Ladies and gentlemen, good day, and welcome to Vedant Fashions Limited Q4 FY22 and FY22 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Menon from ICICI Securities. Thank you, and over to you, sir. Hi, everyone. Depending on the part of the world you are joining the call from, a wonderful good morning, good afternoon, or good evening to you. Representing ICICI Securities, it's our absolute pleasure to host the management of Vedant Fashions Limited today, you know, for the conference call. The company is represented by Mr. Vedant Modi, Chief Marketing Officer, and Mr. Rahul Murarka, Chief Financial Officer. During times like these when discretionary performance has definitely outperformed, I would say, FMCG or consumer staples, the results what we saw from Manyavar, in our opinion, has, you know, met, you know, or definitely beaten the consensus expectations. We were privileged to be part of the Manyavar IPO a few months back. Now over to the management for the opening remarks and Q&A after that. Over to you, sir. Good afternoon and a warm welcome to all the past-participants. I'm Vedant Modi, the Chief Marketing Officer of the company. Thank you for joining us today to discuss the Vedant Fashions Limited quarter four and financial year 2022 results. I am joined by Mr. Rahul Murarka, the Chief Financial Officer of Vedant Fashions. I hope everyone got an opportunity to go through our financial results and investor presentation, which have been uploaded on the stock exchange as well as the company's website. Vedant Fashions Limited is India's largest celebration wear company, with Manyavar being a category creator and leader in the branded Indian wedding and celebration wear market for men's. We have multiple brands in our portfolio, such as Manyavar, Mohey, Twamev, Manthan, and Mebaz, which are positioned to target customers across different demographic segments. Our pan-India 595 exclusive brand outlets are dominant channel for the company. Despite the third wave of COVID, which had affected the first half of quarter four, we are proud to announce that we had a good quarter in terms of strong retail sales coupled with decent growth. We as a company have emerged stronger out of COVID. Performance of the fiscal year has been very encouraging. In quarter four, we have opened net square feet area of around 57,000 sq ft and 17 exclusive brand outlets. As of March 2022, these additions bring the tally of VFL's EBO area to 1.27 million sq ft globally, spanning across 595 stores in 223 cities and towns nationwide. In addition to the network expansion, I would like to highlight a few of our marketing and branding campaigns with mega stars like Shri Amitabh Bachchan and youth icon Mrs. Alia Bhatt during the quarter. The Taiyaar Hoke Aaiye campaign featured Shri Amitabh Bachchan and was aimed at increasing brand salience and drive a behavioral change. The campaign has tried to capture the soul of an Indian wedding and position Manyavar as the preferred brand for wedding occasions. To improve brand recognition of Mohey, we created the campaign Dulhan Waali Feeling, featuring Mrs. Alia Bhatt. This campaign was targeted to connect with the women of today, one who is independent yet has close ties to the Indian culture. The campaign highlights the range of emotions which a bride goes through various times in her wedding journey. On a branded level, we can say that the fundamentals of the business have been sound, robust, and encompassing. During the first 40 days of this financial year, we are seeing robust performance in our store network. This will be the first quarter after two financial years in which the restriction on number of wedding attendees have been lifted. Considering this, we expect good market traction and promising outlook for the new financial year. With this, I would now hand over to Mr. Rahul Murarka, our Chief Financial Officer, to take you through the financial performance of the company for the fourth quarter and the year under review. Thank you. Thank you, Vedant. Namaskar and good evening, everyone. I would like to highlight the key financial performance for the fourth quarter and financial year ended March 31, 2022, based upon the consolidated financial statements of the company. Despite our COVID impact year, the company has reported strong financial revenue and return during FY 2022. Starting from FY 2022 update, the company reported revenue from operations of INR 1,041 crore during FY 2022, delivering a very strong growth of 84.3% compared to FY 2021. The company continued to report industry-leading gross margins of around 67% during FY 2022. The EBITDA margins were around 50%, and the EBITDA stood at around INR 521 crore during FY 2022, with a growth of around 85% compared to FY 2021. The reported PBT during FY 2022 is INR 426 crores, which has significantly increased by 132.5% compared to FY 2021. The company reported best-in-class tax margin of 30% and profit after tax stood at INR 315 crores during FY 2022, with a significant growth of 137% compared to FY 2021. The company also has reported industry-leading ROCE of 75% during FY 2022. Now coming to Q4 performance update. During Q4 of FY 2022, company has reported revenue from operations of INR 296 crore, delivering a very strong growth of around 55% over Q4 of FY 2021. The EBITDA margins were around 50%, and the EBITDA stood at INR 147 crore for Q4 of FY 2022 and against INR 91 crore in Q4 of FY 2021, with a growth of around 62%. The company reported tax margin of around 30% and the profit after tax stood at around INR 89 crores for Q4 of FY 2022, with a growth of 86% over Q4 of FY 2021. The net EBO store area which was added in Q4 was 57,000 sq ft, with total presence of 1.27 million sq ft as on March 31st, 2022. Sales of our company were around INR 1,474 crores during financial year 2022 and grew by 76% compared to FY 2021, with SSG growth of around 65%. The sales of our company during Q4 of FY 2022 was INR 398 crores with growth of around 45% compared to Q4 of FY 2021, with SSG growth of around 33%. We are very happy to share that the board of directors of the company at its meeting held on May 9th, 2022 have recommended final dividend of INR 5 per equity share, which is approx 40% of PAT of the standalone financial statement. With this, I would like to thank everyone and we can now move to the Q&A session. Thank you very much, sir. Ladies and gentlemen, 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. Anyone who has a question may enter star and one. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take our first question from the line of Percy Panthaki from IIFL. Please go ahead. Hi, sir. My first question is on the womenswear segment. With Manyavar, we've become a clear market leader in the menswear segment for wedding and celebration wear. The womenswear segment is significantly larger overall, including unorganized, et cetera, in the space. What really do we need to do to replicate the success of Manyavar in the womenswear segment as well? What are the differences in the challenges or the differences in the key success factors between the men's and the womenswear? Thank you for your question, Percy. We launched the brand Mohey in early 2016. Ever since then when we launched, we had launched with all women ethnic wear categories. We understood that our nucleus would be lehengas and sarees for the brand. We were testing out different categories and we are a very bottom-line focused company and efficiency is in the backbone of the way we work. The brand has been EBITDA positive ever since we started, and there have been multiple sort of workings that we did at a category level. When we understood that lehengas and sarees will be the nucleus, we launched our independent marketing campaigns in 2019, and ever since then, we saw a very good growth in the brand with Alia Bhatt as the face of the same. Talking about differences in challenges, I mean, the overall core learning that we've had is that we need to focus on a few categories, get them right, make that a proper category to work on, and then move on to creating newer categories in the brand. I think all the underlying fundamentals of the brand in terms of inventory management to the kind of conversion rates we see at the store level have all been very promising. That is why moving on the new financial year, we've also decided to open about six to seven exclusive brand outlet doors, followed by the first EBO which we had opened in the new market area of Kolkata for Mohey. Vedant, I understand that Mohey products are not available in all your 595 stores. They're available only in a fraction of that. Yeah. What's the thought process behind that and why not just make at least the product available in all the stores so that whenever there is a couple walk in, et cetera, you can try and do the cross-sell there? Percy, the idea is that we open Mohey in every flagship store which we open for Manyavar. Otherwise if you're opening a Mohey in any store which is less than 3,000 sq ft, we won't be doing justice to the brand, neither would there be enough space for the brand to operate in. In order to justify the space required for Mohey, it's the whole strategy is to open it in flagship stores, which tend to be more than 3,000 sq ft of retail space. Currently, Mohey is available across 99 doors of our Manyavar flagship stores. How do you expect this number to trend? Let's say, three years down the line, this 99 would become what kind of number approximately? I'm sorry, I won't be able to give you any guidance on that. Like we've been mentioning before, the overall strategy in terms of new retail expansion is to drive growth through more flagship stores. You can expect a larger percentage of our fleet to have Mohey as we grow and move into the future. Right. My second question is on the town opportunity for Manyavar. You're present in about 220 odd towns. Over the next five years or so, how many towns do you think there is a scope for you to open a Manyavar store? How many can you go from 220, can you go to 400, 500? What's that number? And how do you determine that number? Do you sort of have at the back of your mind some kind of metric saying that any town with a 2 lakh or a 3 lakh population plus can accommodate a Manyavar store? Yeah. There's an overall logic. We've come out with about 120-150 cities in India that we want to open our new stores in where we are currently not present. There's a logic behind that. In some cases, the logic is a certain set of population. In some other cases, the logic is the catchment of that particular Tier 3 city, based on the kind of markets it has in the whole catchment of that region. That is how we've come up with that whole, sort of calculation of about 120-150 towns that we want to enter in as part of our growth strategy of taking the overall retail footprint to 2.2 million sq ft. Right. Last question from my side. Once the COVID base normalizes on a continuous sustainable basis, what is the kind of same-store sales growth do you think you can clock? We would not like to give any guidance on that, but internally as a company, we aim to achieve a good single digit, triple SSG growth in a sustainable future. That is what we aim to achieve as a company internally. Okay. That's all from me. Thanks and all the best. Thank you very much. Thank you. We'll take the next question from the line of Nihal Jham from Edelweiss. Please go ahead. Yes, thank you so much, and congratulations, Vedant and Rahul, on the strong performance. Two questions from my side. Rahul, first to you. If I look at the conversion from primary to secondary sales, I do notice that there is a divergence, whether it is from Q3 quarter or versus, say, the similar quarter of last year. You did highlight that obviously there was some placement which had happened at the end of Q3, but if you could just highlight anything specific this quarter and how to look at this number going forward. I'll come to the second question after this. Right. Typically in our case, we are continuously reviewing and monitoring our secondary and primary sale, and all our replenishment happens based upon the sale to our customer from our exclusive brand outlets. Both the primary and secondary sales and replenishment moves in the same direction. However, the difference you will find is because of the new store openings. That is where, you know, you'll see a maybe some higher percentage from a financial perspective in terms of primary sales growth over secondary revenue growth. That is one reason, new store opening, where you can see the difference. Otherwise it moves in the similar direction. It is more or less similar on a financial year basis. Just to confirm, was there any impact of, say, the closing inventory last quarter or the Omicron impact in January, which could have impacted this number or that wouldn't be a consideration by the end of the quarter? Typically, January is one of very good months for us because there are a lot of weddings in January and February. Frankly speaking, yes, because of Omicron, we were expecting higher revenue in January and February. Despite of that, we have been able to have a very strong Q4 quarter, I would say. Yes, you know, without Omicron, we would have had a better Q4 result for sure. Sure. The other question was one of the key initiatives that we are trying other than the women's expansion of Mohey, is the fact that we are