and eventually to a full FOFO model. In the near term future that you see over next one or two years, the movement will be more gradual. Got it. Thanks and all the best. Thanks. Thank you. Next question is from the line of Kaustubh Bhaskar from Sharekhan by BNP Paribas. Please go ahead. Yeah. Good evening, sir. Thanks for giving me the opportunity. My question is on the EBITDA margins. Going ahead, as you said that, the marketing spends what you have done for this quarter would phase out going ahead. Considering that in the core business, should we expect margins to stabilize considering the fact that you will continue to grow in double digits? However, on the consolidated front, it will take another year or so because you are investing in some of your newer business, so that will continue to have impact on the profitability. Is it fair to assume that at consolidated level, there will be a gradual recovery in margins from FY 2025? At the core level, we should expect, you know, margins to come back on track from FY2024? I think if you look at our business as sum of parts and you get a better and clearer picture of it. As far as Lifestyle Brands is concerned, I think the good indicator of that would be a nine-month picture instead of this quarter or the previous quarter, et cetera, because the horizontal view of the business is perhaps the most stable view of the business as far as. That's been a very consistent business and a margin which perhaps be moving in the zone that nine-month margins will indicate. It's around 17 odd percent. It will probably move between 17%, 18%, 19% kind of zone as the business grows over the next couple of years. That's the Lifestyle Brand. As far as Pantaloons is concerned, the business is undergoing, as we speak, a more challenging situation. Again, I would suggest you look at a nine-month picture which reflects a reasonably strong performance, not just compared to category and industry, but even with respect to FY2020 performance, which is nine months of same period last year, where the margins have been hovering around 17%-18%. These businesses are in that sense, while they may see fluctuations quarter on quarter, the longer term picture is more stable than the quarterly fluctuations. As far as the new business is concerned, I think we have two, three kinds of businesses. There are parts of ethnic businesses, and if you look at, therefore, ethnic profitability, it's marginally breakeven to positive because part of ethnic businesses are already profitable. New businesses like Tasva are going to take perhaps two years to really come back to breakeven and improve. Some of the other new businesses, which are businesses like TMRW, are a little bit more unclear at this point of time to predict. It could be perhaps a much longer gestation considering the nature of these businesses, and they may take more than two, three years to get to that level. Most of our ethnic business, hopefully, particularly Tasva, which is the one which is consuming most of the investment at this point of time, will take about two to three years to become profitable. Right. Got your point, sir. For this quarter, the interest cost has gone up substantially. Any particular reason for this? This is Ind-AS. [crosstalk] Okay. Oh, okay. Okay. Thank you. The next question is from the line of Devanshu Mansukhani from Emkay Global. Please go ahead. Hey, thanks for the opportunity. The question was on Pantaloons with low traction in Q3. Do you foresee higher discounting in Q4 as Holi is also earlier this time around versus last year? I think low traction in Q3 itself resulted in higher markdowns and competitive forces working as far as this segment is concerned in Q3 itself. I don't think situation has changed, I mean, worsened post Q3. Most of the sales situation which went down was primarily in November post Diwali and little bit in December. I don't think it will change in terms of higher markdowns in Q4. Q4 would be like previous Q4. Got it. January specifically has been relatively much better because of delayed winter sort of getting into. Any early trends that you would like to share for this one? I would say, you know, one month sometimes could give a longer picture, just as I'm urging you to look at nine-month picture for all the businesses to understand the intrinsic nature. January would be an extension of the nine-month story. Businesses are performing along the lines where the premium parts of the businesses are facing and experiencing a stronger uptake versus the value end of the segment. A month here and there, picture keeps moving, but I won't change our view of any form of outlook on that account. Got it. Innerwear seems to have seen a higher loss in this quarter. You sort of attributed to higher marketing. I just want you to check, are we making investments at the gross level as well, through higher incentives as into gain more shelf space here? No, that's, no, that part is very stable. Most of the higher losses which are showing in the other part of the MFL segment is indeed, as you, as you correctly, sort of suggested, is coming from Innerwear and a significant part of Innerwear losses. In fact, almost all the losses are due to incremental and increased advertising that we did. This was a first ever national campaign, both television, digital and outdoor, that we launched for Innerwear. That's really what has impacted both the profitability of Innerwear as well as the overall other business losses. Last question from my end, sir. You indicated in previous answer, previous participant's answer also. Yes. We made some profits in the ethnic segment in Q3. I guess, that is due to stronger traction in other ethnic segments, ex of Tasva. Just wanted to check what is the view for coming quarters, as we made about INR 50 crore loss in last quarter. In this quarter it is a slightly profit. What's your view on this segment in coming quarters? Will we return back to that INR 40-50 crore sort of a loss or? I don't remember making INR 50 crore loss last quarter. [inaudible] INR 40 crores, INR 45 crores. Okay. This quarter, obviously both Q3 and Q4 are very good quarters for ethnic wear businesses because of the wedding, you know, periods. Most of our business in ethnic are related to wedding. I think Q3 will be a better reflection of Q4. Although Q1 and Q2 similarly go through periods of less wedding and therefore, those are more affected for these brands. Understood, sir. Thanks. Thanks. That's it from my end. Thank you. The next question is from line of Vaibhav Agrawal from Basant Maheshwari Wealth Advisers. Please go ahead. Yeah. Am I audible? Yeah. Yeah. Thanks for giving me the opportunity. Sir, as I looked in the investor presentation, like the EBITDA margins would have been about 18.5%, 19% if we adjust the rent and the higher marketing expenses. You said that the Q3 EBITDA margins would be in similar lines to the last year one if you adjust these two expenses. Do we see a 18%, 19% kind of stable EBITDA margins