Ladies and gentlemen, good evening and welcome to the Q1 FY24 Earnings Conference Call of VIP Industries 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 after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Snighter Albuquerque from Adfactors PR Investor Relations team. Thank you, and over to you, sir.
Thank you. A very good evening to everyone, and welcome to the Q1 FY24 Earnings Call of VIP Industries Limited. From the senior management, we have with us Mr. Anindya Dutta, Managing Director, and Ms. Neetu Kashiramka, Executive Director and Chief Financial Officer. Before we begin the conference call, I would like to mention that some of the statements made during the course of today's call may be forward-looking in nature, including those related to the future financials and operating performances, benefits, and synergies of the company's strategy, future opportunities, and growth of the market of the company's services. Further, I would like to mention that some of the statements made in today's conference call may involve certain risks and uncertainties. Please take note of that. Thank you, and over to you, Mr. Dutta.
Thank you, Snighter. Good evening, everyone, and thank you for taking your time and joining this conference call. I hope you've all received a copy of the results published yesterday and the presentation uploaded today. As you would have seen, we had a very challenging quarter one. The revenue growth for the business overall was at 8% for the quarter. We experienced a significant slowdown of demand growth compared to the fast-paced growth that we experienced in the last financial year. While travel, especially air travel, continued its growth momentum from the data that we got, the differential demand growth in quarter one comes from the wedding season, and the wedding season apparently was significantly subdued both on account of the number of dates and possibly spends.
Also, the demand core could be muted because of the replacement cycle of the category, with significant upsurge in luggage buying in the previous year when travel opened up fully post-pandemic. In addition to the external environment, we had a very challenging situation at our Bangladesh facility post the loss of one of our large factories due to fire. Our alternate arrangements to rectify the supply chain could only partially fructify towards the end of the quarter, and unfortunately, we continue to have headwinds in streamlining our supply situation from Bangladesh. The disruption at Bangladesh not only resulted in short supply of some of our key ranges in soft luggage, which impacted the VIP and Skybags revenues for the quarter, but also the lower production has unfavorably impacted our gross margin, and this is due to the underabsorption of the manufacturing overhead at Bangladesh.
C oming back to the revenue growth, while it was at 8%, I would like you to note a point that the growth in our trade channels, what we call as trade channels, both in offline channels like retail, general trade, and modern trade, and online in the e-commerce portals together was at about 16%. These channels contribute to approximately 70% of the business. The balance 30% is CSD institution, and a small part has export business. I'd like to mention especially the institutional sale in the last year was exceptionally high, owing to a one-time order of Hajj that we bagged. If you were to net out this piece, like-to-like growth, it would be at 17%. Also, I'd like to mention about the business channels, which contribute to 15-odd% to the business in this quarter over the previous quarter, owing to significantly lower orders from CSD.
CSD has initiated a very large-scale refreshment exercise for the category, where we are now replacing 50% of all the approved ranges with new ranges from our existing portfolio. While this has impacted the business industry, I believe this will give a positive pull-up to the category in CSD and will be an advantage for us in the future. While there were headwinds in terms of overall demand slowdown and, as I mentioned, the unfavorable impact of CSD on the institutional channel, the underlying growth for us would have been better, given better supplies. Now, coming to the gross margin, the gross margin for the quarter is 49.5. This is 0.5% lower than last year, last year's same quarter.
It's actually lower by about 3%-4% from our targeted gross margin, and this is largely due to the lower production in Bangladesh and, therefore, the unfavorable impact of underabsorption of the overheads. The lower gross margin is also due to the unfavorable mix. When I talk about unfavorable mix, this is both in terms of brand and channels. Our value brand, Aristocrat, had a very good growth at 26% in this quarter over the same quarter last year. However, the growth in VIP and Skybags was muted, and this possibly is largely due to the short supply in some of the key ranges, as I mentioned, from Bangladesh. In terms of channel, I mentioned CSD, and CSD has a higher margin, has a higher margin impact, and with the lower salience of CSD, it also had an impact on the gross margin.
