Ladies and gentlemen, good day, and welcome to the Q2 FY24 post-results conference call of Sai Silks Kalamandir Limited, hosted by HDFC Securities. 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. Jay Gandhi from HDFC Securities. Thank you, and over to you, Mr. Gandhi. Yeah, thank you very much. Good evening, everyone. Seasonal greetings, and thank you for joining the first call post-listing of Sai Silks, and also the second quarter FY24 earnings call. Today, we have with us Mr. Bharadwaj, VP, Sai Silks Kalamandir, and Mr. K.V.L.N. Sarma, Chief Financial Officer with us. So without further ado, I hand over the call to the management for their opening remarks. Over to you. A very good day—a very good evening, and a warm, warm welcome to one and all. I am Bharadwaj Rajaram, Senior Vice President, Sai Silks Kalamandir. Thank you all for taking time to join us today to discuss Sai Silks Kalamandir's Quarter Two and first half financial results of FY 2024. I have with me Mr. K.V.L.N. Sarma, the CFO of our company. This is our first earnings call that we're doing after our IPO, and I would like to take a moment to thank you all for your support. To quickly summarize, Sai Silks Kalamandir Limited has four brands, namely, Kalamandir, Varamahalakshmi Silks, brand Mandir, KLM Fashion Mall. Our retail store presence is in four states of AP, Telangana, Tamil Nadu, and Karnataka, and we have about 54 stores as of September thirteenth. With regard to our store count, we have 12 Kalamandirs, 19 KLM Fashion Malls, 19 Varamahalakshmi Silks, and 4 Mandir stores. Kalamandir, which is focused toward the middle-income class segment, KLM Fashion Mall, a hybrid value fashion mall format. Varamahalakshmi Silks is focused toward the wedding and the celebration wear. brand Mandir focused on premium, high-end, high-end, unique, and elite segment of the society. Together, we cater to the entire spectrum of the women's ethnic industry. During this quarter and first half, we have not added any new stores, and our retail square foot remains the same of around 603,000 sq ft. As you all are aware, our business model predominantly operates in the wedding celebration and the occasion wear industry. During this quarter and H1, we saw an impact of Adhik Maas, which has impacted the wedding date, and that's why the operations of H1 are exactly not representative of the annual figures for this. This year, the calendar seems to have moved a little bit towards H2. On the implementation front, we have made significant progress on narrowing down and finalizing new locations to set up our stores. Post Quarter Two, as you are aware, and as per our intimation to the stock exchanges, we have opened 3 new stores of Varamahalakshmi Silks. That puts us to 57 stores as of today. The business outlook seems to be brighter in the next quarters to come, and we expect robust growth during the next 2 quarters on account of festivals and marriage season, all in all, falling in together. With regards to our Quarter Two and H1 numbers, our CFO, K.V.L.N. Sarma, will take you through them. Thank you. Good evening, gentlemen. With regard to the Quarter Two results, I'll speak on a YOY basis, compared to last year's September figures. We did a turnover of INR 327 crore revenue, as against previous similar quarters INR 309 crore, an increase of about 5.86%. Gross profits stood at INR 136 crore, as against INR 121 crore, an improvement to the extent of about 12.29%. EBITDA increased to INR 55 crore, as against INR 41 crore last year. That would be approximately 34% up. Profit before tax on a YOY basis was INR 31.6 crore, as against INR 23 crore last year, an improvement to the extent of 35%. Profit after tax was is INR 23 crore, as against INR 17 crore last year. That's about 33% improvement on a YOY basis for the second quarter. Coming to half year, the revenue of from operations was INR 631 crore, as against the INR 648 crore last year. That's a small dip of about 2.69%. Gross profit improved by way of various factors to approximately INR 259 crore, as against INR 249 crore last half year. EBITDA is INR 99.6 crore, as against INR 97 crore last year. PBT was, profit before tax was 54, as against sixty-one, and the profit after tax is INR 40 crore for this half year, as against INR 46 crore last year. We... Broadly, one of the reasons why we would have equated the last year's figures, but for a small issue with our flagship store in Chennai, Mylapore, where because of a metro construction, their access was restricted. Otherwise, we would have perhaps equated on the revenue front during this half year. We are expecting that this impact will be there for a quarter or two more. So broadly, this is the financial parameters for the half year and quarter. Now I leave the floor for question and answer session. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask questions, may please press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may please press star and two. Participants are requested to use only 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 CA Garvit Goyal from Nvest Analytics. Please go ahead. Hi, good evening to everyone. Congrats for a good set of numbers. My question is on the industry demand outlook. Like you mentioned, there will be a robust growth. So I just want to ask means, are you expecting any improvement in terms of market share against the peers in the upcoming two quarters? Like, you people are also opening the new stores in Tamil Nadu. So, what is the update on that also? And, what is the outlook or what is the target revenue for FY 2024 in absolute numbers? Thank you for the question. So with regards to the market outlook, as you're all aware, with the Adhik Maas, there's a shift in the calendar of approximately a month or so. And even if you talk about last year, Dussehra season came around October 5. What we generally see in our stores is our women customers, when they tend to buy at least 2-3 weeks in advance. So that's the reason why our Q has little bit shifted towards the third quarter. And if you talk about third quarter, predominantly, it is always being aligned together with wedding and festivals all in all put together. And therefore, we've already seen this traction with our Dussehra seasons. All of our stores have better footfalls and walk-ins