once everything is sorted, like by in the next three, four years kind of a scenario, like when the newer businesses also start performing? I think I would reiterate the point I'd made earlier. For understanding our margins on a longer term basis, whether you look at the annual basis this year, last year, look at a nine-month picture, it gives a fair reflection of where the state of the business is. As I indicated, Madura business operates between 17%, 18%, 19% kind of margins at different points of time. Pantaloons while this quarter may have fallen a little bit but has operated between 17.5%-18% margin. Our new businesses will go through a little bit of fluctuations, while ethnic will probably come back as soon as Tasva investments are over. Our D2C will take longer time to come back. Those will be less predictable on quarter-to-quarter basis. Ethnic in second half of the year will have stronger performance versus the first half of the year. As an overall ethnic business, because there are lot of profitable business there which already reside in that portfolio, they will continue to do well and particularly in wedding periods they do exceptionally well. Our Tasva investment will perhaps withhold the overall ethnic performance in that. On a stable state basis, like we are spending a lot on Tasva and Sabyasachi, all these would be a very high kind of high EBITDA margin business when they mature in the next two, three years, right? Sabyasachi is already a high margin business. It's stable, it's hard growing, but it's a high margin business because the brand is very profitable. The question is really about Sabyasachi is about Tasva, which is where we are making the investment. We need to build awareness. We need to build a network of stores, and it would take time before it becomes a profitable business. When do we expect the operating leverage to kick in from these investments? By when, in the next one and a half years, in the second half of FY 2024, is it possible? It would take much beyond that? I think it will take a little beyond that, particularly for the businesses which are starting off and investing. We have given a reasonable sense of where we see the shapes of various businesses of ours in our external investor presentation that we have made. We are largely going around that line of parts of our businesses who are running ahead of that and some parts are slightly behind. Overall, at a portfolio level, we are closer to that overall mix that we had indicated at that point of time. Okay. In the investor day, probably you will revise the data and come up with the newer figures then? We will come back at an appropriate time with the revised numbers. Okay, sir. Thanks a lot. Thank you. Next question is from the line of Ankit Babel from Subhkam Ventures. Please go ahead. Good evening. Sir, sorry for the repetition, but my question again is on the profitability. I understand you people are in an investment phase, wherein you are investing in various businesses for the long-term growth. As investors, we would like to know, you know, about the profitability part also. How long this accelerated investments will continue? You know, I understand the core businesses of Madura and Pantaloons, you had given the range of 17%-19% margins, which will come up, but new businesses will continue to drag. We need to understand the extent of the drag which can come from these new businesses in, say, next 12 months, so that we can take an informed call. I understand your concern and, just as you have repeated previous question, I would restate the response that I had said. Look at the portfolio that we have. If you look at nine-month picture on revenue side and look at the weighted average of the business. Madura business is about INR 5,000 crores run rate for nine months. You could extend that to look at the annual run rate. Pantaloons today is INR 3,300 crores. You could extend that to look at what's about close to INR 12,000, eleven and a half, INR 12,000 crores of our business. There is a reasonably predictable, although quarterly fluctuating, profitability shape that one could predict. Understood. There is a part of the business which is new businesses that we are growing. Currently, it's about all the new businesses put together in terms of revenue would be operating at a run rate of maybe about INR 1,300 crores-INR 1,400 crores for nine-month period, so about INR 2,000 crores annually. That business is the one which is fluctuating. Most of the ones investment that are likely to come are in Jaypore. Sorry, in Tasva. Little bit in Jaypore and finally in TMRW. We have given an indication of TMRW, where it will probably be in the range of INR 20 crores-INR 30 crores that we are currently experiencing this quarter. It may move a little bit here and there as we acquire new companies and depending on the shape of those businesses. As far as ethnic business is concerned, on an annual level, I think we will come closer to breakeven very soon. I don't expect that to be a very long-term, you know, loss-making business because large part of that portfolio is already productive. As Tasva gains scale, I think it will also come closer to consuming less investment than what it is doing right now. Okay. I won't give an exact number for next year, if that's what you're looking for. Unfortunately, that's not. No, no issue, sir. Direction is very good and that's helpful. Just for simplicity and just for our and everyone else understanding, the figure which you had given, say, two years back, in your investor day was around INR 2,350 crores of EBITDA by FY2026. I understand a lot of things have changed in the last two years, but still, for our simplicity and for our understanding, are you in a position to achieve at least that number in terms of EBITDA in absolute terms? You believe that you will miss that? You believe you will surpass it? Any, any idea on that number, sir? Because that is already there in the public domain which you people have declared. Yeah, I know. We have given in public domain and therefore I'm never going to contradict, except reaffirming the fact that we have given it. Time has passed since then. We will come back to you, as I have mentioned, with the revised set of numbers. What would that number be? I don't want to right now give a response which we may have to later correct either upward or downward. Let me tell you, we are broadly moving in the direction that we have indicated in that. Differences, if any, on revenue side or EBITDA side would only be marginal and would be a function of how each of the new businesses are played out. Our core businesses are fundamentally operating in line with what we have projected. Yeah. Excellent, sir. Thank you so much, sir. Thank you very much. Ladies and gentlemen, on behalf of the management, we thank all the participants for joining us. In case of any further queries, you may please get in touch with Mr. Rahul Desai or Mr. Amit Dwivedi. You may now disconnect your lines. Thank you.