Ladies and gentlemen, good day and welcome to Avenue Supermarts Limited Annual Analyst Meet. As a reminder, all participant lines will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rushabh Ghiya. Thank you and over to you, sir. Thank you Aviras. Good morning all. Welcome to our annual investor and analyst conference call for 2026. I have on call with me, Mr. Anshul Asawa, our Managing Director and Chief Executive Officer, Mr. Ramakant Baheti, Group Chief Financial Officer, Mr. Niladri Deb, Chief Financial Officer, Avenue Supermarts Limited, and Mr. Trivikrama Rao Dasu, Chief Executive Officer, Avenue E-commerce Limited. We hope that you had a chance to look at the presentation, which was uploaded last week on the exchanges as well as on our website. As always, we will start the call with Anshul briefly taking you through the presentation, and post that we will open the question-and-answer session for everyone. Before that, I would just like to draw your attention to the safe harbor statement for good governance and will then hand over the call to Anshul. Thank you. Over to you, Anshul. Good morning, everyone, and a very warm welcome to our annual analyst call. This is my first call with all of you since formally stepping into the Chief Executive Officer and Managing Director role. I've been looking forward to today, not just to share where we are, but also to hear your thoughts and answer some of your questions. Over the past one year, I have now spent a lot of time on the ground, visiting our stores, distribution centers across various cities, and therefore getting to know our teams, our vendors, also our customers. It was really helpful for me because we had a well-planned transition that gave me the time to truly absorb the culture and principles that make DMart special. It also gave me space to step back and reflect on where we need to take DMart next. Therefore, before we dive into the slides of the presentation that Rushabh was speaking about, I'd like to share a few thoughts on my reflection. First of all, the fundamentals of this business that I find are rock solid. The model that this business has of providing everyday low price through an everyday low-cost operation isn't just a strategy, but it also has become its moat, and will continue to protect us for years to come. The operational discipline and the customer-first mindset are non-negotiable for this organization, and the values this company was built on will need to stay intact. What I see ahead of us is of course, a massive opportunity to scale this proven model into many more cities. Yes, store expansion is going to be the key. As we grow, we also need to keep pushing for sharper execution and operational discipline. All of you know that retail is all about execution, plain and simple. To support a much bigger footprint of DMart, we will be investing heavily in building management bandwidth and capabilities across all levels of the organization. Another big priority for me will be modernizing our technology and data stack. We will be upgrading key systems so that we can run tighter operations and use our data, which we have a lot of, much more effectively across our categories, store operations, and supply chain. To sum up, our foundational principles aren't changing, but we will definitely be stepping up our game across technology, execution, and expansion as we prepare for a much larger footprint in the years ahead. I will now move to the business presentation. Hopefully, you have a copy. If you see the first slide, our category contributions over the last year have remained pretty steady. We've seen a slight dip in non-food and a marginal increase in food, but our garments and apparel business have remained stable, and we are happy with how this business is performing. If you move to the next slide, we are sticking with our cluster-based store opening approach. Last year, we entered five new states and we also hit the 500th store milestone. Our focus in the coming year would be to now build store density in these new markets while continuing to expand further in our established ones. Moving to the next slide. I know this particular slide may trigger a lot of questions today, let me address our approach upfront. We made a conscious choice to double down on DMart Ready in 11 key cities where vast majority of our online business comes from. We want our team to be laser-focused on proving that we can run a truly sustainable, profitable e-commerce model there. To do that, we are improving three main things for our customers. First one is around assortment. We want to tailor our collection specifically for online buyers, and this of course is going to be a continuously evolving feature. Secondly, around the speed of delivery. We want to make sure that we are able to deliver to most of our customers within six hours of their ordering. This offers great convenience for especially our large basket shoppers. Finally, around user experience. We want to ensure that our digital interface becomes more easier and more engaging to shop on for our customers. We do want to prove that this Way of working is sustainable in these 11 cities first. We are channeling all our attention and resources in AS towards this goal. Moving on to the next slide. Again, this might elicit some questions because some of you might be keen to know what store addition target we are aiming for this year, having reached 500 stores, having opened 85 stores last year. I do want to state that internally, our benchmark has remained that we should be opening around 15% of our store base as the number that we want to increase annually. That said, however, given the realities of real estate acquisition and the fact that we build our stores, some years this could be a few percentages higher, and some it could be a few percentages lower. Our track time to build so many stores is strong, and we are confident in maintaining this over the coming years. Wherever it will make strategic sense, we will also remain open to long-term leasing. With that context, I will now hand over to our Chief Financial Officer, Niladri, to walk you through the numbers. I'll join you again for the question-and-answer in a bit. Over to you, Niladri. Hello, everyone. Good morning to you. I'm referring to slide number 10, where we see a bill cut. We have a healthy growth reaching close to INR 40 crore of bill cuts in the year gone by. Our like-for-like store growth, which is stores more than two years old, grew about 8.1% for the last year. At the end of March 2026, we had about 20.6 million sq ft of retail business area, and our revenue per sq ft from all stores put together came in about flat at INR 33,422 per sq ft. Moving to slide 11, we reported a turnover about close to INR 67,000 crore in the year gone by. EBITDA margin came in about 7.8%. Profit after tax was about 4.8%, INR 3,224 crore of profit, and we generated INR 4,168 crore of cash from the operations. The inventory days went up to 33.2. This is also due to more warehouses that we opened during the year so that we could better service our customers. Days payables remained flat at 7.2, continuing our strategy of paying vendors quickly. Debt and equity inched up slightly to INR 2,267 crore. Out of this INR 2,267 crore also includes debt arising out of Ind AS 116 adjustments. The actual debt, which is net borrowing on the company, is about close to INR 965 crore as of March 2026 end. The fixed asset turnover came in about 3.2x, and the inventory turnover came at 12.8x, which is an outcome of the higher number of inventory days that we are holding, leading to net worth coming at about 13.5% during the year and ROCE at about 17.1%, which are slightly lower than what we reported the prior year. Slide number 13 shows us the split of standalone and consolidated commercials for March 2026 year gone by. Sales grew by about close to 15%. Gross margin expanded by 16 basis points. Employee cost expanded by 27 basis points due to the investment in service levels of the business. Other expenses declined by 9 basis points, leading to EBITDA, which was almost flat at about 7.85%. PBT came in about 26 basis points lower because of the cost increases that we saw in employee cost largely, and PAT came in about 25 basis points lower because of the employee cost increase flowing down to PBT. At a consolidated level, similar performance. Sales grew about 16%, EBITDA grew about 16%, and PAT grew about 10%. The key subsidiaries financials, Avenue E-commerce, which is our online business for grocery. The sales grew about 17%. EBITDA declined by about 43%. We had a bigger EBITDA gain of 84 basis points, and PBT was about 24% lower to INR 307 crore of net loss. Align Retail Trades, which is the grocery packing business, grew about 16.5%, and PAT grew about 24%. Avenue Food Plaza, which handles the fast and ready food business that we have in adjacency to each DMart store, grew about 35.5% and returned a PAT of 9%. It had a loss last year because of expansion that we are doing in certain parts of the business. Now it has turned around and on course to turn a healthy number. Thank you. I think with that, what we'll do is, we will open the floor for question-and-answer. We can just pause for a minute and then start. 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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset for asking a question. Ladies and gentlemen, we'll wait for a moment while the questions are sent. The first question is from the line of Aditya Soman from CLSA. Please go ahead. Hi, good morning, and thanks for the opportunity. Three questions from me. Anshul, firstly, I would like to understand your perspective on exclusive brands and private labels. Historically, I know you've stated the 2020 strategy on private labels, any change to that since you've taken over? We see that at least as far as shelf space is concerned, a lot more shelf space being taken by private labels. Is this a concerted effort? The second question, you talked about more leasing. If you can just throw a little more light on how economics changes for leasing versus outright purchase, given that these are long-term leases. Lastly, on the last sort of earnings note, you highlighted a slowdown in Metros. Just a little more color on what's driving the slowdown. Is it a capacity bottleneck or is it competition from Quick Commerce or E-Commerce? How you plan to sort of combat that? Thanks. Thank you, Aditya. Thanks for your questions. Let me take them one by one. Your first question, which is on exclusive brands and private label. I think our strategy or approach has not changed. In the past, we've spoken about the 2020 principle. I think my own personal reflection is that, also given my previous background, that Indian market is still a very brand-conscious market. Therefore, for any retailers to succeed in this, you need to deliver real value to customers. Also, as you know, that we are an MRP-driven market, so therefore some comparisons are very easy for people to make. Therefore, you can only give real value when you are able to give, as per our 2020 principle, something where you can give a 20% at least price advantage. You should be able to make some margin, which in our case, we believe should be at least 20% more than the benchmark. You should have the right to at least get 20% volume share, which basically means that we need to give true value. That's why customers would want to buy us. Therefore, wherever it makes sense for us, wherever we see that there is that leverage that we can drive, we are participating, and we are driving that private label business. We are talking here specifically about FMCG private label because as you possibly know, that we do not count in that private label the numbers of our garments and general merchandise. Or for that matter, DMart Grocery as well, which as you know, a lot of it, which serves as own brand or private label. Coming back to the FMCG private label, wherever we believe that we can give great value to customers while making reasonable margin, we would continue to drive that. Your second question, which is around your observation on shelf space. I would only say that there is no such conscious effort to try and drive shelf space. A lot of what you see on the shelf, in part, is actually driven more by customer choice. Therefore, there is no specific plan to drive a differential piece on private label. The third question, which is around your comment on leasing. As you know, DMart has always driven the approach of buying the land, building our asset, and then driving the business through that. What we are also realizing is that in certain geographies, it may just not be possible to get the land that we need. Therefore, we are going to be more open to going for also leasing option, provided, of course, they are long-term leases and provided that they meet our requirements. Therefore, we'll be open to that as well. There are certain geographies that we have been driving that, and we'll continue to do that. In fact, I can possibly share a number also that last year, for example, we now have about 68 stores- 65 stores. 