Avenue Supermarts Limited (DMART) Earnings Call Transcript & Summary

Thank you so much. Good morning, all. Welcome to our annual investor and analyst conference call. We do hope that you're staying safe and keeping healthy in these uncertain times. I have on call with me today the management team -- senior management team from Avenue Supermarts, Mr. Navil Noronha, MD and CEO; Mr. Ramakant Baheti, Whole Time Director and Group CFO; and Mr. Niladri Deb, who is the CFO, Avenue Supermarts Limited. I also hope that you've had a chance to look at our presentation, which was shared on the exchanges yesterday, and it's also available on our website. We will start with Navil briefly taking us through the presentation, and we will leave ample time for the Q&A session. Just before I hand over, I would just like to draw your attention to the safe harbor statement for good governance. And I'll just then hand over the call to Navil. Over to you, Navil.

Good morning, everybody. This is Navil speaking. I hope all of you are very -- are staying safe and hoping that this pandemic issue gets sorted over a period of time. As far as the presentation is concerned, I will follow a format of calling out the page number. I hope you guys have the presentation, which we have uploaded to the exchanges. So I'll take you through last year's performance. I'm at Page 3 right now, which is the business overview, operating and financial summary. So we go to the business overview, which is on Page 4, which effectively then is Page 5 key product categories. So the theme, as usual, is I'll go through the presentation quickly, nothing much has changed. So I'll just read through the presentation. And that will allow us to have more time for Q&A and happy to take as many questions as possible, time permitting. We will make every attempt to answer every single query, yes? So as far as the share of business is concerned, it's business as usual, but food has been better, slightly better compared to the other categories. But then this is, again, a natural secular behavior depending on which cities, which states we operate in. And also, there is a factor of base effect. So as and when the existing stores do better and better, more and more revenue, FMCG tends to do more than non-FMCG. That's a broad message that I would like to give you that as the business matures, FMCG actually accelerates slightly faster than the non-FMCG side of the business. That's been a learning over the last 15, 20 years. Go to Page 6. Once again, the story continues. We've given an option. We'd like to open stores in states that we already operate in. A lot of people who've heard me before would know this, but this is the benefit of people who are hearing it for the first time. Our principle has been that given the amount of money to be invested, we would like to invest it in the states and cities that we already exist in, primarily because it gives you better leverage as far as operating leverage is concerned. Your cost structures are far better utilized if you're investing in the same cities. And obviously, being in the same city, you know the consumer better. So your ability to earn top line gross margins significantly is better than going to a newer market. But that doesn't mean we don't go to new markets, but it's typically an 80-20 or 70-30 principle every year. But we will -- risk capital will probably be 30%, but 70% will be in existing markets. So that's been the trend. The 38 stores also have been added to the same principle. We opened the highest number of stores ever in the history of the company. Part of that was because we had a very -- we had a relatively lower store opening for the previous year. So some of that kind of rolled over in this year. Just to preempt, we'll go to Page 7 to give you a feel about how the store trending has been, store addition trending has been. Just to give you a feel on what it could be in the future. Obviously, because of COVID, we had disruption for the first 3 to 4 months where construction activity was totally stopped. So to that extent, this year, we'll have a muted store opening relatively, but we'll make it up for the year after that because we have a decent inventory of store acquisitions. If you go to Page 8, which is actually Page 9. So again, these are all -- it's the same format since the IPO days. We haven't changed anything. So the trends continue. Our average basket value for last year grew by 6%. Like-for-like, I have commented before, it was lower, but 10.9% is still very encouraging, very good. It looks lower than the previous high, which is 17.8% but that's primarily because in the 17.8%, we had a huge chunk of new stores, which grew very, very fast, and they reached a good peak. And hence, that base effect has impacted the last year's like-for-like being 10.9%. So if I take away the extremely new stores out of the evaluation, then FY '19 and FY '20 don't look very different, okay? It's more or less there. So we are quite glad with a double-digit like-for-like growth. Here again, I would like to call out again for people who've been probably dialing in and listening to us for the first time. Unlike the industry, we do a like-for-like for 24 months and not 12 months, which means we wait for the store to at least finish 24 months since date of opening and then they are -- then we monitor them for like-for-like. And that's primarily because we don't want the blended average data to get distorted because the newer stores grow at a very, very high rate. And we don't want the overall percentage growths to be distorted. So that's why we prefer taking 24 months. As far as square footage is concerned, we not only added 48 stores, which is a new high, but we also had the highest square footage in terms of absolute value, 1.9 million, which effectively means we are opening larger stores. And that has been the direction we have taken for the last 2 years, primarily because as and when the brand has become more and more mature, wherever we are growing, we are -- I mean, whichever cities we are going to, we are hitting larger absolute sales numbers much earlier. And to allow the store to maintain a decent CAGR growth for a longer period of time, we decided that we will add -- we will open larger stores because better infrastructure means -- leads to better CAGR growth for a longer period of time. Stores which are small and which are peaked out, when I say small and peaked out, it means that the revenue per square feet is significantly higher than INR 32,000 -- or INR 35,000 that we generate -- INR 32,000 last year. But once that happens, then the CAGR just flatten out. I mean it's single digit or almost flat. It just about grow at inflation rate or lower. So to take care of that is the real reason why we've been opening larger stores. Also another point is larger store from a CapEx point of view, it's not a proportionate increase in CapEx. The relative increase in CapEx because of the incremental construction cost is lesser. So it makes business sense to open a larger store. Simple underlying principle is do I get top line. Principle is that. If the top line is available, then opening larger stores makes a lot of sense. Yes. And revenue per square feet obviously have gone down because stores have been larger, but that's a metric, which is not so -- I mean it's important to an extent only, yes, but it's been lower than last year at INR 32,879 lakh. We then go to Page 10. So we have -- these are numbers for financial year '20, we did INR 24,675 crores of revenue, 8.6% of EBITDA, which all the operating leverage benefits that we're getting, and we're running this. This is a -- as before, like a very, very tight shift keeping a very, very close look on costs and ensuring that the business is continuing to be run in the same way that we used to run maybe a 10 stores, or 20 stores. That's the principle on which we run the business. And obviously, because of the tax change effect and all of that these are numbers that we have delivered for last year. Page 11. Again, more of the same, except the top right part. But days inventory has been stable. Our payables have been stable. It remained the same. Obviously, debt equity has gone through a big change over the last 4 years. Like you would all know, we did operate a successful fund raise. So all of that is self-explanatory. Our fixed asset turnover ratio is also very, very encouraging. This is something very, very important for us. We all look at this very, very carefully because we are in the CapEx ownership model, for us the fixed asset turnover is extremely, extremely important. And inventory turnover ratio is also something that we keep a watch on yes, but that's been more or less the same. So that's about -- it's broadly on our operating metrics. Page 12 and 13 are basically snapshots of our financials. These have been published. Before to any questions later, I am happy to take them. Then we go to Page 14. I'll spend some time on Page 14, which is basically the Q1 update and a lot about what happened or what is happening right now. Numbers, I'm sure most of you have gone through. So this is a new normal for us. The company was always used to doing stellar positive growth numbers, so this is something very difficult for us. But I think as a team, we've all got together and handled the situation very well. So revenues have gone down for the reasons we have explained earlier, most of the stores are shut. Stores that were operating, were operating with minimal hours. And apparel and general merchandise were not allowed to be sold, in fact, in certain stores, even between the FMCG section, the authorities would say, why do you need a skin cream, it's not essential or shampoo is not essential. So we've gone through that entire cycle. But in general, it was manageable, we cooperated with the authorities. We decided not to be combative, knowledge was limited, fear was at its peak. So we cooperated 100% with all authorities, in fact, built very good bonds with all of them because we all knew that we're all in this together. So -- and I deeply appreciate the work the authorities did, even the senior-most government officials, IAS level guys and they would all be on the ground and come and visit and check. And it is commendable I mean the way they took personal risk and ensured that everything was on track. So for us, the broad fixed points is store closures and lower operating hours. We also had certain unique situations in certain cities, which are forward-looking, which with video representation allowed us to operate 24/7. And that was a -- in fact, that was one reason why we -- it gave us a lot of comfort that even during the peak of the dynamic, those stores were doing very well. So that's one key point I'd like to call out. But otherwise, across the city, country, in fact, the further you went away from our large town, the restrictions were most stringent. And obviously, DMART has very high sales density, which -- high sales density means high number of people in the store. And obviously, business like that -- like this would get impacted the most. So I think that's also a reason why we got impacted like this. And we are not a neighborhood store. A lot of the business went back to neighborhood stores whether it was a regular Kirana shop or a modern trade shop, which was a neighborhood small 2,000, 3,000 square foot store, they all did well. But we are not a neighborhood store to that extent. And hence, we got impacted because people who were living far away couldn't come to the store to buy or if they had to come, they had to wait. At certain points in time, we would have queues of 2 kilometers and 3 kilometers just to buy groceries. So that was how the situation was. And as far as margin dilution is concerned, bulk of the margin dilution happened because we weren't allowed to sell apparel and general merchandise. Those sections were totally shut. So that's the key call out. And obviously, we gave very, should I say, liberal incentive in the beginning of the pandemic because people were afraid to come. We had to run the stores. We had crowds in the stores, but we didn't have enough employees. We hired -- I mean anybody who was staying within a 1, 1.5 kilometer radius would come to work, but that is not enough. So to incentivize and motivate our staff, we announced a very high incentive so that they come to work. And that worked brilliantly because we preempted that this could happen. And that brought in most of our people back to work. And then obviously, over a period of time, the data came back in that it is relatively safer for youngsters. And we didn't have too many COVID cases within our premises. That also built a lot of confidence and that was because of all the measures we took. And ahead of time, I would say, we were constantly watching what's happening globally on this. And COVID actually lagged in India compared to, say, Europe. And we took all the preemptive measures, even if it meant spending a little bit more money, but we took that leap and took all the necessary precautions and also very, very high-octane communication internally every day, every week, we would update people, remind them what they should be doing and not doing and stuff like that. And that helped, that helped us a lot. Everybody was aware about what they were supposed to do. So that's been the situation. The entire feel of what we think about the business has been communicated through multiple releases and also through our AR we have communicated it. So that's where we are. So I think I'll end it up here and open up for Q&A. And yes, that's it. Thank you so much for listening to me.

