December 7, 2021

Earn Money

Business Life

Edited Transcript of V2RETAIL.NSE earnings conference call or presentation 28-Jan-20 5:30am GMT

Q3 2020 V2 Retail Ltd Earnings Call

Mar 19, 2020 (Thomson StreetEvents) — Edited Transcript of V2 Retail Ltd earnings conference call or presentation Tuesday, January 28, 2020 at 5:30:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Akash Agarwal

V2 Retail Limited – Whole Time Director

================================================================================

Conference Call Participants

================================================================================

* Ankit Babel;Subhkam Ventures;Analyst

* Chintan Desai;Param Capital Research Private Limited;Analyst

* Jaspreet Singh Arora;Equentis;Analyst

* Rajiv Bharati

IndiaNivesh Securities Limited, Research Division – Senior Research Analyst

* Varun Singh

IDBI Capital Markets & Securities Ltd., Research Division – Research Analyst

================================================================================

Presentation

——————————————————————————–

Operator [1]

——————————————————————————–

Ladies and gentlemen, good day, and welcome to the Q3 FY ’20 Earnings Conference Call of V2 Retail Limited, hosted by IDBI Capital Markets & Services Limited (sic) [IDBI Capital Markets & Securities Limited]. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Varun Singh from IDBI Capital. Thank you. And over to you, Mr. Singh.

——————————————————————————–

Varun Singh, IDBI Capital Markets & Securities Ltd., Research Division – Research Analyst [2]

——————————————————————————–

Thank you very much. On behalf of IDBI Capital, I would like to thank the management of V2 Retail for providing us this opportunity to host Q3 FY ’20 investor conference call.

I now hand over the call to the senior management team of V2 Retail. Over to you, sir.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [3]

——————————————————————————–

Good morning, everyone. This is Akash Agarwal, Director of V2 Retail. A very warm welcome to all of you. This is quarter 3 and 9 months earnings conference call. Along with me, I have Mr. Ram Chandra Agarwal, who’s the CMD; Mr. Manshu Tandon, who is the CEO; and our investor relations team. I hope everyone had an opportunity to look at our results. The presentation and press release have been uploaded on the stock exchanges and our company’s website.

Now allow me to give you an overall overview on our operation and performance during the quarter. Due to weakened consumer sentiment and extended monsoon as well as the shift in the festive season, our revenue declined marginally by 9% year-on-year in quarter 3 from INR 241 crores to INR 219 crores. Gross profit for the quarter declined from INR 84 crores to INR 65 crores. Gross margins for the quarter declined from 35.2% to 29.9%. This was because the company has taken an additional provision amounting to INR 6.9 crores for the expected loss of sale of old inventory. The EBITDA for Q3 FY ’20 stood at INR 33.7 crores, vis-?-vis INR 30.6 crores Q3 FY ’19.

Profit before tax stood at INR 27.9 crores in Q3 FY ’20, and it was INR 27.5 crores in Q3 of FY ’19. Profit after tax declined from INR 23.6 crores to INR 20.8 crores in FY ’20 Q3.

The company opened 1 new store in this quarter. The company now operates 76 stores in 71 cities with a total area of 8.5 lakh square feet. The same stores sales growth has been minus 7% in Q3 and minus 6% for the 9-month period in FY ’20. The ASP in Q3 was INR 296. And the 9-month ASP is INR 266 this year. The average bill value for Q3 is INR 794 and for the 9-month period, the average bill value is INR 743. The sales per square feet is INR 864 for Q3 and INR 736 for the 9-month period.

The inventory is INR 179 crores as compared to INR 271 crores on March 31, 2019. So the inventory days have reduced from 132 days to 86 days in the 9-month period.

The creditors as of December 31, 2019, is INR 47 crores as compared to INR 139 crores on March 31, 2019. The creditor days has reduced from 68 days to 23 days in the 9-month period.

Cash and bank, including FDR on a consolidated basis stands at INR 75 crores. Working capital is at INR 40 crores. The net cash available to the company is around INR 35 crores. The actual finance cost for quarter 3 was INR 4 million and for 9-month period, it was INR 1.1 crores. Private label contribution is 35% for the business.

So we consider this year as a year of consolidation and course correction. So we have rationalized our sole expansion strategy. We want to focus on geographies where we can leverage our existing customer loyalty. We are rationalizing our store size for better throughput and better per square feet sales and profitability. We are also rationalizing our inventory levels. We have seen substantial reduction in holding level as compared to March 31, 2019.

We are also focusing on product development and private label to further enhance our customer experience. The aim is to provide better products at more competitive prices. Besides this, it also helps us create our product-recall value focused approach towards loss-making stores. We have seen some of our loss-making stores breaking even because we have been able to reduce the cost at those stores and also improving the profitability of such stores. And throughout the company, we have taken an approach to rationalize our costs to increase our profitability.

The consolidation and our focused approach, we believe this will help us improving the overall performance of the company. We have seen a lot of initiatives being taken by the government for reviving the consumer sentiment. So with — the outcome of which should be visible completely in the next financial year.

With this, now I leave the floor open to questions.

================================================================================

Questions and Answers

——————————————————————————–

Operator [1]

——————————————————————————–

(Operator Instructions) The first question is from the line of Ankit Babel from Subhkam Ventures.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [2]

——————————————————————————–

Yes. Akash, Ankit here. Hello?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [3]

——————————————————————————–

Ankit.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [4]

——————————————————————————–

Akash, a few things. The first is, what are your expansion plans in the near term and for the next financial year, say, I mean, how many stores you plan to open in Q4 and in the next financial year?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [5]

——————————————————————————–

So for FY ’21, we’re looking to open 10 to 12 new stores.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [6]

——————————————————————————–

And any stores in — lined up in Q4 of this year?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [7]

——————————————————————————–

I think in Q4, we’ll be opening 1 or 2 stores.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [8]

——————————————————————————–

Okay. Great. My second question is, could you throw some more light on your product development strategy? I understand you people have started backward integration and how that business is going? How scalable that could be? And going forward, what could be the risks attached to that? And what could be the benefits of that venture? If you can highlight something on that.