In terms of our fixed overheads, we continue to invest behind our brands and channel development. You would have possibly seen the high-decibel campaign on Skybags, the key trending campaign, which was across social media, across press and outdoor, and also our campaigns on VIP and Aristocrat. This significantly higher investment in our brands and strengthening our channel, when I say strengthening our channel, I especially mean e-commerce, both in the front end as well as in the supply side, there was significant investment in this quarter, and this led overall to a lower EBITDA compared to last year, and the EBITDA was at 13% and a resultant PBT of 12%. The PBT of 12%, which is INR 77 crore, includes an exceptional income received of the insurance claim of the company.
To sum it up, I think we had a very challenging quarter, and it seems the demand environment might continue to be muted in the immediate future. Also, we have continued challenge in our hands to streamline our supplies. Having said that, I'm quite hopeful about a good festive season coming ahead in Q3, and I feel confident that our focus on building strong fundamentals in our go-to-market, in our brands, and in our supply chain will deliver strong and sustained results. Thank you. With that, I would open the forum for questions, please.
Thank you very much. We will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Tejas Shah from Avendus Spark. Please go ahead.
Thanks for the opportunity. Three questions from my side. First, on growth challenges, you also said that the subdued performance had also an embedded reason of supply challenge also. So as per your assumption, how much incremental growth we would have lost because of Bangladesh fire disruption that we witnessed this quarter?
It's difficult to put a number to it, but a very rough estimate would be about 3%-4%.
And so, would you say that demand sentiment also disappointed you, or was it largely our internal challenges, supply side, which made us come out with underwhelming numbers?
Definitely, the demand environment, it gave us a surprise. We were expecting a better demand environment, and as I said, I think it is more the wedding demand cohort which significantly was muted compared to what it usually would be. I noticed that across other companies who are largely dependent on wedding-based revenues. I think that, and this also corroborates that we saw lower growth in the Hindi heartland where in the summer season, we usually get an upsurge of demand because of wedding. That part was a surprise where we thought the demand was significantly lower than what it could have been or should have been.
Sure. So my second question pertains to our gross margin. So if I see not only for this quarter, but if I compare our share of in-house manufacturing versus pre-COVID, which has improved from 40%-70%, but our gross margin continues to be lower than our pre-COVID period, so ideally, it should actually tend to trend higher than the pre-COVID number. So I just wanted to understand, why is it still low, and where do you see it settling down once we have full control on in-house manufacturing?
So while the full benefit of in-house manufacturing is yet to come onto the business, but the larger point here is that benefit that we have got because of in-house manufacturing is, in a way, ploughed back to make ourselves more competitive in the value end of the segment. And that's how you see our growth and possibly our ability to take share in that has increased. So if you see the Aristocrat share from pre-COVID, 25% now has gone to almost 42%, and the gross margin is at the same level as what it was before. So I think the part that we have got till now in terms of the benefit has been ploughed back to incompetitiveness.
Got it. And so, third and last one, was there any runoff in other expenditure this time? And after this quarter's performance, would you revisit your guidance on both growth and margins for FY24? That's all from me.
Sorry, what was the first question?
Runoff. There is no runoff, per se. However, we have spent more in advertising. That is what you see in the other expenses, and there is the legal and professional fees. There is some warehousing cost because of higher revenue projections. We have taken additional warehouses.
There are some runoffs, very minor ones, but because we, as part of strengthening our supply chain and fulfillment for e-commerce, we are reorganizing our warehouses to make it more in tune with what the channel or the business needs. And that could have been the slight runoff that has happened in this quarter, which will not be consistent in every quarter going ahead.
Sure. And would you revisit your guidance on margins and growth for the year?
It's very difficult right now to pinpoint this, and we will be on the lookout in the coming months to see how it pans out. But I think I am still hopeful that we should be able to get the 12%-15% revenue growth for the year. But while I say it, a lot depends on how the demand environment really unfolds going ahead, especially in the festive season.
Sure. And so, any range for margins, similarly?
O n margins, I think we stand committed to a 52%-53% gross margin, and I think that is something that we should be able to get it back. There were several things right now happening which was more a Q1 thing. As I said, the underabsorption of manufacturing overheads because of the Bangladesh thing, once it's streamlined and we are in the work in progress to make it happen, it should come back to that.
Sorry, EBITDA, if you can help. Hello?
Sorry, I didn't get your last question.
Sir, EBITDA margin, if you can help. You've spoken across.
So EBITDA margin, we should be looking at 16%-17%.
That's all from my side, sir, and all the best for coming quarters.
Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one or two per participant. Should you have a follow-up question, we would request you to rejoin the queue. Thank you. Our next question is from the line of Dinesh Joshi from Prabhudas Lilladher Private Limited. Please go ahead.
Thanks for the opportunity. If I look at this quarter, our volume growth is about 10.5%, whereas the value growth is about 8%. Does that mean we have taken any price cut in this quarter and also any specific reason as to why we were not able to get the institutional order this time around, which has suppressed the top-line growth a bit?
So let me ask you first question. There is a Mix deterioration, as I said, with the differential of Aristocrat versus VIP Skybags, and VIP Skybags had, I would believe, a temporary issue in quarter one because of supply. So that's one. Also, the market, with the demand slowdown, has become more competitive, and there is more pricing and discounts interventions that are happening, and we are matching it as and when it is coming up. So on that account, I think the volume and value difference is coming from there.
How's your order?
Oh, sorry. On the institutional order, as I said, the last year's base had an institutional order of a very one-time nature, which was for the Hajj pilgrimage that was happening. It was a very large order that was executed within quarter one of last year. So it was an exceptional order that came in last year.
Sure. And I mean, in response to the previous participant's question, we mentioned that this time around, we spent more on A&P. So can you share the number, what it was in this quarter versus the base quarter?
S ure.
51 crore versus INR 32 in last year.
So I was just trying to link the A&P growth and the top-line growth, which we have reported. So the A&P spends are quite high in nature, yet the revenue growth is in single digits. So any particular reason as to why the top-line growth has failed to catch up despite such sharp rise in the spends? And also, if I recollect properly, this time around, we launched quite a few offers to promote sales, and prima facie it appears that it has not paid out well. So your thoughts on this piece?
No. I think you're right. The investment on the brand was high as the numbers are showing, but that's coming from our decision that we'll continue to feed the brand, especially in the quarter where the demand environment is more contextual to travel. So that it's a more salient quarter for us to leverage any brand investment. As far as investment and promotion is concerned, this was completely competitive in nature. With the slowdown, as I said, the intensity is high in terms of what competition is doing, and therefore, it was important for us to also be there with the right amount of promotions and all that. The investment not resulting into the revenue, I think, is the crux of it, which is where the whole demand situation possibly is the unfavorable issue which has not resulted in the current revenue growth.
So, just one follow-up, I'll get out of you two. So if the growth fails to pick up, will the A&P spend come down? And secondly, with the slowdown which we have seen, does our A&P capex guidance for INR 200 crore remain intact?
So yes. Going forward, we are going to do a tightrope walk because now that we have to experience the right demand environment to come back with that level of advertising and brand investment. However, any channel investment will continue to be there because that's for the year and also for long term. So we will recalibrate our A&P spends looking at the demand that we are expecting, and it won't be similar to what we had in quarter one. As of right now, our CapEx spends are linked to what we are looking at demand for this year and next year. We are revisiting it. It may not be we may not cancel it, but we will reschedule or postpone the investment for some time and come back to it.
So I can't give you guidance on the CapEx that we will do for the year, but at overarching level, we are committed to the long term, so we'll make sure that our capacity is growing in line with our expected demand in the next two years.
Only get postponed by 1 or 2 quarters, so that's what we're using for the year.
Sure. Thank you and all the best.
Thank you.
Thank you. Our next question is from the line of Prathamesh Sawant from Axis Securities Limited. You can go ahead, sir.
Thank you. Good afternoon, sir. One quick question from mine. Can you give a timeline, as in how long will it take us to normalize our supply situation so that we can return back to the gross margin target that you have?
As of now, I think it's going to take about maybe 2-3 months to get the supplies right, but this has also resulted in an inventory situation which is slightly lopsided or high depending on what demand is there. That optimization on the inventory may take a longer time, but in terms of supplies to cater to the demand and revenues, we should be able to streamline it only by the end of this quarter.
For Q3 demand, we can see the better margins of 50% gross margin. Is that what you can interpret?
Yes.
Sir, secondly, any idea on any market share gains or idea on any market share update?
No, I don't have that right now.
Okay, sir. Thank you. That's it from mine.
Thank you. Our next question is from the line of Karan Khanna from Ambit Capital. Please go ahead, sir.
Hi. Thanks for the opportunity. So Anindya, my first question is on the multiple new launches that you've done over the last few quarters. So you've done significant brand extensions and also new launches, including VIP Skybags. Hello? Am I audible?
