Sai Silks (Kalamandir) Limited (NSE: KALAMANDIR) Q1 2026 Earnings Call dated Jul. 26, 2025
Corporate Participants:
Unidentified Speaker
Rachamadugu Balaji Bharadwaj — Senior Vice President, (IT & E-Commerce)
K.V.L.N. Sarma — Chief Financial Officer
Analysts:
Unidentified Participant
Bala Murali Krishnan — Analyst
Raj — Analyst
CA Garvit — Analyst
Piyush Bangar — Analyst
Shubham Sehgal — Analyst
Sarvesh Gupta — Analyst
Dhwanil Desai — Analyst
Niharika Karnani — Analyst
Ankit Gupta — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Sai Silk Kalamandal Limited Q1FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. We have the management of Shri saik Silk Kalamandir Ltd. On the call with us. I now hand the conference over to Mr. Bharatwaj, Senior Vice President of Sri Silk Kalamandir Limited. Thank you. And over to you sir.
Rachamadugu Balaji Bharadwaj — Senior Vice President, (IT & E-Commerce)
Thank you. Hamchat. This is Sai S Kalamandir, but any which is on behalf of SAIS is Kalamandir. I welcome you all to Q1FY 2526 earning conference call. I have with me Mr. K.V. l.N. Sharma, our chief Financial Officer. I hope you all have gotten a chance to go through our financial as well as our presentations that have been uploaded both on the stock exchanges as well as on our website. I’m happy to say that we had a good start to the financial year which was driven by a strong consumer demand wedding calendar as well as effective festive season that we have positioned and our continued evolution of our offline store presence.
The overall market overview wise the ethnic retail market in Q1 which covered April to June in this quarter we have seen a steady pickup in terms of the consumer demand. This was basically driven by the early onset of the wedding season that has contributed to this increased footfall. This was particularly in the bridal and the festive wear categories. The overall market sentiment also remained positive with a noticeable uptick in both the premium and the mid range ethnic apparel. This reflects continued cultural affinity and evolving lifestyle aspirations especially in the South Indian market. And sarees continue to still be the preferred choice of apparel when it comes to the weddings and occasion wear.
With respect to our financial performance, I think we are happy to achieve a total revenue of about 379 crores compared to 267 crores last year marking a growth of about 42%. YoY gross margin stood at 42.07 compared to 41.26 was achieved which was about last year. Margin expansion also has been possible continuously for the last couple of years on account of better product assortment. The EBITDA level stood at 57.13 compared to 19 crores last year with a growth of about 200%. This growth was majorly possible due to the revived customer sentiment and the favorable wedding calendar compared to last year of not having wedding dates and operational leverages also played a major role in this.
Our pack stood at 30 crores this year compared to 2 crores of last year reflecting a growth of more than 1300%. With respect to our SSGs, SSGs almost stood about 29% showing a robust footfall, recovery and consumer demand across all our formats. With respect to our new store additions, we have opened one new store with Varamahalachmi silks format. With this our total retail square feet present stood at 7.27 lakh square feet with 69 stores spread across more than 20 cities. On the business side, the Saree segment continues to be our flagship product and our core strength.
All our formats saw increased footfall and traction. As mentioned in the last earning call, the wedding calendar has been favorable this quarter compared to last year where there were not many wedding dates available and therefore on account of this all our brands experienced increased footfall and that footfall conversions translated to the revenue numbers that we were able to achieve and we also continue to maintain a track record of not having to close down any stores since inception and we are on track to open the remaining stores planned for the year. From the business update side, we are also excited to launch a new format in the name of Vallisilks.
We plan to launch this brand in the lines of Kalamandir platform. This brand will have the product offering majorly in the low price silks and fancy sarees and targeting majorly towards the women’s sarees. A small and compact format will be our Valvi silks brand. We already tried to put Valli silks in our stores before and on account of getting a continued good response from that we are planning to expand this further into our existing markets and with regards to the outlook wise I think in the next couple of quarters the wedding dates are strategically placed and we don’t see any external factors that affect the business that is going to come forward and Q2 and Q3 are generally the quarters that have major festivals aligned and therefore we are also aligning our marketing campaigns, our stock selection and product positioning properly and getting prepared for the upcoming wedding season.
I mean we continue to remain optimistic about the Indian ethnic wear market which is poised to steady growth given that the cultural continuity, rising disposable incomes and increased occasion based buying is there. I will be now happy to take any 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 table and one on their touchstone 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. The first question is from the line of Bala Murlikrishnan from Oman Investment Advisors. Please go ahead.
Bala Murali Krishnan
Good morning. Congratulations. Get date. So the first question is regarding the store execution this quarter. I think we have opened only one store against the plan of around 10 to 12 stores over the year. So we can able to match that phase in the coming quarters or there could be any lag. What is the exact cause for this delay in opening the stores?
