Aditya Birla Fashion and Retail Limited (ABFRL) Earnings Call Transcript & Summary

Ladies and Gentleman. Good day, and welcome to the conference call of Aditya Birla Fashion and Retail Limited. The call will begin with a brief discussion by the company's management on the recent corporate actions followed by a question-and-answer session. Please note that the company is still in its shut period, so I request you to please restrict your questions to the [ subject ] only. We have with us today Mr. Ashish Dikshit, Managing Director; and Mr. Jagdish Bajaj, CFO. I want to thank the management team on top of all the participants for taking the valuable time today with us. I must remind you that today's discussion may include certain forward-looking statements and maybe viewed, therefore, in conjunction with the risks of the company faces. Please restrict your questions to the transaction and to strategic questions only. Housekeeping questions can be dealt with separately with the IR team. [Operator Instructions] Please note that this conference is being recorded. With this, I hand the conference over to Mr. Jagdish Bajaj. Thank you, and over to you, sir.

Thank you. Good evening, and welcome to the conference call. It gives me immense pleasure to share an important update. As you are already aware, this Friday 5th of May 2023, the Board of Aditya Birla Fashion and Retail Limited approved the company to acquire 51% stake in TCNS Clothing Company Limited through combination of share purchase agreement with counter promoters and a conditional public open offer. This will be at a price of INR 503 per share of TCNS. Subsequently, it also proposed that TCNS will be merged with ABFRL through a scheme of amalgamation or through receipt of necessary approvals. The company will pay INR 1,650 crores for acquisition of 51% stake under the SPA and public open offer, present to be above, TCNS will be amalgamated with ABFRL under the merger scheme bearing shareholders of TCNS. As on effective date, we'll receive 11 shares of Aditya Birla Fashion and Retail Limited for every 6 shares they held -they hold in TCNS. The above transactions will be one of the largest deals in the Indian fashion space. We -- back in 2018, we had explicitly stated our growth strategy for the coming years to be built around ethnic wear, the largest segment in the Indian fashion space. Over these years, the company has made several organic and inorganic moves with an objective to build comprehensive portfolio of brands in this key segment. This deal will allow us to expand our existing ethnic wear portfolio into the largest subsegment, which is premium women's ethnic wear segment, where the branded part of the segment is expected to grow at high double-digit for years to come. TCNS, reputable and popular brands have already cemented a solid foundation in this category, which we aim to leverage and enhance to strengthen our position. Most of you must be aware, but let me still give you a brief about TCNS. TCNS is India's leading women's branded apparel company that owns amongst the most popular women's ethnic wear brand such as W, Aurelia, Wishful, Folksong and Elleven. The company designs sources, markets and retails a wide portfolio of women's branded apparels and accessories. As of December 2022, it sold its products through 650-plus exclusive brand outlets, 2,500 large format stores and 1,100-plus multibrand outlets located in 29 states and 2 union territories in India. It also sells its products in Nepal, Mauritius and Sri Lanka through exclusive branded outlets. Its products are available in India and select countries through the brand websites and other e-com platforms. The company, as all of you are aware, reported a top line of [ INR 933 crores ] and a profit after tax of [ INR 10.6 crores ] for the 9-month period ended December 2022. The company has demonstrated consistent growth in revenues, high gross margin and EBITDA over the years, running an asset-light and self-funding proposed model. Prior to COVID, the company maintained a strong double-digit EBITDA margin and generated positive cash flow, reflecting intensive strength of its brand and robust financial metrics. The business is also led by a very high-quality team, which dedicated itself towards building these brands for more than 15 years. Why we are doing this? India is going through an unprecedented consumption boom, driven by a growing population and increasing purchasing power. In particular, discretionary spending has been on the right as consumers seek to elevate their lifestyles and express their individuality. Of all the discretionary consumption categories, apparel is one of the largest and fastest-growing segments. The organized apparel market is expected to reach USD 7 billion plus by 2028, growing at a CAGR of 15% plus. The company is well poised to leverage this consumer trend and build large businesses around significant and meaningful categories with a brand-led strategy. We have been very clear in our thinking that we would want to operate in all large segments of fashion and lifestyle business. Over the last 25 plus years, the company has successfully demonstrated its stability in building brands, as shown by the notable success stories of Louis Philippe, Van Heusen, Allen Solly, Peter England and The Collective. In last 10 years, we have successfully demonstrated our ability to take over large businesses and turn them around as seen in Pantaloons. The 5 brands that we will inherit as part of the acquisition are going to play pivotal role in building our ethnic women's wear portfolio, where the strength of these brands, combined with our brand building capabilities and operating strength will help in creating tremendous value. As we look ahead with this acquisition, our ethnic wear portfolio will now be complete. Going forward, our focus will be on scaling up existing portfolio of brands into large profitable businesses. This acquisition will be funded by incremental date and internal accruals. In conclusion, I strongly believe that this acquisition will be an important milestone in the evolution of the company into fashion and lifestyle powerhouse of brands. As we move forward in our growth journey, including successful completion of this transaction, we are confident of receiving support from all stakeholders, the teams, the partners and the shareholders. Thanks a lot, and we are happy to take your questions.

