Ladies and gentlemen, good day. Welcome to the Q3 FY 2023 earnings conference call of Kalyan Jewellers India Limited. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectation of the company as on date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode. 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. Rahul Agarwal. Thank you. Over to you. Good afternoon, everyone, thank you for joining us on the Kalyan Jewellers India Limited Q3 and nine-month FY 2023 earnings conference call. We have with us Mr. Ramesh Kalyanaraman, Executive Director, Mr. Sanjay Raghuraman, who is the CEO, Mr. Swaminathan, CFO, Mr. Sanjay Mehrotra, Head of Strategy and Corporate Affairs, and Mr. Abraham George, Head of Investor Relations and Treasury. I hope everyone got an opportunity to go through our financial results and investor presentation uploaded on the company's website and stock exchanges. We will begin the call with opening remarks from management, following which we will open the forum for Q&A session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature and disclaimer to this effect has been included in the earnings presentations shared with you earlier. I would now like to invite Mr. Ramesh Kalyanaraman, Executive Director of Kalyan Jewellers India Limited, to give his opening remarks. Thank you, over to you, sir. Thank you. Good afternoon, everyone. The Q3 was excellent. The recently concluded quarter witnessed continued positive momentum in both footfalls and revenues across all the markets in which we operate. We recorded consolidated revenue growth of approximately 13% in Q3 FY 2023 over the same period in the prior year, and 34% for YTD nine months FY 2023 over the same period in the prior year. Our PAT in Q3 was approximately INR 148 crore as compared to INR 135 crore for the same period in the prior year, a growth of 10%. Stepping back, as we look at our business over the last one year, past year, and aggregate the last four quarters, Kalyan has achieved revenue in excess of INR 13,500 crore and a PAT of approximately INR 434 crore. Within India, we witnessed revenue growth of approximately 12% despite a strong base, with Q3 of the prior year being the first normalized quarter post-COVID. Additionally, we know that December there was some muted demand, three weeks of December, especially because of the postponement of discretionary demand, which is now normalized in January, predominantly because of the gold prices. We continue to see encouraging trends around the share of new customers, which was in excess of 35%. The non-South revenue mix is again improving. It is now at 43% from 37% in the prior year. As you know, during the recently concluded quarter, we announced our plans to open 52 showrooms during the calendar year 2023. Significant portion of these would be franchise showrooms. As part of the strategy, we have invested significant amount of time and effort over the past three, four months in building our internal resources. We have hired approximately 900 staffs, largely for the 20-plus showrooms we will open before Akshaya Tritiya. Highest employee addition in a quarter in the history of the company so far. In the Middle East, we witnessed significant improvement in customer sentiment during the recently concluded quarter, with revenue growth in excess of 24%. We plan to launch the first franchise showroom in the Middle East during the first quarter of the next financial year. While the setting up of the franchise model is taking some time, we would not want to compromise on the growth potential and will be selectively opening additionally owned stores with the internal accruals from the region. As I indicated earlier, our international business will be predominantly franchisee operated in the next three years. Talking about our online platform, Candere, during the recently concluded quarter, we opened the second physical store. We have put together a store rollout plan for the next financial year and expect to take the share of its offline business to approximately 25% by the end of FY 2024. As I look at the current quarter's early performance, we continue to be encouraged by the robust momentum in revenue and footfalls across all our major markets. We continue to remain committed to our recently announced strategy of optimizing our ROE profile using profits and free cash flow to repay debt and reward shareholders and lighten our balance sheet via the divestment of certain non-core assets. I think, over to you, Sanjay. You take them in detail about the numbers. Thank you, Ramesh, and good afternoon, everybody. I'm really happy to be talking to you all after a great quarterly performance. For the just concluded quarter, our company reported consolidated revenue of INR 3,884 crore, a growth of 13% over the same period of the previous year. Consolidated EBITDA came in at INR 327 crore versus INR 299 crore in the same period of the previous year. Consolidated profit after tax came in at INR 148 crore versus INR 135 crore in the same period of the previous year. Next, I shall give you the breakup of the financial numbers between India and the Middle East, starting with India. For this just concluded quarter, our India revenue was INR 3,219 crore, a 12% growth when compared with the corresponding period in the previous year. EBITDA for this just concluded quarter came in at INR 276 crore for the