V-Mart Retail Limited (VMART) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the conference call on V-Mart acquisition of LimeRoad business hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit Kedia from PhillipCapital India Private Limited. Thank you, and over to you, sir.

Thank you, Vivin. Good afternoon, everyone. Welcome to the V-Mart Retail Conference Call to discuss the acquisition of LimeRoad business. On the call, we have with us Mr. Lalit Agarwal, Managing Director; and Anand Agarwal, Chief Financial Officer. Without any further delay, I would like to hand over the call to Lalit Ji, to take us through the rationale for the acquisition, and then we will open the floor for Q&A. Over to you, Lalit Ji.

Good afternoon and good evening, everyone. Thank you for coming on the call on a simple request. We just made an announcement yesterday, and we wanted to appraise and apprise everyone about a little bit details on the acquisition. We know this is a small-size acquisition, but still more clarity can be offered to them. This call is only for this acquisition and with this particular online piece. But other than that, I will not be able to answer any kind of current market situation and current market response and performance. So we announced this deal, and you all know that we have been speaking about it, and a lot of the questions in the earlier calls from all -- most of the analysts and the investors has been into the -- what are we doing towards only retail, what are we doing towards online, how is it working, what are you seeing as a threat? So to try and answer all of this, we are trying to -- and we were thinking and we were trying to build on our own model. And what we are doing is for the last 3 years, we were trying to do a lot of activities. We have been -- we have launched this portal almost 2.5 years back, vmartretail.com. We built this team. We were focusing on bringing the sales up. But somewhere, I realized that something was missing and something very, very good was not being able to do. We were not able to create the right technology. We were not able to create the right team. We were still not able to acquire those kind of digital customers and convert customers who are there on the digital platforms. So some of those things we thought and we understood that this is something which needs a little more of digital culture, little more of digital understanding, which is largely with the start-up world in India and which is there -- which people have demonstrated their true understanding of digital commerce. So that is where we were trying to look for some opportunities outside and how could we acquire people, how can we look at things. And then we came across this particular asset, which we thought was a great asset, which we understood it well. We understood the promoters, we understood the culture, we understood the value system, we understood their numbers. And we saw this marketplace as a real good technology and good team which understood the consumer, which is fashion-led consumer and which has done over the last 1 decade, which has really done a remarkable job in terms of their creativity, their content, their engagement activities, their product lines, their communications, their logistics and supply chain work that they've done. So some of these areas, they're really crafted and curated this particular model towards fashion. And as you all know, that V-Mart has been very, very highly focused on the value fashion where we definitely want to regularly keep providing those trendiest fashion to our consumer base in our markets. And that has been our approach, and that is what we are known for, and that is what we have been regularly saying. So just to add on to that we thought this portal, this particular channel is very interesting, and it will definitely add more fashion quotient in our overall strategy, in our overall look and feel, in our overall customer aspiration. And what we wanted to target is we wanted to target this millennial population, which is a digital-first customer, which is actually growing and which is becoming larger and larger. So this digital-first customer, we all understand that they have their own symptoms, their own syndromes. They want to shop from the particular place, and they want to look different. They want to be seen different, in a different zone and a different geography and different product lines and different brands. So that is what we are trying to target through this particular acquisition. Then how do we attract this particular digital-first customers? These are customers who are still coming to us. There are a lot of them who may not be coming to us. Who are still not looking them as our brand -- looking us as their brand. So how do we bring those customers and that is what the strength of this particular team is and this particular brand is. They have been regularly attracting this particular audience. Within this audience, also, they have been attracting the women audience, which is a great -- which is the toughest nut to crack. They have -- the women audience, the women folks has been the difficult folks in fashion industry. The fashion quotient changes very fast. The fashion, the speed in which the fashion changes is also very high, whether it is ethnic fashion or it is Western fashion. And somewhere what we understood in this whole process of marketplace in women's fashion, which I -- which we saw women's -- in the womenswear segment, if you all remember every time, I keep talking about it, a large portion of India wears traditional wear or ethnic wear. And within traditional and ethnic wear, there is huge amount of diversity across the states and across the region and