© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to the Dollar Industries Limited conference call to discuss Q1 FY '21 earnings hosted by Elara Securities Private Limited. [Operator Instructions] Please note, this conference is being recorded. I now hand the conference over to Mr. Akhil Parekh from Elara Securities Private Limited. Thank you. And over to you, sir.
Thanks, Vikram. Good afternoon, everyone. On behalf of Elara Securities, I would like to welcome you all for the Dollar Industries 1Q FY '21 Conference Call. We have with us Mr. Vinod Kumar Gupta, Managing Director; Ms. Shashi Agarwal, Senior VP, Corporate Strategy; and Mr. Ankit Gupta, CFO.Without taking much time, I would like to hand over the call to the management for their opening remarks. And after that, we'll open the floor for Q&A session. Over to you, sir.
Good afternoon, everyone. Myself Vinod Gupta, Managing Director of Dollar Industries Limited, would like to extend our warm welcome in this earning call for Q1 FY '21 of Dollar Industries Limited.The global economy continues to move in at slow pace and is expected to sink due to current pandemic situation. The Indian consumer's morale and confidence is also very low, as they are growing pessimist about their jobs, income and expenses. However, there is a glimpse of hope in the sentiment survey conducted by RBI with consumers turning cautiously optimistic about the coming years. The impact of COVID-19 pandemic on the health of business of the companies has provided an opportunity to companies to work in a different way that is to run the business in worse scenario. With decreased revenues, the companies are trying to cut cost and now adopt other measures to decrease their other consequential expenses as well. The companies are resorting to other innovative means to draw their customers. Dollar Industries has also resumed its business activities by reopening its factories and offices gradually in line with the guidelines issued by the government authorities from time to time and adopting measures to increase revenue and restrict their cost to the extent possible. We are working towards minimizing the financial impact, keeping the safety of our employees as a priority. The company has recently introduced anti-viral fabric for its products which provides protection from virus. The fabric is treated with the chemical during the processing stage, which makes the fabric resistant to virus. The company continues to think of innovative ways to ensure that the production reaches its consumers safely.This is all from my side. And I will now hand over to Ankit to talk to you about the financial performance of the company this quarter.
Thank you, sir. Good afternoon, everyone. The company achieved total revenue of INR 160.17 crores for the Q1 FY '21 as compared to INR 233.94 crores for Q1 FY '20, a degrowth of 31.5% there. The EBITDA of the company for Q1 FY '21 stood at INR 28.83 crores, which is 18% as against INR 27.32 crores for Q1 FY '20, which was 11.68%. The PBT for the quarter FY '21 stood at INR 22.04 crores, which is 13.76% as against INR 19.96 crores for Q1 FY '20, which stood at 8.53%. The PAT for the Q1 FY '20 (sic) [ Q1 FY '21 ] stood at INR 16.30 crores, which is 10.18% versus INR 13.05 crores Q1 FY '20, which was 5.58%. The loss from the joint venture for the quarter stood at INR 0.52 crores, our share being 50%, that is INR 0.26 crores, whereas in same quarter last year, the profit stood at INR 0.27 crores as with our share being INR 0.13 crores.Now moving on to the revenue breakup for Q1 FY '21: Big Boss stood at 43%; Champion at 1%; Force Go Wear, 5%; Force NXT 1%; Missy 6%; and Regular, which is our economy range of products, 44%. So we saw a huge demand coming in for the economy range of products, whereas -- and also our Thermal is 0 because it was not the season for thermal. The thermal sales will start coming up from Q2 onwards. That's it from my side. And I now open the forum for Q&A.
[Operator Instructions] We have our first question from the line of Nihal Jham from Edelweiss.
I had 2 questions. The first one was on the cost, but if you could just elaborate that on the cost savings side, there's been quite a reduction compared to the last quarter. And even if I look at our subcontracting charges as a percentage of revenues, that has also fallen recently. So is it that there has been a renegotiation of rates with our contractors? And what are the other measures that you've taken? If you could just elaborate on that, then I'll ask the next question after that.
Nihal, this is Ankit here. So firstly, in our overall cost, it will be advertisement expenses, which was reduced to a considerable amount when you compare it to the last year first quarter. Last year first quarter, we spent around INR 27 crores. But this year, it was just INR 11-odd crores. So this was a major saving in the cost. Other than that, when you see the subcontract charges, if you see, our total days of operation was around 50 days instead of the whole quarter, right? So the total production that took place in this quarter -- in the first quarter was in limited numbers. So that's why the subcontract charges are low. And overall, if you see, we have reduced our -- like the inventory, basically the inventory of finished goods instead of producing more. And there has not been much of a negotiation with regards to the subcontract charges, I would say.
That's helpful, I got that. The second one was on the brand-wise mix and you did elaborate that the share of Regular, which is the economy range has gone up from 35% to 44%. I just wanted to understand that in this significant increase in the economy range anything to do with the current state of the economy or any input that you've got from discussing with your distributor or dealers about what's the reason for such a sharp increase in the Regular rate?