India business, a growth of 9% when compared with Q3 in the previous year. We recorded a profit after tax of INR 133 crore compared to a PAT of INR 118 crore in the corresponding quarter of the previous financial year, a growth of 13%. Moving on next about our Middle East business. Our revenue for the quarter in the Middle East came in at INR 641 crore, a growth of 24% compared to Q3 of the previous year. EBITDA in the Middle East business came in at INR 52 crore versus INR 46 crore in the same period quarter of the previous year. The Middle East business posted a profit of INR 17 crore for the quarter, compared to a profit of INR 16 crore for the corresponding quarter in the previous years. Moving on next to talk about our e-commerce business. Candere.com posted a revenue of INR 44 crore in the quarter versus INR 47 crore in the corresponding quarter of the previous year. This quarter recorded a loss of INR 1.7 crore versus a profit of INR 26 lakhs for the corresponding quarter of the previous year. During this quarter, we had no bullion sale, and our gold coin sale to retail and corporate customers was about INR 155 crore, approximately 4.8% of total revenue. We increased our retail footprint in India by opening six more outlets in Q3 of FY 2023, including one outlet for candere.com. As of 31st December 2022, our total store count was 169. With this, I'm done with the summary of the financials, and we can now open the floor for questions. Thank you. Thank you. Ladies and gentlemen, we will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Shirish Pardeshi from Centrum Broking. Please go ahead. Hi. Good evening, Ramesh and team. Thanks for the opportunity. Hi. Hi. Yeah. You started with a very strong festive season. However, the base is also one thing which is there. Just wanted to check, I think this year there was lot of competition on ground and everybody's tried to push the wedding jewelry. In your sense of how the things and demand has happened per se, was it more skewed towards the gold exchange and gave the benefit of wedding jewelry or things are now normalized and we are going back to the pre-COVID days like the normalized sales? Any comments on that? Yeah. As you said, no, festive demand was extremely high. In November also demand was fairly good. December was a bit of what a flat to negative because of the gold prices especially. That is how it was. Not because of competition and not because of any other factors. January is back on track. Everything is normalized and momentum is extremely positive. That is how it is. Okay. One follow-up here, that would you be able to quantify saying that what was the SSG growth in quarter three? No, I didn't get you there. Same-store sales growth. Oh, same-store sales growth was approximately 5%. Okay. In India, I mean. If I have to break, that 12% India growth, 5% is SSG. Yeah. The balance would be grammage or how? You are talking about grammage, volume versus value? No, no. I'm saying India business has grown 12%. Yeah. In that 5%, 5% has come from same-store sales growth. Yes. 7% is from new stores. 7% is new stores. Yeah. Volume would remain flat. That I always say, you know, we look at value because people come with a bucket only, you know. We don't. Yeah. Okay. My second question is that, in the presentation you have said that we have executed 35 LOI for FoCo. However, the commentaries revolved around 900 people, 20 stores. Where this 35 and 20, I mean, is that the difference between 15 stores is going to come in next year or if you can guide me that when these 20 stores will finally get executed? Okay. 11 of the 20 showrooms will be in Q4 itself. Okay. Out of the 35 signed, 11 will be in Q4 itself, and remaining nine will be before Akshaya Tritiya. Akshaya Tritiya is in April. Okay. Rest will be after Akshaya Tritiya. Okay. This, what you have mentioned previously, this is all going to be non-metro, non-tier one towns and non-South markets. It will be non-South, but not necessarily non-metro. Okay. Okay. Okay, got it. My second question on the margin front, maybe if you can give some color on the gold m etal loan, how you look at, and the basically the interest cost burden, what we should factor in? The last view on the gold prices, because the gold has moved significantly higher. Any qualitative comments you can expect? Whenever the history tells that whenever the gold prices run faster, I think people will hold back the purchases. Yeah. We will come from the last according regarding the gold prices. When a gold price volatility is very high, the people take some time to adapt to the new price, and especially the discretionary demand wherein people don't have a hurry to buy, they might push their purchase to the next occasion, maybe, a birthday or an anniversary or any other function which is happening at home. Wedding demand, they will not be able to push it too much or prepone it too much because it has to happen on a particular date. December, the last three weeks, actually, it was. The revenue was not, the momentum was not very high. The demand was muted. It was actually, what. It was same or a negative kind of growth which we were seeing. In Jan, customers are back, revenue is good, demand is very high. Of course, we should give some, what you call, lever to the low base which we had in January last year because of the Omicron. Even if you negate that, I