Brand Concepts Ltd (BCONCEPTS) Q3 FY23 Earnings Concall Transcript

Brand Concepts Ltd (NSE:BCONCEPTS) Q3 FY23 Earnings Concall dated Feb. 07, 2023.

Corporate Participants:

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Analysts:

Devvrat Himatsingka — — Analyst

Rajiv — — Analyst

Satoshi Chatterjee — — Analyst

Mahek Talati — — Analyst

Vineet — — Analyst

Anand — — Analyst

Rizwan Patni — — Analyst

Ankur Gulati — — Analyst

Krishna — — Analyst

Shriram — — Analyst

Rohit Desai — — Analyst

Presentation:

Operator

Ladies and gentlemen, I welcome you all to the Q3 FY’23 Post Earnings Conference call of Brand Concepts Limited. Today, from the management we have with us Mr. Abhinav Kumar, Whole-time Directo and CFO.

As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements. These forward-looking statements may involve risks and uncertainties that may cause actual development and results to differ materially from your expectations. Also, this is a reminder that this call is being recorded.

I would now request the management to talk a bit about their business, the performance during the quarter, any key highlights, post which we will open the floor for Q&A. Over to you, Abhinav.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Good afternoon, everyone, and thanks again for taking out time and joining this call and in so many numbers, really heartened by the fact. So, as you see, we have given our Q3 results and I was asked this question after we had done Q2 quarter that is it just one of those blips or do you see that such kind kind of this thing is sustainable, and I’m happy to share that we’ve done good Q3 quarter. Numbers are as sustaining.

One thing I think I would like to — so we’ve done almost 70% year-on year growth from last year same quarter and EBITDA levels have risen by almost 100%, PBT levels have risen by 101%, and obviously PAT levels have again risen by more than 100%. So in terms of growth, I think we’ve delivered good result. Till nine months if I look at, again nine months results are again quite nice and we’ve grown by — in terms of sales, we’ve grown again by more than 100%. EBITDA levels have more than doubled our sales ad EBITDA levels, I think we’ve more than tripled ourselves in terms of EBITDA levels in the nine months, so pretty happy to share these results with everyone.

Another good aspect that I would like to highlight from the company’s perspective is that it’s not one channel or one particular department, we have in fact grown on all the — on all the channels, so offline as well as online our distribution, large-format stores, our EBO, so all of them have contributed to a good growth. So very-very happy about — and all round sort of 360-degree degree approach and development on that front. Another happy news that we shared in the month of December itself was the announcement of, as had promised that we would announce at least a new brand signing, and we have already announced our association on signing of the the brand, Aeropostale, for Indian market. We’ve signed them for all the categories that we represent, which is shower gear, small leather goods and women handbags. So all the the three categories we’ve signed.

At the same time, we’ve also signed an experimental category of socks with them, which is just an experimental category. We want to see, we want to keep experimenting, we want to see where we can go with that. So, I’m happy to share that news as well. So overall, yes, I think all good. We are on good start. We are on a good wicket and we hope to continue this journey going in the future as well.

Now, without much ado, let’s start the Q&A because I’m sure there will be a lot of questions.

Questions and Answers:

Operator

Sure. [Operator Instructions] We have the first question from Devvrat. Devvrat, you can unmute and ask your questions.

Devvrat Himatsingka — — Analyst

Hi, Abhinav.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Hi, Devvrat.

Devvrat Himatsingka — — Analyst

Congratulations on great set of numbers. So just wanted to understand — so Q-o-Q the numbers are kind of flat because, like, would — should one assume that Q2 was more of seasonally growth which is why we can see no growth quarter-on-quarter.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

See, if you see from Q2 to Q3, yes, there is a minimal growth of 3% to 4%, but see in retail and ideal comparison will never be a quarter-to-quarter. The ideal comparison will always be from the last years preceding quarter — last year same quarter, because yes, retail has seasonality of its own, right? And if you look at certain years also, they also, or everybody in the retail industry they showcase similar sort of trend. So it’s not fair to compare quarter-on-quarter. But what I would still say is that Q2 for us was a very-very good jump from Q1 and we’ve sort of been able to sustain that momentum.

Devvrat Himatsingka — — Analyst

Okay. And secondly just wanted to understand this new brand that you signed, Aeropostale. Now in your previous calls you had mentioned that you will have one lightweight brand and one heavyweight brand. So, Aeropostale would be a lightweight or a heavyweight?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Aeropostale, for us is a lightweight brand for us. This would be a lightweight brand for us.

Devvrat Himatsingka — — Analyst

If it’s possible to give any kind of projection, like, or do you have any targets in mind of what kind of revenues you can do from this is, in say FY’24?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

See, FY’24 would be little difficult to predict because, first — so any new brand we sign, Devvrat, we will — the entire product development process of design, submitting those designs to the license or getting the approvals. And then post that, creating your sample set. The sample sets are again sort of approved and then you get into the final leg of placing the orders to the factory for the first time. So all mold developments, new developments. So, it typically takes between six to nine months initially. So, FY’24, I don’t know-how much of this thing would be seen from Aeropostale. We would probably get about six months of sales window.

FY’25, I think would be the real benchmark where we would reach with the brand, right? That will be the first full-year for the brand. Having said that, I had mentioned this in my earlier calls as well that a lightweight brand for us — our outlook is that in, say, four to five years of horizon, we look around INR50 crore to INR100 crore retail, right, where our wholesale is 50% of that retail. So the turnover that we see, this INR45 crores is primarily wholesale. So which would mean that you would have done INR90 crores of turnover at retail. So, excuse me. So in looking at any lightweight brand, doing about between INR50 crore to INR100 crores of turnover in terms of retial. So that would be the outlook even for Aeropostale.

Devvrat Himatsingka — — Analyst

And are we on-track to sign on the heavyweight brand as you had earlier indicated that you wanted to do one lightweight, one heavyweight. So are we on-track to sign one more heavyweight by, say, end of this quarter?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes. It will be done.

