Ladies and gentlemen, good day, and welcome to Q2 FY24 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 expectations of the company as on date of this call. These statements are not the guarantees of 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Agarwal. Thank you, and over to you, sir. Thank you. Good morning, everyone, and thank you for joining us on Kalyan Jewellers India Limited Q2 FY24 earnings conference call. We have with us Mr. Ramesh Kalyanaraman, Executive Director, Mr. Sanjay Raghuraman, CEO, Mr. V. 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 have the forum open for question and answer 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 a disclaimer to this effect has been included in the earnings presentation 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, and over to you, sir. Thank you. Good morning, and welcome everyone to the call. Hope everybody had a great Diwali. Let me wish everyone an excellent new year. It has been a fantastic year so far. Both the quarters have been excellent. Revenue growth for the first half of the current financial year is around 29%. We are extremely excited with the way the current quarter has progressed thus far, despite higher number of Shraddh days and volatile gold prices. We have witnessed approximately 35% growth in revenue for the current quarter till twelfth of November and compared to the same period during the prior year. This financial year, so far, we have launched 41 Kalyan showrooms in India, and we plan to launch another nine showrooms in the next 45 days. Actually, these nine stores were planned to open before Diwali. There has been a delay. Additionally, we plan to launch around 15 showrooms during Q4 of this financial year, making it 65 showrooms for the current financial year. As we speak, we have 55 franchise Kalyan showrooms in India, and looking at the performance of these showrooms thus far, we are extremely satisfied with the operating momentum on the ground as well as with the return profile, both for us and for our franchisee partners. As we speak, we are finalizing terms with potential franchisee partners for FY 2025. For the next set of franchisee showrooms, we have brought in changes in the model with the objective of improving our share of margin and the return profile. For the next financial year, we have drawn up plans to launch around 80 Kalyan showrooms across India. In the Middle East, we opened the first franchised showroom during the recently concluded quarter. In addition, we have signed another 5 LOIs, 2 for new showrooms and 3 conversions. The launch and conversions of these showrooms will happen during Q4 of this financial year. Regarding the debt reduction plan, we are well on track for the current financial year, having already achieved 1/3 of the total reduced reduction plan for the year. Non-GML working capital loan in India has been reduced by INR 157 crore, and we have been successfully in, meaning increased the GML by around 40 crore. Overall, we reduced working capital loans by 116 crore in India. In the Middle East, with the conversion of the existing 3 showrooms in the region, we are embarking on a debt reduction journey there as well. We expect to garner around INR 100 crore from the conversions of three existing showrooms before the end of the current financial year, which will be fully utilized to reduce the debt in the region. We are upbeat about the upcoming new showroom launches and are gearing up with fresh collections and campaigns for the ongoing wedding season across the country. Now I will invite Sanjay to take you through the financial highlights of the quarter. And, over to Sanjay. Thank you, Ramesh. Good afternoon, everybody. We are really happy to be talking to you all after a very satisfying quarter. We had a couple of days between putting out our results and today. I assume you might have all gone through the numbers and the investor presentation that's up on our website. Hence, I will just highlight the major points now, so we have more time for questions. For this quarter just ended, we reported a consolidated revenue of INR 4,415 crore, a growth of over 27% over the corresponding quarter of the previous year. Consolidated PAT came in at INR 135 crore versus INR 106 crore during the corresponding quarter of the previous year, a growth of 27%. In our India business, growth in revenue as well as PAT was about 32%. As we had indicated in previous interactions, people costs are getting front-ended as we continue to invest ahead of our outlets beginning to earn revenue. Adjusted for this, PBT would have been higher by about INR 5.5 crore. In our Middle East business, we opened our first franchisee store as per our planned rollout. Profits in the Middle East business are lower by about INR 3.5 crore on account of the one-time sale to the franchisee. I am calling this out specifically, since it's the first time we are seeing this in our Middle East business. As we scale up on our franchising model, we expect return ratios to improve, like we are already seeing in India. Talking now about the first half of this year, the consolidated revenue came in at INR 8,790 crores, a growth of 29% compared to the corresponding first half in the previous year. Consolidated PAT came in at INR 278 crores, a 30% growth compared to the H1 of the previous year. During this just concluded quarter, we opened 15 stores, 13 in India, 1 in the Middle East and 1 in our omni-channel Candere format. With this, I'm done with the summary of the financials. We can now open the floor for questions. Thank you. