Q1 2027 Dollar Industries Ltd Earnings Call
Speaker #1: Hosted by Anand Rati Shares and Stock Brokers Ltd. As a reminder, all participant lines will be in the lesson-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing Start, then 0 on the touchstone phone. Please note that this conference is being recorded.
Speaker #1: I now hand the conference over to Ms. Anjali Ojha from Anand Rati Shares and Stock Brokers. Thank you, and over to you, ma'am.
Speaker #2: Thank you. Hi, good evening everyone. I would like to welcome the management, and thank them for this opportunity. We have with us today Mr. Ankit Gupta, President, Marketing, and Mr. Ajay Patodia, Chief Financial Officer.
Speaker #2: I will now hand over this call to the management for their opening remarks. Over to you, sir.
Speaker #3: Thank you, Anjali. Good evening, everyone, and welcome to our Q1, FY27 earnings call. Before we begin, I would like to extend my sincere gratitude to our shareholders, analysts, and partners.
Speaker #3: Your continued trust is what drives us to maintain execution, discipline, uphold the highest standards of governance, and remain focused on compounding long-term value. I would also request everyone to take note of the safe harbor statement in our presentation.
Speaker #3: We are pleased to report that operating income for the quarters toward $405 crore gross profit for the quarter grew 6.9% year-on-year to $1151 crore with a gross profit margin expanding 192 basis.
Speaker #3: This improvement was supported by the calibrated price increase implemented during the quarter, which we had flagged in our previous call. And it is encouraging to see it translate into healthier realizations and stronger margins.
Speaker #3: Operating EBITDA rose 11.4% year-on-year to $48 crore with the operating EBITDA margin improving 106 basis points year-on-year to 11.8%. Reflecting the benefit of better gross margins alongside our continued focus on operational efficiency.
Speaker #3: Profit after tax grew 22.1% year-on-year to $26 crore with the PAC margin expanding 108 basis points year-on-year to 6.4%. Moving on to project Lakshya, as indicated previously, we have now commenced phase two of project Lakshya, we have begun building the team for this phase and have started mapping the retailers we aim to activate across our target markets.
Speaker #3: Our initial focus is on strengthening our presence in the stronghold states by increasing the number of active retailers thereby deepening our market share in these regions.
Speaker #3: In parallel, in markets where our presence is currently limited, we are analyzing local competitive dynamics and retailer potential to develop tailored market entry strategies.
Speaker #3: As on June 2026, we have 327 Lakshya distributors across 14 states, and Lakshya distributors contributed 31% of our business Q1, FY27. As the program scales, we expect this to continue driving increased market penetration stronger secondary sales and improved working capital efficiency at the distributor level.
Speaker #3: Let me now highlight some of the key business and operational trends during the quarter. Our continued investments in newer channels are yielding encouraging results, the quick commerce channel sustained its strong growth trajectory, recording 59.4% value growth and 15.1% volume growth year-on-year.
Speaker #3: With its contribution to revenue increasing to 5% in Q1, FY27 from 3.1% in Q1, FY26. This underscores the growing relevance of these channels and the evolving buying behavior of consumers.
Speaker #3: Moving to our brand portfolio, Dollar Protect, our rain guard segment continued to grow, perform well, recording 49% value growth and 68% volume growth in Q1, FY27, and contributing 5.6% to our total revenue.
Speaker #3: Our regional performance also remained encouraging. The southern region delivered 22.9% value growth and 7.3% volume growth on a year-on-year basis, taking its contribution to our overall business to 8.9% in Q1, FY27 from 7.2% in Q1, FY26.
Speaker #3: We remained focused on strengthening our presence and capturing the opportunities available in this region. Our export business also continued to perform well, recording 16.2% value growth and 15.5% volume growth year-on-year, with its contribution increasing to 4.9% in Q1, FY27 from 4.2%.
Speaker #3: In Q1, FY26, during the quarter we generated export revenue of 19 crore across 15 countries, and will continue to focus on expanding our international footprint.
Speaker #3: Our strategic alliance with GOAT continues to progress well, amplified by our deepening footprint in modern retail and quick commerce in Q1, FY27. This partnership generated a revenue of 16.44 crore or 21% year-on-year increase with a Q1 PAC of 2.27 crores and a PAC margin of 13.8%.
Speaker #3: As we progress through the fiscal year, we remained focused on enhancing operational efficiencies while deepening our presence across our core products, core markets, newer channels, and export geographies.
Speaker #3: We are confident that this disciplined execution-driven approach will continue to create sustainable long-term value for our consumers partners and shareholders. I will now hand the call over to our CFO, Mr. Ajay Patodia, to walk you through the details of our financial performance over to you, Ajay.
