Kewal Kiran Clothing Limited (NSE: KKCL) Q2 2025 Earnings Call dated Oct. 28, 2024
Corporate Participants:
Hemant P. Jain — Joint Managing Director
Pankaj Jain — President – Retail
Analysts:
Lakshminarayanan KG — Analyst
Tejas Shah — Analyst
Palash Kawale — Analyst
Sahil Doshi — Analyst
Sameer Gupta — Analyst
Mehul Pathak — Analyst
Dhiraj Mistry — Analyst
Pritesh Chheda — Analyst
Deepak Lalwani — Analyst
Devanshu Bansal — Analyst
Ankit Kedia — Analyst
Siddharth Purohit — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Kewal Kiran Clothing Limited Q2 and H1 FY ’25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
Before we begin, a brief disclaimer. The presentation which Kewal Kiran Clothing Limited has uploaded on stock exchange and the website, including the discussion during this call contains or may contain certain forward-looking statements concerning Kewal Kiran Limited business prospects and profitability, which are subject to several risks and uncertainties, and the actual result could materially differ from those in such forward-looking statements.
I now hand the conference over to Mr. Hemant Jain, Joint MD, Kewal Kiran Clothing. Thank you, and over to you, sir.
Hemant P. Jain — Joint Managing Director
Thank you, Ridhi. Good morning, everyone. It is our pleasure to welcome all the participants to the earnings conference call for Q2 and H1 FY ’25. Joining me on this call is Mr. Pankaj Jain, President Retail; and Marathon Capital, our Investor Relations adviser. I hope everyone had an opportunity to go through our investor deck and result release that we have uploaded on the exchange and our Company’s website.
Firstly, on behalf of entire KKCL family, I would like to wish each and everyone a happy Diwali and prosperous New Year. We are delighted to report strong start with Kraus Casuals acquisition, unlocking consolidations benefit and driving growth through Junior Killer brand, which is also gaining good transactions. The sales performance in the quarter was positive and stood at INR308.2 crores with the consolidated growth of 17.4% year-on-year.
The standalone sales for the quarter was marginally impact on account of lower manufacturing due to slowdown in consumer demand in the first quarter. However, we had corrected that situation, but garment manufacturing being a lengthy process, we couldn’t cater the demand fully in Q2. We are also in the process of revising our strategy and focus on our other brands like Integriti and Lawman and believe the result of this effort could be seen in the subsequent quarter.
We are seeing optimism in demand due to Diwali festive and believe this trend to improve further with the upcoming wedding and winter season. We believe that with the growth levers and strategic initiatives in place of creating a diversified product portfolio and transforming into a brand powerhouse across age and gender. We stand at the cusp of transformation from denim-centric origin to becoming a vibrant lifestyle brand company.
To [Phonetic] capitalize on the huge potential in the fashion apparel section, we intend to further solidify our position with including our retail presence through brand-led EBOs to enhance brand visibility at this direction, there was a net addition of 21 EBOs in Q2 FY ’25 and further 8 Kraus EBOs got added on account of consolidation bringing the total number of EBOs to 534 EBOs, as on September 30th, 2024. Further, there are around 55 EBOs, which are in various stages of development.
With our enhanced strength of strong balance sheet, in-house manufacturing capabilities and decades of fashion and designing experience, we will continue to bring the best of products offering — catering to diversified consumer base across gender and age.
With this, I would like to conclude and open the forum for questions. We can now begin the Q&A.
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 Lakshminarayanan KG [Phonetic] from Tunga Investments. Please go-ahead.
Lakshminarayanan KG
Thank you. Good morning. A few questions. Sir, first is from your cash flow from operations on a consolidated basis, right? If I look at it, the cash flows have — operating cash flows have come down because there is an increase in trade receivables. Can you just explain whether it is a one-off or how do you see this?
Hemant P. Jain
Good morning, Lakshminarayanan, ji. Okay. If you look at the previous quarters Lakshminarayanan, ji, okay, our working capital cycle has drastically come down to [Indecipherable] 106 odd [Phonetic] period. We were looking at, okay, leveraging this and trying to come as reality as possible and coming close to the market. So that product — but we feel that, okay, we are losing on the opportunity perspective of in terms of the inventory. So I feel, okay, our total working capital would still stay ahead at 120 to 130 odd days period and this trade-off receivable is a one-time structure. I think the entire working capital would stay at around 120 to 130 odd days.
