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Ladies and gentlemen, good day, and welcome to the Dollar Industries Q3 FY '21 Earnings Conference Call, hosted by Elara Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Akhil Parekh from Elara Securities. Thank you, and over to you, sir.
Thanks, Renit. On behalf of Elara Securities, I welcome you all to Q3 FY '21 Conference Call of Dollar Industries. From management side, we have with us Ms. Shashi Agarwal, Senior VP, Corporate Strategy; and Mr. Ankit Gupta, Chief Financial Officer. I would like to congratulate management for delivering again a good set of numbers this quarter. I'll not take much time. Over to you, ma'am, for the opening remarks before we open the floor for Q&A.
Thanks, Akhil. Good afternoon, everyone. Welcome to the third quarter earnings call of Dollar Industries Limited. We witnessed the first digital and much awaited budget among unprecedented times. The government presented a pragmatic and growth-oriented budget focusing on expenditure at a time when fiscal deficit is running very high. The budget is focused on segments that matter the most today that is the capital expenditure and health. This will help in creation of more jobs in the market, giving a push to overall economy and accelerate growth. The budget also helps increase the consumption and demand at consumer level, which is what the economy needs at the moment. Textile industries found a special place in this budget wherein 7 national textile parks have been announced, which will make India a competitive manufacturing and exporting hub. The budget 2021 adds to a positive outlook to the sector. The company's focused journey towards the growth gets an additional boost. We now need to capitalize on the demand being generated at the consumer level. This quarter, the company has recorded exceptionally good growth in sales. The endeavor of the company on timely realization of debtors has resulted in increasing positive cash flow from operations. In spite of increase in cotton prices, the company has been able to maintain its profitability margin. The cotton prices jumped over 10% in the current fiscal. The company had to take measures to combat the sharp increase in price of cotton by increasing the prices of the finished productsNow moving on to the financials, the company's overall total revenue for the Q3 FY '21 and 9 months ended FY '21 stood at INR 312.44 crores and INR 730 crores as compared to INR 255.43 crores and INR 733.14 crores for Q3 FY '20 and 9 months ended FY '20. A growth of 22.32% for Q3 FY '21 and year-to-date remains flattish. The EBITDA of the company for Q3 FY '21 stood at INR 43.81 crores, that is 14.02%. And 9 months ended stood at INR 108.32 crores that is 14.84%. As compared to INR 33.94 crores, that is 13.29% in Q3 FY '20 INR and 85.07 crores, that is 11.6% in 9 months ended FY '20. So a growth of 29.09% for Q3 FY '21 and 27.32% for the year-to-date FY '21. The PBT for the Q3 FY '21 and 9 months ended 21 stood at INR 38.27 crores, that is 12.25%; and INR 90.24 crores INR, that is 12.36%. As compared to INR 26.62 crores, that is 10.42% and INR 62.95 crores, that is 8.59% for Q3 FY '20 and 9 months ended FY '20. So we witnessed a growth of 43.73% and 43.34%, respectively. The PAT for Q3 FY '21 and 9 months ended '21 stood at INR 28.38 crores, that is 9.08% and INR 68.07 crores, that is 9.32% as compared to INR 19.58 crores, that is 7.67% and INR 46.58 crores, that is 6.35% for Q3 FY '20 and 9 months ended FY '20. So we witnessed a growth of 44.95% and 46.11%, respectively. Now moving on to the brand-wise contribution for the quarter ended -- 9 months quarter ended and year-to-date. So in Q3, our brand contribution was: Bigboss, 40%; Dollar Socks, 2%; Force Go Wear, 2%; Force NXT, 3%; Missy 7%; Regular, 28%; Thermal 18%. But when we talk about year-to-date, 9 months ended, Bigboss is 41%, Socks is 1%, Force Go Wear is 3%, Force NXT is 2%, Missy is 7%, Regular is 33% and Thermal is 13%. Now a small update about our JV co company. The JV co is working on launching e-commerce, B2B and channel expansion. Focus is also there on building exclusive space like shop-in-shop in large multi-brand outlet and hosiery stores. The total revenue for Q3 FY '21 stood at INR 4.63 crores and 9 months ended FY '21 stood at INR 11.46 crores as compared to INR 4.15 crores and INR 12.88 crores for Q3 FY '20 and 9 months ended FY '20. So we witnessed a growth of 11.57% for the Q3 result, but a degrowth of 11% if we take 9 months ended. The loss from the joint venture for the Q3 FY '21 stood at INR 1.23 crore with our share of loss being INR 61 lakhs. I'll now open the forum for the Q&A.
[Operator Instructions] The first question is from the line of Shalini from Quantum Securities.
If you could just please say what is the growth in the economy, mid-premium, premium segments, growth in the third quarter and maybe if you could just please share for the 9 months also, it will be very useful.
