Raymond Limited (RAYMOND) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Raymond Limited Q4 FY '21 Earnings Conference Call, hosted by Antique Stock Broking Ltd. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijeet Kundu from Antique Stockbroking. Thank you, and over to you, sir.

On behalf of Antique Stock Broking, I would like to welcome all the participants in the Q4 FY '21 earnings call of Raymond Limited. I have with me Mr. J. Mukund, who is the Head of Investor Relations of Raymond Limited. Without taking further time, I would like to hand over the call to Mr. Mukund. Over to Mukund.

Thank you, Abhijeet. Good evening, everyone, and thank you for joining us for Q4 FY '21 earnings conference call of Raymond Limited. I hope all of you would have received a copy of our results presentation. I would like to urge you to go through this along with the disclaimer slides. Today, we have with us Mr. Amit Agarwal, Group CFO; Mr. Joe Kuruvilla, CEO of Lifestyle Business; Mr. Ganesh Kumar, Chief Operating Officer, Life Business; and Mr. S.L. Pokharna, President, Commercial. I will now hand over the call to our group CFO, Amit Agarwal, who will give you the summary of our company's quarter performance before we open up the floor for Q&A session. Over to you, Amit.

Thank you, Mukund. Good evening, ladies and gentlemen. These are testing times, and I hope you and your near and dear ones are safe. Thank you for joining us today on this earnings call to discuss our results for the fourth quarter of fiscal 2021. Let me give you an overview of the market. During the quarter, we witnessed improvement in consumer sentiment with recovery in the economy, opening up of the job market and pan-India vaccination drive, alleviating fears among consumer to step out and drove the consumer demand. Sentiments were consistently improving in the month of January and February, leading to stronger sales. Furthermore, extended EOSS, coupled with further -- multiple promotional offers, supported the recovery. The marriage demand foreseen from upcoming wedding season in quarter 1 of financial year '21, '22, supported the sequential recovery. We witnessed continued higher recovery levels in retail network in lower-tier 3 to 6 markets as compared to metros and Tier 1 towns. Increase in disposable income among farmers due to higher agriculture output and supportive measures and policies by the government helps this cause. Economic recovery had been encouraging, and with the unlocking the consumer sentiment recovered well in the second half of the year. Before moving to the quarterly financial performance, let me give you brief highlights of the full year of fiscal 2021. The financial year gone by 2021 has been an unprecedented and -- for the sector as well as for the company. During this period, the company showed resilience and agility and focus on cost rationalization and effective working capital management to maintain liquidity. The key financial performance highlights for the whole year was: consolidated revenue for fiscal '21 stood at INR 3,648 crore compared to INR 6,578 crore in the previous year; operating costs stood at INR 1,320 crores, which reflects in reduction of INR 887 crore, which is 40% lower as compared to fiscal '20. This reduction is higher than our stated guidance of lower operating costs by 30% to 33%. As the lockdowns continued in first half of this year and recovery has been witnessed only in the second half, we were able to align fixed costs according to recovery level of the business, and the variable cost has been in line with the sales. Pandemic significantly impacted the revenues during the first half and with the unlocking, our sales recovered almost 3x in second half of the year as compared to the first half. We reported EBITDA of INR 135 crores in fiscal '21 compared to INR 612 crores in the previous year. Due to lower sales in H1, we incurred an EBITDA loss of INR 218 crores and were able to improve by INR 570 crores during second half of the year by achieving EBITDA in H2 of INR 353 crores. Let me talk about the net working capital, which reduced by INR 738 crores from INR 1,855 crores in March '20 to INR 1,117 crore in March '21 by focused approach on collection and reducing inventory. We generated operating cash flow of INR 702 crores and free cash flow of INR 417 crore during the year. The cost rationalization efforts and effective working capital management helped to reduce net debt by 24%, which is INR 443 crores from INR 1,859 crore in March '20 to INR 1,416 crore in March '21. Moving on to the key financial highlights of the quarter. Fourth quarter '21 revenue grew by 9% over the previous year from INR 1,291 crore to INR 1,407 crore. Growth was led by recovery in core business of branded textile and continued profitable growth momentum in engineering and real estate businesses. On a sequential quarter-on-quarter basis, the top line has grown by 9% from INR 1,286 crores in third quarter of fiscal '21 to INR 1,407 crores in fourth quarter fiscal '21. The cost rationalization, along with improved operational efficiency, enabled us to improve the EBITDA margins to 14% versus 0.4% in the previous year. We reported an EBITDA of INR 197 crore with margins of 14%, which has improved sequentially from 12.2% in the third quarter of fiscal '21 as well. We reported a net profit of INR 56 crore for the quarter compared to a net loss of INR 68 crore in the last year. Our continued effort and focus on efficient working capital management led to a further reduction in net working capital by INR 73 crore compared to December levels. Improved profitability, along with relief from working capital management, helped us to reduce the net debt by INR 167 crores during the fourth quarter of this fiscal. Now let me elaborate on each of the points mentioned above. Revenue witnessed growth of 9% over previous year. The