Lakshminarayanan KG
Got it. Got it. Got it. Got it. And because that is more pronounced in the — in the consolidated, I think that’s the reason I asked.
Second question is that there is a footnote to the account, which says that you are actually purchasing the land for around INR57 crores. Can you just explain, perhaps you would have explained earlier I missed out in any other earlier calls. Can you just help me understand what is this regarding?
Pankaj Jain
The property, which we are looking at buying out, it is — it is required for the head office and the registered office. But currently, the head office is falling short of manpower requirement. Also, the — also, we are also looking at exploring the possibility of monetizing the current asset, which is with KKCL right now.
Lakshminarayanan KG
So, sorry, sir, it didn’t — I mean, I didn’t get a clear answer, I mean, or maybe I didn’t understand it. But so there is a current office, which we are — which you may monetize, and you would actually relocate to the new place. Is that the right way to think about it?
Pankaj Jain
Yes. That’s right.
Lakshminarayanan KG
Okay. And where is this place, sir, this one, this previous…
Pankaj Jain
100 meter from the current office.
Lakshminarayanan KG
Got it. Got it. Got it. And from Kraus sales, what is the — I mean, how much it has added for the first quarter and for the first half and how much of Kraus sales has come in this quarter and how did it compare with the previous year quarter or previous year half?
Pankaj Jain
Kraus has performed extremely well, okay, during this quarter. The total revenue is around INR55 crores and the EBITDA margins, okay, has become at par with KKCL.
Lakshminarayanan KG
And what is the Kraus sale either the previous quarter, as well as the previous year’s second quarter?
Pankaj Jain
The entire year figure was around INR175 odd crores. Okay. If you — okay — there was — since the numbers were not comparable because of the accounting policy and structure, that’s why we have not given a comparable figure.
Lakshminarayanan KG
Okay. Okay. And what is the total rental expense at a consolidated level? I mean, how much you pay as a rent across all your…
Pankaj Jain
It will be minuscule [Phonetic] on the total level because most of the KKCL stores are FOFO stores and okay, the number of EBOs on Kraus brand is also not that high. So the total rental level will be minuscule [Phonetic].
Lakshminarayanan KG
Got it. Got it. Sir, on Kraus, just one last question. If you look at full first half on a broad basis, how much the growth would have come in across first half for the brand H1 FY ’25 with respect to H1 FY ’24.
Hemant P. Jain
Lakshminarayanan, ji.
Lakshminarayanan KG
[Foreign Speech].
Hemant P. Jain
Yeah. Hemant here. [Foreign Speech].
Lakshminarayanan KG
Okay. Okay. Okay. Thank you, sir. That is very heartening and congratulations on great set of numbers.
Hemant P. Jain
Thank you, Lakshminarayanan, ji
Lakshminarayanan KG
Happy Diwali.
Hemant P. Jain
Happy Diwali to you.
Operator
Thank you very much. The next question is from the line of Tejas Shah from Avendus Spark Institutional Equities. Please go ahead.
Tejas Shah
Hi. Hi. Thanks for the opportunity. Sir, so far, we have got very tepid numbers from most of the fashion retailers this quarter, but most of them have also indicated that October was strong because of good festive season. So from your experience, how do you read the current demand environment on the ground?
Pankaj Jain
Good morning, Tejas. Okay. I feel, okay, whatever everyone is saying is we are at par with, okay, those numbers itself, we have seen a strong attraction coming from August end itself. And we feel that, okay, this positivity is going to continue for next two quarters at least.
Tejas Shah
Okay. And Pankaj bhai, looking at the inventory in the system today and not only for us, but for industry at large, do you see that industry will go on very aggressive discounting in this festive season or before December or you think that inventory levels are comfortable?
Pankaj Jain
Sir, I think, okay, everyone may have been able to manage the inventory levels well. So I don’t feel — if the quarter two — if the quarter three looks fantastic, I don’t think there’ll be an aggressive discounting happening in the fourth quarter.
Tejas Shah
Okay. And Hemant bhai, in his opening remark also mentioned that there was some challenges or loss of demand because of production issues. If you can elaborate on the same and what are we doing to kind of address those issues so that we don’t lose demand in future?
