Avenue Supermarts Limited (NSE:DMART)

Investor Update

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Jul 22, 2021

I now want to conference over to Mr. Rishwab Gia. Thank you and over to you, sir. Good morning, all. Thank you, Lizzin. Welcome everyone to our annual investor and analyst conference call. We do hope that you are staying safe and keeping healthy in these uncertain times. I have on call with me senior leadership team from Avenue Supermarts Limited Mr. Neville Narona, MD and CEO Mr. Ramathan Vaidi, Group CFO and Mr. Niladri Dev, CFO, Avenue Supermarket Limited. We hope you had a chance to look at our presentation, which was uploaded day before on the exchanges and it's also available on our website. We will follow the usual format with Neville taking us briefly through the presentation. Post that, we will open up the session for Q and A. Just before that, I would like to draw your attention to the Safe Harbor statement for good governance. And I'll then hand over the call to Neville. Over to you, Neville. Thank you, everyone. Thank you, Rishabh. Good morning, everybody. Hope you all are staying safe and also your loved ones are keeping fine. Like every year, I will take you all through the presentation quickly and then open up for Q and A. And I'll do my best responding to every single question, time permitting. So I'll go by the Page number, this is the presentation uploaded on the exchanges. I'm on Page number 5, key updates. This is a quick I thought it's nice to start the presentation by giving you an update of Q1 that has just passed by. Everything that's mentioned on this page except point number 2, which we added newly, is part of what we released in Q1. So what we're trying to say on this page is, which effectively tells us how we are doing as a business, which is primarily organic sales for stores which are 2 years and older, which is finally the point number 2. Where we are saying that 2 years and older stores are already doing 91% of sales in the latter part of June. What is interesting to note there is, I had alluded about it briefly in my update for Q1, but we are now giving you more specifics that in states where regulation has been eased much earlier, we are already doing more revenue than 2019 for 2 years and older stores. That's a very, very positive sign for us. And that has been a consistent direction that if stores are operated with at least 10 to 12 hours of operations per day, but more importantly, caveat being that they should be opened in the afternoon and evening. So if I'm open at, say, 6 in the morning to 6 in the evening doesn't help as much as it's opened at least till 8 or 9 p. M. The sales comes back. So that's a very, very positive time. So we still have primarily one state where restrictions are still a bit tough and hence that state is taking more time for business. To go to Page 6, this basically talks about the mix of sales. Obviously, because of COVID last year, throughout the wave 1 and even in some states after that, there was huge restrictions on selling non essentials. So the mix changes primarily because of restrictions of non essential sales. Food obviously, in fact, had a positive growth rate vis a vis last year. That's why it shows 57%. Non food FMCG, which is basically a shampoo and detergent and all that didn't perform in line with foods for a simple reason is opportunities to go out significantly reduced and hence consumption for those categories reduced. But if you look at this data in context of Q4, I think what we saw was general material and apparel business came back. Yes, it was business as usual in Q4 of last year. But again, the second wave Q1, we again had a huge hit and business was literally shut for almost a month in quite a lot of cities. So that was about the mix. Page 7, same as usual. We continue to do what we've been doing for so many years. Given an option, open stores in cities where we already exist and also there is a calibrated approach to going to new cities and new states, but it's business as usual. We opened 22 new stores and we also converted 2 existing stores into fulfillment centers. I'm sure there will be a lot of questions on e commerce, so I'll take those questions later. But just to give you a perspective, we did this more as an experiment in Mumbai because there was inherent demand and we couldn't scale up our e commerce demand by going to a greenfield new setup. So because we had 2 existing stores, we said why not try this and do e commerce there. And we only picked up those regions where we felt that there is a store close by and a lot of that revenue that is lost is recouped by these stores which are closer. So that's why we selected 2 specific stores that is 1 in Kalyan and 1 in Leerah Road. Go to Page 8. Like we had spoken in the last Analyst Meet, finally because of COVID wave 1 and practically everything shutting down for the Q1, our store openings for financial year 2021 was not very good. We had forecasted that. But we also said that we'll make it up for this year. But at that time, we never imagined a second wave, but we are still catching up and hoping that if there is no further disruption, we should hold on to what we had committed on store openings for a combination of last year and this year, which of 59 stores is what we are told. Going to Page 10. So again, if we go to the first slide, which is Bill's cut. Obviously, because of COVID, the number of people walking into the store significantly reduced. But interestingly, what happened also is people bought more per trip. So that was a good sign and that was also one of the key reasons why we could keep our costs under control. This is again more efficient for us in spite of the lower footfalls. Like for like growth is negative 13% and that again happened because of COVID. This is for stores which are 2 years or older. So again, timely will have COVID. But like I commented, which is also mentioned in the first slide that I spoke about, last 15 days of June has been very, very promising and states where relaxation were declared much earlier are already in the positive. We added 1,000,000 square feet this year because of the credit to stores. So more or less the filing we stored is more or less the same, approximately 50 ks SFT per store. And the reason for that is what we have mentioned earlier also that larger stores is working on better for us and that's why we like the size of stores to operate. And obviously, last slide on this stage, revenue per square feet again came down because of COVID, it's self explanatory. If you go to Page 11, the first slide on the top left is again basically revenues. EBITDA and EBITDA margin again got hit obviously because of the revenue impact. We had new store learning and then we had overall revenues going down. But I still think it's considering the circumstances delivering a 7.3% EBITDA is still not bad. And also a PAT margin of 4.9%. So in general, quite happy with how the business was run and especially to our employees who did a phenomenal job in managing the business in such time times. So I'm personally very, very happy with the way we run the business. Go to Page 12. So top left, inventory was a very interesting area, but it also kind of showed or kind of reflected the capability of the buying team and the basic fundamental of the whole business in terms of what are the kind of articles we have, what we sell, how do we churn them. I think we've done a good job here. And the incremental inventory of 36.5 is something that's nothing to worry about because again when business comes back, we come back to our regular inventory. So I think no issues there. We've not had any major write downs on inventory. And fixed asset to inventory turnover ratio, again, huge drop, drop because we continue with our aggressive store addition plan and it's just a simple arithmetic of lesser revenue and more addition of assets. And that's why it's gone from 4.1 to 3.1. We don't have any debt, right, Lase? Yes. So any comment, Nikhali, on 296? 226 debt that you see on the right hand top corner is largely the AS-one hundred and sixteen restatement of lease liabilities for the stores and PC's behavior. But on a borrowing business, the borrowings are less than last year. Thanks for that, Miladi. Thank you. And obviously, the last slide on this page is return on capital and return on net worth. It's 9.9percent11.5percent. Again, this is an impact of revenues purely and the consequent profit reductions that we saw because of COVID. And here again, my counter to that is Q4 was great. We recovered and we bounced back brilliantly well. But again, Q1 went down because of the 2nd wave of COVID. But again, we are seeing a sharp recovery in certain states where everything has opened up for shopping. Page 30 is just a lot of details on the standalone console. But what I would like to go to is, I'm sure everybody is more interested is on Page 14, which is the e commerce business. And these are the numbers we have delivered. So I'll spend a little bit of time here on Page 14, the First Avenue E Commerce Limited Business. So if you see, we've more than doubled our revenues. Your revenue is primarily from Mumbai City. We started other cities much later. So revenues are great. The business did phenomenally well during COVID. In fact, while the top line and the revenue numbers look good, we also got a lot of flack from the customers because we couldn't service them the way they would want to. The demand was super high. We tried our best to whatever extent we could. But we got excellent insights on the business. And again, kudos to the team for running it really well, very efficiently, kept the costs under control. So what's again for me very personally very, very satisfying is that we've kept a cost under control. We've spent just about the same amount of money that we did at a significantly lower revenue, which is very promising. But again, preempting question on this area. I think we have a very, very long way to go, while we are more positive on this business. And we're positive simply because customers want this, right? Any city, any place we go, there is a section of consumer shoppers who want grocery at the doorstep or wants grocery closer to their doorstep. And that's why the model that we have built. And we want to within the framework of what D Mark stands for, we are going to pay reasonably good attention to this business. So that's my comment on the e commerce business. And with that, I am done with my presentation and open for questions, Vishal. Thank you so much for listening to me. Thank you, Naveen. Listen, we can open the floor for Q and A. Thank you. Ladies and gentlemen, we will now begin with the question and answer session. The first question is from the line of Avi Mehta from Macquarie. Please go ahead. Hi, Adi Ma and Neville. Thanks for giving this opportunity. My first question as expected would be is on e commerce. I wanted to basically understand your thoughts on how you see this space evolving post the pandemic? And how especially do you see this changing the way the customer looks at offline retailing? Would you revisit the offline store sizes? And if you could kind of give your thoughts on this, please? Yes. Good morning, Avi. So it's more or less the same, Avi, as what we spoke last year. Our view is both will coexist. India, again, per capita incomes are such that the basic cost structure on one side, which is the commercial side, and the consumer profiling or the consumer need of the other side, have still not evolved to an extent that we feel that offline will grocery. I'm talking just about grocery commerce or grocery retail, right. We believe that offline also has humongous potential. So we are going to start on both side, Avi, offline as well as online. We will continue to focus our attention on offline building a business, it's a profitable business, it's a business we understand, which has been built or fine tuned for almost 2 decades. So we will build a boat, but primarily all our investments, focus, attention will be on the offline business. And also in large towns of India, we will look at e commerce grocery, the way we are doing right now. That's our view. That's my limited view. I don't want to comment on anything else or whatever. Simply put, is my limited understanding on so many other things that are happening, right? And you have instant grocery retail, you have marketplace retail, so many other things, digital conversions. I don't understand all of that. We understand grocery retail, we understand D Mart, we understand the D Mart customer. And we are looking at it as an alternate channel for more convenience for a particular type of customer who would not want to come to stores that often. That's the way we are looking at it. So then would it mean that for geography wise kind of focus, so cities might see more focus on online or e commerce versus smaller towns, tier 2 tier 1 would see more offline. Is that how I should read the comments, sir? Sir? Yes, yes. So we will be focusing on online more on large towns, which we've always said, that large metals, large towns. And we'll be straddle from that direction. So when I say large town, what do you define as a large town, right? Somebody may say even a one like population town is a large town. What we are trying to say is that we're going to address this opportunity from a metro perspective. Let's see how it's doing in Bombay, Bangalore, Hyderabad, right? And then let me then try Ahmedabad, let me then try Baroda or Surat before Baroda actually considering the population. And then within that, we say, okay, fine, do I have some risk capital to even try maybe another couple of cities? We'll do all of that. But our view is this opportunity is in large towns. I mean, we straddle it from very large town, metro, make it work there and then go slowly to the other cities. So but the second part also on to that the offline would then also be lesser in the larger towns and it will be more in the smaller towns when you see additions? Okay. So it's again, I think this is what I constantly get asked and I counter it by saying why do we need to see it as a binary? Why is it that if e commerce grows, we feel that is going to be a threat to model trade? Not really, because what's the modern trade penetration in the market? So you have to look at that. So in a metro city also, what could be the modern trade penetration? 30%, 35%, 40%, you still have 60% opportunity left. Today in a Mumbai city, for a brick and mortar business, actually, it's not online that is a threat. For us, it is the availability of real estate that is a barrier. So I could be 2x of my current revenue in Mumbai if I could easily find a demod property, a kind of property in more location in Mumbai. Okay. Okay, sir. Okay. Sorry for taking a longer time on this. But my second question, sir, if I may, was on the near term. Now you are at almost a 9% SSS decline in the last 15 days of June. And you've highlighted in the results as well that it takes about 45 days of uninterrupted operations to reach back to normal. Does that imply and please correct if I'm reading too much that we would be back to normal probably by only by the Q3 and that's when we see growth. And if that is the case, if that is what you're feeling, would EBITDA margin normalization also be in a similar kind of timeframe? I cannot comment on that, Avi. What we can say is that it is because bulk of our revenues come from one particular state and there the restrictions are still ongoing. That's what's distorting the overall company numbers, right? So really cannot comment on that specifically. Would the second part be true that EBITDA normalization would be linked to sales normalization? Or would it be you'd tell you a divergence because you're doing a lot more cost? No, no, no. The biggest contributor to improved EBITDA is top line sales and within that non essential sales. These are the 2 important criteria. And both of these, you can deliver them or bring them to normalcy only if the number of hours of operation is reasonably good for the store. So let me put it this way, consumers want to come and shop, right? It's just that regulation, to an extent, hampered that as of now since August. So from a pure standpoint, there's no fear anymore is our sense at the ground from a consumer shopping perspective because in fact, the non essential side in other states where things have opened actually, there is a surge. There's a reasonable surge of buying there because of pent up demand, right? But it needs some relaxation from a operations perspective, store operations perspective. Okay. Sorry, if I may ask, when there is a surge, is there an increase in competition as well, competitive intensity? It's too early to comment on that. I don't think many operator will think about competition, meaning price discounts or whatever, but there is inherent pent up demand, right? People just want stuff. They haven't been shopping for a reasonably long time on the non essential side. So I don't see it as competition. In fact, if there is anything, the unorganized sector has got disrupted quite a lot, especially in non essential side, which is a good sign for operators like us. Anybody who's organized is going to see a reasonably good bump on non essential discretionary buying. Perfect. Perfect. And just one comment or a request, if I may say. I saw in the annual report, you have actually followed through and have not shared any message. I would just request if you could pen or share your thoughts in any form, whether a letter or something, it will be great. It's always useful to understand your thoughts. You're talking about the CEO method, right? Yes, yes. He is asking you to write it. Yes. I'm asking you because you said in the last two annual reports, you would stop, you would stop and you've actually done that this time. I wanted to request if you could please do it in any form, if not in the annual report, any other form, any other medium, but we would love to hear from you. Thank you. Thank you for that, Avi. The only reason I didn't write is because I've