Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit Arora. Thank you, and over to you, sir. Thanks, Mia. Hello, welcome everyone, and thank you for joining us for the Arvind Fashions Limited earnings conference call for the first quarter ended June 30, 2024. I'm joined here today by Shailesh Chaturvedi, our Managing Director and CEO, and Girdhar Chitlangia, our Chief Financial Officer. Please note that results, press release, and earnings presentation had been mailed across to you yesterday, and these are also now available on our website, www.arvindfashions.com. I hope you had the opportunity to browse through the highlights of the performance. We will start with Shailesh covering the business highlights and financial performance, and post that, at the end of the management discussion, we will have a Q&A session. Before we start, I would like to remind you that some of the statements made or discussed on this call today may be forward-looking in nature and must be viewed in conjunction with risks and uncertainties we face. A detailed statement of these risks is available in this quarter's earnings presentation and our annual report filed on our website. The company does not undertake to update these forward-looking statements publicly. With that said, I will now turn the call over to Shailesh to share his views, and over to you, Shailesh. Thanks, Ankit. Good afternoon, everyone. There's overall good performance at ASL in Quarter 1, FY25, with double-digit revenue growth, 1.5% like-for-like growth, 80 basis points increase in GP, which has flowed into EBITDA, and EBITDA has grown by 100 basis points, with value growth of nearly 20% in EBITDA. In all, very satisfying results under tough market conditions. NSV in Q1 is INR 955 crore, and EBITDA is INR 123 crore. Markets have been subdued for a while, and this quarter saw the impact of elections, peak heat wave, and fewer wedding dates, which impacted traffic across offline and online channels. But we are pleased that Quarter 1 results have been in line with our guidance, with growth going up from growth levels of Q4, as we had indicated, and there is a 100 basis point increase in EBITDA. We have seen growth across brands and in every channel. There is growth in volume as well as in price realization. A key highlight was control on discounting, where we delayed the EOSS to end of June, while industry had seen discounting by mid-June. You may recall that we had adjusted our primary billing of spring-summer goods for wholesale channels, with billing being lower to MBO and department store in Quarter 4 earlier, and now we supplied goods at the right time closer to the summer season in Q1, which led to healthy growth of more than 15% in wholesale channels in this quarter. After a few quarters of restocking in online channels, Quarter 1 saw healthy growth in online business, with both revenue and channel profitability seeing healthy uptake. There's handsome growth in online direct-to-consumer business that has grown more than 60% year-on-year and delivered higher channel profitability as well. We are making wholehearted investment behind online business with the right hygiene to gain from its traction. GP has moved up to 55.2%, a gain of 80 basis points, with dual benefit of better price realization as well as more efficient product cost. With good sell-throughs and tight control on discounting, our price realization went up. It was also aided by efforts on minimization, where realization and sell-throughs are higher. This, coupled with continued sourcing efficiency on product cost, we gained 80 basis points in GP. Most of this GP gain has flown into EBITDA, which saw nearly 20% growth to INR 123 crore versus last year's value of INR 103 crore. On working capital front, Quarter 1 saw stable GWC days. We were able to hold on to sell-throughs in SS24 amidst very difficult market conditions and ensured that there was no slippage in inventory. With tight control on inventory, business has grown by 10% with flat inventory value overall and delivering stock turns of four with lowering of inventory base by three days. With our asset-life approach, Growth C has also gone up. At brand level, all three super strong brands, including Tommy Hilfiger, U.S. Polo Assn., and CK, have delivered fantastic results once again, both in terms of top line and bottom line. I can clearly say that for all our brands, product overall in the last few years is paying dividends in difficult market conditions. Product lines are looking fresher, with higher quality and revealing good sell-throughs. Tight control on inventory is ensuring more freshness at counters and helping deliver better sell-throughs, good light-to-light growth, and controlled discounting. The highlight of Arrow Business in this quarter was a mega marketing event with Hrithik Roshan in Mumbai in association with GQ India. This event promoted the super premium 1851 line, and we saw a really big impact of the event content on social media, with some posts reaching more than 10 million views. The efforts to re-energize Flying Machine continue with new cool merchandise of Spring Summer 2024, which is getting encouraging response from channels and consumers, clearly seen in healthy growth of FM in online channels in Quarter 1. The key priority for FY25 is to focus on revenue growth. Our brands remain top of consideration sets, are ready and prepared, and they benefit whenever marketing moves. They also benefit from the industry trend of casualization, as most of our brands have leadership in casual segments. We continue to put energy behind each of our key growth drivers, including retail expansion, like-for-like store growth, premiumization, build-up of online direct B2C business, and growth of adjacent categories. Let me touch upon a few growth drivers here, starting with retail network expansion. We've added more than 40,000 sq ft net of retail space in Quarter 1, with opening of nearly 30 high-quality stores. We remain committed to growing net retail space by around 15%. We are hopeful of further acceleration of build-up in square footage in times ahead. Another exciting aspect of store expansion has been the opening of large flagship stores, especially in U.S. Polo Assn. brands. We want to focus on a few selected landmark locations so that we can showcase the entire range of fast-developing adjacent categories in these stores, including footwear, women's wear, kids' wear, and innerwear. We opened such flagship stores of U.S. Polo Assn. in Jayanagar, Bangalore, Indiranagar, Bangalore, Banjara Hills, Hyderabad, M.G. Road, Goa, and C Road, Jodhpur. We are extremely excited by the initial traction to the stores. We are tracking good numbers and are achieving targets. We are also expanding square foot through innovative formats like Stride for footwear and accessories and Club A for full-price premium retailing of our brands. Along with Club A store in Bengaluru that we opened last year, we have opened two new Club As, one in Surat and another one at Lucknow Airport. Growth of adjacent category also remains a key growth priority for AFL. The share of adjacent category footwear, running flex, and innerwear has crossed 20% revenue share of AFL and has grown in the last one year at CAGR. In U.S. Polo Assn., the share of adjacent category has been even higher, at close to 30%, because of higher investment that market brands on adjacent categories. While footwear, innerwear, and kidswear have good scale, I'm happy to confirm that the initial response to the new women's wear line in U.S. Polo Assn. is also encouraging, and the business has recorded high growth on a small basis. A lot of growth is linked to external market conditions and economic realities, but we remain hopeful that the growth in FY25 will be stronger and better than the growth we saw in previous financial years. We hope for momentum to continue in months ahead, with expectation of slightly better market conditions. Thank you. Thanks, Shailesh. Mia, we can open it up now for question and answer session. 