Ladies and gentlemen, good day and welcome to the Lux Industries Limited Q4 FY 2021 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Saket Todi from Lux Industries Limited. Thank you, and over to you, sir. Good afternoon. Thank you everyone joining the earnings conference call to discuss the performance for the quarter and full year ended 31st March 2021. Along with me, I have Mr. Udit Todi, Executive Director, our CFO, Mr. Saurabh Bhudholia, and SG, our Investor Relations Advisors. I hope you and your family are keeping safe during these tough times. The second wave of COVID, which started in the first quarter of FY 2022, has been more severe than the last year. We at Lux Industries understand the importance of following the necessary COVID protocols issued by the authorities, and we extend full cooperation in the fight against COVID. Our employees have been made aware of the need to adhere to these guidelines and are taking all the precautions. We are pleased to report a resilient performance for the quarter gone by. After the initial challenges posed by the restrictions and lockdowns at the start of the year, we have bounced back extremely well to cover the lost ground, but also outperform last year numbers as well. The performance has been majorly driven by progressive improvement in demand and consumption across the innerwear industry. We witnessed healthy traction for our economy and mid-premium categories and saw a gradual pickup in our premium and export segment. While demand remains strong, the supply situation over the next few months is likely to be adversely affected, impacted by the disruptions from COVID-19 lockdowns in India. We expect it to be better than last year as businesses are more prepared than last year and the lockdowns are restricted to certain states and not the entire country. We expect quarter one FY 2022 to be relatively weak due to the pandemic and expect to improve gradually from the second quarter. We will remain well-equipped to address these challenges and drive consistent, competitive, and cash accretive growth over the medium to long term. The innerwear industry is constantly evolving, and we have always been at the forefront of this evolution, having implemented innovative ways of offering differentiated products in the market by anticipating breakthrough marketing and brand promotion activities. Our commitment towards addressing environment, social, and governance-related issues has been unparalleled. We understand the need of a sustained progress of society to pursue the long-term goals that are beneficial for the community and helps us to make a difference in society by giving back in equal measures. Coming to our performance for the quarter and the year ended 31st March 2021, FY 2021 net revenue is up by 17% to INR 1,965 crores, whereas for the quarter four FY 2021 is up by 49% to INR 601 crores, highest-ever quarter in the history of Lux. Between the categories, premium segment has registered a total growth of 48%, whereas mid-premium and economy has registered a growth of 42% and 59%. Overall volumes for FY 2021 and quarter four 2021 increased by 13% YoY and 29% YoY respectively, which was well above the industry average. Given our steady increase in volume and other strategic initiatives, we have been able to increase our market share during the year. Lux enjoys approximately 15% market share in the organized men's innerwear category. In line with our guidance for advertisement and our marketing spend for FY 2022, our spending for the year stood at INR 106 crore, which is approximately 5.4% of the total revenue. We expect to gradually reinstate and make it back to 7% of our revenue for the current financial year. With this, I will now ask Mr. Udit Todi to share his thoughts. Hello, good afternoon and a very warm welcome to everyone. I hope everyone is keeping safe and healthy during this situation. I'm glad to share that during quarter four FY 2021, we have completed the merger of J.M. Hosiery & Co. Limited and Ebell Fashions Private Limited with the company Lux Industries Limited. The merger of these two companies with Lux will strengthen our presence across geographies and product categories and bring in a lot of operational and financial synergy. Our company has posted robust performance for the year ended 31st March 2021, despite COVID-19 pandemic-induced challenges. Also, with the completion of merger, we are reporting the merged financials for FY 2021 as well as FY 2020. Besides, these companies will also help us strengthen our post-merger business model. J.M. Hosiery & Co. Limited with the brand JM and others, while Ebell Fashions Private Limited with the brand Lyra. Their coming into Lux's umbrella will strengthen our overall portfolio. This in turn will help us leverage our men's innerwear portfolio with a value-added womenswear portfolio, which will make it possible for us to carve away a larger share of the overall wardrobe spending. This merger will also help to unlock substantial value for our stakeholders and streamline the business, as well as help us to achieve a newer growth trajectory. Our EPS post-merger FY 2021 stood at 90.25 versus 48.66 pre-merger state last year. We have a strong presence in central, eastern, northern, and western parts of the country and have plans to foray into southern region of India very soon. The region-wise revenue contribution as of now stands at Northern India being about 30%, Eastern India about 28%, Western India 21%, Central India 18%, South India 3%. While revenue split from segment stood as follows: Mid-Premium contributing 57%, Economy about 31%, and Premium about 12%. Lux, which is a dominant player in the men's innerwear segment, is also accelerating its growth driver via new expansion to capture market share in the ladies and kids segment. With the business of GenX and Lyra getting merged into Lux, the company will have a larger product offering that also offers premium innerwear under the brand ONN and One8. Post-merger, Lux Industries Limited would be among the top company in terms of volume PAN-India wise, reaching up to 300 million pieces for FY 2021. Online sale, which has more than doubled in the last few quarters and continuously showing this same growth trajectory and is expected to reach the INR 100 crore mark within the next three to four years. EBOs under the name of Cozi World are the new offerings, which will again help us to accelerate and achieve our vision. In working capital side, we have been able to continuously optimize our working capital cycle days. For the year ending 2021, our working capital days stood at 122 days, a significant improvement of 38 days over the last year. We continue to maintain our net cash company status and have a gross cash and cash equivalent balance of INR 261 crores. We believe despite the challenging situation caused due to COVID-19, your company has demonstrated superior execution during the recent past and has successfully leveraged the power of our brand and our distribution network to sail through the tough times. We have always strived to make our products available with speed so that they are always available on the