Bata India Limited — Q3 FY26

Bata India Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=Gam3kC-4qos Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to Bata Limited Q3 and FI26 earnings conference call hosted by BNK 0:09 9 seconds securities. As a reminder, all participant line will be in the listenon only mode and there will be an opportunity for you to ask questions 0:17 17 seconds after the presentation conclude. Should you need assistant during the conference call, please signal an operator by pressing star then ash on your 0:25 25 seconds touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Akil Parik 0:33 33 seconds from BNK securities. Thank you and over to you sir. 0:36 36 seconds Yeah thanks Danish. Uh good afternoon everyone. On behalf of BNK securities I would like to welcome you all for 3qfi26 0:44 44 seconds conference call of BA India. Uh from the management side we have Mr. Bunjan Sha MBN CEO. Mr. Amit Aarwal director 0:52 52 seconds finance CFO and Mr. uh Nitan Bagaria APCS. Uh without taking much time, I would like to hand over the call to uh 1:00 1 minute uh uh WJ for his opening remarks post which will open the floor for training session. Over to you sir. 1:06 1 minute, 6 seconds Uh thanks uh and uh good afternoon everyone and welcome to the Bata Q3 FY26 earnings conference call. We have 1:16 1 minute, 16 seconds Gungjan Sha MD and CEO and we also have Amital, director of finance and CFO joining us. We have shared the 1:23 1 minute, 23 seconds presentation as a preere to the stock exchanges uh yesterday. Uh I hope you had time to go through the same. Uh we 1:31 1 minute, 31 seconds have uh already also shared the disclaimer uh which is uh uh part of the presentation. I now request to uh 1:39 1 minute, 39 seconds request gun to take you through the uh you know performance summary. Thank you. 1:46 1 minute, 46 seconds Thank you Nan. Uh hi everyone. Thank you for joining this call. uh this quarter uh we will do this slightly differently 1:56 1 minute, 56 seconds this time in the sense that uh while the presentation has been uploaded and I'm happy to take any questions on it many 2:02 2 minutes, 2 seconds of them are consistent pieces that we have you know showcased over a period of time so uh I will not be taking through 2:10 2 minutes, 10 seconds every chart I will give you some opening remarks on the highlights that I see and then as I said I'm more than happy to answer questions on the presentation or 2:18 2 minutes, 18 seconds otherwise uh so thanks once once more and we'll uh so uh we saw uh turnover le 2:25 2 minutes, 25 seconds growth of about 3% this quarter right it's been welcome after some time uh we do see uh signs of momentum and green 2:34 2 minutes, 34 seconds shoots as I mentioned in my release also uh this was on the back of persistent implementation of the zerobased merchandising uh project now it has 2:42 2 minutes, 42 seconds scaled up to 400 stores and obviously higher marketing spend the second consecutive quarter that we have elevated our marketing spends uh 2:49 2 minutes, 49 seconds doubledigit growth on marketing spends itself and we are seeing the results of that. Uh we hope to continue that going forward. All the key metrics in ZBM have 2:58 2 minutes, 58 seconds shown growth uh as you would have seen in the presentation. uh and the overall margins growth is at double digit uh at 3:06 3 minutes, 6 seconds 10% underlying uh PBT growth uh supported by various actions that we have talked about including uh but not 3:13 3 minutes, 13 seconds only uh the customer first uh there are now uh tangible improvements that we can see in terms of turns availability uh 3:21 3 minutes, 21 seconds turnaround time in terms of resupply to stores uh and obviously uh a longer running project which was rationalization of agent inventory. It 3:30 3 minutes, 30 seconds is now at uh as for our records at very high levels. Now in terms of freshness uh while overall growth was uh was seen 3:39 3 minutes, 39 seconds reasonably democratic across price points. Uh so good to see even the lower price points doing better but we did see 3:45 3 minutes, 45 seconds obviously hush puppies and floats uh from a brand perspective obviously driving growths disproportionately 3:52 3 minutes, 52 seconds better. Uh we also saw a significant turnaround. It has been under works for almost a year. But the corner stores 4:00 4 minutes channel which was in a way rationalized and put on pause is now showing both growth as well as extremely strong margin performance. So we'll see and 4:09 4 minutes, 9 seconds hear a lot more of it coming in the coming years. Uh as I talked about in the last quarter the entire funnel for product creation I had I had broached 4:17 4 minutes, 17 seconds open that topic last time. I promised you that I'll come back with a lot more flavor. We have shared with you now a lot more color and detail on it. uh 4:26 4 minutes, 26 seconds happy to answer questions but uh you will see a lot more actions in the next few quarters specifically focused on 4:33 4 minutes, 33 seconds basically uh the product uh channel getting the product funnel getting reimagined which we feel is a very very 4:41 4 minutes, 41 seconds strong pillar for a growth going forward the franchise network continue to expand now we are at about very close to 200 hopefully this quarter we should cross 4:49 4 minutes, 49 seconds the 2,000 mark uh IND promise uh business continues to expand through the KRO network reaches now 2,000 plus a 4:57 4 minutes, 57 seconds significant addition of almost more than double in the last one year and the last piece was on e-commerce uh we saw strong 5:04 5 minutes, 4 seconds growths uh coming back uh and across the channels marketplaces.com as well as omni uh we also have launched our app 5:13 5 minutes, 13 seconds and now almost 14% of our D2C business uh.com comes through the app uh which is very encouraging within the first 6 5:20 5 minutes, 20 seconds months uh lastly to top it up uh turnover increased by 3% as I mentioned earlier and AITA went up by about 200 5:28 5 minutes, 28 seconds basis points uh by as I said well well-rounded performance across channels from a margin perspective. Uh with that I will come to a close on my comments. 