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 the touchstone 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. The first question is from the line of Priyank Chheda from Vallum Capital. Please go ahead. Yeah, hi team. Congratulations for recent performance in a tough time. My question is on what explains the subdued SSG, which is a retail like-to-like growth, and how the format expansions continue at a healthy pace. What explains on the 1.5% like-to-like retail sales growth? That's my first question. You know, as far as like-for-like growth is concerned, while our normal expectation is above 5%, but in the current market condition, it would be a very satisfying number because we have seen in the industry the like-for-like are negative numbers. While it could be higher, but because of the way the market conditions are, elections are negative, there was a peak heat in May, which probably impacted walk-ins. And also, we delayed the EOSS because we lost some sort of revenue, or if we had gone with the industry, we delayed the EOSS to last to protect our margin and sell-through. So overall, while markets are tough, I would say we have delivered a good like-for-like growth, and many reasons behind that because we renovated stores. There's been good response to our product stories. Sell-throughs have been good, and minimization also is helping. So I would say I would answer the question that we have delivered very satisfying like-for-like in the current market conditions. Of course, it could be better as the market improves and the walk-ins improve, but in the current environment, I think it's a satisfying like-for-like growth of 1.5%. Okay, okay, perfect. So now, again, circling back to the same strategy where we are delaying our discounting for the want of controlled discounting while we are delaying in the participation in EOSS. Now, currently, our gross margins are at 55%. This has never been seen in the history of Arvind Fashions. But then what is actually leading to this is the subdued growth or the subdued sales for a customer who is used to have a discount in the history of their Arvind Fashions brand. So now we have a gain on the gross margin, but then again, we are struggling back for the like-for-like sales. So how do we solve these two problems at the same time? See, I would say that early discounting, early EOSS is not a solution to anything, frankly. It's a main problem in our industry. Now, what we have done over the last few years is to upgrade the product, upgrade the storytelling, upgrade the retail experience. So today, we are giving a very superior experience and significantly better experience than what we were delivering even two, three years. We are hoping that the consumer will fall in love with these efforts, and they will wait for us to buy. And our portfolios are very, very strong brands, and I'm sure they will remain top brands in their consideration, and they will wait for us to start with the right time. But if we start giving high discounting, then consumers will not buy full price. And that's really the core issue in our industry, and we are being very, very diligent on not sort of selling only at discount, and we want to grow profitably. That has been our mantra, that we grow profitably. And that's why our GP has gone up by 80 basis points, and our realization has become better. So market reality is that there will be some brands which will panic and discount early. But the good brands will hopefully rise up. We are ensuring that the good brands are able to take some of the competition in, but we are in line with the good brands. So when the market is, all the good brands also go on EOSS at the right time, we also go on EOSS at that time. But we don't want to panic and go early. Perfect. I just wanted to know your thought process beyond on the point of everyone seems to be racing downward in terms of the price points. These are market trends, or these are value sessions as a whole of a trending which is emerging at a large size. So consumer, of course, is calling for a lot of choices at the lower price point. So is that also kind of impacting the brand positioning where we are right now? Because it seems to be very not able to consume where the consumer price point where we are, while India is going at a premium additional trend, our retail SSGs are kind of subdued. So your thought process on the price points which are getting lower and the value session retail giving a tough competition to other kinds of brands? See, we are quite competitively priced for the quality we give and the competitive set that we operate in. And our strategy last three years has been to focus on these five big brands, which are so big that consumer will make favorable purchase decisions in favor of these. So we are very watchful of the value that we offer. We must give superior products in a superior shopping environment online and offline, and hopefully charge the right price. We are also looking at all the sourcing efficiency wherever possible. So that's why if you look at this season, all our channels have grown, even in this market condition, even if we pressure what you are mentioning. But I believe our brands are rightly priced, and that's why we are able to hold on to our sell-throughs and able to increase our GPN. Perfect. I'll say a few. So if you can throw more light on what has been the profitability path over here, we are on a journey for mid-single digit margins by FY25. That's one. And on overall EBITDA margins, while YOY looks to be higher, but what we have seen is because of the tough market conditions, now last four quarters, we are sliding down on the path of the EBITDA margins as the reported numbers for last four quarters versus the 500 basis points gain in the gross margins of last three to four quarters. So your judgment on the Arrow profitability and overall EBITDA margins going ahead from here? So in the last couple of quarters, I've been explaining the strategy on Arrow, and frankly, I will reiterate the same again that we made a lot of changes in Arrow. We created new product lines to participate in casualization. We created new line Arrow New York for the Gen Z customers. And we benefited a couple of years back. We see almost INR 100 crore delta in EBITDA improvement, and it became a profitable brand at a low single-digit EBITDA. Now, the last couple of quarters have been difficult, and especially for the wedding brand and the formal brand. So what I said that Arrow remains in a low single-digit trend, and our first task is to take it to mid-single-digit brand. And in the current market condition, and we believe the wedding dates are in the second half, that the performance will improve. We are happy that it is where it is, not losing money, gaining scale, is gaining new product lines. We launched a new retail addition of Arrow. So we have done a lot of hard work for Arrow, and we are now waiting for the market to improve a little bit. Now, in terms of the profitability, the medium term to go from low single digit to mid-single digit, it will need a little more scale, and that scale will come when the markets are a little better, the like-for-like growth improves in our stores. So we are doing all the things right. Hopefully, market improves. Currently, the wedding dates are a little low. The market conditions have been a little muted. So