Thomas Scott (India) Limited (THOMASCOTT) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Thomas Scott India Limited Q4 FY2026 Earnings Conference Call hosted by Valoram Advisors. 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, 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 Ms. Purvangi Jain from Valoram Advisors. Thank you, and over to you, ma'am.

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Purvangi Jain from Valoram Advisors. We represent the investor relations of Thomas Scott India Limited. On behalf of the company and Valoram Advisors, I would like to thank you all for participating in the company's earnings conference call for the fourth quarter and financial year ended March 2026. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings conference call may be forward-looking in nature. Said forward-looking statements are subject to risk and uncertainties, which could cause actual results to differ from those anticipated. These statements are based on management's belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place undue reliance on these forward-looking statements while making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's business fundamentals and performance under the period under review. Let me now introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Vedan Bang, Managing Director, heading the e-commerce division of the company. Without any delay, I request Mr. Vedan to start with his opening remarks. Thank you and over to you, sir.

Thank you, Purvangi, and a good afternoon to everyone and a very warm welcome to all of you who have joined us for our earnings conference call. As some of you may be new to our company, I would like to begin with a brief overview about the company and then move on to our operational and financial performance for the fourth quarter and the financial year ended, March 2026. Tom Scott India Limited was incorporated in 2010 as a traditional apparel manufacturer and has since evolved over the years into a technology-enabled fashion retailer. The company has been formed through a de-merger from Banga Overseas Limited with a vision of creating a focused retail and fashion business. Initially, we operated as a contract manufacturer for apparel from our Sholapur facility for reputed domestic clients. This phase lays the foundation for strong product quality, disciplined manufacturing, and deep relationships across the apparel ecosystem. Over the years, we have identified the opportunity to move closer to the consumer and build our own retail identity. Building on the legacy of our manufacturing excellence, Thomas Scott has transformed into a digital-first, data-driven fashion company, integrating technology, analytics, and manufacturing to deliver trend-led products with speed and precision. The plugin-free ecosystem combines real-time data forecasting, real-time demand for inventory and its optimization, and rapid product launch capability. This built-for-demand model, or test and scale model, allows us to bring new styles to market in a very short time, thereby managing inventory risk and ensuring high responsiveness to the consumer's preferences. Today, we operate 15-plus brands and 50,000-plus SKUs, including our own flagship brand, Thomas We also support a number of reputed global brands through exclusive partnerships with marketplaces. Our products are distributed to leading online platforms like Mitra, Amazon, and others, as well as to our own offline stores for our own brand, Thomas Scott. With manufacturing units in Sholapur, Bangalore, and Gurgaon, and fulfillment centers, Broadcasting and Catalog Management. What gives us particular confidence is the architecture that we have built, the data infrastructure, the manufacturing agility, and the multi-brand plan. Every stage of deployment, we are yet to harvest its true potential. We are accelerating Background, let me take you through. Thank you. Category Averages, reflecting the continued strengthening of our business model and deepening acceptance of our brands across marketplaces and customer segments. We have made meaningful progress in expanding our product portfolio. We have had early launches in the Vimindra category that have delivered encouraging traction with newly launched style receiving positive consumer responses. as a category during the quarter, marking our maiden foray into the segment with initial sell-to trends indicating healthy consumer acceptance. All of this based on the same trend analysis that Business and Apparels. Consumer demand generally remained healthy throughout the quarter, supporting strong sales momentum across channels. Additionally, our strategic winterwear inventory positioning continued to contribute positively through January, highlighting the effectiveness of our data-driven merchandising and seasonal planning capabilities. These developments, coupled with our focus on operational execution, product innovation, and technology-led decision-making enabled us to deliver another quarter of strong growth and profitability. Turning to our financial performance, revenue from operations for Q4 to 5526 stood at 78 crores, registering a strong growth of 63% year-on-year. EBITDA for the quarter stood at Rs. 11 crore, reflecting 67% year-on-year, while EBITDA margins stood at 14.14%. Profit after tax for the quarter stood at Rs. 6 crore, representing a growth of 43% year-on-year, while PAT margins stood at 7.71%. For the financial year 2026, revenue from operations stood at 255 crore, reflecting a robust growth of 38% year-on-year. EBITDA increased by 72% year-on-year to 33 crore, with EBITDA margins expanding by 105 basis points to 13.1%. Profit-after-tax for FY26 stood at 19 crore, registering a growth of 51% year-on-year, while PACT margins for the year stood at 7.57%. Our business verticals continued to perform strongly during the quarter. Our own brands, that is Thomas Scott, recorded revenue of Rs. 91 crore during FY26, growing by 62% year-on-year. This performance reflects the increasing acceptance of Thomas Scott brand, supported by our online first rapid product launches and data-driven merchandising approach. The licensed and other brand segment reported revenues of Rs. 148 crore, representing a 53% growth year-on-year. Growth was driven by strong momentum across our market-based partnerships and continued premiumization of our product portfolio through international brands. Our contract manufacturing business also delivered a strong performance, supporting revenues of Rs.15 crore during FY26, a growth of 91% year-on-year, supported by improved capacity utilization and sustained relationships with market customers. FY26 was the year that validated our model, validated that data-driven merchandising works, that technology-led inventory management works. And that a multi-brand platform built on one shared operational backbone works. But we believe genuinely and without caveats that we have only just gotten started. Our revenue has compounded 60% over three years. Our EBITDA has grown at 88% over the same period. Our ROC stands at 22.31%. I would like to add that these are outcomes of a company that is still in its early...