5:38 5 minutes, 38 seconds Uh thank you. Thank you. 5:49 5 minutes, 49 seconds Ladies and gentlemen, we'll begin with a question and answer session. Anyone who wishes to ask a question may press star N1 on their touchstone telephone. 5:57 5 minutes, 57 seconds 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. 6:07 6 minutes, 7 seconds Ladies and gentlemen, we'll wait for a moment while the question assembles. 6:18 6 minutes, 18 seconds Our first question comes from the line of Samir Gupta from Capital. Please go ahead. Uh hello sir, good afternoon and thanks for 6:26 6 minutes, 26 seconds taking my question. Uh sir, firstly if I look at large part of our initiatives uh that are being articulated in the 6:33 6 minutes, 33 seconds presentation. These are focused on simplification of processes, lower inventory, lesser kit style lines while 6:42 6 minutes, 42 seconds it improves efficiency and it also reduces the choice for the consumer and on the other hand there is any hardly 6:51 6 minutes, 51 seconds any retail store addition during the year on an overall basis. Now initiatives are commendable. I'm not trying to downplay them but uh uh how 7:00 7 minutes does this how does this solve for growth or how do we reach that you know double-digit growth aspiration that we have laid out in recent quarters. 7:10 7 minutes, 10 seconds Yeah. Okay. Uh thanks Samir. Uh uh you're right. There are a lot of bunch of things which are enabling uh a lot of 7:18 7 minutes, 18 seconds simplification but let me point out a few of them which will try and give you some flavor of where the uh so the 7:25 7 minutes, 25 seconds biggest one is in my view uh was let's say for example the entire piece on elevating the marketing investments we have significantly taken them up and you 7:33 7 minutes, 33 seconds will see that continuously going up that's driven continuously towards growth right uh and there are you know obviously sudden you know we are also 7:41 7 minutes, 41 seconds making sure that that is focused towards a few product campaigns. Last quarter, for example, our single largest one was on the festive collection and that's 7:50 7 minutes, 50 seconds given us the one prior to that was focused on only two of them which was Victoria Ballerina as well as the the power easy slide and that's given us 7:58 7 minutes, 58 seconds great uh impact and you will see that going forward. The second one that's there is uh I firmly believe and we have 8:05 8 minutes, 5 seconds seen that in terms of the growth rate uh revenue per square foot also is that the zerobased merchandising is giving us incremental benefit continuously right 8:14 8 minutes, 14 seconds and now at the scale that it is it is impacting the overall SSG also so that's the second big piece the third one and 8:21 8 minutes, 21 seconds which I feel is going to be the the longest and taking impact but will have the largest impact also uh in line with our aspirations going forward is the 8:29 8 minutes, 29 seconds product one which I commented in my in commentary. The reason that this is rationalization that you see in kits etc 8:37 8 minutes, 37 seconds is also to get authority on the product going. So we want to make sure that the products at the end of this full funnel that I've talked about over the last 8:44 8 minutes, 44 seconds four quarters we are next four quarters you will see that our ability to make sure that the right kind of a product 8:51 8 minutes, 51 seconds with the right authority from a design material as well as com comfort perspective comes through to the consumers in a scale that is relevant 8:59 8 minutes, 59 seconds enough and which will enable consumers to make our choices much easier for us. 9:03 9 minutes, 3 seconds So I think all of these combined together are uh are supposed to drive growth besides obviously the one that I commented which I'm sure you would have understood which is expansion across 9:12 9 minutes, 12 seconds channels right whether it's franchise or whether it's e-commerce or even the MBO channel. 9:18 9 minutes, 18 seconds Got it sir this is very helpful. Uh second question is that there is a sharp jump in the key retail outlets this 9:24 9 minutes, 24 seconds quarter. Uh and this is both QQ and YI uh looks uh looks very high for one 9:32 9 minutes, 32 seconds quarter. So is there a renewed strategy towards this channel which is the MBO channel been you know under pressure for some years now? 9:41 9 minutes, 41 seconds Yeah. Yeah. Uh so the reason I've been talking about this for some time sir right and I think this is just the cumulative of that effort. So you know 9:49 9 minutes, 49 seconds things take time to gain momentum and then the results come through right. So this is a this is a combination of that. 9:54 9 minutes, 54 seconds It's been ineffort for the last about four quarters. It is not a revisiting the channel but basically trying to look at key these are the big ones. So I 10:03 10 minutes, 3 seconds believe we reach about 20,000 outlets in MBOS's right roughly. uh it's not a very easily trackable data but the key retail 10:11 10 minutes, 11 seconds outlets within that are supposed to contribute to almost these top 10% outlets contribute to almost 25 30% of the turnover and making sure that we are 10:19 10 minutes, 19 seconds able to present a range right the engagement of these outlets is right there is a engagement program which rewards them for the right performance 10:26 10 minutes, 26 seconds gets the display right so that is the journey that we are on I think there is enough scope on expansion itself as well as making sure that the engagement 10:34 10 minutes, 34 seconds becomes better so you will hear a lot more of it going forward but it's in the works for last four quarters so it's not a sudden thing. 