Devvrat Himatsingka — — Analyst

Okay, okay. That’s it from my side. Really good to see your margins improving and — so hope we are able to continue the show, and thanks so much.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Thank you. Thank you, Devvrat.

Operator

[Operator Instructions] Rajiv, you can go ahead and ask your question.

Rajiv — — Analyst

Hello. First of all, congratulations for a good set of numbers.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Thank you. Thank you, Rajiv.

Rajiv — — Analyst

Yeah, my first question would be, your current rate indicates that you will cross INR150 CR to IN160 CR for this year. Is that correct?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes, the current rate definitely suggests that.

Rajiv — — Analyst

Okay. So the next would be, where do you see yourselves in next year and the year after? What is your vision for FY’25?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

So as I had said earlier also, Rajiv, and I would still continue on the same, that for this year itself, if you see from INR86 crores of last year I had given an outlook of around INR136 crores, whereas in nine months itself we’ve done INR122 crores almost, right? So for sure, we as we had at a pace where we would have beaten the estimates that we have given. Continuing on the trend, we look at 30% kind of CAGR to be maintained for the next two to three years and that’s the outlook that I would like to still maintain, and I think we should be able to sort of achieve that kind of a CAGR. I hope I have answered your question.

Rajiv — — Analyst

Yes, yes. My next question will be, till how far do you see margin improvement at EBITDA and PAT levels?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

So, in fact, going forward, the way we have created are budgets, Rajiv, and then I’m being very transparent and honest is that the moment you sign couple of new brands, initial phase there might be certain margin pressures as well. Input costs are also rising everywhere. Now when you have a brand like Tommy Hilfiger, of course, your premium brands are able to command a certain price positioning in the market, right? Certain brands that you sign, which are more in in the mass premium segment or an Aeropostale which might be into a value price segment, you might not be able to fetch the same kind of gross margins, right? And hence there might be a margin pressure from a gross margin perspective. Now till these brands also scale to a certain level, they will entail a certain amount of cost structure to be building. And hence I have always maintained that while we are — generally if you’re growing at 30%, 35% kind of a CAGR. And in fact, from last year to this year if I see, we’ve grown almost double, right. Excuse me.

So, one tends to see a margin pressure, one tends to see a percentage wise gross margins coming down because you aiming for a high-growth. But what we would like to maintain or what I would like to maintain is that even with this high growth we would be in a similar vicinity. So I’m not saying that we’ll marginally — all these gross margins or your EBITDA levels are marginally going to keep going up. There are certain expenses which we’ve planned towards product development, infrastructure building, all of that. And on top of it, the brands will not have the same kind of gross margins because you’ll be playing more in the value segment. So, but economies of scale will also come into picture. So keeping all of this in mind, I would still give an outlook that we would be in this sort of a vicinity of around 6% kind of a PAT.

Rajiv — — Analyst

Okay, okay. Thank you, sir. Thank you so much.

Operator

Thanks, Rajiv. We’ll take the next question from Satoshi Chatterjee.

Satoshi Chatterjee — — Analyst

Yeah. Good afternoon, sir. Thank you for the opportunity. Sir, because I’m new to the company I would like to ask couple of questions on the — like channel distribution as you said that almost half of the distribution is through online channel and then therefore part one is, what would be the margin differences across channels? And second within online, how much percentage of revenue we spend every year on the ad and sales promotion on the online channel and how do you measure the return on ad spends?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

See, online, as you see is 50% of our business. The gross margins over there are tad better. So different segments have different sort of gross margins. But I would say the variants is about plus two minus 5%. And we recalculated more from the contribution perspective. So from your gross margin we reduced the direct expenses. And post that, we come to a contribution level. So at the contribution level, if you’ll see — so if I would roughly translate that at the EBITDA level, I think the variance would be close to plus-minus 1.5% to 2%. That kind of a variance would be there, not more than that. Number one.

Number two, in — see, as a company, overall if you will see our spend on marketing is not that high. So, if you will calculate the percentages in these nine months, you would have spent in totality about 2.2% in terms of marketing, right, which is across all the channels, whether it is online, whether it is offline everywhere. And the reason for that is we are in the licensing business. I have always said this we maintain this that the reason we are paying a royalty to these brands is because we are not in the business of building the brand. We are in the business of building the category for that existing brand, right? And hence we don’t spend too much on brand building activities. Going forward, yes, the marketing spends might increase, but again, overall level [Foreign Speech] marketing spend I don’t see that ever crossing. So, I hope I’ve been able to answer your question.

Satoshi Chatterjee — — Analyst

Yes, yes. Very well explained. And secondly, I would want to understand that the 25% to 30% kind of a CAGR, 30%, 35% kind of CAGR that you’re talking about, how much you think would be coming from the contribution of new brands versus how much would be coming from the distribution expansion of existing brands?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Well, I think the existing brands still has the potential, which is if you’re talking about Tommy and couple of our own brands which are there. So I feel that, you know, Tommy, for example, can easily grow at a 20% plus kind of a CAGR. And the rest of the growth is going to come from the new brands.

Satoshi Chatterjee — — Analyst

Understood. Just in that case, what would be — like I think you’d want to grow your offline channel slightly higher than your online channel and there I think in earlier calls you have talked about 800 touch points that you have in terms of points of sales. How would that grow over the next two to three years?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

So it’s not that we want to grow the offline channel more than the online channel. I have always maintained that our online and offline mix is going to be similar. So online, we’re very-very focused on the digital play as well. In fact, talking a little bit more about digital. In my in the last calls also I had mentioned this that during my last calls also I had mentioned this that we have two kinds of play in the online, which is, one is where you directly supply to all the e-commerce portals, whether it is Myntra, Amazon, Flipkart, Ajio, Nykaa, all of these guys. And the other is a marketplace model where we control the inventory, we are the seller. And we invested into developing this entire infrastructure in-house and I’m happy to share that from where one and a half years back — One, one and a half years we did not have sort of any marketplace sales. And now of our overall online business, almost 24%, 25% of the revenue is coming from our own marketplace operations, right? So, we are equally aligned for digitally as well as offline. It will always be a healthy mix.