——————————————————————————–

Unidentified Company Representative, [9]

——————————————————————————–

(foreign language)

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [10]

——————————————————————————–

So other than that product design, you foresee no other risk?

——————————————————————————–

Unidentified Company Representative, [11]

——————————————————————————–

(foreign language)

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [12]

——————————————————————————–

(foreign language) What could be the investment in that venture?

——————————————————————————–

Unidentified Company Representative, [13]

——————————————————————————–

(foreign language)

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [14]

——————————————————————————–

Could there be working capital investment? Sir, any working capital investment in that?

——————————————————————————–

Unidentified Company Representative, [15]

——————————————————————————–

(foreign language)

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [16]

——————————————————————————–

Okay. (foreign language)

——————————————————————————–

Unidentified Company Representative, [17]

——————————————————————————–

(foreign language)

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [18]

——————————————————————————–

(foreign language)

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [19]

——————————————————————————–

So Ankit, there are 2 parts to this. There are 2 parts to this. I think you are getting confused. Product development, so we want our own designs developed by our own team, that should be 80% and I think you’re talking about the production unit.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [20]

——————————————————————————–

Yes, yes, yes.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [21]

——————————————————————————–

So the target for that is about 25% to 30% this year, we will be producing of the total turnover.

——————————————————————————–

Unidentified Company Representative, [22]

——————————————————————————–

From March onwards.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [23]

——————————————————————————–

Okay. So margin improvement can happen only in — on that 20%, 25%, which will be own manufacturing. Rest is like, you’ll just give the design and you’ll get it outsourced from the vendor?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [24]

——————————————————————————–

So what we are targeting is, we will save at least 10% to 15% on the cost of those 25% of the goods. But we would pass on the benefit to our customer to gain a competitive advantage over our competitors. So we are not looking for extra margin on the goods. So initially, we would use the differential in MRP to kill off our competition. So that is the aim. So we want to increase our per square feet sales rather than our GM percentage.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [25]

——————————————————————————–

Sir, my another question is on your per square feet sales. So in the 9 months, it is INR 736. So on an annualized basis, it would be somewhere around INR 700 because fourth quarter is less. So this INR 700 or INR 720 whatever you end the year with, what are your targets in the next year to take it to?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [26]

——————————————————————————–

So the next year per square feet sales target for us is INR 800. So we are targeting that, and we’re going to achieve that for FY ’21.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [27]

——————————————————————————–

Sir, so in other words you are targeting around 8% to 10% SSG growth next year.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [28]

——————————————————————————–

So there are a lot of things behind that because we have resized a lot of our low EBITDA or loss-making stores. And we have shut down, I think, 5 stores this year already. So I think — and with the new stores that we opened, we are expecting a higher per square feet in those stores. So in the company-wide average, we are looking at INR 800 per square feet sales.

——————————————————————————–

Unidentified Company Representative, [29]

——————————————————————————–

Yes. Overall, we are targeting that also.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [30]

——————————————————————————–

[And SSG], the target would be 5% to 6%.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [31]

——————————————————————————–

Okay. Then lastly, if all these things materialize the way you are aiming, what could be the EBITDA margins, which you are targeting next year? Say, I mean, excluding the impact of AS 116.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [32]

——————————————————————————–

So I think the first target for us internally is to get back to the historical EBITDA margin level. So I think the target for us is 9% to 10% pre Ind AS.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [33]

——————————————————————————–

Okay, okay, okay. Yes, yes. I understand. And you’ll maintain the inventory levels and the creditor levels at this? Or is there a further scope for improvement or it can worsen? What are your — what is your call on the working capital side?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [34]

——————————————————————————–

So the inventory days — the target for the inventory days for us is 90 days. And the credit — average credit days should be maintained at 45.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [35]

——————————————————————————–

Currently, I think it is very less, the creditor days.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [36]

——————————————————————————–

Because we had extra cash on the books, so we had our vendors do some bill discounting so that we could instead of getting the fixed deposit rates of the bank, we took better discounts on the vendors and we did prior payment to our vendors, that’s why the creditor number is less.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [37]

——————————————————————————–

So once the creditor days goes up, do you feel any risk to your gross margins because…

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [38]

——————————————————————————–

No, the pricing is the same. The pricing remains the same.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [39]

——————————————————————————–

The pricing — no, but the cash discount which you were getting now, you won’t get it if you take a credit of 45 to 50 days.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [40]

——————————————————————————–

But the bill discounting that we’ve done is a very small proportion of the total actual creditors. So it doesn’t have a very big impact because we only did it in November and December.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [41]

——————————————————————————–

Okay. And any winter inventory you’re left over with, previous year or this year, any major inventory?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [42]

——————————————————————————–

So last year, we were left with quite a sizable amount of inventory for winter, which is why this year we had a little margin impact because we had to sell all the old year’s inventory at a discount. But this year, it’s at a very respectable level. So we have got it down by almost 70%, 80%.

——————————————————————————–

Operator [43]

——————————————————————————–

The next question is from the line of Chintan Desai from Param Capital Research Private Limited.

