Ladies and gentlemen, good day and welcome to Campus Activewear Limited Q3 and nine-month FY2024 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Before we proceed on this call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. It must be viewed in conjunction with our businesses that could cause future results, performance, or achievements to differ significantly from what is expressed or implied by such forward-looking statements. The Campus Activewear management is represented by Mr. Nikhil Aggarwal, Whole-Time Director and Chief Executive Officer, and Mr. Sanjay Chhabra, Chief Financial Officer. I now hand the conference over to Mr. Nikhil Aggarwal, Whole-Time Director and CEO, for his opening remarks. Thank you, and over to you, sir. Thank you, and good evening, everyone. Campus Activewear staged a strong recovery in Q3 FY24, overcoming the disruptions caused by our B2B and O2O channels business model changes that have happened in Q2 FY24. By focusing on marketplace potential and boosting our marketing efforts, we've managed to increase demand and restock in our primary distribution markets, which were previously suppressed in Q2 FY24 due to destocking and inventory adjustments. Despite the revenue seeming stagnant with an amount of INR 472 crores in Q3 FY24 due to shifts in channel dynamics, we did see a very positive growth quarter-over-quarter. This growth was facilitated by a lower consumption base, increased consumer spending during festive periods, and a surge in online sales. On the margin front, we benefited from the decline in material costs resulting in healthy gross margins at 38.3% during Q3 FY24. However, our marketing and advertising costs remained higher, owing to several TVCs and online campaigns for promoting a wide range of Campus OGs, NitroFly, NitroBoost, and Air Capsule styles. In our ongoing pursuit to fortify our financial standing, we managed to reduce the debt by INR 112.6 crores in Q3 FY24. Additionally, by maintaining rigorous control over inventory and receivables, we've managed to diminish our working capital days from 150 to 68 days as of 31 December 2023 on a quarterly basis. We continue to make judicious investments in the brand-building exercise, positioning as a preferred one-stop family sports and athleisure footwear company for our esteemed consumers. I'm delighted to report that we are steadily progressing towards our planned growth and expansion phase. A testament to this is our achievement of reaching the 250-store milestone across the country with our newest store inaugurated in Seasons Mall, Pune during Q3 FY24. Echoing our discussions from past calls, I'd like to emphasize that FY24 is a year of transition for us. We continue to invest in R&D and design capabilities, leading to product innovation. It enables us to launch premium products resonating with our premiumization journey in the long run. The company remains committed towards its legacy of fashion excellence and customer-first approach and satiates the customer demand through its diverse 20 designs, captivating color styles, and attractive price points for varied occasions. We are very well placed to create long-term value for our esteemed stakeholders with a unique integrated business model coupled with strong balance sheet positions. I will now hand over to our CFO, Mr. Sanjay Chhabra, to take you through more details on the performance. Thank you, Nikhil. Good evening, everyone, and welcome to the Q3 and 9-month FY24 earnings call for the Campus Activewear Limited. During the quarter under review, our revenues from operations stood at INR 472 crores. In terms of volumes, the company sold around 6.9 million pairs in Q3 FY24. The average selling price stands at INR 681 versus INR 669 last year in the same quarter. Similarly, on a category revenue mix, the men-to-women-and-child ratio continued at 75:25 in Q3, driven by our continued focus towards growing this category. EBITDA stood at INR 57.6 crores in Q3 FY24. On the balance sheet side, our net debt stood at INR 48.3 crores as of 31 December, showing a substantial reduction of INR 100 crores plus, both versus last year and also versus sequential quarter. This has resulted in our net debt-to-EBITDA ratio reducing to 0.3 in 9-month FY24 as against 0.6 in FY23. Our balance sheet demonstrates the position of strength with robust return ratios such as ROCE and ROE at 12.7% and 9.7%, respectively, as on 31 December. With this, I will conclude and hand over to the moderator for questions and answers. Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Priyank Chheda from Vallum Capital. Please proceed. So my question is on if I have to go back to your quarterly volumes. December 2021, you sold 6.6 million pairs. December 2022, you sold 7 million pairs. And December 2023, you sold 6.9 million pairs. What has been the reason for almost no growth for the last two years now? And despite all the sneakerization theme, despite all the sports shoes athleisure wear growing in India, what has been the key reason, if you can highlight, would be great. So hi. No, thanks for your question. So basically, we had a remarkable growth right after COVID in 2021. And 2022 and 2023, we have seen muted demand over these last almost 18-24 months now. This has been seen across this entire value segment price category, and we fall into that. Whereas the premium segment for us also has grown. So rather, our product mix has substantially also changed in this volume, where our premium product mix has gone up to almost 48%, 49%. That is 1,500+. And