think the momentum was extremely strong in Jan. Even wedding season is on, and that is what in January it is happening. Okay. That's very helpful. When you come to the margin, you are talking about the EBITDA margin? I'm talking about gross. Gross margin, if you look at, it has been in the similar range, even with a better studded ratio and even with a better non-South revenue. That is basically because of the pressure from the unorganized segment in the gold pricing itself. The gold rate itself has a pressure, and there is high competition with regard to that, especially from the unorganized segment. Otherwise, the margin should have been improved more because we have a better non-South revenue and a better studded ratio as well. That's exactly- Middle East is stabilizing in the range of 15. Tourists are back, momentum is back. Middle East is stabilizing in the range of 15. No, exactly what you said. When you look at the store split, non-South and the revenue, I'm still saying that gross margin has not improved in tandem. Is there any specific one-off in this? Or maybe the better way to explain that is the exchange was higher, and maybe if you can help me the number. What was the exchange number? Because, I mean, in the presentation you have said that the new buyer contribution is at 35%. Yeah. Exchange is very similar to the last quarter and Q3 of the last year. It is in the range of 27%-28% is the metal exchange which we have. It is not because of that. Metal price pressure was there in the quarter. It is even now there as we speak in January. The metal price pressure is there from the unorganized segment and from certain organized players as well. That is the major reason for the margin degrowth. Not degrowth in the sense where margin has not, what you call, improved, even after a better studded ratio and a better non-South revenue mix. Okay. Of course, all of us should consider that it's not apple-to-apple comparison with Q3 last year because the franchisee revenue has also started coming in, and the franchisee revenue, you know, it comes with a lesser gross margin. Okay. Okay, got it. Ramesh, my last question on the Gold Metal Loan. If any color you can provide, where do we stand at the end of quarter three? It is in the range of INR 1,850 crore. INR 1,850 crore? Yeah. Okay. Thank you. All the best to you. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star one. Our next question comes from the line of Manoj Menon from ICICI Securities. Please go ahead. Hi, team. Just to start with, a small query on the quarterly cost actually. There is a comment in the presentation about certain one-off pre-operative costs for franchising. Would you be able to quantify this? Yeah. You know that we there were the main, the major pre-operative expense was regarding manpower, because we had to add approximately 900 employees during the last quarter, Q3, which is predominantly because of the store openings which we have lined up before Akshaya Tritiya. To actually give a number, meaning it will be, you know, the employee costs, per employee cost is in the range of what? INR 35,000-INR 40,000. That's the usual range of an employee cost. EBITDA maybe what? 0.2%. Okay. Understood. Thank you. Secondly, you know, when you had issued a press release a few weeks back about 52 franchisees to be opened for this calendar year. There's also a comment in the presentation about some conversions from owned to franchising for capital unlocking, which you are attempting in South India. Does this 52 includes this or these are 52 completely new franchisee stores? 52 will be store expansion. Over and above that, we will do some store conversion from south to north-south. Meaning the south stores we will convert to franchisee stores wherein the capital will be unlocked. Understood, understood. Secondly, on the franchising bit, right? Typically, if you could help us understand, let's say, what would be the typical size of the store, because given that these are mostly in smaller cities, towns, et cetera. Also, let's say, what is the typical starting inventory, you know, of a franchising store? Inventory will be in the range of INR 20 crore average, I'm telling. There are stores which is what, even INR 25 crore or INR 28 crore, but there are stores which even INR 18 crore. Average you can treat it as INR 20 crore. The first year revenue can be calculated as INR 50 crore, 2.5 stock turn on an annual basis. Understood. No, exactly. Which essentially would mean that, you know, mid to high teens, you know, revenue growth, for, let's say, rolling 12 months is very likely only from expansion. Yeah. Manoj, to give you more clarity now. If you look at if you look at our store expansion for the past, what, two years, usually the footprint growth is around 10%, okay? SSG will be what? 5%. Now the advantage is that this year, if you look at the next financial year, the store expansion will be 30%. Yes, you are right. The revenue growth for the next two, three years will be higher than the usual because the store expansion will be stronger or the higher number of stores will come because we, the franchisee arm has been activated. Okay. Point, Ramesh. The only one finer nuance which I thought wanted to clarify was, you know, let's say, owned store versus a franchising, you could actually book the entire inventory on day one, whereas it'll take a certain