core business of Branded Textile segment grew by 24%, led by strong pick up in primary sales from upcoming wedding season, and Branded Apparel segment saw improvement in recovery led by extended end of season sale and marriage demand. In Garmenting business, the recovery was lower due to continued lockdown in our core markets in EU and U.S. but partly offset due to bulk business. Our engineering businesses continued strong profitable growth momentum with tools and hardware having strong growth of 53% over previous year and also components also having a strong 46% growth over the previous year. We reported an EBITDA of INR 197 crore with margins of 14%, driven by maintaining gross margin similar to previous year level and our continued effort on the cost rationalization through various cost control measures in the areas of sales, marketing, manpower, rental and others coupled with operating leverage. In the fourth quarter, our operating cost OpEx was at INR 408 crores, which is 26% lower on year-on-year basis. Despite revenue growth of 9%, our cost -- fixed costs has been lower as compared to previous year's levels, while variable cost has been in line with the sales, mainly due to controlled advertisement and sales promotion spend. Additionally, the rent cost savings for the full year is to the tune of INR 80 crores at about 43% of the previous year level. This has been achieved through adoption of a collaborative approach with landlords, mainly through combination of rent waivers during lockdown as well as de-aligning the rental. Also, as already stated, our store rationalization is in progress to make retail portfolio healthy. Net store closure is 73 for the fourth quarter of fiscal '22 -- '21 and 152 for fiscal '21, taking retail network to INR 1,486 crore as on 31st of March 2021. With these cost reduction initiatives, we achieved cost reduction of 40% in fiscal '21 and managed to perform better from the guidance given to reduce the full year OpEx by 32%, 33% versus previous year. Thirdly, during the current pandemic times, healthier liquidity is essential for the business, and we have been able to maintain over INR 600 crores to INR 650 crores of cash and cash equivalents throughout the period, while reducing the debt at the same point of time. The company continued its focus on cost reduction and working capital management, which resulted in positive free cash flow and a positive operating cash flow during the year. With reduction in inventory and strong collections during the quarter, net working capital stood at INR 1,117 crores, which is INR 73 crores lower as compared to December and lower by INR 738 crore as compared to March '20. Our operating cash flow was INR 702 crores, and free cash flow was INR 417 crores for the full year 2021. This above initiative of cost rationalization, focused working capital management and maintaining healthy liquidity, it has helped to reduce our net debt levels for the fourth consecutive quarter in the pandemic year. Our gross debt was lower at INR 2,076 crores vis-à-vis INR 2,191 crores as at end of September 2020 and INR 2,430 crores as at end of March 2020. Also, our net debt levels in March 2021 stood lower at INR 1,416 crore compared to INR 1,583 crore in December 2020 and INR 1,859 crore in March 2020. Through effective refinancing, the proportion of long-term debt as a percentage of net debt has increased to 80% in March 2021 compared to 20% in March '20. We were also able to reduce the average interest rate from 8.54% in December '20 to 8.34% in March 2021. The company has maintained a strong focus on deleveraging and demonstrated a net debt reduction of over INR 1,000 crores over the last 6 quarters. This reduction has been achieved mainly through internal cash accruals, proceeds of land sales, which was done in the third quarter of fiscal '20. Now let me talk about various segments in detail. Branded Textile segment grew by 24% in the fourth quarter, led by pickup in primary sales on account of higher number of wedding days foreseen in the April-June quarter of current financial year fiscal '22. Suitings business grew by 24%, led by higher volumes in wholesale and trade channels and increased offtake of gifting solutions introduced at higher price points. Additionally, the secondary sales in our pan-India 600-plus town spread TRS network also showed significant improvement with recovery clocking to 89% in the fourth quarter vis-à-vis 77% in sequential third quarter. From domestic market point of view, there are strong volume growth due to good primary sales and lower rate in previous year. Our B2C shirtings grew by 40% over previous year, led by higher volumes in wholesale channel. However, in exports, the recovery rate was still lower due to slower opening of U.S. and European markets as retail sector remained impacted due to pandemic. At the segment level, the EBITDA margin is at 22.6%, led by improved operational efficiencies and cost optimization initiatives. Branded Apparel witnessed recovery at 60% over the previous year level. We have been prudent on our primary sales to channel partners in MBO and TRS networks to ensure adequate inventory in the supply chain. We have been supporting them in liquidating the inventory and speeding up their collections as well. From secondary sales perspective, we witnessed pickup due to higher walk-ins compared to previous quarters, along with improved recovery in high street stores and in-stores in lower tier towns. Overall, from a margin perspective, the segment reported an EBITDA loss of INR 19 crores. While we have been able to bring in OpEx cost reduction, however, the EBITDA margin was lower on account of higher discounting and extended end of season sales period and weaker recovery in sales. Now let me talk about our retail network. As on 31st of March 2021, we had 1,486 stores spread across 600 towns. All the operational