Ladies and gentlemen, good day and welcome to the Vedant Fashions Q1 FY23 earnings conference call hosted by Edelweiss Securities Limited. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nihal Jham from Edelweiss Securities. Thank you, and over to you, sir. Yes, thank you, Ranjit. On behalf of Edelweiss, I would like to welcome you all to the Q1 FY23 result conference call for Vedant Fashions Limited. From the management today we have Mr. Vedant Modi, Chief Marketing Officer, and Mr. Rahul Murarka, Chief Financial Officer. I would now like to hand the call to Mr. Vedant Modi for his opening remarks. Vedant, over to you. Thank you, Nihal. Good afternoon and a warm welcome to all the participants. Thank you for joining us today to discuss the Vedant Fashions Limited Q1 FY23 performance and results. I'm joined by Mr. Rahul Murarka, the Chief Financial Officer of our company. I hope everyone got an opportunity to go through our financial results and investor presentation, which has been uploaded on the stock exchange as well as on the company's website. Vedant Fashions is the category creator and market leader in branded Indian wedding and celebration wear industry. We have grown from modest roots to become India's largest celebration wear entity. We have strategically created a house of brands which caters to the need of different demographic and geographic segments. Owing to the efficient governance model, the performance of all our brands has been motivating in this quarter. As a company, our governance model is firmly based on three Ps. People, we invest in relationships, be it our customers, our employees, or any of our stakeholders. Products, our mantra for product is twofold, superior quality and value for money. Finally, profits. This P is a litmus test for the above two Ps. It indicates the health of the company. Allow me to take you through the highlights for quarter ended June 2022. We're happy to report an efficacious and satisfying quarter in terms of retail sales, revenue growth, best-in-class margins, and return metrics. All of these despite an adverse and challenging macroeconomic environment and inflationary conditions leading to pressure on discretionary spends. We are witnessing growth momentum through increased efficiencies and establishment of a variable model firm. We as a company have come stronger out of COVID and have surpassed pre-COVID levels in terms of overall customer sales growth, which stands at 60% over quarter one of financial year 2020, and 119% over quarter one of financial year 2022. The triple net growth has been 25% over quarter one of financial year 2020, which was pre-COVID levels, and 105% over quarter one FY 2022. The consumer demand for ethnic wear is also showing great recovery, and we are gearing up for a promising festive and celebratory occasions ahead in this year. On the network expansion front, in Q1 we opened new stores of around 10,000 sq ft, and have a very strong and healthy pipeline for new rollouts planned for the financial year. As of June 2022, VFL's EBO area stands at 1.28 million sq ft globally across 603 stores. The national store footprint tally is at 590 stores spread across 228 cities and towns. We've also opened one new international store in U.A.E. in Abu Dhabi in this quarter, and now have 13 international stores spanning across three countries. Efficient and innovative marketing has been the lodestone in our journey to building great brands. Keeping to the same tenet, we are glad to share an instance in which our marketing campaign for Mohey, Dulhan Waali Feeling, targeting brides to be featuring Miss Alia Bhatt was a huge success. We have witnessed greater acceptability for all our brands, which is a hypothesis that is supported by a strong traction and positive sentiment. Going forward, we are optimistic of having a favorable year ahead. With this, I would now hand over to Mr. Rahul Murarka to take you through the financial performance of our company. Thank you, Vedant. Namaskar and good afternoon, everyone. I would like to highlight key financial performance for Q1 of FY 2023 based upon the consolidated financial statements. The company has continued to demonstrate strong financial metrics and returns during Q1 of FY 2023. Starting from comparison between Q1 of FY 2023 and Q1 of FY 2022, the company has reported revenue from operations of INR 325 crore in Q1 of FY 2023, delivering a very strong growth of 103% compared to Q1 of FY 2022. The company continues to report very high industry leading gross margin of around 68.8% during Q1 of FY 2023. The EBITDA margins were around 51% and the EBITDA stood at INR 165 crore for Q1 of FY 2023 with a growth of around 106% compared to Q1 of FY 2022. The reported tax during Q1 of FY 2023 is INR 136 crore, which has significantly increased by around 122% compared to Q1 of FY 2022. The company reported best-in-class tax margin of 31% and the profit after tax stood at 101 crore during Q1 of FY 2023 with a strong growth of 123% compared to Q1 of FY 2022. The company has a track record of generating significant