Renaissance Global Limited (532923) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Renaissance Global Q4 FY '25 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Snehkumar Purohit from Renaissance Global. Thank you, and over to you, sir.

Good afternoon, everyone, and thank you for joining us on Renaissance Global Q4 and FY '25 Earnings Conference Call. We have with us today Mr. Sumit Shah, Chairman and Global CEO; and Mr. Darshil Shah, Managing Director of the company. We would like to begin the call with a brief opening remarks from the management, following which we will have the forum open for an interactive Q&A session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this is included in the results presentation shared with you earlier. I would now like to invite Mr. Sumit Shah to make his opening remarks.

Thank you, Sneh. Good afternoon, everyone. On behalf of Renaissance Global, I extend a warm welcome, and thank you all for joining us on our earnings conference call for the year ended 31st March 2025. I will begin with a strategic overview of our operational and business performance during the year, following which Darshil will walk you through the financial highlights in detail. We are pleased to report a disciplined financial performance in FY '25, driven by steady performance in our key business segments. Our revenue from continuing operations grew by 6.7% year-over-year to INR 1,988 crores in FY '25, compared to INR 1,863 crores in FY '24. On the profitability front, adjusted EBITDA margin for the year improved to 9.5% from 8.3% in FY '24. We took some bold measures during FY '25 to position the business for long-term profitable growth. To grow our branded business, we made a strategic investment in Jean Dousset Jewelry LLC, a renowned U.S.-based jewelry designer known for bespoke lab-grown diamonds and leadership in bridal jewelry. Jean Dousset operates through its flagship store in Hollywood, supported by a strong digital presence. Leveraging our existing B2B distribution network and retail partnerships, we are well positioned to drive the brand's next phase of growth. To enhance our operational efficiency, we launched a cost optimization program towards the end of Q2. This initiative projected to deliver annual savings of INR 40 crores to INR 50 crores, were a major initiative during the company to improve operating margins going forward for the company. A major strategic decision under this program was the rationalization of excess capacity through closure of our Bhavnagar facility. The closure of the Bhavnagar facility will result in an annual savings of INR 20 crores in itself. During the quarter, we incurred an expense of INR 3 crores related to the acquisition of Jean Dousset and some strategic cost rationalizations related to the acquisitions during this quarter. We also bolstered our overall liquidity by raising INR 163 crores through a preferential issue during the year. Our financial position remains strong. As of 31st March 2025, net debt declined to INR 250 crores, down from INR 319 crores a year earlier. The net debt to equity stood at 0.18 compared to 0.28, 1 year ago, reflecting our disciplined approach to deleveraging. Our cash and bank balances, along with current investments stood at a healthy INR 265 crores. We anticipate further debt reduction during the course of the current year. During this year, we plan to increase the physical footprint of Jean Dousset as it's an omnichannel business that has tremendous potential going forward by opening a flagship location in New York City in Q3 of the current financial year. During the current year, we also launched Wonder Fine Jewelry, our new umbrella brand encompassing Star Wars, Disney Jewels and Marvel. We aim to expand this platform by integrating all of our IP-led brands onto one platform, thereby optimizing efficiency and driving deeper engagement with our global fan communities. Looking ahead, we remain cautiously optimistic. We expect FY '26 to begin on a soft note due to the economic uncertainty created by U.S. trade tariffs. However, our strategic foundation is very strong with our deep product design expertise, global distribution network and digitally integrated brand portfolio, we are confident in our ability to weather near-term volatility and capture long-term value. Our focus remains clear. Scaling our high-margin Direct-to-Consumer segment, strengthening own brands and expanding our global footprint. With that, I hand over the call to Darshil, who will provide you a detailed breakdown of our financial performance.

