Good day, and welcome to V2 Retail Limited Q2 and H1 FY 2025 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. Before we begin, a brief disclaimer. The presentation which V2 Retail Limited has uploaded on the stock exchange and their website, including the discussions during this call, contains or may contain forward-looking statements concerning V2 Retail Limited business prospects and profitability, which are subject to several risks and uncertainties, and the actual results could materially differ from those in such forward-looking statements. I now hand the conference over to Mr. Akash Agarwal, Whole Time Director, V2 Retail. Thank you, and over to you, sir. Thank you. Good afternoon, everyone. A very warm welcome to our Quarter Two and first six months earnings conference call. I hope everyone has had an opportunity to look at our results. The presentation and press release have been uploaded on the stock exchange and our company's website. Building on the momentum of a record FY 2024 performance, we are pleased to report a strong first half performance in FY 2025. Our outstanding results underscore the effectiveness of our strategic initiatives. The performance demonstrates our commitment to sustainable growth, customer delight, and operational excellence. We are confident in our ability to maintain this trajectory, driving continued success and value creation for our stakeholders. Our team of designers, merchandisers, and inventory managers drives our competitive advantage, distinguishing us from the competition. Their specialized knowledge enables us to design on-trend products that captivate customers, curate assortments that anticipate market shifts, and optimize inventory for efficiency and sustainability. This expertise fuels our ability to stay ahead of fashion trends, meet customer needs with precision, and minimize waste and maximize value. Our team's expertise is the backbone of our success, empowering us to deliver exceptional products, experiences, and value to our customers. Let me start with some key updates. We are thrilled to start the current financial year with record half-yearly sales during the first half of FY 2025 and a 2,551% increase in year-on-year PAT. The company added 22 net stores during the first half of the year, taking our total store count to 139 stores. We have added another five stores during the current quarter, taking the current store count to 144 stores. The store addition momentum will continue as we have a very healthy pipeline of upcoming stores. We have seen robust demand in ongoing festive season, and we are very hopeful that ensuing wedding season and the winter season will further strengthen our position in the areas we operate. The growth across all our stores has been encouraging, translating into a robust SSSG of 36% in the first six months of this year. We have been able to consistently deliver high double-digit SSSG for the last few quarters due to our customer-centric and product-first approach. The volume growth has been 49% in the first six months of the year. The full price sales contributed 91% in the first six months of the year, compared to 85% in the last, last year, first six months. We believe that our sustainable and scalable business model will help us to improve our ROCE and ROE going forward. Now, I would, highlight some performance highlights for the first half of this year. Revenue from operations stood at INR 795 crore, registering a growth of 61% on year-on-year basis. Gross margin stood at 28.2%, compared to 29.4% last year. EBITDA for the quarter stood at, eighty-eight point five crore as compared to fifty-five crore in the same, six-month period last year, registering a growth of 60%. EBITDA margin stood at 11.1% as compared to 11.2% last year. PAT stood at INR 14.4 crore as compared to INR 50 lakhs in the corresponding period last year. Now, performance highlights for the quarter. Revenue for the quarter stood at INR 380 crore, registering a growth of 64% on a year-on-year basis. Gross margin stood at 27.3% as compared to 28.1% in the corresponding quarter last year. EBITDA for the quarter stood at INR 33.1 crore as compared to INR 19.9 crore last year, registering a growth of 60%. EBITDA margin stood at 8.7% as compared to 8.6% in the corresponding quarter last year. With this, now I leave the floor open for questions. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. 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. Our first question comes from Abhishek, from AB Capital. Please go ahead. Hello, am I audible? Yes, you are. Yeah. Just wanted to know what was the cause for the loss in this quarter? Like, was it a conscious decision to, in order to get higher volumes, and will it happen in the future going forward? So it is historically a cyclical business. So historically, Q1 and Q3 are our strong quarters. But I think because our base has increased now, all four quarters are a bit positive, which was never the case. So we will continue to deliver EBITDA positive in all four quarters. But if you talk about peak numbers, yes, it is a cyclical business where the festive season is during Q3, so that is usually our best quarter. Then it is followed by Q1, and Q2 is a bit muted, and then it is Q4. Okay. And the investor presentation showed that two stores were closed. What was the cause? So one store was not profitable, so we always take into contingency that if we open hundred stores, we might have to shut down four, five stores. And one store we had to relocate because we found better location, like a better floor plate and better location in the same city. Okay. Thank you. Thank you. The next question comes from Palash Kawale from Nuvama Wealth. Please go ahead. Thank you for the opportunity, and, congratulations on the good set of results. My first question is on employee cost. So our employee cost was slightly elevated in the quarter. So if I look at the historical trends from Q1 to Q2, there's not much difference in employee cost, but this time we were slightly elevated. So any reason, any particular reason or just store additions? So like, we are planning to open another 20 stores in the third quarter. So what happens is there's a lot of recruitment that happens prior to the stores being opened. For example, there are 10 store managers already getting training in a lot of our old stores. So there will be a slight increase in cost because of the new store opening. Okay, got it. So, what is the total number of stores that you plan to open in H2, sir? It should be around forty stores. Okay. And if I look at