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on their touchtone 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. Participants, you may press star and one to ask a question. First question is from the line of Gaurav Jogani from Axis Capital. Please go ahead. Thank you for the opportunity, and congratulations on a good set of numbers. So my first question is with regards to the store expansion. Now, you know, given that we have also upped our guidance in terms of the store expansion to 80 stores in the next year. So if you can highlight which regions are we getting these stores opened? And the related question is, you know, what is the potential number that, you know, we expect to reach in terms of these stores in the next 5 years? And the third related to this is, you know, these franchisee partners that we are opening the stores with, are these existing franchise partners, or we are also adding the new franchise partners? Yeah. So thank you. So three questions, one, around the 80 showrooms, which we are opening for the next financial year. Mostly it will be in non-south markets. Five to 8 showrooms will be in the south, southern part of the country, as we speak. And the second question was around whether the franchisee partners are old or new. It is a mix, mostly, new franchisee partners. But yes, there are old partners who are taking extra showrooms for the next year expansion as well. Sure. Third one was- Yeah. The third was with regards to the store potential, you know, so we are already, you know, reaching, with these 80 stores odd, we will be, you know, crossing the 250 odd mark, number in India itself. Yeah. Just wanted to understand the potential in terms of stores in the next five years for you. The potential, you know, that we are now, meaning in the non-south markets, there are a lot of markets where Kalyan is still not there. So, for our projection, maybe 20% growth in footprint over the next three, four years. That is, that should be the target. Okay. Okay, sure. And so my next question, you know, is with regards to the working capital requirement. Now, you know, given that A, we are growing at a very strong pace, so it's not only through the franchisee stores, but the existing stores are also growing at a very strong pace. Yeah. Now, in that context, you know, one, how should we look at the inventory days? And by, by inventory days, I mean, you know, for example, in FY 2023, we closed with around 180 days of sales, as in inventory days. Now, with the franchise proportion increasing, and probably the franchisee stores will be higher in the next year versus our own stores. So in that light, how should one look at the inventory days or the overall working capital? Yes, inventory days, stock turn will surely go up because franchisee stores come with only 20 days of inventory. Okay? For our own store, it is around 160 days. So stock turn should ideally go up. Over and above that, for our own store also, the stock turn is surely increasing because the revenue growth is higher than the inventory, which we are adding in certain stores, where we renovate the stores and add inventory to take market share. ... So any numbers that you know would like to guide in terms of the inventory days? How should we project the inventory days, you know, given the fact that the franchisee numbers is also increasing, and you said that, you know, only 20 days is required for the inventory in that kind of a stores. Yeah. So any number that you would like to highlight, like. So, now, as we speak now, in Q3, okay, 20% of the revenue approximately comes from franchise. Okay? Over the next two years, it should ideally be 50/50. So 50%, 50% of the revenue comes with 20 days of stock, meaning inventory days, and the rest 50% will be anyway better than 160, because there is an SSG which is happening at the store level. We are not adding that much inventory, meaning if the revenue growth is, say, 10%, we are not adding inventory in the stores for 10%, you know? So, got it. That is how we should take it forward. Okay, got it. So the last question, you know, is with regards to the CapEx that we incur for the store franchise. So I understand, you know, while the CapEx has been incurred by us, but we also receive a one-time fee every year from the franchise partners for the same. Yeah. So just wanted to understand which line item this number gets booked and what is the time it is recognized? Yeah. So, Sanjay, you want to take it? It gets booked on a monthly basis, and it's there in other income, I think, so we will just clarify by the end of this call if it is in other income or it should be there. It won't be another operating income anyway. Sure. Thank you, and that's all, sir. Thank you. Next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead. Hi, good afternoon, sir. Ramesh sir and, Good afternoon. Thanks for the opportunity, and congratulations for good set of numbers. At the beginning of, I just wanted to understand, for our stores, what is the same-store sales growth, if you can specify? And, in the stores which we have opened last year, say, first set of stores of those 12 stores, what is the SSG we have seen in YOY, in the franchise stores? Yeah. So SSG for Q2 overall is in the range of 10%, and 8% is in South India, 15% is in the non-South markets. Okay, that's really heartening. Second, again, on the inventory side, just to expand the thoughts, you said that 160 days, directionally will go up, but I'm a little afraid because I don't think we are opening our stores at the speed at which we are adding the franchise