Campus Activewear Limited (CAMPUS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Campus Activewear Limited Q4 and FY '25 Earnings Conference Call. [Operator Instructions]. Before we proceed on this call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our businesses that could cause future results, performance or achievement to differ significantly from what is expressed or implied by such forward-looking statements. The Campus Activewear's management team is represented by Mr. Nikhil Aggarwal, Whole-Time Director and CEO; and Mr. Sanjay Chhabra, the CFO. I now hand the conference over to Mr. Nikhil Aggarwal, Whole-Time Director and CEO, for his opening remarks. Thank you, and over to you, sir.

Thanks. Good evening, everyone. Thank you all for joining us today for our quarter 4 and FY '25 earnings call. FY '25 has been a year of meaningful progress and strong execution for the company. Despite a challenging macro environment, we stayed focused on our strategic priorities and delivered a healthy 10% year-over-year revenue growth, reaching to INR 1,593 crores. This growth was led by higher volumes, reflecting the success of our efforts in expanding distribution, accelerating online sales, launching fresh and relevant styles and running a high-impact digital marketing campaign. We also made significant strides in strengthening our brand presence. Our expansion into premium large-format stores helped us reach more consumers in Tier 1 cities and metro markets, reinforcing our position in modern retail. Geographically, we continue to build on our stronghold in the North, Central and West regions, while also expanding into South -- Southern India with encouraging traction. Our enhanced online visibility supported this growth. We further enriched our family brand proposition by launching over 250 new styles for men, women and children offering vibrant designs at attractive price points. This has helped us cater to the evolving lifestyle needs of Indian families across multiple locations. Our sneaker portfolio saw an impressive growth of 150% versus FY '24, reaffirming our commitment to deliver stylish high-quality footwear that remains accessible. We also expanded our retail footprint with 30 new stores, taking our total EBO count to 296 across India. On an annualized basis, our gross margin improved by 20 basis points to 52.3%, driven by procurement and production efficiencies. Our EBITDA margin rose by a 120 basis points to 16.1%, driven by disciplined cost control and improvement in working capital management. Notably, our net working capital days improved from 92 in FY '24 to 71 in FY '25, reflecting our focus on operational efficiency. In quarter 4 FY '25, we also launched the second phase of our 'Move Your Way' campaign with Vikrant Massey. The campaign resonated strongly with Gen Z audiences, celebrating individuality and self-expression, and further strengthening our brand connect. We also commenced the commercial production from our Haridwar II facility for manufacturing high-quality Uppers for sneakers during March 2025. Your company will be benefited for this additional capacity for the full year during FY '26. In parallel, we've gone live with SAP on the 4th of April 2025 to streamline operations, enhance inventory control and improve planning and forecasting, laying the foundation for scalable and agile growth. As we look ahead we are energized by the opportunities in front of us. With a strong balance sheet, a growing brand and a clear strategic road map, we remain committed to deliver long-term value through innovation, agility and a deep understanding of our consumer set. Thank you. And now I hand over our call to our CFO, Mr. Sanjay Chhabra, to take you through more details on the Q4 and FY '25 performance.