Speaker #2: Thank you, Ankit ji. Good evening, everyone, and thank you for joining us today. Let me take you through our financial performance for the quarter ended.
Speaker #2: June 30, 2026, for the quarter, operating income grew by 1.4% year-on-year to $405 crore. Gross profit rose by 6.9% year-on-year to $151 crore. With a margin of 37.37.4% and expansion of 192 basis points year-on-year, operating EBITDA stood at 48 crore, up by 11.4% year-on-year, yielding an operating EBITDA margin of 11.8%.
Speaker #2: Profit after tax for the quarter increased 22.1% year-on-year to $26 crore, with a PAC margin of 6.4% and diluted EPS for the quarter stood at $4.59, as against $3.76 in Q1, FY26.
Speaker #2: Our advertisement spend stood at $7.7% of revenue in Q1, FY27, in line with the seasonal front loading of brand investment early in the year, with our annual advertisement expense capped at 100 crores.
Speaker #2: We expect ad spend as a percentage of revenue to moderate over the coming quarter. It adding profitability. Our balance sheet strength meaningfully during the quarter, net debt reduced to 192 crore, as on June 30, 2006, from 277 crore from March 26.
Speaker #2: Taking our net debt to equity 2.2 and net debt to operating EBITDA to 1.01. On an annualized basis, ROE stood at 10.8% and ROCE at 12.9%.
Speaker #2: Even that, we have no major capital expenditure commitment in the near term. Our capital allocation strategy remained clear. We stay focused on improving cash flow, generation, and reducing debt.
Speaker #2: Our cash conversion cycle stood at 160 days for the quarter, and we will continue to work toward improving to it going forward. Moving to our brand-wise revenue contribution for the quarter, Dollar always our economic segment, and Dollar may continue to anchor the portfolio.
Speaker #2: Contributing 44% from Dollar always and 38% from Dollar may. Respectively, Dollar woman missy segment contributed around 8%, followed by Dollar Protect, our reinverse segment at 6%, and Force NST, our premium segment at 4%.
Speaker #2: With Dollar Junior and Dollar Thurmer making up the balance. With that, we conclude our opening remarks and open the floor for question and answer session.
Speaker #2: 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 the touchstone telephone.
Speaker #1: If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question.
Speaker #1: Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Arnav Sakhuja, from Ambit Capital.
Speaker #1: Please go ahead.
Speaker #3: Hi. Thank you for taking my questions. So my first question is that, you know, we're seeing strong growth in the quick commerce segment. So which are our the strong growth is the growth across products.
Speaker #3: Sorry, your voice was breaking. What did you ask? About the quick commerce? Yeah. Hello?
Speaker #1: Arnav, your voice is breaking. It is not clear. It is breaking in between.
Speaker #3: Hello? Arnav?
Speaker #2: Yeah.
Speaker #1: It is not audible. It is
Speaker #3: Is it audible now?
Speaker #1: No, it is still breaking.
Speaker #3: Okay. So I can rejoin the queue.
Speaker #1: Sure. Thank you. Next question is from the line of Bhargav Buddha, from Ambit Asset Management. Please go ahead.
Speaker #3: Yeah. Good afternoon, team. And that's on a good performance. So after almost two years, we've seen the industry taking prize hikes. Do you think that this is sustainable now, given that some of our peers have seen significant deterioration in margins?
Speaker #3: So this time around, there would be some price discipline, and the price hikes which have been announced will be maintained.
Speaker #2: Hi, Bhargav ji. The thing is, we are very hopeful about the fact that things will get stabilized. With respect to the pricing and the overall deep discounting which was going on in the market, the effect it will take some time.
Speaker #2: Like, quarter or two, like we discussed last time also, it won't happen overnight. But yeah, the process has started, and things have started improving in the market as well.
Speaker #2: And that is the reason we were able to garner 11.8% kind of an operating EBITDA percentage.
Speaker #3: Secondly, sir, we've seen a volume decline in the first quarter. Generally, with Dollar, we haven't seen volume declines on a regular regular basis. Do you think that in the next three quarters, we'll catch up and for the full year, we may end up double-digit volume growth?
Speaker #2: Yeah. So that's our internal target as well. So we are very hopeful and aggressive towards the fact that in the next three quarters, coming ahead, we'll be overall at a company level, we'll close this particular fiscal with a double-digit growth, which will be a combination of volume plus value growth.
Speaker #2: And so this year, we are targeting to grow at around 11 to 12%.
Speaker #3: Within something we also in very strong kind of growth portrait. So what have suddenly led to is it the new brand ambassador which we have signed up which is helping us, or anything else?
Speaker #2: Sorry?
Speaker #3: We have seen very good growth.
Speaker #2: Mr. Bhargav, your
Speaker #1: voice is breaking.
Speaker #3: Can you hear me? Hello?
