Ladies and gentlemen, good day, and welcome to TCNS Clothing Company Ltd. Q1 FY 2022 earnings conference call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants' lines will be in 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. Anant Kumar Daga, Managing Director. Thank you, and over to you, Mr. Daga. Thank you so much. Good evening, and welcome to our Q1 FY2022 earnings conference call to discuss operational and financial performance for the quarter. I'm joined by Amit, our CFO, and HGA, our Investor Relations advisory. First of all, I hope you and your near ones are safe and healthy. While the number of cases has sharply declined, we must keep up the guard and continue to remain disciplined and take all necessary steps to contain the pandemic. While Amit will share detailed financials, let me share some key highlights of Q1, our perspective on the emerging situation, and progress on key focus areas for FY 2022 as shared in the last call. It's heartening that in Q1, despite being a severely impacted quarter, it saw an all-round sharper sustained recovery vis-à-vis last year Q1. Overall, the Q1 revenue growth to almost 3x compared to same quarter last year, though on a lower base, but with both online and offline showing strong traction. What's encouraging about this growth is that it's more evenly spread out across tiers of cities and types of stores. Overall, in offline, Q1 saw operational days of close to 48%, and for these operational days, the recovery was about 44% against pre-COVID levels. Our online business continues to see robust growth on a significant base that we have already achieved. Our online business more than doubled in Q1, with both own website and third-party marketplaces growing similarly. A key milestone this quarter is that our D2C contributed more than half of the revenue for the first time on a revenue sales basis. As on date, most of our network is operational, and the sales traction in the last couple of weeks has been extremely encouraging, being around two-thirds of pre-COVID numbers for like-to-like operational days. Though we continue to see disruptions across multiple markets, from mall closures to time and day restrictions, the momentum from Q1 continues to build further. With reduction of cases, gradual unlocking of the country, and increase in vaccinated population, we expect a strong festive season ahead. Now coming to key focus areas for FY 2022. The first area for us is growth of online business. As shared above, the business continued to expand at a rapid pace while we have continued to build on avenues of future growth. One of the key objectives of the last quarter was launch of omni-channel fulfillment model from our stores. It is now fully integrated, live, and stable. In addition to the endless aisle and own website omni-channel capabilities launched last year, now we are able to use in-store inventory across multiple marketplaces, including Myntra, Flipkart, and Ajio. This is a key step towards our strategy of single view of inventory across all online channels. On the product side, we are now creating digital-first products, which will go live on our website and marketplace in next couple of months. This should further add to the D2C business growth. Second focus area this year is an accelerated store expansion plan, and we are looking to add a net of 60+ stores this year. Our expansion program will be driven along two key initiatives, Project Rise, which is upgrading our flagship stores, and Project Bharat, which is entering into tier three, four markets through franchisee route. I'm very happy to share that we have already signed 40+ stores to be opened in the coming months. I'm particularly excited to share that we have signed 15+ stores for Project Rise at very attractive long-term leases. These would massively increase our brand presence and consumer experience across some of the most important retail markets across the country. Third focus area is cash conservation and cost control. Here again, we have cash reserves of about INR 140 crores compared to INR 125 crore in the same period last year. On cost front, we continue to engage with our landlord partners and are finalizing lease reduction for the year. The full impact of the same has not been considered in Q1, as many of the deals are in process of getting signed. From a full-year perspective, we see at least 20% savings against our regular rent commitment. Most of them will flow in the coming quarters. As we prepare for next level of growth, we continue to invest in people, processes, and infrastructure. Hence, there will be limited savings on employee and overhead costs. On the focus area of software top shelves, I'm happy to share that we are making the targeted progress on all fronts. Our automated inventory management system, phase I, has been implemented. Now, we are rolling out the planning and allocation functionality of the same. With regards to our initiative on consolidating our warehousing operations into a single warehouse, we have already consolidated all the