Khadim India Limited — Q3 FY26

Khadim India Limited Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=o2gGN3H4CZU Published: 2 months ago

0:00 Ladies and gentlemen, good day and welcome to the Kardim India Limited Q3 and 9 months FY26 earnings conference 0:08 8 seconds call. As a reminder, all participant lines will be in the listenon only mode and there will be an opportunity for you to ask questions after the presentation 0:16 16 seconds concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please 0:24 24 seconds note that this conference is being recorded. I now hand the conference over to Mr. Omar Baguay from MUFG in time. 0:32 32 seconds Thank you and over to you sir. 0:37 37 seconds Yeah, thank you. Uh good evening everyone. Uh and welcome to Q3 and 9 months FY26 earnings conference call of 0:44 44 seconds Kadim India Limited to discuss the results. We have with us from the management Mr. Ritik Roy Burman the managing director and Mr. Indrajit Chri 0:52 52 seconds the group CFO. They will take you through the results and business performance after which we can begin the question and answer session. Before we 1:00 1 minute begin the conference, I would like to mention that this conference contains certain forward-looking statements about the company which are based on the 1:08 1 minute, 8 seconds beliefs, opinions and expectations of the company as on date of this call. The actual results may differ materially. 1:15 1 minute, 15 seconds These statements are not guarantee of the future performance of the company and involve risks and uncertaintities that are difficult to predict. I now 1:22 1 minute, 22 seconds hand the conference over to Mr. Dik. Uh thank you and over to you sir. 1:29 1 minute, 29 seconds Yeah, thank you. Good evening everyone. 1:32 1 minute, 32 seconds On behalf of Kadim India Limited, I welcome you all to today's conference call to discuss our Q3 and 9 month FI26 results. 1:42 1 minute, 42 seconds We appreciate your continued engagement with the company and trust you have reviewed the financial results and investor presentation submitted to the 1:51 1 minute, 51 seconds stock exchanges. The third quarter of FI26 was marked by a relatively subdued 1:58 1 minute, 58 seconds demand environment particularly in valued-driven segments amid continued pressure on discretionary 2:05 2 minutes, 5 seconds spending. While urban markets demonstrated pockets of resilience during the festive period, overall 2:12 2 minutes, 12 seconds consumption trends remained measured. In this backdrop, we stayed focused on discipline execution, prudent inventory 2:20 2 minutes, 20 seconds management and calibrated marketing initiatives to protect margins and sustain brand visibility. Our 2:27 2 minutes, 27 seconds partnership with Sketchers continues to progress positively. During the quarter, sketches recorded a sequential doubling 2:34 2 minutes, 34 seconds of sales, reflecting strong consumer acceptance and improved throughput across pilot locations. This reinforces 2:43 2 minutes, 43 seconds our strategy of strengthening presence in the premium and lifestyle footwware segments while maintaining balance within our portfolio. 2:53 2 minutes, 53 seconds The at leisure portfolio continues to witness steady consumer interest and we are selectively expanding distribution based on store level performance 3:02 3 minutes, 2 seconds metrics. Among our subbrands, British Walkers delivered a healthy year-on-year growth of 9.9% led by consistent 3:10 3 minutes, 10 seconds traction in the men's formal and semiformal categories. Sharon maintained stable performance with continued 3:18 3 minutes, 18 seconds emphasis on refresh designs and improved instore merchandising. We are also intensifying localized marketing efforts 3:26 3 minutes, 26 seconds and enhancing visual merchandising standards to drive higher conversion. 3:31 3 minutes, 31 seconds Operationally, we remain focused on optimizing costs and improving working capital and efficiencies. Inventory was 3:39 3 minutes, 39 seconds closely aligned with demand patterns to m mitigate markdown risks particularly during the extended festive cycle. 3:48 3 minutes, 48 seconds Franchise engagement remains strong. We continue to work collaboratively to drive throughput and profitability at 3:56 3 minutes, 56 seconds the store level. Let me now take you through the financial performance for the quarter and the 9 months ended 31st 4:03 4 minutes, 3 seconds December 2024 2025. Uh for Q3 uh FY26 revenue from operations stood at 4:13 4 minutes, 13 seconds 86.2 cr registering a decline of 21.8% yearonear. ITA was 4:22 4 minutes, 22 seconds 11.1 cr down by 31% with an IITA margin of 12.8%. 4:29 4 minutes, 29 seconds We registered a minor loss of INR.2 cr during the quarter. For the 9 month 4:39 4 minutes, 39 seconds FI26 revenue from operations stood at 283.5 cr reflecting a decline of 12.5% 4:48 4 minutes, 48 seconds yearonear. ITA was 37.2 cr down by 24.5% with an IVITA margin of 13.1%. 4:58 4 minutes, 58 seconds The decline in PAD during the period was primarily attributed to the impact of the revised labor code implementation 5:06 5 minutes, 6 seconds and changes in recent government norms which resulted in higher employee related costs and compliance adjustments. 5:14 5 minutes, 14 seconds As of the end of the quarter, our retail footprint stood at 864 stores comprising 195 company owned outlets and 669 5:24 5 minutes, 24 seconds franchise operated outlets. E-commerce sales continue to contribute steadily and we remain committed to building a 5:31 5 minutes, 31 seconds balanced omni channel presence. Looking ahead, we remain cautiously optimistic. 5:37 5 minutes, 37 seconds Our priorities remain unchanged, driving profitable growth through sharper product curation, disciplined cost 5:45 5 minutes, 45 seconds management, brand investments and continued expansion in high potential segments. We believe our diversified 5:53 5 minutes, 53 seconds portfolio, strong distribution network and focused execution will position us well as demand conditions gradually 6:00 6 minutes improve. I conclude my remarks and would be happy to take your questions. 