10:41 10 minutes, 41 seconds Got it sir. Again very helpful. Last one if I may squeeze in. Uh can just a bookkeeping one. So 9 months FYI 26. Can 10:48 10 minutes, 48 seconds you just share the broad growth numbers for different brands? Basage, puppies, power, any other you know uh which is meaningfully large. 10:58 10 minutes, 58 seconds Uh can we do something on that or uh I will need to come back to you Samir on this in the interest of time in case I 11:06 11 minutes, 6 seconds have a handy I will comment on it in some other question. 11:09 11 minutes, 9 seconds Sure sir. I'll I'll come back in the queue. Thanks. Thanks for answering all the questions. 11:12 11 minutes, 12 seconds Thanks a Thank you. 11:17 11 minutes, 17 seconds Our next question comes from the line of Korov Joani from JM Financial. Please go ahead. 11:22 11 minutes, 22 seconds Uh thank you for taking my question. Uh so my first question is with regards to the GST impact. You had you know called out in the earlier quarter that that had 11:30 11 minutes, 30 seconds an impact of around 400 pips last time around. Now if we total up the Q2 plus Q3 revenue uh that total I think uh last 11:38 11 minutes, 38 seconds year it's the sales has kind of declined. So uh would it be prudent to say that you know the sales whatever we 11:45 11 minutes, 45 seconds have lost because of the GST disruption that has not come back entirely and possibly could benefit going ahead as well. 11:54 11 minutes, 54 seconds Okay. uh it's a little difficult Gorov to do a complete arithmetic on this because you know uh uh there was an 12:01 12 minutes, 1 second impact which was some amount of impact was channel but a decent amount of impact was also consumer hesitancy now 12:09 12 minutes, 9 seconds uh for sure as I mentioned even at the last quarter when I said that post that we have seen and that momentum as I gave in my opening remarks we continue to see 12:18 12 minutes, 18 seconds that through the uh through the quarter uh how much of of it was a plus minus ETA etc. very difficult to state but we 12:25 12 minutes, 25 seconds do see momentum continuing so which I would say is I think a underlying structural impact of GST 2.0 which 12:33 12 minutes, 33 seconds should continue in general for the foreseeable future. 12:38 12 minutes, 38 seconds Okay. Sure sir. Got it. Uh my next question you know is with regards to the the channel the channel issues if I may just clarify 12:46 12 minutes, 46 seconds the channel issues that we had faced obviously the last I mean the quarter two they have completely eliminated. So it's a reasonably now it's a reasonably 12:54 12 minutes, 54 seconds steady state uh comfortable for everyone. There is no confusion whatsoever in the channel. So I think in that manner I think those wrinkles have got removed. 13:04 13 minutes, 4 seconds Okay. Okay. So just one allied question to this GST question only. Uh I mean because of this rate reduction uh have 13:12 13 minutes, 12 seconds you now seen more attractiveness uh because you know because of the earlier rate hike uh the the mass end kind of 13:19 13 minutes, 19 seconds was getting more impacted. Have you seen more recovery now in this part of the portfolio? 13:25 13 minutes, 25 seconds Uh not as much as I would have liked Gora but uh yes better than what we have seen over the last seven eight quarters. 13:32 13 minutes, 32 seconds Sure. Uh so my next question is with regards to the uh the zerobased merchandising performance uh the one that you mentioned about the quarter performance. Now if you look at the 13:41 13 minutes, 41 seconds delta the delta is around five odd% versus you know the overall stored network. So would you say that you know this is very early stage delta that you 13:49 13 minutes, 49 seconds are getting and as the time progresses this delta can even grow bigger or you largely expect the delta to be around this range only. 13:58 13 minutes, 58 seconds Okay. Uh so it's a delta versus resttop network. So as soon as the rest of the network I mean once the ZDM now is 400 stores our ambition is to take it to 14:06 14 minutes, 6 seconds almost the full network or a large part of it by the end of this year right in the next few couple of quarters. So uh the delta is not the only relevant 14:13 14 minutes, 13 seconds metric but I understand where you're coming from. See this is purely driven by giving us a much better curated 14:20 14 minutes, 20 seconds choice to consumers making it easier for consumers to make decisions and making the full uh you know the machinery working towards the consumer experience. 14:29 14 minutes, 29 seconds Right? But there are many other parts that will add on to this hopefully right as I said just one example that I 14:36 14 minutes, 36 seconds elaborated on to a previous question uh was on the product piece. Now that piece is supposed to give us delta that's why we are putting so much of effort on it. 14:44 14 minutes, 44 seconds I feel that it's very good. Some examples of it that we have launched in men's dress uh the floats is a classic example that we've been on it for almost 14:52 14 minutes, 52 seconds 3 years now. Uh they are all examples wherein we get the authority on the product and that gives us significant purchase from a consumer traction perspective. So they should add on. 15:02 15 minutes, 2 seconds Yeah. All the other initiatives marketing investments being elevated right will add on to it. 15:09 15 minutes, 9 seconds Okay. Okay. And sir, just last question from my end is in terms of the channels itself. You know, we have been consistently seeing two uh two things. 