Dollar Industries Limited (DOLLAR) Q2 FY23 Earnings Concall Transcript

Dollar Industries Limited (NSE:DOLLAR) Q2 FY23 Earnings Concall dated Nov. 11, 2022

Corporate Participants:

Ankit Gupta — President, Marketing

Ajay Kumar Patodia — Chief Financial Officer

Analysts:

Saurabh Ginodia — SMIFS Limited — Analyst

Bajrang Bafna — Sunidhi Securities & Finance Ltd. — Analyst

Vaibhav Agarwal — Basant Maheshwari Wealth Advisers — Analyst

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Sheel Shah — Sameeksha Capital — Analyst

Vishal Bagaria — Roha Asset Managers — Analyst

Chirag Fialoke — RatnaTraya Capital — Analyst

Pallavi Deshpande — Sameeksha — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Dollar Industries Limited Q2 and H1 FY ’23 Earnings Conference Call, hosted by SMIFS Limited. [Operator Instructions]

I now hand the conference over to Mr. Saurabh Ginodia from SMIFS Limited. Thank you and over to you, Mr. Saurabh.

Saurabh Ginodia — SMIFS Limited — Analyst

Yeah. Good evening, everyone present on the call today. On behalf of SMIFS Limited, I welcome you all to quarter two and H1 FY ’23 post-results earnings call of Dollar Industries Limited. We are pleased to host the top management of the Company. Today, we have with us on the call, Mr. Ankit Gupta, President, Marketing; and Mr. Ajay Patodia, Chief Financial Officer of Dollar Industries Limited. We will start the call with some initial comments on the results from the management, post which, we will open the floor for Q&A.

I will now hand over the call to the management. Over to you, sir.

Ankit Gupta — President, Marketing

Good evening, ladies and gentlemen. On behalf of the entire management team at Dollar Industries Limited, I welcome you all to the second quarter FY ’23 post-results conference call.

Currently, the entire Indian hosiery sector is facing the impact of price volatility in cotton and yarn prices. In last quarter and half-year ended September 2022, there has been substantial inventory losses due to continuous falling of cotton and yarn prices. However, such losses are temporary in nature and seems to have an end as the cotton and yarn prices have stabilized at sustainable level. In spite of these challenges, Company showed the revenue growth of 18% in terms of total revenue for the six months ended 2022. Our Q2 FY ’23 total revenue was down by 12% as compared to same period last year. Our domestic sales showed a growth of 10% in terms of volume, while modern trade and e-commerce sales showed a growth of 67% in terms of volume on six months basis as compared to same period last year. For the six months ended FY ’23, Company generated positive cash-flow from the operating activities to the tune of approximately INR40 crores.

As promised, the Company has opened eight EBOs till date and plans to open more by the end of the fiscal to touch the target of 25 to 30 EBOs. Further, our flagship project, Project Lakshya, is going in the right path, while increasing the number of distributors, reach and range of the product. Currently, we are sitting with 189 distributors until 30 September, 2022. This is increasing on month-on-month basis. We have also planned to start this particular project into two new states, Tamil Nadu and Kerala. In this tough time, where the whole Indian industry is experiencing slow demand and price volatility, we saw an increase in volume and value of our products of Lakshya distributors as compared on six months basis of last financial year to the tune of approximately 43% and 46%. We are sure of this idea of theory of constraint will help us in the long run to reach our FY ’25 vision of INR2,000 crores revenue.

Our efforts towards channel financing arrangement for our dealers continues to see good acceptance. We have received positive response of 225 dealers, out of which, 165 distributors have already been boarded under the particular scheme. We expect to onboard several more every quarter, which will continue to improve our receivable days and also help us move towards our overall working capital improvement efforts.

The Company has recently added the new TVC for our thermal brand, partnering with Mr. Akshay Kumar and Ms. Yami Gautam as the brand ambassador to give an extra mileage to the winter sale. This fiscal, we have earmarked 5.5% to 6% for our advertisement expenses. Further, the Company has planned to launch the new product range in women’s athleisure segment and men’s active wear in Force NXT brand, and it will be available in the market by late Q4 FY ’23. We are sure that we’ll be able to maintain the revenue guidance of 14% to 15% on the full-year basis, while maintaining the EBITDA level of 13% to 14%.

Thank you, all. Now, I will hand over the call to our, CFO, Mr. Ajay Patodia.

Ajay Kumar Patodia — Chief Financial Officer

Thank you, Ankit ji. Good afternoon to everyone.