[Operator Instructions] The first question is from the line of Aliasgar Shakir from Motilal Oswal.

I have a few questions. Just first question, trying to understand the mindset this acquisition. So -- so far, in the last 3, 4 years, the acquisition that we have done have mainly been in areas where there has been some product expertise requirement, whether it was occasion wear in Sabyasachi or Tarun Tahiliani, even Reebok and probably even tomorrow where there is a particular requirement. So just trying to understand from that point, what is it that you see here in terms of whether it is product capability reach brand or really ability to get quick a large size that is a key factor that has driven this acquisition? And just related question here is if you could just share your thoughts on the basically daily wear, women ethnic wear where TCNS is -- what is the characteristics of this market? Is it very price competitive? And is that the reason why TCNS has suffered in the recent past, they've had very high margins but growth has been a challenge. So just if you could share some thoughts on the market.

So Ali, let me begin by first talking about the strategic ratio that you've asked. Around 5 years back, and we have been consistently emphasizing that every year and every call, that as a company after having built businesses and largely rescue their market for about 25 years, in 2018, we decided that the company's portfolio would be incomplete if we do not have a significant presence and a leading presence in one of the largest segments of the market. Indian ethnic wear constitutes nearly 30% of overall apparel industry, and we have 0 presence in FY '18, but for the product which is sold inside Pantaloons. In our strategy stated around that time and almost 5 years back, we mentioned that this is a market that we have laid out and crafted a segmental approach to all segments of the market which is luxury end, superpremium end, premium end and the value end of the market. We stated it and called it out in our presentation, which was made to public in FY '21 once again, where we called out each of these segments, our approach to how we will build in each one of them and over the last 4, 5 years have been systematically and carefully crafting that. In the luxury end, we solved the best approach would be to partner with some of the most successful luxury designers in superpremium, and we took some of them and launched prêt lines line an [ SMN ] operating with House of Masaba. At the premium end, we are following an approach which is both organic and inorganic. In the men's wear side, we decided to launch organic because that is the way the market was laid out. It is early stage. Only 10% of overall market is men's ethnic wear and that's why we launched Tasva. And you're aware of last 12 months, 15 months, the success of that grand early days that we've launched about 50-odd stores. The largest part of this market is the women's premium ethnic wear market. And if you look at the characteristics of this market, it's very crowded at the bottom end where a lot of unbranded, undifferentiated products fell at lower price points. At the higher end premium of the market, there are only very few players, which have been able build skill, and TCNS is unique in that sense in the premium segment of the market. Our approach to brand building has been very long term with all other brands, which is why we have been able to nurture and grow businesses over 25, 30 years. We looked at the TCNS platform, we believed that there are -- they're exceptional in being able to build and grow the business over more than a decade, deliver the kind of financial performance, which is rare and exceptional, do it in a cost-efficient manner by raising very little capital in a capital-light asset model, exactly the way we have built businesses around Madura. We see the synergies and our ability to take this business even further. And that's really why we looked at it. We would have loved to build it organically also, it could have taken us a decade or a part of that. It's the single largest segment of the market. And then the opportunity like comes -- like this comes, it's once in -- once in a very long while that you get an opportunity for a market leader which becomes available. And that's really how we looked at it Ali. We have detailed it out in our strategy segment, and this is an opportunity when it presented ourselves. We feel that it has all the right elements, a very strong brand portfolio, a very well-built distribution network. Our portfolio, which consists of subpremium to superpremium segment, management team, which has been stable and exceptional in execution. Now all brands and businesses go through a little bit of challenge at different points of time so was the case -- in this case, where post-COVID, ethnic wear segment across industry has suffered and it's been taking a little while longer to come back and that doesn't deter us. We think good with strength of the brand, history of the business, the quality of management is perfect opportunity for us to take to next level, and that's been our thinking in this segment.