I'll take this question, Shalini. So, we have economy range of products. We also operate in the mid-premium through Dollar Men now, which is comprising of the collections of Bigboss and J-Class. And when we move on to the premium segment through our presence into Force Nxt and we also have shaken hands with Pepe joint -- JVCo., which you just heard about. So, there are these 3 segments. So in economy range of product if I talk about my growth, basically I am having a volume growth here. That's a good volume growth coming for us here, approximately 36%. The pricing, the ASP remained flat this quarter. So the entire contribution, which was increased, has come from my regular economy from the volume change. Bigboss -- if I talk about, my mid-premium segment Bigboss, we again saw a volume change -- volume growth around about 32% there. Pricing again remaining as kind of flattish, a little slight decline -- 0.1% of decline in pricing. So there also, whatever contribution is coming from these mid-premium and economy segments has been mainly because of volume changes.
And ma'am, premium and thermal and athleisure?
So Bigboss collection and the collection in economy, they all comprise of the athleisure here itself. So, we do not have a separate breakup for the athleisure. But definitely, thermals we can talk about because thermals is a different collection altogether. That is Ultra. There again we had -- if I talk about this quarter because here in the quarter level, we see a decline in thermal sales because most of the sales for this particular season happened in our second quarter. So on a quarter -- on this particular call if you talk about the third quarter, we saw a decline of the volume at around about 7% -- 8% and also the prices had gone -- the overall pricing had gone up for the thermal around about 2.5%. So, overall growth stood at round about 6% for last year -- negative 6% here in thermal. If we talk about Force Nxt, Force Nxt again we saw around about 8 -- 9% volume growth with a value growth as well standing at 11%, which is putting a certain value change at 22%. Athleisure segment, we are still running with the Force Go Wear segment, which we'll gradually phase out. Here also, we just see an increase in overall percentage in terms of volume which was 1.5% with an ASP change around about 1%. So overall growth standing at 2.74% here. Socks, definitely there was a huge decline because the demand for the Socks has not still opened up. Schools and offices remaining closed. So there, I would put that 18.5% decline in volume with a decline in value as -- with decline in the ASP as well. So, overall 20% decline in the Socks value. Let's see, let me just -- this would complete the entire portfolio here. So we see also, we -- there was not much of a growth here. So overall, if you put together -- we compare Q3 taking all portfolios together, we will see a volume change of 26% jump with a 5% decline in ASP, round about 20% overall increase in my value here.
And ma'am, your future growth drivers will be what, ma'am?
My future growth driver definitely as we've been talking, about is -- would be again Missy, which we have been talking about in terms of brand. Athleisure, which has been recently introduced on all these 3 verticals that is around with Bigboss, with Force Nxt, with economy segments, with women's segment that is Missy. So, all these segments now carry athleisure into their verticals. So, that's why we are concentrating hard on this. Again, we have seen big volume changes across Bigboss, economy segments, Force Nxt. So, these are going to definitely take this further with the focus also on to the lingerie segments, which we'll be launching very shortly in the next fiscal now, which has been missing from our portfolio. That's again -- that's going to add up to our current market penetration with the complete bouquet of products, which we have to offer to the consumers. Again, like we -- and if I have to look at the percentage, I would say that there has been good traction in athleisure. I have -- overall percentage wise, we have seen from 10% to 11% of the total portfolio is what we have moved from. Like last quarter it was 10%. This quarter it was 11%, overall portfolio level, athleisure brand. Again, coming back for channels, online has been very good for us again. Last time also in the last quarter, we talked about a good jump in terms of online sales were concerned and the same traction keeps on there. We have seen a good growth in terms of the demand coming from the online platform to us. And we think that we will be able to drive this number to around about another percent. Like currently we are -- the online platforms contributes 3%, which I'm sure might move on to 3.5% to 4% by the end of the fiscal. We have to be mindful that large format stores and departmental stores also come into that e-commerce platform because that's the modern retail we are talking about. So there -- that has actually pulled down my overall numbers contributions. Otherwise, we would definitely have seen a jump there. So these are the small factors which are going to drive us. And not to forget the way we have been working with the theory of constraints and we have seen good positive results there. And where we are in full throttle to roll out the pan-India, the entire process in a phased manner. With -- we have already touched upon 5 states now; Maharashtra, Gujarat, Telangana, 3 new states being added. And very shortly, we'll be opening up 2 or 3 more states there and we are sure that this is going to help us drive our growth numbers.
Ma'am, my last question. Ma'am, last time, you had said that your target for financial year '21 in terms of debtor days would be something around 160. So ma'am, where are we with respect to that?
Sorry, Shalini, I missed you. This was regarding?
Ma'am, debtor days, you had said your target for probably financial year '22 will be 160 days of debtors.
