Ladies and gentlemen, good day and welcome to the V-Mart Retail Q2 FY 2023 results conference call hosted by Dolat Capital. As a reminder, all participant lines will be in a 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 and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Himanshu Shah from Dolat Capital. Thank you, and over to you, Mr. Shah.
Thank you, Tanvi. Good afternoon, everyone. On behalf of Dolat Capital, we welcome you to Q2 FY 2023 earnings conference call of V-Mart Retail Limited. On the call we have with us Mr. Lalit Agarwal, Managing Director, and Mr. Anand Agarwal, CFO of the company. We will have this call for 45 minutes and would request participants to restrict themselves to two questions per participant. Let me now hand over the floor to Mr. Lalit Agarwal, Managing Director, for his opening remarks. Thanks, and over to you, Lalit Ji.
Hi. Good morning. Good afternoon, everyone now. This is a good time to be in. I would say, because we are definitely the business and the economy is coming back and the market environment seems to create positivity. Still there are a lot of areas where we keep seeing the risks getting emerged, like from the geopolitical situations to the current situations globally. There are multiple areas of global concerns which are coming in. We all know that. We are also trying to understand all of those. Yeah, India seems to be doing good.
The Indian economy seems to be doing good and futuristically, we are rightly taking those steps. Definitely the monsoon has been okay. Yeah, the late rains have also deteriorated the situation in the rural land. The late rains in October, so a lot of crops may be also got damaged because of that. There has been some pain in the upper belt, especially Uttar Pradesh, Uttarakhand, Bihar, some of the areas where we saw these one-time rains actually had created a lot of panic in the farmers. There are those situations on the rural side. We saw certain parts of northeastern Uttar Pradesh being completely flooded in the month of October.
There was a real challenge in people's movement for a few days of October. There are some of these situations which are hitting the common man. Yeah, otherwise, I think overall, talking about the economic growth, the factory coming in, the strength of the government which we are bringing in as a, you know, bringing in international industries into India. I think all of this is definitely bringing the confidence of the consumer. Confidence of the citizens of India. That will definitely add more value, and that will definitely add per capita consumption. As of now, I think the retail market seems to be good.
Most of the retailers who operate in the bigger cities and the towns. Last year, if you remember, 2022, second quarter, that was a late quarter for most of the people who used to operate in metros. On that base, people are excited, and there is a good growth that is being seen. Largely, the market has grown, both if I look at the rural India and urban India. Market has definitely grown. Still, there is a pressure on the common man, which continues as we have spoken earlier. We continue to see those pressures there. The labor prices still are on very high prices.
I think but yeah, it's tapering down and we are able to see the acceptance level also coming in from the consumers. The consumer is also now able to understand that, yeah, this is something which is going to go on and the new price that, yeah, the acceptance is gonna come in. I think largely retailers have been doing okay. In our case, what we have seen definitely the bigger conglomerates, the larger retailers, they have all tried to expand. They have all expanded as well. We have seen mixed response from them. Some of them have reported good numbers on the back of 2022.
Some are still able to have a muted growth or have a negative growth. I think it's a mixed reaction. All the retailers who are working with the common man, with the mass audience is able to feel the pressure from the few quarters. If I look at the last year, 2022, which was also a good quarter for us and for this particular kind of retailer, I think we've been able to better. We've been seeing a good growth from there.
I think all the areas of work that V-Mart is doing and what we are focusing on, I think that is definitely going to make us more better because right from our focus towards, you know, the whole supply chain, which is the brand and the complete sourcing piece, which is the product designing piece, product sourcing piece, fashion, understanding piece. I mean, those are the areas which we are actively focusing. That is one. I had spoken also earlier, but we have brought in a consultant on that area where they are guiding us on the future strategy and the future work. We are definitely working a lot of areas.
We have divided our merchandising into three parts, which is designing, merch buying and sourcing, which we earlier had a group of one people. I think we've done some good or bad. A lot of work is happening on that. A lot of work is happening on the cash management, on innovation, on the design fronting. How do we bring in a little more trendier, become a little more trendier in terms of our fashion sense? How do we become a little more efficient in terms of our cost parameters? Because inflation continues. Definitely, we have seen a reduction in the cotton prices in the last few months, 1.5 months, I would say. The cotton prices have started tapering down, which is good news.
Which is good news. Yeah, still the crude prices are up. The prices of cotton still are way above the pre-COVID levels. Yeah, the crude has come down by 30% is what we've seen. That effect should be visualized in the next season, which is the spring-summer season. We should be able to further reduce the prices in the spring-summer for the consumer. This particular season, which is going on, the autumn-winter season, we have taken a very strong view over the price. We actually managed our price very well, and we have brought down the prices, which is a very cost price and a very selling price for the consumer.
