Kewal Kiran Clothing Limited (NSE: KKCL) Q3 2025 Earnings Call dated Feb. 11, 2025
Corporate Participants:
Pankaj Jain — President Retail
Hemant P. Jain — Managing Director
Analysts:
Unidentified Participant
Surya Narayan Nayak — Analyst
Shrinjana Mittal — Analyst
Aashish Upganlawar — Analyst
Deepak Lalwani — Analyst
Sahil Doshi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the K will Kirin Clothings Limited Q3 and Nine Months FY ’25 Earnings Conference Call. Before we begin, a brief disclaimer. This presentation which Cable Kirin Clothings Limited has uploaded on the stock exchange and their website, including the decisions during this call contains or may contain certain forward-looking statements concerning Cable Kirin Clothings Limited business prospects and profitability, which are subject to several risks and uncertainties and the actual results contain materially different from those in such forward-looking statements.
As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded.I now hand the conference over to Mr Pankat Jain, President, Retail. Thank you, and over to you, sir.
Pankaj Jain — President Retail
Thank you. Good morning, everyone. It’s a pleasure to welcome all the participants to the earnings conference call for Q3 and nine monthly FY ’25. Joining me on this call is Mr Heman Jain, Joint Managing Director; and Marathon Capital Investor Relationship Advisor. I hope everyone had an opportunity to go through our investor presentation and results release that we have uploaded on the exchange and our company’s website.
I’m happy to report a nearly 28% growth year-on-year on a consolidated sales of INR255 crores. Our growth momentum driven by robust volume growth in the apparel segment and consolidation of cross demonstrate the effectiveness of our strategic initiatives and increasing demand for our apparel products. We have seen healthy volume growth in apparel category on a standalone as well as consolidated basis.
As discussed in our previous call, we had reduced inventory in FY ’24 as compared to FY ’23 for — for changing our production process in-line with just-in-time or near to the season strategy. But let us admit that the lead-time to produce garments is still a three to four-month cycle and we have realized that our ecosystem is not geared up to produce the desired output in such short period.
Despite having strong order book, we were not able to supply the products in Q1 and Q2 of FY ’25. Starting from Q4 — Q2 FY ’25 onwards, we have restored our earlier production timelines but as you know, understand it, it will take at least six to Nine-Month period to reach the optimal level of inventory.
Now our production schedules have been streamlined and believe that from that from Q4 FY ’25, we should see a double-digit growth going-forward. Some part of our revenue was lost due to discontinuation of brand in the MBO channel as part of our brand repositioning strategy as fast fashion brand focusing on youth through our own EBO only. We have opened 61 EBOs of lawman up to Q3 FY ’25.
Our total EBO count as on Q3 FY ’25 was 591, which includes 404 stores of Killer EBO, 61 of Lawman, 10 cross-brand and 116 and other brand EVOs. As a result, we have seen a marked increase in sales contribution from the EVO channel driving — driving positive momentum in the overall sales performance. Furthermore, we will like — we will continue to unlock the potential of the cross-brand by leveraging the group’s extensive distribution network to drive growth through the MBO channel and export markets, while simultaneously fortifying its retaining presence through strategic expansion of cross EBO and targeted counter space acquisition across LFS.
At KKCL, we are working on lot of, including product category expansions as well as segment expansion and are in the process of making detailed roadmap for growth. We shall present our new growth strategy as well as our vision in the next annual result interaction. The government proactive measures to stimulate consumer demand, including direct tax cut is expected to yield positive outlook.
As consumer sentiment continues to recover, companies that have prioritized building robust brand equity, fostering strong customer relationship and establishing a solid market presence are poised to reap disproportionate benefits.
With this, I would like to conclude and open the forum for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer Session. Anyone who wishes to ask a question may press star and one on their touchdown telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles ladies and gentlemen, you may press star and 1 to ask a question. The first question is from the line of Shah from 3A Financial Services. Please go-ahead hello, sir.
Unidentified Participant
Good morning. So my question is what are our planning for capex or are there any future capex planning or if that then how will it will be of internal approvals or what is the planning?
Pankaj Jain
Other than the requirement for our office development, there’ll be a capex requirement of around INR30 crores INR35 crores for next two years, which will be primarily enhanced our manufacturing capability as well as expansion of our retail business, including some EBOs
Unidentified Participant
Okay. Thank you, sir. And can you please what thank you, sir. Thank you.
Operator
Thank you. The next question is from the line of Surya Narayan Nayak from Sunidhi Securities. Please go-ahead.
Surya Narayan Nayak
Yeah, am I audible, sir? Yeah,
Hemant P. Jain
Yeah, very much.
