Ladies and gentlemen, good evening, and welcome to the fourth quarter and full year earnings conference call of Aditya Birla Fashion and Retail Limited. The call will begin with a brief discussion by the company's management on the Q4 FY23 and full year FY23 performance, followed by a question- and- answer session. We have with us today Mr. Ashish Dikshit, Managing Director; Mr. Jagdish Bajaj, CFO; Mr. Vishak Kumar, Director and CEO, Lifestyle Business; Ms. Sangeeta Pendurkar, Director and CEO, Pantaloons. I want to thank the management team on behalf of all the participants for taking 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 risk that the company faces. Please restrict your questions to the quarter and full year, yearly performance and to strategic questions only. Housekeeping questions can be dealt with separately with the IR team. With this, I hand the conference over to Mr. Jagdish Bajaj. Thank you and over to you, sir. Thank you. Good evening, welcome to the Q4 and FY 2023 earnings call for our company. Let me start with highlights of the quarter. The quarters are the highest ever Q4 revenue for the company at both standalone and consolidated level. This was driven by strong retail L2L, omni-channel play, and network expansion. This is despite the fact that overall industry continued to face subdued demand post festive period, especially in value and mass street segment. Our brands, on account of their inherent strength, loyal customer base, and brand building initiatives, have continued to grow from strength to strength. Our strategic growth levers have enabled us to maintain an impressive revenue growth for the sixth consecutive quarter, post-recovery from COVID. Our company has remained committed to its ongoing marketing investments, which have been in place for the first few quarters. The spends are aimed to strengthen our brands, increase our market share, and be ready to seize the long-term surge in discretionary spending. Additionally, we have continued to aggressively grow the distribution network and enhance our capabilities for existing as well as new businesses. It gives me immense pleasure to tell you that our company in FY23 added a record more than 500 stores and also added 1.6 million sq ft of retail space to the network. Now, I will talk to you about financial performance. Company delivered sales of INR 2,880 crore, which is a growth of 26% over same quarter last year. The company achieved a consolidated EBITDA of INR 232 crore. EBITDA for this quarter was impacted due to subdued sales, building organizational capabilities for all our businesses and investment brand building, which were INR 550 crore higher than Q4 last year. The company's consolidated PAT was negative INR 195 crore. In terms of expansion, our branded business added 104 stores led by addition of 25 stores by ethnic business. Pantaloons also continued to expand as the business achieved a net addition of 25 stores during this quarter. The company experienced a remarkable 77% year-on-year growth in e-com sales across its portfolio, primarily due to successful B2B partnership in the e-com space and a strong emphasis on enhancing our own brand websites. Our Lifestyle Brands launched a new Super App that aims to offer customers a seamless experience and curated range of options across our four Lifestyle Brands. Let me update you on full year performance. I am very glad to inform you that our company has made a remarkable recovery post-COVID, as demonstrated by 53% growth in sales versus last year to reach INR 12,418 crore. Our resilience and strategic initiatives have propelled us to reclaim this momentum and strengthen our position for a strong future growth. Company posted EBITDA of INR 1,617 crore, an increase of 34% versus last year. EBITDA margin stood at 13% for the year. Our company significantly surpassed pre-COVID levels in terms of revenue, we also intensified our product focus on brand building initiatives. Our marketing spend was more by INR 350 crore versus last year. The company's consolidated PAT was -INR 59 crore. The pre-Ind AS number would have been a profit of INR 57 crore. I am pleased to tell you that in line with our strategic initiatives, Lifestyle and Pantaloons are now one and a half times of last year's, reaching INR 6,608 crore and INR 4,069 crore, respectively, in revenues. Apart from the established businesses, I am delighted to share with you that the total size of our newer ventures, which comprise of businesses in high growth areas, is already more than INR 2,000 crore. We have added this scale to the ABFRL portfolio in the last five years, while our established businesses, Lifestyle and Pantaloons, have also grown almost two-fourths over the same period. Our Innovia youth fashion and international brands together have grown more than 48% over last year. Ethnic business grew 84% over last year to reach INR 574 crore. Reebok is now well placed to become a major player in Indian sportswear segment. TMRW has acquired 7 brands and is on track to build an exciting portfolio of next gen digital-first brands for the next decade. Our consolidated net debt stood at INR 1,422 crore as we continue to invest in our operations and new businesses. I will now take you through the performance of individual businesses, starting with Lifestyle Brands. Lifestyle Brands posted highest ever Q4 revenues on the back of robust retail performance and strong e-commerce performance. Revenue for the quarter was INR 1,535 crore, 14% higher than last year. EBITDA stood at INR 225 crore. For the quarter, retail business grew by 31% over last year on the back of solid addition of 128 stores during last one year and consistent same-store sales growth. E-commerce continued to be a strong sales channel as e-com sales grew by 49% YoY. For FY23, sales stood at INR 6,608 crore, a 46% growth over last year. This growth was driven by premiumization and casualization as the brands continued to build on their leadership position and gain market share. The business EBITDA crossed 1,000 crore for the first time to reach INR 1,095 crore, growth of 39% year-on-year. EBITDA margin was 16.6% for the year. This year, womenswear business within Lifestyle Brands achieved more than 70% year-on-year growth in FY23. Our presence in small town India has aggressively expanded, now totaling 600 stores. Moving on to Pantaloons business. The Pantaloons division recorded quarterly sales of INR 798 crore with a growth of 18% over last year with an 13% LTL growth. This was achieved despite demand slowdown in value segment. The performance in metro cities continued