6:08 6 minutes, 8 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 6:15 6 minutes, 15 seconds star N1 on the restaurant telephone. If you wish to remove yourself from the question queue, you may press star N2. 6:24 6 minutes, 24 seconds Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question Q assembles. 6:34 6 minutes, 34 seconds The first question is from the line of Tutuja from MKSD Advisor. Please proceed. 6:44 6 minutes, 44 seconds Hello. Yeah. Am I audible? Yes. 6:49 6 minutes, 49 seconds Uh you ma'am, can you please be a little louder? We can't hear you. 7:04 7 minutes, 4 seconds You are not audible. Hello. Hello. Am I audible now? 7:12 7 minutes, 12 seconds Yes. Now okay. Uh so sir uh you indicated doubledigit growth in premium subbrands. 7:19 7 minutes, 19 seconds So uh what percentage of total retail revenue do these now contribute? Subbrands. 7:28 7 minutes, 28 seconds Yes. Uh so uh subbrand would be about 40 60% and 40% is the mother brand Kadins. 7:37 7 minutes, 37 seconds Okay. And uh what is the margin differential versus uh Kadim's mother brand? Can the premium become um like 20 7:46 7 minutes, 46 seconds 25% of the mix in next uh four years? 7:52 7 minutes, 52 seconds No. Means the margin is slightly higher in uh subbrands uh 2 to 3%. But uh what 8:02 8 minutes, 2 seconds has mentioned here that the growth in British worker out of the subbrand there is a growth in the British worker which 8:09 8 minutes, 9 seconds is the premium leather men's formal shoes. So there we have seen growth and also in Sharon. 8:16 8 minutes, 16 seconds Sharon also we have seen which is around 10 to 15% of the total sales of the company. 8:24 8 minutes, 24 seconds Okay. So, so uh like can this be uh like 20 25% of the mix in next 3 to four years? 8:31 8 minutes, 31 seconds Yes, we are already we are uh focusing on the premium brands and we are uh we are giving it to the uh location means 8:40 8 minutes, 40 seconds retail. So in order to increase the uh these two premium brands more products have been this year new products are 8:48 8 minutes, 48 seconds also been built on these two uh subbrands. Hopefully by as you call 3 to four years these two will contribute around 20 to 25%. 9:00 9 minutes Okay sir. And uh one last question uh on the schedule partnership, can you please help us understand the revenue 9:07 9 minutes, 7 seconds contribution so far and the store rollout plan? 9:12 9 minutes, 12 seconds It's a very pilot project we have done this year. So it's around 1.5 to 2 9:20 9 minutes, 20 seconds crores but hopefully in in next year we will increase and now I think it's around 20 stores. 9:26 9 minutes, 26 seconds Yeah, right now we are giving it to only 20 stores. So uh before we were giving it to 10 stores now we have increased it 9:33 9 minutes, 33 seconds to 20 stores and uh around 1 to two crores of turnover is coming from it. So 9:40 9 minutes, 40 seconds we are we are uh I mean meeting the sketchers team we have gone for their u 9:47 9 minutes, 47 seconds displays and everything. So gradually we'll uh increase the range as we deem it fit. 9:57 9 minutes, 57 seconds Okay sir. Thank you. Thank you so much for the answers. Thank you. Thank you. 10:02 10 minutes, 2 seconds Thank you. A reminder to all participants, anyone who wishes to ask a question may press start and one on the 10:09 10 minutes, 9 seconds telephone. The next question is from the line of Ria Malik from RMK Capital. Please go ahead. 10:18 10 minutes, 18 seconds Hello. Am I audible? Yes. Yes. Ria, please proceed. 10:23 10 minutes, 23 seconds Yeah. Uh sir, uh thank you for the opportunity. I meant to ask that the re 10:30 10 minutes, 30 seconds uh revenue declined 21.8% yearonear in Q3 and 12.5% in 9 months 10:38 10 minutes, 38 seconds while the gross margins are also compressed. Can you break quarter 3 performance into volume decline versus price declines versus closures impact? 10:51 10 minutes, 51 seconds See uh what I can uh what I can say about the decline is uh see I also mentioned in my opening speech that we 11:00 11 minutes are doing lot of uh we are trying to make our working capital uh in a better situation. So especially in this quarter 11:08 11 minutes, 8 seconds three what we did is we did a skewed inventory purchase like we didn't purchase so much of inventory. So maybe 11:17 11 minutes, 17 seconds because of that some amount of sale would have got affected. Uh because this year the puja festival got over in 11:25 11 minutes, 25 seconds September 30th itself. So after that October, November, December we wanted to have a healthy inventory situation and 11:33 11 minutes, 33 seconds even our creditors day situation because the market is also a bit subdued. So we uh uh curtailed our purchase. So because 11:41 11 minutes, 41 seconds of which there was you can say some amount of the uh reduction in uh sales is because of that uh reduced inventory 11:50 11 minutes, 50 seconds purchase and apart from that we also closed lot of unprofitable stores in the past two years. So because of that 11:59 11 minutes, 59 seconds reason also uh some of declined uh so it's a culmination of both these two 12:06 12 minutes, 6 seconds things around uh 7 to 8% decline is because of the store closure and uh also 12:13 12 minutes, 13 seconds here as uh Ritik pointed out the creator's days has come down from 131 12:20 12 minutes, 20 seconds days in September 2025 to 117 days. So we are once by March and we will again 12:29 12 minutes, 29 seconds uh reduce the working capital mean inventory days. So the we have 12:36 12 minutes, 36 seconds consciously done this but however uh from the next year then after reduction of inventory we will now fill up with 12:44 12 minutes, 44 seconds the inventory that are moving and hope that uh means the sales reduction because of inventory will not be in the 12:52 12 minutes, 52 seconds next quarters. However, uh there is a challenging situation in the market also. So, we are taking other uh avenues 13:00 13 minutes like the e-commerce from where to generate more uh revenue. 