Our revenue for the quarter two FY ’23 stood at INR342 crores against INR391 crore and revenue for the six-month FY ’23 stood at INR706 crores against INR596 crores in six-month FY ’22. In this quarter, we have a de-growth of around 12%, but in overall six-month FY ’23, we had the growth of 18.41%. Our EBITDA for quarter two FY ’23 stood at INR30.71 crore against INR62.01 crore, registering a de-growth of 50%. In six-month FY ’23, our EBITDA is around INR70.48 crores against six-month FY ’22 EBITDA is around INR98.26 crores, registering a de-growth of 28.27%. Our profit before tax for quarter two FY ’23 stood at INR22.51 crores against INR56.34 crores and in six-month FY ’23, our profit before tax is around INR55.04 crores against INR87.39 crores, registering a de-growth of 37% for six-month FY ’23. Profit after tax for quarter two FY ’23 stood at INR17.95 crore against INR41.24 crores and profit after tax for six-month FY ’23 stood at INR45.82 crores against INR64.35 crores, registering a de-growth of 29% for six-month FY ’23.

Now moving on to brand-wise contribution. For six-month FY ’23, our brand Bigboss contributed around 43%, our Missy, women’s segment, contribute around 9.42% and our economic segment, Dollar Always, contribute around 36.27%. Other than this, in premium segment, we have a contribution of around, from Force NXT 3% and Force Gowear 25% and from thermal, we had contribution of around 6% in this quarter.

I now open the forum for question-and-answer.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]

The first question is from the line of Bajrang Bafna from Sunidhi Securities. Please go ahead.

Bajrang Bafna — Sunidhi Securities & Finance Ltd. — Analyst

Yeah. Ankit ji, just to begin with, we are also seeing this quarter is not the way we have been precisely thinking of. So, definitely there is some amount of inventory loss that has happened during the quarter. So, if you could guide broadly that when the quarter was starting, we were — the rates of candy was going close to INR1,00,000 and then we have seen that constantly declining and now stabilizing around let’s say INR60,000 to INR65,000 a candy. So, what sort of loss that has occurred, which perhaps is there to some extent in the numbers?

And to my mind and my judgment that most of your distributors, when they are anticipating that the prices are constantly declining, the inventory in the system is not expected to built up, because nobody is interested to buy high-cost inventory and then when the constantly the cotton prices are declining. So in that parlance, if you can guide us in both sense that, what sort of inventory losses that has been incurred during the quarter and what is the quantum of inventory that is there in the system vis-a-vis in the normal circumstances when cotton trades at more stable level? So, if you could guide on that sense it would be helpful.

Ajay Kumar Patodia — Chief Financial Officer

Sir, you are very perfectly analyzed the situation. Currently — in current market situation, the same is applicable our — in hosiery industry. With respect to your cash question, regarding our inventory loss, we have high inventory cost in the — in this quarter, because there is — our inventory procurement in the first quarter around is — at that time cotton rate is around INR1,00,000 per kg, now it is reduced to around INR65,000 to INR70,000 per kg. Due to this, our gross margin is down by 3.5% to 4%. In absolute term, it is around INR12 crores to INR13 crores.

And in this quarter, in last quarter Q2, we had expected a good growth in our winter products, which is shifted in quarter three. If our projection is, we can — target is achieved, then this margin is also adjust with our high-margin product, that is winter thermal products. And we hope that in current quarter, we achieved winter sale as we have projected in current year. As winter are in — coming delay in this time and we hope that from next week, there is winter requirement is increased.

With respect to your second question — can you please repeat the same?

Bajrang Bafna — Sunidhi Securities & Finance Ltd. — Analyst

The channel inventory, because since the prices are constantly declining, so what sort of channel inventory that you are visualizing vis-a-vis the normal inventory, which remains in the system?

Ankit Gupta — President, Marketing

So, obviously in this tough times, like when the prices of raw materials start decreasing, what happened is the channel partners, whether it’d be the distributor or retailers, they start refilling the goods only on the cut size basis. And the bulk orders are — they are very skeptical to place bulk orders, like in the normal circumstance. So obviously, there has been a depletion in terms of channel inventory levels, but to what extent, it would be very difficult to say, because we don’t have a visibility to track data. But obviously, seeing some kind of a de-growth in Q2 has already proved the point that, it is already happening in the markets. It’s not that the demand from the consumer side is low, because if you see any industry, who has a retail — proper retail base or who is into EBO channels, their sales has not de-grown much, because they directly serve to the consumers, right?

So, from the consumer point of view, the demand is — it’s not that the demand is low from that side, but obviously, the — there is a depletion in the inventory levels at — in the channel, whether it’d be the distributor point or retailer point.

Ajay Kumar Patodia — Chief Financial Officer

It is also shown in our current quarter working, sir. During this quarter, our — in our Project Lakshya, the volume growth is doubled — increased by 43% in last six months and the total amount of revenues increased by 100%. In last year, around — in full-year, we have total contribution from the Project Lakshya deliveries around INR100 crores. But this time, we achieved in this six months in — from April to September only. So, in our project mix, we targeted the retailer outlet and from that point of view, the consumer demand is already there, but the demand is stuck due to orders not placed by the dealer itself.

So, there is demand. Our forecast is that there is demand at market, is already there. But it is shifted from quarter two to quarter three due to orders not placed by the dealer itself.