semi-premium, which is 1,000-1,500, is 30%. And entry level is about 20% versus approximately 35% in December 2021 for the premium. So it's been a significant shift. This is also the reason why our ASP has grown over these last two years. From December 2021, I believe, would not be more than INR 630 or INR 620, and now it's about INR 680. So one is the product mix and also the channel mix. But yes, we have seen some muted demand in spite of all of these improvements. So sorry, I missed out one figure. Premium, which is above 1,500, is 49% of the mix. What was the entry level, which is less than 1,000? It's about 20%. What was that two years ago? That would be closer to 36% or 38%. Got it. Got it. So sir, in that case, if premium segment has done well, why would our EBITDA margins remain so low? December 2021, it was 21%. December 2023, it's 12%. So what has then led to, in case the mix changes onto a premium side, we should have earned a better margin? If you can help us even dissect this? Yeah. Hi. This is Sanjay. Let me just take up that question. You're right that we are heading towards premiumization. However, it is not getting reflected in our EBITDA margin. So we are talking over a longer range of period wherein the channel dynamics have changed. The inflation has come up in our fixed costs. And when I say channel dynamics have changed, it also means that we have shifted from distribution-led market to the online. And within online, like in this quarter, the saliency of marketplace has increased, which has resulted in a higher performance marketing spend. Coupled with that, we have invested in TV and print media in this quarter big time to propel the growth in demand and also to create awareness of all the new product launches during the quarter. So that is showing a sort of reflection in a subdued EBITDA margin. However, it's a long-term investment to create brand awareness and brand building. That's what is in mind. We do have delivered a decent improvement in both material margin and gross margin. Yeah. Sure. So just last question to untangle the complete data point. What would be the ad spends in the current quarter versus what has been the normalized ad spend that we have done, as well as what would have been the performance marketing spends in the current quarter versus what it would have been in the normalized phase? You can see in the current quarter, our ad spends or the marketing spends put together, all performance and ATL spends are together roughly in the range of 10%. In any normalized quarter, we do spend anywhere between 5% to 7%. That's the differentiator between when we go into a sort of season, including the Big Billion Days stuff and all. What would be the pure brand-level marketing spends that we would do out of this 10%? It would be closer to 6% or. Got it. Got it. All right. Thanks a lot. I'll come back in the queue. Yeah. Sure. Thank you. Next question is from the line of Videesha Sheth from Ambit Capital. Please proceed. Hi. Thank you for the opportunity. The first question was, can you help us understand what led to the sequential decline in gross margin? Is it purely got to do with the increase in marketplace sales? Because that actually should have led to increase in your gross margin. Can you help out over here? Gross margins have actually improved sequentially. We have ended this quarter at 38.3% gross margin versus 37.6% last quarter. Even versus last YOY, it was 37.6% quarter three last year. So I was. Sorry. Go on. Sorry. I was referring to the reported numbers, which come to nearly 54.3% in Q2 and 51.3% in Q3. That's purely the material margin thing. So material margin would get influenced by the channel mix and also the product mix, so in which channel we are selling what at what price point. So that drives the material margin. But eventually, at a gross margin level, we are positive. Okay. Got it. And the second question was again towards ANSC. Now, in the current quarter, you mentioned that the spends were elevated at 10%. So going forward in the near future or the next two or three years, where do you expect this spend level to be at? So our endeavor is to continue to spend 6% to 6.5%, ideally. What happened in quarter three is because of the shift in sales in online from O2O platforms to marketplace, we had to spend additional on performance marketing. So if you remember, in quarter two, we had lost out on O2O sales. So we have managed to recover all of that sales back in quarter three, which is a very encouraging sign, right? And for that, but we had to spend additional on performance marketing. So I believe this would not be, ideally, a recurring event, and we would like to maintain our marketing spends overall at 6% to 6.5%. Got it. That's all from my side. Thank you. Thank you. Next question is from the line of Ankit Kedia from Phillip Capital. Please go ahead. My first question is on B2C online revenues. Despite the shift in Big Billion Day sale, Amazon sale, Ajio sale from quarter two to quarter three, still, our online revenues are pretty much flattish in the quarter. You also just alluded to the fact that you have been able to recoup the revenues from O2O to marketplace, but that is not reflecting in our revenues, actually. Can you elaborate what has happened in the online B2C space? Let me just give some perspective here. The O2O and B2B in the online channels was a big chunk in the last quarter of this last year. And we have been able to sort of recover a large part of it through influencing the consumers in the