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Electronics Mart India Ltd
NSE:EMIL

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Electronics Mart India Ltd
NSE:EMIL
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Price: 191.34 INR 2.92% Market Closed
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Earnings Call Transcript

Earnings Call Transcript
2023-Q4

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Operator

Ladies and gentlemen, good day, and welcome to Electronics Mart India Limited Q4 FY '23 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Karan Bajaj, CEO, Electronics Mart India Limited. Thank you, and over to you.

K
Karan Bajaj
executive

Good evening and a very warm welcome to everybody present on the call. Along with me, I have Mr. Premchand Devarakonda, our CFO, and Strategic Growth Advisors, our investor relationship advisors. We have uploaded our results and investor presentation for the quarter and financial year 2023 on the stock exchange in the company's website. I hope everyone had a chance to go through the statement.

FY '23 has been a very special year for EMIL. As all of you know, that we listed our company on 17 October 2020, and on stock exchange, and it was a very proud moment for all of us at EMIL. I would once again like to thank the entire investor community for the tremendous support during our IPO.

EMIL is the largest player in the southern region in revenue terms with dominance in Telangana and Andhra Pradesh, and is the fourth largest consumer durable and electronic retailer in the country. We have built a long-standing market presence with more than 3 decades of experience. Our company is currently associated with more than 100 brands with over 6,000-plus SKUs and has a long-standing relationship of more than 15 years with a certain number of brands, which operate in product categories such as large appliances, mobile phones, small appliances and other categories.

We provide a complete and unique shopping experience to our customers by showcasing a wide range of electronic products under one group in our multi-brand model and providing a specialized brand experience with our exclusive brand outlets. We go up with limited brands, but in a huge volume as compared to other players who have more brands and on board, this gives us a competitive edge and better bargaining power with the top brands versus the top peers.

In FY '23, we had opened 24 new stores. Currently, we have 127 stores, out of which 114 are multi-brand outlets and 13 are exclusive brand outlets. Out of the 127 stores, 106 stores are leased, 12 are [ owned ] and 9 are partly owned and partly leased.

As on date, we are present in 41 cities across 4 states. During the last year, we entered new territories, which are Delhi, NCR and Kerala. We continue to focus on deepening our presence in this region.

We operate in -- before mentioning into the newer markets, which has led us to establish the brand presence in Telangana and Andhra Pradesh markets. It enables the target customers to identify with us on our brand with our product portfolio and as the understanding to market segmentation and the customer demand preferences. We believe that this approach has also enabled us to achieve significant market share and dominance in the market that we are present in.

We plan to continue and to deepen our store network in Andhra Pradesh and Telangana, and also gradually plan to expand our network in the NCR region with -- in pursuing our defined truster based approach. We plan to open a further of 13 multi-brand outlets in NCR region, 21 multi-brand outlets in Andhra Pradesh and 8 multi-brand outlook in Telangana region, and adopt a methodological approach to evaluate and selecting locations for the new stores by FY '25.

We believe that our local market knowledge, supply chain efficiencies and effective inventory management has enabled us to attain higher cost competitiveness and consistent profitability. Our customized product assortment and comprehensive product portfolio enables us to achieve better visibility, brand recognition, deeper market penetration and increased customer base.

We had 10 large central located warehousing facilities, which are backed by individual storage areas at store level for variable sizes to cater to individual stores or a group of stores. Coming to the Q4 results, we have delivered a growth of 8% on revenue year-on-year from INR 1,328 crores and 25% year-on-year growth for the FY '23 period with the INR 5,446 crores.

On account of investments made to open stores in a new geography, that is NCR, the company has increased in investments in brand building and sales and marketing activities, which will help us deepen the market penetration and increase our customer base in this geography as well.

To conclude, I would like to say that after having established a leadership position in Andhra Pradesh and Telangana, retail electronic market, we have entered Delhi and NCR where we plan to capture significant market share in the coming years.