[Operator Instructions] We have our first question from the line of Abneesh Roy from Edelweiss.

My first question is on the store size and store count. So first on the store size, the larger stores, first 2, 3 years, is there any benefit? I understand the later year benefit. But in the first 1 or 2 years, are you getting benefit of more SKU? Is that something you're doing? And store size, store number essentially. You said FY '20, obviously, because of the COVID there will be lower growth. And next year, you'll make up. So last year, you opened 38 -- so FY '20, you opened 38 stores which was a marked increase versus 21, 25 earlier. So how should we look at the FY '22 number? Will it be the 38 or 40 kind of run rate for the 2 years combined so FY '21, there will be less, but those will get compensated and the annual run rate we should take 40 stores per year for the next 2 years?

Okay. In one question you asked too many questions, but I'll take it one at a time. So first is on the size and its assortment impact. I've answered this before, and I maintain the same stand that a larger store doesn't mean we have any change in strategy in assortment. Our assortment more or less remains the same. Okay, our format, assortment remains the same. But yes, there is an advantage in your ability to sell higher margin products. It allows you to display a general merchandise and apparel relatively better than a small store. So to that extent, we see advantages, yes? So that's the point on the large store. At the same time, there is -- I would not say that from day 1, you get the benefit of a large store. In fact, day 1 takes -- the first few years, the benefit is actually lesser than had it been a smaller store, okay? Because there is a lot of costs involved when you're opening a larger store on an operating perspective, okay? You need to hire more employees, electric and utility cost is higher, all of that, right? So in the shorter term, it will not be very exciting. ROIC may not be very exciting, but it gives you a far better run rate ROIC and a CAGR, okay? A profitable CAGR over a longer time kicks in a accelerated ROIC in the longer term. And that is the reason why we're doing this. Yes? So that's my answer on the first part. On what will happen this year, to be very honest, my view -- my message to all of you is don't expect any -- maintaining the run rate of last year. We've lost 4 months it's monsoons, okay? Construction has got impacted severely because of this, okay? We don't give forward-looking statements, but I'll tell you this year store openings will be muted, okay? All we can tell you is we will make it up for in the next year. So to that extent, you need to look at what -- we opened 21 stores last year, and we opened -- last to last year and we opened 38, right, last year. So probably 21 plus 38, something like that, 59, yes.

In 2 years.

In 2 years. It is something we will probably be looking at, but we could be as low as 21 stores next year, I do not now, okay? Because we're still in the period of monsoon. So this year's store opening will be extremely muted. But at the same time, they are very, very -- we are still confident about the model and the business by e-commerce, and I'm sure there will be a lot of questions in e-commerce. While we understand that e-commerce is going to become big and pandemic has kind of accelerated that opportunity. But not at the cost of brick-and-mortar. We are still very confident and positive about the brick-and-mortar business. And our store additions and our focus on brick-and-mortar recently. Yes? I hope I've answered your question, Abneesh.

