Q1 2027 Bata India Ltd Earnings Call
Speaker #1: Ladies and gentlemen, good day and welcome to the BARDA India Limited Q1, FY27 earnings conference call. Hosted by Ambit Capital Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions at the end of today's presentation.
Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded.
Speaker #1: I would like to hand the conference over to Mr. Arin Garodia from Ambit Capital Private Limited. Thank you, and over to you, sir.
Speaker #2: Hi, good evening everyone. I'm on behalf of Ambit Capital. I thank the management of BARTA India for the opportunity to host their 1Q FY27 earnings conference call.
Speaker #2: Joining us from the management today, we have Mr. Kunjan Shah, MD and CEO; Mr. Amit Agarwal, CFO; and Mr. Nitin Bagaria, AVP and Company Secretary.
Speaker #2: I would like to hand over the call to Nitin for the opening remarks, post which the forum will be open for the question-and-answer session.
Speaker #2: Thank you, and over to you, Nitin.
Speaker #3: thank you and, good evening everyone. Welcome to the Q1, FY27 earnings conference call of BARTA India Limited. We have shared the presentation as a preread to the stock exchanges, I hope you had time to go through the same.
Speaker #3: We have also shared the disclaimer, which is part of the presentation. I now request Kunjan to, take you through the performance summary. Thanks a lot.
Speaker #2: Thank you, thank you, Nitin. Hi everyone. welcome to our Q1 conference call. we have already uploaded presentation, a while back, and therefore I hope you all have had a chance to glance through it.
Speaker #2: So I will limit my comments to, the first slide, which is, the key highlights. we recorded obviously 7, 979, crores, right, of turnover, which was about a 4% growth.
Speaker #2: and backed by volume growth, which was, also both volume and value equally split price growth. the underlying PBT growth, as we have mentioned the press release, watered about 22%, as well as substantiated by a table in the presentation.
Speaker #2: We also crossed the landmark of 2,000 EBO stores, the first obviously brand or a banner in the country. to cross 2,000, and, we now, obviously have desire to move towards 3,000 in the coming future.
Speaker #2: the ad spend was up by about 25%. we did see broad-based growth across channels, ZBM expanded to almost now 80% business contributing stores, close to 800.
Speaker #2: franchise expanded to 750. we saw healthy growth in all channels of e-commerce. as well as our multi-brand distribution outlets. inventory progress continued, year on year, now for 2 years running.
Speaker #2: Stock turns are at industry best at about 2.5 plus. In fact, now edging towards 2.7. And this was despite that our availability is at ever highest levels.
Speaker #2: Our full price, sales were at very close to 90%. And, continues uptick for the last almost 4 or 5 quarters. And we have also the entire product funnel reimagined and started now flowing into the stores.
Speaker #2: And, we should see more and more impact of it backed by marketing campaigns. We did invest behind a couple of key campaigns. this was also backed by, very strong upshift in the Google My Business scores of our stores, which is like an external, outside-in NPS, which is now standing at almost 4.9 for the quarter.
Speaker #2: with that, I'll end my comments and I'll, hand it back for open for questions. Thank you.
Speaker #1: Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone.
Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.
Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all the participants: if you wish to ask any questions, you may press star and one.
Speaker #1: We have a first question from the lineup. Reina Junjunwala from Elara Securities, please go ahead.
Speaker #4: Thank you for the opportunity. I just wanted to understand the cost inflation that you faced in this quarter and how are you mitigating the same.
Speaker #2: Okay. so we, we did mention that even last time, right, there is obviously elevated, raw material prices that we see largely for synthetics that are getting imported, which are crude oil derivatives.
Speaker #2: we have also taken commensurate price increases, to make sure that, that is, mitigated, both on new products as well as existing products. we, we are reasonably confident that we should be able to neutralize it, but I'll let Amit expand a little more on it.
Speaker #2: Yeah.
Speaker #4: Okay, hi. Good afternoon.