Thank you, Sumit. Good day, everyone. We have reported a steady performance during the quarter, driven by robust performance in our key segments. In Q4 of FY '25, our revenue from continuing operations grew by 7% to close at INR 514 crores, compared to INR 480 crores during Q4 of FY '24. Of the INR 514 crores, INR 55 crores was contributed by Owned Brands, which was up 14% year-on-year, compared to INR 48 crores last year. INR 50 crores of this was from our U.S. brands, delivering a robust growth of 18% year-on-year. Our Licensed Brands segment delivered a growth of 29%, reaching INR 84 crores in revenues during the quarter. This growth was driven by a steady and healthy flow of orders from both our retail partners and direct-to-consumer channels, with EBITDA margins of 13.4%. Customer Brands contributed to the balance INR 375 crores in revenue for the quarter with an EBITDA margin of 8.2%. Adjusted PAT for Q4 FY '25 stood at INR 23 crores, marking a 7.4% year-on-year growth, compared to INR 21 crores in Q4 FY '24, with margins expanding to 4.4% from 3.9% in Q4 FY '24. For FY '25, our revenues from continuing operations grew from INR 1,863 crores to INR 1,988 crores, which is a 6.7% growth. EBITDA adjusted for discounted operations, onetime restructuring costs and acquisition-related costs grew 24%, from INR 154 crores last year to INR 191 crores for FY '25. Adjusted EBITDA margins stood at 9.6%, up from 8.3% for FY '24, reflecting enhanced operational efficiencies and disciplined cost management. For FY '25, adjusted PAT increased 21.5% to INR 89 crores, up from INR 74 crores in the same period last year, with margins improving from 4.3% -- to 4.3% from 3.5%. Lastly, regarding our balance sheet, we remain focused on strengthening our financial position. Our net debt-to-equity ratio improved to 0.18 in March '25, compared to 0.28 for the same period last year. Our total net debt stands at INR 251 crores for the period, down from INR 319 crores in FY '24, demonstrating our focus on financial discipline. Furthermore, we anticipate a further reduction in gross debt by 31st March 2026. Our cash and bank balances, along with current investments remained strong at INR 265 crores, marking an increase of INR 75 crores from March 31, 2024. In conclusion, we are encouraged by our resilient performance despite a challenging and evolving macro environment, backed by a strong balance sheet, continued operational discipline and focused strategic execution, we believe we are well positioned to drive sustained long-term growth. [Technical Difficulty]

Mr. Darshil, is your remarks -- we are unable to hear you, sir.

Yes. So that was all on the financial numbers. Back to Sumit for closing remarks.

Yes. I think we can start the Q&A session.

[Operator Instructions] The first question is from the line of [ Kamal Choudhary ], an individual investor.

[indiscernible] in financial year '25 and '26. And is the management is still committed to achieving a net debt-free status...

Mr. Kamal Choudhary, we are sorry, but we are unable to hear you, sir.

Hello? Now, could you hear?

Yes.

Could you provide an estimate of the interest outflow expected in financial year 2025, '26? And is the management still committed to achieving a net debt-free status by the end of the debt -- fiscal year?

I think as of right now, I don't have an accurate number on the exact interest cost during the year. Costs would be meaningfully lower than what they were last year because we've reduced debt numbers, interest costs are a little bit lower. So we are committed to sort of working towards zero net debt. Whether we zero net debt by FY '26 or '27, can't really commit on that, but we are clearly working towards that goal of getting to a net debt zero status and business. So the focus is not singular on balance sheet, but the focus is on increasing profitability, maintaining a prudent balance sheet, which derisks the balance sheet.

[Operator Instructions] The next question is from the line of Diwakar Rana from Prudent Equity.

So my first question is on the tariff front. So if I'm not wrong, the U.S. puts around 2% tariff on our diamonds and gold product. So let's assume they come out with a higher number, maybe 15%, 20%. So how are we positioned to cater to our key market U.S.A., post the tariff imposition?

