Ladies and gentlemen, good day, and welcome to Electronics Mart India Limited Q4 FY 2023 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Bajaj, CEO, Electronics Mart India Limited. Thank you, and over to you.
Good evening, and a very warm welcome to everybody present on the call. Along with me, I have Mr. Premchand Devarakonda, our CFO, and Strategic Growth Advisors, our investor relationship advisors. We have uploaded our results investor presentation for the quarter and financial year 2023 on the stock exchange and company's websites. Hope everyone had the chance to go through the same. FY 2023 has been a very special year for EMIL. As all of you know, that we listed our company on seventeenth October 2020, and on stock exchange, and it was a very proud moment for all of us at EMIL. I would once again like to thank the entire investor community for the tremendous support during our IPO.
EMIL is the largest player in the southern region in revenue terms, with dominance in Telangana and Andhra Pradesh, and is the fourth largest consumer durable and electronic retailer in the country. We have built a long-standing market presence with more than three decades of experience. Our company is currently associated with more than 100 brands, with over 6,000+ SKUs, and has a long-standing relationship of more than 15 years with a certain number of brands, which operate in product categories such as large appliances, mobile phones, small appliances, and other categories. We provide a complete and unique shopping experience to our customers by showcasing a wide range of electronic products under one roof in our multi-brand model, and providing a specialized brand experience with our exclusive brand outlets.
We work with limited brands, but in a huge volume as compared to other players who have more brands and on board, this gives us, this gives us a competitive edge and better bargaining power with the top brands versus its top peers. In FY 2023, we had opened 24 new stores. Currently, we have 127 stores, out of which 114 are multi-brand outlets and 13 are exclusive brand outlets. Out of the 127 stores, 106 stores on lease, 12 are owned and nine are partly owned and partly leased. As on date, we are present in 41 cities across four states. During the last year, we entered new territories, which are Delhi, NCR, and Kerala.
We continue to focus on deepening our presence in this region we operate in before venturing into the newer markets, which has led us to establish the brand presence in Telangana and Andhra Pradesh markets, which enables the target customers to identify with us on a brand, with our products portfolio, and aids with understanding to market segmentation and the customer demand preferences. We believe that this approach has also enabled us to achieve significant market share and dominance in the market that we are present in. We plan to continue and to deepen our store network in Andhra Pradesh and Telangana, and also gradually plan to expand our network in the NCR region.
In pursuing our defined cluster-based approach, we plan to open a further 13 multi-brand outlets in NCR region, 21 multi-brand outlets in Andhra Pradesh, and eight multi-brand outlets in Telangana region, and adopt a methodological approach to evaluate and selecting locations for the new stores by FY 2025. We believe that our local market knowledge, supply chain efficiencies, and effective inventory management has enabled us to attain higher cost competitiveness and consistent profitability. Our customized product assortment and comprehensive product portfolio enables us to achieve better visibility, brand recognition, deeper market penetration, and increase customer base. We have 10 large central located warehousing facilities, which are backed by individual storage areas at store level for varying sizes to cater to individual stores or a group of stores.
Coming to the Q4 results, we have delivered a growth of 8% on revenue year-on-year and INR 1,328 crores, and a 25% year-on-year growth for the FY 2023 period, with INR 5,446 crores. On account of investments made to open stores in our new geography, that is NCR, the company has increased investment in brand building and sales and marketing activities, which will help us deepen the market penetration and increase our customer base in this geography as well. To conclude, I would like to say that after having established a leadership position in Andhra Pradesh and Telangana retail electronic market, we have entered Delhi, NCR, where we plan to capture significant market share in the coming years.
In the southern region, we plan to expand our footprint in places like Vijayawada, Tenali, Guntur, Kurnool, Nellore across tier two and three cities in Andhra Pradesh and Telangana as a cluster-based approach, cluster-based expansion, distribution network, diversified product portfolio, strategically located logistic warehousing facility, will give us a competitive advantage in these existing regions as well. With this, I request Mr. Premchand Devarakonda, our CFO, to update you on the financial performance. Thank you.
Thank you, Karan, sir. Good evening, and warm welcome to all the participants. Now, I would like to present the financial overview of our company for the year 2022, 2023. Our total revenue for Q4 of FY 2023 stood at INR 1,328 crores, as against INR 1,231 crores of Q4 of FY 2022, which has grown by 8%. For FY 2023, our revenue stood at INR 5,446 crores, as against INR 4,349 crores of the previous year, and the growth, growth rate has been 25% year-on-year.