Pankaj Jain
So ideally, okay, last year, we tried one of the experiments, which was trying to work on inventory and try to come in a real time basis, okay. That didn’t work very well for us. Okay. And that’s why you’ll see that, okay, the working capital during that period had drastically come down, okay. We felt that we lost opportunity in this — in the coming quarters. And I — we feel that, okay, going forward, working capital will definitely increase from 100 days to 120 odd days, but we’ll definitely not lose on the opportunity.
Tejas Shah
Sure. Sure. And just hypothetically, if we would have not lost this opportunity, then our growth would have been higher by what amount.
Pankaj Jain
Should be around 10%?
Tejas Shah
Sorry, should be around?
Pankaj Jain
10%.
Tejas Shah
Oh, wow. Okay. Okay. That’s all from my side. I’ll come back in the queue for more questions and Happy Diwali to you and the tea. Thank you.
Hemant P. Jain
Happy Diwali, Tejas.
Operator
Thank you very much. The next question is from the line of Palash Kawale from Nuvama Wealth. Please go ahead.
Palash Kawale
Hi, sir. Thank you for the opportunity and congratulations on good set of results.
Hemant P. Jain
You’re not audible. Can you be a little loud?
Palash Kawale
Yeah. Okay. Just a minute. Yeah. I hope I’m audible now.
Hemant P. Jain
Yeah.
Pankaj Jain
Yeah.
Palash Kawale
Yeah. So sir, my first question is around Killer Junior. So how has that fared and how do you see it panning out in the upcoming quarters?
Hemant P. Jain
The Junior, we launched in April, and we have a very good performance and [Foreign Speech], we are getting a very good response in the Junior. It’s a very first season for us also. But yes, a very positive sentiment in the market and in future, [Foreign Speech].
Palash Kawale
Okay. Sir, our margins…
Hemant P. Jain
[Indecipherable] now is available in all the large format store just we started, and we are getting a very good response, all the good EBOs, good, all large format stores. So it is very first season for us also.
Palash Kawale
Okay, sir. And sir, [Foreign Speech] in next two years, three years, how will you plan?
Hemant P. Jain
See, because lots of brand are coming in Junior because see, if you want to grow them, you can grow, either you increase your category, either you increase genders. So [Foreign Speech], today the brand is all about the lifestyle [Foreign Speech]. So see, we will maintain, as the Kewal Kiran, we will maintain 80% to 20% EBITDA margin.
Palash Kawale
Okay, sir. Got it. And sir…
Hemant P. Jain
[Foreign Speech] averaging is around 80% to 20%, we will maintain that.
Palash Kawale
Okay, sir. That was helpful. And sir, how many EBOs are we planning to add this year?
Pankaj Jain
So under development, if you see — look at the channel [Phonetic] okay, under development are close to around 55-odd stores.
Palash Kawale
Okay. Okay. Okay. That’s it from my side. Thank you. Thank you for the — for your answer, sir and Happy Diwali to the whole team.
Hemant P. Jain
Happy Diwali to everybody.
Operator
Thank you very much. The next question is from the line of Sahil Doshi from Thinqwise. Please go ahead.
Sahil Doshi
Hello. Yeah. I hope I’m audible, sir.
Hemant P. Jain
Yeah.
Pankaj Jain
Yes, you are.
Sahil Doshi
Okay. Yeah. So thank you for the opportunity and best wishes for Diwali, sir. Just a question related to Kraus. If I see the receivable days or the working capital, on a sale of INR55 crores, the debtor was at INR76 crores, the balancing amount. So just wanted to understand what’s the working capital cycle in Kraus? And is there a readjustment this quarter or a one-time thing as you said? So if you can explain that?
Pankaj Jain
Ideally, okay, on Kraus, we look at the net working capital. The net working capital will be a close around 100-odd days.
Sahil Doshi
Okay. Okay. So what is the reason for this? I mean, if I just do consol minus standalone.
Pankaj Jain
Most of it sales or more of the — generally it operates, majority of it changes from one of the channel of sales, which is LFS, where the working capital requirement is very high.
Sahil Doshi
Right, right. So is there a one-time adjustment this quarter or this is the regular feature, which is…
Pankaj Jain
No, it’s just going to be a regular perspective.