Yes, you are.
You've done multiple new launches in VIP Skybags, the Highlander collection, Marvel FIFA collection, etc. So could you elaborate more about the ROI from these investments? Because this is my limited understanding about the industry. So the premium segment and the mass premium segment, typically, it's a fast-fashion category. So if the products become obsolete, say, more than six months, they usually tend to become obsolete and hence, not a lot of demand for these products. So if you can elaborate more on the ROI from these investments, that's another one.
So I think there are two parts to your question, Karan. One is the fast-fashion part of it, and I think since we are manufacturing now most of it, or even if you were to procure it, we keep the lifecycle of the product in mind depending on what we think is going to be the depth of our product versus the consumer opportunity. And so therefore, obsolescence in terms of inventory is something that we, by design, try and track it and control it. It is a fast-fashion, so therefore, you'll have to continuously bring in new products to appease and delight the consumer, and I think we've done a good job in bringing out some of these products right.
So in terms of revenue contribution, if you could quantify what revenue are you typically seeing because of these new launches, say, over the last 1 or 1.5 years?
About 30%-35% of the revenue comes from typically new designs every year.
Sure. That is helpful. My second question is on market share. So we've seen that from Q1 FY19 to Q1 FY23, your revenue has grown at 3%-3.5% CAGR. So if you could elaborate more in terms of when you talk about the wedding demand being muted, is it safe to assume that the competition, the other listed players, and perhaps even Samsonite, is it safe to assume that for them, the revenue split or contribution from the wedding segment will be relatively lesser, or am I wrong in my understanding?
O verall, from the wedding season, the demand specifically to the wedding season, the demand was lower. That's quite evident in our industry and allied industries or categories to do with the wedding season. So I think it will be overall impact of the muted wedding season.
Sure. Talking about the institutional order that you mentioned in the base quarter, which is referred to as one-time, so if you could elaborate more in terms of am I correct in my understanding that this was a B2B order that you received in the Q1 of last year? And was that order taken up by competition this quarter, or is that order not rolled out? If you can elaborate more on that.
It's not rolled out.
It's not rolled out.
Not rolled out.
All right. That's it from my side. Thank you and all the best.
Thank you.
Thank you.
Thank you. Our next question is from the line of Bhargav Buddhadev from Kotak Mutual Funds. Please go ahead.
Good evening, team, and thank you for the opportunity. My first question is on your supply issues which you highlighted. So I was under an impression that you had fast-tracked your new facility at Bangladesh in order to meet the production loss from your factory, which got destroyed in the fire. So was it the case that the new factory did not come up with production as envisaged, or what happened?
So Bhargav, multiple things. The fast-tracking wasn't fast enough in terms of a lot of other, let's say, procedural things that was to be taken care of in Bangladesh. Also, it was not entirely dependent on that because it was a large factory. We had about 2, 3 different parts to the plan B that we created. One was Bangladesh fast-tracking the new facility. The other was even in Bangladesh to start a second shift, which is quite against the grain of how ready-made garment or sewing-based operations happen in Bangladesh and other parts of the world. Third, there were imports from China. And fourth, there were also some developments that we did in new vendors in India. I think we tried doing it all 4. A large part of it worked.
I mean, a part of it worked, and a large part of it did not work within the quarter, and that's something and there are many other factors that came in: the heat wave, the other disruptions in Bangladesh that we've had caused some of the delays in this whole thing.
So given that we were anticipating production issues, was it rational enough to spend a lot on advertising? Because essentially, if you advertise and orders get generated, but if you're not able to supply, then how does that advertisement help?
So it was not to the magnitude that it was completely out. I mean, we are talking about a slice of the brand of the portfolio which were to come, which did not come on time. And we did try to time it to the next extent possible, but advertising goes beyond, I think, having some ranges into the market at that point of time because we're not out of the market. Skybags and VIP brands are big, and it needs to be invested upon a continuous basis for the equity to continue to develop. So I think that was a call taken during the quarter.
Lastly, your e-commerce vertical seems to be doing very well, growth of almost 40%. You had hired a consultant as well for advising. If you can share some thoughts on how is the project with the consultant approaching? What is the expense you are paying, etc. ? That would be my last question.