Got it. This is really useful and very detailed. Any quick thoughts on how do you think TCNS recovery can be played out? I mean do you think that they are too premium in terms of pricing or anything else that you think would help them drive that improvement in profitability?

Ali, you've heard our view on this over a long period of time. I think as a country, Indian consumers are constantly looking for superior and better product. Differentiation and premiumization has been the most consistent theme for us for 25 years for all our brands that we've built. It doesn't mean the consumers will pay high price without the differentiation. So product quality, design differentiation, these are elements for which consumers pay a premium. TCNS portfolio is one of the few, which has been able to command it over a long period of time. I think that's the same thing that will be the focus of management. Of course, for us, a lot of -- to that extent, therefore, I don't believe just price itself is either a problem or an answer to something. It needs to come as an overall package of brand experience, product differentiation, design element, the quality of it combined with the pricing. But premiumization has been a route and it's the one thing that this company has done over a long period of time.

Got it. This is a very useful. Just last quick question on the valuation. Can you share the justification of the differential valuation for the cash as well as the swap ratio, which comes out to be somewhere nearly about 25% lower for the swap versus the cash component?

Probably, I don't think -- I think that's the wrong way to look at it. There are 2 ways. There is a cash component that has come through the negotiations and through the rules that are applicable for the open offer. There is a merger ratio, which has been decided by looking at the fair value of 2 companies by independent valuers. The merger ratio, as you know, the independent valuers would look at long-term potential of each of the businesses, relative value creation, the fund flows that each of the businesses are projected to create over a long period of time. It also includes market price, but market price is just one of them. I think your question assumes that all of that is built into the market price, which you know is obviously, current market price reflects the current situation that the valuation is a more long-term projections. And that's how the value has done. It has been done dependently using multiple method and both the parties believe that it's a fair thing.

Understood...

And multiple have given opinions on this, both in fairness as well as arriving at the value.

The next question is from the line of Garima from Kotak.

My first question is to Ashish. Now if I read the press release, you have mentioned that your FY 2026 target for revenues from ethnic wear segment is somewhere around INR 50 billion, right? Now if I do the math, maybe TCNS can be [ 15 ].

Garima, can I just come in and correct you? We -- on that is FY '27 number. So I think somehow in the press release, it's come out 3 years looking like '26, our intent was '27, but still go ahead with the question.

All right. So even if it is an FY 2027 number, could you help us understand if after TCNS, your current portfolio, which includes Tasva, the designer brands, et cetera, plus TCNS now, is this portfolio enough to really drive you to the INR 50 billion target that you now set for yourself for FY '27?

Absolutely. I think if you look at the various elements of this portfolio, Garima, the 2 large pieces in fact -- I would call out the 3 large pieces are 2 of them from the TCNS portfolio itself, which has the W and Aurelia. Both have potential to become INR 1,500 crore brand. You'll have to independently go and see where they reach over a period of time. Similarly, Tasva, our long-term ambition is to build a INR 1,000 crores plus business. So these 3 themselves are large part of where the market is and the opportunities exists. On top of it, our portfolio that exists of the designer brands and the partnerships that we had Jaypore. So our statement there consists of the brands -- brand portfolio that we have. I think Jagdish also mentioned, as we laid out our ethnic wear strategy, with this, our portfolio is comprehensive, unmatched and complete. And it is with this portfolio that we believe we'll be able to get to he scale that we're talking about.