Thank you, Nikhil. Good evening, everyone, and thank you for joining us for the Q4 and FY '25 earnings call for Campus Activewear. I'll first take you through the Q4 performance. Our operational revenue grew by around 11.5% year-on-year to INR 406 crores in quarter 4 driven by higher distribution, which has registered a growth of 9.6% and also the online channel, which has grown 15.2%. The company sold approximately 6.2 million pairs during Q4, up 7.8% year-on-year. The average selling price also improved from INR 658 -- the average selling price improved to INR 658 from INR 636 last year. Our gross margin was 52.3% versus 50.2% during the same period in last year, driven by higher ASP in distribution and also the online channel. The revenue mix between men and women and children categories stood at 81 to 19 versus 80 to 20 last year same quarter. Our EBITDA for Q4 was INR 76.7 crores. The EBITDA margin expanded by 60 bps year-on-year to 18.7%, owing to lower SG&A. Last year numbers included one-off provisions for inventory and receivables. PAT grew by 7.3% year-on-year to INR 35 crores during quarter 4 '25, and PAT margin stood at 8.5% versus 8.9% last year, slight depletion in PAT margin is primarily due to a higher depreciation owing to impairment of our DIP lines. I now move on to the full year performance. Our operational revenue grew by around 10% year-on-year to INR 1,593 crores in FY '25, driven by higher distribution, which registered 9% growth and online channel, which grew by 11.7%. The company sold approximately 24.9 million pairs in FY '25, up around 12.3% year-on-year. The average selling price stood at INR 639 per pair versus INR 652 last year, a drop of around 2%. This is primarily driven by mix of open footwear, which went up from 14.2% to 15.2% and higher scale of accessories and also to some extent due to lower realization driven by our liquidation of non-BIS inventory. Our gross margins were at 52.3%, an improvement of 20 bps from last year, driven by procurement and production efficiencies. The revenue mix between men and women continued to remain flat 80 to 20. Our EBITDA for FY '25 was at INR 258.2 crores. The EBITDA margin expanded by 120 bps year-on-year to 16.1% in FY '25, owing to lower SG&A. Once again, the last year numbers included one-off provisions for inventory and receivables and hence, the SG&A was higher last year. The current year SG&A numbers are more normalized. PAT grew by around 36% year-on-year to INR 121.2 crores and PAT margins expanded by 130 bps to 7.5%. Our balance sheet continues to demonstrate strength and robust return ratios such as ROCE and ROE of 22.3% and 17.2%, respectively, as on 31st March '25, and we continue to be a debt-free company. With that summary, I would now conclude my remarks and open the floor to the moderator for Q&A session. Thank you.

[Operator Instructions]. The first question is from the line of Gaurav Jogani from JM Financial.

Congratulations on strong revenue growth numbers. Sir, my first question is with regards to if you look at the premiumization in your entire segment, last year, if you look at it, products below INR 1,000 contributed to around 27% and this year it's near 22%. I mean despite this premiumization increase, we are seeing an ASP decline. So one, does this contribution only reflects the footwear contribution and does not include the accessories which could dilute the ASP?

Yes. Gaurav, 2 things are driving this ASP decline. As I mentioned that the first quarter in the full year, we -- our mix of open footwear was quite high. That was a conscious call that we saw this as an opportunity and increased our sale of open footwear. So that's diluting the APS to some extent. And of course, the accessories sales, like again, in quarter 2, we introduced our socks in the distribution market, which was not there earlier. So accessory sale is at an average ASP of INR 140 that again has an impact to some extent on the overall ASP of the organization.

Sure. But sir, I'm just assuming that the open footwear will also be priced INR 1,000 and below. So ideally, that should have led to higher contribution of the products INR 1,050 and above -- below, sorry, but that has actually increased the contribution of -- the premium products have increased. So just wanted to tally that.

Gaurav, a right way or right yardstick to measure this would be that are we able to maintain our margins? So if you see, margins despite higher mix of open footwear, despite accessories mix, despite liquidation of non-BIS inventories, our margins on a full year basis has reflected an improvement of 20 basis points. So we have certain margin thresholds on which we work. And whatever is the mix, I mean, we don't dilute the margins. So I think that's the right way to approach it.

Sure. And sir, my second question is with regards to the online volumes. If we look at the online volumes this year, it's around 7.4 million. And last year it was 7 million. So I mean, roughly, it's increased only by 6%, 7%. So is it a conscious call taken by the company to drive more the distribution and the other parts of the business? I mean, is this a conscious effort taken?

Gaurav, so the effort is actually across all channels, right? We operate every channel strategically in a way that it should have a meaningful contribution to the overall top line. So there is no like conscious effort in terms of the specific number for online,but this is as per the demand. And of course, there was a higher proportion of outright sales this year in the online business versus marketplace. And some of the ASP increase can also be attributed to that. But there is no like -- so this is part of the demand and there is no like strategic or conscious effort to maintain this number in terms of volume.

Gaurav, just to add, I mean, each channel is playing it's own role. I would say that distribution is for mass market. If I talk about the revenue numbers, both the distribution -- I mean, distribution has shown a growth of 9.6% and online has shown a growth of 11.7%. So it's fairly balanced. Each channel is playing its own role. Online, of course, we reach out to the consumers directly through the marketplace business, which is higher in ASP and hence, we are able to sell more of premium products whereas in the distribution it is more of mass market products.