trying to increase the share of wedding attendees, obviously, which end up shopping for the brand Manyavar. Based on maybe the data of SKU pricing that you have, do you have a sense of how that has been picking up? And if there is a approximate share of that, how it has moved over the years? Yes, absolutely. The tricky part with the whole Taiyaar Hoke Aaiye campaign, which was to drive a behavioral change in Indian men to dress up for the wedding, whereas, when we did our research, we found that about 95% of the women dress up according to an occasion. However, only 5% of the men dress up according to an occasion for the wedding. This was the basis of starting the Taiyaar Hoke Aaiye campaign to drive more men to dress up in Indian wear. The catch was that we only launched this campaign in 2019, and we were hit by COVID right after in 2020. The last two years were extremely disrupted. However, when we look at the new financial year trends in April, the performance of the wedding attendees coming back to the stores are extremely encouraging, and I would be happier to share these numbers in our next quarter earnings call about how the whole Taiyaar Hoke Aaiye campaign is kind of phasing out for the wedding attendees. Sure. I'll wait for that. Just one last thing, Vedant. You had shared the two-year SSG last time, or if it's possible to share that and I'll be done. Are you looking at the quarter four versus? Yes. Quarter four FY 2022 versus quarter four FY 2020? Yes. If it's possible from Q4 2019, if it's handy with you. Sharing Q4 FY 2022 versus Q4 FY 2020, it's at 1.6% SSG growth, despite half of Q4 FY 2022 going away in COVID when January and February actually seemed to be the best wedding shopping season, which was quite heavily disrupted due to COVID. We saw 1.6% growth still in terms of SSG compared to pre-COVID levels. Sure. Vedant, thank you. Thank you so much, and I wish you all the best. Thank you. Thank you. Thank you. Thank you. We'll take the next question from the line of Gaurav Jogani from Axis Capital. Please go ahead. Thank you for the opportunity and congratulations on the good set of numbers. My first question, you know, is with regards to if you can share the consumer level change for your brands of Manyavar, Mohey and the other brands for the year FY 2022. Also along with it, the contribution from the EBO stores for FY 2022. Sure. The contribution from EBO store is around 90%, as it has been there historically also, on overall customer revenue. As far as brand-wide details are concerned, you know, all our brands like Mohey, Twamev, Manthan, they are all new brands, and all of the brands are doing very well. Strategically, you know, we are not disclosing the brand-wide details, during calls and discussion, and we are happy to do that once we strategically decide to, you know, share those numbers once we achieve a particular size. Sure. Rahul, just if you can share with me from Manyavar, you know, which is a big brand for you. I mean, you have shared that in the DRHP also. If you can just share for that, it will be helpful. On the Manyavar, you are saying? Yeah. Manyavar consumer level sales for FY 2022, if you can share that? Total was, as I was mentioning in my presentation, it was INR 14,736 million. That was the company total. It grew by 76%, the sales to customers compared to FY 2021. Okay, sure. Yeah. I would request Vedant to also add upon. Hey, Gaurav. In terms of different brands, as Rahulji was mentioning, all of the brands' underlying fundamentals have been performing really well. With Mohey, we've been seeing good traction. In terms of Twamev, because of the aspirational consumers that are already walking into our premium stores, we've seen very good growth. All these brands such as Mohey and Twamev are ready for the next level of growth. With Mohey, we will be opening six to seven exclusive brand outlets. Similarly, for Twamev, we will also be opening five to six exclusive brand outlets in the upcoming financial year. As far as the brand-wise numbers are concerned, we would be happy to share them once they've sort of scaled up to a number where we strategically feel it's fair to start giving out the numbers of those brands individually. Internally, we track them very heavily, and they've all been performing well. Sure. Maybe then my next question, you know, is with regards to the gross profit margins that is ex of, if you take, you know, the job work charges. I mean, they have seen a healthy expansion if I compare it with the FY 2019 levels of around, say, FY 2019, it was around 65% odd, and now it is around 67%. How much of this, you know, is sustainable going ahead? Or, is it because of, you know, this, some advantage, due to the Omicron or, I mean, due to this particular year? And how much of it is sustainable? Gaurav, we've always seen efficiencies is the core of this company, so there have been a lot of work that we've been doing on our inventory replenishment algorithm in order to further optimize our inventory, lower our dead stock levels. There has been further work going on into our demand generation program in order to calculate demand even more better. It's a result of efficiency, and we've seen very good gross margin levels of about 66%-67% in the last two years. We would like to believe that we would be on a similar path moving forward as well. Sure. Just last question with regards to the quarter. I mean, if I see the other expenditure, you know, except the job work charges, they have hardly grown, you know, by around INR 3 crore, if I compare from Q4 FY 2021 to Q4 FY 2022. If you could highlight, you know, what has been the key saving areas here, and that would be from. The other cost, if we exclude the lease cost, other than the job charges you were mentioning? Yes. Next of the job charge. Right. If we accumulate that, more or less it has grown by around, I would say INR 2 crore hardly. That's the increase Q4 2022 versus Q4 2021. Right? It is majorly because of increase in revenue, because of freight expenses, commission expenses, all those expenses which are linked with revenue. Generally, it increases as the revenue increases. You can see that our Q4 revenue compared to last year, it has increased by 55%. As a result, couple of those other costs have also increased, like freight expenses, commission expenses and so on. No. Rahulji, actually, what I was asking was, you know, there is hardly any increase in the other expenditure and so the job charges. If you see the A&P, as you mentioned, it is also an increase of only INR 2 crore-INR 3 crore. I mean, which have been the key saving areas for you here? We are working on a variable model. If you will see our manufacturing process also is largely