Got it. And Ashish, are there any strategies in your mind in terms of driving TCNS towards the margin levels that they have witnessed in the past that is pre-COVID when they were doing high double-digit kind of margins?

Garima, I think you should track this market and most of the people who tracked this market know that it takes an exceptional business to deliver double-digit market -- over a -- double-digit margin over a decade. And our -- all our external study also reflect and showed the strength of the brand. I think COVID has affected some businesses differentially, and we see it in our portfolio also, ethnic wear has been one part of it and that's obviously taken longer to come back. But we are confident that with the combined experience, the strength of the brand and ABFRL's own ability to scale up and add value to these businesses, we will be able to get it back to first the double-digit EBITDA, which we need to get in the next 2, 3 years and hopefully, very soon to the kind of margins that the business used to enjoy before that.

Understood. I have last question for Jagdish, if I may. Could you please help us with the net debt of ABFRL as of 31st of March?

Garima, for that, you have to wait until I announce the number. But let me tell you, for this acquisition, we intend to borrow not more than INR 700 crores to INR 800 crores. Our stated net to debit EBITDA that leverage ratio will increase to approximately 3x in FY '24, but it happens when you do a large acquisition. This is the pre-index EBITDA numbers which I'm talking about. But in next 2 to 3 years or rather 3 years, we will come down to below 2. So this is the position on my net debt.

Garima, we'll come back to the exact number when we announce the quarterly results very soon. We want to focus on this transaction there.

Next question is from the line of Nihal Jham from Nuvama.

Yes, congratulations to the team for completing this acquisition. Just first question was, Ashish, you alluded to the aspect of maybe taking a decade to build a business similar to what TCNS is currently having. Was that the main consideration? Because if I just think about considering a partnership with Flipkart and the kind of distribution that Madura has, along with the aspect that we launched, Marigold Lane and there are certain private brands in Pantaloons, was there a thought of maybe building this category organically or any other aspects of the TCNS business that -- other than the longevity of creating a business of the scale?

So Nihal, let me restate some of the points and perhaps help our thinking on that. The first question was also around that. See, we have, as a company, been building brands organically and acquiring businesses inorganically both. We understand what it takes, both in terms of time, capital, investment, losses, sometimes risks of failures in building a stable, strong business over a period of time. So we are fully aware of. Having decided in FY '19, '18, '19, that this is the market where we want to play a leading -- build a leading business, very clearly, these were all set to build an organic business, and this is what we were doing on one side with us, the other side with the Marigold Lane. If the inorganic opportunity didn't present itself, was not either attractive enough or we did not believe we can add value to it. We would go ahead as we were going ahead, Nihal, in terms of building an organic play. You must appreciate that a portfolio of this nature is one way to come by and second, this long time, it doesn't mean it cannot be created but it does take long time, and we are doing that in many parts of our business. If you look at inner wear, it's a purely organic business that we are building. On the men's ethnic wear, the Tasva, purely organic business. So there is a large part of our portfolio and a meaningful part of our portfolio, which we're building organically. As and when inorganic opportunity of this nature and this quality come up, we have to seriously consider it. And that's the consideration we did. Both options are available. We were going down the organic path, as you are aware, and since this opportunity came up and we evaluated it and both felt that this is perhaps the more sure and certain way of creating value in this segment as well as building presence in this segment.

The second question was on the fact that you alluded that maybe the ethnic wear segment itself has faced certain issues post COVID. But just on TCNS' growth improvement for both the brands, W and Aurelia, any specific low-hanging fruits or any changes in strategy that you immediately are considering which you don't want to share?

Too early for us to have a view. We have this investment captures around long-term belief both in the segment, in the brand and the management team. We think a lot of it will be visible in couple of quarters on its own. We definitely hope and want to build the work with the management team to accelerate and find areas of opportunity where we could add value to further -- at this point of time, I don't think it will be right for me to call out any specific area.