written a lot because of COVID, yes? In fact, last year's AR comment was reflection of this year, right? But I wrote it last year because obviously, we write it around July. Yes, but I have said that if there's something very meaningful, I will definitely write, yes? Okay. Thank you very much. Thanks for the opportunity. I wish you a lot of luck. Thanks, Avi. Thank you. The next question is from the line of Amneesh from Edelweiss. Please go ahead. Yes. Thanks. My first question is on the fulfillment center. So any more markets you want to do this kind of a pilot project? And there was a store which was there in, say, 4, 5 kilometer radius, but any sense of some loss of market share because always the consumer is also quite lazy in India because e commerce is available in Mumbai everywhere. So any market share loss data you could point out because of this? These 2 stores, where we shut down? Yes. So, Abhijh, what we saw broadly is if the alternate store is in a reasonable distance and has capacity to service, at least 40%, 50% of the revenue comes back to those stores, yes, around 40%. But provided those stores have the infrastructure or the capability to service, yes. So that's one data point I can tell you. And another data point is, again, Indian Telugu is very different from others. I think if there is one reason why people don't travel long distances, it's purely because of the infra ability, the time taken to travel is the problem, especially during weekend. Otherwise, people don't mind traveling a little bit more distance to get great value. Yes, that seems like I would like to give you. And any more markets you are planning to? So we are in we've launched in Hyderabad and Bangalore as of March, and we are looking at a few more cities. And Pune, sorry, they are also in Pune, I'm sorry, yes, Pune, Bangalore, Hyderabad. And we are looking at a few more cities. Usually, I mean, if you know keep track of the market, you know that we are doing some more cities too. Yes? So my question was on the fulfillment center getting closed and getting converted. Few more cities you're doing there? No, no, no. Shutting stores to do FC? Yes. No, no, no. Like I said, right, we did Meera Road and Kalyan just because of the paucity of time, there was huge pressure, huge demand. And we wanted to kind of monetize that demand, not just from a revenue perspective, but also it will give us good insights, good learning, yes? And the trade offs were just maybe 40% or 50% revenue loss for these just these two stores. And that's why we took that call. But I don't think we will do that anywhere else as of now at this stage. Avnish, in addition, we are also there in Ahmedabad. Right. Now you always discuss and for the customer also the lowest price proposition for revenue supermarket is extremely strong. Now, of course, with GeoMarts, Flipkart, Amazon, Groppers, packed by Zomato, Big Fast Fit backed by Tata. I'm sure lowest price proposition would have deteriorated versus say 2, 3 years back. Last, and this meet you had discussed, you give freedom to the local store management to address any specific issue on this front. So could you discuss how often that step was needed? And second, any sense you can give versus 3 years back how the situation is? How much are you the lowest in terms of pricing in any basket? So at an entire basket level doing a thorough analysis, I would not be able to comment, Avnish. But like I said, even last year, our systems are very agile. Our decision making is pretty low in this hierarchy. Store managers can decide for themselves what they want to do. So our systems and our processes are aligned to reduce prices to maintain our positioning in the market. In terms of comparative intensity of competition, I don't think there is anything meaningful to talk about there. Everybody, all retailers are focusing to get their overall business back on track, yes? So I don't think the time has come yet about discounting or being aggressive on pricing and all of that. And we don't see that anybody has come reasonably close to our pricing yet. But your concern is as good as ours. Obviously, if there is a business that is working well by cutting prices, maybe a few other retailers will also copy that or do that. But we will see. We always said that we'll compete, and we'll try to maintain our positioning as the best value retailer for a shopper. And the freedom to the local store manager, was it something which was quite commonly used in terms of pricing? Yes, yes. From the very beginning, that's how we worked. Last question on e commerce and the delivery. So three questions there. Free delivery beyond the threshold, any processes there? GeoMART, there is that facility at INR10 or INR20 also free delivery. 2nd is franchising E mart ready. Is that an option which is possible? So we could discuss these 2 and there is one more question I'll ask on this. Okay. So I'm going to ask the 3rd question or I'll answer these 2? Yes. Essentially, third question is again on DMart ready. So when I see your store in DMart ready, it's quite small. But in that small store, you're selling cow's milk, which is essentially extremely low margin. So is that more to popularize that product, popularize that store and as a concept to the customer? Because again, you need refrigeration, you need space and customers can buy that off the shelf. He doesn't need to actually get actually order and then come there. So again, the full delivery thing is not getting popularized, the store is getting popularized. So what is the thought process? Is that a long term thing or more of a short term marketing initiative? Okay. So I'll go 1 by 1. Free delivery is something I don't think we will offer for home delivery. But at the same time, we have now executed a cutoff. We don't charge more than INR 79 now for delivery, the max. Yes. And that's the first question and comment. Franchising, see franchising, we haven't thought about it yet. And for a simple reason is you will do franchising if there's money to be made, right? First is that, is the model right for us? Are we making money? And then you is the franchising what is the trade off? That is, okay, you want to take away a lot of the day to day operational rigor to an entrepreneur, local entrepreneur and so that you scale up parts and things like that, so many other things. So I don't think we actually come in our business building journey to think about that or even or if we are thinking implement that in the near future. We have to make the model work, yes, because that's our response on franchising. And lastly, pouch milk in the DMR ready store. Since it's an idea, I like that we run multiple ideas, so there are hundreds of such ideas, right? And obviously, milk is a football driver, lots of people. Everybody in India uses milk extensively, right? And Bausch milk is the way to go because of the value. So yes, so that's the reason. Just to popularize the model, because see, we were the first guys who came under this concept. And it looked very weird. And on a shopping street, you had a DMart ready store and there's some dial with a computer and nothing to sell, right? So how do you generate curiosity about the model? That's because we made so unique and stands out. And that's when the thought came, okay, let's start selling milk because then somebody is coming into the store and then there is some conversation, some engagement happening. And that's how and but DMart as a brand is very popular, right? So DMart has a brand, so we could get into meaningful conversations with customers. That is the whole idea of having this there. And it came as an afterthought. We did it after we launched it, right. So like that, it's just an idea which has worked reasonably well for us. So we continue to do it. Even though it's like you said, it's terrible business, you make no the gross margin itself are terribly low and then you have refrigeration, rest days, all of that, right? But it is a loss period of time. That's quite helpful. That's all from my side. Thank you. Thank you. The next question is from the line of Latika from JPM. Please go ahead. Hi. Thanks for the opportunity. I'll continue on the e commerce bit. If you could talk a little about how are you thinking at the margin profile, PBT losses were fairly stable and that's a good outcome given the sharp scale up on e commerce sales. But I'm sure you would have seen a mix changing between store pickup and home delivery salients as well. So as you expand into more cities, as you scale up in existing metros, what would you want to target? Would you expect these losses to remain in some kind of a range bound manner? If you could comment on that, please. So, nothing I'll respond to both. Pickup versus home delivery, we don't have any preference. We allow the customer to choose. Customer behavior gives us insights on how we have to tweak the model or offer or give our offering from an assortment perspective. So we don't have any specific agenda per se, whatever helps us expand our revenue, yes? On losses, all I can say is, as we speak, what I've seen over the last 2 years, we are quite delighted with the way the e commerce team has run the show. And I think what you guys need to look at from a losses standpoint is it should be in perspective with the overall business. I mean we are a very, very capital risk, our organization per se. There is not going to be any high expenditure on this area. So if the overall business does extremely well, maybe our aggression on this area will be more, but within the context of how the overall business is doing, yes, that's extremely important for us. And see for us again is that, end of it, the model has to be a working model, a replicable model, and that is what we are looking at. And I think that comes from the DNA of the firm, right. So if even if we take more time in building it in a manner that we actually don't lose money, then expanding it will be super easy, super fast, right. That's how the Humana business has been built. So that is the way to look at it, to be very honest. And I think they're making reasonable progress there. I hope I've answered your question, Yam. In some manner, just another bit which I wanted to clarify is on Demand Ready is a separate subsidiary. Is there a thought that you could potentially at some point look to get a partner which is more crude on digital or you want to run the show on your own considering your expertise in grocery retail? I have no comment there to make, Latika. I think we have a brilliant team who's running it very well. So we never had that thought or that reason to look at right now, but I don't know about the future. But no comment currently. I think we are And last bit to this is that a lot of data would be coming your way on the e commerce shoppers. Any thoughts of collecting data on the offline side in terms of any kind of a loyalty program or anything of that sort? And that's the last question. Thank you. So we don't run a loyalty program. Our basic philosophy of the business is all customers are the same, treat everybody equally. So I've commented on this multiple times. It seems a bit non intuitive to do this, but we aren't harnessing data much. Our data is only to the extent of okay, so and so customer, so and so address, and they're all functional. It's just used for functional use, but nothing else. And no loyalty programs. All right. Thanks. Thank you. The next question is from the line of Arnab Mitra from Credit Suisse. Please go ahead. Yes. Hi, Naveen. My first question was on Dema. Clearly, I had actually an opposite question to an earlier one, which is that you mentioned that you obviously want to set how to perfect model which works at a unit economics level. You've now done this business for a few years. Do you think the model now works at a unit economics levels? And if that is the case, why is your rollout still a little slow? Because we are still a very profitable company. And with the large changes happening in digital adoption, would it make sense to significantly accelerate expansion even if it means slightly higher losses as long as you're confident of the model working at a unit level? Yes, good question, Arun. Maybe that feeling will come maybe a couple of years later. We are not yet there from that standpoint that, okay, I know Bombay is working in a particular way and hence let me burn cash in other cities and crunch the time. I think we're still maybe a couple of years away from that. I get what you're trying to say, but I don't think the confidence level is still there right now. While we made good progress from, say, last year, we have to see and this is very important from a perspective also about once the country stabilizes from COVID, right. So once COVID is completely sorted out, yes, and there's no further fear of the pandemic, then how are we trending on revenues? Then what is consumer insight? What's happening to the business? Stuff like that, right? So that's extremely important for us. So, yes. But I get what you're saying. Sure. And the next question was, I don't know if you will be able to answer this, but whatever business you're getting in Demar Teddy, do you have a sense is it incremental business over what we would have done from the store? Is it the same consumer now ordering foam? Or is it a replacement business that you're seeing, which is a majority of this business? I'm not sure if you have data enough to know that. Yes, good question. I think it's a fantastic question. And this is what we've been tracking in Mumbai. But the right way to answer it is it's neither or not because Mumbai has far more potential, right? We could have maybe 100 stores in Mumbai, but purely for the lack of locations. So to the extent that we're doing more revenue in Mumbai from the e commerce business, we aren't losing revenue from the stores. The stores are doing reasonably well. But there's a caveat there, now because of COVID and Maharashtra having not relaxed non Ziyad. I don't have a very, very clear opinion on that yet. But in general, I would say that it is overall top line accretive, even though you have online business in Mumbai. So again and what is interesting is also that we have the profile of shoppers in e commerce is slightly different, right? They're more aspirational, the mix is better. Like for example, we're selling Davidoff coffee on e commerce. We don't sell Davidoff coffee in brick and mortar, right? So it's quite interesting from that standpoint. So and the beauty of e commerce is it allows you to take bets without losing anything, right? You just buy 12 pieces or 2 dozens of something and keep it in your warehouse and you list it on the website or the app and you get your outcomes at very, very low cost. So that's phenomenal. That's not as efficient even in the brick and mortar business, right, as much as it is here. So these are the very interesting insights we're getting. So yes. Okay. Thanks, Neville. That's it from my side. All the way. The next question is from the line of Manoj Menon from ICICI Securities. I actually only have one question, but request multiple facets of this, hopefully, if you could help us with. This is actually on inflation in general. So what we see as, let's say, ag inflation or food inflation or even crude linked inflation in FMCG basket, etcetera, From the conceptual understanding that for a retailer like you, it's actually good. So, point of question number 1 subset is, is that even the right assertion to make? The reason I'm asking is that even the assertion level clarity from you is because of the limited history, listed history, we're not really seeing this level of inflation, let's say, the last few years, right. I mean, so just your understanding about the long term, that's question number 1. Question number 2, within this, let's say, take the case of an edible oil where there is a 50% inflation for the housewife, What is the consumer behavior? Again, the conceptual understanding is these are maybe relatively less price elastics. Basically, I can't reduce the quantum of oil, which I consume just because the price has gone up. So again, your thoughts on many of those such categories. So one is on the price pass through. The second is actually on the volume, how do you see consumer behavior part? The third one, in your vendor negotiations, how does this work? I mean, kind of, you know, so let's say the vendors are also under a lot of their gross margin retention or reclaiming pressure. So is it that per unit negotiation or still a percentage negotiation with your vendors? Thank you. Yes. Thanks, Manoj. So the recent communication that I get from the category team specifically on FMCG products, I haven't seen maybe it's temporary, maybe it's what I take only certain categories, but like you said, yes, some of the price increases are quite large. So I do not know what will be the impact overall from a consumer behavior, then this is across multiple categories. We will see. But I'll give you one insight specifically on edible oil that since you mentioned. We have seen these edible oil price increases and this huge surge multiple times. This is not the first time, like a 30% price hike or a 40% price hike over a period of month or 2, which happens typically in sunflower. What we have seen is that there is a rapid migration, okay? Consumers move from sunflower to the next cheap available oil. That's the insight we've got always. It always happens like that, right? So if cottonseed is cheaper than sunflower, there's a huge migration. But if soya oil is cheaper than sunflower, it's a huge shift towards soya, yes? That's what typically happens from a consumer behavior standpoint. So that's my take on inflation. In general, like you said, inflation is good for a value retailer. And the reason being is to respond to your third question. All our negotiations are percentage, yes? It's a margin is basis percentage. So obviously, when percentage is the same and the value goes up, it's valuable for a retailer. It gives us more leverage to create better value for consumers, yes. So you can play both. Your overall absolute