65 stores, sorry. 65 stores which are on lease, long leases. Therefore, it's not a very small number. It's a reasonable number in the overall store count of 500 now. That's on the leasing side. Now, in terms of the financials on how this works versus the own stores, I don't think we share that number and declare that publicly. I'm not going to be able to share that with you. Needless to say, I think both these models work well for us and going forward also. Therefore, we will continue to be open to that option. The last question that you asked around- Just a pause. Niladri. I think we have 68 leased stores. Sorry. You are right. It is not 65 stores. 68 stores. Yeah. I think I was mentioning 68 leased stores, that is the right number, not 65. We have 68 leased stores. Okay. Last question that you had, which was on the slowdown in Metros. Indeed, I think we are seeing, especially in Metros like Mumbai, Bangalore, et cetera, where we have stores which are, one, very old, also very dense with very high throughput. Therefore, to some extent, these stores are reaching that saturation point. The points that you made around capacity indeed is an issue in many of these stores, and which is where in some of these cases, we are opening new stores as well. Which impacts, of course, the SSG growth because you have another store coming up nearby. I also think that there is a fair amount of impact also on account of competition, which also is making a dent in some of these stores. Combination of capacity, saturation, high throughput that we are already getting from these stores, plus competition is what to our mind is the reason for some of the large Metros to slow down as far as same-store growth is concerned. Aditya, I hope I've answered your question. Yes, Anshul. Thanks. I'll come back. Thank you. Thank you. The next question is from the line of Abneesh Roy from the Nuvama Group. Please go ahead. Thanks. I have two questions. First is, if I compare the previous call to now, in terms of competition on the quick commerce, daily Amazon Now and Flipkart Minutes have picked up. If you could give a overall summary, in terms of competition versus last year. Are you seeing a pickup in the FMCG part specifically? Because earlier your positioning was at clearly everyday low pricing and even in terms of assortment, FMCG companies used to work very closely with DMart, specific packages, specific pack sizes and specific brand extensions also. Now, when you compare with the dark stores of all these quick commerce, specifically Amazon and Flipkart, given these are new players versus last year, are you seeing a big change in that, in terms of your right to win? I understand the pricing bit, but in terms of availability of a lot of these products. That was my first question. Okay. Thanks, Abneesh. Thanks for your question. If I've understood your question correctly, Abneesh, let me know once I've answered whether I've addressed it. Yes, there is more number of players when it comes to competition this year compared to previous years. When it comes to, let's say, partnering with our FMCG vendors, is there any shift that we are witnessing in terms of their attention or their focus on DMart as a retailer? No, there isn't. In fact, I would say that many of them, in fact, are doubling down. Over the last one year, I've had the opportunity to meet many of our key vendors, not just once, but twice, to discuss how the FMCG businesses of theirs could be driven in DMart. Now, the question that you asked around assortment, I think that has to be an ongoing piece of work that we need to continue to do, which is to try and understand what our shoppers are buying, what are they seeking in a DMart store, and where exactly do we need to get it from. If it is already successful in general trade, we typically get it from the FMCG companies. If it is kind of picking up in a quick commerce or in e-commerce setup, there again, we have ways of understanding what exactly is happening at scale. Businesses or brands which are becoming big and scaled in these channels, we try and bring to DMart. As you know that we drive a volumes game, we are not necessarily the place where a completely new brand will get launched. Once it is gaining traction, it has got some size, it is something that we are able to very quickly bring in through our FMCG vendors. Over the last, I would say couple of years, there is also a fair number of D2C brands as well that we've been able to introduce in our DMart stores based on, again, the success that they've been able to achieve on the online space. Abneesh, I don't see any reason at this point of time to suspect that FMCG companies are not focusing on DMart. I would say, in fact, they are focusing increasingly on DMart, because we have become a very sizable and significant part of their business. In many cases, for example, we are the number 1 retailer for them, as an individual entity. Sure. That's helpful. My second and last question. If I see the recent FMCG results, I do see that food companies are growing faster than the HPC. When I see your slide number five, again, that is coming out very clearly that non-food has lost some share within your revenue to food. I wanted to understand, is GST driving because a lot of the GST rates cut in Q3 happened in food. Is that the reason you could attribute that to? Or is it just that the recovery in FMCG is more in food rather than HPC? To be honest, Abneesh, I don't see that difference between food and non-food. From my perspective, I think the difference that you see in terms of the percentages between last year and this are very marginal and may be a factor of a little bit of inflation in different categories between food, non-food, the mix that we would have sold in these businesses. We don't see any big difference in terms of how foods and non-foods are playing on account of GST. Thank you. That's all from me. Thank you. Thanks, Abneesh. Thank you. The next question is from the line of Avi Mehta from Macquarie Capital. Please go ahead. Yeah. Hi, team. Thanks a lot for the opportunity. Sir, I first wanted to understand from the same-store sales growth perspective. You did highlight about competition, about the fact that dark stores have probably peaked out. Wanted to understand, do you see this moving? What is required for it to move back to the double-digit levels that it was doing? Do you see a path towards that or has the scale kind of has to be factored in mind? A. The second bit is on assortment, sir. You said on category looks in particular. While I do understand on an annual basis it's flattish, is it possible to see general merchandise share going back to historical levels? The last bit is on store additions. You did say CapEx stores is on lease. Does this proportion need to move up as you look to add 15% store additions? These are the three questions. Thank you, sir. Yeah, thanks. Thanks, Avi. I think on same-store growth, as I mentioned earlier that the reasons are basically on account of maturity of these stores, the fact that they're already quite dense, the throughputs are very high, the footfalls are pretty high as well. Therefore, the way DMart has always typically approached this is by opening more stores nearby, so that some of that pressure could be moved to the other stores. Therefore, same-store growth would possibly be hovering more in the range that we are seeing today, and we are not likely to see that go up considerably all things being constant. I'm referring here to inflation and those type of matters. I think on SSG, we should expect, especially for our older stores to have that type of a growth level. When it comes to the second question around assortment and your question on GM&A and whether the GM&A can move to that historical level, I think we've been maintaining for the last few years. We expect this particular part of the business to be somewhere in that 22%-23% kind of a range. It is, as I said earlier also, it is doing quite well compared to the total business. Therefore, we are happy with the progress that is being made in both the general merchandise and the apparel business that we are having in our store. I don't expect it to get to the historical level, and there is no intent also to drive it to that level, because as I said, 22%-23% contribution would be a good contribution in this case. Finally, on the store additions, we don't have a number in terms of the percentage that we would want to get to on lease. As I said, the number that is driving us is that 15% ballpark number on what we want to achieve as store additions on our base. For that, if, for example, we are not able to get owned land property, then we will move to a lease option if that is something which is meeting our requirement. There isn't a number, but would it go up? Possibly it would, because there will be certain cities that we would want to go to, where we might have to go for the lease option, which is always going to be open case in point. Sir, if I may focus on the first part, which is the same-store sales. I do understand. Is the competition from quick commerce, that aspect not kind of peaking out now, and hence that could allow us to move up on the same-store sales? You would cite that also as one of the headwinds. Yeah. The reason. Yeah. I think what might be happening is that some of the customers would be preferring to buy from quick commerce because of the convenience of faster delivery, especially for the lower basket sizes. Therefore, there could be some impact happening on account of that. I'm suspecting that that's not going to change for the next few years. Therefore, that impact would remain while we, of course, continue to keep driving our own assortment, our own execution in these old stores, while of course, continuing to expand into newer geographies and new stores. Got it, sir. I'll come back and get to the third question. Thank you very much for this. Sure. Thank you. The next question is from the line of Anand Shah from Axis Capital. Please go ahead. Yeah. Hi, team. Just a couple of questions. Firstly, on the margins part, we've seen some gross margin improvement happening over the last two, three quarters. Just wanted to understand, one, the driver of this, because the mix has broadly remained similar and even on the margins, if you look at staff costs, we've seen a lot of increase over the last 12 months- 18 months. At least from the annual report I could pick up the staff cost quantum has gone up significantly, almost 40%+. Are we done with that buildup? Because our sense is that may have been front loaded because of aggressive store expansion. Just wanted your thoughts on the margins and where you see GM and staff cost. Okay. Maybe I'll ask Niladri to answer this question, and I'll come in and- I think the gross margin, if you notice, has just gone up by 16 basis points without any appreciable change in the product mix. This, I think, is rational for the margin that we make on the business. As Anshul mentioned earlier, our healthy growth margin is equivalent in the range of 14%-15%, which keeps us very competitive, and that's the moat that we look at. Staff cost, yes, there has been a significant upsizing that we have done for the capability build that we have mentioned earlier. Whether this is the end or not, very difficult to say, but I think we are building the organization for a very large organization size. From that perspective, we think the company can do much better in terms of volume and turnovers, and hence we are building the staff cost ahead of the curve, is how I'll put it. Got it. Just a last question from me. Just wanted some thoughts, and Metro you, of course, highlighted a lot in terms of the matured stores and all, but from, let's say other towns in Tier 2 and maybe in Tier 1 as well, how are you seeing the throughput ramp up, let's say, for the stores you've seen in the last two years that you opened? In general, I'm