Ladies and gentlemen, good day and welcome to the Kalyan Jewellers India Limited Q2 NH1 FY26 earnings call. 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 this conference call, please signal an operator by pressing star, then zero on a touchstone phone. Please note this conference is being recorded. I now hand the conference over to Mr. Rahul Agarwal. Thank you, and over to you, sir.
2026 earnings conference call. Today on the call, we have with us Mr. Ramesh Kalyanaraman, Executive Director; Mr. Sanjay Raghuraman, CEO; Mr. V. Swaminathan, CFO; Mr. Sanjay Mehrotra, Head of Strategy and Corporate Affairs; and Mr. Abraham George, Head of Investor Relations and Treasury. I hope everyone had a chance to view our financial results and investor presentation, which were recently posted on the company's website and stock exchanges. We will begin the call with opening remarks from management, followed by an open forum for questions and answers. Before we begin, I'd like to point out that some of the statements made during today's call may be forward-looking. A disclaimer to that effect was included in the earnings presentation. I would now like to invite Mr. Ramesh Kalyanaraman, Executive Director of Kalyan Jewellers India Limited, to give his opening remarks. Thank you, and over to you, sir.
Thank you. Good evening and an excellent all-round performance during the recently concluded quarter. Momentum on the ground remained robust for most part of the quarter, with an exceptional nine days of Navratri sale to end the quarter on a very strong note. The pickup in the momentum that we witnessed during Navratri continued to the ongoing quarter as well. Same-store sales growth for the 30-day period ending Diwali was in excess of 30% on a like-for-like basis.
As I mentioned during the previous call, we had consciously paused the repayment of debt in India as we were focused on getting the approval for the release of the real estate collateral pertaining to the debt already repaid over the last two years. During the last quarter, we received approval from the lead bank of our consortium for the release. Subsequently, we have reduced INR 130 crore of debt, taking the non-GML debt levels to INR 550 crore as of 30 September, and are on track to achieve the annual debt reduction target of INR 300 crore. We have also initiated steps to monetize the non-core real estate assets. I'll now hand over to Sanjay. He will take you through the numbers. Thank you.
Thank you, Ramesh. Good afternoon, everybody. I'm really happy to be talking to you all after a good quarter and excellent festive season. In the just-concluded quarter, our company reported consolidated revenue of INR 7,856 crore, a 30% growth over the corresponding quarter of the previous year. Consolidated EBITDA came in at INR 497 crore versus INR 319 crore in the corresponding quarter of the previous year. Consolidated profit after tax came in at INR 261 crore versus INR 130 crore during the corresponding quarter of the previous year, a growth of 100%. Coming now to give you the breakup of the quarterly numbers between India and the Middle East, starting with India. For the just-concluded quarter, India revenue was INR 6,843 crore compared to INR 5,221 crore in the corresponding quarter of the previous year. India EBITDA was INR 432 crore versus INR 257 crore in the corresponding quarter of the previous year.
India profit after tax was INR 262 crore compared to INR 120 crore in the corresponding quarter of the previous year, a growth of 118%. Coming now to talk about our Middle East business, revenues in the Middle East for the quarter was approximately INR 866 crore versus INR 800 crore in the corresponding quarter of the previous year. EBITDA in the Middle East was INR 61 crore versus INR 59 crore for the same period of the previous year. The Middle East business posted a profit of INR 15 crore for the quarter compared to INR 14 crore in the corresponding quarter of the previous year. Talking about Candere, the business posted a revenue of INR 93 crore in the quarter versus INR 41 crore in the corresponding quarter of the previous year. We recorded a loss of INR 9 crore in the quarter versus a INR 4 crore loss in the corresponding quarter of the previous year.