shelf when the customer needs them. This has been able to be achieved with a 95% fill rate versus an industry average of 80%. With this, I would now request our CFO, Mr. Saurabh Bhudholia, to take you through the financial performance. Thank you, Udit Ji. Hello, everyone. A very good afternoon and warm welcome to all. Our company reported a strong performance for the quarter and full year ending 31st March 2021. Our revenues for quarter four 2021 stood at INR 601 crore versus INR 404 crores, registering a stellar growth of 49%. Our EBITDA stood at INR 129 crores as compared to INR 66 crores in quarter four, financial year 2020, a strong growth of 95%. We have been able to improve our EBITDA margin by more than 500 basis points, so current EBITDA margin percentage is at around 21.45% as compared to 16.4% in quarter four 2020. Our PAT for the quarter stood at INR 91 crores versus INR 41 crores in quarter four last year, which registered more than double growth of 118%. PAT margin for the quarter stood at 15.07%, showing an improvement of more than 470 basis points as compared to last year, same quarter. Moving to our yearly performance, our revenues stood at INR 1,965 crore vis-à-vis INR 1,674 crore. We are happy to share that we have registered the highest-ever revenue in FY 2021, registering a growth at a rate of 17% over the same period last year. Our sales and marketing expenses stood at INR 106 crore, which is approximately 5.4% of our revenue. In last five years, we have invested around INR 641 crore to build our brand. EBITDA for current year stood at INR 393 crore as compared to INR 275 crore same period last year, growth rate at a rate of 43% YoY. The EBITDA margin has seen an improvement of 355 basis points, which stood at 19.99% versus 16.4% in FY 2020. PAT for current year stood at INR 269 crore as compared to INR 177 crore last year, FY 2020. Growth rate at a rate of 52%. The PAT margin has also shown a big improvement with 300+ basis points as compared to last year, same period. Our return on capital employed also went up by 2%. Last year it was 34%, whereas in this year the ROCE is coming at 36%. As rightly said by Udit Todi, our working capital days reduced to 122 days as compared to 160 days last year. Significant improvement by 38 days in the working capital cycle. The debt-to-equity ratio for the year stood at 0.13 multiple. During the FY 2021, company has generated an operating cash flow of INR 389 crore, out of which around INR 66 crore we have been used for the purpose of CapEx. Another INR 112 crore has been used to repay the borrowing. As on closing date, the net cash positive by flip company is around INR 138 crore. With investment and the cash being invested in the bonds, the gross cash flow is coming at INR 261 crore. Our prudent financial decisions have helped us reduce our debt and become a net cash positive company. Please note the numbers highlighted in the speech and the presentations are consolidated numbers post completion of merger with our group companies, J.M. Hosiery & Co. Limited and with Ebell Fashions Private Limited. Now, let me quickly give you an update on the dividends. Considering the current pandemic situation, the board of directors of the company has decided to conserve the cash and postpone the decision to declare any dividend for the financial year ended 31st March 2021. Looking at how the pandemic situation will evolve, the board of directors would consider rewarding the shareholders in the due course of time. Additionally, on implementing better compliance and governance, we have continued our engagement with EY as our internal auditor, and we have also inducted Economic Laws Practice, ELP, as our compliance consultant for the purpose of indirect taxes. The journey towards to appoint the Big Four is already on. We are expecting that Big Four should be on board in the next 12 - 18 months. With this, we will now open the floor for questions and answers. 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 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. A reminder to participants, anyone who wishes to ask a question may press star and one at this time. The first question is from the line of Varun Goenka from Nippon India AMC. Please go ahead. Good afternoon, Saurabh Ji, Saket, Udit. Let me first congratulate the exceptional performance, completely unbelievable and a very good detailed presentation. I think in terms of the brand-wise data that you guys have given, that's very commendable the way you've presented it. I have three broad questions. One, like you say in a presentation, INR 30 crore pieces around INR 1,960 crore revenue, so our average ASP comes to around INR 66. I thought it will be good to have your view how do you, based on the product mix and how do you see this ASP moving? At what rate should it grow? That's one. Second, in terms of our dealer throughput, where are we today and where do you think, because we are launching so many adjacencies of women's wear and kids wear, where do you think this can go to? Final point, our mix around top eight, 10 cities sales versus the next 15, 20 semi-urban, urban, rural, however we capture it, if we get that data. Those are the three questions. Thank you, Varun Goenka. I'd like to pick up that question. You first mentioned about how the ASP would evolve in the coming few years. As you see that the product mix has now been changing with athleisure coming in, women's wear coming in, that is why a change in ASP has already been witnessed. Going forward, we are seeing that the yarn prices are on the high. The yarn prices are still on the increase. As the input costs increase, our output costs will also go up, which would result in a higher ASP, which should be an organic growth in ASP. Apart from that, we are expecting that in the current fiscal year, the ASP should go by about 5%. At the same time, we will be also looking at a better product mix. If I talk slightly medium-term to long-term, we would see that the product mix would be changing towards higher ASP products such as outerwear and garments. As the company goes ahead, we'll be selling more of garment wear rather than innerwear, which will gradually lead to a higher ASP inorganically also. Coming to your next question, you had mentioned about the dealer throughput. In the earlier presentations, we have mentioned that we are having about 950+ odd dealers, which has now after the merger and everything increased to about 1,150+ dealers. As a company policy, what we maintain is, in any kind of a market, we assess the market situation, what is the depth of the market, what is the requirement of the market, and if we feel that we could get a better throughput by appointing a new distributor, only then do we go and appoint a new distributor over there. That decision is taken on a market-to-market basis. In some markets. The distributors and dealers are so strong that they can handle maybe all the two, three, four brands combined together. Whereas in certain markets, the markets which are very remote and maybe a Tier 3 or a Tier 4 city, over there you'll have to depend on a single particular dealer, so as to say. It truly