margins get enhanced. At the same time, you get more leverage to cut prices further, okay, compared to any other retailer. So for a value retailer, inflation is good because we can deliver better value. I hope I've answered all three questions. Hello, Manoj. Are you done with the questions? As there is no response from the current participant, we'll move on to the next. That is from the line of Kunal Shah from Jefferies. Please go ahead. Hi, Neil. This is Vivek from Jefferies. Couple of questions. First, your stores have always attracted a lot of footfalls and crowding has been the feature. How do you think about in the post pandemic world and until things normalize, do you think that will have an implication on the throughputs at the store level? So Vivek, like we mentioned in the update, right, Page 1 of the update that we uploaded in the exchanges 2 days back or yesterday. On a longer term, what will happen, we do not know. But like I said, whichever states where those relaxation announced much earlier, revenues have come back, right? So that's RU. Other than that, I cannot comment. Longer term, maybe we'll comment after another 2 or 3 quarters pass by. Okay. I see. And Neville, couple of times you have mentioned this issue about real estate. Now in the context of whatever is happening to, let's say, commercial real estate and all, are you finding it easier to, let's say, lock in properties both for DMart as well as DMart ready stores? Yes. So considering whatever softness of real estate or whatever, it has a, I would say, reasonable to marginal impact, not a very positive impact for our business. Prices don't reduce so much because we look for prime real estate, we look for clean titles, all of that, right, and those are in short supply. So for us, times like these when markets soften, deals happen. Deals happen faster like any commodity, right. Transactions increase because people fear the prices will further go down. That's it. That's the only advantage we have. Our view of anything that we do is, say, for a DMart store, we do a day with an understanding that it should open in the next 2 years or 1st year, 3 years. So we don't try to build a land bank per se beyond that or anything beyond that. So yes, so whatever the balance sheet permits us to do within the limits of risk, we try to accelerate our acquisition. Limar Reddy, same issue. When those are all leased properties, we are very particular about the location and all of that. And they don't come at drop down prices. They are maybe 10%, 15%, 20% discount maybe because of the pandemic. But otherwise, it's business as usual. And it's difficult to get good real estate in India. It takes time. Got it. And last question on Demart Ready. You made a very interesting point about dairy of coffee and the fact that you can just run some of these experiments. So in some ways, do you also think that DMart Ready, while it's a separate business for sure, but in some ways, it also could be an experiment factory for your base brick and mortar DMart store, any learnings that you can or you are taking back into DMart stores? Absolutely, absolutely. It's mutual. It's mutual. It's mutual. So assortments and all have undergone change because of DMart. I know we are in the middle of pandemic, so there may not have been that much opportunity. But is that something which you think you will harness more as we go forward? See, it's very complicated because what's not necessary what sales and e commerce will also send in demand, but yes, we learn from each other. I mean, that's what I can say. But it's very dangerous to say, okay, this works in e commerce like those in brick and mortar, not really. Yes, it's because you are addressing different consumer subsets, right? And e commerce, what is the beauty about e commerce is that you can manage multiple cohorts at the same time because of the nature of the business. But I can't do that in a brick and mortar business because it occupies a lot of real estate, which is not very efficient, right? So I hope you get what I'm saying. Like, for example, a store is in a very expensive real estate, whereas a fulfillment center need not necessarily be in expensive real estate, right? So, yes, so to that extent, it's different. But yes, but we learn from each other. Got it. Thank you and wish you all the best. Thank you. Thank you. The next question is from the line of Sunita Satchthi from UBS Securities. Please go ahead. Hey, hi Neville and Roshap. Thank you for the opportunity. Let me go back to the brick and mortar business. I wanted to know more about what you're thinking about your private label strategy. And I know it's a slightly wide question, but any insights into fresh, staples, non food and non food FMCG and general merchandise would be appreciated. So, hi Sumita. Yes, so on private level, again, it's the same story. We are focusing and looking at this opportunity as a long term opportunity. We have a team which works on this. We're building our own label, but obviously at a much, much slower pace. All I can say is the pandemic helped the private label business relatively better than the overall front end. Maybe it's because of the value that private label deliver to consumers. And maybe after some time, once a year and the anxiety reduced and people are looking at tightening their expenditure, looking at alternatives. And within that, we saw more trials for private level. So the private level visited better. I look at the full year period. That's interesting trend. It's also because of the way we are approaching private level, right? We are not going whole hog trying as many categories as possible. The direction that our team is to focus on quality. It has to be at least equal in quality to a major brand. And I think those efforts are helping us. But Can you comment on which categories you've nicely given foods, non foods, general merchandise, Aperol in your presentation? So where is more of your private label salience in across these three? Okay. So I've commented on this before. When we talk private label, we talk only this branded FMCG private label. So that's my all my comments just now was purely on branded FMCG private label. And yes, in apparel and general merchandise, it's different. We focus on basic low unit price products. And we don't see private label per se having any advantage there. So we work with manufacturing brands. But my comment is primarily to address FMCG brand categories because that's where the cost arbitrage is available. Right. And in your stores, obviously, you have extremely regular, extremely loyal customers. Any metric on private label that you could share us in terms of what is this percentage of basket or how is this market share across some of the major categories that you can share? Nothing meaningful, Sumida, to comment. So, I guess, that's still some time. See, I've commented about this before. Even within the branded FMCG sector, even if certain carriers have large margins, you have a local disruptor who comes in, cuts prices and brings in general. So it's tough to play this game, to play this phase. So yes, so we'll take a long time. All right. My second and last question is on your B2B businesses. I know we usually don't comment on these, but it's well known that there is a profitable B2B business also, which goes on FMCG. How big is that now and how is the growth in that business going on? We don't do any B2B business, Sveera. No, not at all. Okay. So not like cash and carry? I think you probably meant commenting on a supply subsidy we had formed, but there's no action there. Okay. No action there. All right. All right. Thank you. Yes. Welcome. Thank you. The next question is from the line of Aditya Sohman from Goldman Sachs. Please go ahead. Yes. Hi. Good afternoon, team. So a couple of questions. Firstly, on store expansion, you indicated that you've seen some acceleration in deals. If you were to open, let's say, 50 or 70 stores a year, what will be the main hindrance? And is it something that you could even do over the next 3 to 5 years opening, say, 50 or even 70 stores a year? So, hi, Aditya. So, the same we are we have spoken about this earlier, Aditya, that real estate is tough. We are trying to do our best, having a large team, ensuring that due diligence is done well and then also building capability from an operations perspective, right? So all of this is work in progress. We are all working hard towards doing that. Now you asked me if you want a pointed response from me on that, will we be are we ready as a capability to open 50 or whatever number of stores per annum? Of course, we are. But the point is, like we always commented, real estate is very complicated in this country. And if those elements work in our favor and we're able to acquire and have decent inventory of real estate, we can accelerate store additions over the next 2 to 3 years or 5 years. I understand right here. No, I think the point I was also coming from was that you obviously have more clusters, right? So when you initially started, that's a number of clusters available at Cell First Door. Now as you've opened up in more space, there are more clusters available. So as an absolute number, that number of new store adds should be going up, right? And that assumption on the base level is correct, right? I mean, that's all I want to check, not specifically about. Yes. So let me know if I've answered your question. But in general, I have spoken about this earlier that we look at opportunity from a population perspective, right? So all 1 lakh plus population cities. And in general, as probably 1 lakh to 2 lakh population, 1 DMart store is reasonably okay to operate, right? So if you do that math and you look at the overall 1 lakh plus cities in the states that we operate, we have a decent run rate from an opportunity perspective. The opportunity is there. The opportunity is awesome, yes. So around we can still have around 1200 to 1300 stores in the cities that we operate already, yes. These are all 1 lakh plus towns. They are in 96 cities. So if you just aggregate all these 96 cities population and you divide it by, say, 1 lakh, broadly theoretical, but that gives you a broad perspective in terms of how many stores can you add. So when I divide it by 1 lag, the only hindrance there is you'll have to factor in and you'll have to bring in an error factor only for cities like Mumbai, Bangalore and Hyderabad because you can't have one store for every one line, purely we have real estate availability. But if you take those numbers out, still there is a huge, huge opportunity. And this is only for cities we operate in. If I look at the entire country, I mean the picture again changes, opportunity goes up with some 2,300 stores. So it's huge opportunity is amazing. It's just that we have to do our stuff right. Right. No, that's very clear. I think that's something we do. And in terms of the opportunity you talked about beyond your cities, I mean, we see no presence in East India. Is that something that you'd be looking to tap over the next few years or it's still more medium term? So you're asking about East India, right? That's right. Yes. So I don't know. We'll see. We've reached out to APE, so Oreste is on the border. So we look at the supply chain from a supply chain standpoint and then that's how we progress. But again, this is a comment which I always give eighty-twenty or seventy-thirty, right? 70% to 80% of our investments will be in the existing states. We like to do that because that creates a moat. That gives you amazing operational efficiency. So we continue to do that. So within that, if it means that we need to go to Odisha, why not? We will go. Or we need to go to Uttar Pradesh. In fact, we are already there, but more. Yes, we will do that. But the point is more money, more investments in existing markets. Very clear. And then just one last one on private label. You indicated obviously that you're gradually ramping up private label. When you think of the gross margins here, do you just think of a gross margin at a demot level or do you think of 2 levels of gross margin, 1 for the product and 1 for Azure demot level? Come again, come again, I missed the question. Yes. So when you think of gross margin for private label, do you just think of it that it should be 15% gross margin that you make for DMart? Or do you think of it as to level 1 as a gross margin for the product and then a gross margin separately for the retail business? So we look at the gross margin within those categories, Odisha. So FMCG is not at 15%, 16%, it's lower, right, because it's a mix. So we operate FMCG at a lower margin. But what we look at is within each category, right, Within each category, we look at what margins these categories operate at. And based on that, we have our own modeling of what we should make on private label. But before you think about margins on the private label, you actually first have to address the ECP to consumer per 100 gram, right? So if the brand is selling, I'd say, INR 10 per 100 gram, what price should private label be? Should it be 9? Should it be 8? Should it be 7? Yes, that's the first question to ask. And then you decide, okay, what's the cost of making this product at the same quality. And based on that, then you decide, okay, what should the margin be? So it's these 2 or 3 things that you need to evaluate and then decide the margins you need to keep. But obviously, you're getting in this business simply because you have a product at a price cheaper than main brand and giving you margins better than the main brand, right? That's why you keep you end up making more money on these categories. Fair enough. I think your last point answers the question. Thanks a lot. Thank you. The next question is from the line of Anand Shah from Axis Capital. Please go ahead. Yes. Hi, Timna. Thanks for the opportunity. Just a couple of questions. Firstly, I just wanted to get thoughts on the GT transformation. We're obviously seeing the return of GT here. I mean, apart from e commerce and especially given what Umar and Rodan are doing in terms of the digital transformation here, I mean do you see any threat at all from the GP sort of coming back very strongly because that obviously is a much larger domain than e commerce. And have you at all seen that impact in any of your markets? So my response to that is it's great if that's happening and it's bringing the capabilities to a much higher level for GT, which is very good. And from a perspective from our business, again, I would repeat the same thing saying that the market opportunity is too large. So everybody is going to do well. Yes. So there are yes. Yes. But you don't see at all that the conversion or acceleration because I mean, let's say at the top level, the pie is large, but the argument top down is empty and e commerce will gain because the conversion exchange is happening. But if GT for whatever reasons sort of holds its ground, then the conversion sort of will not accelerate to that extent and that could make the entire N2A expansion more competitive. I haven't got your question. Competitive like GT will get more competitive to us? No, as in MT itself, if the conversion doesn't accelerate, because like whatever, 8%, 10% penetration, a model trade going to 20%, let's say, 10 years, if that doesn't happen and MT for whatever even stays in that 10%, 15% bucket only, then MT itself would start getting a lot more competitive within the existing player because you want to grow and expand? So our view is defining our business as MT and defining the Kirana as GP and all that is a nomenclature we have done for our own simplicity of communication and understanding. What you define a Kirana guy who becomes like an MD, he puts in his technology or POS and self solvers. He also is an MD, right? So the entire industry evolves to be a better operator. Good for the industry, good for everybody, right? Also, remember that GD Kirana operates on the principle of convenience and not really value or price, right? And we are positioned on the principle of value. So I think we'll quite risk. So it's not a matter of. And yes, so I hope I've answered your question, right? No, no, no. Got it, got it, got it. So we are pretty much. The second question was more on cost. I mean, if I look at general costs, like the other expenses or staff per square feet, I mean, on quarterly basis, I mean, you've done a commendable job that's pretty much being range bound every quarter. Even though your revenues have obviously scaled from Q1, Q2, Q3, Q4 last year, when the pandemic. And if you can highlight this, what you've done on cost structure, because this really seem to have sort of come down from peak on a 1st question basis, even though we keep seeing progressive increase in our revenues. So how are we able to do that is your question? Yes, I mean the initiatives, the initiatives we've taken or any line items we want to call out where there's specific reductions are happening. A lot of our costs are variable costs. So it's nothing much. I mean, it's part of the DNA, the way we work, it's part structural, the way the business operates. See, frontline also operates on a lot of attrition on a month on month basis. So I think you have the ability to moderate your costs far better. Its management is very tuned and focused on, okay, how are revenue moving, so what should we be doing and not doing for this month or next month and stuff like that. So like we've always said, we are very agile. The operations team is very empowered and very focused on all these things, trained very well to manage all these things. So that's how it happens. And then the inherent nature of the business, right, less revenue means less transportation costs, less logistics costs. So more or less, these are quite variable in nature, and that's how we are able to manage our costs better. Okay. And just one last question on your balance sheet side. I mean, we did see a sharp jump in CWIQ to almost INR 1,000 crores. I mean, it seems you're obviously accelerating a real estate expansion here. I mean, this would be at all incremental to the 59 store guidance that you're seeing or this will be more in that direction? I cannot comment on that. Balance sheet is balance sheet. What do you see there, right? And what are we trying to we generally don't give guidance, but just that because of COVID, we just wanted to reassure everybody that the Real Estate acquisition continued with the same pace. There was no impact on the real estate side of the business because of COVID. It's just that they have been postponement due to delayed construction activity. That's the only thing I can comment on. Yes. And the store acceleration, I get it. I mean, in the sense, it's been delayed and we are focused there. Just on the pipeline building on the real estate side, because we do see CWIC going out to a peak some, you haven't done that in the past. I mean, just wanted to get through if it's within the put some acceleration here on building that pipeline or are you doing that ramp? I cannot comment on that. You can make it all in. Okay. No issues, Nish. Thanks for that. Thank you. The next question is from the line of Garima Mishra from Kotak Securities. Naveen, any consumer behavior trends from your stores that you think will sustain post COVID as well? The trends are what we've commented earlier, Raghavan, that basket value has increased with lesser footfall. That's one trend we saw. Another trend we are seeing is whenever but it's not just about COVID, but in general, whenever there's inflation, people downgraded a lot. So that's the second. 