finished goods warehouses and are on track to amalgamating fabric warehouse as well. The impact of this consolidation will be visible starting end of the year, both in terms of cost and much more efficiencies. Other initiatives of express replenishment incubation sale are also fully operational. Overall, quickly implementing our learning from the last year, we have mainly navigated the pandemic this year while embarking on investing in key levers for future growth. I will now request Amit Chand to take you through key financial highlights for the quarter. Thanks, Anant. Good evening, everyone. I'll be giving you an update on our financial performance in Q1. Our Q1 revenue was INR 94 crore, which is a growth of 189% over last year Q1. Our gross margin has improved by 500 basis points from 50.7% in Q1 last year to 55.8% this quarter. However, it continues to be significantly impacted because of skewed channel mix and impact of inventory normalcy on a lower sales base. With offline sales expected to recover in future, gross margin should gradually rise back to normalized levels. We have accounted for rent concession for INR 3 crore under Ind AS 116 accounting in Q1. Many of the rent concession deals are in various stages of discussion, and we expect 20% in savings in rent expense for the full year FY 2022. Employee cost and other expenses are in line with what we spend in a quarter. As Anant already mentioned, we expect limited savings on these heads for the full year. The company incurred a loss of INR 20 crores at EBITDA level in Q1. Vis-a-vis loss of INR 26 crores in similar period last year. At PBT level, the loss was INR 49 crores in Q1 versus INR 50 crores last year. At PAT level, the loss was INR 36 crores in Q1 versus INR 45 crores last year. We need to look at these numbers in reference to the point that the rent savings accounted for in Q1 this year was only INR 3 crores versus INR 19.3 crores in Q1 of last year. As and when we conclude the rent concession deal, further rent savings will be accounted for in subsequent periods. During the quarter, we opened seven new stores while we shut down nine stores. We continue to remain focused and committed to the accelerated store expansion plan, and for the full year FY 2022, we expect to open 60+ new stores on a net basis. Our cash reserve as on date is INR 140 crore. This is in addition to the unutilized bank limits. Thank you. We are now open to questions. Since we are the only listed entity in our segment, we might not be able to share granular details that could be competitive information or requires your understanding of the same. Thank you very much. We will now begin question and answer session. Anyone who wishes to ask a question, please press star and one on touchtone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen you will wait for a moment while the question queue assembles. Participants you may press star and one to ask a question. The first question is from the line of Manish Modi from Nippon India. Please go ahead. I have just two questions. Firstly, let's say if you could probably help me understand how is now the demand environment looking around, given that, let's say, the discounts even have started. Just wanted to get some, let's say, if you could give some qualitative thing, that'll be helpful. Sure. Manish, as I just mentioned, we started end of season sales slightly late this year compared to FY 2020 and FY 2021. It started only in third week of July, and in the last three weeks, what we have seen in the operational stores, a recovery close to 70% against pre-COVID levels. This is the kind of recovery last year we saw somewhere around October, the response is extremely encouraging. If I have to give you some qualitative input on that, we are seeing very interesting trends. One, after a long time, consumer is moving away strictly from a need-based shopping, and there's a lot of impulse shopping that is happening. Second, we have never seen such high proportion of full price sales in an end of season sale, which we have seen in the last three weeks. Third is a very even kind of recovery. The mall's recovery is also very encouraging, which was lacking last time. These are some of the top things that we are seeing right now. With constant vaccination and opening up, if God forbid, if there's no other major wave or something, I think this is a precursor to a strong festive. This is what we feel. This 70% is, let's say, like to like for those three weeks of discount which you'd have in FY 2020. Is that how it is? That's right. This is for July versus July. No, not this is July. This is last three weeks of this year versus last three weeks. Probably third week July onwards, fourth week July onwards. I'm just trying to understand. Like you mentioned, end of season sale was earlier this year. Are you comparing the same end of season sale this year versus FY 2020? You're comparing just July versus July 2020? We said end of season sales started late this year, not early. We started it say somewhere around 19th of July. I'm giving