Surya Narayan Nayak
Okay. Thank you, sir. So just to understand, I can just follow-up question to you. So what exactly is the current capacity of ours and in terms of manufacturing to outsourcing, I believe some of the needed and other setting items we could be outsourcing. So as a percentage, what is the ballpark percentage from manufacturing to outsourcing, A, number two, as you said around INR32 crores of — will be allocated towards the manufacturing capital over next two years. So what will be the ramp-up capacity from the current level? I’ll come next?
Pankaj Jain
Generally our manufacturing is built in-house for our core categories, which is jean shirt, t-shirt, trousers, winterwear and t-shirt and other accessories categories are three categories, which we actually traded. But should to give you a percentage, close to around 80% of the total quantity as we do is in-house production and 20% is around outsourced.
Surya Narayan Nayak
Okay. And what about the current INR32 crores of capex that will go towards the manufacturing? What is the current capacity and what is the — what will be the new capacity?
Pankaj Jain
Okay. The current capacity, we have almost utilized it 100% scenario. Okay, we are building capacities on a year-on-year basis. So — and the INR35 crores requirement is for manufacturing as well as the retail.
Operator
Sir, does that answer your question? Due to no response from the current participant, we will move on to the next participant. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question.
The next question is from the line of Divya from Geogen PMS. Please go-ahead.
Unidentified Participant
Hi, sir. Am I audible?
Pankaj Jain
Yeah, yeah.
Unidentified Participant
Sir, what’s the strategy for? So we have discontinued in the MBOs. So going ahead, what will be our strategy? What will be the price point and what will be the store size.
Pankaj Jain
Okay we have distribution we have discontinued lawman from MBO channel okay and the major focus would be retail friendly. But we have already opened 61 odd stores in the current — okay, during this period for Lawman, okay. And we have got a satisfactory response for the particular brand. The price bucket would be in-line with the youth-centric brands. We have already hired Ankur Srivastav as a brand head for long man.
He has around 13 years of experience in retail industry and is a post graduate in marketing and finance he has earlier worked with Max. And we are planning to open close to 40-50 stores in the next year itself. And the that the strategy for retail stores would be more cocoa-driven for.
Unidentified Participant
Okay. And sir, coming to store openings, what will be our target for next year?
Pankaj Jain
So we feel that okay, close to around 50 to 60 stores of killer ABOs and 40 to 50 stores of long. That would be our planning for the next year.
Unidentified Participant
Okay. Thank you so much.
Operator
Thank you. The next question is from the line of Parna Rathol from MCAP Advisory. Please go-ahead.
Unidentified Participant
Yeah, this is urban that road, not Appen good morning, sir. Congratulations on decent numbers. I have couple of questions on the strategic initiatives, including the cross acquisition, which was done. So just wanted to understand how much was cross-sale in FY ’24, and also how much have we done in Q3 FY ’25? So obviously, FY ’24 wouldn’t have been consolidated, but just to understand that whether the growth is coming from cross on a standalone basis also.
Pankaj Jain
Okay. So if you go to the last year’s numbers, okay, the FY ’24 — FY ’25 — FY ’24 number of cross plan was around INR175-odd crores. Okay, the consolidation happened from the month of July. So you’ll see only for 3/4 for the current year where accounts consolidation is happening.
The quarter one number was around INR55 crores — the quarter two numbers was around INR55 crores. This year’s number is — quarter three number is around INR53 crores, which has a double-digit growth.
Unidentified Participant
Okay, okay. So we are seeing growth in cross on an overall basis. If I extrapolate it to a full-year basis, then we should see a 15% 80% growth in cross-sales vis-a-vis FY ’24, though not consolidated.
Pankaj Jain
The EBITDA numbers have also increased and it is around 20% for Q3 of FY ’25 for the cross particular brand. On a sustainable basis, EBITDA margin should be in the range of around 18% to 20%.
Unidentified Participant
Just wanted to further stand understand on cross, how far as the integration happened? Are we also displaying cross product in our you know, EBOs, are we planning to open up more EBOs on cross? So broadly, what is the strategy — overall strategy around cross growth?
Pankaj Jain
So when it was acquired, okay, majority of the sales for us was from the LFS channel, okay. We have after the consolidation, we have explored and started with exports. Okay, retail has also found real traction. Okay, close to around 10 stores have already been opened up. The numbers are good and exciting for the same. And going-forward, retail and opening up other channels of the sales — other channel of sale for cross would be the particular strategy for us.
Unidentified Participant
Okay. So in terms of EVO, what would be the target, say, for FY ’26 for only cross? And also the family stores which we typically open up.
