Ladies and gentlemen, good day and welcome to the TCNS Clothing Co. Limited Q3 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 participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anant Kumar Daga, Managing Director, TCNS Clothing Co. Limited. Thank you, and over to you, sir. Thank you. Good evening, everyone, and welcome to our Q3 FY 2022 earnings conference call to discuss operational and financial performance for the quarter. I'm joined by Amit, our CFO, and SGA, our investor relations and analytics. I hope you and your near ones are safe and healthy. While the overall situation is improving, it is important to keep up the guard. While Amit can share the detailed financials, let me share some key highlights for Q3, our perspective on the emerging situation and progress on key focus areas defined for FY 2022. I'm happy to share that we have matched our highest ever sales quarter despite COVID-led disruptions towards the end of December. The offline channel bounced back strongly and online channel continues to grow well on a large base. Overall, the Q3 revenue grew 37% sequentially versus Q2 and 38% year-on-year over Q3 FY 2021. Q3 started with an encouraging textile sales, though with the onset of COVID we saw a cautious stance by consumers towards the end of the quarter. In Q3, the offline channel recovered to reach close to 90% levels against pre-COVID on a like-for-like basis. Q3 also saw MBO business getting back on track and we see it scale up from here on. In online, business continues to see robust growth on a significant base that we have already achieved. Our D2C business initiative contributed to more than half of the overall online revenue sales and our brand websites have grown faster to reach a contribution of high teens of the total online sales. Now coming to the key focus areas for FY 2022. First area this year is store footprint expansion. As shared earlier, we worked on an accelerated store expansion program starting Q3 and have added 18 net stores in the quarter. We are well on track to open 30+ stores in Q4 to take our total tally beyond 600 for the first time. Project RISE, which is our key priority, saw opening of 9 stores till end of Q3, and another 10 stores are in pipeline to be opened in next couple of months. As I shared, Project RISE is a very exciting project for us as it'll massively increase our brand presence and consumer experience across some of the most important retail spaces across the country and give a chance to do justice to all the new categories and brand extensions across markets. Project Bharat, which is our attempt to penetrate tier four towns and beyond. We have already opened 5 stores and we have another 15 in the pipeline. The second area for us is the growth of online business. We have a leading presence and a strong base in the channel. As I mentioned, the business has continued to grow well across both website and third-party marketplaces. A key focus area for us has been building the D2C model, and it has driven the growth of business to contribute to more than 50% of online sales this quarter as well. Our brand website continues to grow ahead of third-party channels. The omnichannel fulfillment scaled up strongly this quarter and is now contributing to more than 10% of the sales for select channels. It was about 5% last quarter. The third area is cash conservation and cost controls. Q3 was also a healthy cash accretive quarter for us and our cash reserves stand around INR 180 crores ahead of pre-COVID levels. We set out an ambition of saving more than 20% against our rent cost for the year, and we have already achieved the same. We continue to invest in building future growth engines through additional capabilities across people, processes and infrastructure. The fourth area of focus, we are happy to share that all the initiatives are on track. The integrated warehouse with capability to handle multi-category and multi-channel fulfillment is operational. Our automated replenishment system is also scaling up as planned. As communicated in the last call, we are geared up in spring summer 2022 to build on the new brand and category initiatives. In the new Coordinates brand Elleven, we expect to end the year with 15 stores and extend the presence to 50+ large format doors. Based on the learning in the pilot stage, we have been able to significantly strengthen the product portfolio and get a better product customer connect. The same has been showing encouraging results across existing stores and large format doors. In the footwear category, the footprint has expanded to around 150 exclusive brand outlets. As a category, it's already contributing to high single digits of the store sales across these stores network and contributing to double digits in many large size stores where the category has got full representation. In the cosmetics category, pilot is underway and we will have more to share in the coming season. We are excited to see how these initiatives are building up and are fully committed to a fast scale-up over the next few quarters. We will have much more to share by end of spring/summer 2022 season. I will now request Amit to take you through key financial highlights for Q3 and nine months FY 2022. Thank you. Thanks, Anant. Good evening, everyone. I'll be giving you an update on our financial performance in Q3. Our Q3 revenue was INR 328 crores, which is a growth of 38% over last year Q3 and a growth of 37% over our Q2 revenues. Our gross margin has improved sequentially to 67.8%, which is a significant improvement over Q2 gross margin of 62.7% and last year Q3 gross margin of 61.1%. In Q3, we accounted for rent concessions of INR 7.7 crores under Ind AS 116 accounting. With this, we have so far accounted for INR 27.8 crores of rent savings in the current year and have delivered on our goal of 20% savings on annual rent bill. Our spends on employee costs and other expenses reflect the investments that we have made in people, processes, and infrastructure. As we had mentioned earlier, we expect limited savings on these heads. In Q3, the company generated a positive EBITDA of INR 67.7 crores year-over-year and EBITDA of INR 43.4 crores in Q3 of last year, which is an increase of 56%. PBT for the