Thank you. Our first question comes from the line of Sukrit T. Patel with iSight FinTrade Private Limited. Please go ahead. Good afternoon. I have one question.

The question is, forward-looking guidance on what type of strategic pathways are you planning to position Thomas Scott as a leading omnichannel apparel brand, accelerate digital commerce penetration across tier 2, tier 3 cities, and... Future proof against evolving consumer preferences and competitive disruptions in the fashion retail business. Thank you. I understand the guidance that you're looking for is broadly and broad and strategic. So what I can say is for Thomas Scott brand, we have understood what works in terms of identifying trends and launching them. Our test and scale model works really well and which reflects in the growth of the brand. The brand has grown year on year. We are working on solving for speed by localization of inventory in all geographies. We are looking at additional fulfillment centers to support improvement in the overall speed of delivery so that we are able to cater to the evolving younger consumer demand. What you will also find is that the products that we launch are also leaning towards an aspirational class who are looking for good quality products in natural fabrics like cotton or linen. So we intend to be the pioneer in that particular. The long-standing model that has The line of Ankush Agarwal with We have an insurance claim receivable from a previous fire incident that occurred last year to the tune of about 22 crores approximately. That is one part of it. Second part to it, there is also certain deposits that we have, financial deposits, either with the government or certain financial authorities. So to that extent, there are about 7 or 8 crores that we hold in deposits in that manner. There are some advances, rent deposits. So there are some advances out there as well, and there are some supplier advances. It is explained.

Second, this new category is very good.

It broadens our sort of target market, but in terms of, say, profitability as well, are the Margin Equative in the longer run. In the new categories, we are completely focused on premium brands only, so it will be margin-accretive. The brands that we are doing are higher MRT brands, so we believe that this will be not only margin-accretive, also ROC-accretive, because out here we are tapping into, so there are categories that we manufacture ourselves and hold the inventory from raw material to WIP and then the finished goods. In these categories, we want to take advantage of the... So the model has been constructed for some of these categories in a manner in which it is ROC and margin accretive. It's the same as how we are approaching it right now. Having said that, as I said, we are also focusing within this only on the premium bands. So we believe that, you know, we will have margin accretion through these categories. Thank you.

Our next question comes from the line of Murtaza with Pinpoint X Capital.

Please go ahead. Hi, sir. Am I audible? Yes, Murtaza. You are audible. Please go ahead.

Yeah, thank you for the opportunity. Sir, just to further continue, I just wanted to also understand regarding, like, in Q4, there was some sort of a dip in our own brand, whereas the licensed brands had a faster growth pace. So, I just wanted to understand how much of, how are we seeing the revenue mix shaping up probably in the coming two years, and just wanted to also understand from the perspective of what the blended margins we can expect coming forward.

Sure, Muttada. I'll answer your question without giving very specific power guidance. But with this particular quarter-end question, you are referring to the QOQ performance of Thomas Scott brand. So, for Thomas Scott brand, I can tell you this, that there are new models that have opened up which involve outright sale of Thomas Scott brand products to marketplace channels. When this happens, we generally do not sell to the final consumer. We sell to their distribution arms. And this is generally done at a price which is lower than the retail price. You know, sometimes as low, 30%, 40% lower than the retail price, right? Because of which the revenue that we record is not at the retail price level, it is at the wholesale price level in these cases. But having said that, the margins at the EBITDA level are still neutral, which means that even when we sell on an outright channel rather than selling to the final consumer, the final bottom line margin that we make at an EBITDA level or at a contribution margin level remains the same. So it is just a model change. It is not the margin change. Rather, the margin is, in fact, higher now on our own brand. So, that is the reason why there is a slight difference. But generally, Thomas Scott brand, even with model change, will continue to exhibit positive growth in the future. Obviously, if we do report these numbers rather than on actual net sales basis, which is reconcilable with our financials, but on GMB basis, which is gross merchandise value, then you would see even higher growth than what you are seeing right now. To maintain consistency with the financial reports, we always report on a net sale basis. But having said that, this growth journey will continue for Thomas Kod brand as well into the future. It is for us, on a GMB basis, our fastest growing brand, and that will continue to be the case in the future as well.

