Ladies and gentlemen, good day, and welcome to the Q2 FY 2024 earnings conference call of Go Fashion (India) Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not guarantees of the future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gautam Saraogi. Thank you, and over to you, sir. Yeah, thank you. Good evening, and a warm, warm welcome to everyone present on the call. Along with me, I have Mr. R. Mohan, our Chief Financial Officer, and SGA, our Investor Relations Advisor. I hope you all have received the investor deck by now. For those who have not, you can review them on the stock exchange and on the company website. The retail sector in India has sustained a subdued performance during the second quarter of FY 2024. Furthermore, the demand typically associated with the festive season has been delayed until Q3 this year, resulting in a relatively stagnant same-store sales growth. Despite the current operating environment, our company has demonstrated robust operational performance for both the quarter and the first half of FY 2024. We maintain our confidence that the company will successfully navigate through the short-term volatility and continue to outperform in the years to come. Revenue for H1 FY 2024 stood at INR 379 crore, registering a growth of 15% YoY. Our EBITDA also grew 18% to INR 121 crore. This growth can be attributed to the higher realization due to improving sales mix. Our SSG was flat during the first half, while SCSG for EBO grew by 13% YoY during the same period. 95% of our sales in H1 FY 2024 were at full price. The average selling price stood at INR 752 for the first half year for EBO, an increase from last year, which further re-emphasizes and cements the brand recognition and the uniqueness of our business model. During H1 FY 2024, the company added a total number of 48 stores, net 48 stores, in line with our commitment to the increasing accessibility and convenience for our customers. We aim to add 120 stores on a net basis for the full year in FY 2024. To further elevate the customer experience, we are also exploring omni-channel strategies that leverage technology to seamlessly connect physical and online shopping experiences, in turn expanding our reach to consumers in various cities. We have increased our EBO presence in more than 11 cities during the first half of the year, further enabling and improving reach and helping us build a large customer base. Coming to our working capital and cash flows, the company has achieved a strong positive cash flow from operations of INR 63 crore on a pre-Ind AS 116 basis, a significant turnaround from negative cash flows recorded during the same time last year. This further aligns the company's commitment to sustainable growth by cash flow generation. We strongly remain committed to operational efficiency and continue to see several improvements on the working capital front. We have successfully reduced our inventory days by 21 days as on 13th September, compared to 31st March, which is also an indicator of the cash flows the company has generated. ROCE and ROE for the business on an annualized basis stood at 16.5% and 17% respectively. A growing economy is leading to higher discretionary spending, rapid urbanization, coupled with evolving fashion preferences and an e-commerce boom, with several structural improvements are going to be the major factors to contribute the growth of the Indian retail sector going forward. We remain committed to introducing a wider range of designs while expanding our customer base and market share through addition of new stores in multiple locations. This strategic approach will enable us to realize sustainable and cash flow-driven growth for our company for the years to come. With this, I would like to hand over the call to our CFO, Mr. R. Mohan, to update on the Q2 H1 FY 2024 results and financials. Thank you. Thank you, Gautam, and good evening, everyone. The company continues to maintain a strong operating performance despite the challenging business environment. First, I'd like to give you financial highlights of Q2 FY 2024. Our revenues for the quarter stood at INR 189 crores, as against INR 164 crores in Q2 FY 2023, a growth of 15% YoY. Gross profit stood at INR 115 crores, a growth of 16% YoY, with a GP margin of 60.7% for the quarter. Our EBITDA for the quarter stood at INR 57 crores, as compared to INR 50 crores in Q2 FY 2023, a growth of 14% YoY. Our EBITDA margin stood at 30%. Profit after tax for the quarter stood at INR 20 crores, a 4% YoY growth from Q2 FY 2023. Tax margin stood at 10.6%. Coming to the H1 FY 2024 performance, revenue stood at INR 379 crores in the H1 FY 2024, as against INR 328 crores in H1 FY 2023, a growth of 15% YoY. ... Gross profit stood at INR 231 crore, a growth of 16% YoY, and gross profit margins of 61% for the half year. EBITDA for H1 FY 2024 stood at INR 121 crore, as compared to INR 103 crore in H1 FY 2023, a growth of 18% YoY. Our EBITDA margins stood at 31.9%. Tax for H1 FY 2024 stood at INR 46 crore, as compared to INR 44 crore in H1 FY 2023, a growth of 6% YoY. Tax margins stood at 12.2%. Our advertisement spend during H1 FY 2024 stands at 1.45% of the revenue. Cash flow from operations for H1 FY 2024 has turned positive and stood at INR 63 crore, as compared to INR 2.5 crore, negative INR 2.5 crore for H1 FY 2023. With this, now the floor is open for the questions. Thank you so much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Yes, sir. Hi, thanks for taking my question, and congratulations on a very strong turnaround in cash flow generation. So, Gautam, we are seeing some sluggishness in our revenue growth. So wanted to check if this slowdown is entirely due to weak macros or there is some element of increasing competition as well? Yeah. Hi. Thank you, Devanshu. See, I think it's largely driven by macro. From a competition perspective, I don't see too much of impact because of competition, because what kind of competition we have today, we also saw last year as well. There's no significant increase from last year in terms of competition trending. So this slowdown, what we are seeing in overall revenue and flattish SSG, is because of the overall macro conditions scenario. It's not, it's not pertaining to competition as such. Okay, and alike to this, Gautam, what is the level of SSG or trends that