Debtors?
Hello. Yes, debtor, debtor days.
Yes. We are already currently standing at 133.
Okay. We are at 133. But ma'am, earlier your debtor days used to be much higher. So I mean, what has Dollar done to really bring down debtor days? Because I think it used to be closer -- about 200. At the end of financial year '20, it used to be about 200. So, what has Dollar done to reduce its debtor days?
We have been very, very -- I would say we have set up a process in terms of the collections concerned. First of all, I would say that entire COVID era, which has compelled us to be very stringent with our realization, has taught us a lesson that, yes, if we can drive this in the time -- difficult times, we can surely drive this in the times when things are better as well. So here, a strict policy in terms of realization with the debtors. Channel financing advocation as well has happened -- has been put across to the dealers. And also across -- when we have -- we sat through the entire theory of constraints and have whirled across and then we have understood that, yes, this needs to be driven across with responsibilities being assigned to the respective state heads, the agents et cetera, the targets and the [indiscernible] has been linked there. I think so that has helped us drive the numbers down. And we are sure that we will further bring this number down in another quarter. And this effort from the company side will be there consistently to get the numbers at a much acceptable level.
So ma'am, you're not changing your financial year '21 end, I think, target for debtor days to 110 or something?
We would definitely want to get around about 100, 110. That's what we are working on. And our results have been rewarding and we have been able to perform and stand where we want to. Yes, we are looking forward to 110 days as realization days for fiscal end.
The next question is from the line of [ James ] who is an individual investor.
Ma'am, regarding your advertisement spend, I just wanted to know how much did we end up spending this quarter and what is the number for the full year?
I'm sorry, I have -- we are not able to hear you clearly. If you can -- your voice is a little muffled. If you can just...
Sorry, ma'am. I was looking for the advertisement spend, the marketing spend. So for this quarter, how much did the company spend?
Okay. So the company had spent around about INR 52 crores this particular quarter as -- 9 months ended, INR 52 crores as compared to INR 59 crores last year.
And for the full year, last time we had guided for INR 60 crores to INR 65 crores. Are we sticking to that, ma'am, or will there be any additional spend?
We might come around about INR 69 crores there. Maybe INR 65 crores to -- INR 65 crores was the target. We might stretch a little by INR 5 crores.
Understood. And ma'am, on receivables, you had said that we are about 133 days. On inventory, how is the situation, ma'am? Are we seeing overall destocking in our channel or how is the situation?
If we calculate inventories on the sales, I would be standing around -- again there has been improvement there as well. Say, around about 115 days is what we would stand at inventory there also. We are working towards trying to rationalize our inventories both for the FG and the raw material because the consultants have started working on the back-end side as well. That's the production, supply chain side to rationalize the -- produce whatever is required, which has been demanded from the market and being sold there. So those kind of rationalization is happening at the back-end, which will take -- again, take some times, but we are sure that we will get down the inventory days number as well.
Understood. And our net debt levels, where are we today, ma'am?
Creditors, again an improvement in terms of we have touched around 55 days approximately there. So overall, a good improvement in terms of number of days of -- the entire working capital cycle has improved for the company and the cash flow has been very, very positive for the organization for the 9 months ended. So by the year-end, in the fiscal, when you see the cash flow statement, I think which would be a good news for every one of us.
The next question is from the line of [ Ketan Desai ], who's an individual investor.
First of all, congratulations, ma'am, for the good set of numbers for this financial year as well. I have a question regarding the kind of growth we are seeing in Bigboss. Is it attributed to the new geographies or it is also attributed within the existing geographies also? And second -- hello, are you able to hear me?
The voice is not very clear. Clarity -- it's a little muffled.
Okay. Ma'am, my question is the growth in Bigboss segment, which you are showing. Is it because of the entry into new geographies only? Or there is some traction in existing geographies also?
See, it's a combination of both because -- the reason for -- the simple reason is not only because of the -- we are just limiting ourselves to the geography we were serving in. Definitely there has been expansion in geographies like, for example, let me quote when we worked on the theory of constraint to this project Lakshya in Rajasthan. So there have been areas where we were directly not serving those particular geographical regions. So there we have appointed distributors. Like in my project Lakshya, if I have to look at, we have appointed at least -- 50% of the distributors currently working in project Lakshya are newly appointed distributors in a different region altogether. So, geographical penetration is definitely there. Apart from that, another thing which has added value to my Bigboss portfolio is the athleisure segment. This particular segment has also helped us increase our ASP of the overall portfolio, number one. Number two, it's also helped us increase the volumes there and definitely the traction from the market has also increased because of the demand from the consumer -- at the consumer level. So all these 3 factors combined has helped us grow in this economy region and the Bigboss portfolio.