Nihal, I'll take that one. So Nihal, it's definitely we -- first of all, we understand that the period of operations or the supply or the entire sales revenue generation have been very, very limited. Second of all, we all know that the shops were opening on randomly. Most of the shops are closed, even not permutation/combinations, online shopping. So all these things are -- it's there, it's not in 100% operational economy right now. And these are the numbers, see, the interiors of the country has been a little more -- a little infected rather than the urban areas. So here, the consumption of the low-priced product has been much more in demand than the premium segment products. So hence, you can see the shift and this is a kind of an impact of the pandemic as we are seeing right now. People are going -- moving out less in terms of the market. They do not want to travel far away from their own houses. They want to limit their travel, et cetera. So whatever is available into their vicinity is what they're trying to buy. So -- and at the moment, people are actually cautious in terms of the spend -- the spending requirements. So there is -- has been in this particular impact or change in terms of shifting from premiumization to kind of an -- going for local economic brands or the economy range of products is what is a temporary phase which we are seeing currently.
And what's the ASP of the Regular range there?
So we have also seen a decrease in terms of ASP is concerned in Regular because there's certain discount items which were appearing below the line has now been -- we are taking care of it in our billings system itself. But as an average, we are -- the ASP of the Regular items stands around INR 40 -- INR 35 to INR 40.
[Operator Instructions] We have next question from the line of Prateek Agarwal from Ernst & Young.
I had 2 questions. First one being have -- cut down on fixed costs during this pandemic period and how do we see it panning out in the coming years or the coming quarters? Will there be substantial cut down in fixed costs so that we can come back to the same profitability levels at the end of the year?
Yes. Prateek, so fixed costs when we are talking about, the major elements in our other expenses has gone to be on the advertisement segment. And for sure, the company has taken a decision in terms of cutting down its -- this expenditure on the advertisement is concerned. So what little you see on this particular quarter, that INR 10 crores or INR 11 crores, which appears into our other expenses segment, that is mainly because we had -- for the fact that we had shifted or changed our brand identity, we had changed our branding structure. The logos had been changed. And all these communication was a requirement for the company to be spread across with the consumers that the brand identity is not lost in the transition. So this is an expenditure which we had to incur. But going cautious, the company is definitely going to cut down on the expenditure in terms of this current year.As far as the coming years are concerned, it completely depends on how the entire economy and how the revenues phase out in 2021. That's the time when we will take a decision for the next coming years. We are also trying to work -- that's one of the reason that we talked about. Definitely now since the traveling is restricted, we can always see a decrease in the traveling expenses, that's much more expected. Then we are also trying to work around other fixed expenses where we can really have some savings, can be achieved. So those are segments that the company is definitely working across. Let's hope so that we see these savings which we achieve in this year if we can sustain and take carryforward for the next coming years.
Understood, understood. I just want to follow this question on with one more sub-question, which would be, have we cut down on employee expenses? Are there major layoffs which will bring us more operating leverage and help us cut down on the fixed costs that we have on our books?
So the question -- the answer goes like this, Prateek, that we're not having major layoffs here. But definitely, the evaluation is in process in terms of the performance of the employees. And maybe we have to set the parameters where we have to evaluate and see that we do not carry excess baggage. So we want to be a little thinner there. As far as, again, the salary cuts are concerned, it starts right from the top management, right from the senior management, who have taken the most of the hits of the salary cuts because that's a little heavy. And then it is percolating down depending on the bracket and the slabs which we have put across. But I would say, the major cut goes to the senior management.
Understood, understood. Now the second question that I have is, how do we see our change in mix of sales when we want to compare geographies as to our sales mix prior to the pandemic and during the current scenario, Tier 1 city to a Tier 2 and the urban cities? And the second part of the question, again, with respect to mix is, what are the channels that have been more active in allowing us to achieve sales? Have you seen a shift from a general trade to more of an e-commerce here or something like that?
So overall, if we talk about the change in the demographics, so earlier it would be -- North would be around 36% -- 36% to 40%. East and West, more or less 25%. And South would be around 8%, right? But this first quarter, after the lockdown when we started the operations, we saw some changes, like in North it was around 40%. East went up to 28%, 29%. West was around 25% only as before, and South declined from 9% to 7%. So this is the major demographic change which we saw just after the lockdown reopened in the first quarter.
Before you move on to the second part of the question, I just want to follow up this one with one more piece. Did we see any change in mix from a rural to urban or urban to rural owing to the lockdowns because there were sporadic lockdowns in pockets in the urban area more than the rural areas?
So we saw a lot of traction coming in for -- from Tier 2, Tier 3 cities, and that is the reason why we have economy range of products being sold at a high level like the total contribution being 44%, which was earlier 35%, so we saw a 9% growth in that. So majorly, it came from Tier 2, Tier 3 cities -- the rural belt, I would say, or the semi-urban belt. But from urban belt, what we saw, what we gathered is we saw a good traction in our Athleisure range of products. So we just started Athleisure range of products last year itself. And by this year, we see a total contribution of the Athleisure being 5% of our first quarter sales. So we saw a good traction over there as well.And coming to online versus traditional mix, we don't want to actually make a comment that it is like online sale is taking over or it is being a shift from traditional to organized sales. And before also, our organized sales was just 2% of our total sales, 2% to 3%. And being such a small percentage of our total sales, we won't actually say that it's a major delta shift from like traditional sales to online sales. While we see a good traction on e-commerce platforms for our online sales, like for the brand of Big Boss, Missy or NXT, we are seeing a very good traction on e-commerce platform. Our sales on e-commerce has been 1.5 to 2x and like before the pandemic and after, like in the first quarter itself. But it would be harsh to say that there's a major shift from going from traditional to the online sales because still our traditional sales is around 96%, 97% of our total sales.