Talking about the first half of the year, consolidated revenue came in at INR 15,125 crore, a 31% growth compared to the corresponding first half of the previous year, and consolidated profit after tax at INR 525 crore, a growth of 70% compared to the first half of the previous year. During the quarter, we opened 32 stores, 15 in Kalyan, India, 2 Kalyan stores in the Middle East, and 15 Candere stores. I'm now done with the summary of the financials, and we open the floor for questions. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. 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 is from the line of [Nilay Shah] from [audio distortion] . Please go ahead.
Thank you. Congrats for the results. A couple of questions from me. First is, many of your peers have called out fairly precise numbers for the festive season sales. Could you throw some light on how Kalyan has performed?
Yeah, so I told you, we look at Diwali minus 30 days, and the same-store sales growth has been 30% plus. Because total revenue will misguide you because we have added a number of showrooms, et cetera. It will not be a right way to look at it is what we thought. Diwali minus 30 days every year, we tell you, and SSGs are very strong, 30% plus.
Okay. The other bit is that after Diwali, you tend to see a pretty significant drop-off on this trend versus the normal sort of momentum. How is this year panning out? Is it the same? Is it different?
It's going strong. SSGs are very similar to what we saw pre-Diwali. Post-Diwali, also, weekends are very strong. As we speak, things are moving almost in the same line.
Got it. In terms of your full-year guidance for the number of stores that you'll open up, what's the number now?
We opened India Kalyan 25 till September. Before festive, again, Q3, we opened 15. We are at 40 as we speak, approximately. Yeah, the plan is to open 84 for this year.
Got it, sir. The final bit is on margins. The first half, the margins have been very healthy at the PBT level. Any sort of thoughts on how this trend will evolve into the full year?
Usually, if you have noticed, Q3, the margins, PBT margins, or the gross margins are always on the higher side in Q3 when compared to Q2, specifically because of the own-store revenue share between South and South and the product share also. That is how we should look at it. The pilot is still on, and we get a margin growth in the gross margins. That is how we should look at it.
Got it. So very clear. Thank you.
As I said to you, that the repayment of debt is also there. So interest saving can also be there. With all this, PBT margins should be more in H2 than in H1.
Gotcha. On the pilot bit, just to be clear, what is the plan going forward?
We are maintaining the same levels because now the debt reduction also has started. We will maintain the same levels. If you look at the next financial year, we have the remaining INR 400 crore of debt to be reduced. Now the collateral release is also there, so that liquidation can also happen. The debt repayment for the next financial year can be earlier than what we thought. Once that is done, we might go into increasing the pilot phase.
Thank you, sir.
Thank you. The next question is from the line of Gaurav Jogani from GM Financial. Please go ahead.
Thank you for taking my question. I'm Gaurav from the strong side of numbers. My first question is with regards to the gross margin only. If you can quantify how much is the advantage in this quarter because of the pilot, and is there any other advantage in terms of the last time we had some non-hedge gains also on silver and the other metals? If you can quantify that, Manju.
You're talking about Q2, right?
Q2, yes.
Yeah. Around the same range, maybe 0.2%-0.3% because of the pilot. The rest can be very minimal for other metals like platinum, silver, etc .
Sure. This kind of, again, at least can we expect for the next couple of quarters more to sustain, given that now, although you have not incrementally doing this pilot, but at least it will sustain at the current levels?
It should be in the same level. As I told you before, pilot will continue at the current level for the financial year. It should maintain at the same 0.2-0.3 increase in gross margin. Usually, Q3 gross margins are better than Q2.
Sure. Sure. And just lastly, Candere a bit. We are seeing now losses in Candere at all is coming out at a gradual pace. When can we expect profitability in that segment?
If you look at even now, store EBITDA, we are already positive. Positive means it is meaning strong double-digit EBITDA, positive at the store level. Even if you look at the corporate EBITDA, we are almost neutral now. Way forward, this financial year, we will end Candere year with PAT neutral, PAT positive. The revenue target for the year will be around INR 500 crore.
Sure. Just one clarification. When you say PAT neutral, it will be on the exit basis, not for the full year, right?
Full year.
Okay. Okay. Okay. Thank you, sir. That's all from me.