the size of the opportunity or potential number of towns or cities in the country, how do you see that long-term opportunity, or what is that particular deciding factor that you take into consideration if you want to enter a new town? I think it's too early to have that conversation because unless we reach three, four thousand stores, there is enough potential. Because we look at any constituency that has a population of more than five lakh, and there are a lot of Tier 1 and Tier 2 towns where we can have multiple stores. For example, now in Bhubaneswar, we have five stores. In Patna, we have six stores. So there is a lot of scope still left. So I think that conversation is once we reach thousands of stores. Okay, sir. That's it from my side and, happy Diwali to you. Thank you. The next question is from Yash from Stallion Asset. Please go ahead. Hi, thank you for the opportunity and, congratulations again on the good set of numbers. So I just want to understand, how is the festive season been like? You know, we've already been about three weeks into October. How do you, how are you assessing the demand right now? I would say even in the first half of the year, because we had such a good SSG last year of 31%, we had projected only 15% SSG, but we performed very well and you know we exceeded our own expectations, and we got a 34%, and we've seen that momentum carry on to October as well, but a lot depends on November and December, and the winter and the wedding season. I would say we are still doing high double digits SSG, and we have seen the footfalls also increase quite a bit, so it's been better than what we predicted. Okay. Okay, that's good. And so, you know, as you said, you know, your third quarter typically is the strongest quarter, for the company. And, you know, if I, if I look at December 2023 quarter, you had grown by almost 62% quarter on quarter. Before that, December 2022 quarter, you had grown about 25% quarter on quarter. So do you think then, you know, this quarter as well, we could see, you know, I'm not talking about exact numbers, but I'm just saying that, directionally we would see, you know, 25%, 30%, 40% and something along those lines, like a very big jump on a quarter on quarter basis? If you talk about, yes, total revenue, yeah, the revenue growth should be more than 30-35%. Okay. On a quarter on quarter basis, you're saying, right? Yeah. Okay, thank you. Thank you very much, and all the best. Thank you. Thank you. The next question is from Ankush Agrawal, from Surge Capital. Please go ahead. Yeah. Hi, sir, thank you for taking my question. So the first question is around profitability. So how do you see profitability going into third quarter and for the full year, given that gross margin is something that we have seen consistently reduce the percentage of so every quarter? And I do understand that reducing gross profit margin, but having higher operating leverage in the EBITDA margin is doable. But at what point do you believe this gross margin will stabilize and at what level you can highlight? So, we've always mentioned that, instead of focusing on gross margin percentage, we always focus on EBITDA percentage. So if you look at the first six months, last year, our EBITDA pre-Ind AS was INR 16.7 crore, and this year it's INR 40 crore, which is almost a 140% jump. So I think, if you look at EBITDA, we have, we have been exceptional, and going forward, we always guide that we want to reach 10% pre-Ind AS EBITDA levels in the next two to three years. 10% Pre-Ind AS in the next two to three. Any idea on how much it you will be able to reach this year, FY 2025? So this year, our EBITDA guidance is about 120 crore pre-Ind AS. Okay. The second question is around store addition. So for last two, three quarters, we have consistently seen you exceeding your store guidance. Now, this quarter you're saying that you're gonna add another forty stores in H2, so you would be exceeding your earlier guidance of fifty stores in FY 2025. So I wanted to understand, at what point of time do you think that you will, you know, curtail the store expansion? Because beyond a certain point, aggressive store expansion obviously could constrain on, you know, operating leverage, your cash flow and working capital requirements. And over time, the SSG itself is gonna taper off from the current high level, so that itself could not allow a lot of operating leverage on existing stores to put more new stores. So at what point do you think, you will, you know, curtail this aggression? Because given the guidance of H2, you will probably close FY 2025 with around 50% store growth. Yes, but if you look at the last four years, it was a period of consolidation, and there wasn't much growth, and we did not add a lot of stores. We were focusing on strengthening our model. We were focusing on strengthening our product, and now we see the results of the hard work that we put in the last four years, so now we feel like if we get an ROE of around 20%, then we can easily open 50-60 stores in a year, so I don't think it's a very ambitious number, and that is why, like, if we get a good location and even the new stores, the base is much higher now. So two years back, the new stores used to do INR 600 per square feet per month, but now even the new stores have a base of INR 900 per square feet per month. So we don't want to keep money in the bank when we can we have the management bandwidth and the merchandising bandwidth to be able to open 50, 60 new stores with internal accruals, because we are not leveraging our business in order to open these stores. So I think it's a very realistic and you know a target that we can easily achieve without compromising on business metrics. Okay. Okay. Perfect. That was helpful. Thank you. Thank you. Thank you. The next question is from Varun Singh from AAA PMS. Please, please go ahead. Hello. Sir, there is a lot of echo. If you're using the speaker phone, may we request you use the handset, please? Yeah, yeah. Yeah, yeah. Sure. Sure. Yeah, thank you for the opportunity. So my first question is on the productivity improvement. Revenue per square feet number is yeah is quite good for us right now. But on this front, like, what is, how do you look at, you know, how much scope is left for improving this number further from the current level of maybe INR 900,000 crore? That's my first question. So if you talk about scope, we have, like, I think more than twenty stores that do more than INR 1,400 per square feet of sale also. So I think the day we feel that each and every option or the whole