ramp up, you know, in an owned store. In that sense, rolling 12 months, you know, is likely to be higher because you'll end up having more primary sales versus secondary. Yes, correct. Because it comes in day one, and that is going to be the scenario for what continuously, you know, now it's spinning. Fair point. Yeah. No, fair point, actually. Got it. Lastly, you know, any update which you could give us the larger audience in terms of the progress on the non-core assets divestment? Yeah. You mean the aircraft, right? Yes. It's still there in the presentation. Just anything more beyond that. We told you last time. We told you last time we have engaged a consultant to explore divesting the aircraft, we continue to engage with them very closely. They are actively exploring options to sell the aircraft. Okay. The market conditions, you know, is not the most ideal, we remain committed to follow through on our stated intention. Even if we need to take a modest write-off, we will go with it because the intention is to liquidate the aircraft. We should expect some potential, meaning maybe a write-off. That's what we see from or hear from the market. Very early for us to come out with a number or what to quantify it now. No, no, fair enough. Actually, no, I think even if it's a small write-off, you know, it's anyway non-cash charge actually, so. It's a non-cash write-off. Yeah, absolutely. Sure. Thanks, guys. All the best. Thank you. Thank you. Our next question comes from the line of Nihal Mahesh Jham from Nuvama. Please go ahead. Yes. Thank you so much. Good evening to the management. Sir, I had one question which was on your opening remark about the competitive intensity. Two parts to that. First is this specifically in the South part where you're facing this competition from the unorganized channel, or is it pan-India? Second, what has led to this kind of increased competitive intensity over the last few months? It is pan-India situation. It's not only about South India. It is majorly because of the duty hike a couple of times. The difference between the gold which comes through the proper channel and otherwise the parallel market, what do you call, the percentage is getting higher and higher, no. That is the major area which actually is the reason for the price competition in the market. There is a sizable difference, you know, in the duty. Sure. That is the main aspect or any other aspects which has changed, which is leading to the increased competitive intensity? That is the main meaning we compete with mostly unorganized segment and certain regional players, right? That's a major competition for Kalyan per se. The major pressure comes from the gold rate itself. The reason for the same is the duty increase. That is where. One thing what we think is that the government is taking a lot of measures, making hallmarking compulsory. Again, they also realize that there is a kind of situation here in our country. Once it gets stabilized, I think the competition pressure will be coming down and there might be one gold rate across the country in the next one year, at least amongst the organized players. That's what we think. Appreciate that. Just one more question I had was on the non-core assets. Other than the aircraft, I think there are certain land holdings also. Is there any update on sale of those that you may want to just highlight? That we had told you that is predominantly, you know, when there is lot of free cash and we don't use that cash for any expansion. This year, if you see, we have had expansion for our through our own store also. Predominantly in the next financial year when there is free cash flow, because the expansion is going to be majorly driven by franchisee, that cash will be utilized to repay the bank debts, which in turn might, what, free some lands mortgaged in the bank, which will be liquidated. Again, first thing is that the proceeds from the aircraft, of course, will be the first round of repayment of debt. Over and above that, the next year cash flow will also be utilized for the same. Got that. That was it from my side. I wish you all the best. Thanks. Thank you. Our next question comes from the line of Naresh Vaswani from Sameeksha Capital. Please go ahead. Yeah. Hi, sir. My first question was on the franchisee model. In that, what will be the inventory days on our books? Second is, given that majority of the expansion is through this franchisee, on a console basis, where do you see the inventory terms going ahead in the next three years? Yeah. Can you repeat the question? I skipped something. Yeah. My question is, for the franchisee business model, what will be the inventory days on our books? Because you will be selling the.. That'll be 10-15 days. Inventory. We'll have to keep the- 10-15. Yeah. Okay. 10 to 15 days. Going ahead, how do you see the inventory going? I mean, the inventory terms moving ahead in the next three years. Will it reach 2.8 to 3 times? Now, of course it will because, now, you know the revenue is growing and now we are almost in the range of 2.3+ stock turn. Our target is to take it around 2.5 and then to 3 in the next two, three years. That's our target. Yes. Okay. How will the gold hedging be done for this franchisee partners? We don't own the inventory, you know. It is owned by them. Correct. Yeah. We don't, meaning we don't take the responsibility of hedging. It