Pankaj Jain
So it operates on a separate entity perspective. So there’ll be killer as a brand EBOs, lawman as a brand EBOs across as individual brand EBOs.
Unidentified Participant
Okay, okay, okay, okay. So also on the other income, the other income has decreased substantially, which was INR9 points some-odd crores in last quarter and it has come down to INR1.5 crores. So any specific reason.
Pankaj Jain
It’s just mark-to-market,
Unidentified Participant
Mark-to-market as in — sorry.
Pankaj Jain
So most of the investments have been done in capital front and that have been mark-to-market so
Unidentified Participant
I’ll join back more questions. Thank you.
Pankaj Jain
Sorry.
Unidentified Participant
Yeah, understood. Understood. So I’ll join back the queue in case if I have more questions queue.
Operator
Thank you. The next question is from the line of Rajesh Sharma from Insight Advisory. Please go-ahead.
Unidentified Participant
Good morning, sir. MR. Sir, I had a couple of questions.
Operator
I need to interrupt, sir. I would request you to please use your handset.
Unidentified Participant
Am I audible now?
Pankaj Jain
Yes.
Unidentified Participant
Yeah. So I had two questions. So first is regarding in this current quarter, what is the proportion of fresh sales and versus the discounted sales.
Pankaj Jain
So we don’t map on a quarter-to-quarter basis, but overall over annualized period, we see that, okay, 60% is a fresh sell-through over two season period and discounted about discount period — discount sales is around 40%.
Unidentified Participant
Okay. And sir, the next question is, how do we see the current demand outlook for the Q4? How is it turning up?
Pankaj Jain
We feel we’ll be — we have now streamlined the production process. So we believe that in Q4 ’25, we should see a double-digit growth.
Unidentified Participant
Okay. Okay. And last question, what is the regarding happening our kit strategy
Operator
So need to interrupt, Mr Rajesh, we can’t hear you clearly. Can you repeat your question again.
Unidentified Participant
So my question was the strategy regarding our kid segment, which we have started.
Pankaj Jain
Yeah, it’s just been okay, one season for it. We have seen a decent response and we feel that, okay, it’s too early to comment on that category, but okay, attraction has been good.
Unidentified Participant
Okay. Thank you. Thanks so much.
Operator
Thank you. The next question is from the line of Anurag from Sunidhi Securities. Please go-ahead.
Unidentified Participant
Hello. Yes. Am I audible, sir?
Pankaj Jain
Yes, very much.
Unidentified Participant
Sir, I wanted to ask regarding your retail channel among the retail channels, how much does the Tire one city, Tier two city, Tire three cities contribute to your sales hi, hello.
Pankaj Jain
Okay. So different if I evaluate that, okay, different channel or maybe different brands would have different tire city specifics. So we don’t generally evaluate on how and Tier-1, to do. Overall percentage should be around, it should be around 40 60, 60%, 40%, 60 percentage.
Unidentified Participant
Voltage is like Tire one is 40.
Pankaj Jain
Yeah,
Unidentified Participant
And rest is 60.
Pankaj Jain
Yeah.
Unidentified Participant
Okay. And sir, regarding your capex, you said that you are doing around INR32 crores of capex. So what will be your new capacity after the capex?
Pankaj Jain
We built-in our capacity-based on our estimation for on a year-on-year basis.
Unidentified Participant
Okay.
Pankaj Jain
Okay. Capex I said is around INR35 crores, which we said it will be for the manufacturing as well as retail capability. The bifurcation should be around 50-50.
Unidentified Participant
Okay. Okay. Okay. Thank you.
Operator
Thank you. The next question is from the line of Mittal from Ratna Tyor Capital. Please go-ahead.
Shrinjana Mittal
Hi, thank you for the opportunity. I just wanted to understand on your earlier comment of the production timeline not being restored. So can you just help me understand like how many days of sales did we lose because of that and like what the kind of inventory buildup which was required, which we could not — which we could not get to, yeah.
Pankaj Jain
So if you look at — have we got the first — on the inventory levels, March ’25 to current March ’24 to the current-period, it has drastically increased. This was the inventory levels which we were able to — generally carrying over a period and the — we feel that we have already reached at the current levels and this level should allow us to have a double-digit growth for the going quarters.
Hemant P. Jain
So in March ’23, our inventory level was INR164 crore and which was reduced to INR82 crores in March ’24. So now currently our — on an inventory on a standalone basis is around INR153 crore, okay. So I think generally we used to keep inventory of around INR180 crore to INR200 crore for a decent growth for the company.
Shrinjana Mittal
Right. And so what is our internal estimate that because of this lower inventory, how many days of sales would we have lost? Because saying that we expect a double-digit growth next quarter, right?