Rachamadugu Balaji Bharadwaj
So sir, thank you. I think we are still on track to open the target of about 65,000 retail square feet addition for the whole year. I think in the last call also I started to make a commentary saying that rather than the count of the stores, we are going towards a square feet of stores. We are still on track. I think there was been a small delay because of the rains that are here in Andhra and Telangana. But we have about two stores that we have in Pipeline in the next 15 days. I think as per our RHP also, we were poised to open about 1.4 lakh square feet of retail square feet for the for the whole two years period which we have till March 26.
But the way we are looking at, we should be able to complete this entire expansion which I think currently we are left out with around close to 30,000 square feet or 28,000 square feet which we intend to complete by Q3 of this year itself. So we are still on track to open all the stores as we actually planned. So the next coming quarters also you will be able to hear a few more store updates that will be coming from our end.
Bala Murali Krishnan
Good. So on the long run, if you see on the long run, okay, this 65,000 square feet would be this year as we have IPO proceeds so we are utilizing them for store of but going forward maybe two years or five years down the line. So are we able to maintain this 60,000 65,000 square feet pace even in the long term like five years through our internal accruals or the pace will be slowed down after completion of this IPO proceeds?
Rachamadugu Balaji Bharadwaj
No sir, I think the plan is to open at least 8 to 10% of retail square feet addition every year. I think we are still targeting not just this year, even the next year also we still have plan to open A similar amount of square feet addition. This is going to majorly be possible through our internal accruals our financial stability has been increased in a very very much positive manner and I think the way that the working capital utilization has also completely come down so we are very much geared up to open 65,000 to about 8 to 10% of the retail square production year on year is quite possible.
Bala Murali Krishnan
Okay, fine. So regarding KLM brand, so how’s the.
operator
Rejoin the question queue I’m sure.
Rachamadugu Balaji Bharadwaj
Let me just complete this one question.
operator
Yeah, okay.
Rachamadugu Balaji Bharadwaj
So you guys are talking about KLM I think.
Bala Murali Krishnan
Yeah, let me complete the question. So thanks for the opportunity. So the KLM brand. So I think we are reviving that brand. So how’s the performance in this quarter and as compared to previous quarter? So if the SSLG don’t improve or we’ll see negative SSLC going forward. So do you have any plans to discontinue that brand? That’s all. Thanks a lot.
Rachamadugu Balaji Bharadwaj
With respect to klm, I think we have seen footfall increase in KLM compared to last year Q and we have seen SSG growth also. However our plan of action was one multifaceted plan strategy is what we have for klm. One is we wanted to change in terms of our stock when we wanted to change in terms of sale of SOR inventory. We reduce the inventory and see if we can work with vendors to have a sale or return kind of inventory model. We are also working on product assortment in a much better fashion. So all these things are currently on track.
As mentioned in my last earnings call also I think we gave ourselves time till Q2 of this year. So far Q1 has been favorable. Q1 has been positive. We don’t have any negative SSG. The SSG has been positive. If the same trend continues, we should be able to complete the year with a positive SSG for KLM as well. And at this point of time we are focused more on the revival of KLM in terms of positive SSGs and KLM as a brand. I just want to iterate that this brand when you compare to varamahalakshmi Silks is on the lower end.
But if you take a standalone KLM there’s not much problem or we are not making any loss with respect to this brand. So we don’t anticipate to close down our stores of klm rather enhance these stores with better assortment, better product offering and better metrics and that will be able to like you know, fuel our growth. Probably once all these things set we should be able to expand our KLM format which we at this point of time is a little bit far fetched. Probably one year or two years down the line once after all the metrics are probably sorted, once we are able to regain our SSG level growth then we should be able to look at KREM also as a format to expand further.
Bala Murali Krishnan
That’s all. Thanks a lot. All the rest.
operator
Thank you. Sir, the next question is from the line of Raj, an individual investor. Please go ahead.
Raj
Am I audible?
operator
Yes sir.
Raj
Yeah sir, this year Q2 is having I think no varying dates as compared to we have some varying dates in last Q2. So is this affecting our revenue position this year? And what has been the triple HC growth for Q1?
Rachamadugu Balaji Bharadwaj
Yeah. So Raj, I think triple SG growth for Q1 I think I’ve already mentioned is about 29%. And Q2 as you rightly said, we have wedding dates and in this year Q2 along with the wedding dates you also have the early onset of Dashara that will come in. So all these will be in our favor for the quarter two also. So quarter two the way we’re looking at this, if you have a healthy pipeline of wedding dates as well as the Dashara early festive season also that will come up. I mean if rains or such external factors are not a problem then I think we are on track to have a good performance in Q2 also so far at this point of time as of July the traction has been good and all our stores are seeing some better footfall compared to last year of Q2.