we are seeing so far into Q3 festive? If you could provide some color on this. See, unfortunately, what has happened in Q3 for everyone, for all the retailers, see, last year, Q3 in October, we had all the festivals like Diwali and all the festivals around Diwali in October itself. And this time, these set of festivals have actually moved in November. So when I'm comparing October YoY, October on a YoY basis with October last year, I'm not able to get the clear picture because of that. So probably by the middle of November or end of November, we'll be able to know ki what growth levels we can achieve in Q3. As of now, we are comparing ourselves with the festive sales, which is not the case right now, because festivals are coming in November. Got it, Gautam. And, secondly, I wanted to check on this, cash flow generation. Right. So H1, we have added about 50-odd stores, which should- Right. sort of lead to increase in our inventory by about INR 10 crore. Correct. Despite of this, we've actually reduced by our inventory by about INR 12 odd crores in H1. Correct. So together, this is about INR 20+ crore of efficiencies on this front. So, I wanted to check, as in, what are the drivers of this improvement, as well as are these levels sustainable going ahead, or there is some more improvement that can happen on this front? See, the drivers are basically, like I had mentioned earlier, also, we are continuing to optimize our inventory at a warehouse level. So if I take our warehouse inventory, our raw material inventory, what we had in March, which was about INR 43.5 crore, now we have brought it down to INR 36.7 crore. Okay. Finished goods, what was there in the warehouse level in March was INR 99.9 crore, which we have brought it down to INR 84 crore. Okay. So this significant, there has been a significant reduction at the warehouse level. At the store level, very rightly you pointed out, because the number of stores have increased, the absolute increase in inventory at the store level has gone from 86 to 97. So INR 11 crore of inventory has increased because of new stores also. So the major optimization, what has happened, is actually happened at a warehouse level. And from a future perspective, we are continuing to optimize. We want to go back to pre-COVID levels. Currently, we are at about inventory days of about 105 days. Our eventual target is to take this 105 days to 90 days. Okay. And this further 15 days of reduction will also happen at the back end level? So at the store level, we may- No, there will be slight... There will be a reduction at the store level, but majorly it's going to be back end. Okay. Okay. I have more questions, Gautam. I'll get back in the queue. Thanks for taking my question. Sure. Sure. Thank you, Devanshu. Thank you so much. Would like to remind participants, who wish to ask questions, please press star and one at this time. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead. Hi, good evening, sir, and thanks for taking my question. Firstly, if I look at the other expenses, excluding the ad spend, which you have reported in the presentation. If I just do that, the number, it is up sharply by 39% YoY, and even on a QoQ basis, this is up some 20%. Just wanted to understand if there are any one-offs here. Have we taken any, you know, write-offs, one-offs or, you know, See, um- Receivable write-offs? Yeah. Sorry. Yeah. So, so yeah, so I'll explain, Sameer. See, the only one line, line item which is slightly exceptional here is that we have shut certain number of stores, and the write-off of the fixed assets for those certain stores comes to about INR 1 crore. Apart from that one crore, there's no real outlier. All the other items are relating to sales. They are all variable expenses which are relating to operating of stores. So these expenses are more linked to revenue, but the only exceptional line item which we can see here is only that one crore, which is relating to the write-off of fixed assets in the certain stores which we have closed. Got it, sir. And if you can quantify the number of stores that have been closed? See, we have closed 9 stores in H1, and there are some four or five stores we had relocated for better opportunity. Got it. So it will be... That INR 1 crore will be a combination of the nine stores and the four or five stores which we relocated. But relocation in the due course of business we do, so I can't call it as an exceptional line item. The nine stores, you can consider that as an exceptional line item. Got it, sir. That's, that's fair. Secondly, if I include the subcontracting expenses as a cost and then calculate the gross margin, I see that it is up 80 basis points. Now, cotton prices or raw material prices have, you know, seen a sharp reduction during the course of the year, and there was an expectation that some of this will flow into our gross margin, and we are carrying high inventory of previous costs, and that is why it has not flowed through. Is that still the understanding, that it is going to flow through in coming quarters, or are we largely done and this is what our gross margin needs to be- So- even after this cotton price going down? Yeah. Yeah. So, Sameer, see, on the GM part, you're comparing Q2 versus Q2. The right way of really seeing the gross margin is seeing H1 versus H1. So H1 versus H1, if we compare, there's a 40 bits increase in GM. In the coming quarters, there will be we will start seeing slight improvement because of the cotton price. We have, I also mentioned in my earlier call that because we had bought a lot of inventory at the higher price, and now since we are optimizing inventory and not buying at the lower price, the upside of the cotton prices in our cost will take some time for it to come. So now we are seeing slowly, we are seeing that improvement slowly. So you can see there's a 40 bits improvement. Over the next two-three quarters, you'll see little, little more improvement, and you'll see, gradually you will see a gross margin uptick. Fair enough, sir. 2Q to 2Q is actually 80 bps, is what I called out, so it's. Yeah, but Q2 to Q2, the reason is because in Q2 versus Q2, maybe this Q2 we had slightly lesser EOSS contribution to last year. Maybe. So maybe because of that, the gap of the increase in gross margin is higher in Q2 versus Q2. That's why I'm comparing