15:17 15 minutes, 17 seconds One is your premium products continue to consistently grow at a very decent pace and at the same time the online and the 15:25 15 minutes, 25 seconds uh the EVO channel sorry the online channel continues to also grow at a faster clip. So probably if you can help us out one uh how the contribution for 15:33 15 minutes, 33 seconds the uh the online channel now has changed and also uh on the part that you 15:39 15 minutes, 39 seconds know uh that is it margin dilutive it is margin accative same line something on that sort 15:48 15 minutes, 48 seconds okay all right so uh uh if I can just rephrase contributions how they have moved for e-commerce as well as how are 15:55 15 minutes, 55 seconds they from a margin perspective is that right yeah Yes. Yes. Okay. All right. Uh so growth rates have been uh uh very strong 16:05 16 minutes, 5 seconds I would say. Uh I think we can do a lot more and there's a lot of work that is effort both from uh uh making sure that 16:12 16 minutes, 12 seconds our uh you know penetration in terms of both inventory options as well as partners keeps continuing. I think we 16:20 16 minutes, 20 seconds are there with most of the partners including the quick bombers guys. uh there are a bunch of business partnering that we are doing with some of the 16:28 16 minutes, 28 seconds partners also in terms of their newer initiatives and how can we participate in it right from a category as well as from a uh consumer experience perspective. So that should funnel. 16:39 16 minutes, 39 seconds There is another large piece that we are trying to do in terms of making sure that we also create uh certain kind of a 16:46 16 minutes, 46 seconds brand presence online which is in addition to what we are anyways leveraging from the offline brand presence. Right? So floats is a classic 16:54 16 minutes, 54 seconds example. My contribution of floats online is still not as much or nowhere close to what it is offline. So there is a huge runway that I have in terms of 17:03 17 minutes, 3 seconds driving it. uh and therefore the the necessity of putting brand presence. Now both of these combined together coming to your question we should see this 17:11 17 minutes, 11 seconds growth continue. it is now in uh I would say mid double digits in terms of contribution from an e-commerce perspective and we look at it purely 17:19 17 minutes, 19 seconds e-commerce not just the omni part which is uh uh which is additional and the second one is from a contribution perspective or a profit uh profitability 17:28 17 minutes, 28 seconds I would say broadly it's at par uh it might be slightly lower than overall profitability but my sense is scale 17:36 17 minutes, 36 seconds gives us great benefits in this and I think at the growth that it is it'll hopefully not be a drag anymore 17:44 17 minutes, 44 seconds Uh thanks good. Thanks for answering my question. Thank you G. Thank you. 17:53 17 minutes, 53 seconds Our next question comes from the line of Dwan Shuans from MK Global. Please go ahead. 17:59 17 minutes, 59 seconds Yes. Uh hi, thanks for taking my questions. Uh sir, I wanted to check uh obviously mentioned that growth is not 18:06 18 minutes, 6 seconds handy with you. Can you uh tell us how big is the size of hush puppies for us as in ballpark range? Uh if you can 18:14 18 minutes, 14 seconds allude to it is about uh overall it's in the range of about I think uh 700 crores I would 18:22 18 minutes, 22 seconds say right and uh in retail stores it contributes to anywhere between 15 to 20%. 18:31 18 minutes, 31 seconds 15 to 20%. And this 700 cr is like consumer level sales that we do or is it like uh there is a B2B uh 18:39 18 minutes, 39 seconds is this largely uh so there is no big difference between consumer sale and the realized over. 18:45 18 minutes, 45 seconds Understood. Understood. So the intent of asking this question uh was from uh uh 18:53 18 minutes, 53 seconds prospective increase in competitive intensity in this space. Right. So there is another brand uh Clarks where lights 19:00 19 minutes have been acquired by Metro uh plus uh we are seeing incremental focus of 19:07 19 minutes, 7 seconds expansion in terms of their value brand which is walkway as well. So I wanted to check uh what steps are we sort of 19:16 19 minutes, 16 seconds taking to protect our uh businesses at both uh the value end as well as at the premium end. 19:23 19 minutes, 23 seconds Okay. uh so while I cannot comment specifically on competition but we keep keep a track of it uh Dwanchu right uh for sure I mean that's part and parcel 19:31 19 minutes, 31 seconds of doing business the second thing to just keep in context right uh both ends the market is significantly fragmented 19:40 19 minutes, 40 seconds so it's not like you know it's a duopoly or a monopoly right and there you know one person directly takes a shy slice of 19:47 19 minutes, 47 seconds the pie right but that doesn't mean that there is a consumer trend there is a competition there are trends that we can identify and obviously we learn from also right so that's a continuous 19:56 19 minutes, 56 seconds exercise irrespective of that both at the lower end as well as at the higher end uh there is there is opportunities 20:03 20 minutes, 3 seconds as well as challenges right which we need to be cognizant of and therefore incorporate in strategies uh let me try and tackle a brief manner both of them 20:11 20 minutes, 11 seconds on the lower end see there are there are two large pieces that we are trying