Raj
And sir, any ballpark figure you can give for this year or for FY27.
Rachamadugu Balaji Bharadwaj
I mean for this year we are not looking at giving any number per se. I think a better way is for us to wait till Q3 to give you realistic number. We’re not planning to give any sales forecast number that we want to give at this point of time. Any right time would probably yes. The. Overall growth you might take around 15% compared to last year should be the top line growth that we are internally targeting.
Raj
Okay, answer just the tax overhang is ended and can we see a normalized taxation this year and going forward or any hangover? Is there still left.
K.V.L.N. Sarma
Tax hangover part is completely closed in respect of the company. So there will not be any additions or any further requirements of tax provisions of the previous years henceforth.
Raj
Okay, thank you and good luck for future.
operator
The next question is from the line of CA Garvit from NVIST Analytics. Please go ahead.
CA Garvit
Hi, thanks for the Opportunity and congrats for a good set of numbers. My question is, you mentioned about the business drivers that help you to achieve this kind of significant growth in Q1. As we entered in Q2, how do you see these drivers shaping up and where do you think we will be ending based on these drivers at the end of FY26? That’s my first question.
Rachamadugu Balaji Bharadwaj
Yeah. So with respect to what actually causes SSGs, I think one of the major attributors factors that I need to attribute is with the wedding dates Last year in Q1 if you compare we have negligible to nil wedding dates. We have like probably three or four wedding dates, but that also was in the early first two weeks of April. But in this year, I mean what we had is a distributed wedding day calendar and that was a major reason why we were able to achieve this. And fortunately we have a major contributor which is saris in our entire portfolio and most of our product portfolio is in the occasion and the wedding wear space only.
So this is what we are continuously continuing to do in terms of the overall pie. Our sari contribution is only growing stronger because of varamahalakshmi silk format in play. I mean Q2, Q3, Q4, we see a normal year and not have a different year like last year. In this normal year I think we are very much well positioned to ensure that this year also is going to be a good year moving forward. And with respect to other smaller factors in terms of marketing advertisement, I think last year also we have done a huge amount of marketing in the Tamil Nadu because most of our stores that we have added was in Tamil Nadu.
With respect to marketing also we are taking a cautious approach this year so that we should be able to leverage on the extensive marketing that we have done last year that all that efforts will pave in for this particular quarter as well as the next quarters to come. At this point of time there’s not much difference in terms of how Q1 is going to pan out to Q2, Q3 and Q4. However, the only thing will be the shift in terms of the festivities of festive calendar which is Dashara has Now moved to Q2. So Q3 will be heavily driven by weddings. I mean at the end of Q3 probably in December again the Sankranti season will kick in. So that’s it.
CA Garvit
And from a little long term perspective like this year you mentioned internally we are targeting a growth of 15%, let’s say three years ahead. What kind of cagr we are looking for Sisilc as a company because at the time of ipo, I remember we were pretty aggressive in the terms of growth. But now we are speaking about this 15% kind of number. So despite this expansion we are doing in the terms of offline stores and the different, different brands. So how do you see this overall top line growth shaping up from a little long term perspective, let’s say next three to five years.
Rachamadugu Balaji Bharadwaj
Let me say that, you know, see from the time the IPOs happened, unfortunately the market has not been favorable. And that’s where the growth on top line has not grown been to an effect where we believe which is like a one time off thing. Because last year was an exceptional year. Given that this is a normalized year, 15% growth year on year should be possible not just for this year but the next three to five years also. This is the kind of growth we should be able to expect.
CA Garvit
And the margins that we are doing c urrently, are these margins sustainable? Because you mentioned we are entering into some low value products. So is it going to affect our margins in any way?
Rachamadugu Balaji Bharadwaj
See when we enter into any new market, be it tier one, tier two, tier three basis that the contribution the ASPs will be a little bit different. But in terms of margin, even though we had a tough time last year, we continue to maintain our gross margin levels. So 42% will be a sustainable gross margin. And with respect to EBITDA levels also we think that these EBITDA levels are sustainable. In fact there is a scope to improve our EBITDA levels that we had by the end of this year we should be able to target an additional EBITDA that we have achieved on top of the existing Q1 number.
Probably a better time to comment on that will be later half of this year. But definitely there is a improvement in terms of EBITDA levels that we are looking at as well as the gross margin. Both of them are there. The nature is like Varama Lakshmi silk stores getting added generally will be pulling up the entire gross margin and EBITDA levels at the company level. One of the EBITDA level dragger was klm but the newer store that we’re trying to add is non KLM stores. So things are looking in favor to us.