Speaker #1: Yes, this is better.
Speaker #3: No, I'm saying in South India, in a very long revenue growth, what has led to that growth?
Speaker #2: So it's because of Mahesh Babu, the brand ambassador, that we have taken plus the three now we have started getting traction in the market also in terms of demand from retailers and the consumers as well.
Speaker #2: So our placement has been better than before. And the acceptance is increasing day by day. So like two years back, when we took Mahesh Babu as our brand ambassador also, I said that time also, it's a gradual process which will take some time.
Speaker #2: And now we are seeing the results coming in after two years.
Speaker #3: And lastly, any guidance you would want to give for the full year in terms of revenue growth and EBITDA margin?
Speaker #2: So for the revenue growth, it would be somewhere between 11 to 13%. That is the kind of growth we are looking forward to during this fiscal.
Speaker #2: And at a EBITDA level, it would be somewhere between 11 and a half to 12 and a half percent.
Speaker #3: Okay. Thank you very much and all the very best.
Speaker #2: Thank you.
Speaker #1: Thank you. Thank you. Next question is from the line of Prerna Jhunjhunwala, from Elara Securities. Please go ahead.
Speaker #4: Thank you for the opportunity, and congratulations on the margin performance. After a long time, we've seen the, you know, improvement in margins to double-digit to in the first quarter.
Speaker #4: So congratulations on that. Just wanted to understand, sir, what led to this improvement in margins? Whether it is the price hike or share increment in share of premium products, and or is it something else that is working out for us?
Speaker #2: So I would this margin expansion which has happened in Q1, there are two contributions. The one is the price hike that we have taken.
Speaker #2: So low-cost inventory was there in the system. And because of that, we could see higher EBITDA. And the second thing is we still didn't give in to the market in terms of extra discounting and the schemes that are going on.
Speaker #2: And try to protect our margin and operating cash flow as well. So because of which, yeah, we were unable to garner 9% or 10% kind of revenue growth.
Speaker #2: Instead, we settled with 1.5% kind of overall growth. But at the same time, we try to increase our margin.
Speaker #4: Oh, this is fantastic that you were able to protect your profit and rather than giving in more competition. But how long will you be in a position to sustain this kind of competition?
Speaker #4: Because this will also mean volume-based market share loss, or how should we read it?
Speaker #2: See, the things are settling now. Like, e, yeah, we know that another couple of quarters to go by. But we think that we'll be able to manage with that.
Speaker #2: But like last year, we survived with a good volume growth as well and keeping our margins intact. So this year also, it's too early to comment on that since just one quarter has gone by.
Speaker #2: And three more to come. So we don't think that will be much of a problem for us.
Speaker #4: Okay. And so given cost inflation, would you need any further price hikes or you're good with current price hike that you've taken? And how much would be the price hike that you've taken in till date?
Speaker #2: So till date, we have taken this four to five percent of a price hike. And no other price hike is in picture right now.
Speaker #2: And the yarn prices and the cotton market is also stagnant. And they have stabilized right now. So we don't see any reason why we should need to have a price hike again.
Speaker #4: Understood. And how should we see the competitive intensity in terms of mass market brands versus premium brands? What would be your take on that?
Speaker #4: Whether Post Next and other premium brands that you have are doing much better than mass market, which is your dollar always, and dollar man.
Speaker #4: So how would you see this competition panning out?
Speaker #2: So yeah, from if you see last three years data, Post NXT has been doing really good. Its Kager growth has been above 20%. So it has been growing by 20, 25 percent year on year basis for last three years.
Speaker #2: And the base has now reached around 85 to 90 crores last fiscal, like FY26 we closed this brand at 85 to 90 crore revenue.
Speaker #2: Which is like 4.5 percent to our total sales. So Post NXT is doing really well. Then our dollar protect reinvest segment, which is a seasonal product, that is also growing at a good rate.
Speaker #2: And we are seeing good traction in the market. So high ASP products are getting good traction in the company. Plus, like the upcoming season, which is the thermal season, which is coming in, we are getting good traction over there as well.
Speaker #2: The conferences that we do in the month of July, Pan-India basis. And the booking that we got for thermals is really it shows trajectory for this year as well.
Speaker #4: Okay. And the last question on cash conversion cycle that you mentioned in your commentary, that you are working towards reducing the cash conversion cycle.
Speaker #4: What are the efforts that you're taking there? And how should we see it by the end of this year or at the end of two, three years that you have any targets in mind?
Speaker #2: So for this particular fiscal, we have targeted that around six to seven days improvement will see. As compared to March 26. And over three years time period, it would be a total of somewhere between 15 to 18 days reduction in the overall working capital cycle.
Speaker #4: Understood. And how is the working capital cycle in Luxure Network?