cash driven by a healthy cash conversion ratio. During Q1 of FY 2023, the company continued to generate high cash conversion ratio of approximately 146%, which has been computed based upon operating cash flow over tax. With optimization in working capital, we have been able to achieve industry leading trailing twelve months ROCE of approximately 98% during the period ending June 2022. After a long time during Q1 of FY23, we have witnessed a normal quarter without COVID restrictions. This synergized well with our robust ecosystem, leading to efficiency in operations and resulting in improvement in working capital days from 94 days in FY2022 to 65 days approximately in Q1 of FY2023. This has been computed based upon trailing 12 months revenue and interim MIS reporting format. The net receivable days based upon the trailing 12 months revenue has also reduced to 35 days approximately in Q1 of FY2023 from 53 days in FY2022. The net receivable days have been computed after reducing deposits received from franchisee and provision for sales return from trade receivables. The sales to our customers were around INR 500 crore during Q1 of FY2023, with a significant growth of 119% over Q1 of FY22. The company also reported very strong SSSG growth of 105% over Q1 of FY2022. Now on comparing our Q1 FY2023 performance with pre-COVID levels of Q1 of FY2020, whose figures have been considered basis interim management MIS, our revenue from operations significantly grew by approximately 58%, and we witnessed significant growth in PAT by approximately 81% over Q1 of FY2020. Our sales to our customers significantly grew by approximately 60% with a strong SSSG growth of around 24-25% over Q1 of FY20. Thank you and namaskar everyone. We can now move to the Q&A session. Thank you. 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'll wait for a moment while the question queue assembles. First question comes from the line of Gaurav from Axis Capital. Please go ahead. Hi, thank you for the opportunity, sir, and congratulations on the good set of results. So my question is, first on, you know, the strong expansion in the gross margins. You know, we have seen the gross margins expanding to now 68.8%, and commensurately your EBITDA margins is also now 50%+. So, my question is, you know, how much of this is, you know, a phenomena of the season, of the mix? You know, what could be a steady state levels that we can expect going ahead? Sure, Gaurav. Thanks. As a company, our endeavor has always been to improve our gross margin and improve efficiency in margin. We have been able to do this in the past, and our endeavor will also be to continue to do this in future to improve in our margins. However, on a quarterly basis, the gross margins may vary from one quarter to another quarter, and hence we should look at the gross margin level on an annual basis. As far as your question on steady state gross margins are concerned, no, we don't want to give any guidance, but historically we have seen that we have been able to achieve very high gross margin of 66%-67%, and we don't find any challenge as of now that, you know, in achieving the similar results in future, I think. Sure, sir. Going by your Q1 performance itself, you know, I mean, it looks like you might as well breach the 66%-67% gross margin levels at least for this year. Because, you know, if it has to go below that, you know, the rest of the nine months might do really bad in terms of the GMs. As I mentioned, Gaurav, our thought would be to look at the gross margin at an annual level, because the quarterly gross margin may vary from one quarter to another. You know, maybe we can discuss on the gross margin when we achieve the year-end gross margin level. Sure, sure. My next question, you know, is with regards to the store opening. One, you know, we have added around 10,000 sq ft in terms of the stores, whereas, you know, we have eight stores. Average sq ft comes around 1,250 sq ft for the new stores. Also, the number of store openings, you know, has been relatively in terms of sq ft addition has been only 10,000. On both the fronts in terms of the store sizes and in terms of the sq ft addition, if you can help us, you know, how can we look ahead, going ahead? Hey, Gaurav. Thank you for your question. So when we talk about the 10,000 sq ft number, which was the net opening for this quarter, there were about eight stores opened, and some of those stores that were added in this quarter were also SIS stores, which are typically smaller on average about 500 odd sq ft. Like we've been mentioning for a long time now that, typically, the newer stores which we will open, which are exclusive brand outlet stores, not the SIS version of it, will be 2,000 or more than that typically, unless it's a one-off tier 3 or a tier 4 city that we're entering. So, the plan is to open larger stores as we move forward. Now, with concerns to the 10,000 sq ft number which we've added in this quarter, typically because Q2 is a weaker season compared to the rest of the year, we tend to add majority of our stores by the