you a number of 19th of July till, say, about yesterday versus the same period in FY 2020. Okay. One last one from my side. I believe in lot of the mall operators, when they had given you the concession holidays, they had a claw back clause saying that in FY 2022 and 2023, they will claw back some amount of rent in terms of, let's say, revenue share. Just wanted to understand when they had this clause, did they get the hurdle as INR 100 sale itself or did they get the hurdle to let's say INR 80 sales? INR 100 is the normalized run rate. Manish. You see, right now all kinds of deals are being negotiated, and I don't want to speak out of turn out here. A lot of the clauses which malls have given are also not acceptable, and hence, we have not signed many of the deals yet. All kinds of models from revenue share to clawback to long-term sales related, graded sales, slab-based rentals, all of that is being negotiated depending upon the location and the business that the brands and malls are doing. That's all there is. Would it be the right understanding, let's say if you had, let's say, rent concession already in FY 2021, some amount of that, I'm not sure if that gets covered the operating leverage, but some amount of that will increase because of all this. Let's say key properties would increase on a year-over-year basis. Is that a fair understanding? No, it's not so relevant. It's not that relevant. Okay. Thank you. Thank you. The next question is from the line of Nihal Jham from Edelweiss. Please go ahead. Yes, sir. Thank you so much. Good evening, Anant and Amit. Three questions from my side. First is, on the e-com side, it is definitely an impressive performance that we've seen a growth in over last year. The only thing is that, if I look at some of the other players there, I have some numbers available. They have still managed to achieve what they did in a pre-COVID era or maybe close to the run rate that they were doing even till the fourth quarter of last year, that is till three months back. I just wanted to understand that was it that it is the restrictions that maybe were there or some certain fulfillment issues because of which this channel was not able to reach potential or anything else you know that I like? No, I really couldn't understand the question fully because I think even on year-on-year basis and all, we have been growing at a very good rate. My understanding, online our performance has been better. Barring a couple of weeks in July when we didn't go on aggressive discounting. I don't know what number exactly you are comparing, Nihal. Sorry, if you could help me with that. Amit Chand, if I look at online business, it is around I think approximately INR 20 crores for this quarter. If I look at the same corresponding number even in, say, the Q1 of FY 2020, it was around INR 34 crores. It is, say, around 60% of the normalized level. If you had to say it, we were doing around INR 45 crores-INR 50 crores on a quarterly basis last year. My question was coming from that, was there a possibility that these e-com revenues could have been, say, closer to the INR 30 crore-INR 40 crore range? Or is it that this is the best that could be achieved in the current situation given the restrictions that we have? Yeah. Nihal, for the current quarter, the share of online channel that we have also kind of mentioned in the presentation is 50%, right? If our revenue is INR 93 crores, 50% of that has come from online channel. Okay. I'm sorry. Maybe there must be some disparities. Check that. We have grown well, and this is despite the fact that for a few days there was a ban on all non-essential items. I think despite that, we have been able to grow meaningfully well. Okay. Sure. I'll just check that out. Maybe it must have been wrong from my side. What I wanted to also check on was that when we speak of the Omni initiative that we are making an effort towards, ideally, Anant, how is it that will end up helping drive sales especially in terms of the fact you mentioned that now you'll be able to, say, deliver even via your store where you've got that also in place. What happens is, Nihal, see, lot of time, consumers see lot of products online, but especially in the fresh space, a lot of the portals don't carry the entire inventory because their model is still slightly more old-school in merchandise. What it does is, it doesn't expose the catalog only to the consumers. Now, suppose if someone looks at an Amazon site or a Myntra site and they like a product, even if they don't have a stock, my store can ship it. We don't lose on those sales at all. That's one. Second, what also we have seen is as the time to delivery reduces, your return rate also come down. Wherever we have a localized inventory and we can reduce our time to delivery, that also will help our metrics in terms of sales. That's the second thing. Third is overall the same inventory pool, irrespective of the location, can be used for multiple customers, multiple portals, just enhancing its availability. All these really helps in when you have a strong Omni rollout. That's helpful. Just one last question from my side, Anant, is that currently of the 60 stores that we are planning to add, what is the proportion you think will be franchise-based? If I understand right, out of the total store count of 550, approximately 30%-35% will be franchise. Is that a right assumption? Yes. See, I'll give you a ballpark number, but all this can change depending upon which final locations we are able to open. The idea right now is to have about 35%-45% of franchise stores and balance own stores. Okay. That's helpful. I'll just correct myself. I had read the number on the online side wrong, take that question back. I know. Sure. Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Varun Singh from IDBI Capital. Please go ahead. Yeah. Thank you. Thanks for the opportunity. A couple of questions. First, from the online channel, I think the previous participant has asked regarding why we are not growing as fast as compared to other companies. If I can put that question in a more contextual form, 50% of the INR 93 million is roughly INR 47 million odd revenue that we are enjoying from online channels. We reached the peak of the revenue from online close to INR 65 million, and it is only in Q2 and Q3 of the last financial year, which is Q2 FY 2021 and Q3 FY 2021. From INR 65 million during current quarter, only INR 47 million. It's a lower number. If you can help us understand that during the lockdown period, wherein really customers should be shopping more, and even if I look at your Q1 FY 2020 number, that is also close to INR 40 million. Reducing the seasonality, I mean the quarter-on-quarter. I mean, we think we don't see a significant amount of growth compared to competition. If you can help us understand, how do you think about online channel, the numbers that you are clocking? Varun, two parts to your question. First, is as I just explained to Nihal also, this quarter, even from online perspective, was not operational for the full 90 days. There were restrictions in many of the pin codes for not delivering non-essentials, and that is where some sales were lost. This, I think, is a phenomenon which everyone in the industry has faced. There were a lot of pin codes, especially in the months of later part of April and early May, wherein things were disrupted. Second, coming to your point about growth rates. Growth rate is one that we'll also have to consider the base. At a base level, our sales are probably, I'm not very sure which other players you are talking about. Compared to wider industry, I think our base is also far higher and stronger. We invested in this capability probably ahead of many of the other players. I think if you take that effect also into place, online, at least for operational period, we saw very strong traction and good growth. Okay, sir, my second question is on MBO channel. This is a channel wherein we scale this business up to a significant level, and we were enjoying kind of INR 40-odd million of revenue historically. That INR 40 million has now kind of vanished. Now, I mean, in presentation, I could not find revenue contribution from MBO. It must have been clubbed with online and others because of course over last three, four quarters it contributed hardly 0%- 3%. How do you explain the kind of revenue that we were drawing earlier and why we are not able to revive this channel? How do you think about maintaining this channel going forward? Varun, I think this is something which we have discussed over last few calls also, but let me just reiterate. See, MBO, we started with a rationalization exercise wherein we changed the business model, we changed the approach to the business. If you look at it subsequently, entire industry, most of the players have rationalized this channel at some point in time or other. When this COVID wave one happened, the most impacted channel was MBO. We didn't want to take an aggressive credit call, and hence we just simply downscaled that channel. There were a lot of secondary sales happening, but we were not booking any revenue here. The billing again started this year, this spring-summer, wherein in Q4 you would see some build-up. Having said that, the wave two hit, typically first quarter is not a very big MBO billing month also because they work on seasonal billing. For festive, we should see some numbers coming back in Q2. From a long-term perspective, I don't think MBO channel would hit the same run rate that they were earlier because of all this movement from unbranded to branded and online to online. This channel continues to be in stress right now. You should see some good traction starting Q2 for the festive build-up. Earlier MBO used to be probably 8%-10% of the business. Earlier I also mentioned probably this channel won't be at those levels. It could be at 2%-5% levels. At that level it will come back, provided we get a good six months, no disruption runway. Thank you very much, sir. Sir, just one last question if I may. Still in on store closures. On a net basis, sir, as we