Thank you. The next question is from the line of Nihal Mahesh from HSBC. Please go ahead.
Yes, sir. Good evening. I had three questions. First was a clarification on the debt payment. In your annual report, specifically for the non-GML part, I think you're looking at taking it from INR 880 crore to INR 400 crore. I just wanted to check, this INR 130 crore reduction is specifically for that, and does that target stay?
Yes. If you look at the non-GML, March non-GML was optically higher because of issues with GML. What I told of INR 130 crore debt reduction was negating all that. Because if you look at only non-GML, we have reduced INR 350 crore for H1.
The target of INR 400 crore, INR 4 billion of non-GML loan at the end of FY 2026, that stays?
Yes. It will be at the range of INR 400 crore non-GML by March 31. Next year, it will be debt-free.
Understood. That's absolutely clear. The second thing was in the earlier call, you had mentioned about two parts of the pilot. One was obviously the local jewelry brand, if you could give an update on that. The second part is the pilot related to changing the sourcing specifically for brand Kalyan. If I understand, that is something you're pausing. The pilot for the local hyperlocal jewelry brand continues as per expectations for a launch in Q3?
It is on track. From day one, procurement pattern will be like the pilot for the regional brand. For Kalyan Jewellers, we will not increase the pilot. It will go in the same range for the financial year. Now about the launch of the regional brand, it should be in Q4.
Q4. Any further details you want to share other than the thought of five stores and investment of INR 3 billion-INR 3.5 billion, more than that that you want to clarify in case there is more details to that?
Remains the same. We will do five showrooms in the next 12 months. The investment will be around INR 300 crore-INR 350 crore. We have also got franchisee inquiry for that. Maybe the first couple of stores will be our own store.
Understood. The last question is, generally, with the kind of gold price momentum we've seen historically, it is seen to obviously see a lot of increase in the inquiries of franchisees that have happened historically. Have you seen that, and does that then give you a confidence not this year because there would be a pipeline that in FY 2027, the store addition could be or the franchise addition could be much better in India than what maybe at this point we are thinking?
No. Even now, you know that franchisee capital availability is much more than the 84-85 showrooms which we want to open this financial year. We are putting franchisees on hold even for the next year, right? Expansion scale cannot increase more than this, especially because we have to check the bandwidth very often. Okay? Again, interest level has increased, but interest level was already overboard for us. Some of them, they have expressed interest for the regional brand, which we will surely evaluate.
Understood, sir. I'll come back into Q4 for the questions. Thank you.
Thank you, sir. The next question is from the line of Devanshu Bansal from MK Global. Please go ahead.
Yes, sir. Hi. Thanks for the opportunity. Congratulations on very good numbers in H1. You mentioned that 30% SSG for festive. I wanted to check if you could also split this growth into number of buyers. Has that also sort of picked up in relation to whatever trends we've seen in H1? Within buyers, if you can comment on, say, coins, plain gold jewelry, and studded, that will also be useful.
Yeah. Studded ratios are going strong. New buyer share is in mid-30s, and it is also maintaining the same level. What else did you ask?
I was checking on the buyer growth, sir. So this 30%, how much is the buyer growth in this? Overall, overall, bill cuts, maybe what is the bill cut growth in this 30% SSG?
Yeah. Ticket levels have been the same, maintaining almost the same ticket level. The SSGs have been 30%. That is why I told you the new buyer share is almost 30% plus.
Sorry. So ticket level, you're saying, versus last year, it is same if we compare this. How can this be, sir, that it is 50%-60% increase in gold price?
Yeah. Ticket level, customer does not increase their budget only because the gold prices are going up, because they have their own budgets. Of course, our customers are okay to increase maybe 15%-20% of their budget. Nowadays, why the ticket size is maintaining at the same level is because the number of times customers shop jewelry has predominantly increased now over the last, if you look at five to seven quarters. There have been customers who are coming more frequently than before. New buyers are coming to, again, shop with a lesser ticket size than our own customers.