Speaker #2: The broadly the cost push what we have witnessed is in the range of about 5 to 6%, and as Kunjan mentioned, that we have taken a similar price increase to ensure our margins are protected.
Speaker #2: in the existing quarter, the cost push was not witnessed given that we pulled inventory greater than let's say about 140, 150 days. So that impact of cost push would be more visible from the current quarter, but as I said, that with the cost push, we have also corrected the pricing so largely we expect even in the quarter subsequent quarter, we should not have a match and dilution on account of cost push.
Speaker #4: I also wanted to understand the competitive intensity in the market. whether, unorganized players not, being able to handle this kind of cost push or labor unavailability, how have we benefited, if at all we have.
Speaker #4: from that phenomenon, especially in the lower price products, and, has there been any, major change in the contribution from, those price point products?
Speaker #2: Okay. So there's two different questions, Reina, that you have, right? one is that how are the price points behaving. The second one is on competitive intensity.
Speaker #2: the latter part, latter question is easier to answer, right? We, we did say even last quarter that there is some signs, and I think it was also an impact of one is some of the initiatives that the company has taken, but also I think, the GST, rationalization, etc., about three quarters back.
Speaker #2: Which has shown up in terms of the lower price points showing some resurgency. However, we still see higher growth on the premium side of our products, right?
Speaker #2: So ASB has gone up, right? So I think, while the trend has come down on the lower price points, premium and premiumization will continue as an agenda for, for us.
Speaker #2: The second piece on competitive intensity is the lower price points. I think it's too early to comment on it. As Amit mentioned, I think this whole piece, just like us, many others have still not got the full brunt of the, you know, raw material price increase.
Speaker #2: Therefore, you know, the, the pressure on basically, you know, realized price from consumers, etc., so I think we'll have to wait and watch. We are also watching it very critically.
Speaker #2: and we'll let you know maybe, down the line.
Speaker #4: Okay. The last question is on the brand-wise performance. Could you please highlight on how, Hush Puppies and, Power and other brands, how the growth has been, and any, change in sneakers contribution, that you would like to highlight?
Speaker #2: Okay. so Hush Puppies, obviously led the charge along with, Floats that continues to do extremely strong, sequential as well as year-on-year growth rates. surprisingly, even Bata grew well.
Speaker #2: Right? So, against the trends that were there, and that is led by basically the ladies' category that has done extremely well. Backed by the campaign that we ran with Tapsee Pannu as well as the whole, you know, everyday essential range that we launched.
Speaker #2: So I think these are the standout performers. sneakers, there is Power did well, but Nokstar was a drag. Some of it was also consciously so because we are rationalizing our current lines in Nokstar to, you know, come back with a much stronger collection that you will see coming through in the next couple of quarters.
Speaker #4: And how should we see the wall, revenue growth for the year, for, Bata as a company? Any guidance that you, would like to give to help us understand the, growth that can be, achieved with these, these many efforts that you've taken?
Speaker #4: whether it is brand ambassadors or, ZBM and others, so volume and.
Speaker #2: Okay. We don't get the okay. Yeah. So Reina, we don't get forward-looking guidance, right? So I'll not be able to, give what you're asking for.
Speaker #2: but we are reasonably optimistic. we, in the short term, we did see last quarter some deferment of revenues because of the delay monsoon. And that, we can obviously see coming through in the months of July, etc., and early August.
Speaker #2: but, we, I think the back of all these initiatives, etc., we do see we do remain reasonably optimistic going forward. We'll have to obviously wait and watch the inflation and the price increase.
Speaker #2: In fact, that I think the whole market will have to undergo. So we'll have to wait and watch on that.
Speaker #4: Understood. Thank you.
Speaker #2: Thank you. Thanks, Reina.
Speaker #1: Thank you. A reminder to all the participants, if you wish to ask any questions from the management, you may press star and one. Next question is from the line of.
Speaker #1: Avinash Kurumanchi, from Motilal Oswal Financial Services. Please go ahead.