So that was quite helpful. So my second question is on DMART Ready and e-commerce. So you saw a sharp increase in revenue, but that has not flowed to the EBITDA -- the operating leverage was not big. So INR 143 crores revenue becoming INR 354 crores of revenue. So why that was not visible at EBITDA? Second is why did you withdraw e-commerce in rest of the city, ex of Mumbai, when still normalcy was not there? You could have continued till normalcy was there. And DMART Ready, you have been always very cautious. Now with every player entering into e-commerce, the biggies, what is the stance now? You're doing well on revenue. So any change to the expansion plan outside Mumbai?

Okay. So first on the first part, as far as the e-commerce revenue versus leverage is concerned, I don't think we should be looking at leverage -- operating leverage opportunities at such low revenues. So that's such a small turnover our INR 150 crores to INR 250 crores, INR 350 crores or whatever that number is, expecting that you're getting an operating leverage at such low turnover is not the way to look at it because at such small scale, too early, okay? That -- but we still have got some leverage, but I will still say that there's time, okay? So that's on the e-commerce financials. As far as why did we shut it? Simple. It's that the density of revenue we do, okay, it doesn't allow us to run both from the same premise. Okay? See one thing you must understand, when you see a Walmart and you see a Tesco or all these large retailers globally, their assets are -- there's an opportunity to utilize them better through e-commerce, okay? Because of the whole, what should I say, opportunity. DMART is doing very high intense sales per square footage. It is impossible for us once we start hitting the regular revenues or we open the store for regular business to also run e-commerce, our infra is just not aligned for that, okay? So moment the markets opened and the authorities allowed us to open our stores full fledgedly, full 10 hours, 12 hours is when we decided that it's better to focus on brick-and-mortar and withdraw e-commerce. Yes? So that the reason why we withdrew it.

And new cities? New city to new city?

New cities, we are contemplating. We are contemplating. You'll hear about it as you see it launch. But there's work happening on that. I mean -- sorry, it's just not contemplation. We are also working on it. Yes?

And maybe last question on the non-essential, apparel and general merchandise. What is the status as we speak so in July, what is the status there?

So now we will allow to sell all stuff in 95% and above stores, we are allowed to sell more than 90%, 95%. So see, there is still -- the powers are still with the local connector, right? So he can override or overrule what the government notification at the state level is. But in general, 95% and above stores, where general merchandise and apparel is allowed to be sold. It is selling, but it is not selling at pre-COVID rates. There is still some hesitancy there.

Because of the working hours? Because Saturday, Sunday, the working hours are lower?

We are not able to fathom what the reasons are. Is it fear or spending too much time in the store? Or is it a pressure on -- because of salary cuts in the industry or job losses, we're still able to -- unable to understand it. We're trying to find out more. But all I can say is that the general merchandise and apparel sales are back, but they're not back to the extent of pre-COVID. So if I take Page #5, right, general merchandise and apparel contributes 27%. We are not hitting 27%.

[Operator Instructions] Your next question is from the line of Avi Mehta from IIFL.

Sir, I just wanted to kind of get your thoughts on the customer behavior. You had highlighted in the initial part of the lockdown, that there is a focus on safety over value. How has this progressed? And if you could link it, do you think there is a possible need for higher discounts to lure back the customer to the off-line stores?

So discounting is a factor of market situation and what we do. Attributing any further discount to bring in more customers would not be appropriate in our view. Okay. Let me answer this question to give you more color on what's happening. What we are observing here is the profile and class of people who are shopping into a DMART, relatively, you have a larger section of the middle class or the lower middle class who are coming to the store and the higher middle class contribution has relatively come down. That is usually what we see, okay? Now you could see this in 2 ways, premiumization may reduce. Okay? But what we are also seeing is there's an opportunity for selling more of a basic in the non-FMCG side, yes? So broadly, this is what we are seeing in the market. So that is the way we are looking at it. And obviously, the point is we have commented on this, that if a store is allowed to operate unhindered for a long period of time, 3 weeks, 4 weeks, okay? We are seeing 80% of the business comes back, okay? That's a minimal. I'm not talking to you about the maximum, okay? We don't want, again, the basic culture of the organization. We don't want to get people excited. But it's encouraging. I mean brick-and-mortar business, the way we think while we're sitting at home, work from home and all that and what we observe in the store is very different. People are coming back to our shop, okay? The mix of the people is changing, okay? And one impact we clearly have is for the middle class and the lower middle class, suddenly, the chatter has become more, that [Foreign Language], I don't know. But the point is that the chatter among the middle class and the slightly lower middle class is more around DMART now.

But does that mean Navil that you have to relook at -- one of your strength was the consistency and your in-depth understanding of the product portfolio. Does that have to change now given this? Or do you think it's more tactical now that -- if that happens?

No, nothing much has to change. Buyers are smart and agile, they look at offtakes and decide what they need to do. It's not that there is a completely new ecosystem of vendors that you can look for now to align of that sort, not really. Every manufacturer has got a range across the spectrum, most manufacturers. And the current assortment will solve the problem, not an issue at all. In fact, we are quite excited with this phenomenon. We see a lot of opportunity. Yes.

Okay, okay. And...

We are more attuned to the millennial breadth, the assortment breadth is more attuned to the middle class, right?

Yes. I mean it's just that the premiumization kind of moving away is a bit where I was coming -- what I was trying to kind of understand from that. So does that kind of hinder or change your thoughts on that portfolio that is what I was trying to kind of get from you.

Yes. Premiumization has got impacted. That much I can say.

Okay. And the second bit, Navil, I know you highlighted that the focus remains on brick-and-mortar, not taking that away. But one of the strengths of this company has been a very healthy employee base, the organization culture, the strengths that kind of that brings in. Now that allows you to experiment, which you have done as well through various means to explore new opportunities like e-commerce. In that scenario, while I appreciate that you have pulled back some of the tactical initiatives that you had done to capture demand in these uncertain times. Now with a trend emerging of e-commerce, how would you kind of want to play there? Would you want to invest in technology a lot more in e-commerce, in DMART Ready or in more off-line stores? Any thoughts on that would be helpful.

See, we still maintain the stand that e-commerce for our kind of business, which is grossly e-commerce, opportunities are there only in large towns, okay? So we will hold that position and we will have a strategy around that. That we will expand the grocery business in large towns for e-commerce, where ever we see an opportunity. And see, just because of COVID, we are not going to -- it is not like all hell is breaking lose and we need to accelerate and do it in 1,500 cities, and we are not going to do that.