marketplace, and that sale has got recovered. But there is also an element of O2O, which caters to very small subdealers or distributors, sorry, retailers, and they must be sitting on some inventory. So to recover that sales, it would take some bit of time and could be one more quarter phenomenon. Yeah. To recover that sales in the distribution channel, like you mentioned earlier as well, the O2O sales would be recovered in the distribution channel eventually over the next few quarters. So we were made to get that last quarter itself more than 80% to 90% of it comes in quarter 1, quarter 2. And quarter 3 and quarter 4 is a very small proportion of that. So how much would be that number? If you can quantify from O2O this quarter, you think that slippages would come? All of last financial year, that number has ranged in between 10% to 20%. We can safely assume that 50% of that sales or that channel has shifted to an alternative route. Let's call it a marketplace, or if it gets eventually integrated into the O2O portion, eventually will integrate into the distribution. Demand will come from these channels in due course. Sir, but on the quarter two contract, we are specifically given the number that quarter one and quarter two had bulk of that revenue. So if you can quantify the revenue, what was in the base quarter three and now, how much is that? It will be really helpful to understand the flattish revenue growth. Yeah. That's what I said. It would be in the range of 10% to 20%, depending upon different B2B and O2O partners. Sure. My second question is on the trade distribution part of the business. That number is also flat today. While at the same time, while on the gross margin side, we have seen on quarter-over-quarter basis some deterioration. So have we gone ahead and had heavy promotions in the market, which has resulted in flat revenue growth and impacted margins in the quarter? And collaterally to that, what is the inventory in the system today, which we have, and how is that shaping up versus last year? So, as part of the optimization of inventory (and this was the reason in quarter two that we did not push sales in some of these northern territories like UP and Bihar), we have very successfully navigated that in quarter three, and we've been able to bring the growth back where the salience from the five territories north has performed about 45, giving us 45% of the revenue. I'll just tell you, for trade distribution, north has been basically for 54% versus 44% last quarter. So there's been a significant improvement in both the states, UP and Bihar, in quarter three. But we have not had to make any significant liquidation costs or discounting to achieve the sale. This was primarily driven by the brand building and the marketing spends in line with distribution budget. If you have to look versus last year, if you can just share, how much is the growth in the North region? Versus last year? Same quarter? Last year, quarter three, the growth would be in line with about 5%. The rest of India has actually declined then in the quarter? That's right. Yes. So West has slightly declined, which has been compensated by North. East has been flat as per quarter two. So yeah, the major difference is coming in West, where we have seen some muted demand in quarter three. Sir, typically, quarter three is a heavy quarter for you. With the delay in winter, how is quarter four, first 40 days of the quarter, shaping? So we don't give any forward-looking guidance, but we can tell you that we are trending in line with how the FMCG sectors have been reporting in terms of market sentiments. We do see pockets of growth and also muted demand from other pockets. So it's a mixed kind of guidance that we're seeing for quarter four. But it seems to be there is slowdown, but there is growth and value that we are seeing. Sanjay, do you want to add to this? Yeah. As you mentioned earlier, that we continue to focus on retrieving whatever Q2 volume losses we had, and we continue to drive sort of higher reach and drive volume through our distribution reach. Thank you so much. I'll come back in the queue. Thank you. Before we move to the next question, a reminder to the participants: anyone who wishes to ask a question may press star and one. Next question is from the line of Jasmine Surana from VT Capital. Please proceed. Hi. I wanted to ask a question on the margin side. I assume that the other peers in the industry are doing margins not at 20%, where we're at around 11% to 16%. So do you see any headroom to grow and compete with the peers in the industry? And what could be the levers which would drive the margin expansion ahead for us? When you say margin, are you referring to a beta margin? Yes, sir. Okay. So yes, we have seen a decline in margins. We gave you the reasons for that. There was an increase in ad spend. That was a temporary increase. While we expected, honestly, the second half of quarter three to deliver higher volumes, we did see very good demand in the first half of quarter three. But second half, we saw a bit of slowdown again in the market. Therefore, we were unable to deliver the kind of volume that we had envisaged for quarter three. Therefore, we had to spend some extra performance marketing, but this will not be a recurring event, like I said. So that will add back to the margins in due course of time. And so that would be one. And second, we will continue to improve on the margins and on the gross margin side in terms of both efficiency, in terms of savings, procurement savings, and