stores are compliant with stringent safety guidelines, including contactless payments. As already explained, while we are strongly focused on making our EBO portfolio healthy, at the same time, we are continuously evaluating opportunities where we can improve our retail store footprint. Accordingly, during the quarter, Raymond added 7 stores mainly in metros and lower-tier towns. On net basis, it closed 73 stores. In terms of the Garmenting segment, where the sales stood at INR 126 crores, which witnessed a recovery at 69% level, led by recovery in bulk business due to slowly -- slow opening up of global economy. Our main markets, both Europe and U.S. were facing severe impact of COVID in Q4 and therefore, unable to accept deliveries during the quarter. Also, revenue includes contribution from PPE sales as well. The EBITDA margin for the quarter was negative to the tune of 2.3% due to lower sales. High-Value Cotton Shirting segment sales stood at INR 133 crores, grew by 12%, mainly led by improvement in fabric performance due to gradual pickup in demand in domestic and export markets and higher contribution of yarn sale. EBITDA margin for the quarter improved to 14.7% vis-à-vis 7% in previous year, mainly due to better sales and cost efficiency. Tools and Hardware segment sales stood at INR 120 crore, growth of 53% versus previous year levels, led by growth across product categories in domestic markets and well supported by exports in key markets of LatAm, Europe and Africa. EBITDA margin also improved to 18.5%, led by higher sales and better operating leverage. Auto Component sales stood at INR 69 crores, reported growth of 46% over previous year, led by strong growth in domestic as well as export market. EBITDA margin also improved to 21.3%, mainly led by improved plant utilization levels and operational efficiency. Real Estate business continued to maintain a growth trajectory with one of the strongest quarterly bookings in the fourth quarter since the launch of the project, driven by consumer incentives such as the stamp duty reduction and low home loan interest rates. Additionally, factors such as product augmentation by introducing a new product with balcony, launch of 2 new towers in third quarter and aggressive marketing campaign has helped improve sales momentum in the quarter. Overall, we have received 214 bookings in the fourth quarter, resulting in a total of 1,387 bookings, which is over 60% of our total launched inventory of 2,350 is sold till May '21 with a booking value of INR 203 crore. Overall, our affordable project located in prime location in Thane with unparalleled connectivity has received about 400 bookings in H2. Our construction continues to be on full swing. And currently, the status, as we speak today, is on 38 floor slabs completed completed for tower 1, 2 and 3, and 20th floor work in progress for tower 4, while for tower 5, 6, 7, 8, ground floor work is in progress, tower 9, the excavation is completed, and tower 10 excavation is in progress. Let me now update you about the demerger process. Demerger has been an important step for the group. We have received approval from stock exchanges and already filed application with NCLT. Due to COVID pandemic and related lockdowns, the entire business environment and processes, including regulatory approvals, has been impacted due to temporary closure of business offices and government departments. We expect the overall process to be completed in the current financial year that is fiscal '22. As and when we have a meaningful update, we will inform accordingly. Now let me talk about the current status of the operations and the near-term outlook. Consumer sentiments are impacted due to resurgence of COVID pandemic and related imposition of local lockdowns, weekend curfew, store timing restrictions, night curfew impacting our business. We are taking all precautions both in stores as well as in our manufacturing plants by providing utmost safety and following highest level of sanitization norms. All local lockdown guidelines are being strictly followed. For our Branded Textile segment, we had launched wedding campaign in April, supporting the improved pickup in primary sales on account of a good wedding season in the first quarter of fiscal 2022. However, with the exponential rise in COVID-19 cases and restrictions in social gatherings and weddings in [indiscernible], the secondary sales have been impacted in the month of April. Additionally, digital and online sales are also impacted as the delivery of only essential items is permitted in certain lockdown-impacted cities and towns. Currently, almost 30%, that is 380 stores out of 1,350 stores, are operational as we speak today. From an export perspective, with the rollout of COVID vaccines, large fiscal stimulus packages by various comments, gradual reopening of global economy and catch-up of demand, we are witnessing international retailers gearing up to stock and also, we are getting a lot of inquiries and orders. As far as our engineering business is concerned, Tools and Hardware and Auto Components are witnessing stable demand and healthy order book. Construction activity in our real estate business is in full swing and is in compliance with all the relevant guidelines. Overall, our project is going very well, and we are confident of delivering the project on time. With calls to optimization measures already undertaken, coupled with our focused working capital management, we expect to maintain adequate liquidity. Overall, as the pandemic situation is being addressed nationally, with vaccination gaining pace, we expect business to regain momentum in due course of time. There have been learnings from the first lockdown, and we believe as an organization today, we are far more resilient to handle a similar situation better. Thank you very much. Now we will take questions, please. Operator?