And the second question is on the -- our women's portfolio basically Missy, and there -- we are not able to grow like that -- a space where we are supposed to and we are launching another product in the same segment. So, how do you see that?
Missy, the reason we have -- so see, there has been degrowth in Missy. So, the simple reason for degrowth in Missy is because of the current pandemic situation. There were 2 most affected products in our entire portfolio. One was Socks; another was with Missy leggings. We have to appreciate that we still have people -- the schools have not reopened up. The offices have started opening up. So these things have actually -- the demand for Socks was not there in the market at the consumer level. So there was -- since there is no demand, definitely there will be no sales. Socks is definitely taken care -- again, the similar way, if you talk about leggings. At least for 6, 7 months, women did not move out of the houses and they still did not want to spend their -- at the leggings part because you have to actually go out, venture out to buy that exact color of the leggings matching to your kurta set. So those kind of demands were not there, but now we have seen that traction building up for Missy as well because Missy leggings contribute around about 40% to 45% of our entire Missy portfolio. That's a big number. And if you see a degrowth there, the reason for -- that would definitely pull down the overall contribution of Missy to my portfolio. But if we talk about March '20, Missy was contributing around about 9% to the portfolio, which has come down to 7%. But I'm sure that we will see that traction building up once these things have regularized and we are seeing the demand coming back for leggings and socks as well. So these kind of portfolios, if you talk about, not that you have not been able to build up. It is just about the current situation -- pandemic situation, which has actually led to degrowth of these 2 portfolios. Again, coming back to Force Nxt for the premium side of products. We have to appreciate that these premium generally sell -- these premium products generally sell more into the urban areas than the rural ones. And maximum of the retail shops in the urban areas did not open up till -- major cities did not open up till October-November. Since December, we are seeing traction of people -- they have started opening up the shops, people are moving to the market to buy products. So, that kind of a situation has led to the stagnancy of the portfolios there. With things normalizing now, people going back on to the track of their daily routines in life, I'm sure we will see those traction coming up into the market and they will grow at faster speeds.
The next question is from the line of Mohit Baheti from L&T Mutual Fund.
I just want to get more sense on our EBITDA margins. We are at around almost 14% now. Even on a Q-o-Q basis despite a 5% decline in gross margins, our EBITDA margins are slightly up. So, do we believe that these margins are sustainable?
Definitely these margins are sustainable, Mohit, because there are 2, 3 reasons behind it. Number one, the company overall has decided to cut on to the advertisement expenditures. The budget for the advertisement has been capped at INR 65 crores to INR 70 crores and would continue at the same levels for the next year as well. Traditionally, we were linking my -- the advertisement spends to the sales to the turnover of the company wherein we have now limited that to an absolute number rather than as a percentage to sales. So that's number one reason. We will see those numbers coming down. Secondly, if you just go through the entire -- you have seen that the finance charges -- sorry, finance will not come in part of the EBITDA so we'll not talk there. But in other expenses also, like we are spreading that same number of expenses, which should -- generally those are the expenses are fixed in nature. If you are spreading them over to the larger number -- greater turnover numbers, definitely the percentage will come down. So there you'll get the benefit as well. And the company is also working in terms of increasing the margins at EBITDA level to the product mix. You will see a higher range of products being introduced, ASP going up further, which will again give you a better gross margin and definitely the impact will flow into the EBITDA as well. So all these 3, 4 factors put together would help us sustain our EBITDA margin and rather increase them.
All right. So would you be able to just quantify that what is the absolute amount of ad spend what we have decided?
We are currently targeting INR 70 crores.
Annually?
Annually, right.
All right. And second question was...
You're talking about the advertisement expenses, right?
Right.
Do you want to ask any more questions, Mohit?
Yes. Ma'am, so my second question was the sales growth. What would be your volume growth for the quarter?
Okay. The volume growth for the quarter is around about 26%.
Okay. So the 4% relation decline, what we have reported, is because of change in mix or there is a ASP decline in your products?
The ASP decline is there.
That would be majorly in Bigboss category?
No. That would be majorly into -- ASP has gone down for -- with my different other products, Thermals, Champion, Force Go Wear, a little in Missy because Missy leggings are not being sold. Majorly the demand is in the intimate wear. So, those kind of changes have contributed to my ASP decline. And more so ever if you really look at the numbers, the Bigboss has been the major contributor in terms of the product percentage mix. This year -- this quarter, we have 40% of Bigboss contribution whereas traditionally the numbers were much higher if you look at the contribution coming from Bigboss. The economy range has taken over Bigboss this time. So, that kind of changes has actually led us to the ASP decline.
Okay. So with this increased RM prices, would you take price hikes going forward like after facing this variation decline?
I'm sorry, I did not get your question, Mohit.
So my question is that we have been seeing an inflationary raw material environment. Are you taking price hikes now?