quarter was INR 35.3 crores, an increase of 109% over last year's Q3 PBT of INR 16.8 crores. PAT for the quarter was INR 25.1 crores, which is an increase of 98% over last year's Q3 PAT of INR 12.7 crores. During the quarter, we opened 18 stores on a net basis, taking our store count to 575 stores. The accelerated store expansion which we started in Q3 will continue in Q4, and given the pipeline of stores that are slated to open in Q4, we are confident of closing the year with over 600 stores. I'll be talking about 9 months financial performance now. For 9 months ending 31 December, our revenues were INR 661 crore versus INR 414 crore last year. EBITDA was INR 92.4 crore versus INR 10.4 crore last year. PBT was INR 0.4 crore versus a loss of INR 81.6 crore last year, and PAT was INR 0.1 crore versus a loss of INR 60.3 crore last year. Our cash reserves as on date is about INR 180 crore. This is in addition to the unutilized bank limits. Thank you. We are now open to questions. As we are, one of the few listed entity in our segment, we might not be able to share granular details that could be competitive information. I request your understanding of the same. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Yash Mehta from Edelweiss Securities. Please go ahead. Yes, good evening. This is Nihal Jham from Edelweiss Securities. Am I audible? Yeah, I am. You're audible. Yes. Thank you so much. Congratulations, Anant and Amit, on the strong performance. Three questions from my side. First is on this quarter. Can you just give a sense of, you know, how the discounting generally go on, and when did we start our EOSS? Just to get a sense of, you know, other comments based on other than the recovery that you already mentioned about. Nihal, typically we go on EOSS starting fifteenth December or mid-December, essentially. You know, for sure it's not that full store is less on discount, so it's a kind of promotion that starts. Typically, you know, by mid-February is when we close this. This year we started slightly late and we end. We are aiming to end it next week onwards. That is helpful. The second thing, Anant, I noticed is that if we look at our e-com run rate in terms of top line, which has, say, been around, say, INR 50-55 crores per quarter, would it be right to say that this is now more or less the kind of sustained run rate that this business can achieve in this channel and it can grow organically? I don't want to take some of the new brand, but at least for our core brands, that is W and Aurelia, that for now at least this is something that is the set base and from here you see an organic rate on the top line. How are you internally looking at it? Do you see a massive potential from here also for this to become a much larger share of the business? Nihal, you know, I think as we have explained in earlier calls also, probably one should look at YTD numbers because our online business is a mix of B2B and B2C. If you look at it nine months, we believe on consumer sales, we have been growing at, you know, upwards of high teens kind of number. While on primary basis this is what you see, on secondary basis, that's the kind of growth we have registered. Now, you know, these bases are also not stable state bases. For example, last year online got a huge fillip because of offline struggling really, really badly. I guess, we have to take that with a pinch of salt. Going forward, my sense is we'll be able to register strong growth numbers. My guess at this point in time would be that growth could be in excess of 20%. Even from the current base on this channel is what we are saying. Yeah, yeah. Absolutely. That's helpful, Anant. Just one last question. This is on Elleven. Now, understanding this business a little better, I guess, given that it's more of a utility and less of a brand. Correct me if I'm wrong. That the potential, obviously, to disrupt any existing incumbent is much better off if it seems to be like a strong case, you expand at a fast pace. So is that the thought? No, no, really sorry. I think I'm not being able to follow you clearly. If you could just repeat it, please. Yes. Am I audible, Anant? Yeah. Now you're much more. Uh-huh. It's better. Yeah. Yes. Anant, I was asking on Elleven, the new business that we set up, that currently we obviously gradually expanding. But the understanding of this market that I have, and I could be wrong, is that given it is more of a utility product and there is less of a brand element, that the potential for a new player to come in and disrupt the incumbent is much more possible than, say, in any of the other categories, if we have a good product in place. From that background, do we also have the long-term thoughts of getting very aggressive with this business and scaling it up significantly rather than the current run rate of store count? What is the way that you are looking at this business say three years from now? Sure. Nihal, you are right. It's a more essentials business versus a fashion business. Having said that, brand relevance is still strong in this segment. There are very few bottomwear brands, so obviously the market can take more players. As far as we are concerned, we already have this portfolio existing. It's just that we never thought of it as a concentrated effort. Now we have put that behind this. If you would recall, you know, during the COVID season, we said we would go slow on these because the priorities were different. Now with things coming back on track, we have already got on a slightly more aggressive zone, wherein this year itself we should see the year closing with 15 odd stores. Frankly, you know, if the pilot of store goes well, adding 50, 60 stores a year for Elleven should not be a challenge at all. Our plans will also be very, very aggressive on this particular zone. LFS, large format stores, we are already seeing good traction, so there also you'll see bigger expansion, hopefully. Yeah, my sense is, you know, if you look at 18-24 month trajectory, these could be INR 75 crore-INR 100 crore rented businesses easily, Elleven. This is helpful, Anant. I'll come back if there's any further. Sure. Thanks, Anant. Thank you. The next question is from the line of Varun Singh from IDBI Capital. Please go