outsourced, right? A lot of our other processes are outsourced. Basically other than that, we are left with very few fixed overhead costs. That is the main reason, you know, when we compare. There's a lot of cost efficiency which we always work upon on a continuous basis. Because improving cost efficiency has been the DNA of the company over the years, right? From that prospect, if you'll see that we have been able to control our fixed overhead costs, and that is the reason you see, you know, very minimal growth in other costs compared to past performance. Sure. Thank you. Thank you for answering my question. That's all. Thank you. Thank you. A reminder to our participants, if you wish to ask a question, you may enter star and one. Our next question is from the line of Devanshu Bansal from Emkay Global Financial Services. Please go ahead. Sir, congratulations on a very good performance in Q4 as well as in FY 2022. I just wanted to understand, you have done about INR 1,500 crore of customer level sales in FY 2022. This is despite Q1 and Q4 being impacted due to lockdown. Just wanted to understand, is there an element of demand deferred during the year into FY 2023 as well? Or FY 2022 is a good normal base to base our predictions on? Okay. That's a good question. It's a little difficult to answer on an overall level, but what we feel is that a lot of the demand that was deferred in Q1 was actually taken care in the other three quarters of the overall financial year level. However, we still saw that a lot of the wedding attendees were not entering the stores because there were still COVID-related restrictions. Overall the last eight quarters were disrupted somehow or the other. The first quarter, which is the ongoing quarter, is the first one we are seeing after two years, where there are almost no restrictions in terms of COVID, with all the wedding attendees returning back to our stores. That will of course be a good lever of growth for us as we move on to the next financial year. In terms of the wedding numbers, it's difficult to comment, but we believe that a lot of the pent-up demand was taken care in the year itself. However, there would definitely be some of the other weddings that were postponed to this financial year. Sure. Thanks. That's helpful. Secondly, wanted to understand, we have added about 15% sort of retail space in FY 2022. What is our target for FY 2023? You guys have mentioned that you have a target of doubling the retail space. So by when do we sort of plan to double this? Yeah. In terms of our historical trends, we've been growing at a CAGR of about 16% in terms of increasing our retail footprint. As a company, our internal aims are to achieve similar levels. Wherever there's an opportunity, we will seize on it. There's definitely no restrictions on the kind of growth we can achieve with footprint, and that is how we operate. In terms of any guidance, we would not like to give any particular number on growth for the coming years. We will continue to do what is right in terms of our business, and grow in that particular direction. When I talk at a strategic level, there are three strategies that we follow for growing our retail footprint. The first one is entering the new 130-150 odd cities, which we just spoke about. The second strategy is to enter in the new markets in our existing cities where we are currently not present. Our third strategy, which is the innovative strategy, which is true for Manyavar, is that there are certain key markets in India where there is room to further increase our market penetration. Take for example, markets like Commercial Street in Bangalore and Park Street and New Market areas in Kolkata, where we had about one store to start with in 2009. Now we're at about four stores in those markets. We continuously expand in those regions and increase our market share. Those are the three strategies we'll be following, and we are very confident of sort of delivering similar numbers as we have. Sure, sir. That's really helpful. Lastly, I wanted to understand from the working capital point of view, our inventory, receivables, payables days have sort of reverted back to the pre-COVID sort of level. There is an increase in the other liabilities by about INR 50 crore. What is the reason for that? In terms of numbers, are you saying INR 50 crores increase in liability? Yes. It's in two line items, other current liabilities and other liabilities. Okay. There are two things which are coming in that other current liabilities. One is the refund liability, which is a provision which we make for our sales return. That has increased by around INR 10 crores. We make a provision for sales return every year and every quarter. That has increased with our increase in revenue. Apart from that, we also have received advance from our customers. For one of our, we had one land which is appearing in capital advance, for which we are into a joint development agreement with one of the developers. We have received INR 10 crores of money in relation to that capital advance. These are the two components because of which it has increased by around INR 20 crores. What do we expect for these items going ahead, sir? These should also sort of grow with sales. How should we sort of project these line items? Apart from that, there were other liability also which you're mentioning under financial liability. That has also grown because of security deposits, that's around INR 12 crore again. Now, whenever we open a new store, we receive security deposit. As we grow, as our business grows, as we open new stores, franchisee-led stores, the security deposit amount is going to grow in future. It is going to increase in future. That is an increasing trend which we will see. In terms of advance from customer, which I mentioned, that is a one-time. It was a one-time project which a one-time contract which we are having with the PE developer. We don't expect. Of course, there would be some inflow of money this year also. From a future prospect, we don't expect any further advance amount coming in this respect. As far as refund liability is concerned, which is provision for sales return, that we are doing based upon historical trend of 8%-8.2%. That will also increase as we increase in our sales volume, because that is a provision which we are making on a conservative basis. It will increase with growth in business volume also. These two liabilities, one is security deposit and another is our refund liability. Sure. Lastly, one bookkeeping question. In the PPT, we have mentioned that in India we have about 583 stores. This 595 EBOs, this is globally, or is this in India? The remaining 12 stores are in our global countries. We have about