observe over the last four quarters, we have been closing constantly. For example, in Q1 2021, 8 stores, then 13, and then 10 and this quarter on net basis we closed two stores. We don't see a significant amount of store closure in case of other competition. How do you explain these store closures and how are the analytics you should be gaining confidence in terms of store addition that we are doing going forward? I mean the 60 store addition guidance that you have given. If you can help us understand these store closures compared to competition. That's all from my side. Thank you very much. Sure, Varun. A very fair question. Again, see I don't know whom you are comparing us with as competition because as far as I know, in my trade, most of the brands have really curtailed down their store count over last five quarters. I think it was a very logical thing to do because, see, we took a very aggressive step, both in terms of what real estate at what price we can get now. Our stores typically are not high-ticket stores unlike a lot of the big boxes. Our cost of shutting down a store and then the opportunity gain that we can get from locking in better real estate at lower prices made sense for us to go very aggressive on this. This is what we have been telling last year also. Now we are rationalizing store base. There would be few closures, maybe 25 closures which will happen every year. Apart from that, COVID wave two would make it another four, five stores. Those kind of closures will continue in future. On the confidence from new stores, as on date as we speak, we have already 10, 40+ stores. By Q2, net addition, you won't see a very big number, but from Q3, you should see a 20+ store addition every quarter. All those are signed, all those are in pipeline, and I think you'll start to see that very soon. That's very helpful, sir. Thank you very much for the detailed answer. Yeah. Thank you very much. Participants, you may press star and one to ask a question. Next question is from the line of Jaspreet Walia from Newmark Capital. Please go ahead. Hello. Sir, good evening. Thanks for taking my question. Sir, in your presentation, you mentioned that you'll be introducing online first collection pretty soon. Could you please explain that, how would this collection be different from your usual collection? Are you trying to address different price points or different kind of styles? Yeah, good evening. That's a very nice question. See, what happens is, we are a mix and match brand. Where consumers come to stores, they look at various tops, various bottoms, and they mix and match and create looks. This is one thing which is still slightly challenging online. What we have seen is, there is a consumer base who just want to buy picks. Maybe a two-piece or three-piece. What we are doing is, we are creating those ensembles which are easier to pick. Because we don't have this big challenge in the stores, we are not replicating the same thing out here. This is essentially what we are doing on online. Some two-pieces set, some slightly more entry price point dresses and those kind of stuff. Which we look at, being a missing part in our collection offline, this is not also required in offline, but probably online could do more justice to the further consumer that comes. How would the price points be different from your usual price points which you have at physical retail? See, it's a different product category, essentially. Like-to-like comparison won't be possible. Yes, the prices could be in the range of 10% ±. That's the kind of thing. We are not going down the line of a very low price point or anything like that. It's more about the way product is constructed. Got it. Sir, as far as your Omni initiative is concerned, what's the status right now on the execution front? What has already been achieved and what is left? Whatever is left, by when will the full initiative be rolled out? We have rolled out our Omni initiative in close to 100 odd stores now. In the phase I, we had just our website, our own website attached. Now we have three major partners also who are on board. In next six months, you'll find more and more marketplaces getting integrated into the Omni. The Omni store count also will increase from 100 to probably 150, 175 odd stores. Got it. When would all your stores be covered under this initiative, or that is not required? All the stores are not required because see, in every city, every geography, not all the stores are required. We'll be slightly selective because see, it's an initiative which is good to talk about, but it actually takes a lot of effort on the ground, the staff training, the packaging, and it's a very different thing to execute. I think we'll cover all the major geographies with required number of stores. The intent is not to roll out it to 100% stores in near future. Got it. You said three major fashion portals have already been onboarded on your Omni initiative, and six are left. No, no, I said few others are left. There are smaller marketplaces also, and one or two major