Bajrang Bafna — Sunidhi Securities & Finance Ltd. — Analyst

Yes. Got it. And if you see the cotton prices, which are stabilizing, do you still feel that the cotton prices even might go lower and still the dealers are postponing to place bulk orders because we are already in November and last one month, at least, we are seeing that the prices are getting stabilized between the INR60,000 to INR70,000 band, which is — which looks slightly realistic and hopefully, the dealers will start placing bulk orders So, is there any difference that we have witnessed in the month of November vis-a-vis what the last quarter gone by?

Ankit Gupta — President, Marketing

So, what is happening is, the — see, the third quarter is mainly attributed by the thermal sale. And we are hoping for a good winter and — from past two to three years, we have seen that the winter is coming late to India. So maybe in a week’s time, the weather conditions will change across India, mainly in Eastern and the Northern part of India.

Apart from that, yeah, from few weeks, we are seeing that the cotton prices have stabilized and it seems to be getting at a sustainable level. In near future, we don’t see the cotton prices coming down, because the forward rate also is somewhere near INR65,000 only for candy. So — but from the retailer point of view, the thought process, the psychology with which they work, they are — the channel partners are still skeptical, but, yeah, there is a positive feedback also in the market. There are some areas, which has started taking goods, purchasing goods. And we are very sure that this quarter should be much, much better than what we saw in Q2.

Bajrang Bafna — Sunidhi Securities & Finance Ltd. — Analyst

Yes. Got it. And, thank you, and I’ll come back in the queue for follow-up questions.

Ankit Gupta — President, Marketing

Thank you, Bajrang.

Operator

Thank you. The next question is from the line of Vaibhav Agarwal from Basant Maheshwari Wealth Advisers. Please go ahead.

Vaibhav Agarwal — Basant Maheshwari Wealth Advisers — Analyst

Taking my question. Firstly, I would like to ask you about what has been the industry growth rate for the last three months? How has been the experience and how have we fared compared to the industry?

Ankit Gupta — President, Marketing

Vaibhav, the thing is that, none of the players have come out with the results and it is very difficult to tell what has been the industry growth rate in the past three months. So, there are few players, who have come up with their results. But based on that and extrapolating on that would be — will not justify the exact industry growth rate that we are looking-forward to. But, yeah, the industry has been in distress in the last quarter, because — it is mainly because of the raw material prices movement. And from past two years, what we have been seeing that, it’s too volatile. Initially, 1.5 years, we saw the growth in the cotton and the yarn prices. There was a revision in our selling prices also, every couple of months. But now the things are getting reversed and from June onwards, we are seeing that the prices are declining. There was a surge in the month of August or September in terms of cotton prices, but again, it has come down to INR65,000 to INR70,000 per candy.

So, I think, a few more industry players are yet to come up with their results. And maybe later, we can actually determine what has been the industry overall growth.

Vaibhav Agarwal — Basant Maheshwari Wealth Advisers — Analyst

But what is your sales that — has the market share been intact or any thoughts on that?

Ankit Gupta — President, Marketing

So, we don’t see any reduction in the market share or change in the market share during the quarter. We are not seeing that kind of a traction in the market. It’s intact.

Vaibhav Agarwal — Basant Maheshwari Wealth Advisers — Analyst

Right. Coming to your — second question is on this Project Lakshya. So you said that you had a 43% growth in terms of volumes, but if I look at the total number of distributors, it has almost doubled, from 91 last year to around 189 this year and if I look at the share of revenue, also it has almost increased more than doubled. So what is the sales that you are getting? Is — the distributors whom we have tied-up and under this Project Lakshya, are we seeing better traction and can you give some more color on that?

Ankit Gupta — President, Marketing

So, the major difference is that this distributors, who have been enrolled in Lakshya, they don’t have much of a baggage also inventory sitting at their warehouse, first. Secondly, there has been a rationalization of inventory at channel level or at a distributor level. So due to the price reduction of raw materials, these people are getting skeptical, because they already have huge inventory at their place, in our traditional channels and they’re just ordering the cut size or they just refilling the inventory, that’s it, right? So, that’s why we are seeing downfall order de-growth in terms of volume for this particular quarter.

But in Lakshya, what is happening that, we are replenishing whatever is getting sold from their end to the retailers. And retailer is also purchasing whatever is getting sold from their point to the consumer. So it is based on complete replenishment model, theory of constraint. And that is why we are seeing such a good traction, because — and that is what proves that there is no decline in the consumer demand for the product, or in this particular sector. So this is a very good point for us. Secondly, it also gives us a sense and strong conviction that this particular project is the way to go ahead. And in next two, 2.5 years time, this particular project, combined with IT infrastructure, it will take us to the next level, and we are very sure about it, because if we take the number of distributors, who have — who were there in the last year second quarter and who are here in the second-quarter. If you compare their sales, so their volume growth have been around 15%, but –just for the Q2 sales. And only taking those distributors, who were present in the second quarter last year and who are present — who are continuing with us and are there in the second quarter this year.

