Khadim India Limited (KHADIM) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 9M FY '25 Earnings Conference Call of Khadim India Limited hosted by Orient Capital. [Operator Instructions]. I now hand the conference over to Ms. Masoom Rateria from Orient Capital. Thank you, and over to you, ma'am.

Thank you very much. Good evening, everyone, and welcome to the Q3 9 month FY '25 earnings con call of Khadim India Limited. To discuss the results, we have with us from the management, Mr. Rittick Roy Burman, the Whole-Time Director; Mr. Indrajit Chaudhuri, the Group CFO. They will take you through the results and business performance, after which we can begin the Q&A session. Before we begin the conference, I would like to mention that this conference contains certain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. The actual results may differ materially. These statements are not guaranteeing the future performance of the company and involve risks and uncertainties that are difficult to predict. I now hand over the conference to Mr. Rittick, sir. Over to you, sir.

Yes. Thank you. Good evening, everyone. On behalf of Khadim India Limited, I'm pleased to welcome you all to today's conference call where we will discuss our Q3 and 9-month FY '25 results. We sincerely appreciate your time and interest in our company's performance, and we hope you have had the chance to review the financial results and investor presentation available on the stock exchange. We achieved steady revenue growth with Q3 revenues increased by 2.5% year-over-year. While our gross margins declined by 110 basis points this quarter, sales saw an upward trend supported by festive and wedding season demand. In Q3 FY '25, our Retail segment contributed 66.1% of total revenue, while for the 9-month period, it stood at 63%. As of 9 month FY '25, our total retail store count reached 890 with 61 new store openings during the period. Breaking this down by model, our COO (sic) [ COCO ] store count stood at 222 stores, while our franchise network expanded to 668 stores. Our Distribution business contributed 31.2% of revenues in Q3 and 32.2% over the 9 months. Additionally, we onboarded 15 new distributors during the quarter, bringing the total to 776 as of 9 months FY '25. Looking ahead, we are excited to introduce our new Athleisure segment in the upcoming spring-summer season with price-sensitive range along with other higher-margin products is expected to enhance our gross margin in the coming quarters. Now moving to our financial performance. For the quarter, we reported revenue from operations of INR 160.2 crores, reflecting a 2.5% year-on-year growth. Our gross margin for the quarter stood at 44.6%, down by 110 basis point as compared to same period last year. EBITDA for the quarter stood at INR 14.8 crores, which degrew by 18.7% year-on-year. EBITDA margins for the quarter stood at 9.2%. Our profit after tax for the quarter reached INR 1.2 crores, a degrowth of 36% year-on-year margin for the quarter. PAT margin for the quarter was 0.7%. For the 9-month period, our revenue totaled to INR 474.6 crores, up by 0.7%. Gross margin for the period stood at 46.7%. EBITDA for 9 month FY '25 was INR 51.5 crores reflecting a 4.8% year-on-year degrowth with margins at 10.9%. Profit after tax for 9 months was INR 4.2 crores, showing a 20.5% decline year-on-year with margins at 0.9%. Looking ahead, we remain confident in our strategy and proactive approach. We are committed to building on our strong brand, expanding our retail footprint and innovating to meet evolving consumer demands. We believe that these efforts will lead to positive outcome in the coming quarters, and we are excited about the opportunities ahead. I conclude my update, and I'm happy to open the floor for questions. Thank you.

[Operator Instructions]. We take the first question from the line of Arnav Sakhuja from AMBIT.

I just wanted to know what is the progression on demerger?

It is pending with the NCLT for final hearing.

So any specific time line as to when this hearing will be?

Hello.

Am I audible?

Yes, yes. Tell me.

Yes. So I just wanted to ask, is there any approximate time line as to when this NCLT hearing might be complete?

Within this financial year.

Okay. And once the NCLT hearing is complete, how much time after that will take for the demerger to get implemented?

Within -- whenever the NCLT order comes, the first day of the next month, the demerger will be effective.

The next question is from the line of [ Ashika Madan, SMN Investor ].

Could you please provide me more details on this new product range? And what are your expectations in terms of consumer response and its impact on both top line growth and margin improvement?

You are asking about new product range?

Yes, sir. The new product range and your expectations in terms of consumer response and its impact on top line and...