Pankaj Jain
So if you see in the first-quarter Q1 FY ’25, I think our sales was decreased by 15%.
Shrinjana Mittal
Right.
Pankaj Jain
Yeah. So I think, we are hopeful, very hopeful. We have also seen a good traction our SSG in the Q3 as well. So we are seeing a good traction and we will be able to do a double-digit growth going-forward.
Shrinjana Mittal
Understood. Just one more question of on the cross-sales, like what are the product categories? Is it largely bottoms or is there some also
Pankaj Jain
It’s largely bottoms, okay, where denim contributes the biggest there.
Shrinjana Mittal
Thank you. Thank you and all the best.
Pankaj Jain
Thank you.
Operator
Thank you. The next question is from the line of Aashish from InvesQ PMS. Please go-ahead.
Aashish Upganlawar
Yeah, hi. So half of our sales, as I see from the presentation almost come from EBOs and NCS and the other is non-retail. So would it be possible to give some insights on how the economics of different EBOs work for us because now we have so many brands and different TBOs for them. So just a — some kind of insights would help.
Pankaj Jain
So retail as a channel, okay, it’s growing for us and it’s a composition of LFS and exclusive owned stores. Different brands works on different format scenarios. Killer works on more as compared to COCO scenarios., going-forward, we feel a — the proportion of 44 to should be around 85% 15% lawman is largely operated on a Coco channel and the cross is pretty new, okay, and the base is still low. So it’s too early to comment on cross right now.
Aashish Upganlawar
Okay. So my — actually the point was to understand what kind of ROIs or IRS do different brands in this EBO channel work for us. I mean, you would have certain brands which are really established and the others where we are trying. So certain. Since it’s a composite channel, a composite mix of ABO as LFS, the — and non-retail is MBO, exports and e-commerce. On a composite level, EBITDA margins are similar on a retail as compared to a non-retail. No, no, I’m not talking about the EBITDA margins. It’s mostly to with the return on investments that we make on these stores because different models are being followed, Coke 4, Coco and then I have understand —
Pankaj Jain
Okay, we prepare our business plan, we say that, okay, the first year return should be around 18% and going-forward should be around 24%.
Aashish Upganlawar
Okay. I think we’ll have to probably take it offline sometime to understand it in detail. Yeah. So — and someone asked also this other income, you said that there is a mark-to-market loss that probably has come in the debt funds. Is it right? Is that right? So how was the positioning of the debt fund because typically that should ideally not happen if the treasury management is kind of pretty active.
Pankaj Jain
There is also one of the investment which was done where the company got listed, okay. So that has also impacted the other income?
Aashish Upganlawar
Okay. So this is not entirely to do with the MTM loss, some part of it would be?
Pankaj Jain
Yeah, yeah.
Aashish Upganlawar
How much would that be? Because I’m just trying to figure out how much the normalized other income would look from maybe the next quarter
Operator
Ashish, does that answer your question?
Pankaj Jain
No it does a moment. Okay. So the loss for The listed entity would brought on books is around INR3 crores.
Aashish Upganlawar
Okay. So normalized other income, any idea you can give us the amount of investments that we have on the balance sheet? And then what can we expect the yields to be at kind of roughly
Pankaj Jain
To INR9 crores is what we actually get as a realized gain on the other income?
Aashish Upganlawar
Okay. Okay, okay. So that should normalize from Q4. Hello.
Pankaj Jain
Yeah, I feel so.
Aashish Upganlawar
Yeah, yeah. Okay. Thank you.
Operator
Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask question. The next question is from the line of Deepak Lalwani from Unifi Capital. Please go-ahead.
Deepak Lalwani
Hi, sir. Thanks for the opportunity. Sir, firstly, on the production-related sales loss, if you can quantify the number and which channel was — was affected because of this? So Deepak, it was majorly related to all the channels. See, we work on a two-season cycle.
Pankaj Jain
Okay, so we could not carry-forward the inventory because we could not produce?
Deepak Lalwani
Okay. And in the INR200 crore inventory that were — that we have as of December, if you can quantify what would be the mix between finished goods, fabric of roughly? And in terms of your growth aspiration for the 4th-quarter of double-digit, so if you can indicate how has January been for us?
Hemant P. Jain
Deepak, last-time we just Bata,[Foreign Speech] actually because of the inventory, come,[Foreign Speech] March, May now ’23, those [Foreign Speech]kick on first-quarter other effect at half. So our inventory, [Foreign Speech]Turkey Real-time actually in time in a inventory give bad the manufacturing facilities possible Hawani[Foreign Speech]. So buffers from the inventory 3,[Foreign Speech] if you see inventory for [Foreign Speech]Badana may be and[Foreign Speech]. So quarter-on-quarter to effect quarter three I mean normalized or quarter-four, we expect double-digit growth [Foreign Speech]currently.