Sure. Sir, that is -- I was going to ask, maybe the premium products on the channel this year would have increased better. And hence, despite the lower volume the contribution is largely the same and the growth is better?

Yes, that's right. Yes.

And sir, lastly, on this Haridwar facility, I mean, this Haridwar facility because it has commenced in March month, would that depreciation start hitting from next year for this particular facility. And if yes, how much should be built in the overall number?

Gaurav, yes, the depreciation is there for 1 month in this financial year. Next year, it will be for 12 months. It's an investment of around INR 21 crores, will be amortized over a period of 15 years.

We'll take the next question from the line of Aliasgar Shakir from Motilal Oswal Mutual Fund.

Congratulations for double-digit growth. So first question is on the demand scenario. So if you can just talk about how is the current demand and the competitive scenario, both online and offline. And also last quarter you had mentioned that the BIS cleanup will be over by March. So what is the industry scenario? And have we cleaned up the BIS inventory? And just last related question to that is on the sneakers. So if you could just share what is the growth and mix of sneaker in this quarter?

Ali -- So let me take a BIS first. So on the non-BIS side, while we have made significant progress, but there has -- it's been slightly slower than we anticipated. We were expecting to liquidate a big portion of it by March end. And there are -- it's still slightly lower than that, but it is all like under control and it's basically we're expecting in line with 20 to 40 bps of a margin hit on in respect of the non-BIS inventory in the coming year. And nothing more than that, so that's that non-BIS side. On the demand scenario, we expect this year, we've seen North, East and West doing fairly well, South and Central has sort of been flattish. So we've seen pockets of growth basically across these 3 areas. And metros and Tier 1s in quarter 4, I would say has done -- the saliency has slightly dropped, so versus the rural and Tier 2 and Tier 3 counters, so versus year-on-year. And so -- there has been some dip, I think, in terms of consumer demand in terms -- in metros and Tier 1s. But apart from that, we definitely see a much more positive momentum overall, right, and which has also given us some tailwinds. Going forward as well, we hope that this tailwind and positive momentum continues. We don't see any roadblocks or any headwinds at this moment. But I think more than that, a lot of the internal initiatives that we have taken in terms of channel expansion across all the 3 channels and our supply chain and the back-end improvement measures that we have taken, SAP implementation across -- along with a new warehouse, we've sort of consolidated our warehousing in the back end. So a lot of those efficiencies should sort of kick in into this new financial year going forward. On the sneaker side, Ali, we've seen some very good traction, and we hope we will continue to -- given the lower base, we will continue to expand at a similar pace even this year. And this is definitely also contributing to the higher ASP. And so the volume contribution is roughly about 8.5% for this year, and this should definitely go up in FY '26 given the new plant is also online now and some bit of higher contribution of ASP with respect to sneakers should come in. Over to you, Ali.

Sorry, I was on mute. Sneaker last quarter was some 120% growth. So was that a similar trend in this quarter?

It's actually for the whole year. So the whole year, we have grown at 150% roughly. And the contribution from sneakers, we've closed at about 8.5% for the -- on an annual basis.

Got it. Second question is on the margin front. So you have earlier indicated that you would want to maintain between 17% to 19% margin. So now that we have closed this year with somewhere close to about 15.5-odd margin, should we see that trajectory improving? And by when do you see coming into that range of 17% to 18% margin? And related question on the cost. We've seen a couple of line items seeing big jumps. So if you can just explain, for example, other expenses Y-o-Y and the depreciation increase has seen big jumps. So if you could just explain why that has happened in this quarter.

Yes. Ali, just to add here, the EBITDA margins have improved to around 16.1% on -- if you look at it full year, -- and if you're looking at other expense on a full year basis, I think it has gone up from INR 440 crores to INR 462-odd crores.

I was looking on a quarterly basis. This quarter, other expenses and depreciation interest has gone up significantly on Y-o-Y.