Understood, sir. So what it means is that there's no dip in volume, it's just the model we have changed and sort of the realization we are kind of booking because of what it seems like that. And so what kind of a mix are we seeing going forward regarding our own brand?

So, see on a net sale basis, it is a little difficult to say because of certain model transitions. I'll also explain why this model transition happens. What happens is some of our products are very fast-selling products. They do really well. The data in terms of consumer acceptance is very well available with our marketplace partners. In such cases, they offer to purchase from us these products outright with a certain credit period. As well, because it allows us to kind of. Thank you. on this model is also very good, which makes it a little complicated to commit or rather to discuss numbers from a percentage-wise on both the channels. What I can tell you is the baseline growth rate that we have given so far, we are working towards continuing that in the future, and both channels, be it own brands, be it Thomas Scott brand, would continue the same pace of growth. With Thomas Scott Brand, I can tell you, without, you know, giving too much specific on the margins, the contribution margins are also improving because of these model transitions that we're doing year-on-year. So, those enhancements are also there.

Understood, sir. Understood. And so, regarding, I saw there was the mentioning of thread.ai and catalog.ai. So, are we planning for them to become a third-party SaaS product, or how is the business model as of now, and what kind of timeline are we looking at, internal timeline we're looking at for the revenues from these tools, or what is our plan regarding these?

Right. So we are now actually converting these into a super app for internal use only and with a number of other tools. There would be probably few disclosures towards HY on this. But generally, these will still be for internal use. We are not yet prepared to have staff as a business, and we want to focus on our core business model at the moment, while we continue to benefit from the fruits of what we have developed.

Sure, sir. Understood. And so, lastly, regarding the raw material price volatility, I just wanted to understand how do we manage across or what sort of path two is available to us?

So, generally, we plan a couple of quarters in advance of the basic raw material. Having said that, there is a general industry-wide supply issues caused by raw material price escalations owing to the West Asia war. So, there is certain cost escalations that have happened at an industry-wide level. So, fortunately for us, one area of direct impact would have been winter wear, but we have planned this year's winter wear well in advance. So, there is minimal impact out there. In terms of our continuous products, yes, as and when the products are moving into production, there is slight cost escalation. But everyone understands that these are temporary in nature, and our suppliers and ourselves are working with each other to minimize the impact on the consumer. To a certain extent, a part of it may also be transferred in terms of marginal price increases. But due to our advanced planning, we are in a good position to navigate through this at the moment.

Understood, understood. And so just one final question regarding working capital and the borrowing. There's some sort of a sharp increase in FY26. I just wanted to understand, is this the sustainable level where we are at, or are we expecting it to further normalize, and what is an optimum level of debt we should sort of look going forward?

Currently, our debt to equity is actually closer to, you can say, 0.4 or 0.3. This is largely because... We have 22 crore rupees worth of inventory wiped. So that receivable currently sits in other current assets. Against that, we have bank funding of an equivalent amount. As we receive our... You know, the recoverable from the insurance company within the next few quarters, that will essentially offset those short-term borrowings as well. And then it will come down to a 0.2 kind of level. And generally, our business model is robust enough to manage with these levels. There may be certain short-term borrowings that we may have to take time to time, you know, to fund our work. The first March one-day cut of what our drawdown was in the short-term borrowings on that particular day. There are other days when the drawdown is much lesser as well. Unfortunately, we do not release balance sheets of every single day. So, generally, it fluctuates a little bit, but it will be within this range only. One-time decrease will come in the short-term borrowings on account of insurance receivable. So, that is definitely something that will move the baseline itself downwards. And we're coming to working capital. Working capital in terms of days has generally improved for us from our debtors' inventory and payable days overall realistically if we look at it. And we will continue to work on improvements particularly on the debtor side.

Understood, sir. So, I guess, have we taken into consideration that inventory that was burnt earlier into the current numbers? No, that inventory has been written off. Okay, understood. Okay. Thank you very much. All the best for the future. Thank you. Thank you.

Thank you. Our next question comes from the line of Ankur Gulati with Genuity Capital. Please go ahead.

Sir, a quick question. Any views on operating cash flow turning positive in the next six months, 12 months?