[Operator Instructions] The first question is from the line of Umang Shah from Edelweiss.

Sir, I had 3 questions mainly. First of all, I wanted to understand this quarter, what is our expenses for advertisement, specifically online advertisement? And also, if you can give a split of the online sales that we have on?

So you had 3 questions. So one is in advertisement, the second one you said about the split on the online. What about third one?

Sir, the first question is related to online expenses and revenue that we have earned, if you can give that split?

First, look, for us, I think what is important is to see that we all know very well that as far as the online sales is concerned, it is in the apparel side. On the Fabric side, the market is not so tuned to buy the apparels online in terms of the Fabric segment. So as far as in the apparel side, we have been progressing, and our philosophy is more ongoing towards the omnichannel presence. And in that omnichannel presence, our thought process is to display the inventory in a particular store. So the national -- nationwide inventory is displayed to the person who comes to our stores. And we have been progressively achieving an improvement in the online sales. Though it is a smaller percentage, but I think it is close to 17% to 18% of our revenue in the apparel segment, and that is the revenue which we recognize. As far as expenditure is concerned, it is not so significant because it is the normal expenditure which we incur for any part of our advertisement. We have moved to [lock 2] the digital advertisement. And now I will ask Joe to add a little bit more.

Yes. Can you hear me, guys?

Yes, we can.

Yes. So I think if you're referring to quarter 4, I think it's continued the momentum on online. And I think as Mr. Amit said that it's a big priority for us, especially on the apparel side, looking at, as we said, 18% of the revenue going, which was much smaller before the pandemic. So clearly, pandemic has really got the market to shift a lot more online, and we are out there to capture that massive opportunity. But the way we look at this is that we have a very strong infrastructure of 1,500 stores in the brick-and-mortar. We believe that the future is going to be omnichannel, and we're absolutely ready for that future where we give the consumers the advantage of basically buying online, but be able to pick it up from our stores, which I think will be the future going forward.

Okay. So just to understand the business going forward. As of now, that we are investing in online structure for apparel at least. If I look at -- if I ignore FY '20, but I look at FY '19, from our apparel, it was somewhere close to INR 1,500 crore worth of revenue. So do we think that the additional revenue from online sales of 17% to 18% of the current run rate would be the additional going forward? Or it will be a shift and our revenue might stay at a similar level?