Speaker #3: so I mean, I, I didn't not able to understand in between when you said like, because of the RM crisis, we haven't implemented the pricing strategy, right?
Speaker #3: Taken a price hike in the market. Is that understanding correct?
Speaker #2: Yes.
Speaker #3: So how was the response to that? okay. How was the response to that? I mean, it's been one or two months, right?
Speaker #2: So the stocks are yet to hit the markets. As I mentioned, no, see, we pulled anyways between 140 to 150 days of inventory. So by that time, stocks, the new price stock will start hitting the market at a large scale.
Speaker #2: That would be sometime towards, let's say, September. So it's still there is time.
Speaker #3: Okay. Okay. Understood. Got it, sir. And, second thing is that, I mean, I can see the company implementing a lot of changes even at a store level.
Speaker #3: I was able to notice those changes. Things are working out, in a right direction for us. So if you say, suppose, I'm not looking from the guidance perspective, if you want to target a 10% kind of revenue growth for Bata, what are the three things that would that you need to set in place?
Speaker #2: Okay. so I mean, Avinash, the, the answer to that would be the presentation itself, right? I mean, there are six things or five things that I have put out, really clearly, which are, which are one is consumer-facing as well as enablement for consumer-facing, right?
Speaker #2: So, how do we make sure that the retail experience goes up? And, combined with accessibility, that is expansion. Right? How do, this whole piece of online as well as offline multi-brand, you know, penetration which is e-commerce business as well as basically the entire multi-brand outlet business.
Speaker #2: the, the biggest piece in this is going to be the product funnel reimagined, which is where I s I have mentioned now for almost three quarters.
Speaker #2: That work is aggressively on. And I think that piece is now started showing into the stores. most probably some of you will notice that as you visit.
Speaker #2: But you will see a lot more of it coming in, in the next, let's say, in the, H2 of this year as well as basically the H1 of next year.
Speaker #2: So by March 27, you should see a significant change in terms of the portfolio product that we are offering to consumers. Right? with, as I mentioned, basically a significant amount of authority, from Bata on design as well as comfort, backed by technology.
Speaker #2: And last but not the least, we will want to make sure that basically this whole work that has happened on ZBM as well as inventory declutter, etc., comes across to consumers in a certain manifested form.
Speaker #2: So I think a combination of these levers is what we are hopeful is showing us early signs, and we are hopeful of, you know, impact going forward.
Speaker #3: Okay, sir. Understood. and coming to this ZBM question only, so if I look at it like the full price sales, I'm looking two years past data, they have gone up by 5 percentage points.
Speaker #3: But gross margin 7 included in a similar manner. Ideally, when your full price sales moves up beyond by 1, 2 percent, that should actually reflect it, better gross margins.
Speaker #3: And speaking like, one QF at 25 data versus one QF at 27.
Speaker #2: Okay. I don't know, the data that you are referring to, but at about 89, 90 percent at full price sales, we would be at significant high, and that is also showing up in terms of our markdowns or discounting coming down.
Speaker #2: what does that impacted, Avinash, on gross margins also, the mix, right? Because that I mentioned it, that if, let's say, a channel like franchise, etc., grows much faster, that does come at a lower gross margin.
Speaker #2: While at an EBITDA level, it is obviously neutralized, and it's much more accredited. But at a gross margin level, it is diluted. So it's not apple to apple, comparison that you might be looking at.
Speaker #3: Just to add on, no, Gunjan mentioned, for the current quarter, the channel mix solution is close to 100 basis. So if assuming the same channel mix would have been there, the gross margin purchase would have seen an improvement of 230 basis points versus 130, what you see.
Speaker #3: But ultimately, like Gunjan mentioned, EBIT per pair, what we look at as a benchmark, right, so that is where we are.
Speaker #2: Does that answer your question, Avinash?
Speaker #3: Yes. Yes. Yes. Then how should I see this gross margin going forward? Say, suppose, not for the quarter's perspective, but, like, say, suppose, for full year and, next year.