So, at the moment, the focus is on continued growth, and we are giving high double-digit growth numbers. So far, as we keep continuing this growth without any further infusion of capital, it is not easy to have positive operating cash flows. So, it is only when, you know, the overall opportunity is seized and we start growing at a rate which is similar to our return on capital employed of, say, 23, 24% or even 25%. It's during those times that, you know, the cash flow from operations would start becoming positive. But as of now, the focus continues to remain on growth.

Looking up with a holy, holy one of fun.

No, at the moment, we are happy with our current short-term borrowing that we have working capital limits. See, our working capital also fluctuates quite a bit. So, what you are seeing is a 31st March point in time. Again, you must consider that the major sale of that That quarter has also come in March month itself of Ugadi Gori Padwa. All these three events were in March, and this is where the sale was concentrated. Much of it has been received since then in April. Obviously, I do not give that cut off balance sheet. So what I'm trying to say is that the short-term borrowing limits, even at a 0.2 or 0.3 of debt, is more than sufficient to kind of cushion that overall requirements that we have to continue the way we are operating.

What are the requirements of these? Whatever debt you have, and how much is the term loan?

As I said, the majority of our liabilities are working capital loans only. So if you were to look at our borrowing, our long-term loans have actually decreased year on year from 2.42 crore to 1.48 crore, right? And these are mostly mortgages that we have taken. Short-term borrowing is the part where it is around 45 crore, which is the current draw, which was a drawdown as of 31st of March. All right. Against that, there is a 22 crore drawdown, which is against the insurance claim receivable. So actually, the number, if you are just against the other current assets, is close to 22 crore.

We reiterate the revenue growth guidance for this.

I'm not giving specific growth guidance, but what I'm trying to say is that the growth that we have delivered, we will continue to deliver similar growth.

Our next question comes from the line of Aditya, an individual investor. Please go ahead.

Hi, sir. So, I have only one question regarding the inventory levels.

So, how are inventories?

Yeah, so how are inventory levels and what inventory strategy is being adopted to support future growth while maintaining a vision?

Sorry, I didn't fully capture your question, but I'm guessing it was on the inventory levels. Yes. So, the one thing to understand is that we are end-to-end from manufacturing to retail. We are not only retail or we are not only manufacturing. So, we hold inventory for a manufacturing cycle and then also for the retail cycle, which is the finished goods inventory. So, we always have a mix of both. It takes us anywhere between 45 to 60 days, you know, to manufacture, and then another 100 to 120 days to sell. This is a typical period. Individually, if you compare these periods, say, with a lightbulb-like manufacturer or a lightbulb-like retailer, you would find these to be. So, there is an additional inventory that is always there for the future growth that we have planned, which is in the form of raw materials, WIS. We have sustained investments in Invenkey, and those will again show up in future growth numbers.

This comes from the line of Subhanu Bangal with...

Thank you very much.

So, the approximate selling price for our own brand is something I can really disclose to you. It is somewhere close to 999 rupees. This is not the same as the wholesale price. We also do a lot of wholesale sales. So it is purely at a retail price level. These are the kind of levels that we generally target. Sometimes we receive. The price level that we target is as I mentioned. Thank you. Thank you. Some of our premium brands sell for as high as 2,500 to 3,000 rupees, and some of the value segment work that we are doing can be as low as 600, 700 rupees. But it is not easy for me to give you a blended mix because it does not explain fully the price point level. Having said that, what I can tell you is that generally our overall portfolio is premiumizing, and we are having better price realizations here on earth, and we are moving towards higher price products as well. While giving the same value.

That means we are premiumizing our ASP and our product list. That means our margin will be increased going forward also. And as you said, we are also entering premium category, like super-ass and premium menswear and others category. Can we expect margin improvement in FI27 also?

So, we are working on margin improvements, but I cannot commit to a specific number. But there are a lot of interventions that we are doing to enable better operating margins in the future.

And my last question on our retail segment, as on FI26, and we closed around six stores in Bengaluru, Do you expect any... Are you targeting any store increasing?

At the moment, the return on capital employed is higher for our investments in the online segment, and we are focused on optimal capital utilization. The way the store business is structured is that it should grow organically, which means that stores have to create the profitability to purchase the 7th store. So, as and when that happens, a new store would also get opened. But it will be a pure organic growth on the offline side. Right now, the model where our execution capability and ROC maturity is best is online, and we are focused on that particular platform.

What was the sales mix as an FI26 from our score segment?

In the store, we have done close to about 7%. Of some... Of some...

On this, on the $50.

Question comes from the line of Pawan Kumar with Shade Capital.

Yeah, thank you for the opportunity.