to remain strong, sales in Tier 2 and Tier 3 cities remained sluggish as inflationary pressures and weak consumer sentiments impacted demand. The sales for FY 2023 stood at INR 4,069 crore, a 55% growth over last year. Pantaloons posted EBITDA of INR 635 crore with a margin of 15.6%. Pantaloons continued to expand its private label portfolio with new launches addressing diverse spaces like casual, innerwear, and youth segment. This year, Pantaloons significantly ramped up its store addition with 54 net additions, 25 of which opened during Q4. We plan to sustain this momentum in the coming fiscal year as well. Let me speak about other businesses within Madura. Other businesses segment continues with its outstanding performance. The portfolio comprises of four business lines: active athleisure and innerwear, youth fashion brands, super premium brands, and Reebok. During the quarter, this portfolio has posted revenue of INR 392 crore and 81% growth over last year. This portfolio recorded revenue of INR 1,352 crore, a growth of 57% YoY in FY23. Let me start with innerwear business performance. The business in FY23 posted 33% YoY growth with retail revenue doubling over last year. During the year, brand strengthened its reach to exit with 32,000 trade outlets and 175 exclusive brand outlets. The business also unveiled its fresh new retail identity, setting the stage for a more dynamic and personalized shopping experience. Youth fashion brands consisting of American Eagle and Forever 21 delivered strong performance. American Eagle in FY 2023 delivered 89% revenue growth with 67% LTL growth. Brand opened 6 new exclusive brand stores in Q4 and now available at 37 EBOs. Forever 21 continued to expand its newer market as the brand posted 40% revenue growth over last year in FY 2023. The brand also added 9 stores via a satellite model in last 1 year, showing the trust the brand has gained over the years. The Collective and other super premium brands business witnessed a sharp growth of 60% over last year in FY 2023 with a very strong 41% LTL. The Collective is growing profitably not only in metros, but in non-metros as well. Online revenues continued to surge as our own e-com site, thecollective.in, is on path to be premier luxury e-com destinations in India. Ethnic business. You all know, in 2018, we outlined our growth strategy to be built around ethnic wear, the largest segment in the Indian fashion space. Over these years, our company has made several organic, inorganic moves with an objective to build comprehensive portfolio of brands in this key segment. This quarter, our ethnic segment achieved revenue of INR 174 crore and has grown 72% YoY. This portfolio recorded revenue of INR 574 crore in FY 2023, growing to 1.8x of last year. Business continued to invest in brand building initiative and strategic new store openings. In FY 2023, Sabyasachi grew 50% YoY as the brand launched 2 new stores. Men's premium ethnic wear brand Tasva has continued to expand its network aggressively and is now available across more than 50 stores. Brand Tasva and its products continue to do well, recognized by the consumers and the industry. Jaypore's FY 2023 revenue grew 90% YoY as the brand in FY 2023 added 8 stores to the network to exit the year with 18 stores. Shantanu & Nikhil posted its highest ever yearly revenue with 53% growth YoY. SNCC by S&N, a sport-inspired lifestyle brand, continued to gather customer interest. As you are already aware, and we had a separate conference call as well for it, AB Apparel board has approved the company to acquire 51% stake in TCNS Clothing Co. Limited through combination of an SPA with founder promoters and a conditional public offer. It also proposed that TCNS will be merged with AB Apparel through a scheme of amalgamation post receipt of necessary approvals. These deals will help us complete our ethnic wear portfolio and expand our existing ethnic wear portfolio into premium women's ethnic wear segment. As I'm talking to you today, we have made rapid progress in the process and have already filed the necessary applications with the regulators for their approval. Leveraging our strong brands and their category extensions, our ethnic wear portfolio is primed for rapid growth. We are confident in establishing a substantial and profitable business in the coming years. To conclude. Company continues to be on track to follow its long-term strategic objective. Our brand-led strategy has been key driver of our success till date. It has enabled us to differentiate ourselves, build customer trust and loyalty, and effectively deliver our value propositions. With portfolio of very strong brands in fast-growing segments, we are confident to build comprehensive portfolio of offerings for all consumer segments, varying occasions and price points. Thank you, we are open to questions now. Thank you, Mr. Bajaj. 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. We have our first question from the line of Nihal Mahesh Jham from Nuvama. Please go ahead. Yes, sir. Thank you so much. Good evening to the management. Three questions from my side. First is specifically on the margins for the Lifestyle Brands. There has been around 8% kind of YoY contraction. If you could just help us with the bridge, what part of this was, say, related to the incremental marketing spend which you've highlighted and also the aspect of, say, operating deleverage. I'll come to the other questions after that. Okay. Hi, Nihal. This is Vishak here. Yeah, first things first, you know, usually we, you know, do about 16%-17% EBITDA in a quarter. This quarter was about couple of percentage points lower than that. Last year, Q4 had some exceptional gains that we had one-time gains. Don't go by 1 quarter per se. Okay? This quarter, fundamentally, the difference was, additional investments in advertising by a couple of percentage points. That's it. Yeah. Plus, there were some rent concessions we had last year, which we did not have this year. If you remember, last quarter was the last of the COVID rent relief that we had received from landlords, which was spread through the 4 quarters of last year. This year, we did not have any such gain. Otherwise, basically, fundamentally, the difference between our typical average quarterly EBITDA versus this was about 2% points, largely because of advertising delta. You would see our brands, very strongly advertised through various events, you know, even as we speak right now. Sure, Vishak. Vishak, a follow-up on Madura was on the wholesale channel. You know, while retail has done reasonably well, we see that that