geography. That is where you need so many designs and so many styles and there is a localization need and there is a local taste which is required. So here, when we look at our V-Mart's own fundamental processes and fundamental customer segment and our own share of mix, we see this as a big bottleneck. And we somewhere, we are not able to cater to that, that is why women wear has a percentage of sales mix is very low in our particular performance. So we believe, and we believe that in women wear we need more minds to create product. We need more vendors who could create multiple designs. We need more curated fashion for those regions and for those geographies where those kind of products are there. So that is where, in my store, in our store, we've got a limitation of space. We've got a limitation of a design. We buy out inventory. There's high chances of the inventory not getting sold at the right place or not getting dispatched at the right place. So there are the risks on the women's wear fashion that we anticipated and we saw, and that is why we could not take so many chances and so much of risk to provide product across the stores. In the marketplace, what happens, when you have multiple vendors onboarded on a portal, there are multiple product lines that you get listed, and these product lines are now available to multiple stores in multiple geographies or multiple geographies to multiple customers. All of these customers can choose their own pattern, their own color chart, their own style, their own vendor base, their own dialect or their own taste. That is very important where we could definitely provide diversity in fashion, which is more attuned to the women audience. That is one particular point. But otherwise, other than that, I believe we always have believed that, that is why we are not 100% private label. We always have given a space to a market label also, where we believe products, which are good quality, good faction and good prices are always accepted by my customer, and we always believe in this theory that good product is important to offer to the customer. That is why with the same approach, we believe even the marketplace, where vendor owns the inventory or vendor can unlist those inventory, this can be an additional benefit to both our V-Mart customer who is present in the offline space, who is not there in the offline, but there in the home or is not able to come to the store to take the deliveries and pick the product, can actually order them online, can use those product lines also as the [indiscernible] and all the V-Mart products and all the V-Mart's customer can actually go on this line road portal as a single digital arm for both V-Mart as well as Unlimited customers. So that's the plan that we have that our vmartretail.com will get merged into the limeroad.com. And limeroad.com becomes our digital arm for both the brands that we have, Unlimited in Southern India and V-Mart in the rest of India. So that's the whole model that we are trying to build. Here, we definitely love the team, which is there working; Suchi Mukherjee, who has founded this company -- and I'm so impressed by her understanding of consumer, her understanding of market, her understanding of creativity, content, product and the team and the way she handles. She is a great leader. I really believe that she could really take this journey forward and take this understanding of -- her own understanding over consumer in media and the understanding of digital space and the understanding of fashion and work along with V-Mart's team so that we could actually synergize and create the real omni world -- most powerful omnichannel retailer. That's what we want to create ourselves as. And that's what we are trying to aim at. Definitely, the team below her, the co-founder, Mr. Ankush, who is also a great resource who understands the supply chain and business very well. And the entire team, there's a good amount of digital team, tech team. And we definitely have been chasing the technology and the digitalization space, -- this also gives us a lot of input and a lot of benefit on overall improvement on our technology, overall improvement on our digitalization, which gives us more power on our analytics, gives us more power on our digitalizing the entire process as well. So those are some of the second phases of work. But the first phase is how do we convert this channel to an omnichannel? How do we bring the customers on the same platform? Definitely, there is there are confusions over the brand, V-Mart, Unlimited and now new LimeRoad. But yes, we don't want to lose over the asset of LimeRoad brand. LimeRoad has its own big customer base, almost 17 million customers are registered with LimeRoad, that's a very important asset in the digital space. We know how much e-commerce companies have spent over years over the acquisition of a single customer. We hear INR 800, INR 1,000 getting spend on acquisition of one customer. So 17 million customers is a big number and a big asset, which we want to really use. And added with that, we've got our 30 million customers who are already in V-Mart store and registered with us. So I think we can really offer a new perspective to even our customer and the LimeRoad customer, plus there is a large opportunity to acquire new customers because a lot of shift has happened since COVID and post COVID. So these youth, new generation, new millennials, and this Z generation kids, they all want to shop online and want to have the best fashion. So I think there's a huge opportunity. We will, as a team, do a lot of synergies because there is a lot of opportunity over kids wear, menswear, which they are still not doing good. So there's a huge opportunity