Yes. So new product range, we are working for the spring-summer '24 season is approaching now, which the spring-summer season will include the Eid festival as well as the summer festival, et cetera. There will be some weddings also in this spring-summer -- wedding days also in the spring-summer collection. So like we have been saying that we are -- we have reduced some prices also in the new products as well as existing products in our Khadim's mother brand. So we think that would give us a good growth in sales. And apart from that, right now, the discount season is also going on, which will be there till around 15th of April. So the discount season is also something that the customer likes. So that also will give uptrend in sales.

So what, in the spring-summer '25, we have come up with a product having lower MRP. As we have discussed in the second quarter con call that we would be pushing for volume. So that thing we have already introduced the product, and we are seeing their acceptance in the market also. In the third quarter, we have seen that the volume of the retail business from 17,49,000 pairs has gone up to 17,96,000 pairs. So that is a positive thing that has happened, and we are looking forward that with spring-summer new collection and also the AW new collection in '25, we will be able to achieve the volume that we used to sell previously.

Okay, sir. My next question would be what percentage of your total sales currently comes from online channels. And how do you plan to increase this contribution in the coming quarters? And are there any specific strategies or partnerships in place to drive growth in your an e-commerce business?

Yes. So percentage of online business, I mean, it's somewhere around 4% to 5%. We would obviously like it to increase, so what we have -- I mean, over the past year, we have been researching on this model a lot. And while I wouldn't be able to -- I wouldn't comment on the how much it would increase, but we are working on this channel. We just -- we approve our research and talks with different partners. We found out that we need to focus on selective basket of products. Too many products are not the thing of the online market. And we have to also do some digital marketing, not digital marketing, online marketing of these few selected products. So these findings are also important. The team has found these things out while online is a little bit of a low-margin business, but we have found out these findings of doing online marketing and focusing on selective products, and we hope that we would be able to do [Technical Difficulty] in 1 or 2 quarters, we should be able to do better numbers than what we are doing now.

[Operator Instructions]. The next question is from the line of [ Ankita Tandon ] from the Federal Bank Limited.

My question is regarding the Distribution segment losses which the company has continued to incur in Q3 also, though the losses have declined significantly. But what is the company's view on the going forward Distribution segment losses?

See, we have already told that in the Distribution segment this year, we are trying to reduce the losses. And in the next year, we will try to do breakeven. So we are moving ahead in that direction only. And once the demerger will be done, the new company, KSR Footwear Limited, will be doing the Distribution business, and they will try to increase the sales and also reduce the costs wherever necessary so that the distribution becomes profitable. Last year, the sales has grown by around 15% compared to last year. So that has given an additional margin with which the losses has come down. So we'll try to increase the sales and also reduce some cost. So that in FY '26, the Distribution business is breakeven.

Okay. And my second question is regarding your same-store sales growth rate. So can you please highlight on something the percentage growth rate which the company is achieving from the same-store?

At present, the same stores, there is no growth. We are having the problem of same-store growth. We have seen the last 2, 3 years, there's no growth in same-store. For that, we are changing the product profile that in Khadim product, we have reduced the margin and the MRP so that the volume that comes in will have an effect on the SSG growth.

Okay, sir. Okay. And what is the per month store sale -- per store sales for the -- if we talk about COCO division, means the COCO?

COCO have different types of sales. I mean we have COCO having sales in a year of INR 1.5 crores. We have COCO having sales of -- average sales for COCO is around INR 24 crore to INR 25 crore in a month.

And there's franchisee also apart from that.

Yes, except the franchisee.

Yes, yes. This is our COCO...

This is -- COCO would be INR 20 crore, INR 24 crore and the franchisee would be, if you take the what we call the secondary sale, that would be around another, say, INR 18 crores to INR 20 crores something. Secondary sale that is, not the...

Primary sale.

Not the primary sale. Primary sale is what we sell to them. That is our sale, but I'm talking about their sale, what they sell to the customer.

The next question is from the line of Chirag Shah from White Pine Investment Management.

Sir, two questions. So first, if you can just talk about the demand trends that we are seeing now? Because you were expecting November-December to be good months, but it doesn't seem to be the case [indiscernible] as expected.

We are seeing -- in December, there was a trend -- good demand trend was there in December. But since this time, Puja was shifted a little bit on the second quarter. So we have not seen the sales growth in -- during this period. But December from last year, we have done around 15% growth for the December month.

Yes. December month because of the reversal of the wedding season and other things like EOSS and everything. So -- and also the price reduction and everything, some -- a little bit of price reduction, all of it is not yet into play. There was -- December month was better.

And how do we look at -- sir, going ahead, how should we look at the demand?

So this year -- means, last year in the first quarter, the demand was very muted because of the...