Then what is in city count in the mood to the service would it still be more the way you're doing DMART Ready? Or would you kind of explore delivery-based options? Or any how are you looking at that part of that?

Currently, we will follow our DMART Ready model or unless you have something specific to tell us in terms of anything that you have a point of view on businesses. But I think the delivery model, the DMART Ready model is the model that we will expand. We are quite happy with what we are doing there, which has both options. It has a pickup option as well as home delivery. We want to do home delivery, by the way. So there's an opportunity to do it through that same model.

Okay. Fair enough. No, I was exploring or understanding there are other off-line/online partnerships that are now becoming the talk and do you see that opportunity in the same bread that has been kind of talked about kind of a partnership?

We haven't thought about that yet.

We have next question from the line of Arnab Mitra from Crédit Suisse.

My first question was on the competitive landscape within modern trade. And we've seen one of your largest competitor expanding rapidly one of the competitors in financial trouble. So overall, how do you see the competitive landscape? And versus your largest competitor has the price differential equation remained same in the last year? Or have they become more aggressive and you are having to respond to that? If you could just throw some light on that?

So Arnab, so we will continue to say what we've been always saying that the market size is too large, too large. You spoke only of [Technical Difficulty] players in this market. And there is still opportunity for every single player. The size is just too humongous. So I don't think -- I think we are not worried about any competition, and I also say that none of the competitors should be worried about each other, the market opportunity is extremely, extremely large.

Okay. Okay. And on the DMART Ready business, just to go back to the previous question. So 2 years back, you, I think, had a view that you're still not sure about this business, you want to keep experimenting, but whether this is to be grown aggressively, you're not very sure of that. So that has essentially changed to a situation where you're saying that you're happy with the business now you want to actually expand it. How do you take care of 2 things here? One is you have the possibility that you have been always talking about that your own consumer may actually go from the store to a DMART Ready. And you don't want that to happen because the general merchandise mix is better in the stores. How do you protect that as you now start to expand this business in a more regular fashion?

So okay, one is what I said 2 years back and what I say now will be distinctively different for e-commerce, for sure. Two years is a very long time for the digital business. So we are probably -- okay, let me look at -- put it this way. Pre-COVID, post-COVID. Pre-COVID also we were relatively more positive than we were 2 years back about e-commerce let's put it this way. Post pandemic, all the numbers have changed. It's crazy, okay? The demand, the costing, everything has gone. But the point is you have to take a punt or you have to take a bet, what will it be once COVID settles? Point of that view is what you begin to do from now, right? So our view is it will settle down somewhere in between. The intensity of demand that is there in e-commerce today, for grocery, I'm only talking about grocery, will not sustain once the pandemic settles out. So we are looking at the e-commerce business. And as far as consumers shifting moving from brick-and-mortar e-commerce, I mean those are not some things that we bother about. I mean the moment you start looking at thing like that's your -- that's a very negative way of looking at it. I mean you should let the customer free. Let them shop wherever they want to. We will not design our business architecture in a manner not to allow the shopper to move from brick-and-mortar to e-commerce. I mean that would be very foolish because she doesn't get that opportunity at DMART she will go somewhere else, right? So we don't look at it like that. So if say a possibly Mulund customer who was shopping in the store wants to now shop on DMART Ready, she is very jolly well free to do that, and we would love to give her that choice. We don't look at the business like that.

Just a follow-up on that. So you don't see that as a risk for the mix, which will be much more basic grocery in a Ready versus store where the consumer explores and ends up buying general merchandise. Do you see that as a relatively lower mix business?

Yes. The Ready business is a relatively lower mix business. Yes. But every customer has to be viewed in its own way no Arnab? I will look at the revenues, cost structures, all of that independent to how the consumer basket is changing across 2 channels. I mean, why should that bother us? I have to make it work within the cost structures and the parameters of that individual business. So I will -- so let me answer it this way, if people are moving from brick-and-mortar to e-commerce. I will relook at my brick-and-mortar business to ensure that it stands on its own yes? And we are pretty confident about that. Nothing is going to happen to the brick-and-mortar business because people will need apparel and general merchandise products, too, right?

So we have the next question from the line of Prasad Deshmukh from Bank of America.

Okay. So first question is on the cost structure of the new stores that you would be opening. Post-COVID, we hear there is a sharp cut in asset prices. So could you just give a sense as to in percentage terms also it would help. So pre-COVID, post-COVID, what kind of per store CapEx trajectory would be?

See Prasad, again, I would not recommend to think about it like that because real estate that we look for is generally reasonably prime real estate. It may not be CBD it may not be high street, but it is still prime because we want real estate in a particular manner. It has to be clean title. It has to be in a busy street, relatively busy street, good infra and stuff like that. Properties like these don't collapse, okay, they don't fall to that extent to -- the only thing that happened is in situations like these, when real estate becomes soft, deals happen. People close our deals faster in the fear that if I wait for another 3 or 6 months, the prices may fall further, okay? But it is not like you get a 30% discount or a 40% discount [Foreign Language] okay? [Foreign Language] you may get a 5%, 10%, 15% discount, but that's it. But the point is deals happen faster in a growing accelerated or heated market of real estate deals don't happen because people wait, [Foreign Language] so this is what typically what happens in the real state line. So you can get more closures.

Got it. Got it. And second question on the working capital. This is nothing to point -- the question is more long term. So typically, we have seen in global retail players, working capital as a percentage of incremental sales keeps going down. In fact, it enters into negative territory after like 5, 10 years. As far as DMART is concerned, what are the levers that would move this working capital as a percentage of incremental sales in such direction? I mean if there is any possibility like that?

So Prasad, I have no view on that. Currently, we like to do it the way we are doing it. We like to pay upfront. I don't have a view of moving forward. It will be all be a factor of the market, the supplier and the cost of capital scenarios in the country. But as of now, we don't -- we aren't looking at changing any of that. We continue to do what we're doing.

We have next question from the line of Aditya Soman from Goldman Sachs.

So a couple of questions. Firstly, in terms of sort of delinking the sales to store area, one way to do that is online potentially. Another way is exploring the wholesale business, given that you already are a large customer for a lot of FMCG companies that are a large buyer in -- of agri commodities. So any view on growing that wholesale business?

So Aditya, we were kind of talking about it earlier, but considering the pandemic and what we're going through, I think we kind of postponed that idea for further nothing much happening there. We would like to focus on the brick-and-mortar business and a little bit more focus on the e-commerce business.

I understand. And secondly, we noticed at least before the pandemic that there was an increase in private label, especially your own brands. Was it some sort of trend? Or was it just a small experiment in specific stores?