that impacts in the short term, but we are very hopeful that a strong brand like Arrow, with all the good gains that we have done in the last two to three years, will gain further, and our journey towards mid-single digit EBITDA will happen. We remain confident and just hoping for markets to improve a little bit more. Good to see your team. All the best for the future. Thank you. Next question is from the line of Dheeraj Mistry from Antique. Please go ahead. Yeah, good afternoon, sir. Congrats on a good set of numbers. My question is on online channels where you have grown by 60%. Can we say that the inventory correction which you have taken over the last few quarters, now it's been done, and we can expect normalized growth in online channels going ahead? We're very pleased with where we are in online, and we have made a lot of efforts to pivot the business from wholesale business to our own direct approach where we manage the whole experience from inventory to the pricing to the cataloging. That is really now started showing fruits and bearing fruits, and that's the reason why the numbers have gone up. There is a general traction in the channel. Our brands are very, very strong. There is a good organic pickup happening there for our brands. We are very hopeful that the gains that we've seen will stabilize and will hopefully go further, and we'll continue to invest behind the online direct consumer businesses, and they will continue to grow. Got it. In terms of online profitability, how different it would be from our other channel business? It's fairly competitive, and we've been very, very focused on profitable growth. So the online profitability, even this quarter, has been very good. The channel profitability has gone up by a good percentage. So we are very pleased with what we saw from both the revenue side and also from the channel profitability side from the online channel. So it all also depends on the market conditions, etc. But our brands and our efforts are well placed to capitalize on the online business. Got it. But margin differential is material compared to general? Quite healthy margin, and we ensure that any growth is not going to be detrimental to our percentage profitability. We will ensure that growth is at similar than other channels or even higher if possible. Okay, okay. Again, on inventory in wholesale channel, where we have witnessed 15% growth, which is quite encouraging, is it any part of the growth is also because of the inventory buildup in this quarter, and it can normalize going ahead, or we can assume that this is the normal course of inventory in wholesale channel as well? In fact, we are doing the reverse. We actually took a call to build less inventory in the quarter four. I mentioned that we delayed the launch because, see, the weather pattern has shifted by almost a month. The peak winter happens in Jan-Feb, and the summer sets in a little later now in April-May. So we are trying to match our supply chain to the market realities and the season realities. So we are holding back, and that's why we invoice goods closer to the weather pattern, and I'm sure because of that, our sell-throughs will be very good, and there's no buildup before the season with the channels. Got it, got it. Sir, one question on this minority interest. In this quarter, we had a reported PAT of INR 13-INR 18 crore, and then there is a minority interest somewhere around INR 12-INR 13 crore. So our entire profit has been gone as a minority interest. Any comment on that, or whether it's more this quarter phenomenon, or it should continue going ahead also? So what happens is that there is a seasonality in different businesses, and the previous part benefits from premiumization. So that's really helping. But we get a little more business in H2 in some other brands. The festivals and the wedding calendar makes a little better difference. So the profitability in non-PVH will also be good in the future. So I think it will balance out. And just to add, the comfort and the confidence what we should draw is the fact that if you look at our last year trend line also from Q1 to Q4, as Shailesh mentioned, we had even significantly large losses coming in from Q1, and then it really built up on the non-PVH side of the portfolio. And we are extremely confident that it will pan out the similar way if market conditions remain favorable as to what we have seen in Q1. You should draw confidence that a significant improvement in the non-PVH side of the portfolio in Q1 has happened from the loss margin what we had in Q1 last year. We expect this trend line on PAT. We are extremely focused on the bottom line and the midline profitability. If you will keep seeing this profitability improvement happening, you will see that translate into a disproportionate share coming in from non-PVH also going forward in FY25 and in the near to medium term as well. Got it. That explains a lot. Sir, last question from my end that what we have been building like double-digit top-line growth and also 100 bps of margin expansion going for FY25. Despite subdued environment, we are reporting 100 bps of margin expansion. Is it a possibility to increase our guidance going ahead, or we will maintain our guidance of 100 bps expansion and double-digit growth or early double-digit growth? Yeah, if you look at the fact, we have said that we are expecting a higher revenue growth compared to where we were at quarter four. We were at 5%, and we have now delivered 10%. We have been optimistic that growth will be higher than what was in the past. Market conditions are muted, subdued, difficult. But we are very confident that our growth drivers are working, be it square foot expansion, where a lot of energy has gone, a lot of effort has gone, category expansion, online B2C business, premiumization, like. We are working hard to ensure that our growth drivers remain fully revved up, and we continue to grow. Medium term, we would love the growth rates to move to 12%-15%. We are hoping for the market to correct. We are also very watchful of profitable growth. We are not looking at just growth for the sake of growth. We are very careful that growth should bring efficiency in terms of improvement in EBITDA margins. So we are working hard. It all depends on market conditions also and the economic realities. But we are, in the short term, confident that our job is to up the growth from 5 to high single digits, maybe double digits. And then, as the market improves and as our scale comes larger, we will hopefully grow a little faster also. But in the short term, I would say our guidance should continue to be where we have mentioned to increase it from last year. And we're working hard to ensure that happens. Got it. Thank you. Thank you, Shailesh. Thank you, Ankit. Sure. Thank you. The next question is from the line of Shreyans Jain from Svan Investments. Please go ahead. Congratulations, gentlemen, on those set of numbers. My first question is to be able to appreciate your numbers. Could you give us some sense on the channel? Because I think you've given wholesale detail online. But just in terms of wholesale, could you help us understand how is MBO, how is department stores? And the same for online, if you can help us understand how is B2B and B2C? In the presentation also, if you could help us with this data going forward. Sure. Let me say the primary billing channel like MBO, department store. And I mentioned that we've been trying to time it closer to the season as far as closer to the season so that the stock turns don't get compromised and there's no buildup unnecessary before the season. So that's why in this quarter, both departments, all channels have grown