CA Garvit
Got it sir. And this last question on the product diversification side. So are we open to entering into the jewelry segment going at what are our plans if we are having anything into mind?
Rachamadugu Balaji Bharadwaj
So with respect to jewelry, probably we will not be doubling down on jewelry segment. I think we have a small brand called Rasamahi which sells Silver jewelry, but that’s also like a shop in shop format. In our existing stores itself, we have demarked some space of service area and we have given it to the silver jewelry. But I think at this point of time it’s still a wait and watch. We have completed one year of operations but the silver jewelry segment continues to have a slow paced growth. We don’t anticipate at a company level to expand into jewelry segment at this point of time.
We are comfortable in what we are doing. We believe that our focused approach in terms of ethnic wear, especially in women’s wear is our USP and we will continue to operate that. And with respect to expansion also see even till today, after reaching probably around 69 stores or like 7.27 lakh square feet and able to achieve a turnover over last year about 1462, our presence is relatively even more like, you know, very small, just ap, Telangana, Tamil Nadu, Karnataka is what our presence is. There’s still a lot of opportunity for us to expand in these markets and go beyond these markets also.
So our immediate focus is to expand in the apparel category and not diversify into any other ancillary categories.
CA Garvit
Thank you very much sir and all the best for the future. Thank you.
Rachamadugu Balaji Bharadwaj
Thank you.
operator
Thank you. The next question is from the line of Piyush Bangar from Widget Global Securities Private Limited. Please go ahead.
Piyush Bangar
Good morning everyone. First of all, congratulations for the big setup number. My first question is related to the same store sales growth. The thing is how long does it take for a typical store of ours to mature?
Rachamadugu Balaji Bharadwaj
So in terms of store maturity, generally the way we calculate is we the day where, I mean if let’s assume that we open a store in the month of August, we leave out this year which is a store year of opening and then we calculate next year as a base year. And the further year onwards is when we start calculating the SSGs. So if on an average it will take about close to about 13 months to 18, I mean 20 months to have this maturity. So this is how we calculate. So generally all these stores come into matured stored on April 1st. So this April 1st, whatever stores we have opened in FY23 got matured and these stores we will track as SSG stores.
Piyush Bangar
Okay, so my question is what is the same store sales growth of the stores which have age of more than 12 to 20 months? And what’s the same store sales growth of the stores which have age of less than 12 months to 20 months in Q1FY26.
K.V.L.N. Sarma
Total for the purpose of SSG we consider, I mean the principle of considering SSG. Mr. Bhagwaj has explained as on date 53 stores have come into. Out of our total 69 stores, 53 stores have come in to this matured category in which we achieved approximately 29 plus percent of the SSGs. All other stores are under various stages of maturity levels and that’s in fact most of them are in Tamil nadu only. And FY24 stores, whatever was there in the Q1. I mean right now we are speaking about Q1 thing. So those who were qualified to be considered for Q1 of FY25, they have also shown a positive turnover during this quarter.
Also the other source will be on various dates. So there will not be a comparable figure for them. Overall, if I have to say Tamil Nadu source, the new source that have come in have on an average achieved Approximately reached approximately 30,000 rupees per square feet on an annualized basis where the company’s average is around 45,000 and Tamil Nadu is expected to do more than 45, that is approximately 50,000. So during this period there will be an increased productivity in all these stores on a staggered manner. And then when the same stores produce better productivity and obviously the turnover is one part, the profitability also will be slightly better than what it was right.
Now just take an example. Suppose even if I have to take a 15% increase in turnover this year for which in fact we have already recorded 7.5% increase by the first quarter itself. So for a 15% turnover, even if we repeat the same turnovers, same financials for the balance 3/4 also obviously the PAT would be in the range of about 130 crores and the increase would be 30% over the last year. So thus as and when the productivities are increasing in the stores, in the same store, even I am achieving better productivity, the profitability percentage also improves.
Piyush Bangar
Okay, so could you please quantify the same store sales growth of the stores which were opened by the 31st of March 2024.
K.V.L.N. Sarma
The 1st of March 2024, they have achieved approximately 5%. 31st they have achieved over the Q1 of last year to Q1 of this year, they achieved approximately 4 to 4 and a half percent.
Piyush Bangar
4 to 4 and and half percent. That’s actually. Okay, just a second question. It’s a follow up question to related to the wedding days. How many wedding days are there in Q2FY26 compared to the Q2FY25. Wedding day. Festive day.
K.V.L.N. Sarma
The festivities. I Think I’ve already made commentary that Dashara will be early this year. Apart from that there is no new addition of any festivity there. Dashara is one of the bigger festivals that we have for Q2 and with respect to wedding dates I think last year we have close to 18 days and this year we have probably around 21, 22 days. So it’s just an addition of three days extra is what we have in Q2.