...For FY 2023, same-store sales growth rate stood at 17%, and for FY 2023, approximately 48% of our sales revenue came from large appliances, 38% from mobile, and 14% from small appliances, and IT, and other products. Out of the total revenue from the sale of product, approximately 98% of revenue comes from the retail segment. The top five brands contributed around 64% of our revenue. EBITDA for Q4 of FY 2023 stood at INR 91 crores, as against INR 89 crores, with a growth of 2%. And for FY 2023, EBITDA stood at INR 336 crores as against INR 292 crores of the previous year, with a growth of 15% year-on-year. EBITDA margins for Q4 stood at 6.8%, and for the year, it was 6.2%.
As mentioned by Karan, margins are lower, mainly due to increased investment in the marketing and brand-building activities in the new territory, that is NCR. Tax for Q4, FY 2023, stood at INR 36 crore as against INR 35 crore, with a growth of 2%. For the financial year 2023, tax stood at INR 123 crore as against INR 104 crore of the previous year, which has a growth of 18% year-on-year. ROCE and ROE for FY 2023 stood at 13.7% and 10.4%, respectively. There has been an impact on ROCE and ROE in FY 2023 due to the addition of stores. The working capital days, as on 31st March, stood at 68 days. The gross debt to equity has been at 0.6x, and net debt to equity stood at 0.2x.
Our net debt to EBITDA stood at 0.87x. Our cash flows from operations before working capital changes for FY 2023 stood at INR 342 crore, which matches our EBITDA. With this, I would like to open the floor for questions. Thank you, everyone.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Krishna Kansara from Molecule Ventures, PMS. Please go ahead.
Am I audible?
Yes.
Yeah. So sir, my first question is on the growth part. So our sales have grown by 8% if we compare it with last year's March quarter. So I wanted to know, what has been the reason for a lack in growth? Like, is there any specific category which is impacting it, or is it a region-specific thing?
Yes, ma'am. So, ma'am, if you look at the Q4, Q4 usually in our state, where we predominantly operate out of Telangana and Andhra Pradesh, is usually a period where summer starts off. And if you look at the two major categories that we deal with are air conditioners and air coolers. During that period, because for the 20 days in the March of month, it was raining here, so they directly impacted the sell out of that category. So the growth had actually come in from the other categories, and that particular category of cooler and air conditioner was, you know, probably fattish and a little de-grown.
That is why you would see an impact directly in the revenue number, where if that category would had, you know, played out well, the weather wouldn't been a reason for it. It has definitely, you know, grown much higher.
Okay. So you're saying that the impact on AC sales is the reason behind this?
Yes, ma'am. I just, if I can, you know, just highlight. So basically, what happens when you look at the product mix of that particular month, usually we would look at, air conditioners and, coolers, which contributed to INR 234 crores in the last, quarter, Q4, in last year, versus INR 195 crores only this year. So that was a major drop there. And this being one of the, highest growing category as well, so you would see a change there as well. So, the contribution from this category was not as expected as it would be, because it was, technically a summer period, but it was raining here. You know, so that is why we would see, a decrease in that category.
Okay. Thank you.
And that got extended till the first week of April. But then, during this quarter, we were back again seeing a growth in that category coming back again, because, you know, the weather played out well for us in the last few weeks.
Okay, so you think that, first two months of Q1 have been better than what happened in Q2?
Yes, ma'am.
Okay. Okay. And sir, how much has Delhi NCR contributed in our total sales? If you could give us an absolute or a percentage number for this quarter and also for the full year as well, thank you.
You know, can you repeat your question? I could not hear you clearly.
Sir, my question was, how much has Delhi contributed to our overall top line in this quarter and also for the full year, FY 2023?
Right, ma'am. So, ma'am, so it has contributed, on an annual basis, it has contributed INR 137 crores. So that, that was the sale that we generated. And, on the quarter, it contributed around INR 52 crores, ma'am, from that region.
... Okay, good. And sir, how many stores have like in Delhi have reached the breakeven level?
How many stores in Delhi have reached the breakeven level? That's what the question is?
Yes.