In terms of point-of-sales, if you will see, from 800 — I wouldn’t say that we’ll reach VIP levels or American Tourister levels. There are more than 8,000 point-of-sales across the country. But yes, we want to keep growing. It’s very — it will be very, very hard to say exactly a number to that, but we’ll keep on growing in terms of EBOs, in terms of large-format, in terms of distribution, all the channels.

Satoshi Chatterjee — — Analyst

Great, sir. Thank you. I’ll come back in the queue.

Operator

Thanks, Satoshi Chatterjee. We’ll take the next call from Mahek Talati. Mahek, you can unmute and ask your question.

Mahek Talati — — Analyst

Yeah, am I audible.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes, yes.

Mahek Talati — — Analyst

Yeah. Thank you for the opportunity and congrats for a good set of numbers. My question was regarding our own brands, the Sugarush and Vertical. So, how are they performing in terms of the sales and profitability?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Okay. I would say that they are performing decent. I wouldn’t say that we haven’t bet our shot on these brands. We’ve never sort of gone out of bounds and put in huge amount of marketing money behind these brands. So, they are sort of growing along. And today if you will see, a decent amount of sales is coming from our own brands. They are mostly price fillers rather than, you know, say, brand, brand, or say they are mostly like price fillers, right. And they’re doing fairly good.

Mahek Talati — — Analyst

Understood. And in of our sales mix, like we have three to four major products. One is travel gear, one is small leather SLGs and and one is back pads. So how has been the sales mix and the growth in last one year and which segment do we think will continue to grow at a good pace going forward as well?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

[Foreign Speech] currently it is our least contribution, primarily because we don’t have [Foreign Speech] which we have discontinued. And so in women’s handbags if you will see, we just have our own brand, Sugarush. And we also are doing Tommy women’s wallets, which we classify under the women’s categories. Obviously, hence that is the smallest part of our portfolio and it contributes to somewhere close to about 8% of our overall on sort of turnover. Bulk of it still comes from our small leather goods division, which is the largest division till now. Almost 50% of the sales come from there and about 42% sales comes from travel gear.

When it comes to in terms of growth, I think both the segments have seen tremendous growth. Going-forward, I keep saying is that we always internally also we always peg a higher-growth on the travel gear segment, but small leather goods continues to surprise us. It just keeps on growing. So I would say that while we anticipate that travel gear going forward would grow faster or at a higher pace than small leather goods, but only time will tell which of the categories outsize each other. But we internally feel that travel gear will have a higher growth rate.

Mahek Talati — — Analyst

Understood. Fair enough. And, sir, last was with regarding to the geographical footprint. So you have mentioned that you’re currently present in some states of UP, Maharashtra and Karnataka and you are targeting increasing the market in that areas, which is want I can see from Slide number 9 of you PPT. And you are also targeting some new regions of North-East and newer states of Jharkhand and Chhattisgarh. So, exactly what are we trying. Are we going through to online channel or are we trying to start the offline channel in that areas.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

See online — we are as it is present everywhere, right. Online is India ke dukhan. That store is for the whole country. So it is — it’s all about how many pinpoints — pin codes are you able to service. And today, all your large e-commerce players, of like Myntra, Amazon, they are serving almost every pin code coal available to them, right? Or they would be covering more than 90% of the pin codes available in the country today. So, from online perspective, we are already present everywhere.

So, whenever we talk about increasing our geographical footprint, it will always be offline. Now offline [Foreign Speech] One is, if the city is good enough to warrant a store. So for example, very, very happy to share that we have opened our first store in Bangalore. We have opened our first store in Hyderabad, both in January, right? We opened these two stores. So South, our presence is very less and now we are concentrating building on South. So we have opened our first two stores in Hyderabad and Bangalore. So apart from this, we are getting into distributor agreements in the South of India. We’ve appointed a master distributor for small leather goods. Now we are looking at appointing certain distributors and master distributors for travel gear business in the south territory.

So, the growth is going to be with your own stores, with large-format stores late Shoppers, Lifestyle, Centro now being owned by Reliance. Wherever these guys are increasing their footprint, we are as it is expanding with them. We had when it was earlier Centrum, we had obviously pulled out because of the financial issues. And now that it has been taken over by the Reliance, we’ve again sort of in the process of signing the agreement and rolling out in their stores. So pretty soon we’ll be spreading across their stores. So as and when these guys also keep growing, adding on-stores, we are a preferred partner with all these large-format place. We feature in their top brands. So hence, we will also keep getting space in their stores.

Distribution helps us to increase our multi-brand footprint. So the, mom-and-pop stores, which still in India is huge, right? More than 80%, 85% of the retail, they are still unorganized, right?. It’s still the mom-and-pop stores. So, hence distribution is a way to capture them. So increasing our distribution footprint so. So, yes, we are looking at enhancing our this thing offline primarily through these various channels.

Mahek Talati — — Analyst

Understood. Fair enough. If I could squeeze one last question. So, the Aeropostale agreement which we signed, so are the terms and conditions similar to the Tommy Hilfiger or there are different like in terms of the royalty payment which we are going to make in terms of manufacturing license and all?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

So in terms of manufacturing, in terms of license agreement, yes. All the — this thing that we sign are all licensed agreements, right? And hence we get the manufacturing rights. We don’t sign distribution agreement generally. So, from that perspective it’s exactly the same. Obviously, the royalty rates and all are deferred. And while in the past I may have or I have, in fact I have commented on the actual royalty payout. However, we’ll not be in a position to do that any further because of the confidentiality clause that we have in these agreements. I was reminded even by Tommy this thing that we can’t share the exact percentages. But yes, depending on the brand it differs.