frankly. I mean, wholesale or retail, every channel has grown in this quarter in terms of revenue and in terms of channel profitability. MBO has grown really handsomely because of the shift, and also our distribution expansion has been very aggressive, especially in the casual brands like Flying Machine and Arrow, where we were able to open a lot more shop-in-shops. And also, our strong brand, US Polo, remains the preferred brand for any expansion of any mall or any MBO channel. So MBO is doing well. Department store also, we supplied goods in the right time and seen good growth in our business. And also, profile has been healthy in that channel. Retail, we mentioned that we grew like-to-like under really tough market conditions where a lot of other competitors have shown negative like-to-like. But we have a decent, and we have a good square foot expansion that's happening. So we are looking at CAGR of 15% in square foot addition net. So that channel is growing. Online B2C has grown more than 60%, and we are pivoting this business from wholesale, and there the growth rates are coming down. But we are looking at the overall healthy growth in online from B2B pivoting towards B2C, and the B2C is really firing. And also the retail channel profitability also is one of our good percentage. So overall, this season, we've seen growth from wholesale as well as from retail channel. If you want any specific double-click, I'm happy to give some color to that. No, no, this helps. So second is on now everything is a power brand, right? So if I have to understand, giving you a commentary, you're saying that weddings are lower, so obviously Arrow would be weak. If you can help us in the presentation itself, how is growth across individual brand? I mean, we cannot comfortably have absolute numbers, but just some sense on what was the growth in each of the brands. It would be better for us to understand your numbers. One is that second, this is, sir, you've opened about 45,000 sq ft you've added. So if that also you can help us brand-wise, where you've been opening stores, are these EBOs, COCO, FOFO? So a little more understanding on the store opening also brand-wise would help us. My next question is, sir, on the gross margins. So this you said is a retail was slightly weaker versus last year. From what I understand, the last part of our other expenses includes commission and brokerage, which is higher on the retail side, right? So if I have to look at your other expenses, instead of retail being lower, our other expenses have gone up by about 8% or 10%. Just trying to understand what is the major shift that has happened here. Is it advertisement? Is it rate? Just more sense on the other OpEx? See, our retail has also grown, and it has grown overall, and it has grown in terms of like-for-like. It's also grown in high single digit, and the other expenses are actually in line or maybe slightly lower. There's no surprise there. There's no delta there in any way. It's in line with the growth of the business. There's no other major expenses because all largely commission, and commission is linked to the revenue growth, largely franchisee commission. It's in line with the growth. It's not higher than the growth. It's in line with the growth. As far as GP is concerned, typically retail channel delivers higher GP because the expenses come below. This quarter, what has happened is that retail has also grown, but the wholesale channels have grown slightly faster than retail. But overall, the GP has gone up despite sort of channel, the way it is, and the channel revenue mix. And that's coming from, like I said, better control on discounting, price realization, premiumization, and also we've had good cost efficiency from sourcing. So we got a dual benefit on price realization, which was better, and the costs, which are more efficient. So we got a good 80 basis points increase in GP despite retail being similar to the other channel. If retail had grown faster, the GP would have looked even higher than where it is today. Shailesh, just to add a couple of points, part of your question. One, just to add on what Shailesh said on the GP side, please understand we are again growing margins despite us growing margins by about close to 100-120 basis points last year. So it's on that base. Of course, you need to look at in the context saying there is a general inflation on other expenses, which remains, and some portion or a large portion of that also pieces around royalty and other costs are variable in nature, which is where it is. So you need to look at we have grown the sales at 10%, and we have maintained a very, very sharp overhead, which has only grown by 8%. That's how you are seeing the leverage coming through. So that's on that, just to add on what Shailesh said. On the first part of your question on the brand-wise, I mean, to be honest, it will be difficult for us to kind of give in the presentation any specific data points because we are also bound by certain global confidential contract norms. Having said that, we try our best, and Shesh has tried his best in his opening commentary to kind of give you a color on a brand-wise in a more qualitative way. But it will be difficult for us to kind of really quantify that and do that on a quarter-on-quarter basis. Hope you understand on that front. Thank you. I appreciate it. My last question is, sir, with the kind of improvement that we've seen in our margins and also Arrow now using single digit. So for 2025, 2026, what is the kind of EBITDA that we should look at? Obviously, not asking for an absolute actual number, but give some sense on your direction. Can we do like 100, 200 basis points improvement going forward now because you're saying discounting is lower, full price is higher, and obviously retail growing faster than the other channels going forward? So what is your sense on this? See, our guidelines have been that we want to grow EBITDA by at least 100 basis points. Even in the current really difficult market condition, we are committed. And if you look at this quarter also, the EBITDA has gone up by 100 basis points and is now close to 13%. So we work hard in the current market environment. It will take a lot of efforts to deliver this, and we are delivering that. We are working hard. And that's why we focus on profitable growth. We are just not looking at growth for the sake of growth. And we are only looking at growing businesses where we get commensurate profitability also. So we are committed to answer your question on EBITDA, how will you grow? We will grow 100 basis points is our guidance. Also, it will depend on some market conditions two basis points here and there. But that's our goal, and our guidance remains to up the revenue growth and to grow EBITDA by 100 basis points. Okay. Thank you so much, and all the best. Thank you. Ladies and gentlemen, before we take the next question, I would like to remind participants that you may press star and one to ask a question. Next question is from the line of Palash Kavale from Nuvama Wealth. Please go ahead. Thank you for the opportunity, and congratulations on good setup numbers. So my question is around Arrow and FM. So when do you see these guys going at a higher growth than consolidated levels? So I've been giving commentary on our strategy on Arrow and Flying Machine in every quarter call, and I will reiterate that these are the brands they needed to be re-energized. That effort on Arrow started two years back with complete overhaul of the brand promise, the logo, the advertising, retail identity. We created a smart casual line called Arrow Sport. We created a young formal wear line called Arrow New York. And a lot of them are