ahead. Yeah, thank you very much. Congratulations, Anant sir, for such a wonderful performance. Couple of questions, sir, from my side. First is on the emerging brands. Nihal has already asked you couple of questions on Elleven. My question to you on Elleven brand is, why are we going so slow in terms of, you know, penetration in different channels? For example, we are currently present only in 40 large format stores, whereas our existing presence is more than 2,000. An extended question is, you know, how many large format store we think we will be able to enter into over and above 2,200 plus stores that we are already entered. First question, sir, why we are slow in the... This question is relevant for both Elleven brand as well as footwear brand, which is currently only in 150 EBOs, as opposed to 600 EBOs that we wish to kind of end this financial year with. Any comment over there, Anant sir? Yeah. Varun, first of all, see, I think we would have discussed in past also. As a company, we believe in doing very solid pilots before, you know, doing a full-scale rollout. Because, it's very important to take cognizance of the kind of inventories and investments that will go in these. In Elleven, you know, first couple of seasons after the launch, market was really disrupted. Now as we get more confident, we are trying to build it up further. Now the question is whether we can get into many more large format stores. Of course we can. Can we accelerate EBOs beyond, you know, 40, 50 new EBOs a year? Definitely we can do, and we feel much more confident now after doing a pilot and getting the product customer fit better. I think probably, you know, next season onwards, when we really see couple of months for these 15-odd stores and 50-odd LFS stores, you'll see a very, very rapid scale up. I think scale up in this segment post a successful pilot will surprise a lot of people. It's just that we want to put a very, very solid foot ahead. That's what Elleven is doing. Coming to the question on 2,000 LFS stores. See, we are also quite selective about the partners that we want to expand with. You know, while opportunity lies in getting into many more doors, I think the door economics, the store economics probably there might not be very, very attractive. We are selectively moving ahead. We are already present in most of the large format chains that are there, which can do justice to our brands. Now possibly there, you know, barring a few areas where one brand is present, another is not present, I think it will be more driven by their own expansion plans. Every year we'll be looking to adding 300 to 400 doors. I think that will continue. Beyond that, we'll have to see. Understood, sir. That's very wonderful. Okay. Sir, the second question, sir: why only INR 75 crore-INR 100 crore is the guidance that you are giving, you know, for the bottomwear business? Given 2,000 large format store we are already present. I'm not even counting revenue from EBOs that we will be linking. Sir, why is such a low guidance? No, Varun, Elleven is a different brand also by the way. It will not get the space in all the LFS automatically. It has to be registered as a separate brand, get a separate space. Right. Obviously, you know, not all the accounts, we can get overnight space. Understood, sir. Thank you very much. Sir, just last one question is, sir, I did not understand much about difference between Project RISE and Project Bharat. Project Bharat, I understand, targeting rural hinterland. Sir, if you can please help us understand how our approach towards business is different when we are opening an EBO in Project Bharat. Sir, please explain, I mean, what do we mean by Project RISE? Sure. These are actually, so Varun, I must say we should have explained slightly more in detail. These are actually diametrically opposite projects. Project Bharat, as you rightly understood, it's about getting into tier four, tier five small towns, taking franchisee route, low investment model. It would be the first brand experience probably in these markets for the consumers from branded ethnic players. Wherein in Project RISE, what we realized is, you know, there's a big scope in most of the important markets of the country. For example, if you look at Mumbai, it could be Colaba, it could be Linking Road, it could be High Street Phoenix, wherein our store sizes were just about 800-1,000 sq ft or even lesser than that. What we realized over time, as the brand portfolio increased, not into this new category, in apparel itself, all these stores were hitting a ceiling wherein it was impossible to do more business from the same area, same space. That is where we are now upgrading our retail presence, showcasing all our categories, building bigger, you know, apparel outlet also. That's what Project RISE is all about, having flagship stores. These would be typically now, you know, 2,000 sq ft+ stores, which will be showcasing the brand W in full glory. What would be? All of these would be company-owned, and most of these would be in the bigger, more important markets. What would be typical store size for Project Bharat? Well, see, Project Bharat will be very flexible. It could be anywhere between 500-1,000 sq ft, depending upon the market, depending upon the right partner. Project RISE typically would be at least 1,700-1,800 sq ft and could go up to 3,500-4,000 sq ft. Understood, sir. Thank you, very, very much. All the best, sir. Thanks. Thanks. Thank you. The next question is from the line of Devanshu Bansal from Emkay Global Financial Services. Please go ahead. Okay, sir. Congratulations on a strong set of numbers, and thanks for taking my question. Sir, I wanted to understand how has been the recovery in the number of bill cuts over pre-COVID levels. This is to understand the recovery, full recovery potential upon complete unlocking its stores. Sorry, Devanshu. Our ATVs have increased only in a low single digit number, so this cut would be slightly lower than the total recovery that you see. Okay. Also because footwear is also contributing about high single-digit% as you mentioned. I guess that should be combined within the same bills. Obviously people would not be coming to purchase only footwear at your stores. Still, ATV is in