in our stores, and we believe that this is going to continue all in all across Q3 as well as to Q4 as well. Talking about our Tamil Nadu store presence, I think, as I, we did mention, we have opened three new stores. These stores also have phenomenal response. We have been getting amazing footfalls and walk-ins from day one itself, and we believe this is going to continue in the near future for the next quarters to come. With respect to the market shares, I think it is safe to say that, you know, in the areas where we operate, there are all kinds of players who operate, being unorganized players as well as the organized players. Varamahalakshmi Silks has a heritage because it's having a heritage of over more than 12 years, and that is the reason why our customers are able to resonate to that brand language, and we can expect a good season in the next quarters to come. I hope that answered your question. Right. Right. Right. And what is the absolute turnover target, if you can share? See, unlike a manufacturing process where there will be a capacity and then other good questions, et cetera, in the retail, it would be one factor where giving an indication would be slightly difficult. But by the way that things are going, by the way the calendar has shifted to the second half, we should. We are targeting, we are working towards a target of improvement in the range of about 5%-10% by during this year. 5%-10% in comparison to what? Last year. Last year, YOY, next two, right? Right. Okay. Okay. Thank you, sir, and all the best for the future. Thank you. Thank you. The next question is from the line of Vikas from Equitree Capital. Please go ahead. Yeah, thank you for my question. You just opened these 3 stores right now in this quarter, means is the current going on in October or November. So, and whatever your existing stores is there, is the 54 stores is there, is all these Kalamandir, Varamahalakshmi, and everything. What is your parameter for the mature stores revenue as well as new store revenue? Because generally, what is my understanding of the prospectus and the other documents, your current revenue per store is INR 25 crores per year is top, per store. As per my understanding, is the average number. What is our understanding for the new store, mature store, as well as is a new store? The INR 24 crore or INR 25 crore average revenue is across all the formats as a company's average for the last year. Right. Currently going ahead, we will be expanding only on our premium format, Varamahalakshmi format, which has a higher productivity at the store level. And also during the launching, we do big time launches in all these stores, whenever we are putting up the stores. So initial throughputs will be a little higher than the averages. So in the new stores, of course, these are being coming into existence as a part of the year, three months, four months or so. But during these periods, the footfall and the turnovers will be slightly better than the company averages. Whatever the new stores is there, it is slightly you confident, this- Slightly, slightly better than the company averages in the initial period. It will be a spike in the initial period when we put up this store. Being a new store, and we create a lot of visibility among the local area of creation of the store, et cetera. So there will be a spike initially, and over a period, next two, three seasons, it will slowly taper down, and we'll settle at the company. To quickly add here, the idea here is to make sure the visibility and the nearby visibility, I mean, the vicinity knows that our stores are opened. And, therefore, rather like having a slow growth of, revenues coming in our stores, we expect a good traction from day one itself. So the INR 24 crore number, as you were talking about, is an average pan out of all four formats put together. With that, Varamahalakshmi being on the higher end, I think we should be able to expect better than the company's average, I think. And because these stores are new stores, we should be able to expect a better number than the company average. You track on the month, or it's somewhere, 3 months or 6-month period is required for the break-even kind of number for new stores, or are you confident enough for the day one itself? These stores, because of their higher productivity in the initial stages, in fact, on the CapEx part, we will be able to cover within a short period only. Even then, along with inventory also, it would not take long anyway. But in the initial periods itself, we should be able to cover the CapEx expenditure, et cetera. Okay. One thing also I want to understand, you mentioned this is a 2, I think, warehouse will be coming up in the south. Yes. So- Yes. Any update regarding this one is there? In here? For the new warehouses, which you mentioned on the phone. Places? Yeah, places. One is in Hyderabad, augmenting the warehousing capacity in Hyderabad, and the second will be to serve the cluster in Tamil Nadu. We have identified a small satellite warehouse in Salem as of now, and we will have a major warehouse somewhere around Chennai or other place, depending on the store locations that we finalize ultimately. Quickly to add here, I think the Tamil Nadu entire state, the idea, the areas where we have narrowed down is strategically spread across Tier A and Tier 2 cities as well. For example, Coimbatore, other cities as well. So our warehouse that we plan to put will have a strategic location. So because these upcoming stores, all these 13 new stores will be coming in the Tamil Nadu state, we expect to increment our... We, we expect to put up a new warehouse in Tamil Nadu. Additionally, we also have identified a small distribution slash warehousing unit in and around Salem. This is a more or less, this stores is a kind of the fulfillment center as well as is a backup of your, main stores? This is dedicatedly a warehousing capacity. It will not be a store. It will definitely be a warehousing unit where the Salem unit specifically will be a warehousing slash distribution center. No, I just asked to you. This one is some kind of the... Because you are online presence also there. So this is warehouse for the fulfillment center for the online purpose, or no? No, it is completely for the offline network itself. For the online part of the business, our omni-channel network is able to suffice our online business part. And the entire online operations as of today, the entire inventory and the stock is being catered from the Telangana stores. Okay, only Telangana stores. Okay. Okay. Thank you. Thank you. Thank you. Thank you. The next question is from the line of Jagvir Singh from Shade Capital. Please go ahead. Yeah. Thanks for the opportunity. So in the IPO, we have raised INR 125 crore for the 30 stores. So in how many, how much time these 30 stores will be open? It is approximately 18 months. That is, this year we will be opening about 7-10 stores. Next year will be INR 18 crore, 18 stores in the FY 2025, and the balance 5-6 stores will be in the first quarter of the FY 2026. Mainly these stores will be the Varamahalakshmi format or in Kalamandir, and which format? 