six stores in U.S. and the remaining in UAE. We are also about to open our store in Southall in London this year in the current quarter. Also we will be opening a store in Chicago, U.S. this quarter. This includes 77 shop-in-shops as well, right? Yes. Yeah. The retail area that you provide, it's only for EBOs except for shop-in-shops? It includes shop-in-shop also. The 1.27 million sq ft includes shop-in-shop also. Okay. All right. That's it then. Thank you. Our next question is from the line of Shivam Saxena from ICICI Bank. Please go ahead. I just wanted to know, have you taken any price hikes to combat the increasing cotton yarn prices that make up raw material cost, what I would say? And how much has been the price hikes to protect the margin? No, no, we have not. We have not done any price hikes. As a company, we like to not increase the prices of any particular products. What we do as a continuous ongoing trend is to shift our product category mix. For example, if majority of our kurta offerings lies in the INR 2,000-INR 3,000 range, we slowly start increasing our offerings in the INR 3,000-INR 4,000 range. So coming to your question for price, when we compare quarter four financial year 2022 versus quarter four financial year 2021, we saw an ASP growth of about 4.8%. And this was again, primarily due to the shift in categories, as in the category mix of different product categories. Also as a company, we work on what is known as perceived value. We continuously focus on certain key products where we are able to earn extra margin compared to others, and those allowed us to offset the 10%-12% sort of fabric cost increase that happened over the last two quarters. Even in terms of the increase in costs, when you look at our company and the nature of our product, fabric only makes up 10% of the MRP component of our product. When we look at the price hike on a MRP level, it was only about 1%-1.2% on an MRP level. It was relatively easy for us to overcome. Basically you are saying, if the fabric price increases by 10%, then it impacts your price only by 1%, right? As it is a 10%, right? Correct. Okay. Okay. We don't increase that 1% of all products. Yeah, yeah. However, we play smart with different product categories by changing the mix and some products where the perceived value is very high, we make up for those margins in those certain products. Mm-hmm. How do you see going forward, these prices, fabric prices? Will they start going forward, increase, stabilize, or what you would Sir, it would be difficult to comment on the pricing of fabric. It is something difficult for us to answer. Okay. You would be playing with the same strategy you are saying, like you will be shifting to higher. Yes. Relatively, the overall idea is that our cost of goods sold, the major component is from the business of value addition. There is a lot of handwork that goes into our products in terms of stitching and embroidery, which is what forms the major cost of goods sold. Given the sort of long-lasting relationship we have with our vendors, those costs have been relatively stable. The major price hike has been in the 10% fabric cost, which is anyways relatively a lot lower compared to other apparel manufacturers or retail brands. Okay. Thank you. Thank you. Thank you. We'll take our next question from the line of Ankit Kedia from Phillip Capital. Please go ahead. Three questions from my side. First is on the store size. This quarter we have seen more than 3,000-odd sq ft size each store. Our average store size, including shop-in-shop, is around 2,200. Going forward, are we opening more flagship stores and will the store size be at 3,000-odd levels incrementally? Sir, the overall strategy of the company is that we want a higher share of our business to come from flagship stores as we move forward. That will definitely be the case that we will be opening more flagship stores, larger flagship stores as we move forward. But when you ask about, let's say, the median of a store, it would be difficult to comment on, as we also continue to expand into Tier three cities. We opened a store in a Tier 2 city, Thiruvananthapuram also this year, and entered that market. The amount of stores that we increase, it will consist of both relatively smaller stores and also the flagship and super flagship stores. It will be a mix of all, but given today's averages, there will be a higher share of flagship and super flagship as we move forward. Sure. My second question is on your receivable days. Can you just, you know, share how does the receivable work with the franchisee? So when a new store is opened, do you take upfront, revenue from the franchisee or he's given 90 days period, you know, till the time sales happen and then after that 30 days to recover the money? Can you just throw some light on how the flow happens with the franchisee owner? Sure. When we open a new store, we take upfront security deposits from the franchisee. That is based upon our internal policies. That takes care of our working capital cost also on the very first day. Then, accordingly, the replenishment happens, which is happening on a regular basis. We have an auto-replenishment mechanism also. On a weekly basis, we have a collection model that the product which gets sold, we are recovering money from there. That is our overall recovery and collection model, which we follow. Adding on just in terms of what you were asking, yes, when we open a new store, we book revenue on day one itself of whatever materials we send to the store. The receivable days which seem to be something of 140-odd days, you know, if it's a weekly collection, where does this 140-day receivables come from then? In terms of receivable days, the manner in which we track and monitor it as follows. I would like to explain it a bit. If you see our balance sheet, you'll find a receivable amount, trade receivable amount. The way we monitor is we are seeing a receivable days of 53 days as on FY 2022, on revenue. How we compute it, maybe I'll explain for a minute. We, as I mentioned that we take upfront security deposit on the day one. That is something which is grouped under security deposit under liability as far as financial statements are concerned, right? We're also making provision for sales return against our debtors based upon our historical trend. Now, if we net out these two amounts with my receivable amount, then the receivable days, net receivable days comes to 53 days on my revenue. That is the right, that is an appropriate manner in which we track internally and monitor the sales. Sure. If we get a security deposit, is the inventory given to the franchisee for, you know, four months, apart from security deposit, do we not