3rd is the trend we are seeing recently. We do not know whether it's a tightness of the wallet or it is restricted times to shop, but even the non essential is very need based shopping, right. So to that extent, discretionary spending has not come in the non essential part of the business in states where there is restrictions on timings. These are the indicators I can give you. At the same time, cities where it's open, everything is open, sales are happening well, non essential sales are doing very well across. So do you think, I mean, post COVID, and we've had maybe a couple of months in between, right, where that restrictions have been relatively lesser. So what I want to know is that this basket size expansion, I mean, is it something that you think will normalize extremely rapidly or some impact of this COVID related holding mentality or whatever you may call it, going to the store a little lesser? Do you think some of this is going to remain basis whatever little you may have seen during the last year? P. Vijay Kumar:] I do only to comment, but my broad assumption is it will come back to normal. I mean, let's say that maybe a 5%, 10% differential. The right way to look at it is vis a vis demand, right? When demand happened, how much of the cash business went back to credit. So that's a good indicator to look at consumer behavior. But once everything was okay and fine, cash came back, right? But yes, it had a maybe 5%, 10% higher bump, which was changed. But that's it, very marginal, I would say. So if you take that as a cue, I think it will be very marginal, but people will come back to their old ways of shopping barriers. Okay, understood. The next question was on real estate. So you mentioned earlier in the call that real estate availability in some sense would constrain to what your actual growth potential could be. In the past, you haven't been very open to leasing, but why not explore this more to grow faster? So Garima, it's a misunderstanding to say that, oh, if I lease, I will grow faster. We are not a 1,000, 2,000, 5,000 square feet store, right? We need large stores. Large stores are not easily available. So while the opportunity to grow increases maybe instead of, say, 30 stores, you'll probably have 35 stores, maybe 38 stores, something like that because of leasing, but that's it. It will not allow you to do 3x or 2x of your current run rate just because you're saying, okay, I'm going to lease now. And I'm saying that for a simple reason is we are still out of the reckoning in a mall. Mall operators generally don't like us because of the rentals that we ask for, right? And we've always been saying that retailer like DMart brings in footfall, so you should give it to us at a price better than anybody else. But I think that mature I thought that in 8 to 10 years that maturity will come. I've been talking about this the last 12, 13 years, but still not happened. We still don't get invited by the mall operators. And we don't go there if we don't get it in our price. So the mall part is off, right? So it's just standalone. So yes, so to that extent there is a limitation. Okay, understood. And the last question is clearly more on your product procurement. So is it safe to understand that the larger you grow, the more proportion of your products you would be sourcing directly from companies than their national or retail distributors? Yes. Logically, yes. Logically, yes. It makes sense to do it backwards. All right. Good morning, Neville. Thank you so much. Thanks very much. Thank you. The next question is from the line of Amit S from HSBC. Please go ahead. Hi. Thank you for taking my question. Neville, I have just a question on the network rollout potential, which many people have already asked, but let me just attempt my bit as well on that. So if I were to look at the three things here, real estate availability and procurement cycle, store size as our choice of format and third, obviously, the organizational capability, which is like supply chain or training of people and leadership, etcetera, and that whole package that comes with it. So if I ask you 1 by 1, if real estate and other things were not a problem, from organizational point of view, how much stores you could have opened? Like could you do given your size? Is there a limit that organizational capability places on it like 70, 80, 400 stores? So, Amit, I never thought about it like that. So I have not really thought about it like that. Honestly, no. Sure. But let me just stretch it a bit that why, say, you obviously, the last 2, 3 years, if I noticed the store sizes have been very large, I think, 50,000 to 60,000 square feet, which is a great thing because we are getting a real estate, you might as well get a bigger one. But then I'm sure that many smaller stores like 10000 to 15000 square foot stores must be also running great throughput for you and economics as well. You would know those stores very well yourself. But why not have an open mindset about let me have larger format stores, but also maybe supermarket style stores as well and go deeper into India rather than than having to grow with that owning the real estate, large stores. So that's a great model. But why have that sort of thinking, if you can clarify? And third, obviously, if you can maybe store sizes can be flexible, then rental ability can be easy and maybe penetration could be deeper. Because I believe that that's a rollout. Is it are we like constraining it ourselves? That's the question. Yes. So that's a brilliant point, Amit. And honestly, we are not fixated to the 50 ks thing, right. So in a large town, obviously, 50 ks stores are not easily available. We are very happy to sign even 20 ks stores. If they make sense to us, we do it. It's not that we don't do it. But our view of market is where 50 ks or 20 ks, they're not very easily available. But they're not averse to it. So you should pause out also. Also. 20 ks ish also is what we do. Sure. Sure. Where I'm coming from, Neville, is that if you model the entire India footprint, real estate, urban market centers, I'm sure the large formats will be done one format and largest format will be maybe supermarket format. And why not play aggressively as a tactical strategy rather than having to sort of pursue one line of thinking. I'm saying that eventually they will exist like that. So there should be a very aggressive quest for seeking those. I mean that's the kind of where I'm coming from. I'm not really pushing it too much, but that's where I was coming from. And the hope is that NetSol rollout obviously accelerates by dealing with all these constraints. Fair point, fair point. And like I said, right, we ideally prefer 20 ks and above. Probably you're nudging us towards 10 ks. We have a couple of 10 ks stores also. And if it's a very compelling reason to even do a 10 ks store, we do a 10 ks store also. But like I said, it is not okay, let me answer this this way, Amit. It's not that we're rejecting stores which are coming to us which are around 10 ks to 20 ks, 10 to 30 ks. No, we're not. We're evaluating it on its own merit. That will make sense. We'll go ahead and do it. Okay. Sure. Got it. Very, very helpful, Dhaval. And second, if I may quickly ask about the e commerce integration with your own model. Like you obviously have offline driven model, which you understand very well, execute really well, the cost economics are perfected over time, perfectly understandable. And e commerce is new complement or enabler for you to serve the convenience kind of customer, which has emerged even more post COVID. But if you were to if I were to ask you what is the economic reality of these two services? Whether this e comm business should be like an arm of the store nearby or is like from an organization structure point of view where how the incentive structures run and how the execution happens? Shouldn't it be more efficient if stores were the main economic center of that endeavor or it should be run separately? Because my sense is that it could perhaps be more deeper if Toll were to own it rather than a separate subsidiary doing its own thing. I don't know how to think about that. Yes. So Amit, if you could refer to my call of last year where we spoke about this, so I'll repeat that again. So again, I know where you're coming from because globally all retailers are doing this. And why we are not doing it is for a simple reason is we don't have the infra. Our asset utilization is already very high scale, right? If you look at the value per ton of India versus the rest of the world And then you compare it with the turnover of square feet we do, our assets are already operating at very high level of utilization. And it cannot be disrupted to service our e commerce customer. It will create dissonance and it will bring the productivity down. And that is the reason why we decided to run e commerce separately. Unlike you go to a large retailer in the USA or UK, you there is inherent opportunity to utilize the assets better. Yes, indeed. That's where I was coming from actually. Thanks so much, Neville. Very, very clear. Just last bit me, if I may, Neville, is that about, for example, global role model shape, because obviously, retail has evolved in Western markets for last 50, 70 years and what perfected several models have come in German retailers, European retailers and U. S. Retailers. If you who is your role model? Like or actually there are many role models for different things, but how do you role model your organization? Or is this unique and or you're shaping the product portfolio, cost economics, everything from best practices already established? Can you enlighten us a bit how do we think about that? My favorites are in Cairns. I like Costco, I like IKEA, I like Uniqlo. I mean these are the top 3. There are many more, but top 3 which come to my mind. And it's just not about one thing, multiple things, I mean culture, assortment, simplicity. It's awesome. I love these 3. These are already top of my mind. And I think this all revolves around fundamentally culture. I mean, the way they think products, people, business, partners, employees, it's awesome. I just love So we are shameless copycat. Anything we like about any of these companies, we just go ahead and obviously, you applied hard white makes sense and then go ahead and implement it. So yes, these are the role models personally for me. Okay. Excellent. Thank you so much, Neville. All the best and thank you for taking my questions. Thanks. Thanks, Oliver. Thank you. The next question is from the line of Sandeep Bhatoria from Sun Smith. Please go ahead. Hi, Neville. One quick question around if you could comment on the impact of COVID on the resiliency of your sort of process and system oriented decentralized company culture. And in Q2, what you answered previously around the you see the culture as the fundamental force behind retailing. So if you could talk about what if anything has changed and whether resiliency of your culture has been proven and any insights on that change? So Sandeep, nothing much has changed. I think it's the same. I mean, people are committed, people are doing the job really well. In fact, the 2nd wave interestingly in fact, if I look at if I think about the 2nd wave, it will be the first wave, even though the 2nd wave had more casualty in the country, I think our team was actually more confident on the 2nd wave. And there's a caveat there, Punit. The caveats we have very, very young force, right. Retail, we typically have people 95% of our actually 97%, 98% of our front end employees are below 30%. So our young fellows, and we all know that travel doesn't hurt or impact young people, right? So that was a huge advantage. So it's absolutely 0 fewer among our people. We took all the necessary precautions. The COVID cases in our ecosystem was very, very low relatively to the country. So I think so that was the inherent advantage we had during this time. And we are very liberal for everything. Anybody is calling sick or whatever, we ensured that nobody had any pay cuts, everybody is comforted. In fact, we had a central command system created with quick development of certain apps to ensure we get real time updates on all those who are COVID positive, ensure timely medical care, things like that, having oxygen concentrators on standby for our people, stuff like that. So I think great culture is culture. It doesn't get kind of shaken during tough times, right? So you get the best out of people during tough times. So I think 2nd wave also my sense is we were more confident to deal with it. And let me put the business side of it also. We were more confident as a business model, right? I mean, 1st wave, we didn't know what will happen to the business. But then the second wave, we're very confident. So our calls and our decisions to even shut stores are more aggressive, more and we say it's okay. It's okay if the store is shut for a week, 2 weeks, 3 weeks, doesn't matter, business is going to come back because we saw that in the first place. So our decision making capability with confidence is also there. So, yes, so these are the top of mind thoughts that come to my mind. And when front end staff see management or their senior leaders taking very decision specific calls, keeping safety of their fellow employees and customers as number one priority, I think it builds more confidence in everybody. So I think, yes, so that's the difference I would say that we saw 2nd wave versus the 1st wave. And I'm addressing this question in this way because the 1st wave I wrote a lot about how people reacted to the pandemic, our own employees. And second wave I think was a breeze from a management perspective. Wonderful. Thanks for that insight. And just one more question. I guess, your DMart Ready or e commerce initiative, you come at it from a brick and mortar perspective, as in your brick and mortar trying to build this out or see whether it works from a unit's economic perspective, whether you can scale in the future. And most of the e commerce operators come at it from a tech perspective, right? But they have expertise on technology from them come at it on that. So does that do you think that limits you in the sense, how is your team built in terms of capabilities around technology, whether you've hired a lot of people with that expertise and any thoughts on that front? It's a brilliant point. In fact, that's something that's clear on our mind all the time that brick and mortar retailer comes with legacy baggage, who always talks about cost, talks about ops and sometimes tends to look at technology as one ancillary part of the whole business. And we are very aware of that limitation that is bring to the table. And one of the reasons why we decided to set this as a separate company was knowing very well that this is a limitation we have. And the fact that we run this in a separate company with a separate CEO allows us to bring in that dimension of giving extreme importance to technology. So we are aware of that. And I hope that we build products on the tech side, which are as good as any other operator in the space. But I get what you're saying. Our only direction Sandip is this that there is few things but do it really well. So we'll not have a lot of the Chinese disco balls, bells and whistles around tech for e commerce. But the basic transaction system, the basic apps, the basic search, the way the journey, the navigation, we want to be the best in class. So just do that really, really well. Make the entire shopping journey super cool. That's the direction that I have given to the team, yes? So but point again, and that's something that's on top of our minds. Understood. Thank you for that, Nirmal. Good luck. Yes. Thanks. Thank you. The next question is from the line of Prasad Deshmukh from Bank of America. I have a couple of questions. The first is actually a follow-up of the question that was asked just before this. So when you do say a benchmarking, how do you take and add based abilities compare with say other e commerce food and grocery peers like Sabik Basket? When I'm saying tech, I mean customer interface, backend server abilities and if you have done any senior hires since the changing strategy for Demartready in the last year. So that was the first question. So you're talking about how do we change Figrid? So it's more like customer experience perspective on your app versus say other e commerce players. Is there any benchmarking that has been done? And if you have made any senior hires since this strategy the demand strategy last year? Yes. The second part I