assortment in our store is, you know, best in class, best in the world, that day we'll be able to tell you, "Okay, this is the potential that the maximum per square feet sale that a store can do." But I don't think we will ever reach a day where we feel, okay, we can't do anything better in our assortment. So like I said, even with the 31% SSSG last year, you know, we are showing a 34% SSSG this year. So there are a lot of stores that are already doing INR 1,400 per square feet. They are also growing at 20%-25%. So I don't think there's a cap to this number, but yes, our first target was to reach INR 1,000 per square feet of sale, which we'll do. I think we'll exceed that this year. And our next immediate target would be INR 1,200 per square feet of sale per month. But if you talk about potential, I think if your product is world-class, and if you sell products at the margin that we sell, which is best in the industry, you know, it's only a 55% markup, and we are selling 91% of our products at full price, then I think the sky is the limit. There's immense potential. Understood. Understood. All right. So, I mean, on INR 1,400, 25% SSG, if we are able to do it, so then, like, INR 1,750 is the number, and if we do into twelve, so that INR 20,000-odd per square feet annual, that number is quite, I mean, that's quite good, right? Understood, sir. And secondly, on the product development front, like, how, what are the key markers for us, with regards to what are we doing currently to, you know, keep the team at the best-in-class? If you can maybe want to highlight anything on that front. Yeah, so see, every product has four main attributes. It's the design, the fabric, the color, the fit. So you know, it's getting all four correct. So even if you get three of those right and one wrong, then the product doesn't sell. So in terms of product development, it's all about research, it's all about, you know, who your inspiration brands are, what kind of fashion are you following, what kind of brand identity you are trying to create. So, like, it's very hard to put into simple words, but there are N number of processes that the team has to go through, whether it's using some, you know, paid tools in order to get what colors forecast is there for the next season, what kind of fits are gonna sell in the next season, what kind of new fabrics are gonna sell in the next season. So it's a mixture of, you know, using data, leveraging data, in order to see historical trends, as well as forecasting future trends and creating assortment with the best blend of both of that. Yeah. Got it. So that's about the product development. And about the team? So, like, yeah, we have almost a 40-50 member team, and all the crucial people have been given retention bonuses, and they are all linked to the profitability of the company. They all have incentives also that is linked to their targets. So I think it's a healthy situation to be in. Right. No, no, actually, what I meant was like, maybe how many, foreign trips, et cetera, that the team would be doing, or, like, what are the activities that they are doing to, you know, which is leading, to this, fantastic revenue per square feet numbers, et cetera. So I was... I just wanted to maybe- I can't, like, I don't know the exact number of trips, but yeah, the team travels to- No, not exact, I mean, but anything on that front. Yeah, yeah, definitely. So there, there's both international and national brands that we follow, and there's a lot of international, I would say, sourcing in terms of accessories and fabric, which is very important to create the latest fashion. So when I say research, it has to be done internationally and domestic both. And all the division heads, they travel, they see what's going on, what's the new trend, and that's how we design our new season. And, so just one last question, if I may. Sure. In any of our locations, is there a Zudio store nearby? And if yes, I mean, how has been the performance of that store in that location? That's my last question, sir. Yeah, I think we share almost 20 stores, where a Zudio is within a three-four kilometer radius next to our store, but we haven't seen any sort of significant impact due to Zudio opening, because you know, our ASP is INR 260-INR 270, whereas Zudio's ASP exceeds INR 500. So I think the customer class is different. There might be an overlap, but it's a very small overlap. And India is a big market where, you know, more than 80% is still- Yeah, yeah. Unorganized retail. So it can easily accommodate four, five big national-level players. Absolutely. But of course, it of course depends on who's executing their plan well and what kind of niche are you targeting and where do you position your brand? Absolutely. And, sir, for these 20 stores, our revenue per square feet would be more than INR 1,000 per month? I would have to take out the average, but now the company average is more than thousand, so yes, I think. Yeah, yeah. It will be around thousand, yes. All right, sir. That's it from my side. Thank you very much, and wish you a very happy Diwali. Thank you. Thank you. The next question is from Chintan Shah, from JM Financial Family Office. Please go ahead. Hi, and thank you so much for the opportunity. So I just had one question. So we see right now the scenario, I mean, everybody is looking to add capacities or add stores and within our segment or slightly over even in the premium segment. Just wanted to understand, this is not from a Q1 to Q4 quarter perspective, but slightly medium term, what's giving us the confidence that, you know, considering the end customer we cater to, which is sensitive to, say, macroeconomic and other factors, so what's giving us the confidence that, you know, we add such stores and beyond three, four quarters as well, basically such demand trend will continue, and you know, we won't see a situation of something like that happened in FY 2018, 2019, and we started adding stores and gradually per store, et cetera, numbers declining, and then something or the other that hits us and then we get impacted. This time, just want to understand what is giving us the confidence that we won't face a similar situation across the industry and for us as well? Thank you. So the biggest change, I would say, is the business model itself, and we completely reinvented ourselves. So in FY eighteen, nineteen, we were essentially doing a commodity business, where there was no product differentiation, there was no competitive advantage. You could find the same designs or similar products in other stores, so there was