end of Q2 or start of Q3. We have an extremely strong and healthy pipeline which you will start seeing in the coming few quarters. I think we are very well poised to open a lot of stores and a very high number of square feet in the coming seasons. Sure. That's helpful. Just to follow up on this one, you know, I also see that, you know, you have added three new cities also during the—sorry, five new cities rather, during the quarter. If you know, help us, you know, which are the cities, just, you know, tier 2, tier 3 towns? How are we looking in terms of the city additions? If anything on that. Sure. The cities we entered, the city with the highest population was Balasore, with a population of about 23 odd lakhs. While we went down to a city called Bhimavaram, which is at a population of 1 lakh 8,000 from the last population records we have. I hope that once the new census gets updated, which is I think in two years now, the numbers for population will be a lot more accurate. I think we continue to open stores in newer cities. There are some tier 2 cities that are left to cover, very few of them, but majority it will be tier 3 and tier 4 towns that we enter as new cities. Okay. Just one last bit, if I can pull in. In terms of, you know, across the retail spectrum, we have seen, you know, that this quarter was, you know, aided by a strong wedding season as well as, you know, some bit of pent-up demand also flowing through. If you can highlight on the demand front, you know, how have these two aspects played out during the quarter? I think demand was very strong across channels, and we were able to witness a lot of walk-ins. We were able to witness good increase in volumes and a good increase in our merchandising mix. I think all those levers, like I mentioned in the last quarterly call also, that this is the first quarter that we saw after almost 8 quarters-9 quarters of disruption, where the big fat Indian weddings were not allowed. It was great, from all perspectives, and we are very confident about moving into the future with such trends. Sure. Thank you. That's all from me. Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Percy Panthaki from IIFL. Please go ahead. Hi all. Congrats on a good set of numbers. I just wanted to know, your per square feet sales, which you do typically in a normal year in Q1, is that what percentage higher or lower than the full year sales per square feet? Percy, the way I would like to answer this question is, typically when we look at a historical average of quarter one out of the year, it's about 24% of our business. That is a metric which we can use to, you know, kind of calculate. This is the total sales or this is the sales per square feet you are talking about? This is the total sales. Typically 24% of the year's total sales would come from quarter one. Okay. Understood. Secondly, can you give me an idea, whatever growth you've done this quarter, why you have grown 100%+? How much of the growth is from a pure price increase angle? How much of it is mix and how much of it is volume? Rough estimates of the breakup of this. Sure. Our overall SSSG was about 105.2%. When we break that down into volume and ASP, volume growth was at about 102.3% and ASP growth was about 1.4%. This is at a company level. We witnessed very good growth in terms of our average basket size numbers and different sort of parameters that we track at the store level and at a product level. All of those worked in our favors. Basically, you are saying that the average bill size has gone up so people are purchasing either more number of items or more premium products. Is that the right way to look at it? No. Not exactly, because last year the same quarter was a COVID impacted quarter, so the walk-ins were less. Of course, we saw tremendously a lot more walk-ins coming in from last year. That is why you will see that because a lot more customers walked in, we were able to have very good sales. When we look at average basket size, internally we break it down into average basket size of a groom walking into our stores, and the average basket size of a non-groom walking into our store. As this was a normalized year, the walk-in numbers of non-grooms was higher compared to last year, given it was a COVID impacted quarter. That is why we were able to witness good average basket size growth within these, each segment. Overall, each metric of the business was performing pretty well. We were able to bring in more consumers and consumers within the segment that we operate in, which is groom and non-grooms, we had a better basket size. This 1.2% or 1.4% ASP growth that you are saying, that is pure price increase or it includes the mix effect in this? Like we've been mentioning, Percy, we don't usually incur a direct price increase into our products. It is almost entirely a change in merchandising mix that is a continuous effort. Okay. Because I thought that, a lot of your products, SKUs are long running. It's not fashion, it's not fast fashion or seasonal that your SKUs keep changing. Whatever SKUs you had, let's say two