Speaker #3: Because of the improving inventory and inventory is actually getting decluttered, right?
Speaker #2: Yeah. No, absolutely.
Speaker #3: So how should so I think, see, rather than giving a forecast which we will not, but, what I can tell you is the kind of levers and the impact that they might have.
Speaker #3: Right? One is this whole piece that is there on, you know, product getting reimagined. Therefore, the ASP that it will drive. They will be one we want to basically push towards the premium side of the range.
Speaker #3: And that should have its own commensurate impact on gross margin. The second piece that is there is this whole piece of if full price sales contribution keeps going up, right, from 89 right now, it was 86, 87 last quarter.
Speaker #3: So if that keeps going up, that has its commensurate impact on gross margin. last but not the least is obviously, might get mitigated a little by the channel mix, which we are assuming that, you know, the franchise channel will keep growing faster.
Speaker #3: The e-commerce channel, which keeps growing faster, where the cost lines are very different from cost. Therefore, that might have some kind of an attention impact.
Speaker #3: But I think the first two factors will drive gross margins for us going forward. Okay. Got it, sir. And one last question, if I may squeeze in.
Speaker #3: So as noted by the comprehend this, you said that there are, 775 stores in which ZBM has included. And, these contribute 80% of the retail revenue.
Speaker #3: So I mean, are you trying to say, like, out of the 2,000 stores, this, 30% of the stores, they contribute 80% of the revenue?
Speaker #3: Should I read it in that way, or should I read it?
Speaker #2: No. So out of the 2,000 EPO stores, I mean, ballpark, we've got about 750, franchise stores. We've got about 1,250 which are cost stores, which are direct operating stores.
Speaker #2: Out of that 1,250, about 125 are hush puppies DOS stores, and about 1,025 or whatever the balance number, 1,100 is the Bata focus stores.
Speaker #2: In that Bata focus, 80% of the revenue is getting covered by these 775 stores. Does that answer, clearly the breakup?
Speaker #3: Yes. Yes. Yes. Understood. This is only for the cocoa stores that you are referring to. Does that be in the replicable?
Speaker #2: This is the Pareto that is there. And we, while I think we will make some more progress in the coming quarter, but I think we are very close to saturation on that front.
Speaker #2: Right? obviously, there's, there's a further project which is on project elevate, which is ZBM 2.0 that's being worked upon. Which I'll share, results in the next quarter.
Speaker #3: Thank you, sir. Thank you for answering all my questions. I'll join that.
Speaker #2: Thank you.
Speaker #3: Thank you, Avinash.
Speaker #1: A reminder to all the participants. If you wish to ask any questions, you may press star and one. We have our next question from the lineup.
Speaker #1: Sameer Gupta from IAFL Capital. Please go ahead.
Speaker #4: hi. Good evening, everyone, and thanks for taking my question. I joined a little late, so pardon me if, the question is repeated. And you can just point it out.
Speaker #4: I'll refer to the transcript. so firstly, our employee costs have been slack for over the past five quarters. I'm just looking at the absolute amount here.
Speaker #4: is this a just a function of store rationalization efforts? and, and we are as in factories, related question is, how much is the cocoa store network now?
Speaker #4: I believe, you have not given that number in the presentation, but you did mention 1,250 in, in as response to earlier question.
Speaker #2: sorry, can you just repeat the second question, Sameer?
Speaker #4: How much is the cocoa store network, the, the Bata the non-franchised, retail network? Because you used to give this number separately in presentation, but, now you haven't.
Speaker #4: but I believe you just said 1,250 to Avinash's question.
Speaker #2: Yeah. Yeah. Yeah. So, so second question, much easier to answer. 1,250 cocoa stores, I mean, ballpark, we can obviously share with you offline, the accurate trend line.
Speaker #2: And about 750 franchise stores, so the total is, at about 2,000 plus, right?
Speaker #4: 2,000.