Speaker #2: So in Luxure, receivable days are still better than our non-Luxure distributors. And overall, we are able to control the inventory at a distributor level also.
Speaker #2: So that way, the distributor's ROI is also very much protected. And on an increasing trend. So like their ROI ranges from 17 percent to 24 percent.
Speaker #4: Understood, sir. Thank you. And I'll come back to the question queue if for any further questions.
Speaker #2: Thank you so much.
Speaker #1: Thank you. Before we move to the next question, a reminder to the participants to ask a question. You may press star and one. Next question is from the line of Guneet Singh from Countercyclical PMS.
Speaker #1: Please go ahead.
Speaker #3: Hi sir. Thank you for this opportunity. So in Q1, did we have some low-cost inventory due to which we were able to maintain margins?
Speaker #3: And given that we have taken a four to five percent price hike in Q1, so currently, I mean, with the lower-cost inventory behind us and cotton prices increasing every day and yarn pricing also being I mean, peaking reaching a peak over the, say, last two, three-year period, the current yarn prices are higher as compared to those periods.
Speaker #3: So if we don't take any further price hikes, won't our margins shrink? I mean, going forward in Q2, Q3?
Speaker #2: So the yarn prices and the cotton prices are stabilized now. And we don't think that there's a there'll be a need to increase the price further.
Speaker #2: And it was a very small contribution of low-cost inventory in the system because the prices started increasing from the month of February end. And we took a price hike in the month of April.
Speaker #2: So it's been taken care of. We don't see any reason we'll take a hit on margin or anything.
Speaker #3: Got it. So with the current yarn and cotton prices, we can still be able to maintain 11, 12 percent margins as we are seeing today.
Speaker #2: Yes.
Speaker #3: Got it. Sir, for project Luxure, what percentage of our distributors are enrolled in that? And in the investor presentation, it's mentioned that I think 30, 31 percent of the value and volume is operated through project Luxure.
Speaker #2: So around 20 so around 20 percent of our distributors are enrolled in this particular project, 20, 22 percent contributing 31 percent of our total sales.
Speaker #3: Got it. And what's the target for FY27 in terms of Luxure enrollments? And what kind of a benefit I mean, do you firstly, how many more distributors are you looking to add?
Speaker #3: And what incremental benefits do you see from this?
Speaker #2: So given the competition intensity in the market and everything that is going around, so we are not enrolling any new states as of now.
Speaker #2: And working on a strategy how we can we can enter that the new states with a different strategy. But on the for the states which are already enrolled in this particular project, we have started this phase two wherein we are trying to activate more and more retailers under this particular project.
Speaker #2: And we have just started with the phase two. So it will take some time to show some progress on that.
Speaker #3: Got it. So do we have some targets like currently 21 percent are enrolled? So do we have any targets target some number?
Speaker #2: So currently, no. We don't have for the Luxure project like how many distributors would get enrolled. But yeah, we are trying that since last year, we had active retailers to the tune of 74 to 75 thousand retailers who were active in Luxure project.
Speaker #2: And this quarter, our active retailers went up to 80,000. So for this particular fiscal, we are trying that we have around 90,000 retailers activated or being in the active stage.
Speaker #2: In this particular fiscal.
Speaker #3: Got it. And in terms of sales growth and EBITDA margins, can you help us I mean, understand those numbers for Luxure enrolled retail stores?
Speaker #3: Are there any different from non-Luxure?
Speaker #2: So at a margin level, it's almost similar. Not much of a difference is there. And for the Q1 part, the growth trajectory was almost similar to what we saw at a company level.
Speaker #3: Got it. Sir, my final comment would be regarding so our share has been trading at around 350 currently, which was the same price that was around 10 years ago.
Speaker #3: Whereas over the last 10 years, our revenues are more than doubled. And we have developed dollar as a strong name, which is known in every household and every corner of the country.
Speaker #3: So sir, I would just request you to consider a share buyback instead of paying dividends because not only will it be EPS equitative, and beneficial for the long-term shareholders as it will be a step up in terms of I mean, the earnings pool that will be divided between lower number of shareholders, number one.
Speaker #3: And number two, it will also be a signal to the market towards our own confidence in our company and the fact that our share is undervalued even though we have developed such a renowned and household brand over the last 10 years.
Speaker #3: So I would just ask you to consider a share buyback and in case you have any in case you already have had such a considerations.
Speaker #3: Please let us know.
Speaker #2: Sure. Thank you for the feedback. We'll take that under advisement. And we'll see what can be done on that.
Speaker #3: Thank you very much.
Speaker #2: Thank you.
Speaker #1: Thank you.
Speaker #2: Thank you.
Speaker #1: Participants, if you wish to join the question queue, you may press star and one. Next question is from the line of Anjali Ojha from Anandarati.