Ma'am, right now, what we look at is we look at operational breakeven in 12-14 months. So the stores are all on the track of reaching that number, because few stores are 8 months old, few stores are 6 months old. So it is on the trajectory when we look at the monthly average revenue. So it is on that path of reaching the threshold in 12-14 months that we targeted initially. So we are on track on doing that, ma'am.
Okay, okay. And sir, recently, we announced that we have changed our store counts and our strategy of shifting to MBOs from EBOs. So we reduced our store count in Delhi NCR from 26 to 18 MBOs. So we also cut down on EBOs in Telangana. So what—I just wanted to know your thought process behind the scenes, because we are expanding in Delhi NCR currently, and then, so why are we cutting down on the number of stores there?
Right. So, ma'am, actually, we are operating, we are operating 13 stores right now in Delhi, with 1 more EBO getting added there. So there will be 13 MBOs and 1 EBO coming, getting operated in this quarter. So that is the number. And with the plan of expanding in Delhi with another 13-14 stores, that is the plan. The idea is to get the right location, the right price. So the idea was to revise this so that, you know, we are in line with what we have already signed up in terms of the properties that are getting ready. So, you know, this year, we'll be coming up with some more stores.
So if you can add or find good property at a reasonable price or the reasonable rental that we're looking at, we'll definitely add more number of stores there. So there is no restriction on how many number of stores we'll be adding up, but it is just idea of where, you know, we get the right location at the right price. So that is more important, because we've already signed up 13 locations that are operational, another 6-7 are in the pipeline. So technically, we would be, you know, around 20+ stores by end of FY 2024. So, in the meantime, if this year we add up more stores, we sign up more stores, that will definitely get added up sooner as well.
So there is no restriction on how many stores, but the market that we decided, where we're going to open the stores, that is where we've got to find the right property. So that is, you know, but gets a little difficult to find the right property at the right price. That's the only reason.
Okay. Okay, so we have not cut down on the number of stores because of any issues in the existing stores. It's just a, like, strategic decision.
Yes, madam. Yes, madam. And at the same time, we started expanding in Andhra and Telangana, and if you see, the contribution from our country stores in Telangana and Andhra Pradesh have actually started performing really well for us. So going forward, our strategy was also to, you know, deepen the market, like, you know, Vijayawada, Guntur, Nellore, Tenali, Vizianagaram, where we're already present either with one store or two stores. And those markets also go on to want to expand, you know, because then we can leverage on our marketing, our inventory, our logistics and stuff like that, so that, you know, it's our existing territory, so the cost of operating there becomes much easier and much cheaper than actually venturing into a new city.
We are expanding parallelly in the new geographies that we are present in NCR, as well as with the existing markets in Andhra and Telangana. That is where the plan was to, you know, expedite the growth in our existing markets as well.
Okay, okay. Understood, sir. And sir, just last, last one question. So, what was our advertisement spend in this Q4 FY 2023?
Sorry, ma'am, can you repeat the question?
How much would have been our advertisement cost in this quarter?
Advertising cost in Q4, ma'am?
Yeah.
One second, I'll tell you the advertising cost. So, ma'am, it was around INR 5.3 crores, ma'am.
How much?
INR 5.3 crore, ma'am.
INR 5.3 crore. And, how much of that would be in Delhi?
Delhi was around 2.95, ma'am.
2.95.
Yes.
Okay. Okay, sir. Thank you, sir.
Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Rana Khurana, an individual investor. Please go ahead. Mr. Rana, please go ahead with the question. The next participant is Mehul Desai. Please go ahead.
Hi, sir. Sir, can you just help me with what is your store addition plans for Telangana, AP and Delhi NCR for FY 2024?
Hi, sir. Sir, for FY 2024, we plan to open around 13 stores in Delhi.
Okay.
Yeah, and out of which, 7, approximately 7 are signed up, which would include 1 EBO as well. That will. That is due to get launched next month, that is in [Uncertain] store. And around 10 stores in Andhra Pradesh, sir, and around 5 stores in Telangana.
... Okay. So we are looking at almost 20-28 store additions in FY 24, right? Okay, and I just wanted to reconfirm this, what was the base quarter, the AC cooler sales that you had? You said INR 195 crore in this quarter, what is the base quarter?
The 195, I didn't get you, sir.