13:07 13 minutes, 7 seconds Okay sir. Okay. Got it sir. And sir what would be the underlying like for like volume growth excluding closed coco 13:16 13 minutes, 16 seconds stores? Volume growth means it is a 2% degrowth is there in volume. 13:23 13 minutes, 23 seconds Volume like last year there used to be a huge volume deg growth uh but now it's 2% uh 13:30 13 minutes, 30 seconds compared to like to like stores like to like stores and if you take closed stores then it would be higher but uh yeah uh that's the that's the thing. 13:42 13 minutes, 42 seconds Okay. Okay. And uh okay and so now that the GST reduction has been fully operational for a quarter what has been 13:50 13 minutes, 50 seconds the elasticity response in the 500 to 1500 segment? 13:57 13 minutes, 57 seconds Not much impact has come because this uh because this quarter is not a measure because we have taken uh we have already 14:04 14 minutes, 4 seconds you have seen the sales degrowth we have taken hit in the inventory. So I think in the first quarter we can first 14:12 14 minutes, 12 seconds quarter because this quarter also in the fourth quarter also there would be inventory is less compared to the last year. So the full we can see the GST 14:21 14 minutes, 21 seconds impact in the first quarter of FY27 means the GST impact is there the margin has improved but the volume is not yet coming. 14:34 14 minutes, 34 seconds Okay. Okay sir. Got it. And sir, last question. So are you seeing any recovery in the ticket size or in only footfalls? 14:44 14 minutes, 44 seconds Like are you seeing recovery in ticket size or only footfalls or and also is secondary growth stronger than the primary billing currently? 14:53 14 minutes, 53 seconds See our retail is a secondary sale. So whatever we are seeing degrowth in retail, we are also seeing the degrowth 15:00 15 minutes in our franchise stores for which our primary is also reduced. So uh there is 15:08 15 minutes, 8 seconds a degrowth in footfall but hope we cannot because its impact is in total 15:14 15 minutes, 14 seconds market but whatever we are doing is we are trying to increase the up and also 15:21 15 minutes, 21 seconds uh try to uh not to degrow in volume. So these two steps we are taking but uh we 15:28 15 minutes, 28 seconds are more aggressive in our e-commerce business because uh that is generating means growth more than what we are 15:37 15 minutes, 37 seconds expecting. However in this uh offline channel we will in uh open new 15:45 15 minutes, 45 seconds franchisee and some new coco in strategic location. These two will be the growth factor for the next year. 15:54 15 minutes, 54 seconds Okay. Okay sir. Got it. Thank you sir. Thank you sir. Thank you. 15:59 15 minutes, 59 seconds Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star and one. 16:07 16 minutes, 7 seconds The next question is from the line of Anupam Jane from Indra Securities. Please proceed. 16:14 16 minutes, 14 seconds Uh sir uh your other income was higher this quarter. Can you please explain? 16:20 16 minutes, 20 seconds There is uh since we have closed some shops in this quarter so this is mainly because of the impact of the liability 16:29 16 minutes, 29 seconds return off for the in this thing. So for that reason it has increased. 16:35 16 minutes, 35 seconds Okay. So this won't be the sustainable number going forward. No no that that's uh one of numbers. 16:42 16 minutes, 42 seconds Okay. Second is uh how you had a GST input tax credit of somewhere around 23 crores uh in FI25 16:50 16 minutes, 50 seconds ending FI25. What is your number? Have you used that credit? I have during from April to September the credit has been 16:58 16 minutes, 58 seconds utilized. Now it will be around 13 14 crores uh lying in our input tax rate. 17:05 17 minutes, 5 seconds 13 Bing still left till now 9 month but since now the again the GST has reduced so utilization will be less compared to what it was previous. 17:17 17 minutes, 17 seconds So what will the time period? 17:18 17 minutes, 18 seconds If you have stock of 100 crores uh then it will be because that stock is GST 17:25 17 minutes, 25 seconds paid stock. So the GST input will remain there because uh your input will only go down if you have mean 17:34 17 minutes, 34 seconds stock layer means uh zero stock then there your input will be less but as and when you purchase the input is high and 17:41 17 minutes, 41 seconds since in the last three last quarter we our purchase is less so our input utilization was higher. 17:50 17 minutes, 50 seconds Okay. Purchase was less, input utilization was higher. 17:54 17 minutes, 54 seconds Uh because when you purchase the input GST accum accumulate in your GST ledger. 18:00 18 minutes So if you reduce the purchase then the input accumulation is lower and your output utilization is higher 18:08 18 minutes, 8 seconds output. Okay. So when when can we expect this to be set off? this whole util this whole amount will be utilized because 18:16 18 minutes, 16 seconds this will directly see why I'm asking why I'm asking this will directly help 18:23 18 minutes, 23 seconds in our working capital cycle but this will not mean set up completely because you will have stock you will 18:31 18 minutes, 31 seconds have 90 to 100 cr stock in your uh company so that stock we have to pay the GST and bring the stock everywhere it's 18:40 18 minutes, 40 seconds a GST paid stock so input credit will remain until until every stock is cleared it will remain. 