Ladies and gentlemen, good day and welcome to the Q4 FY 2024 Earnings Conference Call of Kalyan Jewellers India Limited. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantee of future performance and involve risk and uncertainty that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Agarwal from Strategic Growth Advisors. Thank you, and over to you, sir. Yeah, thank you. Good evening, everyone, and thank you for joining us on Kalyan Jewellers India Limited Q4 and FY 2024 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 evening, and let me welcome everyone to the call. Q4 has been fantastic. We entered the financial year on an excellent note. We recorded consolidated revenue growth of approximately 34%, and PBT growth was approximately 44%. This is after adjusting the one-time write-off in the previous financial year regarding the asset, which the write-off of the asset. Improvement in PBT margin during the quarter was driven largely by a higher share of revenue from franchised showrooms. For the full financial year, we recorded a revenue in excess of INR 18,500 crore and a PAT of INR 596 crore. We began the financial year setting certain targets around the key objectives of revenue growth, improvement in cash flow and return on capital, and rewarding shareholders. It gives me immense satisfaction to reflect back on the targets. Let me spend a few minutes here. In line with our already announced showroom network expansion plan, we launched 58 new Kalyan showrooms through the capital-efficient FOCO model in India during the last financial year. We have also successfully converted two existing showrooms in South India to franchised ones. The year also saw the launch of our first franchised showroom in the Middle East. While we reduced our non-GML loans in India by INR 435 crore, we have been successful in securing additional GML limits of INR 170 crore. Overall, working capital loans in India came down by INR 270 crore. With respect to the divestment of mobile non-core assets, we have completed the sale process and have received the proceeds. In line with our announced dividend policy, the Board of Directors has recommended a dividend of approximately INR 120 crore, payout in excess of 20% of the net profit generated during FY 2024. This represents more than doubling of the dividend paid for FY 2023. There has been a delay in the rollout of the first set of Candere showrooms as the last financial year was a year of transition for the platform. We launched 11 offline showrooms in Candere during the last year, taking the total number of showrooms to 13 as on March 31st, 2024. For the current financial year as well, keeping in mind the similar set of objectives, we have set certain targets. We have drawn upon plans to add 130 showrooms in India, 80 Kalyan, and 50 Candere. And we will also open six showrooms overseas during the current financial year. Free cash generated during the current financial year shall be utilized to further reduce the working capital loans by around INR 350 crores-INR 400 crores by March 2025. We have also initiated discussions with banks for the release of real estate collaterals associated with the working capital loans reduced during FY2024, which could be then divested to lighten our balance sheet further. Now talking about the ongoing quarter, we had an excellent start to the financial year despite continuing volatility in gold prices and ongoing general elections across various parts of the country. We are witnessing encouraging momentum in consumer demand, especially around the wedding purchases during the current quarter and Akshaya Tritiya advances. Today is Akshaya Tritiya, and we are seeing strong consumer walk-ins across all the showrooms. Thank you, and I'll hand it over to Sanjay. He will read you through the numbers. Thank you, Ramesh. Good afternoon, everybody. I'm really happy to be talking to you all after a great ending to the financial year. Starting with some numbers on just the concluded quarter, our company reported a consolidated revenue of INR 4,535 crores, a growth of over 34% compared to the corresponding quarter in the previous year. Consolidated EBITDA was INR 306 crores versus INR 257 crores in the corresponding quarter of the previous year. Consolidated profit after tax (PAT) was INR 137 crores versus INR 70 crores in the corresponding quarter of the previous year. This PAT growth is optically looking higher. Please bear in mind, however, that the previous year PAT numbers were suppressed by a one-time write-off of INR 32 crores in Q4 of last year. After adjusting for this one-time write-off, the growth in the operating PAT is about 34%. Now, let me give you a break-up of the financial year performance between India and the Middle East, starting with India. In this just concluded quarter, our India revenue was INR 3,876 crores versus INR 2,805 crores compared with the corresponding quarter of the previous year. Our India Q4 EBITDA was INR 263 crores versus INR 217 crores when compared with the corresponding quarter of the previous year. India profit after tax came in at INR 131 crores for the quarter compared to INR 66 crores in the corresponding quarter of the previous year. I draw your attention again to what I just mentioned a while ago. The one-time write-off that happened in the previous year was pertaining to the India books. Moving on now to talk about the Middle East business. Middle East business revenue for the quarter was INR 624 crores versus INR 549 crores in the corresponding quarter of the previous year. EBITDA in the Middle East was INR 46 crores versus INR 42 crores for the corresponding quarter of the previous year. The Middle East business posted a profit after tax profit of INR 10 crore for the quarter compared to INR 6 crore for the corresponding quarter of the previous year. Moving on to our e-commerce business, Candere, the company posted a revenue of INR 36 crore in the quarter versus INR 32 crore in the corresponding quarter of the previous year. The quarter recorded a loss of INR 70 lakh versus a loss of INR 1.9 crore for the corresponding quarter in the previous year. Talking about the full-year numbers, for the full- year FY 2024 on a consolidated level, revenue came in at INR 18,547 crore, and consolidated profit after tax came in at INR 595 crore. With this, I'm done with the summary of the financials, and we'll now open the floor for questions. Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on 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 a handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Gaurav Jogani from Axis Capital. Please go ahead. Thank you for the opportunity, and congratulations on the great set of numbers, sir. I mean, your margin expansion has been also helpful in the challenging times. So my first question is with regards to, actually, the debt reduction. I mean, though we look at a net debt basis, the debt has come down only by around INR 250-odd crores in that sense. And we have received around INR 130-odd crores, or I would say net INR 100 crores, from the sale of claims itself. So what explains the lower debt reduction in that sense? Yeah, so the plan was to reduce around, what, INR 300 crore, so it ended up in, say, INR 260-odd. INR 435 crore non-GML, actually, we have reduced. Okay, INR 170 crore additional GML we received from banks after a lot of negotiations. Okay, so this was the initial plan itself. And if you see this year, the franchisee model which we have actually chosen is CapEx is going to be from Kalyan, and only the inventory comes from them. So that is why the initial plan itself was only to reduce around INR 300 crore debt, forecasting all this. And aircraft, of course, INR 25 crore more amount is yet to come as of March, which has come now as we speak. Okay. So sir, one related question, I mean, to this part only. So if you look at the absolute inventory increase also, I mean, given that we have now moved to the franchise model, ideally, shouldn't the absolute inventory amount be much lower versus the sharp increase that we have seen year-by-year of around INR 1,200-odd crore? So inventory levels have gone up year-by-year around INR 1,000 crore in India, 1,000-odd crores. Okay, so there we have to understand that, first of all, we have opened around 58 showrooms in the financial year, wherein we will have to keep some pipeline inventory for the same. The gold prices have moved by around 14% during the year. Inventory, of course, we have to maintain volume-wise. We will surely reduce some volume when the price goes up, but we cannot reduce by 14% itself. Okay, so there we'll have to put some meaning, the money will go to inventory. And SSSG, if you see, it has been very strong, around 12%. And to maintain those SSSG levels also, we will have to add inventory in certain stores, certain areas. Over and above certain stores which we revamp to actually capture market share, we will have to add additional inventory there also. All put together, that is what you see. Okay, if you want a split-up of approximate numbers on these, I can give you in a few minutes, meaning so that you get a better idea. Sure, sure, sure. That will be helpful. And sir, the last bit. A couple of minutes. Of course, we will move on, but I will come back to you on the numbers. Sure, sure. Sir, my next question is with regards to the CapEx, as you mentioned, that because the CapEx was being incurred by you this year around, and hence we had incurred around INR 370 crores-odd of CapEx this year. So what kind of CapEx now can we expect going ahead in the next couple of years? And in that context, what will be the net debt reduction targets that you would like to see? Yeah, so two questions. One is CapEx investment for next year and the year after that. Next year, as we have mentioned earlier, we have signed 80 franchisee stores for Kalyan, out of which approximately 50 are in the new model, wherein the whole investment comes from the franchisee partners. The rest 30, the CapEx for those 30 stores, we will have to put. So keep INR 3 crore-INR 3.5 crore into 30, maybe INR 100+ crore for that, plus the asset maintenance CapEx. That will be around, what, INR 100-INR 150 crore. So overall, the CapEx will be in the range of INR 250 crore. Okay, okay. For the next year. Now you talk the year after that, the INR 100 crore will also be not there because all the showrooms which we expand will be under the new model, wherein CapEx will not be put by Kalyan. So there, it will be only INR 150 crore. So here, INR 250 crore. The year next, INR 150 crore. And again, it will continue that way. Okay, okay. So that is question number one. Second is debt reduction. So as I mentioned in my intro, the plan is to reduce around INR 350-INR 400 crore next year, and again, INR 400-INR 500 crore the next year next. So that's the whole plan. Within a couple of years, as we have mentioned earlier, there will be only gold loan in the book. We would like to reduce the working capital limits completely from India, the non-GML shares. Sure, sure, sir. Thank you for this, and sir, I'll come back in with you for more questions. One second. I think Abraham is ready with the numbers which he has. Okay, okay. Yeah, Gaurav. So the pipeline inventory that we had to invest was approximately about INR 200 crore. We also invested around 300-odd crore into the existing showrooms because of the price rise. And we also kind of the year-end inventory because there were some showrooms which were supposed to be