Mahek Talati — — Analyst

Okay, thank you.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Thank you.

Operator

Thanks, Mahek. We’ll take the next question from Guneet. Guneet, you can unmute and ask your questions.

Vineet — — Analyst

Hi. Thank you for this opportunity. So I might have missed this earlier, but what kind of growth are we looking at in the next financial year? And given that you are emphasizing on offline growth in terms of expanding geography, so I mean, what kind of store expansion can we expect in the coming year? Like how many stores do we plan to open for the next financial year?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

So growth, I had mentioned that in looking at close to 30% growth for the entire year. And in terms of stores, we now have 30 stores across the country and probably we’ll have a couple of more store openings before the end of March. For the next financial year, I think we would be targeting anywhere between 12 to 15 new stores being opened.

Vineet — — Analyst

All right. And I have another comment to make. So, I visited one of the stores in Connaught Place and I was just doing a market research. So, I went there, spoke to the people, and they informed me that the monthly sales are about INR8 lakhs to INr10 lakhs. And within the same market, I went do another, I think American Tourister or it was Samsonite store and and I inquired them also just to get an idea. So they give an estimate of about INR40 lakh to INR50 lakh monthly sales. While that was also within the same market. So, I mean, looking at this difference, I mean what are your plans to maybe grow your per store sales to a level of Samsonite or American Tourister? What steps are you taking? And why did you see such discrepancy? I just wanted to hear your comments on this.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes, so in terms of — in terms of retail sales, what happens is location is a very important factor, Guneet, right? So if you walk into a mall, for example, even in a mall which is a closed environment. Once you enter the mall you are confined to within that mall space, right, within those floors. The ground floor stores will always have a higher sales than the first floor, which will have a higher sales than the second floor stores, which will have a higher than the third floor stores, right?. While all these stores might be visible from the central atrium. So visibility is not a problem, but location drives the sales, right? So the Samsonite stores that would have visited in CP. Now CP is, if you will see, is divided into three parts. One is the inner circle, then you have the outer circle, and then you have the radial, right? Our store is on the outer circle. Now for an outer circle store, the sales that we are doing — I’ll not say that they are the best of the figures. Yes, we see that it could easily go up to INR14 lakhs to 15 lakhs. In fact, last month we’ve closed higher than INR12 lakhs, right?. In fact, not even INR12 lakhs.

December we clogged INR13.83 lakhs and Jan we have clogged somewhere around INR13.3 lakhs kind of a sales. So we are slowly and steadily inching up. Now against the same, if you look at my rental, the rental would close to INR2.5 lakhs INR3 lakhs, right. Whereas the Samsonite store that you would have looked at — at a INR40 lakhs, INR50 lakhs, there the rental would be close to INR10 lakhs to INR15 lakhs. So, it is — still the ratio is still to see. Whether it is 1 is to 4 or 1 is to 5, the ratio is going to still be the same. So, yes, you could say that at the time when we took this store, I was not willing to take a bet on a INR10 lakh rental store, right. You could say that we don’t like to bet our shirt on a particular this thing. Now that we have a strong, in fact, if I’m not mistaken, they have two or three stores in entire CP area. So they also have a store in the outer circle. And their circle store does a similar business, around INIR14 lakhs, INR15 lakhs is the kind of business that we do. These stores are — again, they are old stores. So our store is probably two, 2.5 years old. [Foreign Speech] So it’s fairly new, whereas these other brands would have been there for five years, four years, seven years, whatever. So basis on that, there are marginal differences, but [Foreign Speech], I would also like to cite an example of Ahmedabad Alpha One store, right, where in this nine months or in fact, rather if I include January, so about in 10 months, we have done close to INR2.5 crores from that one single store. So it’s about INR25 lakhs a month.

And we have just one more brand on the same floor. And I’m sure their figures are lower than us. I would not like to exactly pinpoint on the Brand, but apart from us, there is just one more travel gear brand on the same — on the ground floor and their figures are obviously lower than us. So it depends on the location, on market and everything. That should — our rent to sale ratio in most of the cases in our stores are good and hence, we are profitable as a unit in all our stores. In our EBU [Phonetic] — overall, EBU is a profitable division for us.

Vineet — — Analyst

Great. Thanks for the clarification. This was quite. Well explained. So would you be able to share your per store monthly or yearly revenues like on average?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

So we do a — if you look at the metro stores, for example, metro stores due SSPDF [Phonetic] close to 80, right, which is sales per square foot per day, so 2,400 kind of this thing for the month, whereas a non-metro store would be giving us close to about 45 to 50, 1,500 kind of SSP. So in totality [Foreign Speech], so [Indecipherable] for us, I’ve already given is contributing almost into 10% to 12% — 10% of our overall business.

Vineet — — Analyst

All right. Thank you very much.

Operator

Thanks, Vineet. We’ll take the next question from Anand [Phonetic]. Anand you can unmute and ask your question.

Anand — — Analyst

Yeah. Hi, Abhinav. Good afternoon and congratulation on good set of numbers, sir.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Hi, Anandji. Thank you.

Anand — — Analyst

So wanted to check with you how much you are planning to invest for the new brand in terms of stores, inventory? What is the capex required for this new brand over the next 18 months?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

So in terms of new brands, it will also depend, Anandji, [Foreign Speech] a lightweight brand will entail anywhere between INR4 crores to INR6 crores. And a heavy weight brand would entail anywhere between INR12 crores to INR15 crores. That’s the kind of investment that we…

Anand — — Analyst

That will include — okay. So that will include opening stores for those particular brand or those will be sold in the Bagline only?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Sir, this will depend really on the bank. So this is for example Aeropostale, if you see. I don’t see us opening stores of Aeropostale. It’s a lightweight brand. So lightweight brands will not have their own stores. Heavyweight brands might have their own stores as well, but the idea would be that the investment is going to go more in building back line where — so if tomorrow have 50 Bagline stores or 100 Bagline stores, whatever brand that you may take, it immediately gets the benefit of those 100 stores, right? So we feel that’s — they’ve got value add for all of us, And hence, the concentration is going to be more on Bagline. So it is a brand which Warren [Indecipherable] made, it’s a very good brand, it’s a very premium brand and you need to open a few stores, then open a few stores.