Also to point out one more thing that, apart from the DFS, the dealer financing scheme, the overall debtor days in our Lakshya Project is very low. So our — overall one-third of our distributors are in DFS or Lakshya distributors are in DFS, dealer financing scheme. And the overall debtor days for Lakshya distributors, like the 189 distributors that we have, the debtor days are coming to around 60, 65 days. So compared to 100 days what we are having on the overall business and Lakshya distributors are being at around 60 days. So, it’s — it clearly shows that we are on a right path and we’ll be able to achieve two most important things, the one is the reach and range in the market, increasing the visibility at the retailer level and second is the improvement in the working capital cycle, which will help us reduce our short-term borrowings or the working capital loans that we have.

Ajay Kumar Patodia — Chief Financial Officer

Other than this, Vaibhav ji, I want also point out that, in calculating 43% volume increase for taking the actual comparison, we are also taking the traditional sales in that area, in which we — Project Lakshya implemented. So we compare the total sale at debt area before Lakshya Project and after that. After implementing the Lakshya Project, dealers belong to Project Lakshya. So, there may be — there will be increase in the volume 43% from the normal, also — normal dealer which are included in this comparison. Otherwise, there is 100% growth in the total sales of the Project Lakshya from last year to current year.

Vaibhav Agarwal — Basant Maheshwari Wealth Advisers — Analyst

Right. Okay. One second, like, I was just asking that, because revenue has even dropped if we look them from last year, but still that — there has been growth. So actually this is getting more traction, I would say, because even though the revenue has gone down around — from INR392 — INR382 crores to INR342 crores our — the contribution from Project Lakshya distributors have gone up.

Ajay Kumar Patodia — Chief Financial Officer

Yeah, correct.

Vaibhav Agarwal — Basant Maheshwari Wealth Advisers — Analyst

Okay. Thanks a lot.

Ajay Kumar Patodia — Chief Financial Officer

Thank you.

Ankit Gupta — President, Marketing

Thank you.

Operator

Thank you. The next question is from the line of Dhiral Shah from Phillip Capital. Please go ahead.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Yeah, good afternoon, sir. Thanks for the opportunity. Sir, just to reconfirm, you said that your revenue from Project Lakshya is around INR100 crore, right?

Ajay Kumar Patodia — Chief Financial Officer

Yeah, in last financial year.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

And what about H1?

Ajay Kumar Patodia — Chief Financial Officer

In H1 FY ’23, it is around INR98 crores. We already achieved the same amount in — within six months.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Okay. And sir, generally, the thermal sales, I know, largely happens in Q2, right?

Ankit Gupta — President, Marketing

So, it’s 50% happens — 50% to 55% sales happens in Q2 and the rest happens in Q3. But since last year was a bad winter season for the industry, so there’s a huge of which happened at the distributor level as well. So, that’s why in Q2, the major shortage that we faced was because of the thermal sales. So, last year Q2 we had [Technical Issues] contribution coming from thermals in Q2 and this year, it has been 6% only.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Okay. So, you’ve seen a de-growth in thermal sales this quarter?

Ankit Gupta — President, Marketing

This quarter. And that’s why the overall profitability also took a bit of a hit and our inventory days is also on a higher side.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Okay. And sir, as on H1 FY ’23, what is our working capital days and how much is the receivable days?

Ankit Gupta — President, Marketing

So, receivable days have been flattish. It has been somewhere around 9,900 [Phonetic] days only. The only catch point is our inventory days. So, if we compare our inventory days with respect to March, like March FY ’21 — sorry, March FY ’22, it has increased from 109 days to 123 days, but if you compare H1 to H1, like H1 last year versus H1 this fiscal, it has been at a similar level, 122, 123 days.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Okay. So, this inventory that we are holding and that is of a high-cost inventory or maybe or is it current level price, so that we can’t get…

Ankit Gupta — President, Marketing

Okay. So, it is a mix of both high-cost inventory plus the thermal stock that we have.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Okay. So even in Q3, we may see a inventory loss?

Ajay Kumar Patodia — Chief Financial Officer

It’s around the very minimum INR2 crores to INR3 crores only, as per our calculation.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Okay. And sir, what was the ad spend during the quarter?

Ankit Gupta — President, Marketing

So, ad spend, for H1, we have spent somewhere around INR60 crores and during the quarter, it was INR25 crores vis-a-vis last year second quarter INR18 crores.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Okay. And sir, last two questions, sir. What is our target for the receivable days for full-year FY ’23, that we want to bring it down?

Ankit Gupta — President, Marketing

So, on a — see, overall working capital cycle for this particular fiscal should be somewhere around 145 days. That’s what we are targeting.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

And sir, what will be your receivable days in that? So, last year it was around 99, right, 99 days?