channel is again, seeing a bit of a contraction. What is the outlook or thought on that channel going forward? Actually, wholesale is fairly strong for us. Q4 you would see a negative primarily because, you know, we had done some accounting changes of a lot of buy and sell stores which we had converted to consignment. If you take that away, if you look at it from a full year perspective, it's a fairly healthy growth. That channel is poised for a lot of growth. In fact, we just concluded a partner meet about in the end of March. There is a lot of optimism around the kind of things that we're doing in the wholesale channel. My sense is then we continue to be leading brands across various large chains. It's a strong channel. Don't go by the one quarter number, which is primarily because of conversion of a set of stores, a large number of stores from buy and sell to consignment to enable superior replenishment, models. This is a one-off adjustment in Q4. That's it. Yeah. After that it will release. Yeah. Okay. I'll maybe take those numbers offline. Last question was on the debt part. From Q3 to Q4, there has been a reasonable increase in debt. If that was as per expectations? Second is, at the time of the TCNS call, we did highlight a target of debt to EBITDA, and how is the bridge to that? If we could just discuss that would be helpful. Nihal, let me answer your first part of the question. I think the increase in debt this quarter has been slightly higher than what we had anticipated. Primarily, and I would say almost entirely led by drop in sales versus the estimates that we had across our businesses. Effectively, from the base that we were, if you look at our growth rate in first nine quarters or first three quarters, the company as a whole was growing at a very rapid pace. To that extent, despite an omnichannel base in this quarter, our sales growth has been slightly lower than our internal estimates, and that's what has resulted into higher inventories, and to that extent, some large part of debt has come through that. We've made investments in subsidiaries, TMRW and ethnic subsidiaries during this quarter, and that has further increased the debt to this level. Sure. Just on the outlook on once we consider TCNS acquisition, GIC money, how do we see it, how do we reach that target debt to EBITDA? Like, what would be the investments next year? At this point of time, Nihal, we probably won't have the exact outlook on that. To give you a sense of where that range would be, I think what Jagdish had mentioned in the call from where you picked up this number during the TCNS investment call, that was the outer range that Jagdish was sort of indicating towards what we might look at, considering that we continue to invest in the growth of our businesses. We continue to see an opportunity both in new businesses as well as existing businesses to grow. You've seen Pantaloons investing in close to 60 stores this year. All the ethnic businesses put together have opened close to 70-75 stores. Madura businesses have more than 250 stores which will open this year. We see that trajectory to continue and therefore, while we don't have an exact number for debt for next year, Jagdish wanted to highlight that there will be a potential increase in debt towards the end of next year. Fair enough. Thank you so much. I'll come back. Thank you. Thank you. We have our next question from the line of Gaurav Jogani from Axis Capital. Please go ahead. Thank you for the opportunity, sir. My first question is with regards to the Pantaloons margin. Now, if we see the Pantaloons margin, even on the reported basis, that has come to around 8.5%. Now, even if this 8.5% we consider one-off, what kind of margins should we build going ahead? What has impacted the margins during this quarter for Pantaloons specifically? Hi, Gaurav, this is Sangeeta. Gaurav, our margin in Q4 is 8.9%. That's largely on account of the fact that we saw a little bit of sluggishness in our top line. If you look at the full year picture, in fact, FY22, our margin was 14.4% versus that we've ended the year at 15.6%. Therefore, our margin versus the full year has improved. I think it's just the sluggishness of Q4, which has resulted in a slightly lower margin in Q4. Sure. 1 follow-up here. You know, even if we see the annual sales per square feet, I mean, that comes to around INR 7,700 odd. You know, I mean, prior to, say, 60, in 1630 we were at around INR 8,800 per square feet. I mean, the sales per square feet, you know, hasn't picked up over the last, I would say 5, 6 years, even pre-COVID levels. How are we looking to drive that sales per square feet? In that event, do you think that, you know, increasing inflationary cost is impacting the margins on the other end? Right. I think our SSPDs we've seen versus last year we have absolutely improved. We've been constantly adding stores, as you know, to our network. This time if you see, we've been presenting to you every quarter, a lot of our store addition has been back-ended and therefore you don't see that kind of a shift. We are, however, very confident of the strategy that we've been on track on over the last few years in terms of improving our product investments that we've made in our stores to improve the in-store experience. The fact that we've invested in our operations, in IT, et cetera. All of that has given us initial improvements in the productivity. I think, again, this year, with the little bit of slowdown that we saw in quarter four and the fact that our stores are back-end ended, the numbers may not be stacking up, but we stay confident of the potential of Pantaloons and equally of our strategy. As the demand comes back, we definitely see that number lifting. Okay. Just one thing. You know, we had guided a bit of 70 stores in Pantaloons. I think we ended around the 54. For the next year, do we maintain the guidance of 70+ stores or it will be more moderated around that 54-55 range? We had given a guidance of 60-70 stores. We actually opened 63 stores, and we've shut about nine stores, which is a standard practice every year that you look at stores that are not profitable. I think going forward this year too, we are looking at opening 40-50 stores. That's net, the net stores or gross the 40-50 stores? Yes, net. Net. Just one last bit on the TMRW subsidiary. I mean, you know, if you look at the exit basis, the run rate for the TMRW subsidiary sales, it's around, you know, INR 220 odd crores that we've get. If I remember for FY 2023, the total sales for all the subsidiaries, 22 was around INR 314 odd crores. At present there is a