[Operator Instructions] We have next question from the line of Prerna Jhunjhunwala from B&K Securities.
Ma'am, I was -- we were going through your presentation which talks about the new identity launched in the quarter. Could you please explain the concept behind Dollar Lehar, where does it stand? Is it a new brand? Or is it a name of a portfolio? And how do we look at it in terms of brand or product or what is the significance of Dollar Lehar?
Basically, earlier when we used to segregate our brands, so there was something called Regular in our portfolio, right? It contained all the sub-brands which were economy range of products. So it used to contain majorly Lehar, Bravery, Commando, Comfort, RKG and all those sub-brands. Put together, they constituted Regular. But after the brand architecture, so all these sub-brands, like Bravery, Commando, Comfort, they have all been consolidated into the sub-brand name called Lehar, which now acts as a category but under Dollar Always. So now Dollar Always is a brand. And under that, we have a category called Lehar, which contains all the products which are there in the economy range of products.
Okay. And sir, could you please explain Dollar Man also? Like there is a thing called J-Class that will remain as a brand under Dollar Man or that is the way we should think?
In Dollar Man, like earlier, we used to just Big Boss as a sub-brand. And Big Boss used to contain a premium range of products within Big Boss known as J-Class, which was launched around 2 years back, right? So now Dollar Man is a sub-brand -- Dollar Man is a brand, and the categories that we have defined is Big Boss, J-Class, Athleisure. So this is how we are segregating it. Now Athleisure is not a part of Big Boss, but let's say, it's a part of Dollar Man, and similarly, J-Class.
Okay. And what happens to Force NXT, sir?
Force NXT, we are not making any changes, it remains as it is. Since Force NXT didn't contain any name of Dollar on its packaging or anywhere, we didn't used to use -- we never used to use Dollar Industries or Dollar logo on Force NXT. So Force NXT remains as it is.
Okay. Okay. Sir, my next question is on the strategy to this distribution channel, the pilot project that you are going through, what is the status there? And how do we define our achievement there in the change in the distribution model that we've gone through?
Prerna, I'll take that one. So Prerna, we've already started this -- the distribution channel -- this particular project, which we are working under increasing the reach and range in the market. So it definitely slowed us down in April because of the entire country being under lockdown. Things were at a standstill. But nonetheless, we tried working over the telephonic system. That way, the teams were -- the TSO and the telecallers back end were trying to reach the retailers wherever possible through the telephonic calls, take orders, and we were trying to make as much as delivery from the DD points to them -- to the extent possible, that's what we were trying to do. So now once we are opening up, things have -- people have started moving, traveling, the supply chain system has resumed, this is something which we are again getting back on track for this particular project. So we have started our rollouts in Maharashtra, Gujarat, Telangana apart from Karnataka and Rajasthan, which we were initially doing. So here, we will -- we are hopeful. But definitely, we still have a limitation of, at times, you have containment zones to face. At times, you have supply chain issues and stuff like that. So within those limitations, we are trying to speed up as much as possible and the target is to cover at least -- finish up the Karnataka and Rajasthan states and also at least 50% coverage in terms of these 3 states which we have rolled out -- we started the rolling. So hopefully, let's see by December, we should have some traction there.
Okay. And last question is on cash flow. Could you please help us with the working capital cycle, how things have moved between the 2 quarters? Because what we hear is there is significant improvement in working capital cycle in the quarter.
So Prerna, the working capital cycle, if I really look at the -- there are 2 ways to look at it, the absolute numbers and in terms of days. If I really talk about in terms of days, definitely, the numbers would not look good because as opposed to 90 days of operating or the revenue cycle has only for 50 days. So we're talking about comparing a revenue of 50 days as compared -- as opposed to calculating on a 90 days number. So definitely, the numbers would increase -- will increase there, for sure. But if you look at the absolute value term, my debtors have come down, my inventory has definitely fallen down because, currently, the production is also like not at a 100% capacity for -- and even my creditors, definitely, because there are certain stretch there in my creditors terms. Overall, if I have to look at it, I take it into my 50 days calculation, if I have to do that, I would say I have been better than previous quarter. I definitely have saved some days, but calculation on 90 days, definitely it looks bad.
We have next question from the line of Saurabh Budhia from Ernst & Young.
So my -- I have one question wherein which is around -- when I was looking around the financial performance for Q1 FY '20, I see material margin for around 54.8% during Q1 FY '21. However, during the same quarter, Q1 FY '20, it was around 58.8%. So I generally want to understand the reason for such a decline in material margin. It is because of the increase in channel margin that we have offered to our channel partners or is there a reduction in our selling price or it is increase in RM cost during the quarter?