Speaker #1: Please go ahead.
Speaker #4: Hi, sir. I wanted to understand what impacted the overall revenue growth and volume growth this quarter.
Speaker #2: Since there was a price hike that was taken in this particular quarter, so what happens is people become skeptical that it might go down in future and since there's deep discounting also, that is going on in the market intense competition that is happening in the market.
Speaker #2: Due to which there was a impact on the overall volume growth.
Speaker #4: Okay, sir. So my second question is so which segment saw the most volume decline?
Speaker #2: So overall, dollar man we saw volume decline of around 3, 3 and a half percent. That was one segment. The other was the stocks category that we saw a volume decline.
Speaker #2: Which was to the which was to the tune of around 7 percent.
Speaker #4: Okay.
Speaker #2: I think price contribution is around 2 percent to our total sales. So 7 percent is minuscule as compared to the overall volume degrowth that we have seen.
Speaker #2: But majorly, the amongst the top contributors, it was dollar man where we saw certain volume degrowth because of which our overall volume degrowth turned to 1.6 percent.
Speaker #2: Negative.
Speaker #4: Got it. Sir, my another question is that you mentioned that you are tapping your advertisements spending at rupees 100 crores annually. So how much margin improvement are you expecting in FY27 or going forward?
Speaker #4: So just from this benefit.
Speaker #2: So if you are able to achieve our target of 12 to 13 percent growth for this particular fiscal, then this it would be like the advertisement cost would be 5 percent to our total sales, which was 5.5 percent last year.
Speaker #2: So around 0.5 percent benefit will be can be seen through the optimization of advertisement cost.
Speaker #4: Okay. And sir, I had one more question. Sir, could you please tell me what is the quick commerce channels contribution margin compared to general trade modern trade and e-commerce?
Speaker #4: Also, can we scale the channel without it putting any pressure on working capital or margins?
Speaker #2: So at a margin level, they are at a similar level because our domestic and we keep a pricing parity when we talk about domestic or the online channels.
Speaker #2: And in quick commerce, it's doing really good because all their big players like Myntra, Flipkart, everyone has entered into quick commerce now. So then we have Zepto, which is doing really good.
Speaker #2: Swiggy, we have started Blinkit. We have just started. So overall, quick commerce is contributing around 5 percent to our total sales. 5 percent yeah, 5 percent of our total sales.
Speaker #2: So it's growing at a pretty fast pace. And in Q1, we saw 59 percent kind of a growth overall in quick commerce. So when compared to the other platforms also, the quick commerce part is growing at a faster rate.
Speaker #4: Okay. Okay, sir. Thank you. That's all from me.
Speaker #2: Thank you.
Speaker #1: Thank you. Participants, if you want to join the question queue, you may press star and one. Next follow-up question is from the line of Prerna Jhunjhunwala from Elara Securities.
Speaker #1: Please go ahead.
Speaker #4: Hi. Thank you for the follow-up opportunity. I just wanted to know what is the volume growth or degrowth in dollar woman and dollar always?
Speaker #2: So dollar woman, we saw a volume growth of 1 and a half, 2 percent. And dollar always was at a similar level as last year first quarter.
Speaker #4: Okay. And any price hikes in dollar always and dollar woman?
Speaker #2: So yeah, across all brands, we have taken this price hike.
Speaker #4: Okay.
Speaker #2: So overall, at a company level, it came down to 4 to 5 percent. But our ASP has increased like for if you talk about dollar man, big boss, our ASP has grown from 82 to 85.
Speaker #2: For our dollar always, our ASP has increased from 4 point 47 to 49. For dollar woman, our ASP has increased from 100 to 104.
Speaker #4: Okay. Understood, sir. Thank you so much, sir, for this follow-up.
Speaker #2: Thank you.
Speaker #1: Thank you. Ladies and gentlemen, to ask a question, you may press star and one. Next question is from the line of Shubhankar Gupta from Equitree Capital.
Speaker #1: Please go ahead.
Speaker #5: Hi. Thanks for sharing the details. Just want to kind of understand a bit more on the brand development on the you mentioned, Manj Babu was taken up two years back and now that's leading to goodness in the south sales, right?
Speaker #5: Just want to understand, like, what does it take to have somebody like Manj Babu in terms of cost?
Speaker #6: Actually, the main cost is not a celebrity cost, but to the main cost on advertisement is the advertisement on media basis. Because the celebrity cost is the ones very minimum in-house in terms of our total advertisement cost.
Speaker #6: So we renew our agreement. We already hire Mahesh Babu two years before, and we already renew our agreement. And that is in similar cost only.
Speaker #6: That is very one to two percent of our total cost for two year period. But actual cost is to how to place the advertisement on electronic media so we have to control the electronic media and more allocation given to the digital media and social platform as well.