losses of around INR 60-65 odd crores also that we incurred. Anything on why the sales, A, has been down versus the last year levels on an exit basis and B, the losses? You're asking about TMRW subsidiaries numbers? Yeah, yeah. TMRW subsidiaries total revenue numbers on an exit basis. If you see it's around INR 54 crores for the quarter, around INR 220 odd crores for the year. Even if you adjust for the seasonality, I think it will still be lower versus the FY22 levels. If you, TMRW business started this year. Even those brands that we have invested in, the first seven set of brands, they have come over a time period starting from October to as late as February month. What you're seeing is reflection of a very small period for some of the brands, full quarters for some of the brands. Therefore, this is not truly reflective of where the run rate of this business is. It's much higher than what is projected in the quarterly revenue guide. If you can, sir, help us out, like what will be the possible exit run rate for the same? Also on the losses part, if you can help us out, you know, can we expect more losses going ahead as we invest into these businesses and how these losses will be funded? It's very early stage for me to give a actual number of losses and projection. Just to give you a sense of the run rate in revenue, these brands have been, as I said, acquired. Many of the brands have just had 1.5, 2 months. Some brands have had 4 months. To that extent, therefore, this revenue run rate is significantly higher than where we are. Far as losses are concerned, yeah, we recognize that this business will have losses for first couple of years. We'd also mentioned and repeated it several times over last one year, that we have committed a certain fixed amount of equity to this business, which is INR 500 crore. A large part of it which we have already committed, invested about INR 350 odd crore has got invested in FY23. The remaining part will get invested over next year and further equity to both fund acquisitions, operations of the business, as well as losses will be raised through external sources. Okay, sir. Thank you so much. Thank you. We have our next question from the line of Tejas Shah from Spark Capital. Please go ahead. Hi. Good evening. Thanks for the opportunity. A few questions from my end. First, Vishak, you spoke about we moving our terms of trade from buy and sell to consignment. Just wanted to understand what led us to change these terms of trade, and how should I account for this change in my model in terms of accounting purpose? Okay. Tejas, we had exclusive stores which were on a buy and sell with the franchisee, and we had exclusive stores which were on consignment. You know, we found this over a period of years, the consignment model allows you to do a certain amount of, you know, we have a special software for replenishment, which allows it to function very effectively when it's on consignment. We took the effort of converting all the stores that we had to consignment in Louis Philippe, Van Heusen and Allen Solly. That has already, you know, created a very smooth transition in terms of inventory management, assortment planning. It was a one-off thing. The exercise has been completed now, except for some stores of Peter England, which are still on the old model of buy and sell. All other stores have already been converted. It just improves the quality of assortment planning, the amount of analytics and information that you have on each store, the way you replenish on a daily basis for whatever sold the previous day in the store, all of that becomes of a superior nature with this model. Yeah. How will it impact the working capital, if at all? Yeah. In some way it is, working capital neutral because the inventory investment is offset by a deposit from the partner, from the franchisee. Okay. Got it. Got it. Second question pertains to Pantaloons. A lot of experiment in terms of model we are seeing in large format stores across brands now in terms of whether COCO, FOFO, and FOCO also in some cases. Just wanted to understand where are we in terms of leveraging the franchise-led expansion strategy for Pantaloons, and if you can share some thoughts on how you are seeing the space also evolving, because we are seeing a lot of changes happening in the whole landscape itself in terms of the model, how large format stores have been operated in the last 2, 3 years. Tejas, I'll just give a quick response, if Sunita has something to add, she'll add to it. Essentially over the last few years, if you see, we have maintained a franchisee mix of between 18, 15, 18, 20, 22% kind of range year-on-year over the last 3, 4 years. We continue to believe that's the balance that we will have. This is franchisees which have not come in 1 year, there is no drastic shift in our model as far as we are concerned. We started moving to franchisees, started testing them in small stores in smaller markets, and slowly over a period of time have grown it. We think this number will probably be range-bound where we were it is, and as we expand the network, a similar amount will stay in franchisee. We don't see in our model a dramatic shift in this model. Okay. I have a follow-up there. When I see our success in Madura piece in terms of engaging with franchise and how much working capital efficient and scalable it can be, and now looking at other large format stores also kind of leveraging that part very efficiently, I was just wondering why we are kind of restricting it to 20%, 22% only. I can understand the better brand control you have always spoken about, but now seeing that others are doing it, managing both polarity of objectives very efficiently, why are we not actually leveraging that part? Tejas, You know, I'm taking away financial accounting jugglery of having financial investment being made by somebody else and counting it as franchisee model. We have found that in a multi-category, large format, multiple product consumer segment, the kind of retail experience that's required is not necessarily easily replicable by franchisees. We are testing it when we continue to sort of improve that, which is why I'm saying the number won't come down. We don't believe a retailer should sort of completely let go of the primary business of retailing. As our confidence in quality of franchising and experience, consumer experience, merchandising, et cetera, improves over a period of time, these numbers may increase. We are circumspect from our experience right now, large format retailing is more complex for a franchisee to manage in terms of merchandising, consumer