capacity utilization, etc. So that should also bring in and improve the margins over time, right? So these two, I would say, are the biggest levers, also driven by the product mix and the channel mix. So this year has been a transition year in that sense where we have seen demand playing out in some pockets and some pockets being extremely slow. So it's been, but we do see a normalized year going forward. Sure. And another one is on the market share. We've been consistently reporting market share on the basis of FY 2021. So if there could be some color on a QOQ or on a YOY basis in terms of the SMA category, how well are we doing? Are we gaining market share, or is there a lot of local competition that you are seeing, which is keeping the market share suppressed? So, like I mentioned in last quarter's earnings call, we have seen market share we did see some slowdown in some specific states like UP and Bihar, which we did call out, where we did lose some market share to probably competition and to some other new players that have entered because UP and Bihar is basically the first market all the new entrants try to cater to, and it makes the whole state extremely competitive. But in doing that, we have also gained a lot of market share in the west, the south, and the central states. So therefore, we believe that we are pretty much at the same number as of two years ago. But we haven't done any latest study to quantify that, so we can come back to you on this. Sure. Just one last question from my side would be on any category expansion that we're looking at? So yes, we've been focusing quite a lot on the sneaker range. They are called the Campus OGs, the originals. They've been doing extremely well. We've gotten an extremely positive response from both the online and offline platforms. So that is something that continues to remain as a key focus category, along with women and kids, where also we have seen consistent improvement quarter-on-quarter for the last four quarters. So these two would remain our key focus areas. Sure. Thank you so much. Thank you. Thank you. Next question is from the line of Jayesh Shah from OHM Portfolio Equity Research. Please proceed. Hello. Hi. Thanks for the opportunity. Am I audible? Yeah, very much, Jayesh. Hi. My first question is, since our premium mix has moved from 35% to 48%, as you explained some time back, that has not materially helped our material margins or gross margin. Am I correct? It has. But the problem is that we've not been able to take a price increase for almost the last two years now given the market situation. There is a certain cost to making these premium products. So overall, yes, the margins have remained the same. There would not be an improvement because of our inability to take a price increase due to market conditions. So. A normal price increase would be what, 5% per annum? Yes. That's right. Okay. So if the gross margins remain, let's say, 38% and 50% of your portfolio is close to premium mix, where do you think is a realistic gross margin figure? I'm not talking of time frame. I'm just saying that let's say your premium settles, let's say, around 60%. Do you see upside in gross margin, or it still requires price hike? No. I don't think we will not be commenting in terms of the outlook, but there are certain levers of optimization that we're targeting, and they include continued savings. Again, as and when we get the opportunity to take a price hike as the market macros improve, we will certainly do so. And BIS also now coming into play will definitely help as the imports are getting restricted from China now and the other countries. That should also help the domestic manufacturers eventually take the price hikes. So we are counting on some of these levers to eventually add into our gross margins. I understand that, but my question was more from the point of view that any increase in premiumization doesn't necessarily reflect on the material margins. It needs, again, to be accompanied by price hikes. Yes. I would agree. It depends. So a higher premium product doesn't necessarily translate into higher margins. It depends on product to product and also the kind of strategy the company is following at that point in terms of the product mix and the portfolio mix. Understood. My second question is, again, on the EBITDA margin that we have dropped from 21% to 12%, of which I could understand that close to 500 basis points is due to SG&A, ads, and promotion and brand level. But the balanced 5% is still something that is not explained. Is that general factory overheads and fixed costs? Yes. So, Sanjay, you want to take that? Director of Finances. Yeah. I mean, this quarter, of course, we get the volume leverage, but on a longer or on a subdued quarter, of course, the fixed costs would, where we are unable to take the leverage benefit, the fixed costs would definitely impact the margins. And even on the current quarter, if we see, then the organic increase is, of course, 10% inflation. There is an increase in our number of EBOs, so that has resulted in a higher SG&A. And there is, of course, a phasing of CSR spend. There is some bit of reclassification of the short-term leases, which has come and which is now sitting in SG&A, which was earlier sitting below as a depreciation and interest cost. So purely accounting stuff. And of course, there is some bit of inventory obsolescence write-offs and a bit of expected credit loss provisions. So there are accounting-related reclassifications. There are inflation, which is sitting in