Yes, absolutely. So we have taken 3 price hikes already. We have taken them somewhere around about November, December, January because the prices have started shooting up November onwards. And there has been huge -- very big spikes in pricing of cotton resulting in price hikes of yarn as well. So we've already done that in terms of November, December, January and we are yet to take another price hike in mid-Feb or March.
The next question is from the line of Pranav Tendolkar from Rare Enterprises.
Congratulations on a great quarter. Shashi, I have just 2 questions. One is that digitization that you are implementing, which is ARS and then DMS. How much of your network is now currently covered in this and at which level? Is it at the retail endpoint or is it at the distributor or wholesaler level that we are talking about in-time replenishment and other digital initiatives? That is one. And second is that the receivables improvement that you are seeing continuously, is it a part of that theory of constraints implementation or is it a part of general shift in terms of trade? Like are you giving some benefit to distributors because you are reducing the receivables or is it that something else, which is resulting in this?
Hi, Pranav. So, I will first take up your digitization question. So most of the digitization which you see there is a result of the project Lakshya, which we are running where we are implementing the replenishment model. So when we enroll or when we take any distributor into -- under this current project, what we have -- they have to compulsorily follow certain digitization methodologies. Number one would be the auto replenishment system. That is basically we have visibility of the inventories at the distributor level. That is done through our distributor management system that is the DMS, which they have to implement as mandatorily at their end, which is a compulsion. When we have the distributor management system, we have the visibility of the sales being made at their end and what is the inventory held by them on a daily basis. That's the real-time visibility which we have. Once we have that, we definitely know what is the sales being made for them. We also know what is the inventory being held by them for the particular stock. This let us -- this gives us an understanding of what is being required for them and definitely we had been working on this for a while. We have traditional datas -- we have some historical datas and we know that what kind of a requirement would come for them for the next 15, 20 days or a month's time. Accordingly, we replenish or send the supply to the distributors. They don't have to raise -- we do it on our own. And that kind of replenishing system is working on a weekly basis currently. So, these 2 tools put together help us to get a visibility in this at the distributor level. Now this has only been done with my project Lakshya, which is we are talking about theory of constant replenishment model. This has not been implemented at -- in the business in general at large. Where we plan -- now, the thing is that we plan to convert the general traditional way of doing business, which we were doing into this particular system, and this would happen in a phased manner. The similar kind of methodology would be implemented into our back-end system. That's the production supply chain system where we would produce only what is being ordered or what is being demanded in the market once we have visibility. And so we -- the team has already started working into this, putting -- or implementing the system at a supply chain level. It will take a while again. Once we do that, we'll see a lot of rationalization happening at the inventory at all the levels; at the maker level, at the central warehouse level, at the depot level. So, these kind of rationalizations will start happening at the inventories also. So these are the 3, 4 things -- the fourth one which we talked about in the presentation is about having the visibility of what the sales officers are doing in the field. They are there to serve them or to address their queries and transactional orders are being taken by our telecallers sitting back-end at the different actual locations.
Right, right. So how much percent of our distribution -- distributors will be now on this? Is every distributor on the system?
So right now, it's very small numbers. We've started with the 5 and that's around about 40 to 50 distributors we're talking here now. So that's a very, very small percentage. But when I track my 9 months number in terms of primary sales, it did start up around about 2.5% of my total turnover. So yes, we have made a little movement there, let me put it this way. But again, that 2.5% is still small in our total primary number. I have to take this number to a -- we have to convert them into a faster, bigger number.
So what are the different financial parameters on which the distributors, which are converted on this system differ from the existing distribution channel? Like is it -- what are the key factors that you define as the success of this implementation?
So before we -- we actually do a [ check ] of the entire distributors before we go ahead. Credibility is one of the key main factors. Then his willingness to adapt to the technology is another key factor because without digitization, this would not help us take us any further. So, that's another change or the willingness of the distributor to change to technology is a key factor. Third parameter is his -- availability of his warehousing capacities, his requirements to have certain number of peoples to serve this kind of a process which we are implementing. Apart from that, his willingness not to sell in bulk and become a wholesaler again. He should actually replenish and serve these areas allocated to market -- to him -- to the retailers not to the wholesalers and not become a wholesaler by himself. So these are the parameters which we work on.
So where you have implemented, has the turnover of the distributor gone up for the defined area or has the cash flow improved? Or is there anything that has qualitatively changed for the business where you have implemented this?