No I don't know, maybe my private label team must have gone there, but no strategic direction in -- at the general level. Maybe that particular store must have seen that but nothing of that sort Aditya. In fact we were very clear the pandemic is a time to not push private label. That is the direction I had given. Because some guys came with a really novel idea I said, nothing doing, pandemic is a time to reassure people and people get reassured when they see familiar brands. So we've put a complete focus on manufacturer brands to ensure that they get what they really want. So in fact it's [Foreign Language] at times like this to try to push an unknown brand when a person is already very anxious on so many other things.

Fair enough, so very clear. And I think in terms of where you're seeing store closures or at least in the early stages of the pandemic, how did you deal with excess, say, inventory as perishable?

So we have very little perishables. We don't sell SMB much. Whatever we sell is more on the vendor, not on our -- the inventory is not us. There is we do that. And otherwise, the only perishable we had, if you may call them is what is temperature control, like our cheese and butter, and stuff like that. But then the nature of the business is such that we carry very low inventory in general so. So okay, in any phase this year the -- for us worry is not the FMCG or the perishable inventory, for us, the slight worry is the apparel inventory, which will see some obsolescence that are almost 4 months have past and sale hasn't happened much. So that's an area of concern, apparel primarily, otherwise, we're okay. But in general, we are okay. Nothing major, no major issue. But food and FMCG, we anyway carry very low inventory, no issue at all there.

Your next question is from the line of Hussain Kagzi from Ambit Asset Management.

I think most of my questions are -- most is answered. Just 2 questions. One is, can you give any broad sense on how our margins have been for food and nonfood and general merchandise over the last year?

We don't declare or disclose that level category margin. But in general, I can tell you margins are more or less the same, as it has been pre-COVID.

Okay. For all the 3 categories?

Yes.

And also, just one data point is do -- can you give an indication of how many DMART Ready stores are there currently?

Around 220-ish in Mumbai. Mumbai means greater Mumbai. Mumbai; Thane; and Navi, Mumbai.

Okay. Okay. Okay. And most of these are only in Mumbai, and Greater Mumbai right?

Yes. Yes. Mumbai; Thane; and Navi, Mumbai.

We have next question from the line of Susmit Patodia from Motilal Oswal AMC.

A couple of things. One, you mentioned in the annual report, the 2 trends that could have a lasting change because social distancing and changing consumer preference. Our assumption was that as soon as we have a vaccine or a durable cure, these may not lead in long term shopping behavior. So if you could expand on that a little bit please?

So the only way we are trying to deal with this issue is by having extended hours. So the authority is cooperating was doing immediately is wherever possible, we are extending operating hours. So a lot of our places, stores are open at 6 a.m.. A lot of places stores are open till 11:00 p.m. A dozen of places stores are operating 24/7. So overall our view is that our kind of consumers are extremely worried about social distancing will come during these hours and shop. So I say we are looking at this. And as far as share numbers are concerned, I have been repeatedly saying that if stores are allowed to operate for a longer period of time and minimum is 80% of the revenue comes back.

Right. Any other -- and the second is, for how long do you think availability will trump value in terms of customer behavior?

I don't know. We have to see. I -- but see, you guys all read. You've seen previous outbreaks, you see the large earlier pandemics. Eventually, things have to come back, right? So your guess is as much as mine or optimism is as much as -- yours as much as mine. So that we have to play by the year, play every month, every week, as you see and act accordingly.

Right. And just lastly, if you could give us any initial insights into the impact that we may have or the benefit that we may get because of the agri reforms that are happening?

Okay. So see, we don't do too much of fresh, okay? So to that extent, our benefits, I do not know to what extent we will get. As far as grains are concerned, I think we've got the view have kind of extracted the juice there because we are deeply connected to the farm on grain, okay? Our setup there is really good. So I cannot put a number to this in terms of how much more will it be but it's a very, very encouraging the rule. And we hope in the longer term, there's no downside there is benefit only, yes? And we are aligned to that. I mean, at least on the grain side, the staple side.

Right. Best of luck. And Navil, just one request, please don't stop writing your annual letters. You keep threatening us every year but I would request you not to.

Okay. Thanks, thanks. Yes.

We have next question from the line of Fatema Pacha from ICICI Prudential Life Insurance.

I wanted to ask you on. So there are some markets which are very big for you like Mumbai is big, MMR is big Gujarat as the margin is big. And there has a decent amount of unlock in these 2 regions in the last 25, 30 days, what are you seeing in terms of customer response in these 2 markets? Are you seeing the risk aversion coming down? Are you seeing this demand pull back because the underlying demand is not bad. It is not a nonfood side like you can see the neighboring stores are all out of inventory. So apparel is so estimate other than has the demand for say as good as that you've lost share to the neighborhood stores? What are you seeing in these 2 regions where as the margin unlock is in progress?

Fatema, so good question. We just want more time. See, the problem is the inconsistency in store opening. At least we don't see at least some at least say 8 weeks of data, we will not be able to give a very clear indication in terms of what's really happening. In general, I can tell you this that every day, additional of opening is better, okay?. The business is coming back. But we just need more since. As far as what is happening to shopping patterns, like what I said earlier also, that it's very clear that in the economic strata, higher you are, more afraid you are, lesser are you coming to the store, okay? But at the same time, you are getting a lot of crowd from the lower strata also into the stores now. Okay. That's broadly our visual view. But we need more time to kind of see the trend. In general, again, like I said, it's not like stagnant and the needle is not moving. It is every period moving more and more positive, more and more positive. That is slowly creeping back. But I think another 6 to 8 weeks, maybe this quarter.

So Q2, is it fair you would at least be on a revenue or square feet flat year-on-year, would that be a good metric for you to have? I would be glad.

I don't want to be cristae. We all know what happened with all the projection on the pandemic, right, especially from the scientific side. So I don't want to make any predictions. My request is just wait for 1 more quarter, and we will follow on the results with a very brief, a very detailed note on what is happening. But my request is wait for the quarter, and I will write extensively on what you're observing on the quarter end.

We have next question from the line of Richard Liu from JM Financial.

I've got a couple of questions out here. I know you spoke a lot on e-commerce already. But I'm sorry, I'm just raising this point again. But -- and I know your view saying that e-commerce is not a viable business because of the way it is done today and so on and so forth. It's difficult to do e-commerce in grocery. The question here really is that considering the kind of guys who are there in the e-commerce field today, even if those guys lose money, but then there are people who are willing to lose money, right? I mean in all these years have been passed, would you guys not have taken away a lot of market share and a lot of consumers away from you. That's question number one. Should I give the other 2 questions as well?