the premium line that we promoted now at 1851. So a lot of the merchandise bricks are ready. A lot of retail bricks have fallen in place. It's still upscale, and it needs to grow a little more, and it needs to open probably many more stores in the country. That's what will take it to the place where we want in the short term from low single-digit EBITDA to mid single-digit EBITDA. The market has not been very favorable for formal wear brands, and wedding dates have also been. It's a big leisure suits is a large business. So that is a short-term headwind, but we are very committed, and market will improve in our effort. Our square-foot expansion will continue on Arrow also. So we are seeing that Arrow will reach a certain point. It will happen in the near term. As far as Flying Machine is concerned, that effort has started two seasons back. We changed the logo. We created a new consumer promise. So Gen Z online first kind of a mindset. And recently, then the logo merchandise has gone. This season, spring summer, we saw very good growth of Flying Machine and online channel. A couple of new stores with a new identity have opened, for example, in Delhi in a DLF Mall of India mall. We are quite happy with what we are seeing, and you'll see in Diwali a lot more intense efforts on Flying Machine to influence the consumer. So maybe the Flying Machine journey is one year behind Arrow, but our three brands, Tommy Hilfiger, Calvin Klein, and U.S. Polo Assn., are really well-placed market leaders, and they're doing really well financially, both in terms of top-line growth and EBITDA growth and EBITDA percentage. Now the focus is on Arrow and then Flying Machine to sort of grow their profitability and scale so that the overall portfolio delivers even better profitability. Okay, sir. Thank you for that. Sir, what was the A&P expense for quarter one? Sorry, we missed that. Palash, which expense? A&P advertisement and promotions. Yeah. So in quarter one, typically, it is closer to 3%, slightly lower than 3% because the campaign happens in the beginning of the season, but towards the end of the season. So we are at between that 3%-4% spend, but for this quarter, it was around 3%. Okay, sir. Sir, thank you for that. Sir, really congratulations on the margins for PVH brands. So do you see these margins growing further by 100 or 150 basis for PVH portfolio? That's excellent. Market leader and doing really well and also growing fast, and the scale leverage can kick in. So I'm sure it'll be doing really well, and it should continue to grow from here. Sir, thank you for that. Sir, what was the debt level by the end of quarter one? Do you see how much debt are you planning to pay this year? Our net debt was around INR 225 crore. There is a seasonality. Next quarter, it could go up by INR 50 crore-60 crore here because we have to build the inventory for the season and the bigger scale. But I think we will remain at this level. Any free cash flow associated that we generate, we will try to pare down the debt levels from that. So I think we've been reducing our debt levels, and that effort will continue. Kedia, you want to add anything? No, thank you. Covered it. Current debt is about INR 225 crore net debt. Yes, this is impacted by seasonality. Yes, sir. Sir, if I look at online channel, what would be the contribution of online D2C right now, and where do you see it stabilizing? See, currently in this quarter, the online contribution is slightly close to 25%. Typically, the B2B and B2C are more or less equal, but the way the trend is, the B2C will keep growing faster and taking a higher share. That journey has already begun. Okay. So thank you for that. That's it from my side. Thank you for answering. Thank you. Thank you. The next question is from the line of Manju Nayar from Systematix. Please go ahead. Yeah. Hi. Good afternoon, gentlemen, and congratulations on a good performance in a tough environment. So firstly, if you can throw some more color on the adjacencies, adjacent categories, how are they performing, whether they are still a drag on margins, and what's the outlook going forward, especially for footwear, which had gotten impacted recently? If you can talk about that as well as the other key adjacent categories. So adjacent category development is one of the key growth drivers for a company across all the brands. And if I look at the overall share of adjacent category like footwear, women's wear, kids' wear, innerwear, this is at a company level is more than 20% of AFL. And in the last 12 months, that growth of this category has been double-digit and it's growing faster than the company. As far as US Polo is concerned, where we have even invested even more heavily and prioritized the adjacent category, the share is even closer to 30% there in US Polo. So that category expansion is working well. It's improving our store productivity, delivering like-to-like growth for us. So it's a big, big sort of part of the way we are taking AFL forward. As far as the footwear business is concerned, there are some regulation changes, and we are in touch with the policymakers, and we are making sure that our supply chain is geared for whatever the change requires. So we'll wait and watch, and we'll react to the realities based on the policies. But given that it's a large contribution now, I just wanted to understand whether these adjacencies are a drag on your margins, basically whether the margins currently are lower than your apparel? Yeah. I've said this in this call, and I reiterate that we are focusing on profitable growth. We are not really looking for growth for the sake of growth. So we're very, very mindful, watchful. Sometimes in some categories, we do invest ahead, and it's important as an investment maybe on marketing side sometimes. But what the data we have is clearly that adjacent categories are not a drag on overall profitability, and they will contribute to the profitability of brand and of AFL. Understood. And Shailesh, just like you gave the journey, your margin expectations on Arrow from low to mid single digits, would you have similar targets for the Flying Machine business brand as well? FM is one year behind. We are just redoing the whole DNA for a long-term success of Flying Machine. So FM is a one-year behind Arrow in that journey. Final bit was on the retail expansion, which you said 15% area expansion is what we are looking at. So are there any specific, I mean, brands that you'll I mean, where you'll be opening more EBOs, or it will generally be across all the five? And any specific markets where you'll look to target if you can share any color on that? So all our brands are growing well and 15% sort of growth in square footage across the brand. But I would say the scope of opening more cities than the non-PVH brands. So US Polo always has a much larger scope because every new mall in every town, small town, we're talking about US Polo as a key partner, right, as a key brand in the or any MBO that opens in any tier two, tier three, city also wants to have US Polo in its shop. So US Polo eventually has a probably their maximum scope in the short term, but Arrow, the way it is, I think it can take many more stores. Flying Machine, once we finish this whole re-engineering of the brand promise, we see a lot of opportunity to grow. We seek also adding square footage, just that where the standards are such that it'll be more mindful and we'll be cautious on which town you go to. It can go to a tier three city that easily has a U.S. Polo Assn. and Arrow can go. So it will be across, but it doesn't matter. Even the big cities and the top cities, there are enough opportunities for growth in Tommy Hilfiger also. Bangalore, for