Sahil Doshi
Okay. Okay.
Pankaj Jain
Okay. But if we are able to crack the other channels of sales very well, okay, the working capital cycle will reduce.
Sahil Doshi
Understood. But is it right to say, sir, that the debtors is INR76 crores on a sale of INR55 odd crores for this quarter?
Pankaj Jain
That’s right. That’s right.
Sahil Doshi
Okay. Understood. Understood. Second question, sir, Hemant bhai, you said in the initial remarks that you’re looking at a rework strategy in Integriti and Lawman. So sir, can you talk a little on that? What is our plans now for this year? And second, K-Lounge also, we were working on the new format. So if for the next one years, two years, what is the thought now?
Hemant P. Jain
For the K-Lounges, okay, as we said, okay, it’s too early, and it is really going to stand still position for at least a year period, okay? Lawman and Integriti, okay, we are looking at — particularly for Lawman, we are looking at retail expansions, which you’ll see from quarter two and — quarter three and quarter four.
Sahil Doshi
Okay. And on the Integriti and Lawman, meaning what is the revised strategy as such?
Pankaj Jain
Integriti, we have looked at, okay, competing against the value price brackets brands and as well as private label, okay? The extraction or maybe the numbers for the same should fall from quarter one of the next year.
Sahil Doshi
Understood. Understood. And in one of the previous questions, you called out that had this impact of production not been there, you would have seen 10% growth in standalone this quarter. So now, since we have moved back to the earlier model, what do you think for the next half for this thing, Kewal Kiran standalone at least? Are we hopeful of a double-digit growth here?
Hemant P. Jain
I’m hopeful for a double-digit growth there.
Sahil Doshi
Understood. Understood. And just…
Hemant P. Jain
We are trying our best to achieve that figure. Market sentiment is also positive. If you see [Foreign Speech] the market sentiment is also positive, and we have hope, we will achieve double-digit growth.
Sahil Doshi
That’s good to know, sir. right. And just last question. In the cash flow, if I see in the first half, we made a payment of INR117-odd [Phonetic] crores for the subsidiary.
Hemant P. Jain
Yeah.
Sahil Doshi
Could you bifurcate how much of it is for the K-Lounge Limited and how much would be for Kraus and what is the expectation in the next half?
Hemant P. Jain
INR116 crores, we have paid to the Kraus.
Sahil Doshi
Okay. Okay.
Hemant P. Jain
Yeah.
Sahil Doshi
So that INR70 crores of rights of Kewal Kiran will come in next quarter?
Hemant P. Jain
Yeah.
Sahil Doshi
Understood, sir. Thank you so much, sir. Thank you and best wishes, sir.
Operator
Thank you very much. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Sameer Gupta
Hi, good morning, sir, and thanks for taking my question. Firstly, looking at a 3.5% decline in standalone, now the Company has a higher salience of fees this year, Dusshera and Diwali are earlier, and we typically sell in our merchandise to the channel partners. All sudden and optically at least this quarter Y-o-Y should have been on the higher side. So in last quarter, we had a 17% decline. So all-in-all, there hasn’t been a significant improvement from last quarter. Would you agree with this assessment? And in light of most value fashion retailers reporting good set of numbers, is it not a fair assessment that we are kind of losing share to those players.
Pankaj Jain
Okay, saying that, okay, we are losing shares to value segment would not be a right assessment, okay. But definitely, as we said, okay, that okay, we lost on the inventory — on the strategy, which we had placed for our inventory to work on a real-time basis, okay? Had it not been the case, we would have reported an absolute growth in this quarter, okay. So definitely, okay, saying that, okay, losing it to value retail is not the right aspect.
Sameer Gupta
Okay. So you are saying that because of your manufacturing issues, you lost out on growth and adjusted for that, you would have grown 10% instead of 3.5% decline. Is that — is that right?
Pankaj Jain
That’s right.
Sameer Gupta
Okay. So basically, I’m assuming that these problems are now behind and going forward with this number 3Q, you should be clocking upwards of 10% growth, right?
Pankaj Jain
Should be in the case of quarter three and quarter four.
