Aditya Birla Fashion and Retail Limited

Jagdish Bajaj

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Jagdish Bajaj

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Jagdish Bajaj

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Jagdish Bajaj

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Jagdish Bajaj

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Jagdish Bajaj

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Tejas Shah

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Ashish Dikshit

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Tejas Shah

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Ashish Dikshit

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the Pantaloon business despite a relatively higher impact of COVID 3 on its business owing to its higher share of business in malls, Pantaloons recorded revenue in Q4 of Rs.

— Jagdish Bajaj

I think what is encouraging for us is that everything that we have shifted in terms of strategy over the last 3 odd years, we have seen impact of that.

— Sangeeta Pendurkar

My question is that it is mentioned in market update that inflationary pressure is offset by price increase, so how is the response that Company got for this price increment?

— Abhishree Bang

Q

Thank you. Good evening and welcome to the Earnings Call for our Company. the year gone by has been a roller-coaster in terms of COVID waves and lockdowns. As you are aware, the first half and especially Q1 of FY22 was severely impacted by the Delta wave. The second half witnessed unprecedented growth as offline stores opened and had it not been for the Omicron wave in January and February, it would have been a record-breaking period. Before I delve on the result, let me tell you about the announcement, which we have made today. We are very excited to inform you that the board in its meeting h

Management

Q

I have many questions. I will just try to club couple of them for efficiency. First question is regarding the fund raise. Last March, when we made this presentation for our FY26 vision, we had in fact shared a very detail capital deployment plan also, which was not around raising any further capital and when I look back FY22, it actually went very well for us in terms of recovery, in terms of numbers, so then what triggered this sudden such a big fund raise? That's the first question.

Ashish Dikshit

Our long-term plan was made in January of last year and was presented to the investors around early March. What happened in April, May, June, all of you remember, all of us remember has been one of the most devastating period for life in general, but I think consumer retail, specifically fashion retail and all of first half of the year was significantly different from what we had imagined. We had come out of the first wave in January and February when this plan was made and to that extent, your contention that nothing has happened in FY22 is actually very far from our own assumptions of how FY

Q

I have a question first on your fund raise and your growth initiatives that you mentioned. So, and coming from the point of view that we are a Company, which has an ability to generate probably more than Rs 1,000 odd crores of operating cash flow. I hear your comments that we want to accelerate our growth initiatives, but when I see Lifestyle, largely franchise-led growth, even Pantaloons, we are increasing now moving to that goal and in fact the kind of free cash flow generation we have, I thought we have sufficient capital to drive growth in our existing portfolio, correct me if I am wrong.

Ashish Dikshit

Fair point in terms of some of our businesses having strong cash flow generation capability, but as I was explaining earlier to Tejas' question, I think the way we see our potential and what has happened in the last 2 to 2.5 years, many of our platforms haven't really played out to the extent that we wanted to do and rightly so considering the situation that the industry was, the consumer was and the overall landscape was. So, we believe, coming to your question where would large part of these investments go, I would say the largest parts would go in singularly expanding Pantaloons franchise t

Q

My first question is with regards to the sharp margin expansion that we have seen in the Madura brands, so just wanted to know how sustainable this is and what has led to this sharp margin expansion during the quarter?

Ashish Dikshit

I will get to Vishak to come in on this question, but I would only suggest that please look at margins over at least 2 quarters because there is some shift in sales quarter-to-quarter, but Vishak would be in best position to explain this to you. First things first, yes, like Ashish said, we have been on a very good momentum and Q4 also, even in spite of January, which was Omicron affected, we had a very good like-for-like sale. So, that significantly helped. The costs are largely fixed and when that gets spread over a larger sale, then it flows straight to EBIDTA. Also, I think because of a ve

Q

A couple of questions from my side. First on the quarter specifically for our Lifestyle brands, the SSG performance has been impressive and definitely industry leading and you have highlighted certain aspects whether it is done with extension of various brands, which have in a way helped us, I just wanted a little more sense, Vishak, if you could bifurcate that, is it mainly the brand extensions or the improvement of the share at E-Com which can bifurcate give more clarity on this growth. Also, there is talk of obviously a wardrobe refresh kind of a trend currently happening, so are you seeing

Vishak Kumar

I think it's a lot of questions. First things first, the momentum on growth was overall good in the market. I think we did a little more, but yes there was a lot of wedding season and all of that, which we were able to capitalize quite well on. We in fact built it very well. We had built a very strong wedding line, etc. As you know, during the periods of pandemic, we had also built a very- very strong casual line and sports line, etc. Now that also came very nicely into the party and with the third impact which is of back-to-work happening and a very strong comeback of a lot of people when the

Q

The first question is regarding the fund raise, why did you select the warrants option and not direct equity?