assuming, I think quick com competition there is less. There the growth is tracking higher, or how are you seeing it dynamically or versus quick com? I think those stores that we mentioned also are doing much better versus the metro stores and the older stores. The throughput and the pickup also in these stores has gone as per our expectations. We are quite happy with the way the progress is happening in these Tier 1 and Tier 2 other cities. Got it. Sir, if I would just follow up specifically then, the SSG in those stores, let's say, would be much better than your company average? Yes. Of course. Thanks a lot. Thanks. Thank you. The next question is from the line of Garima Mishra from Kotak Securities. Please go ahead. Sir, thank you so much for the opportunity. Anshul, this question is for you. In the earnings report, you have highlighted that the DMart focuses on bulk procurement and prefers bulk purchase by customers. Is the model cost still relevant in the context of quick commerce, which is focusing on just the opposite, a higher frequency and low AOV volume? Garima, I have talked about the bulk purchases that we make from our vendors. Also the fact that many of our customers still buy for their monthly or weekly shopping, large amount of quantities, especially given that we have large families and a pattern of buying, which makes people buy both monthly as well as, of course, on a daily basis for convenient shopping, et cetera. I think our business model is created in such a manner that we will be able to provide a significant amount of value to make that trip worth it for the customer to come to a DMart store. A significant number of customers actually make that trip and save a significant amount of money in their monthly budget by doing so. If I were to just reflect on this, I don't see this going away, Garima. This is likely to continue, where people will, of course, at times, for sheer convenience, want to go to a quick commerce site and order something at 9:00 P.M. or 10:00 P.M. or even in the morning. When it will come to taking the whole month's grocery or for that matter, even the whole week's grocery, it would make more sense to come to a DMart store and get that significant saving in their pocket. All right. Understood. In this context only, is competition from quick commerce having any impact on where you would add new stores? Is it likely that most of incremental stores are added in Tier 2, Tier 3 cities or other cities where competition from quick commerce is a little lower? We are not driving it in this manner, to be honest Garima, because as I mentioned earlier, some of our metro stores which mature, which become saturated, sometimes require another store nearby for us to be able to cater to all the customers and also relieve the pressure on those stores. To a large extent, this will be driven by the opportunity that we see both in metro stores to reduce the pressure on our existing ones, but also the growth opportunity that other stores provide. As you know that we have a cluster-based approach, so as we get into more geographies, we will try and increase the density for stores in those states, in those markets. That is also another thing that would drive our store expansion strategy. I mentioned that we have entered into four or five states, therefore in these four or five states that we have entered last year, we would be looking at how we could increase our density in these places, because that would provide us the operational efficiency to be able to again serve the customers with great value. A combination of those. It is not as if we are now identifying those markets where quick commerce is not present and only opening there. That is not the strategy at all. It is looking at every place, whether it is a Mumbai or in a Bangalore or even a Hyderabad. We are looking at opportunities even in these places to open new stores. Very clear. Last question from me. Some view on store level margins. Now, as some of your older stores mature, same-store sales should compresses. There is an inflation-linked increase in costs every year, and this year we have already seen minimum wage hikes, et cetera. How do you intend to ensure consistent margin performance of some of these stores? We don't look at a store level margin in that greater detail, and this is not a metric that we share with our store teams. We look at how we are doing at an overall level, Garima, and as long as we see that the stores are being run in a productive manner, the productivity levels are good, our expenses are in control, and the throughputs are again driving that, we are actually quite okay. We are indeed seeing some inflation on account of the wage codes and also diesel inflation. The throughput increase at this point of time that we see from these stores is taking care of some of that. Are we getting into the granularity of each store's P&L and chasing our teams around that? No, we don't do that. Very clear. Anshul, thank you so much for taking my questions. Thanks, Garima. The next question is from the line of Arnab Mitra from Goldman Sachs. Please go ahead. Yes. Hi, team. I had a couple of questions. The first is actually again related to the quick commerce competition you are facing. I just wanted to understand, are you making any changes in your stores, whether it is for service standards or using data from a consumer side, which will help you maintain a better share of the consumer wallet in these cities where quick commerce is becoming bigger? A related question to that is, why do you still want to stick to a slotted six-hour delivery? Is there some consumer insight that six hours is something where the consumer values quite a lot? Because the service standards obviously have gone up significantly with quick commerce and the expectations of delivery times are now very low. Just wanted to understand the six-hour delivery versus not trying to go for an immediate delivery model, even if it's a longer, like 45 minutes, 50 minutes. Okay. Thank you, Arnab. Thanks for the question. I think the first one on what are we trying to do against quick commerce in the store. I think the way I would answer this question is that like any other channel, whether it is general trade or other modern trades, quick commerce is also now an important and relevant channel. We keep scouting and looking for what is scaling up in these channels. If there is anything which is becoming relevant for our customers, we would want to bring it into a DMart store as well. We have a model of trying those out in a few stores and seeing whether it is getting traction and then, of course, rolling it out fast as well. To answer that question, if there is something which is becoming really relevant on quick commerce or GT or any other channel, Arnab, we do scan that, there are ways of doing it, then we do bring those in. There are quite a few examples that we have in our stores over the last few years where we have done that. As I said earlier also, we will not be the first place where a new brand will get launched. Once a brand gets scaled, it would be brought in quickly into a DMart store and scaled up. That is the answer to your first question. The second question around slotted delivery. Arnab, there our belief is that there are different types of, let's say, models are in operation at this point of time. Quick commerce obviously is the one which is going to be spoken about most, I guess in this call also. It is a model where we are choosing not to play. We believe that our uniqueness could be in being able to provide tremendous value to those who are planning a purchase for their month or fortnightly requirement, they will be fine with a delivery which is under six hours. It's not we are saying six hours, which is under six hours. It is a slotted delivery for a large purchase which also then leads to tremendous value gained for that customer. We believe that there is a significant number of such customers. What we, however, need to do is to make sure that we are able to serve them in a profitable way. Arnab, one of the things that we have chosen, which would be different possibly from other models, is that we've chosen to follow a path where we will grow this business in a responsible way, we will grow this business in a profitable way. We'll grow this business by serving the needs of those set of customers who are looking for value from a large basket. Got it. Thanks. That's very helpful. My second question actually again on the leasing model. You did mention 58 stores which are now leased. Just wanted to understand of the 85 stores which you added last year, if you could give a number of how many of those stores were leased. Why I'm asking this question is just to understand incrementally is the proportion of leased stores going up and therefore does it have implications on CapEx that you need to do now going ahead? And also given that the lease cost would probably be lying in lease or amortization, and you could correct me if I'm wrong. Is it now more important to look at the EBIT margins rather than EBITDA margins because a lot of the store costs would be incrementally lying down. Just wanted help on understanding the lease model impact on financials, at least directionally. I will take on the first part, Arnab, and then hand over to Niladri. When you were talking about how many number of stores did we add last year and how many of them were leased. We had 15 stores added last year which was on the lease model from the 85 stores. Slightly more higher percentage compared to what we have done in the past. Total 68 stores in the total base of 500 stores. 15 added last year. Niladri? Yeah. On the financial modeling, Arnab, this is also about your rights, the finance and the depreciation cost under the Ind AS 116 comes below EBITDA. You can look at PBT as a fair indicator of the impact of lease cost in the P&L. As Anshul mentioned, 15 stores out of 85 stores is not a very big number to distort the P&L wildly. Plus the lease cost also amortizable longer duration of the lease rent, which is a long duration lease contract, unlikely to drastically alter the P&L side. Got it. Thanks so much. If I may ask one last question. In the last three quarters, Anshul, what we've seen is growth of 13% in the December quarter, 19% in the March, and 15% in the June quarter. It's been a little volatile by our own standards which historically were much more closer. If anything, you could help for us to appreciate the variation that happened in the last three quarter growth. Were there any specific factors which happened which could make us understand how these three quarters played out? I think we've been quite transparent, Arnab, in terms of sharing at least the big highlights on each of these quarters. In the quarter where we had the 13% growth, some of that was on account of the deflation that we had in our grocery business and staples business. When it came to last quarter, meaning the quarter 19%, last quarter of previous financial year, the 19% growth to some extent did get impacted by the panic buying that happened in the month of March which then had a spillover effect onto the next quarter, which is this last quarter that has just gone by. There are, of course, a few events that have happened, the few conditions that have prevailed around inflation or deflation that have resulted into this type of a variation that you are talking about. Those were being explained, those were the main reasons for this difference between 13%, 19% and the 15%. Got it. Thanks so much. That's it from my side. All the best. Thanks, Arnab. Thank you. The next question is from the line of Nihal Mahesh Jham from HSBC. Please go ahead. Mr. Nihal, your line has been unmuted. Please go ahead with your question. As there is no response, we are moving ahead with the next question. The next question is from the line of Amit Sachdeva from UBS. Please go ahead. Hi, good evening and good afternoon. Thank you so much for taking my question. My question is on network rollout. Thank you for sharing that there's a 15% expansion target and you're open to leasing as well. What I wanted to ask is that this would imply about 75 stores run rate and gradually going up. Is this ambition right in the current context where everybody's trying to grow stores and grow businesses? Can it be 100,000 150,000 as well? Or is there a bottleneck in going to that number? Or is it something that you want to just feel comfortable with that number? What I want to ask is that, is there a possibility