Saurabh, this is Shashi here. So first of all, I would just want to talk about some basics out here in terms of one line item, which definitely doesn't come in the part of our cost of material consumed, but is also important. This is the subcontracting charges because a lot of work in progress sits with my jobbers who are there and which is actually right now if I have to -- if I really have to look at my gross margins, I should be taking my cost of material consumed and subcontracting charges together and then arrive at an operating cost. But since as per the accounts -- Accounting Standards, we have to treat this as a separate line item. That's the reason it's there. So if we really look into these 3 items, that is my change in inventories of FG and WIP, cost of material consumed and subcontracting charges, if you put these 3 together, you'll not find that there's much of a change in shift for the simple reason because there are a lot of times, the WIP might change at various levels in which they are. There would also be impact of my closing FG that which would be there as well.So all these 3 items would have to be -- I would say that we should consider because we have a longer work-in-progress cycle, like we have many stages to be considered, like you have a processing segment, you have a cutting segment, then you have stitching and the packaging processes. All these 4, 5 interim processes take some time. And hence, at times, these things have an impact on my complete operating margin.Overall, as you rightly said that there would definitely be changes in the cotton prices or the yarn prices, which would impact my cost of material consumed as well. So all these 3 factors taken together, you will see that the difference is not much there.
Okay. Yes. So is there any change in our channel margin during this quarter as compared to quarter last year?
Sorry, Saurabh, if you just want to -- I just could not follow you in the end. You're talking about the channel margins if there's been any change?
Yes, yes. Is there any change in channel margins during Q1 FY '21 as compared to Q1 FY 2020?
No, no, no. No changes, Saurabh.
[Operator Instructions] We have next question from the line of [ Anshul Rathi ], an investor.We have next question from the line of Amnish Aggarwal from Prabhudas Lilladher.
I have a couple of questions. One being that you stated sometime back that the realization in the Regular segment is around INR 40. So what could be the realization in the Big Boss segment for the company? That is one.And secondly, how is the demand scenario panning out? Do you see the trend of down trading by the consumer sustaining over the coming few quarters?
So in Big Boss, we saw growth in our ASP from INR 65 to INR 68, like -- which is Dollar Man, I would say, that contains our Athleisure as well. So the ASP in the Big Boss segment has been INR 68.And now your -- regarding second question, we don't think and we don't see that the consumer is down trading because like they -- maybe they are not upgrading their products or not -- so our Big Boss consumer wouldn't be buying a Jockey, but at the same time, he won't be buying a Lehar also. Maybe he can postpone his purchase for 2 months or, let's say, maximum 3 months, but he can't do away with our product because it's kind of a basic necessity that people want. It's the second scheme of the people. So we don't see any down trading by the consumer, but yes, there can be a deferment of the purchase.
Okay. My second question is on the -- you can say, the trade inventory and receivables. So has the company extended any credit to the consumers in general in the, you can say, the innerwear industry? Is there now increased tendency to provide more credit or the more incentives to the trade to push sales?
So I'll take this question. Rather, I would say that it's going the other way around, sir, because right now, it's -- generally, it's like the sellers' market -- but the buyers' market, but this time it's the sellers' market because of the limited availability of -- limited production and the limited availability of the products. The company -- and basically this lies and goes for the entire industry, sir, as I speak. So it is basically the -- now we -- the company has the power to choose -- pick and choose the suppliers as they want to. And in the process, we have actually realized and liquidated most of the debtors which were standing there for quite some time. So this was an opportunity, a blessing as far as the debtors are concerned. So definitely the company has come down overall in numbers in terms of debtors.Inventory, as we're speaking, as I told you that the production is not coming at a very, very full scale, we're still operating at 70% to 80% of the capacities, I would say the inventory is also not lying too high. So the working capital cycle definitely seems better as compared to what it was in the previous quarter. That's how I would look at it. So creditors, yes, the creditors have not been much of an -- I would say, there's more similar lines. There has not been much of a change. We did stretch our creditors a little. We were able to do that. So that has also given a positive impact to our working capital cycle.
We have next question from the line of Prerna Jhunjhunwala from B&K Securities.
Hello, am I audible now?
Yes, you are.
Ma'am, you've already answered the question on -- my question to some extent. But I would just like to understand how's the inventory and the supply chain for the industry. Has competition increased somewhere or decreased somewhere? Or could you give some insight over that area?
Competition, Prerna, we don't really have the numbers in terms of the inventory is concerned. We don't have that access on numbers there. But overall, I would say that the similar situation would have been with all the companies because the production was limited and April was absolutely very, very limited production or no production kind of scenario. By the time people resumed production, May -- half of May had gone. So inventory -- and see, the supply chain was also stopped. So basically, the logistics was not there. Even if you wanted to, you could not supply to. The trucks were stopped at different places when all of a sudden, the announcements came in terms of the lockdown was started in March. So these issues and concerns were there across. How have individual companies have tied over these particular situation, it definitely differs from company to company. For our side, definitely, we have been able to rationalize our inventories in terms of the raw materials and FG both at the same time.For the competition, I'll not be able to comment, but I can only say that, yes, it should be similar to what we are speaking right now, until and unless they have taken some other measures.