to uplift the kids wear and menswear category in the LimeRoad segment, bring about those kind of products on the INR 800 crores, INR 900 crores of inventory that V-Mart has. All those inventory get listed, live -- get live on the LimeRoad portal, that can really uplift the LimeRoad's expectation. And there is definitely a great demand that we have seen of V-Mart's product on the marketplaces because LimeRoad -- sorry, Myntra and Amazon and Flipkart, all the 3 portals have really given us a very good response. Myntra especially has given a very good response, which shows our acceptability of product in the digital space, in the e-commerce world. So this is a great opportunity, which I believe, which we will focus on. The numbers that they have are also better than the market numbers. The benchmark of market, which we see -- which we have known, those people who have filed their DRHP or people who have come with a public issue, they have their numbers in the market, and we compare those numbers with beer numbers. Most of the numbers, most are the -- either the marketing returns or the logistic cost or the operational cost. So all of those numbers, they call CM1 and CM3. So all of those numbers are better or similar to the best of the marketplaces. So we are very confident on the number. The same mindset that V-Mart has over the cost control, over the efficiency generation point of view, I think the same value systems exist in the LimeRoad team under Suchi. And the same efficiency is being seen there. We saw some of those very good collaboration point, those common value systems, those common DNA, which actually drives efficient and profitable model. So that's the opportunity. They were CM3 profitable before COVID. There could be -- we will definitely target to become profitable with the synergies that V-Mart can bring in, both in terms of quality products, which where the quality is an important parameter for e-commerce space. Most of the customers, consumers who have gone on e-commerce and purchased from e-commerce have not shown great confidence over quality because they are still a marketplace without any control over the quality. At V-Mart, we have a huge control over quality. We could really beat this particular market on the quality parameters, aided by fresh fashion and aided by our private labels, which is our strength and the designer strength that we have. We actually test this market very nicely. So these are the fundamental areas. Our investment that we have done. Let me just clarify over the investment, if you want, almost we are just -- what we have done is we have taken over the liabilities of LimeRoad. Whatever today's liabilities that they had, we did not pay anything on the value part. We took over the liabilities. Almost INR 67 crores of liabilities is either paid by us or by them. Those are the 2 things. Plus over the next 2, 3 years, we believe we need to invest. We need to invest to upscale the business, to acquire more customers and to bring the platform to certain levels where they could start creating profitability. So largely, we target between 2 to 3 years for that moment to get achieved. And that -- until that time, we will need to invest, and we definitely have to be mindful of how much can we invest? We would not want to compromise with our organic growth in V-Mart on our opening of stores, and we also not want to take too much of debt. So we would want to invest something between 15% to 20% of our EBITDA, which is at the upper cap, that is the upper cap that we will invest in the business to promote digital sales. This is purely because we want to be relevant in 2025. We want to acquire those digital customers. We want to build this omnichannel, which is the future of retail. So people who are -- who look long term, has to definitely act towards long-term. So that's our understanding. And you all know that we don't care too much about our current status, but we do definitely care about our future, and we want to protect and preserve our future. So that's the overall thesis of our acquisition. Suchi will be acting as the CEO of the online and omnichannel business line growth for us. Ankush will be the COO. So we will have the complete team. Will -- we will make sure that we don't lose up to any team. We have given a very incentive ESO plan -- good incentive and ESO plan to the team -- to the senior team. And we will definitely want them to achieve them and -- that and be happy. So we will definitely need more guidance from all of you in terms of how do we really make it successful. We did 1 acquisition of Unlimited in South India, where we still believe that, yes, 70% of the integration thought process that we had, we have done those. Still, we don't believe that we have done better and 100% of what we could have done. There are a lot of opportunities and a lot of learning that we will have. We will want to definitely make this integration also successful because this integration requires a different mindset because the culture at a start-up organization is a little different than a culture maybe in a 20-year-old company. So there will be a slight difference. There will be the technology team, the digital team, which have a little differentiated thought process, more younger team, which may have differentiated thought purposes. So -- but we are very open to listen to ideas, implement some of those ideas, and you all have to have the confidence that we will try and learn and do whatever we can. So I would rest my talk here as I open the house for the questions. And maybe I don't know whether Anand wants to speak. But no, maybe we will take the questions and go ahead. So please open the house for the questions. Thank you.