Sameer Gupta
Got it, sir. That’s very helpful. Secondly, I heard the previous participant mentioning receivable of INR76 crore versus revenue of INR55 crore for Kraus. Does it pertain to receivables, which are prior to the acquisition, and if so, have we made adequate provisions for these receivables?
Pankaj Jain
No, no, okay. The business works on that operation and the working capital I said, we look at the net working capital there, okay. When he said that there’s a debtor cycle, so debtor cycle on that channel of sale will stay at the same levels, which are at today.
Sameer Gupta
But sir, INR55 crore revenue, the receivable can be more than that unless it is a prior period, right?
Pankaj Jain
No, not true. Not true.
Sameer Gupta
Okay. I’ll maybe take this offline. Thanks, sir. That’s all from me.
Operator
Thank you very much. The next question is from the line of Mehul Pathak [Phonetic] from — who is an Individual Investor. Please go ahead.
Mehul Pathak
Good morning, sir. Congratulations on an excellent set of numbers. Sir, I wanted to know at a conceptual level on supply chain management, people plan sales based on estimates of demand or nowadays many companies, even in the FMCG, if you take Asian Paints or Marico or even Page Industries, which is similar to your line of business, they replenish demand based on how sale is happening. So Page Industries calls it ARS, Asian Paint calls it vendor-managed inventory, Marico calls it vendor-managed inventory. So what exactly sold is what is getting replaced? And therefore, the 100 — I don’t know what system you follow, but there could be some scope there, this is just a suggestion, you might like to evaluate. According to me, in this system, inventory can easily come down by another 60 days by putting in newer processes in place and newer softwares.
Pankaj Jain
Putting it on the software would not be the right aspect, okay? And the Company is a hybrid model structure, where it is into manufacturing, wholesaling as well as retailing. And the working capital is right now standing at close to around 120-odd days. I think that’s the most efficient working capital working structure. Bringing down would be — okay, we had tried that, okay, in the earlier quarter, and we’ve failed to — we lost on the opportunity, I would put it that way, on the inventory cycle. So okay, we feel that, okay, going forward, if our inventories or the net working capital going to stay at around 120-odd days.
Mehul Pathak
Sir, but I don’t know whether you are following something like an automatic replacement system? Or is it the traditional supply chain planning model, where you will estimate next six months, what the demand is going to be and then you will plan manufacturing?
Pankaj Jain
Really, it’s not a FMCG-based business. It has businesses, as well as fashion risk [Phonetic]. It’s not a core item. So most of the products are fashion, which are perishable and could goes on sales after a six-month period. So the same strategy does not apply. But definitely, okay, we’ll try to explore some of the opportunities on the automated systems.
Mehul Pathak
Thank you, sir. My best wishes to you.
Operator
Thank you very much. The next question is from the line of Dhiraj Mistry from Antique Stock Broking. Please go ahead.
Dhiraj Mistry
Yes. Thank you for the opportunity. Sir, my first question is related to the Kraus. That what would be the ASP of Kraus and when it compare — when we compare it with Killer, Lawman and Integriti and how it is being positioned against each of the brands?
Pankaj Jain
So if you look at Kraus as a brand, okay, a majority of the sales is women, denim wear, okay, women, denim, western wear category, okay. Its core competition, okay, on those channel of sale is, I would say okay, Levi’s only and it is priced reasonably as compared to this competition brand.
Dhiraj Mistry
Okay. Okay. And then it would be lying in much more in premium compared to let’s say Killer or, let’s say, Integriti and Lawman?
Pankaj Jain
See comparing it vis-a-vis is not the right example because both are in two different genders, okay. You compare it to ladies-to-ladies category and the men’s-to-men’s category. So we — every brand of us has a typical TG or competition, which it caters to. As I said that, okay, Kraus compete majorly with Levi’s [Indecipherable] women and only.
Dhiraj Mistry
Got it. Got it. No, the reason why I’m asking this question is that if I see your sales realization per unit, that has down — that is down by almost 22%. So I was trying to compare realization of Kraus versus Killer jeans.
Pankaj Jain
That would — that would give you a vague example because it has a composition of lot many things. One is the mix. One is the gender. One is the category sales. It has accessories also. So that will not give you a right perspective on that.