is owned by them. The inventory is owned by them. Right. If they don't. Meaning, I hope you understand. Right. If they don't hedge, then that would be a risk to this business model, right? I mean, Yeah. We have created a framework wherein, what do you call, the gain which they get in inventory, they don't take it, as what do you call, they will not be able to take it out. Okay? Because for us, the inventory should be in quantity rather than only the amount. We decide a certain kilogram of inventory which has to be there, and it has to be refilled every day with the customer cash which is coming in. Okay? Inventory risk is passed on to them, wherein it is not going to have any liquidity issue there, right? It's only more of a P&L issue. Even the gains will be used to replenish the inventory only. Refill the inventory only. There is no cash flow risk is what I'm trying to say. Okay. They don't close their book every quarter and all, no. They don't have that pressure, right? Right. They are a individual company. That's how it is. Okay. Given that now majority will be franchisee owned, will you be sharing these details separately from the next quarter also? Not from the next quarter. Yeah, because now it is a very competitive information because the number of franchisees are very small. When it reaches a critical mass, we will surely start sharing it individually. Okay. Thank you and all the best. Thank you. Thank you. Our next question comes from the line of Sameer Dalal from Natverlal & Sons Stockbrokers Private Limited. Please go ahead. Hi. A lot of the questions that I had were answered. There's just one thing. You know, the six franchisee stores that you've opened already, if you can give us a brief on how those have been performing and have they reached breakeven? Exactly what's happening at these six franchisee stores? Yeah. So it's meaning it's on track. Revenue is on track. Because right from day one it becomes breakeven, right? Because, you know, store level expenses are many, very minimal, right? So it almost, what? 6%-7% is the store level expense. The margins are 20+%. From day one it becomes breakeven. The franchisee stores which we have opened, everything is on track. Most of them have gone through the Diwali season. The revenue is going as per the targeted revenue which we needed. Profitability is strong. There are franchisees from this so-called six itself who have come back to us to take the next set of showrooms, so it is going in the right direction. Okay. The second question, you know, just a follow-up. What the previous speaker was asking, you know, when the franchisee doesn't hedge and you all have some sort of a profit share with the franchisee, right? When the franchisee doesn't hedge and say the gold prices change drastically and it affects their profitability, wouldn't it affect your profitability if they haven't hedged it to some extent? No. We sell it to them with a gross margin, which we have pre-decided. That is how we sell it to them. Okay? Okay. That is predominantly in the making charge. Wherein, for example, if my cost is X, we sell it at Y. That gross margin comes in at whatever gold price it is. Okay? Regarding the hedging of gold by the franchisees, you know that how they operate it is that whatever cash comes in, they buy the gold on the same day and they refill it. There is no cash flow risk except valuation risk when it comes to their gold prices. Okay? They do not close their books every quarter. They are not bothered on the volatility of their gross margin every month or every quarter. For a traditional jeweler kind of setup, hedging is not actually necessary because it does not affect his cash flow. Okay. That would affect his profitability. You, I believe, have some sort of profit share. That's what I'm trying to address. No. Our profit share is when we sell, meaning- You are taking your profit upfront, you're saying. For example, if the cost of a product is 1%, we sell it at 10%. That 9% is our margin. For us, gold rate does not even impact us, right? Okay. This is, you're taking this margin after because you all are working on a FoCo model, which is a Franchisee-Owned but Company-Operated. That means the staff that is selling is all that is on your books. Yeah. You are taking the profit, including the staff cost, everything, you're taking that upfront. Is that fair to assume? Correct. Correct. Any risk on anything, it lies in the franchisee's book and nothing to you at all? nothing at all. Okay, perfect. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star one. Our next question comes from the line of Rajiv from DAM Capital. Please go ahead. Thanks for the opportunity. Sir, can you throw some light on the Candere de-growth? What exactly is leading to this and how are you addressing this apart from, let's say, the store addition trajectory? Sanjay, you want to take it? I will. Thanks so much. If you look at Candere as a business, you know, this is a business that was 100% online till recently. If you look at the way the online businesses evolved over a period of time, there's a stage in their life cycle when offline presence is key to grow. We are in that phase. We are transitioning to a model where we will be online plus offline. If you look at the competitive landscape, that's also how businesses have scaled. As of now, we have two offline outlets operational. As