——————————————————————————–

Chintan Desai;Param Capital Research Private Limited;Analyst, [44]

——————————————————————————–

Sir, a couple of questions. One is on, what are the initiatives that you have taken, say, for example, in terms of store rationalization, in terms of store size? Can you elaborate more on this? And what would have been the industry growth for the last, say, 6 months?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [45]

——————————————————————————–

So we have identified around 14 stores, and those 14 stores, we are resizing the stores. So suppose the store was 16,000 square feet with 3 floors, we have planned to — we’ve renegotiated with our landlord and we’re planning to reduce 1 floor and operate only 2 floors. And what happens in that case is the EBITDA margin for that store goes up because the sales level do not go down with the — as the same percentage as the area. So we are rationalizing the cost as well as the area of all our big stores which were not performing well. So that is one strategy that we have taken to turn around those stores. And talking about the growth for the last 6 months, our SSG is minus 6% for the last 6 months. But we are very positive — we have a very positive outlook on the coming year because of — also the initiatives taken by the government as well as a good harvest season in December and January. So we are very positive and I think we should see a positive SSG in FY ’21.

——————————————————————————–

Operator [46]

——————————————————————————–

(Operator Instructions) The next question is from the line of Jaspreet Arora from Equentis.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [47]

——————————————————————————–

Just a couple of questions. First, on this extraordinary exceptional item that’s there, I think, about 6 — INR 12-odd crores income. It’s mentioned that there is — it includes about INR 50 lakhs, which is forfeited.

So there — these are 2 different transactions, I mean, through party A, the transaction didn’t happen, therefore you forfeited and then you did the transaction with party B. Is that how we should look at it?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [48]

——————————————————————————–

Yes, yes. These are 2 different parties. So party A’s advance was forfeited and the actual sale happened to party B.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [49]

——————————————————————————–

Okay. And this has been consummated and you’ve got the entire money, that’s why it’s been booked. Is that correct?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [50]

——————————————————————————–

Yes, yes.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [51]

——————————————————————————–

Okay. Any more such noncore assets that you would have — I mean, the company would have that could help us strengthen the balance sheet that you would monetize?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [52]

——————————————————————————–

No. No, we have already disposed of all our noncore assets.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [53]

——————————————————————————–

Okay. Okay. Second is, Akash, in terms of the inventory loss, you mentioned INR 6.9 crores for the quarter. What would be the figure for 9 months. And — sorry, I don’t have it, I mean, if you could also help for the last financial year. I’m just trying to understand what is the typical run rate for inventory loss?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [54]

——————————————————————————–

So historically, what we’ve done is we’ve already taken — always taken a 1% provision for the pilferage of inventory. And this INR 6.9 crores is on top of that. So historically, whenever we had to stock take and we calculated the pilferage, it used to come out to 0.8% to 0.9%. But this additional provision is basically taken for old aging inventories because we feel that we won’t be able to sell that inventory at full price, that’s why this is the — we’re taking a value — net realizable value loss on that particular inventory because we will be selling that inventory at discounts.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [55]

——————————————————————————–

But I remember there was something similar in one of the previous quarters as well. I don’t remember exactly when, was it — if it was Q4 or Q1. So that’s why I’m asking, what’s the…

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [56]

——————————————————————————–

No, we haven’t taken an inventory hit more than our provision ever because we did write off our inventory, but that was way below the provision that we already account for in our results.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [57]

——————————————————————————–

Okay. So it’s always been — till now it’s always been up to 1%. It’s only now that you have taken beyond 1% for the first time?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [58]

——————————————————————————–

Yes.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [59]

——————————————————————————–

Okay. Okay. And this — the next one is related to the — I mean, these are kind of correlated, I don’t know — so we are at about 76 stores, and we were at 77 at the end of last financial year. And I am — I have not been really following the last 2 con calls, but I thought we were targeting to add about 10 to 15 stores. This is obviously the end of last financial year, but we are just about almost the same. So if you could just help understand that. And how we are confident that this time around, I think, now you’re saying 10 to 15 stores addition. So if you could just elaborate little more on this, and then I’ll come to SSG.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [60]

——————————————————————————–

Yes. So we have opened 5 stores this year, but we have also shut…

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [61]

——————————————————————————–

I’m talking about net — sorry to interrupt, I’m talking about net additions. We’ve always been talking of net additions. So that…

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [62]

——————————————————————————–

Yes. As I said in the call, we wanted this year as a year of consolidation, and we wanted to build a strong model and a base to actually grow on. And the good thing that we’ve been able to do is we’ve got down the costs of the company a lot. So now we’re going to push for expansion because we only want to do profitable growth. We don’t want to chase numbers. So every new store that we want to — we will open, we want it to meet our revenue target, EBITDA target, and that’s how we want to expand in the future. And once we feel that the new stores that we’ve opened, they’re doing considerably better than what we expected and we have been able to create a competitive market, we will accelerate the rate of growth. But for now, in the next 12 months, we are looking to open 10 to 12 new stores. And now out of which we have already finalized 4 and 5 stores, so I think we’ll be able to open this 12 store target in the next year.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [63]

——————————————————————————–

Okay. And how many have we closed down in the last 9 months, because here it says 4, but I think that was for the quarter?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [64]

——————————————————————————–

Yes. So we’ve shut down 5 stores and opened 4 stores.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [65]

——————————————————————————–

Okay. Okay. And this 10 to 12 additions, I suppose it’s — it would be net and it would be, let’s say, you would be planning to shut down maybe 2, 3 more, which is net of that?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [66]

——————————————————————————–

Yes, this 10 stores would be net of any store closures.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [67]

——————————————————————————–

Okay. And just lastly on the SSG, you mentioned it was about minus 7% third quarter and minus 6%. So if we look at the industry, I mean, you would know better, but just when we look at the competition, they seem to be growing at, obviously, they’re not at high double digits, but definitely, they are not negative at the same time. So what’s really impacted us more than the industry, which has led to this minus single-digit percentage in third quarter as well as in the 9 months? And how do you plan to bring it back to positive if the conditions on the ground continue to remain the same?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [68]

——————————————————————————–

So there are a number of initiatives that we’re taking and we’re spending more on marketing and improving our customer experience and also we spoke about product development. So we are investing a lot of time and effort on improving our product.