That should also bring in a good. It's a little dull right now. The winter season till now, we didn't see too much of temperature going down. Yeah, I think it will be okay going forward. This is definitely early days. Yeah, even the marriage season for the first 15 days is very low post-Diwali. After that, there are a lot of marriages which will come in. We will definitely. We have seen very good traction of the winterwear range that we launched.
We did a very early launch this time, and we got a very good benefit of that early launch because the culture, the fashion trend of the hoodies and the sweatshirts are very good. We capitalized on those trends, and we definitely feel that particular area of product lines is a big expertise of V-Mart. That makes V-Mart stand apart from the normal retailers and all the retailers who are there in the market. If they are national retailers or they are local retailers, our range of winterwear, our pre-winterwear range definitely has made us stand apart. I think we've been actively working on the digital side. We've seen a very good growth on that side, both from the marketplace.
Our acceptance on the marketplace, right, on Myntra as well as Flipkart has been very good, and we have seen a very good growth on those areas. We have almost grown 100% on marketplace business operations in this particular quarter. It will continue. I think we are getting a good response. But now with our new addition of our own portal, we will definitely want to focus more on. We just concluded the closing on the eleventh. I think now we will focus on bringing the business back first on the LimeRoad piece. How do we first of all get that business back?
There are a lot of broken pieces or processes because of the cash flow crunch that we had. We'll focus on improving and bringing them back in the first 90 days so that the pieces are on track. Our focus will be largely on integrating and bringing the digital culture into the system. How do we create technology, develop technology, and then how do we integrate the two customer bases and then take views of those? We will be able to see some results coming in the next year from there. Largely, that's the idea. Our attention towards the customer lifetime value is very high.
We are focusing very highly on the retention of the customer, loyalty of the customer. Our algorithms and our customer retention tools are really working very fine. We have had a lot of results which we saw right from the increase in the average bill size of the customer, and also the repeat rate. Our repeat rate has also gone up. I think that's something which is going to remain because as more and more competitors come in, it is more important to protect your existing base or existing customer and then attract new customers.
That's how we are also focusing now more on increasing the customer lifetime value as well as the frequency of the customer visits and the retention rate of the customer. Plus, I think it's very important for us to keep focusing on bringing the new customers, because that is the new millennial customer which is, you know, coming into the market. We are definitely working very highly on the complete brand imagery part, the store imagery part, trying to bring on all those areas. Our store display, our visual merchandise levels have really gone very up.
I think the focus towards the right things, improving those right basics, improving the org structure side, how do we focus on those areas. Strengthening those general structures, strengthening the retail structure, that was very important. We are focusing very highly on technology, on algorithms, on forecasting, which is also giving us some results. Again I think in entirety our focus towards the inventory management, the fashion management, the retail management, and then the look and feel of the stores, because giving the customer the look and feel which is differentiated will definitely bring in lot of results. That should bring in more and more benefit to the future.
I think we will definitely keep sticking with our basics, and we will definitely keep working on this. There are a lot of areas of focus and a lot of areas of, I think, work that is happening in the organization, from the futuristic perspective. We are definitely working on that. It's in the interest of the development of our warehousing. We have this new warehouse which should be coming up in the next four- five months. That is also only available, whereas we'll have the online processing facility also. Our Bangalore warehouse which was locked and unavailable, that is also doing very good. With these two warehouses, we should be able to handle the supply chain very well.
We should be able to decrease the time taken replenishing to the store. We should decrease the time or even the cost taken to replenish to the store. That's the model that we would have. Anyway, this particular quarter I think, we've been fairly okay. This festival also, it looks like, festival is good, looking good. It is still not the pre-COVID level, but yeah, from the last year level, if you look at it, we have grown and we are growing, and we are able to see customers coming back. Excitement is there in the customers' buying side. Still they are struggling with their pockets, so we are not able to see the similar results.
Yeah, I think it is improving a lot both in the southern India part and the northern India. Especially in the southern India, we are seeing very good response from the new stores that we opened up. We opened up almost six-seven new stores in southern India. Most of these new stores are giving us very good confidence, largely in tier three only. That gives us a very good you know futuristic understanding of the market. We believe that that market should become a very important market to us and we will be able to catch up those market very fast. With that, I think I'll hand over to Anand. Let him give a little more detail about the quarter numbers, and then I'll take up your questions.
Thank you.
