Aditya Birla Fashion and Retail Limited

Jagdish Bajaj

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Tejash Shah

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Ashish Dikshit

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Tejash Shah

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Ashish Dikshit

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Tejash Shah

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Ashish Dikshit

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Ashish Dikshit

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Ashish Dikshit

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Ashish Dikshit

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And therefore, it had to deal with a more difficult business situation.

— Ashish Dikshit

So that's as far as innerwear is concern.

— Ashish Dikshit

So from the perspective of EOSS is coming in for this quarter, plus, say, Pujo, would you say that maybe the sales were a little lower than expectations given as we highlighted that maybe there's some stress at the lower end of the market?

— Nihal Jham

I just wanted to understand what are the factors that led to this decline?

— Devanshu Bansal

So don't you think as this number increases in absolute terms, this could have some pressure on the margin because ultimately, these vendors who are giving us the product on credit would be also charging as higher margins on the product price?

— Gaurav Jogani

So Pantaloons has absorbed a very high pressure on its cost and yet deliver the kind of quality of profitability, which is very, very strong.

— Ashish Dikshit

So I think it's a difficult question to answer.

— Ashish Dikshit

Fundamental principle is that it's a business where franchisee puts capital and he takes risk on capital on each store because he's equally apart in terms of selection of property in selection of brand.

— Ashish Dikshit

And similarly, if the store doesn't do well, it's a risk that it takes.

— Ashish Dikshit

And therefore, he brings not just capital, but brings his knowledge and to that extent, he takes the risk in the business.

— Ashish Dikshit

Q

Thank you. Good evening, and welcome to the quarter 2 earnings call of our company. Let me take this opportunity to first wish you all and your families a very happy festive season. The quarters are the highest ever quarterly revenues for the company at both stand-alone and consolidated level. This was driven by aggressive network expansion, strong e-commerce performance and new category expenses and by encouraging performance during EOSS and early festive season. The solid comeback seen during last quarter in the off-line channels continued in Q2 as well indicating a strong return of the mark

Management

Q

Just first question pertains to, versus pre-COVID level, there seems to be stronger bounce back in Lifestyle segment. And when we see -- compare it with Pantaloons, it is relatively muted while on margins, it is actually opposite scenario. Lifestyle segment margin is still tracking below pre-COVID levels while Pantaloons phenomenally well on that count. So how should we read this divergent trend on growth in margins between the two segments?

Ashish Dikshit

Tejash, we read the numbers carefully. I don't think you should be concerned about margins for Lifestyle. I want to first start with that. Because if you look at the reported margins for -- EBITDA margins for Lifestyle segment, they're almost same level as Q2 of FY '20, 17% versus 17.4%. So I think we don't need to be concerned about that. It's pretty much in line with what the base was. Even the marginal difference, if I were to explain is largely coming from the shift in channel mix. E-commerce, which is relatively less profitable channel that share of that channel has grown and therefore, i

Q

Yeah. Thank you, so much, and good evening to the management. Three questions from my side. First, is on Pantaloons. This quarter would have seen the full benefit of the EOSS, right? Which was not in Q1. Is that the right understanding?

Sangeeta Pendurkar

Yes, that's right. That's right, Nihal. So from the perspective of EOSS is coming in for this quarter, plus, say, Pujo, would you say that maybe the sales were a little lower than expectations given as we highlighted that maybe there's some stress at the lower end of the market? So I think if you look at our journey over the last few years, we've been constantly trying to strengthen our proposition with our product that has got premiumized and significantly better quality of product and with our stores looking good. I think we feel today a lot more confident in terms of our growth. And I think

Q

Sir profit or in fact, the EBITDA margin of businesses other than lifestyle in Madura segment. We were operating at about 10%, 11%, which got dropped to about 2% in this quarter. I just wanted to understand what are the factors that led to this decline? And how should we see the margin trajectory of these businesses going ahead?