to do one is that even there uh one big 20:19 20 minutes, 19 seconds step we took about a year back and which has now started showing some results Right. Obviously aided by the GST uh impetus also is the value proposition 20:27 20 minutes, 27 seconds piece. We have we have got the value proposition right and that is now showing signs of consistent traction to us. Right? So 20:35 20 minutes, 35 seconds that's one big piece. The second one that's there is accessibility, right? Uh we are now at almost about 700 franchise 20:43 20 minutes, 43 seconds stores. We hope to get to thousand hopefully in the next couple of years, right? If not earlier. And that gives you a significant leeway especially when 20:52 20 minutes, 52 seconds you're talking of the slightly mass end of the products. Right? So that's one two pieces that are there. On the top end piece let's say hush puppy is 21:00 21 minutes specifically the example that you mentioned. Uh there is uh there is a significant expansion. This one is already now sitting at Coco Plus 21:08 21 minutes, 8 seconds franchise. We are at about 160 AOS right we should be hopefully aiming for a 200 exit in the next you know rolling 12 21:16 21 minutes, 16 seconds months or so. So it will see a significant continuous traction in terms of expansion. In addition to that there 21:24 21 minutes, 24 seconds are there are a few other things right the biggest one is in terms of product there is a desire and we see very clearly that there is uh you know 21:32 21 minutes, 32 seconds getting the best kinds of product the best kind of materials behind the product right uh and uh nuances on design color etc right is the ask is 21:42 21 minutes, 42 seconds even higher here and the more we get into let's say departmental stores etc that's giving us even more need for it as well as urgency for it so I think 21:50 21 minutes, 50 seconds those pieces will help us so expansion on both ends as well as making sure that we get the product proposition right will be the key to making sure that we 21:57 21 minutes, 57 seconds continue the you know growth traction on these ends. 22:01 22 minutes, 1 second Uh thank you for this elaborative answer G. So last question from my end I guess I read somewhere that uh we intend to 22:09 22 minutes, 9 seconds increase our export business as well right so with recent uh signing of FDA uh what kind of a scale are we targeting 22:16 22 minutes, 16 seconds from an export perspective over next two three years? 22:20 22 minutes, 20 seconds Okay. Uh so exports is uh and I mentioned this in the past. So basically we have over the last I think one one and a half years set up basically a 22:29 22 minutes, 29 seconds dedicated sourcing hub right uh which applies not only to India but also to the globe of BA right now obviously with 22:37 22 minutes, 37 seconds the FDA that has just come in right it'll obviously take some time to get operationalized which we all know but that doesn't stop us from making sure 22:44 22 minutes, 44 seconds that the groundwork also gets accelerated. So uh I will not be able to give you numbers but the ambitions are pretty large on that front and we are 22:53 22 minutes, 53 seconds wanting to make sure that and because we've got a large footprint of BA in Europe also. So there is invariably a lot of synergy. So even the global BA 23:02 23 minutes, 2 seconds system is now looking at it even with even more urgency of how can we expand exports dramatically. Uh we have been in the ballpark of about 700,000 to 1 23:11 23 minutes, 11 seconds million pairs. Historically you will see a significant jump over the next 2 three years. So I can't commend numbers right now but I'm sure in the next couple of quarters I will have numbers for you. 23:22 23 minutes, 22 seconds Thank you Munjan. Uh thanks for taking my questions. Thanks. 23:27 23 minutes, 27 seconds Thank you ladies and gentlemen. Anyone who wishes to ask a question may press star and one on their touchstone telephone. 23:36 23 minutes, 36 seconds Reminder in order to ask a question you may press star and one on your touchstone telephone. 23:42 23 minutes, 42 seconds Our next question come from the line of Musana from Swan Investment. Please go ahead. 23:48 23 minutes, 48 seconds Um hi. Uh my question would be like how many stores do we have for hush puppies and uh how many stores do we uh aspire to um grow in the coming years? 24:00 24 minutes Okay. Hi Mustana. uh we we have as I just mentioned uh in the prior question 24:07 24 minutes, 7 seconds uh we have about total of 160 EOS about 125 or 135 are Coco and 25 if I remember 24:15 24 minutes, 15 seconds a franchise uh just help me uh I'm just checking the numbers somewhere so okay 24:22 24 minutes, 22 seconds and uh we should be aiming for as I said in the next 12 months uh reasonably ambitious but we should be aiming for 24:29 24 minutes, 29 seconds about uh 200 Plus, so these are the four out stores, right? 24:35 24 minutes, 35 seconds Uh I wanted to know exclusive brand out. Yeah. 24:40 24 minutes, 40 seconds Okay. Okay. Fine. So these are exclusively for Hushi, right? That's what your question was. Yeah. Yeah. Okay. Cool. Thank you. 24:48 24 minutes, 48 seconds Yeah. Thank you, Mr. Thank you. 24:54 24 minutes, 54 seconds Ladies and gentlemen, in order to ask a question, you may press star and one on your touchstone telephone. Our next question come from the line of Chetan 25:02 25 minutes, 2 seconds Takar from M3 Investment Private Limited. Please go ahead. 25:10 25 minutes, 10 seconds Hi Chetan. 