So just to sort of clarify, the U.S. has imposed an additional 10% tariff on jewelry from all countries, except China. China is obviously higher. So as of right now, there is an additional 10% tariff, which has been applied. We are working with all of our customers to pass on the tariffs to them. Since a lot of our customers are domestic customers, contractually, there was a period of time where we were unable to pass on the increased tariffs for a 2-month period. As of right now, most customers have agreed to pay the tariffs, and we plan to pass on the tariff increase to them. However, in the short run, for a 45- to a 60-day period, there is an impact on the P&L due to the tariffs that were imposed, as it took us about 2 months to negotiate and agree with customers to pass on the tariffs.

Okay. So what was the impact in the revenue terms for the 2 months that you said? Can you give any number?

There would not be a meaningful impact to revenue, but there would be an impact for the 60-day period on the bottom line because there were tariffs paid, which were not realized from the customers.

Okay. Sir, I think we will have one more option. Let's say, if the U.S. decided to put around 15%, 20% reciprocal tariff on India. So we also have one subsidiary in UAE. So can we export our goods from there, UAE to U.S.A., not from India? So I think from there, we can bypass the tariff if that happens?

So I think there are obviously rules around country of origin. And we have -- we do have a backup plan in terms of manufacturing goods in the UAE. So there are rules around what classifies as country of origin. And if the reciprocal tariffs do come into effect, we will activate that option at a certain point. As of right now, it's a backup plan depending on how things play out.

Okay. Okay. And sir, one question on the restructuring expense. So in the last con call, you alluded that we have done with all the restructuring expense. But this quarter also, we have done around INR 3.5 crore expense. So by when do you think this expense will be completely eliminated?

So I think that this quarter, the expense that was incurred was related to the acquisition. I think that these were basically costs related to legal expenses as well as severance expenses related to the acquisition of Jean Dousset. These expenses were not related to restructuring expenses or cost control -- cost reduction expenses. We -- post our conference call last year, we had decided to reduce the number of employees in our Bhavnagar unit. And subsequent to that, we have decided to shut down the Bhavnagar manufacturing unit completely. So there will be onetime severance costs related to shutdown of Bhavnagar that will come in Q1 of '26. And I think that as far as we can tell now, we are done with all of the restructuring expenses, and we don't plan to have any more further acquisitions. So I think that Q4 and Q1 will be the last quarters where there will be some restructuring exercises. I think the shutdown of the Bhavnagar unit decision happened post the last call because of which there will be one more quarter of shutdown expenses. And I think there will be far more synergies that come out of now manufacturing in a single location in Mumbai, as compared to running multiple locations. So doing the cost benefit analysis, we decided that even though there is a short-term expense related to doing this, it was worthwhile to make that decision.

Just one clarification, sir. So you said some expense will come in Q1 also? Or -- I just want to clarify.

Yes, that's right. In Q1 of '26, on April 15, we shut down our Bhavnagar facility entirely. So there will be some expense in Q1 of '26 as well.

Okay. So sir, how much revenue have we lost from all these restructuring activities that we have done? Total revenue?

No, we wouldn't -- we don't anticipate reduction in revenue. So I think that structurally, as we move to a more higher value-added product because of direct-to-consumer, higher average order value and shift towards lab-grown diamonds, the fundamental need for our company in terms of production capacity has gone down because our average order value has increased meaningfully. So we don't anticipate any reduction in revenue. It is more a reduction in costs that we are seeing, and we don't anticipate any loss of revenue from any of these activities.

Okay. So I believe the total cost saving will be around INR 65 crores post this Bhavnagar discontinuation, right? Earlier, we were guiding around INR 40 crores to INR 50 crores? Now this is -- this will save around INR 15 crores, this facility? So around INR 65 crores, right?

I would say that INR 50 crores to INR 60 crores is a good estimate of cost savings that we would incur.

Okay. So one last question, sir, we have close to INR 100 crores investment and same cash in our balance sheet. So do you have any plans for growth to grow the top line? We know post the restructuring, we will be growing our bottom line, but any plans for top line growth you have?

