Ladies and gentlemen, good day, welcome to V-Mart Retail Limited Q1 FY 2022 earnings conference call, hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode. 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. Krupal Maniar from ICICI Securities. Thank you, over to you, sir. Thanks, Mallika. Good afternoon, everyone. On behalf of ICICI Securities, we welcome you to the Q1 FY 2022 earnings call of V-Mart Retail Limited. On the call we have with us Mr. Lalit Agarwal, Chairman and Managing Director, and Mr. Anand Agarwal, CFO of the company. At this point of time, I will hand over the floor to Mr. Lalit ji for his opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, sir. Good evening, everyone. Thank you, Krupal, and welcome to this call once again. Very healthy signs, and we are on the back of a very bad quarter as far as the people's psychological thought process and their psyche regarding the whole pandemic and regarding this whole what has happened to the society and loss of lives and loss of mental peace. That has been a big piece in this particular quarter, and that has overpowered everything else, especially in this quarter that we've seen. This particular year, we have seen this pandemic or this lockdown, definitely we have seen the intensity of the cases as well as the awareness and the impact of the COVID was visible very high in the small town, in the state where we operate. Largely, we have seen that the denser states have received more impact of this particular pandemic, this phase of the pandemic. It has been really very demotivating and it's really very concerning for people there because of the low medical infrastructure, because of the low administration outcome. Overall, people had a very miserable period which they went through. We witnessed everything, especially the team had lot of focus on serving the community, serving the society, taking care of the employee, being very close to each and every employee, being very close to each and every family member of the employee, trying to help everyone who were impacted because of the COVID. Even in our immediate circle of influence, whether it is landlord or vendors or my customers or even my other stakeholders, we all got together to try and help wherever we did. We have done lot of work on vaccination. Most of our employees, almost 95% of our employees are already vaccinated. Not with both the dose, but yeah, with single dose, but both the doses will be complete in the further month. There has been lot of grouping that has happened. We as an association also worked a lot towards helping the community wherever we could. Yeah, the impact was high, so as the lockdown and the opening impact were there in the smaller town. We could see consumption also hitting, and we could see stress coming in, both from the customer's point of view of income as well as the mobility of the customer or the traffic and the traffic at the store or the traffic at the market. Overall, movement of people were very low. This has impacted compared to last year's pandemic. This year we did not see lot of migration of labor. This year we did not see people going back to their villages, the city crowd going back to the villages. This time the small town comparatively had lesser number of visitors or those people who used to come in there. Yeah, this time we saw even lesser movement from villages to cities because the transportations and everything was also impacted a lot, and people had the real fear. That was there. Yeah, largely, post that, from June onwards, we started seeing the comeback. There is a good comeback that whatever we saw versus May, we saw a good comeback in June and July. The comeback in terms of the customer or the normalization in the society happened. We could see people also getting tired and people also wanted some relief of that particular environment which got created in April and May. People wanted to come out, and we saw good response coming out. The pent-up demand also was visible in the month of July, a little bit, but not too much. There are still areas in this particular period we actually experienced a very regulatory, very harsh stand from certain state government, especially from state government of Uttar Pradesh and Bihar, where we saw them still impacting the lockdown. Even as I'm speaking today, we have two days closed down, weekend closed down in Uttar Pradesh, which is the best days for our sales, Saturday and Sunday. We have still alternate day operational in Bihar, which is also a very big impact which is getting created in the market of Bihar. Northeast and Eastern states still continue to have COVID rise and COVID cases. There also we are seeing some impact coming in. The normalization has not been as good as last year. We are seeing some store days or the operational days as lower operational days. Even the timing restrictions are there. Overall, the environment at those markets has not become normalized in that respect. The movement of people are restricted in that respect. Yeah, the industry has taken it positively and most of the fashion industry will see the growth coming in, the customers coming back. Comparatively, because last year, the peak of the COVID happened during August and September, compared to this year, we are seeing a falling trend and a very large falling trend and a high vaccination drive, which is helping the confidence of the customer. The confidence of the customer and the employees on the market is still much, much better, and we could expect a better recovery in this particular year compared to last year. That's what we expect, and that is what we are seeing also. If you could see the growth which is coming in even V-Mart's number, compared to last year, compared to FY 2021, it is relatively higher, and that is what has been witnessed in the market. Overall, the market is behaving in all the areas. I think it is happening good. There are other good news on the ASP, the market MSP prices have gone up. The monsoon seems to be good. The agriculture income this time also relatively looks better. Yeah, this time there is definitely inflation in hand. People have pressure on their monthly expense. They have their pressure on the monthly budget. Rise in the salary and rise in the income has not happened. People still are struggling with their budget. We are finding that very evident because large part of the commodity as well as the fuel and energy, all have gone up. All that is impacting the customer, and that has also impacted the price of the product that we are offering. We are also seeing a growth in the price of the product because most of the commodity products that we