Election and no wedding season.

No wedding season. But this year, we have seen that the wedding season will be -- is there from January to June. So that will obviously increase the demand and also...

There's Eid in March.

Eid in March. So this will have a good impact for the demand thing. And with no election and nothing, so we expect -- and with our new product range with the new MRP, lesser MRP, we'll have good demand in volumes.

Okay. So basically, for full year 9% to 10% volume growth is largely driven by the base effect of Q1. Is it right way to look at it?

Come back once again.

For next year '26, full year growth of 9%, 10% is largely driven by the base effect of Q1 because of low demand due to election and all that?

Yes, yes. Because in Q1, we were down compared to last year Q1. But now if you see the sales, we have achieved -- means, at 9 months, we are more than compared to last year 9 months. So the growth mainly has come in the second and third quarter.

And sir, secondly, the price reduction that we did, as of now, it appears it is not really benefiting at aggregate level because there seems to be a drop in gross margin, which was expected. But commensurate increase in [indiscernible] gross profit is not visible. So...

The price reduction has been done in [ SS ] '25 only. So we have reduced the price from January '25.

Yes. If you will take some time for the -- right now, the price reduced product will come, there will be some product with increased price also which will be there. So you should be able to see the effect from March and April like that. Right now, it's just too early for...

So sir, what explains this sequential 400 bps of gross margin -- anything specific you would like to call out?

No. One is that discount we have introduced the early EOSS. So that is the reason for the margin to drop.

We've given a little bit discount this year. We've given more options.

Also, there is -- EBOs have been given product to sell through melas and all so as to reduce the high-priced stock that we have. So because the new stock that will be coming in Khadim brand will be at a lower price. So we are liquidating the higher-priced stock from our system.

So sir, if I can just ask, so versus last year, if you take F '24 versus F '25, per unit discount or as a percentage of realization, what is the discount level? And how should we think it? What is the normal level going ahead?

See, the discounting we started from, I think, in the month of December. So last -- in the year 2024, FY '24, the discount sales as a percentage of total sales was around 20% to 22%. But here, what we have seen that the discount percent has increased to 30% to 32% because the flow of discounted item is comparably higher than what was there in the last financial year. Because since we are shifting from one price bracket to another price bracket, so we have introduced more design in the discount.

Okay. On a percentage of revenue, how does this -- how the discount have gone by 2%, 3% for you?

No discount, I have told you around 20% was the discount sale and now it is around 30%.

I'm trying to understand it's impact on margins, how should...

It's impacted in -- means, in the COO, it has impacted around 7% to 8% margin in that month.

In that month. On an annual or a 9-month basis, how do I look at it? Is it because...

See, on an annual basis, right now, we cannot tell because the discounting will continue till March. Only that time, we can tell what is the comparison because the flow of discounted items has increased in the month of December. So right now, you cannot compare.

No, no, for 9 months. I'm trying to see 9-month basis, what it is as a percentage of sales?

9 months...

Not as percentage of sales, not how much product is discounted, but impact of discount on margin from 9-month basis versus last. I think there's gross margin of say 400 bps on 9-month basis, it is 150 bps, okay? So how much of this is because of discount?

Around -- means, out of the 4%, around 2% to 2.5% would be for discount because this year also, we have given discount in August and July also because that time, the past quarter, the product -- means, it was a dry season. So we started the EOSS early.

Okay. And sir, all the entire discount comes -- is reduced from sales or because of the nature of discounts, something in other expense also? The accounting of discount is in sales, right?

Yes, yes, sales.

Okay. Yes. Because at times above the line, below the line, the accounting requirement is different, right?

No. Discount, what we do is we [indiscernible] from MRP, the sale is reduced. We booked our discounted sale only.

Okay. And the last question, if I can just squeeze in. So the question is, you have been putting in efforts to...

I'm sorry to interrupt you, Mr. Chirag, may we request you to join the question queue, sir. We have other participants waiting for their turn. Thank you. The next question is from the line of Abhishek Getam from Alpha Invesco.

Sir, I wanted to know our strategy on Athleisure. So if you could give just broad numbers, where are we present, which part of the country we are targeting price points and for FY '26, how much contribution are we looking from this segment?

See, as we told that we were piloting a project in Athleisure and we have seen that it has successfully done. So now we are going in the -- means, in this model -- means, in this category. We will be introducing product with an MRP INR of 500 to INR 750. And in the first instance, we'll be giving it to 50 stores in eastern part of the country and in the southern part of the country. So we'll again see how it works because last time the stock was there, it is totally exhausted. So this time, we are going with a greater volume. And we expect that in this year, it will -- the sales would be around 1% or 2% of our total sales.