Yes. So look, as far as the revenue is concerned, we have to take it through objectively. Because the consumption, which has been there, it will continue to grow, but the impact of pandemic has taken its toll. So we believe that there will be some shift in the channels. And what we have seen in the revenue, there were certain channels where we were not been able to generate so much making a profitable growth. Now our big focus will be to consider and grow more on a focused profitable channel. And maybe I can ask Mr. Pokharna because he will tell you that we have closed certain EBO stores, and we have asked our TRS channels, which has been the strongest network for Raymond, to pick up the sales which we lose out in some of the EBOs, which are closed down, which were not very profitable, and also to reduce some of the sales from the [indiscernible]. Mr. Pokharna, maybe you would like to add something. Maybe his line is not good.

[Operator Instructions]

No problem.

Sorry, Amit, you can repeat the question, please?

Pokharna Ji, the question is basically to understand how the revenue between the shift from an off-line channel to online channel will enhance the sales which we have delivered the revenue of -- to the tune of INR 1,500 crores in the FY '20?

FY '22?

FY '19.

Yes. You are saying FY '19, right?

Right. Yes.

Yes. So one is like on online channel, we got almost about 23% sales, which has moved from -- which was the additional sale. And then as far as high streets are concerned, we are having about 1,038 TRSs and about 400 stores of EBOs, with very strong sales deliver for us. Apart from this, we also have -- using about 100 MBOs in the country, which are prominently placed across the country. So those channels have delivered the revenue to us.

Okay. Okay. So we can say the online sales has been the additional sales?

Yes, online channels are additional sales. A little bit shift might take this, but online channel is growing fast and we are additional revenues are being generated out of it.

Okay, sir. Okay. And sir, my second question, for the demerger, sir I couldn't really understand the reasons. So are we saying that from Raymond and the filing of -- so NCLT filing has happened, but the further procedures are not taking place? Or is it the NCLT is not working, something of that sort?

So we have filed the application with the NCLT. And because of these lockdowns and the government offices, the approvals have not happened. And now what we are expecting is the overall process to be completed in this fiscal year. And once it gets done, we will be completing the process in this fiscal year.

Okay. Because -- sorry, sir, just to dwell on this, because we have seen other companies who have literally achieved their demerger approvals, and they have finished and they have listed with the secondary dealers also. So I wanted to understand specifically is it because of NCLT Mumbai or is it Raymond couldn't solve the required documents with NCLT or something of that sort?

No, no, it is neutral process. The process is on as we continue to work with the authorities. It is a process which will take its time. And that's why we are contemplating to complete in this fiscal year.

Okay. Sorry, one last question from my end. This quarter also, we have saved some on rent and also something on advertisement. So do you think -- do you foresee that in FY -- coming years, that is 2 to 3 years down the line, this saving will continue and these will continue to yield the EBITDA margin that we have gained in quarter 4? Because this is probably handsome margins that we have seen with the company. So I just wanted to know that.

No, no, basically, if you see if you look at the rationalization of the cost, even in the fourth quarter what has happened is, we have been able to reduce the cost by 26% compared to the FY '20 level. So that is not just the rationalization on the advertisement and spend, but -- and also on the rental because in the fourth quarter, most of our stores were operational and the rentals were coming back to the normal level. So the rental savings is very, very small in the fourth quarter. As far as the advertisement and the sales promotion spend is concerned, we have a book push going in terms of digital. So the digital advertising will be more and the print and media. However, we are not shying away from advertisement. And you would have seen in the IPL matches, we launched our wedding campaign, which was very well received by the public at large. So I believe that the gross margins and the EBITDA margins in this business, the way we have structured the business and the product mix which we are going through, we will be able to continue to have these kind of margins over the year.

The next question is from the line of Abhishek from Arihant Capital.

I have a question on -- basically on the Real Estate segment. Are you facing some kind of input cost pressure, especially? And have you taken any price hike on the realty segment?

So first of all, we are not facing any kind of a price hike in terms of the input. There is a steel, which if you see, it is a general that the steel prices have increased, which everybody has -- okay. However, we have been -- because of the attractiveness and the location of the project, we have been able to marginally increase the price of our products. And considering the overall project, which is amenities and the location, we command a decent premium in the Thane market. And Pokharna, do you want to add something on this?