stores. So, why that number is going up? Are we taking a bigger number of, bigger size stores, or how we should look at it? And the other question is that, on a year-on-year basis, for the next set of, stores which you are opening under franchise stores, in FY 2025, are you resizing the store size? Yeah, so two questions. One is, I think you are talking about the inventory addition, which you have seen over the last six months, maybe INR 350 crore, right? Yes. That is why... So all these INR 350 crore is not for our additional store. Okay? Okay. I will just deconstruct that for you so that- Sure. things are easier. Sure. Part of the inventory required for showrooms we launched during the month of October would also reflect in the end-September inventory that we are talking about. We have launched 12 showrooms during the Navaratri period, and around one-third of this inventory would have been already there in our books in September. Okay, that is number one. Number two, like you said, we have refurbished or relocated 20-odd showrooms during the last 6-8 months. Cases like Jayanagar in Bangalore, Coimbatore, our own old store, Karol Bagh in Delhi, we relocated the store. So these kind of stores, when we relocate or renovate, we add some inventory to gain market share there. Okay. And the third is that one more point where I would like to highlight here. During October, we opened three own showrooms also. This inventory and all were in the first week of October. This inventory also would have shown up in the overall inventory figures. And, of course, two out of these will be converted to franchised ones over the course of quarter. The third one is an example where in Pitampura in Delhi, as a part of relocation of the existing showroom, we launched a new showroom. We normally keep the old showroom live for a few weeks even after the relocation. Surprisingly, both the showrooms are doing well now, and therefore, we have decided to maintain two showrooms in Pitampura, as we speak. That might not be converted very soon because that was a, what you call, positive surprise for us. So we have not tied up any franchisee partner for the same. Okay. And one follow-up. You want the breakup number for your comfort? I would- If you can, if you can help that. Yeah, yeah. So, again, you know, pipeline inventory is needed for the 40-odd operational franchisee showrooms which we have. Yeah. That can quantify around INR 80 crore-INR 90 crore out of the INR 350 crore. Okay. Inventory that we would have carried for the showrooms launched during Navaratri period would be in the range of, what, INR 60-70 crore. Inventory into the renovated or relocated stores will be in the range of INR 80-100 crore. 3 own showrooms that would have been in the range of INR 80 crore. I'm talking about approximate numbers. Yeah, got it. That's, that's really helpful. Any thought on the resizing of stores? Are you trying to resize the stores for the next set of franchises coming in FY 25? No, no. Franchise, we don't intend to. Even now, no, all the franchises are not of similar, what you call, investment or similar size. We are telling you INR 20 crore as an example for us, so it is an average. So there are stores which has a INR 30 crore inventory, there are stores which has a INR 17 crore inventory. So even now, the size is not same for or constant for all the showrooms which we have opened. So it will remain like that for the rest of the year as well as the next years also. Okay. No, I was just looking for the explanation. In the opening remarks, you said that the, for the next set of, franchise, we have, negotiated the better terms. Yeah. Maybe you can quantify what is that? Yeah. So, Sanjay, you want to take it? Okay. So broadly, we have two drivers, right? One is, actually one driver, just, gross margins that we work with on the franchise front. Now, we will action plans that we have to improve this, and deliver something that is better for us, at the same time, doesn't interfere with, you know, the franchisee expectations. We have found some solutions. We will, of course, only be able to implement that from the second wave of the store that we do next year. I don't think I want to share more at this point because it is sensitive information in that aspect. We'd probably get between 25 basis to 50 basis, thereabout. Cash flows on the capital expenditure that we put out on the top, that are going to move from our balance sheet to the franchise balance sheet, as I mentioned previously. So that's, anyway, going to be a huge thing for us next year. That's helpful, Sanjay. But I just wanted to check, are we moving to a franchise on franchise-operated model for next year? No, no, no. No, as such. We will continue- It is a FOCO model, Ramesh, here. It is a FOCO model. Two major changes. One, CapEx store fit-out is now... We are doing the store fit, fit-out now for this year. Next year, it will be done by the franchisee partner. Franchisee. Second is, margin will improve for us, and it has been decided that franchisee partners will also be happy. But, because we know the performance of the existing stores, and, we thought that there is a merit of improvement. Okay, that's helpful. My second question on the gold metal loan. Maybe you can spell out, end of September, what is the gold metal loan? And related question, what is the status on the non-core asset, which we have spoken about divestment? Yeah. So non-core asset, everything is done, so we are just waiting for the final NOC from banks and, that is it. So maybe, hopefully it should be done in the next, what, three or four weeks. So in this quarter, we should surely expect that. And regarding gold metal loan, it's at the similar level, right? We added about INR 30 crore. Yeah, we added about INR 30-40 crore in India. Otherwise it is consistent. What is the number? India Gold Metal Loan is now INR 1,132 crores, and consolidated Gold Metal Loan is INR 1,856 crores. Thank you, Abraham. 