Ankit Gupta — President, Marketing

Yeah. So, there’ll be — we hope that we’ll be able to reduce it by seven to eight days for the — by the end of fiscal and another three, four days improvement in our inventory days.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Okay. And sir, lastly, what is the category growth — category-wise growth in Q2?

Ankit Gupta — President, Marketing

Overall, on a half yearly basis — so, you wanted on a Q2 basis or half yearly basis? I think…

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Q2. For the Q2, sir, particularly.

Ankit Gupta — President, Marketing

For the Q2, there has been an overall volume degrowth of somewhere around 16%, 16.5%, and the value growth of 4%.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

And sir, across the category, Dollar, Dollar Men, Women category, athleisure wear?

Ankit Gupta — President, Marketing

So, in Bigboss, we saw overall degrowth of 21% this quarter. In regular, this is economy range of products, it’s somewhere around 15%. Thermals were somewhere around 30%. Missy, women’s segment was 7%. And in premium segment, it was somewhere around 25% and 28%.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

And sir, athleisure?

Ankit Gupta — President, Marketing

In athleisure, H1 ’22 versus H1 ’23, the overall revenue contribution has increased from 12% to 13%. So, athleisure wear, we are seeing good traction. Although — yes, so overall the athleisure segment is doing good and we are coming out with the women’s athleisure segment also in the month of February or March starting.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Okay. And sir, what was the export contribution in H1 overall? And what kind of growth we have seen over there?

Ankit Gupta — President, Marketing

Export was 7% during H1. The contribution coming from export was 7%, domestic was 90%, and modern trade increased from 3% to 4%. So, overall, in absolute terms, export has been flattish as compared to H1 last year. And this year, I think, we’ll be able to maintain the similar level what we did last year.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Okay, sir. Flattish kind of a growth?

Ankit Gupta — President, Marketing

What we are focusing on is on the domestic sales that we have and the modern trade — the large-format stores currently.

Dhiral Shah — Phillip Capital India Pvt. Ltd. — Analyst

Okay. Thank you so much, sir.

Ankit Gupta — President, Marketing

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Sheel from Sameeksha Capital. Please go ahead.

Sheel Shah — Sameeksha Capital — Analyst

Sir, can you hear me? [Speech Overlap] Yes, now am I audible?

Operator

It is not that clear, sir.

Sheel Shah — Sameeksha Capital — Analyst

Okay. Just a minute. Yeah, now?

Operator

Yes, please go ahead.

Sheel Shah — Sameeksha Capital — Analyst

Yeah. Just I wanted to know brand-wise advertisement spend? I mean, your advertisement, it has increased. I think, in your comments, you said now budget is 7.5% of revenue for the whole year. Can you just give me the brand-wise advertisement spend for H1?

Ankit Gupta — President, Marketing

Sorry, sir. We are unable to understand. Your voice is a bit muffle. I think you are asking something about advertisement expenditure, which has increased this particular fiscal, is that correct, sir?

Sheel Shah — Sameeksha Capital — Analyst

No. That you already answered. What I am asking is about brand-wise advertisement spend.

Ankit Gupta — President, Marketing

So, majorly, 60% of our advertisement spend happens for the Man product Bigboss Man. Another 15% is for Missy of Dollar Woman, 15% for Thermals, the business product that we have, and the rest is for the in-shop branding and the retail branding that we have and plus the digital media.

Sheel Shah — Sameeksha Capital — Analyst

Okay. Got it. Just one question, I mean, follow-up question. I mean, are you going to maintain this ratio or will it going to the changed for, say, next fiscal year or two years down the line?

Ankit Gupta — President, Marketing

So, given the target that we have for this particular fiscal, what we are aiming is 5.5%, 6% kind of a trend on the advertisement this particular fiscal. And going ahead, it — we will try to maintain 5.5%, 6% based on the projected sales for the particular fiscal.

Sheel Shah — Sameeksha Capital — Analyst

Okay. And just one question, if I can squeeze in. How EBO has progressed so far? And then particularly for Delhi, you opened in June? If you can just give color on that?

Ankit Gupta — President, Marketing

Sorry, progress of what?

Sheel Shah — Sameeksha Capital — Analyst

EBO. How has — I mean, yeah, progress of EBO, particularly for Delhi EBO?

Ankit Gupta — President, Marketing

So, in EBO, we have seen a good traction. So — like modern retail vertical that we have, 6% of our revenue is contributed by EBO, 54% by e-commerce sales, and 40% is large-format store. And in EBO, we have opened eight EBOs, out of which five EBOs opened in the month of September and in October. So, we are yet to see the results, but overall the traction has been good. The consumer footfall in the stores is exciting. Like we are getting seven to 10 consumers every day in the store and so foot is also good.

Overall, what we’re seeing is that apart from the sales factor also, the consumers is getting to know the brand in a much better manner, and they are able to see what all product Dollar Industries deal in. So, they are able to touch and feel the product. They’re able to see the entire category that we have, whether it be kid’s, men’s, women’s, premium segment Force NXT or the stocks that we have. So, the entire segment has been showcased to the consumers and we are seeing a good excitement at the consumer level itself.