18:48 18 minutes, 48 seconds Okay. And then what is the amount that uh sustainably that will be uh in ITC rate that will that we will have to that will be stuck in there 18:56 18 minutes, 56 seconds around 12 to 13 crores because it was when the GST GST was implemented it was there that GST will this because 19:05 19 minutes, 5 seconds previously in the VAT regime for stock transfer you don't have to pay GST but now for stock transfer you have to pay 19:13 19 minutes, 13 seconds GST. So GST wherever there is a stock lying there will be a GST input lying there. This is the logic of GST. 19:21 19 minutes, 21 seconds Okay. And in Punjab government what is the case update? Any update on that? 19:27 19 minutes, 27 seconds It's pending in the high court and there are two three dates already we have we 19:34 19 minutes, 34 seconds have our hearing done. Maybe within next 2 to 3 months some hearing output will come. 19:42 19 minutes, 42 seconds Okay. Uh so your margins have declined because uh so in the last nine months you have guided that you want volume 19:49 19 minutes, 49 seconds growth not sort of volume growth has come but your margins have declined. Can 19:56 19 minutes, 56 seconds we see this increasing in FI27 already in in third quarter the margin has improved again in the next in the next year with 20:05 20 minutes, 5 seconds the premium product being sell the percentage is higher the margin will definitely improve. 20:13 20 minutes, 13 seconds Okay. Any guidance that you want to give? 20:16 20 minutes, 16 seconds Right now means we are fixing the new means margin for our new product for the I think by the end of this quarter we 20:25 20 minutes, 25 seconds can guide a picture for the next next financial new product is your new product is for the SS 26 and AW26. 20:39 20 minutes, 39 seconds Uh that is sorry I didn't get it. 20:42 20 minutes, 42 seconds This is the new product that we create for our uh spring summer season and for our puja. 20:49 20 minutes, 49 seconds Okay. Okay. Okay. 20:51 20 minutes, 51 seconds Okay. And what will be your debt guidance? Because as you're looking to cut down your uh working capital, will 21:00 21 minutes this uh also be reduced? Your debt will be also be reduced this year. 21:05 21 minutes, 5 seconds This year means debt will be remain means at because we have reduced the stock. So again some stock we require. 21:12 21 minutes, 12 seconds So it will be more or less in 110 cr range. Whatever we have in December around 114 we will be having 110 cr. 21:22 21 minutes, 22 seconds Okay. So it will be almost flat to a slight growth. Okay. 21:32 21 minutes, 32 seconds Okay. That's all from my side. Thank you. 21:36 21 minutes, 36 seconds Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star and one on the touchstone telephone. The next question is from the line of Viral Jane from SMG. 21:49 21 minutes, 49 seconds Please proceed. Yeah. Hi. Am I audible? Yes. Yes sir. Yeah. Uh thank you for the opportunity. 21:57 21 minutes, 57 seconds I've got a couple of question. So my first question was with regards to the inventory. So just wanted to know has the inventory cleanup largely concluded? 22:08 22 minutes, 8 seconds Inventory we have reduced the inventory as I told from inventory days of 131 it has come down to 117 days now and by 22:17 22 minutes, 17 seconds next quarter we'll be landing up around 105 to 107 days but after that when we are cleaning up inventory we are also 22:26 22 minutes, 26 seconds have to build some inventory for the new product. So that will be there but we'll be ranging in this in within these days in inventory level. 22:37 22 minutes, 37 seconds Got it sir. And my next question was with regards to the sale. So what percentage of sale in uh Q3 came from 22:45 22 minutes, 45 seconds the promotional discounting around 20 to 22% in our cocoa. 22:53 22 minutes, 53 seconds Okay. 20 to 22%. Got it. And are the franchises still under the margin pressure? 23:02 23 minutes, 2 seconds Franchise margin because of their sales reducing they have some margin pressure 23:08 23 minutes, 8 seconds but uh we are trying to mean increase their secondary sale so that their margin pressure is sorted out and also 23:16 23 minutes, 16 seconds they are like us reducing the cost they are also in the efforts to reduce their costs 23:23 23 minutes, 23 seconds got it and now that the franchisees share a 76% of the network so what is the roe roce difference between the coco and the franchisee model. 23:34 23 minutes, 34 seconds Can you get it back means uh so as we saw that the franchise share is up to now the 76%. 23:42 23 minutes, 42 seconds So what can be the ro distance difference? 23:45 23 minutes, 45 seconds Uh sorry sir store count you are talking about store count is 76%. 23:51 23 minutes, 51 seconds Sales sales we have percentage of network. Yeah. Store store count that means Yeah. Yeah. 23:58 23 minutes, 58 seconds Uh store count but in our sales 60% comes still comes from our uh cocoa. 24:06 24 minutes, 6 seconds So where the means uh the margin is compared to more compared to the franchisee because franchisee there are 24:15 24 minutes, 15 seconds two types of franchisee. One is the EBO franchisee where we sell the product where there is also commission based 24:22 24 minutes, 22 seconds franchise where the uh means the stock is in our books we give them commission. Got it. 24:30 24 minutes, 30 seconds Where the margin is slightly lower compared to Coco and EU. 24:36 24 minutes, 36 seconds Got it sir. And uh as we saw that the store count has been reduced from 893 stores in Q2 FI26 to 854 stores. So what 24:46 24 minutes, 46 seconds is the total number of the stores in the cocoa model in FI26? 24:50 24 minutes, 50 seconds Around 195 is Coco and balance is franchise. 24:57 24 minutes, 57 seconds Got it. And uh what will be the average store level a bit loss of those closed stores? 25:05 25 minutes, 5 seconds There are means uh means store closed uh is around uh uh there are around ranging 25:14 25 minutes, 14 seconds from five lakhs to 25 lakhs in a year. A beta loss per year. Yes, a bit loss. 25:22 25 minutes, 22 seconds Okay. And so my last question was with uh with regards to the future prospect. 25:27 25 minutes, 27 seconds So are we moving towards a largely asset light model over the next uh 3 to 5 years? 