Sir, you said that AC cooler sales were impacted in the quarter, and you said INR 195 crore was the sales in this quarter. What is, what was the base quarter sales for AC cooler segment?
234, sir. Q4 of 2022 was INR 234 crore versus INR 195 crore this year, sir.
Okay. All right, so this is, this is the one, this is the primary reason for your sales per store or, I mean, the sales moderation or SSG moderation.
So if I look at other categories like refrigerator, if I look at mobile phones and audio and video category or built-in appliance, kitchen appliance category, everywhere there is a growth. So if you want, I'll just run you through the numbers also. So mobile and laptop category from INR 448 crore for that quarter went up to INR 539 crore. The panel and the audio division from INR 177 crore grew up to INR 198 crore. Refrigerator business alone from INR 127 crore grew to INR 133 crore. Washing machine from INR 97 crore grew to INR 99.7 crore. Kitchen appliance from INR 51 crore grew to INR 66.5 crore.
Okay.
Other categories from INR 12.129 crores grew to INR 25.4 crores.
Yeah. And the gross margin improvement that we have seen on a sequential basis, I think, like, Q3 had some higher cashback and that, some issue with respect to that.
Exactly.
That was not. So the, that has got corrected, and that is the reason, Q4 gross margins are higher sequentially?
Yes, sir. So after that, we realized that what was going wrong in terms of, you know, where we could go back to the banks, and as we were discussing last time also, to understand and, you know, plug those leakages where, you know, some costs that are directly proportional to our sales revenue, like, you know, credit card charges, cashback, NBFC charges and all. We've tried to plug them in and renegotiated with all the NBFC banks and all, for either giving a higher commission, reducing our contribution on those cashback offers. So though we have run those cashback offers and still running those cashback offers, but we've reduced the contribution to that and renegotiate with the NBFC to increase our margins.
Understood. And, this A&P spend, which you said INR 5.3 crore in this quarter, what was the base quarter number? I think Q4 FY2022, what was the number?
For mobile phones, sir?
No, no. The advertising spend, which you said INR 5.3 crore.
Advertising spend was INR 6.3 crores in the last quarter, versus INR 5.3 crore. And so that again is reduced because Hyderabad, it was raining. So March month, whenever we start promoting our AC festival season, we have reduced our spend here because because it is pouring, there is no point of advertising on the doing radio and print heavily during that period, so for the AC and cooler sales.
Okay, okay, understood. Lastly, on the balance sheet side, I see our debt. What plan in terms of reduction in debt, I mean, the borrowings that we have, how do you see that reducing in next two, three years, or what is the plan there?
So, sir, currently, if you see, our debt levels are much lower than what they were in Q1 last year, mainly because the INR 120 crore of working capital got increased from the IPO fund on the first of April. This balance sheet that you look at is on thirty-first March. That's where the first ten days of April, we had infused INR 120 crore from the IPO fund that we had raised, right? Which was for the working capital requirement for FY 2024.
That automatically got added up, and at the same time, in terms of, you know, getting efficiencies in inventory management and the churns or what we usually do, that is where we've seen our efficiencies coming in. Apart from the long-term debt, which was straightaway for buying our properties in Delhi region, apart from that, the working capital requirements have come down, sir.
Okay. Okay. And, lastly, on this gross margin side, that right now we are clocking around 13.8-14, do you think this 14% range should sustain now? Because given that we should not have-
Yeah, so the idea is to sustain this, sir, going forward as well, and try to improvise on wherever the leakages are and try to improve this. In terms of negotiating with the brand, that is a daily task that we usually do internally. But at the same time, with our expansion that had happened in, you know, other regions as well, we see a higher productivity coming in this financial year. So we're pretty sure, you know, we'll have a little more bandwidth to negotiate with brands on few categories and try to improve that as well.
Okay. Got it. Thanks, Varun, and good luck for FY 2024.
Thank you. Before we take the next question, a reminder to all the participants that you may press Star and One to ask a question. Next question comes from the line of Deepak Poddar from Sapphire Capital.
Hello?
Hello, sir.
Yeah, hello. Yeah, thank you very much, sir, for the opportunity. So just a couple of things I wanted to check. Now, I think in the previous calls as well, we were kind of looking at maybe a 20-25% kind of a CAGR rate going forward. So, because of going slow in NCR, is there any change in that?