Thank you very much, Lalit, and good morning, everybody. It's really been an action-filled quarter here with lots of work happening, not only for the festive period, but as we see better signs of recovery in key markets, especially in bigger towns, and also accelerated new store openings, slight ease in commodity inflationary pressures, particularly around cotton yarn and, but definitely last but not least, a lot of work to get online with marketplace portal and start a new phase of online-focused growth for the years to come. First, let me take you through some of the key highlights from the quarter, and then we can open the floor for some questions.
Sales for the quarter grew by a healthy 50% year-on-year, and also 61% over pre-COVID levels, definitely aided also by the addition of the Unlimited play. Like-to-like sales grew by 10% year-on-year, while the ASP grew by 27%, again, partially also aided by higher price points in South India. For V-Mart, excluding Unlimited, the ASP grew by 20% year-on-year, which again is a very high number, because we had to take in a lot of pricing changes and that got reflected in the, you know, the increased price of products. With 16 new stores in the quarter and two closures, the total store count stood at 405, at the quarter end.
We definitely saw much stronger recovery in tier one markets and also in stores, which were in malls in South India versus tier two, tier three and tier four towns where footfalls remained under pressure. At an overall level, while footfalls were up by 42% year-on-year, but from a pre-COVID levels and on a like-for-like basis, footfalls were still down by roughly around 29% for V-Mart business. Despite this, the average bill size went up by 15%. What was very clearly evident was that the rich were, you know, buying more, or at least people who could afford more were buying more, and people who were still impacted by inflationary trends and other impacts were not coming into shop at all.
This is the sort of trend that we have seen for the last major part of, you know, the year gone by, with slight improvement in the festive period, but still footfalls remain down if I look at from pre-COVID levels. Total sales grew by 50%, as I said, and 61% versus pre-COVID. Unlimited with 6 new stores. Out of the 16 new stores that we opened, 6 were in South, 2 in this quarter. It remained a profitable business, continued its profitable journey. The business definitely looks much stronger with the new stores operating at similar or better sales per sq ft, as compared to the traditional V-Mart business.
That gives us a lot of confidence and, you know, improved figures to open more stores in South India, which can deliver similar operating metrics with lower rentals and similar operating cost. We opened three new large format stores, one in Kolkata, one in Agartala, and one in Odisha. They have a slightly larger FMCG mix. They are all three composite stores and therefore are, as an overall business, FMCG share also went up marginally higher. This is for the quarter, I believe around 11-12%, but on a longer run, it should stabilize around 10% or so. There is no change in strategy as far as the business is concerned.
We remain very, very focused on fashion value apparel, FMCG being, you know, a tactical strategy, to be adopted, at key locations. With inflationary headwinds continuing, and really no increase in disposable income of the middle class and added pressures, due to the deficient monsoons and also, in parts untimely excess rains in UP and Bihar, the Tier 2, Tier 3 towns in key markets still remain under pressure. Definitely the small green shoots of recovery are visible, towards the second half of festival and now also in winters. Definitely the new products that we have launched, pre-winter and a lot of it very exciting winter wear is, pulling in, good numbers, and we are seeing good recovery now in the current month.
Coming on the margin side, the gross margins remain quite healthy at 36.3%, which were largely aided by, as in the previous quarters, higher margin throughput from South India business, which we have optically kept a little bit higher, to manage the higher operating cost. As an overall mix, South India business contributes roughly 20% to the sales mix, but disproportionately higher gross margin mix in the gross margin table. We also did much lower discounting in end-of-season sales, as compared to previous years, since we had very healthy inventory.
We have been very prudent in buying during the last two years during COVID times, and thereby the aging of our inventory remains very healthy, which has also led to slight reduction in the provisioning that we have consistently been following, providing for the last many years. Also, we had mentioned in the last couple of calls that we had increased prices because of the expected continued expectation around cotton yarn price increases. That also helped in improving the ASPs and therefore the higher realizations with lower discounting.
However, also as we mentioned in the last quarter call, we have corrected part of the price increase and the impact of that should get visible in the current quarter, as we also see better cotton yarn pricing coming in from, you know, last couple of months. We've also done a lot of innovations in the product, also the mix and also the sourcing strategies, which should help improve our inventory position going forward even better and also the price positioning for the customer even better. On a go-forward basis, the margins should look, you know, marginally optically higher than pre-COVID, due to the South India mix, but should in the long run stabilize around 34%, you know, in the years to come. On the expenses side, expenses remain definitely under inflationary, largely under inflationary trends.