The other expense has gone up from INR 90 crores to around INR 108 crores, which is a large chunk of this, around INR 10 crores is higher A&P spend, both on the digital media front and on the sales promotion side. So out of this INR 18 crores, INR 10 crores is purely the marketing piece and then remaining is driven by the volume. So the volume growth, this line also includes the freight and the conversion cost. So that also is a subset of increase of INR 18 crores, right? And on the depreciation front from INR 19 crores to INR 22 crores, I explained that it has a one-off impairment hit of our DIP lines, which we have impaired. Out of 5 lines, we have dropped or uninstalled 3 lines because it's a very outdated technology and the school shoes have moved more into the EVA category from the DIP. So INR 2 crores hit on depreciation is sitting there.

Got it. Similar on the interest also...

Mr. Ali, I am so sorry to interrupt. May we request that you rejoin the queue for follow-up questions. There are several other participants waiting.

Sure.

We take the next question from the line of Umang Mehta from Kotak Securities.

Congratulations on a good set of numbers. My question was on open footwear. So would it be possible to share what was the contribution in terms of revenues and volumes this year? And I ask this mainly basically trying to understand that as we go ahead, do you think that sneakers and other parts of your portfolio will be able to ensure that double-digit momentum continues, given that, obviously, the season has not been in favor, so that was the first question.

As I mentioned, the open footwear mix increased from 14.2% last year to 15.2% this year. So that's the kind of contribution it has on our business.

Yes, given -- we don't expect, of course, like there's a seasonality to this. So of course, quarter 1 will also have a higher portion of open footwear category. So we don't anticipate any sort of drop in the category.

Understood. Understood. And just the second one was on your full year margin. On an annual basis, would it be possible to quantify the hit you have taken in terms of BIS basically inventory? I'm asking this mainly just to understand that if it was not there, where would your margins would have ended? And it seems like then your aspiration of 17% is not too far away from where you are already?

You see, there won't be anything called like a direct impact of BIS. I would rather put it as a normal liquidation of slow-moving and nonmoving inventory in this year, since BIS kicked in, we had a time line to chase. And hence, there was a urgency to liquidate certain stocks. And as we mentioned in the beginning that it had an impact of anywhere between 20 to 40 bps on our margins. So that's the number which is sitting there in the current year and in the next year also, it can be likely to be in the same range is how I would put it.

So basically, last year, 20 to 40 bps and similar is expected to be in F '26.

Yes.

[Operator Instructions]. We take the next question from the line of Shraddha Kapadia from SMIFS.

Hello, am I audible?

Yes, Shraddha.

Congratulations on the good set of numbers. Also, basically, my question is somewhat similar to the contribution which the previous participant asked. This is majorly with regards to the men versus women. So if you could help with the revenue as well as the volume mix?

So the category mix for men and women, Shraddha is pretty much similar to last year. It's 81% or rather 80% has been the contribution for the entire year for men and about 13.5% for women and kids would be 6.7%. So that's pretty much in line with how FY '24 was, while the aspiration is there to certainly grow this category slightly higher, so -- but we have premiumized in the women category. So the ASP for the women category has gone up for us. And this year, we expect women's share to definitely go up from this month.

Okay, sir. Thank you so much for that detailed explanation. Also, if you -- have we taken any price hikes in the current quarter? And do we plan to in the future?

Yes, we have taken actually just on the open category side. On the open footwear versus last year quarter 4, we have taken a price hike, which has definitely helped us maintain the margin profile as well overall. And I mean, going forward, we generally do take a price hike at the end of the season. So now there is going to be a higher contribution of our NPD products, which anyways would be priced accordingly. And so therefore, given the seasonality, as we are moving into the season now in quarter 2 and quarter 3, we will be not taking any more price hikes for the time being. We are pretty much there in terms of the pricing that we -- that the company requires.

Okay, sir. If I may just squeeze in one more question?

Sure.

So this is majorly with regards to the BIS. So is there any decline in the competition, especially from China, which we have observed?

Yes. I mean, the imports have certainly dried up. The overall volume has dropped from China. We do see some impact of that. But honestly, to quantify that is still kind of early. There has been some inventory from non-BIS, which is still being liquidated by a lot of the companies into the market. And as the government did extend the BIS time line for the liquidation to July 2026. So companies have sort of taken that leverage and taking their time. So -- but it's obviously a finite quantity. There is no new fresh in coming non-BIS material or goods anymore. And Chinese impact, we definitely see from channel checks that there is much smaller volume into the market.

We take the next question from the line of Niraj Mansingka from White Pine Investment Management.