25:35 25 minutes, 35 seconds Yes, obviously asset line model things will expand more through franchisee and uh in case of coco will only open 25:43 25 minutes, 43 seconds where there is a strategic point and there is um profitability. Got it sir. That was all from my side. 25:51 25 minutes, 51 seconds All the best for the future. Thank you. Thank you. Thank you. 25:55 25 minutes, 55 seconds Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star N1. 26:02 26 minutes, 2 seconds The next question is from the line of Pratik Sha from Investing Alpha. Please go ahead. 26:09 26 minutes, 9 seconds Hello. Hi sir, I hope I'm audible. Yes. Yes. 26:13 26 minutes, 13 seconds Yes. Uh sir, my first question is so East India remains our strongest region. 26:20 26 minutes, 20 seconds So uh the expansions in the south and west are they delivering better growth than the core east region or what is the comparison there? 26:30 26 minutes, 30 seconds Still uh east India is giving a better growth than south and west. West we are 26:36 26 minutes, 36 seconds not opening new store. Now uh we are opening franchising east and some parts 26:43 26 minutes, 43 seconds of south. So our concentration for the next 2 3 years will remain in east and south. 26:52 26 minutes, 52 seconds Okay. any uh divergence in demand between metro city versus tier two or 26:58 26 minutes, 58 seconds three markets franchises are doing a little bit 27:05 27 minutes, 5 seconds slightly better than what do you call that the cocoos so kokos are mainly in uh tire one type of metro 27:14 27 minutes, 14 seconds metro type of markets and franchises are in little smaller markets than that so that trend we can 27:23 27 minutes, 23 seconds say is there okay and u another question was on the 27:31 27 minutes, 31 seconds TNA side like the 9 months of gross margins have declined to 48.2%. 27:37 27 minutes, 37 seconds Was this 53.1% last year so how much of this decline is structural or just in temporary basis? 27:48 27 minutes, 48 seconds But see the gross margin for the first two quarter declined because as we told we sold the mean lots of in the USSS and 27:58 27 minutes, 58 seconds continued the yes for 6 months and also there was uh we have taken a price cut in the last year we have reduced the 28:06 28 minutes, 6 seconds prices we have also reduced prices during the GST cut so more or less we have seen around 20 25% of the sales are 28:16 28 minutes, 16 seconds discounted sales where the margin been impacted and also around 3 to 4% has been because of the price 28:24 28 minutes, 24 seconds cut. So both these taken together has made the decline in the gross margin. 28:30 28 minutes, 30 seconds However, in third quarter the gross margin improved compared to first two quarters. 28:38 28 minutes, 38 seconds Right. Right. And so uh what will be the normalized uh you know uh steady state gross margins for FI27? 28:48 28 minutes, 48 seconds I think around 4950% will be the steady state of gross margin in FI27. 28:55 28 minutes, 55 seconds Okay, got it. And AITA margin is now about uh 13% and uh it was 15 or more 29:04 29 minutes, 4 seconds than 15% earlier years. So post pricing reset any and GST benefit uh GST benefit 29:11 29 minutes, 11 seconds pass through what is the realistic AIDA margin band over the uh to the coming year like two years in the period. 29:19 29 minutes, 19 seconds See the AITA margin decline because of the decline in sales. Okay means we have 29:28 29 minutes, 28 seconds tried to reduce the cost but the reduction of sales is more compared to the reduction of cost. However, I think 29:36 29 minutes, 36 seconds uh based on the cost structure and the sales and the margin for the next year 29:43 29 minutes, 43 seconds around we can expect in FY 27 around 14 to 14.5% a bit. 29:54 29 minutes, 54 seconds Okay. And one last question, uh can premium brands lift uh blended margins meaningfully? 30:01 30 minutes, 1 second Yes, we have seen the the margins in British worker and Sharon is higher and if we uh if the composition of sales 30:11 30 minutes, 11 seconds shifts towards the premium brand obviously the margin will improve. All right sir that was really helpful. 30:20 30 minutes, 20 seconds Uh that's it from myself. Thank you. Thank you. Thank you. 30:24 30 minutes, 24 seconds The next question is from the line of Dan Shuansel from MK Global. Please proceed. 30:32 30 minutes, 32 seconds Hi sir, uh thanks for the opportunity. 30:34 30 minutes, 34 seconds So if you have uh um captured uh what I'm going to ask in uh previous question. So but uh as a management 30:43 30 minutes, 43 seconds there has been a big demerger that has happened right in our company. If you could lay down uh your strategy for uh 30:52 30 minutes, 52 seconds the demerged entity khadim in terms of uh growth margin balance sheet uh that 30:59 30 minutes, 59 seconds would be really helpful uh for us to appreciate and uh track your performance right so uh but uh uh here maybe from a 31:08 31 minutes, 8 seconds three year five year outlook perspective as in how you are trying to expand the network in terms of products what are 31:16 31 minutes, 16 seconds your key focus areas as in terms of gross margin etc. we did the margin etc. 31:21 31 minutes, 21 seconds then it will give us a better picture uh as in how to track your performance. So tidbit uh queries, clarifications etc 31:30 31 minutes, 30 seconds though are really helpful but if you could lay down from a strategic thought process perspective how are you shaping 31:37 31 minutes, 37 seconds the next 3 to 5 years for Kadim um will be really helpful. Maybe if you would like to answer now or uh through a 31:44 31 minutes, 44 seconds detailed PPT uh that's up to you. Uh but uh uh I guess I thought I'll just uh uh 31:52 31 minutes, 52 seconds make this case in this call u to get a better clarity on next 3 to 5 years. 