25 of these will be Varamahalakshmi format. Five of these will be Kalamandir format. But depending on the local requirements and the demand that foresee, we may change the format if necessary. But predominantly, it will be Varamahalakshmi format only in Tamil Nadu. So we have 54 stores and 3 stores open, and total, we are going to open 30 stores in the 18 months. So if we talk about the southern market, so, how much is the potential? How much stores could be there in the next 4-5 years? Talking about the industry over, or the industry per se, our revenues are currently, wherever we're coming from, it's only coming from 12 cities. Though we operate in across 4 states, our revenues are only coming from 12 cities. Now taking the likes of the other potential markets where we have not even explored, for instance, our market in entire Telangana is revolving around Hyderabad. For instance, in entire Karnataka, we have stores only in Bangalore. Tamil Nadu, we just touched the tip of the iceberg, and the rest of the entire market is open for us to explore. In Kerala, we are not even present. The idea here is for us to penetrate deep into Tamil Nadu market, because Tamil Nadu market per se also has an equivalent size of Andhra and Telangana put together. That's what the industry sizing is. Today, as we speak, the total size of the sari industry when we work with Technopak is around INR 46,500 crore. Fifty percent of that is coming from the South Indian states, which is close to INR 23,500 crore coming from the South Indian states. Last year, I'm only talking about the sari revenue. Last year, we did a revenue of about INR 1,350 crore. Out of that, the sari contribution was close to INR 950 crore. Taking that math, and if you put a quick math, you'll understand that our market share in the current areas where we operate is just under 4.5%. That kinds of give you a sense of how big the market is and how much of a potential we have to, we have in these existing markets even before looking out at other sides of the other, other cities and other states as well. At this point of time, we believe that the Varamahalakshmi format is a perfect I mean, perfect fit into the Tamil Nadu market, because the Tamil Nadu market has a very good consumption in terms of sarees, especially silk sarees. With that same vision, that's, that's why we anticipated that, you know, we will be opening up about 20 Varamahalakshmi stores and 5 Kalamandir stores using the IPO proceeds in the next 2 fiscal years to come. On the potential side, as Bharadwaj explained, we have a presence only in Bangalore, and Bangalore has a larger potential further, and we have not even gone into the other areas of Karnataka. So together, and Kerala is fully unexplored. So we have a large potential over and above this 85-90 stores that we'll be completing in the next 1.5 year. On a broader sense, if you take our implementation, perhaps it will be another 6-7 years for us to complete the South itself. On a broader perspective, you can note that we can have approximately 200-250 stores potential within South India itself. Okay. How is the saree market is growing as an industry, and how much percentage it is growing? The industry suggests that, you know, it's growing at an 8% CAGR year-on-year. Okay. What is the like-for-like growth in the Q2? Sorry, I didn't get your question. Same store growth. Like-to-like growth compared to Q2 last year to this year, because we have opened some new stores also. Right. No, no. Yeah, yeah. SSG per Q2, in fact, was approximately -5%, because of the shifting the wedding dates, et cetera, all that. Since we are expecting that the store should be compensating for this and should be much better, we should be even, we should be evening out during the second half, and possibly may achieve a small single digit number by the time we close the financial. So actually, I was hearing an interview post-listing from your company, someone from your company, so they were talking about a 15%-20% growth in the next two, three years. So because retail is growing very good speed in India, so but this year is okay, we can do, you are saying single-digit growth, but next year or FY 2025 or 2026, at some point, we can grow by 15%-20% on? Yeah. When we speak about SSGs, SSGs for these stores will normally be in the range of 3%-4%, and they will be fluctuating on that. Because we are adding additional stores, and those stores are for the premium format, et cetera, the growth on a company level per se, for what we have projected as 15%-20%, can easily be achieved. If we are restricting it to SSG same store, see, in our case, a mature store, we take it as one which has operated for the full year. So if we are talking about SSG, once the store sees the full cycle and stabilizes at one point, from there, the SSG would be in the range of about 3%-4% continuously, but the new stores will be contributing substantially, yeah. Since we will be implementing large number of stores of a premium format in the next 2 years, the growth per se for the company would be in the range of 15%-20% at least. In the organized market, so who are the main competitors in the South market as a brand play? See, I think with respect to competition, I think if you take the, in the listed space, there is no particular like-to-like comparison that we'd like to have. For instance, because we have all four formats targeting, like, as low as INR 200, we have products worth