8 6 and 1 1 3 2. Yeah. My third and last question: There is an incremental noise around the lab-grown diamond. In your lens, in your thought, in your exchange of discussion, what is it that is it going to be a disruptive in nature for us and for the industry? Or it's wait and watch, the consumer is still not picking up the trend? Yeah. So lab-grown diamond, it is still very nascent stage for lab-grown diamonds in India. Too early for us to comment on the impact. Internationally as well, meaning only for the engagement rings, for a solitaire, it has been popular as we speak. So as we speak now, at our store level, there is zero demand. But of course, we are cautiously looking whether there is some demand which will come in, et cetera, which will be taken care at that point in time, but as of now, it is zero demand. Okay. All right, Ramesh, thank you. I'll come back in the queue. Thank you. Next question is from the line of Ashish from Citi. Please go ahead. Yeah. Hi, team. Congratulations on good set of numbers. So the first question was on the franchisee stores, right? So if I look at the 15 stores which were present at the end of FY 2023, right, they, they are... I mean, in some way, they have seen almost more than six months of business. So can you talk a bit about their revenue trajectory, the, you know, the gross margins which those stores have seen, and also the inventory turn, you know, those 15 stores have seen? Because, you know, they, they might have seen a, a bit of a maturity in, in some way. Yeah. So most of the stores are doing what we wanted in terms of stock turn, in terms of margin, and that is why we are reworking on the franchise partner share also for the next year. And of course, there are minor tweaks which we do in certain showrooms, wherein inventory has been added in certain stores, inventory has been reduced in certain stores. So that is a part of the business, you know, so which we do for- Sir, just to kind of you know dig into that, have you seen a similar 20% kind of a gross margin in those stores at a showroom level and 2.5 times inventory turn? Have you seen that? Yes. Sure. And, second thing is, in terms of the delay in store opening, can you please talk about that, that what led to the, delay in the store opening? Majorly, that was because of certain markets where elections were around, wherein we did not want to create our noise level cannot be disturbed with their noise level. Again, there are certain markets where there was some restrictions in the interior decoration work, et cetera, because of some pollution issues. Actually, those kind of issues were making us to delay that store openings. Otherwise, it was planned to be done before Diwali. Sure. And then on the, you know, deleveraging of balance sheets, I understand, you know, you will get almost INR 100 crore from the sale of aircraft net of tax, and that will lead to a repayment. But from a next two years perspective, right, FY 2025 and 2026, can you please—and given that, you know, now you are tweaking the franchising model to, you know, so that your CapEx kind of reduces. So what are the plan for the next two years in terms of, you know, reducing the debt levels and also on the sale of land parcel? Yeah. So land parcel sales, let us keep aside now, because it is going to come once we, for example, this year we are planning to reduce our debts by around INR 350 crores, right? So once we do that, then only we are communicating with the banks to take out the asset, because the land parcels are not very small. So at least we should get an INR 100 crore land parcel, and for which at least we need to reduce INR 350 crore. So that is a process which has to be followed. So even if you keep aside the land parcel liquidation, which will happen, which we need not budget for immediately, because I don't want to make your budgeting complex, okay? But otherwise, easily next year, INR 400 crore-INR 450 crore, and the year next again, INR 550 crore-INR 600 crore. That should be the plan. So within a couple of years after the financial year, I think there will be on... And it is the worst scenario, there will be only the gold loan in our books in India. The cash credit will be completely moving away. Sure. This, this is very helpful. And lastly, I think, you know, in the opening remarks, I think, you know, you guys talked about that, Middle East profit was lower due to one-time sale of franchisee business. Can you please, elaborate a bit on that? Yeah. So we opened our first franchisee showroom in the Middle East in the last quarter, which comes with a lesser gross margin, as you know, because it's also a FOCO model. Okay? So if you keep that aside, our own store gross margins were same. The EBITDA margins were also the same. But you still see a PBT margin coming down. That is because there was an increase in rate of interest from banks there, and that is why the PBT margins are lesser. Got it. Got it. Thank you so much, and all the best. Thank you. Thank you. Next question is from Naresh, from Samisha Capital. Please go ahead. Yeah. Hi. So, firstly, congratulations on good set of numbers. So, the first question, what was the contribution from the franchisee stores, this quarter? Approximately 20%. 