example, saw three new malls in the last 12 months, and all the three good malls have very nice stores of Tommy Hilfiger also. And of course, the non-PVH brands, not just in the big town, but in smaller tier town also, they can expand. Got it. So should we take away, given this aggressive 15% number, I mean, if you open 15%, I mean, 15% expansion plus we get to our targeted number of LTL, so should we be innovating ourselves for, say, 15%-20% growth in the retail part of the business at least? So our retail, if you look at last three years, grown quite well in double digits. But what happens is that when you open 15%, it doesn't actually impact the same year number. It impacts the next year number, right? So that's why in the short term, the impact is less and stores settle down and then grow. So yes, it will fuel our growth, but not necessarily arithmetically the way you are looking at. And in the current market conditions, things are not easy. But if the market conditions improve and the stores started settling down soon, so it'll only fuel growth. And we are committed to the medium-term growth going to maybe 12% and maybe a little higher, but it all depends on the external environment. No, of course. I mean, that is the medium-term. Maybe once the environment improves, at least we are preparing ourselves for a 20% growth as well on the retail part. I would say 12%-15% is the mantra. And like I said earlier, we are very, very watchful on profitable growth. So we are very careful on the kind of stores we sign, the quality of the stores, the need for making money soon. So I think 20% would be a little on the high side, and I hope that that number also happens. But in the current market environment and our whole focus on profitable growth, I think 12%-15% in the medium-term is a good guidance for my side. Understood. That's it from me, Shailesh. Thanks. Thanks, and all the best to you. Thank you. Thank you. Next question is from the line of Gautam Rathi from CWC. Please go ahead. Yeah. Hi, Shailesh. This is Nishith from CWC. Congrats on a great set of numbers. I think kudos to the team. Great execution. Just to know, I just wanted to understand, just wanted to run a thought process by you, and just wanted to know if my thought is right, right? It is very visible given the scale that Tommy Hilfiger has, and the profitability of Tommy Hilfiger is very visible. And if my understanding is right, U.S. Polo Assn. should be a bigger brand than Tommy Hilfiger, but we are seeing multiple things in U.S. Polo Assn. itself. Is it fair for us to assume that in the next year or a couple of years, whenever at some point of time, U.S. Polo Assn. will start delivering EBITDA impact closer to Tommy Hilfiger? And how far are we from that? And is that right to expect? And then how far are we from that kind of performance? No, Shailesh, I mean, I couldn't agree more with you. U.S. Polo Assn. is a total powerhouse in our portfolio and a brand we're very, very proud of. And we have really refreshed this brand in the last two years in terms of product, fashion flair, quality, retailing, marketing. So you've seen closely, Nishith, I know that how the brand is a so strong brand and a market leader coming closer to INR 2,000 crore scale. So Tommy Hilfiger, yes, delivering very good financial metrics, the results on that. And U.S. Polo Assn. is very close, and it's also a double-digit pre-Ind AS EBITDA brand of scale that we are talking about. So in medium term, it should very confidently, I can say, will be a similar profitability brand, whether it's EBITDA or PBT or whatever level that you'll see. It is a work in progress, and very, I would say, short term to medium term is definitely similar percentage on financial metrics that Tommy Hilfiger is doing. I don't have doubt on that. Of course, market conditions can impact. And I fully appreciate that you've just started the journey of reinventing and reinvesting in the brand also last year. But that's very heartening to say that it's not very far away, and we expect it to get there. And the second big distraction, which we are unable to, because it's very apparent, your work in Tommy Hilfiger is showing up very, very apparently, right? What is kind of not fully getting appreciated is because of the non-PVH part of it is not really showing up. And that's where one is it U.S. Polo, you're saying it will come back. Second is the drag, which is there in both Arrow and Flying Machine. You've called them out, and you've said there is a journey and a path to it. But the final destination is at some point of time, and again, if you could give some kind of a guideline, is it one, two, or three years? Let's say in three years' time, is it fair to assume that both these brands will also be at least at a PAT level, will be PAT positive? Because then what will happen is you will have all the brands delivering positively to the PAT. No, I couldn't agree more to you, Nishith, because US Polo is a powerhouse. What we are doing, the way consumers are responding to that, which channel is responding to that, it's a powerhouse both in terms of scale, profitability, the free cash flows that it has the potential to generate in the short term itself. So I mean, if I look at two buckets, Tommy Hilfiger and the second bucket of U.S. Polo Assn., I couldn't agree more to what you're saying. That comes to the third point on Arrow FM, yes, in the medium term in next two years, three years, depending on the market condition, we will be in mid-single digit EBITDA for sure. And at that level, we'll not be a drain at a PAT level, etc. So it's a fair assumption, given all my caveat on market condition, that we should look at that scenario that we will have no major drain from at a PAT level or a PBT level from Arrow and FM, and the Tommy Hilfiger and U.S. Polo Assn. should continue to deliver good financial results. That is very, very heartening, and that makes life very, that is very, very good to hear, Shailesh. And the last point, we understand the top market scenario. Have you seen anything for you to believe that the market condition has worsened from what we were in Q1, or are we broad, or is it getting slightly better? Give us some kind of qualitative from whatever you've seen from the last 30 days you've seen in the first half. I know it's very, very early, but just qualitatively, are you seeing things get better or getting worse, or are we similar? Is it kind of what we were? Markets have been difficult for a couple of quarters. There were some specific issues linked to elections, for example. The global warming or warming in India is a reality we saw that markets are sort of challenging and subdued currently. I'm believing that in the short term, they remain subdued, but maybe slightly better than they have been in the last year. And also the way we are geared up, because once you assess the markets correctly and know that markets are tough, then you react. And that's why a lot of our growth engines are delivering better. And we are very confident that whatever happens to the market condition, our growth will be higher than what we were in the quarter four financial FY24. And this quarter, we delivered in high single digit or if market improves one or two percentage more, it'll rain. But markets are challenging, but we are hopeful that we could get a little better because, for example, last year there was a cricket World Cup in peak of Diwali. We had 5 weekends with India cricket. They're not going to happen in this Diwali, right? I mean, that World Cup is over. So maybe we'll get some better benefits from that in the remaining months of this year. So we'll wait and watch and see. It's tough to predict, but