I have one final question to Jagdish. We'll be getting approximately [ USD $14 million ] from the GIC branch in the second half of FY '24, so ideally when we are looking at the debt to EBITDA that should be something that should be considered, right? Or the number you're giving is just, at this point in time, assuming the INR 700 crores that you will have to raise to finance it?

Yes. So Nihal, when I say 3x of EBITDA, it already factored into GIC money coming into. As you are aware that we have put growth plan across all businesses. And the way our operations are rising, we need for working capital and CapEx within our own setup. That will take care of -- that will be also included into my this plan.

So Nihal, you can keep that.

Next question is from the line of [ Tejas Shah ] from Spark Capital.

A couple of questions from my side. First, TCNS story for an outside like me has been very positively of story driven by motivated team. So what are the plans of retaining the key talent in TCNS and how do you plan to institutionalize some of this essence, which must be personally driven in TCNS as a company?

So just -- we agree and in fact, a part of attractiveness of the whole proposition was solid strength of the brand, business elements as well and equally the team that we built.. Please be assured, and we have a history of doing that. A large part of our company is built around the first acquisition, which is the Madura business, which came with the team. We have subsequently have had many other multiple businesses that we acquired, including our designer business last couple of years. We are very confident that the best professionals would enjoy working in the part of ABFRL and Aditya Birla Group. We clearly have plans, and I'm sure the team is committed to making that happen. You can be sure that it's an important part of both our consideration for the transaction and subsequently also.

And second question, we were, like you spoke about the opportunity in women ethnic wear, and we have been kind of talking and working towards it for a while organically. So -- and then as you pointed out that as and when such opportunities come, you have to take plans at that. But just wanted to understand, does it mean that some of our organic initiatives, which we would have started and now with this opportunity coming into our fold, you will find or consolidate or terminate some of those organic initiatives that you would not take, let's say, 1 or 2 years or 3 years back?

See, the way we had built Marigold Lane, which is really what you'r referring to, which is the only brand we are building in the women's premium wear segment. If there was no inorganic path, which we didn't see until even 1 year, 1.5 years back, we were committed to building that, we have launched 4 or 5 stores. I think at this point in time, we probably have 6 to 10 stores in the business. It's available across a few hundred Pantaloons outlet. We are testing the product, constantly improving the product, and we would have gone ahead and built a large business around that. But now that we have the portfolio strength, experience and proven brand that TCNS platform offers, we wouldn't have to go through the journey of investing and building a new organic brand from scratch. The role of Marigold Lane as the premium brand offering attractive premium products within the Pantaloon store, we will continue to remain. And I don't think we need to change that. It has that proposition built into it. And therefore, to that extent, we wouldn't have to invest the way we will, for example, invest in building Tasva on the men's wear side.

And then the last one, if I may, and I'm not sure if I -- it is part of the scope of the call today. But I just wanted to understand, are there any more white spaces in the portfolio as you see for the next 3, 4 years, which would you -- which you would like to target organically, inorganically going forward in terms of additions of categories or brands? Or do you believe that we are almost there in terms of what we want to achieve ABFRL as a company in the next 3, 4 years?

So I think, as Jagdish had mentioned at the beginning of this call, we had gone out to build an ethnic wear portfolio and which will build a theme for us for 5 years, consistently repeated and carefully built over a period of time. With this acquisition, we believe we now have the platform portfolio, which completely does justice to nearly 1/3 of the market where we had 0 presence 4, 5 years back. I think our journey of building this portfolio is complete with that. The focus of management team over the next couple of years would be to scale these businesses, get them realize the potential, where they should be and get to the place where we want to as far as ethnic wear portfolio is concerned because this is going to be a very important part of value for Aditya Birla Fashion over a long period of time. And we want to make sure that each of our brands, many of them are in nascent state, that's why it's just a 1 year down the line, many of the designer businesses are finding traction that they need to get scale. TCNS platform itself has tremendous possibility as we have seen on the Madura's side, building brands which INR 2,000 crores. I think individual brands at that scale, that's the potential we see because the women's ethnic wear market is also very, very large market. So our focus would be on building them. I don't think there are large portfolio gaps left in it. I think having identified ethnic wear, the largest part of ethnic wear was premium ethnic wear and not having the clear strategy there or a clear path there was the issue with us, which we have filled with this, I think that portion completes the story as far as portfolio is concerned. Where we would continue to look at opportunities will perhaps be only in the tomorrow's part of the business whereas we have laid out ABFRL has made a finite commitment of INR 500 crores equity. And with that, tomorrow we'll look at digital for small brands and tomorrow on its own strength, we will go out and raise capital over the next 12 to 18 months, and that capital will be used to make further exploration of either acquired businesses or small businesses that they would require -- for this capital, a large part has already been deployed.