Ma'am, any light on the regional competition because there's lot of regional competition also in the industry? So how have -- are you facing any problems which can give advantage to you or can gain market share there or any light on that side would help?
So Prerna, I just want to understand, what competition are you saying?
Ma'am, regional competition, not on the scale of the larger ones, but the regional competition because innerwear has a lot regional competition also in the market.
So Prerna, I would say that the regional competition, again, the similar cases that each individual companies or the players, how they have worked out during this lockdown. Again, they would have a little more difficulties as compared to companies which are bigger and larger in size. But nonetheless, having said that, have their products -- I mean the products are still there on these shelves? We see their products, maybe the speed and the rate of production, which they are continuing might have decreased. But to comment on the overall share, it's a sense, like talking very vague because we don't have any such surveys conducted or certified numbers to talk about. At least for the bigger companies, when you see their quarterly results, you can estimate some numbers and talk about those numbers.For regional players, it's a little difficult to comment, but definitely, the products are there on the shelves. People are still doing business, running -- their products are available on the shelves. I would say that, yes, they're very much operational. To the extent in the capacity of their production is something very difficult to determine. Maybe another quarter is what we would be able to understand that what was the impact. Have they really started vanishing because they could not sustain the pandemic? The revenue -- the operations could not continue? The fixed expenses have led them off? Or they have scaled themselves down? Maybe another quarter or 2 is the time when we can see the shelves in the retail counters and then we can estimate.
Okay. Okay. Ma'am, my last question would be the demand in the winter wear. How is it looking and how -- what do you expect for the coming quarters in the winter wear segment? Any order book insight would also help.
Yes, winter wear. Winter wear is definitely looking good because the company starts taking their bookings for the winter wear from August itself. And by September, we try to -- we strive to dispatch the products from September onwards. So as of now, the demand looks pretty good because it was good last year as well. It had actually -- the stock and inventories were cleared, both at all the channels in the company level. So we definitely look forward to a good winter season.
We have next question from the line of Riddhima Chandak from Roha Asset Managers.
So currently, I was just wondering that how -- what is the situation as of now for the labor overall, labor and logistics situation as of now?
Riddhima, logistics is not an issue at all, definitely not. Labors also they have -- when we started resuming mid-May, June, there were definitely some issues. But as you know, we have our captive units in Tiruppur. So the captive units, we did not face much of a problem for the simple reason that labors -- we actually provided shelter and lodging to the labors there in our Tiruppur plant. So they were there. So they did not go back to their native places or to their -- we do not have issues of people migrating from out there because they were well taken care of. As far as Kolkata is concerned, again here initially, there definitely it was a little bit of challenging -- challenges which we faced, but then again, we have taken measures. We have people coming back again to work, and they are there very much. When I say that we are working at 80% capacity just because the entire raw material and the speed, social distancing norms, which we need to maintain and other criteria, which we have to follow for the -- issued by the government, that slows down your entire production channel. That's the reason we can still do with another 20% and have that demand and we can garner those benefits. But apart from that, there is not major issues as far as labors are concerned.
Okay. And in terms of demand, so in the previous call, as you stated that there could be a lot of pent-up demand going forward, but it would be normalized -- it would take some time to get back to the pre-COVID era. So now after the Q1 is over, so what are your expectation that it -- in what time period it could reach to the pre-COVID era?
We are still in the COVID era, Riddhima. Like so to reach a pre-COVID era, first of all, we need to come out of the COVID era. So Riddhima, having said this, we still know that Maharashtra is yet to come out of the pandemic situation, it's getting worse day by day. The number of cases is increasing every day. This is something which we have started working, we have resumed working. But most of all, I'm sure we are working from home. It's still that a lot of people are scared to move out of their premises, though they have to because they're taking all the safety and the precautions. Even the retailers, they are opening up. Again, they are -- they have to follow the guidelines issued by the government, the local guidelines. Some areas are still in the containment zone, like Eastern India, like Bihar, Jharkhand, Orissa, their situations are not very good there as well. So to reach a pre-COVID era, it is going to take some time, Riddhima. It will not happen overnight. But having said that, I would say that, yes, the demand should look good because we are looking forward to a good winter. Q2 always -- as in history, it has been lower -- lowest selling quarter for everyone. So let's see how it really pans out. But I don't think that there would be majorly something to worry about in terms of the demands -- upcoming demands are concerned. Let's see how this pans out because it is all depending on how soon we will get the vaccinations, how soon we get a cure, or how soon we are able to come with of it. Because still, once you walk into the mall, you walk on the streets, you see that people are -- there's a difference in everything. There is always a difference and the sentiments -- the consumer sentiments are poor. People are fearful of losing their jobs, people are fearful of their incomes. Having said that, but still it's all moving on and we are hopeful that things should work because this is basically our commodity, it's not something which you can do away with. As Ankit said right now that this is something you need, you might defer a purchase, but you cannot do away with the purchase.
Yes, exactly. And just a clarification. So is -- are you facing any issues regarding the unavailability of stock at the channel level as of now?
Not really, not really. We are rationalizing our supplies between the distributors to ensure that the stock is available at all DD points so that we are not losing sales.