opened in the first week, first, second week of April. So those showroom inventory also, we were keeping at the end of the year. That was close to INR 200 crore. Okay, okay. Sure, sure. Okay. The existing stores, we had about INR 300 crore. Other than that, it will be INR 200 crore pipeline, INR 300 crore existing showrooms price hike, INR 200 crore at the end of the year, right? That is like. That last INR 300, basically, the refurbishment of the existing showrooms. Okay, sure. Okay, yeah. Thank you. Thank you. A reminder to all participants, you may press star and one to ask questions. A reminder to all participants, you may press star and one to ask questions. We have our next question from the line of Ashish Kanodia from Citi. Please go ahead. Hi, thank you for the opportunity. The first question was in terms [crosstalk] Okay, you're welcome, Mr. Ashish. Can you please be a little louder? Yeah, is this better? Yeah, I can hear you. I can hear you, Ashish. Yeah, okay. So the first question was that historically, we have seen that in some quarters, because of, say, GST or some other reasons, there were a few stores which would be opened as a company store and then subsequently get converted into franchisee stores. So at the end of the current financial year, was there any such stores which was at the end of FY 2024, it was basically a COCO store, but then subsequently, either that has already been converted into franchisee or will be converted into franchisee store in the same next one or two weeks or something like that? No, so all the 58 showrooms which we opened during the financial year in India, all the 58, are franchisee stores. Meaning, there might have been own store converted to what you call franchise later. But fully, if you see, the whole year, 58 new showrooms we opened, all 58 are today franchisee stores, except one, a couple of showrooms. Like in Bombay and all, we had to convert our own store also because the stores were near to that so-called proximity, meaning Matunga or Matunga, right? Yeah, so Matunga store was our own store for the past three years, which got converted this year. Otherwise, all the stores were converted to franchisee stores which we opened this year. Sure, sure. Secondly, if you can just give some ballpark SSSG trends which you have seen in April because gold price has been pretty volatile. Just trying to get a sense that in terms of SSSG, what kind of a trend you have seen in April? April has been strong, as I mentioned. The footfalls are there, except for the first one week where the gold prices were going sharply high. Otherwise, then we saw customers coming back. Akshaya Tritiya, as we speak, is also strong. What we will do, we will because it will be deceiving if I tell only April SSSG because last time, Akshaya Tritiya was in April. This time, we are in May. Okay? So there has to be a degrowth in SSSG only if you look at April versus April because Akshaya Tritiya comes April last year, right? So we will surely try to come up with a revenue update post the weekend because then it will be apple to apple because first 40 days versus last 40 days or something that we are really trying on, right, Abraham? Yeah, we'll really try on. Okay? Sure, sure. Was that helpful? The momentum is strong just for your, as we speak. Yeah. Sure, sure. That's good. And secondly, from a competition perspective, right, and at least what we pick up is that the competition, some of the players have started to give more discount, etc. So what changes have you seen from a competitive intensity perspective in the last, say, three, six months? Has there been any change whether by local players, organized players, anything which you can call out? I presume that your question about competition is related to margin, right? Yes, margin also. Competition comes in many ways. Competition comes when competitors have better inventory, better campaigns, or what you call, better locations or something. But your question goes majorly into margin, right? Pricing. Yes. Yeah, so pricing, if you look at, we have not seen anything drastically different over the past, what, four-five quarters because competition has all intensity has always been there in our industry. And Kalyan, you know we are a very hyperlocal player. So we are used to competing with local unorganized and organized players with around 30%-40% of our regionalized inventory, and which we price also very competitively. So we have not seen a major difference in price competitiveness over the past four-five quarters. And you see, our margins have also been stable over the last four quarters, year- on- year, no? Sure, sure. And then since franchisee stores have scaled up, if you can just give a ballpark number in terms of what is the share of franchisee revenue for the full year, I mean, either absolute number or a percentage so that just from a margins perspective, we get a better flavor. And just the other question I had was in terms of the net debt reduction plan which you said is to reduce by INR 350-INR 400 crore. I presume that this INR 350-INR 400 crore is purely from the free cash flow generation that you generate from your operating business. And if there is any further sale of the non-core, sales of the land, then the net debt reduction could even be higher. Is that understanding correct? No, so we have, meaning, INR 350 crore-INR 400 crore. Why I have kept a range of INR 350 crore-INR 400 crore? Because it depends upon the, what you call, the liquidity which comes, again, because of the asset sale. Because asset sale is not as easy. First of all, we have to get that asset from the bank. Then we'll have to put it on sale. So we have budgeted a certain amount for that. But even if that does not happen, the range will