I can tell you about how the project is progressing, but at a high level, I think it was absolutely the right thing to do, and it is starting to show green shoots in terms of results. But we are significantly focused on making the foundation and the fundamentals strong, whether it is in the product portfolio, whether it is how we show up on the portals in terms of our content, or whether it is supply chain, including from demand forecasting to really making sure how are we designed to fulfill the orders on time and have a very high fill rate. So it is across. It's a 360-degree, and the project is progressing well, and I'm quite confident about it being a game-changer for us in the long term.
Sir, any quantification on what's the fee structure like?
No, I don't think that is worthy to share on this forum.
Fair enough. Thank you very much and all the very best.
Thank you.
Thank you. Our next question is from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead.
Hello. Most of my questions have been answered, but I just wanted to understand your market share in the e-com channel. Your share of revenue is definitely increasing on that front. How do you see this progress in line with your expectations, and how is your market share shaping up on this channel?
We are progressing well, as I said, on our expectation on strengthening ourselves to have a much, much stronger play in overall e-commerce and in the future. Yes, it is aimed at the long term in long term to gain market share. I won't have a quantification on market share as we are just about started, but definitely, the objective of this whole thing is to really grow scale. The output of this project has to be about growing scale and market share within the channel. As I said that possibly as of right now, we can only say that we are definitely seeing early good signs of result also coming in, and we are feeling very good about the progress that we have made from within the organization.
And the second question is on penetration. One slide of your points out on the number of towns that you are penetrated. It's around 1,300 today. So could you just help us understand how this penetration helps in your volume growth and your revenue growth, and what is the possible number of towns that you can enter in the next five years as an opportunity?
So at an overarching level, the big purpose of this is to be where the future long-term growth will be, right? India is growing in smaller towns and downtowns, and it's very important to take our direct distribution to all these towns. We took aim of looking at every town which is above a 30,000 population, right? I can't tell you for 5 years, but by 2025, we wanted to reach to about 80% of this population of all these towns which is above 30K population. And that's the objective on which we are on. We have added about 70-odd towns in this quarter alone. The target is to reach up to about 250 additional towns, which should take us to about 1,500-plus or thereabouts for this year by the end of this year.
This will help on revenue growth? I mean, the presence will be EBO-driven, MBO-driven?
These are largely MBO-driven, right? This is increasing direct reach to outlets which are there, which are selling bags, and a large part of this is also backpack. So it will definitely help in revenue growth and capture the demand, but it will be a slightly longer-term investment that we are doing. As we see the next two to three years where in India, the growth at the bottom end will happen definitely in smaller towns. So that's where this is going to result into.
Thank you. I have one more question, but maybe I can join in the queue on this part only.
No, please go ahead.
I just wanted to understand because the number of cities are so large, do you see any concern on receivable days or inventory getting older in the towns because we are spread so large now? 1,300 cities is one of the best penetrations across many retails.
No, we are also changing our route-to-market model for this, and it is a distributor-led GTM that we have created. And therefore, we had distributors for very large geographies. So maybe a distributor for a whole state. Now, we are going into to get this extensiveness in our distribution, we are getting into slightly smaller geography for a distributor, and therefore, the deeper penetration. So our receivables and all that will be dependent on distributors, and therefore, the distributors we appoint will make sure that the money is safe. And they are the one who is going to go into the towns and create the distribution. So it's not; it won't have a receivables issue.
But there is no direct?
There is no direct distribution into outlets directly by us in the smaller towns.
That helps, sir. Thank you so much, sir. All the best. Thank you.
Thank you. Our next question is from the line of Nihal Mahesh Jham from Nuvama. Please go ahead.
Yes. Thank you so much, and good evening to the management. Sir, my first question was you did highlight about the wedding season being muted. Would it be possible just for our undersigned to get a ballpark sense of what would be the approximate revenue split between the normal and the wedding for this festive quarter?
No, I'm sorry. That's something very difficult to put a number to it and split it. I won't be able to give you that guidance. Maybe the only reason just coming to that is because we saw this similar wedding phenomenon happen even in Q3 of last quarter in October, November, where you had such an impact. But that time, we did end up reporting quite a strong growth. So hence, we're just trying to understand the aberration versus then and now, if there is anything you want to highlight to that.
There was no aberration in last year?
No. Last year, quarter three was very good.
B ut the wedding season was also fine. So in our.