H1 versus H2. Got it, sir. If one last question, if I may squeeze in. Mm-hmm. So 2.5% SSS growth last quarter to -1% this quarter, and there is an element of festive mismatch, which I understand. So if I have to understand this difference of, you know, 3.5 percentage points, can you attribute this entirely to the festive mismatch, or there is an element of slowdown, further slowdown versus Q1? It's a combination of both. It's a combination of both. I think the slowdown continued into Q2. The festive mismatch just kind of made it worse. So slowdown has worsened, if I have to believe then, versus 1Q? I wouldn't say necessarily. I think, this 2.5% going to, to minus, I think it's a combination of both. It's very hard to say whether the slowdown has increased or whether the festive mismatch has caused the 2.5 to become minus. It's very hard to articulate. It's a combination of both. Fair enough, sir. And just a follow-up to this, I mean, I understand you said October YoY, it is difficult to compare, but we can still compare a Puja to Puja or a, you know, start of the festive last year to this, to the element we are this year on a YoY basis to get a trend, that would be helpful. Very hard to comment right now because, What upside we see during festival is around Diwali, and this time Diwali is not in October, so we are unable to compare. As far as Puja is concerned, Puja, when we compare on a YoY basis, because this time Puja came in October, not in September. Puja we have seen decent amount of sales, so our each SSG, if I compare Puja versus Puja, it has been in around 4%-5%. Got it, sir. That is very helpful. Thanks. Thanks for that. I'll come back in the queue if I have any follow-up. But again, Samir, on that, Puja is a very difficult number to compare because our presence in East also is very less. Got it. Puja is only for a particular window, so I wouldn't use that as a comparable for Diwali. Yep. Yep. Yeah. Thank you so much. Participants who wish to ask questions, please press star and one now. The next question is from the line of Sabyasachi Mukerji from Bajaj Finserv Asset Management Company. Please go ahead. Yeah, hi. Thanks for the opportunity. My first question is: What has been the volume decline, SSG volume decline in 2Q? Yeah, it is in Q2. I'll just tell you. Just give me a second. It is in Q2, volume decline is -6%. Minus six? Yes. And in Q1, it was, Q1 it was around, if I'm not wrong, about -3, -4. It was, -3, -4, it must have been around that. Right. So, you know, last time, in, in one Q call, you mentioned that the immediate priority would be to arrest this, decline, volume decline... Right. And I believe it has kind of worsened. One part of, obviously, the festive shift, but, you know, what steps probably are you taking to arrest this decline, and how do you see, the H2 panning out? See, I think, look, we are definitely trying to ensure that, you know, our sales executives are well trained. We are ensuring right inventory is there across all those channels. I mean, on that front, we are trying our best, but these kind of things of SSG going negative is largely macro-related. So we just have to wait out till the environment, the overall selling environment gets better. So there is very little we can do during this time. During this still time as management, what we can put focuses on important line items that like optimizing inventory, keeping costs low. These are the things we can focus on. As far as pushing the revenue number is concerned, it's very macro-related. But having said that, we have taken this time as an opportunity to also increase our omni-channel, trying to shift some of our omni-channel dispatches from the store, so that, that will, in the long run, push the SSG number ahead. On the H2 part, like I mentioned, because October YoY, we are unable to compare, it's very difficult for us to give an approximate idea of how H2 will look like. But, I think closer to middle of November or November end, we'll have a better clarity. Okay. And the last time the revenue guidance was probably somewhere around INR 800 crore-INR 820 crore for the entire full year, 2024, FY 2024. Do you stick to that or do you want to change that number? No, currently I'm sticking to the same number we have guided, because right now we don't know how festive will go. If festive goes well, following which Q4 does well, then we can get to that 800 number. So right now I'm not really changing the guidance. I'll be in a better position to ascertain H2 after middle of November. Okay. Last question from my side is, so you have done a net store addition of 48 stores in H1. Right. So, to, you know, reach 120 net addition, roughly around 70 or 72 stores, are you confident that it'll kind of add 120, or is there- No, we should reach. I don't see any reason why we should not reach. Some of the projects which we had signed had actually got delayed, and they didn't open in H1. Some of the malls, some of the high street projects which were newly under construction, they got delayed. That's why our H1 number is slightly lesser than what we usually do. So we're quite confident that we'll get to the 120 net number by the end of the year. For the next year, your guidance would be around INR 150-170? Yeah. So as of now, we are sticking to that guidance because we are continuing to execute on our [DDD]. Got it. Thanks. That's all from my side. Best of luck. Yeah, no problem. Thank you so much. Thank you. The next question is from the line of Mythili Balakrishnan from Alchemy Capital Management Private Limited. Please go ahead. Hi. Just a couple of bookkeeping questions. It looks like our ASP for the quarter has actually fallen, right? Because last quarter we had an ASP closer to INR 771, and this quarter we are INR 752. So wanted to check whether it's a conscious decision to reduce prices or is it a mix issue? No, no. See, you're comparing it on quarter-on-quarter, it actually has to be compared on a YoY basis, because Quarter Two usually has lower sales compared to Quarter One. So the ASP in Quarter Two will always be lower than Quarter One. So if I compare with Quarter Two last year, there has been a 5%-6% increase in ASP. Got it. In terms of our mix between Western and Indian fusion, et cetera, if you could sort of just give us a broad indication of how it is heading? See, we have checked it very recently. Even now, our ethnic, western and fusion is the same as earlier, 1/3, 1/3 and 1/3. So there's no change in that ratio for us. Got it. And also just wanted to check with you, our CFO, if you could give it in an Ind AS kind of a fashion of how it has moved, because, you know, pre-Ind AS, because this Ind AS- Yeah. So... Yeah, I, I understand. So if I look at it at a pre-Ind AS level- Uh. If you reduce your rent, if you reduce your lease liability payment under financing activities, which is I think about INR 49 crore, if I'm not wrong, if you minus 112 minus 49, you'll get to INR 63 crore of pre-Ind AS OCF, after tax. Okay. And, last year, this would have been? That was INR -2 crore. Okay. INR 2.5 crore. INR -2.5 crore. Got it. Got it. Wish you all the best for a good festive then. Thank you. Thank you. Thank you so much. Thank you so much. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead. Thank you for the opportunity. I was just trying to understand your gross margin uptake. You said, gradually we should see gross margin uptake, but, would like to understand the quantum that could come in, given that, the category has, competition as well, and while reducing the prices via discount, et cetera, as well. So where, do you see the gross margin levels eventually, settling at? Yeah. So Prerna, see, from a GM perspective, I don't think competition will have an impact on GM, because even competition has priced the products maybe at similar levels like us or maybe more. So, because of competition, you will not see us reducing our prices. As far as GM based on cotton prices is concerned, like I also mentioned that, we had bought a lot of inventory on the higher price, and now we are optimizing when the cotton prices are low. So it will take a little bit of time for the upside to happen. My, my gut feeling, is that the absolute, GM increase should be between 100 basis points -150 basis points, is what I understand. Out of which right now about 40 basis points is showing in the financials. How long will it take to reach that 100 basis points -150 basis points? From 40 basis points, it will take a few quarters. Okay. And could you also expand on your city expansion target? Where do you think over long term, how many cities you can reach, maybe in next two to three years? And what kind of penetration levels we can see going forward? See, we are at about 154 cities. I don't see ourselves crossing 250 cities over the next two years to three years. Because, see, what is happening is we are continuing to see a lot of potential and space to expand even in our existing cities. Like if you take the top eight cities, even if I today look at H1, a good number of stores have come from our existing markets. So from an expansion perspective, we are going to give equal importance to newer territories, but also, importance to our existing territories. So in a two-three year window, I don't see this number going 250, across, across 250 cities, beyond 250 cities. Okay. 250 is something that you have visibility of? I'm just giving you... No, no, I mean, look, we have a visibility of far more number of cities as far as expansion is concerned. I'm just telling from a next two years-three year window, how much, how far does this 150 city number go to? We feel that it might go to a 250 city number over the next two years -three years. Okay. Okay. And you're saying- In terms of potential, I think we can go beyond 250 cities. We have a clear roadmap, so we don't see any concerns there. Okay. Okay. And your same-cluster sales growth, which was 16% in Q1, come down to 13%. So, would you like to highlight anything, if there is anything that we should look upon because it's a new metric? No, I think, the demand slowdown. No, I think, look, the slowness, what you're seeing in the SSSG number is also reflecting in the SCSG number. Yeah, at the end of the day, it comes to the sales of a particular store, right? And if a sales of a particular store is impacting because of macro conditions, SSSG takes a hit, even SCSG will take a hit. Just because- Okay. SCSG, we are looking at a cluster level, the number looks better than SSSG, but both numbers definitely take a hit in a weather situation, it's slow. Okay. Understood. Thank you. In fact, I would be surprised if SSSG is slow and SCSG is strong, because, you know, in an overall slowdown situation, it has an impact directly on your sales itself of particular store. Okay. Okay. I thought maybe because you're opening more and more stores in the same clusters, so your SCSG should be better. No, that's the gap between the SCSG and SSG is basically of the new stores, what we have added in that cluster. Okay. Okay. Thank you. Understood. All the best. No problem. Yeah. Thank you, Vandana. Thank you so much. To ask a question, please press star and one now. The next question is from the line of Jasmine Surana from VT Capital. Please go ahead. Hi. I wanted to understand, the margin change in the sense that I understand the Q2 would be better than, the Q2 would be worse than Q1, and then Q3 and Q4 with the festive and the wedding demand that might be impacted. But as a range on the margin, I wanted to understand what is the kind of range that we could call as normal or as stabilized? See, on an annualized basis, about 60%-61% of gross margin, 31%-32% of post-interest EBITDA, and about 12.5%-13% of tax, on an annualized basis. Okay. That is what we have been delivering consistently. In the normal course of business, I think this is the margin what we look to maintain. Perfect. And I also wanted to understand the trend of premiumization or the trend of mass products that are selling within the categories of ethnic and fusion. So, is there any visible trend of more premium products selling or more mass trend, products selling? Well, on that front, I think it's pretty similar to what we have done. I mean, even our mass products are doing fairly well. Okay. Even our premiumization, our premiumized products, what we have recently launched over last year, are also doing fairly well. So I think from that bucket, I think more or less it's the same mix what it, it used to be earlier. There's no any particular outlier we've seen. All right. Thank you so much. Yeah. Thank you. The next question is from the line of Vikas from