be between INR 350 crore-INR 400 crore. Sure, sure. And the franchisee revenue, if you can help with that from a full year perspective. The franchisee revenue, approximately for Q4, was in the range of 25%, the franchisee revenue share. For the full year, will be around 20%. Sorry, for the full year, it will be around 20%? Yeah. Oh, sure, sure. Okay, thank you so much. Yeah. Thank you, sir. A reminder to all participants, you may press star and one to ask questions. You may press star and one to ask questions. We have our next question from the line of Deepak Poddar from Sapphire Capital. Please go ahead. Hello, am I audible, sir? Yeah, yeah, loud and clear. Okay, that's great. Yeah, first of all, thank you very much for this opportunity. Sir, first, I just wanted to understand now this new showroom, we have spoken about 130. So 80 Kalyan stores, all are FOCO model, right? Yeah, 80 all are FOCO model. The only difference between the FOCO model in that 80 is that 50 will be fully funded by the franchisee partner, including the CapEx. The rest 30, only the inventory will be funded. The CapEx will be put by Kalyan. That's the only difference. Hello? Hello? Mr. Deepak, are you there? Sorry, sir, we have the line for the participant disconnected. We'll move on to the next participant. We have our next participant from the line of Shirish Pardeshi from Centrum Broking. Please go ahead. Hi, good evening, Ramesh, Sanjay, Abraham. Hi, hi. Yeah, just two questions in the beginning. You have aspirationally said that you want to expand your Middle East and also India and the geographies business. Can you throw some light? What are your aspirations for next one and a half, two years, three years? For India and outside India? Outside India. India, I told you, we want to open 80 Kalyan and 50 Candere for the next financial year. Okay? And we would like to add 20% at least more footprint every year. Meaning, if we open 80 next year, we would like to go 20% more than 80 in the next financial year for India. And Middle East or outside India, six in the next financial year. And it will go in that range for the next two, three years. There, the only difference is that focus is not only in opening new stores. We would like to really convert our existing stores into franchised ones and reduce the capital invested in that region. So there are two primary focuses outside India. One, open six showrooms a year. Two, convert a few showrooms every year. In the next couple of years, try to make Middle East a predominantly franchisee-driven market by reducing the invested capital in that space. Okay. So if I understand correctly, at the current juncture, you are at 36 stores in Middle East. Now, of that, are two franchise at this time? One. One? one front, yeah. The reason that one can become five or six or seven, whatever it is there? Yeah, so franchise number will keep on increasing. In a share that, you will add six more stores? Yes, exactly. So there will be opening new stores through franchise, but you will see conversions also over and above the six targeted. And inquiries come from different parts today. Inquiries are there from Singapore, U.K., Canada, Australia. But our focus now is Middle East and entry into the U.S., which we have already started. The process I have already started. And the first store in U.S. will be own store. Okay. U.S. stores will be operational in the next one quarter or two quarters? It should be ideally before the end of H1. The first one, yeah. Okay. Second, I just wanted to have some broad understanding. Our non-South sales used to grow upward of 70%-80%, which in this quarter, obviously, I give the best effect, has grown 55% to INR 1,900-odd crore. Now, arithmetically, if I reduce 16% SSSG in the non-South market, I get a number of 38%, which is primarily a number which matches with the store expansion, what we have done in non-South. So my whole question is that this SSSG is driven by the ticket size or driven by the volume or driven by something else? So give some qualitative comments that how this SSSG in the near term is stronger despite the gold prices over the last 90 days, they are very volatile. And why I'm asking this? Because if you need to understand whether this double-digit SSSG will be defended on a high base in FY 2025 as well. We surely don't recommend to budget a double-digit SSSG. Okay? The SSSG which has come last year has been excellent, meaning Q1 was 15%, Q2 was around 10%, Q3 was again 12-13%, Q4 was again 15%. So that is not the way we should really budget for because that is a very strong SSSG. Okay? And this Q1, you imagine, we are trying to grow over and above the SSSG which we done 15% last year. So SSSG is 7%, 6% is the best way to budget for. But however, what we see on ground today, as we speak, is much higher than that. And that is predominantly the new customer walk-in. There is a portion of ticket-size growth. Volume versus value, it is the same old slogan wherein if the gold prices are very high, volume will come down, value will go up because people have a budget for what they can buy. So now, SSSG in South is in the range of around 17%-18%. Non-South SSSG is in the range of 15%-16% for the last year. 38% is new customer growth. Okay. My second question is on the South business. Despite the South business is overbanked in terms of gold, when I look at the competition, they have also reported a very strong cut-off numbers. So what exactly is happening in the South market? Are we trying to have the discounting and promotion as a tool and to grab more footfall and customers, or really the competition is weakening and the branded players are expanding their market share? The South is already a 50% organized market. Again, I mentioned price factors no