experience, et cetera. There's always a case of financially engineering it with somebody else investing in security deposit, et cetera. We believe at this point of time it's important to take control of operations, manage consumer experience, give us greater flexibility in moving merchandise and replenishment, et cetera. You yourself, as you pointed out, it's not that we don't know how to do franchising. We have India's largest franchising network on the Madura side of the business. Many of them have experimented and many others have tried Pantaloons franchising. I think it's little bit more complex and operationally, as well as, the level of control that we want to exercise, which is why we are more careful. At any stage, if we feel more comfortable with the idea of actually it being seamless for consumer, we'll probably do it faster. Right now where we are is where we are most comfortable. Sure. Last one, if I may. When I look at our portfolio on ethnic side now, it looks very wide and very deep also. Just wanted to understand, just from the operating leverage perspective, how should we think about it, whether these brands will interact with each other on the supply chain side or on the retail expansion side to bring out the operating leverage part of having such a diverse portfolio? You believe that they will individually compete against each other in some segments and then let the efficiency of each brand speak out in terms of operating leverage? I think two parts. You know that these brands are very diverse. The portfolio is very, very diverse. To some extent, we want to make sure that we do justice to individual brands. At the same time, we are building management structures which allow both synergy of operations in some areas where the brand is not directly involved, like front-end retail expansion, as well as some area of common, back-end sourcing knowledge, et cetera. We are right now not integrating any operations of the business. Because we believe it's best run within each individual brand. Key functional areas of sourcing in some areas of retail business development, front end is where we are looking at synergy through common leadership management in some of these spaces. We need to initially make sure these brands, remain distinctive and true to themselves to get to a certain size before the impact of synergy and some of those benefits start to play out more. Sure. Very clear. Thanks a lot. Thank you. A reminder to participants to press star and one to ask a question. We have our next question from the line of Aliasger Shakir from Motilal Oswal. Please go ahead. Yeah, thanks for the opportunity. A few questions. Now, first, I just wanted to get a sense on the revenue trends in this quarter as well as, you know, in the coming period. If I see, Lifestyle and Pantaloons, you've done mid-teens growth, maybe if I, you know, do some adjustments of Omicron benefit, the base and maybe price increase benefit, probably would have seen, you know, flattish to maybe, I don't know if at all, you know, declining, volumes. You know, in some of the other companies, retailers also, we are seeing similar trends. You know, since we are catering to multiple categories, both at the premium end as well as at the value end, just wanted to get a sense from you in terms of, you know, the current quarter as well as the outlook. How is the trend? Because price increase that we may have taken in the previous quarters from, because passing on the raw material, you know, price would have, you know, more or less got adjusted. How do you see the revenue outlook, you know, in that context and across both premium as well as value category? Are we seeing any divergent trends? Ali, let me first address the reference to price increase. The price increase in apparel industry, that's not just true for us, I think for all the players in the market, is almost 12 to 15 months back. The real price increase from the cost side pressure and textile value chain came 12 to 15 months back, almost 3 seasons back. Price increases were made then. If anything, we are on the other side of the argument where there is deflationary or at least some readjustment of costs itself, textile. Pricing is not really a factor right now. Having said that, I think you have a right observation. At mid-teen growth in a quarter where the base includes an Omicron effect reflects softness of sales. Our overall growth rate this quarter has got affected significantly across our segments, that's really the point that you have made. It has also resulted in higher inventory, higher debt, apart from some of the other external reasons that I mentioned about the debt. Effectively, this is probably the first full quarter where the impact of slowdown is fully visible across all segments of our business. If you recall our earlier conversations in quarter two and quarter one, I had referred to the lower end of the market being more affected by it. It appears that it is a more widespread, sort of, slowdown in this period. Some of the actions are looking slightly excessive or, just as in Lifestyle Brands, Vishal talked about a big reversal we have taken for conversion of stores. Overall, there is a softness in the market that is clear compared to the pre-festive period. In terms of our outlook, hard to put a number, but our sense is perhaps it's closer to the festive period when we'll start seeing the kind of buoyancy that we had seen in the pre-festive period last year. Understood. You made a comment on deflationary trends. Do you think that any softness in raw material prices will be passed on, which could help you know, revive demand? Well done. Done. This is what I'm saying, your references are behind because the reduction in raw material prices is also a 6-month back story, all of it. As you know, we started to get benefit of it got passed on to some extent wherever brands felt it was useful and necessary. I don't think pricing alone is a factor. I think there are larger demand pressures across not just apparel industry, across discretionary pocket, inflation, overall slowdown in the economy. There are many other macro factors beyond the textile price value equation. Got it. This is very useful. Second question is on Pantaloons. You know, we have reduced our guidance from about 60-70 stores last year to now 40-50 stores. You know, how do I read this? Is this, you know, maybe we are now closer to 450 stores? Probably do you think that, you know, with a 18,000-20,000 sq ft size store, we have reached a fair amount of, you know, base effect and therefore to that extent, you know, incremental