that the store could be 20,000 sq ft, not 40,000 sq ft and slightly more lease, not owned always, but it is the urgency with which you need to build network would help you capture the value. The market is expanding, competition is also rising, as you rightly say. Is there something rigid about this 15%, or is something that is kind of a goal, but it can go up and down? Just want to understand the thought process behind 15%. Yeah. I think, this has been spoken about in the past as well, where we have tried to give a range. This time I wanted to be a bit deliberate in terms of saying internally we go for this 15% number. We plan our acquisitions, be it the land acquisitions, the building of the real estate, the property, all of that. runs through this type of an internal number. Sure the values of real estate and how these could change because of a variety of factors. Sometimes these numbers could be higher, sometimes these numbers could be lower. Last year, for example, to be very honest, we thought that we would be opening a lesser number of stores than what we eventually ended up opening. Because we had certain properties that got ready faster than what we thought, we decided to open them in the last quarter of the financial year. You had a much higher number reflected in the previous year. This all depends on how, as per our business model, stores get ready, the land gets acquired, et cetera. We have built a team, Amit, such that it can actually scale more and more number of stores for us in the future. Land acquisition and building a property is always going to be a challenge. Therefore, we do not want to rush into it. We do want to make sure that whatever we are doing, we are doing properly. We are building a store as per our requirement. We are building as per the regulatory requirements and ensuring that we have people staffed in it who can run these store operations as per the DMart ways of working. Yes, there might be a little bit of a conservatism according to you, but we want to make sure that when we get the store in a market, we get it right the first time and we are able to scale it as the years pass by. The option of lease, as I mentioned already, always open if we are not able to get a land of our requirement. This is something which will be, for example, very relevant for a market like NCR, where it is always difficult to get own property. For that matter in other geographies as well, we are looking at that option. As far as the smaller stores are concerned, if, for example, that smaller store meets the requirement, we will go for that as well. There's no requirement that we need to necessarily have a 40,000+ sq ft store. There are examples of where we've gone for lesser square footage too if that meets that market requirement. Again, coming back, we believe that going for this kind of a number of 15% provides us the bandwidth to do these stores properly, so that we can run the operations as per our DMart ways of working to be able to serve the customers. With that type of a target that we can achieve, we'll also be able to get into that good growth band that we would want to have in the medium to long term. Got it. That's very helpful. Thank you so much. My second question is on the DMart Ready bit. I think very clearly you said that the focus would be on 11 markets and increasing the intensity of service levels to six hours and assortment which are suitable to that. I think seems like a great initiative in my view. My question comes from that, is there a change in the way business was done earlier? Would that be an omni-channel approach? Would you build that capability within the store itself, or it would be still a separate thing which is coming from two different places? What I want to understand is that why not merge that business with the main store business and see that as a one pin code growth rather than e-commerce being profitable. I think how tangible that two revenue stream could be and is under the new plan, it is becoming more integrated or still sort of approached as two different set of requirements. Just want to understand, is there a change in the thinking there, or is more focus in delivering that value? Look, there's no change in thinking. If the question is there a plan to integrate AEL with the ASL business? There is no such plan because our belief is that the online shopper- the customer that DMart really is catering to, has some specific needs which are around convenience, which are around assortment that is relevant for them. Therefore, I think we continue to drive it separately. Integrating with an ASL business, the physical store is going to be hugely challenging, especially given the kind of intensity that we have in our ASL stores. The throughput, the foot fall, et cetera, would just not allow us to run an omni-channel type of an approach that you are talking about. The plan is to keep them separate. I think the only change I would say which might have happened from the past is we were trying different sets of models when it comes to AEL. We are aware of them. We had the pickup points, we had some other models also which were being run. What we are now clear about is that the customer seems to have moved into a delivery type of a model. Therefore, that's where we would put all our focus on, and the others would therefore take a back seat. Thank you so much, Anshul. Just finally, if I may ask the last one. I think Arnab asked this question as well, that growth has been bit volatile as you alluded to. It is because of sometimes pricing inflation and deflation, impacts that kind of revenue trajectory. What I want to ask is, given we are in a bit of an inflationary environment, where pricing across the board FMCG has taken and we see across many SKUs. Would you see that element will be more pronounced now and we should be going back to 19%, 20% growth rate in the foreseeable? I'm not asking for guidance, but on the same principle, I'm just saying that for the 15% kind of growth that we saw last quarter, it was a one-off and we should be hoping for higher trajectory structurally, not just cyclically. Would you sort of signal that as well a little bit because given the pricing is becoming part of equation now? Look, I can't sort of predict in terms of how inflation or pricing would be. As you know that we basically just pass through whatever pricing that is given to us from our vendors. We basically just ensure that the same is passed on and whether there's a price decrease or deflation or an inflation. Therefore, whatever gets passed on to us is what will get reflected in our business results as well. That will be difficult to say what exactly would that mean in terms of actual numbers. Yeah, suffice to say that whatever inflation that will be seen in the marketplace will get reflected in our pricing to customers. Got it. Thank you so much, Anshul. Thank you so much for taking my questions. All the best. Thanks, Amit. Thank you. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead. Yeah. Hi. Can you hear me? Yes, we can. Go ahead. My first question was, I heard you talk a lot about e-commerce, but I wanted to check if you could share with us some color on underlying operating metrics on high-frequency indicators for the DMart Ready business, maybe in a relatively more metro market like Mumbai for you in terms of AOV or transaction growth. Also wanted better clarity on how do you sense the QC risk in whether that risk is more relevant or real for Tier 2 and Tier 3 cities too. Since today, are we underestimating that risk for these markets, something that is bothering us in Tier 1 cities and metros could become a bigger issue in the smaller cities as well? That is the first question. The second question was as you scale up your presence both offline and online, could you call out some of the management leadership changes in your team that you have done over the past one year? Thank you. On the first question, Latika, I think some of the metrics that you were talking about, unfortunately, we do not kind of disclose those. I will not be able to share that. The question that you asked me around what is happening to Tier 2 and what will happen to quick commerce, et cetera. Again, I can't really say what will happen to quick commerce because that is something that is for them to drive. Our belief is that if we can continue to drive our brick-and-mortar business the way we have driven it in the last couple of decades, which is making sure that these are able to serve everyday low prices to customers on everyday low cost, everyday consumption products. We have a very significant value provided to the customer and therefore, a long-term sustainable business model. We need to go to more and more geographies because I think it has been said in the past in these calls as well that the Indian market is still quite a large market, and organized trade at this point of time is still a relatively a small fraction of the total business. Therefore, it will provide the opportunity to all types of channels and business models. I think the question to ask in my mind is that will the brick-and-mortar business of DMart be a sustainable growth model in the long term? The answer to that, we believe is yes, a resounding yes because It is a profitable model. It is a model which is providing value to customers. It is providing value to vendors. if we can keep driving that well, whether it is in Tier 1 or in Tier 2 or Tier 3 cities, we'll do well. What quick commerce does there in the coming years is for them to decide. The question really will be around the sustainability of anything that we provide to customers, which in our case, we believe we'll be able to do through everyday low prices. Sure. Could you talk about any key KPIs you track for your e-commerce operations? Is it like currently it is maybe close to a bit of breakeven or slight losses on EBITDA? What are the key KPIs you will track there? Is it like you would want it to turn profitable first and then scale up? Or any color or any thought process that you could share with us? Latika, I think I've mentioned, saying that we do want to make sure that in these 11 cities, we are able to prove our model, which basically means that we are giving the service that we have promised to the customer around assortment, around delivery time, around the experience or the convenience of shopping on our platform. The real question for me is that, are we able to do that in a sustainable, profitable manner? The KPIs that typically the industry would track, we also track internally. It's not as if we do not track any of those, and those are also equally important. For us, it's also important to understand whether we will be able to do this business profitably because let me be very transparent here. Over the years, last few years, what we are seeing is that as we have tried to expand into more and more cities and geographies, of course, the number of customers acquired were larger, et cetera, our losses also grew quite significantly. I think the call that we have taken is, we would want to make sure that these losses are reduced significantly and we have a way forward to be able to drive this business more profitably. Understood. Anshul, at an aggregate consolidated DMart level, you mentioned that SSG for the business should hover around current levels, which is hovering between 7%-8%, maybe at that level. Assuming that, you have laid out wage inflation and generally the e-commerce will also come with a cost, how should one think about the net margin for the business going ahead? Do you see any material downside risk, or do you think the business should be able to maintain the margins in the current range? I think, Latika, again, I think if you look at the financials over the last five, six, maybe even seven or eight years, our margins have been broadly in that range of 14%-15% at the gross margin level. The net margin also, we believe that it can be around that 5% type of a range, ballpark range. We are quite happy with that. I don't see any significant material impact that should happen on the net margin front. As I've said again in these calls in the past as well, we are not really looking at expanding the margin at the cost of compromising our proposition to customers. Therefore, 15% kind of a gross margin and let's say around a 5% kind of a net margin should be the North Star for this business even in the future. Understood. The last one, just repeating my earlier question on any fallouts on your leadership changes or any