For FY '26?

For FY '26.

Okay. So it will be a smaller business?

But again, if it is again successful, then we'll again increase. We are taking small steps here because there are also -- the product has to be brought. And since it is a new type of product for us, so we are taking a close look and then only invest in more products.

The initial stock that we got that all got extinguished. Now another set of stocks have been ordered. They will come and we will sell that also, plus winters was a bit tight, if I can say winters was a bit not as good as summertime, but -- regarding Athleisure. And then -- so we are learning all these things, and we'll be investing accordingly.

Okay. Are we targeting any age group or male-specific or female-specific? What is your target market here?

No, our product would be for both, means, the young and the middle age.

Okay. And across male and female both?

Yes.

Okay. And what SKUs do we expect to keep in FY '26, number of SKUs?

Around 20 with color and design.

Okay. Sir, also, a couple of calls back, we've spoken about getting on quick commerce, partnering with Zepto, I think. So any color on that?

No. What we have done is that we are shifting our warehouse of e-commerce from our places to Ekart place, so that's why the Zepto thing has been kept under stoppage. So once it starts, we'll start the Zepto thing. All the agreements and everything has been done. So once the place is finalized and operative, then we will start that.

Okay. Sir, usually on quick commerce, there's like ad spends and all that. So do we think that their gross margins will get compromised?

See, in e-commerce, the gross margin is compromised because of our cost of doing the business. So we'll first try out, then if it's okay, then only we'll expand there. Otherwise, we'll not expand.

Okay. And there, we are looking for what's a Pro or British Walkers? And how many SKUs?

What?

For quick commerce, we're targeting which brands, Pro or British Walkers?

No, we'll -- for quick commerce, it should be some socks and all should be there than the EVA products. I don't think we -- it's more of a product category wise thing than a brand thing. So there can be some slip-on sport shoes, there can be some EVA slippers, okay? Because what we feel is that the fancy things, it's more utility type of product will get sold there. So not like some high-fashion ladies slipper or something probably wouldn't get sold in quick commerce. I think what would get sold is a school shoe or clogs type of products, these types of products. And also we are trying to -- like you asked about e-commerce and everything, so we are trying to consolidate our business to -- we are putting a special focus on the cost in the e-commerce business also. So we have outsourced the warehousing bit for e-commerce to Ekart because they are more specialized in handling the returns and sending the goods and everything. So a part of our own warehouse space would no longer be required because of this e-commerce.

Mainly, we are converting the fixed cost into variable cost.

Yes. Actually.

Understood, sir. Sir, just a bookkeeping question. Can you please give me volumes for last 2 quarters for Retail and Distribution and ASPs also?

In Retail, we have sold -- for the 9 months, we have sold around 54 lakh pairs. And in Distribution, it is around INR 1.70 crore pairs.

And ASPs?

Abhishek, does that answer your question, sir?

They're just giving me a number. But yes, I have.

In Distribution, it is 96, and in Retail, it is 596 -- 539.

[Operator Instructions]. We take the next question from the line of [ Sahil Vora ] from MS Associate.

So I was just broadly looking at the peers in our company and have noticed that usually for other peers, Q3 seems to be a peak quarter for a couple of them, even Q1, the back-to-school phase, entire thing that is also a good quarter for them. However, when I look at our business since December '21, it's -- a lot of the quarters were usually -- so there's no seasonality, et cetera. Can you just walk me through in there and what is it that I'm missing with the business?

See, our quarter, because we are primarily in the eastern part of the country. So our peak comes during the Puja thing. So this year since the Puja was in the second quarter because we sell to our franchisee also and Puja was in the month of -- in October -- early October, so the maximum sale has happened in the second quarter. But if you see the second quarter number and this quarter number, the number seems to be same because the Distribution business in third quarter has done more compared to the second quarter. So the Retail business has done more in second quarter. So that's why the seasonality you cannot see because we are having both the wholesale and the retail in the same year. But our seasonality mainly depends on Puja. If the Puja is in the early part of October, then it is -- the peak happens in second quarter. And if the Puja is in the later part of October, then we have more sales in the third quarter of the year.