store is, I mean, it should kind of be lower? I mean, is there anything else that I should read into it? I mean, I was frankly expecting a much faster or larger, you know, run rate of store addition. I think there's absolutely no change in either ambition for the business, nor our sense of opportunity. I think Pantaloons continues to have a very large runway for it over a long period of time. We continue to believe that we are in early stage as a market to organize players' growth. Pantaloons is well positioned with a familiar brand, and it has tremendous opportunities in existing and new markets. I think the moderation is coming primarily on two accounts. One is we have added something like 30-40 stores just in the last 4, 5 months, and that's a very large addition. Close to 25 stores have got added just last quarter. We are doing it at times when there is a pressure on discretionary consumption, particularly for a sustained period of time at the value end of the market, where smaller towns, if you look at, you know, the growth rates or performance of Pantaloons stores in metro or 51 and 52 or 2, we can clearly see that the pressure is much larger as we go away from larger cities. To that extent, we are temporarily moderating the rate of new openings, at least in the smaller towns. That's why it's resulting into slightly smaller numbers than what we ended up with last year. Got it. The pace of acceleration will be a function of recovery in the market? Yes. Yes. We could come back maybe in the second half if things change with higher number. At this point in time, we want to sort of acknowledge the reality that that is facing the business for last couple of quarters and the softness that we continue to experience, particularly in smaller towns. That's where, you know, that's the part of expansion that we want to slow down a little bit. Thank you so much. Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. We have our next question from the line of Sameer Gupta from India Infoline. Please go ahead. Hi, sir. Good evening, and thanks for taking my question. Just wanted some clarity on the net debt number. I understand you have mentioned that it is unusually high inventory which is leading to this bloating of net debt. We've traditionally always kind of followed a model where we have a high amount of creditors which match the inventory even in case that it goes up. Have we changed this practice? Another question here is that with already an INR 1,400 crore level, I mean, given that margins are under pressure, demand is sluggish, you mentioned that, we also see net debt levels to increase in FY 24. Just wanted to understand, are we ready for this kind of an increase in debt from our balance sheet hygiene perspective, or can we not cap our losses in our new investments for the time being? You're asking two questions. One is really about this year's closing net debt situation, second is about strategy for next year. Let me answer each separately. See, what happens are when last four months as the sales started to come below our expected numbers, it resulted in higher inventory resulting, which effectively meant we curtailed some of the purchases for fresh inventory. We still had to pay, which we should, for the inventory that we would have purchased during September, October, November. To that extent, therefore, the payables, because it follows in a, in about 120-140 days, payables came down, because of loss of sales, inventory didn't come down. Therefore, what we are experiencing right now at a point of time of 31st March is a position where inventory hasn't adequately reduced, but payables have reduced. This will offset in the coming quarters, as we move forward because we have purchased less inventory during this period, and therefore to that extent, inventory will come down as we go forward and we have less payables left to be made, and to that extent, net working capital will come down. As we have explained, we have consistently followed the larger principle that your front-end inventory should be adequately and reasonably matched with the credit period on the back end. That is a consistent philosophy. We've followed it for many years, and it has kept our net working capital in the ratio that it exists today. In temporary periods, at moments of time, inventory will be higher, payables will be low, payables will be higher because we are not buying and selling at the same level. There is an increase in purchase before the end of the beginning of the season, which falls due later, three, four months later. The sales also have similar peaks and troughs. Therefore, at all points of time, the picture at a point of time may look different. Overall, as you average it over a period of time, the net working capital cycle that we have established over the last four or four, five years stays good. Don't worry about it. It's a temporary and transient phase. This balance will get corrected very soon. On next year's number, I think, your suggestion is there a way we could expand less either on CapEx or on the losses side? As I've just mentioned, we are moderating our businesses in line with the reality, in response to the previous question on Pantaloons expansion. We look at it carefully every time and right through the close of the year. I don't see a major shift in strategy because I think many of these strategies are built to succeed over a long period of time. Many new businesses we have gone into are very early phase. In some sense, our company is in a transformation phase for last couple of years, and I think we'll have to complete that journey over the next 2, 3 years. You won't shift... You won't see a significant or dramatic shift in strategy, but minor adjustment and calibration that we'll have to do, we'll keep doing that. Got it, sir. That's all from me. Thanks. Thank you. We have our next question from the line of Devanshu Bansal from Emkay Global Financial Services. Please go ahead. Yes, sir. Hi, thanks for the opportunity. Sir, as you have been indicating that our inventory levels have been slightly on a higher side, just wanted to check, do you expect our margins getting impacted in FY 2024, pertaining to this liquidation of inventory? No, not at all. This is a transitory phase in which one period we are consistently adjusting our inventory purchase with future sales estimates. In a long lead time industry like ours, it takes few months for it to show up. There is no risk or expectation of any loss of inventory on this account. To the extent that it exists in fashion industry, I think it's already there in the base and is a