more there because for the past 4-5 quarters, we have not done anything major to improve on the pricing for the consumer. It has been stable. Why the revenue is coming? Because of many and it is very strong in non-South also, no? If you see, non-South also is in the range of 16%. South is in the range of 18%. So across the country, there has been a strong, what you call, SSSG, predominantly because of the new customers which we have acquired over the past two-three years, especially during COVID. And the only area where we put more money today, even though I mentioned that there is no competition on the margin front from competition, but local players have also started spending on ads. Even unorganized player, semi-organized, regional players have started to spend more on ads where we are also investing a bit of money than budgeted because we have to have that, what you call, the noise level has to be there. Otherwise, then there can be a losing market share. Okay? The share of voice has to be there in terms of marketing. Otherwise, there is no pressure on gross margin or price competition is not prevailing for the past four-five quarters. No, the reason why I'm asking, if I go back three years before and in the initial conversation, our story was that we will increase the non-South revenue. Today, non-South revenue is around 49%. 50%, no? 50%. But in terms of when I use the same lens, our margins have come down. So the point here is that if we need to build the more number of franchisees which will come in the non-South market and if the strategy is going to continue, how this margin will look like? Because what we said three years before, non-South revenue scale-up will happen and our margins will improve. But in reality, the margins have not moved upwards. No, no. So margin, I think margin is not improving. So South, actually, revenue grew by 25%. Non-South revenue grew by 55%. Okay? So growth in non-South is still happening. Why you are not seeing a growth in margin is because we came into franchisee model. Franchisee margins are lesser, no, than own store. So franchisee margin comes at 8%, whereas my non-South margin is 20%. Okay? So there will be a degrowth in margin. But PBT margins will go up because the franchisee PBT is 5%, whereas own store PBT is only 4.6%-4.7%. So PBT margins will go up. ROCE will go up, but gross margin will come down. EBITDA will also come down. Okay. So aspirationally, again, I'm going back to ROCE, that we were aspiring 18%-20%. Now, in the current state of strategy, do you think we'll be able to exit 18% end of 2025? Yeah, so ROCE expansion is very strong because you know that now, for the next year model of franchise, again, ROCE is going to be much higher than what, 60%-70% which we have for the franchisee model wherein CapEx is invested by Kalyan because their investment comes only in the pipeline inventory. So ROCE is much higher. And our focus is to grow by franchise view for the next couple of years. So ROCE should be in the range, what you mentioned, shortly. One last question. Have we now framed the dividend policy? Yeah, I mentioned it's between 15%-30%. This year is 20% of net profit, approximately, which we have announced. Okay. All All right. Thank you. Thank you. We have our next question from the line of Anurag Dayal from HSBC. Please go ahead. Yeah, hi. Thank you for taking my question, sir. Yeah, first is I want to understand about seasonality. So Q1 has traditionally been a strong quarter for you, given higher weddings in South. Now, with the share of non-South growing, how does this impact the seasonality? So, one stands to reason Q1 could be weaker now compared to what you used to do earlier. Even in North markets, Q1 traditionally has been weak. So some view on the seasonality, basically, for you right now. Yeah, so Q3 is now our best from revenue because, again, Diwali and non-South revenue share is approximately about 50% as we speak. And then Q4, I mean, after Q3, Q1, and then Q4, and then Q2. That's how usual scenario it works. Okay. So it's just similar, I think, what you mentioned earlier as well last year. It hasn't changed. Still, Q1 is second best, basically, for you guys. Second best. So Q3 is the number one. Okay. Okay. I got it. Yeah. Thank you. Secondly, on this, you said in non-South, you make 8% gross margin, but now you're converting in South as well. We don't know exactly how the franchisee rate is there, given the gross margin also tends to be much lower. Could you throw some light on it, how the economics is working in South? Yeah, so South, again, it cannot be one model across South India because Kerala works differently from Tamil Nadu to Karnataka to Andhra Telangana. It's very early. We are only having two South franchisees as we speak. We are flexible on the working also with the franchisee partner. We will come back to you once it settles down. Too early to speak too much aloud on it because we ourselves have not come to a conclusion on the model because four states work in four ways. Okay. Got it. Thanks for actually sharing the SSSG numbers. I would really love that you start giving retail sales as well since franchisee also is gaining a lot of scale now. Yeah, yeah. Sure. We will come up with it. Thank you, Anurag. No more questions on my side. Thank you so much. Thank you. Thank you. We have our next question from the line of Alia sgar Shakir from Motilal Oswal Financial Services. Please go ahead. Yeah, hi, sir. Thank you so much for the opportunity. I just had the same question on your margin. So of course, as you mentioned, your PBT margins have improved despite the franchisee shift. I just want to understand from an EBITDA point of view. So I mean, your EBITDA, you put quarter standalone is probably