20% of the India business, right? Yeah, yeah, India business. I'm talking only India. Okay. Okay, got it. Second, on the PBT margin front, so earlier, I think we had said that we would be around the 5% PBT margins for the full year, on a full year basis. So first off, we have maintained last year's margin. So for to reach to 5%, we have to better last year's margin in the second half. So, what would be the drivers for that if we have to reach 5% this year? And if not, then in the next year, maybe next two, three years, what would be the guidance which you would like to give, as far as you know, PBT margins are concerned? Yeah. So the first thing what I want to say is that PBT growth will be surely higher than our revenue growth. For Q2, the PBT growth and revenue growth were similar. So as Sanjay mentioned, during Q2, we had some, one, mainly one front-ended employee expenses around INR 5.5 crore. That was because we had to launch 20+ stores for the festival. So if you adjust that INR 5.5 crore, PBT growth would have been higher than the revenue growth in Q2 also, like in Q1. I would like to highlight that in Q1 again, our PBT growth was higher than the revenue growth, as I said now. So for what you asked, going forward, the impact of this front-ended employee expenses will keep coming down, right? Because as the footprint addition as a percentage in FY 2025 when compared to FY 2024, will be surely lower. So- Yeah. Additionally, like what Sanjay said, we are improving on the margins for the new set of franchisee stores, which are opening for the next year as well. That is how we should look at it for the next couple of years. Sure. So I got your point. So one last question. So you said that the non-GML loan will be completely paid off, so in what timeframe are we anticipating that? Next 2-3 years. Okay. That also, I'll tell you, it is a base scenario wherein you know that we are doing this, mainly to take the non-core assets, right? Mm-hmm. Because there are a lot of assets sitting in the book, the balance sheet is heavy. Our intention is to repay these debts, take out these assets, again, liquidate that and bring it back to the system so that the balance sheet is lighter. So in case once we do this or once, once we start this process, if, we are getting a better solution, for our exposure, then we will come back to you and say that we have got a better solution, and then that will be the plan. So what I told you is the base scenario, wherein this is the- Mm. This will be anyway seen, if nothing happens from the other side also. In any case- Mm. Non-GML will come down. Sure. One last question: so now, given that we are generating very strong cash flows, I know that you have a debt reduction plan as well, but any, any update on the dividend policy? Like, how, how do you plan to reward the shareholders over the next two, three years as we generate these cash flows? Yeah. So we, we have a dividend policy now. The dividend will be 18%-20% of the profit which we make. So it will be meaning ranging between 15%-30%. That's the policy which we have decided to do for dividend. Between 15%-30% you said, of the profit? Yeah. Okay. Okay, thank you, and all the best. Thank you. Thank you. Next question is from the line of Dhruv from AUM Fund Advisors. Please go ahead. Hello. Hi. Yeah, sir, all my questions have been answered. Thank you. Thank you. Next question is from the line of Rochita from My Wealth. Please go ahead. Hello, sir. A very good afternoon, and congratulations on a good set of numbers. So most of my questions are answered. There's just a few that, you know, I still have a doubt on. So current quarter, if you see, your absolute sales growth has come a bit lower than your store addition growth. So, you know, how do we look at it going ahead? Because I believe as you add new stores, this number should, you know, further start coming down only. So what is your take on that? So, you are looking at how many percentage of showrooms opened and how many revenue increased, that's what you are asking for, right? Yes, yes. So it comes with a different bucket, size, no? Each... The newer stores come with a, what you call, the target itself is like average INR 20 crore inventory and revenue for the first year, INR 50 crore, but our own store average per showroom is around INR 85 crore-INR 90 crore. So new ones are 50, and the old ones are 85, 90. So the percentage of store footprint will cannot be directly, so, meaning, it cannot be same as the revenue growth going forward as well. Okay, sir. Okay. And, sir, this year, how many Candere stores are we going to add? Like, one has already been launched, and I think you were planning around 22. So are we in line with that? Yeah. We have five now. Okay. so we want to... So we have 4 operational as of now, which are, company-operated. Actually, 4 operational as of 30 September. We opened 2 more, here this week. Our plan is to end the FY with about 25-30, outlets in India itself. As we stated earlier, we'll be coming out, when I say earlier, I mean earlier in the meeting for interaction. We'll be coming out with a detailed 3-5 year kind of plan for that business by the end of the current financial year. By which time, we would have about 30 outlets operational. Okay. Okay, sir. Yes, sir. Thank you so much. Thank you. Next question is from the line of Anurag Jayal from HSBC. Please go ahead. Hello. Yeah, hi. hi. Thank you. Congratulations, Ramesh Kalyanaraman, for excellent result. Thank you. Regarding the expansion plans, earlier you had mentioned