So ultimately, I think the product carries the most weightage to actually get repeat customers in our — in your store and differentiate yourself to the others because right now what has happened is in a small city, earlier, there were about like 1 or 2 players operating in a small market. But now there are 5 or 6 similar kind of players operating.

So we want to create that differentiation and advantage. So I think, this year, we have a positive outlook, so we should see an uptake in the SSG, and it should be at least 5% positive.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [69]

——————————————————————————–

5% plus you’re targeting for or?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [70]

——————————————————————————–

FY ’21.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [71]

——————————————————————————–

And do you think fourth quarter could be anything closer to that?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [72]

——————————————————————————–

Fourth quarter, no, we are targeting after March because the initiatives that I’m talking to you about, it’s still in the execution phase and it will take some time to actually yield results.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [73]

——————————————————————————–

And the earlier part of my question was that, why did we do worse than the industry? If you just help elaborate on that.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [74]

——————————————————————————–

So one of the reasons was we were left with — because we couldn’t meet our expansion target, so we were left with a lot of old winter and pre-winter inventory from last year, which actually had a negative impact on sales in Q3. So we saw a lot of degrowth in our winter wear sales because we had to liquidate our old inventory first because we didn’t want another pileup of inventory this year. So I think that had the biggest impact on our sales. And if you talk about the 9-month period, it’s a mix of a lot of factors as well as competition and the product development not being to the level that we expected it to be. So the kind of products we expected were not up to the mark.

So it’s a mix of a lot of different factors that we were not able to achieve the target, but going forward, I think we are correcting all these things and we should see a turnaround.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [75]

——————————————————————————–

So this winter being good for this kind of products, with the winter wear, would it reflect more in 4Q for us or it’s already there in the third quarter?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [76]

——————————————————————————–

No, you will see the positive impact of this next year because in FY ’19, we were lot of — left with a lot of winter wear goods that we had to liquidate this year.

——————————————————————————–

Jaspreet Singh Arora;Equentis;Analyst, [77]

——————————————————————————–

No, I’m talking about the current quarter, the — I mean, the last quarter, which just went by, because that is what had a very harsh winter, one of the harshest that India has ever seen, I’m talking about that. So is the benefit of that as it’s being seen by some of the inner wear companies when they sold much of their thermal wears, additional thermal wears, way higher than what was last year.

So in our case, would it — would we get the benefit in terms of our apparels? Is it already there in 3Q or would some of it be seen in 4Q as well is what I’m trying to understand, not FY ’19.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [78]

——————————————————————————–

So we couldn’t take the benefit of the extreme winter this year because almost 40% of our inventory was old inventory because of the stock pileup that happened in winter wear last year. So we couldn’t take the benefit of winter being very good this year in India. So I think we should be — now we are left with very less inventory and we’ve been able to clear out most of our stock, so I think next year, you — we will be able to see a positive impact of this.

——————————————————————————–

Operator [79]

——————————————————————————–

The next question is from the line of [Priyanka Trivedi] from Antique Stockbroking.

——————————————————————————–

Unidentified Analyst, [80]

——————————————————————————–

Are we witnessing any consolidation in the industry, basically in your segment, in the value fashion segment?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [81]

——————————————————————————–

I wouldn’t want to comment on others, but yes, we have seen a lot of stores being shut down by our competitors, and what I hear from my vendors is the payments have been — also been delayed. So I definitely think the industry right now is in the consolidation phase, but it’s all about who’s able to execute their plans better and who’s able to create a model that creates a competitive edge over the others.

——————————————————————————–

Unidentified Analyst, [82]

——————————————————————————–

Okay. And what is our investment CapEx in the new manufacturing plant?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [83]

——————————————————————————–

So the initial paid up capital is, I think, INR 15 crores, but we’ve only utilized about INR 3 crores out of that.

——————————————————————————–

Unidentified Analyst, [84]

——————————————————————————–

Okay, fine. And any competitive scenario in your markets, the markets that you are operating in, like how is that panning out?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [85]

——————————————————————————–

So we are seeing competition from other national level players also like Max, Reliance Trends, FBB as well as online competition from online players. But if you talk about new store openings, I think if you compare it from last year, the rate of new store opening has slowed down a lot so — which is a positive for us.

——————————————————————————–

Unidentified Analyst, [86]

——————————————————————————–

Okay. And in which markets are we planning to expand, like these 10 stores that we are planning in FY ’21, like which markets, which geographies are we planning to expand them?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [87]

——————————————————————————–

So we are planning to expand in geographies that yield the best EBITDA for us. So we are only targeting to expand in the existing clusters where we have already established our brand and already doing good numbers.

——————————————————————————–

Operator [88]

——————————————————————————–

The next question is from the line of [Hiten Barucha] from Sequent Investment.

——————————————————————————–

Unidentified Analyst, [89]

——————————————————————————–

Sir, you mentioned that we are looking to open 10 to 12 new stores in FY ’21, right?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [90]

——————————————————————————–

Yes.