Yes. I would like to. Yes. It's a very good question, you raised it. In Real Estate market, for last quarter, I mean, you pointed out, was a phenomenal growth with respect to Raymond. Apart from this, I would like to put forward that in front of our projects, there are other projects going on, which have just completed 1 floor or 2 floor, while our construction speed is so good that we have completed 39 floors in 3 towers and 20 and 4 and 10, so in 10 towers, the customers are extremely happy with the progress. And that's why, despite lockdown in April and in May, we got about 13 bookings. And the response is very good. As far as [indiscernible] is concerned, people are perceiving that, yes, corporatization of real estate is helping and because of a lifestyle company like Raymond is getting into the lifestyle of real estate also. So a good home lifestyle product is being developed, which has been appreciated by everybody. So a very good response, a good teamwork and a strong growth is perceived in this sector.

Sir, I have one more question. How the things are shaping up in Tier 3 and Tier 4, especially in the smaller cities right now vis-à-vis last pandemic? So last time, the recovery was relatively faster. Do you see -- because this time the number of deaths are higher and there has been some kind of there. So do you see any change in the recovery if it's going to happen?

Joe?

Yes, I think you're right. I think we did see in the last year, the Tier 4 to 6, as Amit also mentioned, we clearly saw a much more faster recovery compared to our top tiers. I think it's a bit early for me to comment on it. At this point of time, obviously, it looks like the spread has been even beyond some of the metros, et cetera. So I think in that sense, it's a bit early. But at this point of time, I would say that typically, the recovery that we see is typically much more faster in the lower tier than in upper tier just because of the stringent lockdowns, which coming.

One last question you can ask.

Amit, with your permission, I would just like to add one more thing. A lot of money has been pumped in by government whereas -- either central government or state government into rural economy. And that reflection is being helped by us in third quarter. And I feel once the lockdown is up, a lot of spend will come in the product category in which we are. So we are anticipating a good sale in Tier 3, 4 and 5 terms now because people are flushed with money, whether it has been spent by government or agriculture crops were very good during this period.

So I think the weather forecast is good. The monsoon is normal. So we are assuming that the recovery in the rural area would be definitely much better like the last year.

Okay. Sir, last question, if you can add. We are talking about now the U.S. and Europe is opening up right now. So do you see any pickup in order book right now, whatever your interactions are there right now? And second thing, can you throw some light on China plus also if something happening at that end also?

Yes. Sure. No, I think we have seen a very good improvement in terms of the order book coming from -- especially from the U.S. retailer. And obviously, there is a shift a little bit, if you can say, because everybody wants to have one more competition coming by the side of the China. And that is why there is a little preference coming for India. And maybe I'll ask Ganesh who looks after the Garmenting business as well can comment on the further inflows.

Yes. So what we are seeing is, point number one, customers are definitely wanting to derisk their single supply source strategy, and they are looking at a reliable strategic partner. And we are having discussions with a few customers, both in Europe and U.S. to emerge, and we have been successful in a couple of cases. That's point number one. Second is, with respect to order book, what has happened over the last 1 year is there is a lot of inventory which has been consumed in the international space, and especially in the U.S. All the retailers have reduced their inventory. And now they are also seeing a further surge in demand, and I was in a conversation with a customer yesterday. They are seeing increased improvement in full price sales for them as compared to the discounted sales, which are a majority ratio. So, so far, we are seeing the reflection in our order book for future during H1, and we are very positive that this can convert into a good quarter and half year.

The next question is from the line of Harsh Shah from Dimensional Securities.

Number one, sir...

Sorry, we can't hear you very well.

Can you hear me now?

Yes, yes.

Sir, my question was on the inventory and receivable side. So this year, I mean, we can see from the numbers that you have been proactive in keeping the inventory in better level at a lower rate. But are you seeing any early signs of stress in our receivables or maybe any markdowns that you might have to take on inventory because as you said that you were expecting the wedding season to be a good one based on how recovery was happening right through March, but now things fizzling out a bit? Are you seeing any risk there?