have, and especially cotton and synthetic yarn, everything has seen a very, very high growth as far as the cost is concerned. That has been passed on to the customer, and we are seeing even the average selling price growing because of that. What I expect, it should normalize very fast, and we should expect the regulatory authorities also to behave little more normally. I hope they open up the stores for all the seven days and all the 30 day of the month, and then we see normalization coming in. Especially, I think, post the Independence Day, we should see the normalization coming in, and we should see better days coming out of this. We do still track the city-wise COVID cases. We have not seen any abrupt change in the COVID case across India. We are tracking that every day, we have a very close eyes on that. We believe the vaccination drive is happening at such a good speed and the acceptability of the vaccination is so large in the small town also. That should really help the prevention of the third wave. We are watching on the third wave, I think even if it is going to be, it is going to be cases, not with very acute intensity or acute intensity of death rate. That is what we are seeing globally also, we believe that should continue. Overall, at the organization level, we are bullish. We are on the attacking mode. We have done this new acquisition, so-called acquisition of 74 stores of Unlimited, which has also helped the motivation of the internal employees, internal team, the external stakeholders. The confidence level here is very, very high. People are much more geared up, and they are much more confident on meeting those processes. People are much more agile in their processes. We have adopted a lot of digitalization in the process. The team is really working very hard to try and bring back the business to the normal situation. Even the integration pieces are getting in place from the Unlimited team, and there is a lot of work which is happening. We are targeting a closing date of 30th of August, so that after that we could take the handover of those stores after 1st of September. That's what right now the target is. Most of the things are aligned towards that, and we believe we should be able to do that, and we believe there should be good synergies which should come in, both from what we could learn from Unlimited as well as what V-Mart learning has been till now, which could be imparted to those stores which are operational there. There'll be a lot that will come up. We don't have too many updates right now on that piece. We may not be able to share too many updates, but yeah, as things go, we will definitely want to keep you posted on those updates. Till that time, I want Anand to give you a brief about the numbers, and then further we could take up the questions that we have. Thank you, Lalit, and good evening, everybody. It's been a COVID quarter, but also with the gradual opening up of the lockdowns, new store expansions, and return of footfalls and sales as we have seen. Let me quickly take you through some of the key financial highlights, and then probably we can open the session for questions. Quarter one usually is a very strong quarter for us, normally accounting for almost 25% of the full year sales and almost 1/3 of the full year profit, as this is marked by full price sales and fresh summer collections coinciding with harvest season and an expedited spending patterns. With a strong recovery in quarter four of last year, just around Holi time. The resurgence of COVID in April actually led to a nationwide lockdown, which significantly impacted our operations, and as a result, we could get only about 49% of the operating days in the quarter, which were further impacted due to lower working hours, weekend lockdowns, and other local restrictions. While April saw good numbers till about the mid of the month, May was almost completely under lockdown, and stores started to open only from June onwards, and that too sporadically, differently across the different states. As a result, while the sales grew by 127% over the small and COVID-impacted base of last year, but the doubling of customer footfalls and the combined increase in average selling price by 19% and 3% in average bill size signified a stronger feel of our consumer recovery. Our online operations also continue to do better during this time. We continue to build a stronger platform, streamlined operational issues, and rolled out new digital tools to measure and improve operational efficiency. A key ingredient for the success of our online initiative is going to be around hyperlocal delivery and using our store reach to reduce the time taken and also the cost of last mile delivery. This is an important initiative and will pave the way for operational economies in the long run. While our share of revenues from online is still around 1%, but growing, but we continue to work towards to increase it to around 5% in the next two to three years. On the margin side, there has definitely been an immense pressure on raw material costs, especially cotton yarn prices and logistics costs, driven by oil prices in the last six, seven months. Keeping in mind that these are cyclical changes and not really short-term adjustments, we have strategically increased our selling prices to tackle this. This was done in a gradual manner since March onwards. As a result, our gross margins for the quarter remain in the range of 31%, which is very similar to previous years. Inventory remains under control at INR 365 crore, which is 15% down year-on-year, as well as 15% down from the last quarter. This has happened by way of more dynamic supply chain planning and actively working with our vendor partners to optimize the order placement and delivery cycles. At the same time, we have ensured regular payment to all our vendors, vendor ecosystem, to ensure that there are no future disruptions in suppliers due to COVID, and also to mitigate any possible commodity price shocks to the extent possible. Fresh ordering for the new autumn-winter season is in full swing, and we remain optimistic on a stronger recovery as we move along. Shrinkage numbers which include write-offs and provisioning, climbed up to 4.9% of sales on a very low sales base. While as a percentage of inventory, this remains at around 2%-2.5%, which is in a comfortable range on an absolute INR basis, while in percentage terms, this may still look a bit on a higher side. On a conservative side, we continue to carry additional provisioning that we had created a year back against COVID-related contingencies. Coming to the cash side, we remain pretty comfortable on the overall liquidity