So my first question is, what is the sales mix of your own brand, like from online, from say your own stores and some other channels?

Yes, so there are only two channels essentially. One is offline and one is online. Online is about 93%, offline is 7%. Now online, we sell on... So, wholesale basis as well as on retail basis. So, when I say wholesale basis, we sell to distribution partners of Amazon or Mintra, and on retail basis, I mean we sell directly out there.

Some questions regarding the new segment you are coming into. Are you manufacturing this on your own or you are sourcing outside?

What's your plan in that?

Sure.

So, with this particular segment, we have decided to take advantage of our tech capabilities and partner up with manufacturers rather than do it ourselves. And in that, we kind of give the manufacturer a mechanism to which we are also able to participate in the success. And provide us better credit terms in return. The idea is that we should keep these newer categories as zero net capital investment categories such that we are able to, you know, make a healthy margin and healthy return on capital employed with minimal investment. We are anyway invested in our fulfillment centers and the bulk of the overheads that are associated with this business. So there is no further investment of that sort also. So far, the results show that we are able to recover much faster than we are able to pay. Healthily ROC Accretive. No, we are not doing in-house manufacturing. We are getting this manufactured by trusted manufacturing partners. Okay.

And lastly, what is your capacity utilization right now for whatever you are doing right turnover?

So, presently, our factories are completely full. They are at max capacity. We are actually using a lot of captive capacities to fulfill our total supply requirement. Captive capacity is essentially a factory that we rent out or job work. Thank you. So, the follow-up on this, like, are you planning to expand your manufacturing capacity, or, like, you'll be following this model, like, outsourcing? So, what we found, how manufacturing is a reliable source. But it cannot be scaled overnight. So there are steady investments that we are making in terms of expanding our in-house manufacturing. But it will scale at its own pace because it relies on, you know, infrastructure development, investment in labor, training, and those kind of things. So we will have to balance out both in-house as well as outsource. So, right now, any, like, plan for this sort of, or, like... There are continuous, continuous conditions in our own capacity, especially in Sholapur. So, Sholapur, our space is large enough for our capacity to increase more, and those investments are being done by us periodically.

Thank you. Our next question comes from the line of Siddharth, an individual investor. Please go ahead.

Yeah, hi. So, my first question is, you had two fire incidences in the last one or one and a half years, right?

Can you state your full question, then I can answer it together.

So, yeah, basically, how come two fire incidences and what about the safety protocols and everything of the employees and everyone?

Sure. So, Um... It is important to understand that we operate a number of facilities, including some of them being factories, right, where all these incidents are fairly, not the second one, but the first type of incident that had happened in Gurgaon was fairly common. It was not a major incident, but we are obligated as a part of compliance process to report these incidents to, you know, on the portal to the investors. So we do it. But generally, the first incident that happened in Gurgaon was not a material incident. The amount was very small in that, and you can say it was once in a 10-year kind of or 5-year kind of incident that just happened out of bad luck. We do take our fire safety standards very seriously, and we have, you know, regular fire audit and fire NOCs from local authority. What you will also find is that the local amount for the first incident was not very material. But the second incident was a major incident, without delving into the specifics because it is subject to an insurance game. That incident was unfortunate and beyond anyone's control. Having said that, what you will find is that we have always reported that all our employees and all our staff have always been safe and protected from these incidents because that is our first priority whenever this happens. We have an internal process to follow, and we follow it.

Okay, so what about the insurance claim? When are you planning to get it?

Unfortunately, this is something that is subject to a process, insurance and also adjustment process, so I cannot actually comment on it at the moment. But rest assured, we have everything in place to be able to recover.

My second question is regarding the huge related party transaction with bank overseas. So is it like normal or what is it?

So, initially, when we had started, we did not have the balance sheet strength to take on certain licenses. So, they were taken with Bung overseas over a period of time. They have been transitioned to us directly. The only regulatory transaction that remains with Bung overseas, which will remain over a period of time, is that they are a fabric supplier to us, and we will continue to purchase fabric on normal and basis from them. But they are one of the vendors. They are not the only vendors for fabric purchases. Okay. But over a period of time, this is going to get phased out.

Okay. Okay. So my next question is, your FY24 to 25 receivables had grown by 141%, but your PBT grew by 60% and net profit by 30%. How come net profit is increasing by 30% but receivables increasing by 141%? Same trend we are seeing in 25 to 26. TBT, net profit, 46% se barra hai, receivables, magar 48% se barra hai, cute receivables getting accumulated. So, what is the plan for it? Why is it increasing? Is it going to reduce? Because basically everything is going into receivables. So, the receivables have actually come down this year, from last year, from 25 to 26.