of, like, about INR 5 lakh... So most of the players seem to just focus on one of the segments. But rather, if I have to put the competition in different perspective, maybe Varamahalakshmi itself will compete with the likes of Nalli, Kalamandir will compete with the likes of Pothys, and Taneira will compete with the likes of Varamahalakshmi. So there is each and every format and competes with different players. And again, there's a whole lot of players who are unlisted, being R.S. Brothers, South India Shopping Mall, Kankatala, and other players in the regional players who operate in these markets. More or less, areas where we currently are, wherever in the entire country, the competition comes in unorganized as well as organized, and few of them being in the listed space. These are some of the names that I have taken up, but there are many, many players as such who operate in these markets, who have good market resonance here. Last question, sir, is all these stores are owned by the company, no franchise store? As of now, 54 plus these three stores, all of them are company-owned, company-operated stores only. It's on a long lease, where we rent out the premises from the owner and we set up the stores. We don't even have any revenue sharing with our landlord as well. And that's the model that we have always been following, and we will be looking forward to follow as well. However, with the IPO funds, I think what we would like to see in the near future is to work on our KLM format to work on a franchisee. Broadly, it will be a franchisee-owned, company-operated stores. We are yet to make significant progress there, so we have been more or less the skeleton structure of how the entire structure needs to work. Over the course of next quarters, we anticipate to open one or two of these franchisee stores, carefully assess how these stores are performing, and then probably take a stand once we see these results coming through. Okay. Thank you very much, sir, for answering all the questions. Thank you. The next question is from the line of Ankit Babel from Subhkam Ventures. Please go ahead. Yeah, good evening, sir. A few questions. You are targeting a 5%-10% growth this year and 15%-20% growth next year. So at those levels of revenue growth, what kind of margins you are looking at, at operating level? So we are, whatever stores that we are putting up right now are in the premium segment of ours, Varamahalakshmi format. And also we have various plan strategies for improving the operational efficiency, be it in the sourcing or managing the creditors, reducing payables and all that. There's a multi-pronged attempt that is being made to improve the margins as such. And it will be on a staggered basis as we are putting up stores year after year, this will be improved. And that, the broad target that we have is by year 2026, we should be able to improve the margins to the extent of about 4%-5%. Okay, and this would be mainly led by improvement in gross margins? By efficiencies and improving on efficiencies, as also since premium format will give a better yield, better margins. Together, we should be able to get approximately 5%, 4%-5% improvement in the next two years. Okay. Five to 10% growth this year and a 15%-20% growth next year will land you somewhere around INR 1,700 crores-INR 1,800 crores of revenue. Whereas at the time of IPO, you had guided for some INR 2,000 crores revenue with INR 120 crores of profit, sorry, INR 200 crores of profit. So, are we downgrading it, or are we on track to achieve that? Or, I mean, what is the status on that? No, now that we have the plans already in place, just we are trying to be on a conservative basis at this point of time. But surely we should be able to do much better than what this 15%-20% is, because it is mostly volume-driven. We are putting up additional stores, additional square feet area and all that, and also improving the internal efficiencies. Surely, we can expect much better than 15%-20%, but being conservative is not a bad idea now. So just to reconfirm, I mean, the INR 2,000 crore revenue target and a INR 200 crore PAT target next year, it's quite possible, you are saying? No, no. It is possible by depending on the implementation, but for the present, we will take it only as 20%-25% growth perspective. Okay. This year you had guided for INR 120 crores of profit. We have done somewhere around INR 40 crores in the first half. Do you believe that the H2 can be like INR 70 crores-INR 80 crores so that we can reach to that INR 120 crore mark? We are targeting and working towards that. Maybe there is a 10% ± variation that could be there. But surely we will make an effort to reach to that target. Okay. It's one because... Yeah. Yeah, please continue. Yeah, because, we are expecting, seeing the retail, it is dependent on the, calendar and then, other festivities, et cetera, happening. So by the current, trend and, the, festival dates as well as wedding dates that are there, we shall definitely make an effort to reach to those targets, given a plus or minus, sensitivity to the center of about 10%. Okay. And, sir, what kind of retail area expansion you are looking at in this year and next year? I understand you had guided for 30 stores per se addition, but in terms of sq ft, what would be the year-end sq ft area which you would be working with? And then over- on that base, what kind of growth you are looking at in area- This year, we would be, this year we will be doing approximately 50,000 sq ft addition. Year 2025, we should be able to do anywhere between 80,000-100,000 sq ft. So after adding 50,000 this year, you'll be ending this year with, what kind of retail area in totality? INR 655,000, roughly. 