Hold on. Those are very, very heavy questions hold on. So you're saying that should I be worried if somebody is spending a lot of money on e-commerce and that may take away share from us, right?

Yes.

Yes. So Richard, one is on a pricing perspective, is complete. We will not tie somebody sending company at a significantly low higher lower price than us. Okay. That's all I can say. And they start and I'm saying this because you're asking this question. This is what we've been doing in the past, too, okay? And it is not that e-commerce grocery has not been cutting prices. In fact, if you see the last year or 2, there has been a lot of regression on grocery e-commerce pricing, yes? And in spite of that, our business didn't get affected. Okay? And our business did reasonably well. And that's where the hypothesis again is that the size of the market is so large that there is space for everybody. And see, while demand may stand to value on pricing, there is something more also about DMART, right? And that is to do with the assortment. And I think a play between pricing and assortment only bring out something unique about what it stands for. And that has been demonstrated if you look at the last 2 years of e-commerce aggression. So therefore, e-commerce aggression even in the last 1.5 to 2 years. So I'm speaking primarily based on the part. I do not look at the future. So we'll see.

So the reason for asking this is that if I go by a couple of the statements that you made in the last few results, and also by your action of retracting from home delivery the moment things started to normalize? And I got your comment earlier that it was because of infrastructure of the store earlier. I get the feeling that you are extremely confident that e-commerce is not going to give a dent to your business, no matter what, right? I mean despite the fact that there are guys like Amazon and now Walmart, et cetera. I mean you seem to be very, very confident that you don't need to really get into this game. I was just trying to understand what...

Okay. So I think -- okay, so, Richard, we can reflect this, I think what you are talking about is in absolute, and I'm talking about it as a journey. So we are not trying to be so nice by saying that e-commerce won't do anything. But if you tell me that do I need to put serious money right now and build e-commerce network, we won't do that. We will observe what's going on. We are reasonably agile, and we can accelerate if we want to, okay, only if you want to, okay? We are not speaking about our pessimism around e-commerce because of at to build e-commerce. And I think the fact that we expanded in 2 months in a span of 15 or maybe -- days or 1 month, okay, and it was some scratch that we did it, but we can do it, okay? We don't want to do it for some other reasons, okay? Part of which I explained, right, the brick-and-mortar and e-commerce coming from the same place is not the best way to do it. But if we see e-commerce as a preferred channel for shoppers and software are changing, we will also do it. But we are again saying after today, the opportunity is in large towns only for a model like that. And we are -- one point is that we are not talking about marketplace. That is a business we don't want to get into. Yes, this is pure grocery comes.

Richard's line has dropped.

Our next question from the line of Tejash Shah from Spark Capital.

Good to hear that DMART team is keeping safe and healthy. If you can share your thoughts on non-FMCG private label's adaptations. And especially, how does this China wholesale reset will impact our non-essential private label brands now?

So China component is very small, insignificant. So there's going to be no impact.

[Technical Difficulty] We saw a lot of private labels are actually sourced from China.

Yes. But in the overall scheme of things, it's not -- major sales is from India. Major sales is sourced from India. I think -- so we walk in to us to -- While you see some made in China, the full of the component of articles and our revenue is made in India. And I'm talking about only non-FMCG. Yes. I'm talking about non-FMCG that is the general merchandise and apparel. Bulk of the revenue is made in India.

So since I think we seem to be already at a very high level of throughput efficiency per square feet. So from here, do you see much more room because the shift from grocery to high-intensive non-FMCG was one driver in that [Technical Difficulty].

Tejash, just your line is unfortunately, not very clear. Maybe you can try again once more.

Sorry. Is this better? Hello?

If you repeat that will be helpful.

Is this better.

Sounds better, yes.

I think there are some issues in the line.

Yes. I was just asking that since already our throughput per square feet is very efficient and private label share or share increasing share that share was one of the most important drivers to actually increase that number. So where do you see that ambition? Where do you see private label numbers settling down for us, both in FMCG and at the whole company?

So first and foremost, revenue per square feet in private label, I didn't get that question, but the private label business is very, very low. The percentage contribution to the overall business is also very, very low, especially in the SME segment. And we continue to retain that positioning that private label as a play will take more time. Again, one day at a time. I mean, I don't see private label making a huge dent on FMCG consumer sales right now so, yes.

Sure. And lastly, Navil, if you can -- any new initiatives or experiment that you would have taken in the last 1 year, which is not meaningful to actually show in the PPT there, but you are personally excited about if you can share with us?

Nothing of that sort.

Your next question is from the line of Nitin Gosar from Invesco.

Almost similar set of questions from the earlier participant. I wanted to understand the kind of scenario you are getting...

Nitin, we could not hear you, sorry.

So I just want to understand something similar to or participant question. Currently, we are combating with multiple near-term challenges, maybe not the structural one. I wonder if you with regard to throughput per square feet, even if -- what's the reading on the consumer mindset, even if things were to change or were to improve? Do you sense there is an opportunity to go back to the earlier throughput levels because earlier the mindset of consumer was [Foreign Language] now probably the same mindset will probably well how will you depend to avoid going there. Your thoughts on that? And the second question is with regard to sales mix, general merchandise which was a good contributor to gross profit, your perspective on that, how much time it can take to revive? And what are the cost levers we can maneuver around if certain parameters don't go the way they had been doing in the last 2 years?

So Nitin, again, I cannot predict about the future, I can give you 1 data point, and this is a very interesting data point. [Foreign Language] lockdown was on and we are extremely pleased with the revenues we did. It was like a regular day, regular crowd. Okay. In fact, it was quite encouraging that way. So that's one thing I can share with all of you. Raksha Bandhan -- the day prior to Raksha Bandhan, we did phenomenal sales. It felt like a regular day. So for a human, people are generally want to go out, right? And like I said, this is not a pandemic -- this is as serious as it was imagined to be. I mean, there's enough data out there. So I think so that I can tell you what happened on Raksha Bandhan, right? But I don't know in the future, like I said, [Foreign Language] there's so many elements that have to come together for business to come back.

And second, on your -- on the general merchandise. Your take on the general merchandise sales mix? You think it can come back to normalcy sooner or it will take some time? We want to see how things play out?

I will reserve my comment. Like I said, wait for the quarter. I will write more in detail.

We have next question from the line of Sandip Patodia from Fundsmith.

I just had one question. I don't know if you can answer it, but just wanted if you had any thoughts on the sort of new marketplace model being contemplated by the likes of Reliance and Flipkart possibly on technology-enabled collaboration with Kirana stores and its impact on sort of the value offering that you do and general retail sector and FMCG companies?