Equirus. Please go ahead. Yes. Thank you so much, sir, for the opportunity. So now one question is with respect to performance of the stores, probably in metro tier one versus tier two and three cities. Any color or any comment that you want to say, how was the performance of these two? See, our presence in the non-metro cities is fairly lesser compared to the metro. But, when we analyze it, we have seen that both have had a struggle. It's not that metros have done far better than tier two, tier three. I think both have struggled this quarter. So, I think it's very difficult to point out whether Rajkot has done better than a Mumbai or a Mumbai is better than a Rajkot. I think the decline has been across. Sure, sir. Understand, understand. All right, sir, thank you so much. Thanks. Yeah. Thank you. The next question is from the line of Ankit Kedia from Phillip Capital. Please go ahead. So after five quarters, we have seen the contribution of LFS increase substantially. And actually on YoY basis, they've grown more than, you know, 10%-12%. So what's happened on the LFS side of the business? Are some of your peers where we are putting our products doing much better than the offline EBO market? No, not necessarily, Ankit. I think see, what has happened is, in LFS also we are going deeper now. See, in Pantaloons we've added about 40, 50 stores now in quarter two. We are also getting an entry into Shoppers Stop as well. We are just on the verge of finalizing and re-entering Shoppers Stop, starting in Q3. So I think, from an overall LFS environment perspective, there were some operational issues, what we had in February and March, but that's behind us now. Our LFS business has come back to normalcy. If I compare. If I remove the new store expansion and if I just compare LFS with EBO, both are pretty much similar in terms of growth rate. I don't see too much of disparity. LFS is doing better or EBO is doing better, both are relatively doing the same. But you're seeing higher and faster growth because we've added more number of stores in LFS during H1. But like the likes of Trends, we've continued to expand. Even in Pantaloons, we've added good number of stores, and now we are also entering Shoppers Stop in Q3. Sure. And so on product development, how has been the response for denim, which we are introduced, couple of quarters back now? Are you seeing repeat orders from customers come in? Are we introducing more colors out there? In the denim wear, what are the new product ranges you are looking at, to introduce from a winter perspective? Because in North market, we are starting to see pleasant weather. Are you seeing winter demand come up, sharply in the North? Yeah, I think winter has done very well for us last time. See, I'll tell you, I'll give you an example. North India, for us in Q3, did very well last year because of the introduction of new winter products. If I take our historical performance during the winter season in North, it used to be a little subdued, but last year we did very well because of the introduction. Now, this year also we've introduced a good winter collection, and our winter collection also continues to be core. So the products what we had introduced last year, the same products continued even this time. We have introduced one or two additional products, like the likes of ponte pants, even in the regular pants category with the higher GSM fabric. So many winter products we've come out with, with crease as well. So these winter products, we've just put it in stores. We will know how it performs during November and December. Last year we had a very good response. And now we have placed those enough number of winter styles across all the stores in North India. And in fact, in some areas like Bangalore also, where it becomes a little cold, any place where the temperature is falling less than 20 degrees, we have kept our winter products. As far as denims are concerned, see, denims, we introduced it in very small quantities in many of our stores. We have seen very good response, but for denim to start doing very well for us will take a long time. See, for us, we work on the full mechanism, right? As the sales increase, our inventory at the back end starts increasing. For denim to become a decent contributor in the sales, it will take a long time, but as an initial response, the response has been very encouraging. Sure. And so from an A&P perspective, if I look at last year, YTD A&P spends in the first half was around 4.5%. This time it's 1.5. So from a second half perspective, while I understand demand was not there, so you could have curtailed your spends, now with demand expected to come back in the second half, are you also double downing on A&P and spending back to 3%, or it will be still be, you know, sub 2, 2.5%? See, usually, Ankit, what happens is, you tend to spend majority of your A&P in H1 than H2. Even if you take the last year's trend, it usually happens before festive. Now, because there was a slowdown, we haven't spent too much in H1. Even in H2, we don't see ourselves spending too much. So currently what we are at about 1.5%, if I'm not wrong, by H1. In H2, it might go to around 1.5%-2%. So it's going to be in the similar range. If demand starts coming back by Q3 and Q4, maybe next year we slightly increase our A&P. See, A&P is all dependent on the outside demand. In a sluggish market, we don't want to spend money on advertising because it does not help. Sure, sir, but also it helps in brand building. While it may not relate directly to sales, but, you know, today competition is on a weaker footing, so you can get more stronger with the brand building and new product launches which you are doing. And also, you know, now you're going more digital and omni, so it also helps, on that, you know, from a online perspective. See, from a brand building perspective, Ankit, for us, that 2% spend, 2% or 1.5%, what we are spending is completely from a brand building expense. But see, understand, for us, our biggest brand building exercise is our stores. Is our store location in malls, airports, high streets, and that is our brand building, that is our advertising. Incrementally, for us to spend anything over and above that, we don't have to materially spend anything more. So we feel in a year, if we are spending 2%-3% on brand building, it's