Just a related question to the previous participant. How do you see the market evolving after the inventory of BIS goes down? How -- considering that you have your own manufacturing in-house? How do you see the competitive scenario evolving and how is the volume growth rate in India panning out post BIS full implementation of BIS?

Sure. So actually, last 2 years or rather last 3 years, we've seen the industry not growing in footwear, and that's been the trend for the last 2, 3 years, mainly due to the subdued demand on the consumer side. So we do expect that finally, due to the non-BIS liquidation and actually the BIS implementation, we expect that the industry should start doing. It's a big tailwind for everybody for -- especially, the organized players. And we are fully geared up for it. So with respect to the assortment of products that we are providing this year is 250 new styles is very well received into the market. So we don't -- there are certainly a lot of tailwinds. We just need to execute it right and get it correct.

Can you put some numbers on what is the share you expect to see? Because what I thought was it was a large tailwind for manufacturers -- companies who can manufacture products on their own and we will give an edge to them in pushing the products. So can you give some numbers on how the companies who manufacture in India can benefit and how much is the market share right now for them and how much it can -- some color would be useful on numbers side.

Difficult to quantify numbers, but like it's basically, you need to understand that there is a finite very limited manufacturing capacity for the category that we are in sports shoes across India. And it's like really measurable, the overall capacity, if you just do a bottoms-up of all the players in the market organized and unorganized, you'll end up with a number which is very much quantifiable. So it's a very much -- very finite quantity. And clearly, with the depletion of the imported goods into the market, we do expect there should be a benefit to all the organized and unorganized players, especially the organized players because [indiscernible].

Do you expect those imported good prices of Chinese to go up in the market and hence, your competition -- your product will be competitive. Is that the scenario you are seeing?

Come again, sorry?

Do you expect the prices of all the imported footwear to go up and hence, your products will be competitive on the market. Is that the main outcome? Or is it the availability itself of the imported goods will go down?

No, not really. I mean, so we have always been very competitive with respect to the MNC brands, mainly due to the pricing power that we have. And our biggest USP is actually the value proposition that Campus as a brand provides, right, to the end consumer. So that is very much intact and that will continue to happen. We don't see that -- so actually, there is no real competition in that aspect with the MNC brand because they all primarily start at INR 3,000, INR 4,000 -- rather INR 4,000 MRP and above with a decent pair of shoes. So it's actually a different market that we're both catering to.

[Operator Instructions]. We take the next question from the line of Akshen from Fidelity.

Congratulations on the double-digit growth. Two questions. One was around the broader demand environment, particularly when it comes to footwear industry. Generally, how are you seeing? Because we've seen broader consumption categories having some headwinds. You seem to have done very well. So just trying to disaggregate if this is a market improving or market share improving. That is question one. Question 2 was around UP markets. A couple of years back, we had discussed that market being under stress, particularly around the MBO channel. So as 2 years have passed now from that journey, how has that market behaved for you? Those 2 questions from my side.

Yes. No, great question, Akshen. So actually, I think from a quarter 4 perspective, Akshen, we've certainly gained market share. I don't think the market has really moved the needle that much while it certainly improved versus quarter 4 last year. But on a double-digit growth, we are quite confident that we've gained market share. And because the demand scenario has, I mean, improved but not that much and which is also evident from our peer set numbers, I mean there is some struggle in the market with respect to demand.

On your second question, Akshen, on UP market, I would say that overall, if you see the composition of our growth, it is both mixed, I mean online and distribution. Distribution, of course, to better execution across the board, we have seen growth in, I would say, 6 to 7 markets across India. And UP being a dominant market, yes, the answer would be yes. We are seeing the traction back. There was a growth.

We take the next question from the line of Prerna Jhunjhunwala from Elara Capital.

Congratulations on strong set of numbers. So I just wanted to understand what is driving this growth in volumes? Is it the number of distributors or presence expansion that you're doing? Or it's just online channel expansion? And what is driving expansion on channel -- online channel for you as well? I mean that would be my first question.