years ago, a large part of them would still continue this year. If that is the case, then, I mean, the price increase would have to be in those SKUs only, right? Percy, that's not exactly how the case is. In terms of change in mix, it does not happen, let's say after two years, it's a little quicker than that in typical fashion. Especially in Indian wear, that is what we see. Apart from a white kurta, which is a very classic product, typical products do change within that time frame. It's more to do with the change in mix and the kind of products we churn out. Understood. Last question from me. Any color or flavor you can give on the three smaller brands, that is Manthan, Twamev, and Mohey? Sure. When we talk about Mohey, there are a couple of metrics which we track internally. All of them have been very positive in nature and have been really encouraging to see the brand grow. The quality of Mohey as a brand has been improving in terms of all these numbers that we internally track. There is also one important metric that we keep seeing, that Mohey's SSSG was higher than the company's average SSSG, both compared to last year's quarter-on-quarter, and also compared to pre-COVID quarter one of FY 2020. That was also very encouraging to witness. At the same time, with Mohey, we continue to open the flagship Manyavar Mohey stores, and we will also experiment with standalone Mohey stores this year. I think those are overall things that excite us with Mohey. The nucleus category of Lehenga has been performing really well with very good high conversion numbers coming from the front-end retail store level. Sarees has also been picking up pretty well. When we talk about Twamev, Twamev has been a very, very phenomenal sort of a success story for us internally. It's been beating all our internal numbers. We are very hopeful, and we are very confident of having great exclusive brand outlets of Twamev this year, and we are very confident about the kind of success that Twamev as a brand will possibly bring for us in the future. Manthan is still in the incubation stage. We've been trying out the brand on different online marketplaces and through the MBO channel. Again, it has been growing very rapidly given the small base, but we would like to see the brand and work on the product categories a little more for the coming two to three quarters before commenting on Manthan. Okay, that's all from me. Thanks, and all the best. Thank you. Thank you. Next question comes from the line of Abhishek Basumallick from Intelsense Capital. Please go ahead. Hi. Firstly, congrats on a good set of numbers. I had two basic questions. One is, probably an extension of what you just talked about. Can you just help me understand what are your plans on the Mohey brand in terms of, you know, scaling it up? And the second question is about, you know, what is the competitive scenario looking like, you know, in Manyavar overall? Those two questions please. Sure. In terms of Mohey, I think the plan in terms of a retail footprint expansion is to continue with our growth strategy of having Manyavar Mohey stores as the flagship concept of our company, where typically stores above 3,000-4,000 sq ft will have a good Mohey section within them. Because the TG is very similar for Manyavar and Mohey, this is an additional benefit that we are able to achieve. At the same time, in terms of Mohey, we are also going to experiment with standalone Mohey stores. This one in terms of retail footprint. In terms of product category, there is continuous innovation that is happening through our design and product teams, and that is the result of which we are able to witness better conversion rates at the store. Overall, all the metrics, like I just mentioned, which we track, have been performing better and better over each quarter. I think in the next two to three quarters, we should have a very good confidence of start to scale up the whole Mohey brand overall. Just to get a sense, I mean, could you share what kind of metrics you're talking about? Or, you know, is it just internal and something which you cannot share? Sure. I think the three most important metrics which we track for Mohey internally are productivity, the stock levels, and the inventory turnover ratio, and of course, the conversion at the store level. These are probably the four most important metrics for us, which we track for any of our newer brands. Sure. Thanks. The second question that I had was about the competitive intensity in Manyavar. You know, we've been seeing other brands also, you know, from the other large retail chains. They are also starting to advertise a lot and especially in celebration wear. What are your thoughts on how the competitive intensity is shaping up? Overall, I would like to comment on is what we are witnessing as a brand. Every market we operate in, we've been growing. There has been strong SS SG growth. We've been witnessing good retail footprint expansion across. Until now, we have not witnessed any such pressure. Also, given the kind of moats that exist in this industry, it