Next question is from the line of Varun Singh from ICICI Securities.

So my question is related to the execution part of the business. So over the last 5 years, I think -- I mean, we have done quite a good -- I mean, we have -- our journey regarding women ethnic wear brands, et cetera. But still given the context, if we look at a 5-year revenue CAGR of Aditya Birla Fashion, which is at roughly around 8% to 9%. And of course, our retail expansion would have been relatively more aggressive than this number. And also taking stock of TCNS over the last 4 to 5 years, I mean, the number looks relatively more subdued, but of course, I understand the potential of the brand and of market opportunity which exists out there. But still given this context and background, I just wanted to understand that how are we willing to scale up TCNS business from here going forward, largely related to our ability to leverage our existing distribution channel?

So I think best way to look at it, and I would reiterate about 1.5, 2 years back, we had laid out a plan, which is a 5-year FY '26 plan of scaling up the business to go to a revenue of INR 21,000-plus crores. We are not just on track, we're moving ahead of that. There have been challenges in the last 2 years, which has been largely related to COVID and recovery from there to that extent, some of it. But I would restate here on that part. And therefore, our confidence in building large businesses. We are the only company in the Indian fashion industry, which has 4 brands, which are between INR 1,500 crores to INR 2,500 crores. These have been built organically, and we have strong belief that with the addition of Reebok, parts of TCNS portfolio, we will have 4 or 5 other brands which will be between INR 1,000 crores to INR 2,000 crores in due course of time. So the portfolio of large businesses because fundamentally, we believe in building large scalable brands, which create enormous value over a long period of time. Same thing, I think the model that has worked for us will work in a different context for many of the new businesses that we've acquired. TCNS own portfolio provides that opportunity to build that level of scale and profitability, and we are very confident we will get to that. Short-term issues about last 3, 4 years, what happened? We are as much aware about challenging the industry. And that's something fortunately, we are coming out of that cycle. There may still be softness for a quarter here and there due to consumer and inflationary issues, but I think those are shorter-term issues. Our long-term strategy remains intact. We are very confident that with this portfolio, we'll be able to build a whole new setup of large businesses and brands.

So sir, my question is related to distribution scale-up of TCNS will it be largely given by EBUs or we will be using our own, the strength of Madura brands, et cetera? And also in that context, if we can also understand the percentage of relevant distribution outlet that we could kind of benefit from our existing channels.

Okay. Let me first say even for all our brands, our largest part of business comes from exclusive brand outlets, which means Louis Philippe has a network of more than 600, Peter England would have more than 1,000. These are exclusive brand outlets. TCNS, as a platform itself has close to 650-plus exclusive brand outlets, which is the largest part of any apparel brand in the brand and in the premium segment. It will continue to grow. And that's the way we have built all our brands. This will continue to grow. We have strong partnerships with large department stores. We have very deep partnerships with all the leading e-commerce player. They will provide other multiple platforms. These are not platforms owned by us. These are large consumer platforms where consumers are there and all brands grow through that. Exclusive brand is a large part of our strategy and will continue to be the strategy for TCNS.

Sure, sir. And to my last question is regarding the premium on the valuation that we have paid, which is roughly 30% to 35% compared to our own valuation. I'm taking this simply on market cap to revenue basis. I'm not looking at profitability, which might be relatively subdue for some or other reasons. But still given the 30%, 35% premium that we have paid, I'm sure we must be expecting relatively higher growth compared to the growth that we are already tracking in our own portfolio. So if you can give some guidance regarding what kind of revenue growth potential for next 3, 5 years are we expecting in TCNS? And also the margin, I mean, if you give some color on return on capital et cetera.