cannot comment on. On the first part on benchmarking on across the applications, what you're saying? Customer experience and your backend server capabilities. Okay. So overall, the application or customer experience, all of that, there is a team who runs it and we ensure that on every parameter we are as good as anybody else, right. And so that's a continuous process, yes, and that's how I alluded to in the previous question also that from a tech standpoint, we have to ensure that the journey for every shopping customer on the application is top class, frictionless operation throughout the journey of shopping, yes, whether it's search to eventual checkout. And even post checkout, right, you are awaiting this. So till the point is that the item delivered, yes, how is the journey? And then also if the customer has to reach out to us, yes, so if there is any returns, any issues, for every single element of their entire journey or touch point of communication, we try to ensure that it is super smooth, super good. And yes, from that standpoint, there is a team that works on this diligently to make to ensure that we are among the top 2, top 3 players in the city from that standpoint. Got it. And the second, again, is a follow-up on private label. Well, I understand probably the margins in private label are very similar to what you had in branded. How does the working cycle working capital cycle work in private label? Yes. So good question. By the way, margins are not similar. Margins are relatively better than brand companies for private label. Otherwise, you wouldn't do that business. Working capital was a very good question. We generally tend to hold more inventory in private label products than in brand products for obvious reasons of production cycles, minimum order quantities and stuff like that. Yes. So and that's why, like I said, that you need to ensure that every element on the private label piece is working, only then we get into those categories. So what's my minimum order quantity? The minimum order quantity should not be more than X number of days of sales. My running inventory holding should be within the limits that we have for those categories, stuff like that. Write offs have to be minimal. Packaging has to be great order. But yes, in general, your inventory holding is more than for a branded product. Okay. So just to clarify, is this a working cycle business for working capital business for you? No, it's not. We our policy is the same. We pay quickly, right? So it can't be negative. Okay. And last question on again, Dimatredi. Here, just wanted to confirm if all your orders after charging for this INR 49 or 3 percent of sales, whichever is higher, on the per order basis, are all the orders contribution positive at the gross level? Yes. Gross level. Okay. Thanks a lot, Namin. The next question is from the line of Sheila Rathi from Morgan Stanley India Private Limited. Please go ahead. Hi, Neville. Thank you for the opportunity. So I have two questions. My first question is you have talked a lot about the tough bit with respect to acquiring good real estate. So the question here is that over the last 12 months, have you seen if there are any acquisition opportunities that have got created with respect to some small and modern retailers, which you could think of acquiring and get the problem solved with respect to adding more stores or adding more real estate? So that's my first question. Okay. Hi, Sheila. So our view is we're not very confident about acquisition per se as we speak. So we don't okay, let me put it this way. If growth is our objective or store addition is our objective, is the right is acquisition of another company the right way to do that? No, I would not say that would be if I look at the landscape today in the country. I would rather add stores in my current setup by doing this organic method of store acquisitions. Okay. And my second question is, the earlier the Bmart ready delivery charges were higher, which was INR 49 or 3%, whichever is higher. What was the thought process behind reducing the delivery charges? Yes. With capital to €79,000,000 now, you don't get charged more than €79,000,000 So what was the reason to cut the delivery charges? Because anyway, you were seeing higher traction with consumers on the online bit. Good question. It was simply because, a, people are complaining like hell, okay, considering the confidence of context. And b, we took that call where it didn't build the trade off to the consumer angst to vis a vis a loss to bottom line, it tilted towards the decision to say it's a low. Let's knock it off. Because in general, ADT is anyway the home delivery side of the business was anyway doing well for us. So then we took a call to cap it off. And one final sub question on that. Lastly, you mentioned that home delivery and pickup were about fifty-fifty. Is the number still similar? Or has there been any change? Yes. So good question. Tough to comment now because we just come out on the 2nd wave of COVID. What I can tell you is whenever COVID was intense, it tilted significantly towards home delivery and the pickup point contribution was lower. As the first wave kind of settled down and people are comfortable, again, it went back to 50:50. But again, the second wave, again, it tilted towards HD. But in general, it's kind of 50:50. Shifting. Thank you. Thank you. The next question is from the line of Hiren Dasani from Goldman Sachs Asset Management. Please go ahead. Thank you for the opportunity. I just had a slightly different question on your ESC related practices. And if you can maybe spend a few minutes on highlighting some of the things what you are doing. I'm coming from the perspective that if I look at some of the external rating providers on this parameter, I'm sorry to say, but you rank very poorly on environment and the social related parameters. And part of those poor ratings is maybe lack of meaningful disclosures in your annual reports and in the other published documents. But if you can just highlight what you are doing and if you can also increase the disclosures meaningfully on many of the practices that would be really helpful. Yes. Thanks for that feedback. There is an honest admission that we need to do more in terms of disclosures. I think we need to explain more about what we're doing on this front. So we've got this feedback from multiple other I mean, analyst community also, earlier also. So we are working on that. But we are doing reasonably good work there, especially on the environmental side. The AR speaks a lot about what we do there, especially around renewable energy. We do a lot of work there. I personally look at that myself to ensure that we can convert as much as possible from the usual sources of energy to renewables. So that's one thing. On governance, I wouldn't want to say much. It's for you to judge. This is what we do, what we say, stuff like that. Social, I think, again, I think it's more to do with disclosures in terms of how much we should be writing. Maybe it's also a limitation because of the culture we have, but that's not an excuse. When we talk less, we don't talk in half. But yes, but 5, again, feedback noted, but we do a lot of work given on the social side for our own employees or for communities within the cities we operate. And we do a lot of work with the municipal schools of Mumbai, a lot of information is there in the show. But like I said, again, feedback noted, we'll make more disclosure there and speak more about what we do. And whether we see an opportunity to do more, we will do more. Yes. Just I mean, what I see that the meaningful difference between the industry leaders or the industry, at least industry average scores versus where you are scored. I mean, few points on sustainable sourcing of raw materials, privacy and data security or on the product safety and quality, I think those are most of the disclosure issues. And if you can, if you can, you know, put a separate document on your website later on also. So these things, that would be really helpful. Fair enough. Point taken. Thank you. Thank you. The next question is from the line of Swagatub Ghosh from Franklin Templeton. Please go ahead. Yes. Good afternoon. Thanks for taking my questions. I have 3 quick questions. Firstly, just wanted to know maybe that has been some stake in the demoted subsidiary to Sorry, you didn't hear that, Mr. Ghosh. Sir, your audio is not clear. Yes. I hope it's clearer now. Much better. Thank you. Yes. So first question is I wanted to know management's thought on bringing in some growth capital by directing some stake in BMRT Reddy. Probably that can lead to much higher value generation even at a lower stake for us. So any comments on that? So whatever the business needs, we are able to fund from the parent company. We don't beyond that, I don't have any other comment to make right now. Okay. Sure. Sure. And the other question is you said that you do not have a loyalty program per se, but I'm sure you must be collecting customer data on mobile and email IDs, etcetera. So I just wanted to know what is the level of digital engagement and outreach to our existing offline customers and whether there was a ramp up in those engagements in the last 12 months to bring them back to the stores? So we don't have any specific data on offline customers and we don't engage with any offline customers digitally with any specific customer related data. We don't have any customer related data from that standard for offline shoppers. Okay. So like you do not also like publish the discounts going on etcetera digitally to these customers? No, we do not. Okay. And so would we be having then this data that how many of our DMart ready customers are unique to DMart ready as in we have how many of those customers have ever shopped in offline stores? Would we be having this data? No. We only have the DMart ready data, but it is very need based. We use it only to make deliveries to the right addresses, call the right telephone number so that the order fulfillment is appropriately done. Right, right. But on the offline store level, aren't we missing a trick here by not like collecting any data and not like engaging with them in any way? We haven't been doing it since the very beginning. And it's not that we're saying, oh, we didn't do it earlier, so we won't do it. We don't considering a model, we don't see value in doing that. We our basic philosophy is run the business well, create very strong word-of-mouth, all old fashioned, I know, not appropriate for today's tech world, but that's the way we are. Okay. Sure. But you're saying you're open to change in the strategy if you find merit in it? Absolutely. If business tells us that we have to change, we'll change. But so far it's working for us. So why change? Sure, sure, sure. And one last question is a bit of a basic question. The 2 fulfillment centers that we opened by closing our stores, I just want to understand why couldn't we have done a partial closure and a 20,000 credit store both can act as rewards. So I'm just trying to understand why couldn't I have downsized the store like the front end store and have that store still there and maybe utilize a part of the store as fulfillment center? Why did we have to close the store altogether? These are not very large stores that could allow us to run both together. Otherwise, we would have done what you said. In fact, one of our fulfillment centers is like that, it's on top of a store. So if space is available to run both, so why not? But only it's a very large construction. Otherwise, no. It doesn't make sense. Fair enough. Thank you and all the best. Thank you. The next question is from the line of Mahesh Kabra from Purnatha Investment Advisors Private Limited. Please go ahead. Good afternoon, sir. A query I have is about our employee number. I'm asking the disclosed number in the annual report is outstanding companies. Why is it down via via contractual? Just give me a minute. Let me check the number and get back to you. Sure. So talking about the contractual numbers being lower. Yes. It's down from 38% to 368%, right. Okay. So, okay. So basically, it's a reflection of what we really need. So because like I said, right, the efficiency is got better because basket value has become higher. So to deliver the same number of revenue, the relative reduction in the headcount has happened. And this is in spite of addition of 24 new stores, right? Yes. 22 new stores. Yes. Another question was about your you have 39 distribution centers, which were 36 last year. So this 2 3 of the 3, 2 are the fulfillment center converted or all 3 are there? Come again, come again on the question. Okay. You have 39 distribution centers, which was 36 last year. So the addition of 3 distribution centers includes 2 fulfillment center or fulfillment centers are separate? That's separate. That's separate. This is for ASF, right? So again coming back to your employees think that shows roughly almost equal to your billing size improvement. Is the improvement in your employee productivity, is it? Yes. Like I said, right, when profit are going up, COVID pandemic, attrition were reasonably high at the front end. So staff, my front end management calibrates headcounts accordingly. So yes, so it just gets more efficient because of more lesser footfalls and per basket value being higher has helped. Another thought or an explanation I had thought myself, I just wanted to confirm that with you. Is that has got something to do with the fact that the some of the stores there working under constrained working hours even when it's been in March, quarter? Yes, yes. So multiple levels operating. Okay, thank you. That's it from my side. Thank you. The next question is from the line of Nehal Jamm from EDWise. Please go ahead. Yes. Thank you so much. Good afternoon, Neville, Niladri and the entire team. Three questions from my side. You mentioned in your offline business that general merchandise is a big driver of profitability. Now traditionally, e commerce doesn't have this category, given the lower gross margin and also the focus on discounting that is generally seen. Just wanted to understand how is the path to profitability that you are generally seeing, especially say in a city like Mumbai where you have been telling for moving through this? I'm sorry, there was some disturbance at our end. Could you just repeat the question a little louder? Sure. Am I audible now? Yes. This is better. Yes. I was asking that in case of the offline business, it's not relevant you mentioned that general merchandise is a big driver of profitability. Now traditionally as we understand of the e commerce side, there is not that significant a contribution and given that gross margins are lower and also the focus on discounting that is generally seen in e commerce grocery, how is the path to profitability that you see in this business? And also if you could share your experience that you've seen with a city like Mumbai that you've been present for more than 3, 4 years? This is a specific question for e commerce, right? Yes, specific for e commerce. So, we just cannot comment on what will profitability be, will there be profitability, just cannot comment on that because see your profitability for e commerce is a function of your top line gross margin. So our focus currently is to make the running the operations at a reasonable cost, which makes sense to us, right. And our objective is currently to be competitive there. See, top line gross margin is a factor of market forces, right. But how you run e commerce is in your hand. So applying the same principle of Dmart, brick and mortar, that if we talk about our operating cost prowess, can that prowess be transferred to e commerce? So keep away the technology cost and all of that, How do you run the e commerce business in an efficient manner is the question we ask ourselves. And how do we have a competitive advantage there? That's the way we are approaching the business. So if I have the competitive advantage in terms of running the business at an efficient cost, I think half the battle is won, right. But at the same time, overall company level profitability is a factor of top line margin. So their assortment and all of that, which is a completely different game and more long haul, yes. So that's the way to look at the business. So in the shorter term, how do I run the business at efficient cost? But in the longer term, how do I manage my assortment rates in a manner that you get comfortable advantage which is hard to copy, right? So you have to play both. Understood, Nabil. And just a follow-up on that. So if Remar Radio is only operating in Mumbai and we had not made the investments in new cities, would it have been a model that may have reached profitability by now? It's difficult to comment on that. Sorry, come again. I was asking that say if Dima Reddy was only operating in Mumbai and the investments into the new cities had not been made, would it have been a model that may have already touched a breakeven or turned profitable? Back in our comments. Sure. No worries. Neville, the second question was that you regularly keep mentioning on the EDLP strategy. Now over the last year anecdotally, I do notice that a lot of competitors are coming close to matching prices. Obviously not that they are still there. But just I know you also mentioned last time now that you do keep a regular type of prices. I just wanted to get a sense that if you do see such aggressive pricing action, do you want to take the steps of keeping that disparity or it is something that you're okay with 1, 2 competitors end up matching some of the basket values or even going lower in some of them? So we'll compete. We always said that we'll compete. We'll continue to ensure that our prices are lower. But like I said, beyond a point, you also get to create differentiation because, see, a lot of the items that we sell are something that even your trackers don't pick up. So we observe all these benchmarking trackers that keeps being seen, right? But then just 20%, 30% of the revenue of what a retailer