Pankaj Jain
But again, as I said, the finished goods inventory last year-on a standalone basis was INR54 crores — INR54 crores. And this year we have increased it to INR80 crores.
Deepak Lalwani
Okay. Okay. I wanted to understand, you know if the growth has started from January or you expect it to be back-ended in this quarter?
Pankaj Jain
I would say the mat. On a tertiary level, okay, on our retail EBO, SSG, for the current quarter was close to around 14%.
Deepak Lalwani
Okay. Okay. Got it. Okay. And sir, secondly, on the gross margins, there has been some dip in the standalone gross margins. So if you can indicate is there some level of discounting which has happened in this quarter and/or some pricing-related competition-related pricing discounts that you’ve given?
Pankaj Jain
We do not definitely able to get the price increment in terms of realization and the discounting has also increased because this current quarter is related to winter wear and winter was not as expected.
Deepak Lalwani
I see. Okay. Any sort of discounting that we should expect for Q4 and before any old inventory that is left, whether it be in winterwear or any other categories, which is probably not selling?
Pankaj Jain
We have able to liquidate the winterwear as a category over this sale period. So there will not be much of a carried forward inventory.
Deepak Lalwani
Okay. Got it. And sir, I wanted to understand your thoughts on marketing, like how do we plan to differentiate if you can indicate thoughts on that and any sort of extra spend that we require for you know, the killer franchise and the other franchises put together.
Pankaj Jain
And for that marketing with Deepak, we have not yet pipelined it, okay, but we estimated that on the overall number, it should be around 5% to 7%.
Deepak Lalwani
Okay. Got it. And how has the spend been for this for the last nine months?
Pankaj Jain
Around 5%.
Deepak Lalwani
Okay. Got it. Got it. And sir, given that we are doing the Lawman stores on a COCO basis, how many how many quarters or months will it take for us to breakeven, should we expect a lower EBITDA margin because we are taking this initiative on our books? So if you can give a sense on what should be the expectations on EBITDA margins for FY ’26?
Hemant P. Jain
FY. Deepak,, Amlo Koli[Foreign Speech] margin may goes up actually EBITDA margin 80% to 20% your range must continue correct or continue [Foreign Speech]rushing it,
Deepak Lalwani
[Foreign Speech]Chica, sir. I wanted to get a sense, sir, on the debt that we have on the books. I know it is short-term, so any plan to repay it? What’s the reason for this debt.
Hemant P. Jain
Deepak, [Foreign Speech]to cross card job, cross card job payment, [Foreign Speech]Kapna product because for the office is. Oh, DKK.
Deepak Lalwani
Okay. Got it. And sir, we used to be a dividend-paying company. Any plans to increase dividend payout or do a market buyback if possible.
Hemant P. Jain
[Foreign Speech]Abhi, Dhabi is handing because unnecessary, we don’t want to create — give HOB bankers would have cash flows would have come generate currently. But yes, like it’s too early Abhibi policy decision one year per. Next I may after reply to do more.
Deepak Lalwani
Okay. Thank you, sir. All the best.
Pankaj Jain
Okay. Thank you. Thank you, Deepak.
Operator
Thank you. The next question is from the line of Desha from Sapphire Capital. Please go-ahead.
Unidentified Participant
Hello, sir. Yeah. I hope I’m audible. Thank you so much for taking my question. Just wanted to know what is like your revenue guidance for FY 2026 and what margins can we expect moving forward?
Pankaj Jain
So we feel that okay the — that okay the growth have — growth will be there and it will be close to around double-digit growth and EBITDA margins would be around 18% to 20%.
Unidentified Participant
Okay. All right, sir. Thank you.
Operator
Thank you. The next follow-up question is from the line of Surya Narayan Nayak from Sunidhi Securities. Please go-ahead.
Surya Narayan Nayak
Am I audible, sir? No.
Pankaj Jain
Yeah.
Surya Narayan Nayak
Okay. Thank you. So just to sir, understand the — as you said, around INR35 crores of capex including the EVOs you were running. So sir, I was just understanding that you are — we are actually able to generate a asset turnoff close to 6 times over the gross work. So if I say INR35 crores of gross, so it could be roughly around.
Pankaj Jain
There is not much of noise on your background.
Operator
Sorry to interrupt Mr. There’s a lot of background noise from your end. I would request you to please repeat your question again.