depends on the market. Yes, going ahead, we see that South India is one of the regions where the company is aggressively looking to market itself. That will be one area where we believe that inorganic growth in terms of sales, in terms of network and distribution, we'll be seeing a good amount of sales going ahead from the South Indian market. Right. Our sales mix towards however we capture metros, non-metros, semi-urban, urban, rural, if we have that. We do not have that quite handy with us right now, but we'll ask our IR team to get back to you once we have that data. We've done more of a geographical split and category-wide split. Tier 1 and Tier 2 split, we do not have it handy with us. We'll get back to you. Thank you. Thank you, Saket, and wish you all the best. Just keep up this performance and thank you so much. Thank you. Thank you. Participants, to ask a question, you may press star and one. The next question is from the line of Bhargav Buddhadev from Kotak. Please go ahead. Yeah. Good afternoon, team, and congratulations for a very strong execution. Thank you. My first question is that post-merger, our revenue size has become close to about INR 2,000 crore. Do you believe that at this size, the acceptance of the brand amongst our customers as well as the trade channel can sort of significantly improve, and this in turn can help us push our new categories, like the ones you mentioned, like womenswear and kidswear? That's my first question. Can you come again with the question again? Actually, it wasn't very clear. Can you hear me properly now? Yes. Can you be a little loud? Sure. Sir, I said that our revenue size is now close to INR 2,000 crores. Given our size, do you believe that the acceptance of the brand, with our customers as well as the channel partners, can see a significant flip, and they can sort of consider us more seriously given that we are now close to INR 2,000 crores? Post this, will that be easier to sort of push our new categories like womenswear and kidswear more successfully? Yes. As we can see that in the last financial year, there has been a very huge shift from the unorganized segment to the organized segment. The brand which has the most pull towards the consumers are opting those brands in the organized segment. We are seeing that the brand has a very strong acceptance in the organized market, mainly towards the mid-premium and the economy category. Out there, we are witnessing a very strong growth, which we haven't witnessed in the last few fiscal years. As well as to launch new segments. We haven't concluded as of now that those new segments will be launched under the brand Lux or any other brand, or it can be a new brand altogether in itself. We haven't concluded that, and as it will get concluded, then we can be able to give you a better picture that how that particular brand would be moving forward in its new segment. Okay. The second question is on working capital. We've done a very good job in terms of reducing our cash conversion cycle to about 122 days in FY 2021. Now that we are sort of a size to reckon with at INR 2,000 crores, do you think we can sort of go aggressive in terms of improving this further? If so, what could be the targets that we are looking at in the next two years? For this financial year, I don't think so it would be possible to reduce the working capital further because as we are seeing the pandemic which is spreading out throughout the country, it would be very unclear for us as of now, where the working capital would stand. Our target majorly would be to maintain the working capital as it was last year. For a long-term view over three to five years, yes, our target would be to reduce the working capital if the situation in the country remains normal. My last question is on price hike. Do you believe that the inflation which we've seen in raw material has been broadly passed on through price hikes, or are we still in the journey of passing the entire inflation? Till now, we have passed on whatever inflation has been taking place. We have passed on completely that to our consumers. It has been very well accepted in the market. The inflation started from the month of November. The price hike started from the month of mid-December. December, January, February, March, there were different trenches in which the price hike has been taking place. There has been no adverse effect because of that. Okay. Thank you for the answers and all the very best for the future. Thank you. Thank you. The next question is from the line of Nihal Jham from Edelweiss. Please go ahead. Yes, thank you so much, and good evening, Saket and Udit. Hope you are keeping safe. Three questions from my side. First is, if I look at the performance of the three categories that is in the premium, the mid-premium and economy. For the year as a whole, we do see the divergence that economy has definitely outperformed. I know you've alluded to the fact that there has been a big shift of unorganized to organized. Other than that, anything worth highlighting about what has caused such a strong divergence, specifically maybe related to the other two segments also? As you see, during the last year, the COVID pandemic was in full swing, and it was the rural towns which are doing Tier 2, Tier 3 cities were doing much better than the urban areas. When you look at the rural areas, the consumption is more for the economy products compared to the mid and the premium segment products. That is why that is one of the major reasons, because rural market being more functional and more operational, we saw a shift slightly, the economy products fared well compared to the mid-premium and the premium products. That was primarily on account of, A, unorganized to organized shift, and B, on account of the rural demand. Going ahead, as a direction, we have always maintained that we are looking at increasing our portion of mid-premium and premium segment. If you leave aside this exception of the COVID-19 year, if you look at the trajectory of the segment-wide split, we have fairly moved more so towards the mid and the premium segment. That's helpful. Just a related question. This quarter's performance obviously includes the consolidation. If you had to compare this number to two years back, not last year, because last year, I know you mentioned there was an impact which happened and that sales got spilled over to May and June. Compared to, say, two years back, how has the growth been this quarter? You see, right now we are talking mostly on basis of the merged numbers because even the FY 2020 numbers were revised. For a like-to-like comparison, we had revised the FY 2020 numbers again on a merged entity basis. Talking about any figure for the pre-merged basis, we'll ask our IR team to get back to you. Sure. I'll check that separately. The second question was, now with JM and Ebell being merged and the process more or less clear, we also see that there is an addition to the board related to those companies. Generally, as a new entity forms, what is the potential structure? Do we expect that you would have separate brand heads for those new brands? What is it that would change now