Okay. Okay. And what is the volume number this quarter versus Q1 last year FY '20?
Ankit will take that question.
So in Q1 this year, the volume in terms of number of pieces was around INR 3 crores, which was INR 3.72 crores in Q1 last year.
We have next question from the line of [ Anthony Joy ], an investor.
So one of my first question is, do you source any raw material from China? If so, is there any plans to look for a new supplier?
Anthony, we did not -- we do not have any raw material which is being imported from China. None of them.
Okay. My second question is, what is your market share currently in organized market in India?
Approximately 50% -- 15%.
15%? And how is the upcoming festival season looking in the -- for Dollar?
Definitely good because as I spoke, again, the second quarter is generally a dull season, is a dull quarter -- overall a dull quarter compared to the 4 quarters. And post that you have Pujas and a lot of festivities coming across. And if we are able to tide over it, hopefully, we should be looking for a cheerful festivity season and people would be more than excited this time if things go towards normalcy. And definitely, there we'll see actually a spur in terms of a bigger rise in terms of sales is concerned.
So what is -- ma'am, what is your sales turnover in terms of India to foreign countries like Gulf?
Generally, we have 7% to 8% of sales that goes into the Gulf countries. But this quarter, again, the export was only 4% because you can understand that the numbers -- the entire supply was stopped. The entire -- because of the current situation -- pandemic situation, it's a little difficult right now.
Okay. And then last question. Do you have any plans to reduce your interest cost further?
Sorry, I did not get that question, Anthony.
Do you have any plans to reduce your interest cost?
Yes, yes, absolutely. So actually, our interest cost has gone down, but the only reason it has -- I would say, you're seeing as a percentage, it is a little higher because your base number, the revenue numbers are -- it's really small. And towards the end, we had to increase our working capital limits right now. So otherwise, our rate of interest rate now is very, very competitive, and the plan is also to take it further down and to the extent possible, minimal usage of my credit limit.
[Operator Instructions] We have next question from the line of Saurabh Ginodia from SMIFS.
In your opening comments, you made that there was a significant reduction in the advertisement expenditure in quarter 1. So just wanted to understand the ad budget for the full year.
So ad budget for the full year, we are hopeful that we'll be able to close around INR 64 crores to INR 68 crores, which would be less than what we spent last year as well. It really depends upon the revenues that we go through because like in quarter 1, we had just 50 days of operation and let's see how winter pans out because then in third quarter, we used to spend a lot in the advertisement due to the winters like the Dollar Ultra, Dollar Wintercare that we had.
So overall, we will try to keep in -- this time, we'll go by the percentage to revenue rather than an absolute number. We'll try to cap it at 5% to 6% of the revenue.
Okay. And as you also mentioned that there has been some expenditure related to rebranding which you have done, so is it possible for you to quantify that number?
That sits in my advertisement expenses, that's what we have done. So whatever with the expenditures related to rebranding exercises are concerned that's the hoardings and the TV advertisements or the jingles on the radio stations, et cetera, they are all sitting in my advertisement because these are advertisement expenses.
Okay. And some trends and outlook if you can share on the yarn prices?
The yarn prices have been stagnant right now. Not much of a traction over there.
And do you expect yarn prices to be stable for the rest of the year?
More or less similar kind of a range. Maybe 1% or 2% plus/minus, not much of a differences there.
Saurabh, I would like to add in here. As you know, the fluctuations on a yearly basis is not -- I mean, if we really look at a full year level, the fluctuations are not very much there. It just ranges between a percent as Ankit said, 1% or 2%. Quarter-to-quarter, it might vary. But overall, at 12 months' level, the difference is not much, maybe a 1% to 2%.
Okay. And in the current quarter, exports have obviously come down. But for the full year, will you be able to reach the last year's export turnover?
It will completely depend on the policies of the countries which they execute. If the country allow the exports or the imports to happen in their country -- the policies -- it would depend on the policies. If they allow the imports in their countries, the government allows the import in their countries, then definitely, we'll see -- we would want to export as much as possible. This is something very subjective. I would -- right now, it's too early to comment. But overall, we would want to achieve the 7% to 8% of exports, which we do on a yearly basis.
We have next question from the line of Sanjeev Goswami from Fractal Capital.
Ma'am, can you provide some details on the distribution infrastructure that we have in terms of number of distributors, number of retail touch points? And also give some color in terms of what percentage of sales that we do with cash sales to the retailers?
So the number of retail points -- touch points is around a lakh of retailers for us and around about 950-plus distributors we have currently in the system. And I did not get your last question. What did you want to understand there?
What percentage of the sales is on cash-and-carry basis?
Cash-and-carry basis is basically I would say that currently we have -- as a policy that the industry runs, except for the leaders, it's majorly people have a credit facility being given to them. I would say it's all on -- most of them in credit terms, like we have different credit terms for different channels, but it is all we have. We have some credit terms to be given to the distributors or the channels.
Perfect. And have the credit terms changed during the COVID times? And are we trying to provide some kind of credit relief to the distributors and retailers so that they can actually pick up new stock?