Surya Narayan Nayak
Okay. Okay. So I was just asking that the current gross block to — I mean, turnover asset turn is around close to 6 times. So with the capex of, look, INR35 crores, we are planning. So we could be ending around INR210 crores. So with double-digit growth, whatever we are thinking, so if I, let’s say, go closer to 15%, 16%, it could be asking around INR450 crores of turnover. So I mean, considering your AP-20 ratio of manufacturing business, so the capex seems to be on the lower side. So is it the fact that we will be scaling up further as we as we progress
Pankaj Jain
So there, I think exactly you can’t compare this gross block because I think this is a new strategy which the — because we are opening the new EBOs, okay, that’s why I think there is a capex, okay. So that is exactly not mapped with the earlier CapEx, which we have done, okay, for our factory manufacturing facility. So this is not apple-to-apple comparison.
Surya Narayan Nayak
Okay. Okay. So what would be — I mean,, on the gross side, I mean on the manufacturing side, compared to around INR128 crores of gross block, we could be adding another INR15 crore to INR18 crores. But what about the — what about the ROU assets, are we also scaling up for that?
Pankaj Jain
So on a company-level basis, I think if you see, I think we do an ROE of around 23% 24 percentage, okay, I think this will continue because of the growth also.
Surya Narayan Nayak
The 23% Y-o-Y growth ROE?
Pankaj Jain
Yeah. So ROE to ROE will be calculated on the net-worth only,?
Surya Narayan Nayak
No, no, I’m thinking right-of-use assets, sir.
Pankaj Jain
So right-of-use assets, so I think typically because I I think this year we have opened new EBOs for lawmail, okay. And we expect — I think this will also generate a ROE of at least 20% plus going-forward.
Surya Narayan Nayak
So what is the plan to plan for RO expansion, right of huge assets expansion.
Pankaj Jain
So right-of-use asset is only for the rental because I think for the new we have to keep right-of-use asset for the rental property.
Surya Narayan Nayak
And in the manufacturing capex, we will be adding, as you said, around INR80 around INR80 close to INR20 crores over the next two years?
Pankaj Jain
Yeah. Yeah.
Surya Narayan Nayak
Okay, okay. So — and sir, regarding the margin, you are saying that you will be maintaining EBITDA margin at 18% to 20%. So given the raw-material situation, especially cotton remaining benign, so are you not expecting any sort of rise in margin or — I mean there will be pressure on the pricing scenario.
Hemant P. Jain
[Foreign Speech] Now we have both pressure, luxury, there are other last 18 month cotton, prices gut air. It is stable. So as such and cotton gay prices, but I just before cost effect, of normal, SAE. Mujanil or in future be enough.
Surya Narayan Nayak
No, I’m not — I’m not telling — I’m on the contrary saying that no, because CCI has bought nearly to one-fourth of cotton of last year’s production so-far as at MSP. So the situation is totally very benign for the cotton pricing. So are we not expecting any margin improvement? That is what I’m asking.
Pankaj Jain
See, it is it is too early to say anything because say cotton prices, if you ask me two days, because [Foreign Speech]the milk earlier and a contract goes up there. So, that is my SFO effect, [Foreign Speech]Mujay, as such quarter-four, first-quarter of New Year’s as opposed this right.
Surya Narayan Nayak
Okay. So shall we mean that 18% to 20% will be our peak EBITDA margins for next two years?
Pankaj Jain
100%.
Surya Narayan Nayak
Okay, thank you.
Operator
Thank you. A reminder to all the participants that you may press start and one to ask a question. The next question is from the line of from Suryash Advisors. Please go-ahead. Sir,
Unidentified Participant
Good morning. Just wanted to understand the inventory rationalization that you attempted and you said there was challenge in getting just-in-time production. A, can you elaborate a bit on that? Is there a case for going back to that or you will not go back to that strategy?.
Pankaj Jain
[Foreign Speech]As per such any strategar see how much Koshish karchy just-in-time and the productivity other, but we are fairly in that. So this on a business be, we have orders in our end, but we couldn’t supply that. So [Foreign Speech]Oceka Ugaki as such, it’s our product experiment fill out the recurring
Unidentified Participant
Any problem. 80% could production. So you could have managed, right? So I’m just trying to understand where was the constraint?
Pankaj Jain
Because their entire ecosystem works on the supply cycle, everyone coordinating on that perspective, we try to map it like the most of the e-commerce brands were doing it on the logistic aspect and all, okay, which we failed — which we feel that, okay, because of having the entrepreneurship relationship, we were not able to crack it well-versed. So right now we are not — we are not going ahead with it for at least for a year period.
After that, we will decide whether we actually want to explore that or not explore that.