So no, sir. So actually, NCR, what happened is when we started securing our properties, this was during right after the COVID period, so it was much easier to add on 10, 20 locations that way, much easier. But because few, three properties are getting constructed as well. So the market in Delhi, NCR today, stands at around 30 big markets, where we first wanted to enter before we start experimenting with the peripheries of NCR. So we shortlisted the 30 markets, we are on track of doing that. So by this complete, by the end of this year, we'll be completing the top markets. So after that is when we plan to, you know, secure properties in and around the area that we decided as a plan B.
So, once we execute the plan A stores with the first 20-25 big stores in the market, that is when we plan to expand further. So the plan is still on. There is no changes on the plan of deviating from opening number of stores in Delhi. But right at the current scenario, the property prices have prevailed to, you know, pre-COVID levels or much higher than that. So getting the right property, negotiating it for a longer lease period, you know, is what we are doing, and it is taking much more longer than what it used to take earlier. So getting the right location, the right price, is more important rather than just jumping into a market only because of a competitor being present in that market. So that is not our strategy.
Our strategy is to make sure that we get the right location at the right price. We're just negotiating. Every day we keep on negotiating for properties, and whenever we can close on a good deal, we are going ahead with that.
... Yeah, I, I understood that. Fair enough. So what I was also trying to understand, does it impact our aspiration of 20%-25% growth over the next, what, two, three years, CAGR?
It will be in the same line only. Until now, as I told you, like, you know, some external factors like the weather is impacting something, or, you know, there are, you know, some external factors. Apart from that, we don't foresee anything that will impact our CAGR to be around 20% in the coming years as well.
Fair enough. I understood. And in terms of margins, I mean, what's the aspirational margins that we are looking at? I mean, you mentioned about the gross margin, right? That through negotiation, we would like to improve upon that. So even on the EBITDA margin, I think, what, currently 6.8%, but again, we had, I think, a lower branding expenses this quarter, right? So some insights on the trajectory on the margin front would be helpful.
So sir, the margin also would be in the similar line only. So there'll be, you know, an increase around a point, 1.2% kind of a number, and we will look at, you know, gradually also if we, you know, grow. Because there are some costs involved, especially, you know, in the market like Delhi, where we are just establishing ourselves compared to our existing market in Andhra and Telangana, where people know our brand, much easier to establish a store and turn around a store. So initially, for the first couple of years, that is where we had planned, and we are in line with what our investments are going up in that region.
But that is because we know the market size is so huge there, and even if we, you know, reach a certain threshold of, or a market share there, we'll definitely turn things around for the company. So that is what the idea is. More like an investment that we're looking at, and but the EBITDA margin would be in the same line only, probably a 1-1.2% kind of an increase there.
So aspirationally, I mean, 6.5%-7% EBITDA margin for our kind of business would be a right benchmark, right?
Right. Right. Right.
Okay, fair enough. Yep, that's it from my side, sir. All the very best. Thank you.
Thank you.
Thank you. Before we take the next question, a reminder to all the participants that press star and one to ask a question. Next question comes from the line of Nirav Vasa from Anand Rathi Peace Square.
Hello, sir, and thank you very much for the opportunity. Would it be possible for you to share the promotion spend that we intend to do in FY 2024? Any number that you have formed up, considering the kind of expansion that we are planning in Delhi and other parts of-
Sir, FY 2023, our spend was around INR 50-odd crore, which we're expecting it to be around INR 59 crore in the FY 2024 period. That is the number that we're looking at. That will be in line with the total revenue that we generate for the next year as well.
The other question will be pertaining to what was the actual rent, actual payment that we did in terms of rent in FY 2023, and what can be that number in 2024? Can you please, can you share that data, please?
Yeah. One second, sir.
In FY 2023, it was INR 80 crore.
Oh, yeah. Nirav? Nirav, sir, the FY 2022 rental, actual rental payout that, on the balance sheet looks, divided between the interest and the depreciation cost because of, lease liability, Ind AS 116 was the assessment, was around INR 80 crore. And for, FY 2024, we would look at increase coming in from new stores as well as the incremental rentals, which could be around, INR 85 crore.
Sir, what I was actually asking was, out of this INR 80 crore, how much was cash payment, actual payment? Because, as per Ind AS one, one-
Sir, we are, we are telling the absolute number of rent costs, not what was adjusted in depreciation interest. We are telling you the actual rental cost that we paid a year. So for FY 2023, the actual rental cost was INR 80-81 crores, and for FY 2024, it is predicted to be around INR 85 crores.