Speaker #2: That's the second. Yeah. and, your first question on the employee costs, see, it's a combination of, I think, the comments that you made, not so much on stores, store manpower has actually not changed much.
Speaker #2: but the, the BRS did have an impact on employee costs, and that's one of the objectives and the business case for the BRS. The second piece that is also important and that I think the company has been going through that for the last almost 24 months, you can now see in the last three, four quarters, the trend lines on it.
Speaker #2: Which is on basically a significant organization restructuring that we did in terms of productivity driving agenda. So what was rationalization, backed by implementation of technology platform that we have implemented for the last three, four, five years.
Speaker #2: Right? So the merchandising platform, for example, right, the Blue Yonder package got implemented almost about two years back. Now that finally made us relook at where the manpower is allocated and where it can be reallocated.
Speaker #2: The second piece is, let's say, the franchise channel which has grown so fast, needed more manpower to keep fueling that engine much faster. So there we got invested in.
Speaker #2: But I think the net-net result of that, plus the BRS has been obviously what you are saying in terms of the employee cost.
Speaker #4: Got it, sir. That's very helpful. second, I'm just referring to one of your slides, which is reimagining the product creation funnel. So lesser number of kits, lesser number of styles and colorways.
Speaker #4: While it does reduce complexity, just trying to understand what is the end goal here. Is it just to reduce the time taken from conceptualization to the shelf?
Speaker #4: Because at the end of the day, lesser variety can also impact store conversions, right?
Speaker #2: Yeah. Yeah. No, absolutely. So that is the right balance. And I think we are not too far away. If you look at, you know, the chart which is, I think just preceding that, right, I will just want you no, sorry, not that.
Speaker #2: The lights yeah. Yeah. The chart which is on slide number nine, right, which is reduce clutter at store, which actually gives you index number of lines.
Speaker #2: So we are now at 68% of average lines per store compared to what we were two years back, right, as the as the graph shows.
Speaker #2: are you with me on that?
Speaker #4: Yeah. Yeah. I'm with you. 68% here.
Speaker #2: Yeah. So we are at 68% of that. Now the question is, how bad was X, right? And therefore, how good is 68? My sense is that this, this will settle somewhere around 60%.
Speaker #2: obviously for a larger store, it's more; for a smaller store, it's less, etc. But an average at about 60, 68X will come down to about 60X.
Speaker #2: And that, I think, would be the right balance. the other part of this is that what benefit that does is many things, right? One is that, reducing the kits as well as the uppers brings us significant economies of scale.
Speaker #2: One is in not only in terms of cost, but more importantly in terms of quality as well as experience delivery. Right? So if number of producing centers, the number of articles and molds that they have, as well as the number of materials that they use, if you are able to de-decomplexify that, right, you will be able to demand and therefore assure much better quality delivery to consumers.
Speaker #2: simultaneously, the other big benefit is that you are once you have lesser clutter in stores and we have seen that, you know, now over obviously the whole ZBM journey for almost six quarters, your stories and communications to consumers come out much better.
Speaker #2: So whether it be the easy slide campaign, now you are able to show the full collection at full splendor because the distraction from all the other lines has come down.
Speaker #2: Or, you know, a floats campaign or something that we ran on the ballerinas, etc. So I think it's both the backend as well as the consumer, frontend benefit.
Speaker #2: But there is a.
Speaker #4: Right, sir. Mm-hmm. Huh. So I was just, trying to understand how do you define clutter? So the other way to measure would be how our store conversions have dragged.
Speaker #4: And if there is no real impact on store conversion with this strategy, maybe then you are on the right track. But let's say there is because the other outcome is revenue growth, which clearly, you know, is telling us that, you know, there is some underperformance somewhere.
Speaker #2: Yeah. Yeah. So it's a delicate balance. And we keep measuring for it. But as I said, my cut feel lies somewhere around we are very close to, the right balance.