specific capability build-out that you are particularly focused on. Thank you. I think I've already mentioned about the capabilities that we want to build. One is, of course, in a larger organization with many more stores and a more complex organizational setup, we would need to keep building capabilities across levels, both at senior management at also the store levels. We will need to obviously build capabilities in the technology space that I've also called out. We are looking at bringing in talent in that space as well. As far as my own leadership team is concerned, there are some natural progressions that would anyway happen as superannuation happens or some exits happen. Those will all be part of the natural course that we will be taking and informing as and when they do. Understood. Thank you so much for answering my questions. Wish you the best. Thank you, Latika. Thanks for the questions. Thank you. The next question is from the line of Jignanshu Gor from [inaudible]. Please go ahead. Hi. Good morning, and thank you for taking my question. My first one was on the employee cost and numbers. We've talked about capability building in the employee cost, which I presume explains the significant addition in permanent employee count by almost 4,000 in this year, right. Which is the highest ever. On the contractual employee side, despite we adding 85 stores, the employee count went up by only 2,200, right. Versus an average addition of almost 10,000 in last three years. How should we think about this? Is there any change in approach of how many employees do we have in the store, et cetera? Thanks for your question. Niladri can give you some details here. On this permanent employee count, what happens, Jignanshu, is that every store that we open needs a cohort of permanent employees to run the store efficiently. That is about 75%, 80% of the headcount addition that we have done. This year, since the store count went up, so obviously the permanent headcount will go up. On the non-permanent headcount, you're right. There are two things that we must keep in mind. One is the position that we are seeing in the VLSR report is the position as at point in time, March 31st, to be precise. Second is we have driven productivity initiatives for the manpower in the stores as well as the warehouses. Those counts are inclusive of that. We are seeing some ability for us to do some mechanization, some productivity improvement, which has helped us optimize the headcount of the non-permanent side. That is how we are looking at it. On the absolute number of employee cost per se, there has been slight impact also of the wages code that we implemented from December in the March quarter. That also has contributed to the 33% hike in employee cost in the same store sales. Just if I can follow up on the permanent employee at a store level, would you be able to highlight typically which profiles of employees at stores are permanent versus contractual for us? The frontline employees in the store, which are largely the cashiers and the packers and the shop assistants are all non-permanent. The management employees, which are the department managers, store managers and all that are permanent. Great. Thank you. That's helpful. My second question was on the financing approach or CapEx, right? You said that we have around INR 900 odd crore of actual debt on our books as of March 31st. If I look at a commercial paper, et cetera, as of right now, it seems around INR 800 crore are outstanding. Last year, INR 1,000 crore of NCDs, which you have approved. Is this INR 1,000 crore expected to be in addition to the existing INR 800 crore of CP or a replacement? How do we think about that as a way of funding our expansion? On the expansion side, the availability of funds should not be a hindrance to expanding. The INR 1,000 crore NCD has been approved for us to explore opportunities of reducing the cost of debt. Sometime it could be in addition to the CPs that we are holding. We might go to a INR 2,000 crore borrowing by the end of the year. That is all going towards managing CapEx. Last year CapEx was upwards of INR 4,000 crore. With the increasing store count that we want to pursue, we will need some CapEx as of this supply. This gives us the flexibility to reduce cost of borrowing through the NCD route and also gives us an opportunity to borrow for longer periods without the interest rate risk. If you go to the CP market every quarter, you run an interest rate risk based on how the overall market is moving. We want some certainty in the cost of borrowing, hence we have taken an approval for NCD placement. Yes. Very helpful. Last point on the expansion of the network that we have seen so far. We've been increasing the amount of money that we spend on land acquisition every year, right? Especially over the last five years. We've mentioned in the past that on an average, we convert acquired land into stores in two years. Is that timeline still consistent? Hence, would it be fair estimate to say that the fiscal year 2026 store addition was the fiscal year 2024 land acquisition on a very averaged out basis? Is that a fair estimate? Historically, what we have seen is, depending on the configuration of the store, it anywhere takes between two to three years. If you have a double basement plus multiple story store, it takes a bit longer time. If it's a ground floor store, it happens much faster. The way we look at land acquisition is we keep generally a pipeline of two, three years of projects based on the land acquisition portfolio. If you want a strict correlation of stores opened in 2026, where they all bought land in 2024, might not be true all the time because some stores get converted a bit later. There are some permissions, regulatory approvals which take a longer time. Suffice to say that as of now, we are sitting on a project execution of next two to three years of stores that we'll open. As Anshul mentioned earlier, it takes varying amount of time based on complexity as a local micro market dynamic. Last question on this is, again, in the past we have mentioned that as we follow the 70/30 approach of opening network, which is 70% in the same sort of states or cities and 30% in exploring new states. Our ramp-up time for new stores has gone up. Would you be able to throw some light on that? Is that what we are seeing in the stores that we are opening now, especially in the smaller towns? Are we seeing a faster ramp-up of, let's say, a steady-state earning? Is there an optical implication on the SSSG? Two things we have to keep in mind here. One is, Anshul, that the SSG that we disclose is more than two-year-old stores for us. The second is that it is very city specific. In some cities where we are super saturated, the stores ramp up faster. Some new cities' stores take longer time to ramp up. It's a mix. It's not a single size fits all approach. I think if I can just add here as well. I think there are various factors that happen. It also depends on how strong the DMart brand is in certain states. What sometimes happens is that in a state where the name is known, the proposition is known, even in a smaller or a newer city, the ramp-up happens much faster. It's a combination of different things which drive that. Good. Got it. On the store expansion, just a very quick follow-up. You've mentioned 15% as your As your longer term CAGR target, last year obviously we did 20%. This year, is it possible or feasible without any commitment, of course, to do more than 15% and closer to that 20% again? Or would you say that 15% is a fair estimate even for this year and next year? I think as I said that is the internal number or internal ambition that we will look at will be the 15% number. Again, depending on how the situation turns out on the real estate development, the permissions, et cetera, it could be a couple of percentage points higher or lower. That will be something which will know closer only to time. Thank you so much for the opportunity. I will come back in the queue for more questions. Thank you. Thank you. The next question is from the line of Nihal Mahesh Jham from HSBC. Please go ahead. Yes, hi, team. Good afternoon. Am I audible? Yes, you are, Nihal. Go on. Yes. Hi, Anshul. Anshul, three questions. First is just one clarification that to one of the earlier participants, did you mention that, say, for the cohort of metro stores given, say, the increasing competition maturity and the fact that we are opening more stores closer, that the new normal SSG is going to be more like a mid-single digit or the current trend? Just wanted to first clarify that. I think we've said that it will be around the current trend, what we have been seeing over the last years. Right. Current trend means is it what we did in just the last quarter or you're talking about the year alluded to be more clear? Last year. Last year. Okay, that's very helpful. The second thing is, again, you mentioned that DMart's proposition remains more about the fact that it's slotted and it's for the monthly purchases. As we've been asking literally every year that today, at least from the comparisons we do anecdotally or checking your prices online, that versus a lot of the other quick commerce players, there is sort of pricing parity that we notice. Given that for a store, there is this incremental effort and cost of traveling involved and the time involved. How is it that a customer then makes the choice of then sort of visiting a DMart store? I could be wrong. That may be my view of the prices may be different, but that's one view that has come at least in the last few years, and again, a question that comes along as we speak to you. Yeah. I think it's a fair question and I think it's an important question for DMart, whether we are still seen as the value retailer. That is our core proposition. Our belief. First of all, I think you can be rest assured that this is something that we watch with a hawk's eye, whether it is an online channel or an offline one. We are quite confident to say that majority of the products that we sell, we would be quite competitive when it comes to pricing. The way we look at it also, Nihal, is not at every single SKU level. We finally look at it saying that at a total basket level, how much is the customer saving? If he or she is buying, let's say, INR 5,000 worth of goods, are they actually able to save INR 1,500 or INR 2,000 on that total basket? That's finally what the customers will eventually look at in terms of the ROI of making that effort to come to a DMart store and buying from us. Right, Anshul. Say, look at it from an AOV perspective, we are INR 600. Is it that every purchase that a customer can save, at least say more than 10% or more than INR 150? That is when ideally the choice would move towards a DMart store visit versus say, ordering online. Is that you feel is something that is the value you're providing? Sorry, Nihal. I couldn't get your question. Can you please repeat that? Sorry. I was asking that, say, if you look at it from an average order value perspective, which is Sorry. One second. Nihal, your voice is breaking. Hello? Is this better? Yeah. Right now I can hear you, but I was not able to hear you previously. Sure. I was just asking that, say, if our average order value is INR 1,500 at this point, are we giving a saving of at least say, 10%-15% on every visit that a customer does as per our understanding right now? Our belief is that we should be giving more than that, I don't have that number offhand. If somebody is buying on an average INR 1,500, it will be significantly more than the 10% number that you're talking about. Sure. Just one final question is that given we are obviously incrementally opening so many more stores in Tier 1, Tier 2 cities and beyond, what would be the ballpark difference in productivity versus, say, the metro stores or the average that you're currently doing? I think the productivity, especially in the smaller towns, especially as they scale up, would obviously be lower compared to the metro cities. It takes time before those stores start becoming productive. You should also remember that the cost of operating those stores is also relatively less compared to the metro stores. Whether it is the cost that we would have paid for buying the property itself or running the operations. Those would be lower. At the start, the productivity would indeed be significantly lower, but it gradually picks up. Just possibly get a sense that maturity, how different does it work versus the system