This is the actual cash outgo, right?
Yes. Yes, sir.
Perfect. Would it be possible for you to share the incentive income which was booked in 23?
What is it?
Incentive. Incentive income, sir.
From brands. Incentive income from brands.
From FY 2023 period was around INR 500 crore, sir.
No, that is total.
Total, yeah. Yeah. Ansa, I'll just tell you the details as well.
Just a minute. Incentive income, Nirav, it's INR 292 crore.
Yeah. The incentive income was INR 292 crore versus INR 213 crore for FY 2022.
So my final question, what we are seeing right now is that all the brands in India are expanding their capacities very aggressively, and they are fighting very aggressively to gain market share and everything.
Right.
In the light of this scenario, especially your location, Sri City, has become the hub for the manufacturing of air conditioners. Do you see a strategic advantage based on your core area of Andhra and Telangana, and Sri City becoming manufacturing hub? For the forthcoming summer season, do you think you can get additional margin from brands on two counts? First is because they are becoming very aggressive for volumes. Second is that their factories are very close to your core area of operation. Any update on that would be a great help, sir.
So, sir, as you mentioned, the Sri City goal is definitely much closer, in terms of our operation, region. But, right now it is not directly, benefiting us. Probably for the long term, we might look at that benefit, but usually the brands don't discriminate or distinguish between the locations that they supply to, because, usually it's a cost to them, but, gives us an advantage to negotiate better with them in the future. So I'll definitely, you know, utilize this as a strength of ours to negotiate better and take this as a recommendation from you.
Thank you very much, sir.
Thank you, sir.
...Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Prakash Desai from Desai Investments. Please go ahead.
Good evening, sir. My first question is, how many stores are we planning to open in FY 2024? And can you run us through the store expansion strategy?
Yes, sir. So sir, on an average year, we look at expanding with around 25 stores. So that is the target that usually we have, you know, organically understanding the market and growing there on, until, unless, you know, we get some good locations that we can sign up immediately. So the plan is divided between Telangana, Andhra Pradesh, and NCR region. So the stores that are already signed up for this region, plus the new store that we're adding up, would be around 25-28 stores for this financial year.
All right, sir. Can you guide us on the CapEx for this year, this year and the next year? On the CapEx side, would you be using it for buying out properties or leasing them?
So the idea is open for both for buying out and leasing out. Whereas buying, we've only signed up for a couple of properties that were left with the Kwality company's agreement of sale in Delhi, which the handover is yet to come in. So only those properties signed up, there is nothing additional that we signed up, you know, as buying a property.
So most of them, if we can negotiate, like, Andhra and Telangana, most of the properties we're negotiating for a longer lease at a good rental price. So that is where our expansion plan, our expansion plan, will be for this region. Delhi, definitely, yes, if we find a good property, we would be, you know, looking at an option of buying as well, because the rentals are quite high there.
But, nothing right now, apart from Lajpat Nagar and Kalkaji, that we had already decided to, you know, buy. There's nothing new that will, you know, turn up in the next year or so. Until unless-
All right, sir. All right. Thank you, sir. And one last question: so can you quantify the revenue run rate in the Delhi market, which we have on a monthly basis? And secondly, is the absolute amount of-- what is the absolute amount of fixed cost to run the Delhi stores?
There are two metrics to look at this. So right now, because it is a very new geography that we entered, the number of stores operating versus the marketing that we were doing there, and, you know, so every month would be very different. So if I look at, the Diwali month or number or, you know, the last month number, you know, so every month would be little different because Delhi is predominantly an AC and cooler market, where cooling products are quite heavy, in the whole consumer durable play. So, that is yet to start because Delhi also was pouring, in the last few weeks, you know, not, not at an optimal level of, temperature, where it would, you know, start selling out AC and cooler at a higher number.
So once we get a complete churn, post this quarter, is when, you know, we can look at a certain number of average, coming forward. But, in terms of our, strategy of doing a certain threshold of sales, in Delhi as a region from day one, that is on track. So, two of the stores will definitely cross our expectation. Few will be at par with what our expectation were in Delhi. Probably end of this quarter, we'll be expecting, you know, an average sell out, going forward, because that will create a base for us post the summer season, and then we can look at, Delhi performing much better than what it is doing today.