——————————————————————————–

Unidentified Analyst, [91]

——————————————————————————–

So what is the CapEx we can assume for FY ’21?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [92]

——————————————————————————–

So for each store, the CapEx required is about INR 1.5 crores, so for 10 stores it will be around INR 15 crores.

——————————————————————————–

Unidentified Analyst, [93]

——————————————————————————–

INR 15 crores for 10 stores?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [94]

——————————————————————————–

Yes.

——————————————————————————–

Unidentified Analyst, [95]

——————————————————————————–

And this will be open in which type of geography, like?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [96]

——————————————————————————–

So these will be geographies where we have already established our brands and we have existing stores in those clusters and we have already — we’re already doing good numbers. So we are trying to leverage our marketing as well as logistics. So we’re opening in the same clusters where we have already established our store and we have — those stores are doing good numbers.

——————————————————————————–

Unidentified Analyst, [97]

——————————————————————————–

Okay. Okay. So we are looking in the North, basically, right?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [98]

——————————————————————————–

Yes.

——————————————————————————–

Unidentified Analyst, [99]

——————————————————————————–

Okay. And sir, any revenue outlook for FY ’21?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [100]

——————————————————————————–

So like I said, the target for us as a company is to achieve per square feet sales of INR 800 per square feet.

——————————————————————————–

Unidentified Analyst, [101]

——————————————————————————–

So INR 800.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [102]

——————————————————————————–

That is the target, yes.

——————————————————————————–

Unidentified Analyst, [103]

——————————————————————————–

We spend 9% to 10% of EBITDA margins?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [104]

——————————————————————————–

Yes.

——————————————————————————–

Unidentified Analyst, [105]

——————————————————————————–

Okay. Okay. And 1 more follow-up question, sir. Like, you mentioned like we are looking to improve the marketing and product improvement expense, right, throughout? Did we have set any particular target on marketing as percentage of sales, anything like that?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [106]

——————————————————————————–

Yes. As for the marketing, budget for us is about 1% to 1.5% of sales. But what we are doing is we are doing more effective marketing. So we are just implementing our CRM. So I think the ROI from our marketing spend would be much higher now. So we would be doing more effective marketing rather than just increasing the marketing spends.

——————————————————————————–

Operator [107]

——————————————————————————–

(Operator Instructions) The next question is from the line of [Nimit Raimangia] from — he’s an individual investor.

——————————————————————————–

Unidentified Participant, [108]

——————————————————————————–

(inaudible) it was regarding the [region about] 10, 15 new stores we are opening. So I want to know the region where we are developing? And are you entering new region or any — entering into West or…

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [109]

——————————————————————————–

Your voice is not clear. Can you repeat your question?

——————————————————————————–

Unidentified Participant, [110]

——————————————————————————–

So my question was regarding the 10, 15 new stores we are opening this year in FY ’21. So where are we entering? Are we entering in new region or…

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [111]

——————————————————————————–

Those stores — these stores would be typically in Bihar, Odisha, Northeast, the same. So these are markets which have more historically been good for us, so we want to open stores in the existing markets we’re present in.

——————————————————————————–

Unidentified Participant, [112]

——————————————————————————–

Any plan in future to open in West, I mean, Gujarat, Ahmedabad, or something Rajkot because I heard last we have a store in Rajkot when (inaudible)…

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [113]

——————————————————————————–

No. So we have 1 store in Rajasthan, that is in Kota, but we are not looking to open more stores in the West. We would be expanding in the East.

——————————————————————————–

Operator [114]

——————————————————————————–

The next question is from the line of [Souvik Banerjee] he’s an individual investor.

——————————————————————————–

Unidentified Participant, [115]

——————————————————————————–

So I was wondering like you are planning to open like around 15 stores. And there’s like some negative divergence between your net profits and your OCF. So how do you plan to fund them? Like from debt or from your internal cash flows?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [116]

——————————————————————————–

So the net available cash available to us is almost INR 35 crores, and if you add the EBITDA that we’ll be earning next year, so we have ample cash to open, I think, as I said the CapEx for 10 stores is only INR 15 crores, so we’ll have ample cash available to us. So we won’t be looking for more debt.

——————————————————————————–

Unidentified Participant, [117]

——————————————————————————–

Okay. And could you — like, it will be much helpful if you, like, could share some strategy on how can you — how are you planning to close the gap between the net profit and the OCF?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [118]

——————————————————————————–

How am I going to close the gap between?

——————————————————————————–

Unidentified Participant, [119]

——————————————————————————–

Net profit and the operating cash flows, because although the operating cash flow loss has reduced in the September quarter, but it’s still negative, the operating cash flow.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [120]

——————————————————————————–

Operating cash flow has always been positive and I think the — for next year also it’s going to be positive.

——————————————————————————–

Unidentified Participant, [121]

——————————————————————————–

I think it’s somewhere around — no, it’s a negative thing in consolidated statement on your September 2019, I think, net cash flow from operating activities.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [122]

——————————————————————————–

I’m talking about quarter 3 with you and I’m talking about FY ’21. So if you look at the net cash flows for FY ’21, according to our budget it’s also positive.

——————————————————————————–

Operator [123]

——————————————————————————–

The next question is from the line of Mr. Varun Singh from IDBI Capital Markets and Service Limited.

——————————————————————————–

Varun Singh, IDBI Capital Markets & Securities Ltd., Research Division – Research Analyst [124]

——————————————————————————–

Yes. Akash, out of 76 stores, 14 stores, as you said that we have identified for restructuring or we are doing renegotiation and 5 stores we have already shut down. So which are the geographies wherein all these 14 stores that we’ve identified are — I mean, which geographies would they belong to?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [125]

——————————————————————————–

So it’s a mix. So there are some stores in the South, there are some stores in the East. So there is not 1 criteria that all of those stores fit. So the only criteria they all fit is the store profitability. So we’re trying to improve that. So we haven’t identified a particular region that we are targeting. It’s only the stores that we think could do better and we need to improve upon, and that’s the stores we are focusing on.