low single digits? Yes. See, this is at the company level. When we talk about these new initiatives like footwear and all, of course it's just starting. Overall that impact won't be even 2%. Okay. You know, 150 store rollout has just happened starting spring summer. Earlier footwear in the much lower number of stores. You know, that's not really moving the needle so far. Probably spring summer 2022 onwards, you'll see impact of those coming in these parameters. Understood. Also, I wanted to understand what is the quarter end inventory level, and if you can provide any comments related to the freshness of inventory, then it would be helpful. Hi, Devanshu. This is Amit. Without giving a specific number, we have optimized further on our working capital across different line items as of December 31, when you compare it with the numbers that we had as of September. This is obviously, you know, in the business that we are in, every quarter is different. But what I'm stating is true as of December 31. Sure. Yeah. Uh- Devanshu, while you're on that subject, let me also kind of mention that, you know, we have further improved on the quality of the inventory. We have earlier quoted that typically, historically about 10% of the inventory used to be more than three seasons old. We have done a lot of work there. As on date, 6% of the inventory is what would be more than three seasons old. These are significant progress on that front as well. Sure. That's encouraging. Lastly, I wanted to understand, I mean, EBITDA margins, despite a very good recovery, at per store level as well, are still sort of below pre-COVID levels, which we saw in FY 2019 period. When do you expect margins to recover to those levels? Yeah. If you are looking at the EBITDA levels, post Ind AS 116, right? Yeah. Post Ind AS 116, I guess, FY 2019 numbers were not available. Pre-Ind AS we were doing about 15%-16% sort of margins in FY 2019. My question is, at what levels of recovery would we be touching those levels? Yeah. Divanshu, let me comment on the PBT, because, you know, post Ind AS 116, that is a number that we track internally. Q3 obviously has been a decent quarter with 10.8% PBT percentages. What we believe, as we have historically mentioned, earlier mentioned as well, that when we look at profitability, there are different paths to it, right? You know, the costs have gone up since FY 2019, FY 2020, so we'll need some kind of a commensurate growth to, you know, even go back to those kind of levels. Additionally, we are investing into new initiatives and at the stage where we are in. Obviously we are at the investment in our investment stage, where costs across people, costs across other, you know, investments that we are doing sitting in the P&L, but the benefit is something which will come once the pilot stage is over. We believe that, you know, it's possible for us to go back to the kind of profitability that we used to have at a channel level. Obviously, there may be some variance that may come in due to different channel dynamics. With some commensurate growth, with all the initiatives where we have made investments going back to a level where they start generating revenue contribution, it's possible for us to go back to historical levels. Got it. Lastly, one bookkeeping question. These five stores that we have opened under Project Bharat, these are for which brand? Most of them are Aurelia currently, but it will be a mix of W and Aurelia. Sure. That's helpful. That's it from my side. Thanks. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Jaspreet Walia from Nomura. Please go ahead. Hi. Thanks for taking my question. I'm comparing your December 2021 numbers with December 2019. What I see is that the SG&A expense has gone up significantly while all other costs are down or flattish on a YOY basis. Your SG&A expense in December 2019 quarter was INR 76 crores at same level of sales, which is now INR 85 crores. Can you elaborate the reasons why we are seeing such a trend? See, you know, these kind of discrepancies or differences, variations will keep coming quarter-over-quarter. Because what has happened is in the new accounting standards, the cost of sales get divided between, you know, what comes above the line, the cost of net sales and what goes into selling and distribution. You know, this quarter we had a higher D2C sales and on-website sales and LFS. Based on that, you know, a lot of these expenses come into selling and distribution. Otherwise, there's no additional extra item that is there. It's a channel mix and within channel customer mix. Got it, sir. Thanks. That's all from my side. Thank you. The next question is from the line of Vikas from Equirus. Please go ahead. Good evening, sir. Thanks for the opportunity. My first question is with respect to our gross margins. What explains the rise of the gross margins given the fact that our online part segment also continues to grow even on a sequential basis? Some comments there. Yeah. See, again in online channel, we have three parts, B2B, B2C, and website. B2C, third-party marketplaces and website sales. While B2B online is low on gross margin, in B2C and website, the way accounting is done, gross margins are higher. Unfortunately, it's again that mix. Despite online growth, since it is more driven by B2C and website in this quarter other than B2B, you are seeing that increase. Some part of that is sitting in sales and distribution and in expense. That you would find to be higher. All right. Understood. Since we are on this gross margin topic, this quarter, again, because of better inventory management and aging improving, obviously the balance sheet benefit also sits out here. There are these two reasons. Correct. Okay. Second thing, I was looking at a recovery of the online offline channels where I'm comparing our EBO revenues and LFS revenues with that of Q3 FY 2020 revenues. If we compare the store count-wise, our EBO count has marginally declined, but obviously the quality of the stores in terms of the higher throughput and higher profitability stores have increased. Secondly, on the LFS front also we have added almost around 300+ LFS stores when you compare it with that of Q3 FY 2020 levels. Given this backdrop, would you just comment in