Otherwise, largely, expenses remained in line, except for a bit on the higher side on the rentals, which again is an optical impact because last year we had some savings due to COVID impact, which the landlords were able to, you know, pass on to us, which is continued from this year. Otherwise at an overall level, expenses remain much in line with previous year trends. Good thing to note also on the rental side was that all the new stores that we have signed in South India are on very similar price targets as that of rest of India. So the rental numbers for the new stores in South are in line with the overall India average.
While the legacy stores in, you know, South India still remain high, and thereby we still need to keep the margins, you know, a tad bit higher to manage the, you know, the expense pressure. As a result of better sales, improved gross margins, lower discounting and in line expenses, the EBITDA increased to 10.6% in this quarter versus a 6.1% last year and 3.6% in pre-COVID FY 2020 period. Definitely, the performance definitely on the margin side definitely is better. Coming to inventory, slight upstocking, which is in line with previous years for preparation of festive period. At an overall level, inventory actually went up to around INR 917 crores, which is, you know, the highest that we have ever had.
It is a very thought out strategy for the very carefully planned, you know, process to make sure that we were adequately prepared for the festive period, which is a very strong quarter for us. On a per store average basis, the inventory remained at around INR 2.3 crores, which is still lower than, you know, the pre-COVID levels around INR 2.4 or INR 2.5 crores per store, for the festive period. Since we have been very prudent during COVID period, there is significantly no old inventory that we have as leftover. The bulk of the current inventory that we have is for festive period and for winters and remains under control. Inventory days look optically higher at around 133.
We have put in more experiments in South, and we continue to run the South stores with slightly larger inventory. We should normalize to around 100 days by year-end, if not sooner. At an overall inventory level also, I think we should normalize in the next three-four months, which is again in line with previous year trends. Coming on the CapEx side, the CapEx for the quarter was INR 51 crores. YTD, we have spent around INR 73 crores. These numbers include not only the new store expansion, but also the, you know, the money that we are spending on the new store, new warehouse rollout, which Lalit also just briefly mentioned a while back.
We are targeting to complete the phase one of our new warehouse by February, March, and that should come in very handy for the future growth projections. On a full year basis, I am still looking at a CapEx of around INR 180-INR 190 crore. In addition to this, we have already spent around INR 36-INR 37 crore in closing the LimeRoad acquisition, and there will be another INR 20-INR 30 crore of working capital spent on that account. On the cash flow side, we have been overdrawn for the quarter by roughly around INR 100 crore. On a net basis, it should be around INR 60 crore net of investments and cash on book. Cash balance still remains largely in line with what we had planned.
Because of the higher up stocking of inventory and because of the preparation for the QDC, the festive period, we've built in more inventory and stock, and thereby we had to marginally utilize our working capital limits. The limits that we have are much, much higher. The cash position remains quite comfortable, with no requirement for any more external funding going forward. Online business, as also Lalit mentioned, I think just the marketplace business has gone up by, you know, 100%. At the overall level, including our own OMNI business, it has doubled.
With the new team of LimeRoad, which has just recently come on board, it's a very, very strong team, and really look forward to increasing their contribution in the overall mix of the business and their participation in making V-Mart a very robust and a very strong technology-powered business. On the new stores, we've opened 16 new stores this year. All doing quite well, and we remain on target to, you know, open, you know, at least 55-60 stores for the complete year. That target remains on track, and we should be looking at, you know, a healthy rollout in the next quarter as well. Unlimited business continues to do well.
There has been a like-for-like growth versus last year in Unlimited also, which has been, I think around 15%-16%, which is also very heartening. The operating team there is very confident of delivering a much higher, you know, throughput, and that gives us a lot of confidence that the bet we had taken should take off quite well. With Unlimited and with the newly folded in LimeRoad, I think we should have new areas of growth in the coming years and a lot to cheer about in the next quarters. That is all from my side on the financials. I'll request Himanshu to now open the house for questions, and let's take it from there. 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 their 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 request you to please limit your questions to two per participant. The first question is from the line of Percy Panthaki from IIFL Securities. Please go ahead.
Hi, sir. I was just looking at your sales per sq ft. If I look at the first quarter of FY 2023, basically, and compare it with the first quarter of FY 2020, on a three-year basis, the sales per sq ft was down 28%. If I do the same thing now, Q2 FY 2023 versus Q2 FY 2020, the sales per sq ft is down 10%. There is a recovery from a -28% to a -10%. Do you see this trajectory continuing? Do you think that there is a good probability that, in the coming quarter, Q3 FY 2023 versus Q3 FY 2020, we would see that this -10% would come down to a 0%?