Anand — — Analyst

So currently all the stores, sir, are they branded as Bagline or there is a mix of Tommy also?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

There is a mix of Tommy, Anandji. So around 20 — out of the 30, around 20, 21 stores are Bagline. Nine odd stores are Tommy.

Anand — — Analyst

So in this 20, 21 stores, we will start selling the new brand products, new branded products.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes, sir.

Anand — — Analyst

Okay. And sir, royalty payment you already mentioned that you don’t want to mention that, no problems. Sir, one more thing you mentioned sometime back that in Tommy, you can easily see a growth of 20%.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes.

Anand — — Analyst

And the new brand will mean action over the next [Foreign Speech] FY ’24 rather than FY ’25 as compared to FY ’24. Next year will be tough to grow at 30% because Tommy is a major — so next year, do you think we would be able to do 30%?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

[Foreign Speech] is about INR16 crores, right, which is not that difficult.

Anand — — Analyst

And sir, what is the long-term — can you share, sir, what is the projection which you have given to the new brand so that we have signed this agreement, say INR50 crores in five years? Any numbers for that? Obviously, minimum commitment, sir.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

[Foreign Speech]. So won’t be able to share the — anything regarding the agreement, but I can just say this that being a lightweight brand, we’ve given a very conservative sort of projections and we’ve signed it for seven years, sir. So it’s a seven-year license and we’ve given conservative. So I expect that we will be doing far better than what we have given as a projection to that.

Anand — — Analyst

Sir, this Aeropostale, I have seen their products on website on Amazon and I don’t know who was selling. So any numbers, sir, how much was the…

Abhinav Kumar — Whole-time Director and Chief Financial Officer

[Foreign Speech] it was with Arvind, right [Foreign Speech]. See Aeropostale internationally is a big brand, right? In the U.S., they have more than 500 stores, correct…

Anand — — Analyst

For travel gear, sir?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

No, for apparel…

Anand — — Analyst

For apparel…

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes. And Aeropostale, sir, more importantly is a part of a group known as ABG, which is Authentic Brands Group. [Foreign Speech] it is a $25 billion plus kind of sales kind of a ground present across more than 140, 150 countries, huge. So Aeropostale is a brand that they own. And along with it, they own a lot of other brands also. And our agreement this time is not with any Indian counterpart. Our agreement is directly with the U.S. counterpart of ABG. So it’s directly with Authentic Brands Group. So hence, it gives us an entry into ABG directly, right. So ABG has license partners across the world and hence, it gives us an opportunity to be a part of a group which has so many brands to choose from and they will continue to add more brands in their portfolio as a growth model. So hence, from that perspective, it’s a very, very important milestone for us.

Anand — — Analyst

Understood, sir. Thank you, sir. Thanks a lot. All the best.

Operator

We’ll take the next question from Rizwan Patni [Phonetic]. Rizwan you can unmute and ask your questions.

Rizwan Patni — — Analyst

Hi, good afternoon, Abhinav. Pleasure speaking with you. Abhinav, I was going through — actually, I’m very new to the company, but I was going through some data from analyst and where it says that the market size of the luggage industry is around 20,000 in India. So of course, we have a very, very big way to grow and then possibilities to grow. But on the other side, when I saw your presentation, it says that 50% of the revenue is coming from online, whereas I did some homework and seeing that the other players are not much in online, they are coming — their revenues are coming from more from the store-sales. So — and I heard that 50%, I don’t know, but I’m just thinking that isn’t 50% of revenues coming from single channel is a risk to the business. And how do you see further that can bring equivalent distribution for growth in all other channel so your leverage on one channel becomes more comfortable?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

So yeah, right. And you said the market size, in fact, pre-COVID, the market size according to Euromonitor study research was INR24,000 crores, right. Recently — though I have not seen the latest Euromonitor report, but recently Economic Times has come up with a statement saying that the bags in travel as travel gear and all of these bags market in India is close to INR48,000 crores to INR50,000 crores, right. I don’t know where that figure is coming from. I may still validate it. But yes, point here is whether is INR24,000 crores, whether it is INR50,000 crores, the market is huge, right. So hence, time and again, I have also said this that I don’t need to — we don’t — as a company, we don’t need to experiment into a lot of new categories, because in our own categories where we now have a product expertise, we’ll be able to sort of grow to quite a decent level in our own category. We don’t need to look outside, right.

Having said that, all the other players, they are obviously more on offline and online for them as a percentage is small, yes. Now, if you can see VIP has been in the market for 40 years, right. Samsonite is a global leader of luggage and again into the digital industry for more than 30 years, right. The launched Samsonite and American Tourister way back in ’97, ’98 in India. We are just a eight, 10 year old player, right, whereas VIP has more than 500 stores. Samsonite Group again has more than 400, 500 stores. Safari has 400, 500 stores, right. All these are category players. They have been in this industry for donkey’s [Phonetic] years, right, very, very long. So suddenly, we as newbie coming up and comparing ourselves that oh, they are so much, where are we this much, we will have to take that journey, right.

But the fact remains that we took Tommy as a brand. We started off almost in 2012. By 2022, in roughly 10 years, in which 1.5, two years, [Indecipherable], COVID and all of that. In eight to 10 years, if you look at this year, we’ll be closing at retail [Foreign Speech] closing somewhere close to INR260 crores to INR270 crores odd, right [Foreign Speech]. we’ve been able to build it from scratch to INR250 crores retail level. Tomorrow, once we have more brands, if I take another brand, which is say a heavy weight, which is equally well-known, will I take again eight to 10 years to INR250 crores? Of course not, right. So hence, it’s a journey. We will get to those kind of figures. We will get to — but probably a little more faster and our bet and our entire differentiation from these category players is that they are a core category player, right. So they are a luggage player. They are a backpack player. They are a travel gear player, whereas what we see is that we are a fashion accessories player, right.