In the southern region, we plan to expand our footprint places like Vijayawada, Tenali, Guntur, Kurnool, Mangalore across Tier 2 and Tier 3 cities in Andhra Pradesh and Telangana as a customer-based expansion, distribution network, diversified product portfolio, strategically located logistic warehousing facility will give us a competitive advantage in these existing regions as well.

With this, I request Mr. Premchand Devarakonda, our CFO, to update you on the financial performance. Thank you.

P
Premchand Devarakonda
executive

Thank you, Karan sir. Good evening, and warm welcome to all the participants. Now I would like to present the financial overview of our company for the year '22, '23. Our total revenue for Q4 of FY '23 stood at INR 1,328 crores as against INR 1,231 crores of Q4 of FY '22, which has grown by 8%. For FY '23, our revenue stood at INR 5,446 crores as against INR 4,349 crores of the previous year, and the growth rate has been 25% year-on-year.

For FY '23, Same Store Sales growth rate stood at 17%. And for FY '23, approximately 48% of our sales revenue came from large appliances, 38% from mobile and 14% from small appliances and IT and other products. Out of the total revenue from the sale of products, approximately 98% of revenue come from the retail segment.

The top 5 brands contributed around 64% of our revenue. EBITDA for Q4 of FY '23 stood at INR 91 crores as against INR 89 crores with a growth of 2%. And for FY '23, EBITDA stood at INR 336 crores as against INR 292 crores of the previous year, with a growth of 15% year-on-year.

EBITDA margins for Q4 stood at 6.8%, and [ for the ] year, it was 6.2%. As mentioned by Karan sir, margins are lower, mainly due to increased investment in the marketing and brand building activities in the new territory that is NCR region.

PAT for Q4 FY '23 stood at INR 36 crores as against INR 35 crores with a growth of 2%. For the financial year '23, PAT stood at INR 123 crores as against INR 104 crores of the previous year, which had a growth of 18% year-on-year. ROCE and ROE for FY '23 stood at 13.7% and 10.4%, respectively. There has been an impact on ROCE and ROE in FY '23 due to the addition of stores.

The working capital days as on 31st March stood at 68 days, the gross debt to equity has been at 0.6x and net debt to equity stood at 0.2x. Our net debt to EBITDA stood at 0.87x. Our cash flows from operations before working capital changes for FY '23 stood at INR 342 crores, which matches our EBITDA.

With this, I would like to open the floor for questions. Thank you, everyone.

Operator

[Operator Instructions] The first question comes from the line of Krisha Kansara from Molecule Ventures.

K
Krisha Kansara
analyst

Yes. So sir, my first question is on the growth part. So our sales have grown by 8% if we compare it with last year's March quarter. So I wanted to know what has been the reason for a lack in growth? Like is there any specific category which is impacting it? Or is it a median specific thing?

K
Karan Bajaj
executive

Yes, ma'am. So ma'am, if you look at the Q4, Q4 usually in our state wherein predominantly operate in Telangana and Andhra Pradesh usually a period where some summer starts of. And if you look at the 2 major categories that we deal with our air conditioner and air cooler, given that period because for the 20 days in the March month, it was raining here, so they were directly impacting the sellout of the category.

So the growth is actually coming from other categories and that particular category, cooler and air conditioner was probably flattish and a little de-grown. That is why you would see an impact directly in the revenue number where that category would had played out well as the weather wouldn't be a reason for it, we have definitely grown much higher.

K
Krisha Kansara
analyst

Okay. So you're saying that the impact on AC sales is the reason...

K
Karan Bajaj
executive

Yes. If I can just highlight, so basically what happens when you look at the product mix of that particular month, usually, we would look at air conditioners and coolers, which contributed to INR 234 crores in the last quarter Q4, and last year was INR 195 crores only this year. So that was a major drop there.

And this being one of the highest grocery category as well. So we would see a change there as well. So the contribution from this category was not as expected that it would be because it was technically a summer period, but it was raining here. So that is why we will see a decrease in that category.