Sure. Sure. And the second thing that I wanted to understand is on the inventory side. I guess this is mostly related to inventory that is there at our stores. Last year, September, it was around INR 7,000 crore on standalone. Now it is about INR 8,615 crore, which is like 25% up. From a growth perspective, also, we have seen similar numbers. I wanted to check, as in we have done a very good job that despite this 50%-60% increase in gold price, the inventory, despite this 50%-60% increase in gold price, plus there is 25% growth, the inventory has only grown by about 25%, right? What exactly are we sort of doing? Are we lightweighting? Are we introducing lower-caratage products? Any comments there?
Yeah. Like I have mentioned before, when the inventory price goes up, we do decrease the volume at the store level also. Of course, it cannot be identically reduced. Wherein if gold price goes up by 50%, we cannot reduce volume by 50%. We take initiatives to reduce volume at the store. It can be by way of reducing the caratage. It can be by reducing the, what we call, the volume of jewelry in plain gold, et cetera. It is a, what, threefold, fourfold exercise which we do.
Okay. Has there been a significant conversion also maybe from COCO to franchises? That also a major reason here?
Meaning what do you?
Heavy sort of over the last 12 months. So have we also sort of converted some of our COCO stores to FOCO stores so that this inventory may not have increased to that extent?
Yeah. There have been few conversions in South India, but that is not the major driver. The major driver is because we cut the volume at the store appropriately.
Fair enough. Fair enough, sir. Thanks for taking my questions.
Thank you, sir. The next question is from the line of Aliyasgar from Motilal Oswal Mutual Fund. Please go ahead.
Yeah. Hi. Thanks a lot for the opportunity. And congratulations, sir, on excellent numbers. Question is on the, I mean, gold prices have risen quite sharply. Have you, I mean, your making charges seen any pressure because of that? Otherwise, probably if I think of it this way, maybe the industry profit pool would have doubled. Just if you can share some thoughts on how are the making charges trending with such a sharp rise in gold prices. Also, related question is there's some reduction in gross margin, which I understand probably could have been because of the higher mix of franchisee. Or do you think that has seen some impact because of also making charges?
Yeah. It is only because of the franchisee share which has moved up when compared to Q1, if you are talking about Q1 to Q2.
Correct. What about the making charges? Are you seeing any pressure on making charges because the gold price is going up? Given that gold price doubling, if you assume the similar making charges, then basically the profit pool of the industry would have almost doubled?
Yeah. So when the price goes up, some benefit we pass on to the customers also, which is an industry norm, some tactical campaigns, etc . Otherwise, we don't see any competitive intensity increasing because of this.
Okay. So percentage making charges is more or less the same?
Yeah. It's more or, but of course, we do some tactical making charge benefit or something. But the making charge remains the same as we speak.
Got it. So that basically means that if the gold price has doubled probably in the last one year or so, then to that extent, the profit pool of the industry would have also doubled, right? Because if you are assuming the same making charges on the gold prices.
Yeah. Even industry does the same. It is like one player cannot decide what the industry should do, right? Industry players usually go for, like, wherein almost they do the similar tactics only for customers to come in.
Understood. Got it. If you can talk about the store addition, you gave the number for, I think, 80 stores, which is, I think, for Kalyan, right? Overall, if you can tell me across all different formats, what is the store addition we are building for this year?
Yeah, 80 was for Kalyan. To be precise, 84 Kalyan India. We want to do six international, out of which three run. We opened two in Middle East and one in U.K., 80 Candere is the plan for the year.
Okay. And out of those 80 Candere, how many are already rolled out?
Candere is going a bit behind run, right? So Candere, we have opened only 30 as we speak.
Okay. And we will meet the guidance, or we will have a slower growth in Candere?
Still optimistic on the number because Candere, it is much easier to open a store than a Kalyan Jewellers, which you know, because inventory is the same and showroom size is smaller. So we are still optimistic to meet the Number 80.