situation, absolutely aided by the fund infusion in forms of QIP that we did in February. We did around INR 36 crore of CapEx, opened three new stores and also invested in land for a new warehouse which is being set up in and around Gurgaon. We closed the quarter with a total of 282 stores, we continue to remain optimistic on the overall growth opportunity and will keep investing in new stores at regular normalized pace in the coming year, w ith the caveat of pandemic disruptions not being ruled out. Coming to the expenses side, as you all know, largely our costs are fixed, especially manpower and rentals are the two big components of the P&L. There were no major cost reductions this time, unlike last year. Manpower, there has been no reduction. On the rental side, I think we are looking at very small but marginal relief from the landlords, for two reasons. One, because the lockdowns this year have not been as long as last year, and also there is a much greater reluctance in terms of passing on concessions this year as compared to last year. In terms of electricity expenses and marketing expenses, I think these have largely been in line with the sales. The marketing has been more focused on digital, which is also in line with our focus on spreading the online part of the business disproportionately. As a result, the overall expenses for the quarter were broadly in line with sales, but higher than last year owing to lower reductions, which is also important to keep the growth momentum strong in view of the upcoming festive period wherein we continue to remain buoyant. As a net summary, the quarter ended with a INR 2 crore EBITDA loss, which was almost INR 4 crore lower than last year. On the future outlook, we still remain cautiously optimistic as we continue to look forward to a stronger customer comeback. As Lalit just mentioned, July has started well and in fact, even August is looking good, with the only subject of local restrictions by state government being m ore relaxed now that we are hoping for, which will pave the way for even more normalized working. Even now, as we are seeing complete lockdown in UP for weekends which has now continued for more than two months and Bihar and Jharkhand, not just Bihar, but also Jharkhand has local district level differentiated notifications on lockdown, which is impacting operations significantly. Therefore, we will continue to be careful, while also being cognizant of the strong tailwinds in terms of near normal monsoon increase in the product ASPs reflecting the customers' changing preferences, wherein they were downgrading to a loungewear last year. This year there is a clear message, where more normalization in terms of customer preference is being evidenced. We are planning for a near normal festive period ahead, and will keep a very close eye on day-to-day developments on the pandemic front to avoid any surprises. That's all from my side. I now request the moderator to open the house for questions. Thank you. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who has a question may press star and one on your 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. We would also request the participants to restrict their questions to two only. If time permits, we will come back to you should you have any follow-ups. We have the first question from the line of Percy Panthaki from IIFL. Hi, sir. My question is again on normalization. I'm just trying to figure out what is necessary for normalization to happen. You had 49% lower operational days versus a normal sort of quarter. Your sales was, I think on a two-year basis, down 61%. Is it just that if 100% days are operational, you will get back to that INR 8,500, INR 9,000 per sq ft kind of run rate? In addition to just the restrictions not being there, is there anything else also that is required? Let's say hypothetically, if Q2 there are no government restrictions or local body restrictions and you have 100% of the operating days and in fact even 100% of the operating hours, do you think that the sales per square feet will return to normal immediately, or do you think it will take some more time for that? Yeah, Percy, good question. Let me just remind everyone. This definitely what you're seeing is 49% operational days. Any store which has even been opened for one or two days, we have considered as open. There are a lot of stores where the timing or the day, largely in eastern part or northeastern part, the timing of the store was also constrained, and they were operational only for four hours. Somewhere it was operational for six hours. It was operational for morning hours. All those things were a part of the piece. Right now, whatever, if we look at the store days and the store hours, the sales per square feet from the store hour are much higher. We should get that immediately back. It is not only the operational of the store hours, but it is also a big signal to the customer base for their movement and for their business normalization. It is not a big indicator or it is not a big point where customer can come in, but it is also mentally a big comfort for the customer base that things are normalized, we can now go out. Okay. Basically, if there is no further worsening of the COVID situation, in Q3 we should have sales per square feet at pre-COVID levels. Yes. We expect that to happen. It should happen. What happens is, even the operational days, weekend is closed. Saturday, Sunday, which is primarily you all know that contributes a much higher percentage of sales at a per day level. The important days, which are the holidays for customers, if those are closed, what you get is normally a lower outcome because all the impulse shopping happens only on those days. Right. Also, would I be right in assuming that, if your sales per square feet comes back to pre-COVID levels, then the margins that we used to do pre-COVID at EBITDA level, India suggested used to be like 8%, 8.5% kind of EBITDA margins. Do we see those margins also coming back simultaneously whenever the sales per square feet comes back? I don't think there is any change in the expense level or anything. What we are seeing, the gross margins are also come back. There should not be any struggle if the sales have come back. Understood. Secondly, sir, since now this COVID is now almost behind us, hopefully, what will be your plans for store expansion and see FY 2021 was a little subdued. FY 2022 also, I don't know, maybe slightly subdued. Would it be that to catch up with these two sort of years which are slightly on the lower side, would we see FY 2023 store opening higher than normal so that over a three-year period, whatever you