like DMart does, you still have a huge chunk of business where it's very hard to compare apples to apples, yes? And I've spoken about this in detail even earlier that you have general merchandiser, you have apparel. You have very complex categories. You really can't do a benchmarking per se, okay. Every retailer creates its own differentiation and that allows you to operate with decent margins, yes. So considering all of this, I think and you've seen this before also, earlier also, all discounting is very sporadic from that perspective, yes, and very limited to branded FMCG products. Why I'm excluding the durables and all of that, the expenses, because we don't do business there, but otherwise you have the apple to apple discounting comparisons there too, but we don't do that business. But otherwise most of the comparator is on FMCG branded products, right. So yes, but we will continue to operate at a pricing which is meaningfully cheaper to consumer shoppers than Yes. But we will continue to operate at a pricing, which is meaningfully cheaper to consumer shoppers than anybody else. That is a position we'll love to hold. Helpful, Neville. Last question, you mentioned on wholesale cash and cash was postponed because of the pandemic. Any plans of considering that as things don't rise? No, no, not now. We're still stabilizing our current business and focusing on our current business. Sure. Thanks. Thanks, Nabil and Chief. Thanks. Thank you. The next question is from the line of Swati Mehta from Tilforce Capital. Please go ahead. Hi, Narel. I hope you're well. I had a couple of questions on the Beemath ready business. So the first one is, basically, as the scale of the business doubled, what were the major changes that you had to make from a capability point of view? And I know you touched upon this last time in the analyst meet that you were going to make some big announcements. And whether you're happy with it because as a as customers, we just felt that during the 2nd lockdown that just happened, the experience could have been a little better given that we had the time to prepare during the 1st phase. That's the first question. Yes. So this is subject to Seema ready, right? Yes. That's it for Seema ready. Yes. So fair enough feedback taken on doing it better in the second wave. So again, right, from a Demart standpoint, when I look at the numbers, we did far better than the 1st wave from an e commerce business perspective because if I look at the revenues. So what happened during the first wave was everything collapsed. We couldn't even service our regular orders because for the 1st 15 days, people stopped coming to work and stuff like that. That didn't happen in the 2nd wave. And in the 2nd wave, by that time, we had double the capacity there in a city like Mumbai. We had 2 additional fulfillment centers. In fact, we added a third also, stuff like that. So from 2 fulfillment centers, we moved to 5 in Mumbai, right. But the point is that, again, the second wave, the demand again was very high. So you can't focus on the entire demand. So you will have a section of consumers who shoppers who will be very dissatisfied. And we all know, right, even if you dissatisfy even 1% of the shoppers, the noise it creates on social media is huge. So our e commerce shopper is very demanding shopper, right, demanding customer. So that's where the noise created, the negative feedback that is created. But otherwise, I think just and again you need more fulfillment centers. More fulfillment centers you have, more closer it is to the consumer market, segregate. You are able to service more orders, you are able to service faster earlier with better availability. So that's it. So even after having these 5 fulfillment centers we have, it still falls short. Now the point to make is that what happens post COVID? What happens 3 months later? Okay. Will we continue to have the demand that we're having today? So those are the questions we have to ask and respond appropriately and then do investments appropriately. So that's it. That's the point. And as far as announcements are concerned, announcements were about new cities, which we've already done, Bangalore, Hyderabad and even Pune, Ahmedabad, these are the cities we are operating in. Got it. I think so that's very useful. The second point that we wanted to understand better was that there's, as we mentioned, roughly the again, relating to Bmart ID, The 800 stores of sales is primarily from Mumbai area. And does that mean you were the largest player in the city? And can you share some more color if you have any data on the market share for Mumbai, eBroker? No, I have no clue. I don't know what the market share is in Mumbai, who and how much. I don't know. Okay. Got it. Next question is so this is on the own label piece. Our understanding, at least with the fact that the supplier ecosystem for own label is not super strong in the country. And as we see more and more B2C brands come up, they've been talking a lot about the improving manufacturing capabilities in India, and these are for FMCG products itself. So have you felt that? And if yes, does that change your view on how quickly you want to scale up? And this is taking into consideration all the other points that you mentioned on private label with respect to the pricing and so on, but from a supplier ecosystem point of view. Okay. So your question is how is private label playing in the e commerce setup and in the context of B2C brands? Is that the question? Yes. And do you see the supplier ecosystem really improving? And if yes, does that change your sort of speed at which you will take this up? Okay. So our view is everybody will focus. So first let me talk about D2C brand, which is very interesting and very evolving sector and what we are understanding from it. So we have 2 types of D2C brands, some who want to be on an e commerce platform, some who don't want and want to run it to their own e commerce websites or they're very particular about what website they want to sell from, yes. So those are the challenges we face with certain D2C brands. Obviously, because a lot of people perception of Demartigo, it's a middle class, so not so sexy place to be in. So I don't want to grow to my brand image and stuff like that. So those are the challenges we face. But otherwise niche brands have amazing potential in the e commerce platform. That's our broad view, right? They do reasonably well on the e commerce platform. Private label, again, I would say, it's too early to comment, but it's not bad. It's at least the ratios or the sales of contribution, whether the brick and mortar is either equal to or better. So they are doing reasonably better through brick and mortar stores, right. So that's the insight on private labels. But at the same time, DTC brands mostly are niche. They are a great margin maximizer opportunity. I do not know about how much how will they compete at scale. So that's probably Tang will say. So my view is all three will go, the private label, D2C and the big brands, yes? They all go differently. I just want to clarify, Neville, I can we incorporate some of these D2C learnings within DMart when we create our own labels? No, no, no, no. No, no, no. See, D2C is D2C. They are what should I say? They are marketing geniuses. I mean, they bring their D2C brands are successful because of deep insights. When you're talking about private label, you're talking about staggering the entire franchise across multiple companies, multiple categories. I don't think why in the general course of business, yes, you learn from everybody, but end of the day, what is the principle of private label? Equal to in quality, cheaper in price to consumer and better margin for the retailer, right. When you bring all these three together, I think the simpler the category or the simpler the product formulation and driving efficiency is the way. So they're different. I mean, B2C, I cannot replicate. I'm very, very clear about that. B2C is special. All right. And just one last question for me, which is, so for the products that we sell in Adima Teli stores, are they detailed on the basis of convenience or value? Good question. So it's a discovery for the consumer by Chopper. But in general, I would say the home delivery is more so let's put it this way. I can't give a straight answer. The way the idea of coming into DMart Ready was how can we bring in a model where consumers there are consumers who like DMart but probably don't like to come into the DMart store for whatever reason, right? But how do we give them the DMart experience at the DMart prices? That's their attempt to the DMart remodel. So whatever that means, for some consumers it may be convenience or some it will be price. Yes, so that's the way to look at it. Thank you. That's all from me. Thank you. The next question is from the line of Elias Garshakir from Motilal Oswal. Please go ahead. Yes. Thanks for the opportunity. I have a couple of questions on your online business. So when you see your online business, certainly if you see over last year, you've almost doubled. But when you see your competitors in the last 3, 4 years have gone up 6, 7 times. You mentioned that maybe you will probably kind of take another couple of years to see the things and then probably ramp up. So what is the tipping point that you see that will make you far more aggressive in online than you are barely a fraction of some of your online peers? If you can just share your thoughts there. 2nd point on the same related on online is Dmart ready. So when we think of online, it's a mix with our Dmart ready driven growth. So is there another model that you think you would want to try maybe at a later stage or you think your growth on online will be driven by only the margin? That's on online, if you can first ask. Yes. So the first question is if Bombay demodulation breaks even, our speed of acceleration will be better. We will accelerate faster. So that's broadly the point on what does it take for us to accelerate. And on any other model, I think it's still too premature. We want to fix this model first to think about some other model. So like I've commented earlier also that marketplace is an area we will not get into. So, I think if we fix this, the Demartellini business itself, it's a crazy opportunity, right? So just getting this right is good enough for us for a reasonable amount of time to accelerate the expansion. And can you share what is really being the hindrance? Is it scale? Is it volumes? Because some of the other players in similar regions are doing multiple times of scale probably. Is that correct? I don't know about the other. But as far as for this business to make money, and I've commented this even last year, it's top line. If we get the top line, we can make this business make money. So intensity of sale, yes, intensity of sale on every unit of measurement. So just intensity of sale is in order, we can make this whole. As a consumer, I can say, maybe demark ready today may not be probably in the top 2 or a top 3 preferences for a consumer. It could be probably just purely because of the promotional campaigns done by some of the other online players Or I don't know what would be other reason. But I'm just thinking from the point of view of when you say volumes or sales is your key factor, then where how are we ranking in terms of in consumers' mind as a top online operator? You have a good point. I don't have a very clear answer to that, to be very honest. If you look at the e commerce space, right, the obsession on consumer satisfaction is at the cost of losing a lot of money. Now obviously, we can see our P and L and balance sheet for this year. Obviously, you've seen that there is a huge focus on ensuring that the losses are in reasonable limits. Now when you have those kind of limitations, which comes from the DNA and culture of the firm, you are going to be a trade off, right? You are going to compromise on certain areas. Now the point is as a company, are we comfortable with that? Of course, we are. Yes. So if I want to be in the top one, top 2 from a consumer rating perspective, then obviously the burn rates will be much, much higher. The point is we neither want to be the top, neither want to be the bottom, okay. I am a functional service. Today, if you look at let's for a minute take digital away. Look at the Dmard business, right. I'm delivering very, very functional service, okay. I'm not giving you top class experience when you walk into my store. I'm just giving you great products and good value. Everything else is very transactional. The point is that moment I move back on the digital side, okay, probably because of the competitive context is in a particular order that I look relatively more bad, okay, from a consumer experience perspective on the package. But it's too early. Let's see what time says. Is my product assortment and is my value compelling enough for the consumer to kind of ignore a little bit on the other parts of the experience? Let's see. Let's see with that. So some of the online players who are perceived to be big loss making entities, haven't they all turned pretty much closer to breakeven or profitable? I mean, it could be just because of the COVID factor where their investments in marketing would have been much lower. But a lot of them have actually turned profitable. So I mean, I was just thinking from the point of view that when you achieve scale, doesn't that itself give you enough ability to maneuver with pricing and a lot of those things that could kind of make you much more confident. I'm sorry to just harp on this point, But I mean this launch making factor that is being looked upon as an online as in vertical, isn't that really changing for a lot of online players, mid scale? I haven't seen any online from other online company financials. I cannot comment on that. But everybody knows that with the pandemic, the revenues have gone up significantly. Now how does that add up in the overall scheme of things over a period of time? I think time will tell, right? So we'll see. Right. Okay. Okay. Just quick couple of questions. One is on Dmant Ready. Today, Dmart Ready is seen as a vehicle for online growth. Do you see that, I mean, probably as an opportunity for you to drive daily business? Sorry, sorry. Kamali on the question. I couldn't get it. I'm seeing that Dmarts really today is seen as a vehicle to drive your online business, right? But can Dmarts really drive growth through the daily format in specific cities for the week? The daily format being the regular format? No, I'm saying basically even the format which has typically like 1000, 2000 square feet format where it's like a general grocery kind of a daily format store? That's a bad way. No, we haven't considered that yet. We haven't considered that yet. See, we need to understand that the SIMDG business in India, I think that's one critical point to note. And we've seen in the last 10 years how the convenience format has evolved, right? See, convenience worked well if the gross margin of the business is reasonably good. India doesn't give you decent gross margins. FMCG business doesn't give you decent gross margins to make that business profitable in the brick and mortar also. So to that extent, we are not very confident about selling FMC or grocery in the daily format in a way that you are talking about. Got it. And just last question on private label. I see a change probably in your maybe I should just answer your conviction on private label, which is significantly increasing versus earlier where we were not so aggressive on private label, thanks probably to COVID. But where do you think I mean you can grow this private label? And do you think that this is only as a vehicle to improve your margin? Or do you think private label as a category can actually be a very good vehicle to even increase your customer breadth probably? Yes, good question. So if you look at all global retailers, right, everybody started private label with a me too, better price, better margin principle. And then depending on your confidence in managing that category with your own internal team, then you begin to have differentiated products, especially on the food side, local taste, local stuff. So those are the opportunities for the future. But yes, we also see it that way. But like I keep saying, it's a long Natswini? Listen, can we just take a 1 minute break before we go on to the next question? Just give us a minute, please. Sure, sir. So Ruchab just interrupted me to make a clarification on the store openings. So because there has been a slight understanding gap on store openings, I'm just reiterating what we had said in last year's Analyst Meet where we said that this year that passed by and year, the 2021 period and the 2021, 2022 period combined, we said that we'll open 59 stores. That was the guidance we are giving, and that is what we are retaining, yes. So which effectively means last year we opened 22 stores. So 37 should open ideally this year, yes. So I just want to clarify that and we aren't giving any guidance beyond that. So it's 37% to 99% basically is a sum total of 2 years, not for a one particular year. Yes. So that's why the interruption. Yes. Listen, we can go on to the next question, please. Thank you. The next question is from the line of Pasi Pee from IIFL. Please go ahead. Hi, sir. This is Pasi Pankaki here. I just wanted to understand how your store does in a particular micro market on an average. So in a particular micro market, let's say, within a 2 kilometer radius of your store, what I know you don't have this data, but if you were to just guesstimate, what kind of market share within the grocery industry of that catchment would a demarts store typically have? Pazit cannot comment. We've never done all this analytics. So I don't know. Okay. Secondly, you mentioned that the opportunity is that for 1 lakh population, you can open 1 store. So does that mean, I mean, if you were to look at currently your number of unique customers transacting annually per store, would that be like 25,000 because 1 lakh population would mean 25,000 households. Is that what you mean really? I mean what I said, 1 lakh population town, 1 demand store works. That's it. And this is purely when I put up that store, I observe it for a year, it's doing good revenue, it's giving me profit. That's it. Beyond that, I do not know whether it's 25,000 hours or 15,000 hours or more money in EBITDA. Okay. And this is based on your actual experience in particular couple of towns or 3, 4 towns that it is there? 