Yes, yes. Yes. So I think that clearly, within our 3 segments, we anticipate that we will grow our top line in our Direct-to-Consumer segment by 40% to 50% in the current year. Because as you know, we completed the acquisition of Jean Dousset only at the end of last quarter. So the numbers are -- the top line numbers are not in it. So in addition to any organic growth, our Direct-to-Consumer business is expected to grow significantly in this quarter. And the same is the case with the Licensed Brands. The Customer Brands segment, I think, would be kind of low growth, but we fully anticipate that we would grow our top line in FY '26 as well.

Okay. So sir, have you ever discussed giving out a dividend or doing a buyback within the Board?

Yes. So we -- I think that currently, the Board has discussed getting to zero net debt in the next couple of years, post which we could do a buyback or a dividend. So I think that the objective of getting to a zero net debt over the next 12 to 24 months is something that we are focused on today, post which, capital return to shareholders will definitely become a priority.

[Operator Instructions] The next question is from the line of Shrenik Shah from [ AIPL ].

This is Shrenik Shah. I have 2 questions. One is, any extra revenue from the real estate, the land building in Bhavnagar unit, which has been shut down? I assume the land and building was owned by the company. I may be wrong, but you may give more clarification on that. Any extra revenue is expected? And the second question is, would you be able to give some brief idea about what are your plans in India for expanding retail sales?

So yes, as we mentioned, the Bhavnagar unit has been shut down. I think there will be a process of debonding with customs and clearing all of the inventory over the next 3 to 6 months, post which we will put that piece of land on the market and sell. As of right now, we don't have a clear idea as to whether we will realize value just for the land, or land and building, depending on what the demand is. But clearly, over the next 1 to 2 years, depending on when we find a buyer, the idea is to sell the land and the building in Bhavnagar and realize value for it. It does belong to the company, and to that effect, we will pay down our bank line to that effect. In terms of retail sales in India, I think we are currently working on improving the unit economics of our India retail business, which is Irasva. We are working towards launching a line with a celebrity in Q3 of this year. I think that when the business gets to unit level profitability and when the unit economics make sense, we will expand. As of right now, in the current year, we anticipate that without any growth in the India retail business, our Own Brands should grow by 50%. So I think we are laser-focused on growing profitably. And we're working hard to increase the customer base and the unit economics of the Irasva business. And when we do see signs that the business is showing signs of profitability, we will be sure to grow the business. I think any expansion in retail without the unit economics being fixed will result in losses. I think one can't hurry into retail expansion because it's a high fixed cost business. So we want to do it thoughtfully and methodically. In the current year, however, there will be an additional store for Jean Dousset that we will open in New York. The Jean Dousset store in Los Angeles does about INR 25 crores in sales annually. And at INR 25 crores in annual sales, a retail store in the U.S. makes a lot of sense. So wherever it makes sense to expand physical footprint, we will. We don't think Irasva is there yet. When we do get to that point, we will increase retail sales in Irasva.

[Operator Instructions] The next question is from the line of Shrikant Parakh from Prudent Investments.

Hello. Am I audible?

Yes, you are, sir. Please go ahead.

Yes, yes, yes. First of all, congratulations on a disciplined set of numbers despite a lot of turbulence. My question is particularly on the various -- as you mentioned, one of the participants asked, we might see some impact on the bottom line because the tariff has been not able to pass on due to 45 days to 60 days window. Can we get some sort of a guidance how much dip in the bottom line we are expecting? Particularly in Q1, F '26?

I would say that the approximate impact could be between INR 10 crores for the quarter.

Sorry, I couldn't be able to get you.

INR 10 crores.

Okay. And like, for example, particularly in terms of restructuring effect, I think so there is some spillover impact in Q1 F '26 also?

Yes.

And is there any synergy we are able to see into the bottom line of this restructuring effect in coming Q2 and Q3 quarters of F '26? And by how much roughly around?