Speaker #4: Got it, sir. Last question, if I may squeeze in. ZBM, now 80% of the cocoa, retail revenue, would you say here that, you know, this initiative in terms of picking the low-hanging fruits, we are almost, at the at the end of the journey here?
Speaker #4: Or, you think that there are multiple layers or levers which, which can, you know, drive growth for future years as well?
Speaker #2: So there are. And I, I, while you did acknowledge that you joined late, but I just, listed upon it, broadly following the presentation that I have been talking about.
Speaker #2: So, and a couple of more which we are still in the works. So we'll be shared with you as we go along the journey.
Speaker #2: Right? But the fact is that, this entire piece on the product funnel is going to be a very large piece that you will see.
Speaker #2: We are now started seeing a lot of some of it come through. A large part of this is, I think, will be manifested over the next couple of quarters.
Speaker #2: And you will see in the quarter of, you know, let's say somewhere around March, Jan, March 27, a lot of that into the stores.
Speaker #2: Coming a packed by a certain authority from BATA, from a design perspective, as well as from a technology perspective. And coming on the premium end of the range.
Speaker #2: So we do see already some signs of it already coming through into the stores with some reasonably good success. So early signs of success on it.
Speaker #2: So that's going to be a very large lever which will pan out in many ways. as I said, I think this whole piece on digital as well as franchise expansion has got many, many more legs.
Speaker #2: We right now have potential trade areas just for franchise which are in excess of almost 600 right now. So there's a huge, you know, how do you say, penny to fill on that front also.
Speaker #4: And, when you say a large number of this premium products will hit 10, let's say, fourth quarter of FY27, would it also imply that our marketing spends would have to go up, you know, insane to, to leverage the, you know, whatever advantage we want to take out of these?
Speaker #2: Absolutely. And that's we have already started doing. as you can see over the last three quarters, our spends have been double digit, growth over last year.
Speaker #2: Last quarter was 25% more. And I don't see a reason why in the next coup, you know, period that is coming ahead, I wouldn't say only the quarters, but even the next couple of years, you will see elevated marketing spends.
Speaker #2: You back up this the product range that is coming.
Speaker #4: Okay. Got it, sir. thanks. And, I'll just take this opportunity to, wish you all the best, Gunjan, for the future endeavors.
Speaker #2: Thank you. Thank you, Sameer, all the best.
Speaker #4: Thank you. A reminder to all the participants, if you wish to ask any questions from the management, you may press star. One on your touchstone telephone.
Speaker #4: We have our next question from the lineup. Arin Garodia from Ambit Capital, please go ahead.
Speaker #5: Hi, sir. I hope I am audible.
Speaker #4: Yes, we can hear you.
Speaker #5: my first question is respect to the franchisee store now reaching 750 count. Could you share the comparative store economics specific, like the SSG and the revenue per square feet between the cocoa stores and the franchisee stores?
Speaker #2: Okay. I don't have answers immediately on the revenue per square foot, but I'm sure we can share that with you. but, the like-for-like growth rates have been good.
Speaker #2: So, the way we measure it actually is partner attractiveness on this, right? So, what we look at is basically if the partner sees growth, because the partner sees only like-for-like growth.
Speaker #2: We see both like-for-like as well as expansion growth. Right? he will not expand with us further. And now we are more and more partners who are expanding with multiple stores with us.
Speaker #2: Now, so it does come with like-for-like growth. we are, I would say, basically in the range of ballpark about close to high single digits like-for-like growth for an extended period of time for the last, let's say, four quarters.
Speaker #2: So I would say that's where that stands. That reflects in revenue per square foot, but I don't have a number handy right now. Does that answer your question?
Speaker #5: Yes, sir. And sir, any, like the store economics, what is the margin? Is the franchisee partner is making something some color on that?
Speaker #2: Yeah. broadly, a franchise partner gets in the range of about 18 to 24% ROI. Some are smarter and more efficient. They get a little better.
Speaker #2: If they get a good deal in terms of the real estate piece, but 18 to 24% is, is almost like an underlying floor for a successful partner.