that existing company, you know, operational capacity supports around 60-odd showrooms. Now when you're planning to target, you know, 80 showrooms and higher, so could you highlight some of the steps internally which you are taking, you know, apart from staff recruitment, in terms of to ensure that the, there's a smooth execution of this standard not to roll out? I mean, are you going for more procurement centers or more internal hirings in, on the management levels? Just how are you able to get, digest high number of stores? Yeah. So we have been able to improve the bandwidth over the years, because we also understand that expansion is happening. So again, bandwidth does not mean only staff. Yeah, yeah. As you, as you rightly said, right from contract manufacturers, right from the internal professional team, right from the mid-level management, training online, offline. So there are a lot of things which we parallelly do to cater for the expansion plan which we have. So, and it has been successfully done and executed as well. Okay, great. Thank you so much. And second thing is about the gross margin. So this quarter, basically, the gross margin was similar in YoY terms. But if you see, you know, even the studded ratio has improved, share of revenue from higher margin non-South markets have increased, but the gross margin is still low. I mean, it's not improving. So is it because of some competitive intensity which is higher, so you have to give more discounts or making charges reductions? So what, you know, what answers this gap? Yeah, so studded improvement is shown, yeah. But you know that the new showrooms have contributed for that mostly, right? Because all the new stores were in the non-South markets, and- Yes. Predominantly all the new stores were franchisee FOCO model, which comes with a lesser gross margin. So even if the studded ratio is more, the margins cannot improve because that has come through a FOCO model. Only for the existing showrooms, the revenue growth, again, the studded shares were similar and South also grew, non-South also were growing, so that is why your margin point is not taken care of there. Okay? No, but basically I'm asking at the store level, it's mentioned that margin was flattish. Yes. So store level, studded ratio, because gold also the revenue was going up and studded also revenue was going up, and it was almost flat. So the studded revenue growth, which you see, is majorly because of the new store additions, and it came through the foco model of franchising. But now, because you asked, Q3, we are at the moment seeing some margin improvement, which of course it's only 45 days and it cannot be, what you call, taken for the full year or for the coming years. But as we speak, competition intensity has come down predominantly because we are getting revenue share from the organized segment as well. And there, competition becomes easy because it is high ticket size products, where that does not compete or that does not compete with the unorganized segment. There, we are seeing some improvement in the margin on the ground level for owned stores as well as franchisee stores. Okay, thank you very much. Thank you so much for answering that. Yeah. Thank you. Next question is from the line of Nihal Jham from Nomura. Please go ahead. Yes, thank you so much, and good afternoon, good morning. Am I audible? You're not audible. Can you please speak a little louder? Hi. Am I audible now? Yes. Thank you so much. Couple of questions. First was on the demand bit of it, as you highlighted for the quarter. I think based on what we were picking up is, given the recent spike in gold prices that had happened, demand had stalled. While there were footfalls, demand was obviously not getting converted because prices increased. Our growth is obviously pretty strong at 30% plus. So is this, in your opinion, a case where wedding demand has got activated, which is in a way slightly price-insensitive and more time sensitive? Just your comments on that. Yeah. So you are right, there was a bit of pause in between, wherein gold price suddenly had huge fluctuation. But momentum for Diwali, Dhanteras was very strong. Wedding revenue has also started to come in. Post-Diwali is also good as we speak. Momentum is still strong at the stores as we speak. And even with more number of Shraddh days, we have been able to get a 35% revenue growth on a consolidated basis, India being better. Of course, there is a revenue which has come with the 12 showrooms, franchisee showrooms, which we opened in the first 45 days. That revenue would have been added for, but even without that, the revenue growth was strong. Absolutely. Because I'm assuming the first 15 days, given Shraddh got shifted into October, the performance would have been much weaker versus last year. So it's basically after Shraddh got over till now that we must have seen a robust performance to deliver this 35% kind of a growth. Yeah. That's helpful. The second question was that on our franchise model, have we got any sense of if we can take this model forward into South India, or have we had an opportunity to take? Another related question was that in case we are able to find a model which is ideal for South India, would we want to franchise majority of the existing network, if that is possible, but for owning some of the key stores in some of the key markets? Just your thoughts on that. Yes, so now we have signed up 6 franchisee stores for the South. It is a pilot stage. We have worked upon a model where it suits them as well as us. So it is. We will open 2 or 