Percy, you are somewhere right, and I don't know how you calculate it, because it's not looking that good, but it may not be that good. Maybe in the last year, you would have seen even the Unlimited number, because Unlimited square feet was coming at the end of the quarter. The sales only which we accrued in the last year was only for the month of September. Otherwise also, I think our sales per square feet has gone up and has been bettering both from the existing store as well as the new store that we have opened up.
All the new stores that we have added up in this particular year, or the 27 stores that we added up in this particular year or quarter, and then, even after that, the stores that we added up, we are able to see good response coming in. Most of these stores have been performing very well. The sales per sq ft has also gone up. We also took up, as Anand mentioned, some large properties and some premium properties as well, which also gave us a good sales per sq ft. That was the target, and that is also something that is coming up. I think, what you are asking, that is what we are working for.
Definitely that's the most important KPI that I hold and my team holds, how do we increase our like for like and how do we increase our sales per square feet numbers every year. That should come in.
Are you seeing sort of any improvement, either, in October or in the first half of November versus what you saw in Q2? Of course, seasonally, anyways it would improve, but I am saying adjusted for seasonality. Are you seeing that, basically, any of the indicators are turning, sort of incrementally positive and that, whatever, recovery is there. I mean, we have been recovering over the last six months, but that trajectory is continuing, in that same fashion, adjusted for seasonality. Of course, seasonality itself will mean that your Q3 will be better than Q2. Adjusted for seasonality, whatever that gap is there versus what you were three years ago, that is.
Yeah, Percy. If I speak on it, compared to 2021, then 2022, today, this particular year, this particular festival looks much better. There is lot of shift in the festival period and the timing and rain. As I you know, if I look at month-on-month, it is doing different. If I look at period-to-period, doing different. I think what you are asking, still there are pressures pre-COVID, if I compare it to COVID. Yeah, post that, definitely we are seeing incremental sales coming in, and every quarter we are seeing betterment happening. Even in this festival, we are seeing that betterment continuing.
Thank you. We now move to the next question from the line of Avi Mehta from Macquarie Capital. Please go ahead.
Yeah. Hi, sir. Sir, I just wanted to understand the demand environment little better. I mean, is it that, and not necessarily from a festive period but beyond that, is the optimism that you would have, is it more linked to the price reduction that we have done, which is, in your opinion, enough to get consumers coming back to the stores on a steady state basis? Or do you think more is needed from an income level?
No, I think, sorry, Avi, what you're saying is right. There are both the things happening, because we also acted on it. As I said, we've reduced our prices and that has been taken very nicely. Our range, our product line is also very good. As I said, inflation is still there. The pressure of the consumers are still there. As I said, you know, the acceptability factor, which was a shock till the last few quarters, and now people are somewhere able to now digest it. That this inflation will remain here and we have to now consume.
That is there, but still the challenge on their balance sheet, the actual doesn't match up, and we still are having that friction on that side. That continues. I think, but yeah, the optimism has to be there, because we definitely believe that optimism is really the drive this time, and that is how it will happen. Yeah, I think, we're clear there.
Sir, if I were to say it simply, it is, we are seeing that there would be some pickup. Festive is looking good. For the real recovery, it might take some time because, you know, inflation has to be, you know, people have to chew it in. Price increases, they should see increase in income levels. That, in your opinion, is more a few quarters away? Is that the right way to say it, sir?
Yeah, you're right. I mean, still that income-led consumption is not being seen. I mean, that's as I would not call it just clearly purely income, it is largely about income versus expenses and then the debt being purged. That is not being seen, and that definitely could take another two quarters. That's my expectation. Maybe last quarter we could see something, but yeah, it will take another quarter. Because there are so many things happening on these multiple sides, we don't know what will come up next.
Got it, sir. Sir, to that extent, if I may, would it be fair to say that your focus would be, you know, to kind of get Unlimited because obviously South India is doing much better. You know, you're making a lot better margins over there. Integration also needs to reach your, you know, focus. That will be the first key step in your kind of segment along with, you know, omni, because that also segment is little different. Versus say store addition, the pace, because we've been, you know, we have the ability to ramp store additions in existing geographies as well. You're probably kind of putting that at the second, third step or in your strategic focus rather than the first that it initially used to be. Is that a right read through or no, sir?
I would love to hear your thoughts on that, sir.
Avi, hi. This is Anand. Let me take that. I think we have our, you know, focus in all the three areas. There is no, you know, single priority that we just want to put. At least in the last couple of years, we've, you know, strengthened our organization structure to make sure that we are able to diversify and, you know, move in these two or three different directions parallelly. Yes, there is definitely higher opportunity in South and the teams in South and the business development teams are taking cognizance of that. There is a multi-pronged effort which is happening about, you know, around taking that position up very strongly.