600,000. And on that base, you'll be adding some 100,000 sq ft? Yeah, next year our target would be 100,000 sq ft. Okay, okay. And, sir, what was the per square feet sales in your first half in your Varamahalakshmi stores? Let's, I mean, this is one sensitive thing to be going on a public platform. It shall be restricted to the company level figures at this point of time. Okay. -which we have- Okay. We have done, as we have done last year, it is ranging around 22,000 at this point of time. Once we see a better traction in H2, this might improve to towards the end of the year. Okay, okay. And, sir, overall, are you witnessing any slowdown in the consumer sentiment or in the industry, or are you facing any challenges which, which might, you know, force you to relook at your expansion plans going forward? Or in other words, sorry, in addition to that, any negative thing coming in the Varamahalakshmi stores, I mean, the footfalls which are below expectations or the sales per square feet, which is below expectation. Any negative things which you are looking at? So currently what we see is the only, only impact that we have is a shift of the wedding date calendars from H1 to H2. Apart from that, soon after H2 is ended in October, as I just mentioned, that we have seen great amount of footfalls coming to the stores. And these new stores are also doing phenomenally well, so we do not anticipate any, any major slowdowns or anything that impacts our, any of our stores, not only Varamahalakshmi, Kalamandir, KLM Fashion Mall stores as well. The only thing that we have to understand here is that since we operate majorly in the occasion wear and wedding wear, the impact of these festivities and weddings have an impact on the company, and all of them fall in under H2, is going to just give a good way and track record moving forward, and we do not anticipate any slowdowns or any breakages. One small issue that we have is, as I explained in the opening remarks, our Mylapore stores may have some lesser productivity this year because of the metro construction around, and then next two quarters also, that particular store might have a little problem. Nevertheless, other stores would be operating to the satisfactory levels. How big is that store in terms of revenue on a yearly basis? Just to understand the impact. The impact on overall on a yearly basis could be in the range of about INR 15-20 crores. 15 crore-INR 20 crore. Okay, and so my last question is, what was the reason for a very soft performance in the first quarter of this year? See, I'll take the question. So, overall, I think again, it all narrows down to the occasion wedding wear calendar. So, it's that's the whole essence of where we operate. So, because we operate in the women's ethnic wear segment, and we also... Not only this, one other aspect here is that overall, we have been seeing a weak demand in the consumer discretionary space as well. And that has also been some of the reason which is why we have seen a weak Q1 as well. And Q2 was definitely majorly because of the shift in the wedding calendars. These are the only two reasons why we have seen such a little bit signs of weakness in this H1. Apart from that, everything remains solid, and we only anticipate to grow in the H2. Okay. Sir, what kind of working capital you, you guys are working with for the company as a whole, in terms of inventory days and creditors? Inventory also, we will not have any debtors, as you know, it's all counter sales. I understand. Inventory also, we are trying to optimize as of now because to give you a ballpark figure, last September, we had an inventory of approximately INR 780 crores. We have focused on optimizing that. After adding those 8 stores, this September, we have only INR 719 crores of inventory. So there is a substantial improvement. Normally, September end, we will be filling the stores to the full capacities because of the festivals that will be coming in from October on. So there is an improvement on that, and creditors also, we are slightly reducing over the last year. In fact, last year, the figure was approximately INR 310 crore also, which we have brought it down to INR 229 crore, during the current year. So there's a constant improvement on the working capital, management at this point of time. The borrowings for working capital for this kind of, inventories are in the range, currently are about INR 190 crore. 190? Crores. Okay. The working capital borrowings. Okay, okay. Thank you so much, sir. Oh, yeah, sure. Fine. The next question is from the line of Chinmay Gandre from Canara HSBC. Please go ahead. Yeah, thank you for taking my question. So with respect to the growth for this year, so, suppose we end up with a high single digit sales growth over last year, so it implies, which effectively means for the second half, we will grow, we'll need to grow by almost near 20%. So, are you pretty confident about that growth in the H2, considering even how maybe the festive period happened so far? No, see, SSG is calculated on the matured stores or the existing stores earlier, which we are expecting by the year-end, they will be evened out. So, there will, there will not be any major SSG that could be achieved on the matured stores. But since we have already put up 8 stores last year and this stores this year, already 3 stores and other stores will be coming into operation for a partial capacity. The improvement to the extent of that 5%-10% that we are targeting would be possible. It's not about the cover having an SSG beyond the last year's turnovers. No, actually, I was not talking about SSGs per se. I was talking about absolute, sales growth of around, I think, a digit, from a INR 1,350 crore base, which we had. So based on, what we have done in H1, so basically, effectively for H2, our implied growth is almost near 20%, eighteen to twenty percent would be the number, for H2 versus, last year H2, so, in terms of sales. So basically, considering the festivity, festive period which has stayed so far, we are reasonably confident of achieving this, this kind of numbers? Normally, as a thumb rule also, between H1 and H2, it used to be 45-55 earlier. Then, this year, because of the shift in the with the festivities and weddings and number of weddings being more, this might work out anywhere between 40 and 60 or even better. So that is the that is the logic behind the H2 being much better than what it was last year. One other point I'd like to mention here is that last year, H2, we have added eight new stores, which have happened in the early or in the mid Q3, Q4 time. So even those stores' revenue also will get added in this H. Plus, we have new stores also coming up, we are actively working on, and many of the new stores will also come. So with all of these, we'll definitely be able to get to the projections where we, what we tend to believe to achieve this year. Sure. And in terms