more than enough, enough, over and above what we are spending on for our business. Sure. And so last question is on omni-channel. You know, you made a comment that you started to do delivery from the stores. So just wanted to know more on that supply chain, because online still is a very small percentage, you know, sub 3% of our revenues. So, how can that scale up? And, backend, how are you looking at, you know, pure omni of delivery from the stores? ... See, I think, look, from a technology perspective, we have got it right. I think, the perspective is that, omni-channel as stores is a very new animal for all brands. Now, we had piloted this in about nine stores - ten stores, and three stores - four stores we saw very encouraging response where we were able to drive 5%-6% additional sales in that store through our om- through omni. And surprisingly, in some stores which are a very good performing stores, we didn't see any movement. So we have seen mixed responses as far as omni is concerned, but wherever we have got a good response, it's been very encouraging. So omni, slowly we are going to scale up. Today, we are there in about 15 stores. Every quarter we will add about 15-20 stores in our network, and we have to slowly guide that number. If today I try implementing omni across my 650 stores, it will fail. I need to put a focus of 15 stores or 20 stores every quarter and add that omni network. So it will take a lot of time for that omni-channel to completely settle down, but the initial responses, what we have seen in certain stores has been very encouraging, where we have seen sales increase to the tune of 5%-7%. Sir, this orders which are coming is purely from marketplace or from your own website. So even if that store number increases by 5%, it's pretty much counted in the online revenue, right? It's not a offline generated sales. No. See, the 5% what I'm talking about, I'll tell you, is largely what you're saying is right. See, suppose if I'm doing a dispatch from a store, from a channel bucketing perspective, I'll put it under online if I'm doing a dispatch from the store. I think where we have seen the biggest rise in our 4%-5% is not from the dispatch from the store, but from a customer coming into the store, not finding the color what she wants, and then and there, we have converted that customer from an EBO customer to an online customer. I think that part, the loss of sale, what can potentially happen at a store, we have covered it by the 4%-5% increase by handling an omni. Sure. Yeah, that's very encouraging. Because, you know, that can be- That's very encouraging. When I'm saying that... Yeah, exactly. Because the loss of sale, which was, which we could never track, through an omni channel we are able to increase 4%-5%, that is a superb number, because that can potentially future drive the same store sales growth also for your encouraging, for your existing network. Sir, reason for the loss of sale was because the store was smaller in size, and now you're opening bigger stores, so some part of that could also be covered with your bigger store network, but it's across- No, it's not like that. It's not like that. I think the real question comes down to on a weekend there are a lot of shopping happens. Even when you're well stocked, you cannot have everything at one place at any time, right? So I think this omni thing has very well worked for us in weekends. Understood, sir. Thank you so much. Yeah. Thank you, Ankit. Thank you. The next question is from the line of Nihal Mahesh Jham from Nuvama. Please go ahead. Yes, good evening, Gautam. Gautam, the first question was that the 6% ASP increase that you're seeing on a YoY basis, how much of it is the price hike you've taken? It's largely, yeah, it's largely product mix, Nihal. I think the price hike tapered off last quarter itself. So this 6%, 5%-6% ASP what we've achieved is completely based on product. Understood that. Historically, if I look at your SSG, the larger period, say, the last 4 years, 5 years, there has been a good element of new product launches which I think have triggered incremental demand. Would it be right to say that maybe versus last year, that has been maybe one element which has not been as strong as has been historically? No, I don't say that. Yeah, new introduction of colors and products is very routine in the normal course of business. I don't think we have not introduced enough number of products. I think we've introduced fair number of products over the last 24 months. I think this attribute to reduction in, I mean, this slowdown in sales is because of the overall, overall inflation, what is happening in the market. I think new product launches, I don't think has an impact, has an impact on that. Understood that. And just one more question was that on the online side, if I look at a business construct with a, with the kind of gross margins we have, which is 60% +, and also the fact that the ASPs are reasonably good at INR 750 or higher, why is it that our online share is still, say, at 3%? You did mention on the omni initiative, but even if you look at the direct shipping model, there is enough margins in our say economics to make this an attractive channel for us. So any reasons why this is a channel you've not tried scaling up significantly? No. See, Nihal, I think it's this channel is scaling up very fast. We are growing at more than... See, where our company is growing at 15%, the online channel through the marketplace model and our website model is growing at more than 50%, 40%. It's just that it's not really moving the needle as an overall contribution to business because of the size of EBO and LFS business what we have. The growth rates are very encouraging, but for it to be a decent contributor, it'll take some time. Having said that, the online business in, currently in India is very largely discounted and we are a full price brand. For that notion to, for the online business to start moving from discounted to full price also will take some time. As that transition happens, even our transition from 3% to a higher percentage also will happen. Got that. Just to clarify on that, from an inventory perspective, everything would be listed online. Maybe just from the limitation on discounting is somewhere the scale is not happening because of a conscious choice from