Ramesh mentioned in our opening remarks, we have a strong plan in place for the next financial year to ramp up count on our offline outlets. As you ramp up on offline stores, growth will come back. I believe over the, by the end of next financial year, offline revenues will be at least 25%-30% of total revenue. We have a clear pipeline in place for offline stores to come through, as well as visibility on how it will work for us. This 25%, I mean, will be contributed by, let's say, what is the assumption in terms of store count? What I meant to say was offline revenue will be 25% of total revenues in the Candere business. No, I got that. Those are two stores as of now, right? Let's say by FY 2024 end. Where do you want to take the store count? By the end of next financial year, we should be at about 30 outlets out totally. Okay, great. Secondly, in terms of the Middle East operations, so, there was mid-teen SSG there. Can you help me there? Is there an operating leverage which can kick in there and which we haven't seen this time around? Middle East again, I told you that, of course, when the revenue growth is there in the range which we see now, operating leverage should start stepping in. If you had noticed, the gross margin level has a degrowth, wherein pre-COVID it was in the range of what? 16%-17%. Now it's in the range of 15%, which was, of course, forecasted because once the revenue momentum starts kicking in, tourists come back and competition starts kicking in. We had expected a 15%-15.5% gross margin, which is on track. When the revenue top line grows, of course there can be operating leverage should start kicking in. Again, we have a franchisee plan also in action there, as I mentioned, and we will be working on it in such a way that in the next two, three years, I think it should be a predominantly franchisee-driven arm for us, Middle East. Sure. In your, in a few opening questions, you talked about 5% SSG on the overall India business. Can you break that into South and non-South? The South piece hasn't moved much. Is there an SSG significant. A low single-digit SSG in the South piece? Yes. South would have grown only, what? Less than 2%. If you look at the total growth itself, non-South would have grown at 28%. I'm not talking SSG. The total revenue growth from non-South market would have been in the range of 28% and South in the range of 2%. Almost everything is SSG in South. The 28% may everything is not SSG because we have added showrooms only in the non-South, predominantly in the non-South region for the past, what? Couple of years now. That is one of the reason that the non-South revenue growth is much more than the South. Again, one or two areas where the South revenue growth is not as much as non-South, even the SSG is majorly because the base was higher in the last year because you would remember that there was a lot of migrations happening during that time where people were staying in their hometown in South India during the last year in Q3. Again, in December this year, when the gold prices went up, the discretionary demand usually gets impacted in Kerala, Karnataka and Andhra Pradesh because December is a high discretionary demand month for these three markets. The impact was there in December, which would have again impacted the South revenue. Sure. If you can help me with how does this, share of new customers at 35% tie up with the SSG and let's say by market, this 35% is largely non-South. Is it safe to assume that? Yeah. It should be higher than meaning non-South. New customer growth will be surely higher because the new showrooms, all the customers are new customers. That is how it is. Otherwise the ratio, how we see is that if we have 100 customers coming in or 100 invoices done, 35% of that is from new customers. New customers we see is that if they have not come to us in two years, we treat them as a new customer. Sure. but, in the South, this number would be, I mean, can you give some color there? Yeah. I don't have a number right now, but there will be a healthy new customer addition in the South as well. Sure. Thanks a lot. That's all. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star one. Our next question comes from the line of Shirish Pardeshi from Centrum Broking. Please go ahead. Yeah, thanks for the opportunity and follow-up. Ramesh, I'm slightly confused. You mentioned that we will open 52 franchise stores, correct? Yes. That will come up in FY 2024. Okay. Yes. Okay. Current year 2023. Okay. That was the announcement. Yeah. You can keep it as 52 showrooms for the next financial year as well. That also. That's all. It's almost the same. My point here is that today when we see that we have existing stores and our store count in India is about, if I exclude Middle East, about 137 stores. 