of the festive period so far, could you qualitatively, or, I mean, could you give us a number in terms of what would be your festive versus festive growth, say, Navratri versus previous year Navratri or whatever is any festive period that you consider on a festive to festive... Yeah. I got your question. So, quantitatively, I think, I won't be able to give you an answer. Probably, I'll give you the numbers in the next quarter discussions. But overall, what we've seen is, like, a good amount of walk-ins. Our bills have increased, and our revenues also in these stores have also increased, so we see a good demand. Definitely better than last year. Okay. So, thirdly, my question was on your gross margin. So even if I look at your Q1 numbers and your Q2 numbers, I mean, there is like almost 100-200 basis volatility. I think 39% was in Q1, now we are around 41% kind of gross margins, broadly. So, can you throw some light on this quarterly volatility in terms of the gross margins and... Yeah. Yes, the gross margin mainly depends on our product mix during the period. Normally, when wedding things, wedding and other festivities purchases are not there, the major outflow will be on the fancy sarees and other those kind of products, which normally will have a reasonable gross margin levels attached to it. So that is how we saw a small improvement in the gross margins during this quarter. And of course, when wedding purchases, et cetera, will come, there is a possibility that we will be able to maintain this or improve slightly upon this. Okay, thank you. We are also attempting various methods to improve our purchase efficiency, whereby our cost of goods sold also will come down. So coupled with these two factors, we should be able to maintain the improved gross margins going forward. Okay. Thank you, sir. Bye-bye. Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants in the conference, kindly limit your questions to two per participant. Should you have a follow-up question, please re-rejoin the queue. Thank you. The next question is from the line of Neeraj Savai from Abakkus Asset Manager. Please go ahead. My question is, regarding the cash which we are sitting on post the IPO. So how do we see the interest income and other income part of it for H2 of 2024? Mm-hmm. If you have seen the first- Neeraj, can you repeat the question, please? So I'm seeing post-IPO with the kind of cash which we are sitting on, do we see a big decline in interest income for the second half? And what is the kind of increase which we'll see in the other income? Other income, see, currently we are targeting approximately 7%-8% return on the funds that we have not utilized. But thus far, we have utilized more than INR 150 crores. And then on the balance, we are targeting approximately 7%-8% return till the time we use them. Yes, the interest cost also should come down slightly because we have initiated out of our GCP, we have initiated the process of reducing our payable days, et cetera. Mm-hmm. We initiated in October itself. So going ahead, there might be an improvement in the other income by way of interest on fixed deposits or what, wherever we invest. And the actual working actual finance costs that we spend would come down on a staggered basis. If I were to look at the other income part, what would be the number, if you can guide something for H2? H2 in those 300%, average, more than 40 approximately INR 12 crore-INR 15 crore. Okay. So INR 12-15 crore can come from other income. And what would be the savings on the interest side? If I look at the first half, it's about INR 27 crore, which is interest expense. So how much can it come down in H2? Out of INR 27 crore, nine crore is out of that, Ind AS adjustment. So actual interest outflow was about seventeen to eighteen crore. We may be able to achieve, because the, for us to run down the existing, borrowing and facilities, it might go up to December. So broadly, we may end up saving about INR 1.5-INR 2 crore. Okay, so maybe about INR 15 odd crores would be the interest income for H2? Interest, interest expense. Be the net income for H2 on the cash which we have. Correct. In the festive season, do we see an improvement in margins because the sales velocity will be higher, the OpEx will be more or less similar? So what kind of EBITDA margin would be there for the third quarter, assuming that, you know, the wedding season, festive season, everything has been clubbed together? Yeah, obviously, the margins with our EBITDA, we see even at this level, the stores are with full cost. The stores are running with full cost only. Okay. So whatever additional throughputs that we get out of these stores, barring the sales commissions, et cetera, there will not be any proportionate increase in the expenses. So the margins should definitely be improved in the second quarter with the higher throughputs from these stores, particularly the wedding and other sales. Okay. So if you look at the second quarter, EBITDA margin were about 16.8%. Is it right to assume that H2, our margins would be higher than this? At this stage, it is Higher yes. Surely, yes, because at this point, not 16, 15 and- 6.7. But for the entire H1, we have about 15.8% as EBITDA margin. And because of this, improved sales and the throughputs, particularly in the higher segment, premium segment, so we should be able to get a better margin. So about 17%-18% is something which seems to be achievable for H2? Let us say at this point of time, since it is only one month, since we have already into the better, better phase of the, Year. Yeah, half year, second half year. Yes. We may be able to give a guidance on this after this intermediate term. Right. Got it. That's it from us. Thank you. Thank you. The next question is from the line of Gopal Navandhar from SBI Life Insurance. Please go ahead. ... Hello, am I audible? Can you be slightly louder? It's low, sir. Just wait. Is it better? Yes, please continue. Yeah. Yeah, so, just this 5%-10% growth when you are saying, this is for company as a whole, or it is second half for SSG, what exactly it is? It's in a broader perspective on the company as it was. For full year? For full year. Yeah. Okay, okay. And this gross margin expansion in H1 is largely because of the mix change. There is no price increases, or there has