This quarter, there were anyways 10 days less. Number of days were also less by 10, but we won't be able to put a number.
No, I think your question is more about the contrast between quarter three and quarter one. Quarter three was a good quarter, and the wedding season was also good in that quarter. I don't see a conflict in the correlation there. Maybe the data that I had, there was a low number of wedding dates then also, but I'll take this offline to discuss further. That is fine.
Fair enough. The second question was just to understand and clarify. Of the soft luggage that's produced in Bangladesh, do any of the brands have a much higher share, or it's equally spread across the three?
If your question is coming from the quarter one and the point that I made, the plant that we lost had a higher index on VIP and Skybags production. This is the plant which was our oldest plant in that, and this was the first one. Therefore, this is where we were making largely the premium ranges and high design-intense ranges were done in this particular plant. Therefore, the challenge that we are having to get it streamlined from alternate sources.
Got that. Last point was that on the gross margin side, you did mention about the value segment also in a way compensating for some of the benefits. Is, from a channel perspective, e-com also somewhere a drag on the GM, or that is not something that is overall relevant from a GM perspective?
No, it's not a drain on the gross margin, but it definitely, I mean, I'm trying to tell you something different from your question, but it is also an opportunity there to make more premium sale happen, and that's something that we are pursuing simultaneously.
Understood. Thank you so much. I wish you all the best.
Thank you.
Thank you. The next question is from the line of Akhil Parekh of Centrum Broking. Please go ahead, sir.
Hi. Thanks for the opportunity. My first question is on the premium range, specifically Skybags. If I look at it, the contribution of Skybags used to be 40% prior to pandemic, and it has now come down significantly from that percentage. So any specific challenges? Is it to do only with the demand situation where the demand for the mass range continues to be very strong, or is it to do with the higher competition from likes of American Tourister or Samsonite? That's my first question.
Combination of two or three factors. One, the demand at the bottom of the pyramid, the value range is actually higher, has been higher in the past, and that's how Aristocrat and the value range swelled up. Second factor which is more playing in this quarter is luggage part of Skybags and VIP, which was the supply issue that we spoke about. These are the two larger issues in what I see as the overall Skybags performance for this quarter alone. I don't think it is much of a competitive issue because I think the brand Skybags is quite strong and is doing very, very well. So it's the relative growth between mid-series and us that is higher in terms of GT, or the value band is higher at the GT. And our recent issue on supplies, which has caused Skybags on this quarter to be muted.
Sorry. The second number, the EBITDA margin guidance which you gave about 15%-17% is what we are targeting for this year. But if I look at it historically for many years, the Q1 has been the best quarter for us in terms of sales, margins. If I look at contribution of sales, there's also been a range of 30%-32%, and PBT contribution has been 35%-40% for the Q1. So if I just do a rough math, if we were to achieve 16% of our EBITDA margins on blended level for FY24, we will have to do almost around 17% of EBITDA margin for subsequent three quarters. Do you think this is feasible?
Yes, I think it is feasible because it's going to flow in from the margin. So the gross margin is important. If we were to get at about 50%-53% gross margin in the coming time, we should be able to, given our past on the fixed past and the things that we can do there differently from how it was in quarter one, I think it's quite feasible there.
Also, if you see from last year, this queue of quarter one only is also changing.
But I think FY23 was the only exceptional year. If I look at long-term history of 15, 16, 2, say FY23.
So I'm saying post-COVID, things have changed. So we foresee that may not be quarter two. Quarter three also are equally going to be reasonably bigger. And quarter three, especially, definitely will be bigger or at least equal to quarter one.
Very good. Last question is on the Gross Margin front for this quarter. How much is it because of the inferior product mix, and how much is it because of the higher discounting, if at all, we are given during the quarter? That's all from me.
Mainly, mixed impact is 2%, and discount or realization 1.6%.
That's helpful. Thank you.
Thank you.
Thank you. Our next question is from the line of Nitin Gosar from Bank of India Mutual Funds. Please go ahead.
Hi. Thanks for the opportunity. Well, team, I do appreciate the quarterly challenges that the company is going through, but I failed to understand over the last six years while the absolute revenue growth has been only INR 700 crore for companies like us. And for us, peers said within this industry who is far smaller has also done a superior revenue growth, which is more than INR 700 crores over the last six years during a similar time period. What's been the prognosis over there? Where are we in terms of scaling up the revenue? What are the shortcomings? How are we trying to address that while quarterly challenges do exist? That's well understood.