Dhiraj Mistry
Got it. Got it. And the second is related to the P&L, like our depreciation, if I look at that has gone up from INR2.6 crores to almost INR93 crores and likewise for employee and other expenditure, I understand that this is because of the integration, but what kind of run rate we can expect in terms of employee depreciation and other expenditures. And as far as I know that depreciation shouldn’t be going up because when we acquired Kraus, there was no manufacturing entity, which was acquired with the Kraus manufacturing.
Pankaj Jain
You are right — you are right in saying that, okay, depreciation should not have gone up, okay? It is an additional amortization of intangible assets, which was paid to him — to the company again.
Dhiraj Mistry
Okay. Okay. And regarding employee cost, what kind of run rate we can expect going on?
Pankaj Jain
Similar perspectives, which are there right now.
Dhiraj Mistry
Okay. And this amortization would continue for how long?
Pankaj Jain
Seven years at least.
Dhiraj Mistry
Seven years. Okay. And sir, lastly, just…
Pankaj Jain
The total amortization for the quarter was around INR6 crores, okay. And the total capital is going to continue for a seven-year period.
Dhiraj Mistry
Okay. Okay. And lastly, if I remember correctly that last year, there was a very bad winter season and that resulted in almost a flattish kind of sales last year. So on that base, we still expect that the growth would be still in only in double-digit or we can expect high-teens kind of a growth looking at the current demand scenario?
Pankaj Jain
Already — we have already started our dispatches with winter wear, as a category, okay. We see that, okay, there is going to be a good winter this year. The only thing is when it starts, okay, that allows you to have an additional margin or not the margin because if it starts late, the number of stocks sold during the discounted period increases, not in the fresh sell through. So that is not in our hands.
Dhiraj Mistry
Got you. That’s it from my side. Thank you.
Pankaj Jain
Thank you.
Operator
Thank you very much. The next question is from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead.
Pritesh Chheda
Sir, thank you for the opportunity. Just few questions. Now these EBO expansion that you’re talking, I hope these are franchised is what you’re referring to?
Hemant P. Jain
See, as far as Company policy is concerned, 85% should be the FOFO model and the 15% should be the COCO model. So if you see the [Foreign Speech] mix of opening of stores, that is nearly 90% is still is with in the FOFO model.
Pritesh Chheda
Okay. Okay. Incrementally also it will be like that only, right?
Hemant P. Jain
Yeah, yeah, yeah, yeah.
Pritesh Chheda
Okay. My second question is, two years, three years back when you started your reshaping journey, so the focus was Killer and Lawman and Integriti, we had an opinion to not expand those brands. Now when I listen to your comment…
Hemant P. Jain
No, no, no. Yeah, yeah, please continue.
Pritesh Chheda
Okay. Let’s say, have a lesser focus, okay, not expand but lesser focus. What specifically have — have you guys now thought about Lawman, Integriti because the space — see you were saying that the market is about casuals and denims. So what specifically are you now seeing Integriti and you’re talking about adding stores and all what changes and what changes are you seeing and what changes are you going to get into the brand also?
Hemant P. Jain
If you see [Foreign Speech], we are again changing the strategy in the Integriti and Lawman. Lawman, we said we will only do the retail stores and the Integriti we are trying our best. So it is too early to say anything. It has already started, see [Foreign Speech] our major focus is on the Killer and the — first, we will — because see, it’s all about the market share. The market share [Foreign Speech] we will do Integriti and Lawman.
Already, we started thinking on those brands. And you see that result in maybe in the first quarters of next year. See Killer has already come to an autumn one position.
Pritesh Chheda
Okay.
Hemant P. Jain
Okay. So that has been scaling also, okay. We have also seen that, okay, last 1 year, 1.5 year period, value segment has moved very well, okay. And that’s why we restrategized the Integriti and competitive against the value format, as well as the private labels of those brands.
Pritesh Chheda
Okay. Okay.
Hemant P. Jain
Okay.
Pritesh Chheda
Sir — okay. Okay.On the Kraus brand, the numbers are not part of this P&L, right?
Hemant P. Jain
Sorry?
Pritesh Chheda
For the Kraus brand, we acquired Kraus brand.
Hemant P. Jain
Correct.
Pritesh Chheda
The performance is not a part of the reported P&L, right?
Hemant P. Jain
It’s a part of consolidation.
Pritesh Chheda
It’s a part of consolidation. Okay. Can you tell me the size of the loss of Kraus brand for the quarter?