been any price increases? No, there has been no... In fact, it's not as though there will be a specific price attached to it because the product mix varies from a small INR 50 merchandise to INR 200,000, and there cannot be a revision in between. So it's not about the prices, but the product mix mainly drives, product mix, particularly drives the improvement in the margin in this. Okay, okay. Gotcha. And in general, if I may ask, you know, within the four quarters, how the revenue distributions, in general, it is there? Say maybe Q1 is 25%, 22%. How is the general distribution of revenue across quarters? It will be in the order of, say, Q3, Q4, Q2, and Q1. Q3 being the best, then Q4, and Q2, Q1. Q3, Q2, and Q1 and Q4. Q3 will be the highest. Mm-hmm. Q4 will be the next highest, next better. Okay. Between these two, it will be approximately 55%. Okay. And then Q2 and then Q1 between them would be approximately 40%. Okay. Okay. Sure, sir. Thanks a lot. Thank you. The next question is from the line of Rahul Jain from PhillipCapital. Please go ahead. Sir, this is Ankit here from PhillipCapital. I just wanted to know, are you seeing more pain in Varamahalakshmi or in KLM Fashion Mall? Because some of the value fashion companies are seeing higher pain at the lower income group level. So if you can just share some color between these store formats. Ankit, sorry, I'm not able to hear your question properly. Could you repeat the question? Sure. My question is between Varamahalakshmi and between KLM Fashion Mall, because they account for nearly 75%-80% of the business. Where are you seeing more pain in terms of demand and SSG, given that KLM is pretty much a value fashion store, and your, you know, lower income people, lower middle class, are seeing more discretionary spend pains in north and other geographies as well. So could you just share between KLM and Varamahalakshmi where is the significant pain coming in in the first half? Okay. The, you're talking about the pain in the first half? Okay. So, so overall, I think when you talk about KLM Fashion Mall, I would like to classify it not purely under value fashion mall. A part of a major contribution is coming from the sarees and ethnic side of the men's and kids' as well. So, I would definitely not classify it a typical value fashion. Again, as we always mention, the entire portfolio, be it Varamahalakshmi or be it KLM, we always are driven by festive and occasion wear markets only. And overall, in terms of the consumer discretionary, both these formats saw a little bit of a weak demand in both these formats. Especially Varamahalakshmi is majorly, like, you know, more than KLM, impacted by the wedding dates, and the wedding date calculation, as you all know, is based on the local calendars. That's what happened in Q1. Talking about Q2, it is not just a weak demand. Weak demand was slowly recovering, but the problem what happened in Q2 was majorly because of the shift in the wedding dates. Adhik Maas and all of that, Pitru Paksha, all of that, in the end, has had an impact on both these formats. Now, what's happening right now in our stores is, post-October fourteenth, we have been seeing great amount of footfalls coming into all of these formats of stores. So on a 10-day, like, for Navratri, you know, lastly, our women shoppers typically tend to buy early by 2-3 weeks. Right? So you have to just adjust for that. How much sales, according to you, you would have lost in quarter two because of the shift in festive? So generally, generally, I think last year Dussehra and this year Dussehra, if we compare, I think we have been able to see about 5%-10% increase. But again, we'll be able to discuss more about this in the next quarter. And H2, definitely because of that Adhik Maas and Pitru Paksha coming in, I think that that saw a little bit of an impact. In terms of quantifying it, I, I don't have that quantification metric. Probably we'll be able to share that number in the next quarter with regards to that. Sure. My second question is on the creditor days. You know, do you think now with cash in the kitty, you can reduce your creditor days to have more bargaining on the gross margin side of the business? And from when can we see that show in our gross margins? ... We have initiated that already. In fact, out of our GCP funds, we have started reducing the payable days and negotiating with the vendors on the cash discounts. And we will also be able to discuss about volume discounts once we establish further stores. This year itself, we are targeting to put another 10 stores. So the process has already been initiated. We will be able to see a tangible improvement on account of this towards the fourth quarter of this year. Sir, if you can quantify, typically the CD would be around 1.5%-2%, or it will be marginally lower? So we can, you know, build that in from FY 2025 for the full year that benefit should accrue to us. Broadly, we realized that the weavers are borrowing at rates ranging from between 18%-20%. So within that, we will be able to with per annum, that's it. For that, within that, we will be able to negotiate and perhaps be able to get at least about 1%-1.25% cash discount. Understood. Sir, my last question is on the rentals. Can you share the pre-Ind AS, you know, rental for the quarter and for half year, what you would have paid? INR 25 crore actual cash outlay for the rentals. Understood. Thank you so much, sir, and happy Diwali to you and the team. Thank you. Thank you. The next question is from the line of Yash Sonthalia from Buoyant Capital. Please go ahead. Good evening. I have a few questions. Am I audible? Yes. Yes, sir. Please go ahead. My first question is on inventory. Like, what is the ballpark number for Varamahalakshmi per square feet? Yash, thank you. But then, as we also always discussed, we would not like to share the format level revenues or numbers or any numbers. I think, at this point of time, we believe it to be a little bit detrimental in terms of the company's business interest. Probably, we can discuss post this call. Sure. And, how we are able to sold our unsold inventory or out-of-trend inventory in the business? So generally, the best part about what we operate is majorly because it's all coming from sarees. I think 67% of the revenue came from sarees last