But -- the first week of April, but then during this quarter, we were back again seeing our growth in that category coming back again because the vendor played out well for us in the last few weeks.

K
Krisha Kansara
analyst

Okay. So you think that the [ past 2 months this Q1 ] has been better than what happened in Q2?

K
Karan Bajaj
executive

Yes, Ma'am.

K
Krisha Kansara
analyst

Okay. And sir, how much has Delhi NCR contributed in that total sales if you could give us an absolute or a percentage number for this quarter and also for the full year FY '23?

K
Karan Bajaj
executive

Sorry, can you repeat your question? I could not hear you clearly?

K
Krisha Kansara
analyst

Sir, my question was how much has Delhi contributed to our overall top line in this quarter and also for the full year FY '23?

K
Karan Bajaj
executive

Right. So ma'am, well, so it has contributed -- on an annual basis, it has contributed INR 137 crores. So that was the sale that we generated. And on the quarter, it contributed INR [indiscernible].

K
Krisha Kansara
analyst

And sir, how many stores have lay in Delhi have meet the breakeven levels?

K
Karan Bajaj
executive

How many stores in Delhi have reached the breakeven level? That's what the question is?

K
Krisha Kansara
analyst

Yes.

K
Karan Bajaj
executive

Right now, what we look at is we look at operational breakeven in 12 to 14 months. So the stores are all on the track of reaching that number because 2 stores are 8 months old, 2 stores are 6 months old. So it is on the trajectory when we look at the monthly average revenue. So it is on that part of reaching the threshold in 12 to 14 months that we targeted initially. So we are on track of doing that, ma'am.

K
Krisha Kansara
analyst

Okay. Okay. And sir, recently, we announced that we have changed our store counts and our strategy of shifting to MBOs from EBOs. So we reduced our store count in Delhi NCR from 26 to 18 MBOs. So we also cut down on EBOs in Telangana. So I just wanted to know your thought process behind the scene because we are expanding in the Delhi NCR currently? And then why are we cutting down on the number of stores there?

K
Karan Bajaj
executive

Right. So ma'am, actually -- we're operating 13 stores right now in Delhi with one more EBO getting added there. So there will be 13 MBOs and 1 EBO coming getting operated in this quarter. So that is the number. And with our plan of expanding in Delhi with another 13 to 14 stores, that is the plan. The idea is to get the right location, the right price.

So the idea was to revise this so that we are in line with what we've already signed up in terms of the properties that are getting ready. So this year, we'll be coming up with some more stores. So if you can add or find good property at a reasonable price or the reasonable rental that we're looking at, we'll definitely add up more number of stores there. So there is a restriction on how many number of stores we'll be adding up. But it is just an idea of where we get the right location at the right price.

So that is more important because we've already signed up 13 locations are operational, another 6, 7 are in the pipeline. So technically, we would be around 20-plus stores by end of FY '24. So in the main period -- in the meantime, if this year, we add up more stores, you sign up more stores, that will definitely get added up sooner as well.

So there is no restriction on how many stores, but the market that we've decided where we got to open the stores, that is where we got to find the right property. So that is -- gets a little difficult to find the right property at the right price. That's the only reason.

K
Krisha Kansara
analyst

Okay. Okay. So we have not cut down on the number of stores because of any issues in the existing stores. It's just like strategic decision?

K
Karan Bajaj
executive

Yes, madam. Yes, madam. And at the same time, we started expanding in Andhra and Telangana, and we do see the contribution from our operating stores in Telangana and Andhra Pradesh are actually started performing really well for us. So going forward, our strategy was also to detail the market like Vijayawada, Guntur, Nellore, Tenali, Vijayanagaram where we are already present either with 1 store or 2 stores, and those markets also going to -- want to expand because then we can leverage on our marketing, our inventory or logistics and stuff like that.