25:13 25 minutes, 13 seconds Uh Mr. Takar you may please proceed ahead with your question. Hello sir am I audible now? Yes you are. 25:21 25 minutes, 21 seconds Hi. 25:22 25 minutes, 22 seconds Yes. Hi. Hi. Good afternoon sir. So just two questions. One is when I typically observe the footfall at your store, what 25:30 25 minutes, 30 seconds is quite evident to me is that there is a fair degree of brand recall for customers who are in their 30s and above 25:37 25 minutes, 37 seconds who have experienced the brand and hence there is a large degree of recall when it comes to BA. But when I look at the 25:44 25 minutes, 44 seconds cohort which is say in their uh 20s or mid20s so to speak there's the recall remains quite low even now. So what 25:53 25 minutes, 53 seconds would be your take there? what is your data that you're seeing and your experience and how do we address this and the second question is more from 26:01 26 minutes, 1 second your mix of uh in-house manufacturing and outsourcing because we've seen a VRS which has happened in Hosur as well along with Batanagar that happened so 26:10 26 minutes, 10 seconds how are you looking at the mix between outsourcing and own manufacturing and what are the pros and cons for both of them 26:17 26 minutes, 17 seconds okay uh from a age profile of consumers etc uh your your anecdotal observation is actually not 26:24 26 minutes, 24 seconds is actually not very inaccurate right so our average age of consumers as per our CRM database is in the early 30s right 26:32 26 minutes, 32 seconds so about 3132 is what I remember right it's got a little younger over the last I think let's say 3 4 years but 26:38 26 minutes, 38 seconds it's in that ballpark of 31 32 right so uh so there is a bunch of consumers largely I would say between 25 to 30 26:46 26 minutes, 46 seconds also uh there are the what our consumer research etc uh chithan says is on two 26:54 26 minutes, 54 seconds fronts. One is that uh awareness I don't think that's a problem. So even the 20 consumers know butter do you have 27:02 27 minutes, 2 seconds relevance from a product profile perspective of what they're needing and wanting from an experience as well as product profile there is areas to work 27:10 27 minutes, 10 seconds upon uh I will give you two large but there are many other flavors to it. One is this whole piece on sneakers and you 27:17 27 minutes, 17 seconds will see that work coming through more and more but that space is very very dominant in their consideration of relevance etc from a footwear 27:25 27 minutes, 25 seconds perspective. The second one that there is online right a lot of their consumption their discovery experience 27:32 27 minutes, 32 seconds comes from online as well as even digital interface with brands etc. So we have tried to move a lot of our digital spend which is much easier. Anyways a 27:41 27 minutes, 41 seconds lot of our marketing spend has moved digital and within digital also has moved from you know celebrities towards social media influencers etc. Right. So 27:50 27 minutes, 50 seconds that piece is also the other big pivot that I think is work in progress. We need to continuously keep doing more. 27:57 27 minutes, 57 seconds Right. Now that's on one end. 27:59 27 minutes, 59 seconds The other piece is also making sure that you are able to uh you know as I said uh you are able to make sure your stores 28:06 28 minutes, 6 seconds look younger. So the whole piece that was there of sneaker studio BA red 2.0 as well as now this whole ZBM piece of 28:14 28 minutes, 14 seconds you know making sure that the consumer at the center of the store from a offering perspective are all working towards that same direction. Uh but I 28:21 28 minutes, 21 seconds would say that that's an area that still needs a lot more improvement. I think with elevated marketing spends you will be able to attract those consumers a lot 28:28 28 minutes, 28 seconds more. Uh your second question was uh can you just repeat your outsourcing the mix between outsourcing 28:36 28 minutes, 36 seconds and inhouse versus outsourcing. So it's a long drawn strategy uh chathan that I've been talking about for some time 28:43 28 minutes, 43 seconds now right we were let's say about four years back at almost 30 35% contribution of our product coming from in-house 28:50 28 minutes, 50 seconds manufacturing uh from a long-term strategy we see that coming down gradually right uh and we are now 28:58 28 minutes, 58 seconds sitting in the mid teens I would say roughly and uh that will continue to taper uh not to say we have not invested 29:05 29 minutes, 5 seconds so we have invested in cex as well as technology on certain key lines But the large principle that I mentioned even earlier and the VRS and the actions are 29:13 29 minutes, 13 seconds in those same lines are basically to do with you know wherever I have got an IPR which is technologydriven wherever I've 29:20 29 minutes, 20 seconds got automation and wherever I've got large capex right uh low labor is what I would like to keep in house rest of it is better off done uh through contract 29:29 29 minutes, 29 seconds manufacturers actually just a followup on the second bit so when you do in-house versus the contract manufacturing does it not 29:38 29 minutes, 38 seconds elongate the market time for us or it does not matter really. 29:43 29 minutes, 43 seconds Uh intuitively you're right but what we are doing is we are doing it differently. So we are also consolidating our our contract manufacturing partners. So they were about 120 plus till about 3 years back. 29:54 29 minutes, 54 seconds Now they're down to 60. Uh we will see further rationalization of it. Uh ideally our goal post on this is to have 30:00 30 minutes only 15 partners. Right. So uh yeah so that will give us a significant amount of lead time is one big thing but 30:08 30 minutes, 8 seconds that is not the bigger one. The bigger one is leveraging and cross leveraging best practices technology and innovation product development becoming an extended 30:17 30 minutes, 17 seconds arm etc. So a lot of those benefits are far higher and obviously much better quality control. 