year, and this year the dynamics seems to be a little bit more than that. Fundamentally, the saree is one size fits all. That's the first thing that we'd like to mention here. And the second thing is, these designs and everything do not go out of style or the life cycle of a saree, lifespan of a saree, the shelf life in typical store at least last for about three years. Along with this, we have a very good incentive system that we have, which is enabled in our stores and which, where we, where we proudly say that this incentive section enables us, the customers, to... I mean, the salesmen to sell these products much faster way. Typically, sarees is a category where it's not self-service, majorly driven by salespeople. A lot of push mechanism happens. Meaning to say, when a customer walks into a store, our salesman is given the right incentive, he'll be able to convert that into a proper sale. This incentive structure, I think, is a, it's a very detailed and a multi-level incentive structure that we have in our stores, is enabling us to move the stock very, very swiftly. And the second important point I'd like to mention here also is, most of our stores are in clusters, and we have systems guiding us through every step of the way to understand the probability of sell-throughs in a store one versus store two. That's also a major factor that helps us to rotate the stock from one store to the other store. With these two factors, more or less, we think we are able to quickly liquidate our stock and be able to, like, you know, sell that inventory to our customers. And, we've never run into a situation where we had to throw inventory because of, like, you know, we were not able to sell. And also, another interesting fact that I'd like to mention is, because we have 4 formats in different segments, often what we also tend to do is, like, we try to a little bit of cross-convert these sarees, which happen to, if in case, have any damages, to convert into a kurta or any other value-added apparel. And often, like, you know, it tends to yield a better margin. So we have never had a problem of slow-moving or dead inventory. With this state-of-the-art incentive engine that we have in our company, I think, our salesmen are able to effectively move the stock and liquidate as fast as possible. Okay. So what has been the debt stock or the discounted inventory in past few years as a percentage of total inventory? With respect to our discounted inventory, I think, I'd like to mention here is, more than 90% of the entire sale is full price sale. Most of our formats, I mean, for, if I have to talk about, especially Varamahalakshmi Silks, in the history, we have never run any, discount or any end of season sale or, or, or any clearance sale of that sort. Only in a few select stores of, Kalamandir and, brand Mandir, because it has a heritage, we have been operating these stores for a very long time. Only these stores have, select stores have some sort of an anniversary sale. The idea is not to liquidate any old stock or slow-moving stock, it's just basically to reconnect back to our customers. And with respect to our dead inventory levels, generally, we do not have any dead inventory levels lined up in our balance sheet. All we tend to do is that we tend to adjust this towards our gross margin levels. The way it happens is, we have ASM Audit with our banks. What happens is that banks- Hello? Ladies and gentlemen, please hold the line. The management's line has been disconnected. While I reconnect them, give me a moment. Sure. Sure. Ladies and gentlemen, the management's line has been connected. Over to you, sir. Yeah, I, I hope I was able to answer your question. I'm sorry, I think there was a disconnection from our end. Yeah, yeah, yeah. And, one more question. Am I audible? Yes, sir, pretty good. Yeah, so currently we have EBITDA margin of around 15-16, while some of our peers in South have very high EBITDA margin. So is the difference because of product mix, or are we comfortable with this margin, or we can improve our margin going forward? See, so with respect to Saravana Stores, Kalanikethan, the idea here, the rationale behind keeping it very, very sharp is because we believe our products are rightly priced in terms of the price, quality, customer support, and everything as well. As I already did mention, we do not believe in marking up the products too much and await the end of season sale or any discounted sale coming in that will basically balance it out. We believe our products are rightly priced, and that's the reason why, if you talk about most of our advertisement spends, our advertisement spends are as low as around 3%, which is much, much lower compared to the entire industry. Most of the marketing, most of that, happens through the word of mouth, and that has always been our greatest strength, and we continue to maintain these amount of gross margin levels. Talking about our EBITDA levels, I think currently our from the internal side, I think with respect to the management bandwidth and our fixed costs per se, we are having a bandwidth to expand about to around 50-60 more stores without having to worry too much about these costs making a big difference to the EBITDA levels. So overall, over this course of next two fiscal years, wherein we see an improvement in terms of gross margin levels, as well as all of these stores are coming with the Varamahalakshmi stores, and all of these stores coming in one single state of Tamil Nadu, that will improvise the overall back-end logistical support, the sales support, and the marketing itself doing phenomenally well. All of these tailwinds will definitely enable us to improvise our EBITDA levels from where we are in the next two years to much higher stages. Thanks. Thanks a lot. That answers my question. Best of luck for the upcoming quarter. Thank you, Yash. Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Mr. Bharadwaj for closing comments. Over to you, sir. Thank you all once again for joining this call. Wishing you a very happy and a prosperous Diwali. Looking forward to connect with you all during the next quarter results. Thank you. Have a good day. Thank you, members of the management. Ladies and gentlemen, on behalf of HDFC Securities, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.