Okay. Understood, sir. And sir, my second question would be that I've seen the presentation mentioning that you've also added retail stores and distributors also. But I think over the 9 months, it does not reflect on the revenue. So I just wanted to understand because you also mentioned earlier in the call, you had to take some pricing discounts also. So I think that may offset the volume and value growth there. But largely to understand when you set up a new store in a Tier 2, Tier 3 city, how long does it take until your throughput increases a desired level and payback happens. So if you can just help me with your store economics and stuff?

In our case, for the -- in the eastern part of the country, our stores breakeven in a year. And while in southern, it takes around 2 years. So mainly, we are opening a store in the eastern part of the country, but the sales volume has not increased because there is no growth in the SSG. And also during this year, we have closed store -- COCO store, which was making losses. So these impacts the total sales -- value-wise sales because the volume has also come down a little bit. And also, we have taken some discounts. So all of them together has reduced the sale value.

Okay. Understood. That was very helpful. My final question is that you mentioned that you're also increasing the store count. Earlier in the call, we also heard you talk about optimizing product mix and introducing new kinds of products. So broadly, if you could help us summarize where does your revenue growth come for the next year? I understand that 9 months have already gone through for this financial year. But FY '26-'27, what are some of the levers at your disposal wherein we can see grow revenue growth coming in for your business?

Mainly since we are reducing the price we are focusing on the volume growth in Retail. And also we are -- some new store will be launched. From there, we'll get some volume growth. And also, we are trying to increase the SSG of the existing stores. So these 3 levers are there for retail...

And one more thing which we are doing in the Retail business now is this -- we are basically some of the franchisees -- Retail constitutes of both franchisee and company-owned outlets. So some of the franchisee, we are a very old franchising brand. Franchisees have -- in the eastern region itself have become very like they are not up to the mark. So we are taking them over and going on a sales on commission basis with them. So in that way, what will happen is our sales revenue could increase there as well because they are not -- some of the franchises which are not performing up to the mark. They are not billing the goods from us as much as they require because of their own issues. So what we are doing is we are going to them. We are telling them, okay, you don't have to buy the product from us. We will take over the operations, we will send you the stock and we'll give you a percentage on sales. So that way we have done a few stores, around 30-odd stores, and we are seeing a good response from that. So that is also one of the levers to increase our sales for '27 and...

FY '26.

'26, yes. '26.

Okay. Sir on Athleisure, I was hoping to hear something on it. Do you feel that becomes a material part of your business 2, 3 years down the line?

Athleisure is there, then Athleisure will become -- accessories is also there, plus 4%, 5% Athleisure will become and then accessories around 10%, accessories is doing well. That also has a lot of scope. And we are also trying to see some of the products which are not doing well, and we'll eliminate those and we'll instead keep those products which are doing well now in the store. So these kind of actions are being taken by the team. Clogs is doing well. We are going to put more of clogs. And if you say, like some old type of chappals are not doing well, we'll try to take that out. So these kind of initiatives we are taking in the stores. So all of these things would ensure growth.

We'll take the next question from the line of [ Ankita Agarwal from MNV Capital ].

So despite we can see that there has been 2.5% of year-on-year growth in revenue in Q3, but profitability seems to be impacted. So could you just provide more details on the key drivers behind the revenue growth and why profitability is not keeping the same pace?

See, the 2.5% growth that we are telling is on total 9 months in the -- this quarter-to-quarter highest quarter, but the thing is that the growth has mainly come in the Distribution business where the margin is less. And in Retail, we have -- in this quarter to earlier quarter, because earlier quarter, the Puja was late in the October. So the margin was high. And this quarter in Retail in December, we have introduced more discounted stock. So that has impacted the margin. And once the margin has impacted and the cost, there is an inflationary pressure on costs, the cost has increased compared to last year this quarter. So both of them taken together have reduced the profit.

Okay. And also as we look ahead to the next quarter and FY '26, so could you just give me some kind of guidance in terms of revenue growth and margin expectations? And also, like what key factors do you believe will drive performance? And how confident are you in achieving those targets given the current market conditions?

See, the current market condition is not good. The macro condition is not good, but still, we are trying to increase the sale through various modes. This year, we have taken a fundamental call on reducing the MRP of our mother brand, Khadim. So we are expecting some volume growth and with the volume growth, we will expect the value sales growth there. We are taking initiatives to reduce the cost wherever possible. So with the increased sales and reduced costs, we'll try to achieve more profit and the drivers are: one is volume, one is the new store addition, one is the -- we are also introducing this...

Commission on sales-based type of stores.

In our franchisee.

In our franchisee.