no brand identity. So now, we know the work that we've put in the last four years, now it's a completely different business model, so it's a product-first approach. And if you talk about value fashion and fast fashion, it's a global phenomenon for the last ten years. If you look at brands like Shein, if you look at brands like PrettyLittleLiars, Primark. So this is a segment which is not cyclical as a sector. There will always be value-conscious customers, and in India, the middle class is booming, so I think there would never be a time where, you know, we would not have a customer base. The customers that we're targeting is anyone who earns between INR 10,000 a month to almost INR 70,000-INR 80,000 a month, so that covers almost 80% of India. If you talk about the business model, then, like, because the Gen Z's have a very different shopping habit, where, you know, they're looking for affordability and the frequency of purchases have also increased. So it plays into our strength, and the confidence comes from the fact that we've been able to increase our per square feet sale from, I think it was INR 680, two years back, and now this year we'll do more than INR 1,000. So it shows that the acceptability of the product is there, and the customer is actually seeing the value that they're getting, and they know that the kind of quality that they're getting in V2, it's an unmatched price. So everybody understands value, and especially India, we are all value-conscious customers. So that's what gives us confidence that, you know, it's the result, and it's the footfall growth, it's the revenue growth, it's the profit growth. And the best thing about this business is, you know, the same bandwidth can handle hundred more stores, because you essentially have to just plan the same number of options. So we want to leverage our existing team, the foundation that we have laid, and that's why we want to expand now, because the last four years were a period of consolidation, and it was a period of, reinventing ourselves. It was a period of, working on, increasing our per square feet sales and working on the product. And we feel we've been able to do a good job in that, and that is why we feel now, you know, we want to increase our footprint. Got it, understood. It's a fair point. Just one follow-up on that, so if we see all the other organized players also, what even they are trying to do is, you know, getting more into private label chains. That is what they're trying to do, so my biggest concern is, as they increase their store throughput, let me say, next, increase the store count over the next two years, basically, then does that, that value proposition or the increased competitive intensity could hamper our SSSG growth? and then as we put more stores, actually, the numbers that we're looking at, probably that could be lower and that could impact our overall financials. It's not about who does private labels or who does product development. Even if you look at the best brands in the world, like if you compare Zara to any other brand, it's not like Zara has a different process. Everybody does product development, but it's how you do it, and at the end of the day, it's the assortment that you put in your store. So we feel, you know, and the numbers say that, you know, the assortment that we have is much superior to our peers. So it's not that anyone who increases their private label contribution or product development is going to get an SSSG or is gonna grow their throughput. Because, like, it depends how you're executing it, because, like I said, even a brand who does INR 1,200 per square feet of sale does the same process, and a brand who does INR 700 per square feet of sale does the same process. So the secret sauce is not the process, but, the result or the output or the assortment that you get out of it. Got it. Understood. And just one last question from my side, that is on margins. So I tell in this quarter, when we had such a strong SSSG growth, plus ASPs are increased, plus discounting, discounted sales has been lower, such a quarter, the margins have actually been flat. Now, from a next couple of years perspective, when you're adding so many stores, there's obviously going to be cost is going to come in, and the current existing stores, if I see, the margins have been similar. So when you're guiding for, say, 10% Pre-Ind AS EBITDA margins, I mean, how do we reach there, basically? What will drive this margin expansion? So most of our costs are fixed costs. It's a fixed cost business where, you know, variable cost is a very small proportion of total cost. So even if we increase our sales by 10%, we are essentially increasing profitability by 18%-19%. So even in the future, we are guiding for an SSG of 10%. So if you do the math, within two years, we'll reach an EBITDA percentage of 10%, pre-Ind AS. And you mean that should be impacted by the cost that will come in from the new stores? No, the cost would not exceed INR 200 per square feet per month, even if you're opening new stores. Okay. Okay, fine. All right. Thank you so much for answering my questions. Thank you. Thank you. The next question is from Harsh, from Nepean Capital. Please go ahead. Yeah, hi. Well, all my rest of the questions have been answered. The only question I had was on the store closure going ahead. So with, you know, nearly nine stores being closed in FY 2024, and two stores, you know, being closed in the current quarter, what is our target store closure for going ahead? So currently, like, we don't have any stores that are below the line where we decide to close the stores. But like I said, we are opening so many new stores, so there's always a contingency, and we always take that into account, that we might have to shut down 2%-3% of the stores. So the store closure cost is about INR 300 per square feet, because most of the fixed assets and other things can be used in the other stores. So it's part of business, and whenever we open stores, we know there might be a chance that, you know, we might have to shut them down. So that's about the closure rate should be about 3%-4%. Got it, and if I just may squeeze in one more question. I couldn't really understand the contraction in our gross margin. You know, the ASPs have improved and the earlier participant also said that, you know, the discount rates have also gone down. But despite all that, you know, the gross margins have remained slightly lower. So even for that, and that's where my question is. Thank you. We focus a lot on marketing, and our marketing costs is a part of our