Hemant P. Jain
Resell, we did INR55 crores.
Pankaj Jain
Top line has been around INR55-odd crores.
Pritesh Chheda
INR55 crores for the quarter?
Pankaj Jain
The top line has been INR55-odd crores and the Company — the brand has been able to achieve EBITDA margins, which is equivalent as KKCL.
Pritesh Chheda
Okay. And it is a line-by-line consolidation, right, because you have a 50% holding in it.
Pankaj Jain
It’s a line-by-line consolidation.
Pritesh Chheda
And then a minority?
Pankaj Jain
Yeah.
Pritesh Chheda
Okay. Okay. Thank you very much.
Operator
Thank you very much. The next question is from the line of Deepak Lalwani from Unifi Capital. Please go-ahead.
Deepak Lalwani
Hello, sir. Thank you for the opportunity.
Hemant P. Jain
Yeah, Deepak.
Deepak Lalwani
The question — yeah. The question is in the standalone business, since we had production cuts, is there any channel, which specifically got affected because of this issue.
Pankaj Jain
Sorry, sorry, I didn’t get your question, Deepak.
Deepak Lalwani
Sir, in the standalone business, when we — when we had production cuts, did any channel get affected because of this?
Pankaj Jain
LFS.
Deepak Lalwani
Okay. And the other channels were flat. That’s the understanding. Okay. And the growth going forward when you’re talking about 10%, you know, what is backing this growth? Is it just the low base of last year or…
Pankaj Jain
We book on a pre-booking perspective. So we had orders in hand, where we were not able to produce it equivalently well.
Deepak Lalwani
Okay. Understood. And this 10% growth, can you just bifurcate it into volume and prices?
Pankaj Jain
We haven’t broken down into volume and price, but I’m talking 10% would be in terms of value.
Deepak Lalwani
Okay. Got it. And sir, the Kraus run rate for this quarter was about INR55 crores. So should we assume that this is the seasonally best quarter and or if you can give some light on what this run rate should be on a quarterly basis for Kraus?
Pankaj Jain
See, overall, they did around INR175-odd crores last year period, okay. The current quarter, it has been on a growth perspective. Looking at the numbers, okay, every quarter there will be a, okay, margin change perspective, not much.
Deepak Lalwani
Okay. So this INR50 crores to INR55 crores should be maintained, assuming a 10% growth on that INR170 crore number.
Pankaj Jain
Yeah.
Deepak Lalwani
Okay. Okay. Understood. And any — just the receivables in Kraus look a bit high…
Hemant P. Jain
Deepak, I will say something about the Kraus brand. I say [Foreign Speech] last year turnover was INR176 crores. And Kraus is only available in only large format stores. We changed our strategy, and the other channels are all open. So we are trying to [Foreign Speech] and we have already started working on that.
Pankaj Jain
If you will see from the current quarter itself, in the first quarter itself, we are able to come as far as EBITDA with KKCL.
Deepak Lalwani
Okay. Okay. Understood. And sir, lastly on the receivables Kraus, it looks a bit high. So any provisions that need to be taken for this?
Hemant P. Jain
So any provision, which is as per KKCL norms has been provided in the Kraus also.
Deepak Lalwani
Okay. Got it. Thank you, sir. Those were my questions.
Hemant P. Jain
Thank you, Deepak.
Operator
Thank you very much. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Devanshu Bansal
Yes, sir. Hi, thanks for taking my question. Sir, from a EBO expansion strategy perspective, currently, our presence is more in the Eastern space, plus the presence is under indexed in metros also. So I just wanted to check of the expansion that we are talking about, what is the strategy in terms of expansion region-wise and city tier wise going ahead.
Pankaj Jain
See, we know that, okay, we are underpenetrated in the metro centric, okay. We are working on a strategy to penetrate it more better, okay. But right now, whatever is under development, it’s a mix of okay, both metro centric, as well as Tier one and Tier two. As you rightly reported that, okay, 85% would be around FOFO-odd and 15% as COCO-odd stores. Most of the focus would be metro centric.
Devanshu Bansal
Understood. Understood. So going ahead, whatever our expansion plan is, that 10%, 15% of that will be towards metros and that will happen via COCO stores. Hello?