The credit terms have not changed per se, Sanjeev, but the thing is that I would put it this way that we have been overshooting our terms with the distributors or -- in the past as well. And actually, this was right now the time for us to actually get our realization, not that we're not partnering with them. We have partnered long enough when the GST happened, when there were other crisis. So right now, we are actually, as we said that we have to rationalize our supplies or the orders has to be given to -- evenly spread across the country to all the DDs so that the material is available at all the retail counters. So for that, we definitely have -- are insisting on clearance of their old use, which is very, very important for us. And we have been able to do that. Retailers is something, is being taken care by the distributors and we are asking them to help and support them as much as -- to the extent possible. But again, credit facilities to the retailers is a prerogative of the distributors, like how they want to work that out. That, we have no or little control there.
We have next question from the line of [ Manoj Shroff ], an investor.
Ma'am, just wanted to know in June and August, have we reached 70% to 80% of pre-COVID of sales?
That was in production lines you're talking about, Manoj?
No, sales, ma'am.
June, July -- July, actually -- yes, 70% to 80% of July is definitely there. So if you -- as I told you that second quarter is a dull quarter for this industry. And as a practice, most of the sales happens in the last month of the quarter. So June -- July is not much of a problem right now. We don't see much difficulty in terms of achieving 80%, that's already been taken care of.
Okay. So some of the companies like Rupa has actually had a stronger Q1 versus Q4. And in other sectors, people have reached 90% of their pre-COVID. So can you say June was 90%? Is that fair to say?
June, already the numbers are out, Manoj. If you talking about July or you are talking about...
No, I'm talking just for the June, the 30 days of June.
Yes. So absolutely, June was something which helped us climb there. So June was very strong for us as compared to the last 3 months. April was completely closure, May was 15 days gone there. So whatever sales these numbers, you see its towards the -- some of the beginning of May and then June. So yes, definitely June was very stronger and we overachieved June as compared to the last June '20.
Okay. Got it. And if you can share any absolute -- in your working capital, can you share in absolute terms full year?
Sorry. This quarter is basically just about the P&L being published, so we'll not be able to talk about the balance sheet here.
Got it. And maybe year-end, do we have a number in the debtor days what would we like to aspire to, given you said it's a sellers' market?
Yes. So I have taken this -- but I'll just -- taken this question, Manoj, but I'll just repeat it again. So in absolute numbers, my debtors' days have come down. If I really look at those numbers, I have got -- the absolute number has declined. But since I would be calculating the debtors' days as compared to 90 days, whereas the operations were -- or the sales were just for 50 days. The number would be a spike definitely compared to the previous quarter.
Why?
Again, if I want to -- for argument's sake, if I take that as a 50 days working, my debtor days have always been the number of days.
Would we know like a large chunky -- chunk has come down or it's a very marginal change?
It's a marginal -- it's more than a marginal change, but not a chunk as well.
We have next question from the line of Akhil Parekh from Elara Securities.
One question on the Athleisure segment. We introduced Athleisure during the quarter. I wanted to know is it for both men and women and how are we pricing it?
So Athleisure has been launched in Dollar Man and Force NXT brand last year, right? And we have some track pants for women in Dollar Missy. But in terms of ASP, I would like to say that earlier in Force NXT, we used to have an ASP of around INR 117, which went up to INR 155 just due to the Athleisure segment. So the MRP ranges somewhere between INR 700 to INR 1,200, INR 1,300 in terms of MRP. And if we talk about Big Boss, the MRP ranges from INR 499, INR 500 to INR 900.
Okay. Hello?
Yes.
So if I repeat, you said INR 700 to INR 1,200 for Force NXT and around INR 500 to INR 900 for Big Boss, right?
Right.
Okay. And was the margin different for us in Athleisure segment versus our poor product portfolio? Like, so if we increase our contribution from Athleisure segment by the end of this year, will we see a margin expansion? Is there a possibility of that?
See, Athleisure is still a small chunk of our total sales. It's Just 7% -- 5% of our total sales in Q1 this year. And last year, it was not even 5%. It was just around 2%, 2.5% of our total sales, right? So it won't bring in major change in the margin sector. Although the category -- the Athleisure category has a better margin than the respective innerwears that we talk about like Big Boss, innerwear at the EBITDA level, we have around 10% to 12% of EBITDA. But Athleisure would fetch around 14%, 14.5% EBITDA. And similarly, in Force NXT also, if the innerwear is giving us EBITDA of around 13%, 14%, Athleisure would be giving us around 16-odd-percent. So yes, there's a difference in the margin, we have a better margin in Athleisure. But it won't contribute much to the overall margin at the end of the year.
And would it be fair to assume that we will be doing slightly more margins with the channel partners to Athleisure given that it's relatively a newer category for us? So brand-wise, positioning is far strong in our poor portfolio that is innerwear. So would we giving more margins over there in the Athleisure segment with the channel partners?
Sorry to interrupt, but actually the voice is not very clear from your side.
I'll repeat my question. I'm saying, since Athleisure is a new -- relatively a newer product category for Dollar, so in terms of the channel margin, is it going to be different than what we offer to our channel partners for innerwear category?