terms of why our recovery was almost nearer to around 90% levels and why it wasn't probably higher than that? Any factor that had played a role here? No. Ninety percent is for like-to-like stores. Overall, obviously the recoveries are higher for offline. We were commenting on like to like, and between LFS and EBO recovery has been sharper. Does that answer your question, sorry? Yes. Yes. Marginally yes. Okay. The last question, Anand, with respect to our market, as in, would you comment with respect to how has the competition performed in this quarter? Any comments with respect to market share gain or steady or anything, or market share loss probably, if any. See, I think in all our past interactions, we have said, unfortunately, there's no syndicate data available. I can. Sorry. If you could comment on the top four to five brands. No, I'll share what information we have, but the request is always that you do your own research, because unfortunately, this is what we get from the ground. If you look at third quarter, I think between the brands, we guys have in fact gained share marginally in offline. In the first fortnight of October, obviously, there were some challenges, operational challenges, because of which we were probably lower, but we recovered more than our share by end of the quarter. There we think, you know, we have done well. In terms of market performing overall, ethnic actually saw a sharp recovery compared to Q2 also. Having said that, obviously with you know, occasion usage restriction even now, especially for ethnic, which is like you know, outfits being shared or large scale social events not happening, casual social events being lower. Obviously, this category is still lagging somewhat, but catching up. That's the overall you know, how our interaction with our partners, what we see of the brands that we track. This is what we see. Correct. Lastly, any guidance with respect to stores addition for FY 2023? We typically shy away from giving too much guidance. You know, we believe a number like upward of 25-30 per quarter for next few quarters is something that the minimum we'll be running for. All right. Thank you so much, Anant. Thanks for answering. Thank you. The next question is from the line of Pralay Nandu from GMO. Please go ahead. Yeah. Hi, Anant. I hope I'm audible. Yeah, yeah. Yeah. Anant, just want to some sort of little bit of a long-term sort of a question, right? Just wanted to understand our learnings again in the last two years, right, where we have used this crisis and an opportunity, right, by closing some of the stores which are not profitable, this Project RISE, Project Bharat, saving on rental, added more categories like footwear and accessories. Now Q3 was as normal a quarter as we have seen in the past two years. What are some of the indicators that you are internally tracking to gauge the impact of all the changes that we have done in the past two years? You may choose not to share the value of that indicator, but you know, couple of indicators, because what is happening is that, again, I mean, as somebody asked the question on PBT, you mentioned that there is a lot of investment which is going on. That's the reason why PBT margins are not showing the true picture. What are some of the indicators that you are tracking, right? I mean, to gauge what we have learned in the past 2 years. I think it's a fair question. Unfortunately, you know, for all the initiatives which are long-term, a three-month normalized period is not enough to throw the right indicators. Because, see, some of the metrics that we want to track, and where a lot of effort has gone, is full prices. Another metric is long-term discount in trends. Third is online, your own channels, how they will build versus others. Fourth is obviously improving, you know, rent to sales ratio, cost per foot sales ratio. I guess we need 3-4 normalized quarters to actually create a strong trend around it. You know, these are the areas where we have put in a lot of efforts, and whatever limited way we have been able to test it out, the results are very encouraging. Honestly, one quarter would be too less to comment on these long-term, you know, indicators. No, fair point. Just one more, just on data, how many stores have we closed since the start of COVID? I think on a net level, we would have closed almost 80-100 stores. 80-100 stores. Wow. Yeah. Basically now that we are back to where we started, I mean in terms of more or less, right, 575 stores. Q3 FY 2020 we were at 85, 86, right? We are like opened that many stores, right, in some sense. Again, on again, not sharing the numbers and not asking you to share the numbers, but on these 100 new stores that we have opened, whichever metrics again, you know, this thing that you have mentioned, right? Are they tracking significantly better than what these stores doing or what was our average, right, pre-COVID? In fact, if you look at the kind of stores that we have opened, whether it's Project RISE and all, it is all tracking better than pre-COVID metrics also. Whatever new stores that we have opened, obviously, you know, the markets where we got the learning, we have resized the stores, we have got into better rentals, which again, over a longer time will show results. Sure. Thanks. And see- Thanks a lot. And see again- Sure, sure. Again, I would like to say something. You know, as a business model, our payback period for stores are pretty fast. Second, our investments also are very limited. You know. Right. We were able to ruthlessly close all these stores, and many of these same markets, we have opened a new store at lower rentals. Got it. Right. I mean, my point is that the idea of opening new stores, right? Was it best to save rental or eventually we'll see a higher throughput also, right? No, no, I mean, obviously eventually we'll see higher sales. Because if the sales are not there, what is the point in saving the rental then, which we did? Right. That's what. Correct. Yeah. No, thanks a lot, Anant, for this. Thank you. Thank you. The next question is from the line of Garima Mishra from Kotak Securities. Please go ahead. Hi. Thanks so much for the opportunity. I have one question. Could you please clarify the amount of rental cost