Pankaj Jain
Yes, yes.
Devanshu Bansal
Okay. Second question is from this Lee, Wrangler perspective. So this player, Lee brands actually sort of went outside the system and then they are sort of coming back with a new investor also. So anything that you are noticing from a competition perspective, which is also sort of hurting our growth?
Hemant P. Jain
They’re scaling up their business from a, okay, zero-based structure. So right now, I would not say that, okay, it is hampering the business, but definitely, it’s a competition.
Devanshu Bansal
Okay. Just a little better, sir. So whatever shelf-space we were able to acquire from these brands so…
Pankaj Jain
Even [Phonetic] in all our channels of sales, they are now, okay, have a concentrated focus on one of the channels.
Devanshu Bansal
Concentrated focus on one of those channels. Okay. Got it, sir. Understood. Yeah. That’s it from my side.
Operator
Thank you very much. The next question is from the line of Ankit Kedia from Phillip Capital. Please go ahead.
Ankit Kedia
Sir, just wanted to understand Kraus receivables better, is the accounting policy such a way that the inventory, which we push to LFS is recorded as receivable days, given that as per the SOR now with Ind-AS accounting, you know, the inventory will be on their books and hence receivable days are higher.
Pankaj Jain
True, Ankit.
Ankit Kedia
And because the festive season was earlier, we would have pushed a lot of inventory in Kraus to LFS channels and hence, it’s looking higher. So for the product sold, is it fair to assume 30 to 60 days is the receivables in Kraus and the remaining amount would purely be inventory at the LFS category level?
Pankaj Jain
The inventory has been carried forward, right, okay, over this period. So base stock doesn’t increase. We have been able to — we are maintaining the same base stock structure, okay. And — okay, secondary has been — so if you — if I look at the tertiary levels of sales at Kraus, it has been at growth.
Ankit Kedia
Right. So our accounting of INR55 crores, what we report in Kraus is actually tertiary sales or the sales, which we do only to the LFS channel?
Pankaj Jain
Tertiary sale.
Ankit Kedia
Right. So the inventory, can you give us the inventory number at the LFS category for Kraus because that will sort out the issue of the receivable days actually.
Pankaj Jain
Ankit, we can take this later. And okay, you can talk to me directly on this so that we’ll, okay, work on the number. I don’t have the exact number right now with me.
Ankit Kedia
Sure. And second question is, when you say last year’s sales of INR175 crores for Kraus and there is accounting change. Can you just tell us what has been the change in accounting, which Kraus used to have before versus today, as per KKCL because then that INR175 crores is not a relevant number for us if the accounting change is very significant.
Pankaj Jain
No, no, okay, the INR175 crores, which was given last year was with the change in numbers and accounting policies, everything done for, and it was provided for in that number.
Ankit Kedia
Understood.
Pankaj Jain
The actual reported number in their balance sheet was much higher.
Ankit Kedia
Understood. So INR175 crores is like-to-like after the accounting change.
Pankaj Jain
Yeah.
Ankit Kedia
Understood. That’s it from my side. Thank you so much.
Operator
Thank you very much. The next question is from the line of Siddharth Purohit from InvesQ Investment Advisors Private Limited. Please go ahead.
Siddharth Purohit
Yeah. Hi, sir. Sir, just one clarification with regard to the amortization you said. Amortization for this quarter was INR6 crores and that was for the acquired company and that will continue for seven years, but quarterly will be INR6 crores, right?
Pankaj Jain
Yeah. INR30 crores, INR20 crore, INR21 crores is around [Phonetic] the annual figure.
Siddharth Purohit
Annual — annual figure and that will continue for seven years you said.
Pankaj Jain
Right.
Siddharth Purohit
Okay. Okay. Okay, sir. That’s all. That’s all from my side. All the best, sir.
Operator
Thank you very much. As there are no further questions, I would now like to hand the conference over to Mr. Hemant Jain for closing comments. Thank you and over to you, sir.
Hemant P. Jain
Okay. Thank you very much. I would like to thank once again to all of you for joining us on this call today. We hope we have been able to answer your queries. Please feel free to reach out to our IR team for any clarifications or feedback. Thank you, all, and once again, wishes for a good festive season. Happy Diwali and prosperous New Year.
Operator
[Operator Closing Remarks]