31:58 31 minutes, 58 seconds See I can give you a brief u answer to this question as I already 32:05 32 minutes, 5 seconds told that means we have already closed around 60 65 stores. So now it has reached to a level where now we are 32:14 32 minutes, 14 seconds trying to fix the same number of stores and for the last 3 years we have seen a decline in our sales. So what what we 32:22 32 minutes, 22 seconds are trying to reach in FI27 is that there is no dip in the sales we remain at the same sales because we have 32:31 32 minutes, 31 seconds reduced the cost and we are further trying to reduce the cost. So our main objective is to uh keep the sales at 32:40 32 minutes, 40 seconds least the volume there is no volume deg growth and with the uh with the price with there is a increase in the ASP 32:48 32 minutes, 48 seconds there might be some uh growth in our uh sales and we will try to make a margin 32:56 32 minutes, 56 seconds as I've told you of a gross margin of around 49 to 50%. and we'll try for a bit margin of around 14 to 14.5% in 33:05 33 minutes, 5 seconds FI27. So FI27 will have benchmark here where we will caliber everything and try 33:12 33 minutes, 12 seconds to improve from that part. So what we have we have done we have corrected our inventory. We have taken call on our uh 33:20 33 minutes, 20 seconds stores. We have closed the store which are bleeding. So we have changed our product profile. We are now implemented 33:28 33 minutes, 28 seconds British workers Sheron premium brands to bring in some margin. We are concentrating on e-commerce so that some part of the loss sale comes from 33:36 33 minutes, 36 seconds e-commerce. We are trying for some institutional sale from there also generate margin. So what we have seen if 33:44 33 minutes, 44 seconds we are able to generate sales our margin in AITA level will improve and we'll definitely give a good result and based 33:53 33 minutes, 53 seconds on that yeah we are preparing our budget for this year I can give you a detailed analysis of that in future uh mail or I 34:03 34 minutes, 3 seconds can share you with our PPT so you better give a mail to our IR consultant we will 34:10 34 minutes, 10 seconds provide you with the detailed data. Sure sir. And just what I could gather is uh from a topline perspective uh FYI 27 34:20 34 minutes, 20 seconds should be more like a 350 cr kind of a topline with 14 14 and a half% IDA margin and then that IDA margin what is 34:28 34 minutes, 28 seconds the PAT that you are anticipating sir fat margin at 14% uh pat margin should it be like 2% or how around two 2.5%. 34:39 34 minutes, 39 seconds 2 to 2.5%. 34:41 34 minutes, 41 seconds Okay. And on the balance sheet front sir as in how much are you planning to 34:48 34 minutes, 48 seconds invest or maybe that optimization that we have done in FI26 would it continue in FI27? 34:55 34 minutes, 55 seconds No we will keep the inventory we have already optimized now we are taking up the data optimization. 35:02 35 minutes, 2 seconds So I think some improvement in working capital will come from the data end. 35:07 35 minutes, 7 seconds some money has been stuck in our institutional. We'll try to generate that money. Once that money comes, our 35:14 35 minutes, 14 seconds working capital is more will be sorted out and uh also through uh good uh sales 35:21 35 minutes, 21 seconds and uh uh AITA margin means uh total efficiency of the business will be improved. 35:30 35 minutes, 30 seconds Sure sir. And uh out of total stores uh which are 864 you said about 200 stores 35:37 35 minutes, 37 seconds are Coco and uh for the rest 660 stores there are stores where in some component 35:45 35 minutes, 45 seconds the stock is with us. So what is that uh number as in for how many franchisee stores uh the stock is with us? 35:54 35 minutes, 54 seconds Say around 70 stores. 35:57 35 minutes, 57 seconds Okay. So broadly for 270 stores ballpark uh the stock is with us for red it is with uh franchises right? 36:06 36 minutes, 6 seconds Yes. 36:09 36 minutes, 9 seconds Okay. Okay, great sir. Uh just uh I'm sorry I'm repeating this but if you could lay down your next 3 to 5 year 36:17 36 minutes, 17 seconds growth and uh uh margin road map in your next PPT uh that would be really helpful uh in terms of tracking your performance 36:26 36 minutes, 26 seconds and as a good corporate practice as well uh which will be really appreciated. Thank you so much. Okay. Okay. 36:43 36 minutes, 43 seconds Thank you. The next question is from the line of Ankit Sha an individual investor. Please proceed to. 36:51 36 minutes, 51 seconds Yeah. Hi. Uh so you mentioned that the uh inventory is reduced to 117 days and which you are looking to further reduce 36:59 36 minutes, 59 seconds to 105 days. So uh in absolute amount what would this be and uh also if you could give similar number for the 37:06 37 minutes, 6 seconds dattors also what has been the reduction now the inventory is around 123 crores 37:17 37 minutes, 17 seconds compared to 140 145 crores previous quarters so definitely we'll try to 37:24 37 minutes, 24 seconds reduce it to 115 110 to 115 crores and In datas we have as you told in third 37:33 37 minutes, 33 seconds quarter there is no improvement in datas but from the fourth quarter we will try to reduce the data to the extent possible and in FY27 37:42 37 minutes, 42 seconds we'll try to reduce the data to a normalized level. 37:47 37 minutes, 47 seconds So within this dattors only say 20 25 crores is Punjab the rest is all your franchises right 37:53 37 minutes, 53 seconds franchisee and yes it's franchisee 32 crores is from Punjab balance is mean once the punjab payment comes then data 38:02 38 minutes, 2 seconds r will reduce drastically okay but uh so uh basically if I look at 38:10 38 minutes, 10 seconds your current run rate it's around say uh 380 400 crores of that 40% % is uh say 38:18 38 minutes, 18 seconds roughly um uh say 150 crores as your uh franchisee revenues. Okay. And so but 38:28 38 minutes, 28 seconds but so we are actually carrying datas which are more than one years of our revenues. 38:33 38 minutes, 33 seconds No because this is mainly because the datas in datas there is institutional datas. So that has increased where there is no sales. 