COGS. That is why it is reflected in the gross margin, so we've been running a lot of schemes and offers for our customers to increase the average bill value and to increase the conversion, and we've seen good results of that, and going forward also, like I said, you know, we don't want to target a gross margin percentage number. As long as our absolute EBITDA and EBITDA percentage increases, we, we don't want to focus on this gross margin percentage. At the end of the day, what matters is if your sales are increasing 20% and your gross margin is decreasing only 5%, it's still better for our business. Got it. That's all from me. Festive greetings to you and your team. Thanks. Thank you. Thank you. The next question comes from Yash Sonthalia, from Vallum Capital. Please go ahead. Hi. Thank you for the opportunity, and congratulations on the good set of numbers. So my first question is, as earlier participants also mentioned, like, we are upgrading our guidance of store opening. So will you be able to open those stores from the internal accrual or our debt on the balance sheet will increase for the year? No, it will be through internal accrual. And even that, the debt that we have on our books, it's essentially for bill discounting. So our vendors have a facility where they can take payments and they can discount their bills whenever they want. So we have a CC limit from the bank, and we use it because we want to be one of the best paymasters in the industry, and we want to give that facility to our vendors. Got it. And second question, like, everyone was mentioning, the competition in the market is increasing, so many of your peers are opening more and more stores like you. So do you think this will increase your cost of acquisition of customers? Like, in this quarter, the advertisement costs increased, due to which the gross margins have declined. So do you think structurally, your employee cost or maybe your marketing costs will increase? No, I don't think it will increase. But rather, I would say, you know, as we're opening more stores, we'll be able to leverage our head office and DC costs. So going forward, I think the cost per square feet will come down when we open more stores. Got it. We were doing some improvement on the inventory side in our warehousing and stockkeeping units. So where are we on that? What kind of improvement, sorry? The backup stock we were trying to reduce from, I think, thirty days to fifteen, twenty days, with more orders coming on time. Yeah. So we have been able to increase the on-time delivery from almost 40% to 80% in the last seven, eight months by, you know, educating our vendors, by improving our DNA, by hiring a lot of QCs at the source city. And I think the inventory days, the inventory change that you're talking about, it will start to be in effect from quarter four. Got it. So what, what are our expectations or the ballpark number of inventory days for the upcoming years? So we should be able to reduce it by ten days from, you know, the last eighteen months' historical numbers. Got it. Thanks. That's all from my side. Happy Diwali to the team. Thank you. Thank you. The next question is from Tejas Shah, from Avendus Spark Institutional Equities. Please go ahead. Hi. Thanks for the opportunity, and congrats on good set of numbers. First question is, when you see the numbers, it is largely that you have kind of countered the overall slowdown. And then, and at the same time, your numbers also confirms the feedback that we are getting from different CD companies, that there is some uptick at the mass end of the pyramid. So just wanted to know, when you double-click on your store, your growth based by Tier 2, Tier 3, and then metro wise, what are the consumer trends that you are reading at the overall level? So I would say the macroeconomic, you know, factors are still a bit negative. Even if you look at the results that have come out in consumer durables and FMCG companies, it's not that promising. So I would say the growth that we are showing now is down to our own strength and our own, the changes that we have made. So even if you compare it with our peers, you know, we have been much ahead. So I think that macroeconomic push is still pending, where the overall demand has seen an uptick. So I think when we see that, then the numbers will be even better. Because overall, rural and Tier 3, I think it has been a bit of a slowdown in the last weekly numbers. Interesting. Just to expand that point, are you also seeing that your metro or Tier one store would have not done as well as your Tier, let's say, two, three, four stores? No, in fact, you know, we have almost, I think we have five stores in Delhi now, and three of those stores do better than national average. So even if you have a Tier 1 store, the strategy around the location, it matters a lot. So even in Delhi, so we are located in a location called Mahipalpur, Kapashera. So you have to be in a location where, you know, there are a lot of migrant population, and there's a lot of lower middle class, middle class customers. So like I said, the customers that we cater to is 80% of India. So even in Tier 1, there are people who are servicing the upper class. So if we open a store there, then it does well. Perfect. Second question, just to get some sense on the nature of expansion that we are planning. Are we focusing on deepening our presence in existing markets, or are we entering new states, new markets? And additionally, if you have to just give a ballpark, that what percentage of your expansion will be in existing states or markets versus the new one? I think 80% of the expansion would be in existing clusters or states that we're already present in. But yes, we are testing new markets also, because, you know, the next two, three years, we want to be a national-level retailer. But only one or two stores there to test the water, check the local trend, and strengthen our model in that particular state, and then we'll expand in that state. But I think around 80%-85% will be in existing clusters and states that we're present in. Got it. And the last one, if I may. Usually, what is a thumb rule that we should work with, let's say for 50 more stores, how much of DC area you will need to add, or will you need a separate altogether a new warehouse to fund, to support this expansion? So the figure is around like 15% you always need as a warehouse space of your total retail area. So if you are opening 50 more stores at five lakh square feet, so we would need about 75 thousand to 1 lakh square feet extra for that. Okay. So