more than the market condition, I would say we are very committed to improve on the revenue growth from what it was at quarter four FY24, and we are working hard for high single digit and in good time, maybe 10% revenue growth. That is very, very helpful, Shesh. Thank you very much, and all the best to you and your team. Take care, Nishith. Thanks. Thank you. Next question is from the line of Jatan Sangwan from Burman Capital. Please go ahead. Thanks for taking my question. As a data keeping question, I observed that our interest expenses have increased from INR 35 crore to INR 38 crore. What caused this? Jatan, it's largely on account of non-India inventory because on the Tommy Hilfiger side of the business, that's what we have been maintaining in the previous calls. We have been opening on the Tommy Hilfiger side, the COCO store, so it's only causing. But our real interest cost has actually moved down both on a quarter-on-quarter and on a YOY basis. But this change is not much reflected in depreciation. It's like INR 59 crore, INR 61 crore. So it's a mix of both on the interest and depreciation because as to what you would understand, when you open a new store, there is a component of interest, which is what largely goes up, and then that's how it gets adjusted during the course of half year of the tenure. So that's how you would look at first. It's coming in the interest, and then it's getting normalized as part of when it comes down over the rest of the tenure. Actually, I can just say that both interest and depreciation, the operating numbers pre-indirect are similar, maybe like Ankit said, slightly lesser than before. Some entries are indirect entry, and we've taken over stores in Tommy Hilfiger as COCO stores. So that impacts the depreciation a little bit, but there's no major change. It's only on a downward trajectory. What will be your pre-indirect margin in this quarter? We have always said it's in the range of around 400 basis points from post-Ind AS to pre-Ind AS from our reported margin. You can do that math. We've reported about 12.9% post-Ind AS margin. Just our last question on this part, how much of our Tommy Hilfiger stores have been converted from, let's say, FOCO to COCO? We have 60 stores in Tommy and Flying Machine, which are now COCO stores, 60. Okay. And in Tommy Hilfiger? Nothing. It's in Tommy alone. Okay. Okay. Okay. Got it. Thank you. Next question will be from the line of Sagar Parekh from OneUp Financial Consultants. Please go ahead. Yeah. Hi, team, and congratulations on good performance. Just two questions. One is you mentioned that this Flying Machine is one year behind in terms of profitability versus Arrow, but did you give any number of what is the EBITDA currently of Flying Machine? If not, can you give us, please? We don't disclose and unfortunately can't disclose the brand level margins and revenue on account of our global contracts. But is it profitable, or it's lost being EBITDA? So we said we are on that journey. It's a very, very low single digit, close to about break-even kind of a number. So that's something which is where the work is on to turn that brand around and to make that journey as to what we have seen the turnaround in Arrow over the last 2 to 3 years. Okay. So this Arrow is a mid-single, low single digit, you said, and this is broadly break-even to slight positive. It's in, yeah. Both the brands, we are on a journey to improve profitability. Arrow one year ahead than Flying Machine. Yeah, I get that. Just last question was on the CAPEX. What would be the CAPEX for FY25? So our CAPEX is likely to be in the range of INR 100 crore. Largely to be spent on some COCO stores on the TVS side, some IT CAPEX, and some renovation of stores. How much was the CAPEX last year? So, INR 100 crore seems to be on a higher side. So just. About INR 85 crore. Yeah. It actually is on the Tommy side of the business. I mean, I don't have the breakdown, but close to about half of it or maybe more than that. So again, that's how you should look at it for the FY25 also. Some of the new Tommy stores we are doing directly as COCO stores. So some CAPEX will go there, but our CAPEX is flat in that sense. This quarter was around INR 24 crore, and largely, like Girdhar said, it's for renovation of our shop-in-shops or some maintenance of IT. There's no major project that will require CAPEX other than a couple of Tommy and Flying Machine stores that we are doing on a COCO basis. Got it. Just so this CAPEX would be funded internally, right? Or will we take this up? In Tommy, there are strong cash flows to deploy. Right. Got it. Okay. Great. That's it from my side, and all the best. And congratulations once again. Thank you. Thank you. The next question is from the line of Rajneesh from Nuvama. Please go ahead. Yeah. I'm an analyst. Thanks for the opportunity. Sir, with regard to this margin expansion which we have seen, is it possible to quantify how much of it is because of this COCO to COCO we're doing in Tommy and CK? See, when we convert from franchisee to COCO, definitely the GP goes up, margin goes up clearly. I don't want to give a specific number, but yes, it's a grossly accretive, and we benefit from that investment of CAPEX into the stores. Overall, if I look at, that's a very small piece of the overall GP increase at the SL level. Largely, the GP increase has been because of the better price realization and better cost efficiency in sourcing. So that's because, even in these difficult conditions, our discounting in full price channel was slightly lower than last year. So we benefited from that. Premiumization gives a better realization. So cost efficiency in sourcing and better price realization is that dual benefit giving us that 80 basis points improvement in GP. Sure. Secondly, one of the marketing players has been running steep discounts earlier in the last season as well and probably this season. Do you think that cleanup is done or we have, I mean, we may see that again in terms of competitive intensity? Sorry, I didn't get the question. Which of our brand are you talking about? No, no, no. I'm talking about the competition. One of the marketing players has been entering the industry early, right? Comment on the moves of competition. Everyone has had a guess. Sure. Thirdly, your PBT margins on the online side, is it comparable to the retail side? I'm again repeating that online is a very healthy business for us. Its margins are quite good. And like I said, we are growing businesses which are with that mantra of profitable growth. So at a channel level profitability, online has very good channel profitability. Sure. Lastly, if we were to combine your channel level, for example, the wholesale for Q4 and Q1, and then compare against last year Q4, Q1, I think the wholesale is still at an 8% deficit, right? And I mean, we have seen substantial growth in Q1, but it is not enough to cover the last -18% of the previous quarter, right? So between the department store and the MBO channel, we are growing. And in fact, MBO channel is growing faster because we are able to add distribution for all our brands. So I'm trying to check where because our margins, our wholesale channel has grown. Just that in quarter four, we took an inventory call on bringing it closer to the season and not just adding inventory in the channel before the season starts. So our channels are doing well. I mean, just that in quarter four, we took a decision to delay the inventory buildup closer to the season, and that benefit has come in quarter one. I got the point. My only point is because Q4 by quantum, wholesale is a much bigger quantum, right? Put together, let's say Q4, Q1. We launched the season in a bigger