our side. Exactly. Yes, absolutely. We are completely... So, all our inventory is live and everywhere we are on the pure play marketplace model. We don't keep any of our inventory with any of our channel partners. It's completely drop ship model, where any order comes in, it's shipped from our warehouse to the final customer directly, through, of course, a marketplace's transporter. ... and our reach is also more or less to majority of the pin code. That is also not an issue also? Yes, absolutely. Not at all a problem. This is helpful, Gautam. Thank you so much, and have a good one. Thank you. Yeah. Thank you. The next question is from the line of Binoy from Sunidhi Securities & Finance Limited. Please go ahead. Yes, hi. Thank you for the opportunity. Could you help me with the rental expense for Q2 FY 2024, as well as Q2 FY2023? Which expense? Can you come again? The rent expenses. Sure, I'll just tell you. Just give me a minute. The rent expense, before Ind AS for Q2 is INR 28.83 crores. Okay. For Q2 FY 2023, last year, year-over-year basis, last year was 21.9%. INR 21.9 crore? Was last year Q2, and this year- Okay. Q2 is INR 28.83 crores. Right. Right. So on this, Gautam, are we seeing a little bit of rental inflation here? Because if I look at the store count growth versus if I look at the rental growth, you know, the rent expense increase, that is, the rental expenses are growing at much faster rate than the, than your store count growth, right? So are we seeing some rental inflation? Are we signing properties at a higher rate? Me, I don't think so that is the case. I think, look, we have added about, if I take the 12-month window between Q2 and Q2, we've added also about 120 stores. So the new stores rent also has been added, on an absolute basis between Q2 last year and this year. So our current rents, what is, are getting escalated at 5% every year on an average. Sometimes 5%- Mm-hmm. - sometimes 15% every two years. But the large difference- Mm-hmm. In rent, what you see between INR 21.9 crores and INR 28.8 crores is because of the newer stores we have. It's just that the percentage on revenue has increased. The rent-to-revenue ratio has increased because of the slowdown in sales. If the sales was not slower, then as a percentage, it would have been pretty much in line. No, I'm not talking in terms of percentage only. So if I look at the Q2 rent number, right, it's up something like 31% odd, and if I look at your store count number, it's up something like 20% odd, 20%, 21%, considering 120 odd stores added. So, you know, I'm just coming from this angle. Yeah. So then, so majority of the elements would be obviously... the majority of the elements would be attributed to new stores. Some stores would have also come up for escalation, which happens in the due course of business. Okay, but it is not a function that you are adding properties, and the properties are coming at an expensive rate? No, no, no. No, that is not the case. See, I mean, see, look, for us, rent-to-revenue ratio and EBITDA, whenever we are opening a store, we always keep a very sharp eye on it. That's why we have only a 12%-13% conversion rate on the number of properties we evaluate. So we, it's, it's not high because we are signing the wrong property at the wrong rent. That is not it. Understood. Fair enough. Sorry, earlier in the call, you actually called out the impact of Ind AS 116 on PBT. Can I get that again, please? No, I didn't. I had given the non-Ind AS number of cash flow, where 112- Oh. Crores was a post-Ind AS cash flow, and pre-Ind AS cash flow after removing the repayment of lease liability are pre-Ind AS cash flow comes to INR 63 crores. That is where the, I have given the number. Okay, okay, okay. But is there any Ind AS impact on PBT? 100% will be, because- Okay. So, I, yeah, see, I'll tell you, I'll give you an example. I don't have the exact number here. From what we have seen- Mm. In the past, on a PBT level, there will be an impact of INR 7 crore-INR 8 crore every year. Even, even INR 10 crore? It can go from INR 7 crore to INR 10 crore. See, we don't have the exact number handy, but it can range anywhere from INR 7 crore to INR 10 crore, can be an impact on your PBT. Because- When you're taking up a new store, the rent paid versus what you show in depreciation and interest, the depreciation and interest is shown much higher than the actual rent paid. Mm. It depends on the period of agreement. It depends on lot of conditions. That's where the challenge comes in. Yeah. Fair enough. Fair enough, I understand. And can I have the pre-Ind AS EBITDA margin for quarter two? Eighteen point... For quarter two, I'll tell you. Just give me a second. For quarter two, it is 16.5%. Okay. 16.5% is quarter two, and for- Mm. H1, it is 18.9%. Understood. So essentially you're saying the after rental expense, your EBITDA margin pre-Ind AS is flat. It's because it was- No, last year, H1 was 19.6%, and this year, H1 has been 18.9%. So there is a 70 basis points fall in the EBITDA percentage. Last year, Q2 FY 2023 was how much? Q2 FY 2023 was 18% last year. 18%. Okay. This year Q2 is 16.5%. So there is a 1.5% fall in Q2. Understood. Understood. Fair enough. Gautam- Absolute EBITDA has grown. Only the percentage has fallen. Understood. Understood. So Gautam, now coming to the business, right? When we look, when we see, the product, which is women's bottom wear, it's a very core product, a low-fashion component product, right? Very sweetly priced at, most of your basket is below INR 1,049, right? More than 80% of the basket is priced at below INR 1,049. So I'm just wondering, you know, and the size at which we are, I'm just wondering that at a SSSG level, why should we be looking at a very low single digit or a flattish muted sort of a sales growth, and should this not be attributable to competitive intensity from the larger retailers? Look, I don't think so. Like I mentioned, the competition landscape is pretty much similar to what it was last year and the year before that. I think, also, we also compared the SSG number with our SCSG number. See, because we are growing in clusters and we are adding so many more number of stores in the same locality and in the same city, the one thing which is very encouraging is that our SCSG number has been in double digits at a value level. That