So that it we are existing currently, so the cost of operating there becomes much easier and much cheaper than actually entering into a new city. So we are expanding parallelly in the new geographies that we have presented in NCR as well as with the existing markets in Andhra and Telangana. That is where the plan was to expedite the growth in our existing markets as well.

K
Krisha Kansara
analyst

Okay. Okay. Understood, sir. And sir, just last one question. So what was our advertisement spend in this Q4 FY '23?

K
Karan Bajaj
executive

Sorry ma'am, can you repeat your question?

K
Krisha Kansara
analyst

How much would have been our advertisement cost in this quarter?

K
Karan Bajaj
executive

Advertising cost in Q4 now?

K
Krisha Kansara
analyst

Yes.

K
Karan Bajaj
executive

One second. I'll just tell you the advertising cost. So ma'am, it was around INR 5 crore -- INR 5.3 crores.

K
Krisha Kansara
analyst

How much?

K
Karan Bajaj
executive

INR 5.3 crores.

K
Krisha Kansara
analyst

INR 5.3 crores. And how much of that would be in Delhi?

K
Karan Bajaj
executive

Delhi was around INR 2.95 crores, ma'am.

Operator

[Operator Instructions] Next question comes from the line of [ Rana Kulara ], an Individual Investor. The next participant is Mehul Desai.

M
Mehul Desai
analyst

Sir, can you -- Karan, can you just help me with what is your store addition plan for Telangana, AP and Delhi NCR for FY '24?

K
Karan Bajaj
executive

So sir, for FY '24, we plan to open up 13 stores in Delhi. Yes. And out of which, 7 -- approximately 7 are signed up, which would include 1 EBO as well. That is due to get launched next month, that will increase to the store and around 10 stores in Andhra Pradesh and around 5 stores in Telangana.

M
Mehul Desai
analyst

Okay. So we are looking at almost 28 store additions in FY '24, right?

K
Karan Bajaj
executive

Yes. Correct.

M
Mehul Desai
analyst

Okay. And just one, I just wanted to reconfirm this. What was the base quarter the AC cooler has seen, you said INR 195 crores in this quarter? Sir, what is the base quarter?

K
Karan Bajaj
executive

From the INR 195 crores, I didn't get your question, sir?

M
Mehul Desai
analyst

Sir, you said that AC cooler sales were impacted in the quarter? And you said INR 195 crores was the sales in this quarter. What was the base quarter sales for the AC cooler segment?

K
Karan Bajaj
executive

INR 234 crores, sir. Q4 of '22 was INR 234 crores versus INR 195 crores this year, sir.

M
Mehul Desai
analyst

Okay. So this is the primary reason for a store or I mean the sales moderation or SSD moderation.

K
Karan Bajaj
executive

So if I look at other categories like refrigerators, if I look at mobile phones and audio and video category are building the plan -- plan category, every year there is a growth. So if I -- you want as run through the numbers also, the mobile and laptop categories for INR 448 crores for that quarter went up to INR 539 crores. The panel and the audio division from INR 177 crores grew up to INR 198 crores.

[ Refrigerator ] business alone from INR 127 crores grew to INR 133 crores. Washing machine from INR 97 crores grew to INR 99.7 crores. Kitchen appliance from INR 51 crores grew to INR 56.5 crores. And other categories from INR 12.9 crores grew to INR 25.4 crores.

M
Mehul Desai
analyst

And the gross margin improvement that we have seen on a sequential basis, I think Q3, we had some higher cash back and that some issues with respect to that. So that has got corrected and that is the reason Q4 gross margins are higher sequentially?

K
Karan Bajaj
executive

Yes, sir. To what -- after that, after that, we realized that what was going wrong in terms of where we could run -- go back to the banks and as we were discussing last time also to understand and plug those leakages where some costs that are directly proportional to our sales revenue, like credit card charges, cash back, NBFC charges and all.

We have tried to plug them in and renegotiated all the NBFC banks and all for either giving a higher commission, reducing a contribution on the cashback offers. So though we have run those cashback offers and still running the cashback offers, but we reduced the contribution to that and renegotiate with the NBFC to increase our margins.