Speaker #6: And in also in for hoarding and.
Speaker #5: Got it. Got it. Am I audible? Hello? Yeah. So just so actually, just want to understand, sir, one more thing on this one. So given that dollar has done very proper I'll say celebrity positioning in terms of all the brands which we have.
Speaker #5: So you are saying that there are around five, six celebrities, right?
Speaker #6: Well, four celebrity. Akshay Kumar.
Speaker #5: Four celebrities.
Speaker #6: For our big boss, Saif Ali Khan for our economic segment. Yami Gautam for women's segment, Missy, dollar woman. And Mahesh Babu for our main segment for southern region.
Speaker #6: Only four.
Speaker #5: So just want to understand, like, what like the total cost for the celebrity bit to renew their agreement would be around 8 to 12 like 8 to 10 percent?
Speaker #6: No, no, no. Actually, total cost if we calculate yearly wise, there actually the celebrity agreement is for two to three years. So their cost is appropriate appropriate proportionate to two to three years only.
Speaker #6: And if calculate for one year, it is around two to three percent only of total cost, total advertisement allocation.
Speaker #5: Oh, sir, of the overall, like for all four celebrities you're saying?
Speaker #6: For all, all celebrity.
Speaker #5: Got it. So just like so in that case, like I would just like to understand, like, what exactly is the like the breakup of the brand and development or the advertisement cost?
Speaker #5: Like if you can probably take FY26 and explain it to me so that we can understand it better. Like how to understand, like, the expenses made in advertisement and branding.
Speaker #2: So what happens is in advertisement, a portion goes to the digital marketing. Then there's one big chunk which goes for the TV media buying, which is the new showing your advertisement in different news channel or TV channels taking the prime time then there's one chunk that goes into IPL.
Speaker #2: Apart from that, we have outdoor hoardings also. Newspaper advertisement, retail branding, point of sales, branding, so all those things taken together then there's wall painting, wall wrapping, which happens in tier two, tier three cities or in the semi-urban cities.
Speaker #2: So all these things taken together constitutes this 100, 102 gross spend.
Speaker #6: Advertisement cash is spent on the e-commerce also.
Speaker #5: Got it. Got it. And obviously, this will be including the, you know, the advertisements in the halls, et cetera as well. Got it. Got it.
Speaker #5: That's very helpful. Thank you. Sorry, just one more question. So Ankit, I think you mentioned that like quick commerce is now 5 percent, right?
Speaker #5: Are you also including e-com in this or e-com is separate and you are taking quick commerce to be different, like lights of blanket, Zepto, et cetera?
Speaker #2: No, so e-commerce is another like 4, 4 and a half percent of our sales. So around 10 percent comes from the entire e-commerce ecosystem.
Speaker #2: Yeah.
Speaker #5: Got it. Got it. No, that's very helpful. Thank you.
Speaker #2: Thank you.
Speaker #1: Thank you. Ladies and gentlemen, if you wish to join the question queue, you may press star and one. Next question is from the line of Ashwin Reddy from Samatwa Investments.
Speaker #1: Please go ahead.
Speaker #7: Yeah. Hi. Good evening. Can you explain to us the difference between the phase one and phase two of production implementation? I mean, what are the changes that we should expect now?
Speaker #7: Because I assume that the state which you would start now would probably be the bigger states in your overall revenue. So is there any risk of disruption or what is it that you plan to do differently or some kind of would be helpful to us?
Speaker #2: So what happens is in phase one, what happened was we mapped whenever we used to start a particular state. So we mapped that particular state with the help of our sales team.
Speaker #2: We used to hire sales team. They used to go to the market, map each and every retail outlet. After that, we appoint 700 retailers to a particular distributor, 500 to 700 retailers to a particular distributor.
Speaker #2: And the market that distributor's area, right? So when that distributor gets rolled out, we then the sales team again go to the market, ask each and every retailer for explain them the program, Lakshya program, the royalty bonus royalty bonus points also retailer bonding program that we have.
Speaker #2: Why they should go ahead with by keeping a dollar product in their shop and what benefits they'll be getting. So all those things so when we talk about mapped versus enrolled, like when we try to enroll the retailers under that distributor, so out of that 500, 700 retailers, 250 to 300 retailers say yes that they are willing to buy dollar products.
Speaker #2: But over time, what happens is around 150 to 200 retailers are such who are active for that particular distributor. If the distributor is active in his market, so he it rationalizes to 150 to 200 retailers per distributor.
Speaker #2: So we are in phase two, what happens is we are focusing on the initially we'll focus on the 100, 150 retailers who showed their willingness.