This will continue to decrease further because that's what we are working on. There are certain B2B channels that have opened up for wholesale sale of the goods that we are making in Commeriscord brand. So there are certain receivables that arise from that. Other than that, we are continually working to reduce it, and it will come down over a period of time on the receivables. Having said that, it is lower this year in terms of number of days than it was last year. What you must also understand, which is important, is that our sales are concentrated, rather I would say more than 70-75% of our sales are actually coming in the last month of the quarter. So, all of that amount is actually due. You are looking at a point in time number and making an assessment. But if you look at it on a continual basis, or if I was able to share with you a balance sheet on a continual basis, What you will find is that there are certain... Working capital recoveries that happen post-event, which result in overall love. It is not fair to look at point-of-time figures and then make a broad assessment. You'll find that similarly with our utilization of short-term debt. This is a part of the general business, the way it works, and the nature of how events are clustered in the last month or quarter.

But the percentage growth of receivables is much higher than your profit growth. Plus, if you put receivables back, are there any bad debts in those receivables?

Any amount that we identify to be not recoverable, we adjust for it immediately. Right now, all of our receivables are against our marketplace partners, directly or indirectly, or their distributors, or alpha colors of them, most of it. And otherwise, it is people for whom we do the contract manufacturing, who are again reputed players. As an end, we do identify, we make it. What you must also understand is that you've done a provision for an exceptional item against the insurance claim amount of close to 1.06 per hour in this quarter and in the previous quarter as well. If you adjust for this exceptional amount, also you will find a higher pad growth.

So, any guidance on when these amounts of receivables will reduce, or when will it come in control, or when your debtor rate will reduce, probably?

So, this is a continuous process. You will find consistent improvement whenever the balance sheet gets reported. But then how do you manage the working capital? Because you are saying that you will not raise the funds for working capital. That's what I'm trying to explain to you, that the working capital position that you see is a point in time, and you compare it with another point in time. As I said, there are sales that are clustered around the last month. A lot of that is received in the coming month, say, of April or May. So, our working capital position, as of March end, is not the same as it is for April, right? And this is improving. We believe that within our current fund sources, we should be able to work out the working capital.

This is putting pressure in stock price. Anyway, store, I wanted to ask you have six stores, but according to what I saw, I think some stores have closed, right?

If you look at the gross number of stores and then the net number of stores, obviously there would be a difference. There are stores that we have closed in the past when we found that they are not performing. Generally, we look at... We decide fast in terms of what is working, what is not working. We track the actual consumer behavior within the stores in terms of purchasing. And if we don't find potential in it, we exit those stores as well. So that does happen. It's a part of any retail business.

Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. Our next question comes from the line of Harsh Shah, an individual investor. Please go ahead.

Hello. Hi. Thanks for the opportunity. So my question is that you mentioned that you typically have 40 to 45 days of inventory

and 100 to 120 days of receivable days.

I wanted to understand, so for the outright sales that we are doing to the distributors of these platforms, in that model, you mentioned the price of the... And you also offer them a credit period. So is that beneficial for our working capital cycle or how does it work?

I'll delve a little bit into the fundamentals. First, what I said was that it is about 30 to 45 days on inventory to manufacture, which is the manufacturing cycle without any bother. And then we have 100 to 120 days of finished goods holding period, right? This book put together explains the general inventory cycle of a company that would be doing both, which is 30 to 45 days of manufacturing and 100 to 120 days off. Holding the finished goods, right? On the debtor side, there is a couple of things that are important to understand. One is our manner of accounting is such that we maintain all customer returns also in receivables till such time that those inventory comes back to us. We make a claim as per an approved turnaround time period. And we recover that amount. So if my customer returns are somewhere close to 20%, that amount would at any point of time be within the receivables for such time. Other than that, We try to keep it margin-neutral and ROC-accretive when doing this. So, these are decisions that we make from time to time. Sometimes, selling to some of these distribution partners also helps us to get the inventory much closer to the final customer by housing it in warehouses of the marketplace partners itself.

Right. Okay. So, in the new model also, the receivables

days and the inventory days and everything is similar to the older model?

No, no. It is actually lower. Again, I don't want to give out specific day terms that I have. It is actually lower, and you will find continuous improvement in the debtor days. As we proceed, as and when these, you know, some of these models unlock, and there are certain mechanisms otherwise also that we are unlocking that allow us to get it down.

Right, okay. And you also mentioned that there is some growth inventory also that you have to keep because you are in a growth stage.

Right now, for the next year also, the current balance sheet that we are seeing, is the inventory and the trade receivers can support the growth for the next year?