this will be brownfield, or you will kind of zero in on a new location? So currently we are servicing everything from Farrukhnagar, so we have taken another DC that can support us for another, I think, 80-90 stores. So like, the kind of expansion plans that we have, maybe in the future we'll have regional DCs, where we'll have a south DC, east DC, and a north DC. Perfect. Perfect. That's all from my side, and Diwali wishes to you and the team. Thank you. Thank you. Thank you. A reminder to all the participants, if you wish to register for questions, please press star and one on your touchtone phone. The next question comes from Virendra Bajaj, an individual investor. Please go ahead. My question is already answered by Sanjay. Thank you. We'll move on to the next question. The next question comes from Rahul M, a retail investor. Please go ahead. Rahul, your line is unmuted. Please proceed with your question. Okay. Hello, am I audible? Yes, sir. Yeah. Please go ahead. Congrats on a great set of numbers. I had a couple of questions. First is around V2 Smart Manufacturing, the subsidiary that you have. I think in the last call you had mentioned that there is a 10%-15% cost advantage that you get, you know, for the apparel which is manufactured in-house versus what you source. I was wondering whether there is any plan to expand the capacity of that subsidiary, or if, you know, it doesn't make much business sense, whether you are going to write it off and free up some capital? So plans to expand the manufacturing facility, and the whole idea behind it was to get you know the kind of efficiency where we can negotiate with our vendors better. So now we have transparent costs of making each and every garment, and it has really helped us in you know getting contract manufacturing also done. So now you know last year, I think our own manufacturing constituted 20%. It's already down to 15%, and it'll keep going down in the future. So we have been able to achieve the goal behind why we opened those, and now we've been getting that benefit of cost by you know showing the kind of efficiency that we show in our own factory and tying up with good manufacturers. Got it. And another question is that, you know, although last two years have been amazing from an execution standpoint, but I think almost sky is the limit, right? You also mentioned earlier in the call that thousand-plus stores, you know, can be reached without a sweat. So as you expand, are there any special initiatives that the company is taking to, let's say, expand the management capacity or, you know, any people or HR practices to bring down the retail store attrition or maybe run a loyalty program for the repeat customers and so on? Yeah, so there's a lot of things always happening, and there's a lot of hiring also happening. There's a lot of retention things that are happening. Like I said, there are a lot of retention bonuses also. There's a lot of team-building activities and the kind of training and the career path that we have in our company. I think that is why it's one of the best in the industry, because we have a lot of examples where, you know, the salesperson sees that, like our retail head was a salesperson, and he started from the store level, and now he's a retail head. There are a lot of examples within the company that motivates others in a way that they see that, you know, they can have a similar career path because there are a lot of internal appraisals that happen, and I think that's good for any company. Okay. Thanks a lot, and, you know, have a great Diwali. All the best. Thank you. Thank you. The next question comes from Shreyans Jain from Svan Investments. Please go ahead. Hello, Akash. Great set of numbers. Congratulations on that. You mentioned that, you know, your cost per square feet is about INR 200 a month. Now, if I were to think about the total store area at the end of, let's say, 2025, so my sense is we end at about INR 18 lakh square feet, right? And if I take INR 1,000 square feet of sales, so we'll do about INR 1,800-odd crore. And, like we are saying, we do gross margins of 25%. So I'm just trying to understand, when you are saying INR 120 crore of EBITDA on the year, the math doesn't add up, because, you know, you do INR 200 a square feet, so that's INR 2,400 cost, right? INR 2,400 per square feet into 12 probably, right? So, into 18 lakhs square feet. So that's about INR 430 crore of cost, and you're gonna do a gross margins of about INR 450 crore-INR 500 crore, you know, so you actually end up with about 3%-4% EBITDA margins. So I'm just trying to understand how are we getting INR 120 crore of EBITDA? Just if you can help me understand. Yeah, because the gross margin that you're taking is 25%, whereas the actual gross margin is 28%. That's where the error is. But, you also mentioned that, you know, Q2 and Q4 is slightly weaker for you, you know, so blended, you think you can end the year at 28%? Yes. Okay. Because Q3 is good. Q3 is usually 30% gross margin. Okay. So, and in this INR 200 square feet a month, you don't see any... So this is after considering inflation and, new store expenses and all of that? Yeah. As we open stores, it should come down to INR 190, because we'll be leveraging. Like I said, there's a lot of hiring that has already happened at the head office and the store level in order to service the new stores. So once we open these 50 stores, I think this number should come down to INR 190. Okay, and this INR 190, what is the value for the next two to three years? Say, what kind of leverage do we have in this number? I think it should remain at INR 190. So whatever leverage or whatever inflation we get, will be set off with the leverage or additional area. Okay. All right. Thank you. Thanks a lot, and all the best. Thank you. Thank you. The next question comes from Nitesh Kumar, who's an individual investor. Please go ahead. Mr. Kumar, your line is unmuted. Please proceed with your question. Yes. Am I audible to you? Yes. You need to speak a little louder, sir. Okay. Yeah. Thank you for giving me the opportunity, and congratulations to management on the good set of numbers. My question is for the employment front, like employment generation. Could you give me an average number of person employed on a single store? Like- It's about 35 people per store. 