part of the season in February, March, which we are now doing end of February and March. So yes, quarter four is a bigger wholesale than quarter one, you're right. But this quarter one is a bigger wholesale quarter than what it was last year, quarter one. No, I got that. I'm saying that combined put together, for example, Q4, Q1 last year was INR 664 crores. Versus this year, we are at, I think, close to INR 612 crores. So there is still a deficit in the wholesale side. In the current market condition, we're careful looking at whatever the inventory buildup. We continue to grow, keep an eye on the inventory in the channel, and based on that, we validate the market. And Rajiv, if I can just add, there will be, of course, seasonalities, and we will play by that depending on which channel is fighting and when. We want to just ensure that we stay very, very healthy on our inventory level and stock terms. So yes, you may be right. You may be having the right observation on Q4 and Q1 combined. You are looking at it. But at the same time, if you really step back and look, our retail likes to very, very good in Q4 as well. So retail may have made up for that. Same thing could have happened for online as well. I don't have ready data for that. There will be degrees around on a if you add certain seasons together or 2 quarters together, there may be degrees, but the good part is all the channels; if Q1 has seen an all-around channel performance across all the channels, all the channels have grown. And that's what is heartening for us. Yes, it could be plus and minus on various channels depending on Q4 and Q1. Just add one color to that. In wholesale channel, we have very good visibility on the consumer sales, and we built this hygiene in the last two years where we are getting regular daily update on how the wholesale channels are able to liquidate that inventory to the consumers. Based on that, we create the pull of what more we can sell. So if the market improves, we'll be able to increase the growth. If the market slows down, we also automatically the whole system slows it down. Sure. Just one small bit. Last time, you indicated that you are looking for a high-teens area addition, right? With the current Q1 environment, do you like to revisit that, or are you holding on to that target? Yes, but it's sq ft. You're talking about sq ft addition, right? Yes. Yes. Yes. So we have committed to 15% net addition this year on the current base. And the first quarter was a good quarter, and we built more muscles in the market to ensure that. So we are geared towards that 15% net sq ft addition. Great. That's all from my side. All the best. Thank you. Thank you. Thank you. The last question for today is from the line of Ankit Kedia from PhillipCapital. Please go ahead. Sir, if I just look at the annual report, if I ex Tommy and PVH numbers, other three brands have actually posted a decline last year. So just wanted to know how was the U.S. Polo number? Because even if I look at Flying Machine numbers, still there is a decline, which makes me believe that Arrow would have also declined last year. Is that understanding right? Hey, I mean, I don't have ready data last year, but I can tell you the trend is that last year in difficult market conditions, U.S. Polo Assn. did well. And if I look at this quarter, U.S. Polo Assn. has grown really well in double digit in sales and in EBITDA value also is much higher than that percentage. So U.S. Polo Assn. is a point now where it's really revved up, and the growth and the EBITDA growth is very, very high. That's what. So that's what will keep growing. As far as the Arrow is concerned, I know that the formal category and the wedding dates in the previous quarter have now also been a little slow. So Arrow has been a bit of slowed down, but U.S. Polo Assn. is really doing well. Also, sir, in U.S. Polo Assn., if I just see the annual report, we have cut down 50 stores last year, and we have exited around 20 cities, which is lower than FY19, the city count also. So is this rationalization of stores, cities across brand behind now for us and 150 cities for a brand like U.S. Polo Assn. is pretty much a low number given the time and the acceptance of the brand which we have and where peers are today also. So do you think in next 3-5 years, where do you see the city count for U.S. Polo Assn. coming and the store expansion over the U.S. Polo Assn. pending? So Ankit, I don't think your reading is right. There is the disclaimer, which is what we have given in the stock data. If you look at, there's a hash mark there. We have only taken a monobrand store based on certain feedback coming from you and other industry players as well. So we have not added the point of sale where U.S. Polo Assn. is still sold, but we classify that as multiple brand outlet, but it's still an EBO like a Stride or a Megamart or a Club A. So all of that is not there. Your observation is not right when you look at the number of stores going down. Rather than that, the number of stores and square foot addition is incrementally going up. And that's what you can see. In the last year, full year, net square foot addition was close to about 56,000 sq ft. This quarter alone, it's at about 45,000 sq ft. So there is absolutely full wholehearted intent in terms of putting energies behind U.S. Polo Assn. to kind of grow that brand and rev up as to what Shailesh said, both from a square foot area and from a number of stores and penetration in terms of cities and towns as well. Also, I would just add to what Ankit said. Ankit is that it's such a strong and dominating brand that every retailer in any type of city wants to start the store with U.S. Polo Assn., where every department store, when they go to a smaller town or a regional department store, wants to have U.S. Polo Assn. So brand appeal is very strong. And it's less risky to go to a smaller town U.S. Polo Assn. than, let's say, some other brands. So U.S. Polo Assn., we continue to go to more and more number of towns. It continues to increase its square footage through stores, through MBO channels, through department stores. So I assure you that this brand is really revved up, and it will continue to expand square footage. The last question is on inventory. At the last subsidiary companies I see, inventory days have come down. You see, very heartening. Do you see there is some more juice left or this inventory is now stable and it should be maintained from here on? So it means we are committed to stock turn of 4. We improved from 3 turns to now 4 turns. This quarter also, see, our inventory days have come down by 3 days. We are using every possible means to see how we can improve the stock turn. Also, the advantage of lower inventory is that then we can sell more fresh goods and the margins become better. The EBITDA becomes better. Consumer gets a better experience. So we are really working hard, and that's one reason why we open a chain called factory outlet of our own brands called Megamart, where we are liquidating a lot of our old inventory faster with better cash realization. So we are sure that there will be no stone left unturned to sort of liquidate inventory at good margin as fast as possible. That's it from my side. Thank you so much on all this. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Ankit Arora for closing comments. Thank you, everybody, for joining us on the call today. If any of your questions have remained unanswered, please feel free to reach out to me separately, and I would be happy to answer them offline. Thank you, and look forward to your participation again next month. On behalf of Arvind Fashions Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.