137 plus 52 franchise. That's the correct way to look at it? That's correct. On top of it, my question was, we earlier had said that about 14, 15 stores we will add our own store. Yeah. Will that take a back seat or we will still open our stores also? Next year we will predominantly do only franchise. Our store expansion will not be there. It will be very minimalistic. It will not be in the range of 14, 15, because as I mentioned earlier, the next two to three years, our primary focus will be to use the, what do you call, existing, what do you call, the excess cash flow to repay debts, take out the non-core assets, liquidate it, further lighten the balance sheet. That will be the next two years. Again, 52 openings itself needs a lot of bandwidth, right? So over and above 52, we would not do the 10 or 15 own stores. Got it. Got it. my second question, what Sanjay just mentioned, that today we are having Candere to offline store. We're going to take it up to 30. In, even in Candere also we are doing FoCo or this will be largely our own stores? Maybe if you can give some numbers around it, what is the current size? What is the throughput you are expecting? Maybe some gross margin, because 30 is a big number which we're talking. Yeah. Initially there will be lot of own stores. We Of course, we have franchisee inquiries coming in, we would not do immediately. We will just wait and watch for our existing own stores to get settled down and then only do franchisee for Candere. You mean to say all 30 will be our own stores for FY 2024? It need not be, but at least a dozen will be our own. Okay, got it. Half of that you are saying that will be our own store? Yeah. In terms of revenue, any number you could provide, what kind of monthly annual revenue we can build in our model analysis? Yeah. The average inventory levels in these kind of stores are in the range of what? INR 1.5 crore, and the average stock turn is around four to five. Four to five? Yeah. Okay. Okay. My last question is on slide 35. You have mentioned that south revenue has grown only 2%. Yeah. There's one reference point. The market leader in the organized industry has taken South as a case, and they're putting a lot of discounting, they're putting a lot of new designs, and they're trying to target the wedding jewelry. Is it the fact or outcome or is the result that the competition from the organized players is also heating up, and that's why the South revenues is taken sluggishness? Maybe is there is genuine demand that people have withhold the purchases? No, not at all. October and November, the revenue was strong in the south. December usually comes with a lot of discretionary demand in South India, especially in Kerala, Karnataka and Andhra. Kerala comes with Christmas and Andhra, Karnataka comes with other festivals like Sankranti, et cetera. That is the reason for the south being 2% and non-south being 20%. Again, one more thing which has to be highlighted is that Q3 in the last financial year, the base was heavy in South India because there were a lot of people who were working in the metros who were settled in the south, and the base would have been higher in the south. Otherwise, we don't see any competition from any new or existing organized players in the South because you know that we are one of the leading players in the South India. Sure. My last question on ROCE. Right now we are in the range of 16%-17%. I think at two, three slides you have mentioned that the focus is going to improve with the capital light, asset light model and we are going to improve. Is there any meaningful target you have in mind over the next two to three years which you can spell it out right now? Yeah. Abraham, you want to take it? Suresh, we don't want to give a number here, but we are looking at meaningful improvement in ROC profile over the next two to three years time. Okay. All right. Thanks for coming. Yeah. Because these franchise showrooms are coming with no real capital employed. That'll clearly improve the return profile. Also we're trying to reduce the capital employed by divesture of assets as well as conversion of showrooms. I agree, Abraham, you what you said that. Say today, we are talking about 52 number over 136. Yeah. Almost 40% number we're talking about the franchise stores. Does that mean I mean, arithmetically, are we targeting 35%-40% to reach to next three years? no. That's like a big number though. I know. know. It's, it's, it's- It'll be a meaningful improvement from where we are now. Yeah. Okay. Okay. Okay. No, no problem. Okay. Thank you. Thanks. Thank you. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star one. Our next question comes from the line of Sanika Khemani from Middleton Capital Advisors. Please go ahead. Hello. Hi. Hi, sir. First of all, I congratulate you for a very good set of numbers. My question is that in the last budget, the government has just shown a lot of trust in the lab-grown diamonds. I want to understand what impact will this have on our business. My second question is, are we looking to venture out in this segment? We are closely watching the market. As of now, we are getting very limited inquiry for lab-grown diamonds. The supply ecosystem is developing in India. The government is also giving incentivizing for the same. As and when the diamond the demand grows for that segment, we will be there to meet the demand. Okay. Okay. Okay. Thank you, sir. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star one. Our next question comes from the line of Sreekumar V. from KJ. Please go ahead. Ladies and gentlemen, the line of Sreekumar has disconnected. If you wish to ask a question, please press star one. As there are no further questions, I now hand over the conference to Mr. Ramesh Kalyanaraman for closing comments. Thank you very much. Looking forward for the next quarter. Thank you. Thank you, sir. On behalf of Kalyan Jewellers India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.