So it's actually a mix of certain initiatives, many initiatives, rather, that we've taken on the front end and I'm particularly proud of the front-end team. It's a lot of the execution that has happened actually at ground level, in terms of placement, in terms of expansion of the outlets, the right set of distributors in the right place. So it's a lot of execution really at ground level, which has panned out and given us this growth finally into the distribution on an annualized basis. And it's taken us almost 2 years. We've been flattish, actually, on distribution. We have not grown for the past -- the year before this and the year before that. So it's a good welcome back for the channel, and we expect this momentum to continue, and we will continue to add counters and distributor in the right geography wherever is required. So it's a lot of consolidation efforts,it's the addition of distributors and the retailers. And of course, the right product also being delivered on time and in quantity to the respective outlets. So yes, basically, distribution is an execution play. And online, again, is more tactical. I mean, in nature, while the focus is there on marketplace, but we've also grown on outright this year quite well. And -- so marketplace will continue to remain a focus. And this year, we expect growth to come in, in a similar fashion from online as well.

Okay. And I see that the retail account has increased from around 20,000 to 26,000 in this year, 20,000 in FY '23 to 26,000 today. But number of distributors have actually come down. So could you help us understand how many distributors have been added over the last 2 years?

Prerna, it's a very dynamic field, I would say, we continuously evaluate the performance of our distributors, how they are in terms of expanding our reach. And accordingly, we do certain churns. The distributor count remains in the range of 300 to 350. Yes, we have consolidated certain geographies. And hence, the number of distributors have come down, but the measurable output KPI is that how good we are expanding our reach -- by end of this quarter, I mean, Q4, our reach was at around 23,000-odd outlets versus 19,600 outlets last year. The number you are seeing is our active outlet count, which is around 26,800, that's number of outlets, which build once in a year, but we also follow a different KPI, which is like bare minimum 12 payers built on a monthly basis. So that is reach. And we track both these KPIs irrespective of how many distributors we have on board.

Okay. And how much can we expand further? How many outlets can we reach in the next 2, 3 years' time frame? Just that will help us understand the growth part in the distribution channel that you are targeting at?

So the overall universe is actually quite large, it's about 40,000, 45,000 and we're just at 26,000. So -- but what we have done, the strategy for us is to, first, obviously, get to all the relevant -- most relevant counters for us as a brand and the category. And that's how we're doing that. So along with -- we expect at least an addition of, let's say, 1,500 counters year-on-year. And along with that, an increase in the wallet share for each outlet, so that will lead to the -- basically the growth in the distribution channel.

We take the next question from the line of Manasvi Shah from ICICI Prudential Asset Management.

Congratulations on a good set of numbers. I have 2 questions. First is, sir, if we look at the commentary of other peers as well as other retailers, et cetera, in the online channel, especially marketplaces, it seems that there is some sort of a slowdown. Have you witnessed some similar trends on the marketplaces or maybe higher discounting, et cetera? Like just wanted to understand on that front.

I would say, again, it's a dynamic field, Manasvi, like we have been able to get a fair share on both online marketplace and the outright business. And of course, we are doing a relevant marketing spend to create visibility, create awareness and that's leading to traction and throughput, and we are able to get the desired or rather our team -- sales team is able to meet their set of numbers what we are targeting at the beginning of the year.

Okay. Okay. And sir, on the second question, it's actually around working capital. So impressive work done on reducing inventory, et cetera. Is there more scope? That's number one. And number two, if you look at your secondary sales growth versus primary, is it like mirroring your primary sales growth in the distribution channel?

Okay. First thing first, on the working capital side, I think we have done a fair amount of work in the last 1 year, and we have reached to a level which is, I would say, the most desirable level. But at the same time, we have no plans to cut it down further, which could eventually translate into a sales loss. So from here on, you may see a bit of higher inventory levels, of course, we need to build before the season. The level which you are seeing here, I think that's the optimum level, 95 to 90 days, yes? And on the -- on your second question, sorry, can you please come again?

Your secondary versus primary sales growth.

Yes. We -- I mean, we do have a tracker on the distributor. We have the DMS system, and we see that the inventory levels with the distributors are fairly what they were at the end of FY '24. So we maintain around, I would say, 100 to 110 days of inventory. It continues to be same. And so a fair reflection of that it's primarily working on a replenishment model, which means that whatever we are able to sell secondary, we are replenishing through primaries.

We take the next question from the line of Gaurav Jogani from JM Financial.