Yes. So I think as we mentioned earlier, all of the -- in the last 3 quarters, the cost-cutting exercise that we've undertaken should result in an annual saving of INR 50 crores to INR 60 crores. And all of those expenses, even during the course of this quarter, the restructuring exercises will be classified as onetime. And you should be able to see an annual reduction of INR 50 crores to INR 60 crores in our expenses going forward from quarter 2 without any adjustments. You will see that even in quarter 1. So our annual expected savings are INR 50 crores to INR 60 crores from the restructuring exercise.

Okay. And my last question would be in terms of management visibility. A lot of restructuring and different set of strategies for domestic business and different set of strategies for -- basically for international business, we are trying to create our brand. So any sort of a one thing that management looks to grow RGL as a brand? What visibility is like in terms of next 2 years or 3 years, we want to see ourselves at a INR 5,000 crore revenue, or INR 4,000 crore revenue? Do we have any kind of that visibility or a vision as of now?

Yes. So I think that our vision really is to grow in the branded segment. Our vision is that we'd like to migrate Renaissance to a company which sells its own brands and licensed brands because clearly, it's a very high-quality business to be in. Over the next few years, our goal would be to grow our bottom line exponentially. I think that -- and create value for shareholders. We are not really focused on just the top line number because finally, we feel that optimizing for free cash flow and bottom line is really what creates value. So the goal for us as management is, how do we maximize long-term cash flow from operations and free cash flow. And that's really the goal by sort of creating differentiated brands that can create value over the long term.

So any specific number we have in our mind? If not on the top line, but in bottom line? Any specific set of numbers as a vision we want to be at this pace by 2029 or '30, like next 5-year plan?

At this point, we are not ready to discuss that. I mean we have -- obviously have clear goals in mind in terms of where we want to go. And I think that through a lot of actions that we've taken during the last 1 year, I think that you are getting sort of an indication of where we want to go and really our focus on profitability and growing the branded side of the business. I think that possibly a little bit early to give sort of a more long-term goal, but we'll try and do that sometime in the future.

Sure, sure, sure. And one more question. I joined late a little bit. So have you given any sort of a guidance on interest figures? I mean definitely, our -- I think the debt has come down. And we might be in an achievement of a net debt by somewhere on this year or the next year. So probably how much outgo we are looking for into interest cost this year? Because our interest cost is more...

So I think the number -- yes, in this quarter, our interest costs were actually lower by 16% year-over-year, and we expect to possibly save that on an ongoing basis and look to create further savings as well. So the guidance that I gave for INR 50 crores to INR 60 crores would have some component of interest savings as well.

The next question is from the line of Hiten Boricha from Sequent Investments.

So my question is on the softness, which you have mentioned in your opening remarks. So I just wanted to understand, are we looking for a degrowth in Q1 because of this tariff issue?

We are not going to have a degrowth in revenue due to the tariff issues because we took a call as a company to ship all orders that we had to our customers because a lot of our contracts with our customers are domestic, where we clear the product in the U.S. Our subsidiary clears the product and ships it domestically. Our contracts did not have a clause for tariffs. So most of our customers took the orders in, but at prices without the tariffs. So there will be an impact to the bottom line because the tariffs were absorbed by the company for a period of 60 days. So we do not expect any degrowth in revenue because, I think, we still see that the consumer in the U.S. is resilient, and we have not seen any impact on demand. There is, however, an impact to the bottom line due to the fact that we were not able to pass on tariffs to the customer.

Understood. Understood. And my second question is on the Bhavnagar land. You mentioned we are looking to sell that land. So if you can quantify the value of that land, sir?

I think we've not got clear estimates yet because currently, we are in the process of debonding the land and then evaluating how we will sell it. We've obviously constructed about 60,000 square feet there. So I think the value will vary widely between if we sell it as just as land to somebody who is going to demolish the building versus somebody needing the structure. So there are very wide estimates. We are not yet ready to disclose a number. But clearly, our goal would be to maximize value and use the proceeds from that to pay down debt. Don't have a concrete number to give you at the moment.