30:22 30 minutes, 22 seconds Sure understood sir. So fair to assume that to address the first issue we will first need to obviously address uh the product bit as well and brand marketing 30:31 30 minutes, 31 seconds can continue online and discovery can also help get conversions from the customers you are who are in the younger pool today and to give you credit we've 30:39 30 minutes, 39 seconds seen the impact of store renovation. So that is quite visible and refreshing. So that should be a fair takeaway from this captured well. Thank you. 30:48 30 minutes, 48 seconds Sure. Sure. Thank you so much. All the best. 30:53 30 minutes, 53 seconds Thank you. Our next question come from the line of Anikit Salun from Sunrise Kids and Securities Private Limited. 31:01 31 minutes, 1 second Please go ahead. Uh hello Benjamin. 31:05 31 minutes, 5 seconds Anik Salun just said uh so my question was uh like you added 27 new franchisee outlets and ZBM expanded across 400 plus 31:15 31 minutes, 15 seconds stores. So what's the expected ramp up timeline for revenue contribution for this new and updated stores and like how 31:22 31 minutes, 22 seconds are these performing versus company owned stores? 31:28 31 minutes, 28 seconds Okay. Uh uh okay the you're you're talking of the franchise stores or 31:35 31 minutes, 35 seconds yeah franchise stores franchise stores and ZBM. 31:40 31 minutes, 40 seconds Okay. So ZBM we have got a chart which clearly tells you how they are doing versus rest of the network. Right. So that delta that you see basically just to make it easier for you uh it's 5%. 31:50 31 minutes, 50 seconds We've seen that now over a very large network. These are the top 400 stores of our network right and they are continuously doing better on very large 31:57 31 minutes, 57 seconds scale and as I said we will continuously expand. In fact now we have become more confident as well as we understand the process of expanding faster. So we 32:05 32 minutes, 5 seconds hopefully this year we should be done with the ZDM agenda also. Right. Now coming back to uh and uh coming back to 32:13 32 minutes, 13 seconds the franchise piece uh uh franchise model is attuned towards smaller consumer cohorts. Anig right now 32:21 32 minutes, 21 seconds historically bat was not good at franchise right over the last about four or five years we have expanded it from less than 50 stores to now close to 700. 32:30 32 minutes, 30 seconds As I have mentioned earlier in the call right we aim to be at about thousand plus in the next couple of years. Now 32:36 32 minutes, 36 seconds this is largely driven in tier three and downward markets and smaller suburbs of the larger metros or cities or tier one, 32:45 32 minutes, 45 seconds tier 2 cities. Right now these are consumer cohorts which are smaller. They are upcoming obviously they're growing really fast because that's where urbanization is all happening. 32:54 32 minutes, 54 seconds Historically we were not able to tap into it easily and franchise is a very efficient extremely profitable win-win model which allows us to do that and 33:02 33 minutes, 2 seconds that's given us all this traction. So uh yeah I hope that answers your question. 33:08 33 minutes, 8 seconds Okay. Uh so as you mentioned like you are expecting 1,000 plus franchise stores. So any guidance on revenue growth margin trajectory for the next two quarters. 33:19 33 minutes, 19 seconds Uh I will not be able to give you guidance. Uh but we obviously are doing this for growth right? So the objective is to keep driving growth and franchise is one lever to driving that. 33:31 33 minutes, 31 seconds Okay. And uh my next question is like how is e-commerce and digital share trending and what initiatives are underway to expand this channel. 33:42 33 minutes, 42 seconds Okay, I I answered that in a call in a question prior but it's in basically mid- teens from a contribution 33:50 33 minutes, 50 seconds perspective. It has been our fastest growing channel for the last almost uh 5 years or so now. It's significant bases 33:57 33 minutes, 57 seconds also. So it's no longer a small base. it grew and I've I've shared that in the document also. We grew in at about 15 34:04 34 minutes, 4 seconds odd% last quarter and uh in fact our ambition is to grow it even faster going forward. 34:12 34 minutes, 12 seconds Okay. Uh and my last question is like on inventory and working capital. So in I saw like that inventory efficiencies are 34:22 34 minutes, 22 seconds 11%. That was highlighted. So how sustainable are these improvements and like what are the risk of future inventory buildups if demand softens? 34:33 34 minutes, 33 seconds Okay, I'll hand over to Omit to answer that. 34:37 34 minutes, 37 seconds Hi Anik, thanks for raising this. See what we are doing is a structural correction through the project customer 34:43 34 minutes, 43 seconds first. What we talked about what we have done is we have reduced the number of lines therefore less inventory to be managed. Right? 34:52 34 minutes, 52 seconds Okay. We are improving the freshness of the inventory as we earlier mentioned that right now we are at one time 34:58 34 minutes, 58 seconds all-time low aged inventory and we have doing more sciencebased data analysis in terms of predicting the future demand. 35:08 35 minutes, 8 seconds So all that is helping us in ordering the right inventory right so that we don't end up having 35:16 35 minutes, 16 seconds accumulated inventory which is not desired from a consumer perspective. So the inventory reduction what you see is 35:23 35 minutes, 23 seconds sustainable and you will see further reduction compared to where we are right now. Over the two year we may have done 35:31 35 minutes, 31 seconds about 25% reduction right but that trend will continue. You will see further improvement on that inventory side. 35:40 35 minutes, 40 seconds Okay. 35:41 35 minutes, 41 seconds Yeah. So it is not coming at a compromise of uh ability to serve right. 