Similarly, on the Omni side with the acquisition and the, you know, holding of LimeRoad, that's absolutely a new and a separate team which is going to drive that agenda. There will be some amount of, you know, involvement, but definitely that team is going to run pretty much independently to drive that agenda. Lastly, but again, not the least, the offline business, the existing V-Mart business, there is adequate strength that we have built up to, you know, keep growing that and find opportunity areas like merchandising, like product, like improvement in design, like improvement in within merchandising to keep leveraging whenever we are able to see the recovery in consumer traction back in the market.
Thank you.
The next question is from the line of Tejash Shah from Spark Capital. Please go ahead.
Hi. Thanks for the opportunity. First, sir, with the gross margin, last quarter, self-admittedly, you said that, we are slightly more aggressive on pricing and want to bring it down, gross margin to earlier levels of, less than 33%, 32%. Even this quarter we have done very well on that count. How should we think for the rest of the year and the pricing strategy going forward?
Tejash, you're absolutely right. It's not like we've always, you know, thought of having higher gross margins. But as I explained during my, you know, opening remarks, I think there is definitely a higher mix of gross margins that we are consciously targeting in South India to mitigate the higher operating expenditure. Historically, we have, you know, if you look at the historical V-Mart business, we've hovered around 32%-33%. Because of the South India mix and because of the higher gross margins that we need to take in from that business, there will be one and a half percent increase that should come in from that business.
Plus, optically in this quarter, or you know, there is a you know, a tactical issue of lower provisioning in this quarter because of the better quality of inventory that we hold. Thereby you're looking at much higher margins. At a longer basis on a longer scale, we should average around 34%-34.5%. That is our long-term vision. We do not want to overcharge the customer. We do not want to earn more from the same customer. We want to sell more quantity and increase our rupee margins rather than percentage margins.
Very clear. Second question pertains to in your opening remark, you spoke about some supply chain or backend changes that you have done in procurements or design, production and procurement, if I heard correctly. Just wanted to know, are we doing or I'm sure you would have done, but if you can share, what changes you would have done on demand sensing part or fashion sensing part here. Now with online capabilities coming, we have a lot of data. What are we planning? Obviously early stage, but if you can share some thoughts there. How are we planning to convert data into insights and insights into merchandise improvement, which can relate to the customer demand?
Yeah, definitely, Paresh. There is a lot of opportunity. As you are speaking, my eyes are also getting lit up. I mean, so much to do, so much to understand. Anand is as a full-time actually in London and trying to see the markets and what's happening with fashion trends and stuff. There is a lot of opportunities which is available for now as our volume have grown, as our size has grown, as our need for trade business has grown. I think we need to definitely keep looking at those trend spots, and then we keep looking at those various new model whether digital as well as physical, and there's no shortcut to physical.
We need to definitely understand the market, understand the fashion market, the fashion driver market. Have those kind of teams who have that eye and then is here full-time, understand and get facts of that. Then also have a process which then takes the markdown after two days, average two days time, and deliver those fashions as quickly possible to the customer, which is important. As we said, with the online world, especially from LimeRoad, we think that that particular channel definitely is a fashion driver, should be a trend driver for us. Should also be the channel where we could provide better trend and different trend, which is what we call curated fashion. That's the model that we would want to build.
The analytics that comes out from that, because there are millennials who are shopping there, that clearly gives us a very good trend on what is working, what is not working, what is coming up, what is really worth the work. I think all of that, this is large opportunity and then we are absolutely going. This data is once again going to help us manage the insight a lot more for the fashion as well as the category, plus the fashion plus their location. Which fashion, which location is working very. Lot of things actually planned. We don't want to just put too much of pressure immediately on the team. Yeah, there is work to do, going forward.
Great. That's all from my side then. Thanks and all the best.
Thank you. We'll move to the next question from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Hi, good afternoon, Lalit Agarwal and Anand Ji. Thanks for the opportunity. I have two, three questions. The first question is, right now we have completed first annual full year of Unlimited stores, which we acquired last year in August. Quantitatively, will you be able to share, give some color how we should look at this business in terms of strategy, store growth, merchandise, and maybe in terms of some parameters that how we should build in our models?
Manoj, I don't know about what your model should build in, but yeah, what I see and what I understand. See, let me be very vulnerable on this one. There are areas of both concern and opportunity. We have deteriorated in certain areas which I would say that we arguably wasn't strong on. We are working on all of those. We are trying to better on all of those. There are areas that we were strong on. We were able to develop those side. We got those markets. We are getting those customers. You know, attracting new customers is not always an easy proposition.