38:41 38 minutes, 41 seconds So but uh it's more than one 6 months and it's 38:50 38 minutes, 50 seconds more than 6 months datas is there. So that's what the reason we have taken one we are taking one at a time we have done 38:57 38 minutes, 57 seconds inventory now we are focusing on the datas. So hopefully the datas days we'll try to reduce it to 120 days. No, how 39:06 39 minutes, 6 seconds much is the institutional letters out of this 198? 39:09 39 minutes, 9 seconds It's around uh 35 36 160 would be the franchise. So your your franchise revenues is 150. 39:17 39 minutes, 17 seconds So you're actually carrying one year of data no on franchise. 39:21 39 minutes, 21 seconds Yes. But still we'll try to imp because we have taken the call on the primary sales that sale has been reduced and the 39:30 39 minutes, 30 seconds data the payment cycle has is slow. So for that reason we are getting less 39:36 39 minutes, 36 seconds sales but still we are trying to mean improve the data days once the cycle improves the data days will also 39:44 39 minutes, 44 seconds improve. Okay. And just one more question. I saw your website is completely revamped which is a much better experience than earlier in so so 39:53 39 minutes, 53 seconds now what is our uh if you can help what is our online percentage uh of uh say out of this three uh like say current 40:00 40 minutes run rate if you were to say what is the like how much are we doing on online and secondly what is the margin net margin 40:06 40 minutes, 6 seconds after logistics and uh you know uh the marketplace commission uh what is the margins that we make on online 40:15 40 minutes, 15 seconds see we We around 3 to 4% of the sales comes from online. In online there are two types of sale. One is the sale from 40:22 40 minutes, 22 seconds our own website and the omni cells from the retail. So there the margin is 40:29 40 minutes, 29 seconds around 10%. And whereas in the uh marketplace the margin is 1 to 2%. So 40:35 40 minutes, 35 seconds what we have done we have shifted the total uh the online operation to third party uh means with e-cart. So we are 40:45 40 minutes, 45 seconds trying to reduce the cost so that we generate more uh profit from the online. 40:50 40 minutes, 50 seconds Next year we have a target of increasing the online sales to 10%. Out of that maximum 40:59 40 minutes, 59 seconds sale will come from the kadims.com and britishwalker.com which is our own 41:05 41 minutes, 5 seconds website. We are also in a uh plan of launching the sportshepro.com 41:12 41 minutes, 12 seconds and we are focusing on we are increasing our marketing cost on there so that we can generate more revenue from there and uh get more margin. 41:22 41 minutes, 22 seconds Yeah, we are doing a lot of focus in our own websites now which previously we didn't do much. So we are putting a lot 41:31 41 minutes, 31 seconds of focus in our own website kadins.com britishwalker.com some other websites also can come up. So 41:39 41 minutes, 39 seconds we are going to have a very deep uh penetration through our own websites 41:48 41 minutes, 48 seconds and this is and so no so ecart is basically flipkart right? 41:53 41 minutes, 53 seconds Yeah that's flipkart amazon all those places. No, no. E-cart is owned by Flipkart, right? Yes. It's 42:01 42 minutes, 1 second owned by Flipkart, but they keep the stock for market all the market places. 42:06 42 minutes, 6 seconds So, basically our own own website is managed by us including marketing, shipping, everything. And only the third party marketplace is managed by Flipkart. 42:15 42 minutes, 15 seconds Yes. Yeah. 42:16 42 minutes, 16 seconds But actually see Myntra is the biggest fashion platform today in India. Uh on that we don't have any presence at all 42:24 42 minutes, 24 seconds like and you know that is owned by Flipkart. I don't understand. We have some presence on Hello. Yeah. Yeah. 42:31 42 minutes, 31 seconds Yeah. We have it's not right that we don't have any presence in Myntra. We have got some presence on Myntra. But uh 42:39 42 minutes, 39 seconds you know like for online also we are developing new products so that you know we can have a profitable sale from these 42:48 42 minutes, 48 seconds marketplaces also because what we have seen in what we have seen is by selling too much also in these platforms what you end up 42:56 42 minutes, 56 seconds doing is incurring losses that's why we are focusing a lot on our own website and what we are doing is we are 43:03 43 minutes, 3 seconds developing exclusive lines so that we can you know which are more premium I'm looking or like we are trying to develop 43:11 43 minutes, 11 seconds lines which would be profitable in marketplaces also. So that that exercise we have just started. So once we are 43:18 43 minutes, 18 seconds able to provide products in that we hope that in these marketplaces also we can have a meaningful profitable sale. Until 43:27 43 minutes, 27 seconds then we are f giving a lot of focus on our own websites and only sales uh and and most of all all our own 43:35 43 minutes, 35 seconds website uh stocks get serviced from our stores. So you know the shipping cost 43:42 43 minutes, 42 seconds also reduces because your uh whatever order is coming from Bangalore will get service from the Bangalore stores or 43:51 43 minutes, 51 seconds whatever comes from Kolkata will get service from the Kolkata stores. So that sort of a ecosystem we have uh trying to do. 44:00 44 minutes Yeah. And look you mentioned about west and that you know in west you are defocusing. So just the thought that you know maybe for west you can move 44:07 44 minutes, 7 seconds completely online and whatever uh you know franchisee and stores you have there's no point you know now continuing if you're anyway defocusing. So why not 44:15 44 minutes, 15 seconds shut the entire west region because it will release a lot of capital also. 44:20 44 minutes, 20 seconds No there see there are some franchises who are doing good business they want don't want to stop but uh yes we are 44:27 44 minutes, 27 seconds some state like Rajasthan we have come out in Gujarat there are some good stores that we are but that we don't 44:34 44 minutes, 34 seconds want to stop now because they are doing they are profitable and AITA is also positive understood and just one last question on 44:41 44 minutes, 41 seconds franchisee sales whatever we are billing primary sales whatever we are billing uh what is our margin on that We generate a 44:50 44 minutes, 50 seconds margin of around 42% on the primary sales. Okay. Okay. Understood. Understood. 