take money from them for those four months? For those 120 days? Let me just explain the way the whole statement works from a business perspective. We take an upfront security deposit from the franchisee when we open a store, which covers well more than the cost of goods we send to them. Now, we book our revenue as a company when those products are shipped to the store and reach the store. The franchisee pays us twice every week as and when the product is actually sold to the consumer on the ground level. Sure. If I look at last year's bank guarantee and security deposit, FY 2022 data I don't have. I have the FY 2021 data. Around 53 days of security deposit is there on our books as on FY 2021. Even if I take the absolute amount of receivable days, it comes to 180, and if I adjust for that, it is still 130 odd days. If we cover for the inventory which is paid, why are the receivable days so high? On that, first of all, the amount of deposit which is appearing in the financial statement, it is lower than the gross deposit. I'll just give you some example. Like, as on 31st March 2022, our actual gross deposit received is around INR 150 crore. in the financial statement there's a discounting which is done because of Ind AS adjustment. as a result, the liability which is booked in the financial statement is around INR 120-INR 125 crore, right? the actual deposit is INR 150 crore. Now, if I net out these deposits with my receivable amount which is appearing, and if I reduce the refund liabilities which is also appearing, then you will come to. You'll arrive at a number which is 53 net receivable days on revenue. In FY 2021, yes, because of COVID, you know, the receivable, the movements were impacted. In FY 2021, the receivable days were higher, much higher compared to FY 2022, I would say. Sure. I'll take that separately again with you, sir. Sure. Sir, my second question is regarding your A&P spend. You know, could you? Sorry to interrupt. Mr. Kedia, may we request you to please return to the queue. There are several participants waiting for their turn. Sure, ma'am. Thank you. Ladies and gentlemen, we would request you to please limit your questions to two per participant, so that all participants may get equal opportunity to ask questions. We'll take a next question from the line of Yajash Mehta from Kotak Mahindra Asset Management. Please go ahead. Hi. Congratulations on this set of numbers. I have two questions. The first one being, my apologies if I missed this out. What would be the total revenue contribution from the brand, Manyavar for Q4 as well as FY 2022? The second question being, if you could just throw some color on the EBITDA margins of the other brands, as in, I mean, as per your comfort, if they are above the average or below. Sure, sir. As a company, like I've mentioned before, we are not declaring the numbers separately for all the brands. We are doing it at a company level. Brands apart from Manyavar are at a smaller scale currently, and it's a strategic call to not talk about those numbers at this given moment. Once Mohey scales to a certain level, then we will be sort of sharing those numbers independently. However, the underlying fundamentals of the brand have been doing really well, and all the growth levers are working to our advantage currently. Talking about the margins in the newer brands, they are lower than Manyavar currently. However, the overall idea is that as the brands scale up, we will be able to get their margins similar to the current company average, as and when the economies of scale kind of kick in for those newer brands as well. Thanks. Thank you so much. Thank you. Our next question is from the line of Amit from Stallion Asset. Please go ahead. Hi, Vedant. Vedant, my question's about Mohey scale-up. You said that you'll be opening six, seven stores this year, right? That is a bigger market than the men's category. That is more unorganized. Why has our scale-up been so not very aggressive? Just trying to understand what is the thinking behind this. Sir, I think the overall idea is that we are an extremely bottom line focused company, along with a lot of sort of focus on the efficiency that we are able to give to our franchisees. We take all elements of growth in a very sort of conservative manner, where we are able to also work on bottom line, and it's a calibrated approach that we've sort of decided to take. Whereas we feel that we've cracked the overall lehenga market, we've understood the overall nature. This year onwards, we are very confident about the sari market as well, which we've understood in terms of the wedding and celebration wear market. Slowly we are also trying out different product categories. The markets we are comfortable in sort of piloting with the new exclusive brand outlets, we will be entering those. However, in terms of the kind of fast scale-up that you're requesting for, we will definitely get there in the next few quarters, and we are very excited for the same. With that, what are the factors that will make you scale up? Like, what will you say that if I achieve this is the point where I start scaling up, Mohey to, like, 500 stores as well? The major sort of number that we are chasing as a company with Mohey is that once the exclusive brand outlets sort of reaching a 10,000+ sort of productivity numbers is what our aim is to reach internally. That would be one factor in terms of going towards aggressive growth for the brand. Sorry, I missed that point. What you said, 10,000? INR 10,000 per sq ft as an exclusive brand outlet of Mohey. Got it. Done. Thank you, Vedant. Wish you all the best. Thank you. Thank you. Our next question is from the line of Nikunj Gala from Sundaram Asset Management. Please go ahead. Yeah. Good evening, everyone. I just need clarification on the new store opening where you mentioned you book the revenue on day one. Sorry to hop on this question. So on the day one, assuming INR 100 MRP product, you sell it to the new store. So the entire INR 61 or INR 71, depending upon the lease, you know, you book on the day one that entire INR 61 or INR 71 as a revenue? Yeah, that's right. Okay. whatever margin that we give to the franchisee. Yeah. is reduced from the MRP cost. Yeah, right. Based upon the replenishment which happens on the day one. Yeah. to the franchisee. Yeah. That replenishment value minus the franchisee margin. Yeah, right. Is booked as revenue. Against which he has only given you, INR 33 or INR 35 of, you know, COGS at the inventory at the cost, as a security deposit, right? The remaining amount would sit as a receivables, in your book, right? Look, it's not about the. INR 100 is the MRP. Okay? Right. We have two models of franchisee margin