more continuous process. Got it. Since, previously we had indicated about, an INR 1 billion loss in ethnic on an annual basis, INR 1 billion in D2C and about half a billion in Reebok. Are we still maintaining similar outlook for 2024 as well? Let me start first by Reebok. I don't think Reebok will have a loss. We are beginning to see the first signs of success in this. Reebok has already sufficiently given us confidence to believe that it's a business which will be a profitable business right from year one. As far as D2C is concerned, I think we will continue to invest. I won't give a number at this point of time because we're still trying to get a sense of individual brands as well as overall portfolio that we'll build. No shift in difference from where we probably are today. At this point of time, I don't see a change. On the ethnic portfolio, our primary losses are coming from our investment, deep investments in Tasva. I think that's something that we'll have to continue for some more time before, you know, the brand gets the early footing and a basic level of scale for us to ramp down. I think that will remain slightly at a higher levels, perhaps for a year, 18 months more. Got it. Our CapEx has been about INR 5 billion in standalone operations and about INR 7 billion for consolidated operations in FY 2023. If you could provide a ballpark breakout for this, as in which segments this money has gone. Not very different from... Sir, you're asking details of where that has gone? Yeah. That's mostly in retail stores. I mean, there is a shop-in-shop CapEx that goes, but large part of our CapEx goes into building new stores, renovations or shop-in-shops, and that's across the businesses. Sir, standalone, I guess, includes, Lifestyle Brands is majorly on a franchising basis. Probably about 60-odd stores that we have opened in Pantaloons and maybe the Innerwear GBOs that we may be opening, right? Is this a fair understanding? It is reasonably fair, but not fully correct to say Lifestyle Brands don't open. As one of the things that we are doing in Lifestyle Brands, and as you have seen the sale, scale and size of our brands, two of our Lifestyle Brands have crossed INR 2,000 crore, and we see potential for next level of growth for these brands. We are opening large format stores in many of our brands, and therefore, our share of capital, which is own capital in large format stores in Lifestyle Brands, is increasing slightly, at least for a short period, till there is enough franchise confidence that gets built in these large format stores. That's another reason why some of our capital expenditure is higher, even in the standalone business. Okay. All the new businesses that we are building, whether Jaypore, Tasva at this point, innerwear to a large extent at this point, apart from Pantaloons, are largely own CapEx businesses. Last one from my side, sir. These Style Up stores, are these included in the Pantaloons number? The Pantaloons number is only Pantaloons. It does not include Style Up? It doesn't include Style Up as well. Okay. What would be these year-end store counts for Style Up as of now? Mr. Bansal, sorry to interrupt. Can we keep these housekeeping questions? Sure. you know, discuss it with the IRT. Sure. Sure. Thank you. We have our next question from the line of Varun Singh from ICICI Securities. Please go ahead. Thanks for the opportunity. Sir, just wanted to understand that the total number of stores that we have added in FY 2024 in and in Q4 in Pantaloons, like, what percentage would that be into Tier 1, 2, 3 cities? Rough estimate if you can help us understand. We've added about 25 stores in this quarter as, you know, for, just for quarter four. We've added net about 54 stores, as we told you. Total of 63. With about 9 closures is what we've opened. Our tier one of these 63 stores, about 40 stores are in metro and tier one, split equally, and the rest of the stores are in tier two, tier three. Okay. Metro would be about 20 stores. Metro would be about? 20 odd stores. 20 stores or 40 stores? 20. Metro and tier one, as I said, is about 40 stores. Metros includes. Okay. the metro and some capital towns. About the top 10, 12 cities are about 20 stores are in those cities. Understood. As we highlighted earlier, that there is some amount of stress in tier two, three cities. If you can help us understand that, how has been the performance, I mean objective assessment, in the metro and tier one cities, maybe like performance or anything of that sort? As we mentioned earlier, I think Ashish mentioned 2 x, and I said it at the beginning as well, that we started seeing a little bit of a slowdown post-festive starting from November, December. Our growth in metros are relatively better versus the tier one, tier two, tier three towns. That's again corroborated well with all the reports that you read, given the inflationary pressures. Growth across sectors and this sector also has got impacted more severely in tier one, tier two and tier three. However, as we said before that, it's too early to comment on the new stores because most of our stores are back-ended. We do believe that all these markets, the tier one, tier two, tier three markets, they are still under-penetrated markets. There is potential, but this last five, six months of slowdown has impacted the performance, of, I think most organizations. Okay. madam, overall at portfolio level, what would be the total number of stores in metro and tier one? Our about 50 odd% of our stores, 55-56% of the 430 stores that we have are in metro and tier one. Understood. Understood, madam. Just last question on Reebok. Just wanted to understand that what is the distribution scaleup program out here? Okay. First things first, when we took over the business, we moved about 110 stores. By the end of September, we should have added another 40 stores to this. We should have a cumulative tally of about 150 stores. We're also significantly strengthening the wholesale network. We've already launched in about 30 doors of Shoppers Stop. Many other department store doors will follow. Likewise in multi-brand stores. It's an effort which is on full pelt with huge momentum to be able to scale up the business to be available in the kind of outlets that the brand deserves to be in. Got it. Got it, sir. That's it, from my side. Thank you very much. Wish you all the best. Thank you. Thank you. We have our next question from the line of Ankit Kedia from PhillipCapital. Please go ahead. My first question is on Pantaloons. Is it fair to assume Pantaloons on 3-year basis, EBITDA, we would have made a loss for