Piyush Bangar
Okay, that’s great. Just another thing that has company observed an increase in footfall or higher ticket time?
operator
Request to rejoin the question queue for follow up questions.
Piyush Bangar
Okay, okay, okay, I’ll rejoin the queue.
operator
The next question comes from the line of Shubham Sehgal from Simple. Please go ahead.
Shubham Sehgal
Hello and audible.
Rachamadugu Balaji Bharadwaj
Yes sir, you’re audible. Please stand.
Shubham Sehgal
Yeah, yeah. My first question was so like on the income tax provision that we mentioned about last quarter and also the promoter tax issue we had of 58 crores. So I just wanted to ask like you know why did this occur and if you could just elaborate that are we taking any concrete steps to avoid making such mistake in the future?
K.V.L.N. Sarma
Why did it come? Are we speaking about why it has come?
Shubham Sehgal
Yeah, why? And also are we taking any concrete steps to avoid making such errors in the future?
K.V.L.N. Sarma
In fact when the rate gets come it is for a different reason but they are raided on the entire retail industry during that period on a staggered basis. So why is something that we cannot explain. But having come there are no major deviations that they have seen in the regular operations and compliances. Certain as I explained in the last meeting last call. Also certain employee welfare measures where we have expensed out the staff advances to the salaries etc. Those they have identified and taxed which normally they do when they make a raise and all things.
So on the company side there was no major deviations on the bookkeeping or any specific issues because of which this was there and we are taking enough precautions so that whatever small things they came out with are not repeated and we are taking enough care on that. On the promoter side promoters appealed on the issue and then they will have enough they will take care of those issues that the company is not at all affected by that and company promoters have enough resources to meet that. Having said that I also inquired with the promoter group and they have confirmed that they are not going to raise any money by funding pledging of the shares etc for meeting that requirement.
So overall promoters issue will be within their purview and the company has no major issue earlier and there will not be Any further issues on account of this.
Shubham Sehgal
Okay, so we are taking measures that it does not repeat again, right?
K.V.L.N. Sarma
Yes, you’re right.
Shubham Sehgal
Okay. And my second question was that so our edge has always been into sarees and we are, you know we have been trying to get into multiple products. So I wanted to ask what is the kind of differentiation that we are offering in the products other than sarees and what would be the primary reason that we are venturing into these multiple products and how do we think that this is a good step and you know like we will be successful in the.
Rachamadugu Balaji Bharadwaj
Overall? I think with respect to the product offering wise, SSKL’s major offering is around wedding and occasion wear spaces especially for women. And in the areas where we are currently present which is ap, Telangana, Tamil Nadu, Karnataka, when it comes to any celebration or any wedding, saris is the most preferred choice of apparel. And we have seen that speakers to us very loudly based on our Q1 performance because the wedding dates and the occasions was the only difference between last year Q1 and this year Q1. So in terms of product wise I think one of our major USP is all our brands cater to different segments of the society.
We have better sourcing and supply chain model where we are able to keep our design exclusivity to us and our customers love us to for what we try to offer for best of the best value for the most price conscious and value based purchasing. As you we might have already iterated before. I think we have our full price sale which is more than 95% and we don’t believe in end of season sale or any discounting or any bargaining at the counter. So what’s happening is what this tells us is the customers will love us for what we’re trying to do.
We have a repeat customer purchase rate of more than about 48% to 50% of repeat customer purchase we have at this point of time. In terms of product offering and diversification we will still continue to keep sarees as our major product offering across all our brands, all our formats. However, as the changing dynamics we are also trying to see and add the kurta kurti section wherever possible just to try and observe how the demand and demand trend is. But on the overall side as we expand deeper with Varamahalakshmi silks, the saree contribution to the overall product offering is only going to get stronger once we complete our expansion south India or maybe once we start moving to other geographies in the country then probably the product diversification will take a major part at this point of time it will still be a saree dominant category.
And since we are operating in the occasion and weddingwear space, this is one category that is not affected by let’s say an online presence or maybe somebody, a new entrant that is coming into the business. So even though the cost of entry could be easier, what happens is like the effective management of the entire product offering continuously working on what sells and what does and sell, working with our strategic connections with respect to our viewers who are spread across more than 100 cities. We work with about 2500-3000 vendors at any given point of time. These are all the metrics that puts us away from rest of the competition.
There are competition in our existing stores.
Shubham Sehgal
General strategy, I meant like product specific. So like as you mentioned that you know we are getting into other products so is there like any kind of differentiation we are offering there? So I got it on the sari point that you know we are dominant there and that is going to be our major driver. But we have entered into these different products. So is there any differentiation you’re offering there.