saving rather that has been booked in the third quarter, and which line item does it really appear in? Hi, Garima. This is Amit. In the third quarter, we have booked a total rent concession of INR 7.7 crores. This entire amount has been adjusted against the line item which is rental expense. Okay, understood. Amit, on a sustainable going forward basis, I mean, assuming these rental savings would end. One, for Q, would you have any rental savings that may continue? Second, also, what is the sustainable level of rental expense that you expect? I know the rental line itself sits in three or four line items, thanks to Ind AS sort of accounting. On a pure cash basis, if you were to look at that percentage as a percentage of revenue, where would that number be? Is it like 12%-14%, somewhere in that ballpark? Let me answer the first question first, Garima. You know, in quarter four, we expect a very marginal rent concession. Obviously, with COVID wave, we will have to see how long the disruption continues, when do we start the rental negotiation on that front. Obviously, as what we have seen in historical period, if the recovery is faster, sharper, typically we don't get rental concession. But then obviously the advantage is in terms of us going back to recovery in terms of sales sooner than later. But to answer your question in simple terms, we expect very marginal rental savings in Q4 and going forward. Now, to answer your second question, if you remember our historical rent bill used to be about INR 120 crore, INR 125 crore, INR 130 crore historically. Now, with the current expansion, we expect to close the year with 600 stores, which is in line with what we used to have at the end of Q3 FY 2020. Similar kind of rental bill is what we'll close the current year at. Now, depending on what kind of an expansion we finally plan for next year, the rental of the total rent spend will go upwards from let's say the base of INR 130 crores. Understood, Amit. That's very clear. Thank you so much. Thank you. The next question is from the line of Ankit Arya from Phillip Capital. Please go ahead. Sir, just wanted to understand the price increase in the system. While we have seen 90% recovery compared to pre-COVID at the EBITDA level, how much is led by volume growth and how much in last nine months we have taken price increases for RM inflation? Ankit, you know, in our business because we don't do much of core and there is a huge change season on season on whether we are selling sets or we are selling individual mix and match pieces. It's very difficult to track volumes and price honestly. Because in one season if success is really being we dial up on sets and it gets counted as one piece rather than three piece, and suddenly our AUVs also increase. It would be very difficult for us to give an exact number. But you know, given the current fabric prices increasing and all, we'll have to selectively take price increase, which could be mid-single digit kind of number. Sir, in Aurelia, you know, given that the ASP would be below 1000 for at least 50%-60% of the products, given that the GST, you know, the reversal came in on the last day, what were you thinking on the price increases for the GST? Do you think the customer was ready for a 7% price increase, or how are you looking at it internally? No, frankly, Ankit, it first of all in Aurelia, not 50% is below 1,000, but anyway with all the EOSS discounting and all, of course the numbers could come close to that. See, I think broader industry, if this thing comes along with the fabric input price increases, I think the industry will have to go for a price increase. It's a question about how much you want to pass to the consumers, how much you'll absorb. That will depend upon, you know, what more you can do on cost savings at your end. For example, in our case, we were upping our jogger content of fabric. We were also looking at alternate fabric. Thankfully for us, you know, unlike many other players, our dependence is not only on cotton. We do many more fabrics wherein the price increase has been far lower than what we have seen in cotton. I think we would have still gotten away with a lower price increase, which given the relative pricing of brands should have been okay with the consumers. Sure. Sir, my second question is on bottoms. You know, while a lot has been talked about Elleven, I believe in, you know, few concalls back you said 80%-20% of our sales, even in W and Aurelia comes from, you know, bottom wear. Is it possible that, you know, instead of branding those bottom wear as W and Aurelia, we can brand them Elleven, while they could still be sold in the SKU together or, you know, separately in the store. From a brand perspective, the customer knows the brand much more, and when he's going outside, you know, he can relate and talk about it. I think, Ankit, probably what you are referring to, and which makes a lot of sense is how can we leverage our existing brand to, you know, even populate Elleven more. That's what we have been trying. You know, even in Elleven stores we are offering to the customer that comes from the house of TCNS. We are also in process of placing it in few Aurelia stores, wherein, you know, there will be a shop in shop and Elleven gets promoted. The idea is to keep it separately because see, you know, when we do Elleven and when we do W Aurelia, a lot of products are also different. There are sometimes, you know, W fit is different than Elleven. There are those nuances also. We are also looking at trying to promote it through our Aurelia stores. Sir, my last question is on, you know, Wishful. We have seen a lot of M&A activity, you know, in last six months in the women ethnic space. What is the right to win in Wishful, now given, you know, more consolidation has happened, in the space now and, you know, more money is coming towards, you know, mid to premium kind of a segment? If you look at Wishful and you compare the pricing of Wishful compared to, you know, some of these designer names that are there, I think the product price value equation is very, very strong in Wishful. What we are positioning it is as, you know, a light festive wear. We are not saying it's a heavy festive wear. I think that's the space that