means that our market is not degrowing. Yes, from a profitability and store hygiene perspective, our SSG has been flat, but our SCSG number has been very encouraging, even in a tough environment like this. So I don't really think that the competition landscape has anything to do with it. It is just that the overall purchasing power in the market has been a little subdued over the last six months. No, I, I understand. I'm also coming in from a very fundamental view that, you know, SSSG of flat SSSG, actually to to maintain your margin at a store level, you would need to maintain SSSG of roughly about 4%-5%, give or take, right? About 4% we have to maintain. Right. Now, when you are generating flat SSSGs, so essentially it puts a pressure on your store level profitability, right? And to offset that pressure, you might have to, you know, look to offset it by higher gross margin, which could... Would you think, would it disrupt your price architecture and the value proposition your products? Yeah, yeah. See, I can... okay, I know where you're coming from, and I'll explain it little bit differently. Just, just to finish- Yeah. Just to finish my point, should you not to, and, and in order to, that such a situation doesn't arise, should you not actually also focus on volume growth? And how do you increase the volumes at a per store level rather than, and look at a cluster level? Uh, Yeah. Ideally, we do look at a volume level only because we are a volume-led business and not a value-led business, because we are not increasing our pricing every year. Though our ASPs are increasing, so our focus is more volume. Mm. Now, coming back to your specific question that how do you maintain profitability when your SSG is flat, the SCSG- Mm makes up for it. Let me put it differently, right? Today, our SSG has been flat for the last six months, but if you take the complete- Mm P&L, the impact on EBITDA has not been so much, considering that the SSG has been flat. That is because the SCSG has been good. So the SCSG, see, at the end of the day, one store or two stores might get slowed down, but at the end of the day- Mm The number of stores you're adding in one cluster, then you should look at the revenue, the expense, and the EBITDA as a cluster and not the store individually. So the real way to make up the SSG growth is by obviously pushing volumes, but the SCSG will be a very important factor in making up the growth. That's why even if you see in our current P&L, our operating margin has not come down that much compared to our SSG flat. Okay. I would perhaps take this offline because, you know, I believe you have basically... Yeah. Yeah, yeah. That's all from my side. Yeah. Yeah. Thank you. The next question is from the line of Rajiv B from DAM Capital. Please go ahead. Yeah. Thanks for the opportunity, sir. Sir, will it be possible to call out what is the SCSG volume number this time and, and the previous quarter as well? Sure, I'll tell you. Just one second. Our SCSG volume number for Q2 is 6%, and for H1 is 7%. I'm not having the Q1 number handy, but Q2 is 6% and H1 is 7%. And the 11% SCSG YoY is basically equally split between price and volume? Yes, absolutely. Yeah. And, and is it, is it possible to call out what is the universe in the SS, SCSG in terms of, let's say, number of stores or the volume of, let's say, on a quarterly basis, you do 1.9 million articles, right? So... Yeah. I mean, look, we have about 150-160 clusters- Yeah. About somewhere between 430 store-450 stores come into the clusters, fall into clusters. And let's say, in every quarter, how does this cluster universe change? And is it possible to put this in the presentation as well, in terms of the SCSG universe? We will look into it. That's a good point, Rajiv. We'll look into it if we can show it in the presentation. We... This number does not dramatically change because we are adding about 25 store-30 stores every quarter. So I think probably this cluster number of 420 stores what we had last quarter should move by 10 stores-15 stores every quarter... is my guess. Sure. And in terms of, the articles per bill, has that changed dramatically? Like, a few quarters back, you had called out 2.2. Has that changed dramatically, in the- No, it's the same number. Even now, it's the same number. There's no change on that. Okay. Lastly, on shoppers coming back to fold, I think during the time of IPO, you had, you know, they had dropped out. Exited. What, what changed now? Well, we don't know. I mean, look, see, they want... They actually had, we had also approached them asking that if they could, could come back again, and things worked out. So we are doing a pilot of 10 stores with them, and this festive quarter we are going to start dispatches soon. So, things worked out well at the right time for us. Sure. And lastly, one more thing, We've been, we've been in touch with them for a very long time, and this time we asked them, and they were more than happy to have us back. Sure. And though it's early on the MBO revenue, which is, I mean, which is a vital portion of your entire book, but that number is down, right? So at close to INR 3.6 crores. Now, does it lend anything in terms of the demand from the MBO side is weak for the festive, or should have, there have been slightly better billing? Well, I actually have not studied the MBO market too much because as a business, we don't really concentrate on that front. Probably, we'll track over festive, and I'll come back to you with some feedback by the end of festive. But as of now, I don't have concrete data on why the MBO is because as a focus area, we are more focused on EBO, LFS, and online. Sure. All right. That's all from my side. All the best. Thanks a lot. Yes. Thank you, Rajiv. Thank you so much. As there are no further questions, I would now like to hand the conference over to the management for closing comments. I'd like to thank everyone for being on this call, on this call. We hope we've answered your questions. If you need any more information, please, please feel free to contact Mr. Dhiren Grover from SGA, our investor relations advisor. I would also extend my heartfelt wishes for the upcoming festive season. I wish you a very happy Diwali. Thank you. Thank you. On behalf of Go Fashion (India) Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.