——————————————————————————–

Varun Singh, IDBI Capital Markets & Securities Ltd., Research Division – Research Analyst [126]

——————————————————————————–

Sure. So out of the 14 stores that you have identified, I mean, can we say that it would be largely South-based stores or you would not — you won’t like to comment on that?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [127]

——————————————————————————–

So as I said, they don’t — like, I haven’t seen the proportion, but they don’t all belong to a particular category. So it’s a mix all over India. But yes, we experimented opening in south and it wasn’t a great response, we didn’t get a great response, but all these 14 stores have been identified all over India. So it depends on the store size as well as the store profitability.

——————————————————————————–

Varun Singh, IDBI Capital Markets & Securities Ltd., Research Division – Research Analyst [128]

——————————————————————————–

Sure. And typically, what would be the size of the resized stores, as you said that you have cut down the size of the store, that will improve the profitability or margin?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [129]

——————————————————————————–

So that depends on the store size. So if a store is 17,000 square feet, it will come down to 12,000 square feet, and if a store is 12,000 square feet, it will come down to 9,000 square feet. So it’s not like a typical size that we are targeting, it’s just resizing the store to increase its profitability, but these stores would typically be above 10,000 square feet.

——————————————————————————–

Varun Singh, IDBI Capital Markets & Securities Ltd., Research Division – Research Analyst [130]

——————————————————————————–

All right. And the new stores that we are aiming to open would be roughly of what size? 11,000 to 12,000 or more than that?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [131]

——————————————————————————–

So the new stores that we are looking to open will be between 10,000 to 12,000 square feet average.

——————————————————————————–

Varun Singh, IDBI Capital Markets & Securities Ltd., Research Division – Research Analyst [132]

——————————————————————————–

All right. Sure. And secondly, Akash, like of all the categories, men, women, kids, which category you think is growing fast from [every year’s] level?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [133]

——————————————————————————–

Your voice is not clear, can you repeat your question?

——————————————————————————–

Varun Singh, IDBI Capital Markets & Securities Ltd., Research Division – Research Analyst [134]

——————————————————————————–

Yes. Akash, I’m saying of all the 3 category, men, women and kid, which category you think would be growing the fastest overall?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [135]

——————————————————————————–

So the projection that we have made, we have projected all of them growing at a similar rate of — similar growth rate. So we’re targeting to grow all 3 categories equally in terms of percentage.

——————————————————————————–

Operator [136]

——————————————————————————–

The next question is from the line of [Ranjana Chhabria from IDI Capital].

——————————————————————————–

Unidentified Analyst, [137]

——————————————————————————–

[Mayank] here. A couple of questions that I had. One was on the, can — what was the kind of promotions that we ran during the third quarter?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [138]

——————————————————————————–

So during the Durga Puja and Diwali season, we were running lucky draws for our customers, and during the winter wear, we didn’t run any kind of promotions.

——————————————————————————–

Unidentified Analyst, [139]

——————————————————————————–

So from what I realize that almost every value retailer on street had a 20% or a 30% discount running across November and December. Did we do some similar exercises during the same period?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [140]

——————————————————————————–

So with the kind of margins that we operate on, it’s very tough for us to give a discount during our peak season. So I think you’re talking about brands, which have a cost to MRP multiples of almost 3 or 4x that they’re able to give such discounts initially because I don’t think any value retailer gave 25% discount on winter throughout. Everyone started mid-December or end December.

——————————————————————————–

Unidentified Analyst, [141]

——————————————————————————–

Okay. Got it. Secondly, do we track footfalls and the conversion for the same? If you could just help us understand how the footfalls and the conversion has been vis-?-vis last year?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [142]

——————————————————————————–

So we have already tried 5 different types of technology to actually map our footfalls, but we are not happy with any of them right now. We are not happy with the accuracy that they are showing, so that’s why we don’t talk about footfall numbers. We only talk about average bill size, average bill value and basket size. So — because we don’t trust the footfall numbers.

——————————————————————————–

Operator [143]

——————————————————————————–

The next question is from the line of Ankit Babel from Subhkam Ventures.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [144]

——————————————————————————–

Akash, just one thing. So currently, you are — you have around 8.5 lakh square feet of retail area and you plan to add another 1.5 lakh in the next 1 year. So suppose, on an average, you do a 9 lakh square feet for the next year and on that, if you make INR 800 square feet of sales, the sales comes to around INR 850 crores for the full year and at 9% to 10% margins, the EBITDA should be around INR 75 crores to INR 80 crores. So just wanted to confirm, is — are all these calculations correct?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [145]

——————————————————————————–

So yes, like you said, it all depends on how many stores are we able to open, but yes, revenue target is also INR 800 per square feet and the EBITDA target is 9% to 10%. So if we are able to open all the stores that we are targeting and we reach 9 lakh square feet area, so we will be able to achieve the numbers.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [146]

——————————————————————————–

And other than this product development, are you doing any — I mean, are you people putting any other efforts to increase your sales per square feet to INR 800 because what we have felt and experienced that increasing sales per square feet is very tough in this environment. So — and your sales has also reduced from say, INR 1,000, INR 1,100, which used to be 2, 3 years back to around INR 700.