None of these brands which are core category brands, no matter who whoever they take as a brand ambassador, can never claim themselves to be a fashion brand, right. Whereas our model is very different where we take licenses of various fashion brands, right. And I don’t want to get started on the fashion consumption in India and how and where it’s vulnerable. Fashion today is touching every one at every different point of time, right, whether it is watches as an industry, whether it is footwear as an industry, whether it is underwear as an industry, whether it is garments, obviously, takes the precedence. So we are in this game, right. And we feel that there is a huge future where the youth of the country, the discerning consumers of the country, they’re going to migrate from core category brands to a more fashion forward need and that’s where we come into the picture. And that’s our bit on this entire industry. I hope…

Rizwan Patni — — Analyst

[Speech Overlap]. Yeah, very, very clear. Another question, Abhinav, is regarding the brand agreements. What you do with Tommy Hilfiger? As I remember from one of your past session, please correct me if I’m wrong, the agreement is going to expire somewhere in December and you don’t see any reason of not extending it after that period because of your terms and conditions and your revenue generation from the brand, what you have given to them. On the other hand now, you have taken in Aeropostale which is a lightweight brand as you have suggested. So for future, is there anything coming during the year, not this financial year, but next financial year? Heavy brand coming in your — is there something in talk? Of course, I understand you cannot disclose the brand name or something. But is there something which is under discussion and will be materialized say in a period of a year or six months, somewhere?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes. We are — I had mentioned this earlier also and I would again reiterate…

Rizwan Patni — — Analyst

Sorry to ask you again.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

We are in advanced stages of a contract and with a heavyweight and we hope that these things take a littke time because as I said this is like marriage. So the way I’m confident [Foreign Speech] My team who is going to be presented to them spring/summer ’24. They are traveling here for the first cut design presentation of SS ’24, right. They’re giving SS ’24 and everything. So you can understand that where the whole convertibles comes that once you sign a brand until unless you have done something grossly wrong, this is a like marriage. [Foreign Speech]. It takes a little time because [Foreign Speech]. And here unlike Indian weddings, Prinak [Phonetic] is already signed just like international weddings where you sign a premier agreement. [Foreign Speech]. So sometimes it takes a little more time over there. So — but we are in advanced stages.

Rizwan Patni — — Analyst

My another question would be, if I can, can I continue with the question?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes.

Rizwan Patni — — Analyst

During your agreements, do you have certain kind of say limitation, example let’s say [Speech Overlap] Yeah.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

I have thought of answering this at one go because sort of preempted [Foreign Speech] So we are a multi-brand license player. So none of our agreement restricts us from signing any other brand or any other group. We are not married to either a brand or a group.

Rizwan Patni — — Analyst

Great. Last question, Abhinav. The average selling price between the brands, say Aeropostale and Tommy Hilfiger, what is the minimum average selling price between those brands here? To just understand the heavyweight and lightweight price difference.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

So, Tommy Hilfiger, for example, if I talk about small leather goods, our retail price for small leather goods is to the tune of around about INR2,900 offline and about INR2,200 in online. And if I look if I take the example of, for example, Aeropostale. Aeropostale online would be somewhere around close to INR800, INR900 and offline would be close to about INR1,200, INR1,300.

Rizwan Patni — — Analyst

Thank you so much, Abhinav. Thank you.

Operator

Thank you. We’ll take the next question from Ankur. Ankur, you can unmute and ask your question.

Ankur Gulati — — Analyst

Yeah, hi, Abhinav. Thank you for taking my questions and congrats on a good set of numbers. So first question is, there are some companies which are talking that post-Diwali there was a slowdown in November and December. So how are we seeing in terms of that, what is our comment on that front?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes, so of markets have been talking post Diwali. Retail has slowed down, for sure. And, but somehow I would say that we’ve been able to beat that curve to a certain extent. And, yes, had that momentum of retail still been going, probably the set of numbers would have been slightly better. But yes, overall retail as a segment if you’d see has slowed down a little bit post Diwali, which is a fact for most of the brands. We are able to sort of overcome that this thing as of now because travel as category as a segment is still growing. So hence [Foreign Speech] If you can see, again we had a very good marriage season this year and most of our products, whether it is luggage, whether it is small leather goods, they are very well accepted in terms of gifting and marriages. So that also has sort of beaten the regular trend.

And third is is, till now we are more attune towards the premium sort of category of the market — premium segment of the market. [Foreign Speech]and luxury have still been able to sort of beat that whole curve of the the downward trend. So these two-three reasons they we’ve been able to sort of beat the market trend and we still come out with the good set of numbers.

Ankur Gulati — — Analyst

Sure, and coming to this Q4 quarter, if I look at VIP and Safari numbers, they are low — they tend to be lower because of seasonality, but you are saying we can expect same Q3 kind of numbers, so how should we read into that?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

When did I say that.

Ankur Gulati — — Analyst

Sorry, you said INR180 crore for full year…

Abhinav Kumar — Whole-time Director and Chief Financial Officer

INR160. Yeah, but as I said, numbers are going to be plus-minus 10% here and there in a similar zone. But, yes, you are right, Q4 typically [Foreign Speech] and March again, at least for the primary as well as secondaries, March is not a good month for retail and hence in first this thing itself I had said that you should never look at a retail company from quarter-to-quarter basis. You should look at it from year off the same quarter to the current quarter, right. So it should be an yearly comparison rather than a quarterly comparison because it’s a cycle, right? So Q4 obviously everywhere March, the regular middle class is also is — they have their tax plannings and everything. So retail was a little down [Foreign Speech]

Businesses, your B2B sales get affected because nobody wants to sort of buy on new inventory towards the end of March. [Foreign Speech]Might as well build it in the first week of April. So, that’s a general market trend.