Right. So the slower pace is not because of any issue in terms of the performance or any changes in the store economics, right? I mean, it's just a matter of scouting for new properties.
Yeah. In that vertical, also there has been upgradation by certain players. We had to change certain locations to a bigger location, a better interior, et cetera. That is why execution got delayed. Otherwise, everything is going on track, which you see on the numbers in Q2.
Got it. On the regional format that we are launching, what is the target on that for the full year? How many have you opened so far?
No. We haven't opened anything so far. We will open the first couple of showrooms maybe in Q4 this year.
Got it. Okay. Thank you. Thank you so much, sir. This is very helpful.
Thank you. Participants who wish to ask a question may press star and one on the touchstone telephone. The next question is from the line of Utkarsh Nopany from BOB Capital. Please go ahead.
Yeah. Hi. Good evening, sir. My first question is regarding your Kalyan Indian operation. If the COCO stores revenue growth, based on the data which you provide in the presentation, the Indian operation and the franchisee revenue share, then what we see is that our COCO stores revenue growth has been consistently trending down for the past five consecutive quarters. Earlier, we were doing around 17%-18% kind of revenue growth, which fell down to around 7%-8% growth in Q5, and it fell down to 3% in Q1 of FY 2026. Now, if you see in this quarter, it appears that our revenue growth of COCO stores has degrown by 1% despite the steep rise in the gold prices. Sir, can you please explain the rationale for the same? I wanted to understand from the context that are we using market share in our COCO stores operation?
No. As I mentioned earlier, there has been conversions of owned store to COCO. That is where you see that the revenue has degrown. On a standalone basis, SSGs are strong even in our COCO showrooms. Predominantly, you see South, we have mostly all the COCO showrooms in South. Our SSGs are about 15%-16% consistently over the past six-seven quarters.
Sir, can you please explain once again? I'm not able to understand. You are saying that we are seeing an SSG growth of 15%-16% in our COCO stores. So how come the revenue growth is trending down to be negative in this quarter?
Yeah. So there are conversions which have happened. As I told you before, there have been conversions of certain COCO to FOCO. That is why your revenue on a number basis is coming down.
Oh, okay. Sir, for Middle East plan.
Middle Eastern plan, yeah, our stated earlier stated plan, we want to convert our South for COCO to COCO. That is where you see that the revenue is coming down. SSGs are strong, and we have strong revenue growth in COCO showrooms as well.
If I'm correct, your COCO stores demand constant at once.
What will happen is bigger showrooms would have been converted, and smaller showrooms, we would have opened COCO.
Okay. Sir, your Middle [audio distortion] operation also has a number. Can you hear you properly?
Not able to hear you. Not able to hear you properly.
Sir, what I was asking is that your Middle East operation has also posted a pretty subdued performance in September quarter on both revenue growth and margin. What is the reason for it?
Middle Eastern is mostly SSG. Again, it's 7%. It was, of course, performing better in Q1 and Q4, but 7% SSG on a higher base, and overall growth is around 8%. This quarter is performing really well. It's on track again.
Okay.
Because where the few between the festive, if it changes, the vacation time changes, the revenue can switch quarters. That is why SSGs are 7% in Q2.
Okay. And sir, lastly, going through your annual report, and there, what we see is that your employee attrition rate has gone up sharply, which earlier it used to be around 20%-23% in FY 2023. Now it has gone up to around 52%. And the female attrition rate is around 85%-86% in FY 2028. So can you please explain the reason why the attrition rate is going up so sharply despite rising employee base? And what steps we are taking to bring it down to the controllable level?
It is predominantly My Kalyan, which we have. My Kalyan, you know that we have a marketing franchise, wherein it is more of a door-to-door marketing job. In My Kalyan, the staff, what do you call? In Kalyan Jewellers, if you see, they do not leave the group at all, right from managers to all senior levels, junior level. But My Kalyan, people keep on moving. That is the industry norm of a marketing fieldwork, what do you call, division.