Right. No, very interesting question. I don't see it the last six years in one distinct only because I think in between COVID and the pandemic and what impact it had within the industry and for companies and for different companies within the industry has been very different. I think for VIP, the way I see it is that how the next three years is going to pan out and what are the growth levers that we are working on and our confidence on the long-term prospects bases the fundamentals that we are making strong in the company. Very different things have happened post-COVID. Now, basis of our manufacturing strength, we are gaining traction in the value segment, which was not the case before. I think the needle has moved significantly there, right?
I think the other part will be to look at the mass premium and thereafter mostly the premium segment where we need to make a big dent into it, though it's a smaller part. Also, look at we are eagerly we are poised well in the longer run to really tap the big opportunity in both backpack as well as the ladies' handbag, right? So there are other growth avenues which have been worked upon right now to see how we are going to scale up in the future going ahead. So I think that are the ones which are the pivots on which it is going to grow in the future. The explanation on the last seven years, I think because of the pandemic disruption, the companies that you're talking about within the competitive set have had a very different opportunity and their ability to tap into that opportunity.
No, I appreciate that. But sir, we also have to acknowledge the fact that as a resource, our size of organization has more resource. We have four brands versus peers have only one brand. And this industry provides you opportunity in bouts because it's a consumer discretionary space. So opportunities will also come in bouts. And if you fail to conquer those opportunity in bouts, then we'll have to again wait for another cycle on discretion.
No, you're absolutely right. I don't think there is a question of failure going ahead in the long term to tap these opportunities that we just spoke about. Yes, you're absolutely right. Having a house of brands and the other assets that we have are going to be significantly instrumental in making us tap that opportunity better than others.
Sure. And sir, last observation. I think I also concur with the fact that one of the participants earlier had questioned advertisement spend ahead of supply chain rejig. I think we need to also revisit that inclination to spend heavily on the advertisement because in the last five, six years, that advertisement spend has been continuously high. But I think having a four-brand portfolio will always keep pushing the company to spend more. But ROI needs to be questioned on those investments.
Sure. I mean, I'm taking that as a comment. Yes, that's something that we continuously keep a watch on. It's not a one-quarter decision. I think overall, we will invest in one quarter, and we will not invest in another quarter. These are strategic investments and not tactical for the quarter. I think it does pay off in the longer run.
Sure. Thank you.
Thank you. Our next question is from the line of Hasmukh Visaria from SUD Life. Please go ahead.
Thanks for the opportunity. Most of my questions.
Sorry to interrupt, Mr. Hasmukh. May we request you to use your handset, please? You're not audible, sir.
One sec. Is it better now?
Yes, sir. Please go ahead.
So my question is on Caprese. So we have been very aggressive on that part from the past couple of quarters. But this time around, I haven't seen any slide on Caprese launches or anything else as well. So any comment on that?
The only comment is the slide, and we would send you separately on that. I think we continue to be aggressive. You're not seeing us spending a lot of money in advertising. But once again, I think the work that is happening is making sure we get our product right, we get our organization right, and our go-to-market right. And that's going on a very good it's on a very good wicket right now. But we really haven't started investing behind that to grow revenue at a fast pace because the foundation to be created was very, very important. And if you would research or look at the range that we have launched in the spring-summer collection 2023, I think it's got excellent feedback. In fact, we noticed in the online portals and otherwise also, our full-price sell-through on Caprese range has been far better than the industry standards.
It's still at a very small scale right now. We'll scale it up in the coming year in a big way I mean, in the next financial year in a big way.
Understood. Understood. Thanks for that. That's it from me.
Thank you.
Thank you. Before we take the next question, a reminder to all participants that you may press star and one to ask a question. Our next question is from the line of Hemant Kapasi from Sanctum Wealth. Please go ahead.
Hello.
Yes, Mr. Hemant. You can go ahead with your question, please.
Yes. No, my question's answered. Thank you.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. That was the last question for today. I now hand the conference over to Ms. Neetu Kashiramka for VIP Industries Limited for closing comments.
Thank you, everyone, for taking our time and joining the call. In case you have any other questions, you can call me anytime. Thank you.
Thank you. That concludes this conference call. Thank you for joining us, and you may now disconnect your lines.