model. Right. Yeah. One is 18%, another is 29.5%. Right. Right. Right. Right. There's a GST component also. 10% or 8%, yeah. INR 100 becomes a 35% margin. Okay? Yeah. On day one, on replenishment of INR 100 MRP of product. Right. Our revenue from operations is booked at INR 65. Right. Right. Our receivable is also booked at INR 65. Whatever deposit which we receive- Uh. which is dependent upon our internal policy and mechanism. Yeah. Right. As a clearing my liability. Yeah. He must have given, say, INR 35. The net amount is, you know, the receivables, right? In that case. If you monitor the receivable, I'll- Yeah. Yeah. I'll net out the deposit which I receive on the revenue. Yeah. Yeah. Right. Yeah. Right. Exactly. What percentage of your, if I, you know, ask square feet would be, the stores where you, the Vedant Fashions would be bearing rent? 60% of our revenue comes from stores. Okay. where we bear rent. This is a very strategic call that we take on a store-to-store basis. These are the prime real estate properties of India that we want to have control on, as a company. 50% of sq ft you mentioned? Sorry. 60%. 60. It's more skewed towards, you know, the 71 take rate, if I just take from the retail sales perspective. Ideally it should be 61 in the case where, you know, they must be bearing rent, net sales to retail sales, I'm asking. In the case where you must be bearing rent, it's 71%, right? Ideally in 60% it's more skewed towards, you know, 66, 67. For the year FY 2022, we are looking at 70% net sales to retail sales ratio. This is on account of the new store which you have added. Absolutely. That understanding is correct, right? Absolutely. Yes. Yes, exactly. Okay. Got it. Just lastly, you know, out of 595 EBOs which you have mentioned in the presentation, how much would be shop-in-shop in this out of 595? 77 stores are shop-in-shops out of these. Okay, sure. Lastly, if I can, you know, squeeze in the incremental square feet in Tier 2 or Tier 3 or, you know, the incremental number of towns you want to enter, according to your experience, what kind of a model you are, you know, having whether, you know, the franchisee is ready to bear the rent or you want to bear the rent in that case? In Tier 3 as a trend, it's mostly the franchisee that bears the rent. Okay. That is the sort of model we follow for Tier 3 cities generally. Again, this call is taken on a strategic level based on the store rather than holistically for any tier or on a company level. Okay, sure. Yeah. Thank you. Thanks for the clarification. Thank you. Thank you. Our next question is from the line of Divya Balakrishnan from Wellington Management Singapore. Please go ahead. Thank you. I was a little surprised that you mentioned we don't expect margins of the newer brands to exceed the company average. It would seem like we should have a much higher pricing power once we go closer to the womenswear and the bridal market. Is there something I'm missing over there, or are we just probably trying to be very conservative at this point? Thanks. Ma'am, I think the overall idea is that we are trying to take realistic targets and the overall idea is that as these brands scale up and we improve our inventory replenishment systems for each of these brands, along with setting up a stronger supply chain that is more efficient in terms of producing these outfits for those particular brands, we are confident of scaling up to those levels. However, when we look at a longer term trend, I think it is something we will be able to comment on later down the line, what we're feeling about those particular margins for the newer brands, as in when they actually do scale up to the current company average. Thank you so much. Thank you. Thank you. Our next question is from the line of Jay Shah from OHM Portfolio Equity Research. Please go ahead. Hi. Am I audible? Yes. Yes. Hi. Congratulations for a good set of numbers. My first question is on the SG&A. I believe that you have an outsourcing model, but basically you're promoting brands, so the biggest component should be SG&A, given your celebrity advertisements, IPL team and seminars. Could you just tell us as to how do you look at this expenditure and how can we project this expenditure going into future? Is this related to a percentage of sales? Is it absolute amount with certain inflation or how does it work? In terms of A&P, our outlook moving forward would be at a range of about 5%-6%, for the new financial year, which is the sort of number we are expecting based on the kind of efficiencies we've built over COVID. I think COVID was a great boost in terms of moving towards digital, understanding how can we more efficiently target our consumers on the digital channel. We are able to now understand that whole platform and reach our grooms and brides in a much more efficient manner. That will help us bring down the 7.6% number in financial year 2020 to the 5%-6% number moving on into financial year 2023. I see. Given that you're looking to promote more women's brands, won't we see the spend going up in the short term? Not based on what we've planned, sir. For the current upcoming financial year, the 5%-6% is the sort of number that we have in mind in terms of A&P. Thank you. That's very useful. My franchisee model. Generally, what kind of money do the franchisees make and how has been your experience with the franchisees since you work majorly with most of them? What are the key parameters? Is this linked to their ROIs or how does it work? Sure. We have two models in terms of franchising. The first one is the 18% model. In this model, the franchisee is responsible for making a very beautiful store that has a CapEx of about INR 2,000-INR 2,500 per sq ft, depending on the tier of the city. They also bear all the operational costs of the store, apart from the lease cost. In the 29.5% model, the franchisee also bears the lease cost. These are the two sort of models which we operate in. The kind of payback period we've seen at a franchisee level on average is about 3 to 3.5 years. So they've been making very good money with us, and they are extremely happy. As a company, we've been extremely stakeholder-friendly, and stakeholder growth is one of our most important parameters. 