had planned to earlier achieve, you will reach that kind of number? I mean, you would not do that? Yes, Percy, we are not tweaking our expansion plans, neither on the offensive nor on the defensive. We will continue to run at the same pace. There may be some small adjustments here or there. Whatever we increase, I think the overall trajectory will be that we will want to increase our retail space by 20%-25% year-on-year. There may be small plus or minuses, but otherwise, I think we will like to maintain the same trajectory even for FY 2023, even with the COVID situation being where it is today. Okay. Basically, because let's say we lost out on growth in FY 2021, it's not that we will compensate for that by having a higher than that 20%-25% number in one of the years. Percy, with South India expansion is expected to compensate for that loss of sale. Understood, sir. Yeah. That's all from me. Thanks, and all the best. Thank you. The next question is on the line of Nihal Jham for Edelweiss. Please go ahead. Yes. Thank you so much, and good evening to the management. Sir, three questions quickly from my side. First is on the ASP. You mentioned both aspects that we've taken a price hike, and ideally, this time around, we're seeing lower sale of Akrisja or some of the other more value-focused segments. Would it be possible just to give a bifurcation about what proportion of price hikes have we taken and what is driven by more normalized buying? Because even in our pre-COVID times, Q1 generally used to have a realization of around INR 265- INR 270, and this time we are seeing that it's close to INR 300. That would be my first question. Nihal, the price rise that we had taken was roughly around 5%-6%, it was not uniform across all product categories and all departments, it is a very carefully studied and carefully implemented price rise. Yes, I may not be able to exactly quantify the impact of the sales mix in terms of the change in the different product categories, but in terms of price rise, it would be good to assume around 5%-6%. Sure. That is helpful. Sir, the second question was on the inventory side. Now, this quarter may not be comparable in terms of number of days because of the lower LVD. I just wanted to get a sense that on normalized basis, how many days of reduction are we targeting, and would that mainly be in terms of the inventory lying in store, or is it more the backend warehouse-related inventory that we are targeting to get more efficient for? Nihal, we are actually not targeting any reduction in inventory. I think the way we are looking at it is because it is a very dynamic situation, we would want to be little tight-toed in terms of planning for extra inventory. We are ordering closer to what we feel is the festive or is the season, and thereby, we will want to keep a very tight leash on what is out for ordering. In terms of the overall inventory days, if you remember, traditionally, we have averaged at around 80 days or so, and that is the range that we will first want to come back to in the normal times. If you look at the numbers in terms of how the inventory has moved in the last 1.5 years, we have always tried to keep it very consistent with the kind of sales that we expect in the following two or three months. That's helpful. Sir, just one last question from my side. I see that there is obviously a lot of focus that we are putting in terms of putting the point across of us driving our Omni initiative. If I juxtapose that with the fact that we are still looking at a, say, 4%-5% contribution from Omni over the next two, three years, which is a reasonably decent increase, but not a significant ramp-up that we are seeing. I just want to get a sense on is that in the target market that we generally work in, say, UP, Bihar, primarily. Is it that we are seeing a very fast adaption of Omni initiative that is maybe wanting us also to ramp up on these aspects? Just your thoughts on that is it on ground post-COVID, these markets are seeing a much faster ramp-up on the Omni side, and that is why we are also wanting to move ahead of what the pace we were initially planning for? Nihal, as such, definitely the customer's adoption rate of technology and the acceleration over the online shopping definitely has been helped by the COVID and the lockdowns, and that has led a little change in the customer's habit and consumer habit. We could witness that change during those lockdowns and during those times when people could not travel and come out. Now, as soon as we see the stores opening back, there's a massive drop in the customer's footfall, the kind of people who come on the platforms. It is purely need-based, which is getting driven, and as soon as people are finding it normalized and they want to come back, they want to come back to the store offline, enjoy, and then adopt. As far as our Omni approach is concerned, we are not only serving to those markets where we are present. We are serving to the entire India, and everyone from the entire India is ordering. To your best of knowledge, for us, the third or the fourth best city where we are getting the highest order from is Mumbai or Hyderabad. That's the kind of cities which are adopting our product more, and they want those kind of products. Omni drive is definitely one we want to drive it for our customers, but we have opened our portal for everyone, so there are customers who are also coming in. Omni drive is largely to get ourselves prepared, be there in terms of the technology, in terms of the process, in terms of the people adoption, in terms of our store understanding, in terms of the inventory management, the product definition, the product cataloging. Those are some of the learnings that we are developing and we are taking that up. We are not very aggressive on this. We don't want to lose money. You all understand that still the online business is a great money loss business, and we have not taken that clear-cut path on losing that money. We are being very stable in our approach. We are driving organic traffic. We want those customers who have experienced our portal to come back and then see. There's no huge change that we could see post-pandemic in the markets of UP, Bihar, as you would have seen. Thank you so much, Lalit Ji and Anand Ji. I'll come back if needed. Thank you. Thank you. The next question is from the line of Shirish Pardeshi from Centrum Capital. Please go ahead. Hi. Good evening, Lalit Ji and Anand Ji. I have three questions. When I look at the footfall over last year, say FY 2020, we have reported 393 million footfall. Now, if I average that, the average footfall could be in the range of about 30, 