Sheel Shah — Sameeksha Capital — Analyst

Okay, got it. Thank you so much.

Ankit Gupta — President, Marketing

Thank you.

Operator

Thank you. The next question is from the line of Vishal Bagaria from Roha Asset Managers. Please go ahead.

Vishal Bagaria — Roha Asset Managers — Analyst

Yeah. Good evening, and thank you for the opportunity. So, my question is on the capex front. The last time we spoke on spinning capacity on our warehouse, we were expecting that the both of them would commission somewhere in October-November. And now when we see the presentation, it has been postponed to March and May 2023. So, can you just put — throw some light on the same?

Ajay Kumar Patodia — Chief Financial Officer

Yeah. We already made good progress. Our warehousing project is — already 90% is completed. But due to some — there is a requirement from the government side, there is some problem from the electric connection is there, electric distribution, some part of it is pending on the — from the government front only. Our construction is already ready, but without power distribution, we are not able to commence our productions. And for this reason, our — we take the maximum time, I think by March. Government has commented that power distribution is a key distribution is properly implemented. Because there is delay due to some official government — delay in the distribution of the electric.

And with regard to our expenses in spinning project at the Dindigul, Tamil Nadu, we are on the way. We already constructed the way said where to be — machine to be installed, but there is some — from the — some imported machineries there, which only to be shifted in the month of February itself only. So, it’ll start by end of March or 15th of April only. So, we take one month extra period for given the launching time for, it’s been fine.

Vishal Bagaria — Roha Asset Managers — Analyst

So, the entire INR115 crores has been spent for the capex, that is the right understanding?

Ajay Kumar Patodia — Chief Financial Officer

Yeah, correct.

Vishal Bagaria — Roha Asset Managers — Analyst

So, apart from that, what would be the capex guidance for the current year?

Ajay Kumar Patodia — Chief Financial Officer

Currently, we have no any other, these two only. Other than this, in ’23 – ’24, ’25, there is one only — FY ’24, FY ’25, there is only some minimum repair maintenance, which is around INR8 crores to INR10 crores only.

Vishal Bagaria — Roha Asset Managers — Analyst

Okay. That would be great. And sir my second question is on the EBO front. So, if you could explain what is the cost metrics or the average size when you open an EBO? So, what would be the average store size, the initial investment? And what is the kind of inventory that franchisee owners needs to put? And what would be the breakeven time for an EBO that we estimate? And by FY ’25, since you are targeting that we would be opening 125 EBO stores, so how much that would be as a percentage of our topline as a target? Those are my questions.

Ankit Gupta — President, Marketing

So, our EBO is completely franchisee — FOFO model, franchisee owned and operated. And what we do is we have two particular model which we work upon. One is the complete outright basis, wherein the franchisee purchases the entire stock and we get margin over there. And the other model is the rent plus margin model. So, initial investment from the Company side is just on the POS system that we have and some branding activities that we do over there. Apart from that, it’s all franchisees’ investment.

The store size is typically somewhere around 700 square feet, 750 square feet and can go up 1000 square feet as well. Because the overall category that we have to showcase and the entire product range that we have, we require such space. So, the density is somewhere around six to eight per square feet, six to eight pieces per square feet. So, that is the kind of density we are working upon. So, the overall investment from the franchisee side, including the security deposit and everything, it’s somewhere around INR20 lakhs, INR22 lakhs.

Vishal Bagaria — Roha Asset Managers — Analyst

Okay. And by when do we expect them to breakeven? And how much — what will be the time duration?

Ankit Gupta — President, Marketing

It generally takes two to three months — sorry, three to four months to stabilize the particular EBO. Apart from that, what happened is, like 60% of the sales or 70% of the sales that happens in any EBO is contributed by the winter section only, because the ASPs is very high over. So, it really depends on the region-to-region, like zone-by-zone. So, we are yet to discover as to what kind of our sales figure would come in from particularly EBO on a monthly basis. But just to estimate, I think by FY ’25, we’ll be able to garner somewhere around or INR40 crores, INR45 crores kind of business coming in from EBO itself, from 125 EBOs.

Vishal Bagaria — Roha Asset Managers — Analyst

Okay, sir. Thank you, sir. That would be all from my side.

Operator

Thank you. The next question is from the line of Chirag from RatnaTraya Capital. Please go ahead.

Chirag Fialoke — RatnaTraya Capital — Analyst

Hi. Good evening, Ankit. Thank you so much for taking my question. Just one clarification question. The margin guidance is for the entire year or the second half? That was the first question I had.

Ankit Gupta — President, Marketing

So, see what we say is that prices have been very volatile this particular fiscal, the first half of it. The second half, we think — it really seems that the prices have stabilized as of now. But we really aspire to be somewhere around 14% kind of an EBITDA level, 13% to 14% is what we think is achievable in the second half.