the numbers, and that's sort of subduing the margins apart from the marketing spend we did this quarter. Okay. So is it fair to say that the new normalized levels of EBITDA margins now would be between 15% to 18% rather than 21%, which was there in the past? We're taking quarter at a time. We're not really giving a guidance for the next year. But what I can assure you is the company is very actively working on improving the margins with a lot of things, a lot of initiatives that are happening at the moment. And one of the initiatives, as you would appreciate, is the reduction in our inventory days, which will also eventually help us recover the margins because we are able to now create inventory with also better margins, right, after you sell off the older inventory. So we are taking a lot of proactive steps in order to recover the margins and bring them back to normalized state. Right. So as of now, given that price hikes are difficult, say, in the short to medium term, the margin recovery is predicated on overall sales or volume recovery, right? That's right. Yes. Okay. Lastly, am I right in saying that while 3Q on a YOY basis is flat, but current year, 3Q had the base effect of the festivals, while last year, the festivals were not basically in 3Q. They were in 2Q? It was a combination of both. There was some festivities effect, yes, certainly in this quarter three. But we did, again, see a very muted second half of the quarter where just after the festivities ended, the demand suddenly dropped. And this was like Pan India that we saw. So it was a very mixed demand quarter in that sense. Right. Right. Okay. Thank you. That's all and best wishes. Thank you. Thank you. Next question is from the line of Manish Dhariwal from Fiducia Capital Advisors Private Limited. Please proceed. Good evening. Hi. Hello. Yeah. Yeah. Hi. So am I audible? Can you hear me clearly? Yes. Thank you. Thank you for this opportunity. I basically wanted to understand how is the BIS situation emerging like? Our understanding was that from January 1st onwards, the product that was a cheap import from any of these countries like China, Vietnam, etc., would not be able to be available in the market. I don't think that is the case. Some clarity on this matter is requested. Sure. So So from 1st of January, BIS has been implemented, and it is in full force. Therefore, if you do a market survey, you will find out that any containers of finished goods being imported from China or Vietnam are being held up at the port. They're not being cleared since the 1st of January. Therefore, whatever inventory is already there in the system, in the channels currently, will take some due course to be liquidated and consumed across all the players, across all the companies. So that's the situation in terms of imports. While we have been manufacturing fully 100% BIS-compliant stock since December already, we were the first company to receive BIS certification in the sports and athletics space. But government has given some extension for a Type 2 general category BIS till July for smaller players. Therefore, we are one of the few players that are manufacturing fully 100% BIS-compliant products today. Not everybody in the footwear space is doing so at the moment. Yeah. But in the retail, you will continue to see the inventory, which is already in the pipeline. It will definitely take a few months to sort of sell all the inventory in the pipeline. Okay. Could you also clarify about these smaller players? As in, they have been given this extension till July, is it? I mean, I couldn't understand that point. That's right. There are two types of BIS, type 1 and type 2. Type 2 is a more lenient specification of sport shoes where a lot of the smaller players are operating. Therefore, the government has exempted them, given them time till July of this year to comply with type 2 BIS. But we being the largest in the space and very, very organized, and we take pride in our products, we are fully manufacturing in type 1 category, which is the highest quality standard. We are supplying all the stock in that category today. Yeah. Absolutely. The Campus product, the quality, I don't think is ever a question. So in fact, my compliment to the team to ensure that and to you, you build that impression in the market as well that if someone is using a Campus product, then it's a high-quality product. But see, at the consumer's end, how will he determine or she determine that the product is a Type 2 or a Type 1? I mean, how can I distinguish if I go to the market? Yeah. Great question. So as per BIS norms, every company is supposed to certify whether it's a Type 1 or Type 2 product. Therefore, in all our packaging, we are certifying that it's an ISI product, certified Type 1. Whereas any Type 2 manufacturer today, irrespective of the BIS getting implemented for them in July, they still have to certify from today itself that it's a Type 2 product. Wonderful. Is there a price differential as well on the products from Type 1 and Type 2? Yes, there would be. I mean, Type 2 is. There are many categories that fall in Type 2 like DIP injection process shoes and school shoes and so on. So there are different categories that fall in there, mostly cheaper shoes but also some lower specifications. Therefore, there would be a price differentiation. That's right. Okay. Okay. Okay. I think that's fantastic. See, secondly, in your scheme of things, you mentioned that this year has been a year of transformation, and you also made a lot of efforts. I'm, in fact, engaging