that it is a part of the Lux entity? I'm just trying to think aloud that would the marketing spends potentially be higher or any other thing that you want to highlight post-merger? Post-merger, the directors have a very clear-cut role with regards to what brand they are looking after. Even apart from being collectively together in a strategic decision-making process, but on a day-to-day operational basis, every director is taking care of a particular brand as per se. With regards to your marketing expenditure, last year we had to seriously cut down on our marketing expenditure, and this year we were kind of contemplating on bringing it back to normalcy. After the second wave of the COVID and supposedly talks of a third wave also coming in, we will be looking at revising our marketing expense down again this year. Yes, we have also added a few independent directors on board with us. I would just ask our CFO to take you through them. Hi, Nihal. This time Board of Directors has approved to take two independent directors on the Board. One is Mrs. Ratnabali Kakkar, another one is Mr. Rajnish Rikhy. Let me quickly take you through with the candidature of Ratnabali Kakkar. Kakkar is a graduate in B.A. Honors from University of Calcutta, and she has done the business administration from IIM Calcutta. She has overall 40 years of rich experience in banking and financial services. She has taken the citizenship in London, based out in London, and she has a very good relation with several banking sector based out in London. I believe she will add so much of the value in Lux by bringing the financial decision and to make it more governance and risk-compliant company. Rajnish Rikhy, he is a law graduate and holds a master's degree in business admin from Faculty of Management Studies, University of Delhi. Overall, again, he has 30 years of industry experience in sales, marketing, and stores, other functions. He has worked and advised clients across pharma, FMCG, education, et cetera. He has also served as a Chief Revenue Officer at T.V. Today Network Limited, India Today Group. He was also associated with The Times Group as Director Response, and he also served as the Group CEO and Business Director at Kantipur Media Group. I believe the company is moving towards to take a further step to professionalize the entire culture and the way of working. It should be more corporate governance, risk control, managed company. With this, I believe once these two gentlemen will be on the board, it will really help company to scale up further. Thanks, Saurabh. That's very helpful. I actually had my last question on this incremental aspect of corporate governance. In the commendable part, you mentioned that you're looking at appointing one of the Big Four auditors also. As a timeline, is there a possibility that in the upcoming AGM, you can change the auditors, or there are certain other processes because of which you're giving the 12 -1 8-month timeline? Nihal, on this AGM, if you're asking it specifically, it will be very difficult. Because just a few months back we have started our journey. We are fixing the entire process and the system, and I believe on a shorter view, it will not be before 12 months, and on a larger timeline, this is not more than 18 months. So between 12- 18 months, we are very confident that the Big Four will be on board. Absolutely. Thanks, Saurabh, and congratulations once again. We'll come back with you for any quick questions. Thank you. Thanks a lot, Nihal. Thank you. The next question is from the line of Ajay Khandelwal from BOI AXA Mutual Fund. Please go ahead. Yeah, hi. Thanks for the opportunity. Sir, I wanted to know, with the kind of changes that we have done in our supply chain and considering that our fill ratio is highest in the industry, what kind of working capital we can expect? Maybe qualitatively, if you can highlight how we have achieved this and how trade has responded to this, how has competition responded to this? That'll be helpful to understand. See, as a company policy, we have looked at, even within the last four to five con calls, we have always mentioned that we are looking at bringing down our working capital day. There were a couple of levers which we have used to bring it down. IT has played a very important role, in fact, in bringing this down. We have invested a lot of time and effort in setting up our IT team. All our dealers and distributors have now access to their set of accounts on their mobile phone itself. That was one very big lever. On the other hand, even in terms of credit period days, the company has become more strict with terms to credit days. Earlier, the company was slightly more flexible, but over a period of time, we have gradually reduced the credit days. Because a good amount of brand pull is now there in the market for our products, so even the dealers are now paying up more. The dealers are now reducing their credit days, and they've been paying up quicker. That was one of the major factors. The other factors, if you also see that there has been slight change in the credit outstanding day for our vendors because we believe that we do not want to increase our working capital efficiency by penalizing our vendors. Thirdly, if you see our stock turn ratio has seriously increased. We've been able to manage our stock more efficiently. On basis of these two or three grounds, we've been able to reduce our working capital days. Right now, the current situation, it is difficult to project how this year will play out with regards to working capital, with regards to going forward, how the performance plays out. Going by the experience which we had last year, as soon as the markets open up, we see that our products are one of the basic necessities which the customer needs. When it comes to apparel, vest and brief is one product that we cannot postpone the consumption of. Given our past experience, we are optimistic about the way going forward, but quite difficult to say how the year plays out. I think we'll be able to project it better at the end of quarter one. Sir. Once we meet again for the quarter one con call, we'll be able to give a clearer picture with regards to that aspect. Sir, I'm trying to understand from the perspective of not compromising on our fill ratio. Will these levels be sustainable? If competition extends credit period, do we need to change our course? No, not at all. We believe that even 122 working capital days, we believe that it's slightly on the higher side. If I talk about medium to long-term, we'll be willing it to reduce even further from here. Talking about competition, see, every brand has their own brand strength and brand pull in the market. We believe that the brand equity which we enjoyed right now, the amount of money which we've invested in branding over the last four, five years. This is the time to reap the benefits, and we believe that any effect of competition extending their credit period days will not have any impact on our credit outstanding. In fact, I think it even works out to be better because if the competition ends up giving more credit, your stock turn increases even better. It always works