Speaker #2: But over time, lost interest or did not purchase from the distributor. We'll try to activate them. And after that, they'll come a phase when we'll try to manage the gap between the mapped and the enrolled.
Speaker #2: So this is the phase two that we have started in the and it is going on in the states where we have already implemented Lakshya project as a whole.
Speaker #2: Like Gujarat, Haryana, Karnataka, Telangana, Rajasthan, these are these are some of the states where we have completed the project Lakshya phase one. And now we are going ahead with phase two increasing the number of active retailers.
Speaker #7: I also want to add one line, sir. Our enrolled retailers till date as on around 173,561. But the active retailer now is 80,000 only.
Speaker #7: So in phase two, phase two, the reactivate the 1 lakh retailer which are now not active. So our main target is to reactivate the existing retailers.
Speaker #7: So by this, we get increase our share in the market also. So in phase one, we increase the distributor. But in phase two, we increase the retailers.
Speaker #5: Got it. Got it. When do you plan to start the existing states which you didn't start? Like UP, for example, which are which are the large states.
Speaker #5: When do you plan to start those states or would they not be part of Lakshya in the future or what is the plan there?
Speaker #2: So see, given the overall intensity, that is going in the market and the external factors that is that is not letting us to enter new states basically.
Speaker #2: So actually, whenever you implement project Lakshya, that states or that areas get disturbed for around five to six months. And given the market situation, we don't really want to lose the market share.
Speaker #2: So that's why we are not entering new states now. But later, we will enter and we'll complete project Lakshya in all the remaining states as well.
Speaker #5: Got it. Got it. Got it. And then second question is regarding the post and next key brand. Is there anything different that you think you can do in terms of the in terms of growing the brand?
Speaker #5: Because we do see that some of your peers are also doing doing the premiumization and I believe the traction is and even technical traction as well.
Speaker #5: But I mean, anything different that you that you guys are now doing or that you plan to do in the post and next key brand in terms of positioning or marketing or anything which or it couldn't be some learnings that you've had on the post and next key brand which you want to change in the going ahead to be helpful to get your thoughts.
Speaker #2: I mean, post and next key, we are getting a very good traction in terms of the innerware that we are making with the help of man-made fibers, the bamboo fibers or modal fabric that we are using in that.
Speaker #2: So we are getting a very good result and good traction in the market as well. So earlier what used to happen was post and next key only a leisure range used to sell.
Speaker #2: But now the innerware has also started selling. Which will bring a volume into this particular brand although the ASV would be a bit lower.
Speaker #2: But overall volume will increase for post and next key. And at the same time, there's the active wear range that we have launched in post and next key which is doing good.
Speaker #2: And it has a huge scope in the market also. Thirdly, what we are trying to do is we are we are also building up post and next key D2C website as well.
Speaker #2: And we are start we'll start focusing on that as well which which we were not doing earlier. So we are in talks with a few of the agencies based out of Bombay and we'll try and implement that in near future.
Speaker #5: Got it. I mean, the next to say in the next two to three years, what is the what is a good good number that is expected in terms of the top line growth for the post and next key brand?
Speaker #2: So for last three years, we have been growing at around 25, 30 percent kind of a growth. And going ahead for next two to three years also, we see 20 to 25 percent kind of a growth year on year basis.
Speaker #5: Got it. Got it. Got it. Great. Thank you so much. Good luck.
Speaker #2: Thank you.
Speaker #1: Thank you. Next question is from the line of Shubhankar Gupta from Equatory Capital. Please go ahead.
Speaker #5: Yeah. Hi. Actually, just just I think I'll get confirming two more questions. So post and next key is the at leisure you know at leisure play brand for dollar.
Speaker #5: Is that correct?
Speaker #2: No, it's it has it has innerware at leisure and active wear. All three categories are there in post and next key.
Speaker #5: Okay. Got it. So just want to understand the numbers for this quarter. Like in terms of why why basis, like how did post and next key do this quarter?
Speaker #5: That was one. And second, wanted to understand like in terms of operating metrics for project Lakshya, right? Like we can all read the contribution it is making or the number of states it's available in or running active in, right?
Speaker #5: But in terms of like operating KPI metrics, are there any strong indicators which say that project Lakshya is getting good success or showing goodness?
Speaker #2: So see, first first question that post and next key is growth. In Q1, we did 7 percent kind of a volume growth. Although there has been a value degrowth because the innerware traction was more than the at leisure.
Speaker #2: So the overall ASV declined in post and next key. Because you can't compare the costing of the selling price of innerware with at leisure, right?
Speaker #2: So that's why the value degrowth. But overall volume growth was 7 percent in post and next key.
Speaker #5: What is the ASV for the three products? Like your active at leisure and innerware or.
Speaker #2: I don't have the breakup right now with me, but overall post and next key's ASV is around 220 rupees.