right now at the highest level of the business team here. So I wanted to understand how much of importance do you give to the signage that is visible on any Campus store? It's extremely relevant. We're eventually a brand, right, a D2C brand that's directly going to the consumers. Therefore, branding and the imagery and the perception and the signage, all of these are extremely important to the whole brand ethos and the philosophy that we operate by. That's the whole reason we are making these strides and investing so much over the last six, seven years consistently in branding and marketing, and we'll continue to do so, right? So it's a long-term objective. We do know that we are one of the most preferred and most in-demand brands in the market. Our consumers love the products. They love the quality. They love the designs, the latest innovation that we provide in the market, in the market today. So that definitely is one of the biggest strengths of our brand. Signage is an equally important aspect of that. Okay. So here, I would just like to give one feedback because I did take downs of the various stores, right, without naming a typical or a particular store. I did find that there were cases where the lighting was not right. And then when I went in and spoke to the team there, they said that, "Boss, oh, the irony [Foreign language] है। हमने रिक्वेस्ट डाली है। हमने ये कराया है। हां, हां, जी, दिख रहा है। ये खराब है थोड़ा, लेकिन ये ठीक हो जाएगा।" But then even after when I rewent, I found that things had not changed. That's why I wanted to clarify. So maybe some bit of tightening at the team that does the rounds that, "Boss, how's the signage?" because I think that is the first thing that our customers see. Oh, [Foreign language]रात को तो लाइट ही नहीं चल रही," उसकी, "ओह, नजर ही नहीं आ रहा उसका ब्रांडिंग ही नजर नहीं आ रही।" So that basically makes an impact, which you rightly observed yourself. So one feedback, please. So thank you so much. Wiping it out to us, we will certainly take action. While we do have a meeting. Right. I I think that is very important. To make these rounds. We will make corrections whenever required. Thank you for bringing this to our notice. Thank you so much for taking this in the right spirit. I really appreciate the response that you've given. Lastly, see, I'm not looking at, "See, this other quarter, then क्या मार्जिन रहेगा?" or maybe the margin the next quarter or something. But at a very holistic level, on a longer-term basis, where see, there will be pluses and minuses. You will have to basically do an increase to X time in particular quarter, and you'll have to do some X, Y, Z in another quarter. But at a holistic level, when I look at the Campus as a business, what EBITDA margin do you want your business to be at on a longer-term basis? Say the BIS norms will kind of fall in. They'll become more stricter. You will automatically start getting the benefit of that because there will be so many people who will basically be exiting out of the business because they'll not be able to meet the standards. So all those things will happen. Some new competition will come. Maybe this guy started SELA. So he'll also try to get in competition. But Campus, what are the normalized long-term basis EBITDA margins that you would be satisfied at? So we would love to our aspiration is to get back to our previous ranges of EBITDA margins that we've delivered, let's say, 2-3 years back as well. That would be the aspiration for the brand, and that's what we're striving towards. Therefore, a lot of the initiatives I'd also like to call out that we have appointed in pursuit of further extending the controls and processes, which would also lead to also better margins in some sense, is our migration from Navision to SAP for which we've just appointed Accenture as our consulting partner. And this is, again, a 10-12-month project. So a lot of initiatives, again, would lead to incrementally benefiting the margins. So like I said, what we've delivered is our aspiration in the past. Fantastic response, once again. And so Campus is a very, very strong brand. Campus has a very strong quality association. And you've got a good thing going. And it will require a lot of mistakes to basically spoil the show. So I really hope that won't happen. And all the very best. Thank you so much. Thank you. Thank you. Next question is from the line of Ankit Kedia from Phillip Capital. Please proceed. I just wanted to know, historically, always alluded that the online margins are higher than the trade margins. Now, given the shift in the channel where O2O pretty much doesn't exist, do you still vouch that the online margins will be higher given that you'll need to spend more on the performance marketing as not much as the current quarter, but still the performance marketing spends would still exist going forward? Now, the margins would normalize on online business as well? Okay. Thanks for the question, Mr. Sanjay. Just wanted to add, it is a dynamic setup, and it will continue to evolve the way the O2O and B2B businesses came from nowhere in the last two years, and then now, suddenly, they have tapered down. Likewise, I mean, we might have to just to propel the demand at one point in time, we might have to sort of invest disproportionately in performance marketing, but that does not become the benchmark. We are not just skewed towards one channel. We did spend in the media, in TV, and print ads to create a larger set of awareness. Simultaneously, from a go-to-market perspective, we are sort