Just on the increase on the insurance -- sorry, the interest base, this quarter around the number has increased despite our debt being now 0. So just wanted to understand the reason for the same.

Yes, good question, Gaurav. Interest line now is a reflection of only the ROU assets. So whatever leasehold premises we have in terms of EBOs and warehouses, we create an ROU, right to use, and depreciation is charged on those assets and the interest component is there. So both in the depreciation and interest line, component goes, and that's what is sitting in the interest line. This quarter, you see a higher interest, which is purely due to increase of 2 assets. We took a warehouse in Kulana for our online business, SG warehouse. And also we have taken this Haridwar II facility for the sneakers. So that is on a leasehold premise. And also, we took a raw material warehouse. So we have added 3 leasehold assets in this quarter repeat.

[Operator Instructions] Next question is from the line of Aliasgar Shakir from Motilal Oswal Mutual Fund.

Yes, sir, just to complete the question on margin, where I will just ask you about your aspiration of 17% to 19% margin. How should we see the next 2 years panning out for you?

So Ali, the aspiration certainly is intact. And as you can see, we are trending towards the guided margin and the initiatives we've taken are sort of panning out in that direction. So at this moment, we don't see any headwinds with respect to margins. We have built into, for example, the NPD portfolio and the new launches and margin sort of is primarily driven firstly from the products, right? So as long as we maintain that and control that and the overheads and the costs are also under control, -- so it's a fairly predictable number. So we just need to factor in the non-BIS component, what we just called out and the rest is sort of taken care of.

Got it. So what kind of margin improvement we should expect in the next 2 years?

Two years, I don't know. It's a very dynamic environment. I think if we can predict 1 year, that's a big achievement. So over a year's time, for sure, like we should fall within the range of what we've guided.

Got it. So next year, we should be able to achieve the 17%, 19% margin guidance range. Understood.

See, we continue to expand.

[Operator Instructions]. We take the next question from the line of Priyank Chheda from Vallum Capital.

Sir, my question, again, on the strategic front for Nikhil. After all the rectification that we have undertaken, we always had a targets and aspirations to deliver double-digit volume growth, which we delivered this year. But when it comes to the total revenue growth, which is mid-teens kind of revenue growth, which we aspire, mid-teens EBITDA margins, which we aspire, I see that directionally, things are improving amid in the tough market conditions. But leave aside the market conditions, when should we see these things playing out in terms of revenue growth, growing at mid-teens, EBITDA margins coming out in mid-teens? That is my first question.

Priyank, so I think you've answered your own question. So it's been a fairly tough macro this year. And I think given the adversities that -- and it's very evident from the peers' numbers, right, that are coming out. So it's been a very subdued environment. And I think we've done fairly well with respect to execution this year, and that has primarily led to the volume growth. And ASP growth, of course, is a function of, of course, the planning and the environment at that point, right? So given that in quarter 4, we've certainly grown our ASP by 3%, 3.3%. It's a good indicator that we're sort of getting back on track with respect to ASP. And of course, volume has grown in double digits like I said, finally. So it's a lot of execution more than, I would say, macro sort of supporting at this point. Of course, with macros improving, that should add on to the entire base.

Got it. So -- but what I was alluding to was the margins is something which is internal to the company. So we should see that happening in the coming quarter directionally every quarter sequentially, right?

I think margin is a bit of a seasonality play also. You need to understand, I think, in our line of business, margin should be seen on an annualized basis, honestly, and not quarter-on-quarter because there is an element of open categories, some accessories -- so it's a very seasonal business. So as you know, already. So we should evaluate margins on that aspect.

Perfect. Perfect. Got it. Point taken. My second question is on the 2 aspects of other expenses, which is one is advertisement cost. Now for the full year, if we see, cost, which is INR 135 crores, and we talk -- we spent top dollars among all the peers in the footwear category. And that has grown at 25%, while the revenues have not gone and grown at that commensurated rate. When it comes to last 3 years cumulative expense spends that we do on the media and advertisement spends, which is INR 350 crores, even for last 3 years, this hasn't added to much of the sales, right? So can you explain the thought process behind spending such a high amount on the advertisements? Would we see this capping out at certain limits, certain levels so that we first test the sales throughput rather than growing the spends at a very faster pace? And just let me complete on the other question on the same aspect, which one is, of course, on the advertisement. And the second is on the non-BIS inventory, we always thought that while we have been hearing your commentary till the year-end, we thought that much of the liquidations would be done and would have been done. Despite that, why do we guide that the cost of this slow-moving inventory would remain same as it was in FY '25 while the sales will improve, the sales will grow? The impact should actually come down significantly. So that's my 2 questions.