Speaker #5: 220. Got it. Got it. Fair.
Speaker #2: Yes. So all three categories taken together.
Speaker #5: Got it. And for the operating metrics on Lakshya versus non-Lakshya, like are there any strong operating indicators saying that it's doing well?
Speaker #2: So the so what we have seen in the past is in the Lakshya areas, growth trajectory was much higher than the non-Lakshya states. The working capital cycle in terms of the receivable days is much better in Lakshya states as compared to the non-Lakshya states.
Speaker #2: These are majorly two aspects that we have. The third is the retail reach that we are increasing day by day in Lakshya areas. Because in non-Lakshya areas, not much of a data is available.
Speaker #2: So that is that is also an issue. And with Lakshya project, we are able to take a lot more decision based on a certain state or a certain district or a certain pin code as well.
Speaker #2: So yeah, we are able to do that.
Speaker #5: And in terms of working capital days, like how much better is it? And like from where is it? Inventory? Is it you know it must be better days.
Speaker #5: Like where where where exactly are we seeing inflection for Lakshya versus non-Lakshya on working capital days?
Speaker #2: So seeing the seeing the Lakshya area, we were very hopeful that we can bring down our overall data days to to around 85 to 90 days in near future.
Speaker #2: And we have been working on that since last two years. And we have been able to reduce our data days a bit. But yeah, there's a lot of scope.
Speaker #2: And that's how we'll be able to bring down our overall working capital cycle also in next two to three years. So currently, we are standing at somewhere around 160 days.
Speaker #2: But in next three to four years, we are trying to bring it down to around 130, 135 days. And major major contribution will come in from the data days itself.
Speaker #5: Got it. Got it. And and sorry, I'm asking another question, but like are there any key initiatives or steps which we are taking to reduce this data days?
Speaker #2: So one is the dealer financing scheme that we are doing currently. The second is stricter monitoring and and we are just stopping the supply to the distributor if the payment cycle is not good.
Speaker #2: So that is also one of the reason why we were not able to do much of a volume growth this particular quarter because we were very stringent and and that's the reason why we were able to do a positive cash flow of around 96 crores this particular quarter.
Speaker #5: Got it. Okay. Okay. That's helpful. That's helpful. Thank you. Thanks a lot.
Speaker #2: Thank you.
Speaker #1: Thank you. Next follow-up question is from the line of Guneet Singh from Countercyclical PMS. Please go ahead.
Speaker #5: So in the last one call, we had shared an aspiration of the reaching zero debt by FY28. So I want to understand, are we on track for that?
Speaker #5: And how much of a debt payment are we expected to make in the current financial year?
Speaker #3: Yeah. Already we repaid around 86 crores in this quarter only. And we are on the target. That by FY28, we reduce our we come company into the net debt zero zero debt policy.
Speaker #3: And as we have no any capex commitment in the coming future. So we hope that we achieve this. Within that time.
Speaker #5: Got it. So are we targeting zero long-term debt or I mean zero total debt to be zero?
Speaker #3: Total debt to be zero.
Speaker #5: Okay. Working capital also to go down to zero.
Speaker #3: Actually, we have mainly our debt including 90 percent of our debt is working capital only.
Speaker #5: Right. Okay. Got it. And my second question is regarding our partnerships with Pepe and this GOAT. So how are they going about and what kind of growth or top line or bottom line can we expect from these in FY27?
Speaker #2: So the JV company is doing really good. And this quarter also we saw growth of around 20, 22 percent. And the PAT is at somewhere around 13 and a half percent PAT with a 13 and a half percent PAT.
Speaker #2: So the company is doing really good. And the and it's completely D2C. So it's completely online. And and the traction that we are seeing online and the growth trajectory that we are seeing, I think we'll be able to complete this particular fiscal with around 25 to 30 percent kind of a growth level.
Speaker #5: Got it. And what was the number for these two last year combined?
Speaker #2: So last year we closed this JV company at around 50 crores revenue. And this year we are in line that we'll be able to do 65.
Speaker #2: So our plan is 75 crores. And yeah, we are in track.
Speaker #5: Got it. That's great. That's also my side. Thank you very much. And I wish you all the best for this year.
Speaker #2: Thank you. Thank you so much.
Speaker #1: Thank you. Participants, if you wish to ask a question, you may press star and one. Ladies and gentlemen, to ask a question, you may press star and one on your touchstone telephone.
Speaker #1: As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.
Speaker #2: I would like to thank you all for taking the time out to join the earnings call. Have a nice day. Thank you so much.
Speaker #3: Thank you so much.
Speaker #1: Thank you, sir. On behalf of Anand Rati Shares and Stock Brokers Limited, that concludes this conference. Thank you all for joining us. And you may now disconnect your lines.