So these type of activities are taken to increase the sales value. Margin will slightly go down because we are introducing new products with a lower margin. But with the volume increase, and we have seen that the product is successful in the retail, and we expect that FY '26 will be better compared to FY '25.

Yes, we are more confident because we see some hope, we see good hope because now that the discount season is going on, where again, products are available at a lesser price to the customer. So there is traction, you see. And also one more aspect is that, especially our franchise business, which is mainly in the Tier 2, Tier 3 interiors of the country, there because of the past 3 years, the prices were continuously increased. Now when the prices will be reduced which will take effect from end of March and the stocks will come in, what will happen is these franchisees, et cetera, also will be taking up more products than what they used to like one of our -- we have this BO classification of store called branded outlets, which is mainly in the Tier 4 cities. There, we have recovered quite well because they were given many low-value products over the last 1 year. So there we have recovered well. So pricing is one factor, then second factor is underperforming stores, we are taking over and doing this commission on sales sort of a model that is another factor. Then there is, again, apart from that, we have -- we are focusing on all the trending products like clogs or open -- in open ladies footwear we are -- we have the sub-brands called Cleo and Khadim, where the prices have increased a bit too much now. In the Cleo fashion type of ladies chappal when will be available in the pricing that is affordable by the consumer, it will be a good thing for the consumer, they'll be able to buy from us more than what they used to before -- over the last 3 years, what they used to.

Ladies and gentlemen, in the interest of time, we will take the last question from the line of [ Ankit Shah ], an individual investor.

Sir, one was on the demerger. So what is the status by when do we expect the order to be received?

Demerger is pending before the NCLT for final orders. So the dates are -- within February, we will get -- the dates will be on 21st February. But what is happening, the NCLT is tied up with so much pressure that the thing is not coming up in when it is -- hearing is going on. So -- but we expect that within February, we'll get the order and by next financial year, 1st April, the demerger will be effective.

And the trading will start for the new business distribution by April 1st.

It will take another 2 months' time to the shares of the demerged entity to be listed.

No. So has the court reserved order or they've not yet reserved the order?

No, no, they have not reserved. Once the order is reserved, then suppose we get the order in March, then the demerger will be effective from 1st April. So it will take around 14 days for the order to come from reserve to getting the order in hand.

Okay. And you're expecting the reserve of order happening in Feb itself?

Yes.

And the other question was when I compare the margins of your Retail business, which is roughly 16.5% for the 9 months, it is very low as compared to, say, Metro, which is at 30%, 32% and Bata, which is at 20% to 23%. So what is the key reason for that?

Our margin comprised of our EBO margin, which is lower compared to the COCO margin because they are in Metro and the franchisee business is comparatively lower than us. And they operate in a higher gross margin than us. So that 2 -- these 2 factors reduces our EBITDA margin. Another is the economies of scale. They are operating at a INR 3,000 crores sales, Bata. So their economies of scale will be higher compared to us.

What is our COCO EBITDA margin?

COCO EBITDA margin is around 22% to 25%.

I mean because of dropping, sales have reduced a bit, that's why the EBITDA margins have also dropped a bit. Apart from that, also some other unknown areas where Khadim is not that well known like just Rajasthan or something like that. So those kind of places, we were having shops, but all they were doing is contributing to the EBITDA losses, okay? So we have started taking some calls on such kind of stores. So we are trying to improve the EBITDA margin. It might have dropped for some time.

But that will not be in the level of Metro because Metro...

Yes, it won't be at the level of Metro.

Because Metro will be having a gross margin of around 70%.

Yes. No. But -- so your EBO, the where your accounting works is you build them at...

MRP-led discount.

Which is how much on an average?

Around 30%.

So you lose that 30% straight there, whereas your rent is only -- so that's where you get impacted because rent comes below EBITDA for your COCO.

Yes.

Okay. And Distribution, what is the PBT loss for the 9 months?

It has been provided in our...

That is at the EBITDA level, I'm saying PBT, [indiscernible].

PBT level, [indiscernible] because the finance cost and the depreciation are a combined thing.

As there are no further questions from the participants, I now hand the conference over to Ms. Masoom Rateria from Orient Capital for closing comments.

Thank you, everyone, for joining us on the call today. I would also like to thank the management for sparing time and addressing the questions today. We are Orient Capital, the Investor Relation to Khadim India Limited. For any queries, please feel free to reach out to us. Thank you.

Thank you.

Thank you so much to all. Thank you.

Thank you, members of the management. On behalf of Khadim India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.