31, and now you are saying that your quarter footfall is about 31. Because around 65%, 184 stores we have in UP, Bihar, and Jharkhand, and this area was largely disturbed. Is that the way one should read with the opening up economy, there is a heightened or there is a strong revenue momentum which will happen around festive season? Shirish, it's not just a numeric number of footfalls which just translate into sales. I think the main message here that we are hearing from the ground is that there is much more increased customer activity in the markets, and that is getting reflected in the footfall numbers. On a per store basis, the numbers may remain again very different because again, just as Lalit mentioned, there are local restrictions in terms of timings and different geographies. Some stores are open from, let's say, 8:00 A.M. to only 12:00 P.M., and sometimes they are open throughout the day, et cetera. I think the bigger message, and I think the answer that you are trying to seek is, yes, we are seeing much more positivity in terms of consumer behavior. It's not only reflected in the number of footfalls, it's also reflected in the bill sizes, it's also reflected in the kind of product that he's buying, and also with the kind of confidence that he's coming out and wanting to visit stores even during June and July. What I understand is the positivity rate, what you are mentioning or referring on ground, has gone up substantially in the month of July. That's the way to read? I would say yes. Okay. All right. My second question is just an observation. We have seen a sharp increase in the employee cost. Could you spend a minute to explain why it has gone up so much? The employee cost has gone up because of two reasons. Last year, we were definitely caught off by surprise, and it was a very extended lockdown. Thereby, we had taken measures to look at how we can curtail and reduce our costs, and which included removing the variable part, the incentives, and which also there was a pay cut that we had done last year, which is not introduced this year because the stores were shut only for a limited period of time, and at most of the cases, it was also sporadic. It is not a regular lockdown for three months or two months. Thereby, the kind of flexibility that we had to reduce the employee cost was also very limited. We also did not want to do a lot of cuts this year, keeping in mind the customer response that we are getting and are aspiring for, and because we are in a growth phase. It is definitely far more important to keep the employee motivation at a much higher level and not just work on cost restructuring. I do understand, Anand Ji. What I was trying to understand, if there is a variable part and if the normalcy has not happened, and if the run rate per quarter is about INR 35 crore, INR 34 crore, will that run rate once the normalcy comes back will go up or will be remaining in the same level? Shirish, there is some cost which we have retained, which is permanent in nature, which is more efficiency building and resizing and recalibrating or learning the efficient ways of operation. Those will be something which will remain there even after the normalization happens. Yeah, otherwise, definitely we did not do lot of recruitments, and that will only begin when the festivals are on. We'll see some growth coming in at the cost level. At the percentage level, we should see a downward trend coming forward. Yeah, still, in spite of all this lockdown and pandemic, the minimum wages rise has also been there. We have seen a great rise in minimum wages also in this particular year and also last year. That impact is also coming onto the wage. I got that, Lalit Ji, but I'm just saying that, will this substantially go up? Because if I look at the percentage to net- No, it will not substantially go up. It's about 18% now, which is very high. No, that is the percentage because the denominator is low. Okay. I got it. My last question is on the warehouse part. You did mention last time that we are looking for a land and now, Lalit ji, in your understanding or with your confidence, how much time you think your new warehouse will be up and running? We should take at least 9 months-12 months. It will come in the next year. That's what you're trying to say? Yeah. Before next year, first year. If I may extend with the new warehouse coming up, what kind of synergies you would see in terms of transportation, segregation, staff, and maybe replenishment of orders? I think most of them has already been implemented even in the existing warehouse. What we would expect is we will build a larger infrastructure to handle the better or the bigger volumes and handle it faster. What is going to happen, the mind to market game is becoming very active. Here, the point is, how fast are you able to react to the customer's needs, to the variable environment that is coming up. Everything, it has to be just in time kind of model so that we can operate our stores at a lower base of inventory, and we could operate at the back end much more efficiently and effectively so as to create a large, speeded fashion and then a more fresher fashion to the customer. Our larger target is our goals, and our targets are also to reduce the cost at the warehouse, which is in terms of the manpower and all, so that we could bring in automation. Also, we have to see the infrastructure scalability piece, which is how do we scale up? We don't need to clearly, regularly do that. Once we have done it takes care of at least nine years of our business operation. Sure. Thank you, Lalit ji and Anand ji. Thanks for the opportunity and all the best to you. Thank you. Thank you. A reminder to the participants, anyone who has a question may press star and one. Next question is from the line of Aliasgar Shakir from Motilal Oswal. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Quick question on the recovery side. Last year in the first wave, impact was more in the metros versus Tier 2, Tier 3 towns versus this year when, observation or thought process that impact has been more on the Tier 2, Tier 3 towns. If you could just share some color in terms of how are we seeing the recovery in our metro, basically Delhi or metro stores versus lower towns. Also a related question is, when I see your operating metrics, I see footfalls have gone up, and with that also the conversions and transaction size have gone up. Now, I think last year the narrative was that, maybe people are bunching up their shopping and therefore, transaction size are high, conversion rates are higher, but footfalls are lower. Footfalls have, I think, recovered, but still we are seeing the transaction size conversion holding up. If you can just share some color on that as well. Ali, if you could just see, definitely as we have been speaking in the commentary, footfall are better, so as the sales, because we are seeing overall year-on-year we have seen 127% growth in our sales. There is a growth in the footfall, but still the footfall versus the sale is lower. Still, the sales are higher because the conversion rate is higher, the transaction size is more, and even the average selling price has been higher. What is coming up here is that the customer who is coming in is doing a better buying. He is converting more and he is buying more. Compared to last year, we are also seeing good amount of customers coming in. That is if we look at FY 2021, but if we look at FY 2020, still we have lot many customers who have not turned up, who have not come back. Those are the customers that we have to be very much waiting for, and those are the customers that we are trying to drive them in, because there are a lot of customers who are not comfortable still coming out and who are not getting transportation. That is what we are expecting, which will certainly bring back the existing sales. Understood. If you can just comment on how the recovery is in metros versus rural areas. I would definitely see bigger cities have performed better, especially Tier 1 and 2. Tier 3 and Tier 4 this time has got little more impact, especially in certain geography. As I said about UP and Bihar, where the lockdown and the restrictions are very severe and they have all stopped listening and they have all stopped reacting. There are those kind of reactions which is getting very disturbing in nature because they are impacting all the organized retail stores as well as the retail market overall. The impact is largely being seen in Tier 3, Tier 4, but in certain states, all the tiers are affected. Even in those states, the Lucknow of the world and the Patna of the world also are not allowed to operate. That's the problem. It is more a statewide call, and also a tier wise call, combined which it is coming in. Yeah, recovery in the bigger cities has been little better. Got it. Okay. second question is on this ASP increase. Anand ji said that we've taken 5%-6% increase. Does that now fully cushion our margin? Have we fully passed on the cost increase? I mean, related to that is, are we seeing any impact of this increase? I mean, it's quite overwhelming to know that in such kind of a market you have the confidence to take a price increase. just your thoughts on that. I mean, this is definitely one thing which we were also very scared of. The price rise was so much that we could not handle it, and we could not absorb it. This time, for the first time, V-Mart has passed on the price rise, and we have done this price rise, and we have seen positive response because what we have seen, because as Anand mentioned, there are not all the items we have done equally. We have also segregated that based on our sell-through rate and our customer demand rate and which will hurt the customer more and which will not hurt. We have seen especially products where we have taken up the price range, we also bettered our quality and bettered our product from that perspective. The sell-through rate of those products have been very good. Especially the product which has been procured in this particular season, which are higher price, we have seen a very good response. That also gives us the confidence that the customer also doesn't worry about the small rise, and they all understand and they all know that in the entire market, this price has gone up. That is how they are taking it. Okay, the entire market has taken pricing? Yeah, no one could absorb it. It is very natural that no one could absorb it because the price rise is so high. Got it. Thank you very much, sir. Thank you. Ladies and gentlemen, I would like to remind you to please limit your question to two only as we have other participants in the question queue. The next question is in the line of Girish Pai from Nirmal Bang Equities. Please go ahead. Yeah, thank you for the opportunity. I just want to know how June and July have been in terms of revenue. Have they been equal to June and July of 2019? Hi, Girish. That is still not a full recovery because if we are still seeing two-day lockdowns in a week in UP and alternate day lockdowns in Bihar, it cannot be a full recovery. Definitely for the number of days that we are open, we are seeing almost near to or even probably more than the amount of sales for the equal number of days that were there in, let's say, 2019. Having said that, one must also not forget to discount the factor of pent-up demand just after lockdown opened. There is a phenomena and which we have seen last year also and which we also saw this year. There is some amount of pent-up demand which will lead to some unfounded euphoria. So far, at least in the last 1.5 months, we are seeing a much more positive traction than last year. Do you see any structural savings from a margin standpoint with two waves of pandemic hitting you and you handling it? Once sales comes back to normal, do you think that margins will go up structurally by, say, 100, 200 basis points because of the initiatives on the cost side that you've taken? Girish, in some ways you are right. This pandemic has taught all of us some lessons and there will be some improvements in terms of our operational efficiency. There may be some simple tools in terms of operating leverage, et cetera. At the same time, there have been significant cost pressures because of inflation, commodity cycle price increases. Therefore, my sense is that I would not want to guide towards increased margin structure post-pandemic. Lastly, the UP election is coming up in a few months. What has been your experience in the run-up to the election? Do you see more money going to the hands of the consumers resulting in better spending power? That's my last question. Mr. Pai. I think normally this is what we have witnessed, this is becoming bigger and bigger. Elections are becoming economic driver also. We believe if election pumps in a lot of money in the market and brings in a lot of money in the market, there are always activities which are there. Normally, the beneficiaries are the recipient or the voter bank of that market. There are a lot of disturbance which comes up when there are elections or before the election, which is in terms of whatever political activities happen or the rallies or some kind of riots and some kind of lockdowns and some kind of problems, the protests which are also a part of this. There is some loss that you have before the election, and there is some gain that you have post the election. Okay. Thank you very much. Thank you. The next question is on the line, Ankit Kedia from PhillipCapital. Please go ahead. My first question is on the loyalty customers. 