M
Mehul Desai
analyst

Understood. And this A&P spend, which you said INR 5.3 crores in this quarter, what was the base quarter number, I mean Q4 FY '22, what was the number?

K
Karan Bajaj
executive

For mobile phone, sir?

M
Mehul Desai
analyst

No, no. Advertising spend, which you said INR 5.3 crores in this quarter.

K
Karan Bajaj
executive

Advertising spend was INR 6.3 crores and the last quarter was INR 5.3 crores. And so that, again, is reduced because Hyderabad it was raining. So March month, whenever we start promoting our AC festival season. We have reduced our spend here because it was pouring and there was no point of advertising, -- doing radio and print heavily during that period, so for the AC and cooler base.

M
Mehul Desai
analyst

Okay. Okay. Understood. And lastly, on the balance sheet side, I see a debt. What plan in terms of reduction in debt, I mean, the model that we have. How do you see that reducing in the next 2, 3 years? Or what is the plan there?

K
Karan Bajaj
executive

So sir, currently, if you see our debt levels are much lower than what they were in Q1 last year, maybe because the INR 120 crores of working capital got included from the IPO funds in the 1stt of April.

So this balance sheet that you look at is on 31st March. So that the first 10 days of April infused INR 120 crores from the IPO fund that we had raised, right? It was for the working capital requirement for FY '24. That automatically got added up.

And at the same time, in terms of getting efficiencies in multi management and the churns what we usually do, that is where we've seen our efficiencies coming in. Apart from the long-term debt, which was straight away for buying up properties in Delhi region, apart from where the working capital requirements have come down, sir.

M
Mehul Desai
analyst

Okay. Okay. And lastly, on the gross margin side, that right now, we are clocking around 13.4% are you seeing this 14% range should sustain now given the additional...

K
Karan Bajaj
executive

Yes. So the idea is to sustain this going forward as well and try to improvise on wherever the leakages are and try to improve this. In terms of negotiating with the brand, that is a daily task that we usually do internally. But at the same time, with our expansion that had happened in other regions as well, we see a higher productivity coming in this financial year. So we are pretty sure we'll have a little more bandwidth to negotiate with brand and use categories and try to improve that as well.

M
Mehul Desai
analyst

Okay. Got it. Thanks, Karan. And good luck for the rest of everybody.

Operator

[Operator Instructions] Next question comes from the line of Deepak Poddar from Sapphire Capital.

D
Deepak Poddar
analyst

Sir, just a couple of things I wanted to check. Now I think in the previous calls as well, we were kind of looking at maybe a 20%, 25% kind of a CAGR, right, going forward. So because of going slow in NCR, is there any change in that?

K
Karan Bajaj
executive

So no, so actually NCR what has happened is when we started securing a property, this was during right after the COVID period. So it was much easier to add on 10, 20 locations that were much easier, but because Q3 properties are getting constructed as well. So the market in Delhi NCR today, transit around 30 big market where we first wanted to enter before we start experimenting with the territories of NCR. We just short-listed of 30 markets, we are on track of doing that. It might just complete by the end of this year. We will be completely the top market. So after that is when we plan to secure properties in and around the area that we decided as a plan B.

So once we execute the plan A towards with the first 20, 25 big stores in the market, that is when we plan to expand further. So the plan is still on. There is no changes on the plan of deviating from opening a number of stores in Delhi. But right at the current scenario, the property prices have prevailed to pre-COVID levels are much higher than that.

So getting the right property, negotiating it for a longer lease period is what we are doing, and it is taking much more longer than what you should take earlier. So getting the right location, the right price is more important rather than just jumping into a market only because of a competitor being present in the market. So that is not our strategy.

Our strategy is to make sure that we get the right location at the right price. So we are just negotiating. So every day, we keep on negotiating for properties. And whenever we can close on a good deal, we are going ahead with that.