3 showrooms in the financial year in the South, southern part of the country. And again, South is not a uniform across. South itself comes with different margins in different states. So we are actually piloting it now, and we will be able to guide you more once this pilot stage is over. Regarding conversions or expansion within the South, et cetera, we'll come back to you with a solid plan once this 6 store gets stabilized. Point taken. But in case the pilot works out well for you, is there maybe a long-term thought that majority of the existing network you would want to franchise, or you may want to take it one step at a time? Just your thoughts at this point in time. If you ask me now, of course, it's too early for me to comment, but, more than converting the South stores, we would go into expanding in the southern markets as well, because there are markets like Bangalore or Hyderabad wherein we still have lesser number of stores compared to certain competitors, wherein we would like to gain market share in those markets. Point taken. Thank you so much. I wish you all the best. Thank you, participant. To press star one to ask the question. Next question is from the line of Sunish, individual investor. Please go ahead. First of all, congratulations for the excellent show. My question is a continuation of the question just asked. Do we have a clear strategy on franchisee model going forward, like in metros, we'll be opening show-stores ourselves and other places, franchisee, some sort of strategy like that? Secondly, are the franchisee basically happy? This, not a quantitative question. Are the franchisees basically happy? Are we getting references from the franchisees, any franchisees who have left us after joining? Basically, these are my questions. Yeah. So next 3 years, basically, our growth will be completely fueled by franchisee partners, because we have, as I earlier mentioned, we have, other missions like lightening our balance sheet, reducing our debt, improving our ROEs, improving the return ratios, et cetera. So the next 2-3 years, it will be completely fueled by franchisee partners. And for your question, whether they are happy, yes, they are. And we have done a working, we have done a math, and that is why we are going for new model, wherein we, as Kalyan, will get more benefit on margin side, and again, investment also, we are making them do the CapEx as well, so that it comes with a minimal investment from Kalyan side. In fact, actually, we are restricting the number of showrooms taken by one single person, because we have adequate demand for taking up showrooms by new people. Okay. Thank you. Thank you. Thank you. Next question is from line of Shirish, from Centrum Broking. Please go ahead. Yeah, thanks for the opportunity. Sir, I have three questions. First, to Sanjay. What's happening on Candere? I mean, I know we are looking for offline stores. We are little behind. But why the decline is happening? I mean, it is decline in Quarter 1, it is decline in Quarter 2 also. So when do you stabilize this business, and when do you see the growth will come back? Like we've said earlier, that business is in a stage where, you know, we are only rolling out our offline outlets. Mm-hmm. Till we build a network of these outlets, we will have a situation where we are only growing the store count. So, it is not at all of any worry for us to kind of see why those numbers are declining, because those are fairly inconsequential numbers at the present moment. What we want to do is to build out the network and then come back and talk about it. So you will see us coming back to you in about 6-9 months' time on this. Okay. My second question is on the revenue growth momentum till twelfth of November, what Ramesh has mentioned in the beginning, saying that 35% growth. Just one data point here, because last quarter we have seen Middle East businesses decline, and understandably, we had the Eid movement, which has happened. But then, is that in the Middle East also firing well? And maybe if you can give some quantitative number or maybe some growth parameter in the Middle East business, especially till twelfth of November. The Middle East is doing well. SSG is healthy. Again, Middle East is very sensitive with gold rates also, because their gold rate impact is much higher than in India, because it does not have the dollar, what you call, pegged. So the gold price impact is completely taken, absorbed immediately, in that market. So there has been volatility and... The momentum is strong. SSG is healthy. Again, I will tell you, always, SSG, when you, budget for 5%-7% is a healthy SSG according to me, and, that should be budgeted for the markets is what I-- Of course, on the ground it is much higher, but on a budgeting, 5%-7% is healthy. Got it. Second, related on the 35% growth, our wedding share has always been very strong. So maybe in first half, what is the wedding share we have in the plain gold jewelry? And it has moved significantly, significantly, by the way. You are talking about the first 45 days? No, no, first half. Yeah, so not meaningfully different. We are always in the range of about 55%-60% wedding share, which has been constant over the years, except for one quarter immediately after the COVID, wherein wedding demand was the only demand at that point in time, because casual customers were not there, they were not coming out of the store of their home. Otherwise, it has been the same. I was basically checking on your comment. You said that margin expansion will happen. So maybe, studied portion is going