60%, 65% of our revenues come from loyalty customers. In the current scenario, how is the movement of loyal customers and what marketing initiatives have we taken to drive them to the store? Good question, Ankit. Loyalty, I think has been a big savior for all of us. There has been a very good loyalty demonstration that we have also got. We've got more than 65% of the customers or the sales coming in from the loyal customers and customers who have been shopping from us. That has been good. We have also seen there are a lot of analytics which is now getting into the loyalties, into the customer cohort and in their lifetime value or the annual lifetime value. What we are now started tracking is how is the annual lifetime value of a customer and how should we try and grow that lifetime value? That is what the whole analytics and the campaign and the marketing is guided towards. We have a lot of, more than 20 lakh of customers whom we are targeting so that we could increase their frequency and we could bring them back who are our VIP kind of customers. There are more than 2 million database where we have got those customers who are regularly shopping from us and regularly coming in. We are chasing them, motivating them, giving them lot of insights and coupons so that they are back to the business. That is what has driven because in these days, the marketing team did not have too much a budget for those ATL and those print ads and the TV ads. It is largely driven by those either calls or one-on-one SMSs which have been delivered to the customer. Sir, my second question is on the EOSS. As mega sale would have started now, given the inventory is low in the system for us now, do you see more full price sales coming in and the gross margin expansion could continue in quarter two and quarter three because of that? Ankit, you have to understand that we are post two lockdowns. There were two lockdowns that we had in the last 12-14 months, and all the inventory which was bought even before the first lockdown is still there. Some of the inventory would be still there in the system. We don't want to carry all those inventory. We have to definitely get rid of those inventory also. We should not expect a lot of full price sell-through coming in. Even if there is as a percentage of full price sell-through is higher, but the impact and the margin loss which happens from the old inventory, which has to be discarded from the system, is also relatively high. That is how you are able to see that also in the shrink. If you see the shrink has gone up as a percentage of sales because the provision policies always allow the inventory to be discarded from the system as soon as it is aged. That is how we are taking it. We are focusing on both the sides. One, definitely driving more percentage of full price sell-through from the fresh inventory, and two, also discarding the older inventory so that we don't have a carryover in the next year. Sure. Sir, my last question is on Unlimited, if I can ask on Unlimited. Sir, in FY 2020, Unlimited had around 90-odd stores, with a revenue of INR 530 crores. Now, given that the number of stores have become 74, would this INR 530 crores revenue be the right revenue assumption for us? Of these 74 stores, what will be the like-to-like revenue in FY 2020? If you could just help us with that number. It'll be difficult as of now, Ankit. I would want you to restrict right now, and maybe you could take in a one-on-one call with Rish or Anand so that they can help you. That would be helpful, sir. Thank you so much, and all the best. Thank you. The next question is from the line of Abhijeet Kundu from Antique Stock Broking Limited. Please go ahead. Yeah. Hi, Lalit ji and Anand. Good evening. My question was on the revenue drivers during the end. Essentially, we have seen that there has been an improvement in mix. Higher priced, fresher products have seen increased demand. Footfalls have gone up and all the metrics have improved. What we understand from our channel checks is that wedding season played a very good part during the end of the quarter. As there were a lot of wedding dates in July and all the vaccinations have also happened, that gave confidence to the people. One is wedding season, and then the forthcoming festive season will also help going ahead. Is my understanding right on that? We should ideally see continued momentum in that case. In one of your key markets, again, East, the West Bengal part, there are still higher restrictions are there. Many places have not opened up. Restricted hours of functioning is there. There will be more number of functioning hours we will get in another time. East can also then see a good amount of bump in demand. Is that understanding right? You're right. Absolutely right, Abhijeet. As you understand that India celebrates wedding very highly. The spending in the weddings are very high, and people definitely want to wear and want to look good when there are collection of people. Incidentally, still the weddings which happened in this last two, three months, whether in June or July, a lot of weddings were canceled, and some weddings which happened was very restrictive in the month of June, especially weddings were under 50 people or under 20 people also. That's the kind of wedding which happened, which was only largely with the wedding bride group or bride family. In July, definitely there was some relief and restriction opened, and there were some drivers which happened also because of weddings. We should expect that very huge number of weddings to come in the third quarter, especially in the November and December month, where we should expect a good 25-day of wedding period. Lot of weddings could happen if situation is normal, because a lot of people are yet to get wedded, and they are expecting them yet to get wedded during those times. We should see a good growth coming in from that time. You are absolutely right. Festival is another very big opportunity, and that always is an opportunity this time because in the last two years, people have not celebrated festival. I hope people are allowed to celebrate festival as they were celebrating in earlier times, and we get good Pujo days, and we get good Diwali days, and then that once again could be a good driver for the apparel business. Yeah, in northeastern states, as I mentioned, there are still restrictions in place. For demand, it is not so