Chirag Fialoke — RatnaTraya Capital — Analyst

So, that is for second half, not the full year, that’s what you — that’s what I wanted to clarify. So, clearly, you aspire to be from the second half of the year?

Ankit Gupta — President, Marketing

So, on a full year basis, it would be somewhere around 13%. We really want to be there, yes.

Chirag Fialoke — RatnaTraya Capital — Analyst

Understood. My second question is on the number of dealers that got added in this quarter in the Lakshya project. That seems to be around 15-odd dealers. I understand quarter-on-quarter, obviously, these kind of things can vary, but is this what you would have aspired to be? And also as time passes along, does this numbers tend to increase a lot exponentially? Because when [Indecipherable] starts flowing in, this becomes easier to get traction. Is that the right expectation? Could you just throw a little bit more light on that?

Ankit Gupta — President, Marketing

So, what happened is when you think of starting your particular new state, so there’s a lot of, what to say — the people are not very much convinced about the program, when we start rolling out in a particular state, which is very new. So, we get a lot of — so what happen is, the people are not convinced when we start a particular state, and it really takes — the lead time increases in the starting point, but once we have two to three success stories in that particular area, so the rollout happens in a much faster manner.

So, we have earmarked Tamil Nadu and Kerala, two new states to get enrolled into this particular project. We are on the verge of completion of Rajasthan and Karnataka, because there were some wholesale market which was yet to be tapped and closed down, and it was huge chunk. Apart from that Gujarat — Mumbai and surroundings, we have already completed. In Maharashtra, we have also completed the Vidarbha area. Plus in Gujarat, we are seeing a good traction in Gujarat as well, and we’ll be able to complete by the year end, by the end of the fiscal. Apart from that, we have started Northeast, all the seven states, and — Orissa, Bihar, Telangana, Andhra, and Tamil Nadu and Kerala, we’ll start-off in a month’s time I guess.

Ajay Kumar Patodia — Chief Financial Officer

Other than this, I want to also point out one important thing that in our Project Lakshya, we have a SOP agreement with the distributor that, that distributor have to follow our SOP, then they get the required minimum ROE as per our target. So, if any distributor who do not follow the SOP system, then we have to remove this, because we have to — if we implement Project Lakshya successfully in any area, then should be within our standard.

So, sometime in this quarter, the total addition is 15 only, because there is addition 13, 14 — 30, 34 dealer, but due to some of the dealers which have not performed well or which are not serviced to the retailer as per our SOP that the product should be reached between — within the 48 hours to the retailers’ showroom or the payment is made within 45 days. So, some of dealer we have to remove from the Lakshya project, because they are not performing well and as per our criteria.

So, therefore, in this period, the total net addition is 15, but actually the addition is 34, but some of the dealers which are not performing removed from our Lakshya project. So, we have the target of 12 to 15 dealer monthly, actually.

Chirag Fialoke — RatnaTraya Capital — Analyst

Monthly, certainly. Understood, sir. Just one last question. So, how many dealers would have joined and left us in Project Lakshya till date? If you can just help us understand that?

Ajay Kumar Patodia — Chief Financial Officer

Currently, we have the total number of 189 active dealer in our Lakshya project.

Chirag Fialoke — RatnaTraya Capital — Analyst

But how many would have sort of being tried but left out approximately? What was that number like, if you have that handy?

Ajay Kumar Patodia — Chief Financial Officer

Total number of dealer as on date, I don’t have the accurate number, but it is around 225 to 230.

Chirag Fialoke — RatnaTraya Capital — Analyst

Thank you.

Operator

Thank you. The next question is from the line of Pallavi Deshpande from Sameeksha. Please go ahead.

Pallavi Deshpande — Sameeksha — Analyst

Yes, sir. Thank you for taking my question. I just wanted to understand a little better on the EBO front. So, the numbers you spoke about INR45 crores from 125 stores, that looks good. Given that our competition has had a much faster rollout of EBOs, now Go Fashion adding 100 EBOs and Page Phonetic] has done well with it, why haven’t you chosen a strategy to be more aggressive on the EBO front? Is it because it might disturb the relationship with the Lakshya dealers?

Ankit Gupta — President, Marketing

So, nothing of that sort. As I — so what — the thing is that, Go Colors operate in a very different segments, as well as the Page Industries, Jockey. So, they have always been into this particular industry. They have always been into the retail sector, I would say, not industry, the retail sector, where the open EBOs, they are in modern retail, large-format stores, and after that, they started coming to offline, which is the traditional channel sales. And I think Go Color is still not there in retail, right? So, they have always been there. Their concept of their brands or brand DNA was towards — more towards the retail part.

And we have always been like — from past 49 and 50 years we have been working in the traditional channel and the model retail vertical also opened just four to five years back. So, for us, this particular place, the retail place is very new as a concept also because we have never been into that kind of a thing. So, we have started hiring professionals for that, and we are working on this. But to get a conviction on any kind of a particular project, you need to have some kind of data, you need to open some from number of stores, so that you can gauge whether this will work for us or not.