Okay. But sir?
My Kalyan.
Let me see.
It should continue at the same levels only. We cannot do anything on that.
Is it correct, sir, that my Kalyan, the employee base is roughly around 20%-22% of your total employee base? And that is only contributing to such sharp high attrition rate. Is it correct, sir?
Yes. That is the major reason for that.
Okay. And sir, lastly, sir, on the balance sheet side, can you just give us some sense what should be the targeted peak net debt to EBITDA ratio for the next two to three-year period?
I cannot guide you over that. What you should understand is the gross margins for, meaning first of all, we will have to look at PBT because EBITDA margins are keeping on degrowing, will be degrowing at least for the next year because our expansion will be predominantly FOCO, where FOCO comes with a lesser gross margin, lesser EBITDA margin. Okay. Post the next financial year, we will start opening our COCO also, sorry, COCO also, wherein you will see margins increasing again. Since the debt levels will keep coming down and EBITDA will be growing, the ratio should improve meaningfully.
Okay. Thanks a lot, sir.
Thank you, sir. Ladies and gentlemen, if any participants who wish to ask a question, may press star and one on the touchstone telephone. The next question is from the line of Ashish Kanodia from Citi. Please go ahead.
Yeah. Thank you. My first question was on the demand side. If you look at the last, say, 15-20 days or so, gold prices have started to correct a bit. Last year, when there was a customs duty cut, we saw a preponement of demand and a spike in overall growth. This time, the correction is more gradual. Have you seen any change in consumer behavior in terms of just any preponement of demand, et cetera?
That's why post Diwali also, the demand is trending the same levels of pre-Diwali. Maybe since the price has cooled off a bit, we don't know. But as we speak, the momentum is strong at the stores.
Sure. The second question was on the EBITDA margin side. Now, given that there was an early festive this year, any expenses which were preponed? Because last quarter, when I look at the EBITDA growth, it was more than your revenue growth. This quarter, if I adjust for the base quarter where you had the customs duty impact, the revenue growth and EBITDA growth both are broadly similar. I just wanted to check, while there will be some contraction in EBITDA margin because of franchisee, you are also getting some benefit from operating leverage and the pilot you are running. Was there any expenses which got preponed this time, like higher marketing, et cetera?
Some ad expenses have got booked because Diwali was early. Otherwise, everything remained the same.
Sure. Lastly, just on the collateral, I think you talked about the release of collateral. Can you quantify how much of what is the value of collateral which has been released? Broadly, by when can we expect this non-core assets sale to be concluded?
So INR 150 crore-INR 200 crore of market value assets can be monetized. We have already taken initiatives to liquidate the next financial year. If you very conservatively, maybe the H2 of the next financial year. Not very conservative, H1 of the next financial year.
Will be the sale of these non-core assets, right?
Yes.
Okay. And just last bit is the balance, which is still kind of with the bank, the value would be roughly around INR 300 crore. Is that the right number?
Yes. INR 250 crore-INR 300 crore.
Sure. Okay. Thank you so much.
Thank you, sir. The next question is from the line of Bhavya Gandhi from Dalal & Broacha. Please go ahead.
Yeah. Thanks for the opportunity. My first question is regarding the store openings. Because for the full year, we've guided for 89 stores-90 stores. In the first half, we've opened closer to 22 Kalyan stores. Do you think that we'll be able to open the entire 90 stores by the end of this year?
India was 84, which had planned, and out of which, as we speak, 40 have been done, 25 in H1 and 15 pre-Diwali. That 44 should be done. We have again five months to go.
Okay. Got it. If you can just explain on a QOQ basis, if you look at the PBT margins, over there also, we've seen some fall. What is the reason? I understand gross margin obviously will dilute because of the FOCO mix. On the PBT margins, what is the reason despite finance cost falling?
No. PBT margins have improved, wherein it was 4.5-5.1.
If I look on a QOQ basis, it's showing me almost 40 basis points lower.