So I'll tell you, look, the good part of Raymond as a group is that our dealer franchise network has been in business with us for -- many people have been in business with us for 50 years. So we have seen the large bonding, which ensures that even things go up and down, people are there to pay. There may be a delay here and there by the receivables -- by the customers to pay on time, but there would not be a bad debt. But we don't see any concern on that area. And look, the testimony is that even in the fourth quarter, the sales has been higher, which is close to INR 1,400 crores. And if you see in the fourth quarter, we were able to still reduce our net working capital. So that clearly demonstrates the focus which is being kept on the inventory and the receivable management. Now I just want to add one more thing, that if you see the sales which the company has delivered in the last fiscal year, 2021, and divide it into 2 parts. If you take the first half of the year and the second half of the year, as soon as the markets came back, the unlock has started to happen, we were able to get back the revenues to the tune of 3x. The first half of the revenue was x, then the second half of the revenue is 3x. So that clearly shows that if the market is there, our product will sell, and this is not a perishable. So especially the fabric. If you go to a store of ours, you will see the fabric staying there for 3 years, but it does not lose its value. The -- actually based on our premium pricing, and we keep on increasing the prices in the marketplace, the dealers and the wholesalers keep on benefiting because of the appreciation in prices.

Understood. Understood. And sir, on the Branded Apparel side, so we are yet to see a meaningful recovery there. We are still 40% below the pre-COVID level. So just wanted to get an idea there. I mean, what is the path to sales? I mean, is it our brand is not well taken in the market? Or is the competition too much that they're not able to scale it up? And even on the profitability side, while we have reduced our cash burn but we are still at an EBITDA loss of around 11%, 12%. So just wanted to understand the strategy both on gaining up the business and even the path to profitability.

So if you look at it, we all know the Branded Apparel has primarily in the store in the Tier 1 and Tier 3 cities, which has always witnessed, and we have always mentioned that the recovery in the Tier 1 to Tier 3 city has been slower vis-à-vis the Tier 4 to Tier 6 cities, where the fabric stores are largely present and the apparels are less. Furthermore, we have also seen that we were able to control the supply of fresh merchandise into the market so that adequate inventory levels are there across. Now our focus on the digital and omnichannel service presence will make a major change in the marketplace to improve the sales. Now some recovery you have seen already. But in the recent second wave of COVID, again, it stopped the recovery. Now what is happening? It is the profitability part, which you asked about the question. If I look very specific on the apparel business, in the OpEx cost reduction, we have cut down the cost by almost 50%. And this will enable us to get better margins. Second thing, in terms of the movement of our expenditure on the advertising, sales promotion, we are moving more and more on digital. And we are also considering to bring to 4 to 6 fashion collections in a year instead of 2 collections which we used to have in the past. So that will bring newness in the product as well as lesser inventories. So the churn will be faster, and that will enable us -- because of this, we will have stronger partnerships with the vendors, and the sourcing will become -- give us additional intake margin, and thereby, improving the gross margin. So overall, we have a good path. We are taking down certain channels, which are not the most profitable channels. We will take out some of the unprofitable channels or lower profitability channels and focus on high profitable channels. And this is what I had to say. Mr. Pokharna, you want to add something on the Branded Apparel?

Yes, I would say, there are 2 questions in 2 parts. One, whether our recovery with this competition was lower -- whether our recovery vis-à-vis competition was lower. I would say we have analyzed it in LFS and in other channels, our recovery is not lower, it said better. I mean in Van Heusen and in Aero, the recovery was of 1,600 basis points, we recovered about 2,000 basis points in formal category and about 1,400 basis points in casual category. With regard to your question of inventory control and all, we have also decided to balance the inventory in such a way that we carry non-out-of-stock inventory higher than the booked inventory. So we don't allow the inventory to pile up in the stock, which is not sellable. And as Mr. Amit Ji rightly pointed out, it's non-perishable. So never-out-of-stock inventory is higher in the stock, we keep it and we service. So we are balancing the ratio in such a way that our inventory levels are well within control. And later, of course, has answered rightly. So as far as my view is concerned, we have compared the recovery with respect to our competition. We are no poorer than anyone is said better than other competitions.

Understood. And last question was on the store side. So in TRS, during last 2 quarters, we saw that you were adding margin given net -- on net basis, you were adding stores. But this quarter, we have shut down around -- almost 40 stores in our TRS. So what went wrong? Or what is the strategy there? And also, it would be great if you can give us the breakup between how many of the TRS stores are franchisee-owned and how many are company-owned.

Ganesh Ji, you would like to answer it?