Yes, we have. We have experienced this in Rajasthan, Karnataka. We are seeing the same thing in Maharashtra, Gujarat and Telangana though the numbers of the rollout are small, but yes, we have seen them. Karnataka, it's been more or less 1.5 years. So they have been the first distributor who enrolled into the system. His sales -- the secondary sales has gone multiple times up. His penetration in his market has increased. His realization at the retail level has been better. Rather his number of days has come down. The SKUs held by the distributors, the number of SKUs which he was previously selling and now what he is currently holding in his stock inventory has gone up. With the same amount of investments, he has been able to make-- hold a bigger inventory, bigger in terms of the large number of SKUs and his sale has gone up with his investments being at the same level.
Agreed, agreed. So just -- second question is about receivables. What are you exactly changing?
Receivables are -- this has happened both at the -- I will not say that it's a contribution of this project Lakshya here. Rather this is an effort which has been taken by this company for the business in general where we have been strict with the terms of the trade. The terms of the trade always have been 50 days, but people were taking the leeway at times and we were also allowing them to take that kind of a benefit, I would put it this way, which we have been stricter. Number one, I would say that the major driver was the kind of demand being higher and supply being shorter initially from -- in the first quarter when we opened up. The demand was -- there was a lot of demand in the market whereas the supply was limited. That compelled us to supply on cash basis and that also compelled us to choose between whom to supply and whom not to supply. So probably that particular trend, which we took up at that point of time, has helped us continue with the same trend and we have been stricter and the distributors have understood that they have to make timely payments. More so ever, we see that, yes, the requirement of channel financing especially when we talk about project Lakshya, since it's a very, very automated process, people see that need of getting channel financing. So that's -- little traction is also we are seeing in there in the market. So overall, we would say that's a stringent policy at a company level not to supply for the distributors who are not making on-time payments has helped us get it done. So whatever -- like what we do is, as a simple policy does, if I -- whatever we realize, if the outstanding is beyond control for that particular debtor, we will only supply him 50% of whatever he has paid. We will not give him the full supplies as well. So those kind of stringent policies have helped us bring down those number of days.
Perfect, Shashi. And I hope you and your family are out of COVID range.
We wish the same for you, Pranav. Thank you.
[Operator Instructions] We take the next question from the line of Nirav Savai from HDFC Securities.
Ma'am, I have 2 questions. One is the timelines for this restructuring of the distribution channel. I mean, we have been doing it for almost 1, 1.5 year now. So, how long can it continue? And the second thing is contribution from the LFS segment, if you see last year. Now this year it has impacted the most, but how much would have LFS contributed last year?
Last year, I would say LFS would have contributed around about 1.5% approximately [indiscernible] because we generally take that modern retail, e-commerce platform, that online channel, and LFS together as the modern retail platform and then we report those numbers. So, there would be 50%. Rather I would say much more demand was there from the large format stores than the online platform. So, I would not be surprised if that number would have touched 50% also. But currently this year, it has been absolutely disastrous. So I would say whatever you see currently in the modern retail segment, it would be more kind of an online platform, number one. And what was your other question?
Timelines for this restructuring of distribution, the exercise which we have been doing. How much time would it take to roll out across entire country?
So whatever we talked about, you would have definitely understood it's a very, very big and a lengthy process to implement. So definitely -- initially results are -- they always rise initial -- at the initial phase when we implement something, try to make a big change. And we are trying to change the entire system which has been running in the same way for years now. So, that's another change. So the most important change is the mindset, which we have to bring about in the entire organization, the sales force team -- sales teams which is there on the ground. They have to change the way they have been working, also at the level of the distributors and retailers. So, that's a very, very big change we have. So, finish is a very big term here. I would say that by 2022, I would want to start this process in all the states of India. Pan India, I would start the process and definitely it will be a gradual process. For -- like for Karnataka, we are targeting between March '21 to complete -- to cover at least 80% of Karnataka. Like we are targeting another -- Rajasthan to be covered for 80% of Rajasthan. So, like these kind of numbers we are putting here. To say that we will complete it, what timeline is a big number there. But yes, by '22, we want to start this -- the process in all the states in India. That's what we can commit right now.
Got it. And also one follow-up question. You said you are going to launch the lingerie wear in a couple of months. Will it be under existing Missy brand or what could be the -- would it be altogether a new brand? And what would be the targeted revenue in next 3, 4 years or so from this segment?
Lingerie segment you're talking about, right?
Yes, yes, yes. That's right.
I hand it over to Ankit here to take this question.
If we talk about lingerie, we will be launching it in like next 6 or 7 months' time. So in next fiscal, we'll see the launch of lingerie for -- in the Missy segment. We are not creating another or a separate brand for that. So, it will be -- this product category will be added in the brand Missy only. And in the next -- if you talk about in the next 4, 5 years, we haven't planned it that way right now because this will -- this is a very difficult product category to enter into. It took us a lot of time. So, we have developed quite a few number of styles in that. Initially we'll be launching with 6 to 8 styles and thereafter based on the market feedback and test and trial methods, so next year we'll be coming out -- by the end of next fiscal, we'll be coming out with another 4 or 5 styles and complete our range. So, it's really difficult to give a number to it, but we are very hopeful that we're going to like bring a change in the market.