Sure, sir. That helps a lot. Thank you so much.
Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Nehal Jain from SK Securities. Please go ahead.
Thank you for the opportunity, sir. I had a few questions. Firstly, could you throw some light on the marketing initiatives that you would have taken and to expand in the NCR? What will be the strategy going ahead?
Right. So, ma'am, when we launched in October last year, what we had done is, we had spent money across different ATL media activities by doing cash draw that we usually do back home in Hyderabad and Telangana. So we've done a cash draw, we've done print, radio, outdoor, which is quite heavy with us, with celebrity endorsements and, you know, influential videos and stuff like that. That was our marketing strategy for Delhi. So we want to make sure that because we launched eight stores together, we want to make sure that, you know, because the spread of Delhi, the geography spread is quite big. So to make sure that everybody is well informed of the launch of the stores that in which locations we were launching. So that was initially done.
And, so, August to October, that is when we spent a big money on this activity. And then post that, again, this year, for summer, we've again planned a INR 50 lakh cash prize draw as an incentive to customers, whoever buy and participates in the draw. So that is the marketing, strategy that we've applied there, with definitely print being the most, print and radio being the most effective, medium for that geography.
Okay. And, what, what should it be going ahead, like moving forward?
So we will look at, so definitely what we did in August, during the launch period in October, again, when we launched with other set of stores, it would definitely not get replicated, during this coming years, is because right now our stores are all spread across different months of launch. So we would probably do 1 or 2 stores, at one time, rather than doing a block of 4 stores and 8 stores that we did, initially. So going forward, we will look at, that being in line with our revenue generation that we would do or more to, more to do with specific days of like 15 August or Raksha Bandhan or Diwali, Dussehra.
So the marketing activity is being in line with the big festival days, and there will be then organic activities going on parallelly to promote the stores.
Okay. So, sir, regarding the opening of stores, is this a change in strategy that we are doing about, you know, opening—not opening, like, stores and clusters all together on a same day?
Ma'am, what happened was August 14, when we launched 8 stores together, and the 22nd of October, when we launched 4 stores together, they were all new stores that were getting ready parallelly. So right now, if I look at my one of my stores is ready for launch, say, next month, one is ready a month later. So now we don't want to delay, because the brand is recognized, we don't want to delay of the store opening until and unless we do a soft launch and then combine few stores to do an official launch for all the stores. So that could be a strategy, but, but, they are so simultaneously ready for launch or, you know, in the span of 15 days here and there, then we can plan on opening stores together.
But we don't want to hold up stores, you know, and delay the launch until unless, you know, it is not required.
... Got it, got it, sir. Also, could you share the gross margins across various categories?
So there are no changes on the gross margin across various categories. It remains in line with, you know, what we've done in the past as well. So definitely, air conditioners and air coolers being one of the highest gross margin categories, with around 18%, and then televisions at 17%, large appliances at around 17%-18%. Mobile phones at around 9%-10%. Laptops are the lowest, around 6%. That is more or less the breakup for the gross margin across categories.
Okay, and my last question, could you tell me the SSGR for a mature store and for a one-year-old store?
So, ma'am, right now, if you look at the FY 2023 number, we are at around 17% SSG. But then, if I look at mature stores which are above five years, we are sustaining there around 5%-7% there, which are older ones. And definitely, yes, this year, going forward, you look at the major growth coming in, not only from Delhi, but even Andhra and Telangana stores, because it started performing really well. Because they were few of them were actually opened during the COVID, post-COVID period, which took a little more time to establish because they were in tier two and tier three cities. Now they started performing really well.
Overall, you see a much higher churn coming in from the SSG or churn coming in from the existing stores in Andhra and Telangana as well.
Got it, sir. Thank you. That is my question.
Thank you.
Thank you. Ladies and gentlemen, we have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.
So I would like to thank all the investors and everybody present on the call today for supporting us and trusting in us. We'll definitely make sure that we deliver on what we promised, and going forward, look at you know a great year coming for ahead. Thank you for all your support. You know, we'll definitely be in touch, and our team and we are always available for any question and answers that you have of any kind. Thank you.
Thank you. On behalf of Electronics Mart India Limited, that concludes this conference. Thank you for joining us. You may now disconnect the line.