So Sandip, we would prefer doing what we are currently doing. We don't want to be distracted with anything else. So just the current brick-and-mortar business. In fact, we are also postponing our cash and carry thought that we had earlier. We are focusing just on our current demand business. And wherever we see an opportunity on e-commerce, you may look at that. That's it. In fact, this is the time to completely focus on just it and get this business back on track ASAP.

No, I appreciate that. That's good to hear. I mean I just wanted your thoughts on -- general thoughts on what do you think the impact of that model might be on players in the sector, be it retail or consumer goods companies, if you had any thoughts.

I'm not -- I don't think I'm qualified enough to make a comment on that. Honestly, I can't comment on that. I really don't know.

We have next question from the line of Garima Mishra from Kotak Securities.

Navil, from a land cost perspective, I understand that IRR requirements for different locations will be very different. But is there an absolute feeling in terms of what you would want to pay per square foot for a land parcel that you keep in mind?

Absolutely. We will never buy an expensive place for sure. That's why the note is outbound.

Right. Okay. And any sense on what that number is?

No. Figure and wants to talk about the prices. But it's just a pattern of what is the price -- 2 things, Garima. What is the price that we should pay here for a local area. So that means a very deep understanding of the local market that you don't get tricked into buying at the wrong price. That was extremely important, okay? So that's one part. And the second part is, what is the maximum ceiling that you would ever pay. Okay? This is absolute , again, that is the second part. The third part is also very important is what is the rate you will pay depending on the city for the city's revenue that you make. So it's a combination of 2, 3 things that will tell you that, okay, I will not cross this line.

Sure. Got it. Okay. A related question to that is, see, you are fairly well capitalized, especially after the January fund raise So -- and real estate, like you mentioned earlier that the deal making or from an availability perspective, prices may be a little on the softer side. So why are you not thinking of accelerating your store additions? I understand that you're maybe muted because of various lockdowns and construction activity having been halted -- But any plans of just accelerating this 25 to 30 per year kind of a number in the future, given you have adequate capital available?

Yes, yes. So we are accelerating our acquisition, okay? That -- in fact, that is no way in any way impacted by the pandemic. We are still very, very confident, and we are continuing the acceleration of store addition. But store additions in terms of acquisition. We are giving you feel of next year because of the pandemic and the delay in construction that doesn't in any way mean that we are dealing the real estate acquisition activity. That will continue. But the time we acquire a land till the time it is open, it typically takes around 2 years, right?

Right. Yes.

So that's the lag. But we are very, very regressive in terms of property evolution. Absolutely.

Okay. Got it. So you're saying even during the pandemic deal meeting per se has not suffered much?

No, no, We are very active there.

Okay, okay Understood. And just last question. See, FY 2020 SS different -- Could you give us what would have been the impact on that number had the 4Q sort of impact of COVID not happened on your revenues or something -- just an indicator sense?

We haven't done the numbers very much. I can't comment. I'm not look variable there.

We have next question from the line of Sanjay Singh from PineBridge Investments.

Just wanted to know this separate subsidiary you have for packaging of dry grocery like spices and all. What is this need for the separate subsidiary? Or is it just historical? Or is there a plan around that?

So it's part, the nature of that business is very different. So it made a different set of people. That's it said there is no interplay between -- in terms of the people, the structure, the art of retail and there, it's more like a manufacturing sector.

But any thoughts on taking that outside your stores?

No. Not yet.

Okay. And secondly, can you just share your experience of the ready stores, which are also selling convenience or convenient format for these stores?

Currently, all I can say is give us more time. And since it's a separate company also, you'll since get a reasonable scale there, then we will be able to comment. But obviously, it's value accretive.

Is it better than the Ready format like-to-like?

Which one are you talking about? I didn't get it.

The convenience format of Ready, is it -- how is the experience there?

What do you mean format on Ready. I didn't understand that.

Ready is also selling stuff from the store.

Yes, yes. So it's better, it's good, it's good because it's increasing. And we also feel good about it that give us the first try to build this model of this concept. And it's encouraging, is all I can say. But too early to comment on breakdown making and all of that. We have to see it at scale.

But all the new ready stores will be in this format or will be around the older format.

Mix of both. Okay.

And just on a lighter note, I mean one of your competitors are getting financial problems. Have you ever thought about acquiring?

So it's -- I don't think it isn't appropriate for me to comment on this.

Your next question is from the line of Latika Chopra from JPMorgan.

Yes, I think a lot has been discussed on the front-end part of the business. I just wanted to check on the back-end side, you already run a fairly efficient model, but any areas where you're working more to further improve the efficiencies in supply chain, technology investments for your brick-and-mortar piece, given the rising scale?

Yes. It's a good question, Varun. So it's a continuous process. Supply chain is a continuous process. You build a -- you build a logistic target thinking store will come in a particular size, format, shape and all of that. So that keeps evolving, changing. So there is where we feel that there are opportunities to make it better. But like I've said this earlier, all the opportunities are all in basis points, the savings. But yes, there are opportunities and they constantly evolve. That's why the beauty about this business, and that was also keeps us awake at night is the excitement around rearchitecturing the whole supply chain versus on intensity of sales. So more and more sales we do from the same region, opportunities emerge automatically for the cost savings. So -- but like said, it's a continuous process, and we wanted to look at those.

Sure. The second bit is your main premise for your mission is to ensure low pricing every day. I just wanted to understand how you compare this pricing? How do you benchmark it? Is it done at a region level, city level? And how frequently you do this? And I'm just trying to understand who would be your comparable base for different product categories? How you do benchmark it? Is it done at a region level, city level? And how frequently you do this. I'm just trying to understand who would be your comparable base for different product categories?

So we compare with everybody. Anybody who is operating within a 2 -- 1 kilometer area from our store, we have a team does that, tracks that. Because our objective is to be the lowest price. So this is something very, very important for us. And we have a mechanism through which we track it. So it could be anybody in the vicinity that we track.

And you would do this like on a monthly basis or like that frequently or...

It's almost daily, Latika.

We have the next question from the line of Amit Sachdeva from HSBC.

So I'd just one small question on the store expansion again. And I know you have been maintaining in the past that you want to own all the stores. And the fact that you wanted to rent some stores in malls as well, but rental negotiations always are always deal or some gain. And how that thought process has changed this time post COVID? Because I assume that malls, et cetera, everybody would be in severe pressure? And is there an opportunity to play a larger role here in terms of securing store expansions, et cetera, in malls, which might want a tenant like you? And would you still back your ownership strategy? And I think there's an opportunity here to accelerate not just owning the stores, but also probably expanding presence to rental as well. Any thoughts here?