players, so they are left. Got it. Thanks a lot, sir. That is all from my side. Thank you. Thank you. A reminder to all the participants, you may press star and one to ask a question. Next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Yeah. Hi, Anant. Thanks for the opportunity. I have two questions. Assuming COVID impact to be restricted to FY 2022 only, by when do we expect returning to our per store revenue run rate? Per store revenue run rate? Yeah. I think the way sales are building up, if there's no major disruption, this year itself you should see that coming back, because it's been much better than last year. I believe post-festive, if the momentum continues, then probably we are looking at even if not pre-COVID, very near pre-COVID this year itself. My question was, can expansion into tier two, three, four cities through franchisee route delay per store revenue recovery? No. Sorry. That's your question. If you look at it's a two-pronged strategy, right? One, we are getting into tier two, tier three. Sorry, tier two markets are very good. Tier three or four, where the revenues could be slightly lower per store. At the same time, we are having our target is to have at least 30+ Project Rise stores, which are all the biggest markets. For example, the leading mall in Mumbai or the leading high street in Delhi where we have all increased our store sizes by 2 x. I think that will more than compensate for lower revenue stores in tier three, four markets. If at all, I think at least for this year, it should increase, once all these stores are rolled out. Sure. Secondly, larger players like ABFRL also have indicated aggressive plans with entry at similar price points. Secondly, the focus also remains on increasing share of private labels in their stores. I wanted to pick your thoughts on how are we guarding ourselves from these threats? See, out here, as we always say, ethnic is one of the most attractive spaces right now, and the momentum that we expect to see post this phase would excite all major players. We are not very surprised that many other players would also want to enter the segment. Private labels, again, for as many years as we have been in this space, we have always been focusing on private label. See, brands play a role and private labels play a role, and this is what I've always said, unless you have a category of 100% private business, particularly you will have the stronger brands. That's where, as a brand, irrespective of whoever is coming into the fray or adding to it, you have to ensure that your brand pull, your differentiated product bouquet, and your return metrics on the shop floor all works in your favor. I think we'll be investing, and as we speak, we are investing in all these things, in brand building, in strengthening the product portfolio, in the ways we are reaching our consumers, our backend efficiencies. I think this is where the brands compete, and that is what we'll continue to do. Sure. Thank you. I have more questions. I will come back into queue. Thank you. Sure. Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Varun Singh from IDBI Capital. Please go ahead. Sir, just one bookkeeping question. On other income, there has been a significant decline. Currently it's only INR 3 crore as compared to the run rate of INR 17 crore-INR 18 crore that it was reflected in the books over the last two, three quarters. If you can give us some comment on why it has declined so significantly, and what kind of number we should expect going forward, given that we have more cash balances. I was quite confused in terms of if we have so much of liquid fund, then why other income has declined by so much. If you can help us with that. Hi, Varun, this is Amit. Sir, I'll draw your attention to the note number five, where we have mentioned that last year for this quarter, we recorded rental concessions under other income. That was to the tune of INR 12 odd crores. First, whatever rental concessions we got, we adjusted it against the rental expenses for that quarter and any remainder we had disclosed under other income. If you remove that INR 12 crores from the last year's number, it was about INR 4 odd crores against which this quarter we have recognized INR 3 crores in other income. It is fairly comparable if you account for the rental concessions. Okay. Understood. Thank you very much. Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Yeah, hi. Thanks for the follow-up opportunity. Sir, this question is for Elleven. Go Colors have been expanding by about 100 and 150 stores per year in today's DRHP filing. Can we also see such a pace of expansion in this category once we achieve the desired unit metrics? Yes. This is a category where expansion could be very fast because, particularly they are like, it fits well with high street, the local markets, malls, and again, the model is pretty standard. The product lines being very standard and the store boss being very standard. You are right. Once we have the proof of concept, once we have one season going, the scale-up could be meaningfully faster. This itself could, on a conservative basis, if everything works well, you can open 30, 40, 50 stores of this every year, like Elleven. Okay. This 50 would be still lower than what they are opening, right? I'm just saying, when you start scaling up from the pilot phase to the first scale-up, I think you also need to take into account the kind of entire supply chain, entire coordinates. I was just mentioning to you, this is the least that a brand like this can have. Obviously, the numbers could be far higher. Sure. Do the store closures that we have been doing, do they have a bias towards any of company-owned or franchisee-owned models, or it is secular across both? No, it is not biased towards anything. It is a mix between the brands, between the models. Lastly, just on a competitive positioning only, peers, be it on the menswear side or on the womenswear side, have been raising capital to either fund losses or maybe to expand. Several others have also filed DRHPs, like Manyavar, Go Colors. We having a stronger balance sheet, so how do you see these competitive moves? We also, there might arise a need, as in, we may also go for a capital raise to expand aggressively going ahead? See, we have a model which in normal times is going to generate cash. I don't think for any expansion we will need cash. Again, in terms of losses and all, we have a strong balance sheet, we can sustain it. I think that was since the end of 2018. Even last year you would have seen despite the losses, without any fund raise, we have been able to deliver on a higher cash than what we started with. I think we have some long-term opportunity in working capital, and we should be able to manage with that. The only time probably when we might need a fund raise or something is if suppose there's an inorganic opportunity. That I can't comment on right now. For organic growth and loss funding, I think we are well covered right now. We don't need to look at a fund raise at this point in time. Sure. That's useful. Thank you. Thank you. Thank you. The next question is from the line of Raj Joshi from Ace Securities. Please go ahead. Hello. Sir, I have two questions. The first question is on our rental part. Are we still negotiating with our vendors for the rental cut down? Yes, there are a lot of negotiations which are still happening. There are a lot of discussions which are going on. Okay. As we are seeing in Maharashtra, there are still malls that shut, and the Maharashtra government has given the guideline to open the malls. The thing is that they have given the instruction that only both vaccine who have taken, they can only go. How we are thinking about our current quarter and subsequent quarter will perform? Okay, there are two things. One, you specifically spoke about Maharashtra malls, and second question is about overall performance. Is that, or are they related, sorry? Both are related. Okay. See, most of the country has been operational, though there have been different lockdowns and timing restrictions. I think Maharashtra malls were the last to open. You are absolutely right. With such kind of conditions, it's very difficult to do meaningful sales out there. We are in discussions also with various agencies to figure out how this can be made slightly easier and more favorable for customers to come to the malls. Apart from, see, some of these areas where restrictions are, in other places, we are seeing a much easier opening. Especially last week, I was mentioning, things are looking much more positive. We are very hopeful that if this trend continues and there's no significant third wave or something like that, Navratri could be a very strong season. Unlike many other categories which have gone through lockdown and then pent-up demand, and then people have been able to come and shop and take that out, I think with ethnic this has not happened yet. A lot of business in ethnic happened because of occasions, and for last one and a half years, there's no opening up of that. I believe there's a huge pent-up demand. As and when things open up, I think we'll get to witness the same. Okay, sure. Thank you, sir. Thank you. Participant you may press star and one to ask a question. The next question is from the line of Ankit Kedia from PhillipCapital. Please go ahead. A couple of questions I have. First is on Nykaa Fashion. In one year or two years, they have been able to done around INR 600 crore, INR 700 crore of GMV, and I see we are also present on Nykaa Fashion. Could you just share your experience, how is Nykaa Fashion compared to Myntra or other marketplace models? Is their business model similar to some of the others? Ankit, I won't be able to share too much granular data because it's also about the business model of these people. We have also seen a very rapid scaling up in Nykaa. Having said that, Myntra base and Nykaa base are just not comparable. Myntra is on a very, very large base, still growing at a very attractive rate. I guess Nykaa right now, higher growth rate is also because of very, very low