out. It's a very counterintuitive fact, in case the competition increases their credit period, it turns out to be favorable for us. Great. Just one more question, sir. In our journey of branding, where are we? What kind of expenses? We are to the largest competitor in the industry. Our ad expenses are far higher. Where are we in terms of developing our brand Because we are changing our product mix, moving towards more value-added, high premium brands. Where are we in that journey? I'm sorry, could you please be a little more specific as to what exactly do you want to know? What could be our brand expenses to sales, and where are we going to spend and put our energies? At the company level, historically, we've maintained an average of 8% of our top line as brand expenditure. Last year was an exception. Because of the situation, we had brought it down to 5%, this year again, we'll be reviewing it whether to maintain at 8% or maybe bring it down to 6%-7%. The way this ad expenditure budget is split across different brands depends upon different kinds of market situations and the company policy as a whole. As you very correctly mentioned, we are looking at premiumizing our product portfolio from economy to mid and from mid to premium. The company spends more on their premium and mid-premium offerings rather than the economy offerings. Great. Sir, just one last question. Any kind of margin pressure do we expect in near term in terms of raw material pricing? Whenever the raw material prices increase, the company always ends up passing it on to the consumer. We've done that historically. We've done that last quarter, last to last quarter, and we'll be doing it again. Our margins do not get affected by any inflationary pressures on the input side. Great. Thanks a lot. Thank you. The next question is from the line of Ankit Kedia from PhillipCapital. Please go ahead. Sir, my first question is on the ASP. If I look for the full FY 2021, the ASP increase in premium was only 10% vis-à-vis 6%. In Q4, the price increase in premium is 12% vis-à-vis 18% in economy. What would be now the absolute price differential between economy to mid to premium to premium category now first? From a customer upgrade perspective, what kind of money does a customer need to spend to upgrade from economy to mid premium first? See, generally what happens is, whenever the input costs go up, the percentage of cotton in the entire product is obviously more so in the economy product. As you move up the ladder, the percentage contribution of the raw material drops down because the margins increase. Whatever inflationary pressure is there is definitely passed on to the consumer. Ankit Kedia, like as rightly said by Udit Todi, again, the question what you are asking like how much extra bucks a customer need to incur while moving from one basket to another basket, right? Yeah. If you see my average pricing for the premium product, say like ONN or One8, it is coming in the range of around INR 150+. Whereas my economy range starts from, say, INR 30, INR 35 till say INR 60, INR 70 types. It all depends on which product we are buying, which kind of category we are buying. Otherwise, the difference between the economy and the premium would be very significant. There is a range of around INR 30-INR 80 in economy, whereas premium starts from say around INR 150-INR 180, INR 190, INR 200 types. Sure. Sir, my second question is regarding GenX. Now, if I look at JMHL, had a INR 300 crore top line which got merged. If I look at the Athleisure part of GenX, is only a INR 100 crore business. The remaining INR 200 crore business of this company predominantly lies in which brand or which category, if you can help us understand, because our understanding was bulk of that business is actually Athleisure and GenX. Actually, the business in JM, which was majority under the brand GenX, we have done a brand restructuring, which started last year and which is continuing for this year, and will go ahead for the next year as well. It’s a complete three-year project. In that project, we have restructured many of our products under the GenX brand to come under Lux Venus and Lux Cozi, because we have believed that such products can have a better pull in the market as they are dedicated to such kind of consumers which are very well attracted towards the Lux brand. Lux Venus, Lux Cozi, and Lux Karishma are the three brands which are carved out of the business of JM. The GenX, which is mainly the athleisure in it, has a total revenue of around. INR 103 crores. INR 103 crores. Out of it is majorly dominated by the Athleisure. The total Athleisure wherein the company, which includes GenX, Lyra, ONN, and One8, is approximately INR 150 crores-INR 160 crores. Sure. Sir, my last question would be on the margins front. Now with the merger coming in, do we expect any merger synergies to come in, given that, as you just said that, in GenX, the brands have been restructured, to some of the existing brands in the company. There could be HR, advertising overlap which could have happened. The 20% margins which we saw this year, given that the A&P is lower, and even in FY 2022, you're guiding for lower A&P spend. Can we safely assume if the commodity price inflation remains the way it is, we will be able to achieve the 20% EBITDA margins in FY 2022? Ankit, Saurabh here again. The thing is that definitely, as rightly asked by you, this merger is going to bring some level of the synergy on the table. We are also expecting the way we have restructured the brand and the way we are seeing the sales growth and the other aspects of the business. We are expecting around 150 basis point kind of margin improvement should be there for the current year. Like last year, we have spent around 5.5% in advertisement. Few minutes back, as we clarified that this year again, advertisement costs can bounce back to around 7% types. It may offset to my incremental margin. EBITDA definitely we can maintain at the same level. That's helpful. Thank you so much, Saurabh, and all the best to the team. Thanks, Ankit. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Shalini Gupta from Quantum Securities. Please go ahead. Yeah. Good afternoon, everybody. Sir, I wanted to check with you, see, last year, a lot of the economy business was driven by rural sales. Now this year, we have a situation where rural sales are impacted because of far higher COVID-19 impact over there. Also now the rural India, there are a lot of lockdowns and all that, which were not there last year. Also, we have a high base of rural last year in terms of income. What is your outlook in terms of top-line growth going forward? As in which segments do you see pushing your growth in the future in financial year 2022? For the rural-urban share, the rural has approximately 70% of the market share, and the urban has around 30% of the market share. Coming back to the rural demand, what we have deciphered since the last 12 months, that because of COVID, the unorganized production is getting shut down, and that production benefit has been taking place by the organized sector. Even if the demand is going down by a few basis points, the production or the supply in the economy segment, which is towards the rural area, rural part of the country, is getting down by a much further basis. There is a new market being created, new consumer segment being created in the rural economy, and the brands which has the most hold in the organized sector will benefit out of it. Okay. Sir, since you restricted the number of questions to two, a couple of some data points which you had mentioned earlier in the presentation. You had said economy segment grew by 42%, correct? Yes. Mid and mid-premium segment? Are you talking about the year or for the quarter? We're talking about the quarter, I think. Economy segment has grown at a rate of 30%. That is the complete sales growth for Economy. Mid-Premium is around 13%, and Premium is 7%, that is for the year. Economy has grown by 59% in the quarter, Mid-Premium is 42%, and Premium is 48%. Put together, the total growth for the company is coming around 48%-49%. Economy segment has grown by 59% during the quarter. Mid-premium has grown by how much during the quarter? 