Quarter- on- quarter, if you are looking at, it will depend on what do you call your revenue mix. It will depend upon your ad expenses, et cetera. It is very seasonal now. We cannot look at quarter- on- quarter. You can look at.
Got it. If you can just throw some light on the last three years, whatever FOCO stores we've opened, how utilized are they? Are we still where a few stores are underutilized in terms of sales? Are they still trying to get some traction? Just wanted to understand how much revenue potential is still possible from the new stores that you opened in the last three years.
Of course, all the stores perform the same way we want. There has been, what, 5%-10% of the stores which are underperforming. Again, 5%-10% of the stores which can, or more than that, which can overperform. The rest will be in the level which we want. That happens in our COCO showrooms also.
Okay. Just say, for example, if the gold price becomes stagnated, obviously, our SSGs will start showing normal growth or maybe negligible degrowth also. If you can just help us explain what happens in a stagnated gold price scenario to SSGs, will we still be able to push better product mix, or what is the case when it comes to lower gold price scenario?
You should actually never relate the gold price with SSG. Because if you put last six to eight quarters, constantly, the SSGs have been strong double digit. But all quarters, gold price increase or decrease has not been double digit, right? Customers come with a particular budget, and it depends upon the occasion they buy. Volume will be low when the prices are high. When the prices are low, the volume will be high. That is the way we should look at it. Gold price has no major impact on growth per se.
Got it. Fair enough, sir. That's it from my end. Thank you so much.
Thank you, sir. The next question is from the line of Shubhanu from Three Head Capital. Please go ahead.
Hello, sir. Am I audible?
Yeah. Yeah. Hello.
My first question is, can you tell me a bit more about your two major pilot projects? Why do you want to?
Sorry. Hello?
Can you please come closer to the mic and ask your question?
Now, right?
Yes, sir. You're audible now.
Hello, sir. Can you tell me a bit more about your two main pilot projects? Why open to regional brand? Because as I see your franchise owner, want to open a Kollam showroom than your new any regional brand? Because Kollam showroom is more popular than any of your new regional brand. And why want to do backward integration? Because how backward integration will help in overall margin?
No. Like what you said, Kalyan Jewellers is a pan-India brand. We are there in almost all the states in the country. Okay. We are a hyper-local brand where 30%-35% of our inventory will be local inventory, which will actually be an enabler for a customer to come in. We focus on customers who are a bit aspirational rather than 100% local. Now what we are trying to do is to open a new brand which can be 100% local, 100% authentic to that region so that we can address customers who are non-aspirational and are extremely happy with the regional/local/unorganized players. That is the new brand which we are going to launch. We plan to launch it in Q4. We have not opened any of that kind of format stores as we speak.
Why has a franchise owner opened any of your new local brand than any Kalyan brand?
The franchisee believes in Kalyan as a jeweler who can manage a store well. Because they are already with Kalyan, they have a journey with them. They have a trust with the brand. When the brand announced that it is going to launch a new brand, there are franchisee partners who wish to actually join this journey.
Okay. My second question about backward integration and how this helps your overall margin?
You are talking about the new brand. How will it increase? That has no connection with margin increase. Margin increase, what I told is because of the second pilot which we are doing, wherein backward integration, where we are trying to negotiate with vendors, okay, and get a leaner credit period to increase our gross margin. That was the pilot which I mentioned earlier. The pilot which you asked on the regional brand is what I explained now.
Regional brand margin will be same or lower than?
Regional brand comes with a lesser margin. The regional brand.
ROC will be high.
Stock turn will be high. ROC will be in the range of 16%-18% is what we target to achieve with the brand in the initial year.
Okay. Thank you.
Thank you. Due to time constraint, that was the last question. I now hand the conference over to Mr. Ramesh Kalyanaraman for the closing comments. Over to you, sir.
Hi. Thank you very much. I look forward to the next quarter. Thank you.
On behalf of Kalyan Jewellers India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.