The next question is from the line of Devanshu Bansal from Emkay Global.
In the initial remarks, you mentioned that the government's plan to have 7 textile parks. So, what kind of opportunity and benefits are we sensing here?
So, this is in overall textile level which they have announced. And definitely if you really look, the hosiery segment lies under the textile industry itself. So definitely this would be a benefit in terms of the export-oriented unit, would be having a better benefit to [indiscernible]. We are into exports as well. We have 5% to 7% of exports coming from -- the total revenue which is contributed by exports is 5% to 7%. So, this is another opportunity which we see here. But if you ask me that have we seen any or we are just kind of in -- thinking to get into it, right. It's a very, very nascent stage to decide and to work on to it. The team already is looking into it that how we can get the maximum of the benefit here. That is one thing, which we are looking at, but nothing concrete. There is nothing concrete in terms of how do we benefit here as a company. There's a lot to benefit here. There will be faster manufacturing. Benefits in terms of some -- certain subsidies being announced by the government. I'm sure they are in line. But if you have to talk about the company level, too nascent a stage for us to comment anything right now.
Okay. And my second question is on the RM pricing trend. So how are the prices trending now? And does this increase in custom duty on cotton also impact us or we were sourcing locally only?
See, cotton we have been sourcing like we have a spinning mill as well. So, we do source cotton and that also gives us an insight into the cotton pricing, which definitely in turn impact the yarn prices. So the prices of yarn -- the cotton started increasing November onwards because of the spike. They have taken quite a jump. Rather in this 3 month's' time, there has been around about 35% jump in overall yarn -- if you look at the yarn prices, there have been a jump -- there has been a jump of around about 35%. If I talk about cotton, like we were sourcing cotton candy which is around about 355 kg per day per candy is around about INR 40,000. Today that same cotton candy comes at INR 44,000. That's quite -- 10% jump there if you look at the 9 month level. Yarn prices have also shot up like 30%, 35%, they have gone up so in turn, which would impact our pricing here, our margins as well. So those have been passed in a phased manner to the consumers, to the -- I would not say completely to consumers; to the channel. So, you will see a price hike both at all levels. At the MRP level, the MRP has changed for the consumers. Dealer landing prices has gone up -- the dealer landing prices have gone up. So all these channels have absorbed these prices. Fresh price hike to come in this -- before the fiscal end so somewhere between mid-Feb to March.
Okay. So, we do not see it normalizing in near term. So, the prices are -- you expect it to remain elevated.
Till March it is very, very uncertain, Devanshu. It's like we are very, very uncertain of the pricing currently.
So, what's happening is the market has been very unstable and skeptical about the unstability in the prices of yarn right now. So what we see is or what we emphasize is I think in -- by the month of May, it should get stable, but before that, we don't see any drop or any stability in the prices of the yarn.
Okay. And one last question from my side. You indicated advertisement expenses to remain at lower levels in the coming fiscal as well. So is this an industry-wide phenomenon or this is a strategic decision taken by us only?
So in the next fiscal, what we are planning is we are capping the advertisement expenses to around INR 65 crores to INR 70 crores, as Shashi told. And this is a strategic move by us only, it's not an industry-wide phenomenon. And everyone is deciding on their own strategies. So, we are trying to cap in the absolute amount the advertisement expenditure because we realized that you don't -- so advertisement, you just need for brand development or increasing the brand value. But COVID has taught us something that actually advertisement is not needed much if your sales structure or sales team are in place, the channel is in place to sell your products. And also this fiscal year, we didn't -- the amount that you're seeing like INR 52 crores that we have spent in the advertisement. So, maximum advertisement has been -- maximum expenditure has been done in the shop-in-shop or a retail branding exercise and not on the television or a newspaper advertisement. So earlier our media expenditure used to be around 70% to 80% of our total costs, but this time 60% of our total costs have gone to the retail branding, which gave us a very, very good response.
The next question is from the line of [ Jitendra Agarwal ], who is an individual investor.
So I have 3 questions. First, if it is possible, can you share the debt number, the receivables and the inventory as of December? The second question is related to slide #12, which is related to your distribution. So there are something like approximately INR 5,000 odd crores that yet need to be mapped. I want to understand, obviously this requires a lot of lead on street. So, who's going to bear this cost? Are the new distributors in those PIN codes going to bear that cost or does this come on the company? And even within the existing PIN codes, suppose you go to a new retail outlet, which is currently not mapped, who bears the cost? Is it the distributor or is it on the company's account? My third is there is a small mention of SAP being rolled out. If you could share your thoughts on that.