Okay. Okay. And sir, my last question is on the Licensed Brands. You mentioned B2C will grow around 40%, 50% this year. And you also gave some number in Licensed Brands. So I missed that, if you can repeat that number, sir.

Yes. So I think we expect Licensed Brands to grow in low double-digits. Direct-to-Consumer, which is our brands, will grow 40% to 50% and Licensed Brands would be in double digits. I think the Customer Brands segment would be steady and probably will be mid-single digits. So those are kind of the numbers that we are looking at.

[Operator Instructions] The next question is from the line of Diwakar Rana from Prudent Equity.

Sir, just one clarification. So the impact on the bottom line will be close to INR 10 crores, is that right? In Q1?

From the tarrifs. Yes.

Yes, yes, INR 10 crores. Okay. And sir, 2 broader questions. So are we looking in some other market apart from U.S., in Europe or China?

So we have a division that sells to brands as well as retailers outside of the U.S. It's about 30% of our revenue as of right now. And we continue to try to explore markets outside of the U.S. So yes, we have a business outside of the U.S., although U.S. is 65% of our revenue. There is a business in Europe, and we plan to continue to grow it. So there is Canada, U.K. and Australia are -- and Continental Europe are the markets where we currently sell and Middle East is also a small market.

Okay. And sir, what will be the share of lab-grown diamond in our total revenue in FY '25?

I don't have an exact number for you off the top of my head, but I would say that it would be in the mid-30s, if I were to guess. But we can have our IR team maybe reach out to you and give you an exact breakup if you want.

Okay. Sir, do you have any plans to just expand this lab-grown segment? Because I don't want to take names, but a lot of our competitors in the same segment plan to grow in double digit in this lab-grown. I know you have done a lot of things in this D2C segment. We have done really great. But any plan to foray and expand in this market, only lab-grown?

Going forward, we would fully expect that lab-grown will become the majority of our business over the next 2 years. I mean in the U.S., I think the transition to lab-grown is kind of inevitable. We obviously had a natural diamond business, which is now transitioning to lab-grown. And we sort of -- a lot of new introductions with all of our customers are in lab-grown only. So as the sort of older SKUs transition to newer SKUs, we will see lab-grown becoming a much bigger percentage of the business.

Okay. And sir, just one clarification. You said around 30 is the share of lab grown. So this is INR 30 crores or 30% of the revenue? Just want to clarify.

30%.

[Operator Instructions] The next question is from the line of Naitik from NV Alpha Fund.

My question is on the receivables side. I see there has been a sharp uptick in receivables. So just wanted to understand what is the reason for the same?

Yes. So I think it's nothing significant. I think we expect it to sort of normalize in the next quarter. I think there's really nothing to report. It's just -- I think there are some receivables from December. December is usually a good month that has sort of come in, in early April, and there would be kind of normalization of that in the next quarter.

[Operator Instructions] The next question is from the line of [ Pratibha ] from TS Surgical Private Limited.

Yes. My question is from the top line, like the top line of our company is like stagnant for many years. So what is your future projections? Like what -- do you see any substantial rise in the coming years? What are your future plans?

So I think that the top line of the company has sort of a couple of elements that one has to take into effect while we analyze because we had a gold business in the Middle East, which was about INR 700 crores to INR 800 crores in top line, which we acquired in 2016. That business, we started recording as only value added. So we changed our accounting policy because it was a plain gold business, which -- with very high top line and maybe 4% to 5% gross margins. We changed -- subsequently changed our accounting policy to report only the gross margin earned, and then we subsequently sold the business. So if you were to analyze this over a 4-, 5-year time frame, I think we've added about INR 700 crores in revenue, as against the INR 700 crores that we discontinued, which was not really adding to bottom line or to profitability. And in terms of growth, our focus really is on growing the revenue in Licensed Brands as well as our brands where we expect to make double-digit margins. So we are much more focused on quality of revenue and revenue that will deliver a high ROE and ROCE, and not just revenue that will deliver returns that are below cost of capital. So while we are focused on growth, it's the right kind of growth with the right set of attributes and not just top line growth for the sake of top line.