reduced around 90 basis points and maybe gross margin also, I think, about close to around 130 basis points. So can you just explain out of this how much would be the impact because of the franchisee? And is there any impact because of any pricing or basically making change impacts that we are seeing in other players in the market? No, as I mentioned earlier, gross margin, meaning you see the numbers, there is no pressure on the gross margin. On ground also, for the past four, five quarters, we have not had any pressure from competition because our price is already set to prepare for competition in certain products where the competition prevails. The EBITDA margin will keep on degrowing because all the incremental revenue which comes, it is coming with 5% EBITDA. Our own box is closer to 7.5%-8%. EBITDA will be keeping on degrowing because franchisee revenue share will keep on growing. India Q4 PBT, before exceptional, has improved from 4.4% to 4.6%. That is the way we have to see rather than EBITDA because EBITDA will be keeping on degrowing. Correct. So safe to assume this decline in EBITDA margin is only because of that and there's no other impact because of any reduction in the making charges that you would have seen? Yeah, yeah. Only because of that. Only because of that, okay. Nothing on what you call except that EBITDA margin, there might have been a, what you call, a small dip because we would have invested some more money for advertisements because there has been competition from the unorganized and regional competitors in terms of spending money in their market. That's the only area where we have invested money. So there, there can be a, what you call, effect in EBITDA but not on gross margin. Correct. So just to, I mean, reverse the question. Let me show you EBITDA effect in gross margin of 130 basis points is entirely because of the shift from basically own to franchisee. No change because of the making charges or pricing of gold, right? Nothing. Nothing. Nothing. Understood. This is clear. Second thing is on Candere, sir. So we're about 13 revenue, 13 stores. And I think now we are moving to the franchisee-driven model. You also mentioned that you have quite a decent amount of inquiries. So just want to understand a little longer, three-year or five-year story in Candere. We are aggressively increasing our store. And so we're rating this engagement three to five years. And given the fact that it is right now just around break-even, right, or margin loss making, I just missed the numbers. So how do you expect the profitability to move over three to five years? Hello. Sanjay here. So I'll just take this one. So presently, we are laying the foundation for the offline expansion. And at the same time, we are taking a calibrated approach in driving the pure online piece of the business. The business is continuing to go through a transition phase both at operational and the management level. Like we guided in the past, we are on track to do another 50 stores this year. We already got about 10 operational as of March 2024. We started building the leadership pipeline and spending management there. But we think it's not yet the right time to kind of give a picture on the financial model and how it would look like, say, two, three years out. But I think we should be able to come back to you on this one by the time of, say, Q1 when we end this year. We should be able to put some projections out on how the financials will look. Sure. This is useful. But even qualitatively, because I was just thinking, given that it's still not profitable, so I mean, accelerating pace with the 50-store addition, I mean, what gives you that confidence? And I mean, if qualitatively, you can just help me a little bit on the outlook and profitability. Yeah, so here, Ramesh here. So we have done a lot of groundwork on how to take Candere to the next level. And that is the confidence which we are working on. But execution, why we are delayed for the last financial year is because on the management level, we have brought in new talent. On the mid-level management, we have brought in new talent. And focus is on expansion of physical stores. And that transition was there last year. And that is why we took a small pause. But otherwise, on the confidence in Candere, that is because of the work which we have done over the past one year as in where to take it forward. Okay. Got it, sir. I'll probably take this offline. Thank you so much. Yeah, thank you. Thank you. We have our next question from the line of Bhargav Gandhi from Dalal & Broacha Stock B roking. Please go ahead. Yeah, thank you for the opportunity. Just wanted to have a broad-level understanding. What impact will we see if there's sort of change in the gold prices on the downside? So will it take a hit on the revenue, or how will it be? If you can explain from your past experience. Yeah. So as I have mentioned earlier, gold price sudden impact, if it goes up very high over one week or if it comes down in a week, people take a pause. They wait and watch where this is going to settle down and then start coming to the stores again. That is the only impact. The revenue can move from one quarter to another. But the demand will never be lost. And within demand, the postponement or preponement also does not happen too long because the wedding has to happen. They cannot postpone the demand, postpone the purchase too long. So otherwise, there is no impact in gold price coming down or going up on a mid-term, long-term level. But of course, when it comes down, people take more volume. When it is very high, people purchase less volume because they come with a budget. They will not be able to exceed that budget because their pocket does not increase if the gold price increases also. Right. And what would be the average ticket size for FY 2024? So approximately what? INR 1 lakh? Approximately INR 1 lakh. And what was it last year, if at all? You can give some number to compare. So it was in the INR 85,000 range, INR 85,000. INR 85,000. And just wanted to know on the hedging policy, are we 100% hedged, or we do keep some exposure? No, we don't take any price risk nor price, what you call, gain because we are, as I mentioned before, we are always hedged. 