Sure, sure. So let me take up the A&P first. So no, you're actually quite right. So A&P you need to see it from 2 lenses. One is the brand building and the other is performance marketing, right? So we've definitely disproportionately spent on marketing versus the peers over the last 3 years. And that is in line with our aspiration to continue to build the brand, and that is exactly what we've done. And that is reflecting, actually, we do these brand surveys every year post our season and like post quarter 3. So in January, every year, we do a very detailed and vast survey of the brand resonance the top of mind scores, NPS scores and so on. And we have seen a significant uptick in the brand awareness levels and the TOMS scores. So clearly, the marketing has definitely made the brand much more accessible and stronger across all geographies in the country. And so that is obviously a big boost also to sales. But at the same time, given that this year, we've spent about, let's say, INR 135 crores, which is about 8.4% of the revenue. So I would say that we don't foresee this going down at this point. Maybe in FY '26, we'll continue to maintain this number at 8.4%, 8.5%, basically a percent increase from what we spent in FY '24. But this should be funded from the ASP increase also. And so we don't see any margin hit with respect to the increase in the brand building initiatives. I hope that answers your question on the A&P?

Yes, it does. And on the non-BIS inventories?

Yes. Priyank, on the non-BIS thing, like we have liquidated a substantial part of the non-BIS inventory during the last financial year. And we are still left with a very small tail. And if you see FY '24 results, wherein we had to take some provisions, both on inventory and receivables. I mean, as a matter of practice, we don't want to get guided by some regulations like non-BIS but we want to have a firm liquidation plan for any of our slow-moving and nonmoving inventory beyond certain period, let's say, greater than 1 year or greater than 9 months. And hence, as a guiding principle, we are now sort of allocating 20 to 40 bps for this liquidation budget, and that's how we intend to move and this strategy has played well. I mean, a reflection of that is very much visible in lower inventory levels now we have as a part of working capital hygiene. So irrespective of BIS, non-BIS being there or not, we would continue to focus on liquidating slow-moving inventory as a matter of routine and hence, take this cost as a part of doing business.

Just last question on the -- can you -- can we get a revenue split on D2C online, which is a split of market, how much would have been the sales of marketplace and how much would have been from B2B online, just a rough ballpark numbers or maybe growth will also be helpful.

I think at an overall level, on the investor deck, you can get revenue split. It is still 52% distribution, 38% online and 10% retail. So that's the kind of split.

Yes, I was asking within online, how much would have been from B2B online and how much would have been from marketplace?

It will be predominantly marketplace. We can take this offline. I mean I won't have the number readily available.

We take the next question from the line of Umang Mehta from Kotak Securities.

Just on the -- I mean, a related question to previous one. Given that outright sales would have done better this year, as mentioned by Nikhil, would your performance marketing spends would they have gone down? Because last year, if I recall, they were -- correct me if I'm wrong, but they were as high as INR 60 crores. So I just wanted to check on that one.

No. Eventually, a consumer has to reach out to that platform and buy my product. It needs to have certain ratings and hence, I need to continue to spend on the performance marketing irrespective of the channel it is, I mean, whether it's a pure-play marketplace or it is through outright business. I need to generate that demand and hence there would continue to be a performance marketing spend.

Understood. And then the second one was on LFS. So we've seen a decent 50%-plus Y-o-Y increase in the stores, I mean, the banners you are in. Any revenue growth you can share for that particular channel? Is it very high this year?

Since it is a very small base, the numbers would look high. Yes, we have added Lifestyle and we have added Reliance footprint. But then there has been certain -- one of the Reliance format of fashion factory has degrown. So it's a combined mix bag, but net-net, we have grown in that LFS per se.

That was the last question for today's con-call. On behalf of Campus Activewear Limited, that concludes this conference. Thank you for joining us. And in case of any further queries, please reach out to Campus Activewear's Investor Relations team at [email protected]. You may now disconnect your lines.