It is a difficult proposition because the kind of customer which used to come, they're not enough, and they're even more mature. We want a millennial customer. That's what we are trying to drive. We are focusing on our basic model, the store KPI model must be improved. Let's get into those markets where still customers are not seeing those colors and those fashion. We are working on all of that. We're still learning. There are a lot of metrics, a lot of opportunities that we got. I think honestly, if you speak, I'm not too happy with what we have done till now. We definitely could boast about and say that we have been good, doing good. Yeah, I think we have not done bad as we could have.
That is a saving side. Yeah, going forward, we should be focusing, as Anand said and we all said, that we are focusing more on that particular zone. We are focusing on opening more stores in those particular zones. We will continue the margin arbitrage a little bit till we don't get to a good number of stores and then our entry model and our cost model doesn't come to that line. Of course that we would not want those consumers also to charge more. We want to normalize our margins and then make like standardized margin across India. That's the value system that we have. We need to offer to our consumer. That's the confidence also that we want to develop.
Yeah, largely, if you speak, we could see some growth coming in, and we want to target more because as Tier 1 stores are also becoming better and our mall stores are becoming better. With the acquisition of LimeRoad, our trend stores will also become better. More and more trade mix can lead to more and more better modular in our consumer consumption and consumer attraction. I don't know, model-wise, we will speak separately with Anand and then we'll look it up.
Lalit Agarwal, that's very helpful. Just maybe in terms of numbers, maybe if you can share what is the like-for-like growth or maybe what is the footfall growth for six months, specifically for Unlimited. Or maybe you can share ASP trend, how the spend if the growth is happening.
On the sales, I think we have grown by maybe 15% from the last year number if you don't see like-for-like. If I see the quarter 2 70. I think ASP number. ASP must have gone down. I think it has gone down by around 6%-12% because we wanted to introduce the lowest price point select. It has gone down. ASP has gone down. Customers have increased. Number of customers have increased. The bill size also has somewhat gone down a little bit, not gone down, but gone down a little bit because as our ASP is down, it will go down. Yeah. That's what our motive is.
That's our goal, and that's what we will do.
Okay. My second question on V-Mart. We have been seeing and reading a lot about UP, Bihar, and key markets. Will you be able to share how this last 45 days, especially Chhath Puja and the strong festive season in Bihar and UP has performed? Though we know that there are pain points, and you did highlight in the beginning that the consumption demand is not there. Just wanted to know, curious if things are steadily, I mean, things are moving in a positive direction or still the pain points will be seen because I also gather the winter is setting in to some part of north.
Yeah, I mean, to answer your question, we have seen positive signs towards the Diwali period. We have definitely seen better trends, which should continue. Yeah, because our Hindu calendars are little different and, you know, the marriage dates and these are such shifts happen very fast. Right now, what we are going through is a period called Shradh in Hindu calendar, where there are no marriages happening in the next. Normally post-Diwali on the eleventh the marriages start and then continues till the fifteenth of December. This year, we don't have any marriages and those days when marriages will start, that will be fifth of November.
We have some lull period which will come in this time. Yeah, but still, I think the business will come in. As the pressure in Bihar continues, even Eastern UP continues, because Eastern UP, as I said, the flooding also impacted a lot to them. That area still is not under full good numbers. North, the other parts of Northern India, Bihar is doing better. Odisha, even the Western UP is doing better. I think we still are having a pressure on the numbers compared to pre-COVID levels this year.
Thank you. The next question is from the line of Rakesh Bagri from Monarch Networth Capital. Please go ahead.
Thank you, Lalit ji and team for the opportunity. Sir, I have two questions. One is I want to understand what is your thinking on the revenue per sq ft, because if I look at the revenue per sq ft before COVID, when the V-Mart was running, so it was running around INR 600-700 during non-COVID seasonal period, and during Q3, Q4, it was creeping up to INR 800-900 also. After COVID happened, the revenue per sq ft went down, which is understandable, and Unlimited also happened.
Just wanted to understand what is your thinking on the revenue per sq ft, not from the corporate perspective, over a period of one year, two year, because we have said, like, we will be maintaining, trying to maintain 10% EBITDA margin. What kind of revenue per sq ft? And second, on the inventory. You said, revenue or inventory per store has come down from INR 2.4 crore to INR 2.3 crore, and we have mentioned in the call that inventory further will come down. I just wanted to understand how you are planning to reduce inventory further. These are some questions from my side. Thank you, sir. Thank you.