100% hedged? That is what? Yeah, 99%, 98% hedged because there are yeah. Yeah. Okay. And just if you can share, what would be the average rate on the gold metal loan? Just a second. So 3.75% in India. 3.75% in India. Okay. Yeah. Thank you so much. That's it. I'll get back in to you. Thank you. We have our next question from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead. Yes. I just wanted to understand the advertising spend, what was it this year versus last year? And second was, I think there was a guidance of on a standalone basis, we'll do a PBT margin of 5%. So we still are looking shy of any color on that. Okay. Can you repeat on the PBT? I did not get you there. Yeah. So I think there was a guidance at the beginning of the year of a 5% standalone PBT. No, 5% was standalone PBT for franchised stores. That was the guidance. That is almost in line, not the total franchise because our own store PBT margins are in the range of 4.7. New franchisee stores come with a PBT margin of 5%. Franchisee revenue share is approximately 20% for the full year. The PBT margin has to be in between 4.7%-5%, which is what you see. Right. Okay. Okay. And the advertising expense for this year versus last year? Yeah. Hi. In India, it is 1.9% for this current quarter versus 2.1% last year. No. So you mentioned that it's gone up, and that's what the margin for the year or the advertising? Yeah. We'll explain. We'll explain. You will not see on a percentage-wise because the revenue also has the franchisee revenue, okay? As an amount, it would have gone up. Okay. Okay. No. So then as a percentage, then it's not really impacting that margin. You were saying that it's impacted the margin. No. One second. No, it does because for all the new showrooms that we are launching, ideally speaking, we were not budgeting for any extra ad spends. So that would have actually come in and given us 5%. But if that means, then the leverage on the ad spends on the own showrooms should have been higher because of the revenue growth that we are seeing because the SSSGs have been significantly higher, 12%-13% SSSG for the year. So the leverage should have been much higher. The leverage is not as much as we thought it is because we spend a little higher. Okay. Got it. Thank you. Thank you. We have our next question from the line of Pulkit Singhal from Dalmus Capital Management. Please go ahead. Thank you for the opportunity and congrats on a good set of numbers. My first question is on the franchisee margin of 5% PBT. As the business expands, obviously, as you yourself are seeing, double-digit SSSG versus high single-digit and mix also changes. So actual business margins will be more volatile at a franchisee level. But is the understanding very clear that we get only 5% irrespective of whatever be the margins earned therein, or do we also participate in case there's an increase in business margins? Yeah. It's not like that. Wherein 5% is assuming 20% overall gross margin at the store level. So if the margin goes beyond 20%, we will have a share for that also for the increased gross margin. But since we are expanding into tier two, tier three, tier four cities, even though at our own store level, non-South, it is actually more than 20%, but that are all in metros mostly. So since we are going into suburbs, we assume only 20%. And I think more to do with the higher margin than 20, better not do because 20% is the right margin to target for. But scale also does have an impact, right? I mean, so while you're focusing on gross margin, but I'm saying doesn't scale of the business impact below the gross margin to also create a leverage on the business margin? Yeah. I agree. Yeah. But meaning, we are spending on ad and what you call stuff now, employee cost also, we are investing, okay? And it's front-ended also because we will have to employ the staff at least two-three months before. And then only we can post them to the new stores because then only they will become a Kalyan kind of employee. And ad also, we are at this stage when we are growing into new markets, we are getting strong SSSGs at the ground level. When we see competition also from the unorganized, organized in ad spends, we don't go in that way. So leverage will be there. But I suggest that we don't bake too much leverage into projections. And let us earn it when it comes. So fair point. I'm just trying to understand how the contract is structured. Is it structured such that any kind of leverage benefits or whatever there is, should there be? So that goes to him. That will go to him because for us, the only advantage when the margin goes up at the store level, we might get better than 8% because there can be a share there also. For the future franchisee stores which we are signing, there we have baked in all what you expect. That's why we are not telling how much margin for the new franchisee stores. It can be more than 8%. It can be more than 5% on a EBITDA level. Okay. Understood. Secondly, if you look at this quarter, I mean, your PBT margins have gone up from 4.35%-4.55%. Is this in line with what you had expected initially, or is it coming slightly lower or better than what you were thinking this would be? No. Maybe what we would have missed it were around what, INR 10-INR 15 