[Operator Instructions] The first question is from the line of Tejash Shah from Spark Capital.

My first question pertains to some details on the transaction itself. So who are the existing investors in LimeRoad, who are exiting and will get the proceeds that we are paying to?

So we are not paying any proceed to the investors. We are 100% -- we have taken over the liability only, and we are paying for the liabilities. So no investors will get paid anything from our side.

So the INR 67 crore is total liability only, is it?

Yes, yes, yes. Some part of that has to go to LimeRoad in their account and they will pay. And some part of it will be taken over by us, and we will pay.

Okay, okay. And sir, usually, in online business, so we are also learning as we -- as more online businesses are coming our way. But just wanted to understand, in online business, liabilities accrues on which account? Because this was a marketplace model, right?

Yes, Liabilities are on account of the sellers. Liabilities are on account of the infrastructure cost, on the employee cost and maybe some other statutory liabilities as well. So marketing costs, so most of these liabilities are -- because on the P&L, what do they have? They have the logistical delivery partners. They are the vendors who have supplied the product. They have the cloud and the technology people and then the social media marketing, sales groups and Googles and stuff and then the employee cost.

Okay. Okay. And Lalit, you also mentioned that this due diligence or this integration will be different than what we have done in the past in terms of Unlimited. I mean, before that, also smaller integrations perhaps. So how does this due diligence happens? So is this a technical core devaluation which has happened? And just wanted to understand LimeRoad better. What is the mix between their engineering team and business team mix in the core team, which we have acquired for?

So maybe Tejash will give you more details going forward. But largely, there's a good amount of -- a good number of almost, on the senior side, there will be more than 30% or 40% of the people who are on the engineering and the technical and the technology side. And then there is a large amount of -- big amount of operations team as well.

Yes, sure. And sir, last one, I'll come back in queue after this. Sir, usually, we have seen it in the past that in retail space, the attempt to actually -- for our online retail -- offline retailers to create an online platform, be it Abof or even an Arvind, it has not met with much success despite putting very, very honest effort and capital also. So what are we -- and I'm sure you would have evaluated all this, knowing you, the failure stories also. So what do you think we can do differently to buck the trend here and then do better than at least what history suggests that the success rate is very low on turning it around?

Tejash we are hardcore executors. We don't understand, and we believe every day is important and everyday learning is important. Someone might have failed, someone might have not performed well. We might also fail. There are chances. And that is what we have done. We also launched 3 years back, we made teams and stuff. I would call -- I would not call myself too successful on that front. We also failed there. Even if we do organically, we could fail. If we do inorganically, we could succeed to much more heights. We may not succeed, we may completely fail. So there may be chances, I don't know. We will try to do a lot of things, a lot of good things, try to synergize, use individual capabilities, their individual strengths and then collaborate and try and see what we can do because this is the future. We definitely want to win over this. So that's -- this is not an option. We have to definitely win over this. So that's how I look at it.

[Operator Instructions] The next question is from the line of [ Nihal Jham ] from [indiscernible].

Sir, I just want to take 3 questions. First was that will LimeRoad continue to be a separate business that will drive or the main purpose of this acquisition is to eventually drive the omni or the e-commerce for V-Mart? How should we look at it?

So [ Nihal ], this is definitely an omnichannel strategy. We want to create an omnichannel strategy. But still, we'll have a different unit because this unit has a different culture, a different mindset and a little different kind of business. So we will have a different segment, a different unit within our organization, within our company. It will be in the same company, but we will always look at it differently. I have a different P&L, try to have different KPIs and a different team, but there are a lot of collaboration teams that will get created so that individually, they help each other and create that channel. There will be some uniqueness that you will have in LimeRoad, which is subject to marketplace. So there will be some -- those kind of products and those kind of vendors who would only be selling on marketplace and not to V-Mart stores, but there may be a lot of common products as well. So -- but yes, for the financial purposes, we will also try to do segmental reporting or differentiated [indiscernible].

So once you list all the inventory, as you mentioned of INR 800 crores INR 900 crores, what would be the ballpark...

[ Nihal ], you're not clear. Can you just...

I'm so sorry, I was asking that once you list the entire V-Mart inventory, as you said of INR 800 crores, INR 900 crores, what would be the ballpark mix of the inventory between V-Mart and non-V-Mart?