Yes. Since Athleisure is an outerwear, so the margin structure will change as compared to the innerwear sector. Like in innerwear, if we give around 35%, 40% to a retailer, in Athleisure we can do away with 34%, 35% to a retailer. And -- but the distributor margin would be higher in Athleisure and less in the innerwear because innerwear has a volume business. But Athleisure is not a volume business, it's a margin-oriented business, so a distributor would want a better margin on it. But overall, if you see the realization is almost similar at a company level. But if you see the breakup of the margin, like in terms of retailers and distributors, it would be very different what we gave in innerwear.
Got it. Right. And just my last question, we discussed some of the inventory levels from the company perspective. How was the inventory looking from a distributor and a retailer perspective for our brand?
So at the distributor point, we see a decrease in inventory level as well. And -- but at the retailer level, it is very hard to grasp because some of the areas are still in lockdown. There are retailers who have not been able to open up their stores. But there are a major chunk of retailers who are able to like clear up their stocks by selling it off. So at retailer level, it would be very hard to tell -- whether there are -- there has been a stock depletion or not. But at a distributor level, there obviously has been a -- like inventory shortages with them, and that's why a lot of demand in Q1.
We have next question from the line of Ankit Pande from quant Mutual Fund.
My question would be around the pricing element in this quarter at 30 million pieces. We have the current volume decline of 20%, whereas revenue has declined over 30%. Could you talk about the pricing? Is it mostly down to mix or other issues because with respect to industry, it seems to be more adverse there?
Sorry, you have to repeat the question, your voice was not very clear. It's like buzzing out here. So I -- what I could understand is that questions relating to there has been a decrease in terms of the volume and the value is concerned. And you want to understand the overall ASP of the company. Is that correct?
Well, I would like to understand what has led to this incremental decline in -- the difference between the revenue decline and the volume decline of 20%.
Revenue decline?
Yes.
Revenue decline, the company operated just for 50 days whereas compared to a complete quarter. So there has been a revenue decline there because we could not operate for 40 days and the starting of full...
No, I mean, there was a difference in the pieces that you saw that the volume is 20% decline, am I right? 30 million versus 37 million. And the revenue decline is 32% more adverse. So is it just a mix and nothing to read into this particular quarter? Or is there a more sustained pressure on realizations?
This -- the volume and the value decline is definitely, the mix has changed. In previous quarter, if I have to look last year's, the same quarter, if I have to look, I had 46% coming from my Big Boss itself, whereas in current quarter, I just have a 43%. My economy range of products, we had in mix of 35%. They contributed 35% to my overall revenue. Whereas this quarter, I have 44% coming out from economy range of products. Missy contributed roundabout 9% for me last quarter -- in the last year, whereas this quarter, we just have 6% coming from Missy. So definitely, my entire mix has changed -- has gone haywire. Like for my Big Boss, I have seen an increase in my -- I have seen a decrease in my Missy products because the leggings were, if I have to look at my control mix in terms of like the products sold in Missy ranges, the intimate wear is sold more as compared to leggings. The leggings were not been sold much. Like for example, socks, the school did not reopen. This is basically April, May is the time when children move from one class to another, and they buy a new pair of socks where -- which did not happen because the schools have not reopened, there has been no change there. Like women are not moving out and buying leggings right now. It's only the intimate wear, which is very necessary that they are going out and buying or they're ordering online. Things are happening that way.So the consumer choice of purchase has changed a lot. Like people are buying more kind of in Bermudas and track pants because they are working more from home. It's like they really don't need to be in a formal dress environment kind of scenario if they are working from home. If they're not getting on to video calls, maybe just wearing a tees and a track or a Bermuda will do their work. So there has been change in consumer preference and style and habit of buying. This is what I would understand would be in just some temporary scenario because of the current pandemic and the restricted movement of the people and the consumers. Going ahead as things normalize and we see ourselves coming out of this pandemic, I'm sure that we have to restore to the same old balance.
I mean I understand there has been a mix change. Another way of asking this is that has the company reduced the label prices at all of its products?
No, I'm not able to get your question. It might be the moderator can repeat out the question for you, I would be able to answer because your voice is echoing and I'm not able to understand the question.
Have you decreased the label prices of the products? I hope it's clear.
The prices of the products, we have changed a bit, definitely. Some of the products, the price increases, the company has taken a price increase in the products. That has been passed on to the channel which came in, in fact maybe towards the beginning of June.
Okay. And can you please give me the split of your channel mix, GT, MT and online?
So my channel mix percentage contribution comes majorly from -- it's 95% coming for my traditional channels, which I have my revenue; 2% this time is my online sales, that's modern retail; and I had a 4% of export.
Ladies and gentlemen, that was the last question. I would now like to hand the conference over to Mr. Akhil Parekh from Elara Securities for closing comments. Over to you, sir.
Thanks. On behalf of Elara Securities, I would like to thank the management for answering all the questions very patiently, and I would like to hand over the call to you for any closing remarks or we can close the call.
I would just want to thank the participants who have been very patient in asking questions and listening to our answers, thank you so much. Have a great day. Stay safe, stay back home.
Thank you very much. Ladies and gentlemen, on behalf of Elara Securities Private Limited, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.
Thank you.