average right now? I think, yeah, I don't think we'll be able to disclose that number in terms of the variance by city there, Nihal. Okay, sure. I get that. Thank you so much. Thank you, Nihal. Thank you. The next question is on the line of Manoj Menon from ICICI Securities. Please go ahead. Hi, team. Sorry for the delay to raise this point about DMart versus the quick commerce channel. I actually just wanted to double-check on some of the assertions made little earlier. Let me put it this way. If you look at DMart, quarterly revenue is about INR 19,000 growth currently. Blinkit is about INR 15. The fact of the matter is, quick commerce is catching up in size, and the logical assumption would be price would dictate scale. In that context, if you could just tell us why you mentioned just five minutes back about the value proposition still material. How has that evolved in the last couple of years, and how do you see this, let's say, three years from today? Manoj, I will say possibly the same things that I said earlier. Our belief is that what we need to do is make sure that the DMart proposition now is available in more places. The way that we see this growth happening is by being available in more states, more cities, more markets. Therefore, obviously, the faster we are able to do that and the faster we are able to scale those geographies, the better it would be for us. In terms of the assortment that we gave, as I mentioned earlier as well, we believe that whether it is FMCG products or for that matter, the grocery or general merchandise and et cetera, we are reasonably confident that we understand where the shopper is buying and what we need to provide into the limitation of a DMart physical store. I think we are only improving on that front. Are we comparing ourselves with what is exactly happening on the quick commerce side? We are not, because as I said earlier as well, there is still a lot of runway for organized scale. There's a lot many more customers who need to experience a modern retail or for that matter, an online retail format. Each of us, whether it's a quick commerce or a brick-and-mortar business, we'll keep driving that business model. I think my feeling is that, whosoever is able to drive that sustainably over the next few years is likely to remain 10 years or 20 years from now as well. Thank you. Just maybe if I may, a two follow-up here. Let's say the value proposition for a like-for-like basket, in your opinion, how that's rendered in the last, let's say, two years, and where it's likely to settle in the medium term? I don't have that data right away. We'll try and see if we can provide that information to you. I think the way I would see it is that basket we will want to remain the most competitive, and that is something that we will keep a watch on and not let anyone else take that space. Understood. Secondly, on expansion, I understand this is also discussed in fair bit of detail earlier, could you clarify a couple of things. One, you just mentioned little earlier that one of the opportunities to, let's say, go to newer towns, newer cities, et cetera. When I see this, let's say, acceleration or intent versus the, let's say, actual plan, it appears there is a bit of a gap here. You also mentioned little earlier, 15 minutes back, that capital availability is not an issue, et cetera. What exactly stops you from, let's say, opening 100 stores? Is it, let's say, the fact that the ratio of new locations you need to scout before you finalize one, probably that has increased over the years? What are those top three challenges which stops you from, let's say, opening 100 stores in a year? I think as we discussed, capital is not the challenge. It is also not people. It's not as if we do not have people. It is just that typically, the model that we have chosen takes a lot more time to build new stores. The fact that you need to get the right land which is clean regulatory requirements, and then the fact that you need to build it, which takes anywhere from two to three years' time. There's a certain amount of time that it takes to build stores in this particular model. This being our moat is what we would not want to give up. Having said that, we've said that wherever possible, and if we need to indeed go for a lease option because that is the most feasible and the faster option, we are open to that as well. The number that I've indicated to you, 15%, obviously means that at some point in time in the future, we will need to open up those numbers as well, 100 store or 150 store as well. Our belief is that we will be able to do that at that point in time. At this stage where we are with our 500 stores, I think that number is a very reasonable number to look at. Understood. Lastly, I think there is a retail metric, the number of locations you need to see before you finalize one. It could be 1: 3, 1: 5, depending on obviously the risk profile of each company. Has that changed or how does that metric render in the last few years? I think, Manoj, the conversion has more or less remained steady. We shortlist a lot of properties. We do diligence. Some properties fall off because the documentation is not clear, some landlords also are hesitant to sell everything in white and all that. All these complexities are remaining. We have not seen a significant downgrading of conversion rates across the years. It's not a question of increasing manpower, let's say, in that area so that you want to increase the output also, right? It's something which you can drive if you want to. No, we have increased manpower. That is why the store openings have increased, and we are working as Anshul mentioned. When you say 15% of the baseline, it also is an increasing target year-on-year, right? The manpower is not a constraint. It's also about availability of clean land parcels to our liking and the location. We are working on it. Thank you. Thank you, Manoj. Thank you. The next question is from the line of Aliasgar Shakir from Motilal Oswal [Asset Management]. Please go ahead. Thanks a lot for the opportunity. Maybe I would like to just persist on the same point of quick commerce. Just if I now step back and see how our business has grown over the last five, 10 years. Probably the last five, 10 years, our biggest competition was only kirana, and the EDLP actually was working excellent because like what Manoj said, the scale was in your favor. Obviously we had a sharp working capital and much better assortment, so you were able to pass on all those benefits to the customers. Now your biggest competition, as actually Manoj was indicating, is the quick commerce guys, which have the scale and basically the relatively much better assortment today versus what we thought probably they would offer three or five years back when we were only focusing already sharp on the SKU. That assortment is addressed that, probably scale and pricing is addressed. I hear your point that even now there's a lot of unorganized market that you are catering to who have not yet moved to the modern retail and therefore maybe you are targeting them and getting benefits. Would I be right in my assessing that the competition today has changed dramatically and structurally, the consumer who was earlier comfortable to do monthly pantry shopping because of the value that you were giving is now getting that benefit without doing monthly pantry shopping. Is it structurally, that customer is getting much better benefit and therefore the value proposition is kind of diminishing for us? Yeah. Ali, I think I'll repeat my point again, but I think, and sir you have the data as well, but total organized trade, including quick commerce and e-commerce, still is roughly only early teens. This includes the brick and mortar as well. Quick com, e-com, modern trade, retail, everything is put together in early teens. This is the reason why we keep talking about the fact that there's opportunity for every format. Coming specifically, I think the quick commerce competition that at least we are seeing is still largely in the large, dense metro, which is where possibly our stores might be having some impact because there will be customers who will be preferring the convenience of a 10-minute, 30-minute delivery, given the challenges of metros and the fact that these are very densely populated places where I guess quick commerce is making a lot more sense. Are we seeing that monthly shopping or the large basket shopping reducing in metros? We are not actually. We are actually seeing that to be quite stable and strong. We are continuing to see a good traction in all our Tier 1 and Tier 2 cities. To that extent, I think we are not as worried in terms of the long-term impact of quick commerce to us, not because we are competing with them directly, just because of the fact that there is so much more to drive in the total market of India. Got it. I think the point you are making basically is because India is such an underpenetrated market for organized retail, so as the customer moves from unorganized to organized, you are able to kind of tap that customer and drive growth. The only point I thought is that for that customer earlier, the big lever was modern retail, so he would move to modern retail. Now, probably, maybe because of value proposition improving for quick commerce, he will have that option also available. Given the fact that he doesn't have to do the monthly pantry shopping, he could do it on a daily basis, maybe, that probably could help. I hear your point. Sir, I think the only thing which I would reiterate is that look, shoppers will always have different types of shopping trips. Globally also, if you see, there is presence of e-commerce, maybe not as much as quick commerce, but there are different shopping trips that customers make. The same customer could be making that, sometimes buying for convenience, sometimes buying for experience, sometimes buying for, let's say, a monthly shopping kind of space. Therefore, I think all of those will remain relevant to my mind in India as well. Therefore, given the fact that we are such low penetrated organized trade, given the fact that customers will keep shopping in different ways, whichever is able to have a good sustainable model to service the needs of the customer at that point of time should sustain a strong business in the future. Got it. Well, thanks a lot for that detailed explanation. Thanks, Aliasgar. Thank you. The next question is from the line of Ashish Kanodia from Citi. Please go ahead. Hi. Yeah. Thank you for the opportunity, sir. First on the store expansion, where I hear you out on the 15% internal target which you're working on and maybe the next one or two years, because that's the kind of land bank you have, but three or four years out, if you have to actually grow at 18% or it could be any higher number, just wanted to understand what would be the bottleneck. Is it because capital is not, I think people is not, is it just that because DLF can have a finite supply, like you cannot create land? Just 15% is the right number, even if you have to take a five, 10 year view? No. Our view at this point in time, Ashish, is that this is the right number at this point in time, at least in the foreseeable future. What this number could be three or four years down the line, it will be difficult for me to say that. We believe that at this point in time, we have the capacity, we have the people, and our real estate team is working towards a number where this should be possible to deliver in the foreseeable future. Sure, sir. Secondly, just on the gross margin side, I think, Ashish, from an outside view, what we definitely see is that quick commerce competition has been very intense, and your product mix has not changed. When we look at the slight improvement on gross margins, is it a fair assessment to say that from a customer point of view, you might be actually giving even a slightly higher discount because you are matching prices, you are trying to be the best value provider to the end consumer, and the underlying gross margin improvement would have been slightly better because of sourcing, et cetera, but it's just that at a customer level, the value which you are providing has actually gone up versus what it was one or two years back? No. I think we've been very clear. We do not want to make margins which are beyond reasonable levels. Therefore, wherever we will be getting any benefit which might be on account of sourcing, productivity, et cetera, and if it is in that ball park 14%-15% type of