Can you clarify the question?

I was saying that today...

Maybe Anand can answer.

LimeRoad has a certain number of SKUs that are already listed...

[ Nihal ], Anand on this side. So the inventory mix, we are not targeting any specific inventory mix, the only difference is going to be that we will also put in the catalog of V-Mart inventory. There is already a much, much larger catalog of inventory which is on, let's say, as a marketplace sellers, thousands of vendors have already listed their inventory, and that number will keep on growing. But what Lalit said in the opening remarks more importantly was that even the V-Mart inventory, which is our bought-out inventory, will also be available. As a mix, we are not targeting that this should be 10% or 50% to 25%. I think we will keep on growing the catalog because in a marketplace and an omnichannel play that we are targeting, the bigger the size of the catalog, bigger the size of the options which are available for the end customer, that is the true success with which we can drive repeat behavior of customer sales.

Sure. That's helpful. Just 1 last question. But if we look at the online apparel space at this point in time, obviously, the GMV is more or less lying with the top 2, 3 players. So from that perspective, what is the kind of proposition you want to build for a LimeRoad that ends up eventually getting users to transact and build the GMV from here?

See [ Nihal ], largely there is already a set of customers who love LimeRoad. There will be always an opportunity for niche fashion segment consumer because we are working at a mass level, at a mass level, at a mass -- at a massy level. There are players who are working on premium level, who are working on the premium product lines, which are like around INR 1,000 and INR 1,000 plus product line. So our customer segment, we are a target group that we have targeted at V-Mart. That's the opportunity for us. And the customer of V-Mart, that's also the opportunity to us. So now this particular customer who is right now shopping at V-Mart, who knows V-Mart, who has a relationship here, there is such customers who also don't know V-Mart, but are a similar -- of similar kind who stays in certain rural areas or urban areas, but would get aspirational to get into those platforms. I think for them, all of them creating those kind of trust, which comes with along with V-Mart and our product lines and our quality product and then the kind of offerings and the marketing that we could do. We really don't want to say that we want to fight those biggies of the world. There's nothing that we want to fight. We want to create our own niche space and we want to just work on those spaces. We are not in the rat race of that e-commerce market share.

[Operator Instructions] The next question is from the line of Percy Panthaki from IIFL.

Sir, just wanted to figure out one thing, that in FY '21, of course, there was COVID and definitely there was a decline in sales for many of the players, I can understand that. But FY '22 also saw a decline. And the business is now much smaller than what it used to be. So what is the reason for this decline on an already low base? And probably linked to that is a question that you mentioned that you are very impressed with the way the business is being run with the promoter -- with the operating metrics, et cetera, et cetera. Why is it that such a decent business is being sold at 0 equity value? Why are the promoters okay with parting with their hard sort of work, sweat and blood for a 0 equity value?

See, I mean, you have to understand this very nicely because they had a cash issue and they had a cash crunch for the last 2 years. And overall, this whole start-up market, and we all understand in the start-up market, overall cash has got dried. And overall, if you look at the e-commerce market, even in the e-commerce market, the way that the last question was also there, there is a kind of monopoly or there is a kind of 2 or 3 market players who have taken over majority of the share. So largely the investor circle, that start-up investor circle, they have lost confidence over an e-commerce model as well. This is all my reading. I don't know. I mean, I'm just -- only a commonsensical reading that I'm trying to do. So they did not get funded. And because they did not get funded, they were not able to attract -- and pay their vendors and attract customers. So their ability to pay vendors on time, ability to pay on the social media platforms to acquire customers because they have only 1 channel to acquire customers. They had the drop in their revenue. And that is the reason that the team is so passionate, the team there is so passionate, they wanted to build a business. They saw an opportunity in building the business. It was not easy for Suchi to convince their investors. It was not easy for Suchi to convince herself also. And I really have pride and I really thank and have gratitude towards the whole team and even the investors who actually look forward to save this concept, save this particular team and then give them an opportunity to work forward and build a business in omnichannel. That's a visionary thought process. It is not a desperate thought process is what I would call for. I really want to thank and appreciate the thoughts of investors and the promoters who actually did this because they saw a future, and the future is very live. The future is not only online. -- feature is not only offline. It is an omnichannel future and which they could only fulfill by aligning with us. So that's the future that they're working towards. And they definitely will get rewarded once they are able to achieve those numbers and once we are able to achieve our goals. So we will definitely together achieve those goals. And the promoters and the team, they will definitely get rewarded with good incentive plans.