Wishful is occupying, wherein, you know, most of these other brands are not even operating in. The price points are far higher. Sure. That's helpful, sir. Thank you so much. Thank you. The next question is from the line of Rohit Kadam from InCred Family Office. Please go ahead. Hi, Anant. Thanks for the opportunity. Couple of questions. First is on the competitive intensity, and I'm not kind of looking at the last three quarters, but if you just take a five-year view, is it fair to say that competitive intensity has essentially sort of picked up with a few large private label retailers now sort of entering with their own ethnic wear brands, you know, trying to take them separately as EBOs. We also have a new men's ethnic player who has a women's brand also. While I understand that our brands have sort of segmented differently at a micro level, but it just seems that, you know, the waters are getting a bit rough out there. Strategically, have you thought about how we'll sort of invest and preserve our brands as we capitalize on the broader ethnic tailwinds, going forward? If you look at. Since you mentioned five years, let me give you that perspective, how we see it. First of all, it's a very, very big market with very limited number of brands. When you compare any other segment of apparel and you look, if you look menswear formal, if you look casual, for the market size that they are, they have multiple brands. I won't be surprised if, you know, you'll see more brands coming in. It's a big market, strong, very, very strong tailwinds, you know. Obviously this market can take many more brands. That's number one. Again, I'm not surprised that, you know, some of the big houses are getting into it because this is an area which is growing fast. It's a big base, and obviously this is something here to stay. Now, if you look at last 5 years, can we really think of 10 Indian brands that have come, who have crossed a turnover of even INR 100 crore? Frankly, I don't know of any. While there are many labels, while there are regional players, while there are people online who are operating on price proposition, I have not seen many brands actually coming in and making an impact on design or on product promise. That's one. Second, private labels, you know, it's been a mixed bag. At different points in time, we see different private labels doing well. To win in the market, you need to do consistently well over a long period of time. That's one thing that probably, you know, going forward we'll see much more happening. There again, when we talk about private label, there are two kinds of players. One who are 100% private label, obviously we don't have a role to play there. Second is wherein, you know, there's a mix of external brands and private label. There frankly, you know, the only way to win the race and keep ahead is by investing in your brand, having that consumer pull, offering a very, very differentiated bouquet of products, and doing well on all the retail metrics. That's, you know, as a brand, what we have been concentrating on for last so many years, and that's how we have to operate. Again, in these places there's always a long tail, so if you are better performing external brand, you still, you know, get the benefit of that. That's how, you know, we look at the market evolving. Obviously, more brands will come. We'll have to do what we have done best, keep innovating, keep investing in the brand. If you look at some of the initiatives, which is like Project RISE, which is probably signing Alia for Aurelia, all these are in that direction. That's helpful, Anant. My second question is if you could comment on how the pilot on the BPC cosmetics category is shaping up? Any key learnings there? And how is the traction there? We have just launched in 50 stores. It's been a very, very short time. Obviously, there are tons of learning. If it's okay with you, I'll just reserve my comment. Let us just see that for 3 months, another 3 months, and probably we'll come back. All I can say is we have got a good concept on both selected online partner platform and app stores. Sure. No, that's it, sir. Thank you so much. All the best. Thanks. Thank you. The next question is from the line of Manish Poddar from Nippon India. Please go ahead. Yeah. Hi. Hi. I have two questions. One is, probably if you could explain, you know, what is happening on the omni-channel part, you know, despite, let's say, you know, the opening up and, you know, stores, I think, now running at 100%, that number still sticks, you know, is very healthy. It's actually moved up sequentially. So just, is there anything which you all are doing at your end, or is there anything at the customer end? Just any sense on that. Your question is about omni-channel, right? Right. Omni-channel shares now is, I think, double digits, right? Which was I think 5, 6, 7% last quarter. Yeah. In fact, you know, in the coming quarters, you'll see this number moving significantly up further. What we are doing is we have already rolled out our omni-channel network to over 90% of our serviceable areas, and we are adding one platform after another on this network. The idea is to maximize from a fungible inventory, and that is the road ahead. You know, as more platforms comes, as more stores get enrolled, you'll only see these numbers going up from here. It's largely a function of more stores with the network getting added, not anything at the customer level in terms of trends? No, when more platforms get added and more inventory gets visible to the consumers, obviously more consumers can shop from the omni experience. Okay. Got it. The idea is to make more and more inventories fungible and get more and more customers avail that inventory. Okay. Just second one, similar to the D2C cosmetics kind of thing. Just any sense, let's say now, if you're an online direct D2C brand, what is really called success? Let's say INR 100 crore sales in 2 years, 1 year, 1 season. What is called success? Any probably parallels which you can draw from other companies which are probably unlisted, they would have gained size and scale in 2 years, 3 years. Just trying to understand, if you really click with both the back end and the front end, how fast can you