crore, meaning more or less INR 10 crore because of mainly majorly because of advertisements. And that's what I'm trying to understand. So going ahead, I mean, full year, we are at 4.77%. There'll be higher mix of franchisee. But I mean, how do we see this 4.77% moving the pace of it? I'm trying to understand going ahead. Is the competition intensity significantly increasing? Because the market leader is clearly calling it out, right? And they're saying that they're going to kind of we cannot talk about them. But for Kalyan, we don't see competition intensity in pricing. Whereas we just want to maintain the market share or maintain the targeted market share, we have to have the noise level in the market where we see that the local competitors are spending money on campaigns. But for you to budget in for own store level, PBT margins cannot go up too much. There will be some leverage. But if the SSSGs are only what, 6%-7%, the leverage will be smaller. So new set of stores, franchisee will come at around 5.25%. Franchisee PBT margins will be at 5%. Own store cannot grow up too much. But of course, there will be some operating leverage which will step in. Okay. But let me put it this way. Suppose finance cost is right now 1.5% of CA for you in the standard order. And as you're getting more cash flows and your revenue will go up and your absolute finance cost. No. There will be a leverage. Finance cost, 100%, there is a leverage. I spoke about EBITDA, okay? But finance cost, there is going to be leverage for own stores. Exactly. So I mean, so far, we are focusing on PBT, and we have to consider finance cost as well. Yeah. Yeah. 100%. There is going to be leverage in PBT margins for own stores because finance cost will come down as we are reducing our debt. So theoretically, over two-three years, therefore, because I'm considering this finance cost as well, our business model can cross the 5% PBT margin as well. It will have to be tied to 5%. Of course. Yes. Of course. Yes. Because of two, three reasons. One, all the new franchisee stores are budgeted for approximately 5.25%. And existing stores' PBT are already in the range of 4.8%, which can go upside of 5% because we are in a debt reduction journey. So all put together, PBT margins should see above 5%, maybe what, maybe give it a year more. Understood. Got it. Great. Thank you and all the best. Thank you. Yeah. Thank you. We have our next question from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead. Sir, just two questions. One, the pace of debt reduction at INR 4,500 crore means that INR 400 crore means that you reduce your interest cost at about INR 30 crore, INR 30 crore, INR 35 crores per annum, considering you will first reduce your corporate loan, which would be about 8%-10% rate of interest. Yeah. Yeah. We will only reduce that. We will not reduce our loan. We will only reduce it. Whole loan. Yeah. But theoretically, a point in time, you will also. INR 80 crores for the full year. We own INR 4-500 crore. Yeah. It's spread across the year now. And predominantly, loan reduction will come in H2 because I told you 80 showrooms, 30 are CapEx, which will be all in Q1, Q2 because that model, we stopped signing one quarter before, right? So interest reduction for this financial year will mostly be in the second half. That's okay. That's okay. So you will basically reduce at about INR 30 crore, assuming it was 8% of INR 400 crore. And if you are, let's say, this year's cash flow, if you have a INR 1,300 crore EBITDA, you manage to reduce at about INR 300 crore. Next year onward, you can reduce at about INR 400 crore. So that's a INR 30 crore on this. On the depreciation side, we'll actually enter into a situation where the depreciation number doesn't expand, right? Because if you are not putting CapEx, you don't have an asset to depreciate for. So this INR 275-INR 280 crore depreciation stays where it is? Yeah. So depreciation cannot increase too much because we are not, except for the what you call the stores which we have. So it will not go up in the direction which it was going up. But it will still increase a little bit, right? Pardon? Will it increase a little bit, the depreciation number? Forget next year. Forget the next year. In any case, you're moving to a model where you're not putting any CapEx or inventory. Yeah. So of course, we do create certain assets. But you can put it as flat because it will be very marginal in case if it increases. Okay. And what is there in the other income number this year? So it is rent received from the franchisee partners because what we do is that the premises, we take it for lease and then sublease to the franchisee owner because we don't want the premises to sit on the franchisee books. Okay. So it started with effect this year, right? Last June. Okay. Okay. Meaning last June means not the meaning the June FY 2025. Yeah. 2023. Yeah. Okay. Okay. Sir, I'm done with my questions. Thank you. We have our next question from the line of Siddhant Dand from Goodwill Wealth. Please go ahead. Hello. Hi. Yeah. Hi. I wanted to know the sales number excluding the one-time sales to the franchisee partners, the new franchisee stores or the ones we converted to franchisees. What would the number be? No. We put a ballpark number, 58 into, say, INR 20 crore. That is the one-time revenue. Okay. 58 into INR 20 crore. Yeah. Okay. Perfect. That's an approximate. Yeah. Perfect. This will be the last question for today. I now hand the conference over to the management for closing comments. Yes. Thank you very much for participating. See you all shortly. Thank you very much. Thank you on behalf of Kalyan Jewellers India Limited. That concludes our conference. Thank you for joining us, and you may now disconnect your line.