is a very sort of protected environment. When we talk about the industry moats, we started producing Indian wear in 1999. The journey since then has been very good with all our jobbers, our vendors, and our artisans. You know, handling them and understanding how they operate over the last two decades has been a phenomenal sort of learning for us, and that is why we're able to produce Indian wear directly, which is a tricky task for larger players. When we talk about India as a country, consumer preferences change every 50 kilometers. That means the number of designs that are required, the kind of technology and industry inventory replenishment stack, that is required to manage operations in an Indian celebration wear brand is very complex. We've been able to achieve and be very productive on all of these spheres. Lastly, talking about the brand moats themselves, Manyavar as a brand is one of the most aspirational, yet value for money brand that people are connected with, that too emotionally. That creates an edge. Until now, given the kind of brand power and brand equity Manyavar has, the brand has almost become synonymous with the category. Overall, these are the kind of defense mechanisms that the company has. However, all of that said, we operate in a much, much larger industry, which is about INR 1.8 lakh crores, and there is definitely room for more organized players to enter and operate alongside with us. Sure. Thanks. Thank you. Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Satvik from Generational Capital. Please go ahead. Thank you for the opportunity. First question is for Vedant. Out of the INR 320-odd crore revenue, could you give the breakup of how much of it was from Mohey? And also could you share the per sq ft revenue of, say, Manyavar and Mohey both, if that would be possible. Thank you for your question. We've decided that strategically we're not disclosing the numbers of our brands separately as of now. Once they scale up and are larger in nature, we will definitely start to do that. It would be difficult to comment on this. Talking about productivity numbers which you asked, so about in FY 2022, we saw productivity of about 12,800+ and that is the kind of productivity we've witnessed. Of course, quarter one of this year beat the last year's quarter quite phenomenally with 105% SSSG. It would be quite exciting to see the kind of productivity numbers we're able to achieve this financial year. In terms of brand split, I think you can refer to our DRHP, which mentions the kind of split that our brands have, dated quarter two of financial year 2022. Okay. Sure. That was helpful because I think in the last call, you were mentioning that, you know, once we scale up to, like, say, 10,000 per sq ft in Mohey, then we can look at possibly scaling up that massively. I think that was the key metric you were tracking for the Mohey, specifically. Sure. I would like to reiterate my point. While Mohey, Manyavar Mohey stores, which is our flagship concept, they have a very good productivity level. Even Mohey within our newer stores is achieving very good productivity levels. What I mentioned, or I meant by the 10,000 productivity level in Mohey, is that we are experimenting with standalone Mohey stores this year. We've not done that before. Once we experiment and kind of understand the numbers we're able to give out, it is the expansion strategy for the standalone Mohey concept rather the Manyavar Mohey flagship concept. Okay. That was very helpful. The second question is for Mr. Murarka. Am I correct in my understanding that sales are booked basically when the products are shipped to the franchisees, and not when the actual purchases are done to the customer? Right. That's right. Our revenue which we see in the P&L is based upon the replenishment which we make to our franchisee. Perfect. That was very helpful. All the best. Thank you. Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Rushabh Doshi from Nirmiti Investments Advisors LLP. Please go ahead. Yeah. Hi, Vedant. Hope I am audible. Yes. Yes. Yeah. You know, actually we met couple of your retailers. From them what feedback we got was that, you know, they expect the kids segment to do very well. If you could just throw some light on this. Also, like, you know, maybe around 60% of the retailers, they were a bit conscious of, you know, thinking of adding Mohey because, you know, firstly, it takes a lot of space. And secondly, they have to, you know, take a lot of inventory upfront. You know, how are we addressing these issues, or are we going to, you know, give them higher gross margin here? Like, these are the two questions. If I got the first part correct, you were talking about kids, right? Yeah. Yeah. Internally, we've created a separate vertical for kids, and there has been a lot of work that has gone on in terms of product. And our team has been calling and training about kids, has been talking about how can we solve issues. I think that is why the whole retail network is also excited about kids, and we've been witnessing good growth. Again, kids