Because if you’re comparing it with Page or Go Colors, they are into a premium segment, the target market is very different from what we are. So, we are into — more into class for mass kind of a brand. So, yes, our consumer target market is very different, the demographics is very different. And that is why the overall process is a bit slow. But yes, it will increase, no doubt, by the year end. By the end of this fiscal, we’ll be able to open 25 to 30 EBOs. And after that by FY ’25, we are very positive that we’ll cross 125 EBOs.

Pallavi Deshpande — Sameeksha — Analyst

Right, sir. Sir, I understand, you are the more mass-market brand versus premium, because we are also seeing a shift, I think — you’ve mentioned in the annual report, shift to the outerwear segment more, the Missy and the Force NXT. So, if we have to achieve that shift in the — like 20%, 30% growth is what you’re targeting in the outerwear, is that right?

Ankit Gupta — President, Marketing

Yes. In the outerwear segment, that’d be women’s athleisure or men’s athleisure or the leggings that we have. See, the overall ASP is also very high, and we see a huge opportunities in the market. And we see a good growth coming out of those segments. Apart from that, we have a natural growth rate in our Bigboss and economy range of products, the regular brands that we have. So, overall, [Indecipherable] the company has also risen from INR65 to INR70 in past six months. So last year FY, we closed at somewhere around INR65 and currently it is at INR70. So, there has been a price hike in the month of April. But overall if you see, there has been a change in the overall contribution coming out from the outerwear segment, like athleisure increased from 12% to 13%, woman…

Pallavi Deshpande — Sameeksha — Analyst

Sir, will the advertising — sorry to interrupt. Will the advertising focus more on outerwear now giving its higher margin and like higher ASP, will advertising campaign…

Ankit Gupta — President, Marketing

On the digital platform, yes.

Pallavi Deshpande — Sameeksha — Analyst

Like you said, you have done three TVC. So, I understand one is for Thermals. The other two, would they be for outerwear and those — when will they be — these three TVC, we have not seen much of adding of them. So, when will like…

Ankit Gupta — President, Marketing

So, what is happening is — one is Thermal. The second is Yami Gautam that we had for Missy. We just signed her up for the women’s brand activewear [Phonetic]. Apart from that, during the IPL season, we came out with athleisure at TVC. But mostly, it has been done on the digital platform, social media platform. Overall spend on digital media from our budget is somewhere around 8% now. So, 8% of our total expense we are doing it on digital platform, whether it’d be Google ads or Instagram or Facebook, YouTube. We also started taking some media from like Moneycontrol, Dailyhunt, online newspapers. So, all those activities that we are doing is helping us grow in our outerwear segment and also help us grow in our e-commerce sales as well.

Pallavi Deshpande — Sameeksha — Analyst

Right. So, the INR60 crore ad spend that you’ve done like how much would be spent towards outerwear versus innerwear? In future, you will target more of outerwear spend versus innerwear? The ad spend, like the earlier participants asked the break-up between brands, so I’ll say, I’ll put it in different way. Ad spend for outerwear versus ad spend for innerwear, what will be the ratio? Can we see it go to 50-50 versus right maybe more — it’s more skewed towards innerwear?

Ankit Gupta — President, Marketing

Currently, we don’t see going to 50-50, but yes we have started rationalizing our spend on the men’s innerwear vis-a-vis the other outerwear products that we have. So in women’s, we are already spending 15% of our budget. And apart from that, we have started spending on Force NXT advertisement as well, which will be mostly outerwear than innerwear. Apart from that, during the IPL, we are focusing mainly on athleisure segment also, because it resonates with the — the name resonates with the sportsperson who are actually paying in the IPL, and they wearing our athleisure wear and advertising for it, it really goes well.

Pallavi Deshpande — Sameeksha — Analyst

Right, sir. And sir, next year’s ad budget? I know it’s a little early, but 6% would seem a little low if you want to grow the outerwear side of it. Just any thoughts on that given that some peers are spending up to 8% to 9%. And given that if cotton prices come off, can we see that money is being spent on ad spend?

Ankit Gupta — President, Marketing

So, in ad spend, what we are seeing is 5.5% to 6% kind of a spend that we are looking forward to on our projected sales. So, yes, if we — for next financial year, like FY ’24, it should be somewhere around INR100-odd crores.

Pallavi Deshpande — Sameeksha — Analyst

Yes. Thank you. I’ll get back in the queue. Thank you so much.

Ankit Gupta — President, Marketing

Thank you.

Operator

Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for the closing comments.

Ankit Gupta — President, Marketing

I take this opportunity to thank everyone for joining this call. I hope we have been able to address all your queries. For any further information or any kind of queries, kindly get in touch with us. Thank you once again for joining in. Have a good evening.

Ajay Kumar Patodia — Chief Financial Officer

Thank you.

Operator

[Operator Closing Remarks]