D
Deepak Poddar
analyst

Yes. I understood that fair enough. So what I was also trying to understand, does it impact our aspiration of 20%, 25% growth over the next 1, 2, 3 years?

K
Karan Bajaj
executive

Sir, it will be in the same line only, until unless as I told you that you have some external factors like the weather is impacting something or there are some external factors. Apart from that, we don't foresee anything that will impact our CAGR to be around 20% in the coming years as well.

D
Deepak Poddar
analyst

Fair enough. Understood. And in terms of margins, I mean, what's the aspirational margins that we are looking at? I mean you mentioned about the gross margin, right, that through negotiation, we would like to improve upon that. So even on the EBITDA margin, I think what currently 6.8%. But again, we had, I think, lower branding expenses this quarter, right? So some or impacts on the trajectory on the margin front would be helpful.

K
Karan Bajaj
executive

So sir, the margin also would be in the similar line only. So there will be an increase around 1.2% kind of a number that we would look at gradually also if we grow because there are some costs involved, especially in the market like Delhi where this is stabling ourselves compared to our existing markets in Andhra and Telangana where people knew our brand much easier to establish the core and turn around the store.

So initially, for the first couple of years, that is there, we have planned and we are in line with what our investments are going up in that region. But because we know the market size is full used there. And even if we reach a certain threshold of market share there, we'll definitely turn things around for the company. So that is what the idea is. It is more like an investment that we're looking at. And -- but the EBITDA margin would be in the same lines only, probably 1%, 1.2% kind of an increase there.

D
Deepak Poddar
analyst

So aspirationally, I mean, 6.5% to 7% EBITDA margin for our kind of business would be a right benchmark, right?

K
Karan Bajaj
executive

Right. Right.

Operator

[Operator Instructions] Next question comes from the line of Nirav Vasa from Anand Rathi.

N
Nirav Vasa
analyst

Would it be possible for you to share the promotion spend that we intend to do in FY '24? Any number that you have formed up considering the kind of expansion that we are planning in Delhi and other parts of?

K
Karan Bajaj
executive

So sir, FY '23, our spend was around INR 50-odd crores, which we're expecting to be on INR 59 crores in the FY '24 period. So that is the number that we're looking at. That will be in line with the total revenue that we generate for the next year as well.

N
Nirav Vasa
analyst

The other question will be pertaining to what was the actual rent -- actual payment that we did in terms of rent in FY '23? And what can be that number in '24? Can you please any -- can you share that data, please?

K
Karan Bajaj
executive

Yes. One second. -- in FY '23, it was INR 80 crores. Sir, FY '22 is rental -- actual rental payout that on the balance sheet looks divided between the interest and the deflation cost because of lease liability, [indiscernible] was around INR 80-odd crores. And for FY '24, we would look at increase coming in from new stores as well as the incremental rental would to be around INR 85 crores.

N
Nirav Vasa
analyst

Sir, what I was actually asking was, out of this INR 80 crores, how much was cash payment, actual payment? Because as per...

K
Karan Bajaj
executive

We are telling you the absolute number of rent cost. Not what was adjusted in depreciation interest and telling you the actual rental cost that we bear a year. For FY '23, the actual rental cost was INR 80 crores to INR 81 crores. And for FY '24, it is predicted to be around INR 85 crores.

N
Nirav Vasa
analyst

So this is the actual cash outflow, right?

K
Karan Bajaj
executive

Yes, yes, yes.

N
Nirav Vasa
analyst

Perfect. Would it be possible for you to share the incentive income, which was booked in '23?

P
Premchand Devarakonda
executive

What is it?

K
Karan Bajaj
executive

Incentive income, sir?

N
Nirav Vasa
analyst

Incentive income brand.

K
Karan Bajaj
executive

FY '23 period was around INR 500 crores,sir.

P
Premchand Devarakonda
executive

That is total.

K
Karan Bajaj
executive

Total. Yes. I will tell you the details as well.

P
Premchand Devarakonda
executive

Incentive income, Nirav, it's INR 292 crores.