So I'll start. I think you asked for the debt numbers, right?
Yes.
Okay. So currently I would say that my working capital liabilities is around about INR 109 crores with my long-term liabilities just standing at INR 2 crores. So finance -- even as indicated and you see my finance cost has come down, but we plan that we'll have -- we'll see these numbers coming down gradually. We'll -- long-term liabilities will be not there at and definitely a very smaller little number in terms of working capital requirement from the banks. So, moving on to your next question, that's the...
The receivables number and the inventory number as of December?
Okay. See, the receivables is INR 349 crores approximately. So, that's receivable, so sorry. That's receivable. Inventory is around about INR 300 crores.
Inventory is INR 300 crores and receivables is?
INR 349 crores.
Got it. And payables?
Round about INR 161 crores.
Perfect. And the second question is on Slide 12 of your presentation.
Yes. Okay. So, I'll just tell you what we actually do. We were talking about project Lakshya sometime back. It is part of the project, which we have -- the company has undertaken. What we actually do here is we have our sales team on the field -- on the ground, who we have trained -- who actually goes and helps the distributors even in the traditional channel. They assist the distributors to collect orders, to serve them, to get our kind of a linkage between the distributor, retailer, and the company. Currently we are using that -- those resources who are helping us map those retail outlets. So suppose there is an area allocated to a distributor, he chose to do business with maybe 5 or 7 or 10 or 8 or 2 -- depending on the numbers and the area allocation, he chose -- he picked and choosed his own retailers with whom he was doing business. But under the current model, we say that we don't have to do this. We will serve all the possible retailers in this allocated area. We will go down to each one of them, map them, put them on the -- we have a sales field automation app which we have given to our sales officer in field. They go down, they map them, put them on the SFA for us. And then these retailers are being visited and the benefits of the brand are being explained to them and then in turn then we start supplying them. So, they don't have a choice in terms of whether they want to serve them or not. They serve them. And this is something which has given us a very good result. We have seen a -- we have been able to increase the secondary sales there. So if I talk about the increase in costs, I would say that this is -- maybe the requirement of the sales officer on field has gone up a little, but that's something which the company was already doing in the past also. As the number of distributors are increasing, the number of sales officers are also increasing on ground. That's how we are picking it up. So PIN code, basically in a particular PIN code, if you see that -- if I talk about 95 PIN code, they have been in Delhi whereas we have just mapped 43. So, do I say that I have completely mapped 43? I would say no. This is a work in process. This has not been completed yet. As and when we get our work allocation, the task allocation to the sales officer on field, they would take up this task of mapping and complete it. So it's a slow and gradual process. A team has to be deployed in terms of getting these retailers mapped and put them on the SFA in the automation mode and then reconnecting them. So, this is basically a long haul process, which requires a lot of time, investment as well from the company, which the company is working on. And how to do it a little faster and in a more efficient mode, again we are working through this digitization applications et cetera, which would help us speed up the entire rollout of the project.
Okay. And this cost comes to the company, right, or does the local distributor share part of that expense or not?
See, the company is revamping its method of working, so it comes to the company. But as I told you that the cost of the TSO was [Technical Difficulty]
Sorry, I lost you in between. Hello?
Members of the management we can't hear you. We seem to have lost the line for the management. Please stay connected while we reconnect the management line.[Technical Difficulty]We have the line for the management reconnected. Over to you ma'am.
So, moving over to the cost. As I was speaking that the sales officer cost is always on the company, which we're already bearing that cost. It's just that a slight increase of the number of sales officers would happen and this would again be directly proportionately to -- proportionate to the number of distributors we have. So probably, I would say that's not a very big cost we are looking forward to, but yes, those costs come to the company only.
Got it. And the third question is just on your one-line comment in your presentation regarding SAP versus the ERP that you have existingly have. Can you share some thoughts on that?
Yes. So, currently we are working on Oracle ERP. The company has been working on Oracle ERP for years now, but we definitely are looking forward to moving on to SAP. The process has started internally, shortlisting of the vendors and those -- the process that takes it -- it's a long drawn process again because SAP implementation is not something which is like -- it takes a long -- a lot of work, efforts, and understanding. You cannot go wrong here as well. So, this process has started. It's a very, very nascent stage, but maybe in a year's time we would see that we have got on to the SAP now.
We'll take that as the last question. I would now like to hand the conference back to Mr. Akhil Parekh for closing comments.
Thank you. On behalf of Elara Facilities, I thank Dollar Industries and I thank all the participants who participated in the call. Over to the management just in case you have any closing remarks.
Yes. Thank you so much for -- thank you, everyone, for joining us on this call -- in the earnings call of Dollar Industries Limited. Wish you a happy weekend, and stay safe. Thank you.
Thank you very much. On behalf of Elara Securities, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.