So we have about 1,000-plus TRS stores, out of which 45 is -- 49 is company-owned focus stores and the rest all are franchisee-owned. We had taken some call during the last 1 year due to the pandemic, but that was not based on pandemic. That was based on the earlier performance of the stores, mostly in terms of stores which were not sustainable, profitable over 4, 5 years. Those were the stores which were closed. And you're right, we did close over 50 stores over the full year. But as we move forward, we continue the process of evaluation. The process of adding new stores versus closure of stores which are not profitable is a continuous process. Strategy is that TRS is our strength. It is our core competence. It gives us controlled shopper experience in the market, and we would continue to invest on strengthening that channel.

And the stores which are closed were mostly company-owned or were franchisee-owned?

Both, both mix was there.

In the franchisee, is the call taken by you or the franchise owner takes that call?

So it is a mutual discussion. It is a mutual understanding where the franchisee feels that he may or may not be able to sustain the requirements. So it's something that we take after mutual understanding.

The next question is from the line of Rishikesh Oza from Robo Capital.

Just one question from my side. So on the Real Estate side, what sort of revenue impact can be seen in the next 2 to 3 years?

Yes. So if I look at it, this project is something where we have identified that we are selling close to 3,000 apartments with a revenue close to INR 2,800 crores to INR 2,850 crores. And we -- based on this project, the net profit, which we are going to generate over the next 3 to 4 years would be in the range of INR 750 crore to INR 850 crore. That is the kind of profitability we are seeing in this project.

INR 700 crores to INR 850 crores, that is the profit you said, right?

Yes.

And what kind of revenues you said?

INR 2,850 crore -- INR 2,800 crores to INR 2,850 crores.

The next question is from the line of Asif, an individual investor.

Mr. Amit, the question is regarding the assets allocation in the Real Estate sector. If you see on the pareto basis, around 10% of the total assets are allocated for the Real Estate sector. But whereas the revenue generating by such Real Estate is just 4% of the total revenue. Whereas the Auto segment, where there is just 2% of total assets allocated, and we have almost 5% of revenue generation. Is there any scope of improvement or shift from the Real Estate to the Auto Component in the near future?

I think what is happening is the asset allocation is based on the strength of the fixed assets, which we have invested into every business. However, if you see that land, which is a major asset deployed for the real estate, is on a historical cost basis. So therefore, the value of that land on a market basis is far higher vis-à-vis what you have been sitting on the balance sheet. So this realignment is very, very difficult because it is based on the historical cost basis.

So if it was on a historical part basis, what would be the assets value of your Real Estate segment?

Oh, look, we -- I'll give you one example. We sold 20 acre parcel for INR 700 crores in 2019. And if I consider today, the land parcel, which we are sitting with, is close to INR 100 crores -- sorry, 100 acres. So you can say easily the value of the land is INR 3,500 crores.

The next question is from the line of Dr. Lucky, an individual investor.

My question is like regarding demerger as like one gentleman pointed out, some companies have already obtained. So like our filing system is incomplete or like NCLT is not allowing us to do the filing process? What is the status like? That is a bit unclear. The same thing was told in the last quarter results also. So can we be like a bit clear on this? And...

Yes. Basically, as we mentioned that we are into the process of completing all the formalities with the various regulatory authorities. As then when it gets completed, it will be -- the demerger process will be progressed. And that is why we are saying in this year, in fiscal '22, we are targeting to complete that process.

Okay. My second question is regarding our reality division. So in -- I would like to know what is the progress in revenue we have made in last quarter as we have completed the -- we had started the tower construction work in the last quarter also and this quarter also, we are having some updates on that. So what is the, like, revenue contribution for the large development since last quarter?

No, if I -- as we mentioned, that we have done 214 bookings in the fourth quarter of last year. And if you see the booking value is INR 203 crores. But the Real Estate segment, considering we do the percentage of completion method, that is the basis for the revenue recognition.

[Operator Instructions] The next question is from the line of Abhishek from Arihant Capital.

Sir, just a small query about NCLT part. If there has been further delay from the NCLT, like for -- due to the process right now, would we again go to SEBI for the approval? Or this will continue for the validity of the SEBI approval and exchanges approval remain for how much time?

So the approval is intact. We don't have to go back to SEBI in terms of seeking again the approval.

As there are no further questions, I would now like to hand the conference over to the management for closing comments.

So thank you very much for taking interest in Raymond, and we will talk to all of you next quarter. Stay safe. Stay healthy.

Thank you. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.