K
Karan Bajaj
executive

So the incentive income was INR 292 crores versus INR 213 crores for FY '22.

N
Nirav Vasa
analyst

So my final question. What we are seeing right now is that all the brands in India are expanding their capacities very aggressively, and they are fighting very aggressively to gain market share and everything. So in the light of this scenario, especially your location in 3 cities has become the hub for manufacturing of air conditioners. So do you see a strategic advantage based on your core area of Andhra and Telangana and 3 city becoming manufacturing hub?

So for the forthcoming summer season, do you think you can get additional margin from brands on 2 counts. First is because they are becoming very aggressive for volumes? Second is that there factories are very close to your core area of operation? Any update on that would be a great answer.

K
Karan Bajaj
executive

So sir, as you mentioned, the CECC goal is definitely much closer in terms of our operation region. But right now, it is not directly benefiting us. Probably for the long term, we might look at that benefit, but usually the brands don't discriminate or distinguish between the locations that they supply to because it usually is a cost to them, but this is an advantage to negotiate better with them in the future. So I'll definitely utilize this as a strength of ours to negotiate better and take this as a recommendation from you.

Operator

[Operator Instructions] Next question comes from the line of Prakash Desai from Desai Investments.

U
Unknown Analyst

My first question is how many stores are you planning to open in FY '24? And can you run up to the store expansion strategy?

K
Karan Bajaj
executive

Yes, sir. So sir, on an average year, we look at expanding with around INR 25 crores. So that is the target that we usually have organically understanding the market and growing thereon until unless we get some good locations that we can sign up immediately. So the plan is divided between Telangana, Andhra Pradesh and NCR region.

So the stores that have already signed up for this region plus the new store that we're adding up would be around INR 25 crores to INR 28 crores for this financial year.

U
Unknown Analyst

All right, sir. And can you guidance on the CapEx for this year and the next year. And on the CapEx side, would you be using it for buying out properties or leasing them?

K
Karan Bajaj
executive

So the idea is open for both buying out and leasing out, whereas buying we've only signed up for a couple of properties that were left with quality companies agreement of sale in Delhi, which the handover is yet to come in. So only those property signed up, there is nothing additional that we signed up as buying a property. So most of them, if we can negotiate like Andhra and Telanga, most of the properties are negotiating for a longer lead at a good rental price. So that is where our expansion plan and our expansion plan would be for this region.

Delhi, definitely, if we find a good property, we would be looking at an option of buying as well because the rentals are quite high there. But nothing right now, apart from [indiscernible] that we had already decided to buy. There's nothing new that will turn up in the next year or so.

U
Unknown Analyst

All right, sir. And one last question. Sir, can you quantify the revenue run rate in the Delhi markets, which we have on a monthly basis? And secondly, is the absolute amount of -- what is the absolute amount of fixed cost to run the Delhi stores?

K
Karan Bajaj
executive

There is 2 metrics to look at this. So right now because it is a very geography that we entered this number of stores operating, what is the marketing that we were doing there. And so every month would be very different. If I look at the Diwali month or number or the last month number, so every month would be a little different because Delhi is predominantly an AC and cooler market where cooling products are quite heavy in the whole consumer durable play.

So that is yet to start because Delhi was also pouring in the last few weeks, not at an optimal level of temperature where it would start turning out AC and cooler at a higher number. So once we get a complete churn post this quarter is when we can look at a certain number of average coming forward. But in terms of our strategy of doing a certain threshold of sales in Delhi as a region from day 1, that is on track.

So -- the stores we definitely profit expectations, you will be at par with what our expectation was in Delhi. And probably end of this quarter, we'll be expecting an average sellout going forward because that will create a base for us post the summer season. And then we can look at Delhi performing much better than what it is doing today.

Operator

[Operator Instructions] Next question comes from the line of Nihal Jain from SK Securities.

U
Unknown Analyst

I had a few questions. Firstly, could you throw some light on the marketing initiatives that you would have taken to expand in the NCR? And what will be the strategy going ahead?