Yes, it will continue to support the growth for the next year. There will be working capital improvements as well that will come in. But generally, our current sources of capital support us for the growth plan for the coming year.

Okay, okay. So, there will be no...

So, again, about 22 crore of short-term debt is attributable to an amount that relates to our insurance claim. So, once that is received, then it goes lower to that extent. Since it is not received, then this is the baseline around which there will be some fluctuation.

Ladies and gentlemen, to ask a question, you may press star and one. Participants in the queue are requested to please restrict yourselves to two questions only. Our next question comes from the line of Kushal, an individual investor. Please go ahead. Hello, am I already going?

Yes. Our B2C brand has grown 62%. What was the value?

Classification between... Hello?

Sorry, Kushalya, not fully audible, so you cut off mid-section. Am I audible right now? Yeah. So, out of this growth, well growth versus volume growth. You mean in terms of units sold? Yes. We're not reporting the unit sold because we sell in multiple channels. We are selling wholesale as well as retail. So it's not like for like channels. At the moment, we're not reporting unit growth. But generally speaking, unit growth has been almost at a similar pace of our volume growth. I don't have a specific number to give you our revenue growth. You can say that there has been about maybe it is about three or four. How much percentage of sales exposure we have in export market? So, at the moment, we have no direct exposure to export market. We do sell to distributors who do sell it ahead in export markets. But for us, all our building is done domestically. Okay, and last question on the receivable side, as we mentioned, that receivables are point-to-point mentioned in the balance sheet. So, how much percentage of those receivables are already recovered in May or April? So, generally, there are two parts to the major parts of the receivable. One is the actual receivable from the marketplace. The other is the customer returns. Typically, the customer returns is realized in the next month itself of any particular period, so that would come in, and typically, customer returns of any quarter is 20% of the gross save normally in e-commerce, so that part is realized in the coming quarter. Other than that, the cash flow realization is also typically, from whichever quarter it happens, within 45 to 60 days, which is periodically realized. So that also happens simultaneously.

Thank you. Our next question comes from the line of Manish, an individual investor. Please go ahead.

Sir, can you hear me? I have two questions from my side. First is like, there is line item like other assets that is, I think, like raised surprisingly, I think in the balance sheet from, you can't say, 8 crore to 48 crore, that is other asset items. Can you please elaborate about that?

Sure.

So, I had answered it earlier in the, that was one of the first questions actually I got. So, other current assets comprise of an insurance claim receivable of 22 crore. Other than that, there are, so far, we were not, you know, we were not required to pay taxes or, you know, there's certain tax-related deposits that we have. So, those are there. There are certain deposits that we have with statutory and financial authorities. So, that is also there. In that, there are certain advances that have been given to supply chain partners. That is also a part of this. So these are generally the... Thank you. So, majority of our receivables are more than 90% of our receivables, I would say. I don't have a specific number, but generally most of our receivables are less than six months.

Our next question is a follow-up from Subhanu Bangal from 3Head Capital. Please go ahead.

Thank you for follow-up. Sir, as you already mentioned, why our B2C one-band sells down Q1Q, but I want to understand one more time, a more simple way. Please help me to understand why Q1Q sells down. Sure.

So, as I had mentioned, as I had mentioned, There is a certain amount of sales that we are doing. which is selling to distributors of marketplace channels, such as Gmyntra and Amazon, rather than directly selling, in which case it becomes an outrights. In those cases, we do not sell at retail price. We sell at the wholesale price, which is an X percentage lesser than retail price. This percentage is negotiated periodically with the distributors. So automatically, we are reporting the net sales, which is the billed amount. We are not reporting the gross or net merchandise value. So there will always be a difference between these numbers.

So, going further, do we calculate as a net sell basis?

We've always calculated on sales, and we've consistently reported on that basis only. As I said, we have started selling to wholesale distribution partners of marketplace channels such as Minsta and Amazon, and those sales are happening at less than retail price because they then sell it ahead at retail price.

Thank you. And my next question on our return percentage, because our majority is coming from online, what was the return percentage last financial year?

So generally, our return percentages are lower than category averages. And customer return percentage is around 20%, which is... There is consistent improvement in that return percentage also going down as we proceed. There are certain marketplace-related-led initiatives. There are certain initiatives led from our side. A combination of these factors enable us to control the return percentages. But it's a part of the...

What percentage happened in the FI20s site?

So, I don't have the specific number, so I don't want to misquote, but what I can say is it could be somewhere around 20 to 23 percent in FI 25, and here it is closer to 20 to 21 percent. Okay.

Thank you. That's it from my side. Thank you.