Rakesh, on the overall trajectory of sales per square feet or, you know, sales growth, I think, while it has already been answered, but let me just reiterate. I think we, Percy had the similar question, but let me just reiterate. At an overall level, there has definitely been some pressure from pre-COVID levels, as we have also discussed in the last couple of questions. But if I look at look at the, you know, the pre-COVID levels of sales per square feet, we are definitely hopeful and targeting to reach that level in the next couple of, maybe by next financial year, definitely. This year definitely looks challenging given the, you know, the kind of inflationary trends and the, you know, the contraction in consumer demand that we have seen so far.
From a future perspective, we are definitely, you know, looking to realign ourselves to that 700-800 INR per sq ft that historically we have always, you know, averaged around. There is no change. There is a macroeconomic situation that we are still trying to get over, and it should happen, you know, in the next six-12 months. On the inventory side, this is a seasonal trend, as I explained, that at an average level, typically we hold around INR 1.2 crore of inventory per store throughout the year.
During the you know the onset of quarter three, which is also coincides with the festive period, we have to stock up, and that is a trend that we have always maintained for the last many, many years. There are no major corrective action that are required. It's a normal phasing out of you know winter or festive inventory, which has to happen over the periods of October, November, and December, which again happens every year. We have bought most of the inventory that we needed to buy. October, November purchases will see very, very less amount of inventory purchases, and automatically the inventory levels should come down as we are already seeing that they are beginning to come down.
By December end, we should be in a past control stage, and definitely by the year end, it will come down to absolute normal levels. Thank you.
Thank you, Deep.
Thank you. The next question is from the line of Anant Chaurasia from Manas Equity Research Fund. Please go ahead.
Hello, can you hear me?
Yes, we can hear you. Please proceed.
Anant here. I just have two questions. During the call, when you did the LimeRoad acquisition, you acknowledged that, you know, it was challenging and difficult to build online fees in-house, and therefore you had to pursue the acquisition of LimeRoad. My question is, you know, that business is a very different business with heavy discounting and, you know, chasing customer growth. And, you know, it requires a different mindset. What is the level of cash burn that V-Mart is willing to make, or take to sort of expand that business? And related to that, I noticed that the net debt on the balance sheet as of end of September is the highest, I think since FY 2015.
How should we think about, you know, sources of capital as you pursue growth going forward?
Yeah, hi. This is Anand. Let me take this. On the LimeRoad side, we have taken up this question actually earlier also and during the LimeRoad call. What we are targeting is to build this business profitably in the coming years. This business already has had very strong, you know, historical growth levels, and it's not a very high cash burn business. It is not really competing to, you know, acquire a lot of customers in the near term. It already has a good base of customers with very good, you know, customer retention rates. What we have targeted for ourselves is that we should not be spending more than 15%-20% of V-Mart's EBITDA on, you know, investment, further investments into the LimeRoad business.
The business model or the business plan that we have built for the LimeRoad business for the next four years adequately, you know, recognizes this concept, and we should be looking at a reasonable growth in line with what our expectations are within this number. There is no over cash burn or no extra cash that we are looking to burn, you know, over a number of 15%-20% of the existing EBITDA that DMart is able to earn. Second question on your net debt side. Yes, there is around INR 111 crores of debt that you're currently seeing on the balance sheet. If you look at the net of investments, we have around INR 40-45 crores of cash or cash equivalents sitting on the asset side.
Actually the net utilization is only around INR 40-50, 50 odd crores, which is again in line with the, you know, the stock-up of inventory that we have had to do for this quarter and, in preparation for the festive period. Going forward, we are not foreseeing any significant, you know, cash outflows or outburns. Even as I speak to you currently, our, you know, utilization levels are much under control despite paying for the LimeRoad acquisition.
As also explained earlier, we will be down stocking our inventory as is the case every year, because for the next three months there'll be a lot of inventory which is getting sold, but with very minimal amount of purchases which will happen, thereby further improving you know, the current asset situation, including the cash flows.
Thank you. That was the last question for today. I now hand the conference over to management for closing comments.
Thank you, everyone. We have been talking quite frequently, and I don't have too many things to say. We need to perform more. We definitely need to understand more this particular market, this particular kind of business. Be ready for the future because future looks very interesting, the way the whole world is expecting from India. We should also expect the same from our consumers. You know, everything which comes up to India is going to add up to our per capita income of our consumers and then the consumption of the consumers.
We are definitely on the building up mode, and we will definitely want to build a very, very strong base so that we could actually take up the challenging features which are gonna come in and then the good features which are gonna come in. Thank you and let's meet for now. Bye.
Thank you very much. On behalf of Dolat Capital , that concludes this conference. Thank you for joining us, and you may now disconnect your lines.