Ankur Gulati — — Analyst

Got it. You are saying in for next six to nine months we’ll have to work on brand-building for the new brands that we’ve acquired. So will it be kind of what will as if that will lower our margins?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes, as I said that, net-net [Foreign Speech] we will have a similar sort of this thing. So, my answer was more from the perspective that you could ask me a question or the gentleman I forget who had asked me that. But the gentleman had mentioned that know if if you’re growing by 30% CAGR, will we continue to see a growth in your EBITDA levels, to which I had answered that it might not be the case because there will be certain additional expenses which would be coming in new brands will have towards sort of gross margin. So net-net, we should be able to maintain a similar kind of an outlook. So I wouldn’t give an outlook that we’re going to be increasing our EBITDA by certain basis-points quarter-on-quarter because of our growth. So it was more from that perspective.

Ankur Gulati — — Analyst

Sure. Thank you and all the best.

Operator

Thank you. We’ll take the next question from Krishna. Krishna you can unmute and ask your question.

Krishna — — Analyst

Hi, Abhinav, thanks for making yourself accessible to us. I just have one question, which is sort of more of a big-picture kind of question. As of now we have four brands, two of our own and two licensed. How do you see this growing, say five years out from now what would you like it to be? And the second part of the question is, when do you see yourself being able to have more bargaining power in terms of loyalties moving forward? Thank you.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

So. We clearly want to become a house of brands, Krishna. So that’s our motto, and in the next three to five years while we will continue to have our own brands, but at the same time, I said this earlier also that we would not be betting our shirt on own brands, maybe give a time — give time to our own brands to sort of nurture and develop. See there are two ways in which you can build a brand. One is, if you one want to a marketing activity, you burn INR10, INR20 crores. First, sign up a celerity for for INR3, INR4 crores. And then burn INR6 crores in advertising. And there you go, your brand is built and you continue to pump in that kind of money. But we typically would at least at this point of time, we don’t see ourselves doing that. What we see ourselves doing is, is ceding in the market with that right product at the right price points in our own brands and slowly and steadily our brands will keep on growing. So that’s that the rout that we want to take.

So, yes, to answer your question, in the next five years also, I don’t see a huge percentage of revenue coming from our own brands. Yes, if you ask me this question, so 10 years down the line, probably yes. By then, we would love to sort of establish our own brand or probably by then we would have, you don’t know, you never know, by then you would have becomes so big that you would have probably bought a few brands, or about a few brands, right, but a couple of categories from these brands, right. So all of those possibilities are there. This is how internationally also a lot of licensing companies have grown where after reaching a certain point of size, certain size, they would have bought over the brand, right. So all those possibilities will kick in and hence that’s a very, very long-term plan. [Foreign Speech]. But for the foreseeable future, we see ourselves as a house of brands, all international most likely and doing sales across various different price points. So while we are currently in the premium segment, we will also bring — and all these brands are going to be fashion brands, right. So we’re going to be bringing in brands at various different price points as well. So I hope…

Krishna — — Analyst

Just a quick follow-up on that. There uncertain brands mentioned in your presentation. Are those the ones you are targeting?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

They are more from an example perspective. In fact, if you will see that [Foreign Speech] essentially not lot of people understand the concept of licensing, right. And once you understand the concept of licensing, you actually start understanding that oh, I can — sky is the limit for me when it comes to signing number of brands, right. There will be so many brands would be interested in sort of exploring these additional categories with us. So yes, these are also a couple of brands which we are sort of targeting.

Krishna — — Analyst

One last question, are there any other licensing players in India who are your competition?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Not in our product categories at the moment, but there are enough. So Titan is one of the biggest licensing players in watches industry, right. So apart from its own brand, Tommy Hilfiger is also a Titan license, Tommy Hilfiger watches is with Titan. They have other watches as license also. So eyewear, there is a company known as Sterling Meta Plast in which Marchon, which is the world’s third largest eyewear company, has a strategic stake in sterling now. They have licenses of almost 15 odd brands, right, from Hugo Boss to Tom Ford, to Tommy, to CK to all these brands. So for these different categories, Page Industries is a brilliant example again. So various different categories there are, none in our. We don’t have as yet a competition in our own categories. We are the first players and hence we have that first mover advantage.

Krishna — — Analyst

All right. Thank you so much.

Operator

Thanks. We’ll take the next question from Shriram [Indecipherable].

Shriram — — Analyst

Thanks for the opportunity. I have two questions. You mentioned that the contribution from smart leather goods is 42% for the parent year. So just to know what was the split for FY ’20? And my second question is do you have any plans to get into manufacturing? And I also wanted to know what is the material that is sourced from your book company? You do source some amount.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Sorry.

Shriram — — Analyst

You do source some material from your group company at the IFF overseas. So what is that you purchase from them?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Okay. So small leather goods I mentioned was at 49%, almost 50%, 49.7% to be precise. So about 50% of the revenue is from small leather goods. 42% is at travel gear, right. And if I compare this with FY ’20, obviously, as a percentage, travel gear back then would be around 28% I believe or 25% because A, we were still building up travel gear. Travel gear is a more difficult category to crack, number one. Number two was because of the COVID impact, obviously, the travel had drastically sort of gone down, right. So from there, travel gear shown a very, very good sort of growth incoming. So the growth in travel gear has been higher than small leather goods in the past four to five years, if it answers your question.

Now coming onto in terms of manufacturing, what we source from IFF overseas is backpacks primarily and now we have started sourcing some bit of soft luggage, which is your overnighter trolley, right. But our total quantum of sourcing from IFF overseas would be approximately 20% of their total revenue, right. And from our perspective, if I look at in our overall sourcing bit, I think IFF overseas would be contributing close to 8% — 5% around — 5% to 8%, [Foreign Speech] is what our sourcing from there would be.