35:45 35 minutes, 45 seconds I mean it is at better or even higher availability in stores right so it is not coming at a cost of that it is both 35:54 35 minutes, 54 seconds right that is the whole objective of this project to customer first okay got it thank you 36:02 36 minutes, 2 seconds okay uh that's all from my side thanks Amit and Gjin thank Thank you. 36:17 36 minutes, 17 seconds Our next question comes from the line of Kunal Bhya from Dalal Proto Brooking. Hi. 36:25 36 minutes, 25 seconds Uh hi. Hi sir. Hi. Uh thank you for the opportunity. Um sir uh could you give us some Can I speak a little louder? 36:33 36 minutes, 33 seconds Yeah. Can you hear me now? uh 10% not much. Yeah. Much better. 36:40 36 minutes, 40 seconds Yeah. Yeah. So uh could you uh give some sense on uh for the 9 month period uh uh how has the SSG panned out and uh how 36:49 36 minutes, 49 seconds has been the revenue per square feet. Um and then I'll follow up with another uh yeah we don't share the SSG numbers 36:57 36 minutes, 57 seconds Kunaz but however uh what we have shared consistently has been basically the ZBM performance that has been significantly 37:05 37 minutes, 5 seconds accretive right so that continues uh the overall 9mon numbers are published and available right I would say that uh they 37:13 37 minutes, 13 seconds would be overall flattish I believe right uh but the fact is that uh we had a GST disruption in one of the quarters 37:21 37 minutes, 21 seconds So yeah that's where the commentary will stand. 37:25 37 minutes, 25 seconds Okay. And uh sir it's been like a long period of time wherein uh the growth has 37:32 37 minutes, 32 seconds been lagging around the single uh single digit. Um sir according to you um what is the kind of um assessment we have 37:41 37 minutes, 41 seconds done in terms of the efforts put put in because there are I agree to it there are lot of efforts being put in from the last uh couple of years now. So um still 37:51 37 minutes, 51 seconds there are some pain points which are old enough uh to be handled. So uh is it that the uh uh hard decisions are not 38:00 38 minutes being taken or what is the issue that we we have still not being able to I agree there are some external factors also but uh what are the kind of things uh we 38:09 38 minutes, 9 seconds will still required to do uh to get to a double digit kind of growth uh from this low base effect. if you could uh throw 38:17 38 minutes, 17 seconds some light on uh the broader perspective in terms of the next uh say one or two year period. 38:23 38 minutes, 23 seconds Okay. uh we don't give any forward-looking forecast kunal but uh if you look at it I mean the slide number three on the presentation that has been 38:31 38 minutes, 31 seconds uploaded right is exactly trying to answer the questions on how do we want to drive growth going forward right and 38:38 38 minutes, 38 seconds it also is consciously put in a sequence of gestation of work that is going backwards as well as going forwards right so some of the works that are 38:47 38 minutes, 47 seconds there in the points one two as well as three are significantly underway from an action perspective so the inventory 38:54 38 minutes, 54 seconds declutter making sure that you know the consumer experience is elevated from a stores etc perspective as well as marketing investments are elevated are 39:03 39 minutes, 3 seconds already underway and I have already commented on them I think the one that will give us even more impetus I think there is a lot of scope in the next four 39:10 39 minutes, 10 seconds quarters that you will see is the one on network expansion as well as in terms of the product funnel uh so I think uh that 39:18 39 minutes, 18 seconds that chart itself answers the question that you're talking about and sir according to you any u older 39:27 39 minutes, 27 seconds pain points which you have not been able to uh touch base upon and uh you do feel that u maybe it's a hard decision but if 39:36 39 minutes, 36 seconds taken uh things could improve significantly I think the biggest one not a hard decision but the one with the longest 39:43 39 minutes, 43 seconds gestation is the product piece right uh making sure that we've got a significant authority as well as our stamp of design 39:52 39 minutes, 52 seconds as well as comfort behind uh each product of ours is where the gestation is the longest and but there is now 40:00 40 minutes enough work underway as I have outlined the chart which is uh 40:06 40 minutes, 6 seconds I think uh chart number 15 uh which I had opened up last time and now I've given a lot more color to it right is 40:15 40 minutes, 15 seconds the one that is the longest destination so not the difficult one but the one that you will see a lot more effect coming through not only in my calls to you all but also in the stores going 40:23 40 minutes, 23 seconds forward and hopefully traction from consumers. Okay sir. All the best. 40:31 40 minutes, 31 seconds Thank you. Thanks. Thank you sir. 40:45 40 minutes, 45 seconds Ladies and gentlemen that was the last question for today. I would like to hand the conference over to the management of the BA. Thank you and over to you team. 40:54 40 minutes, 54 seconds Thank you everyone for joining. It was lovely interacting. Uh uh over to you and the moderator for closing. Thanks. 41:02 41 minutes, 2 seconds Thank you so much sir. Ladies and gentlemen, on behalf of BNK Securities that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.