Speaker #5: Understood, sir. Sir, my second question is respect to gross margin expansion of 130 based on 1QFY27. Could you break down how much was driven by your ongoing vendor consolidation program versus the product mix premiumization?
Speaker #5: Additionally, as, like, you approach your target of 15 core manufacturing partners, how much additional margin expan expansion do you expect from supply chain efficiencies going ahead?
Speaker #2: Okay. I will request Amit to respond to it. Actually, broadly, it will be very difficult to put a number given the sensitivity. But as you rightly said, for the current quarter, one of the largest re-lever of the margin expansion is the quality of inventory, what we are holding on.
Speaker #2: Like Gunjan mentioned, in the previous previously also, our share of fresh sales right, that has gone significantly up. So which has resulted in a significant lower markdown, which we are running in, running.
Speaker #2: Although gross margin got diluted because of the channel mix, otherwise we should have seen a uplift of about 230 to 40 bids versus a 130 what you see right now.
Speaker #2: In terms of efforts on consolidation, I think right now we are still away from the roadmap what we have. Right? And it will take some time.
Speaker #2: But yeah, typically, what we have witnessed over a longer period of time, we should have got a delta savings from consolidation at a overall level.
Speaker #2: Of about 0.2 to 0.3% at a year-on-year basis. Right? Last question in terms of premiumization and all, that is something which we keep doing.
Speaker #2: So again, intent is always to expand the margin. Right? Does it answer or anything specific further you want to give this?
Speaker #5: Sir, like, going ahead, as you said, so as of now, there are how many contract manufacturer associated? And.
Speaker #2: Okay. basically, yeah. So let me give you a little more, you know, slightly more longer-term, perspective. So let's say about, two and a half, three years back, we had almost, 100 plus, I think 120 partners.
Speaker #2: Right? Now we are down to below 70. I think close to 60 or so. we should foresee, as we had, we had shared, that we should have 15 core as well as a as a satellite set of another 15.
Speaker #2: So about 30 broadly in the next about five-year journey, three years to five-year journey. Now, ideally, over this period of time, this, this is not the only rationalization.
Speaker #2: As I have also talked, responded to another person earlier, right, we are also rationalizing the kits and the molds in the uppers and the materials getting used.
Speaker #2: That has its own economy of scale impact. So all this clubbed together, over this journey period, right, which is spanning across multiple years, should give us about 200 basis points thereabouts.
Speaker #5: Understood. Understood. Sir, last question is more like, bookkeeping question. Like earlier participants have also asked, like, well, the top line has grew by three, four odd percentage.
Speaker #5: Advertisements spend has increased by 25%. So given this pull-through investment to marketing campaign, what is the expected timeline for this expenditure to translate into you know, kind double-digit kind of a top line growth?
Speaker #5: And how should we model the advertisement and promotional expense as a percentage of sales going ahead?
Speaker #2: As early as possible is our expectation.
Speaker #5: Okay. like, how should we model the ANP expense as a percentage of sales?
Speaker #2: Right now, you can look at whatever is the current trend line, which would be about between three, three and a half percent versus about two and a half percent a year back.
Speaker #2: It's not that we want to immediately shift to seven, eight percent, but you can always look at from a, three and a three, three and a half percent kind of a model.
Speaker #5: Understood. Okay. That's all from my side. Thank you for taking my question.
Speaker #2: Thank you. Thank you, Ariel.
Speaker #5: Thank you. A reminder to all the participants, if you wish to ask any questions, you may press star and one now. Anyone who wishes to ask a question may press star and one on their touchstone telephone.
Speaker #5: A reminder to all the participants, if you wish to ask any questions, you may press star and one. As there are no further questions, from the participants, I now hand the conference over to the management for closing comments.
Speaker #2: thank you, everyone, for joining. Lovely interacting, with you all. Thanks. Thanks, Ambit, guys.
Speaker #5: Thank you. On behalf of Ambit Capital Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