the first time in this business, ex COVID quarters? Yeah, I think, we don't want to, you know, get into different accounting at given, but yeah, the overall this quarter performance, not just for Pantaloons, for as you can make out overall at the company level itself is much softer. Sure. From a customer perspective, we have started franchisee expansion. You know, we always had that initially we will have a CoCo expansion and then we can have a franchisee expansion. For FY 2024 expansion, how will be the mix between franchisee and CoCo? I guess we'll have 1 more year at least of majorly company-owned expansion. During this course of this year we'll perfect the model, figure out the retail operations, merchandising, and other aspects of the business before we start handing over to franchising. One of the things that you have to consider, and this also goes back to the earlier question, that for a company which runs 2,500 stores through franchisees and close to 700 franchisees, making franchisees successful is one of the most important things for us. That's what has fed us into 20-25 years of relationship with franchisees. We are not in a hurry to hand over our businesses to franchisees until the model is Well proven. It doesn't mean that we haven't tried even in Tasva. Couple of stores out of the first 50 stores that we have. Don't have the exact number, but about 6, 7 stores already are franchisee stores. We'll remain watchful that sure we'll not let it grow too rapidly until we have established the business fully. Sure. The last question is Galeries Lafayette. you know, on the first store in Bombay is expected to open in FY 2024. What will be the CapEx for this, and how much losses should we build in for first 2 years for this store? See, I don't think at this point of time I want to, you know, give you a number on that because we are still figuring out the model around. I expect in a good case scenario, we should not be losing money in that business at least in the second year, first year. There are sometimes pre-operative and initial investments. I don't expect to lose money in that business even from year two onwards. Is it safe to build in around INR 100 plus crore CapEx for that and FY 2024 open? I think it'll be split between 2024 and may run into little bit of 2025. Sure. That's great. Sir, one more question if I can squeeze it in. You know, while offline we are seeing some pressure on demand, online, are you seeing any channel pressure out there as well emerge or that's pretty resilient now? I think the demand patterns is more organic. It's channel independent, channel agnostic and similar across channels, especially for, you know, the portfolio of brands that we run, which is widespread, covers multiple consumer segments. All of our brands have online and offline presence. The outlook on the business and consumer behavior is no different online and offline. It's a macro trend which is actually leading to softening of demand. It's no different in any channel. Good. Thank you, sir, and all the best. Yeah. Thank you. We have our next question from the line of Shreyans Jain from Swan Investments. Please go ahead. Hello, can you hear me? Yep. my first question is, just wanted to understand the CapEx number for FY 24 and 25, what would that be? We haven't given out an indication, but, as you saw, you've seen the overall, CapEx for FY 23. 24 and 25 will perhaps, at least 24 would be roughly in the similar range. Okay. Do we envisage any further investments in our newer businesses, be it Ethnic, TMRW or the other businesses? I have indicated TMRW investments. We have said that repeatedly, and that's what we will stay with. We have not made the full investment as yet. As far as ethnic businesses are concerned, yes, Tasva will take more investments. A smaller bit of investment may be required for smaller ethnic businesses, which is Jaypore and some of the designer business, but those won't be large. I think most of the meaningfully large investment will stay with Tasva. Little bit in Jaypore. Why I'm asking is, sir, we are about INR 1,400 odd crores of net debt. Maybe you spoke about the expansion in stores for Pantaloons as well as lifestyle businesses and you're seeing Ethnic also. Just wanted to understand, is this INR 1,400 odd crores the peak, or how should we look at this? Just wanted to understand on that front. That's why the question. I think, if you refer to my response on the Pantaloons question, the calibration of network expansion is more driven by demand side factors and not necessarily from the balance sheet alone. As we said, we'll have to remain watchful, but we won't change our strategy dramatically at the current level. We feel we have the strength in the business to be able to generate cash to deal with situations of higher debt if it comes to that. We have indicated a higher level of debt towards the end of next year, primarily because we believe that we need to continue and there's an opportunity to continue on multiple platforms that we have built during the course of last two or three years. To do justice to them, to the opportunity in front of us, we will continue to invest in this, the businesses as they are. We'll of course be watchful looking at the market realities as we actually invest on ground. Okay. Just my last question on the inventory. Now we've seen about, INR 1,000 odd crores of increase in the inventory. What kind of reductions can we see, in this year or maybe, this quarter? If you can just help us understand that. Please remember this 1,000 crore inventory has come on an increase of 4,000 crores of sales. To that extent, it's increase which is matched to a large extent by the sales increase that you see. Sales has also grown by 50%, inventory has grown slightly lower than that. Yeah, it's a fair point that you made. To the extent of about 300-400 crores is the level of inventory which we believe is higher than ideal than what we should have had at this point of time. That's equally reflective in what we think was the opportunity for us in last two quarters as additional sales that we would have planned for. As we go down, as the sales situation softens, if it remains at that level, that's the opportunity that have... that we have, about INR 300 odd crores of inventory. Okay, sir. All right. That helps. Thank you so much. Thank you. Ladies and gentlemen, that was the last question for today. On behalf of the management, we thank all participants for joining us. In case of any further queries, you may please get in touch with Mr. Amit Dwivedi. You may now disconnect your lines. Thank you.