Rachamadugu Balaji Bharadwaj
With respect to other products? I think we are not getting into any new product category addition per se. But if you’re talking about the existing non sari categories, our differentiation is basically to identify what’s selling and basically source that respective product. And put it for example let’s assume men’s ethnic wear. So we be all majority. I mean in KLM stores we have men’s ethnic wear contribution increase significantly. And we also see the kids and the women section also contribution increase significantly. Now what is our usp? Not having a brand is our usp. I think what we believe in is giving value for fashion.
I think, I think if you’re looking for a product and you’re not worried about brand, that’s what our and rest of our brands come into play. So with respect to our usp, we are those guys where you will be able to get what you need by not spending too much.
Shubham Sehgal
Okay? Yes. Okay. And as you like mentioned, so like you know, this quarter I request you.
operator
I request you to rejoin the question queue for follow up questions.
Shubham Sehgal
Okay.
operator
Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in this conference, please limit your questions to two per participant. The next question is from the line of Sarvesh Gupta from Maximil Capital. Please go ahead.
Sarvesh Gupta
Good morning sir. And congratulations on a good set of number. Sir, most of my questions have been answered. One thing which I wanted to understand is your pre nds numbers and how are they different from the report numbers? And secondly, I saw that.
K.V.L.N. Sarma
You may just approximately 1.75% out of the data. So it’s about 13.25% EBITDA there.
Sarvesh Gupta
Okay. And on the pad basis, sir, Hello?
K.V.L.N. Sarma
Same, same percentage, reduce.
Sarvesh Gupta
Hello?
K.V.L.N. Sarma
With 13.25%, 1.7% will be there.
Sarvesh Gupta
Okay. Okay. And secondly on when I saw the results, so why, oh why for the same quarter we saw that other expenses actually declined which shouldn’t have happened because we have done a store expansion also. So what was the reason behind the same, sir?
K.V.L.N. Sarma
Other expenses normally include these advertisement business promotion expenses also which they are the major ones in that since we have spent substantial amounts on advertisement etc. In the Q3 and Q4 of last year, these issues, these have come down not on a substantial scale but to the extent that there is an adjustment.
Sarvesh Gupta
Hello. Hello. Yeah. So mainly because of reduction in ad expenses in this quarter.
K.V.L.N. Sarma
Yeah, yeah, that’s what I’m saying. Last year throughout impact we have been spending higher on advertisement and business promotion expenses mainly to create visibility in the catchment areas in Tamil Nadu. So since we have spent and we are waiting for the results to come over from that expenditures, Q1, these expenses were slightly on the lower side and hence it’s Almost, I think 49 to 48. Yeah, it’s almost in the same level. Maybe by the Q3 or so when the facilities etc. Will come on a larger scale. Scale there might be a little more spend on that.
But right now it is the business promotion and advertisement expenses are controlled here.
Sarvesh Gupta
Okay. And finally sir, on the inventory. So our overall inventory days is on the higher side which sort of hampers our overall return on capital metrics. So are there any, you know, ways to reduce that? Are we seeing any low hanging fruits around reduction on the inventory days or do we have some special projects that we see?
K.V.L.N. Sarma
Yeah, on the inventory side the optimization is continuing. Just as a ballpark figure, if I have to explain, we have substantially increased our footprint in our square foot area in Varumalakshmi format which was earlier demanding it inventory levels of approximately 20,000 rupees per square feet. And our effective store area expansion was in the range of about 1 lakh 10,000 square feet which if you convert them with the base minimum quantities also it should increase to by 220 crores. But as you can see by the year 25 and at the current levels also the inventory levels have increased only to the extent of about 100 to 125 crore.
So that is, the optimization has already been done. And once we expand in total in Tamil Nadu and then the stores start giving their anticipated productivity levels, this should look much better. So going ahead, this is a continuous process. And from the time we came to IPO and then from where we thought earlier, in fact we were explaining also earlier, more inventory, more sales was the motor in the company. Then subsequently we have put inventory levels also as one of the KPIs. And from then on we are continuously monitoring and then optimizing it, not sacrificing the productivities.
So you can expect that this is a continuous process and we would be reducing it further.
Sarvesh Gupta
And where do we plan to reach on this inventory metric?
K.V.L.N. Sarma
From the 183the plan, the goal was approximately 130 to 130 days, which we think is the optimum level, below which again there might be a business detriment. So to that extent we will achieve once we complete the expansion and once these productivity, these stores are matured, we should be coming to approximately 130 days.
Sarvesh Gupta
So by FY27, can we reach this figure, sir?
K.V.L.N. Sarma
Yeah, by FY27 we should reach to those levels.
Sarvesh Gupta
Okay. Thank you sir. And all the best for the coming quarters.