of consciously working in driving our reach to the more unique retail outlets. And our active retail counts are increasing. I mean, over the last six months, they have increased. It will be a broad-based approach. Eventually, the margins would converge, and there would not be a major delta either on the positive or the negative side between all the channels. Last two years, the margins which we enjoyed in online are behind us. Now, the margins should converge to around 18% to 19%. That's what I gathered from your statement. Depends if the marketplace saliency continues to be on the higher side. Sure. Just on the online part, what was the mix it had to take last full year in terms of O2O, B2B marketplace, and own website? Today, nine-month scenario, what is this mix now? It will help us understand these dynamics better. Yeah. If you see our full-year annual report, so the online was roughly 38% of the mix. And as I said, that different channels within the online space in the B2B would be anywhere in the range of 10% to 20%. So it's a mixed bag. I mean, I won't be able to quote a particular number because there are multiple partners. Sure. Historically, we have made, given the sense there are only four channels in online which you had, probably I'll take it offline with the IR team. Thank you. Yeah. Thank you. Participant, to ask a question, you may press star and one. We have our next follow-up question from the line of Jasmine Surana from VT Capital. Please proceed. Hi. I have just one last question on the volume front. You have given the sales split between the different price segments on the revenue. It would be very helpful if you could also provide us on the volume front, how much is premium, semi-premium, and entry-level? Can you drop us a mail? We can revert back to you on this, please. Sure. No problem. We don't have the numbers handy just now. No problem. No problem. I can get back with the IR team. Thank you so much. Thank you. Thank you. Next question is from the line of Aditya Gupta from Tara Capital Partners. Please proceed. Hi. Good evening. 3 questions first. Back on the margins again. Finding it a little difficult to understand. I know you mentioned to an earlier question, the gross margin movement, and this is, again, going by the reported numbers, which is down 300 basis points quarter-over-quarter. If I look at your sales mix across channels, that's pretty much remained same at 53, 37, 10 for this quarter versus 2QFY24. I am assuming there will not be a major movement in the commodity costs or the raw material costs in the last three months. So what clearly I mean, what explains the 300 basis point decline in gross margin on a QOQ basis? Again, let me just correct here. You're talking about material margin, not the gross margin. And gross margin front. I'm going by gross margin, sir, the way it is reported on the exchanges. Okay. Exactly. Material margin. Yeah. Yeah. So that's driven by the channel mix and the phasing of consumption. So whatever material we have procured in last quarter gets consumed in this quarter and so on. So there is a cycle, right? So despite the sort of improvement in our procurement prices versus last year, there will be a bit of inventory impact. There will be a bit of channel mix impact as to which channel we are selling, at what price point we are selling. So all things put together is getting reflected in the margins. The channel mix, unless I'm wrong, is pretty much same, right? It was 53% for trade in 2Q I mean, 53%, 37%, 10% almost for the 2Q24 and 3Q24. So then either your realization per pair is lower because you've given some discounts to your channel partners, or there is a significant movement in the commodities which were sitting on your book got consumed this time. And then what happens next quarter? Yeah. So if you can see, of course, there would be an absorption impact if you are looking overall from the margin front. So this quarter, we sold more versus what we produced, and our fixed costs remaining same. So there will be a bit of absorption impact as well. And the channel mix, what I was referring to, is the higher sale in the marketplace. So there, while we get a better realization, there are associated costs, direct costs, which means freight output cost, which would influence your margins. Okay. Okay. Second is on the flow-through from the gross to the EBITDA. Now, 3Q24 and 3Q23, the volume is pretty much the same, but the other expenses are up by about INR 48 crores. You said the marketing spends were up from 6% to 10%. That's about INR 20 crores. We still have a INR 25-INR 28 crore increase in other expenses when the volumes are flat. So what explains which variable component went up by a significant amount, if you could please answer? Okay. I did answer this question very beginning. In the SG&A space, there would be routine inflation in an average of around 8% to 10%. Apart from that, we had certain accounting impact roughly toward growth related to lease accounting, which is now sitting in SG&A, which was earlier sitting in the depreciation and interest cost. We have a phasing impact of CSR spend, which we spent in Q3 versus last year Q4. And we have a bit of one-offs related to inventory obsolescence provisions and the expected great loss provision on our receivables. So high-and-large accounting, apart from the inflation, phasing, etc. Employee cost also has increased as per the expectations in line with the. Yeah. In line with the 10% increments and so on, right? So it's also expected to grow. No. Employee