So we have actually moderated our view on ownership over a period of time, last 2 to 3 years. We are open to leasing. So wherever we see an opportunity to lease, we will definitely lease. Only thing is our request is -- with the landlord is to lease for a longer period. So we typically like to do 20, 30-year leases. So that is what we do, but we have changed that positioning for the last 2 to 3 years. We do -- we also do lease. But like I said, most of the properties are owned, leasing would be 20%, 30%, if we intend to, we'll not cross beyond that. But we're open to lease, absolutely open. On malls, I'm not sure right now considering the situation. But we are -- on general property acquisitions, we are -- continue to be aggressive. That is what it is sure.

So post COVID, any soft rental on leasing, et cetera? Has that changed favorably for you? I mean, or is it just the same?

No, no, no. Leasing market is becoming very, very attractive. We are getting a lot of inbound inquiries, but they are mostly in malls. We're evaluating them and let's see. But yes, leasing has become extremely soft, mall leasing has become extremely soft.

Great. That's very good to hear, Navil. And my second quick question is that you alluded to new stores being larger, but give you a short-term cost. But a long-term, long range of growth and opportunity to expand SKUs and things like that. If I read you correctly, because -- and then also sort of put into together that in the last 2 years, average store size had been more like 50,000 to 60,000 square feet versus earlier. So what percentage of the area of the new stores is actually less operational, if I may say in a fully optimized way relative to older stores because it's relatively smaller? And if I may compare the 30,000 stores would have a typical SKU of 8,000 or more. And how this larger stores have an SKU? And what kind of actual expansion we should think about that you could do in various areas? Given that you believe that new SKUs could be margin enhancing and the larger format stores gives you a leg room for longer CAGR. Any thoughts here about how we think about SSG, et cetera, in that context where it could come from assortment, SKU expansion and also maybe higher margin?

So again, my simple response to that is the same that larger stores -- they're doing larger stores simply because so it's on -- okay, let's put it 2 ways, okay? First take the simpler parts, which is the CapEx. When I build a larger store, what you do is you're building more construction. The incremental construction cost is a small part. It's not that if I move from 30,000 to 50,000 square feet, that means my overall cost of deposit goes up even in the same proportion. No. It is just the incremental square footage construction cost with that goes up. Yes? From a cost perspective, it is okay. That's the effect. From an OpEx perspective, yes, there is a higher OpEx. But -- and hence, the trading area, pricing is decided basis on near opportunity. So even if I build a 60,000, 70,000 square footage trading, I may not operate the full. I may operate half or 3/4 or whatever. That's the call the local team takes, and that's why you calibrate your OpEx. So that the OpEx is in line with your other stores, okay? So these are the cost part. Now on the business side, what happens is why we decided to take this direction is you get a far higher CAGR for a longer period of time, okay? And that is extremely profitable for the incremental CapEx. So that's why we get to that. The second part is that our ability to sell higher margin products becomes better. So the general merchandise and apparel, the ability to showcase the product becomes more richer, more better, okay, without doing any fancy investments in CapEx. So the mix of the assortment and higher CAGR gives you an accelerated ROIC. So that's it, broadly. But if you tell me, does that mean that I'm going to have a different strategy for the larger format stores? Not really. See even today, depending on the size of the store, we have different assortments for different stores. We do have that. We calibrated basis the sizing. But that's within that overall DMart positioning that we have. So it's not something distinctly different that we do for larger stores vis à vis the smaller shares. So for example, let's say, the INR 399 kurti, small store may get maybe 30 varieties at a time. The big stores will get 50 varieties at a time because the ability to showcase them is better. That's it.

Got it. Got it. But so typically, Nevillle, how many... [Audio Gap]

Price changes in 2 hours. We can change prices in 2 hours.

And that across the stores or would we just localized decision-making and localized decision is implemented only locally where it is relevant or how does it work?

Tech is aligned to do anything. You want to do all stores, 1 shot. You want to do 1 region while not touching the other. You want to do only 1 store, everything is possible.

We have next question from the line of Vinod Bansal from Franklin Templeton.

Navil, Vinod here. A couple of questions. One, perhaps from repeating an earlier one on the e-commerce part. I think the risk or the fear some of us want to express is that as a platform if e-commerce gains greater traction, especially after this pandemic. Some of our customers already are doing [ rough ] shopping at e-commerce. And there are much larger, bigger players competing with us. So the risk one is seeing is that the off-line platform might lose existing customers to online platform. So Amazon or someone else in your core Bombay markets, core customers, existing customer in Kandivali, Borivali might shift to Amazon. And therefore, the existing store sales might lose out incrementally. That is one risk we are trying to get addressed, especially after you saying that DMart trading is there, but it's not really going to scale up very fast. So do you see that if e-commerce activity from consumer side remains high, we are -- on a weaker platform, we are a good player on a weaker platform? That's one primarily risk if you could comment on.

So Vinod, the way we look at it is in 2 ways. That because of e-commerce, is the business affecting the ARC, yes or no. If it's not, we are okay. And because of the pandemic or whatever, somebody else is doing extremely well, okay. That shouldn't bother us if our business is doing well, okay. But at the same time, we will also look at our e-commerce business more aggressively. I mean the whole idea of getting into DMart ready was driven on that cost that some day, something, some opportunity may arrive. Otherwise, culturally as an organization, we are -- if you can -- if you go back 7, 8 years back, I mean it was -- what should I say, not a problem we've been talking about e-commerce within our company. But yet, we got into business, okay? So like I said, that -- but then if the analyst community expects us to build everything in the span of next 6 months, 8 months, that's not going to happen. We'll take this slowly. Our view is the business is not going anywhere. Build your brand, build what you stand for and which is very unique. And as and when you are ready with your model and you present it to the customer, the customer will come to you. That's our view. So even if somebody else saw this faster than us, we don't have to beat them in that game. We want to play the game of being better than anybody else rather than being faster than anybody else.

Right. So your DMart Ready model, is it -- as it -- is it profitable to the extent you wanted to be profitable? Are the [indiscernible] want?

No, no. It's not at all profitable. It's not profitable even at this scale.

When I see the ROIC perspective, is it something that you are happy with? Or you think there are any changes you need to make?

Sorry, what was the second part?

I'm saying on the return on capital perspective, is it something that you're happy with or there are changes being made there to achieve the ROIC, the targets?

The principal capital is [Foreign Language] it's good enough. [Foreign Language] ROIC, return [Foreign Language]. There's time for return on capital and all those discussions for e-commerce. In fact, our whole focus is on not losing money as much as possible or trying to make the drain as little as possible.