Right, sir. Next question is, can you basically tell us, out of these investments that you want to make apart from, whatever, INR 67 crores you're paying, in addition to that, there are some investments also. Part of those will be parked in the balance sheet and part of them will come to the P&L. So what I wanted to understand is at the P&L level, those investments, can you give some kind of guidance as to how much they will suppress the EBITDA or the profit of the company? That's sort of...

Percy, primarily, if I tell you that there will be a 15% to 20% kind of payout from our EBITDA line. So you could assume if 10% is our EBITDA, then 1.5% will be reduced if we really invest in that particular area. So that kind of investment we need to do from our EBITDA -- from our cash flow so that we build our future.

Okay. And all of that will go into the P&L only is what I'm asking. I got that...

Primarily yes. There's nothing -- nothing on the CapEx side.

Okay. And finally, what -- I understand that you want to do an omni play, et cetera, The future is there. All that I understand. But what I just wanted to understand is why do you need your own digital asset for that? Why can't you use third-party aggregators, Myntra, Nykaa, Amazon to sort of have [indiscernible].

Percy, Percy, Percy. Percy, we're a retailer. We are not a brand, we are not a product manufacturer. We are a retailer and my retail shop is important to me. My retail platform is also important to me. It's all about my brand, my customer. And my customer, how can we -- I allow him to go to another customer, another platform or another shop. So that's the whole approach. If I am a retailer, I need to be like a retailer, whether I'm physical or I'm digital.

Okay. Sir, okay. I'll discuss this more offline.

Definitely, this is a good debate that we should have.

The next question is from the line of Shirish Pardeshi from Centrum Broking.

Lalit Ji and Anand Ji, thanks for the opportunity and congratulations. Two things. Just a clarification on Slide 11, you have mentioned that if the contribution margin for LimeRoad is at 32%, and you've said it has delivered positive contribution of 9% in FY '22, after adjusting customer acquisition costs. So can you a little clarify that how we should look at this?

Yes. Shirish, so the CM1 in the digital world stands for the gross margin, which has basically arrived after deducting the cost of goods sold and the logistics cost and 32% is a very good margin. I believe in the marketplace and the e-commerce industry, it's one of the best numbers that we have seen at least from a benchmark perspective. And it has been consistent. It's not like it's been only in FY '22. I think for the last 10 years' data that we saw and which has been diligenced, it's been a consistent number in the range of [ 32%, 34% ], and that gives us a lot of comfort that this is something which is very sustainable. On the CM3, CM3 is calculated in the online world as the contribution margin, which is set up after all the operating costs before just the fixed costs. So beneath the CM3 is the EBITDA line. So the fixed costs are something like server cost or administrative overheads or people cost, et cetera. The CM3 also has been absolutely consistent at a positive level for the last many, many years, and that also gives us the comfort that this business, given the right kind of support and financial stability, can scale up well. And that is where our comfort also comes in that we are suggesting that we will be able to grow this business sustainably only with a minimal amount of cash investments in the future, which we are capping at 15% to 20% of our go-forward EBITDA line.

Okay. So you mean to say that if I understand correctly, your advertising and employee cost is such high, that's why this business was generating negative EBITDA?

I will not say -- it's also a matter of scale. So for the last 2 years, definitely -- see, there are phases in which the business, online businesses have grown up. So there is a build-up phase. There is a stable phase. So the best phase was around years 2019 -- '18 and '19, where they were able to scale up to INR 700 crores of GMV and an exit rate of around INR 900 crores of GMV. And at that level also, there -- they were CM3 positive at around 8%, 9% and just about to get EBITDA positive. So it's a function of scale versus what is the future outlook. So for the last 2 years because they were in a cash crunch, their sales level had dropped down. They have also converted a lot of cash, reduced a lot of expenditure. So it's not just about because the sales are low, there is EBITDA loss, but it's more a function of how well we are able to address the stability issue, and that is where we come in and bring in that added capital to make this business grow.