K
Karan Bajaj
executive

Right. So as we launched in October last year, what we have done is we had spent money across different [indiscernible] activities by doing cash flow that we usually do back home in Hyderabad and Telangana. So we've done a cash draw, we've done print, radio, outdoor was quite heavy with us. The celebrity investments and influential business and stuff like that, that was a marketing strategy for Delhi.

So we want to make sure that because we launched 8 stores together, we want to make sure that because the spread of Delhi -- geography spread is a side bit, so to make sure that everybody is well informed of the launch of the stores that in which locations we are launching. So that was initially done.

And for August to October, that is when we spend big money on this activity. And then post that, again, this year for the summer, we've again planned a INR 15 lakh cash price draw as an incentive to customers whoever buy and participate in the draw.. So that is the marketing strategy that we applied there with definitely print being the most -- printer radio being the most effective medium for that geography.

U
Unknown Analyst

Okay. And what should it be going ahead like moving forward?

K
Karan Bajaj
executive

We would look at -- so definitely, what we did in August during the launch period in October again, when we launched with other set of stores, it would definitely not get replicated during the coming years is because right now, our stores are all spread across different months of launch. So we would probably do 1 or 2 stores at one time rather than doing a block of 4 stores and that we did initially.

So going forward, we will look at that being in line with our revenue generation that we would do or more to do with specific days of like 15 August or Raksha bandhan or Diwali, Dussehra. The marketing activity is being in line with the big festival days. And there will be then organic activities going on primarily to promote the stores.

U
Unknown Analyst

Okay. So sir, regarding the opening of stores, is this a change in strategy that we are doing about opening -- not opening like stores in clusters or together on a same day?

K
Karan Bajaj
executive

What happened was August 14, when we launched 8 stores together and 22nd of October when we launched 4 stores together, they were all new stores that were getting ready parallelly. So right now, if I look at my -- one of my store is ready for launch. Okay, next month, one is ready, a month later. So now we don't want to delay because the brand is recognized, we don't want to delay the store opening until and unless we do a soft launch and then combine 2 stores to do our official launch for all the stores. So that could be a strategy work out there. There store simultaneously ready for launch or in a span of 15 days here and there, then we can plan on opening stores together. But we don't want to hold up stores and delay the launch until and unless it is not required.

U
Unknown Analyst

Got it. Got it, sir. Also, could you share the gross margins across various categories?

K
Karan Bajaj
executive

There are no changes on the gross margin across various categories, it remains in line with what we have done in the past as well. So definitely, air-conditioners, air coolers being one of the highest gross margin categories with around 18% and then television at the 17%, large appliances at around 17%, 18%. Mobile phones at around 9% to 10%, laptops are the lowest around 6%. That is more or less a breakup for the gross margin across categories.

U
Unknown Analyst

Okay. And my last question, could you tell me the SSGR for a mature store and for a 1 year old store?

K
Karan Bajaj
executive

Ma'am, right now, if you look at the FY '23 number, we are at around 17% SSG. But then if I look at mature stores, which are of 5 years, we are sustaining their around 5% to 7% there, which are older one. And definitely, this year, going forward, you look at the major growth coming in not only from Delhi, but even our Andhra and Telangana store because it started performing really well because there were a few of them were actually opened during the COVID, post-COVID period. It took a little more time to establish because they were in Tier 2 and Tier 3 cities. Now they started performing really well. So overall, you see a much higher churn coming in from the SAG or churn in coming in from the existing stores in Andhra and Telangana as well.

Operator

Thank you. Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.

K
Karan Bajaj
executive

So I would like to thank all the investors and everybody present on the call today for supporting us and trusting in us. And we'll definitely make sure that we deliver on what we promise. And going forward, look at a great year coming ahead. And thank you for all your support. And we'll definitely be in touch and our team and we are always available for any question and answers that you have of any kind. Thank you.

Operator

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

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