42%. 42%, okay. Premium has grown by 48%. Yeah, 48. Okay. Sir, Even you can refer to slide number 35, that which is available on our company website. We have given the complete breakdown over there. Okay. Sir, what was the volume growth for the quarter? The total volume growth for the quarter is around 29%-30%. Okay. Yes, sir. Balance is because of the price growth and the mix. Okay. Sir, I wanted to ask you, if I can just squeeze in one question. Basically, you have seen a huge jump in your gross margins. About 10% is because of price increase, and the rest is because of your mix change? Yeah, true. You're right, Shalini. Even if you see my presentation, we have factored that around 13%-14% we have gone the price hike in quarter four, and balance is because of the change in mix. That has given me a leeway to have my margin more stronger as compared to last year same quarter. Okay. Sir, my last question, what is your raw material outlook? The raw material prices right now, because majority of the raw material comes from Tamil Nadu and Gujarat. Tamil Nadu again is a state which is under complete lockdown right now. Gujarat has just opened up. Talking to the people in this industry and the people those who are in the yarn manufacturing, we get a sense that the raw material prices are on the inflationary side. Once the market opens up, we expect the raw material prices to go up. As we have always mentioned, and we'll mention it again, that if we face any increase in raw material prices, we increase the price of our products, pass it on to the consumer, and maintain our margins intact. Okay. Thank you so much, sir. Thank you, Shalini. Thank you. The next question is from the line of Punit Mittal from Globalcore Capital. Please go ahead. Hi. Thank you, and congratulations for a good set of numbers. My first question is related to your advertisement and branding spend. How much of the total amount that you spend or the percentage, how much is going towards the new-gen digital advertisement in terms of advertisements on Facebook, Instagram, and so forth? This year, as we mentioned, one of our focus areas is growth coming in from our e-commerce sales. We are getting our webpage and we are getting the platform ready. Along with that, we'll also be looking at increasingly spending on the digital platform. Right now, most of our sales are happening through third-party websites like Flipkart, Myntra, and Amazon. Whatever e-commerce sales we get, the company spends roughly about 5% of sales from the e-commerce platform. In the digital advertising space. Going ahead, we believe that we are looking at a very high growth rate coming in from the e-commerce sector, and therefore we'll also be considerably increasing our ad spend, diverting more of our ad spend towards the digital space, because that is where we believe that the future lies. Okay. Got it. A related question on that. You highlighted historically you have spent about 8% of revenues on advertisements and branding. Given the base is very large, of INR 2,000 crore right now, going forward, as you grow, the base becomes even bigger. Also the fact that you mentioned that you do enjoy a very big brand pull and brand equity in the market at this stage. Given these two factors, how do you explain that 8%, which is quite a sizable number, and as the base effect goes higher, it's a large number to spend, also given where the competition is. How do you explain that, and do you really think it's necessary for the company to spend at a high number in terms of revenue? You see the position that right now, we've reached about roughly INR 2,000 crore in sales. One of the major reasons for us outperforming our peers in the market was because we've always invested in our brand-building exercise. Whatever brands that the company now has under its belt, every brand, if you see, is set to reach the INR 500 crore mark and become an INR 500 crore brand. All of this is only achievable on grounds of spending your ad expenditure, on maintaining the brand-building exercise. That is one area where we believe that it is more so of an investment rather than an expenditure. Over the past five years, we've always invested in our brand, and we believe that it's a number which has already been factored into our costings and into our margin. Going ahead, it should be somewhere in the similar zone. Okay. My second question is regarding your push into the southern region of India. What is the specific strategy that you're adopting for the southern market as a new region for you, and what are the challenges that you see for you to penetrate deeper into that region? The South Indian market, if you see, is a very peculiar market. It behaves very differently from Northern India because there is a language barrier. The entire North India speaks and understands Hindi and English as a common language. When it comes to South India, all the four states of South India have their own regional languages, and Hindi is not quite popular over there. That is why our advertisements kind of do not make a mark in the South Indian market. Yes, as a strategy from, we believe in the next two to three years, we'll be kind of investing in local advertising, adopting more of the local strategy to penetrate that market. They're having local pocket players in every state, and we believe that the company has always been very strong in its marketing strength and marketing team. With the required amount of effort, dedication, and advertisement, we'll be able to crack that market. Thank you, Mr. Mittal. We request that you attend to the question queue for follow-up questions. Thank you. The next question is from the line of Arpit Shah from Stallion Asset. Please go ahead. Yeah. Hi, management. Congratulations over there on numbers. I just had three questions for you. If I look at the leader is very aggressively on the rural front with the new portfolio, right? The leader is very aggressive on the rural front. How do you look to defend as a player in that kind of a market? Even if I look at all other players, let's say Rupa or a