Okay. Another clarification on the exchange filing, what you did yesterday. You mentioned that you are acquiring assets worth around INR 14.61 crores. What are these assets?

These assets are typically in the form of tax credits in terms of GST, et cetera, which are currently non-monetizable because we already have enough of those receivables. So therefore, from a cash flow perspective, there will be a cash outflow of roughly around INR 67 crores. That is the entire liabilities or the purchase consideration that we are taking over.

Okay. And my last question on the fundamental thing. In the past, when we look at the history of LimeRoad, they were trying to build a lot of many other things and they have not been successful of late. But 4, 5 years before they were trying to build in brick-and-mortar business, which they tried to open up offline stores in Surat, Gujarat area. So do you think you will -- I mean, this question is directly to Lalit Ji because you said that the existing management will continue to do the business. So such kind of ambitious adventures, we'll still be trying or we will have the clear understanding that we will drive the omnichannel strategy?

Shirish, definitely the start-up world, the youth world will always want to have multiple experiments and innovations and creativity, and they should be allowed to do and empowered to do some of those. And we will also want to be a little adventurous when we think about all of those, but not to that level because they're already getting some retail strength. And definitely, they had multiple plans and multiple things that they would have done in the past, and there are mistakes that people do -- I don't think these were also mistakes. There are certain plans and their plans was backed up by certain promises, but which didn't happen. But I think that you will regret. I'm very confident. They are very mature and they are very, very technically skillful and capable. So I have -- and you understand that now they're not only going to be alone. We are all there together. We are all there to mentor each other and then talk to each other and then collaborate and take decisions and take the right decisions. So we are very happy to have this team, and we will definitely want to do and become a little more younger as an organization with them.

So precisely, Mr. Lalit, when you gave the interview in the media today, I think you said that we want to reach [ INR 250 crore ] GMV. I think that's precisely I want to understand. How we are going to work that journey? Or is it that existing business, you're confident enough that with the V-Mart inventory listing on the LimeRoad, we will be able to attract more customers and the digital-savvy customers will...

So the team, Shirish, has seen a good growth. They have seen a good business. They know how to do that business. They have the capabilities themselves to also run and take their business to that level once given the support from our side, given those kind of money. And plus, I did with the advantage of the 400 stores and aided with such inventory, definitely, there is a potential. And I was talking about potential, I still talk and will tell that there is a potential. And that's the goal that we need to target -- we should target. We have just signed the agreement. We are yet to sit down with the team to try and analyze. I'm commenting a little more in advance. But this is definitely doable. And I'm not saying that this is what we are targeting and goal is. But yes, this is the potential that we have. And we will definitely look forward, maybe 12 months, maybe 18 months. But yes, that is something which is doable.

[Operator Instructions] The next question is from the line of [ Rishabh Duggal ] from CD Equisearch.

Yes. Sir, I want to understand what would be your criteria or checklist for acquisitions in the future?

[ Rishabh ], there is no criteria. We are not a model built for inorganic, man. We are just looking at these opportunities. Wherever we feel that the building up cost is lower or equal to the buying cost, we would invest. That's the only criteria that we believe. [Foreign Language] So that's the whole model that we are focused on.

Sir, I just want to understand -- and I mean, in terms of factors since this acquisition came to me a surprise. So what would be the factors if you will see, whether it would be brick-and-mortar or online or whether you will focus on a certain kind of geographical presence or targeted customer. In these terms, if you could answer.

[ Rishabh ], there is no plan. There is no plan as of now and we don't wish to acquire any more. We are done with our acquisition right now and we are happy.

The next question is from the line of Aliasgar Shakir from Motilal Oswal.

My question is on the marketplace versus, I mean, V-Mart product. So this particular company, LimeRoad, should it be selling exclusive V-Mart products over time and moving out from the marketplace? Or you expect it to continue to also remain a marketplace company?