up, that is one part, but if wedding is also coming down, also we'll be able to get and improve our margin profile. That's not the thought I had. No, no, but higher ticket size product competition actually on ground is lesser, wherein very high ticket size product is unorganized segment might not cater. So there we have a lesser competition. There, of course, standard conversion also is higher on that category. There competition is also lesser because competition is majorly with organized players. There we get a better margin share, and that is what we saw in the first 45 days as we speak during Diwali. Of course, competition is still there. It is intense competition. But for the... Now, for the first 40 what, October to November, we have seen an improvement in the margin. ... Okay. And just last question, you mentioned that we have converted our store in South and on the franchise operation. So I'm sure now you would have some good understanding. So how that store is faring, what are the learnings if you can share? I'm not saying about the strategy, but have you been able to garner the newer customers or the growth or maybe some parameters you can say that what is it that our learning is? No, no, no. I think we have not converted any store in the South. We have only signed six LOIs for South, and we have not opened that as well. We will be opening a couple of showrooms in what? In the financial year. South, we have not done anything. We have only signed LOIs. Okay. So that's a misunderstanding. So you're saying that the six LOI will get executed before March 2024? Yeah. Yeah. So, so far conversion for our information is only which got opened temporarily as owned. Like, for example, we would have opened a showroom in Q1 as owned, which we will convert in Q2. Otherwise, we have not done anything major. Got it. Got it. Thank you, and all the best. Thank you. Thank you. Next question is from the line of Rajiv from DAM Capital Advisors. Please go ahead. Yeah. Good afternoon, sir. Thanks for the opportunity. So with regard to your comment on reworking some the franchisee partner negotiations in terms of the contract. So earlier, from a counter sale of, let's say, INR 100, you were getting INR 8. Are you saying that this will go up by 50 basis points, in sense it will become 8.5, is what you're shooting for the next year? Yeah. So I don't want to give an exact number, but yes, you can budget for around 0.25%-0.5%. Is there a chance that you will also try to sell the existing franchisees, the 40 or 60 number, whichever you take, the asset back to the franchisee partners because it is already clocking, let's say, 20% plus kind of store level gross margins? We will not get into it now because it's all, meaning, don't budget it, budget for that. We, we might or might not, but as we speak, don't, please don't budget for that. Are they clocking already 20%+ kind of on a run rate basis, that kind of gross margin, let's say, the stores which are six months old or before? Yeah. Yes. Right. Great. That's all my questions. Thanks a lot. Thank you. Next question is from the line of Gaurav Jogani from Axis Capital. Please, go ahead. So my question was with regards to, you know, that you mentioned that from next year onwards, the franchisee CapEx model would again be tweaked and, you know, that CapEx will be now shifted from our balance sheet to the franchisee's balance sheet. So in that case, we would be left with a higher FCF. Is that understanding right? Yeah. So the first thing where I want to correct is that, what you call, the CapEx will still be in our books, but the money will flow from them. That is the model, because as you know, it's a FOCO model. The premises is actually signed by us, and the asset cannot be owned by them. So assets will be still owned by us, but they will prepay the asset maintenance charge to compensate the CapEx, which we do. So in the books it will be there, but the money would have... The money would, we would have taken from them. Yeah. So but in terms of cash flows, basically they will fund the CapEx, right, in that case? So your, the cash flows would be much higher in that case. I mean, what we are actually making right now, because right now we are also increasing the CapEx from our books. Yeah. So in that case, don't you think, you know, that the debt repayment should be higher in, like, 2025, 2026, given that, you know, we'll be making much higher FCF in that case? Yeah. So what I am always saying is that we budget for this. We can if we do more, it's good. Meaning, that's why I said, we'll be able to overachieve the next year debt repayment target. Sure, sure, sure. Sure. Yeah, and so just last question, you know, on the other expenses side. So even the other expenses this quarter around was, you know, a bit higher. So anything on that front, and should that be a normalized run rate going ahead? Yes, so no major change, you know, meaning only. Basically, the salary cost will keep on moving up, because you know that the staffs are on our books and it has to go up. Otherwise, it should remain, meaning the usual, what you call, the 5-6% expenses growth will be there. Otherwise it should remain constant. Okay. Okay, sure. Thanks. Thanks, and that's all. Thank you very much. As there are no further questions, I will now hand the conference over to the management for closing comments. So thank you very much. Thanks a lot. It has been good talking to you after a good quarter. Thank you very much. Thank you very much. On behalf of Kalyan Jewellers India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.