9 cities, sorry, we have 9 cities below 1 line also we have a store, okay. And they also do reasonably well. So and then 1 to 5 lakh we have around 55 stores. So this data is this is just I mean this is our data. We have a store there and this is that, yes. Okay. But those stores not have significantly lower sales versus the country average? Could be, could be. I've spoken about this also earlier that lower the pop The reason I asked this is I was doing you some math. Basically your revenue per store approximately on an average is INR 160 crores. And if I take, let's say, a reasonable amount of, let's say, each transacting household spending about INR 2,000 a month, so about INR 25,000 a year, then you really need a much larger population to or rather transacting households to support a particular store and even within that you would have a certain market share within the catchment, right, you won't have 100%. So that math works out very differently for me. I don't know what is the reason for that. Have you considered repeat buying in the same month for the same household? Yes. So INR 2,000 a month, if I consider, per month per household for a guy who transacts with you that would be let's say INR 25,000 a year of value and INR 1 lakh 60,000 is sorry, INR 160 crores is your total sales per store. So in that case, the number of households required to support is actually coming much higher, right? Yes. So I think the cash flow people buy more often. So look at anybody's home, right? Probably your own home. So I think that's the catch. I mean, that's one. So you tend to buy more. Okay. Understood. Fair enough. And secondly, I wanted to ask regarding your sort of approach to store expansion. You have always stated that you would rather go for a slow and steady kind of approach. But isn't there a sort of total finite opportunity? I know there is a big market share gain from unorganized, which can happen over a period of time. But say within a particular catchment, because people don't want to travel more than 2 kilometers, 3 kilometers at a max. So if there is another sort of big organized player who opens up in that catchment before you, doesn't that really reduce the attractiveness of that catchment for you? So far, right, it hasn't affected us. In a lot of cities where we opened, there was a existing retailer operating there. So it hasn't affected us yet from that perspective. P. Vijay Kumar:] Maybe in the city, they might be there. But in a particular micro market, in a particular 2 kilometer radius, has there been cases where 2 large organized retailers are present and when the second guy comes in, there is no impact on the 1st guy sales? There is an impact. I can speak about it. So, people I will operating somewhere and somebody else comes close to me, okay, my business does get impacted for the 1st few months, but then it comes back. So, that's why I keep saying that the market of 100 is too large. So far, no problem. Okay. Okay. And lastly, on Demand Ready, any kind of idea you can give in terms of how the rollout will progress over the next 3, 4 years? Let's say, if we take a longer term period like, let's say, 5 years, how many cities do you think we can have DMart ready in? I cannot comment. It's purely a factor of how we perform in Bombay and how the business progresses in Bangalore, Hyderabad and Ahmedabad, Pune. So this is that. It's one area time. I mean, that's where we are. We can't I mean, we don't give prediction for next year for the brick and mortar business. I can't predict about what will happen 5 years down the line. Really don't know. Play by the year, play by the year, that's the principle we operate on. Yes. That's all from me. Thanks. All the best. Thanks. Thank you. The next question is from the line of Amol Gogate from Karnak. Please go ahead. Thank you. Thank you, Neville, for your time today. Always very interesting to hear your thoughts. I wanted to understand, from what I can hear, there seems to be still some hesitancy in rolling out DMart really. And it seems like it's I mean, certainly much lesser than what it was, say, 18 months ago. But it seems to be linked to your thinking that you need to get Mumbai right. But isn't that a brick and mortar way of thinking about the business? Don't on the e commerce side, companies are lot more aggressive, prepared to expand, mainly because there is a possibility that there are others who would get to the customers faster than you. So how do you think of the lost opportunity? And also why the in light of the potential lost opportunity, why the hesitancy in expanding as fast as you can? So I wouldn't agree that there's more hesitancy than 18 months. Right? In fact, we're more aggressive now than 18 months back. That's why we've gone to these cities, new cities. Okay, let me put it this way that these large cities have a population which are significantly higher. So if you address these cities in a far meaningful way and put in some more money to ensure that we get more shoppers to shop on the application, that would be a better way to address the market opportunity, yes. And why we are not going we are taking this 2, 3 cities at a time kind of approach, simple as see, time will tell whether we are right or wrong in our approach, right. Now it seems like we are being too conservative, but that's the way we are. I mean, can't help much about that. We won't go whole lot across all cities. So yes, so but we'll see how we do in Hyderabad, Bangalore, Ahmedabad and a couple of more cities that we're planning to grow and let's see. If I may just ask follow-up, so not even explained to other cities, but even Mumbai clearly from your comment, it looks like you know that Dmarrady has a lot of opportunity in Mumbai alone, but you seem to be waiting to get the model right. Am I right in understanding that? No, no, no. So Mumbai, we are going whole hog. If you're seeing pent up demand, we are setting up fulfillment centers to fulfill that demand. Mumbai, we are going all out, to be honest. Okay. Okay. That's good to hear. And Mumbai is a 2.2 crore population MMR, the entire Mumbai metropolitan region. So it's a large population. Okay. And for the other cities, is it lack of people that you have? Because obviously, from a funding perspective, you said the parent company can fund that initiative even in the other cities. So anything else that kind of constraints you from rolling out faster? No, we are at the right place. So no issues there from a funding perspective also or people perspective. Got it. Thank you. Thank you. The next question is from the line of Sameer G from ICICI Securities. Please go ahead. Hi. This is Sameer from ISL Securities. Sir, I had two questions. And coming back to the last quarter performance, what we saw was a sharp contraction in gross margin. Now I understand that this quarter, there would have been a higher mix of essentials and staples, but that would be true for the base quarter as well. So is there anything out of the ordinary here that we are missing on this gross margin contraction just for this 1Q performance? Yes, good observation, Sameer. So see, I'll tell you what happened. In the first quarter of last year, everybody was it was new for everybody, right. And there was complete shutdown and Essentials were completely shut. And we had done a slight calibration of margins in the Essential piece last year. That's why it's not comparable to Q1 of this year. Q1 of this year, we didn't touch anything there. And Essential will again and the non essential will again shut. So that's why there was a slight erosion on margin. That's it. Because we're pretty confident that JOBH I mean whatever happens, things will come back, right. And we're not too paranoid about margins per se. We let it be the way it is. 2nd is we didn't have any major onetime costs like we had last year, right. We paid significantly higher wages for people to come back to work and stuff like that. So that's the reason. But it's a good observation. Yes. So that's our responses. Thanks. That clarifies. Also on this on the e commerce bid, just one question. So are there is it completely run separately? So as in the same product on a D Mart store, is it available for a different price or a different deal on the e commerce format? Or is it the same, at least in the similar catchment? So it's a legally, operationally, all sides is a separate entity running a separate setup. Technology, everything is separate. Everything runs independently. It has an independent CEO. His name is Vikram, Vikram Dasu, who runs it. So the broad ethos of what DMAAT stands for is what we what basis which the business runs, right. There is a lot of pricing and purchasing and buying merchandising synergy that is transferred to that company, to that business, right. But otherwise, if you ask me piece to piece, item to item, is it the same price? No. It runs independently basis the principles of Dmard, right. And from an assortment standpoint, it is a subset of the Dmard assortment. You will not find everything that is there in Dmard in a Dmard ready store, right. So this is some analysis, some logic we list a certain set of products in DMart ready. Also there is a reasonable number of articles which you sell in ready which you don't sell in DMart store, right. Because it and that's why we wanted this business to be run separately because it has a different principle, go to market principle, right? So that's how it is now. I hope I've answered the question. Yes, yes, sir, very clearly. But the only thing is that because you're running it with the same brand in the mind of a consumer, isn't it creating some sort of distortion or maybe if I may use that term a little backlash for the brand? If there are differential prices for the same product on different platforms offered by the same company, at least in the mind of a consumer? That's a great point. So basically, look at it from a consumer standpoint. What are Dimaveri stand for? It's the app, right? How the app is communicating or responding? So it's a typical DMart shopper, right, he will buy stuff that he would otherwise buy from DMart, which generally is available on the app, right. And the ethos is that pricing has to be similar, similar meaning same levels of discounts, right. So you're delivering that to the Dmarts shop. At the same time, there are certain shoppers who would want something else, which is delivered to her through the search. So if she is searching, they would have only if she is searching, they would have copy, she can give it a copy on the screen, right. But if she wants NASCAP, NASCAP and DMart maybe either be here. So it is mutually exclusive. So there is no distortion in the positioning of DMart. Got it, got it, sir. And just one final follow-up on that. Is the whole MMR, the metropolitan region of Mumbai being serviced by DMRT Reddy? Or is there still some spaces left out as you said that you're still opening more fulfillment centers? B. Balaji:] There are gaps. There are gaps in certain regions, certain areas, basis physical reach, but more in the non BMC limits. BMC limits, we are covering almost every PIN code unless we have a specific locational challenge that a vehicle cannot reach or it's not appropriate to go and do business there. Otherwise, entire Mumbai city is covered. But MMR, obviously, we have challenges in certain parts because of distance. So those are the gaps. Otherwise, more or less MMR is covered. Thank you, sir. That answered all my questions. Thanks for this. Thanks. Thank you. The next question is from the line of Amnishekharwal from Prabhudasree Ladar. Please go ahead. Yes. Hi, Neville and Tejman. Just a couple of questions from my side. My first question is on Dimartreddy, where we first started the stores as a pickup point and then delivery. So do you have any plan to convert these Beamer ready outlets? First of all, how many outlets we are having? And do we have plan to convert them into neighborhood stores? Because since the big shops closed, we don't have any organized retailer who has gone into this neighborhood kind of format in India. Secondly, when we are giving the guidance on the number of store openings this year at 59, which includes the carryover from last year. So how are we prepared that beyond FY 2022, so we still sticking to say 40 per annum or we have plans to go to much higher numbers looking at the size that you are seeing that there is a potential in the Eastern cities itself of 1200 to 1300 stores? Amnesh, I would like to clarify once again the guidance for this year is 37 stores not 59 stores. Okay. Yes. So that's 1. 2nd is, we have as of 31st March 2021, we have 290 pickup points, okay, of which 276 are in Mumbai. So Barco Holdings is Mumbai. About converting the pickup points to a convenient format, we spoke about it earlier. I'm repeating this again. We do have some pickup points that are relatively larger, And we do sell some stuff there. But that is more to focus on making it more margin accretive, that's it, but not really a whole lot of convenience stores. I would recommend you go and have a look at it and then make your own interpretations. And what is the last part of the question? Store guidance. Store guidance. So store guidance, see, if we don't give guidance, I'm repeating this again. Last analyst meeting, I gave guidance because of COVID-nineteen's relevant disruptions. And hence, we said that, okay, pre COVID, we opened 59 stores over 2 years. So we said 59 in the same following 2 years, which is last year, 2021 2020 1, 2022. So Usman said we opened 22 stores last year. So we are saying we will open 30 stores? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] 35 to 37. See, we've also closed 2 stores. So again, gross meaning is the 24 stores have already been opened in the 2021. So the grand total for the 2 years should be taken at 59 and not for one particular year. I hope that clarifies it, Hamish. Yes, yes, absolutely. Whatever more keen to know was that in terms of the ability of the management team to handle the store openings. So any clarity on that in the medium term that how much of that we can handle? So this question was asked earlier, but I cannot comment on that. All we can say is that whatever the relationship team can give us, we are reasonably well equipped to handle 2 open stores. What that number is, I would not like to comment. All I can say is we are building reasonable capability on the operational side or the project integration side to ensure that we have a decent pipeline of store openings in the future. Okay. And maybe just one request that if we can share on a quarterly basis, let's say, the P and L of our e comm business, so that will be very useful. I don't think that would be possible, but point order, we'll discuss internally. Okay. Thanks a lot. Thank you. The next question is from the line of Binoj Zariwala from Suniti Securities and Finance. Please go ahead. Hi, Venkat. Thank you for the opportunity. My first question is, in the last year, when the sales were still recovering in quarter 2, quarter 3, we saw that our EBITDA margin already hit 8% 9%. Now I understand that you might have done some changes in the way you operate the business extracted some costs out of the system, which is more structural in nature and will not come back. But just would like to know from your perspective, would you like to take this as an opportunity to go further down on your gross margin? So the best I mean, the way I always respond to this is 15%, 16% gross margin is what we look at, right, top line gross margin. So we'll never earn more than that. Now how much lesser should we earn is a factor of competition and all of the other things, right? So the broad principle is not more than 15%, 16% gross margin, 15% just for simplicity's sake. We'll never earn more than that. And we will always focus on our business from a cost perspective to ensure that we run the business as efficiently as possible, but obviously ensuring that we don't cut corners, employees, wages, compensation, talent quality, all of our land should be top class, no compromise there, but still run a very efficient ship, right. And then whatever profit comes on the bottom line is the profit that comes. I mean for us the first two parameters are more important. And then competition, if competition makes us on lesser gross margin, so be it. We will compete. Yes. So that's the way to look at it. Okay. The second question is on inventory level. In quarter 4, in your commentary, you said that you have a problem of plenty inventory because you were optimistic on the business prospects. Has that inventory now normalized? Yes, totally normalized. It will become all right. We didn't know how long the lockdown will be and stuff like that, right. But things have rapidly come back to normalcy. Like I've commented, states which have relaxed norms much earlier are doing phenomenal sales. They're doing all well. So I think all the worries have gone. There are poverty outgrown inventory. In fact, we may end up having shortage of inventory. It's very crazy times actually, the way we are yoyoing between situations in the country, we're going to call it, it's crazy, inflation, stock outs, excessive inventory, flight of labor coming back, multiple things happening. Right. Now very basic question, pardon my ignorance on this. So let us say you are now setting up stores of the average size of approximately 50 odd 1,000 square feet. Now these are typically G plus 2 kind of structures or maybe even G plus 3 structures. Initially when the crowd is still gathering place and it's still coming into the store, you've said earlier that