Dollar, roughly, they're all focusing on expanding distribution. They're focusing on premiumization of their portfolio. How do you differentiate yourselves from that competition? The most differentiating factor is the brand. The most differentiating factor is the brand, which is not available with our competitors. As we see that in the market and the research which we also conduct in the market, that our brand has been projected as the most pull brand. We believe that this is a USP which we have, which our competitors don't have. Because that is the reason we have been able to lower our debtor days in the market, and our distributors are paying up pretty faster than that of our peers. Got it. If I look at your sales mix this year, we have seen a big jump in economy segment, right? Despite that, we have seen a big jump in margins, and which is broadly matching to the leader. Where do you see the margins going, like in the next three to four years? We are broadly 20%, 22% let's say forward for. Where do you see it going in the next three, four years qualitatively? For the current financial year, our target is to maintain the last year financial year margin, which is approximately 19.99%. Because we see a good improvement in the gross margins, which can be adjusted with the margins going down due to advertisement, so the net margins should remain the same. Got it. Sir, if you can just provide some color on how the working capital can move in the next three to four years. We are broadly 122 days right now. How would you expect in the next three to four years? What would the trend be like? See, what we see that anyway, in last 12 -1 8 months, we have worked very vigorously to bring down our working capital cycle. I think the current pandemic, it is not advisable as well as we are not taking any aggressive decision further to reduce the working capital, at least for this year. It will be very unfair if I can say anything immediately just how it will look like after two to three years, because I believe we should wait for some time, let this pandemic get over. Our economy should get stabilized. We should be back to the normalcy, and then again we will rethink and replan our working capital cycle as well as the company. Got it. What would be your reinvestment plans going forward? Given the cash that you are generating around INR 350 crore-INR 400 crore, what would be your typical reinvestment plans going forward? Would you be spending on brands? Would you be spending on capacities? Would you be spending more on promotion, advertising? How the reinvestments would look like? See, the cash can be mainly used for two, three different purpose. Like, as you rightly said, a part of the cash can be used for the purpose of expansion. Definitely, a substantial chunk of the money should be used for the purpose of rewarding the shareholder who has actually put their hard-earned money in the company to get into the growth path. I believe these are the two, three verticals where definitely company is evaluating that how and when, how much investment can be done. Thank you, Mr. Shah. We request that you retain to the question queue for follow-up questions. Thank you. The next question is from the line of Sufiyan Lakdawala from Lalkar Securities. Please go ahead. Hello. Hello. Hi. Thank you for the opportunity. I just want to know, you had CapEx spend of INR 110 crores. What it is towards various premium products, premium segments, and how much that can generate revenue? Your voice is completely inaudible. Hello. Hello. Yes. Yeah. Am I audible? Yes, I can hear. Yeah. Company has a CapEx spend of INR 110 crore expansion plan. Will it be towards which products again? Okay. Specifically CapEx, if you can give the guidance. The majority of the CapEx will be dedicated to our economy and the mid-premium segment. As currently we are seeing that the demand in the economy and the mid-premium segment is so strong that it might not be possible for us to cater the whole demand in the market. Our immediate requirement would be to set up the CapEx for economy and the mid-premium segment. Okay. What will be the net total capacity? Can you give the segment-wise? The total capacity would be very difficult to predict you as of now because the factory is still under construction and it will take at least next 12 months more to completely start up with it. Majoritively will be dominated by the economy and the mid-premium range. Okay. the INR 110 is CapEx spend for FY 2021? Can you come again? Sorry. The total will be INR 110 CapEx for FY 2022? It will be over a period of 12- 18 months. We have already started incurring the CapEx, but I believe, I think the current pandemic, it may be delayed by around three to six months. There will be a spill over to FY 2023 as well. The company is not holding the entire project. As and when one of the facility will be up and running, we will start using that facility. Okay. Yeah. The next question is from the line of Shirish Pardeshi from Centrum Capital. Please go ahead. Yeah. Hi, good afternoon. Thank you for the opportunity and good evening, Saket and Udit and Saurabh. It's a very good presentation I've come across from you, and I really appreciate for the details. However, I have got two, three questions. When I refer your slide 35, and which says that your ASP growth is 13%, while in reality the yarn prices has gone beyond. Would you be able to help me to understand what is the weighted inflation we are facing and to what extent we have taken the price increases, or is there any more price increases are in pipeline? Actually, whatever there's an increase in the yarn prices, that doesn't reflect the increase in the price of the product totally, because there is a percentage of the yarn which goes into the production. Other processes such as stitching, dyeing, bleaching, cutting, packing, and all other overheads are also a part of the product. According to that, according to the yarn prices increment, there has been an increase in the actual costing of the product by approximately 13%, and for which the increase in the cost we have taken place. You mean to say that if I understand correctly, the current inflation is 13%, which is weighted, and you have taken a complete pass on. If there's further price increases, we will wait for another round of price increase. That completely depends on the yarn prices, how it reacts after the Tamil Nadu market is opened. It completely depends on that. What we are seeing and what we are hearing all around is that there will be again an increase in the yarn prices, so there could be a further increase in our sales price. Okay. Wonderful. You did mention in the beginning, the 300 million pieces is the volume for FY 2021, correct? Sorry, can you come again? FY 2021 volume was 300 million pieces. Yes. Does that include the two merged entity or it is outside? Yes, it includes all. Lux includes now everything. Okay. It's the number of the complete consolidated Lux Group of companies, Lux, Ebell, JM, and Artimas. Wonderful. Thank you for that explanation. Would you be able to split, like you gave me a split of revenue by segment, which is premium, mid-premium, and