10,000 sq ft. Okay, 10,000 sq ft and 35 numbers. And what is the approach of management, like increasing the employment in a single store or like automation, near future? I don't understand your question, sorry. Like, management approach for increasing the number of employees or decreasing in the next future? So I think we've, you know, been very efficient, and we are focused on creating a process at the store level, where we don't need a lot of salespeople at the floor to attend to the customer, because now each and every garment in our store is like, hanging. So there's no packing at the store where you need to, you need staff in order to pack the garments back. So that is why we've been able to run such big stores with only thirty, thirty-five manpower. And it's, I think it's essential manpower only now, which is, you know, cashiers and, a guard and, housekeeping. So there's... I don't think there's scope to reduce this further. Okay, got it. Thank you. Thanks a lot, and all the best for the future as well. Thank you. Thank you. The next question comes from Semanto Saini, an individual investor. Please go ahead. Yeah, hi. Thanks for providing the opportunity... So I just wanted to know that can you share the cost spent on advertisement for this quarter? Are we sharing that? The cost of advertisement would be less than, I would say, 0.5%, but when I say marketing cost, so we give a lot of gifts to customers, whereas we have a lot of bill busters running at the store level, where, you know, we, for example, we are giving, we were giving a bedsheet only for INR 99, and that bedsheet costs us almost INR 160-INR 170, so we tell the customer that if you buy for more than INR 1,500 or two thousand, then you can get a bedsheet at that price, where the market price of that bedsheet would be INR 300-INR 400, so instead of advertising costs, it's a lot of marketing costs in kind and gifts to customers, so that would be about 1.5%. Okay. And with the increase in the competition, so how are you seeing the marketing cost or the advertisement cost to, like it would be the same in the coming quarters or, would it increase, and by how many basis points, if you can please clarify that? It should be the same. I think, because like I said, you know, our markup is only 55%. We're already giving a lot of value to the customer, and we're passing on a lot of benefit to the customer, and the customer sees that. So our product is our brand ambassador, and that's the best marketing tool. The kind of variety and the assortment we sell and the price that we sell at. So our marketing cost will always be around 1.5%, including the gifts and the offers that we give at the stores. Okay. And what is the average cost of store opening a new store? The CapEx required is INR 1,000 per square feet. So for a 10,000 sq ft store, it's INR 1 crore. Okay. And what would be the average square feet size for a showroom? Average what? square feet, like what would be the size of a showroom in average? Average store size is 10,000 sq ft. Okay. Okay, yeah. Thank you, and all the best. Thank you. Thank you. The next question comes from Abhishek, from ABC Capital. Please go ahead. Hello, am I audible? Yes, sir. What kind of PAT number are we targeting internally this year? PAT? Uh-huh. So we targeted EBITDA, pre-interest EBITDA of INR 120 crore. So I think PAT is 55% of that. So it should be about. Okay. INR 60 crore-INR 65 crore. Okay. Okay. Thanks. Yeah. Abhishek, sir, you have any further questions? No. Thank you. Thank you. The next question is from Paramjeet Singh, an individual investor. Please go ahead. Yep, Mr. Akash, I am a pretty old shareholder. I want to understand, if you open a store now, how long does it take to reach, per square feet sales of thousand vis-a-vis the situation two years ago? So, two years back, our company average was INR 680, and new stores did INR 550-INR 600 per square feet per month. And now the company average is more than INR 1,000, and new stores, the base is around INR 900 per square feet. And historically, we've seen it takes about 18-24 months for a store to mature. So when we see the cohorts, we see that, you know, the stores that we opened in the last three years are growing at a faster rate than the mature stores. So it takes about two years for them to come close to the old stores. So you mean if you open a store now, it will take two years to give you per square feet sales of INR 1,000 per month? No, what I mean is. So going forward, like I said, you know, so this year we will do more than 1,000, and going forward, next two years, our target is INR 1,200 per month per square feet sale. So the maturity period is two years. It depends on the company base. So when the company base becomes INR 1,200, then it will take two years for those new stores to do INR 1,200. Okay. But now, the stores that we opened two years back, they have reached 1,000 after two years, this year. Okay. Okay, got it. And one more question from my side. I want to understand, do you have any plans for next fundraise, QIP? I mean, your competitor, Zudio, opens 200 stores every year, last fiscal year and maybe this fiscal year as well. So if you have everything set, processes defined, ground work done over the last four years, why not accelerate more and open 200 stores in India with some QIP, fund raise, and all that? Are you thinking on those lines? No, we're not thinking on those lines because, of course, like, when you grow at that pace, it comes with an added bit of risk. And we feel, you know, we have only implemented maybe 20%-25% of the vision that we have for our assortment. This is just the beginning. So I think if we reach that magic number of INR 1,200 per square feet per month, and you know, ROE of 25%, then we might think on those lines. And currently, we feel we're still undervalued. And so I think maybe in a couple of years this will change. Okay. And one more thing. One of your competitor also got into the beauty segment, right? I mean, Zudio Beauty and all they have opened. So in the longer term, do you see this value-conscious market will also expand for you beyond the apparels and maybe some more categories as well? How do you foresee future for V2 Retail? See, we can't predict the future, but right now we don't have any plans to dilute our focus in any other category or even regionalization or any other brand. We want to focus on this, increase the footprint, because there's immense potential just in this model. Maybe in the future we see when we feel, okay, this is getting saturated, and, you know, we have the bandwidth to expand into other, categories or models, we will think about it, but right now there are no plans. Okay, got it. Thank you, and Diwali greetings to you and the team. Thank you. Thank you. The next question is from Akash Singh, an individual