Our next question is from the line of Ishaan Modi, an individual investor. Please go ahead.

Yeah, so first of all, congratulations on the great set of numbers. I had a few of the questions. My first question is that our sales has been increased by 60% is almost, but I see the cost of goods is still in the same age. So how is it possible that our cost of goods is in the same range of, you know, YY levels?

Sorry, your voice was not very clear. Can you repeat your question, please?

Yeah, am I audible now?

Yeah, now you are.

Yeah, so my question is that our sales has been increased by almost 60% on a YOY level, right? But if I see the cost of material, it has been an awfully trend. So how is that? The same cost of materials has grown by how much? It's not have gone by, it's gone. Anyhow, I think it's played at a wide level.

Yeah, so, um, there is certain, if, uh, the, the cost of materials has, uh, It's not like that. I can give the breakup. But generally, the gross margins have expanded because our own brands are in the more premium segment. Our other brands that we are working with are more in the premium segment. And as demonization is happening, there's a general improvement in the overall margins. But to be honest with you, we do not look at the business from a gross margin point of view. We look at the business from a... Thank you.

Thank you.

Yeah, so there's about 16, if you look at it, you're on your basis also, there is about 16% lesser contribution of the cost of material consumed, which is explained by a 16% improvement in the overall selling price owing to premiumization and generally baseline increase in the price at which we sell in Commerce Court brand as well. But mostly owing to premiumization on the other brand side, the other brands that we are selling are more... So, the other brands, not the B2B side, the B2C license and other brands are the ones that are contributing to the premiumization. So, 58% in March 2025 was our material cost. It has come down to 52% in March 2026. All right.

Yeah, so when the B2C side, like, which of the brands has contributed the most for the pre-metization thing?

So, again, this is confidential information and, you know, something that is associated with exclusive marketplace channel partnerships that I have. So, I'm unable to provide you specific brand related to those numbers because it also impacts the disclosures made by my marketplace partners. But generally, it is our international brand portfolio that is driving premiumization. Our international brands that we support, that they're operators for, include brands like Nautica, French Connection, SCUK, and Kenneth Cole.

Also, I like my second question is how short-term borrowing has increased by almost more than 200%. There's not an A525 to A526. If I see the cash flow statement, they transmit it. So what is the reason behind this much amount of increase in a short-term borrowing?

So, as I mentioned earlier, 21 to 22 crore is the insurance receivable, which is sitting in other current assets. Against that, there is a short-term borrowing increase to that level to support business growth despite financial and operational disruption that happened because of the fire incident that we had earlier. So, to that extent, there is an increase. Otherwise, if you look at the baseline, it would be lower by that amount, which is 21 to 22 crores. So as in when we realize the insurance came receivable, you will find that the...

And I think there was an exceptional item, so it was also related to a fire incident that happened last quarter.

Yes, so totally we have booked close to 1.06 crore in this quarter.

All right. And one more thing, the cost of material, maybe I can set a gross margin. So going forward, are we expecting to stay in the same region that was in this quarter? Or are we expecting to shoot up coming quarter?

First, definitely, depending on... The gross margin can vary quite a bit, but the next margin, or rather the operating margin, largely remains consistent. So far as we are focused on growth, our EBITDA margins will remain at the current levels that we are working on. We target the levels at which we are, and we achieve them.

Any colors on the incoming financial or how we are looking?

So, we are working to make the top-line growth continue the same as last year. So, we are working to increase our revenue growth in that fashion. Working capital, increasing our return on capital employees through smarter interventions. So, those improvements may also come in throughout the year. All right.

And how do you see the product mix is improving between different channels going forward?

So, we are finding, so generally, you know, we let our consumers decide the product mix. We don't target, so our business is not a very typical retail where we decide that ABC is the product mix and then we produce based on that. We essentially launch a lot of test options based on an analysis of what is being demanded by the consumers. Once those test options are launched, those test styles are launched, we evaluate the consumer demand, customer feedback on that. And based on that, we scale up what works. So whichever category works for us or whichever style works for us, it scales itself up naturally. It's not something that we have to force. So the mix can be, you know, year on year, depending on what the actual consumer wants and what they are accepting from what they are making from a test to scale point of view. But generally, we think that 8% contribution will continue to remain of men's apparel and the remaining 20% will be a diverse set of categories.

Okay, thank you all the best for incoming.

Ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you all for participating in this conference call. If you have any further questions or would like to know more about the company, please reach out to our Investor Relations Manager at Valorum Advisor. Thank you. Thank you, everyone, for joining this call.

Thank you. On behalf of Valorum Advisor, that concludes this conference. Thank you all for joining us. You may now disconnect your line.