No, Ali, we will want them to continue the way they are. We'll want to find an opportunity in this model. As you understand that when we took over Unlimited, there was a business which was a partner brand business, where they took some inventory of partner brands on SOR, which we continue, which we looked, we reviewed. We made it better and we continued with that. Today also almost 20%, 22% of the sales comes from -- in Unlimited from partner brand. And that is the model that we would adopt and we will learn and we'll adhere. And that's the new opportunity that we could see because even now, as I said in the past, that V-Mart's model is not 100% private label. V-Mart is not a product company. It is a retailer. And for a retailer, we will accept these kind of fundamentals and we will want to sell this kind of product as well. And we will continue with the marketplace. We'll find good opportunity and a good new model within this particular model.

Got it. Your initial remark about having 17 million loyal customers that LimeRoad had, I think, give it a glimpse that LimeRoad is more focused to its own loyal customer base, particularly the women's customer base where they have fared pretty well versus us. But I was thinking that a marketplace, when you compare the direct competitors to Myntra and the others, and you mentioned that they are basically -- the LimeRoad is more value-conscious, whereas the other apparel marketplaces are more premium-focused in them. But size is certainly a big factor and there's a lot of very high customer acquisition cost here. They continue to provide very high promotion. And therefore, the average pricing of a product over there also is not very high, correct me if I'm wrong. In fact, you have a very large portfolio of...

Ali, let me stop you. Ali, there is something which they have been doing because they are running a constrained business until now. In the last 2 years, they had issues with their cash flows and stuff. And there is a future that we will together build. And that's the point that I'm trying to talk on. And that's where we will steer our way and that's the original version of LimeRoad, which it will become. So that's the area that I'm trying to focus on. Let's look at what we could make out of from there.

The next question is from the line of Avi Mehta from Macquarie.

Sir, Am I audible? Sorry.

Yes, sir, you are.

Okay. Sir, just on the acquisition. If I understand you correctly, one of the key resources that you pointed out, which we are taking in is the employee. And I was not very clear on what steps are we taking to ensure retention of the talent pool. And secondly, the culture might be -- and please correct me if I'm wrong, but it seems that the culture would have a very wide variation. So would love to hear your thoughts on how do you plan to kind of tackle these 2 specific issues.

So Avi, you said it right. And that's the biggest area of our focus, and that's the biggest area of my individual areas where I need to give them the comfort, create that kind of environment. And not only me, but I think Suchi is along with us. She is there. She is there as a leader, She has been running the show and she will be running this show. So I think we should not impact and we should not create any disturbance in their culture, in their life, in their way of working and the way they work. We should definitely learn more from them and then try to adopt here. So that's the approach that we take in. And on the retention, I think she has created a passionate and committed team. They're emotionally bonded together as a team, and I can see that as a family. And they are very adhered and glued to each of them. And then I think beyond that, it's the opportunity which will make them retain, the opportunity of making such a large online-only platform and where they could actually operate the way they want to operate. They could actually take back on certain product lines, they could use warehouses, they could use store, they could use this digital -- these customers who are in the offline space and they could also use the 9,500 V-Martians and V-Mart employees who could really support their efforts. So I think there is a lot of opportunity for them. Plus, there definitely would be -- they would be incentivized and motivated so that they are retained. And there are -- there is a retention plan by which they will be retained.

So would you use your own stocks as retention...

Yes. We are issuing the stocks to the senior teams.

Okay. And sir, secondly, just to follow up on some clarification. I mixed the CapEx amount because there will be some amount required to integrate their underlying database -- customer data because that obviously is the most important resource as we speak. So did you share out any CapEx number for that? Or it's not material?

Mostly, it will be OpEx. It will be largely people cost and focus and not too much of CapEx. I mean, we are still working on all of those. You'll have to give us some time. We just signed agreement yesterday.

Ladies and gentlemen, due to time constraints, that was the last question. I would now like to hand the conference over to the management for closing comments.

Yes. Thank you so much. I know you guys trust us a lot, and you guys believe in us and we'll definitely be what we are. We are known as a conservative organization. Lalit Agarwal is not used to such kind of large decisions and big decisions. But yes, I definitely want myself to change a little bit, change my own thought process, invest in future, think something which is not thought of and definitely be strategic more and ensure that our future remains visible and future remains much more promising. So that's what we are working on. We'll always need your cooperations and your good wishes. Thank you so much. Have a good day. Bye.

On behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.