77% of our franchisees have also operated with us for more than three years now, which is kind of a testament to these numbers. We continue to expand with our current partners itself in the existing cities who have a good franchisee scorecard. Right. How's generally been the trend in the franchisees? How many would you have, you know, terminated agreements till now? Historically, almost no franchisee has left us out of their own will. However, when franchisees fall below a certain metric in our franchisee scorecard, they are put on a training plan where we try to improve them operationally. However, even after trying for about two quarters, they are still not able to scale up, then we have churned out a few franchisees from the system, which number would again be extremely small, in the less than 2%-3%, less than that sort of a range. Thank you. That's all. Best wishes. Thank you. Our next question is from the line of Vinod Malviya from Union Mutual Fund. Please go ahead. Yeah. Thank you for taking my question. Just, sorry, I joined the call late. Can you explain the reason for dip in your gross margin when we look at it on a YOY basis? The gross margins have been around 67% for FY 2022, and last year also. Sorry, for the fourth quarter compared to the last year, last year same quarter. For the Q4 FY 2022, the gross margin was 66.4%. Yeah. It was 64.74% in the base quarter, so there's one percentage point decline. What is next? If you compare with Q4 FY2021, in Q4 FY2021 it was 67.4%, and in Q4 FY2020 it was 64.7%. Yeah, Viraj, you would like to add something? Yeah. I mean, there's been a 1% drop when we look at a quarter level. Again, a lot of those parameters have to do with the sort of category shift that we saw in the last quarter. In the later part of the quarter, we saw sales for different categories such as kurtas, which was slightly lower during the previous year-over-year quarter. Those are the main parameters. However, as a company, we feel all the underlying fundamentals have been very strong. Like we've been saying, it's the 66%-67% sort of gross margin scale that we aim to achieve even moving forward. Yeah, in your previous comment you said that, you know, you have not taken any price hike and your focus has been selling on more higher value products. Ideally, that should have, you know, given you a better gross margin. I think in the gross margin when we see the reported numbers, there's a dip. That strategy apparently, it looks like it has not really worked in this particular quarter. Sir, I mean, all the sort of numbers that we work on internally have been performing well. It's more to do with the shift in category of the products. In the high value wedding related products for which the sale was a lot higher in quarter four FY 2021, which was more of a wedding related shopping, we saw trends of more wedding related high ticket item purchases compared to quarter four FY 2022 when we saw the slight bit of wedding attendees and festive buyers returning back to our stores to an extent. It's a very marginal difference that we find in those sort of different categories. Okay. The second question was on your, you know, the franchisee model which you said one is 18%, the other one is 29.5%. So out of how much of the franchises are basically, I mean, you have bought the property on your books and leased out to the franchisee? Yeah. Like we've been mentioning, about 60% of our revenue comes from stores where we bear the lease cost. Almost similar 60% of the sq ft area also, which we pay the lease for, is what it is. Sir, when we compare the numbers between the consumer sales and the reported sales, the difference is almost 30% of it, which indicates that almost all the properties are actually leased by, you know, I mean by the franchisee partners, at least on the reported basis of business. There was similar question, we were discussing like, you know, the average margin which you can consider is around 65%-67%. However, the difference you're seeing is 70% is because of the new store openings, right? Which is appearing as a part of my primary revenue, the revenue which I report in my P&L, which is not appearing in my secondary revenue. That's a gap of 3% which you're talking about. Okay. I have to take this question off then. Okay. Thanks. That's all from me. Thank you. Our next question is from the line of Aliasgar Shakir from Motilal Oswal. Please go ahead. Yeah, thanks for the opportunity. I have a quick question on, you know, the current market conditions. I think you did mention that for the full quarter, your like growth was about 4% despite the impact of Omicron. If you could just share, you know, the current situation on the ground, probably how was March, you know, which was fully stable month, and also in the current month of probably in April, how are you delivering? Quick follow-up question there is, you know, market feedback is that, you know, some of the regions or categories are doing better than the others. You know, what is our observation? Are we seeing, you know, are the category that we operate are doing better than some of the others? Are we getting any specific, you know, benefit out there? Thank you so much. Sure, sir. Of course, March was a very good month for us, as January was quite heavily disrupted in terms of COVID. Not as bad as what we've seen in earlier waves, but still, January was still quite affected. A lot of those numbers were made back in March. It was definitely a very promising month for us. In terms of the kind of traction we are now seeing on ground, it's very optimistic and very promising, and is making us more confident as a business. When we see a lot of trends coming in back in terms of wedding attendees and festive and casual buyers returning back to our stores. This is also affected in terms of our kurta sales increasing as a category compared to what we were seeing in the last two years, which were quite heavily disrupted because of COVID. All the underlying fundamentals are pointing us to a very confident new financial year. Could you share on like basis how we performed in March or probably in April? Also the you know second question that I asked regarding you know specific categories or regions that are doing better than others. Sir, again, any April number we would be happy to talk about in our next earnings call three months later. Sure. In terms of March, I think it would be good to see it at a quarter level because with January being disrupted, a lot of that demand would have moved into March. It is to our benefit to look at it in terms of a quarter itself. March could be a little misleading, sir. Got it. Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference back to the management for closing comments. Over to you, sir. Thank you very much for all of you for joining us for this quarter four FY 2022 and the financial year 2022 investors presentation call. Thank you so much for all your support during and throughout the IPO process and being invested in the company. Thank you, looking forward to more of such calls in the future. Thank you, members of the management. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference. Thank you for