cost is fine. I mean, that's understandable. It's been in that ballpark 5% to 6% range in the last seven or eight quarters except the seasonality. So that's not the other expenses, 20% I mean, the other expenses are up by 42% year-on-year, which is what is really standing out besides the marketing spend also. And then on the last question, Nikhil, in terms of the buildback towards higher EBITDA margins, right, the last time you did 20% to 21% EBITDA margins, your gross margins and again, I'm going by the reported numbers were at 49% to 50%, 49% to be precise. Now, 10 quarters from now, we are sitting on a gross margin of, let's say, 51% to 53% in the last three quarters. But the EBITDA is down due to cost inflation, due to lack of leverage, etc. But how do you see this going back? I mean, with higher gross, do you think the EBITDA on a normalized basis should go back to what we used to do earlier? Or do you think there is just some change, there is more competition, there will be more investment, and the EBITDA is probably not going to go back to that 21% to 22%? No. Like I said, our aspiration is definitely to go back to the previous EBITDA ranges. So definitely, this year has been a year of transition again and a tough year in that sense from a demand outlook perspective for the entire industry. But we have taken in terms in spirit of transition, we have taken some one-offs, like Sanjay just mentioned, in terms of smaller amounts, but both inventory and receivables provisioning as well. So the objective for us is that by the end of this year, we should be fully transitioned and ready to go from FY25 onwards. So that's the spirit with which we are taking this year, right? And I hope our long-term investor partners will realize this vision with us. Got it. Thank you. Last question. If I just do a simple math on trying to get to revenue per EBO, right, there also, we have seen and because a lot of these are new EBOs, and they typically ramp up in a year after opening, there also, we are seeing, let's say, for the and I'm just doing an average over here. We are seeing a decline of mid-single digits, let's say, on a revenue-per-average EBO in the last three quarters. So is this just market weakness, or is it a function of the newer stores not coming in at a much lower starting point, or is it a function of stores not ramping up? What is happening over here? Yeah. Like you said, it's a combination of actually all the three factors. There has been so the demand in the market immediately reflects in our EBO channel. It's a live reflection every day. And there, we have seen that it's trending in line with how the market is responding. So even for the new stores that we're opening, we have seen it being reflected by the actual demand in the market, which is a little bit muted at the moment. So that impact definitely is there in terms of new stores growth that you're seeing. But we still remain committed because it significantly helped us. The stores, as of today, stand at 250 as at December end. And it has really, really helped Campus premiumize and build the overall brand perception and upgrade the imagery of the brand, right? So it acts as a virtual showroom where it's also helped us increase our salience in the distribution market in the key territories. So overall, as a strategy, it's worked really well for the brand. And we will continue to maintain and open the same run rate of stores that we've been maintaining for the last three years. That's about 100 a year, is it? Is that a number to go with? Roughly. Yes. Approximately. 100 a year, including the franchisee-owned ones. Right. Yeah. I'm just going by all the EBOs. Yeah. That's right. Yeah. All right. Thank you for answering my questions, and have a good evening. Thank you. Thank you. Next question is from the line of Rajiv Bharti from DAM Capital. Please proceed. Yeah. Good evening, sir. Thanks for the opportunity. So one small bit. If you can specify what is the quantum of the inventory provision and the provision for the receivable for the current quarter? Okay. Inventory would be close to around INR 400-odd crore, which includes our raw material inventory. That's not the provision for quarters. Okay. Sorry. Provisions. Yeah. Okay. Provisions would be around INR 7 crores both put together. Great. Thanks. Was this, I mean, in the previous quarter also, was there any in the base quarter of Q3 of 2023? Yeah. Of course. There would be around INR 2 to 2.5 crores. I mean, it's purely an aging-based provision. So again, as I said, accounting shift between different age buckets resulting into a higher provision percentage. Great. Thanks, San. That's all from me, sir. Yeah. But I'd just like to add that as the company, we have taken very proactive measures to consume and sell off this aged inventory. Therefore, that is also being reflected in our overall inventory data coming down significantly in quarter three, right? So we will continue to maintain that momentum. And like I said, for this year, the objective is, again, to basically press the reset button from the 1st of April. So by Q4 end, you will be done? Or there's more required? Majorly, yes. I can put it that way. Sure. Okay. Thank you. Thank you. Ladies and gentlemen, that was the last question for today's call on behalf of Campus Activewear Limited. That concludes this conference. Thank you for joining us. In case of any further queries, please reach out to Campus Activewear's investor relations team at ird@campusshoes.com. You may now disconnect your lines. Thank you.