as a category has been doing good SSSG business as well for us. We're also very confident. The only sort of concern with kids really is that Manyavar as a brand is so productive, that sometimes we find it difficult to give the whole kids section more space in our stores, which would immediately increase the business for kids. That is I think the one major thing which we're able to achieve by opening much larger stores. On the other side of your question, so as a company, even though we are in a buy and sell model, the entire inventory is managed by the company, by ourselves, right? So even though the franchisees give us a security deposit which takes care of more than the cost of goods that we send to them, it is not really their responsibility to take care of the product and liquidate it. If the product does not sell well in the store, as a company and as part of our policy, we bring it back to the company, and we send it to another store. We kind of try to use the entire supply chain technology system that we've created in order to make sure that the product gets sold. That is what the key USP of our company is. While on the other hand, this might be the reference to a lot of retailers asking us to add Mohey, but as a policy we've decided that we don't want to add Mohey in stores that do not have the space and capacity to, kind of, you know, show the women the entire plethora of our collections. If the store is less than 3,000-4,000 sq ft, typically we do not want Mohey to be in that store. I think it is more of that point than anything else. Thank you. Just could you just share, like, what percentage would be our kids sales on a overall company level? Sorry, can you please repeat that? I couldn't hear you. Yeah. What percentage would be our kids segment on a company level? Again, we are not disclosing these numbers, but right now it's a very small part of the overall company level in single digits. In low single digits almost. Yeah. Thanks. That's all from my side. Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Ankit Kedia from Phillip Capital. Please go ahead. Sir, couple of questions from my side. First on the job work expenses, you know, why is there seasonality in job work given that the manufacturing would actually happen 365 days? Yeah, Ankit, you are right. As far as our production goes on, we carry out our production throughout the year. Twelve months in a year it is done consistently based upon our targets for the entire year. It's a consistent thing which happens. Job charges also, you'll see that consistently it is incurred all around the year. It's not that in a particular part of the year or a quarter the job charges would be very low, or a particular quarter it would be very high. We carry out production throughout the year on a consistent basis. The reason why I'm asking because if you look at job charges in quarter four was around INR 25 crores and this quarter is around INR 20 crores. The difference in gross margin is actually coming on back of job charges, you know, being low in the quarter. The gross margin is a combination of different things. Actually, if you see, there are two, three components which become part of the gross margin when you compute from our financials. We add people component. One is the job charges. Then we add our consumption, the raw material consumption, the accessories, packing material consumption, and then we add upon the change in inventory. Combination of all that has an impact on the gross margin and costs. By combining all of that we get the cost. Then by reducing from revenue, we get the gross value. Job charges typically higher or lower doesn't have any impact on the gross margin per se, because it's the cost of goods sold which we compute, and the gross margin is built upon whatever we have sold. Also, I would just like to add one point. Another reason of job charges being slightly lower than Q4 is that a festival of Eid is in quarter one of financial year 2023, and that is why we typically see a few days of holidays, and that is why production quantity is slightly lower in some of these quarters. That is another reason why you might see this discrepancy from quarter four to quarter one. Sure. The second question is regarding the employee expenses. There also, you know, quarter four to quarter one, we are seeing some decline in employee expenses. Right. Why that difference also? It is mainly on account of decrease in the director remuneration, which is reviewed periodically by our board members and the NRC committee. For FY2023 overall, will the director remuneration be different compared to FY2022 or FY2021? Is there a board resolution for that or it's a quarterly thing, every quarter is being... There is normally board resolution also for that, based upon which the director remuneration would be different in FY 2023 compared to FY 2022. Sir, can you quantify that? You know, it's a combination of aspects, I would say. There's a fixed component and there's a variable component. Variable component would depend upon the profitability. So difficult, you