Rachamadugu Balaji Bharadwaj
Thank you.
operator
The next question is from the line of Dwanil Desai from Turtle Capital. Please go ahead.
Dhwanil Desai
Hi, good morning sir. So my first question is, you know, last, last year our H1 was very tepid and Q1 was almost a washout quarter. So 29 SFSG, you know, in Q1 on a very low base but on a more normalized basis, how should we think about, you know, SFSG? Can we do or think about 5 to 7% SFSP across formats on a, you know, collective basis? And you know, as a corollary to that, when we talk about, you know, 15% growth, if I go back to your calls earlier, we have talked about 10 to 12% addition on square footage basis.
So that kind of, you know, means that we are looking at 5% kind of an SSH over a longer term period. So is this overall math correct?
Rachamadugu Balaji Bharadwaj
Yes, you’re more or less on the right path. I think our goal is to add 10% of retail square feet addition and SSG wise 4 to 5 is what we should be able to get on a normalized year. Last year, since it has been an exception, we have seen this jump. But if you take this full year, that should be the SSG kind of a number that we should be able to achieve. One thing is, as we keep expanding into our newer Stores, the additional stores are basically varamahalakshmi stores and not the lesser throughput stores.
So that also will be the additional improvement when it comes to the revenue target. So though we add probably 8% of square feet addition because these stores are Varama Lakshmi stores, the revenue contribution will be a little bit higher.
Dhwanil Desai
Got it. So typically sir, what we have seen is, so let’s say from margin perspective, we also guided, you know, last year that we will try to improve gross margin by 150 basis points, you know, over a period of time. So, with 4,5% SSD, do we see any operating leverage kicking in? Because generally our fixed cost below gross margin also would grow at inflation rate of 4,5%. So do we see any operating leverage kicking in that kind of SSSG?
K.V.L.N. Sarma
Yeah, SSSG of 4 to 5% would be adequate because the store level expenses which are subject to inflationary trends and increases in our case are in the range, I mean on a optimum turnover levels when, not during the period when the stores are under maturity, but in the maturities matured stores where they have reached the optimum levels of productivity. The store level expenses are in the range of anywhere between 15 to 20%. Maximum is around, I mean most of the stores, it will be in the range of about 15% or so. So the inflationary trends, the addition additional expenditure or inflationary trends that might even if they are there to the extent of 10 to 15% normally on rental only, we will have about 4 to 5% increase every year.
So say 10 to 15% on a percentage of 15% would have result into approximately 2 to 2.25% overall. So the SSS fees of 4 to 5% will cover the inflationary trend plus leave some additional margin availability for the for that year also.
Dhwanil Desai
So essentially we can think in terms of margin, whatever we are doing today, plus gross margin expansion that we can. Do and let’s say 1 or 2% additional leverage margin. Right. So 2 to 3% delta is available with us over time. Is that EBITDA margin available as and when we grow at 4 to 5% SSG and cross margin expanse?
K.V.L.N. Sarma
Correct. Correct.
Dhwanil Desai
Okay, got it. And a last question, sir, I think we will team back but I may.
operator
Request you to rejoin the question. Thank you. The next question is from the line of Niharika Karnani from CAPCRO Capital. Please go ahead.
Niharika Karnani
Hello. Hi, good morning. So my question is on the lines of EBITDA margin improvement that we saw in this quarter around 50bps compared to last quarter. So apart from VM stores addition. Are there any structural or operational changes which have brought about this increase in margin? And secondly, if we see revenue growth, see it was on a low base revenue of quarter one FY25 which was around 267 crores. So can we see that normalized revenue growth this quarter was in the range of 12 to 15% and not 42%?
K.V.L.N. Sarma
Yeah. In fact we should term the last year as an aberration. Last year is a gross aberration on the negative side. So obviously this year we should term it as a normal year which we can expect on a continuous basis. You are right that last year, last year similar quarters compared to that current year improvement is 41 or so. But on a general indication from this quarter onwards you can expect in the range of anywhere between 15 to 20% because there has been a store edition. And also on a substantial part, say approximately 1 lakh square feet of the stores are getting matured on a staggered manner.
So there will be an additional turnover from these, these new stores also. So safely you can expect around 15 plus or 15 to 20% improvement in turnover. So going ahead.
Niharika Karnani
Understood. And my first question was on Addicta margins. So are there any structural or operational changes which has led to.
K.V.L.N. Sarma
No, no, it’s a normal. That’s what I said. Last year was an aberration. This year is a normal year. If you go back to the FY24 also you will see the EBITDA margins in the range of about 14 and a half 15. So we just came back to normalcy.