44:57 44 minutes, 57 seconds Thank you. That's it for my side. Thank you. 45:00 45 minutes Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star N1 on the Touchstone Telephone. 45:09 45 minutes, 9 seconds The next question is from the line of Anupam Jane from Indra Securities. Please go ahead. 45:15 45 minutes, 15 seconds Uh uh sir you mentioned that sketchers uh uh do a 1.5 to2 cr. Is that a per 45:22 45 minutes, 22 seconds month uh for every month or was that for year? This is for this financial year. 45:28 45 minutes, 28 seconds Okay, that's a very small number. And how many at leven do you carry? 45:37 45 minutes, 37 seconds You're rolling out at leisure inventory because you're rolling out uh at leisure. Yeah, at at leisure we have got around 40 50 uh 45:46 45 minutes, 46 seconds designs and uh inventory would be around uh say like 50 lakhs. 45:54 45 minutes, 54 seconds Okay. 45:56 45 minutes, 56 seconds So uh are you planning for for an aggressive roll out for this or how many and how many stores are in this inventory currently? 46:03 46 minutes, 3 seconds 70 stores. 70 stores. 46:08 46 minutes, 8 seconds So you have 45 SQUs and uh inventory you that that you're carrying is 50 lakh. 46:16 46 minutes, 16 seconds Yes. Okay. 46:20 46 minutes, 20 seconds Any aggressive plan up to scale scale this up? 46:25 46 minutes, 25 seconds That depends. We are mean uh we are in a see the main thing about our at leisure is our pricing is very good. Okay. It's 46:32 46 minutes, 32 seconds a very uh it's a very uh what do you call that competitively priced product. 46:39 46 minutes, 39 seconds So you know what we have seen is during the winter season uh the athleisure sales drops a bit. This is our first 46:46 46 minutes, 46 seconds year. Okay. So uh but again the summers and all are coming. So we hope that the sales will increase again. And uh in at 46:55 46 minutes, 55 seconds leisure uh it's it's mainly like every time you order something you have to order new designs. Okay. It's uh your 47:03 47 minutes, 3 seconds old designs I I don't the apparel industry works like that that the old designs uh are not always available once 47:12 47 minutes, 12 seconds you finish your some of them would be available but not all of them. So we'll be taking it in batches like every 47:19 47 minutes, 19 seconds quarter we'll take some new designs and uh display and see how it goes. What is your store? 47:27 47 minutes, 27 seconds store rollout is your you're less than 10% in your stores currently at le what I'm trying to say is what is your target 47:34 47 minutes, 34 seconds to get at least 50 60% in your store at leia because your sales are dropping your one thing that you're trying to do 47:41 47 minutes, 41 seconds is uh increase it in uh online e-commerce what happens in at leisure is that in if 47:49 47 minutes, 49 seconds you compare to our stores there are stores which are very small where we cannot put up the at leisure things So 47:57 47 minutes, 57 seconds that is also a hindrance for us because we don't have a changing room for ladies the ledger we cannot give a changing 48:05 48 minutes, 5 seconds room. So these are the factor that are taken into consideration after that we are planning out to roll the in at le 48:12 48 minutes, 12 seconds store but do you have any target that we can track this? 48:19 48 minutes, 19 seconds No, we we will definitely increase the at le sales but we will not go whole hog because uh because there are lots of 48:26 48 minutes, 26 seconds store where we do not have the space to put in at leure and there are some problem in uh means changing room also 48:34 48 minutes, 34 seconds we don't have any changing room so because inger you require the changing room so will it be 50% will it be 30%. 48:43 48 minutes, 43 seconds I think in our koko will definitely go ahead but in franchisee it depends on the franchisee whether they want to take 48:50 48 minutes, 50 seconds the pleasure because out of the 600 60 franchisee 50 60% of the store is around 48:57 48 minutes, 57 seconds 400 square ft 300 square ft so where at leisure will not be possible. 49:03 49 minutes, 3 seconds Yeah. Okay. Secondly, you said when you were giving guidance that you want to do again you are looking for institutional sales 49:12 49 minutes, 12 seconds institution not institutional it's institutional in the form of school institutional safety issue where to the 49:21 49 minutes, 21 seconds private companies okay okay yeah that because I was confused because we are already stuck with Punjab government and we are again 49:29 49 minutes, 29 seconds looking for institutional sales no government in we have stopped for the last five years yeah that's what That was the that's your intention was change. Okay. Thank you. Thank you for clarification. 49:40 49 minutes, 40 seconds Thank you ladies and gentlemen. That was the last question for today. I now hand the conference over to Mr. Omar Baguay for closing comments. Over to you sir. 49:52 49 minutes, 52 seconds Thank you for join joining us on call today. I would like to thank the management for sparing the time and answering all the queries. We are MUFG 50:00 50 minutes in time investation advisors for Kadim India Limited. For any queries, please feel free to contact us. Thank you everyone and have a great day. 50:08 50 minutes, 8 seconds Thank you. 50:11 50 minutes, 11 seconds Thank you on behalf of Hadim India Limited. That concludes this conference. Thank you for joining us.