Ashish Dikshit

We were looking at longer term solution for our capital needs for 3 to 5 years, at least 5-year horizon. So, we came up to a number. As you can make out from the previous questions that it's not that we need all that capital today. We wanted to make sure that our balance sheet is strengthened over a period of time and capital infusion is more in line of what we think would be our requirement as we go forward and that's really how we needed to stagger it and warrants came up as the best solution to do that. My second question is regarding the D2C strategy, which was laid out last quarter, just

Q

Sir, Pantaloons, we were doing close to about Rs. 8,000 to 8,500 revenue per square feet pre- COVID, can we get back to this run rate in FY23?

Sangeeta Pendurkar

So, as I mentioned before in terms of our strategy, I think all the things we have done to strengthen the proposition of Pantaloons and if you would have seen during the pre-pandemic, we were on a good trajectory to strengthen our productivity through the stores. What obviously we have seen over the last two years is a disruption on account of lower foot falls and that story has been told by us and many of the other players in the industry. In FY23, our endeavor will be to absolutely improve the performance over this year. I think both with demand coming up and these supply chain issues being

Q

A couple of question. The first is in this D2C business, should we expect some cash burn in the initial years?

Ashish Dikshit

There would be because while what we would acquire would be largely profitable businesses, though subscale, but to get them scaled would require investments, which may have to go through a period of losses in that business that you'll have to do to grow these D2C brands. Some of them would be seller brands, which are intrinsically profitable and hopefully will remain that way. Some of them are direct-to-consumer brands, which require deeper investment in early phase to acquire customers, create stickiness around that and they will go through a period of losses in that. So, it is fair to expect

Q

My question is that it is mentioned in market update that inflationary pressure is offset by price increase, so how is the response that Company got for this price increment?

Ashish Dikshit

Many of these price increases have been more continuous in nature than a one-time. If you follow textile value chain, the raw material prices have been going up now for last 9 to 12 months. Of course, the intensity may have gone up of late, but there has been a continuous price inflation in raw material prices and there has also been there for a consistent matching of that at least from the second half of last year. Much of that will play out and will depend on how rest of the inflationary environment plays out in the country across other consumption baskets over the next 6 to 12 months. We wi

Q

I just had a question that what will be your guidance across surveillance in terms of revenue for FY23, could you throw some light on that?

Ashish Dikshit

We don't give guidance of that nature. At this point of time, it's hard for us to put a number to it. We have an internal target that I don't think it will be fair right now to give guidance on that.

Q

On Pantaloons, you said that you have lost Rs. 150 crores in Q4. Can you provide what was the lost sale in H2, just to get a trajectory?

Ashish Dikshit

I think the number would be probably similar or little bit more around that. So, effectively we have lost closer to Rs. 300 crores in this period due to various impacts that happened. Of course, the number is much higher as you can make out in H1, but overall number for H2 also would be in extent to Rs. 250 to Rs. 300 crores. And on the innerwear side, if I heard it right, you said we grew 15% YoY in Q4. Can we break this for Q4 and 33% for the full year number in terms of volume growth? I won't have that number right now. We can share with you separately. And lastly on the sourcing side, on t

Q

My question is, we are raising about Rs. 2,200 crores in capital and assuming that we deploy this capital over the next 3 years by FY26, what is the kind of asset turnover ratio that we can expect from this?

Ashish Dikshit

We have laid down a plan very clearly, which was given at the beginning of last year where we have created both revenue profitability, overall projections on that. That plan has got appended to certain extent because of losses that we have incurred in H1 particularly and to some extent part of H2 in FY22. A part of the capital would strengthen the balance sheet, which has got impacted by last year. Rest of it would be ploughed back to actually accelerate some of the plans, which have not got played out last year. Also, as I indicated, with the strength of platforms we have with the addition of

Q

Just on Reebok, the consolidation was supposed to happen from Q1. Has there been a delay given that globally the deal has actually completed, when can we see that happening in India?

Ashish Dikshit

The deal we starts seeing from quarter 1 of this year. The deal, you are rightly saying, has got completed. We will get the consolidated numbers from quarter 1 this year.