you typically start the store partially not completely, right? And then as the ground picks up, you open up the additional floor or so. Now in your retail area, when you so my question is that in your retail area, when you mentioned that this is about 8,800,000 square feet of retail area, there would be stores which are you've not completely opened up. So do you while counting retail area, do you take the entire retail area of the store or only the retail area which is operation? Only operational. Only operational. Okay, okay. So which means so just for clarity purpose, you're saying that let's say it's a 3 g plus 2 and you started g plus 1 then you only count g plus 1, right? Yes, probably yes. Okay, okay. That's Yes. And Neville wanted to share one last one observation with you. On Remark Ready, when we are looking to order, there is a waiting period of 3 4 days. Is there any internal target where you want to lower this waiting period? So waiting period is a factor of demand. If demand is excessively high, So waiting period is a factor of demand. If demand is excessively high, the waiting periods go longer. What we have done is, 1 Jugar we have done is, now we don't take orders beyond a particular number of days. That's the only way to cut the waiting time because whenever you open it for 7 days, you get orders put over 7 days, number 1. Number 2, also to understand that there is a set of customers who don't see it as a waiting. They actually voluntarily select the period of their choice. We have to also look at it from that perspective, right. So yes, but point taken, we are these are the challenges we are facing. How we should be able to see the internal conversations we are having is how do we ensure that we deliver 100% of orders within 24 hours. And if there is an opportunity to deliver within 12 hours, can we? If there is an opportunity to deliver within 6 hours, can we? Yes. So these are conversations we're having. But second point taken, but if you look at global e commerce grocery delivery especially, they also have slots for a longer period of time because they want people to plan grocery shopping. So that's also we should not even just see it as waiting time. Yes. There are some people who want it on a weekend, on a particular time slot, date slot, things like that. So you have to look at both ways. Right, right. Understood. And last question is, you've done some land has been acquired in the subsidiary, this approximately of INR 18 crores in FY 'twenty one, which subsidiary has this been acquired in? So this is the grocery side, I think. I think it's in the RTL business, which does the grocery processing. So we bought some line there to build out some manufacturing The next question is from the line of Varun S. From IDDI. Please go ahead. Yes. Thank you for the opportunity. So two questions. First on real estate acquisition, just wanted to understand that in the long term, will it be okay if we match long term assets with long term liabilities, which is a long term debt? Or how are you thinking about funding the acquisition of land going ahead, I mean, over and above the cash that we generate from operations? Yes. So if we need to raise debt to buy real estate or to help us in expanding our business, of course, we will do that. But the point is that it's a factor of 2 things. One is, most importantly is that, is my company capability good enough to open stores at that run rate, number 1. Number 2 is what debt is the right debt without having any risk to the balance sheet, right? So both are equally important. But in general, if you're asking only just about RUB 1,000,000,000 debt to open stores, of course, why not? We've done that in the past too, right? Sure. So, Gandhav, we are not averse to taking debt also going forward for funding acquisition. Great. And second question What acquisition or what? Real estate? For the real estate, yes, that's okay. For general aggregates. Right, right. And sir, my second question is you already mentioned about that DMart is not averse to opening 20,000 store and we also have a couple of 10,000 stores. Sir, but I just wanted to understand that on the maximum store size front, is there any kind of limitation that we thought of that opening is the maximum size and we are not we don't want to go beyond that like more than 1 lakh 50,000 square feet size of stores on an individual basis. My reason for asking this question is Dmarts can use same principles of trial disruption to kind of penetrate into lot more categories. So for example, consumer durables for example, we don't sell bicycles, etcetera. So I don't know, I mean, which one categories are what the there is huge amount of optionality in terms of categories that we are tapping, particularly on the non food side. So this is a large format store and category evolution or tapping new categories. So how do you think about it, sir? Yes. So the main thing is relevance, right? I mean, how relevant is your model to the category we operate. So that has to be retained. We like to work in categories which are simple to understand, simple to explain, simple to easy to carry, things like that. But at the same time, as the country's economy evolves, if say for example, per capita income consistently income increased consistently at 7% to 10% every year, that automatically over every 3 to 5 years creates enormous opportunities, okay. Now point is when those opportunities get created, how do you align those opportunities to your model and what are the ancillary relevant categories that you can enter into. And this is a particular activity we do with the buying team. And it's their job to do that, to review that. And we keep doing small trials, small pilot and then we decide, let's do this subcategory 2. So in general, your point taken, but we are very particular about, okay, what are the things we should not be doing, yes? So but it's a very fluid situation. I don't have a very clear good answer. I'm just giving you a broad ethos, the principle of how we do that. And that's why owning property, owning real estate and building slightly more gives you that future leverage, that future dexterity to try this new thing. So yes, absolutely right. So on I mean maximum store size, any commentary on that? No, I cannot comment on that. But I mean, it's logical, right? You don't build unnecessary large stores just because you own the real estate. I don't think that's a very prudent way. So we are very prudent with our capital and with decisions like these. So yes, so but I can't give you a number if you want to build beyond this size. Right, right. And just to answer the last question that on customer experience, so we talked a lot about online customer experience, but in the offline space, which I mean the business that we know quite well and as you rightly highlighted that lot of customers who do not want to go to offline Dmaj stores. So these are needs to be exclusive set of customers. But in the offline customer space, sir, what are the things that we are offsetting for to improve customer experience because long customer queue is one of the main problem. So but I don't see Dheemaj using too much uptake to solve for this problem. For example, customer doing a self checkout kind of stuff. If you can throw any highlight on how we are obsessing about customer experience in the offline Dmah stores? So we follow a principle of ForRQC. So ForRQC is right product, right size, right place and quantity and then good checkout. That's the basic ethos on which the company operates. So for us, the principle of customer experience revolves around 4 attributes. That's it, yes? So if I give you the right product at the right price, it's at the right price board and the right quantity, right. And then having a quick checkout, that's it. For me, I have a quick checkout. So quick checkout, any test related thing that we are doing? Now, yes, specifics about quick checkout is a very interesting journey, interesting story. What happens is, if you notice that the ratio of number of checkouts to the trading space Bmart has would probably be one of the highest in the country, probably globally also, okay. The problem is that as many checkouts I add, I get more and more crowd in the store, right. Beyond the point, there's a limitation of a brick and mortar store. You can't add you can't break down walls and put checkouts in the open, right. So the challenge is that's why during peak hours then we do have queues, okay. So then what do you need to look at? Then you need to look at a technology. How fast can it be? How good your software is? How quickly can it shut out? How good are your scanners? So we constantly evaluate there's an invest in technology to ensure that it is super fast. But there will be 20% of the time in a shopping area that you will have queues. But also remember that in a brick and mortar retail store, these queues are only during weekends and only in that 3 hour, 4 hour window. Otherwise, it's super smooth. There's hardly any there's no queue practically. Understood, sir. So thank you very, very much for all your answers. Yes. Thanks. Thank you. The next question is from the line of Rishi Srinath from Bellwether Capital. Please go ahead. Hi. Just want to understand how does adding square feet to existing stores work? Do we build out the store like G plus 3 and then keep it empty and add later? Or do we kind of construct newer floors? And when we do that and when we add flows, do general merchandise kind of get a higher indexation or increase in assortment from general merchandise? If you could kind of shed some light on how adding square feet to existing store works? Yes. So this whole connotation that is tilting towards adding square footage, this is coming through multiple questions. These are more edge cases. In general, we are relatively close to what we want to operate the store at, okay. But it's not that we build later. The building is already made, but we don't make it we don't operationalize it in certain cases, yes. So the store is built, the building is made, right. So that's the answer to the first part of the question. The second part of the question is obviously when you have larger stores, your ability to sell higher margin products becomes far better. So yes, general merchandise and apparel has a better platform on which it can be sold. So that's just kind of margin accretive. It has more on better margins. Yes, got it. No, but given that we have a lot of standalone buildings, do we tend to kind of add square feet to existing stores in the 1st place? No, we don't. It's not we haven't come to that scale yet. Not really. Very rare. I may be asking this question because you must have noticed it in very few locations, but that's very rare, if it's from that perspective. Got it. Got it. And on D Mark Reddy, just wanted a couple of questions in. So in the non Mumbai markets, are we looking at the same format where we're going to set up significant number of pickup points and kind of have that touch delivery as well as pickup point experience? Or are the newer markets slightly more indexed to delivery business? And the second one is, is the last mile in the delivery operations in sourced or are we using an outsourced operator for that? Yes. So wherever we are going, which our city we are going, we are going with the pickup model also, since pickup plus home delivery both. And we are doing the delivery ourselves. To the doorstep, everything is owned by us? Yes, yes. We would like to own the entire experience. Got it. And what are the you had alluded to it about 5, 6 questions back about shortening the time span of delivery. What are the bottlenecks that we are facing, especially in the pickup point side of the business, to for say to get right now SUEZ from the dark stores doing in about 45 minutes. Given that we have pickup points fixed infra setup, even if we do 3, 4 drops a day from our distribution center, just want to understand what are the key bottlenecks for us to significantly reduce lead time? I'm only talking about Mumbai because that's why we have density of operation. Okay. So let's look at from perspective of this concept of instant grocery, right? If you're talking about it from that perspective, we don't want to compete there, right? Promising in like 45 minutes and all that, that's not the business. No, I'm more talking about, say, if I order on a morning, then probably pick it up from a pickup point in the evening or something like that, significantly shorter lead times than what we have. In the delivery business, I can understand we have a limitation of suite on street, but what would be the limitation for the pickup business? So morning to evening is doable. It's a factor of our own capability and capacity, yes. So today, we are unable to do it because of the distance between the pickup point and the fulfillment center. So, okay, let me put it this way. If I have a point of delivery, whether it's pickup or home delivery, which is within a 2 to 3 kilometer radius of this fulfillment center, I can probably even deliver it in 6 hours. But the challenge is, say in a city like Mumbai, till a year when I had only 2 FCs, fulfillment centers, right, and some of them had to travel like 20 kilometers one way. So and then you have to even optimize your delivery routes, right. So because of those challenges that you would want to first populate the slots in a manner that is more beneficial for DMart than the consumer because you want to optimize your delivery routes. And that's why you couldn't offer those conveniences of good delivery. But you are able to do that with scale. As you get more and more revenue, you know that this pin code you generally get these many orders per day. And hence you can then crunch the time from order to delivery. Yes. So it will happen with time as you get more and more revenue. So basically as we add larger fulfillment centers, as the depth of the revenue goes up, we'll be able to shorten lead times as well as kind of maintain logistics so that we get a cost advantage. Is that the right understanding? As long as you add more fulfillment centers, not larger fulfillment centers, More fulfillment centers and the travel time between the FC and the destination has to be short. Perfect, perfect. And last question from my side is, we've been hearing that real estate transactions have been happening. If you could kind of give us a sense of more than deal availability, deal throughput versus, say, a year or so back, how has been the acceleration? Say, assume 100 was the deal throughput last Jan or just before the pandemic struck, do you see a significant improvement in the deal throughput that we are seeing, especially for our expansions that are likely to be for the next 2 year window or 3 year window? So let me put it this way. I've mentioned this again last year. I'm saying the same thing again now. It has been better than previously, yes? So the deal pipeline is better. How much better? I cannot comment. You will know as we open stores. Okay. Thanks. Thanks a lot. Thank you. The next question is from the line of Ashish Kanodia from Ambit Capital. Please go ahead. Yes. Thank you for the opportunity. So in some of the stores, I noticed that you have a coffee shop in shop kind of a model in your footwear segment. So just wanted to understand that what led to that having a separate shop in shop And what has been your experience altogether with that model? So shop in shop basic principle is what we can do, we bring in a partner, right? So that is the principle. The partner does it better than us. Us. So that's it. That's the whole principle. And it serves a particular unmet need that I for a coming one, which I cannot, right. So whether it's so in footwear, what is it? The biggest challenge of footwear is inventory because of design, right. So obviously, you need a footwear expert to do that. And that's why we have that in the footwear side. Or let's take a mid high, right, classic Indian mid high. Obviously, Chando or Ghatitaram, Parativari is far better to manage that. And that's why they are there. That's the principle basically that you are serving an unmet need which you can't do. And then the vendor expertise has extreme high value if he runs it himself rather than us. That's it. Sure. That's helpful. And secondly, currently, you say Bangalore, Hyderabad or Ahmedabad or Pune, right, how are you fulfilling the orders for DEMA 3D? Because my understanding is the fulfillment centers are all based on Bombay. Is that correct? No, no, no. Grocery cannot run like that. So that's the principle in marketplace maybe. But in Grocery, you have to have the fulfillment center in the same city. So currently, you have fulfillment center across all the 5 cities? Absolutely. We can't run those visits otherwise. Sure. Sure. Got it. Got it. That's very helpful. Thank you. Welcome. Thank you. The next question is from the line of Shirdesh Jain from Apax Capital. Please go ahead. Hello. Thank you for the opportunity. Sir, I wanted to ask you keep saying that you are happy the way you are and you don't really want to change much because today this is what works for you. So I want to show how do you make sure that you're not ignorant about the disruption around you because the change of disruption is pretty high. So how do you make sure you're not ignorant about those facts and you are moving with time? So just about that. The fact that we enter the e commerce business itself is an indicator that we're not keeping eye shut. And other than that, like I said earlier, I'm saying this again, if you guys think that we are missing out something, please tell us, happy to hear. Tell us these are the 3 things we should do. These are the 4 things we should do. Very happy to listen. At least if there is an area that we have not thought about, your advice or your few comments will help us think about it. So we are not so when we say we are happy to do what we are doing is after listening to everybody, after evaluating the opportunities and then saying, okay, of these 10 things,

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