So what is first, giving you that confidence that you will increase it from here on? And what are the efforts — other than the product development, what are the other efforts which you are putting to take it to that level?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [147]

——————————————————————————–

So one recent effort, and I spoke about is, obviously, the CRM. So I think our marketing efforts would be much more targeted and focused and effective now. So that is one positive. Another positive is we are going live on SAP HANA in like 15 days. So that will give us better data visibility and faster decision-making time. And also the turnaround that we’re seeing in — already seeing in our loss-making stores or low-performing stores because of reducing costs there and resizing them. So that’s why we are very positive and we already — our first target was to reduce our inventory levels, which we were able to do and the percentage of old inventory has also reduced because we did a lot of liquidation this year that had a negative impact on our margins.

But I think all those factors now would — have given us a good base to grow on for FY ’21. So we’ll have more fresh inventory available for the customer.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [148]

——————————————————————————–

But don’t you think that the new stores again which you would be opening would be having a lower sales per square feet and that can put some dent on the overall sales per square feet calculation?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [149]

——————————————————————————–

Well, that’s why we have changed the new store opening strategy, and we are opening in the regions that we’re already established in. For example, we will open stores where already I have a store in the same city, which is doing very well as that city itself has the potential for 2 or 3 more stores. So we’re trying to expand in locations where we will be able to leverage our existing brand value, brand recall value, loyalty of the customer. So I think the risk factor in those cities comes down drastically, and the probability of the store doing well increases.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [150]

——————————————————————————–

And how you foresee the risk from competition, I mean, because everybody is still very aggressive in opening stores. And — so the same locality if — as you mentioned that there is scope for another couple of stores and if competition opens up 4, 5 stores, then how do you see that?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [151]

——————————————————————————–

So the risk of competition will always be there because the entry barriers to this business is low. That’s why as I said, we are trying to create differentiation which cannot be replicated. So I think that’s a long term process and we are not faced by any competition. So because we know that we have to make ourselves strong because any industry you work in, you have to deal with competition.

So we are focusing on ourselves and focusing on making ourselves stronger so that no matter who opens a stores next to us, we are not impacted by it.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [152]

——————————————————————————–

And lastly, how soon can we see a positive SSG? I mean, like Q4, Q1, Q2? It would be front-ended, back-ended, front loaded or how…

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [153]

——————————————————————————–

I think the first positive SSG target for us is also Q1 for FY ’21. So I think that we should see a positive SSG in Q1 FY ’21.

——————————————————————————–

Operator [154]

——————————————————————————–

(Operator Instructions) The next question is from the line of Rajiv Bharati from IndiaNivesh.

——————————————————————————–

Rajiv Bharati, IndiaNivesh Securities Limited, Research Division – Senior Research Analyst [155]

——————————————————————————–

Sir, just wanted to check the — this rationalization you are doing in 14 stores, that is to what quantum? You said 3 floors will be to 1 floor. So basically 5,000 square feet per store. Is that the number you’re looking for? So the 70,000 is what you’re going to reduce from the current base? Can you give clarification to this?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [156]

——————————————————————————–

It will vary according to the stores. So some stores have a floor plate of 3,000 square feet and it varies from 2,000 to 5,000 square feet. So I think the total area that we will be reducing would be around 50,000 square feet.

——————————————————————————–

Rajiv Bharati, IndiaNivesh Securities Limited, Research Division – Senior Research Analyst [157]

——————————————————————————–

Okay, 50,000. So let’s say — that means equivalent to 5 stores opening in the next year, so that will be incremental area. So only 5 stores opening we should add up to the new number and that will multiply with the INR 800 target you’re — per square feet target you are aiming for, for the next year.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [158]

——————————————————————————–

But we want to open 10 new stores. We didn’t talk about any area. So we want 10 new stores and…

——————————————————————————–

Rajiv Bharati, IndiaNivesh Securities Limited, Research Division – Senior Research Analyst [159]

——————————————————————————–

Yes, yes, 10 stores at 10,000 [rupees] square feet, so the increment will be 0.5 only

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [160]

——————————————————————————–

Yes, yes, yes.

——————————————————————————–

Rajiv Bharati, IndiaNivesh Securities Limited, Research Division – Senior Research Analyst [161]

——————————————————————————–

Sure. And the other thing is in terms of cost of retailing, the employee cost has gone up in Q3. So is this the new number we should look at, the INR 172 per square feet on the cost of retailing on a monthly basis? Because we had INR 156 in the first 2 quarters, and then that has shot up to — it was INR 160 something and then it has gone to INR 172. Is this the new normal now?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [162]

——————————————————————————–

Yes. So for the cost budget that we have made, budget is INR 170 per square feet going forward.

——————————————————————————–

Rajiv Bharati, IndiaNivesh Securities Limited, Research Division – Senior Research Analyst [163]

——————————————————————————–

Okay. And in terms of the — what is the tax rate we should assume because it’s a little here and there. So for the full year, what is the number we should be assuming for…

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [164]

——————————————————————————–

So next year, we’ll be in the tax rate of 25%.

——————————————————————————–

Rajiv Bharati, IndiaNivesh Securities Limited, Research Division – Senior Research Analyst [165]

——————————————————————————–

Okay. Lastly, in terms of this new facility or the manufacturing facility, so there has been little — I mean, there is a lot of managerial change in your organization. So in terms of bandwidth to run this unit while you are still trying to fix up your — the retailing piece, how are we stacked there?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [166]

——————————————————————————–

So we have got a senior management to run that. We do smart company also from the existing industry. So we have got experienced people, 15 years’ experience, 20 years’ experience, and they are handling that new business also. And for our existing business also, the bandwidth — we are investing on the bandwidth, so we have rehired our CEO, Mr. Manshu Tandon, so he has rejoined the organization, and we’re also hiring senior management people in all the gaps that we have currently because we are investing a lot of — lot on HR to actually build — to actually support the growth that we targeted.