investor. Please go ahead. Mr. Singh, your line is unmuted. Please proceed with your question. As there is no response from the line of current participant, we'll move on to our next question. Our next question is from Kushal Goenka, an individual investor. Please go ahead. Hi, thank you so much for the opportunity. Sir, what kind of post Ind AS EBITDA number that we are looking for, for FY twenty-five? We don't look at, you know, even the projections that we make, we don't do post-Ind AS, because- Okay. Pre-Ind AS only makes sense to us. So, even the investors and, you know, internal targets, everything is pre-Ind AS, all the reports are pre-Ind AS. So we don't like, we don't even make the numbers for post-Ind AS. Okay, thank you. And second question would be, since Q2, do you think from next year, like FY 2026, Q2, we can see a positive PAT, because since we are growing and if we get the operating leverage, so can we see a positive PAT from Q2 next year? Yeah, definitely can be, but the first target was to be EBITDA positive, and for all four quarters, which we will achieve this year. But, then the next target would be PAT positive in all the four quarters. So hopefully by next year we can do that as well. Okay. Okay, that's great. Thank you so much, and best of luck. Thank you. Thank you. The next question is from Manav, an individual investor. Please go ahead. Sir, can you give the store addition for the H2? How much you are going to add in the H2 of this year? So, I think I already mentioned it. We would add around forty stores in H2. Sir, can you give the sales growth guidance and same store sales growth guidance for this year? So first six months it was 34%, and I think for H2, our target is around 15%-20%. Okay, sir. Thank you. Thank you. The next question comes from Bhagavant Reddy, an individual investor. Please go ahead. Yeah, hi. Am I audible? Yes, sir. Yes, sir. Yeah, sir, I just wanted to know, the current ratio of, stores that are, profitable and that are burning. So how many stores, are profitable and how many are in loss right now? So we don't have a single store right now, which is a loss. I think it's the first time in the company's history. Okay, that's great. That's great. And, I had another question on our manufacturing. All our manufacturing is done in India or, some part of it is overseas? It's a very insignificant amount, like, most of it is from India. Okay, okay. Yeah. Thank you, sir. Happy Diwali. Yeah, but we are exploring Bangladesh as an alternative. Okay. Okay. Thank you. The next question is from Vinayak Kariwal from Xponent Tribe. Please go ahead. Hi, sir. Thank you for the opportunity. So sir, you mentioned that you were basically doing common retail in eighteen and nineteen, and now you have focused on your brand identity. So I wanted to know, what is the unique selling proposition? So if we imagine a Style Baazar or various other value retailers compared to a V2 standing there, what will a customer... Why will a customer enter a V2 and not the other players? Will it be the unique branding or the product or the store experience? So what's the focus and USP there? Yeah. So, you know, historically, people used to follow brands or buy brands because they found something different, or they found the latest trend, or, you know, whatever that celebrity is wearing or whatever the fashion influences are wearing, they always found that product in that brand, and that's why they were willing to pay higher for that particular assortment. But now, like I said, because of fast fashion and because now, you know, the cost of making the garment is not a lot, but the brand markup is almost 500%-600%. So we want to bridge that gap where, you know, our markup is only 155%. So the cost to MRP multiple is, there's a huge difference. You know, we were just taking feedback from our customers, and one of the customers said, "Okay, I want a Levi's T-shirt for INR 2,200, and, you know, I'm getting a better T-shirt in V2 for INR 300." When people thought about brands earlier, they thought, okay, because it's at a higher price, it means it is a better product. Which is not true. It is a higher price because it has a higher markup. So when you say, why would the customer walk into V2? Because they will be able to find the latest fashion, the best fabrics, the best colors, the best fit, and they would get that product at a 55% markup. So that, that's the unique selling proposition or, you know, that's the value proposition. But like I said, we've only been able to implement maybe 20%-25% of the product assortment that we want to have. And the day we reach 100%, I think, like I said, the sky is the limit and it'll be amazing whoever is able to do that actually in India. Okay, sir, so you think if a store near you could do a lesser markup or provide a higher value proposition, maybe your competitive advantages would suffer? So it's not just about the markup, like I said, you know, again, it's assortment as well. Everyone can sell at a lower price, but, you know, you cannot talk about assortment in words. If you actually visit a store versus our competitors, then you'll see the difference. The numbers say and numbers talk. So everyone can say that their assortment is better than the other, but at the end of the day, it's the customer who decides. And, you know, like, Zudio has n number of competitors from, you know, affordable and Style Up, there's like Zudio, and there are n number of competitors. But if you walk into a Zudio, you always have five times the customer than any other closest competitor. Until unless you visit the store and see the product, it's very hard to put into words that what the customer is getting different. Because it's not like they have different margin strategy or Zudio is selling at a much lower price than its competitor, but it's the assortment, you know? The kind of, like I said, four attributes of a product, you have to get all four correct, and you have to do that for 3,200 designs. So at any given point of time at any of our stores, there are 3,200 designs and 3,200 SKUs. So it's all about assortment. Okay. Thank you. Thank you. Ladies and gentlemen, we would take that as our last question for today. I would now like to hand the conference over to Mr. Akash Agarwal for closing comments. Thank you, everyone, for joining on the call. We hope we've been able to answer your queries. For any further information, we request you to get in touch with Marathon Capital, our investor relations advisor. Wish you all a very happy Deepa- Deepavali and New Year. Thank you. Thank you.