So -- see, your question has a lot of intrinsic and somewhat contradictory assumptions. When you acquire a business, you acquire the business on the valuation of that business and that's how the initial part of the transaction is built, which is the open offer and the share purchase agreement with the promoter. That is not built on ABFRL, but that's built around TCNS and its expectations of promoters and open offer price. The second part of the transaction is built by valuers who have valued the long-term potential and projections of our business and, therefore, value of the business. So this implications of premium and valuation multiples are -- there more sort of short term in nature. The transaction actually captures the long term value of it and this is how the whole business -- the construct of the scheme is.

Next question is from the line of Gaurav Jogani from Axis Capital.

Sir, am I audible?

Yes.

So my question is more with regards to the ethnic wear industry, especially on the women's side. So if we see there are highly any brands which are in the range of this INR 500 crores to INR 1,000-odd crores. So a, I would like to one from you to know what you think is the major problem for the brands not to scale up beyond the INR 1,000 crores odd mark? And b, related part of this is what differentiating things that ABFRL will do here that is helping you to scale up these brands to the next level?

So I think, Gaurav, at a very high level, we have been in the journey for all our brands across the portfolio. And it's not just true for us, it's to for many other brands in the industry. They go from INR 100 crores to INR 500 crores to INR 1,000 crores to INR 2,000 crores. Each of the brands that we have grown or any of the competitor has grown has been a journey where a different set of skills come at INR 400 crores, INR 500 crores, INR 1,000 crores, et cetera. I think TCNS portfolio brands, at least 2 of the leading brands, which is W and Aurelia, are fairly well positioned to become INR 1,000 crores and INR 2,000 crores over a period of time. We have gone through our own journey in multiple of our brands on that. So we are quite confident about how this journey goes. In terms of what we will add to the TCNS current team and management? I think, first of all, a large part of this growth and ambition is built into their business plan. They have been executing it extremely well until FY '20, if you look at the performance. I'm very confident that in a short period of time that journey will recover on its own based on the learning and the knowledge that, that system has. But as a company, we bring ability to scale brands on multiple dimensions, which is expanding product portfolio, premiumizing this into products, improving the state performance, building an asset-light franchise model, expanding distribution, building deeper partnerships with department stores, growing our brands even faster with partnerships with e-commerce players. So there is multiple levers, which we have executed across the portfolio brands. Some of it exists already in the TCNS business, but I think at another level, we will be able to add that value to this portfolio to accelerate the growth. We believe the size of the opportunity is very, very large. Very few brands have broken through the manner that TCNS portfolio brands, which is the top 2 brands are getting space. There is still value in some of the other smaller brands in the portfolio, be it Wishful at the top or Elleven. But over a period of time, we think what we have got is the right source, which has helped us build very scalable brands. And I think the same formula will work for that.

Sure, sir. Sir, the next question is with regards to why we are looking to buy the entire company? Don't you think just buying the 51% stake and having a controlling stake would have solved the purpose because in that case also, you will be having the controlling management and you can drive the changes that is requisite that you're looking for?

So I think here the thought is that a very strong -- this is a very large market. And in our size, this itself will be a very large meaningful opportunity for us. And for ABFRL stakeholders, as well as the TCNS shareholders, the best would be a complete integration where there's fungibility of capital management, and it allows us to fully execute the plan, and that's really why it is. In a partial set up, some of these synergies still don't come in. And if it was -- it's a part of our -- fully part of the realized machinery, which has been executing over a period of time, we believe that we'll be able to extract maximum values.

Sure. Sir, and my last question is with regard to the ethnics wear industry. I mean, we do understand that COVID has impacted performance for various apparel players amongst those, but however, we see -- the ethnic wear, the daily wear segment, if you look at it, it's kind of -- I would not say a basic necessity, but a kind of thing that everyone would use in the daily wear segment. So why do you think the growth specifically hasn't recovered to the earlier levels, even after we have seen 1 year of normalization in the overall scheme of things?