Ashish Dikshit

So I think you're right, that's part of the segment, which internally we put three businesses there. One is the Super Premium business, which is collective and the high end of the international brand. Second is the value fashion business, which is American Eagle and Forever 21 and third is Innerwear business. The larger part of the shift in margin profile currently is coming from Innerwear. We expect that in another 6 to 12 months, as Innerwear starts to chase the next step of its growth, which is INR 500 crores, INR 600 crores, where it's running today to about INR 1,000 crores, may take some

Q

The first question is with regards to the net debt. The net debt right now is around INR 250- odd crores, as mentioned in the press release. And I'm assuming that the INR 750 crores of the GIC money has also come in into this. So effectively, if you take off that GIC money, the net debt should be around INR 1,000-odd crores. And if we see at the end of March '24, it was somewhere around INR 500 crores. So it means that without that, our net debt has effectively increase of INR 500-odd crores or maybe this is due to some losses. So if you can explain this difference here of this INR 500-odd cro

Ashish Dikshit

So I think you're right, the way you have calculated it and that's the reason we raised capital because we feel -- and we have talked about in the past, our business is set for very, very aggressive growth. We expect to grow more than 50% or thereabout this year, and we feel even going forward, that's the kind of growth rate that our business is set for. When you're growing that fast, and you could see that in the numbers of Madura, Pantaloons over last year, we also need to build in inventory. And therefore, at the beginning of the season, the regarding the buildup of inventory. In a fast- gr

Q

Couple of questions from my side. First is on the private label contribution in Pantaloons. For last 3, 4 quarters, this number is around 62%. Previously, you guided that you want to take it up to around 70% in the medium term. Where are we in that journey given that bulk of the stores are going to be in Tier 2, Tier 3 cities for Pantaloons where private label could be more suited comparative sense?

Ashish Dikshit

So I'll come to your central question, but the assumption that Pantaloons expansion only in Tier 2, Tier 3 of that ratio is dramatically higher, it's not true. In fact, as a format, we are finding increasingly greater opportunities in bigger cities as urbanization is driving a lot of concentration of population, new establishments are coming up, etcetera. So I don't think that mix is changing significantly. We are clearly short on what we have indicated and set goals for ourselves as far as the share of private label increase is concerned. But it doesn't -- it's an endeavor, we will have to ge

Q

Couple of questions. First is on Pantaloons. So when I see the area addition versus the revenue growth, let's assume, over pre-COVID, it's somewhere about 20%, 21%, both of them. Does it - - I mean, how do I read this? You've said before that your revenue per square feet probably changes depending upon where you're opening stores. So is it because of that factor? Or else, how do I look at the SSG? That's the first question.

Ashish Dikshit

So I think, Ali, at a very high level, our sales per square feet on the like-to-like stores has started to exceed pre-COVID level. If that's the question you were looking for. The -- as you rightly mentioned, the square feet addition and productivity additional shift necessarily not directly correlated because it's a function of where you open the store. And we have very large variance depending on the tier of town that you opened the store as far as SSG is concerned, while it may be same space in terms of square footage. Does that -- are you looking for anything more specific than that? This

Q

Sir, you said that this year, we will grow by 50% and our revenue would be around INR 12,000 crores, INR 12,500 crores. And next year, we would also grow 50%. So is that...

Ashish Dikshit

No, Vaibhav, I think now you're putting words into us. I said, look, last year, revenue was INR 8,000 crores. Our first half revenue is close to INR 6,000 crores. Second half is always better than first half. It also comes with greater expansion. So it should be reasonable for you to assume that the overall revenue for this year would be more than INR 12,000 crores, INR 12,500 crores in that sense. And therefore, that would be 50% growth. What I said about next few years is in context of our investment that we are a company, which is poised for -- we have multiple levers of growth, and we have

Q

So most of my questions have been answered. I wanted to know what was the percentage of ad spend this quarter as the percentage of the revenue and what is the outlook on this advertising spend going forward?

Ashish Dikshit

So I think in the immediate terms, advertising for next couple of quarters will continue to grow because it's a necessary nourishment that brands and businesses need when they want to be on such high level of growth trajectory that we are on. The classical ad spend percentage that we have kept for the branded side of our business is closer to 4%. For a short period, it goes higher to maybe 4% to 5%. On Pantaloons, we had operated at 2.5% to 2% to 2.5% percentage, maybe for a short period, it may go up to maximum 2.5%, 3%. But as scale comes, that will again start to wind down. And at this poin

Q

The question is with regard to the Lovechild, the new cosmetics brand, which you have recently launched, how we are taking it forward? And when it comes to marketing and ad spending, how aggressive we would be on the Reebok in the coming quarters?

Ashish Dikshit

Quarter is a very short time to comment on, but Lovechild had just been launched. It's largely being sold online and with few stores that House of Masaba has. At this stage, we are more interested in making sure our consumer proposition is working. Our product receives good feedback. And therefore, most of the spend is largely digital in creating awareness among the young consumers. It is nothing which is out of ordinary. And we'll wait for brand to get established, the whole range of products to get launched, which will happen over the next couple of quarters, before we scale advertising as f