——————————————————————————–

Rajiv Bharati, IndiaNivesh Securities Limited, Research Division – Senior Research Analyst [167]

——————————————————————————–

Sure. And in terms of what is the capital employed because you mentioned that is the — the mention was the shareholders’ equity. What is the total capital employed for this facility, in the sense, in the business? Is it plus 10?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [168]

——————————————————————————–

INR 15 crores.

——————————————————————————–

Rajiv Bharati, IndiaNivesh Securities Limited, Research Division – Senior Research Analyst [169]

——————————————————————————–

All INR 15 crores is really that one?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [170]

——————————————————————————–

Yes, yes.

——————————————————————————–

Rajiv Bharati, IndiaNivesh Securities Limited, Research Division – Senior Research Analyst [171]

——————————————————————————–

This is the paid-up? There’s no debt on the…

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [172]

——————————————————————————–

Yes, paid-up capital, yes, paid…

——————————————————————————–

Rajiv Bharati, IndiaNivesh Securities Limited, Research Division – Senior Research Analyst [173]

——————————————————————————–

Okay, but there’s no debt so far?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [174]

——————————————————————————–

No. no, debt.

——————————————————————————–

Operator [175]

——————————————————————————–

The next question is from the line of [Lokesh Patel]. He’s an individual investor.

——————————————————————————–

Unidentified Participant, [176]

——————————————————————————–

(foreign language)

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [177]

——————————————————————————–

Sorry?

——————————————————————————–

Unidentified Participant, [178]

——————————————————————————–

(foreign language)

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [179]

——————————————————————————–

(foreign language).

——————————————————————————–

Unidentified Participant, [180]

——————————————————————————–

(foreign language)

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [181]

——————————————————————————–

Pardon me?

——————————————————————————–

Unidentified Participant, [182]

——————————————————————————–

(foreign language)

——————————————————————————–

Unidentified Company Representative, [183]

——————————————————————————–

(foreign language)

——————————————————————————–

Unidentified Participant, [184]

——————————————————————————–

(foreign language)

——————————————————————————–

Unidentified Company Representative, [185]

——————————————————————————–

(foreign language)

——————————————————————————–

Operator [186]

——————————————————————————–

The next question is from the line of [Priyanka Trivedi] from Antique Stockbroking.

——————————————————————————–

Unidentified Analyst, [187]

——————————————————————————–

Yes, I just needed a clarity on, the winter inventory is completely sold off now, the old inventory?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [188]

——————————————————————————–

It’s not completely sold out, but we have sold a sizeable chuck of it.

——————————————————————————–

Unidentified Analyst, [189]

——————————————————————————–

So like how much percentage of the total inventory would be sold? So basically, the INR 6.9 crores of the provision that you’ve done is on the remaining inventory that’s left, right?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [190]

——————————————————————————–

So that INR 6.9 crores is against not just winter inventory, that is against any old aging inventory in our system that is above 1 year. So that doesn’t just have winter and has all the inventory that is above 1 year in our system.

——————————————————————————–

Unidentified Analyst, [191]

——————————————————————————–

Okay. And what would be the percentage of the winter inventory remaining in the system now?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [192]

——————————————————————————–

So I think it’s only 7% left.

——————————————————————————–

Unidentified Analyst, [193]

——————————————————————————–

7% is left?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [194]

——————————————————————————–

Yes.

——————————————————————————–

Unidentified Analyst, [195]

——————————————————————————–

Okay. And you just mentioned that there has been an increase in the staff cost of INR 170 per store, so — per square feet, sorry. So is — what is the reason behind that?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [196]

——————————————————————————–

So we have hired a few people in senior management position because we know we need good professionals if we want to grow in the future and to meet our future target. So — but we are looking to maintain it at INR 170, INR 165 to INR 170, the total cost for the company.

——————————————————————————–

Unidentified Analyst, [197]

——————————————————————————–

Okay. So it won’t increase further?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [198]

——————————————————————————–

No.

——————————————————————————–

Unidentified Analyst, [199]

——————————————————————————–

So it will like stay in this range?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [200]

——————————————————————————–

Yes.

——————————————————————————–

Operator [201]

——————————————————————————–

The next question is from the line of Ankit Babel from Subhkam Ventures.

——————————————————————————–

Ankit Babel;Subhkam Ventures;Analyst, [202]

——————————————————————————–

I have just one last thing. There has been a lot of resignations of independent directors and there has been lot of recruitment. Is there is a strategy like why so many resignations and recruitments happening?

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [203]

——————————————————————————–

So we wanted to improve the quality of our Board, so we have appointed 3 new independent directors. So one is Mr. Arun Kumar Roopanwala (sic) [Arun Kumar Roopanwal], who has over 3 decades of experience in the retail industry; one is Mr. Lalit Kumar, he also has experience in multiple sectors and extensive experience in the retail segment as well as Mrs. Archana Yadav who has 14 years of expertise in taxation and audit. So it was our target, internal target for the past 1 year to actually improve our Board, so that’s why you saw the resignation of old members and hiring of these new experienced members in our Board.

——————————————————————————–

Operator [204]

——————————————————————————–

Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.

——————————————————————————–

Akash Agarwal, V2 Retail Limited – Whole Time Director [205]

——————————————————————————–

So thank you, everyone, for joining the call. We hope we’ve been able to answer all you queries. Have a nice day. Thanks.

——————————————————————————–

Operator [206]

——————————————————————————–

Thank you. On behalf of IDBI Capital Markets & Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Video Transcript

Source Article