a range, we will pass that on to customers. You are right that we will, as we've always been doing, we will keep looking at competition and making sure that we are still the best value retailer in the region, and that is something that we will keep doing. Is that making a significant impact on our margin at this point of time? Suffice to say that it's business as usual, and whatever small impact would have happened as well is, I think, compensated for through the other efficiencies which Niladri earlier spoke about. Sir, my point was more from a customer point of view that maybe as a customer, the value which they were getting while visiting a DMart store, has it kind of improved even further given it's just that sometimes the competition helps the customer. When you look at a customer spending on the same basket of products, the value which they were getting maybe one and a half, two years back versus what they're getting now, is it higher? Yeah. Again, as I said, I don't have this number right away, but I would assume so because we are not any less competitive than we were in the past. We are obviously seeing a lot more competition across cities, therefore it is quite possible that they would be getting a lot better value. I don't have an exact number to give you, Ashish. Sure. Just last one because you tried DMart Ready in more number of cities. Now the focus is on say the top 11 cities. My question is more from consumer behavior and also from a quick commerce perspective that what you might have seen in terms of the quick commerce impact in the top four, five cities two years back. Are you seeing the similar impact in, say, the next 15, 20 cities? I mean, not talking about the Tier 3 towns, Tier 2 towns, but beyond the top four, five cities, if you look at the next 15 cities, 20 cities, are you seeing that, one, the consumer behavior are kind of gently moving towards more delivery focused and that way you are seeing at least some bit of impact in terms of whether just the average order size or average bill value or in terms of the frequency in which they are visiting. Are you starting to see some of those impacts in the next 15 cities, 20 cities now? No. Ashish, I think it will be difficult for me to say, but we are not seeing any significant impact in those cases. As I said, there seems to be more an impact in, let's say, densely populated metros against some of the infrastructure challenges. Therefore, I think that is where we see a little bit more. Whatever impact, if at all, would be quite minimal in other places. Got it. Thank you, all the best. Yeah, thank you. Thank you. The next question is from the line of Rakshit Desai from IIFL Capital. Please go ahead. Hi, sir. This is Percy Panthaki here. Sir, just first one clarification. My line was not very clear when you actually did clarify in response to an earlier question. When you said that SSSG can maintain at current level, did you mean last quarter level or last financial year level? Last financial year. Okay. Secondly, just wanted to understand these seven cities which you exited for quick commerce. How were those cities different from the existing cities and why only in those cities this DMart Ready model did not work for you? I think these cities are, as I mentioned, their contribution that we were getting from a business perspective was very minimal. Therefore, we decided not to spend more time and resources on those cities and trying to prove the business in those cities, and instead focus on the remaining 11, which is where we have a sizable business. In fact, some of those cities were relatively new as well for us when we went in. Rather therefore to spend and invest more, we said, let's focus on the majority of the business. That's the answer to your question. Understood. Do you track something like, let's say, same city sales growth instead of a same store sales growth for the brick and mortar? What is the equivalent metric that you have for the DMart Ready and what is that tracking at? I think the equivalent for DMart really will be a pin code level growth. Okay that they would be looking at. While we, of course, look at overall city level growth as well for the brick and mortar. Would you be able to give some idea what is the same pin code sales growth for the DMart Ready? No, that we don't disclose. Sorry. Okay, fair enough. Any flavor, if not the exact number, like is it a single digit or a double digit? That's a good attempt. Okay. Fair enough. One from the consumer behavior point of view. If, let's say, there was earlier a consumer who was largely shopping at DMart, and now he has partially shifted to quick commerce, have you done some kind of consumer insighting studies or anything which tells you how his behavior changes? Does he visit the store less often, while buying the same quantity as earlier? Or does he visit the store as often as earlier, but reduces bill size? Or any kind of insights in case you have done any focus group studies or anything of that sort on this topic? No, we haven't done that. I think that probably you are aware as well that we do not really track customer data, especially in our brick and mortar stores. It will not be possible for us to track or trace a customer and their shopping behavior. Nor have we done a study that way up to this day. Okay. Lastly, on the store opening, I know this has been done to death, but I still want to ask this question. Earlier con calls, whenever we used to ask why more stores cannot be opened, the response used to be that land acquisition is a very complex procedure, lot of permissions are required, et cetera, and that is the bottleneck. Now that you are open to leasing, that bottleneck goes away. Why is it that we are not able to accelerate the store opening? That's one part of the question. Second part of the question, just a data point, out of the 68 lease stores that you have, how many were opened in the last fiscal? I think this last question we answered earlier, maybe you kind of missed it. We had opened 15 stores out of the 85 that we opened last fiscal, were leased. Look, I think. Okay It's not the first time that we're going to be starting leased stores in DMart. We have, as I had mentioned earlier, about 68 stores out of the 500+ stores that we have now. We have 68 stores which are on lease. You can imagine 63 stores prior to last year were on lease. I think, the challenge even on lease would always be about getting the right property, which is going to be able to cater to the right number of customers, and also as per the requirements that we would want to have for running a DMart store. The challenges will largely remain the same as we have said in the past, which is around getting the right property. Okay, got it. Thanks a lot and all the best. Thank you. Thank you. The next question is from the line of [inaudible] from Ambit Capital. Please go ahead. Yes. Hi. My first question was on the initial comments that you made on [investing] behind tech and security release. Specifically on the tech stack, which specific systems or area in the value chain need a behavior overhaul? Is it pertaining to the store of front-end inventory or the supply chain? Please, if you can share your thoughts on the same. I think we will be looking at it at an overall level, I would say all aspects of our tech, wherever there is a need to upgrade, we are looking at doing the same, starting with our ERP system to all our operations. There would be some or the other advancement that we are discussing at this point in time. Sure. As basis these investments, do we expect any near-term margin trade-offs before the benefits show up? No. If at all, they'll be very marginal and therefore, I don't think that is something that we need to flash or highlight at this stage. Noted. Thank you. Thank you. Thank you. The next question is from the line of Jay Gandhi from HDFC Securities. Please go ahead. Yeah, hi. Thank you for your opportunity. Am I audible? Yes, you are, Jay. Go on. Yeah. Most of my questions are on DMart Ready. Given that we've cut back on our DMart Ready presence, why weren't cost structures improving? Transport costs have shot up quite a bit and so are expenses too. I understand service levels have improved, and maybe that cost a little bit of money, but overall, I would've presumed you would have probably improved on your cost structure. I probably will address the question for later. Yeah. Jay, I'll ask Trivikrama, who's the Chief Executive Officer for DMart Ready to respond to this. Sure. Jay, your question is about why the costs are not reduced. Is that what you're saying? Yes. Especially the transport costs. Given that the supply chain would have been tightened further because of the right sizing. Okay. I'll answer it in two parts. One is, in some of these cities that we exited. We were looking for operating evidence to see how the model works across various levels of demand. What we've realized is or the cities that we exited, our capacity utilization, which is throughput, and order density were not as ideal as we hoped they would be. Right? Right. You must have noticed that in our contract labor cost went up by 24% and transport by 13% or so. If you're alluding to some of the financials that we published for you. Yes. Yeah. That's primarily because and that's also one of the reasons why we wanted to consolidate, so that we remove the complexity of delivering in a network that is not as dense as we would prefer it to be. The markets that we are focusing currently, we are hoping we'll be able to have better throughput, and better service levels, and better order density. The efficiency will reflect in fiscal year 2027 and onward that you will. That's what. Yeah. The second one was, See, I always thought online purchases are more intent heavy and less impulsive, which likely means that structurally gross margins are lower. Correct my chain of thought if I'm incorrect. Is there a way that for any levers that we haven't yet monetized against to probably be offline portfolio? Probably that's not the ambition at all. Could you clarify your question? I didn't quite understand. Yeah, I'll repeat myself. Generally, online purchases are more intent heavy and less impulsive. Maybe because the general merchandise portfolio also is relatively lower in the mix in online shopping. Hence structurally gross margins are lower. How does one, over a period of time, bridge that gap with the offline portfolio at the gross margin level? Is there an ad income lever that we haven't monetized- Okay yet or? Understood. A couple of things. That's also one of the reasons why our operational precision has to be significantly better. Right? Right. If you look at our assortment, it's predominantly FMCG, food and non-food, and not as much on general merchandise. However, in the last couple of years, we've ramped up our assortment in that particular area. It probably will never match the same levels that we see in our offline stores. There's not much margin play there other than improving our operational efficiencies. To your question about monetization, as you may have noticed, we don't really monetize our app and site experiences. That's a big lever at any point in time we can pull when we are there. Right now the focus is on delivering on that stock-up mission really, really well and provide a dependable service for our customers. That's what our focus is, and we'll try and improve order density, better throughput, and overall productivity. Right. One question I had was on the service levels. I mean, you've dramatically improved it from a couple of days to within six hours. Right? Is there a way or is this a conversation that you guys typically have that to balance that and probably reduce minimum order value, too? All right. We have a different. Maybe. I'm sorry. Is there more? Yeah. It's a fair question, Jay. Actually, our minimum order value is variable across cities. Based on the tolerance and acceptance of a particular city, we actually have variable minimum order value. We believe that given the fact that we are primarily serving the shopper's stock-up mission, we've calibrated minimum order value and all those things accordingly. Fair enough. How many DMart outlets do you have today in the city? Are you talking about the pickup points, or are you talking about- Yeah stores? Yeah, basically, the stores which we use. effectively visit that store, right? We currently have 165 pickup points. Okay. Well, thanks, I think I'm done with my. Thank you so much. Yeah. You are welcome, Jay. Thanks. Thank you. Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Yes, sir. Hi. Thanks for the opportunity. Sir, first question is on getting some idea around the potential debt increase in the business. We are currently growing at about 16%-19%, but we are requiring external capital. This is likely because the return ratio is currently at 13%-14%. Right? I wanted to check on levers that can improve the current ROE profile, or whether the debt level would gradually keep on increasing over next few years. I think, Devanshu, what has happened is, if you notice, we did a fundraise in 2020 when we came out with the minor dilution of close to INR 1 billion. That money is over now, hence we are doing fundraise. As the number of stores progresses, we believe in next two, three years, the existing stores will generate enough capital for us to not keep on borrowing anymore. Sir, your expansion plan will also keep on increasing, right? It's not fixed that you will add only 70 stores-80 stores, right? As the business grows, unless the ROE profile improves, you will continuously need external capital. You're right. What we need to also keep in mind is the cost of a store in a metro is very different than the cost of a store in non-metro. Our understanding is, on a balance number, with next two, three years, existing store count itself should be just able to generate sufficient amount of capital that we need for expansion. If you look at last three years, our store count has increased by 200 stores, right? I'm looking at it that way. Got it. Secondly, I wanted to check, we currently are only catering to about 50% of retail SAM, in terms of categories. We do not have meaningful presence in large categories like fresh, right? Quick commerce as well as some of the other organized chains like [inaudible], et cetera, are positioning themselves as a fresh-first option. Right. Do you see opportunities for expanding the number of categories that we currently cater to? I think on this one, wherever there's an opportunity which we will be able to drive meaningfully in our stores, we'll keep looking at. There are some pilots that we are doing in some of our stores with some fresh fruits, for example, in Mumbai, which is giving some strong results. Is there a plan to have a full-fledged fresh portfolio in the near future or this point of time? No. We'll keep looking at opportunities which we can deliver in the current store environment. Okay. Understood. Anshul, you did say that your focus is on slotted delivery from an organic expansion perspective, but wanted to check, are you open to any inorganic opportunities or strategic partnerships, at least for playing in this fast-growing quick commerce space? Yeah. I think this is something that we cannot discuss here at this call. At least this will be more a discussion at the board level. Understood. Sir, just last one bookkeeping question, this is around the land value that is there on our balance sheet. Right. We do not disclose the land which is currently for operational stores and the land which is for the upcoming stores, upcoming new stores. It becomes difficult to actually analyze your operational performance. If you could highlight and separate notes in the balance sheet on this front, it would be really helpful. If you could provide these numbers for fiscal year 2026, I'll be really grateful. I think what happens, Devanshu, is the land gets capitalized as soon as the registration is done. If you do a ballpark analysis of two to three years needed to make a new store, you can draw your own conclusions of the value of land that is coming. It's very unlikely that we will buy land this year and open the store the same year. Most of the integration will happen for forward years. Still, if you could call out the number, then it will help us. Right. Whatever 500 store base number is there in your growth log, that will be helpful in terms of analyzing your business properly. We don't disclose that, Devanshu. Got it. One last question, if I may, if you can allow me to go ahead with that. Yeah, definitely. Sir, in Q4, we opened about 60 odd stores, right? I wanted to check if all these stores were operational for full quarter Q1. Why I'm sort of asking this is a pretty big number. Right. This should have contributed meaningfully to your Q1 sort of numbers. That was not sort of reflected in the reported growth. Were these operational for the full part of Q1 or from Q2 onwards, we should see a more full quarter contribution from these 60 stores? I think all the stores that we opened in last quarter were fully operational in Q1. We keep on disclosing to the exchanges as on the day we open the store. All the stores that we opened till 31st March are fully operational in Q1. You need to also understand, Devanshu, that the new stores take a lot of time to ramp up, especially in a new city where we enter or a Tier 2, Tier 3 city. That is why you might not have seen the kicker coming in the sales immediately. It takes some time, but all stores are operational the whole of Q1. Got it, sir. Thank you for taking my question. Thank you. Thank you. Ladies and gentlemen, we will take the last question from the line of Karan Torani from Elara Capital. Please go ahead. Hi, thanks for taking my question. The first question was around the growth rate that you mentioned on LFL. You said LFL will be closer towards last financial year. Does that imply only the performance for the next two to four quarters because you will see positive impact of price hike? Or do you feel you are confident of LFL growth rate even beyond FY 2027 being in the range of 7%-8%? I think it's very difficult to say what it will be in the next year because there could be lots of different variables at one point in time. I think what we are at this point of time saying is that in the coming financial year, we see that this is something which is possible for us to deliver. Right. My second question was around the quick commerce part. Again, creating that point of elephant quick commerce. Given Amazon, Flipkart coming into this business, the competitive intensity will really increase from thereon. Because Flipkart as a player, they are going to do 2,000 stores in the next six to 12 months as per the report. They are also expanding aggressively beyond the metro markets. The thoughts are probably the theme of quick commerce will take some time in the non-metro market, given the kind of slow adoption by few key players. With Flipkart and Blinkit going big, especially in non-metro market, even Amazon, maybe in a certain extent will go a little over there. Could we see a bigger risk for LFL, which could even convert below 5% in the medium term? Can you just repeat your last statement again? Yeah. My last statement was that invariably six months back, quick commerce players were not doing aggressively in the non-metro markets because the early adoption, there was no clarity in terms of adoption. Given Amazon, Flipkart coming to the business, given Blinkit now kind of coming back in terms of their expansion plan, do we see a potential risk on this 5%, 6% LFL in the medium term as well? No, we don't see that, to be honest, because again, as I repeated earlier as well, that in most of these smaller places, organized retail is even lesser than what you see in metros. Therefore, we believe that both for modern trade, the brick and mortar format, as well as the online, they'll be a huge amount of, let's say, way to move forward. Whatever be the competition, I think we will remain true to our proposition of being the best value retailer in that geography. Our belief is that, especially in these tier 1, tier 2 towns, that proposition will hold a huge amount of value for customer segment. Just one last thing, if I may. What is your view on the assessment of adoption of QC beyond the top 10 cities, 12 cities that you are seeing right now? Any trends that you see invariably when you see that adoption will be slower over there? No, we haven't done any such work and have no point of view on this. I think the best would be to ask the quick com companies in terms of how they are seeing it. We do not have- Got it. Thank you so much for my time. Thank you. Thank you. We will take the last question from the line of Vivek from Jefferies. Please go ahead. Hi. Mr. Vivek. Good afternoon. Am I audible? Yes, please go ahead. Couple of questions again on DMart Ready. You have reduced your timeline to let's say six hours or below. Are you also thinking about at least experimenting a bit with the quicker delivery formats at all? No, Vivek, we are not looking at that as an option. May I ask why is that if there is such a huge? Because look, the earlier participant at different points, you mentioned about asking the quick commerce companies, but they have made their point by any which way moving to let's say, 1,000 stores, 1,500 stores, 2,000 stores. India already has Flipkart and Dark Store, et cetera. They have made their point by their actions, which is why I think all of us are interested to know your point of view, because QC companies are putting their money behind the smaller towns as well. I think, as I said in the beginning as well, we are very clear that in these 11 cities where bulk of our business comes in, we want to make sure that we are able to provide a service which is also sustainable to run over a longer period of time, which basically means that it needs to be profitable as well. At this point of time, we have seen a lot of erosion of profitability, expansion of that erosion over the years, and we do want to make sure that is not something that we would be happy to continue with. Therefore, our approach would be to make sure that this 6-hour delivery model, we are able to prove in these 11 cities. Then once we are able to do that, then we will take it further up. The other quick com companies have chosen a very different route, and I guess that suits them. In our case, we would rather do it this way. Great. Okay. Do you also find the quick commerce business model still a bit unsustainable? Is that the reason why you are reluctant? That's the first part of this question. The second part is there anything that can change your decision in coming quarters or years, whereby you may also look at this space? I think, I'll not be able to comment on what their business model is, because that's for them to kind of decide how they will want to run their business. Our view is clear that whatever we want to run, we want to provide obviously great value to customer, great shopping experience through our DMart Ready platform. It needs to also be profitable, only then we'll be able to sustain it in the long run. In the future, will we be willing to look at it? It's too early for me to comment, because again, if I look at what we are intending to do with the DMart Ready, we believe that we will be reasonably successful on this model once we have proven it in these 11 cities. Therefore, we want to actually in the future expand this even further. Got it. The last question is, in a world, Anshu, where everybody says data is the oil, you do not collect any level of data from the customer. The fact that you are also building your DMart Ready business, do you think at some point of time you should be doing that so that if I'm a shopper at DMart and if I log into DMart Ready, you know a lot about me already. Why there is that reluctance not to get the data? Does it increase the cost or the time at the checkout, which is why you are reluctant in doing this? Yeah. I think on DMart Ready, let me clarify. DMart Ready, we have customer data, and that's not where we were talking about not having customer data. It's more on the offline stores- Sorry. I meant offline only, Anshu. Yeah, offline only. Offline, we do not collect this data because I think one of the values that this organization rides is around simplicity. We want to make sure that the experience is simple enough. We do not take more time of the customer than is required. You're right from a quick checkout perspective. From the perspective that we do not want to make shopping experience complex for the customer. We want to avoid collecting this data and then trying to then make the shopping experience more complex. Got it. Sir, you were saying something? I'm fine, Vivek. Got it. Thank you. Wish you all the best. Thanks a lot, Vivek. Thank you. Since this was the last question, we will now conclude the call. On behalf of Avenue Supermarts Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.