blitzscale? That's what I'm trying to understand. Manish, first of all, what we are trying to create is not essentially an online D2C cosmetics brand at all. For us, cosmetics, at least one of our offline retail is going to play a very significant role. Secondly, you know, when we are investing in business, obviously we are, we keep an eye on how much money we are investing, what kind of cash burns would it take. Obviously, you know, we are not in a business wherein we are going to burn lot and lot of cash and just get growth upfront. It's a strategy that we are following, what we have followed for our other businesses. Obviously now online being a big part of the total business, it will also play a bigger role in the new categories. Anant, what I'm trying to understand is any parallel to any other brand, let's say, you know, for a brand, let's say with the metrics which you're saying, you know, which maintain the steady-state gross margin, you know, as the economics. Is INR 100 crore in 3 years a good number or, you know, can that happen really faster? Just want to understand that. A brand-new brand, you know, that is what I'm trying to understand. I guess once your pilot is successful, with the kind of network we have, to achieve a INR 75 crore-INR 100 crore run rate over 18-24 months should not be a very big challenge. Okay. Got it. Sorry, just a pilot. Let's say footwear now, when you've got into, you know, let's say 150 EBOs from where you were about 18 months back. Footwear, is there an understanding that in the next 18, 24 months it will be in that similar run rate or- Yes. That's how we want it, okay. Okay. That's great. Thank you so much. Got it. Thank you. Thank you. Thank you. The next question is from the line of Pankaj Lovaris, an individual investor. Please go ahead. Thanks for taking my question. Am I audible? Sir, you're sounding very low. Can you speak a bit louder? Just a minute. Mr. Pankaj, we cannot hear you, sir. Hello? Sir, we cannot hear you. Can you speak a bit louder? Hello, am I audible? Yes. Please go ahead. Okay. Thanks for taking my question, sir. I just wanted to understand, in the last conference call you mentioned about self-transforming into a platform company. What are the initiatives we are taking for the same? Are we going on the same lines as another listed company which is into mainly into cosmetics and now entering into apparel and developing. Sir, I'm really sorry we are not being able to follow. I lost you once you said you are trying to become a platform company and then I lost you completely. Yes. I wanted to understand whether what are the initiatives we are taking regarding the same. Are we If you look at it. Sorry. Are we going on the same lines as another listed company which is into cosmetics and now also getting into apparel? No, sir. I'm not sure which company you are alluding to, but if my understanding is right, that's a very different player. Obviously from a consumer lens, you know, apparel and cosmetics and accessories, they all form part of fashion. You know, there could be different routes, there could be different starting points. If you want to become a head to toe wardrobe solutions brand, then obviously you have these categories. That's our journey. When we say platform, it's a platform which will be an omni-channel, multi-brand, multi-category. That's the business model we spoke of. I want to pin down if you are going to launch any apps regarding in that on that line? No, no. App and all, see, those are individual initiatives which can form part later. We are now going to be an online-first only in the future. It will be an omni-channel model, and most of our business comes from offline. While the share of online will go up, it'll still take years to change. It will be more of a slightly higher offline mix. Sir, regarding, I have another question wherein I would like to know whether we would be able to. Since we are a domestic brand right now, are we going to plan our foray outside and whether we will be able to get some market share with, as India signs FTA agreement with UAE and other nations? You know, we already have some international presence. We have stores in Sri Lanka, Mauritius, we have stores in Nepal. We have opened a store in Bangladesh. Unfortunately, last 18, 24 months, we have gone slightly slower on these initiatives. We do have plans to venture into newer markets, especially, you know, Middle East and all. We are also exploring online launches in some of these markets. You'll see more action on that in coming quarters. Sanjay sir, last question. When do we expect our EBITDA margins to reach pre-COVID levels? I mean, 2021 plus, in that range. I think Amit just mentioned about it. It'll depend upon quite a few parameters. You know, once the channel mix gets stabilized, once the new initiatives started, it starts throwing, you know, relevant revenues and margins, we should be able to get closer to those levels. Sure. Thank you, sir. Thanks a lot and good luck. Thank you. Thank you. The next question is from the line of Ameya Karambelkar from Kotak Investment Advisors. Please go ahead. Hi. Good evening, sir. Thank you so much for the opportunity. Sir, from a more normalized and medium-term perspective, how should we think about our working capital? Sir, your perspective on that would be helpful. Thanks. You know, historically our working capital has been close to 115-120 days. With all the initiatives that we have taken during the COVID times, in terms of supply chain integration, automated replenishment systems and all, we believe, you know, we have a fair chance of bringing it down to 110 days level very, very quickly. Thereon, over the next 3-4 years, the aim would be to bring it down closer to 100 days. Thanks, sir. That's very helpful. Thank you. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to Mr. Anant Kumar Daga for closing comments. Yeah, thank you. Thanks, everyone. We take this opportunity to thank you for joining the call. We hope we have been able to answer your queries. For any further information, please do get in touch with us or HDA. Have a nice evening. Take care. Stay safe. Thank you. Thank you. On behalf of TCNS Clothing Co. Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.