much of contribution coming from those particular states. Yeah, I should expect relaxation coming in the times ahead. People will want to celebrate. Yeah, we also have a risk which is associated with the government policy, where maybe the government policies, as last time they did not allow the Pujo pandals to get celebrated or Pujo pandals to get open. If they allow the same thing or if the same thing happens, it may be a big deterrent in the overall consumption. Right. What has been the reduction in lead time now? As you said, and which is the right decision to make, is having more of fresh products, cutting down the lead time between the ordering of products and getting it, making the orders closer to the season, all of that. It will remain still dynamic, right? It's for this year, and then once things improve, we would go back to previous way of ordering. You are seeing some potential process changes? In short, Abhijit, there is some structural change that we have also adopted, and the agility is also which is kicked in, and there is definitely a need of this particular kind of. It is not so peaceful. The dynamicity always involves a lot of complications and a lot of catechism. We are also developing some technology tool, and we have developed some, so as to give the vendor a little more easiness to track those orders and get those pieces in place. I equally have the empathy with the vendor because he is also in a big difficulty, and for him also it becomes very difficult if we are not able to give them a sufficient time horizon for the plan. Yeah, somewhere we are able to manage it, especially during these times when the festivals are there and winter season is there, the lead time goes up. Otherwise, overall, we have really brought down the lead time by at least 20% of the days. Okay, thanks. That's it from my side. All the best. Thank you. I would request participants to please limit your question to two only. The next question is from the line of Himanshu Nayyar from YES Securities. Please go ahead. Yeah, hi. Good afternoon, sir. Most of the questions are answered. Just a couple of bookkeeping points. Firstly, on the CapEx front, other than the normal CapEx for store opening, how much would we be spending this year, mainly on this new warehouse and any other initiatives that we might have? If you can give a number there. Himanshu, the new warehouse will entail a total investment of roughly around INR 100 crore-INR 120 crore in phase one, out of which we've already done roughly around INR 40 crore. Now all of this may not happen within this financial year. I think in this financial year, probably it would be more around INR 40 crore more of CapEx on account of warehouse. We are targeting to open 40-50 new stores total within this year, out of which we've already opened three in the first quarter, and there are, I think, 5 or 6 more stores which have opened subsequent to that. Total CapEx on new store would be around INR 50 crore plus warehouse of around INR 40 crore-INR 50 crore. There is a big cash outlay that will happen on the acquisition of the 74 stores in South India. That should be around INR 150 crore. Got it. Second point was on the other income bit. I believe there is about a INR 2 crore of rental waiver that we have added on there. If I adjust for that, then the other income looks slightly lower. Are there any one-off there, given the significant cash that we would be having at least at the end of June? No, I think the other income right now only takes into account the income that we have got on the investment. The rental waivers have not really kicked in in this quarter very significantly. They will come in whatever number will be next quarter. Can you tell about the current cash balance that we have on the books, at least at the end of June? I think that's already there in the investor presentation. You can have a look from there. Okay. All right, sir. That's it from me. Thank you. Thank you. The next question is from the line of Akhil Parekh from Elara Capital. Please go ahead. Hi, Lalit sir. Hi, Anand sir. I have two questions. One is, are we seeing a specific trend in terms of the merchandise which is getting sold, especially when we saw the demand going up in month of July and till 15th of August? Anything specific like marriage wear or maybe daily wear which is doing better as compared to the other categories like formal wear? Akhil, especially we've seen a very good. Hello? Sorry, Akhil? Yeah. Akhil, you're there? Yes, sir. I'm there. We've seen a good demand rise coming in from especially kidswear. Kidswear really has rocked very well, and it has done very well. Other than kidswear, we have also seen demand rise coming in from casual wear, which is both casual shirts, T-shirts and denims, which have given a good rise. We expect that to continue. Yeah, wedding wear also has seen a good growth, but not too much. Okay. My second question is on the e-commerce part. In your previous question, you mentioned that Mumbai and Hyderabad, they are third and fourth largest cities for us for e-commerce. How is the fulfillment happening for this order? Because we don't have, I believe, fulfillment centers spread across India. Any plans around putting up fulfillment centers given we are targeting to reach at least 5% of e-commerce sales in next one or two years? As you all know, the Unlimited piece which is what we have acquired now, those ultimately will also be our Omni center and they will also be our fulfillment center going ahead. We are now, we'll become a pan-India player, we will have those centers which is near to the customer. Today, it is getting serviced by the nearest store from that city or by the warehouse itself. Got it. Just one bookkeeping question, if you can highlight average basket size for e-commerce, if possible? Average ticket size. INR 550. Okay. All right. Thanks a lot and best. Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I would now like to hand the conference over to the management for their closing comments. Thank you everyone for being on the call. I know this has been the second call in the quarter, we will definitely keep talking more and keep meeting more. We have very exciting times coming ahead. Wish us all the best in the festival. In the integration plan, there are a lot of experiments that we have done. We really want to work hard and strategize well so that we are able to come out successful and meet you once again post this quarter. Thank you so much for being there. Once again, wishing you all the best, have a safe day. Thank you. Bye. Thank you very much, sir. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect the line.