Unidentified Participant
Sure, sure. And the other question is, sir, what is the extent of overlap between cross-brand and your traditional Killer jeans brand, for example? Do you see any cannibalization happening? What is the profile of your customer there,
Hemant P. Jain
[Foreign Speech]wear brands? So Amlo may be wear branding. So there is no chance of wrong question.
Unidentified Participant
Yeah. Sure, sure, sure. Sure. Sorry, wrong question, sir. Thanks,
Hemant P. Jain
[Foreign Speech] or argue about production just in the aim of and because other all are the — they don’t have their own manufacturing unit., the major problem is that we have our own manufacturing unit. The time on work-in progress. We are not sales by vendor base company, Amara supply on-time. So as car, right? Okay, we just have an inventory field. In future, also better.
Unidentified Participant
Sure, sure. Thanks very much for clarifying. Thank you.
Operator
Thank you. The next question is from the line of Sahil Doshi from ThinqWise Wealth Manager. Please go-ahead.
Sahil Doshi
Hi, sir. I hope I’m audible.
Operator
Yeah. Sorry to interrupt, sir. I would request you to please use your handset.
Sahil Doshi
Yes, I’m on the handset.
Operator
Okay. Please continue, sir.
Sahil Doshi
Yeah. So the question first relates on the balance sheet. I just see there is INR100 crores-odd of debt now and roughly INR250 odd crores of cash and investments. Related to cross and other investments which we have in property, how much more outflow is expected and how should we think about this?
Hemant P. Jain
[Foreign Speech] So as just other good cash-flow or, because you properly also in-construction soda was and that is a three-year plan, not give quarter here, quarter one on quarter two impact irony. So construction [Foreign Speech] Hoga office, Soda was impact again within three years. So I don’t think [Foreign Speech] Zaga change.
Sahil Doshi
Okay. Sir, cross cap, anything further outflows in cross-over the next one year.
Pankaj Jain
So the deal was done on a staggered payment, there will be outflows for next three years, okay, but it will — okay. It will be INR50 crores for the next three years.
Sahil Doshi
Cumulative INR50, right?
Pankaj Jain
Cumulative INR50.
Sahil Doshi
Okay, understood. And this also takes it on account of increase in our stake over a period of time.
Pankaj Jain
No, no, no, no.
Sahil Doshi
This is only for the initial —
Pankaj Jain
The initial done okay buyout.
Sahil Doshi
Okay, understood. Understood. Sure. And just related to that, when you said the other income should be normalized INR8 crore to INR9 crores, this is per quarter you’re saying or annually?
Pankaj Jain
Yeah.
Sahil Doshi
Okay. So this quarter we had an M2M impact of INR3 crores. So that’s where it’s lower is what you were alluding.
Pankaj Jain
Yeah.
Sahil Doshi
Okay, understood. Secondly, on the strategy on law man, I see you called out also you hired Mr Ankursh. Could you just talk about the strategy a little more in terms of when you say the price range would be in the bracket of youth fashion, so who are we benchmarking to? What is the kind of target city audience?
And is it more men or it’s more, you know, overall youth men and women?
Hemant P. Jain
See initially it’s the manswear brand so [Foreign Speech] Abhia most or it is too early to say anything. [Foreign Speech] Boska just Abhi Mr Ankur the strategy set-up or [Foreign Speech] Kobi — Kobi Chi Chu for at least eight quarter two, quarter after and Kobi strategy. Just so we are just opening the store. In future respect assay or, better warm looking. So the look aspects, the ambients, the price bracket would be as comparable to a Gen Z brand where you mean Gen Z as in like something like snitch or a zodium or a snitch sold store would be the right example.
Sahil Doshi
Okay. And in terms of pricing, how would this be?
Pankaj Jain
Similar to them or maybe a 10% plus-minus.
Sahil Doshi
Okay. Okay. And also in terms of store economics, if you can share how are these because it’s a cocoa model? And also in terms of positioning in terms of cities, is it more —
Pankaj Jain
And if we feel that okay, ROE would be around 20% on the overall investment structure should be around 20%, okay, but it’s been just a quarter and okay, it’s too early to comment on that. Okay. We said that, okay, in the next presentation, we’ll give you a full-fledged above presentation or the strategies of the next three period, next three years.
Sahil Doshi
Okay, understood. Understood. And just wanted to one clarification in one of the questions you said the SSG in standalone was 14% at EPO level. Is that correct?
Pankaj Jain
At EBO level during the current quarter was around 14%.