Okay. My next question is related to your domestic brand, Irasva. Like you have opened four stores in India, right? So is it -- is those profitable? One. And what are your expansion plans in India?

So to answer your question, in our presentation deck, we disclosed profitability by division. And the Irasva business lost around INR 4 crores last year. This obviously is attributable to scale and corporate overhead related to running a new brand that is not amortized over a large variety of stores. We are focused on fixing the stores that we currently operate. And when we see signs that the unit level economics are favorable, we will expand. We will not expand -- we see that.

[Operator Instructions] The next question is from the line of Ashish Shah from Business Match.

One slightly long-term question, this whole tariff thing, do you see any long-term threats to our competitiveness of our business?

Yes. So I think that if there are differential tariffs between India and China, we see a very big opportunity to actually -- not just for us, for other companies in India to take market share. I would say that while early in the game, but I think that we've, in the last 2 months, added 4 or 5 new customers, which could be very meaningful over time. And I think a lot of these opportunities have happened because of the tariffs and because of brands and retailers wanting to move supply chain away from China. So I think as of right now, India seems to be in at least a neutral position as compared to any other country and slightly favorable compared to the other jewelry manufacturing destinations. That's primarily Thailand, India, China and Vietnam. So we see differential tariffs with China as possibly a very large opportunity where we could gain market share and grow our top line long term.

Okay. That's very helpful, Sumit. On the Jean Dousset acquisition, is that a brand that you would look to cross-sell to other retailers as well? Or it will always remain like our own brand?

I think as of right now, we are we are going to focus on selling Jean Dousset direct-to-consumer. I think at some point, there will be cross-selling to retailers. We are not at that point yet. I think we are right now looking at opening a store in New York, in Q3 of the current year. Based on the performance of the Los Angeles store, we expect that to be significantly accretive to the brand. I think we see a lot of opportunity to grow the business direct-to-consumer because there is a very big fan following, especially given the legacy of Cartier and him being the great grandson of Cartier. A lot of organic following. It's got a very favorable mix of our acquisition costs. So I think there is a lot of opportunity to grow the brand direct-to-consumer. I think as it gets bigger, there's opportunities to expand distribution to the retail partners, we may look at that. There are no conversations going on at the moment.

Okay. So 2 more things. One on the pricing side, so I'm assuming the direct-to-consumer brands and the other channels how we sell through, there we must have already taken some price corrections, right, to neutralize the tariff hikes?

For the first [indiscernible], so we were unable to pass on tariffs to the customers. April and May, there will be some impact. Most customers have now agreed to accept the tariff increases. There are some which are still -- but we fully expect that by the end of this quarter, [indiscernible] resolution in terms of tariffs with customers on -- we've taken price increases already [indiscernible] at the cost of the price increases. So there will be an impact on margins in this quarter -- tariffs, that there will be normalization from Q2 onwards in terms of margins.

Okay. And any early signs of any impact on the demand side because of the increase in prices? Or is it too early? Or...

Nothing yet. We don't -- we've not seen any impact on demand. I mean consumer demand, by and large, in the U.S. pretty resilient, and there hasn't been much of an impact.

The next question is from the line of Hiten Boricha from Sequent Investments.

Hello? Am I audible now? Hello?

Yes. Please, go ahead sir.

Yes. Sir, my question is on margin. You mentioned the margins will be impacted. So what kind of margins impact we are expecting?

In this quarter, as I discussed, there is going to be about a INR 10 crore impact due to tariffs not being passed on to customers.

Understood. A INR 10 crore impact on EBITDA, right? Or you are talking about sales, sir?

Impact on EBITDA.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Sumit Shah for closing comments.

Thank you, everyone, for joining us on FY '25 conference call. We look forward to speaking to you for our next conference call. Thank you for your time.

Thank you. Ladies and gentlemen, on behalf of Renaissance Global Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.