Shriram — — Analyst

So do you have any plans to [Indecipherable]?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes.

Shriram — — Analyst

Can you elaborate.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes. We’ll look at — we are in serious contemplation and it is — the entire proposal, everything has been put up to the Board and we are looking at getting into manufacturing, primarily in the travel gear segment. And the reason for us to get into manufacturing in the travel gear segment is A, if you see small leather goods is today for us a bigger category however. As of now, we don’t have plans getting into manufacturing small leather goods. Leather industry in India is pretty well developed industry and hence, we don’t see the need or the urge or having any sort of competitive advantage that we will have in getting into leather manufacturing. Whereas when it comes to travel gear as an industry, all manufacturing becomes a huge competitive advantage because it A, cuts own your dependence on China. India is still not so well developed when it comes to manufacturing in travel gear, be it backpacks, be it luggage, be it hard luggage, the entire gamut of travel gear products. There are very few factories. Second, as a group company, IFF overseas has been in existence for more than I think 25 years now, right. And with that kind of experience where we have manufacturing already for various different brands, you name a brand and probably we would have manufactured for them. So we have this entire strength in-house, which we feel that we can leverage. And third and the last point is that unlike how we understand manufacturing, this industry, the manufacturing is not that asset-heavy. So your asset turn is close to 5 to 6 times. So if you’re able to do a 5 to 6 times kind of an asset turn, it’s not a very asset-heavy industry. So considering all of this, we are contemplating to getting into our own manufacturing.

Shriram — — Analyst

That will be part of the listed entity or…

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Listed entity. Whatever we do would now primarily be only in this listed entity.

Shriram — — Analyst

And currently, basically how does your sourcing work, like how much would be from China, Bangladesh or…

Abhinav Kumar — Whole-time Director and Chief Financial Officer

So we are quite — you could say, Shriram, that pre-COVID, we were 100% dependent on China when it came to travel gear products, luggage, soft, hard, everything was 100% China. So — but thanks to the entire team working very, very closely with certain manufacturers here. Also thanks to IFF overseas helping us out in sort of establishing sort of an ecosystem where the fabric now is getting developed with a fabric manufacturer, right, so that we are able to maintain that same standard of quality. So component of manufacturing we’ve gone to various different components. Thanks again to the experience of IFF overseas. We have been able to sort of create that kind of a structure where now I would say in terms of travel gear, I think 60% now is India and 40% is still in China. We aim that — but to be honest, this 60:40 ratio also not correct, being brutally honest if I have to, because China, the entire supply chain has been disrupted because of the lockdown [Foreign Speech] the COVID wave swept the whole country. So then again the effect came and they shutdown for the New Year. So, one it opens, I would still believe that only in the luggage part [Foreign Speech] Again, thanks to overseas and a few more factories in India, we have been completely able to bring it to India. So, backpacks now is 100% domestic, but luggage continues to be fifty-fifty. Going forward, we want to bring this down and say one, one and a half years down the line, we would love to see 90% domestic and only a 10% for certain products which we will not to be able to develop in India, only for those kind of products we go go to China.

Shriram — — Analyst

Thanks, Abhinav.

Operator

Due to the paucity of time, we’ll take one last question from the line of Rohit Desai. Since he has not asked a question. Rohit, you can unmute and ask your question?

Rohit Desai — — Analyst

Hi, Abhinav. Rohit Desai. So I have been attending couple of calls and I have see how the growth have been coming quarter-on-quarter. And so, is it fair enough to understand all take it as brand concept wants to become something like Titan Industries, which has multiple brands in its portfolio, license and owned as well as it’s manufacturing in-house also manufacturers lot of and hence it is able to control the market in a far better manner. Is it safe to understand that, that that’s what brand concept wants to become?

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Yes, a very-very good, I would say observation, Rohit And yes, even in my previous calls and in certain of my one-on-one meetings, I have always drawn similarity with Titan. And internally we we really look forward to Titan as a company. If you see — they also are sort of — we’ve manufactured dials for them, we’ve done a lot of business for Titan. So we’ve always been very-very closely associated also with Titan Industries. But you’ve absolutely right that there’s just one difference is that when Titan started, they started with their own brand and they had the legacy, they had the know-how, they had everything there first they built their own brand. That’s the only difference between us and Titan. But if you — apart from that one difference, if you will see, Titan today has multiple brands at multiple price points in the fashion space. So, in fact in way Titan, and I always give this as an example, that Titan revolutionized the way watches was seen as a category. So till late 90s and I think I’ve given this example too many times, hence I was not giving it today. But you’ve actually put the right point across.

So if you’d remember till late 90s, watches was a time keeping device. It had a utilitarian use, like it was a utilitarian category. And 10 years down the line, by 2010, watches was a fashion accessory and it continues to be so today. So at every given price point there are multiple brands available, multiple design sensibilities, right?. Now today even a Giordano, which is not a watch company, but their watches are available across, I think almost all watch stores, right. A Fossil, it’s not a watch company, but Fossil watches are seen everywhere, right? People very happily wear that. Apple was not a watch company, right? Now the watches category is changing into a wearable industry, right. So these are — whereas if you consider our categories, our industry, it is still the luggage industry. So these changes are bound to happen. So, yes, in a way we are Titan of this industry. We have our own stores also. We have [Indecipherable] stores also, we have distribution also. We are wanting to become household brands. And we want to be focused on the categories that we know the best. So in a way, yes, we really emulate Titan quite a lot.

Rohit Desai — — Analyst

Thank you.

Operator

Thanks, Rohit. And, Abhinav, I would have definitely asked you for your closing comments, but I think the last question answers what do you want to. So that brings us to the end of this call. On behalf of Brand Concepts I thank you all for participating on the call, and I thank the management of Brand Concepts, Abhinav, for giving us this valuable time. Thanks.

Abhinav Kumar — Whole-time Director and Chief Financial Officer

Thank you everyone for joining us.

Operator

[Operator Closing Remarks]