know, to give you any number on that because of the variable component. Sure. That's helpful. Thank you so much. Thank you. Thank you. The next question comes from the line of Vikas Mistry from Moonshot Ventures. Please go ahead. Sir, I have only a few questions. Mainly, the question is on rental outfit for celebration, how this is going to cannibalize your market? Sir, could you please repeat your question? It was. Sir, my question is that, is that the rental market for the celebration outfits, how this market will going to impact, our business? This is a market that we continuously analyze and study. As far as India as a country is concerned, culture here is very strong. Still, for majority of our events and celebrations, we've seen a trend of people tending to buy new clothes, as it is part of our cultural heritage, and that trend continues. However, as a company, we continue to monitor and see the rental market and how that kind of, you know, evolves over the coming years. Sir, if it evolves, are we thinking in direction to just be pivoting to that part also? I think it would be very premature to comment on that. The whole idea is business is very dynamic. We try to keep a track of the overall industry, what the consumers are thinking, what the consumers want, and we take decisions accordingly. Right now, we don't see any such trends happening in the rental market that is of any concern to us at this stage. Okay. My final question is on Mohey. How we are thinking to scale that up? I mean, any guide, any further understanding on it, how we try to scale this up, it coming to three to four years? Sure. I think with Mohey as a brand, we started the brand in 2016. We took about three years to understand that L ehengas will be the nucleus of our category, supported by sarees and gowns. We launched independent marketing initiatives with Alia Bhatt as our brand ambassador in 2019, and immediately the brand picked up. We were able to witness very good growth. It was one of the fastest brands to reach INR 100 crore of customer revenue in just five years in India. All of these trends that we saw were very positive. Even now, the brand's underlying metrics which we track are all in a very good and positive direction. I think over the next three to four quarters, we should be in a very comfortable position to start scaling up Mohey and start to see benefits out of the brand. In terms of our retail footprint strategy, like I mentioned before in the call, we will continue to open up flagship stores of Manyavar and Mohey, which are very profitable stores for our franchisees and for the company, and we will continue to start the experiment with the standalone Mohey stores this financial year. Great. Thank you. That's all from my side. Thank you. Thank you. Next question comes from the line of Percy Panthaki from IIFL. Please go ahead. Hi. Just some accounting questions. One is the employee costs are down in quarter-over-quarter. That is versus Q4, they are down materially. Any reason for that? Percy, this is mainly because of decline in the director remuneration. Director remuneration has reduced in Q1 compared to Q4. Is this just a phasing issue, or, I mean, what is the reason for this decline? The director remuneration are decided by the board, and we have an independent NRC committee comprising of all independent directors. They periodically review and revise the director remuneration. I think annual revision in director remuneration, it was revised, and as a result of which, the revised remuneration has been booked in the current quarter. It has been revised downwards? Yes. Yes. Okay, this is like a permanent saving which will accrue for the remaining three quarters as well. Yes. It is for the entire year. As I mentioned, it is a mixture of a fixed and a variable component. The variable component would depend upon the profitability level. Understood. Secondly, can you give some idea on margins? Your EBITDA margin is in excess of 50%. Is there some particular set of conditions which is resulting in this being so healthy? Like, is it that you've got some inventory gains on raw materials, or there is some phasing of the ad spend, or there is some normal seasonality or something like that? Or this is like something which is sort of the factors are recurring factors and this kind of margin can continue for the rest of the year? In last two years, if you will see, Percy, we have been able to consistently deliver around 50% of EBITDA. I think, you know, one of the major aspects which has happened is the introduction of Ind AS 116, the lease rental accounting, okay? Which was introduced with effect from first April 2019. Now, as a result of which, earlier than this new change which has come, all my rental expenses used to come before EBITDA as a lease cost. Okay? After this Ind AS 116 accounting has come, majority of this cost is appearing as a depreciation in my profit and loss account, which has in a way resulted in a change if you see our EBITDA levels prior to 2019-2020. After that, there has been some impact because of that