Sahil Doshi
Okay. So despite that, if you’ve seen a reported standalone growth of 1%, so where-is the de-growth been in 1%, what exactly are you comparing and overall standalone Y-o-Y growth is 1%. This is — that number I’m giving you about the tertiary levels, this is at primary levels.
Pankaj Jain
So if the — okay, both are not comparable directly.
Sahil Doshi
Okay. Okay. Okay. No, got it. Perfect. I’ll get back-in the queue. Thank you so much and best wishes.
Operator
Thank you. Ladies and gentlemen, you may press S and one to ask a question. The next question is from the line of Abhijit from Antique Stock Broking. Please go-ahead.
Unidentified Participant
Yeah, hi, sir. So essentially wanted to get a understanding of the demand scenario because all the
Unidentified Participant
Many of the players have seen some amount of pressure during the quarter and there was a — and hence there was a end of — early end of season sale. So what is the overall market scenario? You would do a 15 double-digit growth that both.
Pankaj Jain
Abhijit, the current quarter looked exciting for us. We said that okay, the tertiary sale was plus by 14% on the tertiary levels. So I don’t feel — okay, we feel there has been uptick and okay, and that growth should sustain for the current — okay, going quarters also.
Unidentified Participant
Okay. And the non-retail part, the LFS part because there was some amount of pressure in the MBUs and LFS that feedback. So how has that been — that also has been good for you?
Pankaj Jain
Yes. That has been good for us. Growth will be on a small — okay, lower percentage perspective, but okay, there was an absolute number, there was a growth on that channel also.
Unidentified Participant
Understood. Thanks. Thanks. That’s all from my side.
Operator
Thank you. The next question is from the line of Deepak Lalwani from Unifi Capital. Please go-ahead.
Deepak Lalwani
Hi, sir. Himanji, I wanted to ask this question to you again. Sorry, there was less clarity on my side. So you’re talking about double-digit growth in Q4. So have you seen growth in primary sales in January, given that tertiary was good?
Pankaj Jain
Yes. Yes.
Deepak Lalwani
Okay. If you can give a number to that growth, how much growth have you seen in January?,
Hemant P. Jain
[Foreign Speech] I get the number.
Pankaj Jain
It’s a seasonal cycle scenario. Okay, let’s wait till the quarter gets ended and then we talk about it.
Deepak Lalwani
Okay, sure. And sir, secondly, I wondered your comment on how has the kids portfolio shaped up for us?
Pankaj Jain
And it’s just been okay one season scenario and we are finding attraction from all our channel partners.
Deepak Lalwani
Okay. Okay, got it. And what about the athleisure and winterwear portfolio? Any thoughts that you can share? How is it scaling?
Pankaj Jain
Yeah, it has been over, okay. For strategy for next year will define. And as we said, okay, in the next presentation, we’ll give you an entire strategy perspective for all our brands for the next three period, three years.
Deepak Lalwani
Okay. Got it. And even on athleisure, any takeaways that — any takeaways on growth that we should be aware of?
Pankaj Jain
See, it’s a micro analyst’s perspective. On a macro, I’m giving you the number.
Deepak Lalwani
Okay. Fine. Thanks,. Thanks.
Pankaj Jain
Thank you,.
Operator
Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Rajesh Jain from Research. Please go-ahead.
Unidentified Participant
Hello. Yeah. Yes, sir. Thank you for the opportunity. I have couple of questions. One is regarding the manufacturing expenses, which has increased sharply from 7.1% to 11.2% of revenue, that is like from INR14 crores to around INR28 crore. So what’s the reason behind it?
And my second question is with regards to GP margins. On a standalone basis, it has reduced from 43.3% to 40.7% and also on the consolid basis from 43.3% to 41.4%, like it better if you can explain.
Pankaj Jain
So the GP margin, I said, okay, the decrease is mainly because of a little bit of a higher discounting and the price increase, we were not able to take a price increase. That’s two aspect that has reduced to the GP margin. What was the other question
Unidentified Participant
With related to manufacturing expenses, sir. It has increased sharply.
Pankaj Jain
Manufacturing expenses. So if it comprises of both the companies, that’s the reason it has increased. So I think INR11 crore of manufacturing expenses was INR4 crores. So that got increased this year as compared to last year only was manufacturing expenses was INR14 crores. So INR11 crore additional INR4 crores. And also I think we have built-up the finished goods inventory on a standalone basis. That’s why overall the manufacturing businesses have gone up.
Unidentified Participant
Okay. Okay. Okay. Thank you very much, sir.
Operator
Thank you. As there are no further questions from the participants, I would now like to hand the conference over to Mr Jain for closing comments.
Pankaj Jain
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 clarification of feedback. Thank you all and once again wishes for good festive season. Thank you very much.