Niharika Karnani
Got it, Got it. Thank you.
operator
Thank you. The next question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Ankit Gupta
Thanks for the opportunity and congratulations for a very good set of numbers. So given we are expanding largely on the Varma Lakshmi format. So you know, and you also spoke about, you know, SSH of 4,5% which can lead to improvement in our EBITDA margin. Let’s say two, three years down the line. Can we expect our EBITDA margins to expand from 15, 16% that we have currently to almost, let’s say around 18, 19%. Is that an aspiration that we’re looking for?
K.V.L.N. Sarma
It should in fact if you have seen Q3 last year also we seem to have achieved approximately 17 and half percent of EBITDA margin. And going ahead that would be the target. We should on a staggered basis go on improving. And our target for FY27 should be in the range of about 20%.
Rachamadugu Balaji Bharadwaj
SSJSC levels play a key role here. I think on a normalized year when there’s a positive ssgs, I think these are the numbers that should be possible for us. So yes, it’s an achievable target in the next two to three years time.
Ankit Gupta
FY27 we’re looking at EBITDA margins of around 20%. Is that the right.
Rachamadugu Balaji Bharadwaj
We don’t want to put a number currently I think but you should be able to see a year on year progress. I mean quarter on quarter also you should be able to see that progress coming in. But on an average, I think last year compared to last year because quarter one was a negligible quarter, I think we’ll have to ignore that. But in this particular quarter you should be able to see anywhere around 16 plus kind of an EBITDA number.
Ankit Gupta
Sure, sure, sure. Second question was on our strategy for klm. You know we have you highlighted that in this quarter even KLM has done well with positive sshg. So although we are not looking to expand this format in the near term, let’s say two, three years down the line, look to expand, add new stores in the KLM format or our focus is not to expand there.
Rachamadugu Balaji Bharadwaj
Sangit. So currently, so currently in the near to medium term probably we will not look at expanding to new KLM stores. The whole objective is to refine a little bit more in terms of the overall product availability as well as continue to see 3, 4/4 of continued SSGC growth. Once we’re able to see that on a long full year basis, that’s probably when we should be able to look at. But given the fact where we are short to medium term we are not looking at expansion of our KLM formats. It is all going to be in the other formats.
Ankit Gupta
Sure. You also spoke about in the opening speech you spoke about one more new format that we are planning to launch which will be in the sari range itself. So can you elaborate on that what kind of you know like price range will be targeting and what is the rational behind you know, opening one or adding one more format into our existing critical four format that we have.
Rachamadugu Balaji Bharadwaj
So the format that we are trying to open is called Valley Silks. Earlier we have tried this format out in a couple of our stores in Andhra. We have got phenomenal response. And this particular format is in lines of Kalamandir itself. In terms of product offering Kalamandir has more like a family store or a vibe. But Vali Silks is exclusively going to be women’s wear especially in the low priced silk as well as low priced fancy items. This is where the USP for Valli Silks is. And this format if you see in terms of Capex requirements also will be 20 to 25% cheaper than the rest of the formats.
That’s one. Number two will be in terms of the digital first engagement. We are trying to go on a different approach where we only completely spend on digital and not go doubling down on offline marketing. So that’s number two and majorly this will be. We are taking an advantage of how in the current store formats where we currently have 3,000 to 4,000 square feet kind of a format is what a Valley Silks will have. All of our remaining stores have a little bit bigger formats like 6000 in case of KLM, it’s probably around 12,000 to 18,000 square feet.
These will be compact stores, compact formats only focused on women’s wear, sarees, lower Capex and of course I think, I think in terms of shopping experience and in terms of other metrics we’ll try to do the best. And one more important thing about this particular format is we are trying to go ahead and run this as an offer or offer driven kind of a format. Meaning to say like most of our Kalamandir or Sari brands don’t have an offer based selling proposition. But this will be like either we will have every weekend there might be some unique offers that we run in place.
So that’s more or less going to be the model how a Valley Silks format will run. I mean this is how it was running earlier also. So we are trying to exclusively open a couple of stores and see how it works out. And if it works out then that will probably open up a large, a bigger market. Even in the existing AP Telangana Tamil Nadu market it still has a potential to open up doors for new stores in the current markets also. So that’s with one listings.
Ankit Gupta
Okay. Okay. Thank you. Thank you so much.
operator
Thank you ladies and gentlemen, in the interest of time this would be our last question. I would now like to hand the conference over to Mr. Bharatwaj senior vice President for closing comments.
Rachamadugu Balaji Bharadwaj
Thank you all one and all for joining this call. I think SSKL continues to remain focused on the growth, profitability and delivering value to all the stakeholders. Thank you for your trust and support and looking forward to connecting with you all after the next quarter. Ending conference call. Thank you. Thank you for joining on a Saturday.
operator
Thank you on behalf of Saisil Kalamandir limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.