base compared to Myntra. Our experience so far has been very encouraging on Nykaa as well. Sure. Sir, my second question is on the gross margins. While this quarter gross margin has been the second best in last four, five quarters, do you think with the online share increasing, it is incrementally getting tough for us to go back to the old margins? While I know in the past conf calls, you have always said that you should look at EBITDA margins on online and not at gross margins because they would be lower. From our perspective, should we look at declining gross margins compared to FY 2020 while the EBITDA margin would be similar? Would that be a good guesstimate for us? Ankit Kedia, your understanding is bang on. With online, because of the way it's structured, whatever the costs are, your gross margins will get slightly impacted. Margins also depend upon what kind of share website has, what kind of share third party marketplaces have. All that will evolve. Yes, historically we have been delivering EPS. Obviously, with the channel increase share of online, it will come down slightly. Again, at the PBT levels, I think all these get equalized. Probably that would be the best metric, if you ask me. Taking into consideration all the below the line items, cost items. That should be a more fair comparison. Sure. Sir, are you seeing any change in the delivery cost for online with omni coming in now, from more and more stores coming in? Are you seeing the unit economics for online improving steadily over the last one, two years, or pretty much remaining the same? No, we are seeing an improvement. If you look at our own website also, I think all these parameters are improving. As I just mentioned, with omni, the return rate also drops. The moment return rates drop, even at the same cost per delivery, your delivery cost comes down. We are also seeing higher number of repeat customers coming and much more repeat purchases happening, which is because better overall marketing increase. We are definitely seeing an improvement in the profitability on the online side. Thank you. The next question is from the line of Shivaji Mehta, an individual investor. Thank you for this opportunity. Sir, with competition heating up and a lot of listed players now announcing entry into the ethnic wear space, and also some of the private equity-backed unlisted players announcing plans to list in the next one to two years, do you feel that margins could be under pressure going ahead? The thing is, if you ask me the discount, the one impact of this is discounting. You know how it's manifesting discounting. If you ask me the peak we had seen was last year. This year onwards, there's some more rationalization in that. Having said that, see, I don't think too many players are coming in the same area where we are. Competition definitely is heating up much more in the online D2C segment, which is where we don't play actually. There probably, it is much more sharper. The ranges where we play is about having a differentiated product at a slightly massive and premium pricing. Out there it's still very limited. I guess, whichever player comes in, given our supply chain strength, given our product assortment, MRP matrices, I don't think we would be in an advantageous position to my mind because scale and all also relies. While I feel there could be some players coming and discounting and all getting more serious, but I think it will be restricted to some part of the business. That's our feeling right now. Makes sense. Sir, final question from my side is basically on the yarn and the cotton prices, which have been on a rise. What could be the impact of this in terms of the price hike that we may need to take going ahead if they stay at these levels? Yeah, that's a question that we wrestle every day with. See, so far, because we do a lot of job work of our fabrics, and then we've been able to do some reverse engineering on our products. We've been able to mitigate the risk to a large extent for monster specific reasons. Next spring, summer 2022, we are yet to place orders. I think because as a brand, we use multiple fabrics, and it's not that the yarn prices have increased across, we're still able to substitute a lot of fabrics that are slightly more reasonable fabrics. Some parts could be impacted. For that, probably, in those specific product categories, we might have to take a slight price increase. That we'll see when we are placing our systems tomorrow. Okay, thanks a lot, sir, and have a good day. Thank you. Thank you. A reminder to all the participants, you may press star and one to ask a question. As there are no further questions, I will now hand the conference over to Mr. Anant Kumar Daga to close the call. With this, I would like to thank you for joining on the call. We hope we have been able to address your queries. For any further information, please do get in touch with us or HGA. Have a nice evening. Take care. Cheers. Thank you very much. On behalf of TCNS Clothing Co. Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.