economy for value? Can you split that 300 million pieces for volume also? In the percentage terms, it's already there in the deck. If you see the volume percentage between premium, sub-premium, and economy, it is there on the slide number 20, but it is just from the growth perspective. If you need absolute number, definitely my IR can provide those numbers for you. Thank you. Ladies and gentlemen, we will take the last question from the line of Nikhil from SIMPL. Please go ahead. Hello. Am I audible? Yes. Yeah. Hi. Thanks for the opportunity, and congratulations on a great set of numbers. Congrats for a great work. I have two questions. One is, if we look at our realization, it comes to around INR 66 per piece based on the total sales and volume. Now, if we have to move on the higher price band, then our premium brands like ONN, One8, Lyra, and some of the thermals and all have to contribute. Thermal has grown very strongly. If we look at the trajectory of the brand ONN and Lyra and all, how do you see the growth for brand ONN and for Lyra? If you look at, there is a lot of competition, even organized, unorganized, and even the listed players both are also there in the legging segment. How do you see overall price range moving up for Lyra? A connected question is, if you look at our P&L based on the annual report for Ebell, which we had shared, the ad spend and promotion is almost 12%- 15% of sales. Would you say that the quantum of investment which we were doing behind Lyra will sustain, or would that also come back to 7%-8%, which we are guiding for the company level? If you can just help me on these two brands, because these will drive the premium journey a lot. Yeah. As you had mentioned, last year was an exception because of the COVID scenario in which we had seen a slight decline. In Lyra, we were able to capture 90% of sales of what we did in the corresponding period last year. Because as you know, in the COVID scenario, womenswear all across the economy, whether it is apparels, whether it is cosmetics, whether it is any other segment. Menswear, products being consumed by women, has taken the majority of the hit. Even despite that situation, we were able to recover 90% of our sales, which we believe was also a commendable task. Going ahead, as you mentioned, right now, about 80%, 85% of our sales is being driven by the legging segment. Going ahead, we are expanding more so in the athleisure for women under the same brand, Lyra, and also in the innerwear space, which is lingerie for women. These are the two areas which are our focus areas for growth within the same brand, and we believe those are the areas where we'll be able to build the brand better and at the same time get better margins and better ASPs. Our products in the athleisure and the innerwear segment are already out there in the market, and they're doing quite well. It is just that in the next maybe two or three financial year, we'll be able to ramp it up and maybe multiply it 2X every year. That is what we're looking at when it comes to the brand Lyra. We believe that in the next two to three years, we'll see a major driver of the growth coming in from Lyra. As well as ONN is concerned, again, if you see, making exception of the last year, if you see the last to last year, the growth has always been there in the premium segment. Again, even within the portfolio of the ONN, athleisure as a category has been doing quite well and performing quite well. These are the reasons I believe that the ASPs will be higher, and at the same time, it will be one of the major growth drivers for the company. I believe I've been able to answer your question. Just two things. One is, since we are adding more product lines behind Lyra, so the investment behind ad spend and promotion, which was fairly higher compared to our company average of 12%-15%. I'm just cutting you in between. We believe that even if you look at the balance sheets of Ebell Fashions, which was mainly Lyra, our ad expenditure has in fact been at par with what we do in Lux, which is about 8%. In fact, it was slightly lesser than 8%. It was about 6%-7%. Oh. We believe that 6%-7%, even during the current financial year, what we are guiding as an advertisement expenditure, and our ad expenditures will remain in the same category. Sorry to elongate it, if I'm not wrong, the numbers from the annual report which I get, the ad spend and promotion was around INR 30 crores-INR 40 crores on a top line of INR 200 crores-INR 300 crores. This is based on the annual reports which we have filed with the ROC. Probably, I can take it offline. From which year? From 2018 to 2020. 2021 number we don't have. Okay. Are you sure? No, we are taking this question. Yeah, I can take it offline. Yeah. Second point. Second question was, sir, as you mentioned that on the unorganized side, as you said that in the rural, many of the plants have been shut down and supply is a major issue. Over the last one year, what we have seen is we have done a great job in reducing our working capital, but even for our listed competitors, they've been able to do a decent job in reducing their net working capital days. One thing which you mentioned that even if the players or the unorganized regional or the competitors, even if they increase the credit period, it will be beneficial for us. I didn't get it intuitively. If you can just spend some time and help me understand why it should be beneficial. I would have thought that the distributor would be going for a product where he is getting a more credit period or probably better margin. It is a completely market-driven strategy, and it's a marketing call. What happens is, it is not that the one who gives more credit period, their goods will get sold first. It is always what the customer is demanding in the market, what gets sold. If the customer comes and demands that I want a particular brand called Lux from the market, the distributor will always have to supply that brand first. The credit period is a direct function as to what your brand pull is. That is why we mentioned that even after we have reduced our credit period in the market, even if the competition reacts in whatever way, it will not affect our brand pull in the market because ultimately, when the customer is coming into the shop and asking you for a particular branded product, the retailer as well as the distributor has to supply that particular brand. That is how the marketing always works. Thank you. Please go ahead. Yeah, no, it's okay. You can. Thank you. Ladies and gentlemen, due to time constraint, we will take that as the last question. I would now like to hand the conference over to Mr. Udit Todi for closing comments. I would like to take this opportunity to thank everyone for joining this call. I hope we've been able to address all your queries. For any further information, kindly get in touch with our strategic growth advisor, those who are our investor relation advisor. Thank you once again for participating in the call. Thank you. Ladies and gentlemen, on behalf of Lux Industries Limited, we conclude this conference. Thank you for joining us. You may now disconnect your lines.