accounting, I would say. Otherwise, I think we have been able to deliver consistently around 50% of EBITDA in the recent times. We are confident as of now, and we don't see any challenge also towards this. Is there any seasonality here also in terms of, like, typically in a normal year, your Q1 margin would be higher or lower than a full year margin? On a quarterly basis, you know, as Rahul also mentioning, you know, our quarterly split of revenue does vary from one quarter to another. Typically, we have Q3 is the best quarter for us, with around 30-35% of revenue coming from there. Q1 is around 24-25%. Q4 is around 25-27%. Q2 is around 12-14%. That's the range which comes. Of course, the operating leverages which we get on account of the fixed overhead, okay, that increases in the quarter in which we have higher revenues. Okay. In those quarters, you will get maybe a higher PAT margin because of the operating leverages on account of the fixed overhead cost. In the quarters which are having the lower revenue mix, in those quarters you will have a lower PAT margin because of, you know, the lesser operating leverage of the fixed overhead cost. Those may be. Got it. It will be in from one quarter to another. Got it. There'll be a variation in EBITDA margin quarter to quarter, but there's no reason to believe that gross margins would vary from quarter to quarter, right? That will also vary, Percy. The gross margin also. Look, we can see the gross margin of 68.8% in the current quarter, right? As we mentioned, you know, improving the gross margin has always been the endeavor of the company in the past and in future also. In quarterly basis, it may vary because of various factors. That is why. No, no. Random variations are seen. I'm saying there is no systemic variation that this quarter has to be higher and this quarter has to be lower, as far as gross margins are concerned. Would that understanding be right? That is correct to an extent because unlike other peers in the industry, we don't have any end of season sales or discounts that come up in a quarter two or a quarter four. The range of our gross margin, which we expect to be about 66%-67%, which is what we are comfortable seeing at this time, will continue to happen in the coming quarters as well. That gross margin levels do not change significantly at all. Right, right. Thank you. That's all from me. Thank you very much. Thank you. Thank you. Last question comes from the line of Ankit Kedia from Phillip Capital. Please go ahead. Vedant, two questions from my side again. One is, you know, you said non-groom related footfalls were higher in the quarter. You know, does the kurta and non-groom related sales have similar gross margins in the system, or they will be slightly lower in the system as, you know, your advertising campaign is also towards the non-groom related sales to drive that? Gross margins within the Manyavar brand are pretty similar. I mean, there is slight variance in different products, even within, let's say, kurtas, because we believe in pricing according to the consumer type. While we as a company use science in almost all our aspects, pricing in some is something where we brought in art. We price our products without looking at the cost, and then we look at the cost and see if this product makes sense and should we send it to our floor. Overall, while there is some variance within each category themselves, overall margins within the Manyavar brand are pretty similar. Sure. My second question would be on online. You know, this quarter in the presentation, you haven't shared the share of online or the revenues. What's happening on the online side? You know, this year we were expected to see revamp of, you know, digital things. Where are you on the progress front on that, if you can just highlight? Sure. In terms of numbers, compared to pre-COVID levels of quarter one financial year 2020, we are about 3.7x when it comes to our online revenue. The CAGR has been about 55% for three years. In terms of our overall digital strategy, we've hired good companies with one of the best-in-class software technology platforms. The overall digital revamp is in place, and we are quite excited and should be out somewhere, sometime in quarter four of this year. One last thing. You know, you mentioned this quarter a lot of shop-in-shop was opened. The presentation again doesn't have the number for that, while earlier presentations used to have that. If you can consistently give us this data point, it will help us analyze online and shop-in-shop, you know, where the EBOs open. Just a feedback on that. Sure. We'll take that into consideration for next time. Thank you. Thank you. Due to time constraints, we have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments. Thank you everyone for the participation and hope we were able to reply properly to all your queries. Please feel free to connect with us in case you have any further queries or questions. Definitely. Thank you so much. Thank you. On behalf of Edelweiss Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.